TaxTMI 
TaxTMI 
TaxTMI 
1998 (9) TMI 483
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....resented before this Court and are pending for final decision. The list of other winding up petitions pending in this Court have been annexed to the Judges summons as Annexure 'C'. 3. The application for stay of the proceedings under section 138 of the Negotiable Instruments Act pending decision of the winding up petitions have been made on the ground that the Government of Gujarat in exercise of power conferred on it under section 3 of the Bombay Relief Undertaking (Special Provisions) Act, 1956, has declared the applicant-company with effect from 27-3-1997, as a 'relief undertaking' and certain directions have been issued in exercise of power conferred under section 4(i)(c )(iv) of the said Act in relation to the applicant-company. The declaration of the company as a relief undertaking also included direction that all rights, privileges, obligations or liabilities other than liabilities, arising from law in relation to workers of the 'relief undertaking', accrued or incurred before the said undertaking was declared a relief undertaking and any remedy for the enforcement thereof, are suspended and all proceedings relating thereto pending before any Court, Tribunal, Office or Auth....
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....o proceed with the winding up petition or to make the final winding up order. 7. This contention of the learned counsel for the respondent, in my opinion, is not well founded. Section 442 vests in Company Court jurisdiction to stay or restrain proceedings against company at any time after the presentation of a winding up petition and before a winding up order has been made. It is the power to be exercised during the pendency of winding up petition before it, with effect from the date of its presentation until winding up order is made. The suspension of proceedings of winding up only results in stay of final disposal of winding up petition. That is to say, the Court would not proceed to pass a final order of winding up and any proceedings for that purpose shall remain stayed. The proceedings remain pending before the Court awaiting final order. The fact that the Court would not be able to make a final order does not take out the proceedings out of the seisin of the Court. The Court remains in the control of the proceedings. The Court also continues to have necessary power to make ancillary orders to protect the pending litigation before it from other embellishment and to see that t....
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....Code and the refusal to entertain the petition on the ground mentioned in the impugned order is patently illegal." 11. The Bombay High Court in Sujanbhai Haribhau Kakde v. Motiram Gopal Saraf AIR 1980 Bom. 188 in the context of staying suit under different provisions applied the same principle. Determination of tenancy rights under the Bombay Tenancy and Agricultural Lands Act could only be under that Act by the revenue authorities. If in a civil suit, such question arises, which is exclusively triable by authorities under the revenue law under section 125 of the said Act, the suit was required to be stayed before the Trial Court pending determination of such issue by competent authority to whom it is to be referred. Temporary injunction granted during pendency of such suit was challenged on the ground of want of jurisdiction of the Court to proceed with the hearing of the application and pass order thereon. The same was rejected by the Bombay High Court. The Court said: ". . .suffice it to say that the phrase 'stay the suit' could not have been used with the intention to deprive the civil court from making any order whatsoever in a suit the moment any contention involving the is....
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.... of its authority to deal with proceedings pending before it altogether. 14. The learned counsel for the respondent further urges that in this case, the order of winding up proceedings are not stayed under the notification, but has been stayed by the orders of the Court itself and, therefore, the aforesaid principle would not apply. I am unable to accept this contention too. If the contention is to be accepted that the Court ceases to have jurisdiction of dealing with any ancillary proceedings, one proceedings of suit is stayed, result would be that it cannot hear and make an order on application for vacating the order passed by itself or even if the creditor wants to withdraw the proceedings altogether, his application cannot be entertained. 15. Constitution [Construction ?] which has such startling consequence and is contrary to the well-settled position of law, cannot be accepted. This preliminary objection,therefore, is rejected. 16. Another objection raised by the learned counsel for the respondent is that the phrase 'any proceedings' under section 442 or for that matter 'other proceedings' section 446 of the Companies Act does not take within its ambit the criminal proceed....
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....re, be it by administrative authority, the Legislature or any other authority including Courts. We are obviously not concerned with this wide expansive meaning of proceedings. In its popular sense, it refers to a legal action or process. In its sphere of legal activity, it may embrace entire process from instituting or carrying on action at law beginning with the institution of an action to its culmination in judgment. Such legal action may constitute enforcement of private right imposition of taxes, or for punishing a person for alleged commission of offences, as defined under various laws. It may be an action before ordinary courts administering justice by determining private rights as well as enforcing laws, or may be before administrative Tribunals, or may be by way of invoking extraordinary jurisdiction of superior courts under Constitution for issue of writs and directions. Looking to context in which expression has been used, it may mean all process in its entirety or relate to every step in an action as a separate proceeding. We are concerned with the expression 'proceedings' in the context of legal proceedings that are taken in Courts. 19. The word proceedings in the cont....
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....determination of private right, and commences at the instance of an affected person as remedy for enforcement of his right, it may be termed as civil proceedings or proceedings of civil nature. If it relates to assess- ment and imposition of tax liability, it may be termed as revenue proceedings and if the action is initiated to enforce law for prosecuting a person for alleged commission of an offence, it may be termed as criminal proceedings. 25. As stated in Bradlaugh v. Clarke 52 LJ AB 505, civil proceedings is a process for the recovery of an individual right or redress of individual wrong, inclusive of suits by the crown. It is opposed to criminal proceedings. 26. In this context, reference may also be made to ILR 16 Cal. 267 wherein a full bench of Calcutta High Court opined : "The word 'proceedings' is a very general one; it is not limited to proceedings other than the civil proceedings and civil proceedings other than suits. When applied to suits, it may be used to mean suit as a whole or it may be used, and often is used, to express the separate steps taken in the course of suit the aggregate of which makes up the suit." 27. This decision shows that without prefix in i....
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.... a word of wider import used in the statute by interpreting it in the light of other words in the company of which it occurs. 32. The principle rule of ejusdem generis is one of the specie of wider rule noscitur a sociis and is an application of the maxim. According to Maxwell, this rule means that when two or more words which are susceptible of analogous meaning are coupled together; they are understood to be used in the cognate sense. They take as it were their colour from each other; that is the more general is restricted to a sense analogous to a less general. 33. In Words and Phrases, the maxim has been thus explained : "Associated words take their meaning from one another under the doctrine of noscitur a sociis, the philosophy of which is that the meaning of the doubtful word may be ascertained by reference to the meaning of words associated with it; such doctrine is broader than the maxim ejusdem generis." 34. Above rule was explained in State of Bombay v. Hospital Mazdoor Sabha AIR 1960 SC 610, Gajendragadkar, J., speaking for the Court with a word of caution said : "...In fact, later maxim (ejusdem generis) is only an illustration or specific application of the broade....
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.... one expression is exhaustive of the meaning falling in its broader sense, there will not be any requirement of any further expression to widen or limit the scope of one expression and latter expression would be mere surplus [age]. A construction which renders any expression of Legislature as mere surplusage has to be avoided. 40. In Jagdish Chandra Gupta v. Kajaria Traders (India) Ltd. AIR 1964 SC 1882, construing provision of section 69(3) of the Indian Partnership Act, 1932, the Supreme Court held that interpretation ejusdem generis or noscitur a sociis need not always be made when words showing particular classes are followed by general words. Before the general words can be so interpreted, there must be a genus constituted or a category disclosed with reference to which the general words can and are intended to be restricted. 40.1 In the case of Babu Lal v. Hazari Lal Kishori Lal AIR 1982 SC 818, while construing the [word] 'proceedings' which was defined in the Act, the Apex Court said : "...The term 'proceeding' is a very comprehensive term and generally speaking, means a prescribed course of action for enforcing a legal right. It is not a technical expression with a defi....
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..... Ltd. AIR 1933 PC 63. This goes to show that in the sense in which the term is ordinarily used, word 'suit' is but one of the species of wider connotation 'proceedings'. In other words, suit is a proceeding, but all proceedings are not suit. 46. In Black's Law Dictionary, the expression 'suit' in its generic sense has been stated to mean : "A generic term of comprehensive signification referring to any proceeding by one person or persons against another or others in a court of justice in which the plaintiff pursues, in such court, the remedy which the law affords him for redress of an injury or the enforcement of a right, whether at law or in equity. It is, however, seldom applied to a criminal prosecution." 47. In Hayatkhan v. Mangilal AIR 1971 MP 140, a Division Bench of M.P. High Court in the context of controversy before it opined : "... the word 'suit' is capable of having a very wide connotation and may include any legal proceedings commenced by one person against another in order to enforce a civil right... ." (p. 142) 48. The expression 'suit' in this wider sense embraces within it exhaus-tively all proceedings of civil nature, which as noticed above, means in all its....
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....the expression is confined to 'civil proceedings' only. 51. Law is well-settled that any rule of interpretation which renders use of any word or words by the Legislature as surplus ought not to be accepted. In this connection it will be apt to refer to the decision of the Supreme Court in Ali Gulshan's case (supra). The Court was considering expression 'any other public purpose' in section 6(4)(a) of the Bombay Act, 1948. The word [expression?] 'any other public purpose' was preceded by expression 'for the purpose of a State, the purpose of the Union and any other public purpose'. The High Court has restricted the meaning of 'any other public purpose' to mean that such public purpose must be for the purpose of Union or for the purpose of the State, by applying the principle of ejusdem generis. The Court disagreeing with the application of the maxim was of the opinion that : "... it is requisite that there must be a distinct genus, which must comprise more than one species, before the rule can be applied. If the words 'any other public purpose' in the statute in question have been used only to mean a State purpose, they would become mere surplusage. Courts should lean against suc....
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....on 446(2) so as to require permission before issuing notice under section 446(2). The Court stated : "... Looking at the legislative history and the scheme of the Indian Companies Act, particularly, the language of section 446 read as a whole, it appears to us that the expression 'other legal proceeding' in sub-section (1) and the expression 'legal proceedings' in sub-section (2) of section 446 of the Companies Act convey the same sense and the proceedings in both the sub-sections must be such as can appropriately be dealt with by the winding up Court. . ." (p. 885) 58. Thus, the expression 'other proceedings' or 'legal proceedings' are found to relate to such cases, which could be dealt with appropriately by the Companies Court and not to all pervasive general meaning of proceedings to include proceedings of every nature. 59. I am not persuaded to accept the contention of the learned counsel for the respondents for reading the aforesaid observation of the Supreme Court in S.V. Kondaskar's case (supra), to control the meaning of the word 'proceedings' under section 442, or for that matter, under section 446 to exclude criminal proceedings as such from its purview. The ratio in S....
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....ction (3) is confined to pending proceedings in a Court, other provisions are not confined to proceedings before a Court only, but extend to proceedings before any other authorities as well. In sub-section (2) there is some enumeration of proceedings covered by it. Thus, the scope of interpretation in construing two provisions cannot be identical, nor by use of expression, 'any suit or other proceedings' in two provisions by itself place one as synonym for the other. Yet reading of sections 442 and 446(3) makes it clear that if as per ratio of S.V. Kondaskar's case (supra) test of a case appropriately by the Company Court is applied, the test supports the view that term 'proceedings' in both provisions embraces within it both civil and criminal proceedings pending in the Court, because all pending cases by or against company irrespective of its class are liable to be transferred and disposed of by the Company Court, in contrast if compared with proceedings which are not pending or instituted in a Court. 61. Law in England also appears to be same. Considering section 226(b) of the Companies Act, 1948, corresponding to section 442 of the Indian Companies Act, 1956, in J. Burrows (Le....
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.... 'proceedings' include criminal proceeding also within the meaning of term under section 442, it does not follow that Court would grant stay of proceedings mechanically so soon an application is made before the Company Court where a petition for winding up shown to be pending final order. Stay of proceeding pending winding up petition is not a matter of course but in case of exercise of discretion on the part of Court. If that were so, section 442 would have been cast in the way section 446(1) has been couched. 68. Ordinarily, law does not favour staying proceedings, and to allow the litigation to become stale. It leans in favour of expeditious termination of proceedings. Grant of stay of proceedings is directly related to object which is to be achieved or purpose which the stay of proceedings is to serve. This requires consideration of facts in several aspects. Position of law has been thus stated in Official Liquidator v. Dharti Dhan (P.) Ltd. AIR 1977 SC 740 : "In section 442 of the Act the power to stay a proceeding is not annexed with the obligation to necessarily stay on proof of certain conditions although there are conditions prescribed for the making of the application f....
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....d and conducted for the purpose either of preventing the commission of a crime or for fixing the guilt of a crime already committed and punishing the offender, as distinguished from a civil proceedings which is for the redress of a private injury for the ventilation of a private right and determining the other persons' liability on their right. If that principle is applied, ordinarily, a criminal proceeding is not one which has a bearing on the company's civil liability having reference to the object of winding up. 74. In Harish C. Raskapoor's case (supra), the Court looking to the facts and circumstances of the case, found it necessary to stay the proceedings against the company and its directors as well where they were accused of such offences not in their individual capacity but for their acts as officers for the purpose of achieving the object of implementation of the scheme approved by the Court under section 391 of the Companies Act. The stay of proceedings under section 391(6) thus was directly related to object of section 391 and to serve the purpose of orders made thereunder. The case cannot be considered as a precedent to be mechanically applied as a matter of rule under....
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..... The Court was of the opinion that where continuing proceedings and allowing recovery will result in undue preference to creditor, Court would grant stay though, in the facts of the case, Court did not grant such stay. Obviously, if where any proceedings are likely to result in grant of undue preference contrary to priorities, staying such proceedings will be serving the object of winding up proceedings and is justified. 78. The same cannot be said with respect to proceedings under section 138 of the Negotiable Instruments Act as prosecution under the Act has not been provided for recovery of the sum in respect of which the cheque has been returned unpaid. That can only be enforced by pursuing proceeding in civil court or any other civil proceedings. Thus, the prosecution under the Negotiable Instruments Act is not for enforcement of liability against the company but is to fulfil the object of statute to lend impetus and credibility to banking system by enhancing acceptability of cheques as payments which is in general interest of trade and industry. Imposing punishment for an offence under section 138 is not so much for failure to pay the debt as is for affecting faith in genera....
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....reover, the notification is only a temporary measure, the obligation and liabilities and remedies are only envisaged to be suspended for a while and not effaced. 81. Therefore, criminal proceedings, which do not have nexus with the object with which an undertaking is declared as 'relief undertaking' under the Act, ordinarily are not required to be stayed in aid of such declaration; if the same are not specifically directed to be stayed by the State Government and otherwise do not affect the purpose for which undertaking is declared as 'relief undertaking'. 82. It may be noticed that even in the case of Harish C. Raskapoor (supra), on which reliance has been placed by the applicant, the Court took in consideration the object of scheme, the indefinite time likely to take in implementing the same, the effect of continued criminal proceedings against directors on smooth implementation of scheme and possible chances of waning of evidence, allowed the proceedings to continue until recording of evidence and stayed proceedings thereafter only. The limited relief was considered necessary keeping in view of the paramount object of implementation of a scheme sanctioned by the Court for a li....