IN THE HIGH COURT OF GUJARAT AT AHMEDABAD O.J.APPEAL NO. 50 of 2012 In OFFICIAL LIQUDATOR REPORT NO. 294 of 2011 In OFFICIAL LIQUDATOR REPORT NO. 39 of 2006 FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE RAVI R.TRIPATHI and HONOURABLE MR.JUSTICE N.V.ANJARIA ================================================================
1 Whether Reporters of Local Papers may be allowed to see the judgment ?
Yes
2 To be referred to the Reporter or not ? Yes
3 Whether their Lordships wish to see the fair copy of the No judgment ?
4 Whether this case involves a substantial question of law as No to the interpretation of the constitution of India, 1950 or any order made thereunder ?
5 Whether it is to be circulated to the civil judge ? No ================================================================ ROSHAN MAGANLAL DESAI Appellant(s) Versus OFFICIAL LIQUIDATOR Opponent(s) ================================================================ Appearance:
PARTY-IN-PERSON, ADVOCATE for the Appellant(s) No. 1 OFFICIAL LIQUIDATOR for the Opponent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE RAVI R.TRIPATHI and
HONOURABLE MR.JUSTICE N.V.ANJARIA
Date : 06/11/2012 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE RAVI R.TRIPATHI)
1. The appellant is practicing as an advocate having 45 years standing to his credit. He is a senior advocate of this Court but not ‘a designated senior counsel’.
2. The present appeal arises out of an order passed by the learned company Judge in Official Liquidator Report No. 294 of 2011 in Official Liquidator Report No. 39 of 2006 dated 18/19-07-2012.
3. The prayers made in Office Liquidator Report No. 294 of 2011 in para-24, read as under :
“a) This Hon'ble Court may be pleased to ratify the action taken by the Official Liquidator in entrusting the briefs to Shri Roshan Desai, Advocate as Special Arguing Counsel in the cases mentioned in para 22 above on such fees as may be agreed to and approved by the Hon'ble Court;
b) Such other and further orders and directions as this Hon'ble Court may deem fit and proper in the matter, may also be passed.”
3.1 The Official Liquidator report no. 294 of 2011 was required to be filed in the circumstances, set out in para-16 onwards of that report. The same are reproduced for the ready perusal.
“16. It is submitted that in case of Mardia Steel Ltd.(In Liquidation) in O.J. Appeal No. 8 of 2009, at the interim stage, since the advocate brief was not able to present the case of the Official Liquidator properly, an order was passed by the Hon'ble Court, sanctioning the scheme at the interim stage as also directing the Official liquidator to hand over possession. The Official Liquidator was constrained to prefer SLP, in which the Hon'ble Court was pleased to quash and set aside the interim order passed by the Hon'ble Court and issued direction to the Division Bench of the Hon'ble Court to follow certain procedure and decide the issue afresh. It may also be stated that immediately within 15 days ARCIL issued a notice under Securitization Act for taking possession. The matter was entrusted to Panel Advocate who did not give proper reply. A Special civil Application was filed which was also entrusted to the advocate, which was also not handled properly.
(emphasis supplied)
17. In these circumstances, the Official Liquidator entrusted the Brief to Mr. Roshan Desai, Advocate. Shri Roshan Desai, Advocate, appeared in the hearing of the OJ Appeal No. 8 of 2009 and represented the case of the Official Liquidator and cited authorities. Hon'ble Court was pleased to reject the Appeal on 7th October,s 2011.
(emphasis supplied)
18. An application was filed by Mr. Rasiklal S. Mardia being Company Application No. 90 of 2010 for damages. Mr. Roshan Desai, Advocate was entrusted the brief and he presented the case of the Official Liquidator and at present the same is pending for decision of this Hon'ble Court.
19. In case of Mardia Chemicals Ltd. (In Liquidation) also the Advocate appointed by the Official Liquidator at Mumbai did not handle the case properly. Mr. Roshan Desai, Advocate was entrusted the brief and as per his advice, legal action is being initiated by the Official Liquidator to protect the interest of the Official Liquidator.
20. In case of the Ahmedabad Manufacturing & Calico Mills Co. Ltd. (In liquidation) Official Liquidator's report 206 of 2008 was preferred praying that respondent be directed to comply with the direction issued by the Hon'ble Court. At the time of hearing, the Hon'ble Court was of the opinion that Official Liquidator's Report is drafted without applying mind and the Hon'ble Court has not given any direction which is to be complied with by the Respondent. Respondents were required to pay sum of Rs. 6.00 crores and odd. The breif was entrusted to Mr. Roshan Desai, Advocate and on his advice, an amendment of the prayer clause was preferred to reflect the correct position.”
3.2 In the OLR 294 of 2011, the list of the matters entrusted to the appellant-Shri Roshan Desai, learned advocate, is set out in para 21. For ready reference, para-21 is reproduced.
“21. At present following briefs is entrusted to Shri Roshan Desai, Solicitor & Advocate over and above lease matters, Assignment matters, primal (sic) Piramal Financial Services Ltd. and Vitta Mazda Ltd. (In Liquidation).
(a) Mardia Steel Ltd.
(b) Nafdua Chemicals Ltd.
(c) Alps BPO Services Ltd.
(d) Amruta Mills Ltd.
(e) Mahendra Mills Ltd.
(f) Revival Scheme in respect of Prasad Mills Ltd., Vania Silk Mills, Aryodaya Spining & Weaving Mills Co. Ltd. etc.
(g) Commercial Ahmedabad Mills Co. Ltd. & Vijaya Mills Co. Ltd. ULC matters.
(h) The Ahmedabad Manufacturing & Calico Mills Co. Ltd.”
3.2(a) In Para 22 of the OLR 294 of 2011, it is stated as under :
“22. It may be stated that since objection is raised for appearance of Mr. Roshan Desai, Advocate in matter of Mardia Steel Ltd. (In Liquidation), this report is filed for ratifying the action taken by the Official Liquidator for entrusting the briefs to Mr. Roshan Desai, Advocate as Special Arguing Counsel.”
(emphasis supplied)
3.3 The Office Liquidator submitted to the jurisdiction of the learned company judge, as set out in para-23, which reads as under :
“23. If Hon'ble Court directs the Official Liquidator, the Official Liquidator will obtain prior approval before any brief is entrusted to Special Arguing Counsel and in case, looking to the urgency, brief is entrusted immediately, the Official liquidator will seek rectification of the action of the Official Liquidator in entrusting the brief.”
3.4 Paras 41 onwards of learned Company Judge, which is challenged in this Appeal and are relevant for the purpose of considering this Appeal, read as under :
“41. This is, to say the least, a very unfortunate state of affairs. The Official Liquidator is enjoined to assist the court and carry out the functions assigned to him under the supervision and control of the Court. If the Official Liquidator takes a stand contrary to the court and functions at cross-purposes with the Court, it would seriously hamper the smooth working of the Court.
42. None of the explanations rendered by the Official Liquidator for not seeking the sanction of the court before engagement of the concerned advocate are adequate or satisfactory. The prayers made by the Official Liquidator in the Report dated 25-12-2011 are, therefore, unacceptable to this Court and hence, stand rejected.
(emphasis supplied)
43. At this stage, when the dictation of the order in the open Court is almost completed and only the operative part remains to be dictated, a request has been made by the concerned advocate to grant him an opportunity of hearing. As the Court is hearing a Report filed by the Official Liquidator for ratification of his actions, it is a matter solely between the Court and the Official Liquidator, therefore, it is not required that the concerned advocate be heard.
(emphasis supplied)
44. During the course of hearing, as the Official Liquidator could not assist the court properly even on factual aspects, the Court requested Dr.Amee Yajnik, learned advocate, who is on the panel of the Official Liquidator, and Mr.Ashok L.Shah, learned advocate, to assist the court on factual aspects to a limited extent. The Court acknowledges the assistance rendered by them.
45. Though the Official Liquidator is functionally under the control of this Court, administratively, he is under the control of the Central Government. This Court, therefore, considers it appropriate that a copy of this order be handed over to Shri P.S.Champaneri, learned Assistant Solicitor General of India for further communication to the Secretary, Ministry of Corporate Affairs, Government of India, New Delhi for information and further necessary action, as considered appropriate.
46. With these observations, the Report is rejected. “
4. Appellant appeared party-in-person and submitted that the effect of the order impugned is that, ‘all matters which were assigned to him, stands withdrawn’, including the matter/s wherein his appointment as learned advocate was sanctioned by the learned company Judge at the relevant time [Hon’ble Mr. Justice A. R. Dave, as he then was] by order dated 24.01.2003 in Official Liquidator report no. 52 of 1999 in Company Petition no. 126 of 1990 had ratified his appointment. Relevant part of the order (dated 24.01.2003) reads as under :
“In this report of the Official Liquidator, one of the prayers is with regard to ratification of appointment of learned advocate Shri R.M.Desai as an advocate for the Official Liquidator. It has been submitted by the Official Liquidator that as several important and complicated legal issues are involved in the matter, it was necessary to avail services of an advocate. In the circumstances, he has engaged learned advocate Shri R.M. Desai as an advocate. Looking to the facts of the case, the prayer with regard to ratification of appointment of learned advocate Shri R.M. Desai is granted ”
(emphasis supplied) The party-in-person summited that despite the clear order as above, the Official Liquidator has withdrawn the matter of Vitta Mazda Ltd.
4.1 The order under challenge cannot be read to mean that the matters wherein appointment of Shri R.M.Desai is ratified by the Court at the relevant time are also required to be withdrawn from him. It appears that if the attention of the learned company Judge would have been drawn to order dated 24.01.2003 referred to hereinabove, necessary clarification would have been made in this regard. Had the learned Company Judge been properly assisted at the time of hearing, present controversy would not have arisen.
4.2 Learned party-in-person also brought to the notice of this Court that similar is the position in the matter of M/s Amruta Mills Ltd. (In Liquidation). This Court [Coram : Hon'ble Mr. Justice D.A.Mehta as he then was] passed an order on Official Liquidator Report No. 122 of 2009 on 26.10.2009, relevant part of which is as under :
“1. This report has been filed by the Official Liquidator of M/s. Amruta Mills Ltd. (in liquidation) seeking permission to avail of services of Shri R.M.Desai as senior arguing Counsel to defend the Special Leave to Appeal (Civil) No. 29952 of 2008 and other cognate matters involving issue regarding disposal of leased properties of the company in liquidation before the Hon'ble Supreme Court of India on such fees as may be considered just and appropriate by this Court “ (emphasis supplied)
2. Mr. R.M. Desai, learned Advocate has consented to represent the Official Liquidator in the aforesaid matter and in cognate matters before the Hon'ble Supreme Court of India.
3. Heard learned Advocate for the Official Liquidator as well as the Official Liquidator. It was pointed out that for the purpose of fixing fees this High Court vide order dated 25.8.2009 rendered in OLR No. 93 of 2009 has approved the Scheme formulated by the Official Liquidator and in relation to engaging of an Advocate in the Supreme Court the Court has observed in paragraph No. 6 of the order :
“The OL may file separate report for approval of the engagement of any advocate in the Supreme Court as and when such litigation is filed against the OL or is to be filed by the OL. However, it is observed that at that time, the normal fees would be at par with the fees fixed by the Central Government for such advocate/counsel, as the case may be, for Supreme Court matters”.
2. When one goes through the Scheme which has been approved by the Court it becomes clear that in paragraph No. III(f) the Scheme provides for as follows :
“f) Special Arguing Counsel – Notwithstanding anything contended hereinabove for highly contested matters wherein complicated questions of Law are involved and such other alike matters other than the company law/liquidation matter, at the discretion of the Hon'ble Court, the Official Liquidator may engage senior/senior designated advocates/senior law officers as special arguing counsel from case to case basis on such fee as are applicable to the Central Govt. Counsel/Senior Law Officers or as may be determined and sanction by the Hon'ble Company Court in such individual case”.
3. Thus it is apparent that in case of a Counsel, who has been engaged specially to argue a case before the Supreme Court on behalf of Official Liquidator, the normal rates of fees would be the rates applicable to the Central Government Counsel/Senior Law Officers, with a discretion vested in the Company Court to determine and sanction in such individual case a rate which may not necessarily be at par with the rates applicable to the Central Government Counsel.
4. During course of hearing, the Court has had the benefit of assistance from Assistant Solicitor General Mr. Champaneri, who is present in the Court, and the Court was informed that in the Supreme Court of India the Additional Solicitor General is entitledto charge professional fees @ Rs.16,000/- OR Rs. 25,000/- OR Rs. 40,000/- per day per matter.
5. In the circumstances, considering the fact that Shri Desai, while according his consent, has quoted fees @ Rs.20,000/- per day per matter, it would be just and proper if the following rate of fees is fixed for this group of matters only with clarification that this order shall not operate as a precedent and the discretion vested in the Court shall not be in any manner stand curtailed.
6. The Official Liquidator shall engage Shri R.M.Desai as an Advocate to specially argue the main Appeal @ Rs.17,500/- per day, while in rest of the matters the rate to be charged shall be Rs. 8,500/- per day per allied matter. The actual out of pocket expenses to be separately paid ”
(emphasis supplied) The report was accordingly disposed off.
4.3 Perusal of the above order clearly reflects quality of the services that have been rendered by Mr. Roshan Desai as an advocate.
4.4 Matter of M/s Amruta Mills Ltd. (in Liquidation) is also included in para-21 of OLR 294 of 2012. The Court even at the cost of repetition reiterates that all these aspects must not have been effectively brought to the notice of the learned company Judge who passed the order under challenge in this appeal.
4.5 It was further pointed out by the party-in-person that the orders passed by the Division Bench of this Court in Pravinbhai s/o Jasbhai Patel & 4 vs. O.L. of Ambica Mills Ltd. & 12 others being OJ Appeal No. 34 of 2005 in Company Application No. 187 of 2004 in Company Petition No. 66 of 1988 and in O.L. of Gujarat Ministeel Ltd. vs. Ahmedabad Municipal Corporation being OJ Appeal No. 12 of 2002 in Company Application No. 314 of 2000 in Company Petition No. 44 of 1998 wherein this Court [Coram : Hon'ble Mr. Justice P.B.Majmudar, as he the then was & Hon'ble Mr. Justice Mohinder Pal] had passed an order on 4.9.2012. Relevant parts of the order read as under :
“OJ Appeal No. 34 of 2005
1. At the request of Mr. Shah, learned Counsel, appearing for Mr. Munshaw, learned Advocate for the appellant, the matter is adjourned to 13TH SEPTEMBER, 2012.
2. Mr. R.M. Desai, learned Advocate, states that, unless the Hon'ble Court permits him, he shall not be able to appear in the matter on behalf of the Official Liquidator.
3. Considering the fact that Mr. Desai is representing the Official Liquidator, he is permitted to appear on behalf of opponent No.1, herein. However, Mr. Desai, shall communicate this order to the office of opponent No.1. The interim relief granted earlier to continue, TILL THEN.”
(emphasis supplied) . . . . . . . . . .
OJ Appeal No. 12 of 2002
1. Mr. R.M. Desai, learned Advocate, states that, unless the Hon'ble Court permits him, he shall not be able to appear in the matter on behalf of the Official Liquidator.
(emphasis supplied)
2. In view of the fact that the present appeal was filed by Mr. Desai on behalf of the appellant in the year 2002, he is permitted to appear on behalf of the appellant in this matter. Office is directed to SEND a copy of this order to the appellant-Official Liquidator, forthwith. Mr. Desai, shall also communicate this order to the Official Liquidator ”
4.6 It is important to note here that these orders are later in point of time to the orders under challenge in this appeal. This Court is at pains to reiterate that if all these orders had been brought to the notice of the learned company Judge, the order would have been different. But as stated hereinabove the learned Company Judge passed order rejecting the Official Liquidator’s Report praying that “ this Court may be pleased to ratify Official Liquidator in entrusting the brief to Shri Roshan Desai as Special Arguing Counsel in the cases mention in para-22 above.”
4.7 On perusal of papers, this Court found that by order dated 3.5.2006 passed by the learned company Judge in Official Liquidator Report No. 39 of 2006, the Scheme referred to in the order under challenge was framed. The relevant part of the order [Corum : Hon'ble Mr. Justice R. S. Garg, as he the then was, dated 3.5.2006 reads as under :
4. The Official Liquidator has submitted that this Court required the Official Liquidator to submit a list of the advocates so that a panel is made and lawyers are allowed to help and assist the Official Liquidator and represent him in the Court. He submits that he has to deal with as many as 477 companies (in liquidation) and has also to appear in the Court almost everyday either for filing replies or for submitting his reports.
5. The Official Liquidator submits that the number of the staff given to him is inappropriate and many times he has to work very late in the night. His submission is that in other Courts, the Company Court has allowed the Official Liquidator to engage counsel for preparation of the reports, finalisation of the reports, submission of the reports and to represent the Official liquidator in the Court. He submits that if he is allowed to seek assistance of the legal accumen, then, he would be able to do much work on the administrative side and the counsel representing him would be able to assit the Court. His further submission is that in many cases, legal issues are raised and he, not being a legal brain, many times, is unable to assist the Court, which, sometimes, irritates the Court. His submission is that in accordance with the order dated 21.1.2006, passed in Official Liquidator Report No. 94/05, he has displayed notices on the notice boards of the Bar/Institution/Organization including the applications from the Chartered Accountants, Company Secretaries and Govt. Approved Valuers for preparing panel of the advocates, Chartered Accountants, Company Secretaries and Govt. Approved Valuers for the office of the Official Liquidator. He submits that he has received communications from the Bar Council of Gujarat, City Civil Court, Labour Court, Chief Metropolitan Magistrate's Court, Institute of Company Secretaries of India and the Gujarat Institute of Civil Engineers and Architects, confirming that the notices were displayed on their notice boards.
6. The Official Liquidator has further submitted that he has received applications from the Advocates, Chartered Accountants, Company Secretaries and Govt. Approved Valuers for their empanelment. He submits that present is an application for engaging counsel and, therefore, this Court may allow him to engage five lawyers from Annexure:C/1 who have practice of less than seven years, two lawyers from Annexure:C/2, who are having practice between 7 to 15 years and two counsel from Annexure:C/3, which includes the names of the lawyers who have practice of more than 15 years.
7. The Official Liquidator has orally submitted that in relation to appointment of others, he would submit separate report. He informs the Court that the persons empanelled in Annexure:C/1, Annexure:C/2 and Annexure:C/3 are not his relations nor have any connection with him.
8. Taking into consideration the totality of the circumstances and the workload of the Official Liquidator, I am of the opinion that the report deserves to be allowed. The Official Liquidator is allowed to retain the following advocates from Annexure:C/1:-
[1] Mr.Asit B. Joshi [2] Mr. Samir B. Bundela [3] Mr. Pratik S. Shah [4] Mr. Hiren M. Modi [5] Mr. Kirankumar Lalchand Sharma.
(emphasis supplied)
9. From Annexure:C/2, the Official Liquidator is allowed to engage [1] Mr. Mrugesh J. Jani and [2] Mr. Sudhir M. Mehta and from Annexure:C/3, he is allowed to engage [1] Ms. Ami Yagnik and Mr. Jagdish S. Yadav.
(emphasis supplied)
10. The Official liquidator shall pay retention charges of Rs. 5,000/-, Rs.7500/- and Rs. 10,000/- to the advocates in Annexures: C/1, C/2 and C/3 respectively. The Official Liquidator may issue necessary notice/letters to the counsel who have been approved by this Court. He may require the counsel retained/engaged by him to help and assist him in his day-to-day work and also to represent him in the Court.
(emphasis supplied)
11. The Official Liquidator is given liberty to make further application if he finds that more advocates are required. He would also be free to make an application to this Court for removal of any advocate from the select list if he finds that such particular counsel is unable to help and assist him in his day-to-day work or in representing him in the Court. Retention fees to the lawyers shall be paid from the Company Paid Staff Salary Reserve Fund. The Official Liquidator Report No. 39 of 2006 stands disposed of.”
(emphasis supplied)
4.8 Thereafter, the matter came up for consideration of this Hon'ble Court in Official Liquidator Report in 93 of 2009 wherein this Court [Coram : Hon'ble Mr. Justice Jayant Patel] Passed order dated 25.08.2009.
“1. The present report has been submitted by the Official Liquidator for approval of the draft scheme for engagement of the advocates for the office of the OL and to pay the remuneration/fees as per the scheme at Annexure “B”.
2. It may be recorded that this Court earlier vide order dated 3.5.2006 in OLR No.39 of 2006 had given directions to the OL for engagement of certain counsel after making certain observations about the manner of discharging the duties and the fees to be paid, etc.”
4.9 In para 3 of his order, the learned judge has referred to an order passed in Company Application No.424 of 2008 dated 9.7.09 and quoted para 8 of that order, which reads as under :
“8. However, before parting with it deserves to be recorded that normally when any professional is engaged, may be a lawyer or a Chartered Accountant or a Valuer or any other professional, as the case may be, the OL may be required to pre-determine the fees before assigning the work so that at a later stage, there may not be dispute on the aspects of quantum of fees. If the professional has accepted the brief having known that he is to be paid a particular amount towards fees, it may not generate the feeling to the professional that he is not paid the amount for the work he has discharged. Therefore, the OL shall examine the matter in light of the observations and while preparing the schedule of fees for the respective professionals, the OL may take into consideration the fees, if any, prescribed by the Central Government, the Institution concerned, or any other statutory bodies, who normally engage such professionals.
Thereafter, the OL shall also examine his record, wherein the quantum of the fees to similar professionals or such professionals have been so sanctioned by this Court. It also deserves to be recorded that normally the panel should be prepared for acceptance of the work at a pre-determined fees, excluding the service tax, if any, and such panel should be revised at least at the interval of every three years, so as to make room for new entrants of the profession as well as to have a better and wider choice. The OL shall also, if possible, consider the details available of the practice followed by the office of the OL or by other High Courts in other States. The OL shall examine the aforesaid aspects and shall come out with appropriate report within four weeks from today.”
(emphasis supplied) “6. Perusal of the scheme shows that the modalities for engagement and preparation of the panel are, in any case, subject to the approval of this Court and, therefore, the same can be permitted. The schedule of fees of the Advocates as suggested, keeping in view the quantum of work and with a view to see that the Court functioning also becomes smooth, can be permitted, save and except retainership for advocate on record for Supreme Court, since the same is not required, keeping in view the number of matters being filed or pending. Hence, not sanctioned for the same. The OL may file separate report for approval of the engagement of any advocate in the Supreme Court as and when such litigation is filed against the OL or is to be filed by the OL. However, it is observed that at that time, the normal fees would be at par with the fees fixed by the Central Government for such advocate/counsel, as the case may be, for Supreme Court matters.
(emphasis supplied)
4.10 The learned single Judge suggested certain modifications in clause IX set out in para-7 which reads as under :
“7. Further, in Clause IX after (A) and (B), there will be following substitutions of the terms of engagement than the prescribed in the draft scheme as under:-
(1) The aforesaid additional professional fees shall be payable if the number of disposal of the cases during the month for which the fee is claimed, in any case, should not be less than 50% in a month for additional professional fees claimed. To say in other words, if the Counsel/Advocate has appeared on any day in the cases, more than five cases, where effective hearing has taken place, he/she would be entitled to additional professional fees only if during that month the number of disposal of the cases, which were assigned to him/her exceeds half number of the working days of that month and not otherwise.
(2) The drafting Counsel/additional drafting Counsel will be required to draft at least thrice the number of working days in a month. To say in other words, the drafting Counsel will have to undertake the work of drafting of at least three drafting on every working day or total drafting in a month will have to be three times the working days in such a month.
8. No change in the other part of the scheme.
9. Hence, the scheme from page 82 to 89 is approved with the aforesaid modifications.
10. The OL to undertake the process of empanelment immediately and to complete the said exercise preferably within one month.
11. The OLR is disposed of accordingly.”
5. Coming back to the order under challenge, the learned company Judge referred to the ‘Scheme’ while referring to order dated 29.12.2011 [Coram : Hon'ble Mr. Justice K.M.Thakkar]. The relevant part of order dated 29.12.2011 is reproduced in para-6 of the order impugned. Reading of the portion quoted below suggests that the learned Judge did consider the contents of OLR 294 of 2011 (dated 27.12.1011) in detail.
“2. On perusal of the relief sought for and the other details mentioned in the report, it emerges that the OL has taken out present application requesting the Court to ratify the action already taken by him viz. engaging advocates, who are not on the panel sanctioned under the scheme i.e. sanctioned panel.
3 From the details mentioned in the report, it appears that before engaging services of the advocate/s who are not on the sanctioned panel in different matters, any sanction of the Court was not taken and therefore, now the OL has sought ratification at interim stage of the proceedings. In present application, request for ratification is made in connection with eight cases and the advocate engaged in the said cases the details whereof are mentioned in para-21 of the report.
4. However, the OL has even not mentioned the reason or justification as regards his decision and action of engaging advocate/s who is/are not on the sanctioned panel before engaging the services and before determining the terms of engaging such advocate/s.
5. Even in present report, the details of the terms on which advocate/s is/are engaged in different matters, whose names are not on the sanctioned panel, have not been mentioned.
6. Likewise, the reason as to why such decision was taken and implemented by the OL without prior sanction from the Court in all such cases is also not mentioned with required clarity and details.
7. The OL has also not stated as to whether there are any other cases (i.e. other than those which are mentioned in para-21) in which any other advocate/s and if there are any, then, why details are not mentioned who are not on the sanctioned panel has/have been engaged or not.
8. As mentioned above, the terms and conditions on which the services of the advocate/s whose names are not on the sanctioned panel are also not mentioned in present report and the details of past/concluded cases wherein the advocate/s except from the sanctioned panel was/were engaged and fees have been paid, are also not mentioned.
9. Without mentioning such relevant details, the OL expects the Court to ratify the action and has requested that his action of engaging advocate/s, whose names are not in the sanctioned panel, be ratified.
10. Unless and until the complete details of all the matters in which services of advocate/s has/have been engaged in such manner, i.e. except from the sanctioned panel, and unless the details of the terms and conditions on which the services have been engaged are set out in the application, the request cannot be considered.
11. It is beyond comprehension as to why the OL should not have mentioned such relevant details in present report.
12. It is also beyond comprehension as to why the decision was taken without informing the Court and without seeking sanction from the Court at the time when the services of advocate/s, whose names are not mentioned in the sanctioned panel, was/were being engaged.
13. Since now such facts have come to the notice of the Court and since it prima-facie appears that the action are contrary to and in breach of the applicable Rules and also the Scheme, the Court considers it appropriate to direct the OL to place on record all details of all such matters where advocates/s has/have been engaged by the OL, without sanction of the Court, by fixing terms directly and not from the sanctioned panel.
14. It appears that there could be several other applications and/or various reports which might have been disposed of wherein the OL might have engaged advocate/s, whose names are not on the panel sanctioned under the scheme, and even the professional fees might have been paid by the OL in such cases. However, those details have also not been mentioned in the present report.
15. In absence of such details, it is not possible, at this stage, to ratify the action taken by the OL.
16. Under the circumstances, the OL is directed to file a supplementary report giving all the relevant details including the details illustratively mentioned hereinabove. Three weeks' time for the said purpose is granted to the OL. The OL shall place such details on record of present report on or before 19.1.2012. The registry shall place present report for further consideration on 20.1.2012.”
5.1 The learned company Judge after quoting the aforesaid portion of the order dated 29.12.2011 [coram: Hon'ble Mr. Justice K.M.Thakkar] has referred to the clarificatory report dated 12.01.2005 filed by the Official Liquidator and an order passed by learned company Judge [coram : Hon'ble Mr. Justice K.M.Thakkar] on 1.2.2012.
5.2 The learned company Judge has then referred to another report filed by the Official Liquidator dated 23.02.2012 and has quoted para-1 of the said report in para-11 of the impugned order. The learned company judge has then taken pains to refer to various paragraphs of that additional report in para-13, 14 & 15 of the order impugned. The learned company Judge has then reproduced the words which are ordered to be added to clause-(f) in the scheme which pertains to ‘specially arguing counsel’. Earlier clause(f) read as under :
“f) Special Arguing Counsel – Notwithstanding anything contained hereinabove for highly contested matters wherein complicated questions of Law are involved and such other alike matters other than the company law/liquidation matter,at the discretion of the Hon'ble Court, the Official Liquidator may engage senior/senior designated advocates/senior law officers as special arguing counsel from case to case basis on such fee as are applicable to the Central Govt. Counsel/Senior Law Officers or as may be determined and sanctioned by the Hon'ble Company Court in such individual case.”
5.3 Whereas after order dated 6.3.2012 [Coram : Hon'ble Mr. Justice K.M.Thakkar] clause(f) is to read as under :
“Special Arguing Counsel- Notwithstanding anything contained hereinabove, for highly contested matters wherein complicated questions of law are involved and such other alike matters other than the company law/liquidation matter, at the discretion of the Court and only with the prior sanction, approval and permission of the Court, the Official Liquidator may engage senior/senior designated advocates/senior law officers as special arguing counsel from case to case basis on such fee as are applicable to the Central Govt. Counsel/Senior Law Officers or as may be determined and sanctioned by the Company Court in individual case. In any case Official Liquidator shall not engage any Advocate, in any category, even as Special Arguing Counsel, without prior sanction, permission and approval of the Court unless his/her name is mentioned in the panel approved by the Court.”
(emphasis supplied)
5.4 In light of the said change, the learned company Judge ignoring all the aforesaid aspects and holding that the Official Liquidator is trying to justify his conduct which is not explainable and justifiable rejected the Official Liquidator report 294 of 2011.
6. What falls for the consideration in this appeal is whether the action of the Official Liquidator deserves seal or approval by the court in light of the aforesaid facts and more particularly when it is submitted that it was submitted to learned company Judge that the practice which is followed by the present Office Liquidator is the same practice which was followed by his predecessor. It is argued that it was conveyed to the learned company Judge that the litigation in the office of the Official Liquidator can be divided into two major groups. The first group consists of the matters filed against the Official Liquidator and the second group consists of the matters filed by the Official Liquidator. It is very effectively argued that in the first group of matters, which are filed against the Official Liquidator, there is always urgency and the Official Liquidator has to act very promptly to avail services of the counsel and to present its case before the learned Company Court and therefore, as the practice stands, the Official Liquidator avails services of the counsel by instructing such counsel in the matter who in turn prepares the reply and presents before the company Judge. It will be necessary to record here that so far not in one single matter, any company court has ever shown displeasure or objected appearance of any counsel engaged by the Official Liquidator. This becomes significant because this necessarily go to show that neither the advocate engaged nor the act of engaging any particular counsel by the Official Liquidator is viewed with suspicion. It will be appropriate to remind ourselves that there is power vested in the company Judge to disapprove the engagement of any advocate made by the Official Liquidator. It is only when learned company court allows the learned advocate engaged by the Official Liquidator to appear and argue the matter representing the Official Liquidator the counsel continues which amounts to approving of engagement of a counsel by the Official Liquidator. This Court is told that in past 52 years, in no single case not one advocate engaged by the Official Liquidator is disapproved by any of learned company court or the Bench hearing appeals arising from orders of the learned Company Judge.
6.1 The another disturbing factor which has come to the notice of this Court is that the whole chapter was opened on an objection raised by one Shri Rasiklal S. Maradia who filed company application no. 90/2010 for damages and who contended that the appointment of learned advocate Shri R.M.Desai is not proper. If the objections/contentions raised by said Shri R.S.Maradia are analised, it brings out a curious situation. It is nothing else than a situation where an accused is contending before the Court that his case should not be proceeded by a particular Public Prosecutor, as he apprehends that on account of efficiency and capacity of that public prosecutor, his guilt will be brought home and he will be convicted. On the basis of his request/objection, if the appointment of the Public Prosecutor is evaluated by the Court, then it will happen, as it has happened in this case, that the appointment of that public prosecutor will be cancelled.
6.2 In any view, if in a given case, a situation arises wherein the circumstances so warrant then a direction can always be issued, but the same can always be prospective and not retrospective. In the present case, as recorded hereinabove, proceedings are initiated on an application filed by a person aggrieved by the efficient representation of the matter before the Court. A situation, which is discussed hereinabove, poses a serious question. An accused cannot have a right to select the Public Prosecutor. In the present case, after hearing the parties, learned Company Judge was pleased to reject the ‘Valuation Report’ submitted by the valuer of Shri Rasiklal Maradia and appointed Gujarat Industrial and Technical Consultancy Organisation to prepare Valuation Report. It is aggrieved by this order that Shri Rasiklal Maradia raised an objection that under Rule 307 of the companies Court Rules, 1959 Liquidator cannot entrust the brief to the present appellant – a senior advocate who has been appearing for Official Liquidator for all these years. It is in view of the said objection that the Official Liquidator filed report being OLR No. 294 of 2011 for ratification of the action that is appointment of appellants as an advocate to represent Official Liquidator which came to be rejected, giving rise to the present appeal.
6.3 Coming to the scheme, it is provided in clause (iii) which pertains to 'Panel for Counsel'. Sub clause(a) pertains to 'Panel of Senior Standing Counsel'. Clause (b) pertains to 'Panel of Additional Standing Counsel'. Clause (c) pertains to 'Advocate on record in the Supreme Court of India'. Sub clause (d) pertains to 'Panel Advocate' and similarly other sub clauses provided counsel/additional drafting counsel and Special Arguing counsel. Now the clause 'Special Arguing counsel' as stood amended after an order of this Court in this very report dated 6.3.2012 which is already quoted hereinabove but even at the cost of repetition again. The clause reads ad under :
“Special Arguing Counsel- Notwithstanding anything contained hereinabove, for highly contested matters wherein complicated questions of law are involved and such other alike matters other than the company law/liquidation matter, at the discretion of the Court and only with the prior sanction, approval and permission of the Court, the Official Liquidator may engage senior/senior designated advocates/senior law officers as special arguing counsel from case to case basis on such fee as are applicable to the Central Govt. Counsel/Senior Law Officers or as may be determined and sanctioned by the Company Court in individual case. In any case Official Liquidator shall not engage any Advocate, in any category, even as Special Arguing Counsel, without prior sanction, permission and approval of the Court unless his/her name is mentioned in the panel approved by the Court.”
(emphasis supplied)
6.4 The underlined portion is added pursuant to order of this Court [Coram : Hon'ble Mr. Justice K.M.Thaker] dated 6.2.2012. To appreciate the exact implication of the amended clause, it will be necessary to go to clause (iv) which pertains to term of engagement/empanelment of which sub clause(i) reads as under :
“1. Initial engagement/empanelment - The term of engagement/empanelment shall be for a period of two years or until further orders, whichever is earlier, whereafter extension/renewal may be considered by the Hon'ble High Court depending on the performance of the Counsel. However, no counsel will be eligible for renewal after completion of third term or completion of period of 6 years of engagement.”
(emphasis supplied)
6.5 Despite sincere efforts, this Court is not able to read this clause as workable clause. The entire clause seems to be formulated to take care of an imaginary apprehension that everything taking place will be only by an illegal/irregular mode. So far as empanelment is concerned, it may be possible that the clause may be made operative but so far as engagement is concerned, if an engagement is to be renewed at the end of every two years, what will be the position of the advocate who is engaged in a matter and the matter is not over within two years. There will be a ‘renewal’ of engagement and what happens if the matter is not over within six years. Clause says that “However, no counsel will be eligible for renewal after completion of third term or completion of period of 6 years of engagement.” Besides, if a matter is highly contested one and involves complicated questions of law, as is referred to by the learned company Judge [Coram : Hon'ble Mr. Justice A.R.Dave, as he then was] in Official Liquidator Report NO. 52 of 2009 wherein the report of the Official Liquidator contained one of the prayers with regard to ratification of an appointment of present appellant - learned counsel Shri R.M.Desai as advocate for the Office Liquidator. It was pleaded in the Official Liquidator Report and it is recorded by learned Judge that “......it has been submitted by Official Liquidator that several important and complicated legal issues are involved in the matter, it was necessary to avail services of an advocate.......” Now that was a matter pertaining to Vitta Mazda Ltd. The appointment made by Official Liquidator is ratified by this Court by speaking order in the year 2003. Now if the ‘Scheme’ is made applicable retrospectively, the appointment of the advocates will stand expired or cancelled on expiry of six years.
6.6 This Court is at a loss to understand as to how come the scheme is made operative retrospectively. The law on the point is well settled and even the Legislature avoids to make the laws applicable retrospectively then how can a scheme be made applicable retrospectively. It is clear from the facts demonstrated hereinabove that the Clause pertaining to engaging of 'Special Arguing Counsel' and the clause pertaining to the term of engagement or empanelment, are unworkable. As is discussed hereinabove, in the matters which fall in the first group i.e. the matters filed against the Official Liquidator are the matters, which are required to be attended with due priority and urgency by the Official Liquidator and the interest of the persons, which is required to be protected by the Official Liquidator is presented properly before the Court, services of the counsel are required to be obtained by the Official Liquidator, of course subject to the approval from the Court i.e. the Company Court. This Court is of the view that so far as the clause pertaining to engagement of 'Special Arguing Counsel' is concerned, should have provided for the prior sanction, approval and permission of the Court. However, three things namely prior sanction, approval and permission need not be commented upon, but the same should have been preceded by a clause “as far as possible” which would have taken care of emergent situation but as the clause stands today, it is made mandatory and thereby shutting off all possibilities of engaging a counsel in emergent situation. Similarly, the addition to the clause “ in any case Official Liquidator shall not engage any advocate in any category even as Special Arguing Counsel, without prior sanction, permission and approval of the Court unless his or her name found in the panel approved by the Court” is also not only sounding harsh but going to work very impractical. Let it be made very clear that this Court does not intend to confer unguided powers on the Official Liquidator in the matter of engaging or empanelment of any advocate, but at the same time, making it mandatory to have prior sanction, approval and permission of this Court sounds like tying down a person and then throwing him in water to swim. Such a situation is not called for.
6.7 In view of the aforesaid discussion, this Court is of the view that it is expedient that clause engaging 'Special Arguing Counsel' should be suffixed by the words ‘as far as possible’ and similarly the last phrase which is added be also suffixed by the words “as far as possible.” These words should be read before - in any case Official Liquidator shall not engage any advocate, in any category, even as special arguing counsel, without prior sanction, permission and approval of the Court unless his / her name is mentioned in the panel approved by the Court.
6.8 Coming to sub clause (I) of clause (iv) 'initial engagement and empanelment' is concerned, the same should be applicable only to ‘empanelment’ and ‘engagement’ be taken out from said clause. It can as well be provided that as the ‘engagement’ is taken care of by sub-clause (ii) of clause (iv) by providing termination of engagement, there is no other provision required to be included or incorporated in the scheme for the purpose.
7. In view of the above discussion, this appeal is allowed. The judgment and order dated 18/19th July, 2012 is quashed and set aside subject to the aforesaid directions. In all matters wherein appointment/engagement is not approved by the Court, the Official Liquidator shall move an application seeking approval at the earliest preferably within three months from the date of receipt of a copy of this order. The Official Liquidator is directed to assign the matters to the learned advocate (appellant herein) wherein there is a specific approval granted by the Court or his appointment is approved or ordered by a specific order.
8. So far as appointment of the appellant in Company Application No.
398 of 1998 which is reflected from letter dated 9.3.99 which reads as under :
“In the above matter the Official Liquidator has been served with a copy of the aforesaid Company Application moved by the respective applicants before this Hon'ble Court regarding dispossession of the properties of the above company (in Liqn.). I am enclosing herewith copies of the aforesaid applications for your ready reference. Since as per the orders of the High Court you have already been appointed in the similar matters for appearing and conducting the matter for and on behalf of the Official Liquidator (In liqn.), I request you to kindly cause your appearance in the aforesaid proceedings and attend the matter in the best interest of the Company (in liquidation) ”
(emphasis supplied) The appointment of the appellant will continue.
9. Similarly, so far as the matter referred to in letter dated 18.11.1999 at page 23 of the compilation is concerned in Company Application No. blank of 1999 in Company Petition no. 205 of 1996 (Ramanlal Parshottamdas & Others vs. Official Liquidator of Sarangpur of Cotton Mfg. Co. Ltd. the letter reads as under :
“ I am sending herewith a copy of the above application received by this Office for your ready reference. Since similar matters are already entrusted to you by this Office, you are requested to kindly cause your appearance in the matter for and on behalf of the Official Liquidator in the best interest of the Company (In Liqn.). Progress of the matter may be intimated to this office from time to time ”
10. As the letter refers to appointment of the appellant in similar other matter, it is deemed proper to ratify the appellant's engagement in these matters.
[RAVI R. TRIPATHI, J.] [N.V.ANJARIA, J.] cmjoshi