9911796707
TMI Blog1973 (12) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 1 is a joint stock company belonging to what was commonly known as the Dalmia Jain group. Respondent No. 2 was also a joint stock company in the same group and while respondent No. 2 was in voluntary liquidation with respondent No. 3 as the voluntary liquidator, the liquidator proposed a scheme of arrangement under section 153 of the Act of 1913 for the amalgamation of respondent No. 2 with respondent No. 1 and after the statutory meeting of the members had been held to consider the scheme and had approved of it, the same was sanctioned by the District Judge, Delhi, by an order made on February 10, 1953. By a subsequent order of February 13, 1953, the District Judge in exercise of powers conferred on it further directed that the whole property of the transferor-company, that is respondent No. 2, would stand transferred to and vest in the transferee-company, that is respondent No. 1, and that all the liabilities of the transferor-company would, by virtue of the said order, become the liabilities of the transferee-company. Certain other directions were also made by the said order but these are not relevant for our present purpose. The appellant herein, Union of India, had a larg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction to entertain it and as to whether, assuming that it was maintainable, it was within time. On the first question, it was contended on behalf of the appellant that on a true construction of the provisions of section 153A(1)(f) of the Act of 1913, and its corresponding provision, i.e., section 394(1)(vi) of the Act of 1956, it must be held that the terms "to secure that the reconstruction or amalgamation shall be fully and effectively carried out" occurring in the said sections include within their scope an application for a direction to the transferee-company, in the case of amalgamation of companies, to pay to the creditors of the transferor-company the amount due to the creditors or to discharge the liability incurred by the transferor-company before the amalgamation, and that the payment by the transferee to the creditor of the transferor company or the discharge of liability by the transferee-company of the transferor-company would be matters which would be "incidental, consequential and supplemental" to the amalgamation even though the scheme of arrangement leading to the amalgamation did not contain any provision with regard to the manner in which the liability is to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of the company. (3) An order made under sub-section (2) shall have no effect until a certified copy of the order has been filed with the Registrar, and a copy of every such order shall be annexed to every copy of the memorandum of the company issued after the order has been made; or in the case of a company not having a memorandum, of every copy so issued of the instrument constituting or defining the constitution of the company. (4) If a company makes default in complying with sub-section (3) the company and every officer of the company who is knowingly and wilfully in default shall be liable to a fine not exceeding ten rupees for each copy in respect of which default is made. (5) The court may, at any time, after an application has been made to it under this section, stay the commencement of continuation of' any suit or proceeding against a company on such terms as it thinks fit and proper until the application is finally disposed of. (6) In this section the expression "company" means any company liable to be wound up under this Act and the expression "arrangement" includes a re-organization of the share capital of the company by the consolidation of shares of different cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transferred to and vest in, and those liabilities shall, by virtue of the order, be transferred to and become the liabilities of, the transferee company, and in the case of any property, if the order so directs, freed from any charge which is by virtue of the compromise or arrangement to cease to have effect. (3) Where an order is made under this section, every company in relation to which the order is made shall cause a certified copy thereof to be delivered to the Registrar for registration within fourteen days after the completion of the order, and if default is made in complying with this sub-section, the company and every officer of the company who is knowingly and wilfully in default shall be liable to a fine not exceeding fifty rupees. (4) In this section the expression 'property' includes property, rights and powers of every description, and the expression 'liabilities' includes duties. (5) Notwithstanding the provisions of sub-section (6) of section 153, the expression 'company' in this section does not include any company other than a company within the meaning of this Act." The provisions of sections 391 and 394 of the Act of 1956 which, except to the extent that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the company. (5) If default is made in complying with sub-section (4), the company, and every officer of the company who is in default, shall be punishable with fine which may extend to ten rupees for each copy in respect of which the default is made. (6) The court may, at any time after an application has been made to it under this section, stay the commencement or continuation of any suit or proceeding against the company on such terms as the court thinks fit, until the application is finally disposed of. (7) An appeal shall lie from any order made by a court exercising original jurisdiction under this section to the court empowered to hear appeals from the decisions of that Court, or if more than one court is so empowered, to the court of inferior jurisdiction. The provisions of sub-sections (3) to (6) shall apply in relation to the appellate order and the appeal as they apply in relation to the original order and the application." 394. "Provisions for facilitating reconstruction and amalgamation of companies.-(1) Where an application is made to the court under section 391 for the sanctioning of a compromise or arrangement proposed between a company and any such pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conducted in a manner prejudicial to the interests of its members or to public interest. (2) Where an order under this section provides for the transfer of any property or liabilities, then, by virtue of the order, that property shall be transferred to and vest in, and those liabilities shall be transferred to and become the liabilities of, the transferee-company, and in the case of any property, if the order so directs, freed from any charge which is, by virtue of the compromise or arrangement, to cease to have effect. (3) Within 'thirty' days after the making of an order under this section, every company in relation to which the order is made shall cause a certified copy thereof to be filed with the Registrar for registration. If default is made in complying with this sub-section, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to fifty rupees. (4) In this section- (a) 'property' includes property, rights and powers of every description; and 'liabilities' includes duties of every description; and (b) 'transferee company' does not include any company other than a company within the meaning of this Act; but 'tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ides for the transfer of the undertaking or the property of the company concerned in the scheme, the court may either by the order sanctioning the compromise or arrangement make provisions for various matters which are referred to in clauses (a) to (e) of section 153A(1) of the Act of 1913 and clauses (i) to (vi) of section 394(1) of the Act of 1956. Clause (f) of sub-section (1) of section 153A of the Act of 1913, which corresponds to clause (vi) of section 394(1) of the Act of 1956, makes provisions for matters which are not specifically enumerated in the earlier clause and provides for "such incidental, consequential or supplemental matters as are necessary to secure that reconstruction or amalgamation shall be fully and effectively carried out ". It is well-settled that the amalgamation of two or more companies may either be by the formation of a third company with which the other companies are merged or by the absorption of the tranferor-company into the transferee-company and, in case where the amalgamation is by the latter course, provision has to be made for the transfer of the assets and liabilities of the transferee company to the transferee-company. A reference to claus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transferee-company of the liability of the transferor-company to the petitioner could not be said to be a step in aid of the completion of the process of amalgamation. To put it differently, the process of amalgamation of the company by the absorption of the transferor-company into the transferee-company and the consequential transfer of the assets and liabilities of the transferor-company to that of the transferee-company did not depend or could be said to be incomplete without the discharge of such liability by the transferee-company. The liability of the transferee-company to pay the creditors of the transferor-company could not be a step in aid to amalgamation but would be a consequence of it. The directions sought by the petitioner under section 153A(1)(f) of the Act of 1913 could not, therefore, be within the scope of the said provision and the petition was accordingly not maintainable. Although the petition was not sought to be justified with reference to the provisions of section 392 of the Act of 1956 it may be appropriate to consider if the relief sought by the petitioner or the assumption of jurisdiction by the court to entertain the petition could be justified with re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a compromise or arrangement between the company and its creditors normally would, it is doubtful if the court would have any power either under section 392 or section 394 of the Act of 1956 or under the corresponding provisions of the Act of 1913 to make the direction of the kind sought by the petitioner and become a forum capable of making a decree or an executable order having the force of a decree, which is what the appellant in effect seeks. Section 392 of the Act of 1956, which confers much wider powers on the court than were conferred under the Act of 1913, does not empower the court to make any such direction and the only effect of the sanction of the compromise or arrangement between the company and its creditors would be that the parties become bound by the terms of the arrangement but if in terms of the arrangement payment is not made it could only invoke sub-section (2) of section 392 and order the winding up of the company if it comes to the conclusion that the conditions of that sub-section have been satisfied. The court could not in such a case assume the role of an ordinary civil court for the enforcement of the creditors' right to payment as it could, for example, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a true construction of the provisions of article 137 of the Limitation Act, 1963, and of section 30 of that Act, the court ought to have held that the present petition was beyond the scope of the provision of article 137 and there was, therefore, no period of limitation prescribed for it either under the Limitation Act of 1963 or that of the Limitation Act of 1908 and that the petition was, therefore, within time. On the other hand, learned counsel for the respondents sought to justify the conclusion of the court on the aforesaid question on the basis of a decision of the Bombay High Court in the case of Employees' State Insurance Corporation v. Bharat Barrel and Drum Manufacturing Co. P. Ltd., which was also relied upon by the learned District Judge, Delhi, in support of the conclusion arrived at by him. Although, in the view that I have taken of the maintainability of the petition and the jurisdiction of the court to deal with it, it may not be necessary to consider and decide this question but in view of the importance of the question, I have thought it fit to examine it and to deal with it. After hearing learned counsel for the parties and after going through the various dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effect of altering the long acquired meaning of article 181 on the sole and simple ground that after the amendment the reason on which the old construction was founded is no longer available." This decision of the Supreme Court was referred to and followed in a number of subsequent decisions of that court and reference may only be made to two of these, that is, the cases of Bombay Gas Co. v. Gopal Bhiva and Smt. Pravita Bose v. Kumar Rupendra Deb Raikat. In its third report, the Law Commission of India dealt with the question of a suitable provision in the new Limitation Act for applications or petitions under special laws as it was felt that there was no such provision in the existing law of limitation. This is how the recommendation runs at page 5 of the official printed report: "We recommend that a new definition of the word 'application' so as to include any petition original or otherwise, should be added. The object is to provide a period of limitation for original petitions and applications under special laws as there is no such provision now. Consequential alterations in the definition of the word 'applicant' should also be made." By the Indian Limitation Act, 1963, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Procedure for which no provision is made in Part I of the division dealing with applications but also applications under various special statutes such as the one with which I am concerned in the present case and I am not surprised that High Courts of Bombay, Calcutta and Kerala have taken that view. In Employees' State Insurance Corporation v. Bharat Barrel and Drum Manufacturing Co. P. Ltd, a Division Bench of the Bombay High Court was concerned, inter alia, with the question whether an application for relief under section 75 of the Employees' State Insurance Act, 1948, was subject to any period of limitation and it was held that although having regard to the limited application of article 181 of the old Act it was not, such an application was subject to article 137 of the new Act. In the case of Ram Kumar Kajaria v. Chandra Engineering (India) Ltd., the question arose as to the application of article 137 to an application for pre-emption under the West Bengal Land Reforms Act, a special statute, and after considering the comparative phraseology of articles 181 and 137, the definition of the term "application" in the new Act, the statement of objects and reasons and the legisl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hani v. Presiding Officer, Labour Court, Hubli, which does not appear to have been placed before the Calcutta and Kerala High Courts. The decision of the Bombay High Court was earlier than that of the Supreme Court. In the case of Town Municipal Council, Athani, the Supreme Court was called upon to consider if an application claiming computation of benefit for over-time work under section 33C(2) of the Industrial Disputes Act, 1947, was subject to any period of limitation and whether article 137 of the Limitation Act, 1963, applied to such an application was answered in the negative on two grounds, namely, (1) article 137 did not represent such a drastic alteration of the scope of article 181 as to justify a conclusion that it would include within its sweep all applications irrespective of the fact whether they had any reference to the Code of Civil Procedure, and (2) article 137 would have no application to applications made to the Tribunal or authorities other than courts. This is how Bhargava J., as he then was, speaking for the court in that case, dealt with the first question: "It appears to us that the view expressed by this court in those cases must be held to be applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applications to courts" and that the industrial tribunal or labour court were not courts and the article would have no application to proceedings before these authorities. In this case, Sikri J., as he then was, who spoke for the court, considered the earlier decision of the Supreme Court in Town Municipal Council, Athani and noticed that article 137 had been held to be inapplicable to applications made under section 33-C(2) of the Industrial Disputes Act in that case on two grounds and while agreeing with the earlier decision in respect of the ground that the article had no application because the industrial tribunal or labour court was not a court to which article 137 could apply, felt that it was not necessary to express any views on the first ground, namely, whether the scope of article 137 extended to applications under special statute and it was observed that this question required "serious consideration" and apparently a mild doubt was cast on the correctness of the earlier decision of the Supreme Court, and I say so with utmost respect. This is how the matter was dealt with in paragraph 4 of the judgment: "It is not necessary to express our views on the first ground given ..... X X X X Extracts X X X X X X X X Extracts X X X X
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