2003 (9) TMI 624 - HC - Companies Law

High Court Upholds Tribunal on Jurisdiction; Company Retains Land Rights

Elias Meyer Free School & Talmud Torah Versus Beni Ltd.

The High Court upheld the Tribunal's decision regarding jurisdiction under Article 323B of the Constitution of India, affirming the exclusion of the High ... Winding up – Suits stayed on winding-up order Issues Involved:1. Jurisdiction of the High Court versus the Tribunal under Article 323B of the Constitution of India.2. Validity of the State Government's order under Section 6(3) of the West Bengal Estate Acquisition Act, 1953.3. Rights of the company in liquidation concerning the land under the West Bengal Estate Acquisition Act, 1953, and the West Bengal Land Reforms Act, 1954.4. Locus standi of the school in the dispute over the land.5. Applicability of Section 446 of the Companies Act, 1956, in the context of the Tribunal's jurisdiction.Detailed Analysis:1. Jurisdiction of the High Court versus the Tribunal under Article 323B of the Constitution of India:The court examined whether the dispute should be heard by the Tribunal set up under Article 323B of the Constitution of India. The West Bengal Estate Acquisition Act, 1953, and the West Bengal Land Reforms Act, 1954, fall within the Tribunal's jurisdiction. The High Court's jurisdiction, except for writ jurisdiction under Articles 226 and 227, is excluded by these Acts. However, Section 446 of the Companies Act, 1956, grants the court jurisdiction to entertain and dispose of proceedings involving a company in liquidation. Despite this, both parties proceeded before the Tribunal, and the applications were kept pending with an interim order of status quo.2. Validity of the State Government's order under Section 6(3) of the West Bengal Estate Acquisition Act, 1953:The Tribunal found that M/s. Beni Ltd. held 13 acres out of 24.25 acres of land, and the remaining 11.25 acres were never leased out for the factory. The State Government erred in treating M/s. Beni Ltd. as the holder of the entire 24.25 acres. The Tribunal observed that the land was in possession of M/s. Beni Ltd. as a lessee directly under the State Government. The Tribunal set aside the State Government's order under Section 6(3) of the Act, directing the land and land reforms officer to decide afresh regarding the 11.25 acres.3. Rights of the company in liquidation concerning the land under the West Bengal Estate Acquisition Act, 1953, and the West Bengal Land Reforms Act, 1954:The Tribunal and the Division Bench of the High Court established that the company (in liquidation) held the land within the ceiling limit prescribed by the Land Reforms Act, 1955. The Division Bench held that the company became entitled to retain the land within the prescribed ceiling as per Section 14Z of the 1955 Act. The State Government's order of resumption under Section 6(3) of the 1953 Act was held to be misconceived since the provisions of Section 14Z of the 1955 Act had become operative.4. Locus standi of the school in the dispute over the land:The court found no locus standi for the school at this stage. The locus standi, if any, was with the State, which was discouraged by both the Tribunal and the Division Bench. The court held that there is no dispute to separate the land from the structure of the factory owned by the company.5. Applicability of Section 446 of the Companies Act, 1956, in the context of the Tribunal's jurisdiction:The court clarified that both parties accepted the Tribunal as the appropriate forum. The company court allowed adjournment based on the parties' contentions to dispose of the matter before the Tribunal and the Division Bench. This was considered a leave granted by necessary implication. The Tribunal's jurisdiction is conferred by the Constitution of India, and the decisions made by the Tribunal and the Division Bench are binding.Conclusion:The application in C.A. No. 568 of 1999 is formally treated as disposed of, and the application in C.A. No. 62 of 1999 is dismissed. The court upheld the Tribunal's and the Division Bench's decisions, confirming the company's rights over the land within the prescribed ceiling limits. No order as to costs was passed.