SHIV DAYAL Vs. LIBERTY FINANCE PRIVATE LIMITED

JUDGEMENT

(1.) This is an appeal against the order of the learned single Judge directing the public examination of the appellant Managing Director of the Company in pursuance of the application moved under Section 478 of the Companies Act by the Official Liquidator of the company against which winding up order has been passed on 13.2.1967. The dates and the period it has been taken to pass final order are indeed for distressing and a point to ponder about the delays, calling for urgent steps if system is to maintain its credibility.

(2.) On 28.7.1970 the Official Liquidator filed a report under Section 455(1) of the Companies Act being C. P. 74-D/66 which he brought to the notice of the Company Judge together with the observations of the auditor. In the report the Official Liquidator has mentioned that payments were made and not accounted in the books of accounts, over payments and double payments were made to the parties, preferential payments to creditors were made af(er the orders for provisional winding up was passed; no securities were obtained by the company against the loan/investments made and the failure of the company to realise outstanding due from the hirers/debtors in time aggravated the financial position. Some of the instances mentioned were that though the amounts have been entered in day books as having been received from the hirers of the company but no entry has been made in the ledger; no receipts from payees were obtained while making payments which would indicate dubious nature of payments and full address of payees are not available on record. It was mentioned in the application that the auditors report had already been sent to the Judge in the Chamber which may be treated as a proof of this application. The Official Liquidator therefore prayed that order should be passed to examine publically the Managing Director of the Company to whom it may be necessary to put such examination concerning the conduct of the business. On the same date i.e..28.7.70 while forwarding the report under Section 455 of the Act the Official Liquidator being report No. 131/70 also prayed that the auditors report brings serious irregularities, misappropriation of funds of the company which need to be explained by the Managing Director/Officers of the Company to consider further action under Section 531, 531 A, 542 & 543-of the Companies Act and that an Advocate be appointed to conduct the public examination of the Managing Director. The Auditors report had already been sent to the court. On that application Rangarajan J. vide his order dated 29.8.72 directed that he considered necessary to have the public examination of the appellant. Notice of that order having been sent to the appellant, he moved the comany Judge praying that the ex-parte order dated 29.8.72 directing the public examination be set aside. The learned Judge has refused to set aside the order for public examination of the appellant and the matter has come up before us in appeal.

(3.) There is difference of views as to the competency of appeal against an order directing public examination. (1963(1) Co. L. J. 41) K.Joseph, Augusti & others v. Official Liquidator, Palai Central Bank, Ltd. & (1943(2) M. L. J. 499) Chokkalingam Chettiar v. The Official Liquidator in re; the Nagarather National Bank (in Liquidation), Ramnad at Madura, have held that the appeal against such order lies while (1936 Rangoon 166) U Po Ke. v. U Po Thein, has held that no appeal lies against such order. We now ever, do not consider it necessary to give our views on this aspect because on merits we are satisfied that the order directing the public examination was an appropriate and valid order.