i s.c.R. SHANKARLAL AGGARWAL AND OR::i. v; SHANKARLAL PODDAR AND ORS. (S. J. IMAM, K. SuBBA RAo, N. RAJAGOPALA AYYANGAR and J. R. MUDHOLKAR, JJ.) Company Law-Sale-Confirmed by Company Jwl,ge-
Set aaide by Division Bench-Administrative and judicial ordera-Distinction-Discretion exercised by company Judge- Interference on ground that certain factors were not considered by him-Letters Patent Appeal against order of Company Judge-
Whether maintamable-Ctause 15 of Letters Patent of Calcutta High Court-lndian Companies Act, 1913 (7 of 1913), •· 202. Luxmi Spinning and Weaving Mills Ltd. was ordered to be wound up compulsorily by an order of the High Court of
Calcutta on a petition of the first respondent, Shankar Lal Poddar. Before che winding up order, the appellants institu- ted a rnortgage suit against the said company and Joint Re~eivers were appo1uted by che High Court.
Later on, Joint Liquidators were appointed in the winding up proceedings. The Joint Liquidators applied for directions regarding the sale of the asseLs aud properties of the company and the Court sanctioned the same. ,-rne sale was held after complying with the require- ments of law w1th regard to advertisenlent. etc. The highest bid of Nandlal Agarwalla was for Rs. 3,37,000/- and the bid of the appellant firm
was Rs.3,35,000/-. The bid of Nandlal was accepted and he was directed to pay immediately 25% of the bid money. As he stated that he had not brought cash, he was allowed to go and bring the same.
As he did not turn up inspHe of watting for him for some time. the appellant firm was asked to stand by their previous bid for Rs. 3,35,000/-but they refused to du so. The property was thrn put up for sale once
again and the highest bid of the appellant firm of Bansidhar :O.hankarlol for Rs. 2,25,000/- was accepted. The sale was con- firmed by the C;mpany Judge. The first respondent filed an
appeal ag•iust the order confirming the sale and his appeal was at lowed by a Division Bench of the Calcutta High Court. The liquidators were ordered to re-sell the propertv after due adver· usement. The appellants came to this Court by special leave against ~he decision of the Division Bench.
The questions for consideration before this Court were : (!) Whether the order of the Company Judge confirming the ·1963 Jonur.ry, 24 SlumkarlaJ Agg•ru:al sale was merely an administrative -orci.,;.. passed in ·!he-_ course of the administration of the assets of _the company. under lfqui- dation, and therefore not a jµdicial order subject to appeal, (2) whether on a proper construction of s. 202 of the Indian COmpaniesAct it was a condition fort he availability of iln appeal v.
Shanlwlal P.Mar that the· order should be open· to appeal under cl.-15 of the Letters Patent of the Calcutta High Court and if the above were answered in the afl'irmative whether independently of s.-202, the – order of the Company Judge in _this case amounted to Judgment within cl. 15 of the Letters Patent, and (3) whether the. – appellate cotirt acted improperly . in interfering with the order of the Company Judge. _ _
1 · -Held, that the order _of the Company Judge confirming the sale was not an administrative but a judicial order. It is not correct to say that every· order of the Court; merely for the reason that it is passed in the course_ of the realisation of the a!Sets of the Company, must always be treated merely as an- – – administrative one. The question ultimatelydepends upon the _ ·nature of the order that is passed. An order according· sanction • to a sale undoubt•dly involves a discretion and ·cannot be. termed merely an administrative order, for before confirming the sale the court has to be satisfied, particularly where the con- firmation is opposed, that the sale has been held in accordance with the conditions subject to which alone the liquidator has been p<"rmitted to effect it, and that even otherwise the sale has been fair and has not resulted in any loss to the parties who would ultimately have to share the realisation •.
It is not possible 😮 formulate a definition which would satisfactorily distinguish between an administrative and a judicial order. That the power is entrusted to or wielded by a· . person whO functions as a court i~ not decisive . Of the question. ·whether· the act or decioion is adminis•.rative or _judi9ial. An administrative order would be one whi:h is directed to the regulation or supervision of matters as distinguished from ati orde1 which dedctes the ri~hts of parties or confers or refuses to conf'T rightsto propertv which are the. sunject of adjudic1tion before the court. One of the tests.would be whether a matter which involv … the exercise of discretion is left for the ·decision – .of the authority, particularly if that authoi'ty. were a court, and if the discretion has to be exercised on objective, as , distingui- shed from a purely subjective consideration, it would be a judicial decision.
It- has sometimes been said that the essence of a judicial prcY-ceding or of a judicial __ order _is that thore would be two parties and a Zia brtween them which is the subject of adjudication, as a ,esult of that ot'der 9r a decision on an issue between a proposal and an opposition._ Nodo µht it 1 S.C.R.
would not be possible to describe an order passed deciding a lia before the authority that is not a judicial order but it does not Shanl<arlal Aggarwol follow that the absence of a lia necessarily negatives the order v.
being judicial. Even viewed from this narrow standpoint, it is Sha'lkarlal Podd!4' possible to hold that there was a lis before the Company Judge which he decided by passing the order. On the one hand were the claims of the highest bidder who put forward the contention that he had satisfied the requirements laid down for the· accep- tance of his bid and was consequently entitled to have the sale in his favour confirmed, particularly so as he was supported in this behalf by the Official Liquidators. On the other hand, there was the first respondent and the large body of unsecured creditors whose interests, even if they were not represented by the first respondent, the court was bound to protect. If the sale of which confirmation was sought was characterised by any deviation from the conditions subject to which the sale was directed to be held or even otherwise was for a gross undervalue in the sense that very much more could reasonably be
expected to be obtained if the sale were proper\y held, in view of the figure of Rs. 3,37.000/- which had been bid by Nandlal Ag-arwalla it would be the duty of the court to refuse the confirmation in the interests of the general body of <Tedi- tors, and this was the submission .made by the first respondent, There were thus two points of view presented to the court hy two contending parties or interests and the court was called upon to decide between them, and the decision vitally affected the rights of the parties to property
Under the circumstanres, the order of ~he Company fudge was a judicial order and not administrative cne. and was therefore not inherently incarable of being brought up it. ;ppeal.
H•ld, also, that Letters Patent Appeal was competent. The second part of s. 202 of the Indian Companies Act which refers to ccthe manner" and "the ('Ondition subject to which appeals may be had" merely regulates the procedure to be followed in the presentation of appeals and of hearing them, the period of limitation within which the appeal is to be
presented and the forum to which the appeal would lie and does not restrict or impair the substantive right of appeal which has been conferred by the openine; words of s. 202. The words
"order or decision" occurring in the firsr Part ofs. 202, thou~h wide, would exclude merely' procedural orders or those which do not afFet t the ri~hts or liabilities of parties. Held, also that the appellate courr did not <Ct improperly in interfering with the order of the Company Judge
The Company Tudge did not take into consideration the fact that certain hidders had left at the time when the property was put SAIJl!karlal Aggarwal v, Sllanlart.l PoJdar up for auction once again. The Judges of the Division Bench were justified in considering that the sale to the appellants ought not t,o have been confirmed.
Madan Gopal Daga v. Sachindra Nalh Sen (1927) I. L. R. 55 Cal. 262, reversed. Bachharaj Facloriea Ltd. v. The Hiraji Mills Lid .. I. L. R. (1955) Born. 550 and Wesl<rn India Theatres Ltd. v. Ishwarbhai Somabhai Patel, I. L. R. ( 1959) Born. 295, approved.
Asrumati Debi v. Kumar Rupendra Deb Raikot (1953) S. C.R. 1159 and State of Uttar Pradesh v. Dr. Vijay Anand Maharaj [1963] I S.C.R. I referred to. CrvrL APPELLATE ju1nso1cT10N : Civil Appeal
No. 214 of 1960. Appeal by special leave from the judgment and order dated December 11, 1958, of the Calcutta High Court in Appeal from Original Order No. 176 of 19;,5, S. T. Desai, Himmatsinghl.:a and B. P. Mahe-
shwari, for the appellants. N. G. Chatterjee, B. M. BagaruJ, M. V. Go- swami for B. G. Misra, for respondent No. I. 1963. January 24. The Judgment of the Court was delivered by AYYANGAR, J.-The principal point
raised for consideration i,n this appeal by special leave relates to the correctness and legality of an order by a Division Bench of Calcutta High Court refu;ing to confirm a sale by the licp1idators
of the assets of a company which is being wound up. The company in question-the Luxmi Spinning & \\leaving 1'.lills Ltd.-a company incor- porated under the Indian Companies Act-was carry·
ing on business at Calcutta. On a petition of the 1st resp(•ndent-Shankarlal Poddar-made to the 1 S.C.R. High Court of Calcutta, this company was ordered to be wound np compulsorily by order dated August 22,
l\l55. Bul before this order was passed, certain matters had transpired to which it is necessary to advert. The appellants claiming that they had advanced loans to the company under two registered
deeds of mortgage and alleging that there had been default on the part of the company in performing its obligations as to payment of interest etc. under the said deeds instituted a mortgage snit in the High
Court of Calcutta for the usual reliefs under 0. 34, Civil Procedure Code. Pending the disposal of the suit they moved the Court for the appointment of a receiver, and the 'ccond appellant ;md the Managing
Director of the company were appointed Joint recei · vers and they took possession of the assets of the company. By reason of this circumstance, when the order for winding up was passed in August, 1955 though
the Official Receiver was appointed as Official Liquidator, still he was directed not lo interfere with the possession of the.Joint Receivers. Sub~cquen tly by a fnrlhcr order dated September 8, l 955 two
independent persons who are respondents 2 & before us were appointed as Joint Receivers in the suit and they were also directed to function as Joint Liquidators in the winding up proceedings.
The Joint Liquidators applied for directions to the Court as regards the sale of the assets and properties of the company and the Court by an order dated December 20, 1955 directed their sale by pub-
lic auction after due advertisement in the manner set out in the order and notice of this sale was directed to be given to the appeHants who had by that date obtained a mortgage decree in their suit.
At this stage it is necessary to mention that in the winding up proceedings the validity of the appellants' claim as creditors and as secured creditors is challenged, Sh.nkarlal At:arwcl
Sh4nkarl•l 'P(JJJ1.r Shmarlol Au111"'ol ' •. Sllalr"W Pt<ldllr .4.1).r7fga, /. ,22 and a claim by the State of West Bengal to arrears of certain taxes in regard to which priority is
claimed is also pending adjudication by the Comp Illy Judge . In pursuance of the aforesaid directions of the Court dated December 20, 1955 the liquidators held certain auctions to which it is unnecessary to refer
since these proved infructuous, but ultimately the appellants and others agreed to have the sale of the assets to be held free of all charges and encumbrances and to their claims to security o\/er the properties
being transferred to the sale·proceeds when paid into Court. Consequent on this agreement the Court made an order on July 10, 1956 by which the.Joint Liquidators were directed to sell the properties free
of all encumbrances, the sale proceeds re~ lised being held in Court to answer the claims nf rhe creditors according to such priorities as mi~ht he determined by the Court. The sale by public auction thus directed was
duly advertised to be held on September 8, l!J56 at 2 p.m. The conditions subject to which the proper· tics were to be sold which were approved by the Court included, inter alia, (l) that the sale was
subject to a reserve price to be determined by a valuer and surveyor which however was not to be made known to the bidders but had to be kept in a sealed cover until the bidding was over, (<!) the sale was
subject to confirmation by the Court, (3) that it was in the discretion of the liquidators to accept or reject any bid, (4) as far as possible the highest bid was to be accepted provided the liquidators considered
that the bid was for a sufficient amount, (5) immedi- ately on acceptance of the bid by the liquidators the bidder was required to deposit 25 per cent of tht amount of the bid in cash "in default whereof the
liquidators were at liberty to put up the property again for sale", (6) the purchaser was to pay the i S.C.R. SUPREME cotr.R T REPOR ts balance of purchase moneys within two weeks from
the date of confirmation by the Court. The sale was held as advertised. There were in all 36 b"ids for lot No. 1 which consisted of the business and properties of the company starting with
a bid for Rs. 1,50,000/· from 8 bidders including the 1st appellant who himself personally bid for Rs. 3,00,000/-. Thereafter there was keen competi- tion between one Nandlal Agarwalla and the ap-.
pellant firm of Bansidhar Shankarlal and after successive bids by these two the highest bid reached was that by Nandlal Agarwalla who bid for Rs. 3,37,000/·, the penultimate bid of the appellant-
firm being Rs. 3,35,00U/-. No further bids were offered and thereupon the Joint Liquidators accepted the bid of Nan~Ual and he ,was tlirected to pay imme'. diately Rs. 84,250/- this being 25% of his bid,moI'!ey.
This bidder, however, stated that he had not brought the cash and then the Receivers offered to take instead a cheque from his solicitors," if he so desired, but this also the bidder declined and thereafter Nandlal
Agarwalla left the .place giving the impression on those there, including the Joint Liquidators that he had gone to bring the money. The liquidators waited ~ror· a.bout 20 minutes but as he did not
turn up they again put up the property for sale. Before doing so, however, they-the liquidators- enquired of the appellants whether they would stand by their previous bid for Rs. 3,35,000/-
in which case they were informed that theirs would be treated as the highest bid. They would not agree and thereupon the. liquidators put the property to auction again and the starting bid was by the
appellant firm of Bansidhar Shankarlal who, as stated earlier, had, at the former bidding, offered Rs. 3,35,000/- now starting the bid with Rs. 1,50,000/- and after 8 more bids there were no further bids
beyond Bansidhars' for Rs. 2,25,000/-. This bid was accepted . by the official liquidators . subject to Slu111karlal Azgarwal v. Shankarlal Podiar AY.)'ango1, J. . —,~.' ,..- -….
) ' ./ 724 ·-SUPREME cocJRt Rtl'OR.fs [i964] Vot. – 1953 ,_ Slian11rlal .Ag:sru·.J confirmation by the Court after-they –ascertained by opening the sealed cover received from the valuer·
that this amount was not below the· price for which the property could be sold. Immediately on the acce· ·v. Sh.nkarl•l PodJar ptance being intimated Bansidhar paid the amount required to be paid by the conditions of the sale •.
. _ · The liquidators took out a Master's summons -. on September 11, 1956 stating these facts and prayed for an order from the Company Judge that the sale be confirmed or such other directions be given as the
Court may deem fit and proper. The summons was opposed by the 1st respondent and the main point urged by him was that when Nandlal • Agarwalla's bid was accepted by the Joint Liquidators, several .
other5 who had come to bid for the property left the auction room unc:ler the impression–that that -sale was goi11g through and that .the sub.sequent ~ale at_ which · the 'appellant was the highest b1ddrr was_ not such as
could be confirmed by the Court; '!he summons was heard by the Company Judge-l'.B. Mukharji, ].-.. ang the learned Jud~e passed an order acceding to the prayer of the hqmdators to confirm the sale.·
Thereupon the !st respondent filed an appeal against the order confirming the sale and also applied for . the stay of d!=livery of possession of the properties of the company to the appellant. In . the application –
for stay the appellate court passed an order in these terms: "On Bansidhar Shankarlal giving an under- . taking to this Court to purchase the property for Rs. 3,35,000/- should the appeal be allowed
and on Bansidhar Shankarlal · depositing with their. Solicitors Rs. 16,000/· to be held by the Solicitors free from lien and subject to further order of this Court to abide by the result of the
suit challenging the mortgage in favour of – – Bansidhar Shankarlal, there will be no further orders in this application and Bansidhar I S.C.R. Shankarlal will be entitled to posses,ion of the
factory and its assets on a sum of l\s. Jli,000/- being deposited with their Solicitors." There were a few more directions made by the Court to which however it is unnecessary to refer.
The appeal was allowed and the order confirming the sale was set aside <.1nd the liquidators were directed to resell the property aticr due advertisement. It is from this decision of the
Division Bench that this appeal has bern preferred by special leave. Learned Counsel for the appella11ts urged before us the following points : (1) The sale by auction by the Joint Liqui-
dators effected after obtaining the sanction of the Court on December 20, 19fi5 under s. 178 (c) of the Indian Companies Act, HJ13 was merely an act performed by them in the course of their adminis-
tration of the ass<.1ts of the company and the action of the Judge in confirming such sale also partook of the nature of an administrative act, and not being a judicial order no appeal lay against it.
(2) Even if the order of the Company Judge was a judicial order, still it was not a judgment within cl. 15 of the Letters Patent of the Calcutta High Court and so no appeal lay to the Division
Bench. (3) No doubt, s. 202 of the Indian Companies Act permits appeals against orders and decisions in the course of a winding up but that provision is of no avail, because for an order to be appealablc
under s. 202, it has, in the case of an order of a Single Judge of the High Court, to satisfy the requirements of cl. 15 of the Letters Patent. .f.h mk111lal Aggarwol v. Shankarlal Fotlda;
4Yyongar, J. Sla.M.rl•l Au.uw•l SA.w•lal Poiiar (4) Even if the order of Mukharji, J., was a jud;cial order capable of appeal, still it was a discretionary order and cou Id not be interfered with
by an appellate court merely because they considered that it was not a correct order to pass. In the light of these submissions the questions to be considered are : (1) whether the order of the
Company Judge confirming the sale was merely an administrative order passed in the course of the administration of the assets of the company under liquidation and therefore not a judicial order subject
to appeal, (2) (a) whether on a proper construction of s. 202 of the Indian Companies Act it was a condition for the availability of an appeal that the order should be open to appeal under cl. 15 of the
Letters Patent of the High Court, (b) If the above were answered in the ;ifnrmative, whether independ- ently of s. 20:? the order of the Company Judge in this case amounted to a judgment within cl. I ii of
the Letters Patent, and (:l) whether the appellate court acted improperly in interfering with the order of the learned Company Judge. We shall deal with these points in that order.
( 1) First as to the scheme of the relevant provisions undtr the Companies Act. Section 179 of the Companies Act, l!J I 3 specifies the powers of the official liquidator. It enacts, to quote only the words
material for the present appeal : "17!J. Powers of Official liquidator. The official liquidator shall have power, with the sanction of the Court, to do the following things :- (a) …………………………………………….. . (b)
···················••·····•·•······•······•··········• l S.C.R. (c) to sell the immovable and movable property of the company by public auction or private contract, with power to transfer
the whole thereof to any person or company, or to sell the same in parcels; 'I hough s. 180 which reads : "180. Discretion of official liquidator.-The Court m11y provide by any order that the
official liquidator may exercise any of the above powers without the sanction or intervention of the Court,. …….. " makes provision for eliminating the need for the sanction c.f the Court required for action by the
official liquidator under s. 179, as such a' power was not exercised in this case this section may be left out of account. Section 183 of the Act makes provision for t'ie exercise of control by the Court over the
liquidator and sub-s. (3) enables the official liquidator to apply to the Coun for directions in relation to any particular matter arising in the winding up. Section 18! of the Act requires the
Court to cause the a3sets of the company to be collected and applied in discharge of its liabilities. On the basis of these provisions, we shall proceed to consider whether the confirmation of the
sale was merely an order in the course of administra- tion and not a judicial order. The sale by the liquida- tor was, of course, effected in the course of the realisa- tion of the assets of the company and for the purpose
· of the amount realised being applied towards the discharge of the liabilities and the surplus to be distributed in the manner provided by the Act. It would also be correct to say that when a liquidator
effects a sale he is not discharging any judicial function. Still it does not follow that every order Slumk.irlal Aftatw•I v. ShankaTl•l P..Jiar , Shank4rllll .tf::•rw&l v. Shank4Tlsl
P~1dar Ayytmgar, J. of the Court, merely for the reason that it is passed in the course of the realisation of the assets of the company must always be treated as merely an · administrative one._ . The question ultimately depends
upon the nature of the ·order -that is passed. An order according sanction to a.sale undoubtedly invol- ves a discretion and cannot be termed merely a ministerial order, for before confirming the sale the
· Court has to- be satisfied, particularly where the -confirmation -is opposed, that the sale has been held in ·accordance with the conditions subject to which alone the liquidator has been permitted to effect it,
· and that even otherwise the sale ha.s been fair and has not resulted in any loss. to the parties who would · ultimately have to share the realisation., – – – '…._ The _next· question is whether such an order
could be classified as an administrative order. One thing is clear, -that the mere fact that -the order is passed in the course of the administration of the assets of the company and for realising those assets is·
not by itself sufficient to -make it an administrative, as distinguished from a judicial, order. For instance, _ the determination o[ amounts due to the company _ from its debtors which is also part of the process of –
the realisatic-n of the assets of. the company is a matter which arises in the course of the administra- ' tion. · It- does· not on that account follow that the · determination of the particular amount due from a
debtor who is · brought before the Court is an ad- ministrative order. It is perhaps not possible to formulate a definition which would satisfactorily distinguish, in this context, between ·an administrative and ajudi-
cial order. That the power is entrusted to or wielded by a person who functions .as a Court is not decisive of the question whether the Act or decision is admi- nistrative or judicial. "But we conceive that an
administrative orc;ler would be one which is directed l S.C.R. '· to the regulation or supervision of matters as distin· guished from an order which decides the rights of parties or confers or refuses to confer rights to
property which are the subject of adjudication before the Court. One of the tests would be whether a .matter which involves the .exercise of discretion is left for the decision of the authority, particularly if
that authority were a Cuurt, arid if the discretion has to be exercised on objective, as distinguished from a purely subjective, __ consideration, it . would be a judicial decision. It has sometimes been said that
the essence of a judicial proceeding or of a judicial · order is ·that there should be two parties and a lis between them which is the subject of adjudication, as a result of that order or a decision on an issue
between a proposal and an opposition. No doubt, it would not be possible to. describe an order passed deciding a lis before the authority, that it is not a judicial order but it does ·_not follow -that the
ab•ence of a lis · necessarily negatives the order being judicial. · Even viewed from . this . narrow standpoint it is possible to. hold that' there · was a lis l:iefore the Company Judge which he decided
by passing· the order. .On the one hand were the claims of the highest· bidder who put forward the contention that he had satisfied the· requirements laid down for the acceptance of hi3 bid and was cons·
equently entitled to have the sale in his favour · confirmed,· particularly so as he was supported in this behalf by the official liquidators. On the other hand there was the 1st respondent and not to speak
of him, the large body of unsecured creditors whose interests, . even if they were not represented by the 1st respondent, the Court was bound to protect. If the sale of which · confirmation was sought was
characterised by · any deviation from the conditions subject to which the sale was directed to be held or · even otherwise was for a gross undervalue in .the sense that very much more could reasonably be expected
to be obtained if the sale were properly held, in view Shanl;ar/lll .lt:arw•l v. Shankarlal PodJar Sr:,;·,J..rlal Agt•'wel Sh•nk4rlal Ptxldcr of the figure of Rs. 3,37 ,000/- which had been bid by
Nandlal Agarwalla, it would be the duty of the Court to refuse the confirmation in the interrsts of the. g<-ncral body of creditors and this 1rns the sub- mission made by the 1st respondent.
There were thus two points of view presented to the Court by two contending parties or interests and the Court was called upon to decide between them. And the deci- sion vitally affected the rights of the parties to pro-
perty. In this view we are clearly of the opinion that the order of the Court was, in the circumstances, a judicial order and not an administrative one and was therefore not inherently incapable of being
brought up in appeal. (2) The next point for consideration is whether even if this was a judicial order no appeal lay from it under s. 10~ of the Indian Companies Act unless the order amounted to a judgment within cl. 15 of
the l.<'ft<'rs !'~tent of the Calcutta High Court. Section :.:u~ runs as fullows : "202. Appeals from orders.-Re-hearings of, and appeals from, any order or decision made or given in the matter of the winding up of a
company by the Court may be had in the same manner and subject to the same conditions in and subject to which appeals may be had from any order or decision of the same Court in cases within its ordinary jurisdiction."
It was submitted that assuming the order of the Company Judge was "an order or decision made or given in the matter of the winding up of a company by the Court" the last words of the section "subject
to the same r.onditions in and subject to which appeals may be had from any order or decision of the same Court in cases within its ordinary jurisdiction" restrict- ed the right of appeal conferred by the lst limb of the
section to those which might be preferred under cl. 15 of the Letters Patent in the case of a judgment of a t I S.C.R. Single .Judge of the High Court. Io support of this submission learned Counsel relied on the decision of
the Calcutta High Court in JJJndrm Gopal Da(fa v. Sachindra Nath Sen('). It was there held that an order made in the winding up of a company by a Single.Judge of a High Court in order to be appeal-
able under s. 202 must satisfy the requirements of cl. 15 oi the Letters Patent, viz., that it must be "a judgment" within the meaning of that clause. C. C. Ghose, J. rejected the construction that the
words "same manner and subject to the same condi: tions" occurring in s. 202 were merely a reference to the procedure to be observed as regards the manner of filing an appeal or the forum to which the appeal
lay and not the substantive right to prefer an appeal. Buckland, J. who agreed with Chose, J. considered that though the word "manner'' might refer to the procedure for filing an appeal, the word "conditions"
could not be given any such limited meaning but would import a reference to the limitation on the right to appeal itself as laid clown in cl. ~5 of the Letters Patent wher.e the order appealed from was
that of a Judge of the High Coi;rt. It must be mentioned that in the appeal now before us the objection that no appeal lay from tbe order of Mukherji, J. was raised before the Bench, but the
learned .Judges rejected it on the ground that the order of the learned Judge was "a judgment" with- in cl. 15 of the Letters Patent and so appealable under that provision. This interpretation of the scope of s. 202 of
the Companies Act has not been accepted by several other High Courts. The leading case in support of the other view is Rachhruaj Factories Ltd. v. Tlie Jliraji !]fills Ltd.('). The learned Judges were dealing
with an appeal against an order of the Company judge adjourning a petition for winding up in order to enable certain shareholders to -file a suit for a declaration that certain debentures were not valid in law. '!'he
(I) (1927) J.L,R. 55 Cal. 262. (2) J.L.R; (1955) Dom. 550, Slzank.rlRl J:earwal v. Shankarla/ Podd«r Shoniaf/al A11aru.-al v. Shant.•141 Poddar Company Judge made the order under s. 170 of thl'
Companies Act which provides that on hearing a petition for winding up the Court may dismiss 01 adjourn the hearing conditionally or unconditionally or make any intcri111 order etc.
A preliminary objection was taken to the hearir.g of the appeal on the ground that the order from which the appeal was preferred was not a judgment within the meaning of cl. 15 of the Letters Patent and therefore no appeal
lay. It was urged that under s. :?O:? the right of appeal conferred was subject to "the same conditions" to which appeals might be had from the decision of the Court in cases within its ordinary jmisdiction and
since the said condition was not fulfilled the appeal was incompetent. Chagla, C. J. repelled this cont en· tion and pointed out that the Courts which dealt "ith winding up petitions and to what;e orders s. :!0:!
applied were not m~r~ly the High Courts Lut alsn the District Courts. If the construction of the section on whose correctness the preliminary objection was based were upheld it would mean that in tlie case of
an order made by a District Court the appealability of that order would be depenclcnt on its satisfying the conditions of arpeal for "decisio11s" laid down under the Civil Procedure Code.
l!nder the Code "crders or decisions" are classified into two heads-decrees and orders. Whereas an appeal lies by virtue of s. 96 of the Code against every decree which is defined
ins. 😕 of the Code, only certain typl's of orders under particular provisions of the Code which arc listed in s. 104 are capable of appeal and none others. It was not in dispute that very few of the orders passed in a
winding up would amount to decrees within the Code. There was no doubt either that most of the orders or decisions in winding up would not be comprehended within the class of appealable orders specified in
s. 104 or 0. 43. r.l. If therefore the contention of the respondent were accepted it would mean that in the case of orders p<.: :ed by the Distric.t Courts appeals would lie only ag;.;nst what would be decrees under
I S.C.R. the Code as well as appealable orders under s. 104 and 0.43. r.l and very few of the orders passed in the Courts of the winding up would fall within these cate- gories. On the other hand, the expression "j udg-
ment" used in cl.15 is wider. The karued Judge point- ed out that the position would therefore be that a decision rendered or an order passed by a District Court would not be appealable because the conditions laid
down by the Civil Procedure Code were not satisfied, yet an exactly identical order or decision by the judge of the High Court would be appealable because it might constitute a judgment within cl.15. The
learned J udgc therefore rejected a construction which would have meant that the same orders passed by District Courts and by a Single Judge of a High Court wauld be subject to different rules as to
appealability. The learned Judge observed that the right of appeal was conferred by the 1st limb of s. 202 and 1hat the second limb merely. dealt with the procedural limitations of that appeal. He further
pointed out that the expression "order or decision" used in s. 202 itself· indicated that the order or decision .was not merely procedural in character but that which affected the rights and liabilities of
parties. The learned Judge referred to t:1e decisions in Jliadan Gopal Daga v. Sachindra Nath Sen (1), and the cases following it. and expressed his dissent with the reasoning which found favour with the Judges of
the Calcutta High Court. The decision in Hachlwraj Factories Ltd. (') was later followed by the same Court in Western India Theatres Ltd. v. Ishwarbhni Somabhai Patel ('). We find ourselves in agreement
with the view here expressed. 11!/adan Gopal Daga (' ), proceeds wholly on the meaning which could be attributed tu the word "conditions" in the expression "subject to the conditions" occurring in s.202 and
does not take into account the context in which s. 202 was designed to operate and particularly the fact that more than one grade of Court each governed by different ru !es as to the nature of the decision
(I) (1927) J.L.R. 55 Cal. 262. (2) I.L.R. (1955) Born, 550. (S) I.L,R. (1959) Born. 295. Shar.karlal Aggar1<al v. ,\'/uJnkt1rlal Poddar Ay,angar, J. .- – …… 734 SUPREME couR.t REPORTS [i964J \rot.
which would enable an· appeal .to be preferred could S!umktulal Aggarwal be vested with jurisdiction under the Act. When by v. the proviso to s.3 of the Indian Companies Act, ' .. 1963
Shankarlql Poddar l!) l.3 the Indian ·Legislature enabled jurisdiction .. ~yyangar, J. to be vested in District Courts· so as to be· constitut- ed the "Court having jurisdiction under the Act",
knowledge must be imparted to it that the District Courts and the High Courts functioned under different statutory. provisions as regards rights oC appeal from their orders and decisions. Besides, it would also be
fair to presume that they intended to prescribe a uniform law as regards the substantive right of appeal conferred by s. 202. It could not therefore . · be that an identical order if passed by one class of
· .. "court having jurisdiction under the Act" would be ·.final,. but that if passed by another Court vested with identical powers and jurisdiction would be subject to an appeal. . – –
.• – ·- There is also one another aspect from which the problem could be viewed. Takin~ first the provi- sions of the Civil Procedure Code which would govern the orders passed _by District Courts; it would
be seen that apart from "decrees" which are appeal- able · by reason of s. !J6 of the Code, "orders" are appealable in accordance with s. 104. That sect.io.n .after. enumerating certain orders which- are made
appealable, contains a residuary clause (i) copferring a right of appeal in respect of "any order made under rules from which an appeal is expressly allowed by rules"-and the rule referred to is 0. 43. r. I. Now
. under s. 122 of the Code each of the High Courts is vested with power "to make rules, to annul, alter or add to all 01 any of the rules in the 1st Schedule". In exercise of this power High Courts have in respect
of the Civil Courts subject to their appellate jurisdi- ction made alterations and additions in the rules including those in 0.43.r.l, either extending or restric- ting the right of appeal · conferred by the Code as
originally enacted. The_ question that arises on this 1 S.C.R. state of circumstances is whether the legislature, when it enacted s. 202 of the Companies Act, intended that the righi of appeal should vary from State to
State depe!!ding on the particular rule in force in that State by reason of the exercise by the High Court of its power under s. 122, Civil Procedure Code. The anomaly created by the constructi•'!H urged
by learned Counsel . for the appellant does not stop here. Even taking the case of the High Courts them- selves, the construction of the word 'con<lition' as including the appealability of the decision "°''"Id lead
to ra~her strange results. The relevant ;vords of s. :!02 are : "Subject to the same conditions …… lo which appeals may be had from any order or decision of the same Court in cases within its ordinary
_i\Jrisdiction "-"ordinary j uriscliction" and not "ordinary original jurisdiction." The question that would arise is as to what is meant by "ordinary jurisdiction" of the Court. l'lainly the
words would only exclude jurisdiction vested in the Court by special statutes as distingu;shed from the statutes constituting the Court. Undoubtecily; in the case of?. High Court the limits of whose jurisdiction
arc governed by its Letters Patent, the Letters Patent would determine what the "ordinary jurisdiction" is. But that Letters Patent is not immutable and has been the S>Jbject of several alterations.
Thus when the Companies Act was passed in l!ll 3, an appeal lay from every "judgment" of a Single Judge of the High Court. But in March 19l!J it was amended so as to exclude the right~ of appeal from judgment
passed in exercise of revisional jurisdiction and in exercise of the power of superintendence under s. )07 of the Government of India Act, .UH5. There can be no doubt either that the exercise of revision~ 1 or
supervisory jurisdiction is as much "ordinary jurisdi- ction" of the High Court as its original or appellato 196_~ Shankarlal Ag:u; .ual v. ShtJnkarlal Pc:: far Ayyangar, J. jurisdiction and it cannot be that there has been any
s, .. ,.,w All0tw•I a Iteration in the law as regards the appealability of v. . dcrisicr.s of a High Court under s. 202 of the Com- Sliankllrlal Podtiar A))'angu, J. panies Act by reason of the amendment of the Letters
Patent. Again, the Letters Patent were amended in January, 1928 when appeals against decisions in second appeals were made subject to the grant of leave by J udgcs rendering such decisions.
If the decision in a second appeal were in the exercise of "ordinary jurisdiction", and there can be no contr- oversy about it, then the construction of s. 202 of the Companies Act in relation to a High Court which is
the primary Court exercising jurisdiction under the Companies Act (vidc s. 3 (I) of the Act) would lead to anomalous results as judgments or decisions rende- red in different types of cases, though all of them arc
in the exercise of "ordinary jurisdiction", arc subject to different conditions as regards appcalability. We thus agree with Chagla, C.]. that the second part of the section which refers to "the mauncr" and "the
conditions subject to which appeals may be had" merely rq;u latcs th<' procedure to be followt'd in the presentation of the appeal and of hearing them, the period of limitation within which the appeal is tu be
presented and the forum to which the appeal would lie and clues not restrict or impair the substantive right of appeal which has been confcrrec.l by the opening words of that section. We also agree with
the learned Judges of the Bombay High Court that the words "order or decision" occurring in the lst part of s. 202, though wide, would exclude merely procedur<>l orders or those which do not affect the
rights or liabilities of parties. Leamed Counsel for the appellant did not suggest that if this test were applied the order of the learned Company Judge would be an order or decision merely of a procedural
character from which no appeal lay. On the footing that we accepted the constru. ctiou of s. 202 of the Companies Act which found favour with the learned Judges of the Calcutta High
Court in Madan Gopal Daga ('),that in order to be appealable the decision mu~t satisfy the test of being "a judgment"' within cl. 15 of the Letters Patent of the High Court, learned Counsel submitted to us
elaborate arguments as to what was comprehended within the expression "judgment" in cl. 15 of the Letters Patent and invited us to hold that the order of l\{ukharji J., confirming the sale was not a judg·
ment and that the decision of the learned Judges in the judgment now under the appl'al that it was "a judgment" was erroneous. There has been very wide divergence of opinion between the several High
Courts in India as to the content of. the expression "iudgment" occurring in cl. 15 of the :(.etters Patent. This conflict of opinion was referred to by this Court in A-'rurMti Devi v. K um.ar Rupendra Deb Raikol ('),
and in, St1Jte of Uttar Praiksk v. Dr. Vijay Anand Makara.i (8) where, after setting out the cleavage of views on the question by the several High Courts, the points as to the proper construction of the word
was left open for future decision when the occasion required. We comider that that occasion has not ari•en brfore us either since in view of the constru- ction which we have adopted of s. 202 of the Indian
Companies Act the scope of the expression "judg· ment" in the Letters Patent does not call for exami· nation or final decision. The next contention put forward was this. The learned Company Judge had a discretion to confirm or
'"not to confirm the sale. In order th~t the discretion imight be properly exercised the official liqnidators had placed every mP.terial fact in the Master's summons which they filed and every one of those
facts had been considered by the learned Judge. If, after considering those facts, the learned Judge thought that it was a fit case in which the sale could be confirmed it was not open to an appellate court
to interfere with that order merely because on its (I) (1927) J. L. R. ~5 Cal. 262. (2\ 11953] s.o.R. 1159. (SJ [1963) I S.0.R. I. Shankarlal A.11.,w• v. Shank•r/ol Po4i•· .i,.,.,,,…, /.
196!1 sM.t .. 1 1 ,i11.,,,,a1 v. ~rial Podda• appreciation of the facts it would have refused confirmation and directed a fresh sale. Learned Counsel further submitted that if the Company Judge
had applied his mind to the facts and every fact was before him the order passed in the exercise of his discretion could be interfered with only if any relevant facts were disregarded or if the order was
arbitrary or capricious or if the appellate court considered that there has been a miscarriage of justice and his submission was that on the facts of this case no such infirmities attached to the order confirming
the sale. Before considering the objection in this form it would be proper to examine whether the liquidators were within their power in proceeding with the sale after Nandlal Agarwalla failed to tum up after an
appreciable interval. The power of the liquidators in this behalf was, according to the learned Couns~I for the appellant, derived from cl. 5 of the conditions of sale which reads :
"5. Immediately on acceptance of the bid by the Joint Receivers and Liquidators subject to clause I hereof, such bidder shall deposit 25 percent. of the amount of such bid with the
Joint Receivers and Liquidators in cash, in default whereof the Joint Receivers and Liquidators will be at liberty to put up the property again for sale." We might add that this is the only clause under
which, on a sale becoming abortive, the liquidators were empowered to continue the sale without a fresh advertisement. It would be seen that this clause requires the bHd~r whose bid is accepted to deposit
immediatelv 25% of the bid amount. In the context of tire fact• ·th~t transpired in the present case the si~o1ificance of the word 'immediately' would become clear. If on the failure of Nandlal to make the
1 S.C.R. deposit immediately the. liquidators had proceeded to hold a fresh auction it would be apparent that all those who had come there to bid would still be there, but what happened was that the liquidators gave time
to Nandlal to go home in the expectation that he would come back with the amount required to be deposited. In the circumstances it was not unnatural that the persons who had gathered there to bid were
under the impression that he would bring the money and make the deposit and as a matter of fact the narration of facts by the liquidators in their Master's summons clearly shows that they themselves were
under this impression. In the circumstances the continued presence of the bidders there manifestly served no purpose and several of them therefore left the place and went away. The bidding list which is
., Annexure 'A' to the petition of the liquidators showed that New India Transport Co. which had bid up to Rs; 2,55,000/-, Babula! Bhagwandas who bid up to Rs. 2.75,000/- and Chabildas Agarwal who went up
to Rs. 2,85,000/· were not there when the second auction was held. The result therefore was that when after waiting for about 20 minutes the liqui- dators continued the auction several had left and the
appellant was able to become the highest bidder for the price of Rs. 2,25.000/- . This feature of the case was mii!sed bv the learned Companv Judge and forms the basis of the decision of the Division Bench. We
would go further and add that on a proper construction of condition 5 the liquidators were not entitled to proceed wi~h the sale in the circumstances that happened bel!:ause of the interval of time they
granted to Nandlal to make the deposit which gave the impression to those who gathered there that there would be no further auction on the same date at which they were entitled to bid. Learned Counsel
for the anpell?.nt referred us to the fact that one S.K. Chakrab~r.i who in-ihe first auction had bid up to Rs. 2,98,000{ · was pre~ent at the resumed auction and that he bid then only for Rs. 2,00,000/- and that
196J Slranknrlal AUo'"'al v. Shmiia,lal Poddar. AYJ""l"'• I. l§o $1wolnr141 Au"""41 sa-t.lol P1i"1r "'-· J. this feature of the resumed auction was not noticed by the learned Judges in appeal. We consider that
this is not a very relevant circumstance for a decision of the question either as regards the powM' of the liquidators to hold the fresh sale without advertise· ment or whether the sale at the resumed auction had
been at an undervalue. It is possibly profitless to speculate how or why it happened that persons who half an hour earlier had been willing to bid for much larger· figures suddenly permitted the appellant to
become the purchaser for Rs. 2,25,000/· • It may be mentioned that at the resumed bidding there were only six bidders of wbom three had not bid at the earlier auction at all, though aoparently they were
present-Shantilal Bansidhar, Power & Machinery Construction r.o., and Relay Corporation. Besides these three, thl're were onlv two others-Mahabir / Prasad who had earlier bid for Rs. 2, 10 ,000/- and
nt)W r.ontented himself with a bid for Rs. 1,90.000/· and S.K. Chakraborty who though originally thought that the propertv was worth having for R~. 2,98,000/· now refuse<i to go beyon<i Rs. 2,00,000/· . These
fact! show that if those othel"I who had gathered there at the beginning of the auction but who left the place u11<ier the impression that Nandlal would make the required nayment had continued th~re, the
appellant's bid for Rs. 2,25 0()()1. would not have bePn tlie highl"lt bid. We con•ider thererore the learned }Jdges of the Division Bench were justified in c,.,nsi iering that the sale to the appellant ought
not to have been confirmed. There was one further point made by learned Counsel that when the learned Judge'! allowed the appeal of the rcsoondent they should not have c;lirected a resale of thr property by a fresh auction
but should have confirmed the sale to the appellan!J at the price t)f Rs. 3,35.000/· which was the amount of their bid at the first auction. The basis of this argument was the undertaking which
l S.C.R. they gave at the time of the disposal of the application for interim stay pending the hearing of the appeal. We have already extracted the terms of that undertaking. It is not easy to find any le~l
basis for this argument. It is true that in the event of the appeal being allowed the Court might have, possibly with the consent of the 1st respondent before us, insisted upon the appellant taking the property
for Rs. 3,35,000/- but that surely cannot give the appellants any legal right to insist that the property be sold to them. It was a condition for the grant of the indulgence of stay and by no stretch of
language could that be read as implying that the appellants had a right to purchase the property. It is true that the appellants have made a grievance about this matter in the application for leave to this
Court as well as in the statement of the case but that hardly improves the position. This matter may also be looked at from a slightly different point of view. Immediately Nandlal
failed to turn up on September 8, 1956 the liquida- tors enquired of the appellants whether they were willing that their penultimate bid be treated as the highest bid and they be declared purchasers. This
offer was refused as apparently they were satisfied that they would be able to get the property for a much less sum. Thereafter the liquidators tock out a Master's summons seeking sanction of the Court for
the sale to them for Rs. 2,25,000/-. The appellants supported that application. ·In other words, they wanted that the Court should confirm the sale to them for Rs. 2,25,000/- and that was the order which
they obtained from the learned Company Judge. It was only when the appeal was filed and an appli- cation for stay was moved before the appellate court by the 1st respondent here that the offer which is
embodied in the undertaking was made. In the circumstances it is difficult to see what justification there is for the contention that the learned Judges aA .. karlal Jlfla<11Jal Slakorlal Poiiat'
.4.»antar, J. 1963 – ~1.1.1"""""' SAcrdml<l Pod"11 A.t1flllz<l'.I· 191$ should, when they allowed the appeal, have con- firmed the sale to them for Rs. 3,35,000/-. We consider there is no substance in this submi..esion .
The result is the appeal fails and is dismissed with the costs of the 1st respondent. Appeal dismi8sed. STATE OF RAJASTHAN AND ANR SRIPAL JAIN (B. P. SINIIA., c. J., P. B. GAJENDRAGADKAR,
K. N. WANCHOO, M. HrnAYATULLAH and j. C. SHAH, jj.) Siau S.nrict-Onler of compul.aory r.tirem•nt-Power of IMptdor-Gt.neral of Polke-Order if amaunt. to puni./1menl- l/ must be •ubmiti.d t-0
Governor-Conati!ulion of India, Arla. 166, 311-Rajaathan Serviu Ruk•, rr. 56, 244(2)- Ruja8tlzan Civil Servicta (Gla~•ification, Conlrol and Appeal) Ruka, 1958, "· 14, 34-iluka of Bu.ainus,., rr. 21, 3J(vii)- Rajaatlian General Clau.u Act, 1955 (Vlll of 1955), sa. 32(33), 32(75).
The respondent in the present ap!'C'li was a Circle Inspector in the Rajasthan State Service. He was compulsorily retired from service and the order WlS communicated to him by the luspcctor·Gencral of Police. Thereafter he filed a writ r..<;tition in the Rajasthan High Court challenging the order. fhc High Court allowed the writ petition on the ground that r. 31 (vii) (a) of the Rules of Business applied to a case of compulsory retirement under r. 244(2) of the Rajasthan Service Rules and as the papc,.. had not been submitted to the Gover· nor the order of compulsory retirement in the present r.ase was bad. The State of Rajaathan appealed to this Court by way
of 1pccial leave.