w w w . L a w y e r S e r v i c e s . i n



M/s. SBI Global Factors Ltd. & Another v/s Official Liquidator of M/s Minar International Limited


Company & Directors' Information:- SBI GLOBAL FACTORS LIMITED [Active] CIN = U65929MH2001PLC131203

Company & Directors' Information:- MINAR INTERNATIONAL LTD [Under Liquidation] CIN = U99999MH2006PLC158966

Company & Directors' Information:- B N GLOBAL PRIVATE LIMITED [Active] CIN = U15400PB2014PTC038543

Company & Directors' Information:- K V GLOBAL PRIVATE LIMITED [Active] CIN = U24100DL2014PTC263567

Company & Directors' Information:- GLOBAL CORPORATION LIMITED [Active] CIN = L74999DL1992PLC048880

Company & Directors' Information:- T & I GLOBAL LTD. [Active] CIN = L29130WB1991PLC050797

Company & Directors' Information:- K G GLOBAL PRIVATE LIMITED [Active] CIN = U74999DL2000PTC104788

Company & Directors' Information:- A. V. GLOBAL CORPORATION PRIVATE LIMITED [Active] CIN = U63090DL2007PTC159315

Company & Directors' Information:- A N GLOBAL LIMITED [Active] CIN = U92110MH1985PLC035269

Company & Directors' Information:- D S GLOBAL PRIVATE LIMITED [Active] CIN = U74899DL1995PTC071516

Company & Directors' Information:- A B C GLOBAL PRIVATE LIMITED [Active] CIN = U51909PB2011PTC035103

Company & Directors' Information:- I A T GLOBAL COMPANY PRIVATE LIMITED [Active] CIN = U24116DL1997PTC084916

Company & Directors' Information:- J D GLOBAL PRIVATE LIMITED [Active] CIN = U51909DL1997PTC091270

Company & Directors' Information:- B N G GLOBAL INDIA LIMITED [Active] CIN = U52590DL2011PLC225377

Company & Directors' Information:- N K COMPANY (GLOBAL) PRIVATE LIMITED [Active] CIN = U52390WB2010PTC153624

Company & Directors' Information:- K B K GLOBAL PRIVATE LIMITED [Active] CIN = U24296DL2016PTC290487

Company & Directors' Information:- M & D GLOBAL PRIVATE LIMITED [Active] CIN = U31101UP1974PTC003937

Company & Directors' Information:- V R GLOBAL PRIVATE LIMITED [Active] CIN = U45200WB2007PTC120797

Company & Directors' Information:- M M GLOBAL PRIVATE LIMITED [Strike Off] CIN = U29120WB1986PTC041280

Company & Directors' Information:- R V GLOBAL PRIVATE LIMITED [Active] CIN = U74990MH2009PTC195301

Company & Directors' Information:- M M C GLOBAL INDIA PRIVATE LIMITED [Strike Off] CIN = U11200MH2010PTC206910

Company & Directors' Information:- S R GLOBAL PRIVATE LIMITED [Strike Off] CIN = U51109WB1997PTC084553

Company & Directors' Information:- H V GLOBAL PRIVATE LIMITED [Active] CIN = U18101DL2000PTC103960

Company & Directors' Information:- R P GLOBAL PRIVATE LIMITED [Strike Off] CIN = U74990MH2009PTC193409

Company & Directors' Information:- M S GLOBAL PRIVATE LIMITED [Active] CIN = U70100MH2008PTC213273

Company & Directors' Information:- GLOBAL INTERNATIONAL LIMITED [Strike Off] CIN = U36911UP1999PLC024754

Company & Directors' Information:- R S V GLOBAL LIMITED [Strike Off] CIN = U51909DL1994PLC059032

Company & Directors' Information:- N B GLOBAL (INDIA) PRIVATE LIMITED [Active] CIN = U15122UP2012PTC051614

Company & Directors' Information:- FACTORS PRIVATE LIMITED [Active] CIN = U51102TN1946PTC000726

Company & Directors' Information:- A M GLOBAL PRIVATE LIMITED [Active] CIN = U74999MH2015PTC261061

Company & Directors' Information:- L S A GLOBAL INDIA PRIVATE LIMITED [Under Process of Striking Off] CIN = U74900TG2015PTC098308

Company & Directors' Information:- R L GLOBAL INDIA PRIVATE LIMITED [Strike Off] CIN = U52300HP2014PTC000764

Company & Directors' Information:- G R GLOBAL PRIVATE LIMITED [Active] CIN = U70102KA2013PTC069586

Company & Directors' Information:- H. E. GLOBAL PRIVATE LIMITED [Active] CIN = U72901GJ2016PTC092866

Company & Directors' Information:- INDIA FACTORS LIMITED [Strike Off] CIN = U74999DL1984PLC018750

    Company Application No. 698 of 2018 in Company Petition No. 376 of 2010

    Decided On, 03 May 2019

    At, High Court of Judicature at Bombay

    By, THE HONOURABLE MR. JUSTICE S.J. KATHAWALLA

    For the Applicants: Matthew Nedumpara alongwith Preeti Dambre instructed by C.J. Joveson, Advocates. For the Official Liquidator: Sharan Jagtiani along with Sumeet Nankani, Advocates.



Judgment Text

P.C.:

1. The Applicant is an ex-director of the Company in liquidation, M/s Minar International Limited (“the Company”). The Company was ordered to be wound up by an Order of this Court dated 16th March 2012 and the Official Liquidator was accordingly appointed as liquidator of the Company. By an Order dated 17th September 2013 the Company Court (Coram: N.M. Jamdar, J.) granted leave to the Original Petitioner to bring the Official Liquidator of the Company on record in a suit that the Original Petitioner was prosecuting against the Company and the Applicant. That Suit had already been filed in 2009 in the Kodagu District (Coorg) in Karnataka (“the Suit”). Further, the Company Court also granted leave to the Original Petitioner under Section 446 of the Companies Act, 1956 (“the 1956 Act”) to proceed with the Suit and to bring the Official Liquidator on record. The Application for leave was allowed by the Company Court.

2. The present Application has been filed on 15th May, 2018, seeking: an order from the Company Court to hold and declare that with the repeal of the 1956 Act and its substitution by the Companies Act, 2013 (“the 2013 Act”) the Order granting leave is rendered null and void in view of this Court losing jurisdiction to continue the Suit (Prayer (a)); recall of the aforesaid Order granting leave under Section 446 of the 1956 Act (wrongly numbered as prayer (a)). The Application also seeks interim reliefs of stay of further proceedings in the Suit. As this Application is being decided finally and as it was argued on that basis, the prayer for interim reliefs does not arise for consideration.

3. The main ground pleaded in the Application and as contended by learned Advocate for the Applicant for revoking the leave under Section 446 of the 1956 Act is set out in prayer (a) of the Application. In the Application and in the submission of the Applicant, it is contended that the grant of leave under Section 446 of the 1956 Act is contrary to the doctrine of estoppel as the Original Petitioner/Petitioning Creditor has already elected its remedy of filing the Suit for recovery of moneys against the Company and the Applicant, who stood guarantor for the credit facilities extended to the Company. It was submitted that the effect of grant of such leave was to allow two proceedings to proceed simultaneously against the Company or its ex Director, the Applicant herein.

4. Although the Application accepts and admits that the Company Petition having been filed and allowed much prior to 1st June 2016, is a ‘saved Petition’ and continues to remain within the jurisdiction of this Court, the learned Advocate for the Applicant submitted that by the coming into force of Section 430 of the 2013 Act on 1st June 2016, this Court has lost all jurisdiction over the winding up proceedings and that the Order granting leave under Section 446 of the Act ceased to be alive. It was also submitted that Section 430 of the 2013 Act is a procedural provision that operates retrospectively. It is further submitted that all orders passed in the Suit also are a nullity as a result of the aforesaid submission.

5. Mr. Sharan Jagtiani, learned Counsel for the Official Liquidator, opposed the Application and submitted that the same is totally misconceived in law. As regards the doctrine of election, it is submitted that the same has no application to the present case because the same can never apply as between the Suit and the winding up proceeding. The Suit is a proceeding for recovery of money against the Company and the Applicant in his personal capacity as guarantor and for realisation of security whereas the winding up proceeding is based on the exercise of a statutory right of a creditor that would result in winding up of a company, which is an order in rem.

6. It was then contended on behalf of the Official Liquidator that the other submission that the 2013 Act repeals the earlier 1956 Act and that Section 430 of the 2013 has the effect of annulling the Order granting leave is also entirely wrong in law. It was submitted that the Company Petition in which the Order granting leave under Section 446 of the 1956 Act was passed, admittedly remains within the jurisdiction of the High Court as it was filed and finally allowed much before the coming into force of the provisions of the 2013 Act. It is further submitted that even the Order granting leave under Section 446 of the 1956 was also much before coming into force of Section 430 of the 2013 Act. Section 430 of the 2013 Act can never apply retrospectively to invalidate such Orders and acts, which are in any event saved by the repeal and saving provisions of the 2013 Act.

7. Before dealing with the submissions it is pertinent to note that this Court after the hearing concluded on 21st February, 2019, by an order passed on that day i.e. 21st February, 2019, gave an opportunity to the Applicant to file its written submissions on or before 27th February, 2019. Since Mr. Matthew Nedumpara, Advocate for the Plaintiff had stated that he being a senior citizen would take some time to file the written submissions on behalf of the Applicant, this Court waited much beyond 27th February, 2019 for the written submissions of the Applicant which despite a long wait were not filed/tendered by the Applicant.

8. Based on the Application and the submission made by the parties, I am of the opinion that both of the main submissions advanced by the Applicant in support of the Application are entirely without any merit and are liable to be rejected. In support of the submission of estoppel or cause of action estoppel the learned Advocate for the Applicant relied upon the decision of Thoday v. Thoday reported in (1964) 1 All ER 341. The principles laid down in that case have no bearing on the issue in the present matter as the distinction between a suit for recovery and winding up proceedings is now well settled and the nature of the two proceedings is entirely different. A company petition is filed on the basis that a company is commercially insolvent or deemed to be commercially insolvent and is therefore liable to be wound up because it is unable to pay its debts. It is not a recovery proceeding based on a claim for money neither is it a proceeding for realisation of a security for recovery of a money claim. The cause of action or legal basis for both these proceedings is entirely distinct. This scope of a company petition has been clearly stated by the Hon’ble Supreme Court in the case of Haryana Telecom Ltd. v. Sterlite Industries (India) Ltd. reported in (1999) 5 SCC 688 at paragraph 5, relied upon by the Official Liquidator, which reads as follows:

“The claim in a petition for winding up is not 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….”

(Emphasis Supplied)

9. There is another reason why the principle of estoppel or cause of action estoppel can have no application in the present case. The Company Petition is between the Petitioning Creditor and the Company alone, whereas the Suit was filed against both, the Company and the Applicant, in his individual capacity as the exdirector/ guarantor thereof. The Applicant as ex-Director is not and could not be a party Respondent to the Petition for winding up. I am therefore of the opinion that such proceedings are simultaneously maintainable even if the underlying subject matter of the dispute may overlap.

10. The next contention of Mr. Nedumpara on the effect of Section 430 of the 2013 Act on the jurisdiction of this Court in ‘saved Petitions’ and earlier Orders already passed in those Petitions, is also entirely without any merit and is liable to be rejected. In my opinion once it is admitted and accepted even by the Applicant that the present Company Petition is a ‘saved Petition’ and not to be transferred to the National Company Law Tribunal under the Notification of 1st June 2016, then the winding up process to be followed in respect of such a company would be in accordance with the provisions of the 1956 Act, under which it was ordered to be wound up. As has been seen from the facts stated above, the winding up Order and the Order granting leave under Section 446 of the 1956 Act are much prior to the coming into force of the provisions of the 2013 Act and the Notification of transfer of company petitions other than ‘saved petitions’ to the NCLT.

11. Section 430 of the 2013 Act only ousts the jurisdiction of a civil court to entertain a suit or proceeding which the Tribunal is empowered to determine under the 2013 Act or under any other Act. Section 430 of the 2013 Act reads as follows: “Civil court not to have jurisdiction—No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which the Tribunal or the Appellate Tribunal is empowered to determine by or under this Act or any other law for the time being in force and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or any other law for the time being in force, by the Tribunal or the Appellant Tribunal.”

12. It is ex facie clear that Section 430 of the 2013 Act, which was not even a statutory provision in force at the relevant time of orders in the present Company Petition, can have no bearing on the authority or jurisdiction of this Court to grant leave under Section 446 of the 1956 Act in a petition that was and continues to remain within the jurisdiction of this Court. At the relevant time this Court undoubtedly had jurisdiction to consider the Application for leave under Section 446 of the 1956 Act. Moreover, this Court was acting as a Company Court in granting such leave to allow the Suit to continue. The Suit has accordingly continued and it is also clear that the Suit, being for recovery of money, is not in respect of a matter that even after the coming into force of the 2013 Act is within the jurisdiction of the Tribunal or Appellate Tribunal.

13. Further, I also find no merit in the submission that Section 430 applies retrospectively because it is a procedural provision. It is clearly not a procedural provision but a substantive provision on the ouster of jurisdiction of a civil court and, in any event, apart from the issue of retrospective operation, I find there is no merit in this submission relying on Section 430 of the 2013 Act.

14. Lastly, and in any view of the matter there is also merit in the submission of the Official Liquidator that the Order granting leave under Section 446 of the 1956 Act would be saved under the repeal and saving clause of the 2013 Act. Section 465 of the 2013 Act reads as follows:

“465. Repeal of certain enactments and savings (1) The Companies Act, 1956 and the Registration of Companies (Sikkim) Act,1961 (hereafter in this section referred to as the repealed enactments) shall stand repealed:

Provided that the provisions of Part IX A of the Companies Act, 1956 shall be applicable mutatis mutandis to a Producer Company in a manner as if the Companies Act, 1956 has not been repealed until a special Act is enacted for Producer Companies:

Provided further that until a date is notified by the Central Government under subsection (1) of Section 434 for transfer of all matters, proceedings or cases to the Tribunal, the provisions of the Companies Act, 1956 in regard to the jurisdiction, powers, authority and functions of the Board of Company Law Administration and court shall continue to apply as if the Companies Act, 1956 has not been repealed:

Provided also that provisions of the Companies Act, 1956 referred in the notification issued under section 67 of the Limited Liability Partnership Act, 2008 shall, until the relevant notification under such section applying relevant corresponding provisions of this Act to limited liability partnerships is issued, continue to apply as if the Companies Act, 1956 has not been repealed.

(2) Notwithstanding the repeal under sub-section (1) of the repealed enactments,—(a) anything done or any action taken or purported to have been done or taken, including any rule, notification, inspection, order or notice made or issued or any appointment or declaration made or any operation undertaken or any direction given or any proceeding taken or any penalty, punishment, forfeiture or fine imposed under the repealed enactments shall, insofar as it is not inconsistent with the provisions of this Act, be deemed to have been done or taken under the corresponding provisions of this Act; (b) subject to the provisions of clause (a), any order, rule, notification, regulation, appointment, conveyance, mortgage, deed, document or agreement made, fee directed, resolution passed, direction given, proceeding taken, instrument executed or issued, or thing done under or in pursuance of any repealed enactment shall, if in force at the commencement of this Act, continue to be in force, and shall have effect as if made, directed, passed, given, taken, executed, issued or done under or in pursuance of this Act; …”

(Emphasi

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s Supplied) 15. Section 465(2) of the 2013 Act states that notwithstanding the repeal of the 1956 Act, any Order made under the 1956 Act, shall be deemed to have been made under the corresponding provision of the 2013 Act, provided that such Order is not inconsistent with the provisions of the 2013 Act. Section 446 of the 1956 Act corresponds to Section 279 of the 2013 Act and is not, in any manner whatsoever, inconsistent with the provisions thereof. I am therefore of the opinion that in any view of the matter the Order dated 17th September 2013 passed by this Court in exercise of its powers under Section 446 of the 1956 Act, shall be deemed to be an Order passed under Section 279 of the 2013 Act. Accordingly, any reliance on Section 430 of the 2013 Act to contend that the said Order is annulled or void by the enaction of Section 430 of the 2013 Act is without any basis whatsoever, as the said Order would be expressly saved by Section 465 read with Section 279 of the 2013 Act. 16. Additionally, it may be noted that there is gross delay in filing the Company Application. However, as the contentions of the Applicant have been considered and rejected on merits, the aspect of delay is not being dealt with in detail except to note that there is unexplained delay in filing the Company Application. For all of the above reasons there is absolutely no merit in the Company Application. The Company Application is accordingly dismissed with no order as to costs.
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