TMI Blog2019 (2) TMI 1050X X X X Extracts X X X X X X X X Extracts X X X X ..... ch an order will not be given effect during the pendency of appeal, unless stayed by the appellate court. If this interpretation, as submitted by Sri Mathur, is accepted, than no stay order would be required in any appeal, as the order under appeal will become final only on final disposal of the appeal and, thus, a stay order will have to be presumed. Such can not be the interpretation of sub section 7. Thus this submission of Sri Mathur is also rejected. The order of RBI remains operative, as there is no stay order passed in the appeal of SIFCL, till now. As per first proviso to Section 434 (1)(c), only such winding up proceedings are to be transferred which are covered by the Transfer Rules, 2016 and since, the present winding up proceedings, as already found, are not covered by the aforesaid rules, the same are saved from being transferred. From the above, it is clearly indicated that the SIFCL is repeatedly using dilatory tactics to somehow scuttle the hearing of the case. Therefore, satisfied that a mere warning would not suffice to send a strong message. Thus, looking into the conduct of SIFCL, impose a cost of ₹ 5 Lakhs upon the Directors of SIFCL collectively, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by Part VII of the Companies Act, 1956. SIFCL is a Residuary Non-Banking Financial Company (RNBFC). 2. Sub-section (1) of Section 45-MC of RBI Act provides the grounds on which RBI can file a winding up petition against the NBFCs. Subsection (4) further provides that the provisions of Companies Act 1956, relating to winding up of a Company, shall apply to a winding up proceeding initiated by RBI under Section 45-MC of the RBI Act. Section 45-MC reads as follows:- 45MC. Power of Bank to file winding up petition. (1) The Bank, on being satisfied that a non-banking financial company, (a) is unable to pay its debt; or (b) has by virtue of the provisions of section 45-IA become disqualified to carry on the business of a non-banking financial institution; or (c) has been prohibited by the Bank from receiving deposit by an order and such order has been in force for a period of not less than three months; or (d) the continuance of the non-banking financial company is detrimental to the public interest or to the interest of the depositors of the company, may file an application for winding up of such non-banking financial company under the Companies Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... empowered to issue directions to the auditors of NBFC to order special audit of NBFCs, prohibit acceptance of deposits by NBFCs and for filing of application for winding up of NBFCs (Section 45- MC). 6. SIFCL was originally incorporated on 7.8.1987 and registered as Sahara India Savings Investment Corporation Ltd., with the Registrar of the Companies, Uttar Pradesh. The Company commenced its business on 11.8.1987 and thereafter changed its name to SIFCL, with effect from 23.11.1994. SIFCL is an NBFC and is, thus, under the regulatory control of RBI, as per Chapter III-B of the RBI Act. By the nature of its business SIFCL is classified as RNBC, which receives deposits under any scheme/arrangements by way of contributions or subscriptions or by sale of units or certificates or other instruments or in any other manner. SIFCL was issued a certificate of registration for the said purpose under Section 45-IA of the RBI Act. The same is required for its business activities, which are to be conducted in compliance with the provisions of RBI Act and the directions, instructions, guidelines and circulars issued by RBI from time to time, either generally or specifically. 7. RBI caused ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.2008 of Supreme Court reads as under:- 5. After hearing learned counsel for the parties, we are of the view that in view of the peculiar facts involved, it would be appropriate for the appellant Reserve Bank of India to give an opportunity of hearing to Respondent No.1 so that it can, if so advised, place materials to substantiate its stand taken in the reply to the show cause notice. Learned counsel for the appellant is right in his submission that the principles of natural justice have been followed in the present case. But an opportunity of hearing would be appropriate, because of nature of proceedings. It shall not be construed as if we have stated so to be applicable in all cases. Because of the peculiar nature of the case, we are directing to be so done. We, therefore, direct that Respondent No.1 shall appear without any further notice before the designated authority of the Reserve Bank of India on 12.06.2008 when the matter shall be heard. It is open to Respondent No.1 to place such material on which it proposes to rely upon. Needless to say the authority shall consider all the relevant aspects of the case and pass a fresh order. Till the matter is disposed of af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill reconstitute the Board of Directors of our company within a period of thirty days from today and the Board shall consist of 50% of such independent directors who are acceptable to Reserve Bank of India. The appointment of these additional independent directors will be got ratified at the ensing Annual General Meeting of the company. The above arrangement will continue till such time as all depositors are paid in full, (iv) Appointment of statutory auditors from the panel of auditors suggested by Reserve Bank of India shall be made in the ensuing Annual General Meeting of the company envisaged by August 31, 2008. (v) We will continue to comply with all the requirements of the applicable provisions of the Reserve Bank of India Act and the directions, guidelines, instructions and circulars issued thereunder. 7. The RBI had by its letter of April 16, 2007, advised SIFCL to plan an alternate business and move out of the RNBC model and to complete the process of transition within a period of 3 years commencing from April 1, 2007. SIFCL did not give any positive plan for an exit which was satisfactory for over a year. This fact together with non-observance of various R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 7 of RNBC Directions. (vii) SIFCL shall, without prejudice to the above, be entitled to carry on its other business activities in accordance with law. (viii) SIFCL shall submit a comprehensive business plan before the close of business on 16th August, 2008. 10. SIFCL proposed that as is the practice for all large financial institutions governed by RBI and in keeping with quality corporate governance, SIFCL, will (a) reconstitute the Board of Directors of SIFCL while a period of thirty days from June 16, 2008 so that the Board shall consist of 50% of such independent directors as are acceptable to Reserve Bank of India, (b) get the appointment of these independent directors ratified at the ensuring Annual General Meeting of the company and continue the said arrangement till such time as all depositors are repaid in full, and (c) appoint statutory auditors from the panel of auditors suggested by Reserve Bank of India at the ensuring Annual General Meeting of the company envisaged by August 31, 2008 and continue to appoint statutory auditors each year from the panel suggested by Reserve Bank of India till all depositors are repaid in full. The said undertaking of SIFC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account, out of the proceeds from the above sale of directed investments, the Company has divested ₹ 484.67 crores (Annexure III) to Sahara India, a Partnership Firm and has not utilised the same towards repayment to depositors' liability or for depositing in to 'SEBI Refund Account'. (iii) The sale of directed investments amounting to ₹ 524.98 crores, during the months of August 2014 and September 2014, has resulted into a shortfall of ₹ 477.48 crores in the maintenance of directed investments as required under Para 6 of Residuary Non-Banking Companies (Reserve Bank) Directions, 1987 as at September 30, 2014. (iv) The Company has lent ₹ 484.67 crores to Sahara India a Partnership Firm and thus not complied with Para 20 of Non Banking Financial (Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007 which restrict lending of funds to single party not exceeding fifteen percent of its Owned Funds. B. Latest position of Directed Investments and Aggregate Liability to Deposit (ALD) holders as per Residuary Non-Banking Companies (Reserve Bank) Directions, 1987 to find out the ALD gap after the subseque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. Information for ALD subsequent to July 2014 is not made available to us. 4. The Company has not complied with sub limits of Directed Investments as laid down in Para 6(1)(a) of Residuary Non-Banking Companies (Reserve Bank) Directions, 1987. For the month of September 2014 there is overall shortfall of ₹ 477.48 crores and accordingly shortfall as per Para 6(1)(a) and 6(1)(b) has not been worked out. C.Amount of unclaimed deposit as per latest information available. Statement of Unclaimed ALD (Deposits Matured but not claimed) Particulars 31.03.2014 30.06.2014 31.07.2014 31.09.2014 Deposits Matured but not claimed (Rs.Crores) 1,083.38 1,08648 1,087.70 1,089.13 Number of Accounts (Nos.) 1,24,15,953 1,24,69,615 1,24,88,842 1,25,18,652 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the directions issued by the Bank and the contraventions committed by the company as described above on or before March 25, 2015. Your explanations in this regard may be submitted to the General Manager, Reserve Bank of India, Kanpur before the date specified above. In case you desire to avail any opportunity for personal hearing, the same may be requested in your written explanation. Please take further notice that if you failed to submit satisfactory explanations as stated above, the Reserve Bank may proceed to take action against you under the provisions of the Reserve Bank of India Act, 1934 which may, inter alia, include cancellation of your certificate of registration under section 45 1A (6), filling winding up petition under section 45 MC, initiation of criminal proceedings for offences punishable under section 58B of that Act etc. as may be open to the Bank under law without giving you any further opportunity to show cause against any such action. 13. This is issued without prejudice to the action that the Bank may take against you pursuant to Bank's earlier show cause notices ((i) DNBS.KAN.No.2156/21.12005/2013-14 dated April 29, 2014 on penal interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a shortfall of ₹ 378 crores on point to point basis but the entire amount of aggregate deposit liability are backed by adequate/quality assets including fixed assets of the Company which is evident from the books of accounts which market valuation is much much more than the gross liability and there will not be any shortfall at all in making the repayment of deposit liability to the esteemed depositors of the company. Further, the Aggregate Deposit Liability of the Company net off secured loan against deposit is ₹ 689.64 crores as on 31st March, 2015. 4 5. A general chaotic situation has developed in the Para Banking field due to SEBISahara issue and due to acute problem of payments in the field due to attachment of accounts of group entities. People were queuing for the payments in the service centres and also at many places under violent situation and workers were facing threatening etc and it even created panic amongst the field force including Hon'ble depositors of Sahara India Financial Corporation Limited. In such circumstances our service centres/workers were asking for entire payment advice from the Head-Quarter and that too backed by fund. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatutory Auditors as unclaimed amount as on 30.6.2014 is unclaimed amount on that date which can be claimed by the esteemed depositors at any time. It is not correct to conclude that ₹ 1086 crores had been unclaimed forever. You will appreciate that we have opened Escrow Account with Punjab National Bank, Mahanagar Branch, Lucknow with ₹ 10,000/, details of which had already been communicated to you. We mention that unclaimed amount as on 30.6.2015, if any, shall be deposited in the Escrow Account as aforesaid. However, in the meantime, you are requested to kindly take up the matter with Securities and Exchange Board of India to transfer the proceeds retained by West Bengal Infrastructure Development Finance Corporation Ltd. (11.85%) Bond of West Bengal Infrastructure Development Finance Corporation Ltd., face value ₹ 24 crores) which was invested by the Company in the aforesaid Bond out of the depositors' money. 16. Thus, the aforesaid reply by itself shows that the Company was accepting the violations being committed by it regularly. It also admitted, amongst other violations, that despite opening the Escrow account, only by ₹ 10,000/-, SIFCL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these circumstances, the CoR No.12,00152 dated December 3, 1998 issued to M/s. Sahara India Financial Corporation Ltd. is hereby cancelled under sub section (6) of section 45-IA of 1934. The company will, however, continue to be governed by the relevant provisions of the RBI Act, 1934, till it repays all the outstanding public deposits. The company is directed to submit the quarterly reports and monthly return showing the details of repayment of deposit amounts. 28. A copy of this order may be communicated to the company. 18. In the aforesaid background, finding SIFCL, amongst others, to be violating the provisions of RBI Act, not being able to pay its debts, its CoR cancelled and, thus, finding grounds for winding up under Section 45-MC made out, the present winding up petition is filed by RBI. It is claimed by SIFCL that against the order dated 3.9.2015 of RBI, it has filed an appeal before the Central Government under Section 45 (1) A (7). However, no orders are passed on the same till date. Therefore, RBI submits that a case for winding up of SIFCL is made out on all the grounds stated in Section 45-MC of RBI Act and, thus, this Court may pass appropriate orders incl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) that the occupier of a cashew factory does not conform to the provisions of law relating to safety, conditions of service or fixation and payment of wages to the workers of the factory; or (b) that raw cashew nuts allotted to a cashew factory by the Cashew Corporation of India are not being processed in the factory to which allotment has been made or that such nuts are being transferred to any other cashew factory; or (c) that there has been large scale unemployment, other than by way of lay off or retrenchment, of the workers of a cashew factory, by order published in the Gazette, declare that cashew factory shall stand transferred to, and vest in, the Government: Provided ......... 22. In the said case, on being satisfied the Government could pass an order as a result of which factory would stand transferred and vested in the State Government. In the said background, paras 10 and 11 of the judgment read:- 10. It is well-settled that if a statute requires an authority to exercise power, when such authority is satisfied that conditions exist for exercise of that power, the satisfaction has to be based on the existence of grounds mentioned in the statute. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lower than that at which it is assessable under this Act, or any deductions or exemptions have been wrongly allowed in respect thereof, the assessing authority may, after issuing notice to the dealer and making such inquiry as it may consider necessary assess or reassess the dealer or tax according to law: Provided that the tax shall be charged at the rate at which it would have been charged, had the turnover not escaped assessment, or full assessment, as the case may be: Explanation I.-Nothing in this sub-section shall be deemed to prevent the assessing authority from making an assessment to the best of its judgment. Explanation II.-For the purposes of this section and section 22, 'assessing authority' means the officer or authority who passed the earlier assessment order, if any, and includes the officer or authority having jurisdiction for the time being to assess the dealer. Explanation III.-Notwithstanding the issuance of notice under this sub-section, where an order of assessment or reassessment is in existence from before the issuance of such notice, it shall continue to be effective as such, until varied by an order of assessment or reassessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quence upon their established rights. 25. In the present case, the only power that RBI exercises, on being satisfied under Section 45 MC (1) of the RBI Act, is to file a winding up petition before the Court. It does not in any manner impact any right of the petitioner vested in it. 26. During the course of arguments, it was specifically put to Sri Mathur, counsel for SIFCL, as to what rights of petitioner are impacted by filing of winding up petition. Sri Mathur could only submit that it would cause a serious doubt about the continuation of the Company and affect its market. However, beyond that, he could not point out any serious civil consequence or divesting of any other settled right of SIFCL. 27. Sri Mathur also relied upon the judgment in the case of JVG Leasing Ltd. (supra). In the said judgment the Delhi High Court, in paragraph-10, framed the following questions for determination:- 10. In this backdrop, two questions arise for determination, namely:- (a) non-banking finance company which is denied licence by the RBI under section 45-IA of the RBI Act or a company whose license is cancelled under the aforesaid provisions, has to be necessarily wound u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a company should be wound up (b) rather than conferring power on another agency/authority like Registrar of Companies or the Company Law Board, it is specifically to the regulator, namely, the RBI, as the regulator is in a better position to enlighten the court on these aspects. It may further be notices that sub-section (1) of section 45MC empowers the RBI to file a petition on any of these grounds on being satisfied , that one of such grounds in case of an NBFC exists. Thus, even before filing such an application bank has also to satisfy itself about the existence of such a ground on which it proposes to file the application for winding up of such NBFC. As per the procedure adopted by the RBI, such satisfaction is arrived at only after the bank conducts the inquiry/investigation into the affairs of such NBFC. When irregularities are found out, even show-cause notice is given to such a company and it is heard in the matter. Before passing an order under section 45 MC or passing an order prohibiting such NBFC from receiving deposits from the public. There is a remedy of appeal provided to the affected company. 18. The intention of the Legislature in making these provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to non-banking financial companies and section 45-I (f) provides definition of NBFC in the following terms: (f) 'non-banking financial company' means-- (i) a financial institution which is a company; (ii) a non-banking institution which is a company and which has as its principal business the receiving of deposits, under any scheme or arrangement or in any other manner, or lending in any manner; (iii) such other non-banking institution or class of such institution, as the bank may, with the previous approval of the Central Government and by notification in the official gazette, specify.] 20. If such a company is allowed to do some other business, confidence of the public can be shaken. Legislature, it is obvious, did not intend this course for such a company. If the promoters/shareholders want that some other business activity should be done, they can always incorporate another company with some other name and do such a business. 21. When the matter is looked into in the aforesaid perspective, I am not convinced with the interpretation given by him to sub-section (4) of section 45MC of the Act and to suggest that since all the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad argument of the learned counsel for the respondent is that before filing a winding up petition under Section 45-MC of the Reserve Bank of India Act it (Bank) is required to be satisfied as to the existence of one or the other contingencies enumerated in the section warranting the filing of the winding up petition. It has been submitted that such a satisfaction of the Bank is necessary prelude for the filing of the winding up petition which is wanting in the present case. It has been reasoned that the satisfaction about the existence of certain conditions enumerated in this section before filing a winding up petition is a duty to be performed by the Bank and not the power conferred on it. The line of reasoning adopted and suggested by the learned counsel for the respondent is that the power of Deputy General manager (DNBS) to sign and verify the winding up petition is not synonymous to the duty to be performed by the Bank regarding being satisfied about the existence of one or other eventualities enumerated in Section 45-MC for filing winding up petition. To my mind, the present winding up petition cannot be thrown over board on the basis of play of words or on an apologetic appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is liable to be rejected that the petition has been filed without satisfying the requirement of satisfaction of the Bank which is a pre-condition for the filing of winding up petition. 31. In para 19 aforesaid, this Court has categorically held that the winding up petition cannot be thrown over board, as ultimately it is for the Court to form an opinion, on the basis of material placed before it, as to whether the grounds exist for allowing the winding up petition. 32. So far as State of Haryana case (supra) is concerned, the order under challenge was a suspension order, and the provision required on being satisfied that it is necessary or desirable to place under suspension a member of the service against whom, disciplinary proceedings are contemplated or pending . In the said background it was argued in the said case, that, the impugned order nowhere says that the Governor of Haryana was satisfied that it was either necessary or desirable to place applicant under suspension. Attention is drawn to para 10 of said judgment which reads:- 10. We find it difficult to agree with the said view of the tribunal. The mere fact that the impugned order of suspension does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were satisfied before the order was passed. We are equally not impressed by Shri Pathak's argument that if the recital is not there, the public or courts and tribunals will not know that the order was validly passed and therefore it is necessary that there must be a recital on the face of the order in such a case before it can be held to be legal. The presumption as to the regularity of public acts would apply in such a case; but as soon as the order is challenged and it is said that it was passed without the conditions precedent being satisfied the burden would be on the authority to satisfy by other means (in the absence of recital in the order itself) that the conditions precedent had been complied with. 33. Thus, submission of Sri Prashant Chandra is that the law is settled that there is presumption about fulfillment of condition in favour of authority which passed the order. He further submits that in a case where the order does not contain recital about condition being fulfilled and the order is challenged on the said ground, the burden to prove that the condition was fulfilled would be on the authority passing the order by placing material before the court. Thus, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Thus the jurisdictional facts on which the appropriate Government may act are the formation of an opinion that an industrial dispute exists or is apprehended which undoubtedly is a subjective one, the next step of making reference is an administrative act. The adequacy or sufficiency of the material on which the opinion was formed is beyond the pale of judicial scrutiny. If the action of the Government in making the reference is impugned by a party it would be open to such a party to show that what was referred was not an industrial dispute and that the Tribunal had no jurisdiction to make the Award but if the dispute was an industrial dispute, its factual existence and the expediency of making a reference in the circumstances of a particular case are matters entirely for Government to decide upon, and it will not be competent for the Court to hold the reference bad and quash the proceedings for want of jurisdiction merely because there was, in its opinion, no material before Government on which it could have come to an affirmative conclusion on those matters (see State of Madras v. C. P. Sarathy) (1). R.M. Narayana Chettiar and another. Vs. N. Lakhmanan Chettiar and others ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on turns on the answer to two subsidiary questions (i) whether in according or declining to accord permission under the proviso to section 63(1) of the Act, the Collector or the officer authorised by the State Government in that behalf acts in an administrative capacity or a judicial or a quasijudicial capacity and (ii) whether the aforesaid order dated December 8, 1958 passed by the Prant Officer, Thana was one on merits or otherwise. Turning to the question (i), it has to be observed that there is nothing in section 63 of the Act to indicate that in exercising his jurisdiction under the proviso to sub-section (1) of the section, the Collector or the authorised officer has to act judicially or in conformity with the recognised judicial norms. There is also nothing in the aforesaid Section of the Act requiring the Collector or the authorised officer to determine any question affecting the right of any party. The function which the Collector or the authorised officer discharges under the aforesaid proviso is, therefore, an administrative one and not judicial or quasi-judicial. 35. The law settled by the supreme court by the aforesaid judgments is fully applicable in the prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re. 37. Thus, this Court categorically found that the petition cannot be thrown out only on the ground that the same is signed by the Deputy General Manager. In the present case, further, as is already referred to above, the show cause notice was issued by the General Manager and its reply was also required to be submitted before the General Manager at Kanpur, who has filed the present winding up petition. Therefore, in view of the said judgment of Krishi Export (supra), it cannot be said that the present petition could not have been filed through General Manager. I find no reason to disagree with the aforesaid view. 38. Third submission of Sri Mathur is that against the order passed under Section 45-IA-(6) of the RBI Act, an appeal is already filed by SIFCL before the Central Government as per sub-section (7) of Section 45- IA of the RBI Act, which provides that an order passed on appeal by the Central Government shall be final. Therefore, till the disposal of appeal, the order passed by RBI is not final and cannot be given effect to. For convenience, Section 45-IA (6) and (7) are reproduced below:- (6) The bank may cancel a certificate of registration granted to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of being heard. 39. Sri Mathur in support of his submissions, places reliance upon paragraph 23 of Krishi Export (supra) case which reads:- 23 . It is not disputed by the petitioner that the respondent has preferred an appeal against the order of the Bank dated 17.9.1998 before the Central Government and the same is pending. The submission from the side of respondent is that since its appeal is pending before the Central Government, the order of rejection passed by the Bank declining registration of it (respondent) is not final and as such the Bank cannot rely on ground (b) of sub-section (1) of Section 45-MC of the Act to back its winding up petition. On the other hand, the argument of learned counsel for the petitioner is that no stay order has been passed by the Central Government staying the Bank's order dated 17.9.1998. This Court is of the opinion that no stay order is required to be passed by the Central Government to put a brake to the operation of rejection order during the pendency of the appeal. Sub-section (7) of the Section 45-IA is couched in and unambiguous terms that where an appeal is preferred against the rejection of application for registrati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f SIFCL, till now. 41. Further, Sri Prashant Chandra, learned counsel for RBI submits that till date, the said appeal is not even entertained and has not been heard even for admission and the notices on the said appeal are not issued as yet. SIFCL, except for filing of said appeal, has not taken any steps for arguing the same even for admission. In the said circumstances, it cannot be said that the appeal has been entertained by the Central Government. Thus, there is no question of there being of any stay of order of RBI. I fully agree with the submission of Sri Prashant Chandra. Neither the language of sub-section (7) provides for any automatic stay of order of RBI nor, in absence of any order showing application of mind by Central Government in entertaining the appeal, such an argument can be raised by SIFCL. SIFCL at least ought to have taken steps for arguments before the Central Government. There is nothing on record to show that it could not appear before the Central Government to argue the matter, on stay or otherwise or approach any court for such directions, in last so many years. Therefore, I do not find any force in the submission of SIFCL. Even otherwise, at best, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssions on an application which the respondent company has filed yesterday in the registry and this Court should summon the said application. On being informed to him that Sri J.N. Mathur, learned Senior Advocate has nearly concluded his arguments and he is supposed to argue the matter today, he submits that Sri J.N. Mathur is no more having instructions in the matter. Thereafter, Sri J.N. Mathur and Sri Kumar Ayush have also appeared before the Court and submitted that they have no instructions in the matter. This is nothing but a delaying tactics on part of the respondent company. After a matter has been heard at length, without assigning any reason and without leave of the Court, it is most inappropriate to withdraw a counsel and come up with a new counsel. The arguments were nearly completed, therefore, permission to a new senior counsel, at this stage, cannot be granted. It would have been a different situation if a new senior counsel would have come up along with the earlier counsel so that the arguments would not be repeated. But this is not the situation. In fact going strictly as per law, neither Sri J.N. Mathur, the earlier senior counsel nor Sri Kumar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the written submissions, signed by Sri Kumar Ayush advocate, earlier instructing counsel, who on the last date had informed that he had withdrawn from the case, came up before the court on which following order was passed:- (Order on C. M. Application No. 108880 of 2018) No one is present for the applicant/opposite party to press or argue this application. Judgment in this case is already reserved. Put up with record. After lunch at 02:15 p.m., a mention is made by Sri Kumar Ayush, learned counsel appearing for the respondent. He submits that written submissions may be taken on record. The same are taken on record. It was specifically put to Sri Kumar Ayush if he or senior counsel would like to argue the case today. He submits that he is not in a position to reply the same. He submits that some future date may be fixed as he is not prepared today. This is nothing but an attempt to delay the proceedings of the case. The judgment in this case is already reserved. Hence his prayer for fixing further date is rejected. 46. Against the said order dated 8.10.2018 also an SLP No. 28560/2018 was filed which was dismissed by the following order dated 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is in itself misconceived. Different provisions of Companies Act, 2013 were enforced, by separate notifications, on different dates. Section 434 of the Companies Act, 2013 was also enforced, in parts, on different dates. Section 434 (1)(a) and 1(b) were enforced w.e.f. 01.06.2016 by notification number 1934(E) dated 01.06.2016. Sub clause 1(a) and 1(b) are not applicable with regard to winding up proceedings and it is only Section 434 (1)(c) which relates to winding up proceedings. Before Section 434 (1)(c) could be enforced, Companies (Removal of Difficulties) Fourth Order, 2016 amended the same w.e.f. 15.12.2016. Thus amended section 434 (1)(c) for the first time was enforced w.e.f. 15.12.2016 only by notification number SO-3677(E) dated 07.12.2016. Therefore, for the first time, Section 434 (1)(c) came in force is from 15.12.2016. Prior to 15.12.2016 Section 434 (1)(c) was never enforced. Therefore, there is no question of transfer of any pending winding up proceedings under Section 434 (1)(c) from 15.11.2016 or from any date prior to 15.12.2016. 50. Further Section 434 of the Companies Act, 2013 which came in force, as aforesaid, from 15.12.2016, has been amended from tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... winding up, for which orders for allowing or otherwise of the proceedings are not reserved by the High Court shall be transferred to the Tribunal. Provided also that- (i) all proceedings under the Companies Act, 1956 other than the cases relating to winding up of companies that are reserved for orders for allowing or otherwise such proceedings; or (ii) the proceedings relating to winding up of companies which have not been transferred from the High Courts; shall be dealt with in accordance with provisions of the Companies Act, 1956 and the Companies (Court) Rules, 1959; Provided also that proceedings relating to cases of voluntary winding up of a company where notice of the resolution by advertisement has been given under subsection (1) of section 485 of the Companies Act, 1956 but the company has not been dissolved before the Ist April, 2017 shall continue to be dealt with in accordance with provisions of the Companies Act, 1956 and the Companies (Court) Rules, 1959. (2) The Central Government may make rules consistent with the provisions of this Act to ensure timely transfer of all matters, proceedings or cases pending before the Company Law Board o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 2013, 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 information forming part of the records transferred in accordance with rule 7, required for admission of the petition under sections 7, 8 or 9 of the Code, as the case may be, including details of the proposed insolvency professional to the Tribunal within six months from the date of this notification, failing which the petition shall abated: (2). All cases where opinion has been forwarded by Board for Industrial and Financial Reconstruction, for winding up of a company to a High Court and where no appeal is pending, the proceedings for winding up initiated under the Act, pursuant to section 20 of the Sick Industrial Companies (Special Provisions) Act, 1985 shall continue to be dealt with by such High Court in accordance with the provisions of the Act. 6. Transfer of pending proceedings of Winding up matters on the grounds other than inability to pay debts .-- All petitions filed u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orders for allowing or otherwise such proceedings; or (ii) The proceedings relating to winding up of companies which have not been transferred from the High Courts; Shall be dealt with in accordance with provisions of the Companies Act, 1956 and the Companies (Court) Rules,1959 . 24. It is clear that with effect from 1 June, 2016, all applications complaining of oppression and mismanagement of a company have to be made before the NCLT. The question is what happens to a proceeding like the present one being an application complaining of oppression and mismanagement under Secs. 397 and 398 of the 1956 Act which was filed in th is Court in the year 1988. Mr. Mookherjee and Mr. Sen, learned Senior Counsel, would both contend that because of Sec. 68 of the Amendment Act, 1988 which was never repealed, the present application has to be heard and disposed of by this Court. With great respect for Mr. Mookherjee and Mr. Sen that I have, I am unable to accept this contention. My reasons are as follows. 25. Section 68 of the Amendment Act, 1988 was a transitional provision. It did not preserve the jurisdiction of the High Court generally. It only provided that proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Judge and of the Division Bench in Special Appeal, of Calcutta High Court cannot be applied to the present case as are clearly distinguishable. 56. In view thereof, as per first proviso to Section 434 (1)(c), only such winding up proceedings are to be transferred which are covered by the Transfer Rules, 2016 and since, the present winding up proceedings, as already found, are not covered by the aforesaid rules, the same are saved from being transferred. 57. Coming to the second leg of submission for transfer, that, the second proviso to Section 434 (1)(c) provides that any party to winding up proceedings, pending before any Court immediately before the commencement of Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018 (the said proviso has come into force w.e.f. 06.06.2018), may file an application for transfer of such proceedings and the Court may transfer all such proceedings to the Tribunal. The prayer is made by SIFCL, in the aforesaid application bearing Application No.99993 of 2018, for transferring the present proceedings to NCLT. 58. There is no reason given in the entire application as to why the present winding up proceedings should be transferred. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application being C.M. Application No.94843 of 2018 dated 28.08.2018 is filed seeking partial modification of ex-parte order dated 16.09.2015 passed in the present petition, to enable respondent company to deposit the amount of ALD in the Escrow Account. Both the applications are filed almost for the same relief, that is for vacation or modification of the same order dated 16.09.2015. In view therefore, both the applications are being considered together. The order dated 16.09.2015 reads as follows:- Heard Sri Anil Tiwari, learned Senior Counsel assisted by Sri Pritish Kumar, learned counsel for the petitioner. Considering the order of the Hon'ble Supreme Court dated 24.2.2015 passed in I.A. Nos.47-55 in C.P. (C) No.412 and 413 of 2012 in C.A. No.9813 9833 of 2011 and C.P. (C) No.260 of 2013 in C.A. No.8643 of 2012 wherein petitioner has been allowed to initiate such action as may be legally permissible under the provisions of the Reserve Bank of India Act and the Regulations framed thereunder, and the averments made in the company petition which has been preferred by the Reserve Bank of India under Section 45-M.C. of the Reserve Bank of India Act, 1934 read with Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat:- (1) the provisions of Section 45IA, 45IB, 45IC, 45MB and Section 45MC of the Reserve Bank of India Act, 1934 (2 of 1934) shall not apply to any non-banking financial company. (a) doing the business of insurance, holding a valid certificate of registration issued under Section 3 of the Insurance Act, 1938 (IV of 1938) (b) being a stock exchange, recognised under Section 4 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956; and (c) doing the business of a stock-broker or subbroker holding a valid certificate of registration obtained under Section 12 of the Securities and Exchange Board of India Act, 1992 (No.15 of 1992). 63. The Certificate of Registration is attached as Annexure-SA-3 to the said supplementary affidavit. The said Certificate of Registration granted under section 3(2A) of the Insurance Act, 1938 is in favour a company namely Sahara India Life Insurance Company Limited dated 06.02.2004. The said insurance registration is not in the name of respondent SIFCL but in the name of an entirely different company. The notification dated 06.03.1997 provides that certain provisions of RBI Act including Section 45-MC shall not apply to any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the arguments relating to jurisdiction and consequent transfer of the petition to NCLT are heard in open Court. The applicant respondent prays accordingly. The applicant respondent assures this Hon'ble Court that no repeated arguments would be made and the submissions will be made only on those aspects which have not been argued as yet. 5.8. The applicant further submits that if this Hon'ble Court reaches to the conclusion, after hearing the oral submissions of the respondent on the issue of jurisdiction and maintainability of the Winding Up petition, then this Hon'ble Court may grant an opportunity of detail hearing on the merit of the petition, as the opportunity of hearing was suddenly closed on 13.09.2018 when the Senior Counsel wanted to argue the application on maintainability and had informed the Court that if the application of maintainability were to be rejected, he was ready to argue the matter on merits as well as on the same day without seeking any adjournment. It was made clear that there was no attempt to delay the matter. In any manner the perusal of the record of proceeding will make it clear that the respondent no.1 has not made any attempt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wal from case on 13.09.2018 was true and bona fide? The answer that comes to me is, No. Proceedings were stage managed on 13.09.2018 only to get the matter lingered and keep the same pending. This Court is suffering from one of the highest pendency of cases in this country. The luxury to hear the matter again and again is not available. There are large numbers of litigants waiting for their turn to get their matter taken up. Their right to get their matter heard and decided from this Court is of equal importance to this Court as that of the respondent SIFCL. 68. It would also be relevant to look into the previous conduct of the respondent SIFCL in this case. In this case, hearing was started earlier by another Hon'ble Judge of this Court on 07.04.2016. The matter was heard on 11.04.2016, 19.04.2016, 20.04.2016, 12.05.2016, 16.05.2016, 17.05.2016 and 20.05.2016. Lengthy hearing was granted. Thereafter the case was fixed for 25.05.2016. On 25.05.2016 another senior advocate came from Delhi and sought an adjournment on the ground that he is not yet briefed properly in the case. The order dated 25.05.2016 speaks for itself and is quoted below:- A mention has been by Sri Kap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia vide order dated 03.09.2015 has already cancelled the licence of the Company and, therefore, the Company cannot accept any deposit from the public. The order dated 03.09.2015 is pending consideration in an Appeal before the Central Government and as such the Company is not in a position to accept any deposit from any one. Sri Arohi Bhalla has also brought to the notice of the Court that Sri Kapil Sibbal, Senior Advocate, who is to argue the matter, on account of his personal difficulty could not attend the Court today, therefore, some other date may be fixed sometime in the month of August, 2016 . He proposed 17th, 18th, 24th, 25th 26th, August, 2016. Sri Prashant Chandra, Senior Advocate vehemently opposed the request of Sri Arohi Bhalla for adjournment of the case. Considering the aforesaid facts and in the interest of justice, the case is adjourned for the day. List this case on 17.08.2016. It is made clear that on the next date, the case will not be adjourned in any manner on the request of opposite party. In the meantime, it is open for the petitioner to file rejoinder affidavit to the detailed counter affidavit of opposite party. 70. Thus, desp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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