SHANKARLAL AGARWALLA Vs. SATYA NARAIN JUGAL KISHORE

JUDGEMENT

(1.) The facts in this case are shortly as follows : Messrs Laxmi Spinning & Weaving Mills Ltd. (hereinafter referred to as the said company) is a company incorporated under the Indian Companies Act, 1913. On or about the 31st January, 1953, the company executed a first mortgage of its assets for Rs. 1,25,000 in favour of Shankarlal Agarwalla and Dinanath Agarwalla in the name of their firm of Bansidhar Shankerlal. On the 21st January, 1954, the company executed a second mortgage of its assets for Rs. 2,00,000 in favour of Shankarlal Agarwalla and Dinanath Agarwalla, in the name of their firm of Bansidhar Shankarlal. On the 25th November, 1954, a suit was filed for the enforcement of the said mortgages, being Suit No. 3365 of 1954 (Bansidhar Shankerlal v. Laxmi Spinning and Weaving Mitts Ltd.). In or about February, 1955, one Nathmal Bhojnagarwalla instituted a suit in this High Court against the company and the mortgagees, inter alia, for a declaration that the mortgages were void. On the 13th May, 1955, a preliminary mortgage decree was passed in Suit No. 3365 of 1954. On or about the 22nd August, 1955, an order was made by this High Court for winding up of the said company at the instance of the petitioning creditor, Satya Narain Jugal Kishore. In the winding up proceedings, an application was made by the said creditor for an order for examination of certain persons including the said Shankarlal Agarwalla under section 195 of the Indian Companies Act, 1913 (hereinafter referred to as the said Act). On the 31st July, 1957, an ex parte order was passed by the company court, inter alia, for examination of the appellant, Shankarlal Agarwalla under section 195 of the said Act. The said Shankarlal Agarwalla thereupon made an application for setting aside the said order. On the 14th September, 1961, Mitter J. made an order setting aside the said ex parte order dated 31st July, 1957. The relevant part of the order is as follows :

(2.) In the meanwhile, on 16th November, 1960, Suit No. 301 "of 1955 instituted by Nathmal Bhojnagarwalla was dismissed by consent after sanction was granted to the liquidators to enter into a compromise for the payment of a certain sum of money to the plaintiff in the said suit. It might be mentioned here that in the liquidation proceedings two private liquidators were appointed as the joint liquidators. On the 25th November, 1961, the petitioning creditor, Satya Narayan Jugal Kishore, made another application for the examination of several persons including the said Shankarlal Agarwalla under Section 195 of the said Act. On 21st May, 1962, an ex parte order was made by the company court, inter alia, for the examination of the said Shankarlal Agarwalla under Section 195 of the said Act. Thereupon, the appropriate summons was issued and was served on the "said Shankarlal Agarwalla. A copy of the said order dated 21st May, 1962, is set out at page 77 of the paper-book. The order, inter alia, provided as follows:

(3.) On 24th February, 1964, the said Shankarlal Agarwalla made an application before the company court for being represented and/or assisted by attorney and/or counsel at the examination. This application was contested by the petitioning creditor. On 11th March, 1964, the company court dismissed the application and the dismissal was without prejudice to the contention of Shankarlal Agarwalla that the order dated 21st May, 1962, was bad. On the 22nd April, 1964, the said Shankarlal Agarwalla made an application, inter alia, for the following orders :