TMI Blog2017 (3) TMI 1272X X X X Extracts X X X X X X X X Extracts X X X X ..... n for adjudicating applications, in relation to the revival of the Company in provisional liquidation. - CO.APPL.(M) 115/2016, CO.PET. 704/2014, CO.PET. 948/2016, CO.PET. 1061/2016, CRL.O.(CO.) 11/2016 - - - Dated:- 15-3-2017 - MR.SIDDHARTH MRIDUL J. Respondents Through: Mr. P.V. Kapur, Sr. Advocate with Mr. Ajit Warrier, Mr. Sidhant Kapur, Mr. Angad Kochhar, Ms. Pankhuri Bhardwaj and Ms. Bani Brar, Advocates for Spirewoods Residents Association. Mr. Kailash Vasdev, Sr. Advocate with Mr. Shreyans Singhvi and Ms. Ekta Mehta, Advocates in CO.APPL.2089/2016 in CO.PET.704/2016. Mr. K.K. Sharma, Sr. Advocate with Mr. Ayush Chaurasia and Ms. Gagandeep Chauhan, Advocates for Investors in CO.APPL.(M) 115/2016. Dr. Saif Mahmood, Advocate with Mr. Sumant De, Mr. Vivek Aggarwal, Advocates in CO.PET.704/2014. Mr. C.A. Sinha and Ms. Sanjan Chawla, Advocates in CO.APPL.2082-2088/2016, 2091/2016, 2093/2016, 2105/2016 2120/2016. Mr. Vivek Kohli and Mr. Vishnu Anand, Advocates for Petitioner No.1 in CO.APPL.(M) 115/2016. Mr. Yeshi Rinchhen, Advocate for Petitioner No.2 in CO.APPL.(M) 115/2016. Mr. Sunil Gandhi, Mr. Vivek Kohli and Mr. Vishnu Anand, Advoc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adjudicate applications instituted under the provisions of Section 391 of the Companies Act, 1956, in relation to the revival of a Respondent Company in provisional liquidation, subsequent upon coming into force of the subject notification, w.e.f. 15.12.2016. 5. At the outset, it would be necessary to briefly advert to the backdrop in which the question of law that requires determination has arisen. 6. This Court by way of its order dated 08.03.2016 admitted winding up petition, being Company Petition No. 704 of 2014, instituted against the Respondent Company- A.N. Buildwell Private Limited, and appointed the Official Liquidator attached to this Court as the Provisional Liquidator, to inter alia, take possession of the assets, books of accounts and records etc. of the Respondent Company. 7. As regards the steps taken by the Official Liquidator, appointed as the Provisional Liquidator of the Respondent Company in compliance to the directions contained in the said order dated 08.03.2016, the Official Liquidator has filed a report being OLR No. 197 of 2016. The relevant averments made in the said report, are encapsulated as follows: a) It has been stated by way of the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated to be under construction but security guards of the security agency empanelled with the Official Liquidator have been employed at the site. e) Furthermore, it has been stated by way of the present report that the team from the office of the Official Liquidator visited the site project/office at Sector-103, Daultabad, Gurgaon, Haryana on 29.04.2016 to take over possession of the assets/records of the Respondent Company. It has been stated that the said project is an unfinished one spread over an area of approximately 11 acres. Inspection of the site was conducted and the possession thereof has been taken, as stated. Two offices and five rooms therein have been sealed, and security guards for the watch and ward of the premises have been deployed, as stated. f) It has further been stated that the office of the Official Liquidator issued a letter dated 01.06.2016 to the Manager, Punjab National Bank, Sector-29, Gurgaon, Haryana seeking information regarding any account of the Respondent Company with the Bank or any other branch of the Bank. It has been also stated that Punjab National Bank is holding charge over the assets of the Respondent Company as per Form 8 filed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... those proceedings which are reserved for orders for allowing or otherwise of such proceedings shall not be transferred. 4. Pending proceeding relating to Voluntary Winding up: All applications and petitions relating to voluntary winding up of companies pending before a High Court on the date of commencement of this rule, shall continue with and dealt with by the High Court in accordance with provisions of the Act. 5. Transfer of pending proceedings of Winding up on the ground of inability to pay debts.- (1) All petitions relating to winding up under clause (e) of section 433 of the Act on the ground of inability to pay its debts pending before a High Court, and where the petition has not been served on the respondent as required under rule 26 of the Companies (Court) Rules, 1959 shall be transferred to the Bench of the Tribunal established under sub-section (4) of section 419 of the Act, exercising territorial jurisdiction and such petitions shall be treated as applications under sections 7, 8 or 9 of the Code, as the case may be, and dealt with in accordance with Part II of the Code: Provided that the petitioner shall submit all information, other than in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs qua revival of the Respondent Company cannot be construed as being independent of the pending winding up proceedings. In other words, learned counsel would urge that the winding up proceedings and the proceedings qua the revival of the Respondent Company are inextricably linked and that all the matters in relation to the revival of the respondent company are proceedings relating to winding up , inasmuch as, inter alia , the powers that the Company Court would exercise in relation to the Respondent Company, under the provisions of Companies Act, 1956 pursuant to the admission of the winding up petition, would also take within its sweep the power of sanctioning a Scheme of Compromise and/or Arrangement between the Respondent Company and its members and/or creditors. It would, therefore, be submitted that, the Applications seeking sanctioning of the Compromise and/or Arrangement between the creditors and/or members of the Respondent Company and its Ex-Management should be dealt with by the Company Court as the Company Court would have exclusive jurisdiction over the same. 12. In other words, it would be submitted that the proceedings seeking sanctioning of the Compromise an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order to buttress the submission, that the proceedings seeking sanctioning of the Compromise and/or Arrangement of the Respondent Company, for the revival of the Respondent Company, ought not to be transferred to the National Company Law Tribunal, learned counsel would place reliance on the following decisions: (i) Renusagar Power Co. Ltd. v. General Electric Company Anr., reported as (1984) 4 SCC 679; (ii) Mansukhlal Dhanraj Jain Ors. v. Eknath Vithal Oagle, reported as (1995) 2 SCC 665; (iii) Associated Banking Corporation of India Limited (In Liquidation) v. M/s Nazaralli Kassambhai Co., reported as AIR 1952 Bom 223; (iv) Meghal Homes (P) Ltd. v. Shree Niwas Girni K.K. Samiti and Others, reported as (2007) 7 SCC 753; (v) GSL (India) Ltd. v. Bayer ABS Ltd., in Company Application No.228/1998 in Company Petition No.295/1996, decided on 28.09.1998 by the Hon'ble High Court of Gujarat; (vi) West Hills Realty Private Ltd. v. Neelkamal Realtors Towers Pvt. Ltd., in Company Petition No.331/2016, decided on 23.12.2016 by the Hon'ble High Court of Judicature at Bombay; (vii) KSL Industries Limited v. Arihant Threads Limited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce fee or charges or rent thereof, irrespective of the value of the subject-matter of such suits or proceedings. xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx 14. So far as the first condition is concerned, a comprehensive reading of the relevant averments in the plaints in both these cases leaves no room for doubt that the plaintiffs claim relief on the basis that they are licensees on monetary consideration and the defendants are the licensors. The first condition is clearly satisfied. Then remains the question whether the third condition, namely, that the suits must relate to the recovery of possession of immovable property situated in Greater Bombay is satisfied or not. It is not in dispute that the suit properties are immovable properties situated in Greater Bombay but the controversy is around the question whether these suits relate to recovery of possession of such immovable properties. The appellants contended that these are suits for injunction simpliciter for protecting their possession from the illegal, threatened acts of the respondents/defendants. Relying on a series of decisions of this Court and the Bombay High Court, Gu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or in respect of or in connection with or in relation to or in consequence of or concerning or relating to the contract are of the widest amplitude and content and include even questions as to the existence, validity and effect (scope) of the arbitration agreement. 15. In Doypack Systems (P) Ltd. v. Union of India [(1988) 2 SCC 299], another Division Bench of this Court consisting of Sabyasachi Mukherji (as he then was) and G.L. Oza, JJ. had an occasion to consider this very question in connection with the provisions of Sections 3 and 4 of the Swadeshi Cotton Mills Co. Ltd. (Acquisition and Transfer of Undertakings) Act, 1986. Sabyasachi Mukherji, J. speaking for the Court, has made the following pertinent observations in paras 49 and 50 of the report: (SCC p. 329) The words arising out of have been used in the sense that it comprises purchase of shares and lands from income arising out of the Kanpur undertaking. We are of the opinion that the words pertaining to and in relation to have the same wide meaning and have been used interchangeably for among other reasons, which may include avoidance of repetition of the same phrase in the same clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the decisions referred to a pari materia provision as found in Section 28 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 (hereinafter referred to as the Bombay Rent Act ), it will be necessary to refer to the said provision. Section 28(1) of the Bombay Rent Act reads as under: 28. Jurisdiction of courts.- Notwithstanding anything contained in any law and notwithstanding that by reason of the amount of the claim or for any other reason, the suit or proceeding would not, but for this provision, be within its jurisdiction,- (a) in Greater Bombay, the Court of Small Causes, Bombay, (aa) in any area for which, a Court of Small Causes is established under the Provincial Small Cause Courts Act, 1887, such Court and (b) elsewhere, the Court of the Civil Judge (Junior Division) having jurisdiction in the area in which the premises are situate or, if there is no such Civil Judge, the Court of the Civil Judge (Senior Division) having ordinary jurisdiction, shall have jurisdiction to entertain and try any suit or proceeding between a landlord and a tenant relating to the recovery of rent or possession of any premises to which any of the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or direction issued thereunder or in any other law for the time being in force, no other court shall have jurisdiction to entertain any matter relating to or arising out of the winding up of a banking company. Therefore, jurisdiction of all Courts other than the High Court as defined in s. 45A was clearly ousted with regard to all matters which relate to or arise out of the winding up of a banking company. Then s. 45B conferred power upon the High Court to decide all claims made by or against any banking company, including claims by or against any of its branches in India, and all questions of priorities and all other questions whatsoever, whether of law or fact, which may relate to or arise in the course of the winding up of the banking company, coming within the cognizance of the Court. Now, the narrow question that we have to consider is whether a suit filed by the Official Liquidator to recover a claim due to a banking company from its debtor is a matter relating to or arising out of the winding up of a banking company. It may be pointed out that the Legislature has used a slightly different expression in s. 45B . The expression used in s. 45B is which may relate to or a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry to consider in the first place s. 179 of the Companies Act. That section deals with the powers of the Official Liquidator and it provides that The official liquidator shall have power, with the sanction of the Court, to do the following things: and among those things one is to institute or defend any suit or prosecution, or other legal proceeding, civil or criminal, in the name and on behalf of the company. Clause (i) of s. 179 provides: to do all such other things as may be necessary for winding up the affairs of the company and distributing its assets. It may be contended, as has been contended by Mr. Daji, that the Court sanctions the filing of the suit in the course of the winding up and the sanction to file the suit does arise out of the winding up. But the actual filing of the suit has nothing whatever to do with the winding up. Mr. Daji says that once the sanction of the Court is given, the official liquidator must resort to the ordinary Courts of the land in order to enforce the claim of the banking company against its debtors. But this argument overlooks one or two important considerations. It is one thing to say that the company before it is wound up is enforcing i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uits are disposed of before the Court would be in a position to wind up the affairs of the company and distribute its assets. Therefore, if the sole purpose and the whole object of this legislation is to wind up the affairs of banking companies as expeditiously as possible, then it stands to reason that the Legislature must have intended that the assets should be realised as quickly as possible, and when the official liquidator files a suit against a debtor of the banking company, all he is doing is to attempt to realise part of the assets of the company. (Emphasis Supplied) 22. In Meghal Homes (P) Ltd (supra) the Hon ble Supreme Court whilst dealing with the issue whether Section 391 of the Companies Act, 1956 would apply to a company, which has already been ordered to be wound up, observed as hereunder: 33. The argument that Section 391 would not apply to a company which has already been ordered to be wound up, cannot be accepted in view of the language of Section 391(1) of the Act, which speaks of a company which is being wound up. If we substitute the definition in Section 390(a) of the Act, this would mean a company liable to be wound up and which is bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contributories of the company ultimately resulting in the death of the company by an order under Section 481 of the Act, being passed. But, nothing stands in the way of the Company Court, before the ultimate step is taken or before the assets are disposed of, to accept a scheme or proposal for revival of the Company. In that context, the court has necessarily to see whether the scheme contemplates revival of the business of the company, makes provisions for paying off creditors or for satisfying their claims as agreed to by them and for meeting the liability of the workers in terms of Section 529 and Section 529-A of the Act. Of course, the court has to see to the bona fides of the scheme and to ensure that what is put forward is not a ruse to dispose of the assets of the company in liquidation . (Emphasis Supplied) 23. The Hon ble High Court of Gujarat, in GSL (India) Limited (supra) whilst dealing with the issue of the stay of proceedings pending before various Metropolitan Magistrates filed by the company, observed as under, in relation to the scope and ambit of the provisions under section 446 of the Companies Act, 1956: 60. Here it must be cleared that on a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s' in both provision embraces within it both civil and criminal proceedings pending in court, because all pending cases by or against company irrespective of its class are liable to be transferred and disposed of by the Company Court, in contrast if compared with proceedings whit are not pending or instituted in a court. (Emphasis Supplied) 24. The Hon ble High Court of Judicature at Bombay recently in West Hills Realty Private Limited (supra) whilst observing that the court was conscious of the controversy which would commonly arise in number of petitions pending before the Court in view of the subject notification, rendered the following observations: 13. In the premises, it follows that every winding up petition under clause (e) of Section 433 which is pending before the High Court and which is not served by the petitioner on the respondent company shall stand transferred to NCLT under Rule 5 of the Companies (Transfer of Pending Proceedings) Rules, 2016. If such pending petition is served by the petitioner on the respondent, the petition will continue to be dealt with by this court and the applicable provisions will be the provisions of 1956 Act. 25. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppear different than when the statute is looked at without the glasses provided by the context. With these glasses we must look at the Act as a whole and discover what each section, each clause, each phrase and each word is meant and designed to say as to fit into the scheme of the entire Act. No part of a statute and no word of a statute can be construed in isolation. Statutes have to be construed so that every word has a place and everything is in its place. 26. In Associated Cement Companies (supra) the Hon ble Supreme Court whilst determining the question of liability under the Bihar Finance Act, 1981 has observed with respect to the interpretation of the term exemption operating as an exception, as hereunder: 12. Literally exemption is freedom from liability, tax or duty. Fiscally it may assume varying shapes, specially, in a growing economy. In fact, an exemption provision is like an exception and on normal principle of construction or interpretation of statutes it is construed strictly either because of legislative intention or on economic justification of inequitable burden of progressive approach of fiscal provisions intended to augment State revenue. But onc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proposing a scheme in respect of the company, whether such application has been filed before or after the order of winding up has been made. (vi) The scheme of the Companies Act, 1956 empowers the Company Court to consider and approve a scheme of compromise and/or arrangement proposed by way of an application moved by the liquidator under the provisions of section 391 of the Act, in the case of a company which is being wound up. This manifestly indicates that in case of a company which has been ordered to be wound up by the Company Court, a scheme proposed for its revival, would be exclusively dealt with by the Company Court itself. (vii) All pending proceedings in relation to the revival of a Company in provisional liquidation, as in the present case, will continue to be dealt with by the Company Court under the applicable provisions of the Companies Act, 1956 including Section 446 of the Companies Act, 1956. (viii) The expression employed in clause 3 of the subject notification, other than proceedings relating to winding up would operate as an exception to the subject notification. The rules of interpretation qua an exception require a strict construction in ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld not have been the intention of the Legislature in its infinite wisdom, to create a situation where, the scheme relating to the revival of company in provisional liquidation, pending consideration before the Company Court would be required to be transferred to and dealt with by the National Company Law Tribunal; leading to multiplicity of proceedings with the real possibility of conflicting decisions on the dissolution/winding up and/or revival of the respondent company. 30. In view of the foregoing, the issue that arose for consideration before this Court, is answered in the affirmative. The Company Court would exercise exclusive jurisdiction for adjudicating applications, in relation to the revival of the Company in provisional liquidation. 31. Ordered Accordingly. 32. Consequently, Company Application No. 2615 of 2016 and Company Application (Main) No. 115 of 2016 be determined by this Court, in accordance with law, and will not stand transferred to the National Company Law tribunal as posited by learned counsel appearing on behalf of the petitioners in Company Petition No. 704 of 2014, in terms of the provisions of the Companies Act, 1956, read with the subject noti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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