(COURT OF APPEAL)

MUSTAFA ABDEL HAMID ABUL IZZ  v. GABIR ABDEL HAMID ABUL IZZ

AC-REV-605-1969

AC-REV-62 1-1969

Principles

Civil Procedure—Appointment of a receiver or a manager—Civil Justice Ordinance, s. 146—Courts can appoint a receiver or manager to companies without reference to the provisions of the Companies Ordinance 1925

Civil Procedure—Appointment of a receiver or a manager—Civil Justice Ordinance, s. 146—Court may appoint a receiver or a manager out of its own motion and without any application from either party

Courts can appoint a receiver or a manager to administer the affairs of the companies under the Civil Justice Ordinance, s. 146, without reference to the provisions of the Companies Ordinance 1925, because there are no restrictions in the above Companies Ordinance; restricting the general power of the court to appoint a receiver or a manager.

Obiter dictum: According to the Civil Justice Ordinance, s. 146, the court out of its own motion and without any application from either party, may appoint a receiver when the court thinks fit.

Advocates: Mohamed Ibrahim Khalil & Mirghani

El Nasir & Ahmed Ugool for the applicant

Abdel Rahman Yousif for the respondent 

Judgment

Salah Eddin Hassan J. January 12, 1970:—These two revisions AC REV-605-1969 and AC-REV-621-1969 were raised by Mustafa Abdel Hamid against the order passed by Province Judge, Khartoum, on August 23, 1969 that both parties should sign together until a manager is appointed. Applicant was represented in AC-REV-621-1969 by advocate Mohamed Ibrahim Khalil and in AC-REV-62o- by advocate Mirghani El Nasri and advocate Ahmed Ugool. We decided to combine the record of both revisions because they are contesting the same order.

The historical sequence of events in this litigation could be summarized as follows:

(a) On March 13, 1969 respondent petitioned the High Court and two suits namely CS-20-1969 and CS-21-1969 were allowed against applicant. In both suits there is an allegation of fraudulent conversion by applicant of all the shares of respondent in El Aktan Trading Company, and Abu El Izz Commercial.

(b) On April 2, 1969, the Province Judge issued an order to the various banks not to accept any document or cheque unless jointly signed by both parties.

Applicant objected to this order and after lengthy hearings the court ordered both parties to submit. In the meantime the Sudan Commercial Bank filed a third party application for excepting a certain account from the operation of the order concerning joint signature. This application has not been disposed of up to this moment and we hope that the High Court will give it top priority when the cases come before it.

On April 9 the learned Province Judge passed an order under the Civil Justice Ordinance, s. 146, for the appointment of a manager for both companies; which order he interpreted as discharging the order of joint signature. Against this order two applications for revision were submitted by respondent, namely AC-REV-399-1969 and AC-REV-214-1969, and both revisions were summarily dismissed by His Honour Judge Tawfik on the grounds that the High Court below actually appointed no manager yet and that the decision should have been completed by the actual appointment of a certain manager, and as such both applications are premature.

The cases were sent back to the High Court and at the time when the High Court was considering the appointment of a manager a fresh application was submitted by the respondent to the court for an order providing that the affairs of both companies be co-managed until a manager is appointed. The main ground was that there is grave possibility that the affairs of the company might be seriously mismanaged during the period preceding the appointment of a manager.

Both parties were heard on this application and at last the court made an order that both parties should sign together until a manager is appointed.

The court made a reservation that it will not hesitate to cancel its previous order if applicant (respondent now) tries to hinder the activities of the company.

Against this order are the present applications. The grounds of both applications could be summarized as follows:

(a) The order of joint signature was set aside by Judge Dafalla and it cannot be reimposed again. According to the Civil Justice Ordinance, s. 144, an order for injunction may be discharged and varied or set aside by the court only once and for all.

(b) The last order of joint signatures amounts in fact to a review of the order of Judge Dafalla. This is ultra vires the powers of the Province Judge as he cannot review his own orders without obtaining leave.

(c) The operation of joint signatures is practically difficult and will seriously work to the detriment of the company.

(d) The power to sign has been conferred on applicant by the Board of Directors and hence the legal course open to respondent is to call a meeting of the Board of Directors.

(e) The order appointing a manager has been imposed by the court without anybody asking for it.

Furthermore, applicants moved the court to exercise its power under the Civil Justice Ordinance, s. 172 (2), and decide finally the question relating to the appointment of a manager. It was further raised in this respect that the lower court has no jurisdictive power to pass an order appointing a receiver to a company and there is a special law relating to companies providing for safeguards against abuse of powers of directors and the like which is the Companies Ordinance 1925.

Having considered all these arguments and the references quoted we came to the conclusion that the last order dated August 23, 1969, is neither a revival nor a review of the order which had been cancelled on April 9, 1969. In fact it is a fresh order made in pursuance of a new application submitted on August , in respect of a new situation created by the decision made by Judge Tawfik by authority of the Chief Justice. By this decision the cases were sent back to the High Court to proceed to complete the order of the appointment of a manager by actually appointing one. As the appointment may take time the application dated August was made and a fresh order was imposed relating to joint signature. We agree with the learned Province Judge that the very purpose for which the order of appointing a manager was made will be defeated if he is to allow applicant (defendant) to retain the sole management of the company. At the same time he made the order conditional by saying that the court will not hesitate to cancel its previous order if plaintiff (respondent now) tries to hinder the activities of the company. This leaves it open for applicants to approach the High Court at any time in case of hindrance by respondent.

The reference by some of the learned advocates to call a meeting of the Board of Directors is I believe out of place in view of these disputes. The only place is the Court of Justice.

The request made by applicants to this court to exercise its power under the Civil Justice Ordinance, s. 172 (2), and make a final decision in respect of the order directing the appointment of a manager can only be answered in the affirmative if we are empowered to review the decision made by Judge Tawfik to the effect that the order to appoint a manager is not yet mature until a manager is actually appointed. With due respect we have the misfortune to differ with the learned Judge of the High Court. We believe that once an order to appoint a manager is made it is mature enough to be the subject of proceedings for revision even before the actual appointment of a manager takes place. But the question remains: Are we entitled to review this decision? The majority of the court is of opinion that we cannot. According to the Civil Justice Ordinance, s. 184, and the interpretation thereof in Christos Simos v. Hassan Mohamed Dawoud (1961)S.L.J.R. 67, and also Gabir Abul Izz v. Ahmed Abdel Aziz and Others, AC-REV-160-1969, review may be granted:

(a) When new and important matter or evidence which after the exercise of due diligence was not within the knowledge of the applicant or could not be produced by him when the decree or order was made.

(b) On account of some mistake or error apparent on the face of the record.

(c) If there is any other sufficient cause.

These last words are apparently used to cover exceptional cases where obvious injustice would result by strict adherence to the terms of the decree or order as originally passed.

It has also been repeatedly held in India that a court cannot review its judgment merely because it has come to a different conclusion on further argument and further consideration. Accordingly we believe that mere difference of opinion does not amount to a sufficient cause to justify the review of the decision passed by Judge Tawfik. At the same time we should like to comment by way of obiter dictum that the Civil Justice Ordinance, s. 146, empowers the court out of its own motion and without any application from either party to appoint a receiver for the management or custody of any property movable or immovable and may entrust him with such powers as the court thinks fit. Moreover a receiver or manager for a company can be appointed by the court without reference to the provisions of the Companies Ordinance. This view has been held by the High Court of Allahabad, Lahore, Madras and Mysore. Only Calcutta High Court holding a different view: see Mulla, Code of Civil Procedure (13th ed.,1965), 1536.

Both applications are therefore dismissed with an order that costs be paid by applicants.

Ramadan All Mohamed 1. January 12, 1970:—I quite agree with the judgment of my learned colleague, the Honorable Judge Salah, and the reasons he relied upon. I have not much to say except the following remark.

The learned counsel for applicant—advocate Mirghani—contends that the lower court ought to have relied on the Companies Ordinance1925, in search of jurisdictional basis in appointing a receiver or manager. The learned counsel is urging us to hold the view that in the existence of a special law, i.e. the Companies Ordinance1925, no recourse should have been made to the Civil Justice Ordinance, S.146. He then referred us to the Companies Ordinance1925, SS. 111 and,112 as restricting the general power of the court to appoint a receiver or manager except for the protection of the interests of the debenture-holders. The first leg of this submission is, no doubt, correct. In the existence of a special law recourse should first be had to the provisions of that special law.

It remains to consider then whether there is any provision in the Companies Ordinance1925, restricting the general power of the court to appoint a receiver or manager. The Companies Ordinance1925, ss. 111 and 112, only refers to the duty of registration of appointments of receivers and filing of accounts of receivers respectively, and there is nothing in these provisions which lay any restrictions on the power of the court to appoint receivers or managers. The normal procedure for safeguarding the interests of debenture-holders is to commence a debenture-holder’s action, the first step in which will be the appointment of a receiver. But the discretionary power of the court to appoint receivers in such cases is said not to cover instances where the debentures are not secured by a charge: Harris v. Beauchamp Bros. [1894] 1 Q.B.801.

It seems to me that the learned counsel for applicant had these principles and case law applicable to a debenture-holder’s action in mind. These principles and case-law cannot be taken to apply in the case in hand. Had there been a specific provision in the Companies Ordinance 1925,restricting the general power of the court to appoint a receiver or manager in an action by a shareholder it would have been a valid objection to such an appointment. In the absence of such a restriction the power of the court under the Civil Justice Ordinance, s.146, remains intact

The court has a statutory jurisdiction to appoint a receiver by an interlocutory order in all cases in which it appears to the court to be just or convenient to do so.

B. M. A. Baldo J. January 12, 1970: The important issue in these two applications for revision is the question of joint signature and that of appointing a manager to administer the affairs of the two companies.

In Abul Izz Commercial Company three accounts are kept, a Tractors account operated under first respondent’s signature alone; and Merchandise and Current accounts run under the signature of the managing director with one of the directors or an officer from the management. In 1969 applicant was authorized by the Board of Directors to sign with others. As a result of this resolution, trouble between the parties arose and reached the High Court. It was on April 2, 1969 that His Honour the Province Judge, Khartoum, passed an ex parte order restraining El Nilein Bank from accepting the sole signature of either party; that in effect, means that only the joint signature of the parties would do. On April 8, 1969 His Honour the Province Judge ordered that a manager be appointed under the Civil Justice Ordinance, s. 146, before next session. This is not a subsidiary order as one of the learned advocates for respondent con tends. It is an original order and in effect quashed the previous one, but itself lapsed by the non-appointment of a manager by next session.

On revision against the order of appointing a manager the Honorable Judge of the High Court, Tawfik A/Magid, by authority of the Chief Justice dismissed the application summarily, holding that the application for revision is premature as the manager was not appointed. With due respect to this view of the law I do not agree, as I think an order is an order and once passed by the court is final unless it is made conditional. Whether this order is subject to review by this court or not, it must be stated that a misconception of the law or the facts constitutes sufficient cause for review of an order. But the fact remains that the deadlock created by the directors of these companies could only be solved by the appointment of a manager

The latter order passed by His Honour the Province Judge, Khartoum, re joint signature is a totally different order from the previous one. It cannot be described as a revival of the old order as another of the learned advocates for respondent is suggesting. Furthermore, new circumstances have arisen after the judgment of Judge Tawfik making a dividing line between the last order and the old ones.