Civil Appeal No 1510 of 1987 etc
From the Judgment and Order dated 461987 of the Gauhati High Court in FA No 19 of 1984
Dr Shankar Ghosh Gobind Das Ashok Sen SN Mukharji NR Choudhary and GS Chatterjee for the appearing parties
The Judgment of the Court was delivered by SABYASACHI MUKHARJI J
These appeals by special leave 1072 relate to the affairs of Ms Eastern Tea Estate P Ltd It was of two branches namely the Dutta s and the Choudhury section Due to death and lack of cordiality between the erstwhile partners the two branches first drifted and then parted company as it unfortunately is the fate of so many Indian concerns and there were disputes and litigations in Court
The Civil Appeal No 1510 of 1987 arises from a judgment and decision of the Division Bench of the High Court of Gauhati dated 4th June 1987
It appears that that a petition was filed originally by the appellant under sections 397 and 398 read with section 403 of the hereinafter called the Act 
The company petition came to be disposed of on 4th February 1977 in accordance with the compromise arrived at between the parties
The said compromise comprised of inter alia two relevant paragraphs for the present purpose which read as follows 1
Mrs Arati Dutta will take over Chandana TE and Choudhury group will take over Martycherra TE On 25th January 1976
The Bank liability of the Company in respect to Martycherra TE amounting to Rs220000 Approx shall be shared equally of which Rs110000 shall be paid by Mrs Arati Dutta on 25th January 1976 at Silchar in presence of Shri BK Das Advocate and Shri SK Sen Advocate
The entire liability of the Company would be equally shared and for that purpose an independent Auditor shall be appointed by Shri SK Sen Advocate who shall undertake to start the accounting from the 1st week of February 1976
The shares owned by Mrs Arati Dutta and her sons and daughters will be sold to the Company on 25176 and necessary permission shall be taken from Hon ble High Court in this regard
The staff salary and gratuity of the employees of the Head Office of the Hon ble High Court is obtained shall be considered as the Liability of the Company and will be borne by the two parties equally
1073 6
Mrs Arati Dutta shall have to pay another sum of Rs12500 to the Company in addition to her payment of 5 liability of the Company
 Thereafter there were differences between the parties and it could not be adjusted as the parties could not agree as to audit
On 9th November 1982 the parties agreed that no auditor need be appointed in the matter of determination of liability and the matter of determination of liability as per the 1973 Balance sheet should be left entirely to the Court
In accordance with the compromise the parties were asked to submit their Balance sheets regarding the payments made by them which related to liabilities in the Balance sheet as on 31st December 1973
The parties filed their Balance sheets and the learned Single Judge of the High Court computed the liabilities of the parties on that basis
Aggrieved however by the said decision the appellant preferred an appeal before the Division Bench of the said High Court
The first question that was raised before the Division Bench was whether the appeal lay to the Division Bench under section 483 of the Act which dealt with appeals from orders
The said section was as follows 483 Appeals from orders Appeals from any order made or decision given in the matter of winding up of a company by the Court shall lie to the same Court to which in the same manner in which and subject to the same conditions under which appeals lie from any other order or decision of the Court in cases within its ordinary jurisdiction
 It was submitted by learned counsel that though the first application by the appellant was under sections 397 and 398 read with section 403 of the Act the same could be taken in the matter of winding up of a company to which the reference has been made in section 483
On the other hand it was submitted that no appeal lay
It appears to us that though this present application was relating to sections 397 and 398 and as it arises in respect of the orders passed under sections 397 and 398 of the Act the provisions of section 483 would be attracted and an appeal would lie to the Division Bench
This conclusion seems to follow from an analysis of the sections as interpreted by the various decisions of this Court as well as one judgment of the Delhi High Court to which we will refer
However it is sufficient for the present purpose for us to refer to the observations of this Court in Shanta Genevienve Pommerat  Anr
vs Papers Pvt Ltd  Ors
AIR 1983 SC 269 where this Court observed that an appeal under sections 397 and 398 read with 403 of the would lie to the same 1074 court to which in the same manner in which and subject to the same conditions under which the appeals lie from any order or decision of the court in cases within its ordinary jurisdiction
This Court made the following observations at page 269 of the report Now an order under sections 397 398 and 403 of the  on the face of it cannot be said to be an order made or decision given in the matter of the winding up of a company
Relief undoubtedly under section 397 andor 398 is in fact an alternative to winding up
No doubt order under sections 397 or 398 could be an order made or decision by the High Court
Having jurisdiction under the the appeal will lie to the Division Bench of the same High Court
This is not disputed
Chapter XLII of the Bombay High Court Rules provides for appeals to appellate Court
The Rules make provision for certain type of appeals to be placed in the first instance for admission before a Bench of the High Court to be appointed by the Chief Justice
It is not in dispute that the appeal preferred by the present appellants was not one such appeal which can be placed for admission under Rule 966 A and it follows from this Rule that the appeals other than those mentioned in that Rule are not to be placed for admission
This point is no more res integra in view of the decision of this Court in Ms Golcha Investment P Ltd vs Shanti Chandra Bafna AIR wherein after considering the provision contained in Rule 966 A it was held that appeals other than those set out in the Rule are not to be placed for admission and they were entitled to be admitted as a matter of course
This Court accordingly quashed the order dismissing the appeal in limine observing that the appellate court erred in summarily dismissing the appeal because it was bound to entertain the same and dispose it of on merits
This observation will mutatis mutandis apply to the present appeal
 References may also be made to the decisions of this Court in Shankarlal Aggarwal  Ors
vs SL Poddar  Ors AIR 1965 SC 507 Ms Golcha Investments P Ltd vs Shanti Chandra Bafna supra and Ms Tarapose  Co vs Cochin Shipyard Ltd  The Delhi High Court in Gokulchand D Morarka and another vs Company Law Board and others 1075 correctly in our opinion explained the position
There the High Court found that pending the petition for winding up of the company filed by two of its creditors for failure to pay a debt in spite of statutory notice the Company Law Board had filed a petition under sections 397 and 398 of the and in an application applied for interim reliefs of removal of the sole Director and Constitution of a Board to manage the Company
The Company Judge passed ex parte orders restraining the Company from disposing of its assets and restraining debenture trustees from enforcing their rights
Thereupon an application was filed under section 442 for stay of the petition and that petition under sections 397 and 398 was filed by 125 shareholders and a Bank has also filed another winding up petition claiming a large money
Pending the winding up petitions the Company Judge heard two applications together and passed a common order for removal of the sole director and constitution of a Board of Directors with a retired Judge as the Chairman
Appeals were taken to a Division Bench against another order of the Company Judge
It was held over ruling the preliminary objections that the order passed by the Company Judge was appealable under section 483 of the because firstly any order passed under section 397 or section 398 was one which was passed in lieu of winding up and hence it was in the matter of winding up and secondly the order passed in CA No 323 of 1971 expressly fell within the scope of section 442 as the order had been passed after at least two applications had been filed for the winding up of the Company
The Court further held that there was nothing in section 483 of the  which took away or curtailed the right of appeal provided by section 51 of the  and clause 10 of the Letters Patent Punjab as applicable to the Delhi High Court and that the jurisdiction conferred on the Bombay Judge of the High Court under section 10 of the was none other than its ordinary civil jurisdiction and appeal lay also under clause 10 of the Letters Patent to a Division Bench from the order of the Company Judge
In this case in the High Court of Gauhati however unlike the Bombay High Court or the Calcutta High Court or the Delhi High Court no Letters Patent was applicable to the Gauhati High Court
It was therefore held that there was no provision for an appeal to the judgment of the learned Single Judge of the High Court
In our opinion the decision in Shankar Lal Aggarwal  Ors
vs Shankar Lal Poddar  Ors
supra of this Court indicated the true position where 1076 this Court held that section 202 of the Companies Act 1913 was in parimateria with the present section
This Court preferred the view of the Chief Justice Chagla of the Bombay High Court reported in Bachharaj Factories Ltd vs Hirjee Mills Ltd AIR 1955 Bombay 355 to the view expressed by the Calcutta High Court in Madan Gopal Daga vs Sachindra Nath Sen AIR 1928 Calcutta 295 wherein it was held that an order or the decision made or given in the matter of winding up of a company to be appealable had to satisfy the requirements of clause 15 of the Letters Patent
This interpretation was not accepted by other High Courts and the Bombay High Court held differently
The view of the Bombay High Court was preferred by this Court in the aforesaid decision and it was observed as follows We thus agree with Chagla CJ that the second part of the section which refers to the manner  and the conditions subject to which appeals may be had  merely regulates the procedure to be followed in the presentation of the appeals and of hearing them the period of limitation within which the appeal is to be presented and the forum to which appeal would lie and does not restrict or impair the substantive right of appeal which has been conferred by the opening words of that section
 In our opinion this position is clear from the observation of this Court in Shankar Lal Aggarwal  Ors
vs Shankar Lal Poddar  Ors supra that the appeal lies to the same High Court irrespective of the powers under the Letters Patent
Sections 397 and 398 read with section 483 indicate that the appeal would lie in the same manner to the same court and naturally and logically an appeal from the decision of the Single Judge would lie to the Division Bench
This in our opinion follows logically from the ratio of decision of this Court in Shankarlal Aggarwal  Ors
vs Shankarlal Poddar  Ors
supra as well as other decisions referred hereinbefore
It is true that there is perhaps no procedure to file an appeal from the decision of the learned Single Judge of the Gauhati High Court
If that is so rules should be framed by the High Court in its jurisdiction of Rule making power for filing and disposal of such appeals
But absence of the procedural rules do not take away a litigant s right to file such appeals when the statute confers such a right specifically and the jurisdiction of the High Court to dispose of such an appeal if so filed
We therefore propose to deal with the decision of the High Court
Here we are further helped by the fact that there is an appeal 1077 from the decision of the learned single judge being Appeal No 151187
In either view of the matter the view taken by the High Court is before us
As noted the learned single judge was asked by parties by agreement to compute the liabilities in view of the failure of the parties to agree to another auditor
We have heard Sree Ghosh learned counsel for the appellant and we have also heard Sree AK Sen learned counsel for the respondent
Sree Sen s contention was that the current liabilities came to a sum of Rs66584163
He further submitted that the parties having agreed to divide the liabilities equally the liability to the share of the appellant came to a sum of about Rs332 lacs
As the appellant had paid a sum of Rs136 lacs the contention of the appellant was that the appellant has to pay a further sum of Rs2 lacs
In the alternative it was urged by the appellant that what could be demanded from the appellant was the liabilities which were outstanding and not paid off by the time the settlement had been arrived at between the parties in January 1976
But having regard to all the events and terms of settlement we are in agreement with the Division Bench of the High Court that so far as the Bank liability of Martycherra TE was concerned the same had to be taken at the figure of Rs220000 as stated in clause 2 of the Agreement and not at Rs628000 and odd as given in the Balance sheet of 31st December 1973
The Division Bench computed the liability which came to a total of Rs163467546 which has computed after deducting a sum of Rs220000 which was governed by clause 1 and it comprised of Bank Liability
The Division Bench took into consideration that the appellant had paid a sum of Rs13603806 after the compromise
She had not paid anything more than this
Therefore it follows that only a sum of Rs68129967 was payable by the appellant to the respondent
The Division Bench in our opinion correctly modified the determination on that figure and that is the sum which should be the liability of the appellant
Sree Ghosh learned counsel for the appellant tried to submit before us that a sum of Rs13603806 should be given credit in computing the liability of the appellant and according to him the Division Bench fell into an error in not deducting this liability of his client
We are unable to agree with this view
In the aforesaid view of the matter we uphold the direction of the Division Bench in so far as they computed the liability and direct that the appellant would pay that sum to the respondent in settlement of the dues referred hereinbefore
sum of Rs13603806 was directed to be paid at the time of the admission of the appeal by the Division Bench of the High Court
If that money has been paid or realised by the respondent the appel 1078 lant would pay the balance amount of Rs68129967 and if the money is paid the respondent will by virtue of this order be entitled to withdraw the same and give credit to the appellant for the same
The balance sum will be paid by 15th March 1988
In default of payment by that date the amount will carry 18 interest
The appeal is disposed of accordingly by so holding
In view of the aforesaid position decision in CA No 151187 which is from the decision of the learned Single Judge no longer survives and is disposed of accordingly
SLP C No 8152 of 1987 which is a cross petition filed against the decision of the Division Bench of the Gauhati High Court no longer survives and is disposed of accordingly
Parties will pay and bear their own costs
NPV Appeal disposed of


Summary:
 large number of teachers working in the educational institutions governed by the Uttar Pradesh Intermediate Education Act 1921 were appointed or promoted on an ad hoc basis
The question of regularisation of their services engaged the attention of the State Government and it was decided to amend the Act by an Ordinance
Section 16 GG was accordingly introduced on April 21 1977
The Ordinance was replaced by the Uttar Pradesh Education Laws Amendment Act 1977
The appellant and respondent No 1 were both appionted as Assistant Teachers in an Intermediate College with effect from July 8 1967
Respondent No 1 was promoted by the management as Lecturer in Hindi on an ad hoc basis with effect from March 1 1976
The District Inspector of Schools approved of it on October 5 1976
Subsequently on November 20 1976 he again made an order promoting both the appellant and respondent No 1 as Lecturers in Civics and Hindi respectively on an ad hoc basis
Their services came to be regularised by virtue of the new provision
section 16 GG with effect from April 21 1977
After their services were so regularised dispute arose regarding the seniority
While the first respondent claimed seniority over the appellant on the basis of his appointmentpromotion made on March 1 1976 the appellant claimed that he being older than the first respondent was entitled to be treated as senior by virtue of the second part of clause b of regulation 31 of the Regulations framed under the Act
The District Inspector of Schools came to the conclusion that the fortuitous appointmentpromotion of the first respondent on March 1 1976 could not have any effect on the question of seniority between 1050 them and held that since the appellant and the first respondent had been accepted to be promoted in substantive capacity on the same day and since the appellant was older than respondent No 1 the appellant should be considered as senior by virtue of the second sentence in clause b of regulation 31 of the Regulations
Aggrieved by the aforesaid decision the first respondent filed a writ petition before the High Court which was allowed the order of the Disctrict Inspector of Schools was set aside and it was declared that the first respondent was senior to the appellant on the ground that the first respondent had been promoted to the post of lecturer on March 1 1976 pursuant to certain orders issued under the Act which continued to be in operation until section 16GG was brought into force
Allowing the appeal by Special Leave
 HELD 1
The appellant is senior to the first respondent
1056E 21 What is crucial for the purposes of the case is the date from which the appellant and the first respondent should be deemed to be holding their posts in substantive capacity
Section 16GG of the Act clearly lays down that any teacher whose services are regularised should be deemed to have been appointed in a substantive capacity with effect from the date of its commencement
It does any say that the services of such teachers should be deemed to have been regularised with effect from the date from which they were continuously officiating in the post in question
The date of commencement of the section being April 21 1977 both the appellant and the first respondent who were by then holding the posts of Lecturers on an ad hoc basis are to be deemed to have been appointed in a substantive capacity on the same date that is April 21 1977
1055G H 1056A 22 On the question of seniority cl
b of Regulation 31 of the Regulations provides that the seniority of teachers in a grade shall be determined on the basis of their substantive appointment in that grade and if two or more teachers were so appointed on the same date seniorty should be determined on the basis of age
1056C In the instant case the appellant is older in age than the first respondent
He should therefore be treated as senior to the first respondent by reason of the second sentence in cl
b of Regulations 311056E F 1051 3
The High Court omitted to consider the effect on the words with effect from the date of the commencement of this section  in subs
1 of section 16GG of the Act and also sub section
2 of that section which provides that every teacher deemed to have been appointed in a substantive capacity under sub s1 should be deemed to be on probation from the date of the commencement of the section
1056B C