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Judgment
H. Suresh J.
Devidayal Tube Industries Company Limited is in liquidation. M/s. Harilal Thakkar and Co., a proprietary concern of solicitors, was appointed by the official liquidator to assist him in the performance of the his duty u/s 459 of the Companies Act, 1956, M/s. Harilal Thakkar and Co. (hereinafter referred to as "the claimant") has taken out the present chamber summons in respect of certain professional costs arising out of what is known as "instructions for brief. It is an admitted position that in respect of various items of work done by the claimant, he has been paid, in all, a sum of Rs. 8,57,986.08. Of course, he says, that payment has nothing to do with the question that is before me. The present claim arises out of a company application bearing No. 30 of 1984 filed by certain applicants as against the official liquidator in which the applicants had claimed a direction that the official liquidator should hand over the possession of three godowns of which the applicants were the owners, and for payment of a sum of Rs. 7,21,856 being the arrears of compensation calculated at the rate of Rs. 3,962 per month in respect of the same. The claimant represented the official liquidator in the said company application and it appears finally that the matter was disposed of and the claim of the applicants, as far as the payment was concerned, was reduced to Rs. 1,60,000 and the possession of the godowns was ordered to be handed over to the applicants. The claimant had engaged a counsel whose fee has been paid by the official liquidator. After the disposal of the said company application, the claimant submitted his bill of costs in respect of the work done by it to the Taxing Master. In the said bill of costs, the claimant has claimed towards instructions for brief item, a sum of Rs. 32,500. Since the costs have to be taxed, the matter was referred to the Taxing Master. It was argued before the Taxing Master that the claim would fall within the scope of rule 600 of the Rules and Forms of the Bombay High Court (Original Side) in its several jurisdictions, 1957, as existed prior to the recent amendment on May 1, 1980. The Taxing Master, by her order dated November 12, 1986, held that the claim would fall within the scope of rule 600 and that under the said rule, the maximum amount that could be sanctioned from the court to sanction any other payment. However, before she could finally pass the order, an application was made that the claimant would apply to the court within three weeks from that date and till then the matter be kept pending.
The claimant, thereafter, wrote a precipice addressed to the Prothonotary and Senior Master, High Court, Bombay, setting out all the aforesaid facts with a request that the abovementioned matter be placed before the judge in chamber at any time, when they would make an application for appropriate directions, to the effect that rule 600 had no application and that more than Rs. 1,000 should be allowed towards instructions for brief item.
It appears that the matter was mentioned before the chamber judge. But the chamber judge felt that the matter should be placed before the judge who had dealt with the company application earlier and that is show the parties took the matter before Mr. Justice Shah, as he then was, though he was not the company judge at that point of time). Later on, at so transpired that the claimant was advised that he ought to have taken out a chamber summons and the court could not have been moved on a mere precipice as such. That is how the present chamber summons was taken out on or about March 24, 1987, and since then the matter has seen pending.
It is interesting to note that the present rules do not provide for my taxation by the Taxing Master as such. The Taxing Master heard this matter, admittedly, after the present Rules came into force. The order is dated November 12, 1986. Therefore, the question is how the Taxing Master could have dealt with this matter at all. In answer to this, I was shown an order passed by the then Acting Chief Justice, Mr. Chandurkar, and the order is as follows :
"UPON READING section 459 of the Companies Act, 1956, read with rule 307 of the Companies (Court) Rules, 1959, and rule 338(2) of the said Rules and Letter No. OL/G-203/Estt/5310, dated May 12, 1983, of the Micial Liquidator, High Court, Bombay, I DO ORDER that the Taxing Master, High Court, Bombay, do accept for taxation the bills of costs pertaining to the period after December 31, 1976, lodged by the advocates engaged by the official liquidator in performance of his duties unless otherwise ordered."
I am a bit intrigued as to how the Chief Justice could have passed an order as above. There is no provision either under the company law or in the Rules framed under the High Court, Original Side Rules, whereby the Chief Justice could pass an order directing that the Taxing Master should accept for taxation the bills of costs pertaining to the period after December 31, 1976, lodged by the advocates engaged by the official liquidator in performance of his duties unless otherwise ordered. Of course, I am aware of the fact that since then, the Taxing Master as also the official liquidator have been acting pursuant to this order passed by the then learned Chief Justice.
In my view, this is not a judicial order nor can this be said to be an administrative order which could have been passed under any provision of law or any of the rules as such. If that is so, the question is, what is the provision relating to taxation of bills of costs lodged by the advocates engaged by the official liquidator ?
When the matter was argued before the Taxing Master, it was contended that the erstwhile rule 600 would apply, and in that event, the Taxing Master Could not have allowed, towards instructions for brief, any sum exceeding Rs. 1,00 unless otherwise ordered by the court. Rule 600 is as follows :
"600. The Taxing Master shall not allow as instructions for brief any sum exceeding Rs. 1,00 unless otherwise ordered by the court in -
(a) Short causes.
(b) Appeals from the decision of a judge in any matter when only one counsel is allowed.
(c) Long causes set down as undefended.
(d) Long causes in which the opposite party does not enter as appearance and in which an ex parte decree is obtained.
(e) Appearances for any formal party who only appears to submit to the order of the court and to ask for costs.
(f) Matrimonial suits.
(g) Hearing on further directions and costs.
(h) Hearing on Commissioner''s report and on exceptions to the Commissioner''s report.
(i) Chamber matters adjourned into court.
(j) Notices of motion."
If one has regard to the items mentioned in the said rule, it becomes clear that there is no mention of company applications or judges summons in that rule at all. But, I am told that it was a matter of practice that the Taxing Master has been acting under this rule even in the past in respect of the claim for brief, for instructions relating to company matters or judges summons. But it is clear that the practice is not based on law nor on any rule having the force of law. Strictly speaking, even rule 600 does not apply at all.
Since there is no corresponding rule under the present rules, my attention is drawn to rule 604 of the present rules. Rule 604 is as follows :
"All the rules and provisions in the Rules and Forms of the Bombay High Court on the Original Side, in its several Jurisdictions, relating to taxation of bills of costs of attorneys, and relating to recovery of such costs, as in force prior to January 1, 1977, shall, if not inconsistent with the above rules, continue to apply to taxation by the Taxing Master, of all pending bills of costs and any new bills of costs to be taxed hereinafter pursuant to rules 601 and 602 above, and also to recovery of such costs."
If one analyses rule 604, it is clear that taxation of bills of costs of attorneys shall be governed by the rules as in force prior to January 1, 1977, in respect of all the pending bills of costs and in respect of new bills of costs to be taxed hereinafter pursuant to rules 601 and 602 above and also for recover of such costs. Rules 601 and 602 are as follows :
"601. In -
(a) every suit or proceedings in the High Court disposed of prior to January 1, 1977.
(b) every matter completed prior to January 1, 1977, which is not subject to any proceedings in court, and
(c) any matter whether subject to court proceedings or not, where it is desired to have bill of costs taxed for work done up to December 31, 1976,
an attorney shall lodge his bills of costs for taxation whether the bill be between party and party or otherwise on or before December 31, 1982 :
Provided that bills for costs which could not have been lodged for taxation without an order of the chamber judge under the rules in force prior to January 1, 1977, shall not be accepted by the Taxing Master without an order of the chamber of the chamber judge, permitting such bills to be lodged on sufficient grounds. 602. The chamber judge may, on sufficient cause being shown, enlarger the time appointed by rule 601 fixed by an order enlarging time, upon such terms, if any, as he may think proper."
Therefore ,reading the two together, it becomes clear that in every suit or proceedings in the High Court disposed of prior to January 1, 1977, or in any matter where it is desired to have bills of costs taxed for work done up to December 31, 1976, an attorney shall lodge his bills of costs for taxation on or before December 31, 1982. Rule 602 provides for enlargement of time. In other words, it is clear that these rules pertain only to bills of costs in respect of work done up to December 31, 1976. If bills are already pending under rule 604, they shall be taxed in the same manner as was done under the earlier rules. If the bills are not submitted by January 1, 1977, and the bills are submitted thereafter on or before December 31, 1982, the same shall be again decided on the basis of the rules existing under the old rules. What is important is that the bills must relate to the work that is done up to December 31, 1976. It has nothing to do with any fresh bills of costs for the work done after December 31, 1976. In my view, rule 604 cannot be availed of for the purpose of assessing any bill of costs for the work done after December 31, 1976.
Apparently, the learned Chief Justice was induced to pass an order purporting to be under rule 604, when it has no application whatsoever,. In the order, which is a general order, he referred to three provisions under the Companies Act, namely, section 459, and rules 307 and 338(2) of the Companies (Court) Rules, 1959. Section 459 of the Companies Act, 1956, is an enabling provision. It enables the liquidator with the in the performance of his duties. Rule 307 of the Companies (Court). Rules, 1959, again obliges the official liquidator personally to appear and conduct for sanction to employ and advocate or attorney, and the court may sanction such employment. Rule 338(2) says :
"338(2). Save as otherwise ordered by the court no payments is respect of bills of advocates, shall be allowed out of the assets of the company without proof that the same have been considered and allowed by the taxing officer of the court. The taxing officer shall, before passing the bills or charges of an advocate, satisfy himself that appointment of an advocate to assist the liquidator in the performance of his duties has been duly sanctioned."
Therefore, there is no question of the learned Chief Justice passing any general order under any of these provisions. If the official liquidator desires to employ an advocate or attorney, he must take the sanction of the company court, in each individual matter, and the taxing officer, before passing the bills or charges of an advocate, must first satisfy himself that the official liquidator has so obtained the sanction.
This takes me to the true position relating to the employment of advocates by the official liquidator and how their bills and charges are to be passed. If the official liquidator desires to employ any advocate, he shall first obtain the sanction of the court in each matter (see section 459 and rule 307). Perhaps, it is possible for him to have the terms and conditions as to fees and charges of the advocates fixed at that stage.
Under the Rules, it is the Registrar who shall be the taxing officer of the court for the purpose of these Rules (see rule 340). Under rule 2, sub-rule (11), "Registrar" means, in the High Court, the Registrar of the High Court, and includes the prothonotary Master and Assistant Master, and such other officer as may be authorised by the Chief Justice to perform all or any of the duties assigned to the Registrar under these rules. I do not know whether, under any of these rules, the Chief Justice has authorised any of the officers to perform the duties of the Registrar. Therefore, at present, it must necessarily mean the Company Registrar of High Court. It therefore, follows that as far as company applications and matters arising under the company law and matters relating to judges summons, etc., are concerned as regards the costs and taxation of costs, the matters shall go to the Company Registrar who shall be the taxing officer of the court for the purpose of these rules. It is in this sense that the present arrangement of assigning these matters to the Taxing Master by virtue of some provisions under the Rules to the High Court cannot hold good. In the circumstances, the bill of costs of the present claimant must necessarily go to the Company Registrar for the purpose of consideration as to whether the same can be allowed or not.
Though, it is not necessary for me to lay down in this matter as to how the bills of costs should be preferred and what should be the scale of fees for an advocate employed by the official liquidator, it is interesting to note that ordinarily the scale of advocate''s fees shall not exceed the scale set out in annexure III (see rule 348). Of course, the court, however, has power to fix a fee for any matter not provided for in these rules and it can fix a fee higher or lesser than the fees prescribed in annexure III in any particular case the court considers it necessary to do so in the interest of justice (see rule 353). However, the taxing shall be done in accordance with the practice and procedure of the court relating to taxation in its other proceedings save as provided in this rule (see rule 343). If one has regard for rule 356, it becomes interesting to note that, ordinarily, the official liquidator shall not be permitted to enter into an agreement with an advocate for payment of any higher fee than what is prescribed in annexure III. Ordinarily, the bills of costs of an advocate employed by the official liquidator shall be taxed subject to any order of the court according to the Rules regulating taxation of costs between party and party (see rules 356, sub-rule (6)).
In the result, I pass the following order :
The Taxing Master has no jurisdiction whatsoever to assess bills of costs in any matter arising out of liquidation proceedings or in company matters. It is the Company Registrar who shall be the Taxing Officer is this behalf, and the taxation of costs shall be done in accordance with the rules provided under the Companies (Court) Rules, 1959.
In this view of mine, I must necessarily have bills of costs pending before the taxing Master withdrawn and the matters should go to the Company Registrar for the purpose of taxing.
As regards the costs of these proceedings, the claimant shall bear his own costs. But, as regards the advocate engaged by the official liquidator, he shall be paid a fee of Rs. 450, which shall be allowed out of the assets of the company.