TMI Blog2004 (11) TMI 334X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions 433, 434 and 439 of the Companies Act praying for winding up of the respondent-company on the ground that the respondent-company has become insolvent and that it is unable to pay its debt. It is an admitted case of the parties that OA No. 154/2001 is also pending adjudication before the Debt Recovery Tribunal-II, Delhi between the parties hereto, which was also initiated on the basis of a petition/application filed by the appellant herein praying for recovery of the amount due and payable to it. The said proceeding before the Debt Recovery Tribunal was instituted by the appellant prior to the filing of the winding up petition. 3. In the aforesaid company petition, an objection was taken by the respondent that the petition is not maintainable as the appellant has already chosen a forum of recovery, i.e., before the Debt Recovery Tribunal and, therefore, the said company petition is not maintainable. The learned Company Judge took up the aforesaid issue for consideration. After referring to the records and various decisions it was held by the learned Company Judge vide orders dated 31st October, 2002 that the said petition should be dismissed for the reason that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for recovery of its alleged dues. 8. Mr. Rajiv Nayar, appearing for RPG Transmission Ltd., submitted before us that the Debt Recovery Tribunal has exclusive jurisdiction in respect of the claim for recovery of the amount allegedly due and payable and, therefore, the same subject-matter cannot be agitated before any other Tribunal or before the Company Court. It was submitted that the Debt Recovery Tribunal and the Company Court have concurrent jurisdiction in respect of recovery of the dues and, therefore, when recourse is taken to one remedy, the other remedy is barred. In support of the said contention, the Counsel relied upon the decision of the Supreme Court in Allahabad Bank v. Canara Bank AIR 2000 SC 1535. Learned Senior Counsel also referred to and relied upon the provisions of sections 17, 18 and 34 of the RDB Act. Reliance was also placed on the decision of Supreme Court in Damji Valji Shah v. Life Insurance Corpn. of India AIR 1966 SC 135 for the proposition that in view of the provisions of sections 18, 19 and 34 of RDB Act, the Debt Recovery Tribunal has the exclusive jurisdiction to adjudicate on the subject-matter and, therefore, there cannot be a parallel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es by the Banks and Financial Institutions and, therefore, according to him, the provisions of the said Act, namely, RDB Act would take precedence over the provisions of the General Act, namely, the Companies Act, 1956 and, therefore, the petition filed before the Company Court is misconceived. 10. On behalf of the company, the Counsel further submitted that in case two or more remedies are available to the petitioner, it is for the petitioner to choose one of the remedies available before him and once he opts for a particular remedy, then in that event no other remedy would be available to him. In support of the said contentions, the Counsel relied upon the decision of this Court in Ramaswamy Palledar v. Secretary to the Government of NCT of Delhi 2000 (56) DRJ (Suppl.) 646 and also the decisions of the Supreme Court in Punjab State Electricity Board v. Bassi Cold Storage 1994 Supp. (2) SCC 124 and Solidaire India Ltd. v. Fairgrowth Financial Services Ltd. [2001] 30 SCL (SC). 11. As against the aforesaid submissions it was submitted on behalf of the two banks, namely, The Bank of Nova Scotia and ICICI Bank Ltd., that winding up proceedings under the Companies A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s just and equitable that the company should be wound up; ( g )if the company has made a default in filing with the Registrar its balance sheet and profit and loss account or annual return for any five consecutive financial years; ( h )if the company has acted against the interests of the sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency or morality; ( i )if the Tribunal is of the opinion that the company should be wound up under the circumstances specified in section 424G : Provided that the Tribunal shall make an order for winding up of a company under clause ( h ) on application made by the Central Government or a State Government." 14. Preamble to the RDB Act as also sections 17, 18 and 34 provide as under: " Preamble. An Act to provide for the establishment of Tribunals for expeditions adjudication and recovery of debts due to banks and financial institutions and for matters connected therewith or incidental thereto. Section 17. Jurisdiction, powers and authority of Tribunals. (1) A Tribunal shall exercise, on and from the appointed day, the jurisdiction, powers and authority to ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so held that by virtue of section 18 the jurisdiction of any other Court or authority which would otherwise have had jurisdiction but for the provisions of the Act, is ousted and the power to adjudicate upon the liability is held to be exclusively vested in the Tribunal. The Supreme Court, however, hastened to add that this exclusion would not, however, apply to the jurisdiction of the Supreme Court or of a High Court exercising power under article 226 or 227 of the Constitution. After observing in the aforesaid manner, it was held by the Supreme Court in paragraph 22 of the judgment that the provisions of sections 17 and 18 of the RDB Act are exclusive so far as the question of adjudication of the liability of the defendant to the appellant. 16. In paragraph 25 of the said judgment, the Supreme Court held thus : "Thus, the adjudication of liability and the recovery of the amount by execution of the certificate are respectively within the exclusive jurisdiction of the Tribunal and the Recovery Officer and no other Court or authority much less the Civil Court or the Company Court can go into the said questions relating to the liability and the recovery except as provided in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also whether the remedy provided in the said two Acts are concurrent or exclusive of each other and as to whether or not there is any inconsistency between the two Acts. At this stage, we have to make a special mention of a decision of the Supreme Court in Haryana Telecom Ltd. s case ( supra ) wherein a similar question was raised in respect of Arbitration and Conciliation Act, 1996 vis-a-vis Companies Act. In the aforesaid appeal, the contention raised was that when a winding up petition is filed in respect of an agreement between the parties, which contains an arbitration clause, in that event such disputes, which are the subject-matter of the winding up petition, should be referred to arbitration. The Supreme Court while dealing with the aforesaid plea referred to the provisions of section 8 of the 1996 Act, which provides that the judicial authority before whom an action is brought in a matter governed by an arbitration agreement, would refer the parties to arbitration in accordance with the arbitration agreement. After considering the said provision as also the facts of the said case, the Supreme Court held that what can be referred to the arbitrator is only that dispute o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of the RDB Act, the petition for winding up would not be maintainable. In the said decision, the Bombay High Court referred to the decision of the Supreme Court in Haryana Telecom Ltd. s case ( supra ). In paragraph 5 of the said judgment, the Bombay High Court, after referring to the provisions of sections 17 and 18 of the RDB Act, held as follows : "Section 18 of the RDB Act provides that, on and from the appointed day, jurisdiction of Courts and other authorities in relation to matters specified in section 17 is barred. Section 17 provides that on and from the appointed day, a Tribunal constituted under the RDB Act shall exercise the jurisdiction, powers and authority to entertain and decide applications from the banks and financial institutions for recovery of debts due to such banks and financial institutions . Thus, it is obvious that the exclusion of the jurisdiction of all other Courts and authorities is only to the extent the jurisdiction is specifically vested in the DRT." In respect of the submission that what could be done by the Company Court can equally be done by the DRT under the RDB Act, the Bombay High Court held in paragraph 6 of the said judgment as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dition to the above, Mr. Chandhiok, learned Senior Counsel for the appellant-bank, also made reference to the decision of this Court in Madhya Pradesh Iron Steel Co. v. G.B. Springs (P.) Ltd. [2003] 42 SCL 785 (Delhi). A plea was raised in the said case that in view of pendency of a civil suit for recovery of money on the Original Side of the High Court, the Company Petition filed by the petitioner for winding up of the company could not be entertained. The aforesaid submission that the Company Petition should be dismissed since a civil suit has been filed was not accepted by the learned Single Judge of this Court. It was held in the said decision that admission of a winding up petition would not necessarily and invariably result in recovery of amount due and, therefore, filing of a civil suit for recovery of money is essential since the decree passed in such a suit is executable. 23. In Andhra Steel Corpn. Ltd. v. Bank of Baroda AIR 1995 Cal. 367, it was held by the Calcutta High Court in paragraph 6 as follows : "In my opinion an application for winding up is a special right or remedy given under the Companies Act and the Court while hearing a winding up applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recovery of debts then in that case the provisions contained in the Act of 1993 cannot prevent the Banks or financial institutions in approaching the Company Court for an order of winding up." In paragraph 29, it was held that when the matter is closely examined with reference to both the Acts, it appears that the provisions of section 433( e ) has been interpreted by Their Lordships in a number of decisions that such petitions under sections 433 and 434 of the Companies Act, 1956 are not merely for recovery of debts and it is meant for the benefit of the public at large that such institutions who are unable to pay their debts should not be allowed to function for public purpose. Accordingly, it was observed that the petitions filed under sections 433 and 434 of the Companies Act are not inconsistent with the provisions of the RDB Act rather both the provisions of the Acts can co-exist without doing any harm to the provisions of the RDB Act. 25. The aforesaid decisions referred to at the Bar make it crystal clear that the intention and the purpose for initiating a proceeding under the RDB Act is to recover the amount which is allegedly due and payable to the bank/financial i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rfere with and/or override their respective area of jurisdiction. 26. In our considered opinion there is no inconsistency between the provisions of winding-up and that of the recovery proceedings initiated under the RDB Act and, therefore, the provisions of section 34 of RDB Act would have no application in respect of the proceedings initiated under the provisions of sections 433 and 434 of the Companies Act. 27. There can be no dispute with regard to the proposition sought to be advanced by Mr. Tripathi that in case of inconsistency between the general law and a special law, the special law would override the provisions of the general law and that the latter Act would also have precedence over the earlier Act. We accept the proposition that if there be any inconsistency between the provisions of the RDB Act and that of the Companies Act, it is the RDB Act, which would prevail. But on the other hand, if there is no inconsistency between the two Acts and the provisions of winding up and the provisions of recovery are found to be two distinct remedies and procedures mutually exclusive of each other, in that event we find no reason as to why a financial institution or a bank s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contentions of Mr. Tripathi are misconceived and are accordingly rejected. The contention that the petitioner could choose one of the remedies available in case where two or more than two remedies are available is applicable when the remedy provided for is one and the same but when two different remedies are provided for two different reliefs, in that event the plea of election of remedies is not applicable. We, therefore, hold that the winding up Court is concerned with the issue as to whether or not a company could be declared as commercially insolvent and, therefore, comes within the ambit of provisions of section 433 of the Companies Act. The Debt Recovery Tribunal does not have any jurisdiction to entertain any such application for winding up of a company whether the same is by any bank and/or other financial institution. We also hold that both the remedies and jurisdictions are mutually exclusive of each other and, therefore, there cannot be any inconsistency between the two different remedies provided for in two different legislations. We respectfully agree with the Division Bench decisions of Bombay and Calcutta High Courts referred to above. The legal issue, which arises ..... X X X X Extracts X X X X X X X X Extracts X X X X
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