Avinash Hansraj Gajbhiye vs Official Liquidator, V. Pharma P. LTD.

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2006 Supreme(SC) 138

2006(2) Supreme 271
Supreme Court of India
(From Bombay High Court)
S.B. Sinha & P.K. Balasubramanyan, JJ.
Avinash Hansraj Gajbhiye —Appellant
versus
Official Liquidator, M/s. V. Pharma P. Ltd. —Respondent
Civil Appeal No. 1156 of 2006
(@ Special Leave Petition (Civil) No. 23706 of 2003)
Decided on 17-2-2006
Counsel for the Parties :
For the Appellant : Gagan Sanghi, Rameshwar Prasad Goyal, Advocates.
For the Respondent : T. Raja, S.C. Sharma, Advocates.

Headnote:Companies Act, 1956—Sections 543(1)(a) and 483—Civil Procedure Code, 1908—Order XLIII Rule 1(w), Order XLVII Rule 7—Review—Order passed by Company Judge in a misfeasance application, holding that all the ex-Directors of the Company were jointly and severally liable u/s 543(1)(a) to pay to the company an amount of Rs. 6,29,220/- with interest—Company Judge rejected application for review—It was held that there was no error apparent on record—Appeal filed by one of the ex-Directors of the company that went into liquidation—Whether High Court can be faulted for refusing to review its order dismissing the appeal or in dismissing the company appeal itself—(No)—No ground is made out for interference.
Held : While dismissing the Petition for review of the order dated 7.9.2001, on 16.8.2002, the Company Judge found on the basis of the material on record of Company Application No. 40 of 1999 and the contentions sought to be raised by the appellant that there was no error apparent on the face of the record in the order dated 7.9.2001. Therefore, what was involved in Company Appeal No.3 of 2002 was only the correctness of that order of the Company Judge and the Division Bench by its judgment dated 19.9.2002, found no reason to interfere. The review was sought by the appellant on the basis of certain additional material which according to him had relevance and the Company Judge had found that no ground based on discovery of new and important matter which after the exercise of due diligence was not within the knowledge of the appellant or could not be produced by him at the time when the original order was passed, was made out. This finding by the Company Judge was affirmed by the Division Bench in its order dated 19.9.2002. When the appellant sought a review of that order, as indicated earlier, the Division Bench considered the conduct of the appellant right through the proceedings and found that the appellant was indulging in dilatory tactics just to thwart the order passed by the Company Judge on the misfeasance application. The court also found that there was no ground made out for reviewing its order dated 19.9.2002. On a consideration of the relevant aspects, we find that the Division Bench and the learned single Judge were both justified in not acceding to the prayer for review made by the appellant. (Para 5)

Judgment

P.K. Balasubramanyan, J.—1. Leave granted.

2. This appeal, as can be seen from paragraph 1 of the Petition for Special Leave to Appeal, challenges the order of the High Court of Bombay, Nagpur Bench dated 18.7.2003 whereby the Division Bench of the High Court refused to review its judgment in Company Appeal No.3 of 2002 dated 19.9.2002 dismissing the appeal. Company Appeal No.3 of 2002 was filed by the appellant, the legal representative of an ex-Director of M/s Vidarbha Pharmaceuticals Private Limited, a company that went into liquidation and which was ordered to be wound up in Company Petition No. 7 of 1985 by order dated 9.11.1998. Though that appeal was against the order dated 16.8.2002 in Company Application No. 56 of 2001, the appellant attempted to challenge the earlier orders dated 7.9.2001 and 22.7.1999, passed during the winding up proceedings. By the order dated 7.9.2001, the Company Judge had dismissed the application No. 40 of 1999 filed by the appellant for setting aside the order dated 22.7.1999 passed by him in a misfeasance application, holding that all the ex-Directors of the Company were jointly and severally liable under Section 543(1)(a) of the Companies Act to pay to the Company an amount of Rs. 6,29,220/- with interest thereon at the rate of 18% per annum with effect from 6.10.1996 along with the costs of the proceedings. The order dated 22.7.1999 that was sought to be challenged was the order on the misfeasance application. The order dated 16.8.2002 was one by which the Company Judge rejected an application for review filed by the petitioner seeking a review of the order passed on 7.9.2001. The appeal was in time only as regards the order dated 16.8.2002 refusing to review the earlier orders in misfeasance proceedings passed by the Company Judge. The appeal was not accompanied by even an application for condoning the delay in filing the appeal as against the orders dated 7.9.2001 and 22.7.1999 even though the challenges to them were clearly barred by limitation. The Division Bench of the High Court, therefore, ordered on 19.9.2002 that the orders passed by the Company Judge on 7.9.2001 and 22.7.1999 were not amenable to scrutiny for their sustainability in the appeal filed and the appeal had to be confined to one from the order dated 16.8.2002. Thereafter, the appeal was dismissed holding that the Company Judge was justified in refusing to review the orders passed in the Misfeasance Application. The appellant then filed a petition to review the judgment in Company Appeal No. 3 of 2002. By order dated 18.7.2003, the application for review was dismissed. It is that order that is challenged in this appeal.

3. For the purpose of this case, we do not think it necessary to consider the question whether the appeal filed before the Division Bench under Section 483 of the Companies Act against an order refusing to review the orders on the Misfeasance Application was maintainable, the wide words of Section 483 notwithstanding (an order rejecting an application for review is not appealable even under the Code of Civil Procedure either under Order XLIII Rule 1(w) or Order XLVII Rule 7). We proceed on the assumption that the appeal was maintainable.

4. Learned counsel for the appellant submitted that the order of the Division Bench sought to be reviewed, proceeded on the basis that it was an appeal challenging the order dated 16.8.2002 passed by the Company Judge dismissing an application for review preferred by the appellant and the order dated 16.8.2002 passed by the Company Judge and the challenge thereto, included a challenge to the prior orders dated 7.9.2001 and 22.7.1999. This argument cannot be accepted. The order dated 16.8.2002 was that the Petition for review filed by the appellant seeking a review of the order dated 7.9.2001 passed in Company Application No. 40 of 1999, which was one for recalling the order dated 22.7.1999 was liable to be dismissed. The Company Judge after referring to the facts le

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