TaxTMI 
TaxTMI 
2001 (4) TMI 941
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....iquidator to take possession of the assets of the company. Pursuant to the said order the provisional liquidator has taken custody of the assets of the company after preparing an inventory in the presence of the secured creditors. While so, the State Bank of Hyderabad and other banking companies who also claim to be secured creditors moved an application--O.A. No. 286 of 2000--before the Debt Recovery Tribunal wherein an application to appoint an Advocate-Commissioner to take possession of the assets of the company has also been made whereupon Mr. S. Ravikanth, Advocate has been appointed as Commissioner. Thereupon the Advocate-Commissioner requested the Official Liquidator through a letter to be present before him on the specified day. However, the Official Liquidator could not be present before him for want of communication of the aforementioned letter whereupon the Advocate-Commissioner filed a memo before the Debt Recovery Tribunal and pursuant thereto the Debt Recovery Tribunal passed the following order : In view of the above provision of law this Tribunal can appoint a Commissioner for making an inventory of the properties of the defendant or for the sale thereof where it....
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....he provisional liquidator is appointed pending a winding up order on behalf of the Company Court, in such a case whether it would be legal or proper having regard to the scheme of both the Companies Act and the Act for the Tribunal constituted under the later enactment to deal with the property that is under the control of the Company Court which happens to be the High Court, without obtaining the leave of the Company Court, is a matter, in my view, which is not dealt with and decided by Their Lordships in the above cited case in Allahabad Bank (supra). Having regard to the far reaching consequences such & the one with which this Court is confronted in the present case, and having regard to the hierarchy of the judicial system in this country, where the 2nd respondent-Tribunal is undoubtedly a subordinate Tribunal contemplated under Article 227 of the Constitution, the said aspect is required to be decided authoritatively by a Bench of appropriate strength, more particularly when by virtue of the declaration under Section 10 of the Companies Act, the Court having jurisdiction under the Companies Act is the High Court but not an individual Judge of the High Court. It is a differe....
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....tion in prison; (c) appointing a receiver for the management of the movable or immovable properties of the defendant; 8. Other modes of recovery have been provided for in Section 28, Sub-section (5) whereof reads thus : The recovery officer may recover any amount of debt due from the defendant by distraint and sale of his movable property in the manner laid down in the Third Schedule to the Income Tax Act, 1961 (43 of 1961). 9. Sections 19(2), 19(18)(e) and 19(19) of the Act read thus : Where a Bank or a Financial Institution, which has to recover its debt from any person, has filed an application to the Tribunal under Sub-section (1) and against the same person another Bank or Financial Institution also has a claim to recover its debt, then, the later Bank or Financial Institution may join the applicant Bank or Financial Institution at any stage of the proceedings, before the final order is passed, by making an application to that Tribunal. Where it appears to the Tribunal to be just and convenient, the Tribunal may, by order- (e) appoint a Commissioner for preparation of an inventory of the properties of the defendant or for the sale thereof. W....
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....ication is so made may stay or restrain the proceedings accordingly, on such terms as it thinks fit. 446. Suits stayed on winding up order.--(1) When a winding up order has been made or the Official Liquidator has been appointed as provisional liquidator, no suit or other legal proceeding shall be commenced, or if pending at the date of the winding up order, shall be proceeded with against the company, except by leave of the Court and subject to such terms as the Court may impose. (2) The Court which is winding up the company shall, notwithstanding anything contained in any other law for the time being in force, have jurisdiction to entertain, or dispose of- (a) any suit or proceeding by or against the company; (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 arise in course of the winding up of the company; whether such suit or proceeding has been instituted or is instituted, or such clai....
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....r the District Magistrate within whose jurisdiction such property, effects or actionable claims or any books of account or other documents of the company may be found, to take possession thereof, and the Chief Presidency Magistrate or the District Magistrate may thereupon after such notice as he may think fit to give to any party, take possession of such property, effects, actionable claims, books of account or other documents and deliver possession thereof to the liquidator or the provisional liquidator. (1B) For the purpose of securing compliance with the provisions of Sub-section (1A), the Chief Presidency Magistrate or the District Magistrate may take or cause to be taken such steps and use or cause to be used such force as may in his opinion be necessary. (2) All the property and effects of the company shall be deemed to be in the custody of the Court as from the date of order for the winding up of the company. 13. Section 457 of the Companies Act provides for the power of the liquidator. 14. The controversy, which arises for consideration of this Court, is as to whether having regard to the provisions contained in the said Act vis-a-vis the Companies A....
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....e sums so realised. 16. In the aforementioned backdrop the Apex Court formulated the following questions: From the aforesaid contentions, the following points arise for consideration : (1) Whether in respect of proceedings under the RDB Act at the stage of adjudication for the money due to the Banks or Financial Institutions and at the stage of execution for recovery of monies under the RDB Act, the Tribunal and the Recovery Officers are conferred exclusive jurisdiction in their respective spheres? (2) Whether for initiation of various proceedings by the Banks and Financial Institutions under the RDB Act, leave of the Company Court is necessary under Section 537 before a winding up order is passed against the Company or before provisional liquidator is appointed under Section 446(1) and whether the Company Court can pass orders of stay of proceedings before the Tribunal, in exercise of powers under Section 442? (3) Whether after a winding up order is passed under Section 446(1) of the Company Act or a provisional liquidator is appointed, whether the Company Court can stay proceedings under the RDB Act, transfer them to itself and also decide questions ....
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....ibunal under the RDB Act and in accordance with Section 19(19) read with Section 529A of the Companies Act and in no other manner. The provisions of the RDB Act. 1993 are to the above extent inconsistent with the provisions of the Companies Act, 1956 and the latter Act has to yield to the Provisions of the former. This position holds good during the pendency of the winding up petition against the debtor-company and also after a winding up order is passed. No leave of the Company Court is necessary for initiating or continuing the proceedings under the RDB Act, 1993, Points 2 and 3 are decided accordingly in favour of the appellant and against the respondents. (Underlining is ours) However, in our opinion, the aforementioned decision is not an authority for the proposition with which this Court is concerned in this case. 19. In Dias on Jurisprudence, Fifth Edition at page 143, it is stated- Pronouncements of law, which are not part of the ratio decidendi are classed as obiter dicta and are not authoritative. Rationale and dicta tend to shade into each other. The former have law-quality and are binding on lower Courts; dicta, too, have law-quality but are not binding at a....
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....it would be unwise to endow it with as much authority as the actual decision. These observations by the way, obiter dicta are without binding authority, but are nonetheless important; not only do they help to rationalize the law but they serve to suggest solutions to problems not yet decided by Courts. Indeed dicta of the House of Lords or of Judges who were masters of their fields, like Lord Blackburn, may often in practice enjoy greater prestige than the rationale of lesser Judges. 21. In C.I.T. v. Sun Engineering Works (P) Limited, [1992]198ITR297(SC) , Dr. A.S. Anand, J (as the learned Judge then was) stated the law in the following terms : It is neither desirable nor permissible to pick out a word or a sentence from the judgment of this Court, divorced from the context of the question under consideration and treat it to be the complete 'law' declared by this Court. The judgment must be read as a whole and the observations from the judgment have to be considered in the light of the questions which were before this Court....." 22. In Java Sen v. Sujit Kr. Sarkar ILR 2000 A & N 145, it was held- "It is now well known that a decision is an authority for what it....
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....he judgment in its entirety and not in isolation. 27. The point which falls for consideration of this Court did not fall for consideration before the Apex. Court in Allahabad bank's case. It is one thing to say that the Tribunal has exclusive jurisdiction in relation to adjudication and execution but it is another thing to say that such jurisdiction has to be exercised in a particular manner. 28. The Tribunal although has a plenary jurisdiction, its right of execution, in our opinion, must be done having regard to the provisions laid down therein. We must also take into consideration the fact that the Tribunal is subject to the supervisory jurisdiction of this Court. The jurisdiction of the Tribunal for adjudication and the right of execution vis-a-vis the jurisdiction of the Company Court has been determined in Allahabad Bank's case but not the mode of recovery thereof. 29. When a liquidator or a provisional liquidator as the case may be is directed to take into his custody or under the control the property, effects and actionable claims, the company is or appears to be entitled to by reason of the provisions contained in Section 456 of the Companies Act, there ca....
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....the literal meaning is not in accordance with the legislative purpose (in the Code called a purposive-and-strained construction). 32. It is further a well settled principle of law that when an order is passed by one Court, the doctrine of amity or comity of reasons demands that no order contrary thereto or inconsistent therewith should be passed. In Lewis Injunction the law has been laid down. In Law of Injunctions by Lewis & Spelling, the law has been stated in the following terms-Conflict and loss of jurisdiction, Where a Court having general jurisdiction and having acquired jurisdiction of the subject matter has issued an injunction, a Court of concurrent jurisdiction will usually refuse to interfere by issuance of a second injunction. There is no established rule of exclusion which would deprive a Court of jurisdiction to issue an injunction because of the issuance of an injunction between the same parties appertaining to the same subject matter, but there is what may properly be termed a judicial comity on the subject. And even where it is a case of one Court having refused to grant an injunction, while such refusal does not exclude another coordinate Court of Judge from....