TMI Blog2001 (3) TMI 897X X X X Extracts X X X X X X X X Extracts X X X X ..... e petition was accepted and notice was issued to the company, the company appeared and opposed the petition by an affidavit in reply. The only point urged in the affidavit in reply dated 8-10-2000 is that it was not commercially insolvent, that it engaged a large number of workers and that winding up of the company would cause hardship to the workers and their families. It was further urged that the respondent had already moved Application No. 1249 of 2000 seeking recovery of certain debts before the Debt Recovery Tribunal ( DRT ) constituted under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 ( RDB Act ). Based on this circumstance, it was urged in opposition to the petition for winding up that the Company Court had no jurisdiction to entertain the winding up petition. Hence, it was prayed that the company petition be dismissed summarily. The argument did not find favour with the learned Company Judge who admitted the petition. Hence, this Appeal. 4. Mr. Shah, the learned Counsel appearing for the appellant, strenuously contended that the judgment of the Supreme Court in Allahabad Bank v. Canara Bank [2000] 4 SCC 406, supports the proposition canv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titution. The jurisdiction of the Tribunal under the RDB Act is only to adjudicate the liability of the respondent before it, ascertained the debt due to the bank/financial institution and issue a certificate for recovery thereof. Once such a certificate of recovery is issued to the Recovery Officer, the Recovery Officer is empowered to execute the same in the manner prescribed under the RDB Act. We find that the jurisdiction to wind up the company is wholly unavailable to the DRT. Hence, what could be done by the Company Court under section 433( e ) could obviously not be done by DRT. 7. We are supported in our view by a judgment of the Supreme Court in Haryana Telecom Ltd. v. Sterlite Industries (India) Ltd. JT 1999 (4) SC 545. In that case, a winding up petition was filed by a creditor before the High Court and the company moved an application under section 8 of the Arbitration and Conciliation Act, 1996, contending, inter alia, that the High Court should refer the matter to arbitration. This contention failed before the learned Single Judge of the High Court and before the Division Bench of the High Court. When the matter came up before the Supreme Court, the Suprem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... challenged in the appeal. The Supreme Court raised and considered the following points : 1. Whether in respect of proceedings under the RDB Act at the stage of adjudication for the money due to the banks or financial institutions and at the stage of execution for recovery of monies under the RDB Act, the Tribunal and the Recovery Officers are conferred exclusive jurisdiction in their respective spheres ? 2. Whether for initiating of various proceedings by the banks and financial institutions under the RDB Act, leave of the Company Court is necessary under section 537 before a winding up order is passed against the company or before provisional liquidator is appointed under section 446(1) and whether the Company Court can pass orders of stay of proceedings before the Tribunal, in exercise of powers under section 442 ? 3. Whether after a winding up order is passed under section 446(1) of the Companies Act or a provisional liquidator is appointed, whether the Company Court can stay proceedings under the RDB Act, transfer them to itself and also decide questions of liability, execution and priority under section 446(2) and (3) read with sections 529, 529A and 530, etc. of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diction to decide questions which were exclusively left to the jurisdiction of the DRT and would have no jurisdiction to transfer the application pending before the DRT to itself for trial, no purpose would be served by insisting on leave being asked from the Company Court before the application could be proceeded with before the DRT. For this reason, the Supreme Court was inclined to hold that there was no need for the Appellant Bank to seek leave of the Company Court to proceed with its claim before DRT or in respect of the execution proceedings before the Recovery Officer. It was also held that such proceedings could not be transferred to the Company Court. 12. Dealing with the provisions of sections 442, 446 and 537, the Supreme Court reiterated the principle laid down in its earlier decisions in Governor General in Council v. Shiromani Sugar Mills Ltd. AIR 1946 FC 16 and Sudarsan Chits (I) Ltd. v. O. Sukumaran Pillai [1984] 4 SCC 657 to the effect that Parliament had enacted the Companies (Amendment) Act, 1960 and added sub-sections (2) and (3) into section 446 with the purpose that instead of allowing the claims to be proceeded with against the Companies in variou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts." 15. The Supreme Court pointed out in Allahabad Bank s case ( supra ) that the Companies Act and the RDB Act can both be treated as special laws and the principle is that, where there are two special laws, the latter will normally prevail over the former, if there is a provision in the latter special Act giving it overriding effect. 16. Dealing with the argument based on sections 529 and 529A, in the light of the provisions of the RDB Act, the Supreme Court held that it will be necessary for the DRT to decide questions of priority bearing in mind the principles underlying section 73 of the Code of Civil Procedure inasmuch as section 22 of the RDB Act gives sufficiently wide power to the Tribunal/Appellate Tribunal to decide such questions of priorities, sub- ject only to the principles of natural justice. In fact, as the Supreme Court pointed out, the powers under section 22 of the RDB Act are much wider than those of Civil Courts and the only restriction on its powers is that principles of natural justice are to be followed. 17. Upon a careful consideration of the judgment in Allahabad Bank s case ( supra ), we are unable to agree with the learned counsel for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of winding up is an discretionary order and where it is possible to ascertain that a large number of employees are likely to be rendered jobless as a result of the order, or where there are other circumstances indicating that the financial stringency is a temporary phase and the company is able to get out of it, there is no need for the Company Court to make an order for winding up. He relied on the judgment of the Company Court of the Gujarat High Court in Rishi Enterprises, In re [1992] 73 Comp. Cas. 271 and the judgment of the Punjab and Haryana High Court in State Trading Corpn. of India Ltd. v. Punjab Tanneries Ltd. [1989] 66 Comp. Cas. 634 . What has been held in these two judgments is unexceptionable. If there is a silver lining, then the dark clouds need not impel the Company Court into admitting the petition for winding up the company. But is there a silver lining at all in the appellant s case ? is the crucial question. We have already referred to the gist of the affidavit in reply filed to oppose admission of the winding up petition. One would have expected the argument to be based on surer foundation. If there was any material presented before the Company Court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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