Bombay High Court
All India Motor Transport Mutual ... vs Paphael George on 1 January, 1800
Equivalent citations: [1963]33COMPCAS1166(BOM)
JUDGMENT Shan, J.
1. This appeal is filed by the original respondent company against a decision of Mr. Justice K.K. Desai holding that this court had jurisdiction to entertain the petitioner's petitioner for winding up of the respondent company although its registered officer was situated within the local limits of the principal civil court of original jurisdiction of the Poona district and not within the limits o the ordinary original civil jurisdiction of this court.
2. It was contended on behalf of the company before the learned judge that this court was not competent to entertain the petition, inasmuch as the definition of "court" as given in section 2(6) of the Insurance Act, 1938, referred to the principal civil court of original jurisdiction in a district and the expression also included "the High Court in exercise of its ordinary original civil jurisdiction", and that, therefore, the company having had its registered officer in poona, only the principal civil court of original jurisdiction in that district would have jurisdiction to entertain the petition. On behalf of the petitioner, on the other hand, it was contended that under section 53 of the Insurance Act, and insurance company could be would up by the court in accordance with the Indian Companies Act, 1913, and that inasmuch as a company under the India Companies Act could be wound up only by the High court irrespective of the place where the registered office of the company was situate in the State, a petition for winding up a of an insurance company could likewise be made to the High Court irrespective of where its registered office was situate in the State. The learned judge relying upon the provisions of section 616 of the Indian Companies Act, which provides that the provisions of the Companies Act shall apply to insurance companies except in so far as the said provisions are inconsistent with the provisions of the Insurance Act, 1938, was of the opinion that the jurisdiction of the High Court was not excluded 4either by the definition of the word "court" as given in section 2(6) of the Insurance act or by the provisions of Section 53 of that Act. In the view of the learned judge, the provision of the companies Act to the effect that the High Court shall have jurisdiction in matters of winding up with regard to every company registered under the Act was not inconsistent with the provisions either of section 2(6) or section 53 of the Insurance Act. The tenor of the learned Judge's judgment shows that it may be that the district Court at Poona might have jurisdiction to entertain the petition under the provisions of the Insurance Act but the jurisdiction of this court was not thereby excluded in respect thereof. Accordingly, the learned judge held that the petition could be entertained by this court and ordered the petition to be advertised in certain newspapers after the applicant before the learned judge was substituted in place of the original petitioner in the petition. It is against this decision of the learned judge that the respondent company has filed the present appeal.
3. It was urged by Mr. Bhat, who appeared for the company, that the learned judge was in error in coming to the conclusion that the provisions of section 10 of the Companies Act were not inconsistent with the provisions of section 2(6) and section 53 of the Insurance Act. He referred to section 110 of the Insurance Act which makes a provision for appeals against certain order passed under the Act, and urged that in that case of the present company the principal court of civil jurisdiction which would be entitled to entertain the present petition would be that court within whose local limits the principal place of business of the company was situate, that is to say, it would be the District Court at Poona. Mr Kothare, learned counsel for the respondent- original petitioner-contended, on the other hand, that the conclusion that had been arrived at by the learned judge on the construction of section 10 of the Companies Act and section 2(6) and section 53 of the Insurance Act was perfectly justified and that, in so far as the provisions of section 110 of the Insurance Act were concerned, they were not so clear as to indicate unambiguously that the court which had been referred to in sub- section (2) of that section was the court for the purpose of passing the order referred to in sub-section(I) and not the court which shall entertain an appeal.
4. Now, first turning to the definition of "court" as given in section 2(6) of the Insurance Act, it is clear that the "court" which which has been referred to therein is the principal civil court of original jurisdiction. It is also clear that so fat as a district in a Start is concerned, the principal civil court of original jurisdiction in that district would be the district court. The definition further makes it clear that even in a State where there is a High Court which has no ordinary original civil jurisdiction, the principal civil court of original jurisdiction, so far as the district in which the High Court in a State is possessed of ordinary original civil jurisdiction that such High Court shall be the "Court" for the purposes of the Act and shall be competent to entertain disputes as to matters arising under the Insurance Act. It is undisputed that in this country we have got States each of which has get a High Court but it is only a few of these High Court that have go to ordinary original civil jurisdiction, such as Bombay, Calcutta and Madras; other High Courts have got no ordinary original civil jurisdiction. Nevertheless, there is a District Court in the district in which the latter type of High Court is situated, and it is this District Court which would be the principal civil court of original jurisdiction for the purposes of this Act. Under the Companies Act, on the other hand, no distinction is made between a High court which has got ordinary original civil jurisdiction and one which has not. Section 2(11) of that Act defines the "court" as follows:
"The court means-
(a) with respect to any matter relating to a company (other than an offense against this Act,) , the court having jurisdiction under this Act with respect to that matter relating to that company, as provided in section 10;
(b) with respect to any offense against this Act, the court of a Magistrate of the First Class or, as the case may be, a Presidency Magistrate, having jurisdiction to try such offense."
5. This definition of the word "court" does not really throw any light upon what jurisdiction it really has for the purposes of the Companies Act. For that purpose, we must turn to section 10 of that Act, which deals with the jurisdiction of courts and it is as follows:
"(1) The court having jurisdiction under this Act shall be-
(a) The High Court having jurisdiction in relation to the place at which the registered office of the company concerned is situate, except to the extent to which jurisdiction has been conferred on any District Court or district Courts subordinate to that High Court in pursuance of sub-section (2); and
(b) Where jurisdiction has been so conferred, the District Court in regard to matters falling within the scope of the jurisdiction conferred, in respect of companies having their registered office in the district."
6. Sub-section(2) of section 10 empowers the Central Government by notification in the Official Gazette and subject to such restrictions, limitations and conditions as it thinks fit, to empower any District Court to exercise all or any of the jurisdiction conferred by this Act upon the court, which means the High Court. The Central Government, however, has got no authority to empower the District Court to exercise jurisdiction with regard to winding up of companies with a paid up share capital of not less than one lakh of rupees. The provisions of the section make it clear that the initial jurisdiction for the purpose of the Companies Act in respect of companies under the Act is vested in the High court without making any distinction between its ordinary original civil jurisdiction and appellate civil jurisdiction of such High Court. In other words, the High Court referred to in this section is not the High court having ordinary original civil jurisdiction alone but it is the High court having jurisdiction in relation to the place at which the registered office of the company concerned is situate. It is only when the Central government chooses to exercise its power conferred upon it by sub- section (2) of section 10 to empower the District Court to exercise all or any of the jurisdiction of the high Court that the District Court may exercise such jurisdiction in respect of companies situated within the limits of the district. In the absence of such jurisdiction being conferred upon the District Court, it is only the High Court which will have exclusive jurisdiction to deal with all matters under the Companies Act in respect of companies having their registered officer at any place within the State. Thus, the very definitions, from the point of view of jurisdiction of "court" under the INsurance Act and the companies Act are materially different from each other. Whereas emphasis under section 2(6) of the Insurance Act is laid upon the ordinary original civil jurisdiction of the court, there is no such emphasis to be found in the definition of "court" as given in section 10 of the Companies Act. Whereas the "High Court" referred to in section 2 of the Insurance Act is only the High Court in exercise of its ordinary original civil jurisdiction the "High Court" referred to in section 10 of the Companies Act is the High Court as an institution irrespective of whether it has or has not ordinary original civil jurisdiction. Where the High Court has no ordinary original civil jurisdiction, its chief Justice usually nominates one of the judges of the High court to deal with matter arising under the Companies Act. Where, on the other hand, the High Court has got ordinary original civil jurisdiction, the Chief Justice usually assigns one of the judges on the original side to deal with such matters. But so fat as the "High Court" for the purposes of the Insurance Act is concerned, it must have, in order to deal with such matters. But so far as the "High Court" for the purposes of the Insurance Act is concerned, it must have, in order to deal with matters arising under that Act, ordinary original civil jurisdiction of its own; if not, that High Court will not have anything to do whatever with the matters arising under the Insurance Act. In such a case, it will be the District Court of the district in which the principal place of business of the insurance company is situate, which would have the jurisdiction to deal with matters arising under the Insurance Act in respect of that company, despite the fact that the High Court for the State is situate inn the same district. usually nominates one
7. Turning now to section 53 of the Insurance Act, sub-section(1) thereof provides as follows:
"The court may order the winding up in accordance with the India companies Act, 1913, of any insurance company and the provisions of that Act shall, subject to the provisions of this Act, apply accordingly."
8. We are not concerned with sub-section(2) of that section because it only furnishes additional grounds for the purpose of winding up of an insurance company. It was contended on behalf of the petitioner that "the court" in this section would include this High court having jurisdiction under the companies Act, in spite of the fact that the registered office and the principal place of business of the company in question were situate in Poona. In order to test this argument, we must first find as to what an "insurance company" means under the Insurance Act. That expression is defined in section 2(8) of that Act. That definition runs as follows:
"'Insurance company' means any insurer being a company, association or partnership which may be wound up under the India Companies Act, 1913, or to which the Indian Partnership Act, 1932, applies."
9. Thus, what a court can wind up under section 53 of the Insurance Act is any insurer being a company, association or partnership which may be wound up under the Companies Act,or to which the INdian Partnership Act, 1932, applies. If it be true that the expression"Court' as used in section 53 of the Insurance Act has the same meaning as the expression "Court" under the Companies Act, we have got to find as to whether the High Court under the Companies Act would be able to order the winding up of a insurance company which is a partnership to which the Indian Partnership Act applies. Now, it cannot be disputed that the word "Company" the Companies Act as defined is clause (10) of section 2 of that Act means the company as defined in section 3. Section 3 defines the word "company" as follows:
In this act, unless the context otherwise requires, the expressions company shall, subject to the provision of sub section [2], have the meanings specified blow:
[i] Company means a company formed and registered under this act or an existing company as defined in clause [ii].
10. For the purposes of the present discussion it is not necessary to refer to the other provision of this section. According to this definition, the expression company under the companies ACt means only the company formed and registered under the act or an existing company, and it cannot further be disputed that the companies act by section 10 provides for the jurisdiction of the High court for the purposes of winding up of these companies. Besides, there are provisions in the Act which provide for winding up of unregistered companies as well but it must be noted that an unregistered company is not the same thing as a partnership. For the purposes of part X of the companies act which deals with winding up of unregistered companies, an unregistered company has been defined in section 582, so far as it is material for the purposes of the present discussion, as follows :
For the purposes of this part, the expression unregistered company...
[b] save as aforesaid, shall include any partnership, association or company consisting of more than seven members at the time when the petition for winding up the partnership, association or company , as the case may be, is presented before the court.
11. From these provision, it will appear that it is not every partnership which can be ordered to be wound up under the companies act: the partnership which is contemplated by section 582 of that act, is one which has more than seven members at the time when the petition for winding it up is presented. But the partnership referred to in section 2[8] of the Insurance act is a partnership to which the indian partnership Act. 1932 applies. Such partnership may well consist of less than seven members, and it is obvious that such a partnership would not be covered by the provisions of section 582 of the companies Act. Such a partnership can, however, be wound up as an insurance company under section 53 of the Insurance Act. Apparently. Therefore, the High court which has got jurisdiction under the Companies ACt. for the purposes of winding up a company will not be companies to order the winding up of a partnership with less than seven members. In regard to such partnership all that can be dawns that it will be dissolved either at the instance of one of the partners of by a decrees of the court. But if such partnership happens to be one doing business in insurance section 53 contemplates the winding up thereof in accordance with the provisions of the companies ACt. If we are right in this opinion about the want of jurisdiction in the High court under the companies act to order winding up of a partnership consisting of less than seven members, then, surely, the expression court as used in section 53 of the Insurances, act cannot mean High court as contemplated by the companies Act. This is the inconsistency which we find between the provisions of the Companies act and the Insurance act, so far as the jurisdiction of the courts for the purpose of winding up is concerned.
12. Besides, the court as defined in the Insurance act is clearly intended for the purposes of that act itself, and there is hardly any warrant for us to depart from the purpose of that definition in regard to its application to section 53 of the Insurance act and bring in some other court for the purposes of winding up of an insurance company. Section 53 of the Insurance act starts by using the words the court and there is hardly any reason to assign to this exertion any meaning other than the one which is deliberately given to it by the legislature in the act itself. Had it been intended otherwise, in other words, had it been intended that the High court having jurisdiction under the companies act should be the court having jurisdiction under the companies Act should be the court for the purpose of winding up of all insurance companies, nothing could have been easier than to say the winding up of any insurance company shall be made in accordance with the Indian companies act. Without making any reference whatever to the court which would have jurisdiction to pass an order of winding up. The very fact, however, that such phraseology has not been adopted by the legislature leaves no doubt in our mind that the court contemplated by this section is only the court which is either the principle court of civil jurisdiction in a district or a High court which has got ordinary original civil jurisdiction. If the principle place of business of an insurance company is situated within a district which has no High court then the court which would have jurisdiction under section 53 of the Insurance act would be the principle court of original civil jurisdiction in that district, i.e. the District Court. But, where such place is situated in a district in which the High court of the State is situate and such high court has ordinary original civil jurisdiction, then, the order for winding up of the insurance company under section 53 of the act shall be made by such High court. If on the other hand, such High court has no such jurisdiction, the District court for the district in which it is situated would be the principle civil court of original jurisdiction. For example, in Allahabad the High court has no original civil jurisdiction nevertheless, there is a district court in the district of Allahabad which would for the purposes of this act be the principle civil court of original jurisdiction, and if an insurance company, whose principle place of business is situate within the district of allahabad is to be wound up, it would be the District court in Allahabad and not the High court which would have jurisdiction under section 53 of the Insurance act act to order the winding up thereof.
13. Accordingly, we are of the view that there is a clear inconsistency between the court having jurisdiction for the purposes of winding up of a company under the companies act and the court having jurisdiction under the Insurance act for the same purpose , and that the special provision made in the Insurance act with regard to the court which would have jurisdiction to order winding up of an insurance company should prevail over the general provisions made under the companies act in that behalf.
14. The Construction that we have put upon the expression court as defined in section 2[6] and used in section 53 of the Insurance Act also derives support from the provisions of section 110 of that act. That section provides for appeals against certain orders passed under the act it also provides the forum which shall be competent to make the orders against which the appeals are provided. That section runs as follows:
"[1] An appeal shall lie to the court having jurisdiction from any of the following orders, namely:
[a] An order under section 3 refusing to register, or cancelling the registration of an insurer;
[b] An order under section 5 directing the insurer to change his name;
[c] an order under section 42 cancelling the licensee issued to an agent;
[d] an order under section 75 refusing to register an amendment of rules;
[e] an order under section 87 or section 87A;
[f] an order made in the course of the winding up or insolvency of an insurer or a provident society.
[2] The court having jurisdiction for the purposes of sub section [I] shall be the principle court of civil jurisdiction with whose local limits the principle place of business of the insurer concerned is situate.
[3] An appeal shall lie from any order made under sub section [I] to the authority authorized to hear appeals from the decisions of the court making the same and the decision on such appeal shall be final."
15. Sub section [4] provides for the time during which the appeal contemplated by the section may be filed. It will appear from the provision of sub section [3] that the appeal from the orders specified in sub section [I] shall lie to the authority authorized to hear appeals from the decisions of the court making the same. Sub section [2] appears to be clumsily worded. In the light of the provisions of sub section [3] however, sub section [2] can only be construed to mean the court" which would make the orders specified in sub section [I] and such court is the principle court of civil jurisdiction within whose local limits the principle court of civil jurisdiction concerned is situate. If the principle court of civil jurisdiction is a District court, then an appeal would the would lie to the High court because the High court under sub section [3] would be the authority authorised to hear appeals from the decisions of that court. Sub section [I] of section 110 uses the expression. " An appeal shall lie to the court having jurisdiction and sub section [2] starts with the words the court having jurisdiction for the purposes of sub section [I]. If one were to consture these words in sub section [2] one would think that they really indicate the court in which the appeal shall lie because the purpose of sub section [I] is only to provide an appeal against the orders specified therein. That is why we were inclined to observe that sub section [2] is not happily worded. In any event, it seems to us clear that the orders contemplated be sub section [I] can only be made by the principle court of civil jurisdiction within whose local limits the principles place of business of the insurer concerned is situate. If the principle place of business, for instance, of an insurance company is situate in Bombay then, the principle court of civil jurisdiction for the purpose of these orders would be this high court on its original side. If, on the other hand, the principle place of business is situate outside Bombay in any of the districts in the state of Bombay, then the District court in such district would have jurisdiction to make these orders
16. If would, appear, however that there is no reference among the order specified in sub section [I] of section 110 to an order made under section 53 of the Insurance Act and it might well be contended that inasmuch as such an order is not contemplated by this sub section, the court which would make such an order would not necessarily be the principle court of civil jurisdiction within whose local limits the principle place of business of the insurer concerned is situate but might as well be the High court having jurisdiction under the company act. It may be observed, however, that this section provides for appeals mainly against such orders made under the Insurance act as are not contemplated by the Companies ACt. Inclusion of orders made in the course of winding up of an insurance company which can be wounded up under section 53 of the act amount the orders specified in section 110[1] was not really necessary in view of the express provision in section 53 itself that the provisions of the companies act relating to winding up of companies shall, subject to the provisions of this act apply accordingly and one of these provisions contained section 483 of that act relates to and provides for appeals from orders made or decisions given in the matter of the winding up of a company. That section runs as follows:
Appeals from any order made, or decision given, in the matter of the winding up of a company by the court shall lie to the same court to which, in the same manner in which, and subject to the same conditions under which appeal lie from any order or decision of the court in cases within its ordinary jurisdiction."
17. According to the provision of this section, read with those of section 53 of the Insurance Act,. appeal from orders made in the matter of the winding up of an insurance company which would undoubtedly include the order for winding up of such company shall lie to the court to which appeals lie from any order made by the court in cases within its ordinary jurisdiction. Clause [f] of sub section [I] of section 110 of the Insurance act uses the expiation in the course of the winding up thereby excluding the order for winding up of an insurance company form the scope of the section. This change in the expression may have been necessitated by the inclusion in that clause of the orders made in the course of the insolvency of an insurer who is an individual, which be made only under the Insolvency act and not under the companies act. A Provident society can of course, be ordered to be wound up in accordance with the provision of the companies act under section 88 of the Insurance act, and the provisions of the companies Act relating to winding up apply to winding up of provident societies subject to the provision of part III of the Insurance act which deals with provident societies as in the case of insurance companies. Accordingly an order made in the court of the winding up of a provident society is as much a subject of appeal as the one made in the course of the winding up of an insurance company under sub section [I] of section 110 of the insurance act. An order for the winding up a provident society, however, is not covered by clause [f] of that sub section. Nevertheless, such order will be appealable by virtue of the provisions of section 483 of the Companies act in the same way as an order for winding up of an insurance company. The exclusion of the orders for winding up of an insurance company and a provident society from clause [f] of sub section [1] of section 110 of the insurance act however does not imply that such orders could be passed by any court other than the one specified in sub section [2] of that section, which alone has jurisdiction to make order in the course of the winding up of either of theses companies. The court which has jurisdiction to make orders in the course of the winding up of such company after it is ordered to be wound up under the insurance ACt. Accordingly in our opinion, the absence of the order from in our opinion the absence of the order for winding up of either of these companies in clause [f] of sub section [I] of section 110 of the Insurance ACt does not justify the contention that such order can well be passed by a High court in exercise of its jurisdiction under the companies is not situated within the local limit's of its ordinary original civil jurisdiction. The court which would have jurisdiction for the purpose of making an order for winding up an insurance company would be the principle court of civil jurisdiction within whose local limits the principle place of business of the insurance company concerned is situate.
18. According even on the provision of section 110 of the Insurance act we are of the view that the court which has exclusive jurisdiction for the purposes of the Insurance act is the court having jurisdiction 2[6] of the Insurance act and not the High court having jurisdiction High court having jurisdiction under section 10 of the company act. In this view, we are afraid, there cannot be any question of excluding the jurisdiction of the High court under the companies act for the purpose of entertaining a petition for winding up under the insurance act. The court contemplated under the Companies act for the purpose of winding up, in our opinion, is entirely different from the court contemplated by the Insurance act in that behalf. Both are mutually exclusive so far as winding up is concerned. If the principal place of business of an insurance company is situate within the local limits of the original civil jurisdiction of the High court then undoubtedly, the High court will have jurisdiction to entertain a petition for winding up of that company; but it such place is not situate within such local limits, the High court will not have any jurisdiction to entertain any such petition In our opinion, the definition of the expression court in section 2[6] of the insurance act is based upon the concept of territorial jurisdiction. The District court within its own district is the court paramount for the purpose of entertaining petitions for winding up of an insurance company having its principle place of business within its own limits. Likewise, a High court having ordinary original civil jurisdiction will be the court paramount for the purpose of entertaining such petition if the principle place of business of such company is situate within the limits own original civil jurisdiction . It is not as if the High court, as under the companies in the State irrespective of whether the principle place of business of such company is situate within the local limits of its ordinary original civil jurisdiction or not. The position under, the Insurance act, in our judgment seems to be entirely different and, as we have already observed in the earlier part of the judgment, the essential difference arises out of the fact that an insurance company may as well be a partnership consisting of less than seven members which could only be governed by the partnership act. Such a company, as we have already stated, can never be ordered to be wound up under the companies Act, and, in so far as such partnership is also contemplated by the expression insurance company as used in section 53 of the Insurance act High court cannot. in exercise of jurisdiction conferred upon it by section 53 of the Insurance act in the sense in which it is defined in section 2[6] of the act. This construction cannot be said to be narrow at all, as the learned judge, with respect was inclined to remark. The construction is quite consistent with the purpose and other provision of the act and again with respect we do not agree with the view of the learned judge that the High court under the companies act has overall jurisdiction even in respect of companies governed by the Insurance act.
19. In the result, we set aside the order passed by the learned judge and order the petition to be returned to the original petitioner to be presented, if he is so advised, to the proper court. There will be no order for costs of the petition as will as this appeal. Liberty to the appellant's attorneys to withdraw the deposit of Rs. 500 made in this court. No order on the stay application.