Serving notice of summons is necessary and no order that affects the rights of a party should be heard without providing them with an opportunity to represent the case.
Grover, A.N. Shah, J.C. Hegde, K.S.
Smt. Jatan Golcha
M/S Golcha Properties Ltd
- Whether the person is to be served with a notice of the summons under the general rule of natural justice and that no order should be made affecting the rights of a party without affording a proper opportunity to it to represent its case.
- Whether the High Court had erred in not entertaining the appellant’s appeal.
- The respondent company, which was holding leasehold rights in the appellant land, went into liquidation.
- Accepting the Official Liquidator's Report, the Company Judge (Rajasthan High Court), without hearing anyone or issuing notice to the appellant, ordered the auction of the leasehold right of the respondent company.
- The appellant sent a letter to the Official Liquidator revoking the licence granted to the company and calling upon him to deliver possession of the land.
- The Official Liquidator claimed that the company was entitled to a further period of the lease under the agreement. Notice was issued in respect of the proposed auction sale.
- The appellant filed an appeal before the High Court. The High Court held that since the appellant had not appeared before the Company Judge, she was not entitled to maintain the appeal, and further that the only remedy of the appellant was by way of a suit after obtaining leave of the Company Judge under S. 446 of the Indian Companies Act.
The appellant contended that the order filed for an appeal was rejected by the High Court because she had not appeared before the Court.
Relevant paragraphs of the original judgement
- Rule 103 of the Companies Rules provide for the tasking out a summons for the directions not only with the reference to the settlement of the list of contributors and the list of creditors but also the exercise by the Official Liquidators of all or any of the power under Section 457 and any other required directions of the Court
- The exercise of power under Section 457 of the act to sell the immovable and movable property of the Company by the public auction or private contract would certainly fall within the ambit of the Court.
The Court held that summons has to be issued to the petitioner on whose petition, the order for winding up was made. It is implicit that if the directions which have to be given by the Court would affect any person prejudicially, he must be served with a notice of the summons under the general rule of natural justice and that no order should be made affecting the rights of a party, without affording a proper opportunity to it to represent its case. The High Court was thus clearly in error in not entertaining and deciding the appeal preferred by the appellant, who was the owner of the land in which leasehold rights are said to have been created by her, in favour of the Company in liquidation, which was sought to be sold.
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