TMI Blog2013 (5) TMI 739X X X X Extracts X X X X X X X X Extracts X X X X ..... PPL shall therefore pay interest to MPL at 6% per annum on the sums due. C.A filed under Section 446(2)(b) proceeded on the wrong assumption that this liability was yet to be determined. However, it is within the inherent powers of this Court to substitute the proper and applicable provision even if a wrong provision of law has been relied upon or if the application is filed under a wrong provision of law. Pertinent to note, even an order passed by a statutory authority under a wrong provision of law would be held valid once it is established that such authority had the power to make such order under another provision. This being the position with orders passed by authorities, a party taking recourse to a wrong provision of law while approaching the Court cannot be placed in a worse situation. As pointed out in BORPUKHURIE TEA ESTATE V/s. PRESIDING OFFICER, INDUSTRIAL TRIBUNAL (1978 (3) TMI 182 - SUPREME COURT OF INDIA) charged with the duty of administering justice, have to remember that it is not the form but the substance of the matter that has to be looked into and parties cannot be penalized for inadvertent errors committed by them in the conduct of cases. Once the rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d directing SPPL to pay the amounts as per the order dated 03.10.2001 of the Board for Industrial and Financial Reconstruction (BIFR) in Case No.101 of 1994, along with interest. Aggrieved thereby, SPPL filed OSA No.13 of 2007. The application to suspend the operation of the order dated 05.01.2007 in C.A.No.1074 of 2006 was however dismissed by a learned Division Bench of this Court on 17.04.2007. The Division Bench observed that the order in the company application did not suffer from any illegality and accordingly dismissed the interim application seeking suspension thereof. However, the OSA itself came to be allowed by another learned Division Bench of this Court on 16.07.2007. The Division Bench was of the opinion that the objections of SPPL with regard to jurisdiction and limitation had remained unanswered and that apart, the documents which were pressed into service by it at that stage, including the order dated 06.10.1999 passed by the BIFR, were not considered earlier and therefore as the principal questions had remained unanswered and as additional evidence was now forthcoming, the Bench deemed it appropriate that the matter should be considered afresh. The company applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C No.2 of 2006 to add him as an applicant in C.A.No.1074 of 2006 in the place of SBI or in the alternative, to substitute him as the applicant in the said C.A. in the place of SBI. C.A.No.889 of 2008 was filed by SPPL to permit it to file additional documents as per the order dated 16.07.2007 passed in OSA No.13 of 2007. However, SPPL thereafter sought permission to withdraw the said application and by order dated 02.09.2011, C.A.No.889 of 2008 was dismissed as withdrawn taking note of the fact that SPPL had filed C.A.No.1003 of 2011 in the meanwhile. In C.A.No.1003 of 2011, SPPL reiterated its prayer in the earlier application to permit it to file additional documents. By order dated 28.10.2011, the said application was allowed. As stated supra, MPL's case before the BIFR was numbered as Case No.101 of 1994. The record of the BIFR's hearing in the said case on 06.10.1999, wherein representatives of MPL, SBI and SPPL participated, reflects that the APSFC, vide letter dated 05.10.1999, had informed the BIFR that in response to its advertisement for sale of the subject property, SPPL had offered Rs.2.25 Crores which was not acceptable. The BIFR also took note of the fact that SPP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the assets of MPL and that it had no objection to the unit being continued to be run by SPPL, subject to payment of lease rentals at the agreed rates permitting the State financial institutions to appropriate the same on pro-rata basis. The representative of SPPL informed the BIFR that they were earlier paying lease rental of Rs.1.5 Lakh, which during the previous year had been increased to Rs.3.50 Lakh. He stated that he had no objection to the winding up of MPL. As the case had been lingering on its file since 1994 and as there was no possibility of reviving MPL at that late stage, the BIFR confirmed its earlier opinion that it would be just, equitable and in public interest if MPL was wound up. In view of the request of the APSFC to take up sale of MPL's assets, the BIFR appointed it as the Selling Agency under Section 20(4) of the SICA. The BIFR further observed that as the unit was running, the present arrangement with SPPL as to continuation of operations should be permitted subject to regular payment of agreed lease rentals till such time the winding up recommendations were confirmed by the concerned High Court. It was further made clear that SPPL was being allowed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order dated 25.04.2007 on the ground of limitation. However, the said order was set aside by this Court in W.P.No.18243 of 2007. By order dated 25.01.2008 passed therein, a learned Judge of this Court held that SPPL's appeal ought to have been decided on merits after hearing the parties concerned. Thereupon, the AAIFR re-considered Appeal No.63 of 2007 and again dismissed the same by order dated 24.02.2009. Significantly, the grievance of SPPL in the said appeal was only with regard to the use of the words 'lease' and 'lease rentals' by the BIFR in the impugned order dated 03.10.2001, as it claimed that it had not taken the unit of MPL on lease. Referring to the past history of the case, in its order dated 24.02.2009, the AAIFR also noted the fact that SBI had filed O.A.No.838 of 2001 before the DRT, Hyderabad, which had passed order dated 27.11.2001 directing SPPL to deposit the monthly lease rental of Rs.3.50 Lakh with it. Before the AAIFR, the case of SPPL was that it had earlier offered Rs.2.20 Crores for out-right purchase of the assets of MPL in September, 1998, but as the said offer was not accepted, it began running the unit of MPL under a working agreement entered into b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... month from December, 1999 to November, 2000 which was subsequently enhanced to Rs.3.25 Lakh per month from 01.12.2000. The AAIFR was not impressed by the contention of SPPL that the words 'lease' and 'lease rentals' had been loosely used by it in the said correspondence. The AAIFR observed that in formal correspondence which had legal import; words were not expected to be used loosely. The AAIFR further agreed with SBI that whether it was called 'lease rent' or a 'deposit' was immaterial, and that SPPL did not stand absolved of paying the same as long as it continued to use the unit of MPL and make business out of it. Surprisingly, SPPL advanced arguments before the AAIFR that the Company Court or a Writ Court would have no jurisdiction as the case of MPL was referred to the BIFR under Section 15(1) of the SICA. This contention was disallowed by the AAIFR. The AAIFR concluded that SPPL was pursuing parallel proceedings in various fora and as the issue involved in the appeal was already before the competent Court, there was no justification for SPPL to indulge in multiple litigation on the same issue. The AAIFR therefore held that it did not find any legal infirmity in the impugne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SPPL was to deposit Rs.1,50,000/- per month in SBI in an interest bearing no lien account and this amount was to be adjusted against the cost of acquisition of MPL by SPPL. This agreement was to come into force from the date of acceptance of the same by the BIFR/SBI. Thereafter, under the working agreement dated 01.12.2000, MPL and SPPL again reduced into writing the fact that MPL had approached SPPL and represented to it that it should take the infrastructure of MPL for a period of 12 months on such terms and conditions and on payment of such 'rentals' as may be mutually agreed upon, commencing from 01.12.2000. Again, it was reiterated that upon termination of the said agreement by efflux of time or otherwise, SPPL would, at its own cost and expense, forthwith handover or cause to be handed over to MPL the said infrastructure. SPPL was to deposit Rs.2,75,000/- per month in SBI in an interest bearing no lien account and this was to be adjusted against the cost of acquisition of MPL by SPPL. This agreement also was to come into force from the date of its acceptance by BIFR and SBI. In its counter filed in C.A.No.1881 of 2011, SPPL contended that as per the terms of the working ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als' by the BIFR in its order dated 03.10.2001. This is further confirmed by the arguments advanced on behalf of SPPL before the Division Bench of this Court in W.P.No.7634 of 2009 that the Company Court dealing with C.A.No.1074 of 2006 would misconstrue the observations made by the AAIFR in its order dated 24.02.2009 as to the 'lease' and 'lease rentals' to be binding. It is therefore too late in the day for SPPL to deny that, be it under the name of 'lease rental' or 'deposit', it was bound to comply with the order dated 03.10.2001 passed by the BIFR and make the payment of Rs.3,50,000/- per month as directed therein. In this regard it may also be noticed that as per the so-called agreement between SPPL and MPL, the 'rentals' deposited by SPPL were to be adjusted against the cost of acquisition of MPL by SPPL. This condition had no binding effect, as by the date of the execution of the said agreement in 1999, MPL had already been registered with the BIFR as a sick company under Section 15 of the SICA. Without the permission of the BIFR, no such agreement for disposal of its assets could have been entered into by MPL. Further, in the order dated 03.10.2001, the BIFR merely appro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Rules of 1959, which clearly demonstrated that there was no separate provision for SBI to seek such relief under the Act of 1956. He further contended that though an objection had been taken by SPPL in its counter filed in C.A.No.1074 of 2006 at the earliest point of time that SBI, being a creditor of MPL, had no locus to file the said application, the Official Liquidator did nothing in the matter till the year 2011, when C.A.No.1881 of 2011 was filed. The prayer in C.A.No.1074 of 2006 is that this Court should direct SPPL to deposit the lease rentals payable to MPL from October, 2001 onwards to the Official Liquidator pending disposal of RCC No.2 of 2006. RCC No.2 of 2006 came to be ordered on 30.08.2006 itself when this Court directed the winding up of MPL upon the recommendation of the BIFR. However, as stated earlier, the unit of MPL was purchased by SPPL on 24.05.2005 even before the filing of this application and therefore, the alleged liability of SPPL to make the monthly payments would be only upto this date. The prayer in C.A.No.1074 of 2006 in seeking such payments to be made pending disposal of the RCC was therefore misconceived. The alleged liability of SPPL from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter. As pointed out by the Supreme Court in BAL NIKETAN NURSERY SCHOOL V/s. KESARI PRASAD (1987) 3 SCC 587, if the Court is satisfied that a bonafide mistake occurred in the filing of a suit in the name of the wrong person then the Court can set right matters, in exercise of its power under O.1.R.10 CPC, and promote the cause of justice. This would however require that that instituted suit be proper and maintainable. As this Court has already opined that C.A.No.1074 of 2006 was itself not maintainable, the question of impleading or transposing parties in this application does not arise. It is no doubt true that in its counter dated 30.08.2006 filed in C.A.No.1074 of 2006, SPPL specifically raised an objection that SBI, claiming to be a secured creditor of MPL, could not maintain the application and that it had to be filed only by the Official Liquidator. The same is reflected in para-6 of the order passed in the first instance on 05.01.2007 in C.A.No.1074 of 2006. Notwithstanding the same, the Official Liquidator filed a separate application to direct SPPL to deposit the lease rentals at Rs.3,50,000/- per month from October, 2001 to 24.05.2005, only in the year 2011. The que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with reference to the cause of action arising and the date of filing only and all other provisions would only enable the computation of the period. In each case, the application of the Liquidator would have to be considered with reference to the nature of the claim and then only the computation could be done in order to find out whether the claim was in time or not. In computing the period of limitation for claims to be made under Section 446(2)(b) of the Act of 1956, the Full Bench observed that the applicability of the relevant Article of the Limitation Act with reference to the nature of the claim has to be decided and then the question as to whether such period of limitation had or had not expired on the date the petition for winding up was filed or the winding up proceeding commenced has to be determined. C.A.No.1881 of 2011 was filed by the Official Liquidator under Section 446(2)(b) of the Act of 1956 read with Rule-9 of the Rules of 1959. Section 446(2)(b) deals with the power to entertain or dispose of any claim made by or against a company. Such a claim would invariably be subject to the law of limitation and applying the law, this application of the Official Liquidator ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision Bench. Sri E. Manohar, learned Senior Counsel, contended that SPPL cannot be brought within the ambit of Section 468 of the Act of 1956 as it does not fall into any of the categories mentioned in Section 468 of the Act of 1956. The categories so mentioned are those of a contributory, trustee, receiver, banker, agent, officer or other employee of the company. The relationship between SPPL and MPL was sourced in the working agreements dated 01.12.1999 and 01.12.2000. There is controversy as to whether SPPL was a lessee of MPL in the light of the clause in the working agreements to the effect that the sums deposited by it shall be adjusted against the cost of acquisition of MPL by SPPL. However, the working agreements also envisaged SPPL returning the unit to MPL upon expiry of the agreements by efflux of time, indicating that the parties also contemplated the possibility of the agreements not being fully workable. SSPL was obligated under these working agreements to pay the monthly 'rentals' to the credit of MPL into the interest bearing no lien account. As pointed out by SPPL itself, this working agreement was to be given full effect only in the event MPL recovered from i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith orders passed by authorities, a party taking recourse to a wrong provision of law while approaching the Court cannot be placed in a worse situation. As pointed out by the Supreme Court in BORPUKHURIE TEA ESTATE V/s. PRESIDING OFFICER, INDUSTRIAL TRIBUNAL (1978) 2 SCC 667 , Courts, charged with the duty ofadministering justice, have to remember that it is not the form but the substance of the matter that has to be looked into and parties cannot be penalized for inadvertent errors committed by them in the conduct of cases. Once the relief sought is traceable to another source available in law, mere filing of the application under the wrong provision would not have the effect of denuding the party of the right to claim the relief. (See DINESH DALMIA V/s. CBI8 and COAL INDIA LIMITED V/s. UJJAL TRANSPORT AGENCY(2011) 1 SCC 117). This Court would therefore be justified in treating an application filed by a party under a wrong provision of law as one filed under the appropriate provision and deal with it accordingly. The filing of C.A.No.1881 of 2011 by the Official Liquidator under the wrong provision of the Act of 1956 therefore has no significance once the relief claimed thereund ..... 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