TaxTMI 
TaxTMI 
TaxTMI 
2019 (6) TMI 77
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....editors and members under Sections 391/394 read with Sections 80, 81, 100 and 103 of The Companies Act, 1956 (old Act - in short). The Petition was dismissed on the ground of locus standi, without going into the material facts of the case. According to the Appellant, NCLT misinterpreted the law. 2. Briefly stated, the facts are that, the Company was incorporated on 14th May, 1954. There was a reference of the Company to the Board of Industrial and Financial Reconstruction (BIFR) as a sick company in April, 1993. After due procedure, BIFR referred the Company to winding up before the Hon'ble High Court of Bombay in 1998 and High court admitted the winding up petition on 9th December, 1998. The Order of the High Court (Annexure A3) passed in CP 895/1998 mentioned that BIFR has recorded an opinion that it was just and equitable that the Company should be wound up. The Hon'ble Single Judge of the High Court in the Order recorded that he had perused the various Orders of BIFR and he found rehabilitation and revival of the Company is not possible and therefore, in the public interest, the company should be wound up. Accordingly, the Order was passed to wind up the Company and Official ....
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....rate Affairs issued Notification No. GSR 1119(E) dated 7th December, 2016 titled as "The Companies (Transfer of Pending Proceedings) Rules, 2016" (Rules - in short). According to the Appellant, NCLT, Mumbai issued Notice dated 22.03.2017 (Annexure - 6) which showed transfer of the Companies Scheme Petition 243 of 2012 which had been filed by the Appellant to the NCLT. He has filed copy downloaded from the official website of the High Court of Bombay (Page - 77) which showed remark that the proceedings had been "transferred to NCLT, vide office letter bearing No.COM/12/2017 dated 07.01.2017". The concerned Notification of the Rules has also been filed for perusal. 6. It appears that the matter came up before NCLT and the NCLT after hearing the parties referred to Section 391(1) of the old Act and concluded that once the Company was in liquidation, it was the liquidator alone who was authorized to file the Company Petition either for compromise or arrangement in respect of the Company in liquidation. NCLT also discussed Judgement in the matter of "Sunil Gandhi and Ors. Vs. A.N. Buildwell Private Limited and Ors." reported in MANU/DE/0780/2017 : [2017]203CompCas330(Delhi) but discar....
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....g at it to see if person other than the Liquidator could apply under Section 391 of the old Act, but did not consider that Judgement was primarily holding that such matters like the present one could not have been transferred in the first place itself and NCLT should not have exercised jurisdiction in such matter when the winding up proceeding is in advanced stages pending in the High Court. It was submitted that Appellant has been delaying the proceedings for one reason or the other. It was submitted that all the concerned have objected to the scheme as can be seen from the Impugned Order itself and the Petition filed by the Appellant should have been dismissed on merits. The Counsel stated that since 1998, the Company was not functional and the present proceedings are mere protracting of the liquidation proceedings. The Counsel also referred to the Orders dated 1st October, 2018 passed by this Tribunal in this Appeal directing Official Liquidator not to go ahead with the sale/auction of movable/immovable assets of the Company. According to the Counsel, in such liquidation proceedings pending for long, merely because a scheme had been proposed would not be any reason to stay the l....
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.... word has not been used by the legislature and concluded that when Official Liquidator has been appointed in winding up Order, nobody has locus to represent the company save and except the Liquidator appointed in that Company because the statute has given a mandate since winding up Order has been passed, Official Liquidator is the sole authority and custodian on behalf of such Company. Taking such view, the NCLT has proceeded to dismiss the Company Petition. The Judgement in the matter of "Sunil Gandhi" (Supra) also was analysed by the NCLT only from this angle to conclude that ex-management could not apply under Section 391(1) of the old Act although the NCLT noticed that the Judgement recorded that in cases like present one, the same could exclusively be dealt with by the Company Court, i.e. Hon'ble High Court. 11. The learned Counsel for the Appellant relied on the Judgement in the matter of "Vasant Investment Corporation Ltd." reported in 1978 SCC OnLine Bom 151 and Judgement in the matter of "Rajendra Prasad Agarwalla & Ors. Versus The Official liquidator, High Court" reported in 1977 SCC OnLine Cal 189, which Judgements along with others were considered by the Hon'ble High ....
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....he liquidator in the case of a company which is being wound up, to propose a compromise or arrangement with creditors and members indicating that the provision would apply even in a case where an order of winding up has been made and a liquidator had been appointed. Equally, it does not appear to be necessary to go elaborately into the question whether in the case of a company in liquidation, only the Official Liquidator could propose a compromise or arrangement with the creditors and members as contemplated by Section 391 of the Act or any of the contributories or creditors also can come forward with such an application. 34. By and large, the High Courts are seen to have taken the view that the right of the Official Liquidator to make an application under Section 391 of the Act was in addition to the right inhering in the creditors, the contributories or members and the power need not be restricted to a motion only by the liquidator. For the purpose of this case, we do not think that it is necessary to examine this question also in depth. We are inclined to proceed on the basis that the Somanis, as contributories or the members of the Company, are entitled to make an applicatio....
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....helpful to consider whether the Impugned Order is right in its view that only the liquidator could apply. The Judgement in the matter of "National Steel & General Mills Versus Official Liquidator" (referred supra) makes it quite clear that Liquidator is only an additional person and not exclusive person who can move application under Section 391 of the old Act when the company is in liquidation. Looking to these Judgements, we are unable to support the view taken by NCLT that the Appellant could not have filed the Petition under Section 391 of the old Act. 13. The NCLT did not examine the matter on its merits. Ordinarily, we would have directed remand of this mater and would have directed the NCLT to decide the matter on merits. But, however, here we have a difficulty which the learned Counsel for Respondent No.1 has raised in the present Appeal. It is a legal question and we have to examine the same. The Notification dated 7th December, 2016 (Page - 78 of the Appeal) which framed the Rules mentioned has been discussed by the Hon'ble High Court in the matter of "Sunil Gandhi". In this Judgement, the Hon'ble High Court dealt with the following issue:- "4. The issue that arises ....
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.... been forwarded by Board for Industrial and Financial Reconstruction, for winding up of a company to a High Court and where no appeal is pending, the proceedings for winding up initiated under the Act, pursuant to section 20 the Sick Industrial Companies (Special Provisions) Act, 1985 shall continue to be dealt with by such High Court in accordance with the provisions of the Act." The Hon'ble High Court has then extensively dealt with the expression in the above Rules relating to "other than proceedings relating to winding up" employed in Rule 3 and considering various Judgements observed in para - 27 as follows:- "27. On a conspectus of the above decisions, the following legal positon emerges: "(i) That the expression 'proceedings relating to winding up' is of the widest amplitude and content. (ii) The expression 'relating to' which is used synonymously with the expression 'pertaining to' is an expression of expansion and not of contraction. (iii) The expression 'relating to the winding up' is much wider and much more expansive than the expression 'arising out of'. (iv) That the argument, that subsequent to the subject notification coming into force on 15.12.2016,....
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.... qua the proceedings relating to revival, it was observed:- "iv. A bare reading of the subject notification itself and in particular Clause 5 thereof, shows that where the respondent has been served, the proceedings shall be retained by the Company Court and would not be transferred to the National Company Law Tribunal." "vi. In the proceedings relating to winding up, as in the present case, applications under the provisions of section 391 of the Companies Act, 1956, for the revival of the company in provisional liquidation, would constitute an exception, and would a fortiori fall outside the purview of independent proceedings which ought to be transferred to the National Company Law Tribunal, under clause 3 of the subject notification." The Hon'ble High Court answered the issue (referred supra in para - 4) in affirmative and recorded that the Company Court would exercise exclusive jurisdiction for adjudicating application, in relation to the revival of the Company in provisional liquidation. The Hon'ble High Court declined to transfer the matter it had before itself to the NCLT. Considering the view taken by the Hon'ble High Court and the law as it appears to us considerin....