TaxTMI 
TaxTMI 
2010 (5) TMI 387
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....f facts leading to the filing of the aforesaid applications need to be stated first. One Winsome Textile Industries Limited, respondent No.1 in CA No. 835 of 2009, filed a petition for winding up of M/s Mangla Cotex Limited, a company incorporated under the Companies Act, 1956, having its registered office at Ludhiana. In the aforesaid petition for winding up by a unsecured creditor, the respondent company was served and has put in appearance before the Company Court on 13-3-2003 through Shri A.K. Rampal, Advocate on the basis of power of attorney signed by Mr. Sudhir Kumar Jain, present petitioner acting as Managing Director of the respondent-company. No reply was filed on behalf of the said respondent though many opportunities were granted at the request of learned counsel appearing on behalf of the company. The winding up petition was ordered to be admitted on 31-10-2003. The factum of admission was published in the "Indian Express" Chandigarh Edition; "Dainik Tribune" a vernacular newspaper and Punjab Government Official Gazette. Since no objection was received, this Court passed an order of winding up on 16-1-2004. The Official Liquidator was directed to take over possession o....
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....e request of learned counsel representing the secured creditors, the matter was adjourned to 20-7-2006. During the pendency of the said application, an application bearing number CP No. 650 of 2006 was filed by the Canara Bank for transposing it as petitioner. 5. It was on 16-11-2006, after hearing learned counsel for the parties, that CP No. 650 of 2006 filed by the Canara Bank for transposing as petitioner was allowed. The present CA No. 364 of 2006 was adjourned for 30-11-2006. Even when CA No. 364 of 2006 was pending, another application CA No. 387 of 2006 titled Ashwani Kumar v. Winsome Textiles Industries Ltd. [2009] 147 Comp. Cas. 155 (Punj. & Har.) with affidavit of Manish Kumar Jain s/o Padam Kumar Jain dated 10-5-2006 was filed for setting aside of the order dated 23-3-2006 whereby the Official Liquidator was permitted to sell the property of the company in liquidation. It was averred in Para No. 9 of the application that the company, i.e., M/s Mangla Cotex Limited, has been promoted by Shri Manish Kumar Jain, Shri Rajesh Kumar Jain, Shri Ashwani Kumar Jain and Shri Sudhir Kumar Jain, all sons of Shri Padam Kumar Jain in joint sector with Punjab State Industrial Develo....
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....n, was suffering from serious health and psychiatric problems which prevented the petitioner to prosecute the proceedings initiated by the unsecured creditor for winding up of the company. The medical record to support such contention has been placed on record. Therefore, it is contended that there is sufficient cause for not contesting the petition for winding up by the former management which led to the passing of winding up order on 16-1-2004 and all subsequent orders including the order permitting the Official Liquidator to sell the property of the company. Thus the order dated 16-1-2004 and the order permitting the Official Liquidator needs to be recalled. 10. I do not find any merit in the aforesaid argument. The company was served and had put in appearance on 13-3-2003. The appearance before this court by an Advocate was on the basis of a power of attorney signed by the present petitioner for and on behalf of the company. Learned counsel for the company has sought time to file counter affidavit to contest the claim of the unsecured creditor but none was filed. It was on 31-10-2003, the petition was ordered to be admitted and the factum of admission was given wide publicit....
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.... 2-5-2006. In view of the said fact, CA No. 835 of 2009 cannot be said to be an application for setting aside of winding up order dated 16-1-2004 and 23-3-2006, as is sought to be argued. 13. For the sake of argument, if it is assumed that CA No. 835 of 2009 is an application for setting aside of winding up order dated 16-1-2004 and order dated 23-3-2006 permitting sale of the assets of the company, even then the said application is not meritorious and does not warrant any indulgence from this Court at this stage. The said application filed on 1-12-2009 lacks bona fide. Earlier, CA No. 387 of 2006, CA No. 682 of 2007 and CA No. 815 of 2007 were filed by the brothers of the present peti- tioner on 10-5-2006, 3-10-2007 and 15-11-2007 respectively to seek set- ting aside of the order dated 23-3-2006 and order dated 16-1-2004. The said applications were dismissed on 30-9-2008. The appeal against the said order stands withdrawn on 4-12-2009. It appears that the four brothers have filed different applications to achieve the same object, i.e., to seek setting aside of the order of winding up and permission to the Official Liquidator to sell the assets of the company. The applications f....
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....adjudication of liability and the recovery of the amount by execution of the certificate are respectively within the exclusive jurisdiction of the Tribunal and the Recovery Officer and no other Court or authority much less the Civil Court or the Company Court can go into the said questions relating to the liability and the recovery except as provided in the Act. It has also been held that there can be no interference by the Company Court under section 442 read with section 537 or under section 446 of the Companies Act, 1956. 16. Later in Transcore v. Union of India [2008] 1 SCC 125^1, Hon'ble Supreme Court examined the provisions of DRT Act as well as Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ("NPA Act").On analysing the provisions of DRT Act, it was held to the following effect :- ".....we find that the said Act is a complete Code by itself as far as recovery of debt is concerned. It provides for various modes of recovery. It incorporates even the provisions of the Second and Third Schedules to the Income-tax Act, 1961. Therefore, the debt due under the recovery certificate can be recovered in various ways. The remed....
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.... inconsistency between these two remedies under the two different Acts. Therefore, the doctrine of election has no application in this case." 18. It has been further held that it is wrong to say that where two Acts provide parallel remedies, doctrine of election is not applicable. It was held as under :- "In the light of the above discussion, we now examine the doctrine of election. There are three elements of election, namely, existence of two or more remedies; inconsistencies between such remedies and a choice of one of them. If any one of the three elements is not there, the doctrine will not apply. According to American Jurisprudence, 2d, Vol. 25, page 652, if in truth there is only one remedy, then the doctrine of election does not apply. In the present case, as stated above, the NPA Act is an additional remedy to the DRT Act. Together they constitute one remedy and, therefore, the doctrine of election does not apply. Even according to Snell's Equity (Thirty-first Edition, page 119), the doctrine of election of remedies is applicable only when there are two or more co-existent remedies available to the litigants at the time of election which are repugnant and inconsisten....
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.... with other creditors similarly situated. He has to establish his debts before the official liquidator after the passing of the winding up order as any creditor would have been able to do so. It has been held as under :- "(21) From the skeletal scheme of the Act, summarised and referred to in brevity above and what has been expressly provided, the brief design from short exordium appears to be that winding up of a company is provided by specific and precise legislation. It is a case of insolvency of a corporate existence and I can safely venture to state that it can be equated with the bankruptcy of a person particularly when the company is sought to be wound up through agency of the Court for its inability to pay its debts or where it is found to be just and equitable that the company should be wound up. At this stage, it may be noticed that section 434 defines the deeming provisions when the company would be deemed to be unable to pay its debts. I may further venture to state that the scheme and provisions of the Act obviously ensure that winding up of the company particularly the creditors, shareholders and contributries etc. In spite of the fact that winding up might have be....
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.... court to adjudicate a money suit. Section 433(e) vests in the company court the jurisdiction to wind up a company, inter alia, under clause (e), if the company is unable to pay its debts. Section 434 creates a statutory fiction that if the creditor has issued a prescribed notice to the company to pay up the debt and the company fails to do so or falls to secure the said debt within the prescribed time, the company shall be deemed to be unable to pay its debts. Once such a contingency has arisen, and the statutory fiction has come into play, it is perfectly open to the company court to entertain the petition under section 433(e) of the Companies Act, 1956." 24. The argument that what could be done by the Company Court can equally be done by the DRT was found to be erroneous. It was held to the following effect :- ".....There is no provision in the RDB Act empowering the Tribunal to wind up a company which owes the debt to the applicant financial institution. The jurisdiction of the Tribunal under the RDB Act is only to adjudicate the liability of the respondent before it, ascertain the "debt" due to the bank/financial institution and issue a certificate for recovery thereof. ....