9911796707
TMI Blog1980 (6) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... he first respondent therein, defaulted to pay rent from December 1, 1976, and sublet the building to respondents 2 to 4. The fifth respondent in the petition was the official liquidator. Respondents 1 and 5 did not contest the petition. Respondents 2 to 4 filed objections denying the sub-lease and setting up an arrangement under which they had paid rent to the first respondent. The third respondent also contended that the petition was not maintainable without the sanction of the liquidation court. During the pendency of the petition, respondents 2 and 3 entered into a compromise with the petitioner and agreed to an order for eviction of the portion in their possession on condition that they would be given a fresh lease on terms mentioned in the compromise. Since the petitioner confined his claim for an order for eviction on the ground of arrears of rent, the question whether there was a sub-lease in favour of respondents 2 to 4 was not gone into. An order for eviction was passed on the ground of arrears of rent. The landlord filed E.P. No. 262 of 1978 in the Munsiff's Court, Cochin, for delivery of the building. Respondents 4 and 5 challenged the order for eviction, on the ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or after the commencement of the Companies (Amendment) Act, 1960. (3) Any suit or proceeding by or against the company which is pending in any court other than that in which the winding up of the company is proceeding may, notwithstanding anything contained in any other law for the time being in force, be transferred to and disposed of by that court. (4) Nothing in sub-section (1) or sub-section (3) shall apply to any proceeding pending in appeal before the Supreme Court or a High Court." It is apposite to mention at this stage that sub-section (1) corresponds to section 171 of the Indian Companies Act, VII of 1913. Sub-sections (2) to (4) were not then in the earlier Act. There is no dispute that in the instant case, the eviction proceedings were initiated before the rent control court after the official liquidator was appointed as the provisional liquidator by the Bombay High Court in Company Petition No. 1 of 1978. The argument put forward is that the petition before the rent control court, viz., R.C.P. No. 27 of 1978, came under the purview of "other legal proceeding" in section 446(1) and, therefore, leave of the winding-up court should have been obtained. There is no cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istribution of assets are not involved, those which are outside the purview of the winding-up court and other courts of law and those which are within the exclusive jurisdiction of other statutory bodies may not come under the purview of section 446. Thus, it has been held in M.K. Ranganathan v. Government of Madras [1955] 25 Comp. Cas. 344 (SC), that a secured creditor who falls outside the purview of the winding-up court, who has the right to realise his security by sale of the mortgaged premises, need obtain leave of the court under section 171 of the Act of 1913 only when intervention of a court is sought. A sale by the receiver of the trustees appointed by mortgagee-debenture-holders without leave of the winding up court was upheld in that case. The Supreme Court had occasion to consider the scope of section 446 in Damji Valji Shah v. LIC of India [1965] 35 Comp. Cas. 755 (SC). The Vishwabharati Insurance Company, which was a composite insurer, passed a resolution on 6th January, 1956, transferring an amount of Rs. 82,000 from the life insurance fund to the general department, probably in anticipation of the impending legislation in relation to the life insurance business. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the expression 'other legal proceeding' in sub-section (1) and the expression 'legal proceeding' in sub-section (2) convey the same sense and the proceedings in both the sub-sections must be such as can appropriately be dealt with by the winding-up court. The Income-tax Act is, in our opinion, a complete code and it is particularly so with respect to the assessment and reassessment of income-tax with which alone we are concerned in the present case. The fact that after the amount of tax payable by an assessee has been determined or quantified its realisation from a company in liquidation is governed by the Act because the income-tax payable also being a debt has to rank pari passu with other debts due from the company does not mean that the assessment proceedings for computing the amount of tax must be held to be such other legal proceedings as can only be started or continued with the leave of the liquidation court under section 446 of the Act. The liquidation court, in our opinion, cannot perform the functions of Income-tax Officers while assessing the amount of tax payable by the assessees even if the assessee be the company which is being wound up by the court. The orders ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on the winding-up court by sub-section (2) of section 446, there would be conflict of proceedings and conflict of decisions. Sub-section (1) is intended to avoid such a situation ; and it confers the ultimate control in the matter on the winding-up court which is entrusted with the function of collecting and distributing the assets of the company according to law. Applying the above principle, it follows that an assessment or reassessment proceeding or a proceeding to impose penalties under the Income-tax Act does not fall within the ambit of sub-section (1) of section 446 of the Companies Act, 1956, as such a proceeding does not come under sub-section (2) of the above section, while sub-section (1) would apply to a claim for arrears of income-tax or any other amount by way of penalty or otherwise, as such a claim falls under sub-section (2)." A Division Bench of the Calcutta High Court held in Mukerjee (S.N.) v. Krishna Dassi [1933] 3 Comp. Cas. 269 , that section 171 of the Indian Companies Act, 1913, was intended to safeguard the company's assets against wasteful and expensive litigation in regard to matters which are capable of determination more expeditiously and more che ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e should be granted to continue the proceedings before the Rent Controller or whether it should be transferred to the winding up court. The case arose under the Indian Companies Act of 1913, which did not contain provisions like those in sub-sections (2) to (4) of section 446 of the Act now in force. The court had no occasion to consider the reasoning adopted in S.V. Kondaskar v. V M. Deshpande [1972] 42 Comp. Cas. 168 (SC), and the other cases already referred to. The decision in In re Osier Electric Lamp Manufacturing Co. Ltd. (in liquidation) [1967] 37 Comp. Cas. 306 (Cal.) arose in connection with an application for leave under section 446 of the Companies Act. The case related to proceedings under the Bombay Rents, Hotel and Lodging House Rates Control Act, the provisions of which are different from those of the Kerala Buildings (Lease and Rent Control) Act. Section 28 of the Bombay Act provided for filing of suits in specified courts which were conferred jurisdiction to entertain them. What the Calcutta High Court held was that in such cases the concerned court and the winding up court had concurrent jurisdiction, and, therefore, taking into account the convenience of partie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 537 that certain of the proceedings taken without leave are null and void it follows that in other cases absence of leave may not have the effect of making the proceedings non est. The principle underlying the maxim expressio unius est exclusio alterius is applicable in such cases. It follows that absence of leave in cases not covered by section 537 would only make the proceedings voidable and the person to safeguard whose interest the provision is incorporated should get the proceedings declared as not affecting his interest. See Roopnarain Ramchandra Private Ltd. v. Brahmapootra Tea Co. (India) Ltd., AIR 1962 Cal. 192. In State of Bihar v. Syed Anisur Rahman [1977] 47 Comp. Cas. 372 (Pat.), the State of Bihar had been paying amounts as per orders of court in discharge of three compromise decrees obtained against a company. It so happened that the company had gone into liquidation prior to the passing of the compromise decree as per order of the Calcutta High Court and an official liquidator had been appointed. Since no leave of the winding up court had been obtained, the State of Bihar moved the concerned court to withhold further payment. That court refused to do so. Nand La ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowing quotation from Mr. Solomon Judah's Commentary on a similar provision in the English Act (pp. 3 & 4): "Whenever proceedings are commenced without leave, the proper course for the liquidator is to apply to the court for stay of the proceedings, and not to plead the omission to obtain leave as a bar to the further maintenance of the proceedings, as in practice, the section has always been worked out by applying to stay the proceedings." It is interesting to note in this connection that the Madras High Court in Krishnamachariar v. Hanuman Bank Ltd. [1963] 33 Comp. Cas. 543 , has taken the view that in a case where the liquidator had notice of an execution sale and obtained adjournment of the sale his conduct amounted to waiver and the execution sale held could not be held to be affected by the provisions of either section 171 or section 232 of the old Companies Act (corresponding to section 446 and 537 of the new Act). Whether the effect of waiver would amount to admission of the claim need not be considered here since the liquidator has not taken any steps to have the order of eviction vacated on the ground of absence of leave. Having allowed the rent control court to pass a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are allowed by law, lie to the district court : Provided that whenever a subordinate judge's court is established in any district at a place other than the place where the district court is stationed, the High Court may, with the approval of the Government, direct that appeals from the decrees or orders of munsiff's courts within the local limits of the jurisdiction of such subordinate judge's court be preferred in such subordinate judge's court: Provided further that the district court may remove to itself from time to time appeals so preferred and dispose of them itself or may, subject to the orders of the High Court, refer any appeals from the decrees and orders of munsiff's courts preferred in the district court to any subordinate judge's court within the district." It is not disputed that a notification has been issued under the proviso to the effect that appeals against the decrees and orders of the munsiff's court, Cochin, are to be filed before the subordinate judge, Cochin. The argument is that once a notification is issued all appeals from the decrees and orders of the munsiff are to be filed before the subordinate judge and, therefore, the subordinate judge's court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal powers and jurisdiction. Under section 39, where the value of the subject-matter does not exceed four thousand rupees, appeals lie to the district court and in every other case to the High Court. Under section 39(3) the High Court is empowered to direct by notification "that appeals lying to the district court from all or any of the decrees or orders passed in an original suit by any subordinate judge shall be preferred to such other subordinate judges as may be mentioned in the notification. When that is done such subordinate judge is to be deemed to be a district court for the purposes of all appeals so preferred". By virtue of this provision the High Court issued direction that appeals lying to the district courts from decrees or orders passed by any subordinate judge in two specified classes of cases "shall be preferred to the senior subordinate judge of first class exercising jurisdiction within such civil court". The question arose whether the senior subordinate judge is a court to which appeals would ordinarily lie. The Supreme Court observed (p. 395) : "In determining the court or courts to which an appeal will ordinarily lie, we have to see which court or courts enter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... done the subordinate judge could have considered the aspect at a preliminary stage and such a course would have enabled the respondent to take other appropriate steps if the revision petition had been held as not maintainable. The case here is one similar to the Full Bench decision in Ramayya v. Venkanraju, AIR 1954 Mad. 864 [FB]. In that case, in the course of an appeal before the High Court, presumably filed under section 47 of the CPC, against a decision of the subordinate judge in appeal against an order of the munsiff, objection was taken that the appeal before the subordinate judge was not maintainable as the matter did not fall under section 47 of the CPC. The Full Bench held that, in the circumstances of the case, it was only fit and proper to set aside the order of the munsiff, in exercise of the revisional jurisdiction. The Full Bench observed [p. 870 ] : "The powers of the High Court under section 115, Civil P.C., are very wide. Under that section, the High Court may call for the record of any case which has been decided by any court subordinate to such High Court and in which no appeal lies thereto and make such order in the case as it thinks fit. Under this section, ..... 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