Gujarat High Court
Agarwal vs O on 11 January, 2010
Author: K.A.Puj
Bench: K.A.Puj
Gujarat High Court Case Information System
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OJMCA/582009/2009 4/ 85 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
MISC.
CIVIL APPLICATION No. 58 of 2009
In
OFFICIAL
LIQUDATOR REPORT No. 37 of 2008
In
COMPANY
PETITION No. 1 of 2003
For
Approval and Signature:
HONOURABLE
MR.JUSTICE K.A.PUJ
===================================
1
Whether
Reporters of Local Papers may be allowed to see the judgment ?
2
To
be referred to the Reporter or not ?
3
Whether
their Lordships wish to see the fair copy of the judgment ?
4
Whether
this case involves a substantial question of law as to the
interpretation of the constitution of India, 1950 or any order
made thereunder ?
5
Whether
it is to be circulated to the civil judge ?
===================================
AGARWAL
MITTAL CONCAST PVT LTD - Applicant
Versus
O
L OF M/S JALAN FORGINGS LTD (IN LIQUIDATION) & 2 - Respondents
===================================
Appearance
:
MR NK PAHWA for Applicant.
MR
JS YADAV for Official Liquidator.
MR MD PANDYA for Respondent
Nos.2 & 3. ===================================
CORAM
:
HONOURABLE
MR.JUSTICE K.A.PUJ
Date
: 11/01/2010
CAV
JUDGMENT
The Applicant has taken out this judges summons seeking clarification / modification in the order dated 18.3.2008 read with order dated 21.11.2008 passed in Official Liquidator Report No. 37 of 2008 and Company Application No. 443 of 2008. The Applicant has also prayed for the declaration that the Applicant is not liable to pay the outstanding electricity dues of the Company in liquidation, for the pre-liquidation period in respect of composite lot, which included land bearing Plot No. 2348 of Survey / Block No.219 / paiki-3 admeasuring 28,328 sq. meters situated at Champaner road, Moje Chandrapur, Taluka Halol and land bearing Plot No. 2348 bearing Survey / Block Nos. 110/1/1118 and 110/1119 admeasuring about 32136.90 sq. meters, situated at Champaner Road, Moje Khinjarva, Taluka Savali, District Vadodara admeasuring in aggregate 60464.90 sq. meters apropos to the order dated 18.3.2008 made by this Court in OLR No. 37 of 2008 read with order dated 21.11.2008 passed by this Court in Company Application No.443 of 2008. The Applicant has further prayed for the direction to the Respondents to take all necessary steps to provide fresh electricity connection in respect of the land in question without insisting to pay the outstanding electricity dues of the pre-liquidation period of the Company in liquidation. The Applicant has further prayed for direction to the Respondents to provide temporary electricity connection at the site of M/s Jalan Forgings Limited (in liquidation), at the land described hereinabove, without insisting to pay the outstanding electricity dues of the pre-liquidation period of the Company in liquidation.
An affidavit in support of judges summons is filed by one Mr. Suresh Agarwal, Director and Authorised Officer of the Applicant. An affidavit in reply is filed on behalf of Respondent Nos. 2 and 3 by the Executive Engineer, Madhya Gujarat Vij Company Limited. Affidavit in Rejoinder is filed on behalf of the Applicant. Affidavit in Sur Rejoinder is filed on behalf of the Respondent Nos. 2 and 3 by Executive Engineer of Madhya Gujarat Vij Company Limited.
Heard Mr. N.K.Pahwa, the learned advocate appearing for the Applicant, Mr. J.S.Yadav, the learned advocate appearing for the Official Liquidator and Mr. M.D.Pandya, the learned Senior Counsel appearing with Ms. Maya Desai for the Respondent Nos. 2 and 3.
It is the case of the Applicant that M/s Jalan Forgings Limited came to be wound up by this Court vide its order dated 1.12.2005 passed in Company Petition No. 325 of 1999. This Court has confirmed the terms and conditions of sale of the assets of the Company in liquidation and directed the Official Liquidator to invite bids for sale of the properties of the Company in liquidation. Pursuant to the said order, the Official Liquidator published public advertisements in the local dailies and offers received by the Official Liquidator were placed before the sale committee for consideration. After the sale committee considered the offers, the Official Liquidator filed his report No.37 of 2008 before the Court for confirmation of sale. This Court directed the Official Liquidator to intimate all the bidders for inter se bidding before this Court and after inter se bidding took place before this Court, the offer of M/s Ajar Enterprises came to be accepted at Rs.4.25 crores in respect of the composite lot, which included the land in question. By order dated 18.3.2008 passed by this Court in OLR No. 37 of 2008, this Court has confirmed the sale on the terms and conditions approved by this Court in favour of M/s Ajar Enterprises. As per the terms and conditions of the order confirming the sale in favour of M/s Ajar Enterprises Private Limited, the said party was permitted to appoint one nominee and accordingly said party has appointed the present Applicant as its nominee. The Applicant has paid the full consideration pursuant to the order dated 18.3.2008. After making entire purchase consideration the Applicant has approached this Court by filing Company Application No. 443 of 2008 seeking directions to the Official Liquidator to procure all the documents relating to the title of the property from all the secured creditors and also had prayed for execution of sale deed in favour of the Applicant. This Court vide its order dated 21.11.2008 directed the Official Liquidator to make sale deed in favour of the Applicant and also directed the Official Liquidator to hand over all the original documents to the Applicant in respect of the property in question.
Pursuant to the said order dated 21.11.2008, two separate sale deeds came to be executed in favour of the Applicant on 16.4.2009. Since the Applicant was desirous to start up its unit, the Applicant on 7.5.2009, made an Application to the Respondent Electricity Company for getting new electricity connection of 4000 KVA by providing a new HT connection. The Applicant also paid requisite fees for registration of the application to the Respondent Electricity Company. In response to its application, the Applicant received a communication from the Respondent Electricity Company on 11.5.2009, wherein the Applicant was directed to pay the dues of the Company in liquidation for the pre-liquidation period though the same is contrary to Clause 15 of the terms and conditions of sale. The Respondent No.3 informed the Applicant on 22.5.2009 that there are arrears of Rs.3,61,88,241.27 (principal amount) in the name of previous consumer in the land bearing Survey No. 2348 and it was made explicit that only after payment of the said arrears, the application of the Applicant for electricity connection would be processed. Immediately upon receipt of the said communication, the Applicant informed the Respondent Company that the Applicant being the auction purchaser is not liable to pay the dues of the electricity company, which is also evident from the sale deed executed by the Official Liquidator. The claim of the electricity company is entirely for the pre-liquidation period and therefore, the stand of Respondent Electricity Company is not correct as per the say of the Applicant. The Applicant has also lodged a complaint with the Consumer Grievances Redressal Forum, which came to be disposed of by the Forum without appreciating the relevant provisions of the Companies Act, 1956 and the terms and conditions governing the sale in respect of the property in question. The Applicant has thereafter taken out the present judges summons seeking the above declaration as well as direction to the Respondent authorities.
Mr. N.K.Pahwa, the learned Advocate appearing for the Applicant submitted that the Applicant is not required to make payment of the statutory dues of the predecessor of the Company in liquidation. The claim of the Respondent Company is in respect of pre-liquidation period and therefore as per the Clause 15 of the terms ad conditions of sale, the Applicant is not liable to make such payments. Even the sale deed in terms stipulated that payment of dues for pre-liquidation period shall be settled as per the provisions of the Companies Act, 1956. It is further submitted that the insistence of the Respondent electricity Company to pay dues of the pre-liquidation period by the Applicant is without any authority of law. Mr. N.K.Pahwa further submitted, without prejudice to the above contention, that even otherwise considering the overriding provisions of Sections 529, 529A read with Section 530 of the Companies Act, 1956, the dues of the Electricity Company are required to be settled by the Official Liquidator in order of priority as provided for in the above referred provisions. The Respondent Electricity Company is required to raise its claim before the Official Liquidator and settled its dues in accordance with the provisions contained in the Companies Act. He has therefore submitted that the stand of the Respondent Electricity Company is erroneous and contrary to law. Mr. Phawa has further submitted that the only object of filing the present Company Application before this Court is to clarify that Clause 15 also includes electricity dues and the Applicant being auction purchaser and covered by Clause 15 of the terms and conditions is not liable to pay the outstanding electricity dues for the pre-liquidation period. He has therefore submitted that this Court should suitably clarify / modify the order dated 18.3.2008 in OLR No.37 of 2008 read with the order dated 21.11.2008 passed in Company Application No.443 of 2008, whereby the sale was confirmed in favour of the auction purchaser, including the right of appointment of nominee and the title was transferred in favour of the Applicant on the terms, including the term / clause no.15 of the terms and conditions of sale.
Mr. Pahwa further submitted that in a similar matter filed by one auction purchaser being Company Application Nos.11 of 2008 and 12 of 2008, this Court by final order dated 3.3.2008 has directed Uttar Gujarat Vij Company Limited to provide new electricity connection and power supply to the auction purchaser without payment of the dues for the pre-liquidation period. He has further submitted that the said order was challenged by the Uttar Gujarat Vij Company Limited before the Division Bench of this Court by filing OJ Appeal No. 160 of 2008 with Civil Application No. 324 of 2008 for stay. The Division Bench by its order dated 12.2.2009 has refused to grant interim stay against the said order.
In support of his submission that the applicant is not liable to pay the dues of the previous owner, as per the terms of the sale as well as order of this Court, Mr. Pahwa relied on the following decisions and/or judgments :-
In Gujarat Industrial Development Corporation V/s. Official Liquidator (Company Application No.33 of 2009) decided on 03.08.2009, this Court held that so far as any other liability of the lessee towards local taxes outstanding of the notified area, it can be termed as individual liability of such Company in liquidation who is the occupier of the property and such can be equated with the other taxes of the local authorities. As per the decision of the Apex Court in the case of A. I. Champdany Industries Limited V/s. Official Liquidator and another, reported in (2009) 4 SCC 486, the amount outstanding towards such taxes would fall in the category of debt under Section 530 and such taxes would not be recoverable as obligations to be discharged by the Company in liquidation as lessee with GIDC. The said principle was reiterated by the Court in the case of Narmada Coaters Private Limited V/s. Official Liquidator of Gujarat Rodrel Engineering Products and another (Company Application No.201 of 2009) decided on 13.08.2009.
In AI Champdany Industries Limited V/s. The Official Liquidator and another, (2009) 4 SCC 486, the Apex Court held that the demand for arrears of property tax from the purchaser is not justified. Seller is bound to pay all public charges upto the date of sell. Unless there is a contract to the contrary, the rights and obligations of the parties to a sale would be as per the provisions contained in the contract. The Court further held that the common law principle which was existing on the date of coming into force of the Constitution of India must yield to a statutory provision.
In State of Gujarat V/s.
O.L. of Kengold (India) Limited (In Liquidation), 2008 (0) GLHEL 221065, while deciding the application for review and/or recall of the orders passed bythe Court, it is observed that the auction purchasers are not liable to discharge any of the liabilities pertaining to the pre-liquidation period of the Company in liquidation and all attachments which are made on the assets of the Company in liquidation are required to be removed and the auction purchasers are entitled to get absolute, clear and marketable title, free from all encumbrances of the pre-liquidation period of the Company in liquidation.
In Torrent Power AEC Ltd.
V/s. Shreeji (Rakhial) Commercial Co-operative Housing Society Limited, 2006 (3) GLR 1944, the Division Bench of this Court held that a consumer is one who receives, or is supplied electric power and premises are of consumer. Supply of electric power can be disconnected where any person neglects to pay any charge for electricity in respect of supply which was made to said person. Premises cannot be consumer. The Court further held that the appellant Electricity Company's contention that it required to supply power to premises and not to person and hence, if premises are transferred, then transferee is liable to clear the dues of transferor is without any force and substance.
In Ananta Mills Limited (In Liquidation) V/s. City Deputy Collector, Ahmedabad and others, 1972 (42) COMPANY CASES 476 (Gujarat), this Court held that in order to give full effect to the principle underlying the winding up provisions of the Companies Act, the only approach to the problem would be that an attachment simpliciter of the properties of a Company, which was subsequently ordered to be wound up without any further action being taken, would be of no consequence or effect against the Official Liquidator and the property could be disposed of by the Official Liquidator, fully ignoring the attachment.
In Regional Director, E.S.I. Corporation V/s. Official Liquidator of Prasad Mills Limited, 2006 (3) CLJ 379 (Gujarat), the Division Bench of this Court held that the Companies Act is a complete code in itself. It provides that in what manner the Company Petition is to be entertained; how a Company is to be taken up for winding up, in what manner an Official Liquidator is to be appointed, how the Official Liquidator shall enter upon the properties belonging to the Company and after the property comes under the hands of the Official Liquidator, in what manner it shall be distributed. The Court further held that Section 529A and 530 of the Companies Act, 1956 provides for a clear Scheme in relation to distribution of the properties belonging to the Company. The first priority is to distribute the assets of the Company in favour of the claimants under Section 529-A of the Companies Act, 1956 and thereafter the question of Government dues or the taxes or the property attached to them shall arise.
In Rajratna Naranbhai Mills Company Limited (In Liquidation) V/s. New Quality Bobbin Works, 1973 (43) COMPANY CASES 131 (Gujarat), this Court held that when the High Court is conducting winding-up proceedings of a Company ordered to be wound up, its jurisdiction is not confined to its ordinary jurisdiction but a special jurisdiction is confined upon it by Section 446 (2). If there is a suit or a proceeding by the company or against the company pending in any Court, the same can be withdrawn and disposed of by the High Court. It may be that such a suit or proceeding would not ordinarily lie in the High Court. But the High Court acquires jurisdiction because the Company is being wound up and because special jurisdiction in respect of the Companies which are ordered to be wound up is conferred by Sub-section (2) of Section 446. It is a statutory duty cast upon the Liquidator that a winding-up order being made, he must collect all the assets, properties, effects and choses-in-action of the Company. Section 456 (2) again enacts a deeming fiction by which all those properties collected by the Liquidator shall be deemed to be in custody of the Court. If the liquidator fails to collect the assets of the Company, he would be charged for negligence in performance of duty. Therefore, while performing the duty, if he comes across any sale of property of the Company which would be void under any of the provisions of the Companies Act or any other law for the time being in force and which would not be binding on him a Liquidator of the Company, it would be equally his duty to take action to collect those assets. If this is the duty cast on the Liquidator, simultaneously power was conferred upon him under Section 457 (1) to institute or defend any legal proceeding. If he has power to institute or defend legal proceedings and if in performance of his duty, he comes across a transaction which is void against him, the transaction becoming void because of the winding up proceedings, it would be a question of fact arising in the course of winding up of the Company and this Court will have jurisdiction to decide that question. This appears to be the scope and ambit of jurisdiction conferred upon the High Court under Section 446 (2) of the Act.
In The Commissioner of Customs and Central Excise V/s. The Official Liquidator, High Court and Millenium Pulp and Concentrates (I) Limited, [2007] 139 Company Cases 591 (Madras), it is held that after a winding up order was passed and after appointment of Official Liquidator, entire affairs of Company would come to hands of the Official Liquidator controlled by the Company Court. Company Court Rules gives wide powers to Company Court to pass any order in furtherance of justice taking into consideration charge created over properties.
In Textile Labour Association and another V/s. Official Liquidator of Vijaya Mills Limited, [2006] 129 Company Cases 423, it is held that the Company Court has an ample power under Section 446 (2) of the Companies Act, 1956 to entertain and dispose of any suit or application by or against the Company. Accordingly, the Court has held that the respondent No.3 was never and is not the tenant of the Mills Company in liquidation. His possession was that of an encroacher and he was illegally and unauthorisedly occupying the disputed premises. The Court, therefore, directed the Official Liquidator to take away the possession from the respondent No.3 immediately and he was further directed to inform the Ahmedabad Electricity Company to disconnect the electricity supply forthwith.
In Official Liquidator, Himalaya Tools (India) Private Limited V/s. M/s. Gujarat State Finance Corporation and others, 1991 (2) GLH 208, it is held that once winding up order is passed, the undertaking and the assets of the Company passed under the control of Liquidator whose statutory duty is to release them and to pay out of sale proceeds to his creditors. No new rights can thereafter be created and no incomplete rights can be completed.
This application was strongly opposed by the Electricity Company. Mr. M.D.Pandya, the learned Senior Counsel appearing for the Electricity Company has raised certain preliminary objections against the maintainability of this application. He has submitted that the Applicant in substance seeks for adjudication of the claim raised by the Applicant that it being a purchaser of the properties of the Company in liquidation, is not under obligation to clear pre-liquidation dues of the Company in liquidation in the shape of electricity dues of the Company as claimed by the Respondent Company and as a condition precedent for being entitled to be considered for getting new power connection from the Respondent Company at the premises that were formerly properties of the company in liquidation. He has further submitted that the civil dispute has arisen, after the completed sale and after the applicant has become full and absolute owner of the properties upon a completed sale thereof by the Official Liquidator, between the Applicant and the Respondent Company and this Court has no jurisdiction to entertain and adjudicate the said dispute. He has further submitted that unless a particular matter is specified in the Companies Act or the Rules framed thereunder as one to be dealt with by the Company Court, it cannot exercise jurisdiction merely because it pertains to a claim by the Respondent against the purchaser of properties and formerly belonging to the Company in liquidation sold to the Applicant by the Official Liquidator. Mr. Pandya further submitted that the Companies Act specifies certain questions or disputes to be resolved by the Central Government, certain matters by the Company Law Board and certain mattes to be dealt with by the Company Court and in respect of all other questions of civil disputes, the jurisdiction will be of the ordinary Civil Court or of the Court exercising extra-ordinary jurisdiction under the constitutional provisions. Only such matters as are specified in the Act or in the Rules to be dealt with by the Court could the Company Court deal with. With respect to all other questions / disputes, the jurisdiction of ordinary Civil Court is neither expressly nor impliedly barred. He has therefore submitted that the natural corollary is that, unless a particular matter is specified in the Act to be dealt with by the Company Court, it cannot exercise jurisdiction merely because in some distant way the Company comes into picture.
Mr. Pandya further submitted that Section 2(11) of the Companies Act, 1956, defines a Court to mean the court having jurisdiction under the Act with respect to the matters relating to that company as provided in Section 10, meaning thereby the appropriate court as between the High Court and the District Court when notified with reference to that matter. Those matters that are required to be dealt with under the Companies Act are specifically mentioned in certain Sections such as Sections 17, 79, 101, 391(2), 398, etc., some of which have now been assigned to the Company Law Board. If the case does not fall under any of those sections listed in Rule 11 of the Companies (Court) Rules, 1959, then they are not cases which are specifically excluded from the Civil Court. It is only when there is a special mode prescribed under the Companies Act could ordinary jurisdiction of the Civil Court be ousted. As long as the jurisdiction of the Civil Court is preserved, the question of bypassing the general remedy cannot arise. The Company Court functions only under the statutory conferred jurisdiction. There is no specific provision in the Companies Act, 1956, or the Companies (Court) Rules, 1959 enabling the Company Court to entertain the proceedings of the type with which the Court is presently concerned seeking declaration and other reliefs as are sought and seeking adjudication of the dispute as involved in the matter. He has therefore submitted that the present proceedings are void as not being amenable to the jurisdiction of this Court. The preliminary objections as regards jurisdiction of this Court is amply supported by judicial pronouncement of the High Courts and the Apex Court. By merely looking at the manner and words in which relief is claimed and by merely using the words in the interest of justice this Court cannot overlook the real substance of the dispute of which adjudication is sought by the present proceedings and this Court thereby could not be expected to exercise jurisdiction otherwise not vested in it.
Mr. Pandya further submitted that the Respondent Electricity Company is not making a claim under the provisions of the Companies Act nor it is making any claim on the strength of any thing contained in the order of this Court dated 16.3.2008 read with order dated 21.11.2008 passed in OLR No. 37 of 2008 and Company Application No.443 of 2008. He has further submitted that the Respondent is not making claim as a creditor under the provisions of the Companies Act and is not making any claim on the basis of any priority in the matter of payment of sums demanded from the Applicant under the provisions of the companies Act so as to require any clarification / modification or declaration as sought for. He has further submitted that it is not disputed that when the occasion arises of official liquidator discharging the liabilities of the company to its creditors the respondent could not claim any priority other than that as envisaged by the provisions of the Companies Act. Nor is the respondent making any claim on the basis of any recital in the sale deed. There is no misgiving or misunderstanding so far as the contents of the orders or recitals of the deeds. The demand by the Respondent is not under but outside the purview of the provisions of the Companies Act and would not be governed by the provisions of the Companies Act and would not attract the provisions of Sections 529, 529A read with 530 of the Companies Act. The claim by the Respondent is not under the Companies Act but is a claim outside the purview of the said Act and is a claim for a sum made by the Respondent supplier of electric power against an intending consumer as a condition of such consumer being entitled to be considered for grant of new power connection as per the statutory condition governing supply of power by the respondent, the validity whereof is upheld by the Division Bench of this Court and legal authority to demand which sum is even without the existence of any statutory provisions upheld by the Apex Court. Mr. Pandya has therefore submitted that this Court could not as a Company Court grant any declaration as prayed for in respect of a claim not made or arising under the Companies Act and which claim is held to be legal. Mr. Pandya has therefore submitted that the present proceedings instituted before this court should not be entertained and deserve to be summarily rejected.
Mr. Pandya, in support of his submission that the Company Court does not have jurisdiction in all matters pertaining to the Company incorporated under the provisions of the Companies Act, relied on the following decisions of various High Courts as well as Apex Court :-
(1) In R.Prakasam v. Sree Narayana Dharma Paripalana Yogam, (1980) 50 Company Cases 611, it is held that;
Whether for vindicating corporate rights or personal, whether representative or individual, the action cannot be confused with initiation of proceeings before the company court in all matters. Except in cases where the Companies Act, 1956, confers jurisdiction on the company court or some other authority like the Central Govt. or the Company Law Board, either expressly or by implication, all other disputes pertaining to a company are to be resolved through the fourm of civil courts when the disputes are capable of being resolved by them.
The Court further held that;
The definition of court in cl. (11) of s. 2 and s.10 of the Companies Act, 1956, dealing with jurisdiction of courts read together only enable the shareholders to decide as to which court they should approach for remedy in respect of a particular matter. It is difficult to construe the definition clause as one conferring jurisdiction exclusive or otherwise and even s. 10 refers only to the court having jurisdiction under this Act where such jurisdiction is conferred by the Act under particular sections like ss. 107, 155, 163, 163(2), 237, 397, 425, etc. The conferment of jurisdiction on the court is not under s. 10 but by the other provisions of the Act.
The Court furtehr held that ;
Section 10 of the Act does not purport to invest the company court with jurisdiction over every matter arising under the Act. In view of the elaborate provisions contained in the 1956 Act in regard to management and conduct of a company's affairs, including even important interenal matters of administration, the scope for interference by the civil court may have become more limited, but the power has not at all been taken away. Where a wrong is done to an individual member he could insist by recurse to a civil suit on the strict observance of the legal rules, statutory provisions and provisions in the memorandum and articles which cannot be waived by a bare majority of shareholders.
(2) The same principle is reiterated by the Delhi High Court in the case of Maharaja Exports And Another v. Apparels Exports Promotion Council, (1986) 60 Company Cases, 353.
While dealing with the suit filed by the plaintiff, a shareholder in a company, who had filed a suit against the company for a declaration that the notice issued by the company regarding the holding of an annual general meeting was illegal and had, besides other reliefs, sought a declaration that the 27 members of the existing executive committee (i.e., the board of directors) were not entitled to hold their respective offices and further that 18 members who had retired by rotation were not entitled to continue in office, the Court held that;
The civil court had jurisdiction to entertain that suit.
(3) The Andhra Pradesh High Court has also reiterated the same principle in the case of Avanthi Explosives P. Ltd. v. Principal Subordinate Judge, Tirupathi, And Another, (1987) 62 Company Cases, 301, and held that;
The director of a company could maintain a suit before the civil court challenging the validity of resolutions passed by its board of directors to the effect that he had been disqualified from being a director as he had not disclosed his interest as required by sections 293 and 299 of the companies Act, 1956, as a partner in a firm from which the company had taken a sub-lease of premises.
(4) In Thiruvalluvar Velanmai Kazhagam (P) Ltd. v. M.K.Seethai Achi., (1988) 64 Company Cases, 304 (Madras), it is held that;
The exclusion of the jurisdiction of the civil court is not to be readily inferred. Such exclusion must be either explicitly expressed or clearly implied. A provision of law ousting the jurisdiction of a civil court must be strictly construed and the onus lies on the party seeking to oust the jurisdiction to establish his right to do so.
The Court further held that;
In respect of all matters dealt with under the Companies Act, 1956, the court having jurisdiction is the court as defined under section 10 of the said Act. But in respect of matters not dealt with by the Companies Act or for which the Companies Act does not provide remedies, the ordinary civil court alone will have jurisdiction. In other words, the civil court will have no jurisdiction only in respect of matters falling exclusively within the jurisdiction of the court having jurisdiction under the Companies Act.
The Court further held that;
A suit fled by a company against its former managing director for rendition of accounts cannot be considered to be a matter within the Companies Act and hence the ordinary civil court will have jurisdiction in the matter.
(5) In R.R.Rajendra Menon (No.2) v. Cochin Stock Exchange Ltd. And Another, (1990) 69 Company Cases, 256 (Kerala), it is held that;
Unless a particular matter is specified in the Companies Act as one to be dealt with by the company court, it cannot exercise jurisdiction merely because it is also a matter which relates to a company. There is no provision in the Companies Act, expressly or impliedly specifying that an application to compel a company to comply with the requirements of section 257 of the Companies Act would lie before the company court.
The Court therefore held that;
The single judge was right in dismissing as not maintainable the petition filed by the appellant seeking a direction to the respondent company, to circulate before the meeting of the respondent-company, his letter showing an intention to propose himself as a candidate for the ensuing election to the council of management of the company.
(6) In M.G.Doshit v. Reliance Petrochemicals Ltd., (1994) 79 Company Cases, 830 (Gujarat), it is held that;
Section 10 of the Companies Act, 1956, which provides that the location of the registered office of the company would determine the territorial jurisdiction of the High Court cannot be construed to mean that the High Court has jurisdiction with respect to all matters relating to that company.
The High Court is a special court or a company court with special company jurisdiction and that jurisdiction has to be found from specific provisions of the Act. The High Court does not have any general plenary or residuary jurisdiction to deal with all matters and all questions arising under the Companies Act.
No special remedy is provided under the Companies Act, 1956 for breach of the provisions of section 166 of the Act, which prescribes the time and place for holding annual general meetings of companies. Therefore the common law remedy within the jurisdiction of the civil court would remain. Therefore, the High Court, in the absence of a specific provision, has no jurisdiction to pass orders in respect of alleged breach of section 166(2) of the Companies Act.
(7) In Prakash Roadlines Ltd. And Another v. Vijaya Kumar Narang, (1995) 83 Company Cases, 569 (Karnataka), it is held that;
Under the company law, there is a distinction between individual membership rights and rights available to qualified minorities. The qualified minority rights are generally enforceable by recourse to civil suits except in cases where specific provision is found in the Companies Act for its enforcement elsewhere.
There is no particular provision in the Act which specifically provides for the enforcement of the right under sections 257 and 284 by invoking the jurisdiction of a special court or Tribunal. Sections 397 and 398 are effective to grant relief to individual members under all circumstances. Therefore, a suit filed by a shareholder against refusal by the company to accept the notice given by the shareholder under sections 284 and 257 to move certain resolutions for removal of directors and proposing the names of persons as directors in their place at the annual general meeting of the company, would be maintainable.
(8) In Poonamchand Kothari v. Rajasthan Tube Manufacturing Co. Ltd. And Others, (1996) 87 Company Cases, 842 (Rajasthan), while dismissing the petition, filed under Section 10 of the Companies Act, 1956, the Court held that;
The power under section 10 could be exercised by the court only in respect of the matters for which the jurisdiction was conferred by other provisions of the Act or the rules made thereunder. The High Court when acting as a company court and special jurisdiction conferred by the provisions of the Companies Act or Rules made thereunder, the power could not be exercised as a general power or as plenary or residuary jurisdiction. If there was any dispute between the subscriber and the company, it could be tried in a civil court. Even if any provision had been contravened by the company, power had been given for prosecution of the company, but that had to be exersised by the court having jurisdiction and not by the High Court. Since the court had no jurisdiction, no direction could also be issued to the Registrar to file a complaint against the company.
(9) In Tej Prakash S. Dangi And Others v. Coromandal Pharmaceuticals Ltd. And Another, (1997) 89 Company Cases, 271 (A.P.), it is held that;
There is no specific provision in the Companies Act, 1956, enabling the company court to entertain a petition seeking a declaration that a notice in the newspapers of forfeiture of shares in a public company is void and that certain persons continue to be the holders of those shares. If the forfeiture is claimed to be invalid due to any legal infirmity, no specific power is provided therefor in the articles. The only section which may be referred to is section 155 of the Companies Act which empowers the court to rectify the register of members if the name of any person is, without sufficient cause, omitted from the register of members of the company. This section, however, was omitted by the Companies (Amendment) Act, 1988, with effect from May 31, 1991, because this power was assigned to the Company Law Board under section 111(4). Again, by a recent amendment brought about by the Depositories Ordinance, 1996, section 111 has been confined to a private company and a new section 111A has been incorporated which empowers the Company Law Board to direct any company to rectify the register or the records if the transfer of shares is in contravention of the provisions of the Securities and Exchange Board of India Act, 1992, or regulations made thereunder or the Sick Industrial Companies (Special Provisions) Act, 1985. Therefore, a petition seeking a declaration that a forfeiture of shares is void is not amenable to the jurisdiction of either the company court or the Company Law Board under section 111 or section 111A of the Companies Act.
(10)In K.Radhakrishnan v. Thirumani Asphalts And Felts Pvt. Ltd. And Others, (1998) 91 Company Cases, 31 (Madras), it is held that;
The enactment of a special statute like the Companies Act does not have the effect of barring the jurisdiction of the civil Court unless the statute expressly prohibits the jurisdiction of the civil court in relation to all matters arising under the statute or the scheme of the statute is such that such prohibition is necessarily to be implied. There is no provision in the Act expressly barring the jurisdiction of the civil court with respect to all matters arising under the Act. The bar of jurisdiction is implied and is in respect of some matters only. Neither section 2(11) nor section 10 of the Companies Act creates jurisdiction with respect to all matters arising under the Act concerning a company whose registered office is located within the jurisdiction of the company court. The jurisdiction of the court is to be ascertained from the other substantive provisions of the Act. The exclusive jurisdiction of the company court is therefore limited to matters which are required by the other provisions of the Act to be dealt with by the court.
Section 283 of the Companies Act sets out the circumstances on the occurrence of which the office of a director shall become vacant. The section does not contemplate any application being made to the company court either to declare that the office has been vacated or to declare that the office has not been vacated. The company court cannot, therefore, entertain a petition to declare that the petitioner continues to be a director and that he has not vacated the office.
(11) In Inter Sales v. Reliance Industries Ltd. And Others, (2002) 108 Company Cases 681 (Cal.), while allowing the appeal filed against dismissal of the suit by the Civil Court on the ground that it did not have jurisdiction, the Court held that;
The court as defined in section 2(11) read with section 10 of the Companies Act did not have the jurisdiction to decide the subject-matter of the suit from which the appeal had arisen and as such the jurisdiction of the civil court vested under section 9 of the Code of Civil Procedure, 1908, was not ousted by the Companies Act.
The Court further held that;
To fall within the jurisdiction of the court as defined in section 2(11) read with section 10 of the Companies Act, 1956, the matter should be such as is provided by the Act to be adjudicated by the court . In respect of matters regarding which the Act does not provide for adjudication by court, the adjudicating authority cannot mean the court as defined by section 2(11). It is only where the Act provides for adjudication by the court , that the court would mean the court as defined in section 2(11). The definition clause cannot be given the interpretation that whenever there is a dispute relating to a company, it is the company court as defined in section 2(11) that will have the jurisdiction.
(12) In Dwarka Prasad Agarwal (Decd.) By Lrs. And Another v. Ramesh Chandra Agarwala And Others, (2003) 117 Company Cases, 207 (Supreme Court), the Apex Court held that;
By sections 9 and 10 of the Companies Act, 1956, the jurisdiction of the civil court has not been ousted. Section 9 of the Code of Civil Procedure, 1908 confers jurisdiction upon the civil courts to determine all disputes of civil nature unless it is barred under a statute either expressly or by necessary implication. Bar of jurisdiction of a civil court is not to be readily inferred. A provision seeking to bar the jurisdiction of the civil court requires strict interpretation. The court, it is well-settled, would normally lean in favour of the construction, which would uphold retention of jurisdiction of the civil court. The burden of proof in this behalf shall be on the party who asserts that the civil court's jurisdiction is ousted. Even otherwise, the civil court's jurisdiction is not completely ousted under the Companies Act, 1956.
The Court, considering the facts of the case further held that;
The civil court was concerned with the rival claims of the parties as to whether one party had illegally been dispossessed by the other or not. The dispute between the parties was eminently a civil dispute and not a dispute under the provisions of the Companies Act. Such a suit, apart from the general law, would also be maintainable in terms of section 6 of the Specific Relief Act, 1963.
(13) In Vijay Kumar Gupta And Another v. Ram Naresh Singh And Others, (2004) 122 Company Cases, 771 (Patna), it is held that;
The jurisdiction of the civil court is a very expansive one as is evident from section 9 of the Code of Civil Procedure, 1908, and its exclusion is not to be readily inferred. Unless its jurisdiction is barred by the statute either expressly or by implication it has jurisdiction to entertain a suit concerning a dispute of a civil nature. If a stature creates a special right or liability and a forum for determination of the same and provides that all questions concerning such right or liability are to be determined by the said tribunal or forum and bars the jurisdiction of the civil court, then such rights and liabilities are to be determined by the tribunal or forum created by the statute and not by the civil court.
In the case before the Patna High Court, the respondents in a suit complained that the decision of appointment of additional directors as well as employees of the company in question was illegal and a nullity as not taken by the decision of the board of directors, and also prayed for certain other reliefs. The petitioner's application challenging the maintainability of the suit was dismissed by the civil court. On a revision application, the Court while dismissing the application, held that;
Neither by express provision nor by necessary implication had the suit been barred nor was there any provision for adequate or efficacious remedy provided under the Companies Act with regard to the dispute raised in the plaint.
The Court therefore held that the suit was maintainable.
(14) In Smt. Premvati And Others v. Smt. Bhagwati Devi And Others, (2008) 145 Company Cases 440 (Delhi), it is held that;
Except in cases where the Companies Act, 1956, confers jurisdiction on the company court or some other authority like the Central Government or the Company Law Board, either expressly or by implication all other disputes pertaining to a company are to be resolved through the forum of the civil courts.
A dispute as regards the right of inheritance between parties is a civil dispute and cannot be said to be a dispute as regards oppression of minority shareholders by the majority shareholders and / or mismanagement.
(15) In B.K.Syed Zakir v. The Bangalore Electricity Supply Co. Ltd. and others, AIR 2005 Karnataka 289, it is held that;
A duty is cast upon the Court to protect the public property and see that such claims which would be against the interest of public are not encouraged. There is a statutory provision empowering the Board to claim the said amount. The Court has to give effect to the said right of the Board and not to find fault with that claim.
(16) In Seena B. Kumar v. Asst. Executive Engineer, Electrical Major Section, Mavelikkara and others, AIR 1998 Kerala 343, while incorporating the Regulation 15(C) of conditions of supply of Electrical Energy Regulations, the Court held that;
Where the occupant desires reconnection he has to remit the entire arrears of current charges and the dues in respect of the connection already given to the premises. After payment of the entire amount the Board can give reconnection to a new consumer. It is also open to the Board to recover the amount through revenue recovery proceedings from the previous consumers, but on recovery of the said amount it should be refunded to the new consumer. Such a provision cannot be said to be a illegal provision.
Mr. Pandya further submitted that the Applicant has willfully and deliberately suppressed material fact from this Court and thereby misdirected the Court. The Applicant has not disclosed the fact that prior to moving this Court by presenting the present proceedings the Applicant company had approached the Consumer Grievances Redressal Forum with its complaint against non-release of the new HT connection of 4000 KVA due to non-clearance of pending arrears of the previous consumer, i.e. the Company in liquidation. The matter was adjudicated by the forum and in light of the judicial pronouncement of the Apex Court in the matter of Paschimanchal Vidyut Vitran Nigam Limited and others v/s. M/s DVS Steels and Alloys Pvt. Limited, the forum held that non-release of new HT connection to the complainant by MGVCL, pending the payment of past arrears of the previous owner by the new purchaser to the MGVCL is not untenable and refused issuing direction to MGVCL to consider granting the new HT connection to the complainant, pending payment of past arrears due from previous owner. He has further submitted that if the Applicant had felt aggrieved by non-issuance of the direction by the forum as prayed for, by non-redressal of its complaint by the forum it has been statutorily provided with a remedy which is to approach the Ombudsman. The Applicant has chosen to bypass the said remedy and without disclosure of the said proceedings and order passed therein, has chosen to file the present proceedings which is not permissible in law. If the said remedy is not availed of the adjudication by the forum, he has submitted that the same attained finality and could not be ignored by filing the present proceedings.
Mr. Pandya has further submitted that the decision on which the Applicant has placed reliance is not applicable in this wise that while deciding the said matter, this Court has not considered the impact of statutory condition no.2(j) of the conditions of supply governing the parties to any contract relating to supply of power nor the judgment upholding validity thereof nor the judgment of the Apex Court referred to by the Respondent. All these questions arise before this Court for the first time and hence the proceedings referred to in paragraph 15 could in no way come in the way of this Court deciding the issues raised by the Respondent.
Mr. Pandya further submitted that in light of the observations made by the Apex Court in Isha marble's case in exercise of its powers to frame conditions of supply a condition of supply had come to be introduced by the Board being condition no.2(j) which reads as under:
Re-connections or new connection of any premises where there are arrears of the Board pending from the consumers / occupiers shall not be entertained. New successors / occupier has to clear these dues of the previous consumer before the application of successor / occupier is processed for supply of electricity. If the Board at a later date gets the full or part of these dues from the previous consumer, then amount shall be refunded to the successor / occupier after adjusting the costs including legal expenses to recover such arrears and the refund shall bear no interest.
Mr. Pandya has further submitted that the validity of this condition 2(j) has been upheld by the Division Bench of this Court by its judgment dated 18.7.2005 rendered in LPA Nos. 691 of 2003. He has further submitted that similar denial to supply power without the outstanding dues from previous consumer are cleared, has been upheld by the High Court of Kerala in the case of K.J.Dennis v/s Official Liquidator and Others, (2002) 108 Com. Cases 353 and K.G.Purushothaman v/s Kerala State Electricity Board & Anr., AIR 2007 Ker, 201. The demand made by the Respondent is thus justified in law and the Applicant, who is governed by the above condition of supply, is therefore not entitled to the reliefs sought for.
Mr. Pandya further submitted that the Apex Court in its judgment in the matter of Paschimanchal Vidyut Vitran Nigam Limited v/s DVS Steel Private Limited, (2009) 1 SCC 210 has held that;
Distributor of supply of electricity can stipulate as one of the conditions of supply that the arrears due in regard to the supply of electricity to the premises when it was in occupation of the previous owner / occupant should be cleared before electric supply is restored to the premises or a fresh connection is provided to the premises. If there be any statutory rules in this behalf insistence upon fulfillment of the said requirements could be insisted.
The Apex Curt has further held that;
If the rules are silent, it can stipulate such terms and conditions as it deems fit and proper to regulate its transactions and dealings and that there was nothing unreasonable in imposing such condition.
In support of submission that Notification issued under Section-49 introducing Condition 2(j) despite repealed of the Electricity (Supply) Act, 1948 by the Electricity Act 2003 still continues to operate. Mr.Pandya relies on the following decisions :-
(a) In State of Punjab Vs. Mohar Singh Pratap Singh, reported in AIR 1955 SC 84, it is held that whenever there is a repeal of an enactment, the consequences laid down in S. 6 of the General Clauses Act will follow unless, as the section itself says, a different intention appears. In the case of a simple repeal there is scarcely any room for expression of a contrary opinion. But when the repeal is followed by fresh legislation on the same subject the Court would undoubtedly have to look to the provisions of the new Act, but only for the purpose of determining whether they indicate a different intention. The line of enquiry would be, not whether the new Act expressly keeps alive old rights and liabilities, but whether it manifests an intention to destroy them. The Court cannot therefore subscribe to the broad proposition that S. 6 of the General Clauses Act is ruled out when there is repeal of an enactment followed by a fresh legislation. Section 6 would be applicable in such cases also unless the new legislation manifests an intention incompatible with or contrary to the provisions of the section. Such incompatibility would have to be ascertained from a consideration of all the relevant provisions of the new law and the mere absence of a saving clause is by itself not material. The provisions of S. 6 of the General Clauses Act will apply to a case of repeal even if there is simultaneous enactment unless a contrary intention can be gathered from the new enactment. Of course, the consequences laid down in S. 6 of the Act will apply only when a statute or regulation having the force of a statute is actually repealed. It has no application when a statute, which is of a temporary nature automatically expires by efflux of time.
(b) In Chief Inspector of Mines and Anr. Vs. Karam Chand Thapar etc., reported in AIR 1961 SC 838, it is held that Though under S. 31 (4) of the Mines Act, 1923, the regulations became part of the Act, they are not repealed along with the Act by S. 88 of the Mines Act, 1952. The Rules and Regulations do not lose their character as rules and regulations, even though they are to be of the same effect as if contained in the Act. They continue to be the rules subordinate to the Act, and though for certain purpose, including the purpose of construction, they are to be treated as if contained in the Act, their true nature as subordinate rule is not lost. Therefore, with regard to the effect of a repeal of the Act, they continue to be subject to the operation of S. 24 of the Central Clauses Act.
(c) In The Brihan Maharashtra Sugar Syndicate Ltd., Vs. Janardan Ramchandra Kulkarni and others, reported in AIR 1960 SC 794, it is held that Section 658 of the Companies Act, 1956 might have been enacted ex abundanti cautela, but, by virtue of it, S. 6 of the General Clause Act, remains applicable with respect to the effect of the repeal of the Companies Act of 1913. The latter section preserves the rights and liabilities created by S. 153-C of the Act of 1913 and a continuance of the proceeding in respect thereof would be competent in spite of the repeal of the Act of 1913, inasmuch as a contrary intention is not indicated in the later Act. It is further held that there is nothing in S. 647 of the Act of 1956 which can be understood as indicating an intention that S. 6 of the General Clauses Act is not to apply. On the other hand, the provisions of S. 153-C of the Act of 1913 have been substantially re-enacted by the Act of 1956 and this would indicate an intention not to destroy the rights created by S. 153-C. The Court further held that S. 24 of the General Clauses Act, does not cancel the notification empowering the District Judge to exercise jurisdiction under the Act of 1913. Since under S. 6 of the General Clauses Act the proceeding in respect of the application under S. 153-C of the Act of 1913 is continued after the repeal of that Act, it follows that the District Judge continues to have jurisdiction to entertain it. If it were not so, then S. 6 would become infructuous.
(d) In Jayantilal Amratlal Vs. The Union of India, reported in AIR 1971 SC 1193, it is held that in order to see whether the rights and liabilities under the repealed law have been put an end to by the new enactment, the proper approach is not to enquire if the new enactment has by its new provisions kept alive the rights and liabilities under the repealed law but whether it has taken away those rights and liabilities. The absence of a saving clause in a new enactment preserving the rights and liabilities under the repealed law is neither material nor decisive of the question
(e) In Jayantilal Amratlal Vs. The Union of India, reported in AIR 1971 SC 1193, it is further held that a saving provision in a repealing statute is not exhaustive of the rights and obligations so saved or the rights that survive the repeal. Whatever rights are expressly saved by the 'savings' provision stand saved. But, that does not mean that rights which are not saved by the 'savings' provision are extinguished or stand ipso facto terminated by the mere fact that a new statute repealing the old statute is enacted. Rights which have accrued are saved unless they are taken away expressly. This is the principle behind Sec. 6(c), General Clauses Act, 1897 .
(f) In State Vs. N.B.Hankins reported in AIR 1957 Punjab 243, the Court was called upon to decide the question as to whether the Notification issued by the Chief Commissioner of Delhi under the Act of 1918 continues to be in force under the Act of 1952. While giving answer to this question the Court referred to Section-24 of the General Clauses Act, which says that, where any Central Act ... ... is, after the commencement of this Act, repealed and re-enacted with or without modification, then, unless it is otherwise expressly provided, any ... notification ... issued under the repealed Act ... ... shall, so far as it is not inconsistent with the provisions re-enacted, continue in force, and be deemed to have been issued under the provisions so re-enacted, unless and until it is superseded by any notification issued under the provisions so re-enacted.
(g) In Deep Chand Vs. State of U.P. Reported in AIR 1959 SC 645, the Court while assuming that Parliament in the present case by enacting the Amending Act repugnant to the State law with respect to the same subject matter, i.e., nationalization of road transport, impliedly repealed the State law, Section 6 of the General Clauses Act saves the scheme framed under the U. P. Act; a scheme framed is a thing done under the repealed Act within S. 6 of the General Clauses Act.
(h) In Ram Parshad Vs. State of Punjab, reported in AIR 1966 SC 1607, it is held that he expression 'things done' occurring in Art. 357 (2), in our opinion, must receive in liberal and extensive construction. As already indicated, all the clauses of the Regulation Order must be read together as an integrated whole and we have to find, on a construction of all the clauses, whether they were intended to continue beyond the period of one year in which Cl. 4 (1) (iii) occurs, it is not unreasonable to construe the power to make rules vested in the Board under that clause as things done within the meaning of Art. 357 (2). There can be no doubt about the intention to preserve and continue the rules even after the period of one year after the cessation of the Emergency so that there may not be any hiatus in the administration of the affairs of the Bank.
(i) In Hasan Nurani Malak Vs. S.M.Ismail, Assistant Charity Commissioner, Nagpur, reported in AIR 1967 SC 1742, it is held that the words "anything duly done" in sub-cl.
(a) of Section 86(3) of Madhya Pradesh Public Trusts Act, 1951 are very often used by the legislature in saving clauses such as we have in S. 86 (3). Section 6 of the General Clauses Act, 1897 also provides that unless a different intention appears the repeal of an Act would not affect anything duly done or suffered thereunder. The object of such a saving clause is to save what has been previously done under the statute repealed. The result of such a saving clause is that the pre-existing law continues to govern the thing done before a particular date from which the repeal of such a pre-existing law takes effect. On a proper interpretation of the expression "things done" it is to be held that such expression is comprehensive enough to take in not only the things done but also the effect of the legal consequences flowing therefrom.
(j) In Neel @ Niranjan Majmudar Vs. The State of West Bengal, reported in AIR 1972 SC 2066, the Court held that the combined effect of Sections 6 and 24 of the general Clauses Act is that the said notification of 1923 issued under Section 15 of the Act of 1878 not only continued to operate but has to be deemed to have been enacted under the new Act.
Mr. Pandya further submitted that seeking any clarification as sought for or by seeking a declaration as sought for, the electricity company could not be called upon or be expected to be prevented from insisting upon compliance with the demand as a precondition of being entitled to power supply, which demand, it can legally make. This Court's jurisdiction cannot be invoked for that purpose. He has therefore submitted that the application deserves to be dismissed.
While dealing with the preliminary objections raised by Mr. Pandya on behalf of the Respondent, Mr. Phawa in Rejoinder has submitted that the terms and conditions of sale are approved by this Court, based on which the sale of the properties in question was confirmed in favour of the Applicant. He has further submitted that no civil dispute has arisen as alleged by the Respondent. He has further submitted that this Court is having the jurisdiction to entertain the application and to grant the relief as prayed for. This Court is a Court winding up the Company and it ipso facto has jurisdiction to entertain the proceedings of the nature initiated by the Applicant and this Court has the jurisdiction to decide the claims by or against the Company in liquidation as per the provisions of Section 446(2) read along with other relevant provisions of the Act. Mr. Pahwa has further submitted that as per the scheme of the Act, once a Company is ordered to be wound up and a Official Liquidator is appointed, all the assets of the Company in liquidation vest in the custody of this Court through the Official Liquidator. The custody of the assets of the Company in liquidation vest in the Official Liquidator free from all encumbrances and charges. The assets of the Company in liquidation are to be disposed of by the Official Liquidator on the basis of the terms and conditions to be approved by this Court. Any issue arising from the interpretation of the terms and conditions as approved by this Court or arising from the confirmation of the sale can be decided only by this Court. During the pendency of the winding up proceedings, the Company Court is as such deemed to be a Court of winding up Company and it is competent to decide all issues arising out of winding up proceedings. Any person aggrieved by any action / order is entitled to maintain an application before the Company Court and the Company Court has jurisdiction to entertain and decide all such issues. The claims by or against the Company are required to be decided by this Court as per provisions of Section 446 of the Act. The Official Liquidator is obliged to settle the claims of secured creditors, unsecured creditors and statutory creditors as per the provisions of Section 529, 529A and 530 of the Act. He has therefore submitted that this Court has jurisdiction to decide the priorities in claims of various claimants. The stand taken by the Respondent Company is thus misconceived and contrary to the scheme of the Act.
Mr. Pahwa further submitted that the Respondent Company is indirectly seeking to enforce its claims against the Applicant though the Respondent Company is obliged to lodge its claims with the Official Liquidator as per the scheme of the Act. He has further submitted that as per the scheme of the Act, once the assets of the Company in liquidation vest in the Official Liquidator, all the claimants are required to lodge their claims with the Official Liquidator and the Official Liquidator is required to settle the dues pari pasu and as per the priorities provided for in Sections 529, 529A and 530 of the Act. The very object of winding up is to put all the secured creditors at par and pay them pari pasu.
Accordingly, all the attachments, if any, of any authority or body would become ineffective. Considering this object and the scheme of the Act, the Respondent Company has no option but to lodge its claims with the Official Liquidator. The claim of the Respondent Company until the date of winding up are required to be settled as per the above provisions of the Act.
Mr. Pahwa further submitted that the jurisdiction of this Court is the special jurisdiction in view of the fact that the jurisdiction of this Court is under the Act which is a special law. This Court is only the competent Court to decide the issues arising from the winding up proceedings. The relevant provisions of the Act also contain non-obstante clause. Hence, no other Court or Forum is competent to decide the issues, which this Court alone can decide. He has further submitted that the condition no.2(j) of the conditions of supply as referred to by the Respondent Company is misconceived. The said condition is not binding on the sales effected under the order of this Court. The sales effected under the order of this Court are governed only by the terms and conditions approved by this Court read with the provisions of the Act, which is a special law. He has further submitted that even otherwise condition no.2(j) is no longer in existence. This condition therefore would have no application in the facts of the present case. He has further submitted that a judgment of the Division Bench as referred to by the Respondent Company and as rendered in LPA 691 of 2003 would have no application to the facts of the present case. The subsequent decision of this Court after the enactment of the Electricity Act, 2003 would govern the field which in terms observed that the condition no.2(j) no longer exists. Mr. Pahwa submitted that this is without prejudice to the contention that this condition in any case would have no applicability in cases of sales effected under the supervision and orders of this Court. He has further submitted that the judgment of the Apex Court in the case of Paschimanchal Vidyut Vitran Nigam Limited (supra) is also not applicable to the facts of the present case. The findings recorded in the said judgment by the Apex Court would have no application in cases of sales effected under the orders of this Court. The Respondent Company is bound by the terms and conditions approved by this Court and is also bound by the provisions of the Act, which is a special Act. Mr. Pahwa has therefore submitted that the reliefs prayed for in the present application deserve to be granted and the application be allowed.
Based on the above submissions and judicial precedents, Mr. Pahwa submitted that this Court is well within its jurisdiction to decide this application and grant the reliefs as prayed for.
While dealing with the applicant's case on merits and even with regard to preliminary objections, Mr. Pandya reiterated his submissions on the basis of the affidavit-in-sur-rejoinder dated 26.10.2009. Mr. Pandya has also expressed practical difficulties in granting electricity connection. He further pointed out as to how much cost would be incurred and how much time would be consumed even if this Court directs to grant electricity connection to the applicant. He has, therefore, submitted that apart from the non-maintainability of this application on the ground of jurisdiction, even on merits, the application deserves to be rejected.
Having heard the learned advocates appearing for the parties and having considered their rival submissions in light of the relevant statutory provisions contained in the Companies Act, 1956 and Rules framed thereunder as well as the judicial pronouncements on the subject, the Court is of the view that the present application is not maintainable as this Court has no jurisdiction to decide the same and to grant the relief prayed for therein. Since the arguments are canvassed on merits, the Court is of the opinion that the applicant failed to make out any case on merits so as to deserve any relief from this Court.
The applicant, in this application, in substance seeks for adjudication of a civil dispute that has arisen between the contesting parties after the applicant has become full and absolute owner of the property that was formerly property of the Company in liquidation. No claim or question arises for adjudication under the provisions of the Companies Act. The Official Liquidator or the Company Court is in no way concerned with the dispute between the purchaser at Court auction and the seller of electricity which dispute has arisen after completed sale and after the property in the premises has passed to the purchaser. The terms and conditions of the sale of properties confirmed in favour of the applicant under the orders of this Court are in no way ambiguous and call for any clarification. The denial to the effect that no civil dispute has arisen between the parties is clearly misplaced. This Court as a winding up the Company has nothing to do with any dispute that may arise subsequent to a completed sale of the property of the Company in liquidation between the purchaser and a third party. It is incorrect in law to assert that the Court has ipso-facto jurisdiction to entertain proceedings of the present nature. Though this Court has jurisdiction to decide claims by or against the Company in liquidation as per the provisions of Section 446 (2) read with other relevant provisions of the Act, in as much as in the present proceedings, there is no claim by or against the Company involved and as the electricity Company is not claiming any sum from the Liquidator or the Company, but is claiming from the applicant, as an intending consumer of power, certain sums payable as a pre-condition to process application to avail power supply, the right to make such demand is legal in view of the condition contained in the conditions of supply of power and is even otherwise, without its existence, such condition in the statutory conditions of supply is recognised by the Apex Court. The true scope and ambit of the powers under Section 446 (2) and other relevant provisions does not render any assistance to the applicant in view of the fact that this Court has no jurisdiction to entertain the matter and grant reliefs as prayed for.
There is no dispute about the effect of an order of winding up. No issue arises for interpretation of terms and conditions of sale as approved nor does an issue arise from terms of confirmation of sale. The dispute has arisen between the purchaser of property only when the purchaser desired to get power supply from a distributing licensee which asserts its right to demand depositing of certain sums by an intending consumer as a condition precedent to process the said intending consumer's request for power supply. The right to make such a demand is legal and upheld by several Courts including the Apex Court. No issues arise out of winding up proceedings in the present case calling for adjudication by the Company Court. In the present case, there is no question of any person aggrieved by any action / order and hence, becoming entitled to maintain application before the Company Court. There arise no such issues over which the jurisdiction of the Company Court could be invoked. There is no question in the present proceedings of settlement of claims of Creditor of any category by the Official Liquidator under Sections 529, 529A and 530 of the Act nor is there any question of invoking Company Court's jurisdiction in the matter of deciding priorities. The reference to various provisions of the Act made by the applicant in its affidavit-in-reply is clearly misconceived and misplaced on the facts of the case. The applicant's claim that for adjudication of the dispute involved in the present case, the Company Court has exclusive jurisdiction is not at all well-founded and judicial pronouncements of the High Court of Andhra Pradesh, Calcutta, Delhi, Gujarat, Karnataka, Kerala, Madras, Patna, Punjab & Haryana and Rajasthan and the Apex Court have held contrary to what is sought to be contended by the applicant. The law on the point is well-settled that Civil Court's jurisdiction in the matter of adjudicating disputes like present one is not estopped and that the Company Court's jurisdiction is only confined to specified matters by relevant Sections of the Act read with the Rules and as such, the Company Court lacks the jurisdiction to entertain and adjudicate the disputes that has arisen between the parties.
It appears that the electricity Company is not indirectly seeking to enforce its claim against the applicant as alleged. As per condition No.2 (j) of the Conditions of supply, if at a later date, the electricity Company gets full or part of the dues in question from the Company, for which claim is lodged with the Official Liquidator, then the applicant will be entitled to refund in accordance with the said provision. The Electricity Company is not claiming to recover its dues from the assets of the Company in liquidation. For its dues against the Company, a claim is lodged with the Official Liquidator and the same may be settled as per law and whatever is realized upon settlement of said claim in accordance with the provisions of the Act, the intending consumer who as per conditions of supply and as per law declared by the Apex Court deposits the sum due from the previous consumer, will become entitled to refund. There is no question in the present case of any encumbrance or any attachment becoming ineffective. A basic difference between a claim by a Creditor against the Company in liquidation before the Official Liquidator and requirement to fulfill any condition to avail power supply from a distributing Company which condition is legally upheld is being lost sight of, while submissions are made based upon Scheme of the Act and liability of the Company in respect of pre-liquidation claims. There is no question of Creditor making a claim against the Company in liquidation contrary to the provisions of the Act so as to confer jurisdiction upon the Company Court to decide such claim. The Court is, therefore, of the view that there is no question of seeking any clarification as contended since the terms are clear and unambiguous.
The filing of proceedings for the very relief before the Consumer Redressal Forum was very material fact. Though necessary disclosure is made while invoking jurisdiction of the Company Court, having approached the said Forum for the very relief and upon not succeeding before the said Forum, it is not permissible to contend that the said fact was not material or that the said proceedings were not competent. The judgment in the matter of Paschimanchal Vidyut Vitaran Nigam (Supra) is applicable and forum was also justified in the view taken. The judgment of the Forum not having been challenged has attained finality and as such also, no relief could be granted.
As per the direction given by this Court at the time of hearing of this application on earlier occasion to place on record the present state of affairs and other details as regards cost involved and time that may be required for making power supply available in affidavit-in-sur-rejoinder, it is stated that the civil construction is still going on and the same has not come up to a stage so as to be avail and utilise power supply demanded. There are several compliances expected before the applicant can demand supply of power at the point of supply and to the knowledge of the electricity Company, the said conditions are still not complied with. The applicant was addressed a letter requiring information on those vital aspects which later till date has remained unacknowledged and not replied. The existing 11KV line passing through the premises has the existing line capacity of 150 Amp. and the same is practically fully loaded. The demand of the applicant is of 4000 KVA i.e. 213 Amp which cannot be catered on the line as same would far exceed the capacity of the line. At a joint survey carried out, this was already indicated and necessity to lay down 11KV underground cable from Khakhariya S/S up to the point of supply at the premises was indicated to the applicant and a map indicating such proposed underground line was duly signed by the applicant's representative in token thereof. Khakhariya 66/1 KV S/S from which the applicant will have to be connected by 11KV line gets its supply from 220/66 KV Chandarpura S/S. The said 66 KV line of supply to Khakhariya S/S has existing capacity of 300 Amp with DOG Conductor and the existing load on the said line is 296 Amp. The load demanded by the applicant is 4000 KVA i.e. 213Amp and the total Amp load exceeds the existing capacity of the line. The Electricity Company while evaluating technical feasibility to supply the applicant the power demanded had got in touch with the Gujarat Energy Transmission Corporation Limited (GETC0). The Corporation alone is authorized to lay down lines of 66 KV. In response thereto, GETCO has informed that the technical position is that unless 66 KV line from Chandrapura is strengthened, it cannot carry the further load as is demanded by the applicant. The said strengthening involves considerable expense and would require sufficient time to carry out the said work. Thus, to enable the electricity company to supply to the applicant through the new 11 KV underground cable from Khakhariya S/S to the point of supply of the applicant, the first requirement is of strengthening of the 66 KV line from 220/66 KV Chandrapura S/S to 66/11 KV Khakhariya S/S by GETCO.
It is further stated in the affidavit that over and above the requirement of deposit of outstanding arrears, the applicant will be required to make the payment, inter alia, for the indoor feeder breaker panel at the S/S end, for 11 KV DP structure at S/S end, for 11KV indoor cable Box 185 Sq. Mtr., for 11 KV straight joint 185 Sq. Mtr., for 11 KV outdoor Cable Box 185 Sq. Mtr., 11 KVXLPE 185 Sq. Mtr. Cable, 3 Core including laying 11 KV DP structure with HG Fuse & Ab switch using 9 Meter long RSJ pole, for 11 KV DP structure with HG Fuse and Ab switch & LA for mounting CT PT set using 11 Mtr. RSJ pole. The total of the amounts required to be paid for the above would have to be added a sum equal to 5% towards contingency, 1.5% towards transport and packaging charges, 2% towards W/C establishment charges and 15% towards supervision charges. Over and above service connection charges and the pro rata charges @ 850 per KVA payable to GETCO will also be payable. The firm quotation in this behalf as per the norms and rate as approved by GERC will be given to the applicant. The rough and ready approximate estimate in this behalf comes to Rs.63,80,106/-. Over and above the said sum, the applicant is also required to give security deposit which approximately would come to Rs.1,40,00,000/-. Thus, the total may come to approximately Rs.2,03,80,106/-. GETCO will be required to strengthen 66 KV line, the estimated cost whereof is approximately to the tune of Rs.24.51 Lacs.
It is further stated in the affidavit that upon inquiry from GETCO as to the time that it would require after the grant of sanction to strengthen the 66 KV line, GETCO has conveyed that GETCO will have to tenderize the work and fix the agency finalization whereof would take about 60 + 25 days. About 10 days would be required for arrangement of materials. Further, it is conveyed that it would be necessary to erect additional 11 number of H frame structures and the said work will require shutting down of existing line on daily basis. The shutdowns will be required to be planned on every staggering holiday I.e. once a week so as to maintain continuity of supply of about 70 to 75 thousand of consumers which includes agricultural, domestic, commercial as well as industrial consumers getting power from the existing line and in view of such nature of work, the said work would consume about 80 days. Strengthening of new Panther conductor may take about 3 days. The estimated time as indicated is conveyed which is subject to everything else being normal and there being no obstruction to availability of right of way. The laying down of 11 KV underground cable by the Electricity Company may take about 30 days. It is also stated that these details are furnished on a rough and ready estimate and upon the applicant fulfilling all the pre-requirements for availing power including deposit of outstanding dues, payment as per FQ, executing agreement on stamp paper, furnishing the required NOC and other Certificates from the concerned offices, application for power supply could be processed. Upon fulfillment thereof, the applicant would be entitled to have power supply as demanded by them.
From the above details and averments in the affidavit which are not denied, the Court is of the view that till the above conditions are fulfilled, the applicant is not entitled to either temporary or permanent power supply and hence, at this stage, the applicant does not deserve any relief from this Court.
With regard to applicability of Clause 2 (j), few submissions made by Mr. Pahwa are required to be taken note of. Clause 2 (j) came to be introduced as condition of supply vide Notification dated 10.08.2001 issued under Section 49 of the Act, 1948. Section 49 of the Act, 1948 empowered erstwhile GEB to impose terms and conditions of supply to the consumers. The Act, 2003 came into force vide Notification dated 10.06.2003 issued by the Government of India. Section 50 of the Act, 2003 provides for specifying an electricity supply code by the State Commission. The State Commission is constituted as GERC. GERC has issued Electricity supply Code which have come into force on 31.03.2005. Section 185 (1) of the Act, 2003 provides for repeal of Act, 1948 and other Acts. Section 185 (2) (a) of Act, 2003 is the saving Clause. Under this provision, any act, order, notification etc. will be saved provided (a) Such act, order, notification is not inconsistent with Act, 2003; and (b) the act, order, notification is deemed to have been under the corresponding provisions of the Act, 2003. Considering Clause (b) above, there has to be corresponding provision under Act, 2003 so as to provide for saving of any act, order, notification as referred to in Section 185 (2) (a). It is true that there is no provision akin to Section 49 of the Act, 1948 in the Act, 2003. Under the Act, 2003, the Company has no powers to provide for terms and conditions of supply of electricity. Section 50 empowers only GERC to issue supply code which is to be applied uniformly by all the distribution licensees. The Court, however, does not accept the submission of Mr. Pahwa that in absence of there being a corresponding provision as Section 49 in the Act, 2003, Clause 2 (j) which came in force under a notification issued under Section 49 of the Act, 1948 is not saved. In fact, considering the legal position discussed above, Clause 2 (j) is treated as saved. There is no inconsistency between the provision of Clause 2 (j) and the provisions of the Act, 2003 and the Supply Code specified under the Regulations by GERC as contended by Mr. Pahwa. Clause 2 (j) provides for reconnection of power to the premises whereas Act, 2003 read with the Supply Code provide for a power to a person. However, supply of power to a person must be in relation to the premises.
In Prime Dairy Products (Pvt.)Ltd., Vs. Gujarat Electricity Board (Special Civil Application No.6678 of 2003) decided on 2.9.2009, the Division Bench of this Court, while deciding the question as to whether the Electricity Board can insist for payment of arrears of electricity dues of the earlier consumer as a condition precedent either to restoration of electricity supply or release a fresh connection in favour of the new owner/occupier of the premises of the shop, and whether clause 2(j) of Conditions of supply framed by the Board is ultravires of the provisions of Indian Electricity Act, 1910, read with Electricity Supply Act, 1948, or Electricity Act, 2003, held that this question has already been considered by a Division Bench in Letters Patent Appeal No.1484 of 2004. The Division Bench vide its judgment dated 18.7.2005 also referred to the challenge to Clause 2(j) of the Conditions of Supply and held that they do not find anything manifestly arbitrary in the Board's insistence on the charges/dues as a condition precedent for restoration of the supply or release of fresh connection. Clause 2(j) of the Condition of Supply has been framed by the Board with a view to ensure that unscrupulous consumers are not able to dupe it of lakhs and crores of rupees. It was felt that in the absence of such a condition, unscrupulous consumers were avoiding payment of the electricity charges. The Court held that what the Board has done by framing Clause 2(j) of the Conditions of Supply is to remove the loopholes from the scheme of supply of electrical energy and the Court did not find any justification to strike down the same on the ground of arbitrariness, more so because the interest of the applicants has been amply safeguarded by making a provisions for payment of the amount which may be recovered by the Board from the erstwhile consumer by availing appropriate legal remedies. While arriving at this conclusion the Court has also referred to the decision of K. G. Parshothaman Vs. Kerala State Electricity Board and another (AIR 2007 Kerala 201), which was confirmed by a Full Bench of Kerala High Court in Suraj K.R. Vs. Secretary, Kerala State Electricity Board and another (AIR 2006 Kerala 194).
In Apex Tech Wood (P) Ltd., Vs. Uttar Gujarat Vij Co. Ltd., (Special Civil Application No.8649 of 2009) decided on 7.10.2009, while rejecting the prayer made by the petitioner for declaration that the petitioner company is not responsible for the past dues and, therefore, the demand by the respondent company for the past dues is illegal and hence the letter raising such demand is required to be quashed and set aside, the Court held that all the conditions raised by the learned advocate for the petitioner stands answered by the decision of the Apex Court in the case of Paschimanchal Vidyut Vitran Nigam Ltd.,(Supra) and, therefore, even if they are not dealt with by the Court independently the same would be treated to have been answered.
In Gujarat Electricity Board Vs. Jaisal Silk Mills Pvt. Ltd., (LPA No.691 of 2003) decided on 18.7.2005, the Division Bench of this Court held that the condition of supply framed by the Board in exercise of its power under Section-49 of the Act are statutory and Clause 2(j) thereof which requires a prospective consumer to deposit the arrears of electricity dues outstanding against the former consumer falls within the ambit and scope of Section-49(1). The Court further held that the ratio of the Supreme Court judgment in the case of Isha Marbles Vs. Bihar State cannot be applied to the cases before the Division Bench because Clause 2(j) of the conditions of supply framed by the Board which is statutory in character contains a specific provision for payment of the arrears of the electricity dues as a condition precedent for restoration of the connection or grant of fresh connection. The Court has also rejected the petitioner's challenge to Clause 2(j) of condition of supply on the ground of violation of Article-19 of the Constitution as there was no unreasonable restriction on their right to carry on trade or business.
In view of the foregoing discussion, this application deserves to be rejected and it is accordingly rejected without any order as to costs.
(K. A. PUJ, J.) Top