TaxTMI 
TaxTMI 
2012 (12) TMI 536
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....Bhuvan Gugnani, Adv. for CRB Capital Markets Ltd. Mr Rajiv Bahl, for Official Liquidator Advocates who appeared in this case: For the Appellant Mr Neeraj Malhotra, Adv. with Mr Shourjya Mukherjee, Adv. For the Respondent Mr Sudhanshu Batra, Sr. Advocate with Mr Bhuvan Gugnani, Adv. for CRB Capital Markets Ltd. Mr Rajiv Bahl, for Official Liquidator Advocates who appeared in this case: For the Appellant Mr R.P. Bhatt, Sr. Adv. with Mr Ishaan Madaan and Mr Chirag M. Shroff, Adv. For the Respondent Mr Sudhanshu Batra, Sr. Advocate with Mr Bhuvan Gugnani, Adv. for CRB Capital Markets Ltd. Mr Rajiv Bahl, for Official Liquidator JUDGMENT BADAR DURREZ AHMED, J 1. In all these appeals the judgment dated 24.01.2006 delivered by the learned company Judge is under challenge. The appellants are aggrieved by the fact that the learned company Judge allowed the company petition No. 251/2002 filed on behalf of CRB Capital Markets Limited (the common respondent in all these appeals). CRB Capital Markets Limited (hereinafter referred to as 'CRB Capital') had filed the said company petition No. 251/2002 seeking sanc....
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....out in Chapter IIIB of the RBI Act. The chapter heading itself reads as under:- "Provisions relating to Non-Banking Institutions receiving deposits and Financial Institutions." CRB Capital was provisionally classified as a loan company on 04.05.1993 and the classification status was changed to that of Equipment Leasing Company on 16.06.1993. 4. It is pointed out by the RBI that on 12.04.1993, based on the Shah Committee recommendations on the role of NBFCs a circular was issued to all the NBFCs advising them to get themselves registered with RBI if their net owned funds were more than Rs. 50 Lakhs. It is alleged that CRB Capital, although it had net owned funds of more than Rs. 50 Lakhs, did not apply for registration till the year 1996. CRB Capital made an application to RBI for registration only on 24.10.1996 and on receipt of the application RBI decided to inspect the company before registration. Inspections were carried out between November 13, 1996 and November 18, 1996 with reference to CRB Capital's financial position as on 31.03.1996. However, the inspection extended to the Mumbai office of CRB Capital and therefore the inspection was completed in its entirety only....
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....997 requiring CRB Capital to submit a schedule of assets which could be used for discharging its obligations and liabilities. According to RBI, the reply submitted by CRB Capital made no mention of its assets and only spoke of its liability. 8. According to RBI, CRB Capital was also advised to prepare a plan indicating the month-wise maturity pattern of public deposits, month-wise cash flow as also sale of assets (if any) for the purpose of re-payment of deposits by virtue of a letter dated 15.05.1997. CRB Capital did not respond to the said letter. It is also alleged that the efforts of the RBI to contact the Managing Director / Directors and Officers of CRB Capital were in vain. And that, all the offices of CRB Capital remained closed since 1997. It is further alleged that the Chairman of CRB Capital (C.R. Bansali) was not traceable and no other official of the company was available. Two of the Directors had informed RBI that they had resigned from the board of directors of the company with effect from 06.03.1997. In the meanwhile, RBI had also allegedly received a complaint from the Government of Gujarat informing it that a number of co-operative banks in the State of Guja....
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.... Metropolitan Magistrate, New Delhi. 13. While proceedings in the winding up petition (company petition No. 191/1997) filed by RBI, were going on, CRB Capital filed an application being C.A. No. 1416/1998 in the said company petition seeking approval for the scheme of re-arrangement formulated by them. By an order dated 23.02.2002, the company court directed the consideration of the scheme propounded by CRB Capital by the creditors of the company. Pending consideration of the scheme, the company court had also directed that no further step including publication be taken pursuant to the admission of the company petition No. 191/1997. The company court also directed the scheme to be considered by the secured creditors, unsecured creditors and shareholders of CRB Capital and, accordingly, meetings were held. A modified scheme of compromise and an arrangement was filed by CRB Capital for approval of the company court. On 01.07.2002 a meeting of the secured creditors was held. It was attended by 28 secured creditors. On 02.07.2002 a meeting of unsecured creditors was held at Talkatora Stadium and out of the 1,34,000 depositors, 14,461 attended the meeting either personally or through....
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....uivalent to 25% of the principal amount shall be made within 3 month from the date of sanctioning of the scheme by the Hon'ble Delhi High Court. b) Payment of balance 75% of the principal amount shall be made in eight equal quarterly instalment commencing from the month following the expiry of six months from the date of sanctioning of the scheme of Arrangement/ Compromise by Hon'ble Delhi High Court. STATE BANK OF INDIA (Unsecured Creditor) Since the charge over the securities held by State Bank of India have not been registered with the Register of Companies, State Bank of India is considered as an unsecured creditor. All the assets whether moveable or immovable held by the State Bank of India except asset owned by CRB Corporation Ltd. shall be liquidated by the Bank in private negotiations in consultation with the propounder of the scheme for recovery of the principal amount. Any shortfall and/or deficiency in discharge of the dues of the Bank against recovery from the various assets held by SBI, the same shall be paid and/or discharged by the company at par in terms of the payment of schedule as applicable to other unsecured creditors. No interest, however, shall be....
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....he order passed on 4/11/97 in CA No. 1536/97 in C.P. No. 191/97 and for freezing the Bank accounts of these Companies be vacated. 2. The Official Liquidator be directed to hand over the Books of Accounts, records documents, assets & properties of the Company as well as the other Group Companies including the Cash balance lying with him and / or deposited in any Bank to the Propounder of the Scheme. 3. SEBI & Stock Exchanges (a) The Registrations and Licences, granted by Securities and Exchange Board of India (SEBI) for carrying out different activities by the Company and other Group Companies, which were suspended as a consequence to the appointment of Provisional Liquidator by this Hon'ble Court be restored and SEBI and the Stock exchanges where the shares of the Company as well its Group Companies were listed be directed to revoke its various orders passed u/s 11B of Securities and Exchange Board of India Act (SEBI Act) and or any other provisions of SEBI Act and other Laws, Regulations, & bye-laws of SEBI and Stock Exchanges. The details of such Registrations and Licences given to the Company and its Group Companies are as under:- i) Category-I Merchant Banking Re....
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....d dealer in foreign exchange. 5. Trust petition No.3 filed by SEBI before the Hon'ble Mumbai High Court be transferred to this Hon'ble Court and after such transfer the assets, books of accounts, records etc of CRB Asset Management Company Ltd, CRB Trustee Limited and CRB Mutual Fund Ltd. be handed over to the Propounder of the Scheme. 6. INCOME TAX AUTHORITIES The Income-tax Department be directed to stay the demands and vacate the ex-parte orders and to allow the Company to file Appeal/s. Revision Applications and any other proceedings before the appropriate authorities and or Court and any delay in filing such proceedings be condoned and interest & penalties be waived. 7. CIVIL/CRIMINAL CASES All the cases, civil as well as criminal, filed against the Company, its ex-Directors & Officers, particularly the following cases filed against the Company and its Directors be vacated or stayed sine-die. Details of such cases, inter-alia, are as under: a) All the Complaint cases filed u/s 138 of Negotiable Instruments Act against the Company and its Directors and/or its Officers. b) Case No. 42/97 filed by CBI in Session Court at Mumbai on the Complaint of State Bank ....
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....ns be given to CBI to hand over all the records and documents of the Company as well as its Group companies including records of Fixed Deposits etc. 10. All the cases filed by the Official Liquidator before this Hon'ble Court for recovery of dues from the debtors and other parties be decided and decrees passed. 11. The liabilities in respect of employees of the Company as well as its Group Companies be limited to their dues upto 21.5.97 and the services of the employees be treated as terminated on payment of their terminal benefits and arrears or dues if any upto the said date. 12. The following companies with whom the Company had entered into bought out deals be directed to pay the amounts due from them along with accrued interest till the date of payment- Rs. in crores 1. ELIN Electronics Limited 7.20 2. Garware Petrochem Ltd. 2.55 3. Stickwel Fashions Ltd. 2.94 4. RRB Aurolite Ltd. 0.62 5. Sakumbari Sugar Mills Ltd. 1.92 6. United MachineryWorks Ltd. 0.35 7. North India Cement Limited 0.30 ------ 15.88 ------- The Hon'ble Justice Dalbir Bhandari was pleased to appoint Official Liquidator on the Board of Directors of the above mentioned c....
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....heme under sections 391/392 of the Companies Act could be propounded or considered. It was urged that CRB Capital had lost its substratum and deserved to be wound up and that winding up would be in the interest of depositors as also in general public interest. It was also urged by RBI that the scheme was contrary to statutory provisions and as such approval ought not to be granted as that would be opposed to law as also public policy. A similar set of objections was made by the other objectors. 15. On behalf of CRB Capital it was submitted before the learned company Judge that the secured creditors, unsecured creditors and shareholders had accepted the modified scheme by an overwhelming 3/4ths majority in value as well as by simple majority. It was submitted that winding up of a company is a step which results in the civil death of the company and would be contrary to public interest as lakhs of depositors and shareholders all over the country would find that their funds and investments have dissipated. It was contended that RBI, while balancing the general public interest, has also to take into account the interest of the Bank and financial institutions as well as secured and u....
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....he scheme as propounded contemplated payment of 100% of the deposit to the deposit holders who had invested up to Rs. 5000/-, there was a cap put on it to the extent of Rs. 10 crore to be paid within the year. The learned company Judge, however, felt that the upper limit of Rs. 10 crore for such depositors was not in public interest. Consequently, he directed that the limit of Rs. 10 crore to the payment of deposits up to Rs. 5000/- be removed and the scheme was modified to that extent. It was also modified by directing that widows, disabled persons, retired government servants and persons above 55 years of age would get the entire deposit re-paid without any limit within one year after the sanction of the scheme. Insofar as the other unsecured creditors were concerned such as the deposit holders and bond holders above the value of Rs. 5000/-, they were to be paid an amount equivalent to 50% of the principal amount in five annual installments commencing from the date of sanctioning of the scheme and the balance 50% of the principal amount was to be discharged in the form of allotment of shares of CRB Capital of Rs. 10/- each at par as soon as the approvals from the competent author....
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....n of the scheme is modified and now reduced to 4 annual equal instalments constituting 50% of the principal amount beginning from the expiry of 12 months from the date of sanction of the scheme. (III) With regard to the relief and concession sought in part IV of the scheme under the heading Reserve Bank of India i.e. (i) to (v) from the Reserve Bank of India the petitioners have during the course of hearing given up the reliefs / concessions sought in clauses (ii) to (v) under the heading Reserve Bank of India and are not been pressed and accordingly the said clauses (ii) to (v) shall stand deleted from the Scheme. In so far as relief (i) is concerned directions have already been given in para 37 above. (IV) As regard para 5 of part IV of the scheme which related to the Trust Petition filed by SEBI before the Bombay High Court it is contended by the parties that Trust Petition No.3 filed by SEBI before the Hon'ble Mumbai High Court is presently pending before the Supreme Court of India for transferring the same and accordingly the said para 5 shall stand deleted from the scheme. xxxx xxxx xxxx xxx (VI) That the propounder of this scheme shall within 15 days from the dat....
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....1-392 of the Companies Act could set aside quasi-judicial orders passed by a statutory authority like the SEBI constituted under the Securities and Exchange Board of India Act, 1992? iii) Whether criminal and income tax proceedings pending against the company and its Directors could be stayed by the Company Court while sanctioning a scheme under Section 391-392 of the Companies Act? iv) Depending upon the answers of questions 1 to 4 above whether the scheme formulated in the instant case is bonafide, feasible and fair? v) Whether grounds for winding up of the company under Section 45 MC (1) of the RBI as made out in the winding up petition exist. If so, to what effect?" 20. Being aggrieved by the said order dated 29.02.2008 passed by the said Division Bench in the said appeals, CRB Capital preferred Special Leave Petitions before the Supreme Court which got converted into Civil Appeal Nos. 2733-2736/2009 (CRB Capital Markets Limited v. Reserve Bank of India & Ors.). Those civil appeals were disposed of by the Supreme Court by an order dated 22.04.2009 in the following manner:- "23. We are, accordingly, of the view that since the Division Bench has not considered on m....
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.... RBI Act and therefore the same cannot be sustained in law. It was also submitted that the learned company Judge was only impressed by the fact that the majority of creditors (secured and unsecured) and shareholders had passed the scheme and therefore the same ought to be sanctioned. The learned counsel referred to the decision of the Supreme Court in the case of Miheer H Mafatlal v. Mafatlal Industries Limited: (1997) 1 SCC 579, wherein, according to the learned counsel, the Supreme Court held that a scheme could not be sanctioned if it violated any law. According to the learned counsel, the Supreme Court also held that the court sanctioning a scheme had to consider the pros and cons of the scheme with a view to finding out whether it was fair, just and reasonable and was not contrary to any provisions of law and did not violate any public policy. It was also contended that the concessions sought by CRB Capital were contrary to the statutory provisions and could not be granted in law. It was submitted that in the absence of such concessions the scheme was not workable. Importantly, the learned counsel for RBI drew our attention to the fact that the proposal to discharge part....
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.... CRB Capital submitted that there is no prohibition on considering a scheme under Sections 391/392 of the companies Act during the pendency of a winding up petition filed by RBI under Section 45MC of the RBI Act. In fact, according to him, Section 45MC(4) makes all the provisions of the Companies Act, 1956 "relating to winding up of a company" applicable to a winding-up proceeding initiated on the application made by RBI under Section 45MC of the RBI Act. He then submitted that Part VII of the Companies Act dealt with winding up. Chapter I thereof contained preliminary provisions dealing with modes of winding up and contributories. Chapter II of Part VII dealt with the cases of winding up by the Court/Tribunal. Section 433 which stipulated the circumstances in which a company could be wound up fell within this chapter. And, so did Section 446, which provided for stay of suit on the passing of a winding up order. Section 446(2)(c), according to Mr Batra, empowered the Court/Tribunal, notwithstanding anything contained in any other law for the time being in force, to have jurisdiction to entertain or dispose of any application made under Section 391 by or in respect of the company....
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....mited (supra). On the basis of the said decision it was contended that a scheme under Section 391 of the Companies Act could be sanctioned by the company court even if it were contrary to the statutory provisions. 27. In essence, insofar as the first question is concerned, the learned counsel for the CRB Capital submitted that a scheme under Section 391/392 of the Companies Act, 1956 was maintainable even in a winding up petition filed by RBI under Section 45MC(1) of the RBI Act. It was also submitted that a scheme could be sanctioned even if it were contrary to the provisions of the RBI Act. 28. The learned counsel appearing on behalf of SEBI, adopted the arguments of Mr Parag Tripathi. He submitted that a scheme could not be contrary to statutory provisions and, in any event, could not contain any terms or conditions which trenched upon the power of SEBI under the Securities & Exchange Board of India Act, 1992 (hereinafter referred to as the SEBI Act). The other submissions of the learned counsel for SEBI were essentially centred on the next question and we shall refer to them when we deal with that question. 29. The learned counsel appearing on behalf of the Official Li....
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....mpanies Act, 1956 could be approved by the company court only when an NBFC complies with the provisions of Section 45QA of the RBI Act and re-pays the entire amount due to the depositors as per terms of the deposits. It was also contended that in case the NBFC in question does not comply with the requirement of section 45QA of the RBI Act such a company would be liable to be wound up and dissolved. 30. The learned counsel for the Official Liquidator then sought to draw a distinction between a secured and unsecured creditor. It was submitted that depositors are not secured creditors. It was contended that under the provisions of Section 529 of the Companies Act, after the passing of a winding-up order, the security of every secured creditor is deemed to be subject to a pari passu charge in favour of the workmen to the extent of the workmen's portion. Furthermore, under Section 421 of the Companies Act, 1956, notwithstanding anything contained in any other provision of the said Act or any other law for the time being in the winding up of a company, dues of workmen and debts due to secured creditors are to be paid in priority to all other debts. Section 530 of the Companies Act als....
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....Companies Act, 1956. Sub-section (4) of 45MC makes it clear that all the provisions of the Companies Act, 1956 relating to winding up of a company shall apply to a winding-up proceeding initiated on the application, made by RBI under Section 45MC of the RBI Act. At the same time we must also notice Section 45Q of the RBI which reads as under:- "The provisions of this Chapter shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law." This provision makes it abundantly clear that the provisions of Chapter III-B shall take effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law. The argument of the learned counsel for the RBI was that because of Section 45Q, the provisions of Chapter III-B of the RBI Act had precedence over the provisions of the Companies Act and therefore during the pendency of a winding-up petition under Section 45MC no application for sanctioning of a scheme under Section 391/392 of the Companies Act, could be entertained by the ....
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....and the Judgments relied on, it is clear that the powers of the court under sections 391 to 394 of the Companies Act is unhindered by any of those provisions. The only two circumstances under which the company court is prevented from according sanction is contained in proviso to sections 391 and 394 where the official liquidator or the Registrar of Companies files a report stating that the affairs of the company is conducted in a manner prejudicial to the members of the company and the company. Insofar as the power of the court to accord sanction, proviso to section 392 is concerned, once the conditions are fulfilled, there is no impediment for the court to accord sanction. Once these statutory requirements are complied with, though the provisions of the scheme contravene the legislative mandate, it is permissible to make provisions in the scheme contrary to the other statutory provisions. The order of the company court, according sanction, will have the affect of overriding those other statutory provisions." It was held by the learned single Judge of the Karnataka High Court that it was permissible to make provisions in the scheme contrary to statutory provisions othe....
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....ercing the minority in order to promote any interest adverse to that of the latter comprising the same class whom they purported to represent. 8. That the scheme as a whole is also found to be just, fair and reasonable from the point of view of prudent men of business taking a commercial decision beneficial to the class represented by them for whom the scheme is meant. 9. Once the aforesaid broad parameters about the requirements of a scheme for getting sanction of the Court are found to have been met, the Court will have no further jurisdiction to sit in appeal over the commercial wisdom of the majority of the class of persons who with their open eyes have given their approval to the scheme even if in the view of the Court there would be a better scheme for the company and its members or creditors for whom the scheme is framed. The Court cannot refuse to sanction such a scheme on that ground as it would otherwise amount to the Court exercising appellate jurisdiction over the scheme rather than its supervisory jurisdiction. The aforesaid parameters of the scope and ambit of the jurisdiction of the Company Court which is called upon to sanction a scheme of compromise and ar....
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....uestions have overlapping considerations and, therefore, are being dealt with together. It was contended by Mr Parag Tripathi, on behalf of the RBI, that the scheme could not be sanctioned as the concessions sought were beyond the scope of Section 391 of the Companies Act. First of all, the scheme envisaged a direction to the Income Tax Department to stay its demands and vacate ex-parte orders. The scheme also envisaged that the company be permitted to file appropriate petitions before the appropriate Court and get any delay in filing the same condoned. It was contended that income tax proceedings could not be the subject matter of a scheme under Section 391 of the Companies Act. Reliance was placed on the Supreme Court decision in the case of S.V. Kandeakar v. V.M. Deshpande: (1972) 1 SCC 438. Insofar as the criminal cases were concerned, it was contended that the scheme envisaged that all civil and criminal cases be "vacated or stayed sine die". It was contended that the learned company Judge erred in law in sanctioning this part of the scheme. It was submitted that a Division Bench of this court in D.K. Kapur v. R.B.I.: 2001 (105) Company Cases 643 (Delhi), had clearly held that....
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....s Act, which is a general Act, to the extent there is inconsistency between the provisions of two Acts. It was submitted that the reliefs and concessions sought by CRB Capital under the scheme required the revocation of various suspensions and cancellations granted against CRB Capital and also the revocation and setting aside of various orders passed by SEBI which cannot be allowed under the provisions of Section 391 of the Companies Act inasmuch as the SEBI Act is a complete code and a complete procedure is prescribed thereunder for challenging and assailing the orders passed by SEBI under the said Act. A reference was made to Section 15-T and Section 20 of the SEBI Act which read as under:- "15-T. Appeal to the Securities Appellate Tribunal.- (1) Save as provided in sub-section (2), any person aggrieved- (a) by an order of the Board made, on and after the commencement of the Securities Laws (Second Amendment) Act, 1999, under this Act, or the rules or regulations made thereunder; or (b) by an order made by an adjudicating officer under this Act, may prefer an appeal to a Securities Appellate Tribunal having jurisdiction in the matter. (2) No appeal shall lie....
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....ovided that before disposing of an appeal, the appellant shall be given a reasonable opportunity of being heard." 36. It was contended that several reliefs and concessions were sought under the scheme and one set of such reliefs and concessions entailed directions being given to SEBI to revoke its various orders passed under Section 11B of the SEBI Act. SEBI had passed orders, inter alia, suspending the trading in shares of CRB Capital as well as its other group of companies in all Stock Exchanges. A suspension order had also been passed by SEBI and other Stock Exchanges suspending the membership rights of the Ex-Directors of CRB Capital. It was, therefore, contended that the reliefs and concessions sought by CRB Capital against SEBI were totally inconsistent with the provisions of Section 15T and Section 20 of SEBI Act and thus the said provisions would override the scheme propounded by CRB Capital to the extent it sought the setting aside of the orders suspending and cancelling various registrations etc. granted to CRB Capital. The learned counsel for SEBI placed reliance on the Supreme Court decision in the case of Tata Motors v. Pharmaceutical Products of India Limited & Anr....
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.... the scheme under Sections 391/392 of the Companies Act, 1956. Section 391 of the Companies Act reads as under:- "391. Power to compromise or make arrangements with creditors and members.-(1) Where a compromise or arrangement is proposed- (a) between a company and its creditors or any class of them; or (b) between a company and its members or any class of them; the Tribunal may, on the application of the company or of any creditor or member of the company, or, in the case of a company which is being wound up, of the liquidator, order a meeting of the creditors or class of creditors, or of the members or class of members, as the case may be, to be called, held and conducted in such manner as the Tribunal directs. (2) If a majority in number representing three-fourths in value of the creditors, or class of creditors, or members, or class of members, as the case may be, present and voting either in person or, where proxies are allowed under the rules made under Section 643, by proxy, at the meeting, agree to any compromise or arrangement, the compromise or arrangement shall, if sanctioned by the Tribunal, be binding on all the creditors, all the creditors of the class, ....
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....any; (b) any claim made by or against the company (including claims by or against any of its branches in India); (c) any application made under Section 391 by or in respect of the company; (d) any question of priorities or any other question whatsoever, whether of law or fact, which may relate to or rise in course of the winding up of the company, whether such suit or proceeding has been instituted or is instituted, or such claim or question has arisen or arises or such application has been made or is made before or after the order for the winding up of the company, or before or after the commencement of the Companies (Amendment) Act, 1960. (3) xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx (4) Nothing in sub-section (1) or sub-section (3) shall apply to any proceeding pending in appeal before the Supreme Court or a High Court." 38. It is clear that under Section 391(1), the company court could, at any time after an application is made to it under Section 391, stay the commencement or continuation of any "suit or proceeding" against the company on such terms as it thinks fit until the application is finally disposed of. In this provision, two things are to be noted.....
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....t it is noteworthy that Section 148 occurs in Chapter XIV which beginning with Section 139 prescribes the procedure for assessment and Section 147 provides for assessment or reassessment of income escaping assessment. This section empowers the Income Tax Officer concerned subject to the provisions of Sections 148 to 153 to assess or re-assess escaped income. While holding these assessment proceedings the Income Tax Officer does not, in our view, perform the functions of a Court as contemplated by Section 446(2) of the Act. Looking at the legislatative 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 proceeding" in sub-section (2) 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. The Income Tax Act is, in our opinion, a complete code and it is particularly so with respect to the assessment and reassessment of income tax with which alone we are concerned in the present case. The fact that after the amount of tax payable by an ass....
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....er to scrutinise the claim of the revenue after income tax has been determined and its payment demanded from the liquidator. It would be open to the liquidation court then to decide how far under the law the amount of income tax determined by the Department should be accepted as a lawful liability on the funds of the company in liquidation. At that stage the winding up court can fully safeguard the interests of the company and its creditors under the Act. Incidentally, it may be pointed out that at the Bar no English decision was brought to our notice under which the assessment proceedings were held to be controlled by the winding up court. On the view that we have taken, the decisions in the case of Seth Spinning Mills Ltd., (In Liquidation) and the Mysore Spun Silk Mills Ltd., (In Liquidation) do not seem to lay down the correct rule of law that the Income Tax Officers must obtain leave of the winding up court for commencing or continuing assessment or re-assessment proceedings. (underlining added) In a more recent decision of a Division Bench of this court in Krishna Texport Industries Ltd. v. DCM Limited: [2008] 114 Company Cases 113 (Delhi), the Division Bench observe....
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....I, would have to be decided and determined in terms of that Act and cannot be interfered with by the company court while sanctioning a scheme under Section 391 or in the course of winding up under Section 446 of the Companies Act, 1956. The same is the position with regard to the orders that have been passed by RBI under the RBI Act. 41. As would be apparent from D.K. Kapur (supra) the expression "suit or other legal proceeding" as appearing in Section 446(1) as also the expression "suit or proceeding" under Section 446(2) of the Companies Act do not include criminal proceedings. The same would be the position with regard to the expression "suit or proceeding" as appearing in Section 391(6) of the Companies Act. The consequence of this would be that a company court while examining or sanctioning a scheme under Section 391/392 of the Companies Act cannot stay any criminal proceedings as that is beyond the scope of the powers and jurisdiction of the company court. In Krishna Texport Industries Ltd (supra) a Division Bench of this court has taken the unequivocal view that Section 391(6) of the Companies Act does not envisage either quashing or stay of criminal cases against the com....
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....is Act to pass any order and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any order passed by the Board or the adjudicating officer by, or under, this Act." The above provision, inter alia, entails that no injunction shall be granted by any court in respect of any action taken or to be taken in pursuance of any order passed by SEBI or its adjudicating officer. This provision also stipulates that no order passed by the SEBI or the Adjudicating Officer under the SEBI Act shall be appealable except as provided under Section 15 or 20. The latter provisions have already been set out above. Therefore, there cannot be any interference with the provisions of SEBI Act while a scheme is sanctioned under Section 391 of the Companies Act. 43. The two questions have, therefore, to be answered in the negative. Q.4 Depending on to the answer to the questions above, whether the scheme formulated in the instant case is bona-fide, feasible and fair? 44. We have already noticed the submission made by the learned counsel for the parties. It is apparent that the reliefs and concessions as sought under ....