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of <h1>Court's Jurisdiction on Sanctioned Schemes under Indian Companies Act: Limits and Interpretations</h1> <h3>Smt. Bhagwanti Versus New Bank of India Ltd.</h3> The Court determined that once a scheme is sanctioned under Section 153 of the Indian Companies Act, it does not retain jurisdiction to entertain ... Compromise and arrangement Issues Involved:1. Jurisdiction of the Court under Section 153 of the Indian Companies Act to entertain applications post-sanction of a scheme.2. Definition and scope of the term 'company' under Section 153(6) of the Indian Companies Act.3. The extent of the Court's powers to enforce or modify a scheme post-sanction.4. Applicability of Sections 153A and 153B of the Indian Companies Act.5. Whether a scheme under Section 153 is an alternative mode of winding up.6. The inherent jurisdiction of the Court to enforce a scheme.Issue-wise Detailed Analysis:1. Jurisdiction of the Court under Section 153 of the Indian Companies Act to entertain applications post-sanction of a scheme:The Court found that once a scheme is sanctioned under Section 153, the Court does not retain jurisdiction to entertain applications for enforcing or modifying the scheme. The Court's jurisdiction is limited to ordering meetings and sanctioning the scheme. The Court stated, 'Section 153 does not contemplate or confer any such power on the Company Court.'2. Definition and scope of the term 'company' under Section 153(6) of the Indian Companies Act:The term 'company' in Section 153(6) is interpreted to mean any company liable to be wound up under the Act. The Court clarified that this definition is restrictive and not merely descriptive. It was held that 'The expression 'liable to be wound up' appears to have a restricting effect and the companies formed and registered under the Act or of the existing companies only such of them are liable to be wound up as satisfy the conditions specified in section 162 of the Act.'3. The extent of the Court's powers to enforce or modify a scheme post-sanction:The Court concluded that it does not have the power to enforce or modify a scheme post-sanction unless the scheme falls under Sections 153A or 153B. The Court noted, 'The Court sanctioning the scheme has no further seisin on the scheme and has no jurisdiction or power as the Company Court to entertain any application for enforcing the scheme or modifying the scheme.'4. Applicability of Sections 153A and 153B of the Indian Companies Act:Sections 153A and 153B provide specific powers to the Court for schemes involving reconstruction or amalgamation. The Court emphasized that these sections allow the Court to make orders for incidental, consequential, and supplemental matters to ensure the scheme is fully and effectively carried out. The Court stated, 'When a scheme is of the kind mentioned in section 153A or section 153B of the Companies Act and is sanctioned even otherwise than in course of winding up, even then the Court may by the order sanctioning the scheme or by any subsequent order make provision for all or any of the matters mentioned in the several clauses of sub-section (1) of section 153A or in section 153B.'5. Whether a scheme under Section 153 is an alternative mode of winding up:The Court rejected the argument that a scheme under Section 153 is an alternative mode of winding up. It clarified that the scheme is not a substitute for winding up but a separate mechanism. The Court observed, 'Section 153 is in Part IV which deals with management and administration and not Part V which deals with liquidation.'6. The inherent jurisdiction of the Court to enforce a scheme:The Court dismissed the argument that it has inherent jurisdiction to enforce a scheme under Section 153, stating that jurisdiction must be expressly conferred by the statute. The Court noted, 'It is indeed a truism that no legislative enactment can provide for all the cases that may arise, and it is an established principle that Courts must possess inherent powers, apart from the express provisions of the law, which are necessary to their existence and the proper discharge of duties imposed upon them by law. But it is equally true that Courts are not given, nor did they ever possess, an unrestricted and undefined power to make any order which they might consider was in the interests of justice.'Conclusion:The Court concluded that it does not retain jurisdiction to entertain applications for enforcing or modifying a scheme post-sanction under Section 153 unless the scheme falls under Sections 153A or 153B. The term 'company' under Section 153(6) is restrictive, and the Court's powers are limited to those expressly conferred by the statute. The applications must be laid before the Company Judge to be disposed of in light of this decision.
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