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2017 (5) TMI 315 - BOMBAY HIGH COURT

2017 (5) TMI 315 - BOMBAY HIGH COURT - TMI - Proceedings transferred to the NCLT, Mumbai - whether in the present proceedings the conditions for not transferring set out in the proviso to Rule 3 of the said Company (Transfer of Pending proceedings) Rule, 2016 are satisfied and thus are not required to be transferred to NCLT? - Held that:- The legislature, accordingly, inserted proviso (ii) under Section 434(1)(c) of the Companies Act, 2013. Insofar as the proceedings other than the winding up ar .....

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n 434 (1)(c) read with proviso thereto, read with the Companies (Removal of Difficulties) Fourth Order, 2016, read with the Companies (Transfer of Pending Proceedings) Rules, 2016, these proceedings stood transferred to the NCLT with effect from 15th December, 2016. In my view the interpretation of the proviso to Rule 3 as sought to be canvased by the learned Senior Counsel for the petitioner thus being contrary to aforesaid provisions can not be accepted. - Insofar as the winding up proceed .....

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ed for orders for allowing or not. In my view, there is no discretion left in the hands of the Court to not to transfer such proceedings to the NCLT on the ground that it would be more convenient or that in the interest of justice the proceedings shall be heard by this Court, though the hearing is not concluded and proceedings are not reserved for order for allowing or not. Thus the present proceedings stand transferred to the NCLT, Mumbai. The Tribunal shall proceed with the matter from the sta .....

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ucha for the respondent no.1 (ROC). ORDER : 1. By this petition filed under Sections 559 and 560 of the Companies Act, 1956 the petitioner i.e. the Commissioner of Income Tax-8, Mumbai seeks a declaration that the striking off of MoTech Software Pvt. Ltd. from the Register of Companies by respondent no.1 under Section 560(5) of the companies Act 1956 and all acts done by the respondents in furtherance thereof is null and void ab-initio, nonest and of no legal effect, whatsoever. The petitioner a .....

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tions 559 and 560 of the Companies Act, 1956 have to be transferred to the National Company Law Tribunal (NCLT) constituted under Section 408 of the Companies Act, 2013 or not. Learned Senior Counsel for the petitioner and the learned Senior Counsel for respondent nos.2 and 3 addressed this Court on this issue. 3. On 10th April 2014, the petitioner filed this company petition for various reliefs in this Court. The company petition was opposed by the respondents by filing affidavit-in-replies. Th .....

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hereafter filed a company application (L/66/2016) inter alia praying for amendments in the company petition no. 643 of 2014. It was the case of the petitioner that the amendments were sought to clarify and correct certain inadvertent mistakes that were made in the petition as originally filed. That the amendments were sought are set out in paragraphs 4, 6 and 8 of the company application. 5. This Court accordingly passed an order on 21st April, 2016 allowing the amendments as prayed for without .....

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ted 21st April, 2016. The petitioner, thereafter, amended the company petition including a ground of appeal. Respondent nos.2 and 3 filed additional affidavit to the amended petition. The petitioner filed rejoinder to the said additional affidavit. The amendments were carried out on 5th May, 2016 and since then the matter was not heard by this Court and had been adjourned from time to time. 6. Under Section 560 of the Companies Act, 1956, the Registrar of the Companies was empowered to strike of .....

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n appropriate orders. The words Tribunal was inserted in place of words Court by Act No. 11 of 2003. By the Companies Act, 2013 the Companies Act, 1956 came to be repealed and various provisions of Companies Act, 2013 were brought into force by issuance of various notifications by the Central Government from time to time. By exercising of powers conferred by section 1(3) of the Companies Act, 2013. 7. Insofar as Section 248 of the Companies Act, 2013 which corresponds to Section 560 of the Compa .....

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Company Law Appellate Tribunal (NCLAT) respectively. In exercise of those powers the Central Government issued two separate notifications both dated 1st June, 2016 constituting the NCLT and the NCLAT, respectively. On 1st June, 2016, the Central Government by exercising powers conferred under Section 434(1)(a) of the Companies Act, 2013 issued the notification appointing 1st June, 2016 and providing that as on that date all matters and proceedings pending before the Board of Company Law Administ .....

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re the subjects dealt with by the Company Law Board till then under the provisions of the Companies Act, 1956. In the year 2016, the Parliament enacted the Insolvency and Bankruptcy Act, 2016 to consolidate and amend laws relating reorganization and insolvency resolution of corporate persons. The said Act received assent of the President on 28th May 2016. The Central Government issued another notification dated 7th December, 2016 and brought into force various other provisions of the Companies A .....

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date of commencement of the said rule. 9. Rule 3 of the said Rules reads thus; Transfer of pending proceedings relating to cases other than winding up. 3. All proceedings under the Act, including proceedings relating to arbitration, compromise, arrangements and reconstruction, other than proceedings relating to winding up on the date of coming into force of these rules shall stand transferred to the Benches of the Tribunal exercising respective territorial jurisdiction: Provided that all those .....

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eferred to aforesaid issued by the Central Government by exercising powers conferred under Section 1(3) of the Companies Act, 2013 including the notification dated 7th December, 2016 notifying Rules called as the Companies (Transfer of Pending Proceedings) Rules, 2016. It is submitted by the learned Senior Counsel that this company petition has been filed by the petitioner for various reliefs under Section 560(6) of the Companies Act, 1956. He submits that the matter was fully heard from time to .....

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herwise , this Court has ample powers not to transfer such proceedings which were fully heard and /or atleast substantially heard, to the NCLT and can hear this petition itself. He submits that if the matter is transferred to the NCLT by this Court, in this situation, there will be gross injustice to the petitioner, and the present proceedings would be further delayed for no fault of the petitioner. It is submitted by the learned Senior Counsel that the words or otherwise would apply in a situat .....

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of Bombay 1957 AIR 521 and in particular paragraph 12. He submits that the words or otherwise are intended to cover all those proceedings which are reserved for orders for allowing and would cover all other cases which were fully argued or atleast substantially argued. 14. Learned Senior Counsel placed reliance on the judgment of the Supreme Court in the case of Animal Welfare Board of India v s . A. Nagara ja (2014) 7 SCC 557 and in particular paragraphs 33, 38, 39. He submits that the express .....

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ements and reconstruction and winding up of Companies, pending immediately before such date before any District or High Court, to the Tribunal and the Tribunal is thus empowered to proceed to deal with such proceedings from the stage before their transfer. He submits that under these enabling powers conferred upon the Central Government, the Central Government has issued the said notification dated 7th December, 2016 and notified the said the Companies (Transfer of Pending Proceedings) Rules, 20 .....

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ch amendment were carried out on merits. He submits that in view of Section 434(1)(c) of the Companies Act, 2013, the pending proceedings thus will have to be transferred to the NCLT and will have to be proceeded with from the stage before its transfer. 17. It is submitted by the learned Senior Counsel for respondent nos.2 and 3, that the Court has to consider while interpreting a provision as to in what context and for what object and purpose such provision was enacted by the legislature. He su .....

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f the Companies Act, 2013. 18. Learned Senior Counsel for respondent nos.2 and 3 distinguishes the judgment of the Supreme Court in case of Smt. Lila Vati Bai vs. State of Bombay (Supra) and submits that the said judgment will not assist the case of the petitioner, but would assists the case of his clients. He submits that the Supreme court in the said judgment has construed the expression or otherwise while considering the provisions of the Bombay Land Acquisition Act, 1948 as amended by Bombay .....

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oceedings are reserved for orders for allowing or for any another purpose. Only such proceedings shall not be transferred. He submits that in the present proceedings, such conditions for not transferring the proceedings to the NCLT are not satisfied. 19. In so far as the judgment of Supreme Court in case of Animal Welfare Board of India vs. A. Nagaraja (Supra) relied upon by the petitioner is concerned, the Supreme Court has construed the provisions of the Prevention of Cruelty to Animals Act, 1 .....

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uired to be transferred to NCLT. 21. Before I deal with the relevant provisions of the Companies Act, 1956, the Companies Act, 2013 and various notifications issued by the Central Government by exercising powers under section 1(3) of the Companies Act, 2013 and by exercising powers under Section 434(1)(2) of the Companies Act, 2013, I shall first deal with the factual aspect in this matter. 22. It is not in dispute that the petitioner has filed the proceedings under Section 560(6) of the Compani .....

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y petition. A perusal of the amendments carried out in the company petition indicates that the petitioner had brought certain additional averments on record by way of amendment and also amended a ground vide paragraph 40(a). This Court while allowing the said amendments by order dated 21st April, 2016 had recorded the submission made by respondent nos.2 and 3 that the matter was substantially heard by the previous Bench and at the fag end, an amendment was sought by the petitioner. This Court ob .....

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ave filed an additional affidavitin::: reply pursuant to the liberty granted by this Court. A perusal of the roznama indicates that after carrying out the amendment by the petitioner, the matter has not been heard by this Court on merits. The matter appeared before this Court on 10th April, 2017 when an issue arose whether this petition can be heard by this Court or not. Certain arguments were advanced on the said issue on 10th April, 2017 and the matter was adjourned to 21st April, 2017. 24. A .....

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ial amendment application is allowed, the opposite parties are not prejudiced and are provided with a full opportunity to defend their case. 25. It is contended in the said affidavit that the amendment to the Company Petition was made with a view to facilitate this Court in determining real question involved in the present controversy. Admittedly there were no arguments after amendments to the company petition were carried out by the petitioner. Even according to the petitioner the arguments wer .....

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uding the subject of striking of the defunct Companies from the Register of the Companies by the Registrar. The word Court was already substituted by Act No. 11 of the 2003 by the word Tribunal i.e. the NCLT as defined under section 2(g). It is not disputed that the section 248 of the Companies Act, 2013 corresponds to section 560 of the Companies Act, 1956. 27. By a separate notification issued by the Central Government by exercising powers conferred under section 1(3) of the Companies Act, 201 .....

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w Tribunal by issuing a notification to exercise and discharge such powers and functions as are or may be conferred on it by or under the Companies Act, 1956 or any other law for time being in force. Pursuant to such powers conferred upon the Central Government, the Central Government has already notified the constitution of NCLT and as well as NCLT in Chapter XXXVII of the Companies Act, 2013. 29. Section 434 of the Companies Act, 2013 provides for transfer of certain pending proceeding. The sa .....

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edings where winding up of company had commenced subject to the Supervision of the District Court or the High Court before the commencement of the Companies (Second Amendment) Act, 2002, such winding up proceedings shall continue to be under the supervision of the District Court or the High Court, as the case may be, and such company shall be wound up in the same manner and in the same incidents as if the Companies (Second Amendment) Act, 2002 had not been passed. 30. It is thus clear that an ex .....

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provides for transfer of proceedings before the Company Law Board to the NCLT. Section 434(1)(b) provides for an appeal to the High Court, by any person aggrieved by any decision or order of Company Law Board made before the date as may be notified by the Central Government within 60 days from the date of communication of the decision or the order of CLB to him on any question of law arising out of such order. Section 434 (1)(c) of the Companies Act, 2013 provides for transfer of other proceedi .....

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relating to winding up of the Company shall be transferred to the Tribunal that are at a stage as may be prescribed by the Central Government. Second proviso to the said provision provides that only such proceedings relating to cases other than winding up for which orders for allowing or otherwise are not reserved by the High Court shall be transferred to the Tribunal. The said second proviso is inserted by the Companies (Removal of Difficulties) Fourth Order, 2016 with effect from 15th Decembe .....

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for orders for allowing or otherwise; and 2. Those winding up cases which would not be transferred to the Tribunal and be proceeded with the High Court on account of commencement of the corresponding provisions under the Companies Act, 2013 or under the Insolvency and Bankruptcy Act, 2016. 3. The said order further records that the difficulties have arisen regarding transfer of proceedings relating to cases other than winding up where hearing have been completed and only pronouncement of order .....

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nies Act, 2013. Insofar as the proceedings other than the winding up are concerned, it is clear beyond reasonable doubt that where hearings have been completed and only pronouncement of order is pending or reserved with a view to avoid any delay and prejudice to the rights of the parties to the proceedings who are likely to be affected by such transfer at such stage, the legislation has provided such safeguard not to transfer such proceedings at such stage to the NCLT. Admittedly in this case th .....

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provisions can not be accepted. 34. In my view, notification dated 7th December, 2016 issued by the Central Government by exercising powers conferred under Sections 434(1) and 434(2) of the Companies Act, 2013 thereby prescribing the Rules called as the Companies (Transfer of Pending Proceedings) Rules, 2016 will have to be read with substantial provisions of section 434(1)(2) of the Companies Act, 2013. The Court has to also consider the purpose, objects and intent of the legislature while enac .....

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mpany law board, BIFR etc. The legislature itself thought it necessary to enact the Companies Act, 2013 and the Insolvency and Bankruptcy Act, 2016 to consolidate the Companies Law Administration and Insolvency proceedings against certain parties before a separate body constituted viz. The National Company Law Tribunal and National Law Appellate Tribunal under one roof. 35. In my view, there is no discretion provided to the Court by the legislature insofar as the transfer of the pending proceedi .....

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to be thus heard from the stage before their transfer. 36. Insofar as winding up proceedings are concerned, transfer of such proceedings are separately provided under Rules 4 and 5 of the Companies (Transfer and Pending Proceedings ) Rules, 2016. In respect of such winding up proceedings, second proviso to 434(1)(c) makes it clear that only such proceedings shall be transferred to Tribunal that are at a stage as may be prescribed by the Central Government. Rule 5 of the said Companies (Transfer .....

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l Government which are referred to aforesaid, has held that those petitions which are admitted and where notice of petition was not served on the respondent pursuant to the order of admission, will stand transferred to the NCLT and will be taken up for admission once again to require the petitioners in those petitions to furnish information for admission of the petitions under section 7, 8 or 9, of the Insolvency and Bankruptcy Act, 2016. 38. It is held that for winding up of Company under Secti .....

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anies Act, 1956. The said judgment dated 23rd December, 2016 is further clarified by this Court by an order dated 17th January, 2017 by this Court. It is clarified that the sine qua non for transfer of a winding up petition to the NCLT under the Companies (Transfer of Pending Proceedings) Rules, 2016, is non-service of a pending petition. It is clarified that as for the service of the petition, it is not necessary that the service must be effected only in pursuance of an acceptance order. Any se .....

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ll other proceedings including proceedings under Section 560 of the Companies Act, 1956 is different and transfer thereof is based on and is depending upon the condition whether hearing in such matters is concluded and the proceedings are reserved for orders for allowing or not. In my view, there is no discretion left in the hands of the Court to not to transfer such proceedings to the NCLT on the ground that it would be more convenient or that in the interest of justice the proceedings shall be .....

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on made by the Government that there was a vacancy and held that those words were not words of limitation but of extension so as to cover all possible ways in which a vacancy may occur. The Supreme Court held that the expression or otherwise intended to cover all possible cases of vacancy occurring out for any reasons whatsoever. In my view the said judgment of the Supreme Court would not advance the case of the petitioner but would advance the case of respondent nos. 2 and 3. 41. If this Court .....

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