TMI Blog2015 (12) TMI 1772X X X X Extracts X X X X X X X X Extracts X X X X ..... en pending since 1996, it is necessary that the issue of title to the paintings is decided quickly. It is made clear that no further time will be granted to Sheetal Mafatlal to file her evidence and compilation of documents. As regards prayer clauses – (b), (c) and (d) in the Official Liquidator's Report, to the extent it relates to the paintings, the Official Liquidator may file further report after the issue of title to the paintings claimed by Sheetal Mafatlal is determined. As regards the other articles contained in prayer clauses - (c) and (d), the Official Liquidator may list those articles and file further reports as necessary. As regards prayer clause – (a) in the Official Liquidator's Report, the ex-directors of the company (in liquidation) are directed to file within four weeks, the Statements of Affairs to the extent not submitted, as required under section 454 of the Companies Act, 1956 and handover the books of account/record of the company (in liquidation) to the Official Liquidator to enable the Liquidator to further in winding up proceedings. Mr. Atulya Mafatlal, an ex-director of the company is directed to (a) file an affidavit in order to indicate his sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irect the police authorities of Crime Branch CID, Unit-II, Satrasta, Mumbai to hand over the paintings/articles belonging to the company (in liquidation) to the Secured Creditors of the company (in liquidation) under intimation to the Official Liquidator, after completion of investigation of criminal case filed by Smt. Sheetal Mafatlal; (d) Whether this Hon'ble court would be pleased to permit the Official Liquidator to place a necessary further report in respect of above said paintings/articles belonging to the company (in liquidation) seeking further necessary direction of this Hon'ble Court. 2 The counsel for the Official Liquidator informs the court that Atulya Mafatlal, ex-director of the company (in liquidation) has filed the Statements of Affairs but they would like to examine whether it contains all information and documents. The main issue in this report is relating to the 44 paintings, which, it appears to the Official Liquidator, belongs to the company (in liquidation). These paintings are kept in the safe custody of J.J. School of Arts as investigation is being conducted by the Police authorities, Crime Branch, CID Unit-II, Saat Rasta, Mumbai but in deemed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te to or arise in course of the winding up of the company; 456. Custody of company' s property. (1) Where a winding up order has been made or where a provisional liquidator has been appointed, the liquidator or the provisional liquidator, as the case may be,] shall take into his custody or under his control, all the property, effects and actionable claims to which the company is or appears to be entitled. (1A) For the purpose of enabling the liquidator or the provisional liquidator, as the case may be, to take into his custody or under his control, any property, effects or actionable claims to which the company is or appears to be entitled, the liquidator or the provisional liquidator, as the case may be, may by writing request the Chief Presidency Magistrate or the District Magistrate within whose jurisdiction such property, effects or actionable claims or any books of account or other documents of the company may be found, to take possession thereof, and the Chief Presidency Magistrate or the District Magistrate may thereupon, after such notice as he may think fit to give to any party, take possession of such property, effects, actionable claims, books of account or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... either in full discharge of the whole amount or not, as the Court thinks fit, with or without costs of the examination. (6) If, on his examination, any such officer or person admits that he has in his possession any property belonging to the company, the Court may order him to deliver to the provisional liquidator or, as the case may be, the liquidator, that property or any part thereof, at such time, in such manner and on such terms as to the Court may seem just. (7) Orders made under sub- sections (5) and (6) shall be executed in the same manner as decrees for the payment of money or for the delivery of property under the Code of Civil Procedure, 1908, (5 of 1908) respectively. (8) Any person making any payment or delivery in pursuance of an order made under sub- section (5) or sub- section (6) shall by such payment or delivery be, unless otherwise directed by such order, discharged from all liability whatsoever in respect of such debt or property.] 6 Section 446 gives very vide powers to the company court. Section 446 (2) (d) was introduced pursuant to an amendment which came into effect from 28th December, 1960. The Apex Court in the matter of (1984) 4 Supreme Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e court in which the winding up proceedings are pending.(1) 'To give effect to these recommendations, sub-sec. (2) was suitably amended to bring it to its present from by Companies (Amendment) Act, 1960. The Committee noticed that on a winding up order being made and the Official Liquidator being appointed a Liquidator of the company, he has to take into his custody company property as required by Sec. 456. Sec. 457 confers power on him to institute or defend any suit, prosecution, or other legal proceeding, civil or criminal, in the name and on behalf of the company. Power is conferred upon him to sell the properties both movable and removable of the company and to realise the assets of the company and this was to be done for the purpose of distributing the assets of the company amongst the claimants. Now at a stage when a winding up order is made the company may as well have subsisting claims and to realise these claims the Liquidator will have to file suits. To avoid this eventuality and to keep all incidental proceedings in winding up before the court which is winding up the company, its jurisdiction was enlarged to entertain petition amongst others for recovering the claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion under the Act with respect to that matter relating to that company, as provided in Section 10. Section 10 provides that the court having jurisdiction under the Act shall be the High Court having jurisdiction in relation to the place at which the registered office of the company concerned is situate, except to the extent to which jurisdiction has been conferred on any District Court or District Courts subordinate to that High Court in pursuance of sub-sec. (2). The winding up petition has thus to be presented in the High Court before the Judge who is assigned the work under the Companies Act. Therefore, the Court which is winding up the Company will be the court to whom the petition for winding up was presented and which passed the order for winding up the Company. In this case, the order was made by the learned Company Judge in the Kerala High Court directing winding up the company. An appeal lies against the order for winding up the Company under section 483 to the same court to which and in the same manner in which and subject to the same conditions under which, appeals lie from any order or decision of the court in cases within its ordinary jurisdiction. In exercise of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g them to an end, this sub-section was amended in its present form in 1960 conferring jurisdiction on the court winding up the company to entertain amongst others any suit or proceeding by or against the company or any claim made by or against the company or any other question whatsoever which may relate to or arise in course of the winding up of the company. In the absence of a provision like Sec. 446 (2), the Official Liquidator in order to realise and recover the claims and subsisting debts owed to the company would have to otherwise file suit in various forums. These suits may drag on through the trial courts and then the appeal court resulting not only in multiplicity of proceedings but also holding up the progress of the winding up proceedings. The Liquidator will have to also incur expensive litigation cost. This was the object behind enacting section 446 (2) and therefore, it must receive such construction at the hands of the court as would advance the object and not thwart it. This court is the court as defined in the companies act. 8 The Official Liquidator has not filed the report without any basis. There was a report in news paper in which it was stated that investig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e jurisdiction. The parties need not go to the Rent Court which has exclusive jurisdiction to decide such matters. In an unreported judgment of the Division Bench of this court in the matter of Appeal lodging No.688 of 2014 in Company Petition No.423 of 2010 dated 31st March, 2015 International Asset Reconstruction Company Pvt. Ltd. vs. Deepak @ Gajanan Kanegaonkar Ors., it was submitted that validity or otherwise of the purposed lease falls within the exclusive jurisdiction of the Small Causes Court (or Rent Court) under the Maharashtra Rent Control Act, 1999 and therefore, the company court could not have entertained and gone into that aspect. The Division Bench rejected that submission and held that in view of the provisions of section 446 and section 456 of the Companies Act, 1956, the company court has jurisdiction to decide these issues. 11 The counsel appearing for Sheetal Mafatlal tendered copies of three judgments to submit that this court has no jurisdiction. None of these judgments are of any relevance. The first judgment is in the matter of A.I.R. (37) 1950 East Punjab 204 Janda Rubber Works Ltd. vs. Collector of Bombay and Anr. It is much before even the Companies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reported order of a Single Judge (Gupte, J.) of this court which was confirmed by the Division Bench in the matter of Company Petition No.423 of 2010 dated 28th October, 2015 and Appeal lodging No.828 of 2015 dated 30th October, 2015. M/s. Phoenix Alchemy Private Limited (in liquidation). 13 Moreover, sub section (1) of section 456 provides where a winding up order has been made or where a provisional liquidator has been appointed, the liquidator or the provisional liquidator, as the case may be, shall take into his custody or under his control, all the property to which the company is or appears to be entitled. It provides therefore, not only where parties agree that the company is entitled to a property but even in cases where to the Liquidator it appears that the company is entitled to a property. There has been news paper report in this case regarding the paintings. There are police investigation regarding the paintings and the ex-director of the company has provided information to the Official Liquidator that these paintings belong to the company and not to Sheetal Mafatlal. Therefore, the Liquidator had powers and the paintings are correctly in the deemed custody of the Li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich is presented otherwise than in accordance with these rules or the practice and procedure of the Court. Rule 9 - Inherent powers of Court -Nothing in these rules shall be deemed to limit or otherwise affect the inherent powers of the Court to give such directions or pass such orders as may be necessary for the ends of justice or to prevent abuse of the process of the Court. These subject property are very valuable and here is a person who claims the paintings belong to her whereas according to the Liquidator it belongs to/appears to belong to the company (in liquidation). Therefore, it is necessary for the ends of justice that the practice and procedure of the court and provisions of the Code of Civil Procedure are applied. This would also be beneficial to Sheetal Mafatlal who will get an opportunity to prove that the paintings rightfully belong to her and not the company (in liquidation). 17 In view of the above, Sheetal Mafatlal to file an affidavit in evidence together with compilation of documents to prove that the 44 paintings lawfully/legally belong to her, that she is entitled thereto and she has title to those paintings and serve a copy thereof upon the Offici ..... X X X X Extracts X X X X X X X X Extracts X X X X
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