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OFFICIAL LIQUIDATOR FOR M/S. JAIPUR SPINNING & WEAVING MILLS LTD. V/S THE PODAR MILLS LTD. & OTHERS , decided on Thursday, December 10, 2015.
[ In the High Court of Rajasthan Jaipur Bench, Company Application No. 75 of 2013 in S.B. Company Petition No. 10 of 1980. ] 10/12/2015
Judge(s) : ALOK SHARMA
Advocate(s) : Applicant Gaurav Sharma, , R.K. Meena, Official Liquidator. R6, Praveen Samdhani, Sr. with G.P. Sharma, Anuroop Singhi, R1 to R3, A.K. Sharma, Sr. with Rachit Sharma.
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    1. Two misc. applications one bearing No. 14743/2015 at the instance of Swarnbhumi Township Pvt. Ltd. (hereinafter the applicant) and the other bearing No. 25787/2015 at the instance of the Official Liquidator of M/s. Jaipur Spinning & Weaving Mills Ltd. interconnected as they are are being disposed of by this common order.2. M/s. Jaipur Spinning & Weaving Mills Ltd. was directed to be wound up by this Court in Company Petition No. 10/1980. The Official Liquidator (hereinafter O.L.) attached to the High Court was appointed as liquidator of the company in winding up.3. Assets of the Company in liquidation were leased out to Podar Mills Ltd. vide registered lease-deed dated 30.12.1964 for a terms of 99 years. That lease-deed was modified by another lease-deed executed on 23.08.1968 increasing the leased area from 35 380 sq. yards to 56 629 sq. yards and for the period to 999 years. Alleging breach of conditions of lease-deeds aforesaid on various counts the O.L. filed company application No. 75/2013 under Sections 456 457 460(4) read with Section 446(2)(d) of the Companies Act 1956 (hereinafter the Act of 1956) and Rules 9 232 and 233 of the Company (Court) Rules 1959 (hereinafter the Rules of 1959) for various reliefs as reproduced hereunder :(i) By an appropriate order or direction the respondents be ordered to hand over peaceful lawful and vacant possession of the property let out to it by the lease deed dated 30.12.1964 and modified by the deed dated 23.08.1968 immediately;(ii) By an appropriate order or direction it may be directed to sell/auction the properties after valuation as directed by this Hon'ble Court in its judgment dated 07.12.2007;(iii) Or any other appropriate relief may kindly be granted to the applicant which this Hon'ble Court may deem fit and proper in the facts and circumstances of the case.(iv) Cost of the litigation may kindly be granted to the applicant.(v) Declare the transactions dated 30.03.2007 19.07.2007 and 19.07.2007 executed by the Podar Mills Ltd. in favour of City Buildtech Pvt. Ltd. (respondent No. 7) Swaranbhumi Township Pvt. Ltd. (respondent No. 5) and Girirajkripa Developer Pvt. Ltd. (respondent No. 6) respectively and as null and void consequently all the rights accrued in favour of respondent Nos. 7 5 & 6 be declared to have come to en end.(vi) The Official Liquidator be permitted to take the possession of the property with the help of District Magistrate as per clause (IA) and (IB) of the provision of Section 456(1) of the Companies Act 1956.4. The maintainability of the aforesaid application was contested on the ground that merely because the company was in liquidation its right as a lessor against the lessee Podar Mills Ltd. could not be treated except otherwise in accordance with law and hence where cancellation of the lease-deeds dated 30.12.1964 and 23.08.1968 was sought the dispute being complex in nature an application under Section 446(2)(d) of the Act of 1956 was not maintainable and instead the O.L. of the company in liquidation should be required to file a suit in terms of Section 456(2)(a) of the Act of 1956 for the reliefs prayed for.5. On the matter coming up before this Court on 01.05.2015 it was recorded that counsel for the parties agreed that the said application may be tried as a suit on the basis of pleadings of the parties on record as in the amended application reply thereto and rejoinder. It was thereupon directed that the company application be tried as a suit on the consent of the counsel for the parties. Subsequently the matter came up before this Court on 15.05.2015 and further directions for disposal of the application to be tried as a suit as directed vide order dated 01.05.2015 were issued relating to admission/denial of documents and framing of issues.6. At this stage application bearing No. 14743/2015 at the instance of Swarnbhumi Township Pvt. Ltd. came to be filed. It was stated that as under the order dated 01.05.2015 the application under Section 446(2)(d) of the Act of 1956 was ordered to be tried as a suit the provisions of the Code of Civil Procedure 1908; the Indian Evidence Act 1872 as well as the Rajasthan Court Fees and Suits Valuation Act 1961 (hereinafter the Act of 1961) were applicable and hence in view of Section 11 of the Act of 1961 the O.L. should be required to pay the proper court fee i.e. advalorem upon the application. On 17.07.2015 time was sought by the O.L. to file reply to the application aforesaid.7. On 29.10.2015 application No. 25787/2015 was filed by the O.L. praying that the order dated 01.05.2015 passed by this Court in Company application No. 75/2013 be clarified and it be ordered that the Company Application No. 75/2013 had not been converted to a suit but only to be tried as a suit and therefore all the legal implications of a suit were not attracted. And albeit the application was to be tried as a suit it retained its character as an application relating to Section 446 (2)(d) of the Act of 1956. In the alternative it was prayed that the order dated 01.05.2015 in so far as it recorded the consent on behalf of the O.L. to try the application under Section 446(2) (d) of the Act of 1956 as a suit be recalled as the consent was not so intended to be and even otherwise was under mistake of law.8. Mr. Gaurav Sharma appearing for the O.L. submitted that a full court judgment of the Delhi High Court in the case of Jaimal Singh Makin v. The Official Liquidator [AIR 1978 Delhi 169] has held that when an application under Section 446(2)(b) of the Act of 1956 or similar application is filed by the O.L. before a Company Court in the case of a company under winding up there is no power with the Court to direct its conversion into a suit. Counsel submitted that the Delhi High Court has held that subsequent to the amendment of 1960 to the Act of 1956 which incorporated clauses (b)(c)(d) in Subsection (2) of Section 446 of the Act of 1956 a very comprehensive jurisdiction was conferred on the company court to decide all claims by or against the company in liquidation the object of the amendment being to empower the company court to decide all claims and other questions whatever by or against any company so that winding up proceedings were expedited eschewing costs entailed in regular suits such as by way of advalorem court fees. The Delhi High Court in the aforesaid case held that a money claim by the O.L. of a company in winding up was maintainable against a debtor by way of an application under Section 446(2)(b) of the Act of 1956 and it was not necessary that he be required to file a money suit and pay advalorem court fee thereon under the Delhi Court Fee Act. It was held that the option being conferred by the statute on the O.L. it was for him to avail it and he having so done it was incumbent upon the company court to address the application in accordance with law without seeking to require its conversion to a suit. Mr. Gaurav Sharma submitted that a company court thus has no power to direct conversion of an application into a suit. Such a situation was obviously not intended under this Court's order dated 01.05.2015 nor could have at all been so intended.9. Mr. Gaurav Sharma then referred to the judgment of this Court in the case of Official Liquidator Maharaja Kishangarh Mills v. Mahesh Metal Works [(1973) 0 RLW (Raj.) 151] to point out that similarly this court entertained an application under Section 446(2)(b) of the Act of 1956 for eviction and arrears of rent instead of requiring that a suit be filed by the company in liquidation for the purpose. Reference was also made by Mr. Gaurav Sharma to the judgment of Andhra High Court in the case of Mamatha Chit Fund P. Ltd. v. Smt. Doure Swarropa Rani & Ors. [2007 136 Comp Cas 758] to submit that it was therein held that the raison d'etre of the amendment of 1960 to the Companies Act 1956 incorporating Clauses (b) (c) and (d) into Section 446 was to effectuate the object of giving jurisdiction to the Company Court to resort to a separate and cheap remedy at the instance of the O.L. of a company in winding up as if the O.L. were to be called upon to pay full court fee on every claim filed like in a suit the very intent and purpose of the amendment of 1960 to the Companies Act 1956 would be lost. In coming to the said conclusion the Andhra High Court held that an application filed by the O.L. under Section 446(2)(b) (c) & (d) could if required be adjudicated as if it were a suit even following the procedure envisaged in regard thereto under CPC. However as the claim was in the nature of the application as statutorily provided for the court fee payable would be as relevant to an application and not as payable on advalorem basis on a regular suit. Reliance was then placed on the case of Sudarsan Chits (I) Ltd. v. O. Sukumaran Pillai [(1984) 4 SCC 657] where the Apex Court noted that prior to the amendment to Section 446 of the Act of 1956 in 1960 the O.L. in order to realise and recover the claims and subsisting debt owed to the company in winding up had the unenviable task of filing suits which as universally known dragged on through the trial court and thereafter in appeals resulting not only in multiplicity of proceedings but also held up the progress of the winding up proceedings and the final dissolution of the company in liquidation. Consequently to save the company which was ordered to be wound up from this prolix and expensive litigation and to accelerate the dissolution of companies Parliament created a cheap and summary remedy by conferring jurisdiction on the court winding up the company to entertain applications in respect of claims for and against the company. That was the object behind the enactment of Section 446(2)(b) (c) & (d) and therefor the Apex Court held it must receive such construction at the hands of the court as would advance the object and at any rate not thwart it.10. Mr. Gaurav Sharma further submitted that aside of the fact that the application filed by the O.L. under Section 446 (2)(d) of the Act of 1956 could not be directed to be tried as a suit even otherwise the said application could not be tried as a suit under the provisions of CPC. Attention of this Court was drawn to Section 26 CPC which provides that every suit shall be instituted by the presentation of a plaint or in such other manner as may be prescribed. Counsel submitted that Order IV Rule 1 CPC provides that every suit shall be instituted by presenting a plaint in duplicate to the court or such officer as appointed and every plaint shall comply with the rules contained in Orders VI and VII so far as they were applicable. Further Order IV Rule 1(3) CPC provides that plaint shall not be deemed to be duly instituted unless it complies with the requirements specified in sub-rules (1) and (2). Counsel drew the attention of this Court to Order 6 Rule 1 CPC which defines pleadings to mean plaint or written statement. Further Order 6 Rule 15 CPC provides that save as otherwise required by law every pleading shall be verified at the foot by the party or by one of the parties pleadings or by some other person proved to the satisfaction of the court to be acquainted with the facts of the case. And the person verifying is to specify by reference to the numbered paragraphs of the pleading what he verifies of his own knowledge and what he verifies upon information received and believed to be true and also furnish an affidavit in support of his pleadings. Order 7 Rule 1 CPC prescribes the particulars of a plaint which inter alia mandatorily require a statement of the value of the subject matter of the suit for the purposes of jurisdiction and of court fees so far as the case admits.11. Mr. Gaurav Sharma submitted that an application under Section 446(2)(b) of the Act of 1956 did not satisfy the requirement of Section 26 read with Order IV VI & VII CPC and therefore could not under any circumstances be construed as a suit validly instituted As such aside of the judgment of the Delhi High Court where an application filed under Section 446 (2)(b)(c) cannot be treated as a suit no suit in the eye of law has been validly instituted before this Court. Consequently the application alone as laid before this Court should be so treated and adjudicated no doubt in the manner of a suit not as a suit. This is the purport of direction in the order dated 01.05.2015. In support of his contentions Mr. Gaurav Sharma referred to a judgment of the Madras High Court in the case of Mallika Dharmaraj & Anr. v. Executive Officer of Arulmigu Visweswara and Arulmigu Veeraraghava Perumal Temple of Triupur & Ors. [(2014) Supreme (Mad) 3870]. Therein the Madras High Court held that albeit CPC 1908 had not defined the word suit Section 26 CPC mandated the laying of a suit in the manner set out in Order IV Rule 1 CPC. It was held that where the requirement for laying a suit under CPC was not complied with no plaint could be deemed to be validly instituted and therefore could not be tried as a suit. The Madras High Court in the case aforesaid quoted with approval its earlier judgment reiterated in R. Subramanian v. Arulmighu Dhandayuthapani Swamy Thirukkoil [2008 (1) MLJ 300] wherein it was held as under :Thus to construe a proceeding as a Suit one has to see whether the same has been instituted by presenting a plaint. Order 7 C.P.C. prescribes as to what are all the particulars to be contained the Plaint. If Order 4 and Order 7 C.P.C. are closely analysed it would leave no doubt that the Petition filed under Section 19 of the Tamil Nadu Public Trusts (Regulation of Administration of Agricultural Lands) Act 1961 is not a Suit since the same has not been instituted by presenting a Plaint before a Civil Court. Therefore in my considered opinion Section 10 C.P.C. is not at all applicable.12. In the context of the submissions made counsel prayed that the application No. 14743/25015 filed by the applicant-Swarnbhumi Township Pvt. Ltd. seeking payment of court fees on the application filed by the O.L. be dismissed as the directions of this Court in its order dated 01.05.2015 that the application under Section 446(2)(d) of the Act of 1956 be tried as a suit does not entail its conversion as a suit. He prayed that a clarification also be accordingly made.13. Mr. Praveen Samdhani Sr. Advocate with Mr. G.P. Sharma and Mr. Anuroop Singhi appearing for respondent No. 6 submitted that the application for clarification/recall of the order dated 01.05.2015 passed by this Court filed by the O.L. is misconceived. It was submitted that the O.L.'s consent to try the company application filed under Section 446(2)(d) of the Act of 1956 as a suit is evident in the order dated 01.05.2015. There is no ambiguity therein. Consequently neither is there any occasion for clarification nor to recall of the order dated 01.05.2015. It was submitted in the alternative that in the event the application under Section 446(2)(d) of the Act of 1956 cannot be converted into a suit as held by the Delhi High Court in the case of Jaimal Singh Makin (Supra) the said application be dismissed in view of the fact that it seeks to agitate extremely complicated complex and disputed questions of fact which cannot be tried summarily by way of an application.14. Mr. A.K. Sharma Sr. Advocate appearing with Mr. Rachit Sharma for respondent Nos. 1 to 3 adopted the submissions of Mr. Samdhani and further emphatically submitted that with the OL's consent to treat his application under section 446(2)(d) of the Act of 1956 as a suit it partake the character of a suit with all its attendant consequences including payment of advalorem court fees thereon under the Act of 1961. It was submitted that the relief claimed in the Company Application No. 75/2013 is one for declaration and possession and it cannot be summarily tried as would be under Section 446(2)(d) of the Act of 1956. Sr. counsel submitted that in the facts of the case the application for clarification/recall of the order dated 01.05.2015 is clearly an afterthought inasmuch subsequent thereto the matter was put up before the Deputy Registrar for admission/denial of documents and framing of issues which are the steps in the adjudication of a suit.15. Heard. Considered.16. The judgment of the Hon'ble Delhi High Court in the case of Jaimal Singh Makin (Supra) is quite categorical holding that an application filed under Section 446(2)(b) of the Act of 1956 cannot be directed to be tried as a suit by the company court. The logic of the judgment would apply propriovigore to application under Section 446(c) and (d) of the Act of 1956. The intendment of the amendment to Section 446 of the Act of 1956 in 1960 has been categorically delineated by the Supreme Court in the case of Sudarsan Chits (I) Ltd. (Supra) as being for the purpose of expediting claims in respect of company in winding up without any unnecessary expenses and burden of delays for the O.L. who acts as a trustee for the general body of creditors and workers of the Company in winding up. The Andhra High Court has in the context rightly stated that even though an application be filed under Section 446(2)(b) (c) & (d) of the Act of 1956 for any nature of claim of a company in winding up against a third party it can always be tried where warranted as per procedure relevant to a suit. The character of the application would in such a circumstance still sustain without it being converted formally into a suit for the purpose of trial. No judgment contra to the judgment of the Supreme Court in the case of Sudarsan Chits (I) Ltd. (Supra) the full bench judgment of the Delhi High Court in the case of Jaimal Singh Makin (Supra) and Andhra High Court judgment in the case of Mamatha Chit Fund (Supra) have been cited before me.17. Further even otherwise it is evident from the provisions of Section 26 of CPC read with Order IV Rule 1 CPC as also Order 6 & VII thereof that a suit to be validly instituted has mandatorily to be compliant with various aspects detailed in CPC. Absent such characteristics a valid institution of the suit cannot be found. This position has been categorically adverted to by the Madras High Court in the case of Mallika Dharmaraj (Supra). Again no judgment contrary thereto has been cited before this Court whereby any proceedings taken non-compliant with the characteristics as detailed in CPC can be treated to be a suit. Finally the order dated 01.05.2015 states that the application under Section 446(2)(d) of the Act of 1956 filed by the O.L. be tried as a suit. No directions were issued to file a plaint compliant with the provisions of Section 26 CPC read with Order IV Rule 1 thereof. The consent of the counsel for the O.L. and the intendment of this Court in passing the order dated 01.05.2015 was thus quite obviously not to treat the application under Section 446(2)(d) of the Act of 1956 as a suit but only to try it as one.18. In the circumstances I would be inclined to dismiss the application No. 14743/2015 filed by the applicant-Swarnbhumi Township Pvt. Ltd and allow the application No. 25787/2015 filed by the O.L. with the clarifications detailed herein above.Put up on 05.02.2016 as prayed.Application of Official Liquidator allowed; Application of S dismissed.