Delhi High Court
V.K.Sharma & Anr. vs Nemo on 25 January, 2017
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Decision : January 25, 2017
+ CO.APP. 1/2017
V.K SHARMA AND ANR ..... Appellants
Represented by: Mr.Deepak Khosla, Advocate.
versus
NEMO ..... Respondent
Represented by: Mr.Rajiv Bahl, Advocate for
Official Liquidator.
Ms.Swati Setia, Advocate for
Reserve Bank of India.
CORAM:
HON'BLE MR. JUSTICE PRADEEP NANDRAJOG
HON'BLE MR. JUSTICE YOGESH KHANNA
PRADEEP NANDRAJOG, J.
1. The appellant is aggrieved by the fact that concerning an
application for public examination of the persons named in the application
the learned Single Judge has issued notice to the persons concerned applying
the principle of natural justice audi alteram partem.
2. Learned counsel for the Official Liquidator does not dispute the
position that the Serious Fraud Investigating Office, under the Union
Government has submitted reports concerning land of the company in
liquidation in the State of Andhra Pradesh and also by the Income Tax
department.
3. The appellant may not have a right to take the lead role in the
public examination of any person, but as the ex-Director of the company in
liquidation would have a stake in the assets of the company being available
to pay the creditors. Learned counsel for the Official Liquidator concurs by
stating that public examination of persons is at the discretion of the court, to
be exercised as per law and that while conducting the public examination the
court can take assistance of any person. Section 478 of the Companies Act,
1956 envisages that any person can be examined publicly to disclose the
assets of a company in liquidation and such other relevant information as
would be helpful in the liquidation of the company.
4. We note the facts which are brought to our notice, making it clear
that we are not opining on the correctness or otherwise of the said facts
because the facts are very hazy and that is why public examination of the
persons concerned is prayed for.
5. The case of the appellant is that one Kolla Madhava Reddy had
some kind of an arrangement with owners of land in Hyderabad. He was
possessed of some documents executed by the land owners. These
documents empowered him to interact only with some government
authorities concerning the land. No interest in the land was created in
favour of Kolla Madhava Reddy. It is further the case of the appellant that
Mr.Kolla Madhava Reddy got in touch with the company in liquidation and
facilitated sales, agreements to sell etc. by the land owners in favour of the
company in liquidation. These lands are the assets of the company. But on
the strength of documents and by manipulating record has started taking
possession of the land of the company and had started alienating the same.
Shri Rajiv Behl learned counsel for the Official Liquidator states that even
the Official Liquidator has filed an application for public examination of
Mr.Kolla Madhava Reddy.
6. We find that public examination of six persons is prayed for. Four
of them appear to be the family members and relatives of Kolla Madhava
Reddy.
7. Two other persons Col.M.J.Ganapathy and Mr.N.Durgaiah whose
public examination is prayed for are stated to be the ex-Director of the
company in liquidation and an agent respectively of the land owners.
8. The issue is no longer res integra. Decision of the Supreme Court
reported as (1962) 32 Comp.Cas. 0097 Satish Churn Law Vs. H.K.Ganguly
holds that the court has to decide the application filed before it without the
involvement of the person whose public examination is prayed for. No
doubt, if a person is summoned for being publicly examined he/she would
have to be made known the subject matter and the issues on which the
person would be examined. The person would also be entitled for the
complaint filed against the person.
9. The position therefore would be that the decision whether or not to
publicly examine a person is a decision to be taken by the court with the
assistance of only the Official Liquidator or the person who has moved the
application. Needless to state that the Official Liquidator or the applicant
person would have to prima facie satisfy the court with reference to
objective facts that case is made out to publicly examine the person named.
The said person cannot participate in said decision making process. Only if
the court summons the person would the person have a right to know the
material in respect of which the person is being examined so that the person
can respond. Proceedings by their very nature are not adversarial and are
intended at gathering relevant facts which would facilitate the assets of a
company to be recovered so that the dues of the creditors can be paid in
accordance with law.
10. Accordingly we modify the impugned order and direct the learned
Single Judge to decide the applications filed before the Company Judge
seeking public examination of persons guided by the law declared by the
Supreme Court in Satish Churn's case (supra).
11. Shri Deepak Khosla urged that the learned Company Judge be
directed to in turn direct public examination of the persons, if directed by the
learned Company Judge to be so done, before a Registrar or a Joint Registrar
of this Court, a request which was vehemently opposed by Shri Rajiv Behl,
learned counsel for the Official Liquidator as according to him that would
defeat the purpose of a public examination.
12. We do not deal with said request and leave it open for the
appellant to make it before the learned Company Judge who would decide
what further course has to be chartered.
13. The appeal is disposed of in terms above.
14. No costs.
15. Dasti under the signatures of Court Master today itself.
(PRADEEP NANDRAJOG)
JUDGE
(YOGESH KHANNA)
JUDGE
JANUARY 25, 2017
rk
