TaxTMI 
TaxTMI 
TaxTMI 
2015 (12) TMI 1772
X X X X Extracts X X X X
X X X X Extracts X X X X
....t/record of the company (in liquidation) to the Official Liquidator forthwith to proceed further in winding up proceedings; (b) Whether this Hon'ble court would be pleased to direct the Secured Creditors of the company to co-operate with the Official Liquidator in ascertaining the ownership of the paintings in issue of the company (in liquidation); (c) Whether this Hon'ble court would be pleased to direct the police authorities of Crime Branch CID, Unit-II, Satrasta, Mumbai to hand over the paintings/articles belonging to the company (in liquidation) to the Secured Creditors of the company (in liquidation) under intimation to the Official Liquidator, after completion of investigation of criminal case filed by Smt. Sheetal Mafatlal; (d) Whether this Hon'ble court would be pleased to permit the Official Liquidator to place a necessary further report in respect of above said paintings/articles belonging to the company (in liquidation) seeking further necessary direction of this Hon'ble Court. 2 The counsel for the Official Liquidator informs the court that Atulya Mafatlal, ex-director of the company (in liquidation) has filed the Statements of Affairs but they w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rce, 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; 456. Custody of company' s property. (1) Where a winding up order has been made or where a provisional liquidator has been appointed, the liquidator or the provisional liquidator, as the case may be,] shall take into his custody or under his control, all the property, effects and actionable claims to which the company is or appears to be entitled. (1A) For the purpose of enabling the liquidator or the provisional liquidator, as the case may be, to take into his custody or under his control, any property, effects or actionable claims to which the company is or appears to be entitled, the liquidator or the provisional liquidator, as the case may be, may by writing request the Chief Presidency Magistrate or the District Mag....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e him to be apprehended and brought before the Court for examination. (5) If, on his examination, any officer or person so summoned admits that he is indebted to the company, the Court may order him to pay to the provisional liquidator or, as the case may be, the liquidator at such time and in such manner as to the Court may seem just, the amount in which he is indebted, or any part thereof, either in full discharge of the whole amount or not, as the Court thinks fit, with or without costs of the examination. (6) If, on his examination, any such officer or person admits that he has in his possession any property belonging to the company, the Court may order him to deliver to the provisional liquidator or, as the case may be, the liquidator, that property or any part thereof, at such time, in such manner and on such terms as to the Court may seem just. (7) Orders made under sub- sections (5) and (6) shall be executed in the same manner as decrees for the payment of money or for the delivery of property under the Code of Civil Procedure, 1908, (5 of 1908) respectively. (8) Any person making any payment or delivery in pursuance of an order made under sub- section (5) or sub- s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ilitate the disposal of winding up proceedings. The provision so enacted probably did not meet with the requirement with the result that the Committee appointed for examining comprehensive amendment to the Companies Act in its report recommended that 'a suit' by or against a company in winding up should notwithstanding any provision in law for the time being be instituted in the court in which the winding up proceedings are pending.(1) 'To give effect to these recommendations, sub-sec. (2) was suitably amended to bring it to its present from by Companies (Amendment) Act, 1960. The Committee noticed that on a winding up order being made and the Official Liquidator being appointed a Liquidator of the company, he has to take into his custody company property as required by Sec. 456. Sec. 457 confers power on him to institute or defend any suit, prosecution, or other legal proceeding, civil or criminal, in the name and on behalf of the company. Power is conferred upon him to sell the properties both movable and removable of the company and to realise the assets of the company and this was to be done for the purpose of distributing the assets of the company amongst the claim....
X X X X Extracts X X X X
X X X X Extracts X X X X
....twithstanding anything contained in any other law for the time being in force. Sec. 446 (2) thus conferred special jurisdiction on the court winding up the company which otherwise it may not have enjoyed. The court in the Companies Act is defined in Sec. 2 (11) to mean with respect to any matter relating to a company (other then any offence against this Act), the Court having jurisdiction under the Act with respect to that matter relating to that company, as provided in Section 10. Section 10 provides that the court having jurisdiction under the Act shall be the High Court having jurisdiction in relation to the place at which the registered office of the company concerned is situate, except to the extent to which jurisdiction has been conferred on any District Court or District Courts subordinate to that High Court in pursuance of sub-sec. (2). The winding up petition has thus to be presented in the High Court before the Judge who is assigned the work under the Companies Act. Therefore, the Court which is winding up the Company will be the court to whom the petition for winding up was presented and which passed the order for winding up the Company. In this case, the order was made ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....der will relate back to the date of the presentation of the winding up petition. In this view of the matter no anomalous situation can ever arise." (emphasis supplied) 7 Therefore, as the winding up proceedings drag on for decades with no end in sight and with no benefit to the creditors and contributories of the Company, to accelerate the process of winding up so as to bring them to an end, this sub-section was amended in its present form in 1960 conferring jurisdiction on the court winding up the company to entertain amongst others any suit or proceeding by or against the company or any claim made by or against the company or any other question whatsoever which may relate to or arise in course of the winding up of the company. In the absence of a provision like Sec. 446 (2), the Official Liquidator in order to realise and recover the claims and subsisting debts owed to the company would have to otherwise file suit in various forums. These suits may drag on through the trial courts and then the appeal court resulting not only in multiplicity of proceedings but also holding up the progress of the winding up proceedings. The Liquidator will have to also incur expensive litigation....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... no jurisdiction to decide on the title compelling the Liquidator to file suits in various forums, where it may drag on for years thereby successfully holding up the winding up proceedings. 10 It is settled law that even where there is a dispute relating to any premises between the company and a licensee of the company or lessee of the company, the company court will have jurisdiction. The parties need not go to the Rent Court which has exclusive jurisdiction to decide such matters. In an unreported judgment of the Division Bench of this court in the matter of Appeal lodging No.688 of 2014 in Company Petition No.423 of 2010 dated 31st March, 2015 International Asset Reconstruction Company Pvt. Ltd. vs. Deepak @ Gajanan Kanegaonkar & Ors., it was submitted that validity or otherwise of the purposed lease falls within the exclusive jurisdiction of the Small Causes Court (or Rent Court) under the Maharashtra Rent Control Act, 1999 and therefore, the company court could not have entertained and gone into that aspect. The Division Bench rejected that submission and held that in view of the provisions of section 446 and section 456 of the Companies Act, 1956, the company court has juris....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s case the paintings were in the custody of the Police authorities. The provisions under sub sections (1A) and (1B) of section 456 of the Companies Act, 1956 did not override the jurisdiction of the company court under the act in the matter of legal custody of all property, effects and proceeds of administration in winding up. I gather support for this view from an unreported order of a Single Judge (Gupte, J.) of this court which was confirmed by the Division Bench in the matter of Company Petition No.423 of 2010 dated 28th October, 2015 and Appeal lodging No.828 of 2015 dated 30th October, 2015. M/s. Phoenix Alchemy Private Limited (in liquidation). 13 Moreover, sub section (1) of section 456 provides where a winding up order has been made or where a provisional liquidator has been appointed, the liquidator or the provisional liquidator, as the case may be, shall take into his custody or under his control, all the property to which the company is or appears to be entitled. It provides therefore, not only where parties agree that the company is entitled to a property but even in cases where to the Liquidator it appears that the company is entitled to a property. There has been ne....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 1959 reads as under : "Rule 6 - Practice and Procedure of the Court and provisions of the Code to apply -Save as provided by the Act or by these rules the practice and procedure of the Court and the provisions of the Code so far as applicable, shall apply to all proceedings under the Act and these rules. The Registrar may decline to accept any document which is presented otherwise than in accordance with these rules or the practice and procedure of the Court. Rule 9 - Inherent powers of Court -Nothing in these rules shall be deemed to limit or otherwise affect the inherent powers of the Court to give such directions or pass such orders as may be necessary for the ends of justice or to prevent abuse of the process of the Court." These subject property are very valuable and here is a person who claims the paintings belong to her whereas according to the Liquidator it belongs to/appears to belong to the company (in liquidation). Therefore, it is necessary for the ends of justice that the practice and procedure of the court and provisions of the Code of Civil Procedure are applied. This would also be beneficial to Sheetal Mafatlal who will get an opportunity to prove that the pai....