Delhi High Court
The Bank Of Nova Scotia vs Rpg Transmission Limited on 23 November, 2004
Equivalent citations: II(2005)BC265, [2006]133COMPCAS172(DELHI), (2005)3COMPLJ287(DEL), 115(2004)DLT453, 2005(79)DRJ214, [2005]64SCL261(DELHI)
Author: Mukundakam Sharma
Bench: Mukundakam Sharma, Gita Mittal
JUDGMENT Mukundakam Sharma, J.
1. In both these two appeals only one issue which is a pure question of law arises for consideration and decision of this court. The issue that is involved is whether winding up proceedings under the Companies Act could be initiated by a Bank or a Financial Institution after instituting a recovery proceeding by it under the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter called `the RDB Act').
Company Appeal No. 2/2003:
2. The aforesaid appeal arises out of CP No. 323/2001, which was instituted by the Bank of Nova Scotia, appellant herein, claiming itself to be a creditor of the RPG Transmission Limited. The appellant filed the said company petition under the provisions of Sections 433, 434 and 439 of the Companies Act praying for winding up of the respondent company on the ground that the respondent company has become insolvent and that it is unable to pay its debt. It is an admitted case of the parties that OA No. 154/2001 is also pending adjudication before the Debt Recovery Tribunal-II, Delhi between the parties hereto, which was also initiated on the basis of a petition/application filed by the appellant herein praying for recovery of the amount due and payable to it. The said proceeding before the Debt Recovery Tribunal was instituted by the appellant prior to the filing of the winding up petition.
3. In the aforesaid company petition, an objection was taken by the respondent that the petition is not maintainable as the appellant has already chosen a forum of recovery i.e. before the Debt Recovery Tribunal and, therefore, the said company petition is not maintainable.
The learned Company Judge took up the aforesaid issue for consideration. After referring to the records and various decisions it was held by the learned Company Judge vide orders dated 31st October, 2002 that the said petition should be dismissed for the reason that the petitioner had already chosen a forum of recovery i.e. before the Debt Recovery Tribunal and, therefore, the petition for winding up cannot be entertained.
4. Being aggrieved by the said order passed by the learned Company Judge on 31st October, 2002 in CP No. 323/2001, the aforesaid appeal is preferred in this court on which we have heard the counsel appearing for the appellant as also the counsel appearing for the respondent, who have drawn our attention to the various decisions referred to by the learned Company Judge and also other decisions of various High Courts as also of the Supreme Court to which reference shall be made during the course of our discussion on the issue raised.
Company Appeal No. 34/2004:
5. The aforesaid appeal arises out of the order dated 31.8.2004 passed by the learned Company Judge in CP No. 55/2004, which was filed by the respondent bank praying for winding up of the appellant company on the ground that the said company has become insolvent and that it is unable to pay its debt. Prior to filing of the said company petition, the respondent bank also filed a recovery proceedings under the provisions of RDB Act which is pending and, therefore, an objection was raised by the appellant before the learned Company Judge that the aforesaid company petition is not maintainable as the respondent bank had already chosen the forum of recovery of the amount allegedly due and payable by filing OA No. 68/2003 before the Debt Recovery Tribunal.
6. The objection of the appellant herein was taken up by the learned Company Judge. By passing the impugned order dated 31st August, 2004, the learned Company Judge held that the said issue, which is raised relating to the maintainability of the petition could be decided at a later stage as a similar issue is pending before the Division Bench but in the meantime directed the appellant to file its reply to the petition. Being aggrieved by the order dated 31st August, 2004, this appeal has been filed in this Court on which we have heard the learned counsel appearing for the parties in depth.
7. It is, therefore, clear and apparent that in both the aforesaid appeals the issue that arises for consideration and decision is whether the company petition would be maintainable in view of the fact that the bank has already instituted recovery proceedings before the Debt Recovery Tribunal for recovery of its alleged dues.
8. Mr. Rajiv Nayar, appearing for RPG Transmission Limited, submitted before us that the Debt Recovery Tribunal has exclusive jurisdiction in respect of the claim for recovery of the amount allegedly due and payable and, therefore, the same subject matter cannot be agitated before any other Tribunal or before the Company Court. It was submitted that the Debt Recovery Tribunal and the Company Court have concurrent jurisdiction in respect of recovery of the dues and, therefore, when recourse is taken to one remedy, the other remedy is barred. In support of the said contention, the counsel relied upon the decision of the Supreme Court in Allahabad Bank v. Canara Bank reported in AIR 2000 SC 1535. Learned Senior Counsel also referred to and relied upon the provisions of Sections 17, 18 and 34 of the RDB Act. Reliance was also placed on the decision of Supreme Court in Damji Valji Shah & Anr. v. Life Insurance Corporation of India and Ors. for the proposition that in view of the provisions of Section 18, 19 and 34 of RDB Act, the Debt Recovery Tribunal has the exclusive jurisdiction to adjudicate on the subject matter and, therefore, there cannot be a parallel proceeding in any other forum on the same subject matter or on the same cause of action. It was also submitted that where a bank or financial institution has already invoked the jurisdiction of the tribunal prior to moving the Company Court in a bid to seek effective relief, then the Company Court may refuse to entertain a petition for winding up. Another submission, which was advanced by Mr. Rajiv Nayar on behalf of the respondent - RPG Transmission Limited was that the RDB Act as disclosed by its preamble, is an Act to provide for establishment of Tribunals for expeditious adjudication and recovery of debts due to banks and financial institutions and, therefore, the action on the part of the petitioner in moving the Company Court when the matter is pending adjudication before the Debt Recovery Tribunal is an abuse of the process of court and also violates the principle and intention of the legislature for enacting the RDB Act.
9. Mr. Prag Tripathi, Senior Counsel, appearing for the appellant in Company Appeal No. 34/2004, also adopted the arguments advanced by Mr. Rajiv Nayar. During the course of his submissions the Senior Counsel advanced some additional points which are set out hereafter. It was submitted by him that if on a proper examination of the company petition, it becomes clear that in pith and substance, the petitioner creditor is seeking to recover its dues, then in such a case, the Company Court would not entertain the winding up proceeding as the subject matter would be covered by the RDB Act. It was also submitted by him that the RDB Act covers the entire field relating to recovery of the amount due and payable and, therefore, there cannot be multiplicity of proceedings for the same cause of action which would be opposed to public justice and public interest. He sought to submit that if an enactment covers the entire field then a person, who seeks a remedy relatable to the subject matter covered by the such enactment, must necessarily approach the statutory authorities constituted under the Act and no other. The next submission of Mr. Tripathi was that when there is conflict between the provisions of two separate enactments, provisions of the latter Act will override those of the former Act and that in the present case not only is the RDB Act a latter enactment, but it is also a special enactment in respect of matters relating to recovery of dues by the Banks and Financial Institutions and, therefore, according to him, the provisions of the said Act, namely, RDB Act would take precedence over the provisions of the General Act, namely, the Companies Act, 1956 and, therefore, the petition filed before the Company Court is misconceived.
10. On behalf of the company, the counsel further submitted that in case two or more remedies are available to the petitioner, it is for the petitioner to chose one of the remedies available before him and once he opts for a particular remedy, then in that event no other remedy would be available to him. In support of the said contentions, the counsel relied upon the decisions of this Court in Ramaswamy Palledar v. Secretary to the Govt. of NCT of Delhi and Anr and also the decision of the Supreme Court in Punjab State Electricity Board v. Bassi Cold Storage, Kharar and Anr. and Solidaire India Limited v. Fairgrowth Financial Services Limited & Ors. (2001) 3 SCC 71.
11. As against the aforesaid submissions it was submitted on behalf of the two banks, namely, The Bank of Nova Scotia and ICICI Bank Limited, that winding up proceedings under the Companies Act and RDB Act are two distinct proceedings which are not alternative to each other. It was submitted that the prayer in the winding up petition is for winding up of the company for inability to pay a debt exceeding Rs. 500/- whereas the prayer in the RDB Act is for recovery of the sums due. In support of the said contention, the counsel relied upon the decision of the Supreme Court in Haryana Telecom Ltd. v. Sterlite Industries (India) Ltd. . It was also submitted by him that the winding up court and the debt recovery tribunal are two distinct forums and operate in separate fields as a winding up court does not adjudicate upon the debt of the appellant which the Debt Recovery Tribunal does and that the Debt Recovery Tribunal cannot issue any order for winding up of the respondent company. It was also submitted by him that Section 34 of the RDB Act provides that the provisions of said Act would have overriding effect over the Companies Act only to the extent of inconsistency therein, if any, and, therefore, since both the winding up and the recovery proceedings are two different remedies, the provisions of winding up as provided in the Companies Act could not be said to be inconsistent with the remedy prescribed under the RDB Act. He also referred to the decision of the Bombay High Court in Viral Filaments Ltd. v. Indusind Bank Ltd. reported as [2001] 33 SCL 132 (Bom.).
12. In order to appreciate the aforesaid contentions of the counsel for the parties, it would be necessary to extract the various relevant provisions to which reference was made by the counsel during the course of their submissions.
13. Section 433 of Companies Act provides as under:-
"433. Circumstances in which company may be wound up by Tribunal. - A company may be wound up by the Tribunal,-
(a) if the company has, by special resolution, resolved that the company be wound up by the Tribunal;
(b) if default is made in delivering the statutory report to the Registrar or in holding the statutory meeting;
(c) if the company does not commence its business within a year from its incorporation, or suspends its business for a whole year;
(d) if the number of members is reduced, in the case of a public company, below seven, and in the case of a private company, below two;
(e) if the company is unable to pay its debts;
(f) if the tribunal is of the opinion that it is just and equitable that the company should be wound up;
(g) if the company has made a default in filing with the Registrar its balance sheet and profit and loss account or annual return for any five consecutive financial years;
(h) if the company has acted against the interests of the sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency or morality;
(i) if the Tribunal is of the opinion that the company should be wound up under the circumstances specified in section 424G:
Provided that the Tribunal shall make an order for winding up of a company under clause (h) on application made by the Central Government or a State Government."
14.Preamble to the RDB Act as also Sections 17, 18 and 34 provide as under:
"Preamble: An Act to provide for the establishment of Tribunals for expeditions adjudication and recovery of debts due to banks and financial institutions and for matters connected therewith or incidental thereto.
Sec.17: Jurisdiction, powers and authority of Tribunals.- (1) A Tribunal shall exercise, on and from the appointed day, the jurisdiction, powers and authority to entertain and decide applications from the banks and financial institutions for recovery of debts due to such banks and financial institutions.
(2) An Appellate Tribunal shall exercise, on and from the appointed day, the jurisdiction, powers and authority to entertain appeals against any order made, or deemed to have been made, by a Tribunal under this Act.
Sec.18. Bar of Jurisdiction.- On and from the appointed day, no court or other authority shall have, or be entitled to exercise, any jurisdiction, powers or authority (except the Supreme Court, and a High Court exercising jurisdiction under Article 226 and 227 of the Constitution) in relation to the matters specified in section 17.
Sec.34. Act to have over-riding effect. - (1) Save as otherwise provided in sub-section (2), the provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act.
(2) The provisions of this Act or the rules made there under shall be in addition to, and not in derogation of, the Industrial Finance Corporation Act, 1948 (15 of 1948), the State Financial Corporation Act, 1951 (63 of 1951), the Unit Trust of India Act, 1963 (52 of 1963), the Industrial Reconstruction Bank of India Act, 1984 (62 of 1984), the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986) and the Small Industries Development Bank of India Act, 1989 (39 of 1989).
15. In Allahabad Bank v. Canara Bank (supra), the Supreme Court was called upon to decide the issue relating to the impact of the provisions of RDB Act on the provisions of the Companies Act, 1956. In the said case the Supreme Court discussed various questions as to whether the Tribunal can entertain proceedings for recovery, execution proceedings and also for distribution of moneys realised by sale of assets of company against which winding up proceedings are pending and as to whether or not leave is necessary and the priority in which money is to be distributed amongst various creditors. After discussing the various provisions like Section 17 and 18 of the RDB Act, it was held that it is clear from the provisions of Section 17 of the RDB Act that the Tribunal is to decide the application of the banks/financial institutions for recovery of debts due to them. It was also held that by virtue of Section 18 the jurisdiction of any other court or authority which would otherwise have had jurisdiction but for the provisions of the Act, is ousted and the power to adjudicate upon the liability is held to be exclusively vested in the Tribunal. The Supreme Court, however, hastened to add that this exclusion would not, however, apply to the jurisdiction of the Supreme Court or of a High Court exercising power under Articles 226 or 227 of the Constitution. After observing in the aforesaid manner, it was held by the Supreme Court in paragraph 22 of the Judgment that the provisions of Sections 17 and 18 of the RDB Act are exclusive so far as the question of adjudication of the liability of the defendant to the appellant.
16. In paragraph 25 of the said judgment, the Supreme Court held thus:
"Thus, the adjudication of liability and the recovery of the amount by execution of the certificate are respectively within the exclusive jurisdiction of the Tribunal and the Recovery Officer and no other Court or authority much less the Civil Court or the Company Court can go into the said questions relating to the liability and the recovery except as provided in the Act."
17. While analysing and discussing the various issues raised before it, the Supreme Court referred to the decision of Damji Valji Shah (supra) wherein the Supreme Court has held as follows:
"the provisions of the special Act i.e. the LIC Act will override the provisions of the general Act, the Companies Act which is an Act relating to Companies in general."
After referring to the aforesaid decision, the Supreme Court in the case of Allahabad Bank (supra) observed as follows in paragraph 31 of the judgment:-
"the appellant's case under the RDB Act - with an additional section like section 34 - is on a stronger footing for holding that leave of the Company Court is not necessary under section 537 or under section 446 for the same reasons. If the jurisdiction of the Tribunal is exclusive, the Company Court cannot also use its powers under section 442 against the Tribunal/Recovery Officer. Thus sections 442, 446 and 537 cannot be applied against the Tribunal."
The Supreme Court also held that Section 19(19) of RDB Act is clearly inconsistent with section 446 and other provisions of the Companies Act and that only section 529A is attracted to proceedings before the Tribunal. Therefore, on the questions of adjudication, execution and working out priorities, the special provisions made in the RDB Act shall have to be applied. It was, however, held by the Supreme Court in the said decision that in view of Section 34 of RDB Act, the said Act would override the Companies Act to the extent there is anything inconsistent between the Acts. An analysis of the decision of the Allahabad Bank (supra) would reveal that the said decision was rendered mainly in the context of the provisions of the RDB Act and sections 442, 446, 529A and 537 of the Companies Act. The provisions of sections 433, 434 and 439 were not at issue and not at all considered by the Supreme Court in the said judgment. The issues that also arose for consideration in that case have no relevance and bearing in respect of the facts and issues at hand. Consequently, the said decision has no relevance and bearing and does not answer the issues that arise for our consideration in this case.
18. Therefore, our consideration, enquiries and discussion would also extend to ascertaining the object, purpose and intendment in enacting the two legislations and also whether the remedy provided in the said two acts are concurrent or exclusive of each other and as to whether or not there is any inconsistency between the two Acts. At this stage, we have to make a special mention of a decision of the Supreme Court in Haryana Telecom Ltd. (supra) wherein a similar question was raised in respect of Arbitration and Conciliation Act, 1996 vis-a-vis Companies Act. In the aforesaid appeal, the contention raised was that when a winding up petition is filed in respect of an agreement between the parties, which contains an arbitration clause, in that event such disputes, which are the subject matter of the winding up petition, should be referred to arbitration. The Supreme Court while dealing with the aforesaid plea referred to the provisions of Section 8 of the 1996 Act, which provides that the judicial authority before whom an action is brought in a matter governed by an arbitration agreement, would refer the parties to arbitration in accordance with the arbitration agreement. After considering the said provision as also the facts of the said case, the Supreme Court held that what can be referred to the arbitrator is only that dispute or matter which the arbitrator is competent or empowered to decide. In paragraph 5, the Supreme Court held as follows:
"The claim in a petition for winding up is nor for money. The petition filed under the Companies Act would be to the effect, in a matter like this, that the company has become commercially insolvent and, therefore, should be wound up. The power to order winding up of a company is contained under the Companies Act and is conferred on the court. An arbitrator, notwithstanding any agreement between the parties, would have no jurisdiction to order winding up of a company."
19. We may also refer to some of the other decisions on which reliance was placed by the counsel for the parties. In Viral Filaments Ltd. (supra), a similar legal issue, which is raised in the present petition, came up for consideration. A Division bench of the Bombay High Court in the said decision held that the argument that what could be done by the Company Court can equally be done by the DRT under the RDB Act was erroneous. It was held in the said decision that there is no provision in the RDB Act empowering the Tribunal to wind up a company which owes the debt to the applicant financial institution. The Bombay High Court held thus:
"jurisdiction of the Tribunal under the RDB Act is only to adjudicate the liability of the respondent before it, ascertain the 'debt' due to the bank/financial institution and issue a certificate for recovery thereof."
The High Court also held as follows:
"once such a certificate of recovery is issued to the Recovery Officer, the Recovery Officer is empowered to execute the same in the manner prescribed under the RDB Act. The jurisdiction to wind up the company is wholly unavailable to the DRT."
It was further held that:-
"what could be done by the Company Court under Section 433(e) could obviously not be done by DRT."
20. While coming to the aforesaid conclusions, the Bombay High Court referred to and relied upon the provisions of Sections 17 and 18 of RDB Act as also Sections 433, 434 of the Companies Act and on appreciation thereof came to the aforesaid conclusions that there was no merit in the contention that merely because the petitioning creditor before the company Court was a bank/financial institution or because an application had already been filed before the DRT under the provisions of the RDB Act, the petition for winding up would not be maintainable. In the said decision, the Bombay High Court referred to the decision of the Supreme Court in Haryana Telecom Ltd. (supra). In paragraph 5 of the said judgment, the Bombay High Court, after referring to the provisions of Sections 17 and 18 of the RDB Act, held as follows:
"Section 18of the RDB Act provides that, on and from the appointed day, jurisdiction of Courts and other authorities in relation to matters specified in section 17 is barred. Section 17 provides that on and from the appointed day, a Tribunal constituted under the RDB Act shall exercise the jurisdiction, powers and authority 'to entertain and decide applications from the banks and financial institutions for recovery of debts due to such banks and financial institutions'. Thus, it is obvious that the exclusion of the jurisdiction of all other Courts and authorities is only to the extent the jurisdiction is specifically vested in the DRT."
In respect of the submission that what could be done by the Company Court can equally be done by the DRT under the RDB Act, the Bombay High Court held in paragraph 6 of the said judgment as follows, while observing that the said plea is erroneous:
"There is no provision in the RDB Act empowering the Tribunal to wind up a company which owes the debt to the applicant financial institution. The jurisdiction of the Tribunal under the RDB Act is only to adjudicate the liability of the respondent before it, ascertained the 'debt' due to the bank/financial institution and issue a certificate for recovery thereof. .......... We find that the jurisdiction to wind up the company is wholly unavailable to the DRT. Hence, what could be done by the Company Court under Section 433(e) could obviously not be done by DRT."
The Bombay High Court, while recording the aforesaid conclusions also noticed the decision of the Supreme Court in Allahabad Bank's case (supra) and summarised the issues which were raised and considered by the Supreme Court in the said decision. The Bombay High Court specifically extracted the contents of paragraph 50 of the said judgment of the Supreme Court in its decision. It also examined the issue of conflict between special and general law. The Bombay High Court summarised the law as follows in paragraph 5 thus:
"There is no provision in the RDB Act empowering the Tribunal to wind up a company which owes the debt to the applicant financial institution. The jurisdiction of the Tribunal under the RDB Act is only to adjudicate the liability of the respondent before it, ascertained the 'debt' due to the bank/financial institution and issue a certificate for recovery thereof. .......... We find that the jurisdiction to wind up the company is wholly unavailable to the DRT. Hence, what could be done by the Company Court under Section 433(e) could obviously not be done by DRT."
21. In respect of the plea raised before the Bombay High Court that the role played by the Company Court under Section 433and the DRT under the RDB Act is more or less equivalent since in the company petition also the Company Court has to adjudicate the amount due to the petitioning creditor before it can admit petition under Section 433(e), it held in the negative. It was the observation of the High Court that the admission of petition for winding up under Section 433(e) need not be preceded by an adjudicated liability of the company, for, it proceeds upon the inability of the company to pay its debts.
22. During the course of arguments before us in addition to the above, Mr. Chandhiok, learned counsel for the appellant bank also made reference to the decision of this Court in Madhya Pradesh Iron & Steel Company v. G.B. Springs (P) Ltd. reported as 102 (2003) DLT 120. A plea was raised in the said case that in view of pendency of a civil suit for recovery of money on the Original Side of the High Court, the Company Petition filed by the petitioner for winding up of the company could not be entertained. The aforesaid submission that the Company Petition should be dismissed since a civil suit has been filed was not accepted by the learned Single Judge of this Court. It was held in the said decision that admission of a winding up petition would not necessarily and invariably result in recovery of amount due and, therefore, filing of a civil suit for recovery of money is essential since the decree passed in such a suit is executable.
23. In Andhra Steel Corporation Ltd. v. Bank of Baroda , it was held by the Calcutta High Court in paragraph 6 as follows:
"In my opinion an application for winding up is a special right or remedy given under the Companies Act and the Court while hearing a winding up application decides only whether the company is liable to be wound up or not and does not decide the question as to recovery of debts due to any bank or financial institution. The winding up court is only concerned to decide whether the company comes within the ambit of the provisions as mentioned in Section 433 of the Companies Act, 1956."
In paragraph 8, the learned Single Judge of Calcutta High Court held as follows:
"In my opinion a winding up proceeding cannot be filed before the Tribunal formed under the aforesaid Act of 1993, and the Tribunal does not have jurisdiction to entertain any application for winding up of a company, whether it is made by any bank or financial institution or any other parties."
24. To the same effect is the decision of the learned Single Judge of Kerala High Court in The Industrial Credit and Investment Corporation of India Limited and etc. v. Vanjinad Leathers Ltd. and etc. . A Division Bench of the Calcutta High Court decided the case of Maxlux Glass Private Limited v. ICICI Limited Company reported as I (2002) Banking Cases 182 (DB) wherein a similar plea was raised as to whether the Company Court under the Companies Act will have jurisdiction to entertain a petition filed by the bank for winding up of a company. After considering the provisions of Sections 17, 18 and 34 of the RDB Act and Sections 433 and 434 of the Companies Act and decisions rendered by different courts including that of Supreme Court, it was held by the Division Bench of the Calcutta High Court in paragraph 26 as follows:
"........ filing of a petition under Sections 433 and 434 of the Companies Act, 1956 before the Company Court cannot be said to be inconsistent with the provisions of the Act of 1993. Once it is held that the petition is not only for the recovery of debts but they are more than that as mentioned above then in that case it cannot be said that the jurisdiction of the Company Court is ousted by virtue of Section 34 read with Sections 17 and 18 of the Act of 1993. Had it been a case where the petition was filed for recovery of debts only then perhaps the arguments raised by the learned counsel for the appellant would derive support from the decisions given in the case of Allahabad Bank v. Canara Bank (supra), but it has been the consistent view of the Apex Court that the petitions filed under Sections 433 and 434 of the Companies Act are not petitions for mere recovery of debts then in that case the provisions contained in the Act of 1993 cannot prevent the Banks or Financial Institutions in approaching the Company Court for an order of winding up."
In paragraph 29, it was held that when the matter is closely examined with reference to both the Acts, it appears that the provisions of Section 433(e) has been interpreted by their Lordships in a number of decisions that such petitions under Sections 433 and 434 of the Companies Act, 1956 are not merely for recovery of debts and it is meant for the benefit of the public at large that such institutions who are unable to pay their debts should not be allowed to function for public purpose. Accordingly it was observed that the petitions filed under Sections 433 and 434 of the Companies Act are not inconsistent with the provisions of the RDB Act rather both the provisions of the Acts can co-exist without doing any harm to the provisions of the RDB Act.
25. The aforesaid decisions referred to at the Bar make it crystal clear that the intention and the purpose for initiating a proceeding under the RDB Act is to recover the amount which is allegedly due and payable to the bank / financial institution whereas the purpose for invoking the provisions of Sections 433 and 434 is to wind up a company on the ground that it has become commercially insolvent. The aforesaid position is also crystal clear when the relevant provisions of both the acts are noticed. The Preamble of the RDB Act lays down the object and purpose for which the said Act was enacted where it clearly provides that the purpose is expeditious disposal and recovery of debts due to banks and financial institutions and matters ancillary thereto like issuance of certificate for such recovery, etc. Section 17 of the Act reiterates the same position when it speaks of the extent of jurisdiction. On the other hand, the entire purpose of instituting a proceeding under sections 433 and 434 of the Companies Act is to wind up a company for its inability to pay a debt and for becoming commercially insolvent. The intention and purpose for instituting the two proceedings are, therefore, distinctly separate and not identical. Haryana Telecom Ltd. (supra) clearly lays down that claim in a petition for winding up is not for recovery of money but to the effect that the company has been commercially insolvent and, therefore, should be wound up. Therefore, the two Acts provide for two different remedies. The jurisdiction of the Tribunal under the RDB Act is to adjudicate the liability of the debtor during the course of which it is ascertained as to what debt is due to the bank / financial institution and after ascertainment of the said liability a certificate of recovery thereof is issued. The Tribunal has not been given the power and jurisdiction to declare a company as commercially insolvent. Therefore, the Tribunal constituted under the RDB Act is an exclusive Tribunal for the purpose of adjudication and determination of the liability and dues and also for recovery of the same by execution of the certificate which would be within exclusive jurisdiction of the DRT and the Recovery Officer and the said jurisdiction is not vested on the Company Court as it has been conclusively held in the decision of Allahabad bank (supra) that the Company Court has no jurisdiction to decide questions, which were left exclusively to the jurisdiction of the DRT. Both the said Acts operate in two distinct and mutually exclusive jurisdiction and each one of the Act does not and would and could not interfere with and/or override their respective area of jurisdiction.
26. In our considered opinion there is no inconsistency between the provisions of winding-up and that of the recovery proceedings initiated under the RDB Act and, therefore, the provisions of Section 34 of RDB Act would have no application in respect of the proceedings initiated under the provisions of Sections 433 and 434 of the Companies Act.
27. There can be no dispute with regard to the proposition sought to be advanced by Mr. Tripathi that in case of inconsistency between the general law and a special law, the special law would override the provisions of the general law and that the latter Act would also have precedence over the earlier Act. We accept the proposition that if there be any inconsistency between the provisions of the RDB Act and that of the Companies Act, it is the RDB Act, which would prevail. But on the other hand, if there is no inconsistency between the two Acts and the provisions of winding up and the provisions of recovery are found to be two distinct remedies and procedures mutually exclusive of each other, in that event we find no reason as to why a financial institution or a bank should be deprived of invoking the remedy provided to institute a proceeding for winding up a company in respect of which it has also instituted a recovery proceeding under the provisions of RDB Act.
28. The contention of Mr. Tripathi that the pith and substance of a winding up petition is also recovery of money is also misconceived inasmuch as, according to us, the pith and substance and intention for instituting such proceeding is to get a declaration against the said company that it is commercially insolvent and, therefore, is required to be wound up. The aforesaid conclusion is reinforced by the very fact that for recovery of the amount the bank or the financial institution has already taken recourse to the specific remedy which is provided for recovery of the amount due and payable to the said bank or financial institution under the provisions laid down under the RDB Act.
29. So far as the procedure for recovery of the dues is concerned, the same is provided for under the RDB Act, which covers the entire field. Therefore, there could be no dispute with the proposition of law laid down in the decisions of the Supreme Court in Custodian, Evacuee Property, Punjab and Ors. v. Jafran Begum ; Firm of Illuri Subbayya Chetty and Sons v. State of Andhra Pradesh ; M/s Kamala Mills Ltd. v. State of Bombay on which strong reliance was placed by Mr. Tripathi. However, the aforesaid decisions have no application to the facts of the present case as we are of the opinion that the winding up proceeding is initiated with the intention of declaring a particular company as commercially insolvent and to see that such insolvent company is wound up in the interest of the general public whereas the very intention of filing a proceeding under the RDB Act is to recover money. Neither the RDB Act nor any other legislation has vested the power and jurisdiction on the Tribunal to declare a company as insolvent and also to wind up such a company. The said jurisdiction is exclusively vested on the Company Court whereas the exclusive jurisdiction to ascertain the liability and to recover the said amount through a certificate is vested with the Tribunal when such liability is more than the amount stipulated in the said Act.
30. Therefore, it cannot be said that RDB Act covers the field for winding up an insolvent company and, therefore, the contentions of Mr. Tripathi are misconceived and are accordingly rejected. The contention that the petitioner could chose one of the remedies available in case where two or more than two remedies are available is applicable when the remedy provided for is one and the same but when two different remedies are provided for two different reliefs, in that event the plea of election of remedies is not applicable. We, therefore, hold that the winding up court is concerned with the issue as to whether or not a company could be declared as commercially insolvent and, therefore, comes within the ambit of provisions of Section 433 of the Companies Act. The Debt Recovery Tribunal does not have any jurisdiction to entertain any such application for winding up of a company whether the same is by any bank and/or other financial institution. We also hold that both the remedies and jurisdictions are mutually exclusive of each other and, therefore, there cannot be any inconsistency between the two different remedies provided for in two different legislations. We respectfully agree with the Division Bench decisions of Bombay and Calcutta High Court referred to above. The legal issue, which arises for our consideration is answered accordingly. The impugned order passed by the learned Single Judge on 31st of October, 2002 in CP No. 323/2001 is set aside and the entire matter is remitted back to the learned Company Judge for re-consideration and for giving a decision on the facts of the said case.
31. Consequently, the legal issue raised in the other appeal i.e. Company Appeal No. 34/2004 is also answered accordingly. We find no infirmity in the order passed by the learned Single Judge in the said case on 31.8.2004. However, as we have answered the legal issue raised before us, which was kept open by the learned Company Judge, now the Company Court may consider the matter in terms of the observations made herein. The impugned order passed by the learned Company Court in the aforesaid appeal (Company Appeal No. 34/2004) is upheld and the matter shall now be considered by the learned Company Judge in accordance with law.
32. In the facts and circumstances of the present appeals, we leave the parties to bear their own costs.