2002 (10) TMI 415 - HC - Companies Law

Company Court's Jurisdiction in Winding Up Petition Affirmed Post Notification

The Company Court retained jurisdiction over a winding up petition despite the respondent-company being notified under the Special Courts Act. Assets ... Winding up - Circumstances in which a company may be wound up Issues:Winding up petition under Companies Act, jurisdiction of Company Court post-notification under Special Courts Act, impact of Special Courts Act on acquired assets, genuineness of Fixed Deposit Receipts, jurisdiction of Company Law Board under Special Courts Act, relevance of past judgments in similar cases.Analysis:1. The petitioner filed a winding up petition against the respondent-company under sections 433(e), 434, and 439 of the Companies Act, 1956, alleging that she had deposited Rs. 6,00,000 in two Fixed Deposits with the company. The company was later notified under the Special Court Act. The Custodian appointed under the Special Courts Act contended that the Company Court had no jurisdiction to entertain the petition post-notification. The question arose whether the Company Court's jurisdiction is automatically ousted upon notification under the Special Courts Act.2. Referring to past judgments, it was established that the Special Courts Act's jurisdiction is limited to transactions during a specific period and properties attached pursuant to that period. The assets acquired post-notification are not automatically impacted by the notification. The Court clarified that the Company Court retains jurisdiction over debts and claims beyond the Special Courts Act's scope. The respondent's attempt to shield behind the Custodian's appointment was deemed invalid, and the genuineness of the Fixed Deposit Receipts was confirmed.3. The judgment in Canara Bank v. Nuclear Power Corpn. clarified that the Company Law Board's jurisdiction could be invoked under the Companies Act despite the Special Courts Act. However, the definition of 'securities' under the Special Courts Act excludes Fixed Deposits, making the winding up petition maintainable in this case. The decision in Hiten P. Dalal v. Bratindranath Banerjee further supported the jurisdiction of the Company Court in matters not falling under the Special Courts Act.4. The respondent-company was directed to disclose details of assets acquired post-1992 and the utilization of the deposited amount. The Court admitted the petition as it did not impinge on the Special Court's jurisdiction, indicating that the Company Court retains authority in such matters. The case was scheduled for further proceedings to determine the appointment of a provisional liquidator for acquired assets.