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Judgment
S.R. Nayak, J.—I have read in draft the judgment of my learned Brother L. Narasimha Reddy, J. With considerable diffidence, however, I am unable to agree with His Lordship''s opinion to allow the appeal and set aside the order of the learned Company Judge dated 13-5-2001 in CA No. 475 of 2001, and, therefore, I propose to state my reasons for the dissent.
At the threshold, the question regarding maintainability of this appeal was raised by Sri S. Ramachandra Rao, learned senior Counsel appearing for 1st respondent and, therefore, it becomes necessary for us to decide that question in the first instance.
This OSA is filed u/s 483 of the Companies Act, 1956 (for short, ''the Act''), against the order of the learned Company Judge in CA No. 475 of 2001 in CA No. 53 of 1999 in RCC No. 8 of 1998 dated 13-5-2001. The appellant, namely, Bysani Anjaneyulu, was not a party in the Company Application and he has preferred this appeal seeking leave of the Court. The background facts leading to the filing of this appeal be noted briefly, and they are as follows:
The Company by name Sri Ramalingeswara Agro Processors (Private) Limited was ordered to be wound up on the recommendations of the Board for Industrial and Financial Reconstruction (for short, B1FR). In view of the orders passed by the BIFR, RCC No. 8 of 1998 came to be instituted in the Company Court. The A.P. Industrial Development Corporation, the 2nd respondent herein, being one of the creditors of the Company, brought out sale of the assets of the Company in exercise of its power u/s 29 of the State Financial Corporation Act, 1951. It is stated that after few attempts, M/s. Trilinga Technical and Management Consultant (Private) Limited, the 1st respondent herein, came forward to offer an amount of Rs. 42 lakhs as sale consideration. On an earlier occasion, complaining that the principles laid down by the Apex Court in its judgment in Mahesh Chandra v. State of U.P. AIR 1992 SC 905, were not followed, the Company represented A. Rajendra Prasad, its authorised signatory, filed WP No. 24234 of 1998 praying for the following relief:
".....the High Court will be pleased to issue any appropriate writ, order or direction, preferably a writ in the nature of mandamus declaring the action of the respondents 1 and 2 in seizing and selling and conveying the petitioner Company unit viz., Sree Ramalingeswara Agro Processors Private Limited in favour of the 4th respondent as illegal and violative of Article 14 of the Constitution of India and consequently direct the respondents 1 and 2 not to enter into any further agreements with the 4th respondent in respect of the petitioner-Company unit."
That writ petition was finally heard and disposed of by order dated 7-9-1998 by one of us (S.R. Nayak, J) with the following directions :
"After hearing the learned Counsel for the parties, I dispose of the writ petition directing the respondents not to finalise the sale of the petitioner''s unit made in favour of the 4th respondent till 13-9-1998. No costs. However, it is made clear that if the petitioner fails to purchase the assets for Rs. 42 lakhs as claimed by him in his representation, it is open for the respondents 1 and 2 to finalise the same made in favour of the 4th respondent after 13-9-1998."
Since the Company did not comply with the conditional order made by this Court in the above writ petition, the 2nd respondent confirmed the sale in favour of the 1st respondent. At that stage, the appellant herein filed WP No. 29628 of 1998 in this Court praying for the following relief:
".....the High Court will be pleased to issue any appropriate writ, order or direction, preferably a writ in the nature of mandamus, declaring the action of respondents 1 and 2 herein in handing over the 5th respondent''s unit to the 4th respondent herein as illegal, violative of Article 14 of the Constitution of India and consequently direct the respondents 1 and 2 to set aside all proceedings issued by them in favour of the 4th respondent herein in the matter of delivery of the 5th respondent-Company''s unit situated at Uppugunduru, N.G. Padu Mandal, Prakasam District to the 4th respondent and to deliver the said unit to the petitioner."
The learned single Judge having regard to the pleadings of the parties framed the following points for consideration:
(1) Whether the sale in favour of R-4 is in accordance with the guidelines formulated in Mahesh Chandra''s case; and
(2) Whether the offer of the petitioner is bona fide?
The learned single Judge on appreciation of the entire materials on record and the case law on point answered both the questions against the appellant herein and finding no merit in the writ petition dismissed the writ petition by order dated 22-1-1999. The appellant, being aggrieved by the said order, preferred WA No. 126 of 1999. When the said writ appeal was pending, it appears, the Official Liquidator, filed CA No. 53 of 1999 assailing the validity of sale of the assets of the Company by the 2nd respondent in favour of the 1st respondent. In the said Company application, the main complaint was non-compliance of the mandatory provisions of Section 537 of the Act.
The Division Bench, before which the writ appeal was posted for final hearing, thought it appropriate to hear and dispose of the writ appeal along with CA No. 53 of 1999. The Division Bench, by its judgment and order dated 8-5-2001 disposed of WA No. 126 of 1999 and CA No. 53 of 1999 holding-
"Thus, on a reading of the aforementioned provision, it is clear that when the Company is being wound up subject to the supervision of the Court, any sale held without leave of the Court or any transfer of properties of the company after such commencement shall be void. In other words, the above provision clearly prohibits a sale or any transfer of the property without the specific leave of the Court. Admittedly, in this case, the mandatory provisions have been violated. Further, the learned Counsel appearing on behalf of the A.P. Industrial Development Corporation fairly conceded that no leave was obtained. Since the mandatory provision as contained in Section 537 has been violated, we are inclined to hold that the sale made in favour of the 4th respondent is void.
We, however, make it clear that we have not gone into the merits of the case as to whether the sale in favour of the 4th respondent was legal and valid. But, we have set aside the sale only on the sole ground that there is an infraction of the statutory provision.
Further, we leave it open to the Company Court to decide the issue in Company Application No. 53 of 1999, Liberty is given to the parties concerned to press their respective contentions before the Company Court in Company Application No. 53 of 1999. The Company Court shall dispose of the application after duly hearing the parties in accordance with law. The writ appeal is dismissed and consequently company application is allowed only on the sole ground that the permission of this Court has not been obtained. We leave it open to the A.P. Industries Development Corporation to approach the Company Court for seeking permission and to proceed further in the matter in accordance with law."
The appellant herein, being aggrieved by the above order made by the Division Bench insofar as it dismissed WA No. 126 of 1999, preferred SLP to the Supreme Court and the same was dismissed by the Supreme Court. Neither the Division Bench of this Court nor the Supreme Court have disagreed with or dissented from any of the findings recorded by the learned single Judge and therefore, the appellant is bound by the findings recorded by the learned single Judge.
In the meanwhile, the 1st respondent herein filed two applications, being CA No. 474 of 2001 to implead it as a party-respondent in CA No. 53 of 1999 and CA No. 475 of 2001 with a prayer to confirm the sale of the Company effected by the 2nd respondent in its favour. The learned Company Judge ordered CA No. 474 of 2001 and thereafter took up CA No. 475 of 2001 for consideration. The learned Company Judge has opined that the sale in question squarely falls u/s 537(1)(b) of the Act. However, the learned Company Judge ordered CA No. 475 of 2001 on the ground that the 1st respondent made payment of the entire sale consideration way back in the year 1988 and that it might have incurred interest on the amount deposited and also taking into account the fact that the sale effected by the 2nd respondent in favour of the 1st respondent was transparent and fair. Hence this appeal u/s 483 of the Act by the appellant herein.
In order to hold that this appeal filed by the appellant/third party is maintainable u/s 483 of the Act, it becomes necessary for the Court to decide whether the appellant is prejudicially affected by the order impugned in this appeal, whether the 1st respondent and/or the Company Court was under a legal obligation to implead the appellant as a party-respondent in CA No. 475 of 2001 and the incidental question whether the appellant herein could be treated as a ''party concerned'' within the meaning of that phrase occurring in the order of the Division Bench in WA No. 126 of 1999 dated 8-5-2001.
Meeting, the contention of Sri S. Ramachandra Rao, learned Counsel for the 1st respondent, that this appeal is not maintainable, because of the orders made by this Court in WP No. 29628 of 1998, WA No. 126 of 1999 and that of the Supreme Court in the SLP in which proceedings also the appellant sought virtually the same reliefs and failed everywhere, and that the present attempt of the appellant in filing this appeal is nothing but desperate attempt of a sinking man, and it tantamounts to abuse of the process of law, the only submission of Sri S. Ravi, learned Counsel for the appellant is that both the 1st respondent and the Company Court were under a legal obligation to implead the appellant herein as a party respondent to CA No. 475 of 2001 and since they have not impleaded the appellant as a party-respondent to that Company Application, the appellant has a right to prefer the appeal against the order made in CA No. 475 of 2001 as provided u/s 483 of the Act. When we pointedly asked Sri S. Ravi, learned Counsel appearing for the appellant to trace the obligation on the part of the 1st respondent or the Company Court to implead the appellant herein as a party-respondent to CA No. 475 of 2001 with reference to any of the provisions of the Act or otherwise, learned Counsel was not in a position to trace such obligation on the part of the 1st respondent or the Company Court. Therefore, we may take it that in terms of the Act there was no obligation on the part of the 1st respondent when it filed CA No. 475 of 2001 or the Company Court when it heard the said Application, to implead the appellant suo motu herein as a party-respondent to the Company Application. However, Sri S. Ravi, learned Counsel for the appellant, would contend that in the context of the case and particularly having regard to the observations made by the Division Bench while disposing of WA No. 126 of 1999 and CA No. 53 of 1999, the 1st respondent ought to have impleaded the appellant as a party-respondent to CA No. 475 of 2001. The learned Counsel, alternatively, would contend that having regard to the ''liberty granted to the parties concerned to press their respective contentions before the Company Court in CA No. 53 of 1999,'' by the Division Bench, the Company Court itself was under an obligation to implead the appellant herein suo motu as a party respondent and it should have, heard the appellant on merits before disposing of CA No. 475 of 2001.
It is true that the Division Bench while disposing of WA No. 126 of 1999 and CA No. 53 of 1999 left it open to the Company Court to decide the issues that arise for decision in CA No. 53 of 1999. It is also true that the Division Bench reserved liberty to the parties concerned to press their respective contentions before the Company Court in CA No. 53 of 1999. The appellant herein, it is trite, is not a party to CA No. 53 of 1999. ''Liberty'' is not a right in the strict sense, but it is a freedom or free will. Liberties are the things, which one may do without being prevented by the law. The sphere of one''s legal liberty is that sphere of activity within which the law is content to leave him alone. It is true that the term ''right'' is often used, in ordinary parlance, in a wide sense to include such liberty. The interests of unrestrained activity thus recognized and allowed by the law constitute a class of legal rights clearly distinguishable from those, which are recognized and protected by rule of right or rule of law. Rights of one class are concerned with those things which other persons ought to do for a person; rights of the other class are concerned with those which that person may do for himself. The former pertain to the sphere of obligation or compulsion; the latter to that of liberty or free will, Salmond, speaking about the correlative of liberty states --
"The correlative of A''s liberty to do a thing is B''s no right that it shall not be done, and the correlative of A''s liberty not to do a thing is B''s no right that it shall be done. "No-right" is a manufactured word indicating the absence of right against another in some particular respect. To say that B has a no-right against A is simply another way of saying that B has not a right against A, just as to say that A has a privilege against B is simply another way of saying that A is not under a duty towards B."
Undoubtedly, having regard to the observations made by the Division Bench reserving liberty to the parties concerned to press their respective contentions, it might be open for the appellant herein to implead himself as a party-respondent to CA No. 53 of 1999 or CA No. 475 of 2001 or any other applications that might have been filed before the learned Company Judge. Whether the appellant can do so or not is not the question that is required to be decided by us. That is a hypothetical question. The question is whether any legal obligation is cast on the Company Court or the 1st respondent to implead the appellant herein as a party respondent suo motu as a condition precedent to maintain the Company Application No. 475 of 2001. In this regard, with great humility and respect, I differ with my learned Brother, L. Narasimha Reddy, J. As already pointed out supra, Sri S. Ravi, learned Counsel for the appellant was not in a position to trace the duty on the 1st respondent or the Company Court to implead the appellant suo motu as a party-respondent to CA No. 475 of 2001 with reference to any provisions of the Act. A legal duty is an act opposite of which would be a legal wrong. Legal rights and legal duties are matters of law. Unless the Court finds that a person is obligated to perform a duty in favour of another in the regime of law, enforcing such duty would not arise. Therefore, I hold that neither the 1st respondent nor the Company Court was under any obligation to implead the appellant herein suo motu as a party respondent to CA No. 475 of 2001. It is trite that since the Court does not find any obligation on the part of the 1st respondent or the company Court to implead the appellant as a party-respondent to the application, finding fault with non-impleadment and on that ground setting aside the order impugned in this appeal would never arise.
Alternatively, it is also relevant to notice that if by the order impugned in this appeal, some of the rights of the appellant are impaired or affected, undoubtedly, the appellant can seek review of the order impugned in this appeal before the learned Company Judge by making appropriate application. The appellant, without making any such effort before the learned Company Judge, cannot straightaway maintain this appeal, particularly having regard to the fact that the appellant sought nullification of the sale of the assets of the Company in favour of the 1st respondent in WP No. 29628 of 1998, WA No. 126 of 1999 and SLP before this Court and the Apex Court and failed everywhere. It is well settled by the judgments in J.N. Bowri v. Official Liquidator (1961) 31 Com Cases 220 : AIR 1960 gua 190 , East India Cotton Mills Limited Re (1949) 19 Com Cases 61 , Vanaspathi Industries Limited v. Prabhu Dayal Hari Ram (1950) 20 Com Cases 311 : AIR 1950 EP 142, Manoharlal Manilal Shah v. Official Liquidator (1969) 38 Com Cases 643 that an appeal by a person who was not a party to the winding up proceedings is not competent and that an unsuccessful bidder at an action has no right to appeal against the order of confirmation. In Manoharlal Manilal Shah''s case (supra), a Division Bench of the Gujarat High Court held --
"Now it is well settled that the right of appeal is a creature of statute. Nobody has any inherent or natural right of appeal. Even a party to the proceeding in which the impugned order is made has no right of appeal from it unless such right is specifically given by the statute. Now, Section 483 of the Companies Act, 1956, gives a right of appeal against any order made or decision given in the matter of the winding-up of a Company by the Court and it would therefore appear - and in deed, as pointed out by us above, this was not seriously disputed -- that an appeal would lie against an order made by the Company Judge sanctioning the sale of the property of the Company in liquidation. Such an order would be an order made in the matter of winding-up of the Company and would therefore be appealable u/s 483. But the question is who can prefer the appeal. The section does not say explicitly to whom the right of appeal is given and the question would therefore have to be resolved on a proper interpretation of the section. The right of appeal is, by the section, to be exercised in the same manner and subject to the same conditions as a right of appeal from any order or decision of the Court in its ordinary jurisdiction is exercised. The reference to the "manner" and the "conditions" clearly imports the principles and practice governing appeals from orders made by the Court in the exercise of its ordinary jurisdiction. The question as to who can appeal against an order made in the matter of winding up of a Company must therefore depend on the answer to the inquiry as to who is entitled to prefer an appeal against an order made by the Court in the exercise of its ordinary jurisdiction. Now, appeals against orders made by a single Judge of this Court in its ordinary jurisdiction are governed by Clause 15 of the Letters Patent and it is well settled that an appeal under Clause 15 lies only at the instance of a party to the proceedings who is adversely affected by an order made in the proceeding or his representative-in-interest and a stranger to the proceeding even if bound by the order or aggrieved by it or prejudicially affected by it, cannot appeal except with the leave of the Court. It is a general principle of civil law recognized since long that ordinarily where an appeal is provided without specifying who shall be entitled to prefer the appeal, the right of appeal is exercisable only by a party to the proceeding and no person who is not a party to the proceeding can exercise the right of appeal unless leave to appeal is granted by the Court. Lindely L.J pointed out in In re Securities Insurance Company [(19/894) 2 Ch. 410, 413],
"I understand the practice to be perfectly well settled that a person who is a party can appeal (of course within the proper time) without any leave, and that a person who without being a party is either bound by the order or is aggrieved by it, or is prejudicially affected by it, cannot appeal without leave."
I am in respectful agreement with the opinion of the learned Judges of the Division Bench of the Gujarat High Court in the above case. In the first place, the appellant herein, not being a party either to CA No. 53 of 1999 or to CA No. 475 of 2001, cannot maintain this appeal. Secondly, the appellant cannot be treated to be a person who is prejudicially affected by the order of the learned Company Judge impugned in this appeal. As already pointed out supra, on an earlier occasion, the Company under liquidation itself had filed WP No. 2423 of 1998 questioning the sale of the assets of the Company in favour of the 1st respondent herein and that writ petition was disposed of directing respondents 1 and 2 therein not to finalise the sale of the petitioner-Company in favour of the 4th respondent therein (who is the 1st respondent in this appeal) till 13-9-1998. However, the Court further directed that if the petitioner-Company fails to purchase the assets for Rs. 42 lakhs as claimed by its authorized signatory, it was open for respondents 1 and 2 therein to finalise the sale in favour of the 1 st respondent herein after 13-9-1998. Admittedly, the Company failed to purchase the assets for Rs. 42 lakhs and since the order made in WP No. 24234 of 1998 dated 7-9-1998 has become final, the sale was finalized in favour of the 1st respondent herein. Further, the Company as such did not make any application before the learned Company Judge to implead it as a party-respondent either to CA No. 53 of 1999 or to CA No. 475 of 2001. In the backdrop of these facts, the appellant herein cannot be treated to be a person prejudicially affected by the order made by the learned Company Judge in CA No. 475 of 2001. Be that as it may, that is not the contention of the learned Counsel for the appellant and therefore, there is no need to further dilate on this point.
Further, the phrase ''parties concerned'' occurring in the order of the Division Bench should also be understood in the context of the order. The sale was set aside by the Division Bench on the ground that it was done without the leave of the Court and, therefore, it violated the mandatory provisions of Section 537(1)(b) of the Act and without going into the other contentious issues. In that context, the Division Bench, understandably, reserved liberty to the parties concerned in CA No. 53 of 1999 to press into service the other contentions raised by them in CA No. 53 of 1999. As already pointed out supra, the appellant herein is not a party-respondent to CA No. 53 of 1999. In that view of the matter, he cannot be considered to be a ''party concerned'' as regards CA No. 53 of 1999. Even liberally construing the phrase ''parties concerned'' occurring in the order of the Division Bench, it could, at the most, be said that the appellant herein, if he so wishes or desires, he has liberty to implead himself as a party respondent either to CA No. 53 of 1999 or any other application or applications filed in CA No. 53 of 1999 such as CA No. 475/2001. Liberty to do something himself cannot be confused with right to claim something from another in performance of a legal obligation cast on the other.
In the result and for the foregoing reasons, I hold that this appeal is not maintainable at the instance of the appellant and it is accordingly dismissed with no order as to costs. However, I make it clear that this order shall not come in the way of the appellant herein making an appropriate application before the learned Company Judge, if he is so advised, to implead himself as a party-respondent to CA No. 53 of 1999 or CA No. 475 of 2001 and seeking review of the order impugned in this appeal. All points raised in this appeal by the parties, including the contention that the attempt of the appellant to set at naught the order made in CA No. 475 of 2001 by the learned Company Judge and impugned in this appeal, tantamounts to abuse of process of law having regard to the dismissal of WP No. 24234 of 1998, WA No. 126 of 1999 and the Special Leave Petition, are left open to be agitated before the learned Company Judge for consideration and decision.