J. L. Kapur, J. - (1.) This appeal by, special leavc raises a question of interpretation of S. 237 of the Indian Companies Act. Appellant No. 1 is one of the past directors of the Bank of Commerce Ltd., now in liquidation and appellant No. 2 was its Managing Director. The Bank was ordered to be wound up by the High Court of Calcutta on August 7, 1950 and one G. K. Dutt. Bar-at-law was appointed its Official Liquidator but on September 7, 1950 the Official Receiver was appointed in place of Dutt. On July 23, 1952 respondent No. 1 filed in Court of the Presidency Magistrate a complaint against the appellants u/ss. 120B, 406, 467, 477A, Indian Penal Code and 182A of the Indian Companics Act and stated that he was doing so under the authority of the official liquidator and the official liquidator had obtained the directions of the High Court to file the complaint. On May 5, 1953 the appellant applied to the Presidency Magistrate for dismissal of the complaint as bring without the sanction of the Company Judge and therefore the official liquidator in his official capacity was incompetent to prefer the complaint, being the creation of the statute he could only act within the four corners of the statute. He possessed only those powers which the statute conferred on him. This application was dismissed by the Presidency Magistrate on June 13, 1953.
(2.) The appellant then applied to the High Court for quashing the criminal proceedings on the ground that the prosecution was 'ab initio' void because of the absence of prior direction judicially given by the High Court under S. 237 (1) of the Indian Companies Act. The High Court found against the appellants and discharged the rule. The learned Chief Justice held that the provisions of S. 237 (1) are no bar to a prosecution by the liquidator; that under S. 237 (1) there is "nothing in the nature of a judicial proceeding"; that it could not be said that the order was not a valid direction under S. 237 (1). He said: "There can be no question in the present case that the relevant facts were all placed before the Company Judge, because they are all set out in the report of Adhikary and the affidavits annexed thereto to which the order expressly refers and with reference to which the liberty to bring legal proceedings was expressly given. In view of those circumstances, it is impossible to say that the Company Court had not before it all the facts on which the prosecution is based or that it did not apply its mind to the considerations relevant to S. 237 (1)". He also held that cl. (a) of S. 179 empowers the liquidator to institute or defend legal proceedings in the name of the company and that it was expressly concerned with the powers of the liquidator whereas S. 237 dealt with the powers of the Court to give directions. P. B. Mukherji J., gave a concurring judgment. After referring to the history of S. 237, he held that under that Section the Company Judge can act 'ex parte' and it was not necessary for him to hear a director or an officer of the Company complained against and that direction given under that Section was not a condition precedent to a prosecution by the official liquidator nor is it the intention of that Section to impinge on the powers of a criminal court under the Code of Criminal Procedure. Leave to appeal having been refused by the Calcutta High Court, the appellants have come to this Court in pursuance of special leave. (2) On the application of the official liquidator Bachawat J., on January 15, 1951 made an order which must be taken to be one under S. 179. In this order it was said: "And it is further ordered that the said applicant be at liberty to institute or defend any suit or prosecution, or other legal proceedings. civil or criminal in the name and on behalf of the said Bank and to continue all pending suits and execution proceedings by or against the said Bank and for that purpose to engage advocates, Vakils and other lawyers and to pay out of the assets of the said Bank in his hands all costs of and incidental to such suits, prosecutions and/or legal proceedings." On July 22, 1952 the official liquidator obtained the order from Bannerji J., which the High Court has held, and in our opinion rightly, to be an order under S. 237 (1) of the Indian Companies Act. This order said: "It is ordered that the said applicant be at liberty to take such civil or criminal proceedings as he may think necessary over the report of the said Jasoda Dulal Adhikary read with the affidavits of H. Sen Gupta and Nepal Chandra Mitra as set out in the said Exhibit "A".The passage already quoted from the judgment of the learned Chief Justice shows that all relevant facts were before the Company Judge, as they were all set out in the affidavits placed before him. The complaint was then filed on July 23, 1952. During the pendency of the complaint the appellants took an appeal against the order of the Company Judge dated 22-7-1952, but it was dismissed on the objection taken by the liquidator that it was an administrative order and not a judicial order.
(3.) On August 5, 1953 the official liquidator took out misfeasance proceedings under S. 235 of the Companies Act and the appellants then applied to the High Court for quashing the criminal proceedings already started on the ground of commencement of proceedings u/s. 235. This application was also heard with the rule which was issued on June 29, 1953 and it was dismissed by the same judgment by which the rule was discharged, i.e., of June 21, 1954.;