TMI Blog2017 (5) TMI 315X X X X Extracts X X X X X X X X Extracts X X X X ..... o, 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 proceedings are concerned, the pending proceedings as on 15 December, 2016 in High Court shall stand transferred to the NCLT or not depend upon the effect of service under Rule 26 of the Companies (Court) Rules, 1959 or not whereas the criteria for transfer of all 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 proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uments by both the parties, at the late stage, the petitioner herein made an oral application before this Court for seeking amendments to the company petition on 14th January, 2016. The respondents, however, raised an objection to the said oral application for amendment of the petition. The petitioner was thus directed to file an application for seeking amendment to the petition. The petitioner thereafter 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 prejudice to the rights and contentions of the respondents on the merits of the amendments. This Court recorded in the said order that as the matter was admittedly heard on number of occasions before the previous Bench, this Court allowed the said amendment subject to the petitioner paying costs o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Administration (CLB), shall stand transferred to NCLT, to be disposed of in accordance with the provisions of 2013 Act or Companies Act, 1956 as the same may be. 8. By another notification issued on the same day, the Central Government appointed 1st June, 2016 as a date on which various provisions of the Companies Act, 2013 which were listed in the notification came into force. The said provisions included the relevant provisions of the Companies Act, 2013 concerning operation and mismanagement which were 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid the Companies (Transfer of Pending Proceedings) Rules, 2016. He submits that since the matter was fully heard or atleast substantially heard by this Court from time to time, in view of the proviso to Rule 3 and more particularly the words or otherwise , 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 situation where the Court can exercise powers not to transfer the pending proceedings under Rule 3 though such proceedings were not reserved for orders. He submits that such powers are conferred upon the Court under the said proviso in the interest of the justice and to prevent any injustice to the parties to the proceedings. 13. In support of the aforesaid submissions, the learned Senior Counsel for the petitioner placed reliance on the judgment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 submits that the purpose and object of the constituting NCLT is to transfer the pending proceedings before the District Court or the High Court under the provisions of the Companies Act, 1956 and the Companies Act, 2013 before one Forum i.e. NCLT depending upon the stage of such matters which are separately set out in the said the Companies (Transfer of Pending Proceedings) Rules, 2016. He submits that the expression or otherwise cannot go contrary to the substantive provisions under Section 434 of 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 Act II of 1950 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner had thus filed a company application inter alia praying for amendments to the company 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 observed that since admittedly the matter was heard on several occasions before the previous Bench, the amendments were allowed subject to the petitioner paying costs of ₹ 10,000/each to respondent nos.2 and 3. The said amendments have been allowed without prejudice to the rights and contentions of the respondents on merits of those averments. 23. On perusal of the roznama annexed thereto, it is clear that amendments have been carried out by the petitioner on 5th May, 2016. The respondents have filed an additional affidavitin::: reply pursuant to the liberty granted by this Court. A perusal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Companies Act, 2013, the Central Government has appointed 26th December, 2016 as the date on which provisions of Sections 248 and 252 of the Companies Act, 2013 came into force. Under Section 252 of the Companies Act, 2013, a person aggrieved by an order of Registrar notifying their company as dissolved under section 248 may file an appeal to the Tribunal i.e. NCLT. 28. Under Section 408 of the Companies Act, 2013, the Central Government is empowered to constitute a Tribunal to be known as the National Company Law 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 said provisions corresponds to Section 647A of the Companies Act, 1956 which provided for transfer of all proceedings including proceeding relating to arbitration, compromise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 December, 2016. The Companies (Removal of Difficulties) Fourth Order, 2016 clearly indicates that the said order was issued and notified by the Central Government by exercising powers under Section 470(1) of the Companies Act, 2013 to remove various difficulties expressed in the said order. The said order indicates that difficulties had arisen regarding continuation of the provisions of the Companies Act, 1956 such as : 1. Those proceedings relating to cases other than the winding up that were reserved 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ast 100 years in this Country. Before the enactment of the Companies Act, 2013, the subject like rectification of Register of Members, claim of compromise and arrangement, reconstruction of sick industrial Company, oppression and mismanagement and winding up was provided under different statute and were executed through different Forum such as High Court, Company 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 proceedings is concerned. The said rules provide for a mandate for transfer of the proceedings subject to an exception provided in proviso to Rule 3. In my view the expression or otherwise will have to be read in the context of the conclusion of hearing of the proceedings where the orders were reserved for allowing or for any other purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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 service effected on his own by the petitioner on the respondents is equivalent to the service under Rule 26. The petition in that case is not liable to be transferred to NCLT. 39. In my view, it is thus clear that insofar as the winding up proceedings are concerned, the pending proceedings as on 15 December, 2016 in High Court shall stand transferred to the NCLT or not depend upon the effect of service under Rule 26 of the Companies (Court) Rules, 1959 or not whereas the criteria for transfer of all 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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e not defeated by subtle devices. The provisions of the Companies Act, 2013, are not a welfare legislation. 43. Be that as it may, the provisions of the Companies Act, 2013 read with various notifications issued by the Central Government including the said Rules, makes it clear that in case of the proceedings other than the winding up of the proceedings which were pending in the High Court on 15th December, 2016 stood transferred unless the hearing in those proceedings are concluded and the proceedings were reserved for orders for allowing or not. The said judgment of the Supreme Court in case of Animal Welfare Board of India vs. A. Nagaraja (Supra) thus does not even remotely assist the case of the petitioner. 44. In my view, for the reasons recorded aforesaid the present proceedings stand transferred to the NCLT, Mumbai. The Tribunal shall proceed with the matter from the stage before its transfer. Since the argument were not concluded before this Court, the parties may advance their argument before the NCLT. It is ordered accordingly. The office is directed to transmit the papers and proceedings in this matter to the National Company Law Tribunal, Mumbai expeditiously. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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