JUDGMENT - M. C. CHAGLA C. J. :

This appeal raises a rather important question as to procedure to be followed in the winding up of companies. The respondents presented a petition for winding up of the appellant company before Mr. Justice Coyajee who was the Company Judge. The petition was presented on 11-11-1955 and the learned Judge made the following endorsement.

"Accepted. Petitioners waive service. Hearing 2nd of December."

It may be pointed out that before this petition was filed the respondent company had given notice of the presentation of the petition to the appellant company and in answer to that notice the appellant company appeared before Mr. Justice Coyajee, and all that Mr, Justice Coyajees endorsement indicates is that the appellant company had waived service of the petition. On 1-12-1955 Mr. K. M. Modi, Managing Director of the appellant company, made an affidavit setting out his defence to the case sought to be made out by the petitioners for the winding up of the appellant company, and in this affidavit he raised various contentions with a view to satisfy the Court that the petition should not be proceeded with. Pursuant to the direction given by Mr. Justice Coyajee, the petition came up before him on 2-12-1955. Mr. Justice Coyajee did not take up the petition as he knew the Managing Director of the appellant company and he felt that he would feel embarrassed if he tried the matter, and therefore he directed that the matter should be heard by some other Judge. The petition was placed before Mr. Justice Desai and after several adjournments Mr. Justice Desai made the order which is under appeal. The order was made on 3-7-1956 and it directed that the petition be advertised in the daily newspapers The Times of India and Bombay Samachar of Bombay, the Statesman of Calcutta, the Hindusthan Times of Delhi, the Hindu of Madras, and in the Bombay Government Gazette on the 30th day of July 1956, and the learned Judge further ordered that the petition be placed on his daily board on 20-8-1956 for hearing and final disposal.

(2) It is this order against which the appellants have come in appeal, and the preliminary point raised by Mr. K. T. Desai for the respondents is that no appeal lies under S. 202 of the Companies Act and that the order made by the learned Judge is a purely procedural order and does not affect the rights of the parties. We have pointed out in Bacharaj Facto-ries Ltd. v. Hirjee Mills Ltd., 57 Bom LR 378 that S. 202 conferred upon a party aggrieved a substantial and valuable right of appeal and that the Court must be anxious not in any way to cut down or impair that right. At the same time we expressed the opinion that if an order made under S. 202 was merely a procedural order which in no way affected the right or liabilities of parties such an order would not be appealable. As we shall presently point out, it is unnecessary for us at this stage to decide whether the order made by Mr. Justice Desai is procedural or affects the rights of parties, because the view we take is that Mr. Justice Desai made this order without exercising his jurisdiction to hear the appellants and deciding their contentions as he was bound to do at this stage. Clearly, therefore, apart from any other question, failure on the part of the learned Judge to exercise his jurisdiction would be appealable under S. 202 of the Companies Act.

(3) What is urged by Mr. Desai is that as soon as Mr. Justice Coyajee accepted the petition, Mr. Justice Desai had no discretion left in him and it was obligatory upon him to make an order of advertisement which he has made. Says Mr. Desai, if it was obligatory upon him to do so, then his order cannot be challenged. Turning to R. 733 of the High Court Rules.

"every petition for the winding up of any company by the Court, or subject to the supervision of the Court, after admission, shall be advertised fourteen clear days before the hearing."

What is made obligatory by this rule is the advertising of the p

Click Here to Read the rest of this document