High Court Of Delhi
OFFICE LIQUIDATOR R.S.MOTORS PRIVATE LIMITED - Appellant
Versus
J.S.SAWHNEY - Respondent
Company 538 of 1975
Decided On : 09/02/1975
COMPANIES ACT, 1956 - SECTIONS 542, 543 - COMPANIES (COURT) RULES, 1959 - RULES 10, 11, 19, 260, 261, 262 - PROCEDURE FOR COMPANY APPLICATIONS - DISTINCTION BETWEEN PETITIONS AND APPLICATIONS - WRITTEN STATEMENT - NECESSITY - CODE OF CIVIL PROCEDURE, 1908 - ORDER 8, RULE 1 - APPLICABILITY.
Fact of the Case:
An application was filed under Section 543 of the Companies Act, 1956, seeking certain reliefs concerning the actions of the ex-Directors of the Company in liquidation. The application was styled as a company application and not as a company petition. The first respondent was served and appeared for the first time after service, but no written statement was filed. The court passed an order directing ex-parte proceedings against the first respondent, leading to the filing of the present application for setting aside the ex-parte proceedings.
Finding of the Court:
The court held that the procedure prescribed by the Companies (Court) Rules, 1959 for company applications is different from that prescribed under the Code of Civil Procedure. In the case of company applications moved by a judge's summons, the respondent is not required to file a written statement on appearance, as the provisions of Order 8 Rule 1 of the Code are not applicable. The court further clarified the procedure to be followed in different types of company applications, distinguishing between petitions and applications, and specifying the forms and rules applicable to each.
Issues: 1. Whether the first respondent was required by law to file a written statement on appearance in the company application under Section 543 of the Companies Act, 1956. 2. What is the procedure to be followed in company applications moved by a judge's summons under Sections 542 and 543 of the Companies Act, 1956.
Ratio Decidendi: 1. The Companies (Court) Rules, 1959 provide a distinct procedure for company applications, which differs from the procedure under the Code of Civil Procedure. 2. In the case of company applications moved by a judge's summons under Sections 542 and 543 of the Companies Act, 1956, the respondent is not required to file a written statement on appearance. 3. The procedure for such applications is governed by Rules 260, 261, and 262 of the Companies (Court) Rules, 1959, which provide for the filing of points of claim and points of defense after the summoned party has put in appearance.
Final Decision: The court rejected the application to set aside the ex-parte proceedings, as the first respondent was not required to file a written statement. The applicant was permitted to rejoin the proceedings at the current stage.
( 1 ) THIS application for setting aside ex. pane proceedings has been moved in relation to a company application pending in this Court moved by the Official Liquidator of M/s. R. S. Motors (P) Ltd. (in liqdn. ). The application is under Section 543 of the Companies Act, 1956 and prays for certain reliefs concerning the actions of the ex-Directors of the Company (in Liqdn.), I have gone through the main company application and find that certain allegations against the ex-Directors of the Company, which I need not set out in any detail at this. stage, have been set out in the application; which has been styled as an application under Section 543 of the Companies Act, 1956. There is no doubt that it lias been moved not as a company petition but as a company application. Notice of this application was given to the respondents in the following words :-
"issue summons in Form No. 121 to the respondents for 6th December, 1974".
( 2 ) THEREAFTER, the first respondent was served and appeared for the first time after service on 29th May, 1975. No order was passed on that date regarding the filing of a written statement. Nor was any written statement filed. Nor was any time granted for filing a written statement. The next date fixed was 23rd July, 1975, for the service of the other, respondent- On that date, respondent No. 2 was not present and respondent No. 1 was also absent. The court passed an order directing ex-parte proceedings against respondent No. 1. This has led to the filing of the present application for setting-aside the ex-parte proceedings.
( 3 ) NOW, this application has been moved immediately after the last date i. e. 23rd July, 1975. No proceedings took place on 23rd July, 1975 and. therefore, the question for consideration is what is the effect of the first respondent being absent on 23rd July, 1975. In short, the question is whether respondent No. 1 can now file a written statement. This has led to the raising of the subsidiary question, which is wether respondent No- 1 was required by law to File a written statement either on 29th May, 1975 or 23rd July. 1975. the previous two dates of hearing.
( 4 ) UNDER the provisions of the Code of Civil Procedure, on or before the first date of hearing, a defendant to a suit has to file a written statement because of the provision of Order 8 Rule I of the Code. If that provision applies also to the present proceedings, then, the first respondent ought to have filed a written statement before 29th May, 1975, and having failed to file any written statement he must now seek the orders of the Court for permission to file a written statement. As he did not file a written statement on 29th May, 1975 I do not see that the position was at all altered by his absence on 23rd July, 1975. So, the question to be decided is whether on 29th May, 1975 the first respondent was required by law to file a written statement. I have been taken through the provisions of law and have examined the Companies (Court) Rules, 1959 on the procedure which is to be followed in dealing with applications under Sections 542 and 543 of the Companies Act, 1956 and also in respect of other applications under these Rules.
( 5 ) THE procedure prescribed by the Companies (Court) Rules, 1959 is somewhat different from the procedure prescribed under the Code of Civil Procedure and indeed differs materially from the procedure normally followed even in the Original Side of this Court. The Companies (Court) Rules have divided the various applications which can be moved before the Court under the Companies Act, 1956 into two categories. One category is described as petitions and the other as applications. The nomenclature being used by this Court, is company petitions and company applications. The provisions of Rule 10 of the said Companies (Court) Rules, 1959, say that all applications under the Act shall be moved either by a petition or by a judge s summons. Then Rule II proceeds to specify which appl
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