Commissioner Of Income Tax-8, ... vs Registrar Of Companies, Mumbai ...
2017 Latest Caselaw 2092 Bom

     vinak                                    1                                      FJ.com.pet.643.2014.odt

  
              IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                   ORIDINARY ORIGINAL CIVIL JURISDICTION

                        COMPANY PETITION NO.643 OF 2014


     Commissioner of Income Tax-8, Mumbai
     having his office at Room No.-259, 
     Aayakar Bhawan, Mharshi Karve Road, 
     Mumbai                                                                    ... Petitioner 

                     V/s.

     1.  Registrar of Companies, Mumbai
         having his office at "EVEREST" Building, 
         100, Marine Drive, Mumbai - 400002

     2. Mr. Kesavan Varadarajan
        Erstwhile Director, MoTech Software
        Pvt. Ltd. (since dissolved), residing at 
        B-104, Cukhmani CHS,
        B-5 Yashodham, Opposite Bus Depot,
        Goregaon (E), Mumbai 400063

     3. Mr Kaushik Vrajdas Ved
        Erstwhile Director, MoTech Software
        Pvt. Ltd. (since dissolved), residing at 
        D/603, Dharam Palace Shantivan,
        Borivali, Mumbai 400066                                             ... Respondents
                                        ...
     Mr. B. M. Chatterji, Senior Advocate a/w. Mr. Abhay Ahuja, Mr. Ranjit  
     Basu, Ms. Maya Majumdar for the petitioner. 
     Mr.   Rafique   Dada,   Senior   Advocate   a/w.   Mr.   Z.   Dada,   Mr.   Hetal  
     Thakore, Mr. Kunal Parikh i/b. M/s. Thakore Jariwala & Associates  
     for respondent nos.2 & 3.
     Smt.S.V.Bharucha for the respondent no.1 (ROC).
                                          ...
                                    CORAM             :  R. D. DHANUKA, J.

                                    RESERVED ON       :  21 APRIL, 2017.  
                                    PRONOUNCED ON  :   2  MAY,  2017.




 vinak                                    2                                      FJ.com.pet.643.2014.odt

ORDER :-

1. By this petition filed under Sections 559 and 560 of the Companies Act, 1956 the petitioner i.e. the Commissioner of Income Tax-8, Mumbai seeks a declaration that the striking off of MoTech Software Pvt. Ltd. from the Register of Companies by respondent no.1 under Section 560(5) of the companies Act 1956 and all acts done by the respondents in furtherance thereof is null and void ab-initio, non-est and of no legal effect, whatsoever. The petitioner also seeks an order and directions against the Registrar of the companies to restore the name of the said company to the Register of Companies and seeks that the notice dated 20th April, 2012, 20th May, 2012 and notification dated 30th March, 2013 to quash and set aside.

2. During the course of argument of this petition, a question arose for consideration of this Court as to whether in view of Rule 3 of the Companies (Transfer of Pending Proceedings) Rules, 2016, the present proceedings under Sections 559 and 560 of the Companies Act, 1956 have to be transferred to the National Company Law Tribunal (NCLT) constituted under Section 408 of the Companies Act, 2013 or not. Learned Senior Counsel for the petitioner and the learned Senior Counsel for respondent nos.2 and 3 addressed this Court on this issue.

3. On 10th April 2014, the petitioner filed this company petition for various reliefs in this Court. The company petition was opposed by the respondents by filing affidavit-in-replies. The matter was thereafter heard on several occasions by this Court.

vinak 3 FJ.com.pet.643.2014.odt

4. Before the conclusion of the arguments by both the parties, at the late stage, the petitioner herein made an oral application before this Court for seeking amendments to the company petition on 14th January, 2016. The respondents, however, raised an objection to the said oral application for amendment of the petition. The petitioner was thus directed to file an application for seeking amendment to the petition. The petitioner thereafter filed a company application (L/66/2016) inter alia praying for amendments in the company petition no. 643 of 2014. It was the case of the petitioner that the amendments were sought to clarify and correct certain inadvertent mistakes that were made in the petition as originally filed. That the amendments were sought are set out in paragraphs 4, 6 and 8 of the company application.

5. This Court accordingly passed an order on 21st April, 2016 allowing the amendments as prayed for without prejudice to the rights and contentions of the respondents on the merits of the amendments. This Court recorded in the said order that as the matter was admittedly heard on number of occasions before the previous Bench, this Court allowed the said amendment subject to the petitioner paying costs of Rs.10,000/- each to the respondent nos.2 and 3. This Court also permitted the respondents to file further affidavit responding to the amendments that were allowed by this Court by the said order dated 21st April, 2016. The petitioner, thereafter, amended the company petition including a ground of appeal. Respondent nos.2 and 3 filed additional affidavit to the amended petition. The petitioner filed rejoinder to the said additional affidavit. The amendments were carried out on 5th May, 2016 and since then the matter was not heard by this Court and had been adjourned from time to time.

vinak 4 FJ.com.pet.643.2014.odt

6. Under Section 560 of the Companies Act, 1956, the Registrar of the Companies was empowered to strike of the defunct Company from the Register of the Companies on various grounds. Section 560(6) of the Companies Act, 1956 provided that if a Company, or any member or creditor thereof, was aggrieved by the Company having been struck off the Register, the NCLT on an application made by the Company, member or creditor before the expiry of twenty years from the publication in the Official Gazette of the notice was empowered to pass an order for restoration of the said Company to the Register and pass an appropriate orders. The words "Tribunal'" was inserted in place of words "Court" by Act No. 11 of 2003. By the Companies Act, 2013 the Companies Act, 1956 came to be repealed and various provisions of Companies Act, 2013 were brought into force by issuance of various notifications by the Central Government from time to time. By exercising of powers conferred by section 1(3) of the Companies Act, 2013.

7. Insofar as Section 248 of the Companies Act, 2013 which corresponds to Section 560 of the Companies Act, 1956, the same has been brought in force by a notification dated 26th December, 2016. Section 252 of the Companies Act 2013, which is also brought in force by the same notification dated 26 December, 2016 provides for an appeal to the NCLT against the order of the Registrar notifying the Company as dissolved under Section 248. Sections 408 and 410 of the Companies Act, 2013 confers powers on the Central Government to constitute the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) respectively. In exercise of those powers the Central Government issued two separate notifications both dated 1st June, 2016 constituting the NCLT and the NCLAT, respectively. On 1st

vinak 5 FJ.com.pet.643.2014.odt

June, 2016, the Central Government by exercising powers conferred under Section 434(1)(a) of the Companies Act, 2013 issued the notification appointing 1st June, 2016 and providing that as on that date all matters and proceedings pending before the Board of Company Law Administration (CLB), shall stand transferred to NCLT, to be disposed of in accordance with the provisions of 2013 Act or Companies Act, 1956 as the same may be.

8. By another notification issued on the same day, the Central Government appointed 1st June, 2016 as a date on which various provisions of the Companies Act, 2013 which were listed in the notification came into force. The said provisions included the relevant provisions of the Companies Act, 2013 concerning operation and mismanagement which were the subjects dealt with by the Company Law Board till then under the provisions of the Companies Act, 1956. In the year 2016, the Parliament enacted the Insolvency and Bankruptcy Act, 2016 to consolidate and amend laws relating reorganization and insolvency resolution of corporate persons. The said Act received assent of the President on 28th May 2016. The Central Government issued another notification dated 7th December, 2016 and brought into force various other provisions of the Companies Act, 2013 including the provisions relating to winding up contained in that Act with effect from 15th December, 2016. The Central Government issued another notification on 7th December, 2016 and notified the rules i.e the Companies (Transfer of Pending Proceedings) Rules, 2016, and brought the said Rules into force with effect form 15 th December, 2016, except rule 4, which provides for transfer of pending proceedings relating of voluntary Winding up of Companies pending before a High Court on the date of commencement of the said rule.

vinak 6 FJ.com.pet.643.2014.odt

9. Rule 3 of the said Rules reads thus;

Transfer of pending proceedings relating to cases other than winding up.

"3. All proceedings under the Act, including proceedings relating to arbitration, compromise, arrangements and reconstruction, other than proceedings relating to winding up on the date of coming into force of these rules shall stand transferred to the Benches of the Tribunal exercising respective territorial jurisdiction: Provided that all those proceedings which are reserved for orders for allowing or otherwise of such proceedings shall not be transferred."

10. Rule 5 provides for transfer of pending proceedings of Winding up on the ground of inability to pay debts. Rule 6 provides for transfer of pending proceedings for Winding up of matters on the ground other than inability to pay debts. Rule 7 provides for transfer of Records.

11. Mr Chatterji, learned Senior Counsel for the petitioner invited my attention to various notifications referred to aforesaid issued by the Central Government by exercising powers conferred under Section 1(3) of the Companies Act, 2013 including the notification dated 7th December, 2016 notifying Rules called as the Companies (Transfer of Pending Proceedings) Rules, 2016. It is submitted by the learned Senior Counsel that this company petition has been filed by the petitioner for various reliefs under Section 560(6) of the Companies Act, 1956. He submits that the matter was fully heard from time to time by various judges of this Court. He submits that due to certain reasons the petitioner was required to carry out amendments to the company petition which amendments have been permitted by this Court.

 vinak                                    7                                      FJ.com.pet.643.2014.odt

12.              My   attention   is   invited   to   Rule   3   of   the   said    the 

Companies (Transfer of Pending Proceedings) Rules, 2016. He submits that since the matter was fully heard or atleast substantially heard by this Court from time to time, in view of the proviso to Rule 3 and more particularly the words "or otherwise", this Court has ample powers not to transfer such proceedings which were fully heard and /or atleast substantially heard, to the NCLT and can hear this petition itself. He submits that if the matter is transferred to the NCLT by this Court, in this situation, there will be gross injustice to the petitioner, and the present proceedings would be further delayed for no fault of the petitioner. It is submitted by the learned Senior Counsel that the words "or otherwise" would apply in a situation where the Court can exercise powers not to transfer the pending proceedings under Rule 3 though such proceedings were not reserved for orders. He submits that such powers are conferred upon the Court under the said proviso in the interest of the justice and to prevent any injustice to the parties to the proceedings.

13. In support of the aforesaid submissions, the learned Senior Counsel for the petitioner placed reliance on the judgment of

i l a V ati Bai v. State of Bombay Supreme Court in case of Smt. L and in particular paragraph 12. He submits that the words "or otherwise" are intended to cover all those proceedings which are reserved for orders for allowing and would cover all other cases which were fully argued or atleast substantially argued.

14. Learned Senior Counsel placed reliance on the judgment of the Supreme Court in the case of Animal Welfare

1 1957 AIR 521

vinak 8 FJ.com.pet.643.2014.odt

Board of India v s . A. Nagara 2 and in particular paragraphs 33, ja 38, 39. He submits that the expression "or otherwise" is not used as words of limitation and the legislature has intended to cover all situation.

15. Mr. Dada, learned Senior Counsel for respondent nos.2 and 3, placed reliance on Section 434 (1) (c) of the Company Act, 2013, which provides for transfer of certain pending proceedings and submits that under the said provisions the Central Government is empowered to transfer all proceedings under the Companies Act, 1956 including proceedings relating to arbitration, compromise, arrangements and reconstruction and winding up of Companies, pending immediately before such date before any District or High Court, to the Tribunal and the Tribunal is thus empowered to proceed to deal with such proceedings from the stage before their transfer. He submits that under these enabling powers conferred upon the Central Government, the Central Government has issued the said notification dated 7th December, 2016 and notified the said the Companies (Transfer of Pending Proceedings) Rules, 2016. He submits that the said Rules have been brought in force with effect from 15th December, 2016 except Rule 4 which provides for pending proceedings relating to voluntary Winding up.

16. It is submitted that in this case, the proceedings are not admittedly reserved for orders for allowing or otherwise. The arguments were not concluded. The petitioner had applied for the amendments to the company petition, which were allowed by this Court. No argument have been advanced by the parties after such amendment were carried out on merits. He submits that in view of 2 (2014) 7 SCC 557

vinak 9 FJ.com.pet.643.2014.odt

Section 434(1)(c) of the Companies Act, 2013, the pending proceedings thus will have to be transferred to the NCLT and will have to be proceeded with from the stage before its transfer.

17. It is submitted by the learned Senior Counsel for respondent nos.2 and 3, that the Court has to consider while interpreting a provision as to in what context and for what object and purpose such provision was enacted by the legislature. He submits that the purpose and object of the constituting NCLT is to transfer the pending proceedings before the District Court or the High Court under the provisions of the Companies Act, 1956 and the Companies Act, 2013 before one Forum i.e. NCLT depending upon the stage of such matters which are separately set out in the said the Companies (Transfer of Pending Proceedings) Rules, 2016. He submits that the expression "or otherwise" cannot go contrary to the substantive provisions under Section 434 of the Companies Act, 2013.

18. Learned Senior Counsel for respondent nos.2 and 3 distinguishes the judgment of the Supreme Court in case of Smt. Lila Vati Bai vs. State of Bombay (Supra) and submits that the said judgment will not assist the case of the petitioner, but would assists the case of his clients. He submits that the Supreme court in the said judgment has construed the expression "or otherwise" while considering the provisions of the Bombay Land Acquisition Act, 1948 as amended by Bombay Act II of 1950 and XXXIX of 1950. The Supreme Court held that the legislature had been cautious and thorough going enough to bar all avenues of escape by using the words "or otherwise" . It is held that those words are not

vinak 10 FJ.com.pet.643.2014.odt

words of limitation but of extension so as to cover all possible ways in which the vacancy may occur. He submits that the expression "or otherwise" in Rule 3 which provides for transfer of pending proceedings has to be read and understood in that context and would mean that if proceedings are reserved for orders for allowing or for any another purpose. Only such proceedings shall not be transferred. He submits that in the present proceedings, such conditions for not transferring the proceedings to the NCLT are not satisfied.

19. In so far as the judgment of Supreme Court in case of Animal Welfare Board of India vs. A. Nagaraja (Supra) relied upon by the petitioner is concerned, the Supreme Court has construed the provisions of the Prevention of Cruelty to Animals Act, 1960 and has held that in the matters of welfare legislation, the provisions of law should be liberally construed in favour of weak and infirm. He submits that the said judgment also would not assist the case of the petitioner.

20. The short question that arises for consideration of this Court is whether in the present proceedings the conditions for not transferring set out in the proviso to Rule 3 of the said Company (Transfer of Pending proceedings) Rule, 2016 are satisfied and thus are not required to be transferred to NCLT.

21. Before I deal with the relevant provisions of the Companies Act, 1956, the Companies Act, 2013 and various notifications issued by the Central Government by exercising powers under section 1(3) of the Companies Act, 2013 and by

vinak 11 FJ.com.pet.643.2014.odt

exercising powers under Section 434(1)(2) of the Companies Act, 2013, I shall first deal with the factual aspect in this matter.

22. It is not in dispute that the petitioner has filed the proceedings under Section 560(6) of the Companies Act, 1956 for various reliefs. Though the matter was heard from time to time by various Judges of this Court, the fact remains that these proceedings were not reserved for any orders. It is not in dispute that the petitioner had made an oral application for seeking amendments to the company petition. The respondent nos.2 and 3 had opposed the said application seeking amendments to the petition. The petitioner had thus filed a company application inter alia praying for amendments to the company petition. A perusal of the amendments carried out in the company petition indicates that the petitioner had brought certain additional averments on record by way of amendment and also amended a ground vide paragraph 40(a). This Court while allowing the said amendments by order dated 21st April, 2016 had recorded the submission made by respondent nos.2 and 3 that the matter was substantially heard by the previous Bench and at the fag end, an amendment was sought by the petitioner. This Court observed that since admittedly the matter was heard on several occasions before the previous Bench, the amendments were allowed subject to the petitioner paying costs of Rs.10,000/- each to respondent nos.2 and 3. The said amendments have been allowed without prejudice to the rights and contentions of the respondents on merits of those averments.

23. On perusal of the roznama annexed thereto, it is clear that amendments have been carried out by the petitioner on 5 th May, 2016. The respondents have filed an additional affidavit-in-

vinak 12 FJ.com.pet.643.2014.odt

reply pursuant to the liberty granted by this Court. A perusal of the roznama indicates that after carrying out the amendment by the petitioner, the matter has not been heard by this Court on merits. The matter appeared before this Court on 10th April, 2017 when an issue arose whether this petition can be heard by this Court or not. Certain arguments were advanced on the said issue on 10 th April, 2017 and the matter was adjourned to 21st April, 2017.

24. A perusal of the affidavit-in-rejoinder, filed by the petitioner, on 2nd August, 2016, in reply to the additional affidavit dated 25th June, 2016 filed by respondent nos.2 and 3 and more particularly paragraph 3(d) clearly indicates that it is the case of the petitioner that the respondents did not complete their arguments during the hearing and the petitioner did not get an opportunity to submit a rejoinder. It is also contended that this Court has not admitted the company petition and thus pre-trial amendment application is allowed, the opposite parties are not prejudiced and are provided with a full opportunity to defend their case.

25. It is contended in the said affidavit that the amendment to the Company Petition was made with a view to facilitate this Court in determining real question involved in the present controversy. Admittedly there were no arguments after amendments to the company petition were carried out by the petitioner. Even according to the petitioner the arguments were not concluded. The submissions made by the learned Senior Counsel for the petitioner across the bar that the argument were concluded or were substantially concluded is contrary to the plea of the petitioner itself.

vinak 13 FJ.com.pet.643.2014.odt

26. With these facts in hand, let me now consider the effect of Rule 3 of the said company (Transfer of Pending Proceedings) Rule, 2016. It is not in dispute that the Companies Act, 1956 is relating to companies and certain other associations and provides for different subjects including the subject of striking of the defunct Companies from the Register of the Companies by the Registrar. The word "Court" was already substituted by Act No. 11 of the 2003 by the word "Tribunal" i.e. the "NCLT" as defined under section 2(g). It is not disputed that the section 248 of the Companies Act, 2013 corresponds to section 560 of the Companies Act, 1956.

27. By a separate notification issued by the Central Government by exercising powers conferred under section 1(3) of the Companies Act, 2013, the Central Government has appointed 26th December, 2016 as the date on which provisions of Sections 248 and 252 of the Companies Act, 2013 came into force. Under Section 252 of the Companies Act, 2013, a person aggrieved by an order of Registrar notifying their company as dissolved under section 248 may file an appeal to the Tribunal i.e. NCLT.

28. Under Section 408 of the Companies Act, 2013, the Central Government is empowered to constitute a Tribunal to be known as the National Company Law Tribunal by issuing a notification to exercise and discharge such powers and functions as are or may be conferred on it by or under the Companies Act, 1956 or any other law for time being in force. Pursuant to such powers conferred upon the Central Government, the Central Government has already notified the constitution of NCLT and as well as NCLT in

vinak 14 FJ.com.pet.643.2014.odt

Chapter XXXVII of the Companies Act, 2013.

29. Section 434 of the Companies Act, 2013 provides for transfer of certain pending proceeding. The said provisions corresponds to Section 647A of the Companies Act, 1956 which provided for transfer of all proceedings including proceeding relating to arbitration, compromise, arrangements and reconstructions and winding up of the Company, pending before the commencement of the Companies Act (Second Amendment) Act, 2002 before the District or the High Court in the said Act, and several other Acts mentioned therein. The proviso to section 647(A) of the Companies Act, 1956 indicates that those proceedings where winding up of company had commenced subject to the Supervision of the District Court or the High Court before the commencement of the Companies (Second Amendment) Act, 2002, such winding up proceedings shall continue to be under the supervision of the District Court or the High Court, as the case may be, and such company shall be wound up in the same manner and in the same incidents as if the Companies (Second Amendment) Act, 2002 had not been passed.

30. It is thus clear that an exception was carved out by such proviso and only if the winding up of company had already commenced before the commencement of the Companies (Second Amendment) Act, 2002, such proceedings were required to be continued before the District Court or High Court as the case may be and not otherwise. However, notification for transfer of proceedings to NCLT has been issued by the Central Government recently.

vinak 15 FJ.com.pet.643.2014.odt

31. Similar provision is also made in Section 434 of the Companies Act, 2013, Section 434(1)(a) provides for transfer of proceedings before the Company Law Board to the NCLT. Section 434(1)(b) provides for an appeal to the High Court, by any person aggrieved by any decision or order of Company Law Board made before the date as may be notified by the Central Government within 60 days from the date of communication of the decision or the order of CLB to him on any question of law arising out of such order. Section 434 (1)(c) of the Companies Act, 2013 provides for transfer of other proceedings under the Company Act, 1956. The said provision is very wide in nature and includes proceedings relating to arbitration, compromise, arrangements and reconstruction and winding up of the Companies pending immediately before such date before any District Court or the High Court.

32. The said provisions further provides that the Tribunal may proceed to deal with such proceedings from stage before their transfer. The first proviso to said section 434(1)(c) clearly provides that such proceedings relating to winding up of the Company shall be transferred to the Tribunal that are at a stage as may be prescribed by the Central Government. Second proviso to the said provision provides that only such proceedings relating to cases other than winding up for which orders for allowing or otherwise are not reserved by the High Court shall be transferred to the Tribunal. The said second proviso is inserted by the Companies (Removal of Difficulties) Fourth Order, 2016 with effect from 15th December, 2016. The Companies (Removal of Difficulties) Fourth Order, 2016 clearly indicates that the said order was issued and

vinak 16 FJ.com.pet.643.2014.odt

notified by the Central Government by exercising powers under Section 470(1) of the Companies Act, 2013 to remove various difficulties expressed in the said order. The said order indicates that difficulties had arisen regarding continuation of the provisions of the Companies Act, 1956 such as :-

1. Those proceedings relating to cases other than the winding up that were reserved for orders for allowing or otherwise; and

2. Those winding up cases which would not be transferred to the Tribunal and be proceeded with the High Court on account of commencement of the corresponding provisions under the Companies Act, 2013 or under the Insolvency and Bankruptcy Act, 2016.

3. The said order further records that the difficulties have arisen regarding transfer of proceedings relating to cases other than winding up where hearing have been completed and only pronouncement of order was pending or is reserved, since their transfer to Tribunal may result into delay and rights of the parties to the proceedings are likely to be affected prejudicially.

33. It is thus clear that in view of the various difficulties having been arisen in such cases, the Government has exercised its powers under Section 470 of the Companies Act, 2013 and issued the said order thereby removing such difficulties. The legislature, accordingly, inserted proviso (ii) under Section 434(1)(c) of the Companies Act, 2013. Insofar as the proceedings other than the winding up are concerned, it is clear beyond reasonable doubt that where hearings have been completed and only pronouncement of order is pending or reserved with a view to avoid any delay and prejudice to the rights of the parties to the proceedings who are likely to be affected by such transfer at such stage, the legislation has provided such safeguard not to transfer such proceedings at such stage to the NCLT. Admittedly in this case the hearing of this

vinak 17 FJ.com.pet.643.2014.odt

petition was not concluded and thus in view of Section 434 (1)(c) read with proviso thereto, read with the Companies (Removal of Difficulties) Fourth Order, 2016, read with the Companies (Transfer of Pending Proceedings) Rules, 2016, these proceedings stood transferred to the NCLT with effect from 15th December, 2016. In my view the interpretation of the proviso to Rule 3 as sought to be canvased by the learned Senior Counsel for the petitioner thus being contrary to aforesaid provisions can not be accepted.

34. In my view, notification dated 7th December, 2016 issued by the Central Government by exercising powers conferred under Sections 434(1) and 434(2) of the Companies Act, 2013 thereby prescribing the Rules called as the Companies (Transfer of Pending Proceedings) Rules, 2016 will have to be read with substantial provisions of section 434(1)(2) of the Companies Act, 2013. The Court has to also consider the purpose, objects and intent of the legislature while enacting an Act. The purpose and intent of enacting the Companies Act, 2013 was to consolidate and to amend the laws relating to companies for last 100 years in this Country. Before the enactment of the Companies Act, 2013, the subject like rectification of Register of Members, claim of compromise and arrangement, reconstruction of sick industrial Company, oppression and mismanagement and winding up was provided under different statute and were executed through different Forum such as High Court, Company law board, BIFR etc. The legislature itself thought it necessary to enact the Companies Act, 2013 and the Insolvency and Bankruptcy Act, 2016 to consolidate the Companies Law Administration and Insolvency proceedings against certain parties before a separate body constituted viz. The National

vinak 18 FJ.com.pet.643.2014.odt

Company Law Tribunal and National Law Appellate Tribunal under one roof.

35. In my view, there is no discretion provided to the Court by the legislature insofar as the transfer of the pending proceedings is concerned. The said rules provide for a mandate for transfer of the proceedings subject to an exception provided in proviso to Rule

3. In my view the expression "or otherwise" will have to be read in the context of the conclusion of hearing of the proceedings where the orders were reserved for allowing or for any other purpose to prevent any delay and prejudice to the rights of the parties to the proceedings. Section 434 (1)(c) clearly provides that such proceedings upon transfer will have to be thus heard from the stage before their transfer.

36. Insofar as winding up proceedings are concerned, transfer of such proceedings are separately provided under Rules 4 and 5 of the Companies (Transfer and Pending Proceedings ) Rules, 2016. In respect of such winding up proceedings, second proviso to 434(1)(c) makes it clear that only such proceedings shall be transferred to Tribunal that are at a stage as may be prescribed by the Central Government. Rule 5 of the said Companies (Transfer of Pending Proceedings) Rules, 2016 provides for transfer of such winding up of proceedings on the ground of inability to pay debts.

37. Rule 5 of the said Companies (Transfer of Pending Proceedings) Rules, 2016 has been recently construed by this Court in the case of West Hills Reality Private Limited vs. Neelkamal Realtors Tower Pvt. Ltd. in Company Petition No.331 of 2016 in the Judgment pronounced on 23rd December, 2016. This Court

vinak 19 FJ.com.pet.643.2014.odt

after considering various notifications issued by the Central Government which are referred to aforesaid, has held that those petitions which are admitted and where notice of petition was not served on the respondent pursuant to the order of admission, will stand transferred to the NCLT and will be taken up for admission once again to require the petitioners in those petitions to furnish information for admission of the petitions under section 7, 8 or 9, of the Insolvency and Bankruptcy Act, 2016.

38. It is held that for winding up of Company under Section 433(e) of the Companies Act, 1956 which is pending before the High Court and which is not served by the petitioner on the respondent Company on or before 15th December, 2016 shall stand transferred to the NCLT under Rule 5 of the said Company (Transfer of Pending Proceedings) Rules, 2016. If such pending petition is served by the petitioner on the respondent before such date, the petition will continue to be dealt with by this Court and the applicable provisions will be provisions of the companies Act, 1956. The said judgment dated 23rd December, 2016 is further clarified by this Court by an order dated 17th January, 2017 by this Court. It is clarified that the sine qua non for transfer of a winding up petition to the NCLT under the Companies (Transfer of Pending Proceedings) Rules, 2016, is non-service of a pending petition. It is clarified that as for the service of the petition, it is not necessary that the service must be effected only in pursuance of an acceptance order. Any service effected on his own by the petitioner on the respondents is equivalent to the service under Rule 26. The petition in that case is not liable to be transferred to NCLT.

39. In my view, it is thus clear that insofar as the winding

vinak 20 FJ.com.pet.643.2014.odt

up proceedings are concerned, the pending proceedings as on 15 December, 2016 in High Court shall stand transferred to the NCLT or not depend upon the effect of service under Rule 26 of the Companies (Court) Rules, 1959 or not whereas the criteria for transfer of all other proceedings including proceedings under Section 560 of the Companies Act, 1956 is different and transfer thereof is based on and is depending upon the condition whether hearing in such matters is concluded and the proceedings are reserved for orders for allowing or not. In my view, there is no discretion left in the hands of the Court to not to transfer such proceedings to the NCLT on the ground that it would be more convenient or that in the interest of justice the proceedings shall be heard by this Court, though the hearing is not concluded and proceedings are not reserved for order for allowing or not.

40. Insofar as the judgment the Supreme Court in case of Smt. Lilavati Bai v. State of Bombay (Supra) relied upon by the learned Senior Counsel for the petitioner is concerned, the Supreme Court had considered the provisions of Bombay Land Acquisition Act, 1948 and more particularly the Section 6 thereof. The Supreme Court held that the Court could not go behind the declaration made by the Government that there was a vacancy and held that those words were not words of limitation but of extension so as to cover all possible ways in which a vacancy may occur. The Supreme Court held that the expression "or otherwise" intended to cover all possible cases of vacancy occurring out for any reasons whatsoever. In my view the said judgment of the Supreme Court would not advance the case of the petitioner but would advance the case of respondent nos. 2 and 3.

vinak 21 FJ.com.pet.643.2014.odt

41. If this Court accepts the interpretation as advanced by the learned Senior Counsel for the petitioner on the expression "or otherwise" even though the hearing has not been concluded in the proceeding and the order is not reserved or the matter may be at any other stage, the same would be contrary to Section 434(1)(c) read with proviso, read with the Companies (Removal of Difficulties) Fourth Order, 2016 and also would be contrary to legislative intent to consolidate and amend the laws relating to Companies and several other parties under the Companies Act, 2013 and the Insolvency and Bankruptcy Act, 2016 under one roof and before one adjudicating authority i.e. The National Company Law Tribunal subject to limited exception provided in the proviso to Rule 3.

42. In so far as the judgment of the Supreme Court in case of Animal Welfare Board of India vs. A. Nagaraja (Supra) relied upon by the learned Senior Counsel for the petitioner is concerned the Supreme Court in the said Judgment has construed the provisions of the Prevention of Cruelty to Animals Act, 1960 and has held that in the matters of welfare legislation, the provisions of law should be liberally construed in favour of weak and infirm. The Court should be vigilant to see that benefits conferred by such remedial and welfare legislature are not defeated by subtle devices. The provisions of the Companies Act, 2013, are not a welfare legislation.

43. Be that as it may, the provisions of the Companies Act, 2013 read with various notifications issued by the Central Government including the said Rules, makes it clear that in case of

vinak 22 FJ.com.pet.643.2014.odt

the proceedings other than the winding up of the proceedings which were pending in the High Court on 15 th December, 2016 stood transferred unless the hearing in those proceedings are concluded and the proceedings were reserved for orders for allowing or not. The said judgment of the Supreme Court in case of Animal Welfare Board of India vs. A. Nagaraja (Supra) thus does not even remotely assist the case of the petitioner.

44. In my view, for the reasons recorded aforesaid the present proceedings stand transferred to the NCLT, Mumbai. The Tribunal shall proceed with the matter from the stage before its transfer. Since the argument were not concluded before this Court, the parties may advance their argument before the NCLT. It is ordered accordingly. The office is directed to transmit the papers and proceedings in this matter to the National Company Law Tribunal, Mumbai expeditiously.

(R. D. DHANUKA, J.)