Appeal by special leave from the judgment and order dated April 17, 1961 of the Calcutta High Court in Appeal from Original Order No. 132 of 1960. C. Setalvad, Attorney-General of India, M. Banerji and S. N. Mukherji, for the appellant. Mukherjee and P. K. Bose, for the respondent. 1961. December, 5. The Judgment of the Court was delivered by SHAH. J.-Ballygunge Real Property and Building Society Ltd.-hereinafter called the Company-was on January 8, 1958, ordered by the High Court of Judicature at Calcutta to be wound up. On January 18, 1960, the Official Liquidator submitted an application accompanied by a signed statement for an order that the appellant be examined under s. 477 of the Indian Companies Act, 1956. This application was granted ex-parte by Mr. Justice
 K. Mitter on January 18, 1960, and the appellant was served with the order to attend the Court on March 22, 1960, for the purpose of being examined concerning the affairs of the company, and to bring with him and produce at the said time and place the following books and papers, mentioned in Schedule B to the order, viz.,
 Ballygunge Estate (Private) Ltd.-Cash Books, General Ledger, Journal, Minutes Books from 1939 to 1948, Property Register. Ballygunge Building Society Private Ltd.- Cash Books, General Ledger, Journal, Minute Books, Property Register. Ballygunge Real Property Building Society Ltd. (In liquidation)-General Ledger for 1949, and all such other books, papers, deeds, writings and other documents in his custody or power in any way relating to the affairs of the Company. This order was published in public newspapers. The solicitors of the appellant by letters dated February 29, 1960, and March 10, 1960, called upon the Official Liquidator to furnish them with copies of the petition and the report on the basis of which the order was made. The Official Liquidator having informed the solicitors of the appellant that the latter were not entitled to a copy of the report of the official liquidator, the appellant applied by a judges summons for an order recalling vacating, setting aside or modifying the order dated January 18, 1960, and for a direction to the official liquidator requiring him to supply copies of the report of the official liquidator and of the other documents relating to the application and alternatively for an order granting leave to inspect the court records and proceedings of the application and to take copies thereof. The appellant contended that the order made by Mr. Justice Mitter on January 18, 1960, was obtained by suppression of material facts and that, in any event, the order made without notice to the appellant was vexatious and oppressive and amounted to an abuse of the process of Court. He submitted that he was a Director of the Company between the years 1939 to 1953 and had attended meetings of the Board of Directors of the Company and without reference to the records of the meetings of the Board and particularly without reference to the Minute Books, it was not possible for him to recollect any details as to transactions which might have taken place in the Boards meetings. He stated that he was not concerned with the administration, management or the day to day working of the Company, except to the extent of taking part in the Boards meetings, that he never had in his custody the books referred to in the order and that the official liquidator had never asked for or enquired of him about any documents, that he was not aware of the matters on which information was required by the official liquidator and unless those matters were made known to him, it was not possible for him, to answer questions or to give information required of him, that to enable him to answer questions or supply information, it was necessary for him to know the nature of the enquiry and the charges and to inspect the records and documents of the Company and without the assistance of such records and documents his proposed examination would be highly oppressive and harsh and was likely to prove futile. The official liquidator submitted that all the available papers in the books with the liquidator will be made available at the time of the examination of the appellant but he-the official liquidator-was not bound to give information in advance about the nature of the enquiry to do so, he contended, would defeat the purpose of the enquiry. He also submitted that the appellant had no right claim inspection or to obtain copies of the statement which accompanied the judges summons dated January 18, 1960. Mr. Justice Law rejected the application filed by the appellant, holding that the order dated January 18, 1960, was final and that he had no power to review, modify, alter or vary the same, that the order merely summoning for examination under s. 477 of the Companies Act did not affect a partys rights, there being no charge, no complaint and no allegation against him. The learned Judge observed that it was not necessary for the Court in the first instance to determine that the person called upon to furnish information actually possessed that information if the Court has reasons to think, or if even an allegation is made that a certain person is in possession of information which would be of use in the course of winding up, the Court can call upon him to appear in Court and examine him, and that rr. 243 (1) and 243 (2) of Companies (Court) Rules laid down the same procedure as was laid down in In re Gold Company (1879 12 Ch. D. 77 at page 82) and different from the procedure which was laid by r. 195 of the Indian Companies Act, 1913. In the view of the learned Judge the statement of the official liquidator on which the order dated January 18, 1960, was made not being on oath or affirmation was not legal evidence and did not form part of the proceedings of the Court and the appellant could not demand facility for inspection of the statement or copy thereof. Against the order of Mr. Justice Law an appeal was preferred to a Division Bench of the High Court. The High Court held that the order having been initially pass ex parte an application for discharging or modifying the order was in law maintainable at the instance of the appellant but the order in so far as it directed the appellant who was a director of the Company to appear before the Court to be examined touching upon the affairs of the Company was, in the circumstances of the case, desirable and necessary, and that the statement of the official liquidator on which the order dated January 18, 1960, was issued not being an affidavit was not required by the Companies (Court) Rules 1959 to be kept on the file of the liquidation proceedings the statement was a confidential document and was-save by order of the Court-not open to inspection of any person other than the liquidator. The learned judges modified the order in so far as it directed production of the books of account relating to the Ballygunge Estate (Private) Ltd. and the Ballygunge Building Society Private Ltd., because those companies were not parties to the liquidation proceedings. Against the order of the High Court this appeal with special leave has been preferred to this Court. Three questions fall to be determined
 Whether an ex parte order directing the examination of a person under s. 477 of the Indian Companies Act, 1956 is liable to be modified, or vacated on the application of the persons affected thereby
 Whether there is any ground for discharging or modifying the order dated January 18, 1960 and
 Whether the appellant is entitled before his examination to inspect the statement submitted by the official liquidator in support of the application for the order dated January 18, 1960, or to be furnished with a copy thereof. Section 477 of the Indian Companies Act, 1956, provides 477 (1) The Court may, at any time after the appointment of a provisional liquidator or the making of a winding up order summon before it any officer of the company or person known or suspected to have in his possession any property or books or papers of the company, or known or suspected to be indebted to the company, or any person whom the Court deems capable of giving information concerning the promotion, formation, trade, dealings, property, books or papers, or affairs of the company. The Court may examine any officer or person so summoned on oath concerning the matters aforesaid, either by word of mouth or on written interrogatories and may, in the former case, reduce his answers to writing and require him to sign them. The Court may require any officer or person so summoned to produce any books and papers in his custody or power relating to the company but, where he claims any lien on books or papers, produced by him, the production shall be without prejudice to that lien, and the Court shall have jurisdiction in the winding up to determine all questions relating to that lien. If any officer or person so summoned, after being paid or tendered a reasonable sum for his expenses, fails to appear before the Court at the time appointed, not having a lawful impediment (made known to the Court at the time of its sitting and allowed by it), the Court may cause him to be apprehended and brought before the Court for examination. If, on his examination, any officer or person so summoned admits that he is indebted to the company, the Court may order him to pay to the provisional liquidator or, as the case may be, the liquidator at such time and in such manner as to the Court may seem just the amount in which he is indebted, or any part thereof, either in full discharge of the whole amount or not, as the Court thinks fit, with or without costs of the examination. If, on his examination, any such officer or person admits that he has in his possession any property belonging to the company, the Court may order him to deliver to the provisional liquidator or, as the case may be, the liquidator, that property or any part thereof, at such time, in such manner and on such terms as to the Court may seem just. Orders made under sub-sections (5) and (6) shall be executed in the same manner as decrees for the payment of money or for delivery of property under the Code of Civil Procedure, 1908 respectively. Any person making any payment or delivery in pursuance of an order made under subsection (5) or sub-section (6) shall by such payment or delivery be, unless otherwise directed by such order, discharged from all liability whatsoever in respect of such debt or property. Clauses (5), (6), (7) and (8) it may be noted, were inserted by Act 65 of 1960. Section 463 of the Companies Act authorises this Court to make rules for all matters relating to winding up of companies which by the Act are to be prescribed and for other matters. This court has framed Companies (Court) Rules, 1959, out of which rr. 243, 244 and 249, which are material, are as follows -
 Application for examination under Section 477.-(1) An application for the examination of a person under Section 477 may be made ex parte provided that where the application is made by any person other than the Official Liquidator, notice of the application shall be given to the Official Liquidator. The summons shall be in Form 109 and, where the application is by the Official Liquidator, shall be accompanied by a statement signed by him setting forth the facts on which the application is based. Where the application is made by a person other than the Official Liquidator, the summons shall be supported by an affidavit of the applicant setting forth the matters in respect of which the examination is sought and the grounds relied on in support of the summons. Directions at hearing of summons.-Upon the hearing of the summons the Judge may, if satisfied that there are grounds for making the orders, make an order directing the issue of summons against the person named in the order for his examination and or for the production of documents. Unless the Judge otherwise directs, the examination of such person shall be held in Chambers. The order shall be in Form No. 110. Order for public examination under section 478.-(1) where an order is made for the examination of any person or persons under Section 478, the examination shall be held before the Judge provided that in the case of High Court, the Judge may direct that the whole or any part of the examination of any such person or persons, be held before any of the officers mentioned in sub-section (10) of the said Section as may be mentioned in the order Where the date of the examination has not been fixed by the order, the Official Liquidator shall take an appointment from the Judge or officer before whom the examination is to be held as to the date of the examination. The order directing a public examination shall be in Form No. 112. The Judge may, if he things fit, either in the order for examination or by any subsequent order, give directions to the specific matters on which such person is to be examined. By s. 477 the Court is authorised to summon before it (1) any officer of the Company, (2) any person known or suspected to have in his possession any property or books or papers of the Company, and (3) any person known or suspected to be indebted to the company, or any person whom the Court deems capable of giving information concerning the promotion, formation, trade, dealings, property, books or papers or affairs of the company. By r. 243 an application for an order for examination may be made ex parte, and the Company Judge may, if he is satisfied that the interest of the company will be served by the examination of a person-be he an officer of the company or other person make the order. The primary test for making the order is whether it is just and beneficial to the business of the company, But the power conferred by the section is very wide and the Court must guard itself against being made an instrument of vexation or oppression. The order which is made ex-parte is not final it is always open to a person summoned to apply for vacating or modifying the order on the ground that it has been obtained without placing all the requisite materials before the Court or by mis-statement of facts or on other adequate grounds. Rule 9 of the Companies (Court) Rules preserves to the Court its inherent powers to give such directions or pass such orders as may be necessary for the ends of justice or to prevent abuse of the process of Court, and a direction to vacate an order previously made, is in a proper case within the Courts inherent jurisdiction. The relevant provisions of the English Companies Act, 1862 (25 26 Vict. c. 89), the English Companies Act, 1929 (19 20 Geo V c.3) and the English Companies Act, 1948 (11 12 Geo VI c,88) on the question relating to examination of officers of the company or other persons are substantially the same as s. 477 of the Indians Companies Act, 1956, and the principles laid down by the superior Courts in England, which have been assimilated in the practice of Company winding up by the Courts in India are useful in determining the nature of the proceeding. In re North Australian Territory Company (1), Lord Justice Cotton vacated an order in appeal where the order for examination was not made in the interest of the Company in liquidation, but was made with a view to assist the interest of the company in prosecuting an action which has been brought up by the liquidator. In that case the liquidator filed with leave of the Court an action against another company for setting aside an agreement of purchase and obtained an order for affidavit of document, but the Court refused to order production of certain documents, or the examination of the defendant companys secretary on interrogatories, on the ground that discovery was premature. The liquidator then obtained an order under s. 115 of the Companies Act, 1862 for the examination of the secretary before an examiner. The Secretary refused to answer certain questions relating to the matters in issue in the action and the Court held that the liquidator had shown no reason for seeking discovery except to assist him in the action and so to evade the order of the Judge postponing discovery in the action and therefore the witness was justified in refusing to answer the question. Lord Justice Bowen in that case observed that the power conferred by s. 115 is an extra-ordinary power. It is a power of an inquisitorial kind which enables the Court to direct to be examined-not merely before itself, but before the examiner appointed by the Court-some third person who is no party to a litigation. That is an inquisitorial power, which may work with great severity against third persons, and it seems to me to be obvious that such a section ought to be used with the greatest care, so as not unnecessarily put in motion the machinery of justice when it is not wanted or to put it in motion at a stage when it is not clear that it is wanted, and certainly not to put it is motion if unnecessary mischief is going to be done or hardship inflicted upon the third person who is called upon to appear and give information. In re Metropolitan Bank (Heirons case)(1) a similar situation arose. The liquidator who had brought an action on behalf of the company against an officer exhibited interrogatories which had been fully answered by the defendant, and thereafter, the liquidator sought an order from the Court to examine the defendant under s. 115 of the Companies Act, 1862. It was held that the liquidator must satisfy the Court that it would be just and beneficial for the purposes of the winding up. The Court in that case held that the action of the liquidator was vexatious. In In re Mavile Hose, Limited, (2) an order which was regarded as premature and oppressive in the circumstances of the case was discharged by the Court. The Court has therefore jurisdiction in proper cases, i.e. where it is satisfied that the order is vexatious, or oppressive, or where other adequate grounds exist to discharge the same. In our view, the High Court was right in holding that in a proper case it would be open to the Company Judge to vacate an ex-parte order obtained under r. 243 of the Companies (Court) Rules. The jurisdiction to vacate or modify an ex- parte order under r. 243 being granted, the question which falls to be determined is whether the order passed by Mr. Justice Mitter was oppressive or vexatious or otherwise liable to be vacated or modified for adequate grounds. In our view, there is no ground for holding that the order is liable to be vacated or modified. It was never even suggested in the High Court that the order for examination was per se oppressive or vexatious. This is not a case in which the order is sought to facilitate the progress of an action filed by the official liquidator against the appellant, nor is there reason to hold that the order is sought in aid of some collateral purpose-a purpose other than effective progress of the winding up in the interest of the company. The appellant was for many years a director of the company, and therefore concerned with guiding the affairs of the company. He was prima facie a person who would be able to give information likely to promote the purpose of the winding up. It appears also that Mr. Justice Mitter was satisfied on the statement filed by the official liquidator that the appellant had the custody of certain important books of the company. The plea of the appellant that compelling him to submit to examination without permitting him to have access to the books before answering questions put to him is oppressive has no substance. The affidavit filed on behalf of the liquidator clearly states that the relevant records of the company will be made available to the appellant at the time of the examination. The High Court, in appeal, expressed the view that on the merits there was no ground for interference and it was satisfied that it was desirable and necessary that the appellant as a director should be examined. The appellant having been a director of the company during the period when it is alleged the affairs were mismanaged, is likely to be aware of the management and in possession of information conducive to effective prosecution of the winding up and if the learned Judge thought it fit to order that the appellant be examined the order cannot be regarded as either vexatious or oppressive or otherwise liable to be set aside. Counsel for the appellant submitted that the order for examination must be made after considering all the facts and circumstances of the case and that there was nothing on the record to show that the facts and circumstances were considered by Mr. Justice Mitter before he made the order for examination.
The appellant has admitted in his affidavit that he was served with a copy of the order, but he has not chosen to produce it in the Court of First Instance, nor is the order printed in the record prepared for the use of the Court in this appeal. It was never suggested before the High Court that the order was made without considering the material facts and circumstances. The Court has made the order in exercise of the jurisdiction vested in it and in the absence of any material to show that the order was made for a collateral purpose or by the misleading the Court, the appellant is not entitled to have the order vacated. As pointed out by the Master of the Rolls in In re Gold Company Ltd., (1) It must be remembered that both the Chief Clerk and the Judge know a great deal more of the proceedings in the winding-up than the Court of Appeal can know, and there may be various grounds for exercising the discretion, upon which the Court of Appeal cannot possibly form any opinion. We must recollect also that it is not necessary to make out a prima facie case-the probability of a case is enough. A fair suspicion may be well worthy of further investigation, and it may well be worth the expense and trouble of examining witnesses to see whether it is well founded. It is not necessary that the applicant should establish his case before he applies to the Judge he may say to the Judge, I have a strong ground for suspecting that a certain transaction was fraudulent if it is proved to be so we shall get a large some of money will you let me lay out a small sum of money in order to examine a witness or two, so as to ascertain the facts? In that case the Court will exercise a discretion. Mr. Justice Mitter was the company Judge in charge of the liquidation proceedings of the Company. Before him a statement of the official liquidator was produced and in the light of the materials placed before him, he passed the order which is now sought to be modified. This Court cannot proceed upon an assumption that the order for examination of a person who has ceased to be a director prior to the date of the winding up must necessarily be regarded as oppressive or vexatious. A director of a company, past or present, is ordinarily in a position to give useful information about the affairs of the Company in winding up. In the circumstances, we think that the High Court was right in holding that no case was made out for modification of the ex parte order. Two grounds were set up in support of the plea that the appellant before he is examined is entitled to inspect the statement of the official liquidator (a) that it is contrary to rules of natural justice to disallow inspection of the statement on which a judicial order imposing an obligation upon a party is made, and (b) that the rules of procedure prescribed under the Companies (Court) Rules authorise the person summoned to inspect the statement of the official liquidator on which the order is made. Rule 243 expressly contemplates that an application for examination under s. 477 may be made ex parte. An application by an official liquidator is required to be supported by a statement signed by him, but the rule does not contemplate any notice to the parties likely to be affected by the issue of the summons. The proceedings are intended to be confidential. As observed in In re Gold Company (1) by Sir George Jessel R in these mattersthe object being to keep the proceedings secret from the person sought to be affected, and the practice is, and as far as I know always has been, that the liquidator, instead of making an affidavit, simply makes a written statement which he leaves with the Chief Clerk, who thereupon issues an order, and the written statement cannot, be got at by anybody whereas an affidavit can. This practice in our judgement is consonant with right and justice. That proceedings for examination of officers and other persons are confidential is emphasised by rr. 247 and 248. By cl. (2) of r. 247 no person is entitled to take part in the examination under s. 477 except the official liquidator and his advocate but the court may, if it thinks fit, permit any creditor or contributory to attend the examination subject to such conditions as it may impose. Clause (3) provides that notes of the examination may be permitted to be taken by a witness or any person on his behalf on his giving an undertaking that such notes shall be used only for the purposes of re-examination of the witness. It is also provided that on the conclusion of the examination, the notes shall, unless otherwise directed, be handed over to the Court for destruction. Rule 248 provides inter alia, that the notes shall not be open to the inspection of any creditor, contributory or other person, except the official liquidator, nor shall a copy thereof or extract there from be supplied to any person other than the official liquidator, save upon orders of the Court. The proceedings for examination under s. 477 being intended to be commenced only in the interest of the Company and for the purpose of collecting evidence for the effective prosecution of the liquidation are by rules expressly to be commenced by order which may on the application of the official liquidator be made ex parte. The order does not purport to decide any question in dispute between the Company and the persons sought to be examined. It only proceeds upon the satisfaction of the Court that the person should be examined in the interest of the Company, it appearing to the Court just proper that he should be so examined. There is nothing in the scheme of the Act which indicates that an order passed for the examination of a person under. s. 477 may be made only after serving a notice upon such person the Rules expressly contemplate that the order may be made ex parte. Rules of natural justice are therefore not violated merely by the issue of an order requiring a person or persons to appear before a Court for his examination under s. 477. Nor do the rules of procedure framed by this Court for examination under s. 477 contemplate and right of inspection of the statement of the official liquidator. As we have already pointed out, r. 243 contemplates an order ex parte and the scheme of the Rule further emphasises the fact that all these enquiries are intended as already discussed to be confidential proceedings. The person whose examination is sought to be held, has therefore no right to inspect the statement made by the liquidator on which the order of the Court proceeds. Rule 360 of the Companies (Court) Rules provides that every duly authorised officer of a the Central Government, and, save as otherwise provided by these Rules, every persons who has been a director or officer of a company which is being wound up, shall be entitled, free of charge, at all reasonable times to inspect the file of proceedings of the liquidation and to take copies or extracts from any document therein, and, on payment of the prescribed charges to be furnished with such copies or extracts. The right to inspection is given in respect of the file of the proceedings of the liquidation. But the statement made by the official liquidator under Rule 243 does not form part of the file of the proceedings of the liquidation. The statement is not to be made on oath it has to be shown to the Company Judge and the Judge has to apply his mind to the contents thereof, but it does not, as pointed out by Mr. Justice Law, form part of the liquidation proceedings. In the Company (Court) Rules, there is no rule specifying the documents which are to be included in the file of the liquidation proceedings. The order passed by the Court and the summons issued thereon may be regarded as forming part of the file of the proceeding of liquidation, but having regard to the nature of the statement made by the official liquidator on which this Judges order is passed, it is not part of the file of the proceedings of liquidation.
The person summoned even if he is an officer or director of the company, is therefore not entitled to inspection thereof relying upon Rule 360. It was urged by counsel for the appellant that the petition for an order under s.477 was inexorably connected with the statement of the official liquidator, and if the party affected by the order was entitled to inspect the petition, he was entitled to inspect the statement which formed part of the petition. There is however, no warrant for the view that the petition and the statement form part of the same document. The petition has, it is true, to be supported by a statement, but the statement is independent of the petition. It appears that the practice of the Calcutta High Court, prior to the promulgation of the Companies (Court) Rules, was different. Under r. 195 an application for examination of a person under s 195 of the Indian Companies Act 1913, could be made ex parte to the Judge but it had to be by petition verified by the official liquidator stating the facts upon which the application was based. It was also provided that at the hearing, the Judge may, if satisfied that a prima facie case for examination had been made out, direct the issue of a summons or summonses against the person or persons named in the order for examination and or for the production of the documents. Manifestly, the order could be obtained on a petition which was required to be verified by the official liquidator and there had to be a formal hearing and only if a prima facie case for hearing had been made out the order could be made. Under the Companies (Court) Rules a different practice, which approaches the practice prevailing in the English Courts has been set up. The mere fact that under r. 195 of the Calcutta High Court Rules under Act of 1913 the appellant might have had a right of access to the statement on which the order was founded will not be an adequate ground for holding that the earlier practice must continue to prevail. If the appellant is not entitled to inspection of the statement he would certainly, for the same reason, not be entitled to a copy of that statement.
DECISION ??

In the circumstances, we think that the High Court was right in holding that no case was made out for modification of the ex parte order.

There is nothing in the scheme of the Act which indicates that an order passed for the examination of a person under. s. 477 may be made only after serving a notice upon such person the Rules expressly contemplate that the order may be made ex parte. Rules of natural justice are therefore not violated merely by the issue of an order requiring a person or persons to appear before a Court for his examination under s. 477.

Nor do the rules of procedure framed by this Court for examination under s. 477 contemplate and right of inspection of the statement of the official liquidator.

As we have already pointed out, r. 243 contemplates an order ex parte and the scheme of the Rule further emphasises the fact that all these enquiries are intended as already discussed to be confidential proceedings. The person whose examination is sought to be held, has therefore no right to inspect the statement made by the liquidator on which the order of the Court proceeds.

The mere fact that under r. 195 of the Calcutta High Court Rules under Act of 1913 the appellant might have had a right of access to the statement on which the order was founded will not be an adequate ground for holding that the earlier practice must continue to prevail. If the appellant is not entitled to inspection of the statement he would certainly, for the same reason, not be entitled to a copy of that statement.

This Court cannot proceed upon an assumption that the order for examination of a person who has ceased to be a director prior to the date of the winding up must necessarily be regarded as oppressive or vexatious. A director of a company, past or present, is ordinarily in a position to give useful information about the affairs of the Company in winding up.

An application by an official liquidator is required to be supported by a statement signed by him, but the rule does not contemplate any notice to the parties likely to be affected by the issue of the summons. The proceedings are intended to be confidential.

This practice in our judgement is consonant with right and justice. That proceedings for examination of officers and other persons are confidential is emphasised by rr. 247 and 248.

Appeal by special leave from the judgment and order dated April 17, 1961 of the Calcutta High Court in Appeal from Original Order No. 132 of 1960.

It was never suggested before the High Court that the order was made without considering the material facts and circumstances. The Court has made the order in exercise of the jurisdiction vested in it and in the absence of any material to show that the order was made for a collateral purpose or by the misleading the Court, the appellant is not entitled to have the order vacated.

Rule 243 expressly contemplates that an application for examination under s. 477 may be made ex parte. An application by an official liquidator is required to be supported by a statement signed by him, but the rule does not contemplate any notice to the parties likely to be affected by the issue of the summons. The proceedings are intended to be confidential.

The proceedings for examination under s. 477 being intended to be commenced only in the interest of the Company and for the purpose of collecting evidence for the effective prosecution of the liquidation are by rules expressly to be commenced by order which may on the application of the official liquidator be made ex parte. The order does not purport to decide any question in dispute between the Company and the persons sought to be examined.

Rules of natural justice are therefore not violated merely by the issue of an order requiring a person or persons to appear before a Court for his examination under s. 477. Nor do the rules of procedure framed by this Court for examination under s. 477 contemplate and right of inspection of the statement of the official liquidator.

If the appellant is not entitled to inspection of the statement he would certainly, for the same reason, not be entitled to a copy of that statement.

Ballygunge Real Property and Building Society Ltd.-hereinafter called the Company-was on January 8, 1958, ordered by the High Court of Judicature at Calcutta to be wound up. On January 18, 1960, the Official Liquidator submitted an application accompanied by a signed statement for an order that the appellant be examined under s. 477 of the Indian Companies Act, 1956.

the appellant was served with the order to attend the Court on March 22, 1960, for the purpose of being examined concerning the affairs of the company, and to bring with him and produce at the said time and place the following books and papers, mentioned in Schedule B to the order

The appellant was for many years a director of the company, and therefore concerned with guiding the affairs of the company. He was prima facie a person who would be able to give information likely to promote the purpose of the winding up. It appears also that Mr. Justice Mitter was satisfied on the statement filed by the official liquidator that the appellant had the custody of certain important books of the company.

It was never even suggested in the High Court that the order for examination was per se oppressive or vexatious. This is not a case in which the order is sought to facilitate the progress of an action filed by the official liquidator against the appellant, nor is there reason to hold that the order is sought in aid of some collateral purpose-a purpose other than effective progress of the winding up in the interest of the company

The appellant was for many years a director of the company, and therefore concerned with guiding the affairs of the company. He was prima facie a person who would be able to give information likely to promote the purpose of the winding up

Justice Mitter was satisfied on the statement filed by the official liquidator that the appellant had the custody of certain important books of the company. The plea of the appellant that compelling him to submit to examination without permitting him to have access to the books before answering questions put to him is oppressive has no substance.

The affidavit filed on behalf of the liquidator clearly states that the relevant records of the company will be made available to the appellant at the time of the examination. The High Court, in appeal, expressed the view that on the merits there was no ground for interference and it was satisfied that it was desirable and necessary that the appellant as a director should be examined.

The appellant having been a director of the company during the period when it is alleged the affairs were mismanaged, is likely to be aware of the management and in possession of information conducive to effective prosecution of the winding up and if the learned Judge thought it fit to order that the appellant be examined the order cannot be regarded as either vexatious or oppressive or otherwise liable to be set aside

The appellant has admitted in his affidavit that he was served with a copy of the order, but he has not chosen to produce it in the Court of First Instance, nor is the order printed in the record prepared for the use of the Court in this appeal. It was never suggested before the High Court that the order was made without considering the material facts and circumstances

The Court has made the order in exercise of the jurisdiction vested in it and in the absence of any material to show that the order was made for a collateral purpose or by the misleading the Court, the appellant is not entitled to have the order vacated

A director of a company, past or present, is ordinarily in a position to give useful information about the affairs of the Company in winding up. In the circumstances, we think that the High Court was right in holding that no case was made out for modification of the ex parte order

The proceedings are intended to be confidential.

But the statement made by the official liquidator under Rule 243 does not form part of the file of the proceedings of the liquidation. The statement is not to be made on oath it has to be shown to the Company Judge and the Judge has to apply his mind to the contents thereof, but it does not, as pointed out by Mr. Justice Law, form part of the liquidation proceedings

In the Company (Court) Rules, there is no rule specifying the documents which are to be included in the file of the liquidation proceedings. The order passed by the Court and the summons issued thereon may be regarded as forming part of the file of the proceeding of liquidation, but having regard to the nature of the statement made by the official liquidator on which this Judges order is passed, it is not part of the file of the proceedings of liquidation

The person summoned even if he is an officer or director of the company, is therefore not entitled to inspection thereof relying upon Rule 360.

The petition has, it is true, to be supported by a statement, but the statement is independent of the petition. It appears that the practice of the Calcutta High Court, prior to the promulgation of the Companies (Court) Rules, was different.

The mere fact that under r. 195 of the Calcutta High Court Rules under Act of 1913 the appellant might have had a right of access to the statement on which the order was founded will not be an adequate ground for holding that the earlier practice must continue to prevail. If the appellant is not entitled to inspection of the statement he would certainly, for the same reason, not be entitled to a copy of that statement

Justice Law rejected the application filed by the appellant, holding that the order dated January 18, 1960, was final and that he had no power to review, modify, alter or vary the same, that the order merely summoning for examination under s. 477 of the Companies Act did not affect a partys rights, there being no charge, no complaint and no allegation against him

and different from the procedure which was laid by r. 195 of the Indian Companies Act, 1913. In the view of the learned Judge the statement of the official liquidator on which the order dated January 18, 1960, was made not being on oath or affirmation was not legal evidence and did not form part of the proceedings of the Court and the appellant could not demand facility for inspection of the statement or copy thereof.

Against the order of the High Court this appeal with special leave has been preferred to this Court

If, on his examination, any officer or person so summoned admits that he is indebted to the company, the Court may order him to pay to the provisional liquidator or, as the case may be, the liquidator at such time and in such manner as to the Court may seem just the amount in which he is indebted, or any part thereof, either in full discharge of the whole amount or not, as the Court thinks fit, with or without costs of the examination

Clauses (5), (6), (7) and (8) it may be noted, were inserted by Act 65 of 1960

It was held that the liquidator must satisfy the Court that it would be just and beneficial for the purposes of the winding up. The Court in that case held that the action of the liquidator was vexatious

The Court has therefore jurisdiction in proper cases, i.e. where it is satisfied that the order is vexatious, or oppressive, or where other adequate grounds exist to discharge the same

In that case the Court will exercise a discretion.

Rule 243 expressly contemplates that an application for examination under s. 477 may be made ex parte. An application by an official liquidator is required to be supported by a statement signed by him, but the rule does not contemplate any notice to the parties likely to be affected by the issue of the summons

It is also provided that on the conclusion of the examination, the notes shall, unless otherwise directed, be handed over to the Court for destruction. Rule 248 provides inter alia, that the notes shall not be open to the inspection of any creditor, contributory or other person, except the official liquidator, nor shall a copy thereof or extract there from be supplied to any person other than the official liquidator, save upon orders of the Court

There is nothing in the scheme of the Act which indicates that an order passed for the examination of a person under. s. 477 may be made only after serving a notice upon such person the Rules expressly contemplate that the order may be made ex parte. Rules of natural justice are therefore not violated merely by the issue of an order requiring a person or persons to appear before a Court for his examination under s. 477

Ballygunge Building Society Private Ltd.- Cash Books, General Ledger, Journal, Minute Books, Property Register. Ballygunge Real Property Building Society Ltd. (In liquidation)-General Ledger for 1949, and all such other books, papers, deeds, writings and other documents in his custody or power in any way relating to the affairs of the Company

Against the order of Mr. Justice Law an appeal was preferred to a Division Bench of the High Court

Rules of natural justice are therefore not violated merely by the issue of an order requiring a person or persons to appear before a Court for his examination under s. 477.

Nor do the rules of procedure framed by this Court for examination under s. 477 contemplate and right of inspection of the statement of the official liquidator.

The primary test for making the order is whether it is just and beneficial to the business of the company, But the power conferred by the section is very wide and the Court must guard itself against being made an instrument of vexation or oppression.

The order which is made ex-parte is not final it is always open to a person summoned to apply for vacating or modifying the order on the ground that it has been obtained without placing all the requisite materials before the Court or by mis-statement of facts or on other adequate grounds.

Justice Mitter was oppressive or vexatious or otherwise liable to be vacated or modified for adequate grounds.

The plea of the appellant that compelling him to submit to examination without permitting him to have access to the books before answering questions put to him is oppressive has no substance.

The Court has made the order in exercise of the jurisdiction vested in it and in the absence of any material to show that the order was made for a collateral purpose or by the misleading the Court, the appellant is not entitled to have the order vacated.

We must recollect also that it is not necessary to make out a prima facie case-the probability of a case is enough.

An application by an official liquidator is required to be supported by a statement signed by him, but the rule does not contemplate any notice to the parties likely to be affected by the issue of the summons. The proceedings are intended to be confidential.

As we have already pointed out, r. 243 contemplates an order ex parte and the scheme of the Rule further emphasises the fact that all these enquiries are intended as already discussed to be confidential proceedings. The person whose examination is sought to be held, has therefore no right to inspect the statement made by the liquidator on which the order of the Court proceeds.

the statement made by the official liquidator under Rule 243 does not form part of the file of the proceedings of the liquidation. The statement is not to be made on oath it has to be shown to the Company Judge and the Judge has to apply his mind to the contents thereof, but it does not, as pointed out by Mr. Justice Law, form part of the liquidation proceedings.

The person summoned even if he is an officer or director of the company, is therefore not entitled to inspection thereof relying upon Rule 360.

There is however, no warrant for the view that the petition and the statement form part of the same document.

-Ballygunge Real Property and Building Society Ltd.-hereinafter called the Company-was on January 8, 1958, ordered by the High Court of Judicature at Calcutta to be wound up.

The appellant contended that the order made by Mr. Justice Mitter on January 18, 1960, was obtained by suppression of material facts and that, in any event, the order made without notice to the appellant was vexatious and oppressive and amounted to an abuse of the process of Court.

Mr. Justice Law rejected the application filed by the appellant, holding that the order dated January 18, 1960, was final and that he had no power to review, modify, alter or vary the same, that the order merely summoning for examination under s. 477 of the Companies Act did not affect a partys rights, there being no charge, no complaint and no allegation against him.

In the view of the learned Judge the statement of the official liquidator on which the order dated January 18, 1960, was made not being on oath or affirmation was not legal evidence and did not form part of the proceedings of the Court and the appellant could not demand facility for inspection of the statement or copy thereof.

The learned judges modified the order in so far as it directed production of the books of account relating to the Ballygunge Estate (Private) Ltd. and the Ballygunge Building Society Private Ltd., because those companies were not parties to the liquidation proceedings.

Section 463 of the Companies Act authorises this Court to make rules for all matters relating to winding up of companies which by the Act are to be prescribed and for other matters.

By s. 477 the Court is authorised to summon before it (1) any officer of the Company, (2) any person known or suspected to have in his possession any property or books or papers of the Company, and (3) any person known or suspected to be indebted to the company, or any person whom the Court deems capable of giving information concerning the promotion, formation, trade, dealings, property, books or papers or affairs of the company.

By r. 243 an application for an order for examination may be made ex parte, and the Company Judge may, if he is satisfied that the interest of the company will be served by the examination of a person-be he an officer of the company or other person make the order.

Rule 9 of the Companies (Court) Rules preserves to the Court its inherent powers to give such directions or pass such orders as may be necessary for the ends of justice or to prevent abuse of the process of Court, and a direction to vacate an order previously made, is in a proper case within the Courts inherent jurisdiction.

In our view, there is no ground for holding that the order is liable to be vacated or modified.

It was never even suggested in the High Court that the order for examination was per se oppressive or vexatious.

This is not a case in which the order is sought to facilitate the progress of an action filed by the official liquidator against the appellant, nor is there reason to hold that the order is sought in aid of some collateral purpose-a purpose other than effective progress of the winding up in the interest of the company. The appellant was for many years a director of the company, and therefore concerned with guiding the affairs of the company.

He was prima facie a person who would be able to give information likely to promote the purpose of the winding up.

It appears also that Mr. Justice Mitter was satisfied on the statement filed by the official liquidator that the appellant had the custody of certain important books of the company.

It was never suggested before the High Court that the order was made without considering the material facts and circumstances.

Rule 243 expressly contemplates that an application for examination under s. 477 may be made ex parte.

There is nothing in the scheme of the Act which indicates that an order passed for the examination of a person under. s. 477 may be made only after serving a notice upon such person the Rules expressly contemplate that the order may be made ex parte.

In the Company (Court) Rules, there is no rule specifying the documents which are to be included in the file of the liquidation proceedings.

The order passed by the Court and the summons issued thereon may be regarded as forming part of the file of the proceeding of liquidation, but having regard to the nature of the statement made by the official liquidator on which this Judges order is passed, it is not part of the file of the proceedings of liquidation.

The petition has, it is true, to be supported by a statement, but the statement is independent of the petition.

The mere fact that under r. 195 of the Calcutta High Court Rules under Act of 1913 the appellant might have had a right of access to the statement on which the order was founded will not be an adequate ground for holding that the earlier practice must continue to prevail. If the appellant is not entitled to inspection of the statement he would certainly, for the same reason, not be entitled to a copy of that statement.

On January 18, 1960, the Official Liquidator submitted an application accompanied by a signed statement for an order that the appellant be examined under s. 477 of the Indian Companies Act, 1956.

This application was granted ex-parte by Mr. Justice
 K. Mitter on January 18, 1960, and the appellant was served with the order to attend the Court on March 22, 1960, for the purpose of being examined concerning the affairs of the company, and to bring with him and produce at the said time and place the following books and papers, mentioned in Schedule B to the order, viz.,
 Ballygunge Estate (Private) Ltd.

This order was published in public newspapers.

The solicitors of the appellant by letters dated February 29, 1960, and March 10, 1960, called upon the Official Liquidator to furnish them with copies of the petition and the report on the basis of which the order was made.

The official liquidator submitted that all the available papers in the books with the liquidator will be made available at the time of the examination of the appellant but he-the official liquidator-was not bound to give information in advance about the nature of the enquiry to do so, he contended, would defeat the purpose of the enquiry.

He also submitted that the appellant had no right claim inspection or to obtain copies of the statement which accompanied the judges summons dated January 18, 1960.

Against the order of the High Court this appeal with special leave has been preferred to this Court.

If any officer or person so summoned, after being paid or tendered a reasonable sum for his expenses, fails to appear before the Court at the time appointed, not having a lawful impediment (made known to the Court at the time of its sitting and allowed by it), the Court may cause him to be apprehended and brought before the Court for examination.

If, on his examination, any officer or person so summoned admits that he is indebted to the company, the Court may order him to pay to the provisional liquidator or, as the case may be, the liquidator at such time and in such manner as to the Court may seem just the amount in which he is indebted, or any part thereof, either in full discharge of the whole amount or not, as the Court thinks fit, with or without costs of the examination.

-Upon the hearing of the summons the Judge may, if satisfied that there are grounds for making the orders, make an order directing the issue of summons against the person named in the order for his examination and or for the production of documents. Unless the Judge otherwise directs, the examination of such person shall be held in Chambers. The order shall be in Form No. 110.

In re North Australian Territory Company (1), Lord Justice Cotton vacated an order in appeal where the order for examination was not made in the interest of the Company in liquidation, but was made with a view to assist the interest of the company in prosecuting an action which has been brought up by the liquidator.

the Court held that the liquidator had shown no reason for seeking discovery except to assist him in the action and so to evade the order of the Judge postponing discovery in the action and therefore the witness was justified in refusing to answer the question.

Lord Justice Bowen in that case observed that the power conferred by s. 115 is an extra-ordinary power. It is a power of an inquisitorial kind which enables the Court to direct to be examined-not merely before itself, but before the examiner appointed by the Court-some third person who is no party to a litigation.

In re Metropolitan Bank (Heirons case)(1) a similar situation arose.

It was held that the liquidator must satisfy the Court that it would be just and beneficial for the purposes of the winding up. The Court in that case held that the action of the liquidator was vexatious.

In In re Mavile Hose, Limited, (2) an order which was regarded as premature and oppressive in the circumstances of the case was discharged by the Court.

As pointed out by the Master of the Rolls in In re Gold Company Ltd., (1) It must be remembered that both the Chief Clerk and the Judge know a great deal more of the proceedings in the winding-up than the Court of Appeal can know, and there may be various grounds for exercising the discretion, upon which the Court of Appeal cannot possibly form any opinion.

As observed in In re Gold Company (1) by Sir George Jessel R in these mattersthe object being to keep the proceedings secret from the person sought to be affected, and the practice is, and as far as I know always has been, that the liquidator, instead of making an affidavit, simply makes a written statement which he leaves with the Chief Clerk, who thereupon issues an order, and the written statement cannot, be got at by anybody whereas an affidavit can.

Against the order of Mr. Justice Law an appeal was preferred to a Division Bench of the High Court.

In our view, there is no ground for holding that the order is liable to be vacated or modified.

The Court has made the order in exercise of the jurisdiction vested in it and in the absence of any material to show that the order was made for a collateral purpose or by the misleading the Court, the appellant is not entitled to have the order vacated.

The mere fact that under r. 195 of the Calcutta High Court Rules under Act of 1913 the appellant might have had a right of access to the statement on which the order was founded will not be an adequate ground for holding that the earlier practice must continue to prevail.

It was never even suggested in the High Court that the order for examination was per se oppressive or vexatious.

it is not necessary to make out a prima facie case-the probability of a case is enough. A fair suspicion may be well worthy of further investigation, and it may well be worth the expense and trouble of examining witnesses to see whether it is well founded.

This Court cannot proceed upon an assumption that the order for examination of a person who has ceased to be a director prior to the date of the winding up must necessarily be regarded as oppressive or vexatious.

This practice in our judgement is consonant with right and justice.

The person whose examination is sought to be held, has therefore no right to inspect the statement made by the liquidator on which the order of the Court proceeds.

The appellant has admitted in his affidavit that he was served with a copy of the order, but he has not chosen to produce it in the Court of First Instance, nor is the order printed in the record prepared for the use of the Court in this appeal. It was never suggested before the High Court that the order was made without considering the material facts and circumstances.

As pointed out by the Master of the Rolls in In re Gold Company Ltd., (1) It must be remembered that both the Chief Clerk and the Judge know a great deal more of the proceedings in the winding-up than the Court of Appeal can know, and there may be various grounds for exercising the discretion, upon which the Court of Appeal cannot possibly form any opinion.

It is not necessary that the applicant should establish his case before he applies to the Judge he may say to the Judge, I have a strong ground for suspecting that a certain transaction was fraudulent if it is proved to be so we shall get a large some of money will you let me lay out a small sum of money in order to examine a witness or two, so as to ascertain the facts?

There is nothing in the scheme of the Act which indicates that an order passed for the examination of a person under. s. 477 may be made only after serving a notice upon such person the Rules expressly contemplate that the order may be made ex parte. Rules of natural justice are therefore not violated merely by the issue of an order requiring a person or persons to appear before a Court for his examination under s. 477.

Nor do the rules of procedure framed by this Court for examination under s. 477 contemplate and right of inspection of the statement of the official liquidator.

As we have already pointed out, r. 243 contemplates an order ex parte and the scheme of the Rule further emphasises the fact that all these enquiries are intended as already discussed to be confidential proceedings.

Under the Companies (Court) Rules a different practice, which approaches the practice prevailing in the English Courts has been set up.

This application was granted ex-parte by Mr. Justice
 K. Mitter

The Court has therefore jurisdiction in proper cases, i.e. where it is satisfied that the order is vexatious, or oppressive, or where other adequate grounds exist to discharge the same. In our view, the High Court was right in holding that in a proper case it would be open to the Company Judge to vacate an ex-parte order obtained under r. 243 of the Companies (Court) Rules.

This is not a case in which the order is sought to facilitate the progress of an action filed by the official liquidator against the appellant, nor is there reason to hold that the order is sought in aid of some collateral purpose-a purpose other than effective progress of the winding up in the interest of the company.

It appears also that Mr. Justice Mitter was satisfied on the statement filed by the official liquidator that the appellant had the custody of certain important books of the company.

A director of a company, past or present, is ordinarily in a position to give useful information about the affairs of the Company in winding up.

The right to inspection is given in respect of the file of the proceedings of the liquidation. But the statement made by the official liquidator under Rule 243 does not form part of the file of the proceedings of the liquidation.

But the power conferred by the section is very wide and the Court must guard itself against being made an instrument of vexation or oppression.

The appellant was for many years a director of the company, and therefore concerned with guiding the affairs of the company. He was prima facie a person who would be able to give information likely to promote the purpose of the winding up.

The appellant having been a director of the company during the period when it is alleged the affairs were mismanaged, is likely to be aware of the management and in possession of information conducive to effective prosecution of the winding up and if the learned Judge thought it fit to order that the appellant be examined the order cannot be regarded as either vexatious or oppressive or otherwise liable to be set aside.

The order does not purport to decide any question in dispute between the Company and the persons sought to be examined. It only proceeds upon the satisfaction of the Court that the person should be examined in the interest of the Company, it appearing to the Court just proper that he should be so examined.


This is an appeal with special leave under article 136 of the Constitution against the order of the High Court of Judicature at Bombay, refusing to call for a statement of case from the Income-tax Appellate Tribunal under section 66(2) of the Income-tax Act. The appellants are a registered firm carrying on the business of money- lending and speculation in silver and shares. The partners of the appellants firm were also partners of Messrs. Morarka Co., who were the managing agents of the Sholapur Spinning and Weaving Company Ltd. - hereinafter called the Sholapur Mills. The firm commenced business in August, 1942. In Samvat year 2000 (November, 1943, to October, 1944) the appellants purchased seventeen ordinary shares of the Sholapur Mills and thereafter they purchased 82 more ordinary shares between November, 1944, and October, 1948. By November, 1948, the appellants held 99 ordinary shares. The appellants also purchased at diverse times 6,780 preference shares of the Sholapur Mills. All these shares were entered in the books of account of the appellants as stock-in-trade and valued accordingly at the end of each accounting period. During all these years, not a single shares, ordinary or preference, was sold by the appellants. The following table sets out the profit and loss in respect of these shares calculated by the appellants according to the method of valuation of stock adopted by the appellants. Year of Account Assessment year Ordinary shares Preference shares (Maru) Rs. Rs. 2000-01 1945-46 Loss 30,802 Nil. 2001-02 1946-47 Loss 35,468-8-0 Nil. 2002-03 1947-48 Profit 72,545 Nil. 2003-05 1949-50 Loss 3,21,831 Loss 12,020
The appellants submitted their returns for income-tax in respect of the assessment years 1945-46, 1946-47 and 1947-48 with the Income-tax Officer respectively on July 27, 1948, November 11, 1948, and May 23, 1949. In the proceedings for assessment of tax in the assessment years 1945-46 and 1946-47, the Income-tax Officer disallowed the loss claimed holding that the shares formed the appellants capital investment. In the assessment year 1947-48, the Income-tax Officer excluded from the return the amount of profit alleged to have resulted to the Appellate Assistant Commissioner by three orders dated May 4, 1951, the shares of the Sholapur Mills were held to be stock-in-trade and the profits or losses computed according to the method of valuation adopted by the appellants were directed to be taken into account in assessing the taxable income. These orders were not challenged in appeals to the Income-tax Appellate Tribunal. In the assessment year 1948-49, the appellants did not furnish return and they were assessed to tax under section 23(4) of the Income-tax Act. For the assessment year 1949-50, the appellants furnished their return claiming that they incurred a loss of Rs. 3,33,851 in the shares of the Sholapur Mills. This was computed on the alleged difference between the market value of the shares at the close of the previous year of account and the market value at the end of the accounting period, the shares being treated as stock-in-trade. The Income-tax Officer found that the appellants had inflated the loss by Rs. 1,85,000 and that the shares being capital investment and not stock-in-trade, the loss could not be allowed as a revenue deduction. The Appellate Assistant Commissioner disagreed with the view of the Income-tax Officer and held that the shares were the stock-in-trade of the appellants, but agreeing with the Income-tax Officer he held that the loss had been inflated by Rs. 1,85,000. Against this order, the Income-tax Officer appealed to the Income-tax Appellate Tribunal which reversed the order of the Appellate Assistant Commissioner and restored the order of the Income-tax Officer. The Tribunal held that the mere fact that in the previous years the shares were treated as stock-in-trade and the profits and losses in respect thereof were included in the taxable income of the appellants did not preclude the Tribunal from arriving at the conclusion that the shares were capital investment. They substantially confirmed the view of the Income-tax Officer on the facts found. An application submitted by the appellants for a reference under section 66 (1) of the Income-tax Act of the following questions was rejected by the Tribunal.
 Whether the Tribunal misdirected itself in law and or acted without any evidence in finding that the investment of the assessee in the shares of the Sholapur Mills was a capital investment and not its stock-in-trade ? Whether in any event in view of the assessments made for the years 1945-46, 1946-47 and 1947-48 and the Appellate Assistant Commissioners order for these three years, it was open to the department to hold for the assessment years 1949-50 that the said shares do not represent the assessees stock-in-trade ? Whether the Tribunal misdirected itself in law in omitting to consider certain material facts which were taken into account by the Appellate Assistant Commissioner and expressly maintained in the Appellate Assistant Commissioners order, including the fact that the assessee had been holding shares in several other companies as stock- in-trade and this position has been accepted by the department although in those shares there have been preferred with special leave. In our view, the High Court was right in refusing to call for a statement of the case under section 66(2) of the Income-tax Act. The conclusion of the Tribunal was based on inferences of fact raised from materials before the taxing authorities. The conduct of the appellants clearly indicated that even though they were dealing in shares of other companies, the shares of the Sholapur Mills were treated by them as capital investment for the purpose of maintaining their managing agency. The number of shares held by the appellants went on increasing from time to time and not a single share was ever sold. The Tribunal pointed out that the returns for the assessment years 1945-46, 1946-47 and 1947-48 were filed by the appellants after they knew that there were wide fluctuations in the quotation of the shares of that company. They also referred to the circumstance that the appellants were interested in the managing agency of the Sholapur Mills and that every member of the family of the appellants was holding shares

 The conclusion of the Tribunal was amply supported by evidence. It can not be said that because in the previous years the shares were held to be stock-in-trade, they must be similarly treated for the assessment year 1949-50. In the matter of assessment of income-tax, each years assessment is complete and the decision arrived at in a previous year on material before the taxing authorities cannot be regarded as binding in the assessment for the subsequent years. The Tribunal is not shown to have omitted to consider the material facts. The decision of the Tribunal was on a question of fact and no question of law arose which could be directed to be referred under section 66(2) of the Income-tax Act.
DECISION ??