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Judgment
Bilal Nazki, J.—These four appeals were heard together and are being disposed of by this common judgment.
O.S.A. Nos. 16 and 34 of 2004 have been filed by M/s. Canara Bank against orders passed by a company judge on July 25, 2003 See Canara Bank v. Mopeds India Ltd. [2005] 124 Comp Cas 824 (AP) and March 18, 2004 See Canara Bank v. Mopeds India Ltd. [2006] 132 Comp 812 (AP) in Company Applications Nos. 584 of 2002 and 467 and 473 of 2001, respectively in Company Petition No. 48 of 1989. O.S.A. Nos. 70 of 2003 and 38 of 2004, have been filed by the Andhra Pradesh State Financial Corporation against orders passed by the company judge on July 25, 2003 See A.P. State Financial Coporation v. Mopeds India Ltd. [2005] 124 Comp Cas 833 (AP) and March 18, 2004, in Company Applications Nos. 535 and 536 of 2002 and 467 and 473 of 2001, respectively in Company Petition No. 48 of 1989.
A preliminary objection has been raised by the respondents that these appeals are not maintainable, as such, they should be rejected. It is contended that the orders have been passed by the learned company judge in an appeal against the order of the official liquidator and a further appeal to this Court is barred in view of the amendment to Section 100A of the Code of Civil Procedure, 1908, with effect from July 1, 2002.
Learned Counsel for the appellants, on the other hand, submits that the order passed by the company judge is not an order passed in a judicial proceeding, as such the word "appeal" used in Rule 164 of the Companies (Court) Rules, 1959 (for short "the Rules") was a misnomer.
In order to appreciate the arguments of the parties, a look at different provisions in the rules is necessary:
Rules 147 to 179 of the Rules deal with debts, and claims against company in liquidation. Rule 163 of the Rules gives power to the official liquidator to accept or reject the proof furnished and it lays down that after such investigation as he may think necessary, the liquidator shall in writing admit or reject the proof in whole or in part. Every decision of the liquidator accepting or rejecting a proof, either wholly or in part, shall be communicated, to the creditor concerned by post under certificate of posting where the proof is admitted and by registered post for acknowledgment where the proof is rejected wholly or in part, provided that it shall not be necessary to give notice of the admission of a claim to a creditor who has appeared before the liquidator and the acceptance of whose claim has been communicated to him or his agent in writing at the time of acceptance. Where the liquidator rejects a proof, wholly or in part, he shall state the grounds of the rejection to the creditor in Form No. 69. Notice of admission of proof shall be in Form No. 70.
After an order is passed in terms of Rule 163 of the Rules, an appeal can be filed by a creditor under Rule 164 which is quoted below:
Appeal by creditor.--If a creditor is dissatisfied with the decision of the liquidator in respect of his proof, the creditor may, not later than 21 days from the date of service of the notice upon him of the decision of the liquidator, appeal to the court against the decision. The appeal shall be made by a judge''s summons, supported by an affidavit which shall set out the grounds of such appeal, and notice of the appeal shall be given to the liquidator. On such appeal, the court shall have all the powers of an appellate court under the Code.
This rule makes it clear that if a creditor is dissatisfied with the decision of the liquidator, he may appeal to the court against that decision. The other provisions from Rule 165 onwards deal with subsequent events including the procedure where the creditor appeals.
In the present cases, Company Applications Nos. 535 and 536 of 2002, were filed by the Andhra Pradesh State Financial Corporation and Company Application No. 584 of 2002, by the Canara Bank under Rule 164 of the Rules against the notice of rejection of proof of debt issued by the official liquidator. Against the notice of admission of proof of debt of workmen issued by the official liquidator, the Andhra Pradesh State Financial Corporation and the Canara Bank filed Company Applications Nos. 467 and 473 of 2001. In all the cases, the company judge has exercised jurisdiction under Rule 164 of the Rules and decided the matter in two of the cases on July 25, 2003, and two other cases on March 18, 2004.
It is now contended by the respondents that since this is a second appeal or at best an appeal under Letters Patent, therefore, it is barred. Learned Counsel for the appellants, however, submits that reference as an "appeal" to the proceedings under Rule 164 is a misnomer and as a matter of fact, the learned company judge was not dealing with an appeal but he was dealing with the proceeding, which cannot be termed as an appeal in view of the different provisions of the Companies Act. A reference is made to Sections 460(6) and 483 of the Companies Act. Section 460 of the Companies Act deals with exercise and control of liquidator''s powers.
Sub-section (6) of Section 460 of the Act lays down that any person aggrieved by any act or decision of the liquidator may apply to the court, which may confirm, reverse or modify the act or decision complained of, and make such further order as it thinks just in the circumstances.
Section 483 of the Companies Act deals with appeals from orders. It lays down that appeals from any order made, or decision given, in the matter of the winding up of a company by the court shall lie to the same court to which, in the same manner in which, and subject to the same conditions under which, appeals lie from any order or decision of the court in cases within its ordinary jurisdiction.
It is contended by learned Counsel for the appellants that as a matter of fact, the present appeal may not be termed as an appeal, but Section 483 of the Act gives a right to an aggrieved party to file an appeal against an order of the company court in the matter of winding up of a company. But the words in Section 483 of the Act "subject to the same conditions under which, appeals lie from any order or decision of the court in cases within its ordinary jurisdiction" are crucial and according to learned Counsel for the respondents, these words make these appeals subject to the Letters Patent and subject to the ordinary jurisdiction of the High Court.
Now in view of Sections 460(6) and 483 of the Act and Rule 164 of the Rules, the appeal from order passed w/r 164 can be held to be an appeal against an order passed by the company judge in an appeal. So the question would be what was actually heard by the company court, whether it was a proceeding, which it could be termed as an appeal or whether it was a proceeding, which was not an appeal.
Various judgments have been pressed into service by the parties. The dictionary meaning of the word "appeal" is, "Removal of the cause or a suit from an inferior court to a superior judge or court for re-examination or review". The appellate jurisdiction involves a re-hearing on law as well as on facts and is being invoked by an aggrieved person. In Wharton''s Law Lexicon, the word "appeal" is defined as "the judicial examination of the decision by a higher court of the decision of an inferior court". It would mean that an appeal was a judicial examination of a judgment passed by an inferior judicial authority. The word "appeal" is not defined in the CPC or any other law.
In AIR 1932 165 (Privy Council) , the Privy Council defined the word "appeal" in the following terms (page 167):
There is no definition of appeal in the Civil Procedure Code, but their Lordships have no doubt that any application by a party to an appellate court, asking it to set aside or revise a decision of a subordinate court, is an appeal within the ordinary acceptation of the term, and that it is no less an appeal because it is irregular or incompetent.
This definition has been consistently followed by the courts in India and by a catena of judgments, it is well-settled that appeal is a statutory right and if appeal is provided by law, the right to appeal follows, and if no such right is provided by a statute, there could not be any appeal.
In Chautala Workers Co-operative Transport Society Ltd. and Another Vs. State of Punjab and Others, , the High Court of Punjab also went into the question and held (page 100):
An appeal in legal parlance is held to mean the removal of a cause from an inferior or subordinate to a superior Tribunal or forum in order to test and scrutinize the correctness of the impugned decision. It amounts in essence and pith to a complaint to a higher forum that the decision of the subordinate Tribunal is erroneous and therefore liable to be rectified or set right.
In another case reported in State of Gujarat Vs. Salimbhai Abdulgaffar Shaikh and Others, , the Supreme Court almost held the same principles though it was a case in criminal proceedings. It held that though the word "appeal" is used both in the Code of Criminal Procedure and in the CPC and in many other statutes, it has not been defined anywhere. Over a period of time, it has acquired a definite connotation and meaning, which is as under (page 57):
A proceeding undertaken to have a decision reconsidered by bringing it to a higher authority, especially the submission of a lower court''s decision to a higher court for review and possible reversal.
An appeal, strictly so-called, is one in which the question is, whether the order of the court from which the appeal is brought was right on the material which the court had before it.
An appeal is removal of the cause from an inferior to one of superior jurisdiction for the purposes of obtaining a review or retrial.
An appeal, generally speaking, is a rehearing by a superior court on both law and fact.
In Shiv Shakti Coop. Housing Society, Nagpur Vs. Swaraj Developers and Others, , the Supreme Court again considered the question relating to the definition of appeal and held (page 668):
It is fairly a well-settled position in law that the right of appeal is a substantive right.... An appeal is essentially continuation of the original proceedings and the provisions applied at the time of institution of the suit are to be operative even in respect of the appeals. That is because there is a vested right in the litigant to avail the remedy of an appeal.... The right of appeal is only by statute. It is not a necessary part of the procedure in an action, but the right of entering a superior court and invoking its aid and interposition to redress the error of the court below.... The appeal, strictly so called, is one in which the question is, whether the order of the court from which the appeal is brought was right on the materials which that court had before it.
The respondents have placed reliance on various other judgments. In Union of India (UOI) Vs. Official Liquidator and Another, , it is held that a right of appeal is a creature of statute. Nobody has an inherent or natural right of appeal. Reliance is also placed on Navalkha and Sons v. G. Ramanujulu Naidu [1967] 37 Comp Cas 48 (AP). In Smt. Ganga Bai Vs. Vijay Kumar and Others, , the Supreme Court held in paragraph 15 as follows (page 1129):
It is thus clear that the appeal filed by defendants Nos. 2 and 3 in the High Court was directed originally not against any part of the preliminary decree but against a mere finding recorded by the trial court that the partition was not genuine. The main controversy before us centres around the question whether that appeal was maintainable. On this question the position seems to us well established. There is a basic distinction between the right of suit and the right of appeal. There is an inherent right in every person to bring a suit of a civil nature and unless the suit is barred by statute one may, at one''s peril, bring a suit of one''s choice. It is no answer to a suit, howsoever frivolous the claim, that the law confers no such right to sue. A suit for its maintainability requires no authority of law and it is enough that no statute bars the suit. But the position in regard to appeals is quite the opposite. The right of appeal inheres in no one and therefore an appeal for its maintainability must have the clear authority of law. That explains why the right of appeal is described as a creature of statute.
Learned Counsel for the appellants, on the other hand, submits that there is no quarrel with the principles laid down by the Supreme Court in defining the appeal, but their contention is that, as a matter of fact, what was discharged by the learned company judge was not an appeal but it was a proceeding which as a misnomer had been mentioned in Rules as an appeal.
We have already mentioned Sections 460(6) and 483 of the Act and also Rule 164 of the Rules. It may be pointed out that the rules have been framed by the Supreme Court in terms of the powers conferred on it u/s 643 of the Companies Act.
Learned Counsel for the appellants contended that in terms of Sections 460(6) and 483 of the Act, it is clear that an official liquidator has to work under the control of the court and u/s 460(4) of the Act, the liquidator can apply to the court in the manner prescribed, if any, for directions in relation to any particular matter arising in the winding up. But Sub-section (5) of Section 460 of the Act lays down that subject to the provisions of the Act, the liquidator shall use his own discretion in the administration of the assets of the company and in the distribution thereof among the creditors.
Learned Counsel for the appellants has referred to the judgments to show that an order passed under Rule 163 of the Rules is not, as a matter of fact, an order passed by the official liquidator but is an order passed by the official liquidator under the supervision and control of the court and also for and on behalf of the court and that u/s 483 of the Act, the appeal lies to the court which has its ordinary jurisdiction. Various judgments have been pressed into service. One of the judgments being Arati Dutta Vs. Eastern Tea Estate (P) Ltd., , in which the court, while dealing with powers of the Division Bench against an order passed by the learned single judge under Sections 397 and 398 of the Act and also the provisions of Section 483 of the Act, was of the view that the appeal would lie to the High Court irrespective of the powers under the Letters Patent. The court held in paragraph 8 as follows (page 325):
In our opinion, this position is clear from the observation of this Court in Shankarlal Aggarwala v. Shankarlal Poddar [1965] 35 Comp Cas 1 (SC), that the appeal lies to the same High Court irrespective of the powers under the Letters Patent. Sections 397 and 398 read with Section 483 indicate that the appeal would lie in the same manner to the same court and naturally and logically an appeal from the decision of the single judge would lie to the Division Bench. This in our opinion follows logically from the ratio of decision of this Court in Shankarlal Aggarwala v. Shankarlal Poddar [1965] 35 Comp Cas 1, as well as other decisions referred hereinbefore.
There is another judgment of this Court in State Bank of Hyderabad v. Official Liquidator [1999] 98 Comp Cas 679 : AIR 1999 AP 313. This judgment, in fact, does not support the case of the appellants. In Shiv Shakti Coop. Housing Society, Nagpur Vs. Swaraj Developers and Others, , there was a comparison made by the High Court on the powers of courts under revision and the appeal. Reference is also given to P.S. Sathappan (Dead) by Lrs. Vs. Andhra Bank Ltd. and Others, , wherein the recourse to Section 100 of the CPC amendment was considered by the Supreme Court. This judgment, in fact, was against the appellants.
Coming to the argument that the appeal under Rule 168 is a misnomer and the proceedings before the learned company judge should not be treated as an appeal, learned Counsel for the appellants has referred to the judgment of the Supreme Court in Shiv Shakti Coop. Housing Society, Nagpur Vs. Swaraj Developers and Others, . It is contended that appeal must be from a lower court to a superior court, but in this case, orders were passed u/s 163 by the official liquidator for and on behalf of the court. Therefore, an appeal filed under Rule 164 would not be an appeal, but it is only seeking confirmation or reversal of the findings of the official liquidator under Rule 163. The judgments, which have been quoted by us, hereinabove, in our view, lay down the principles governing the definition of the appeal.
These principles, which we have quated extensively hereinabove, would also in our view, lay down that statutory authority should be able to correct the erroneous finding arrived at by an inferior authority and in the absence of such correction by the superior authority, the order or finding given by the inferior authority would be final and executable. If a notice is issued under Rule 163 by an official liquidator and is not challenged by way of an appeal in terms of Rule 164, the notice becomes enforceable and executable. Therefore, the remedy provided under Rule 164 is actually an appeal and not a mere proceeding, which can be termed as a misnomer for an appeal. It has been settled by the Supreme Court and also by a decision of the larger Bench of this Court in United India Insurance Co. Ltd. v. S. Surya Prakash Reddy [2006] 4 ALT 448, that an appeal is not maintainable against the judgment, rendered by a single judge in an appeal arising out of a special enactment.
In such circumstances, an appeal would not lie to the Division Bench. Therefore, the appeals are dismissed.