Sunil Gandhi & Anr. vs A.N. Buildwell Private Limited
2017 Latest Caselaw 1383 Del

40 to 43 & 48

         IN THE HIGH COURT OF DELHI AT NEW DELHI

                                          Pronounced On: 15.03.2017


+       CO.APPL.(M) 115/2016

        SUNIL GANDHI & ANR.                  ..... Petitioners

                                 versus

        A.N. BUILDWELL PRIVATE LIMITED       ..... Respondent

+ CO.PET. 704/2014

SH. AMARPREET SINGH OBEROI & ORS...... Petitioner

versus

M/S A. N. BUILDWELL PVT. LTD. ..... Respondent

+ CO.PET. 948/2016

NEMIKA JHA ..... Petitioner

versus

A.N. BUILDWELL PRIVET LIMITED ..... Respondent

+ CO.PET. 1061/2016 VINEET GOEL ..... Petitioner

versus

A.N. BUILDWELL PVT. LTD. ..... Respondent

+ CRL.O.(CO.) 11/2016

A.N. BUILDWELL PVT.LTD.(IN PROV.LIQN.)..... Petitioner

versus

SURENDER KUMAR HOODA & ORS. ..... Respondents

Through: Mr. P.V. Kapur, Sr. Advocate with Mr. Ajit Warrier, Mr. Sidhant Kapur, Mr. Angad Kochhar, Ms. Pankhuri Bhardwaj and Ms. Bani Brar, Advocates for Spirewoods Residents Association.

Mr. Kailash Vasdev, Sr. Advocate with Mr. Shreyans Singhvi and Ms. Ekta Mehta, Advocates in CO.APPL.2089/2016 in CO.PET.704/2016.

Mr. K.K. Sharma, Sr. Advocate with Mr. Ayush Chaurasia and Ms. Gagandeep Chauhan, Advocates for Investors in CO.APPL.(M) 115/2016.

Dr. Saif Mahmood, Advocate with Mr. Sumant De, Mr. Vivek Aggarwal, Advocates in CO.PET.704/2014.

Mr. C.A. Sinha and Ms. Sanjan Chawla, Advocates in CO.APPL.2082-2088/2016, 2091/2016, 2093/2016, 2105/2016 & 2120/2016.

Mr. Vivek Kohli and Mr. Vishnu Anand, Advocates for Petitioner No.1 in CO.APPL.(M) 115/2016.

Mr. Yeshi Rinchhen, Advocate for Petitioner No.2 in CO.APPL.(M) 115/2016.

Mr. Sunil Gandhi, Mr. Vivek Kohli and Mr. Vishnu Anand, Advocates in CRL.O.(CO.)11/2016.

Mr. Sharad Banshul, Advocate for applicant in CO.APPL.3038-

3045/2016 in CO.PET.704/2014.

Mr. Sanjeev Kumar, Advocate for Petitioner in CO.PET.1061/2016.

Mr. Sayed Aquib Ali, Advocate for petitioner in CO.PET.704/2014.

Mr. Mohd. Belal, Advocate for applicant in CO.APPL.304/2017 & 306/2017 in CO.PET.704/2014.

Mr. K. Datta and Mr. Shavnak Kashyap, Advocates in CO.APPL.2615/2016 in CO.PET.704/2014.

Mr. Ashish Dholakia, Mr. D. Kishore Kumar and Mr. Gautam Bajaj, Advocates for Investors in CO.APPL.(M) 115/2016 & CO.PET.704/2014.

Mr. Neeraj Sharma, Advocate for applicant in CO.APPL.4226/2016 & 4227/2016 in CO.PET.704/2014.

Mr. Amit Kumar Mishra, Advocate for petitioners in CO.PET.948/2016.

Mr. Sanjeev Kumar, Advocate for Petitioners Nos.1,2,14,15,35,40,41,44 & 45 in CO.PET.704/2014.

Mr. Mayank Goel, Advocate with Mr. Lalruatpuia Sailo and Mr. Monamshel Maring, Advocates for the Official Liquidator.

CORAM:

HON'BLE MR JUSTICE SIDDHARTH MRIDUL

SIDDHARTH MRIDUL, J (ORAL)

CO. APPL. (M) 115 of 2016 & CO. APPL. No. 2615 of 2016

1. The present order will determine a neat question of law that has arisen in the backdrop of the notification Regd. No.D.L.-33004/99 dated 07.12.2016, issued by the Ministry of Corporate Affairs (hereinafter referred to as 'the subject notification').

2. One of the present applications, being Company Application No. 2615 of 2016, came to be instituted under the provisions of section 391 of the Companies Act, 1956, read with Rules 9 and 11 of the Companies (Court)

Rules, 1959 on behalf of the 04 Buyers' Association, namely, Spire Woods Buyers Association, Federation of Spire Edge Buyers Association, Spire Woods Block E & F Buyers Association and Spire Edge Allottees Association, seeking approval of this Court to the proposed Arrangement of the Respondent Company.

3. The other application, being Company Application (Main) No.115 of 2016 came to be instituted, also under the provisions of section 391 to 393 of the Companies Act, 1956 read with Rules 9 and 11 of the Companies (Court) Rules, 1959 on behalf of the Ex-Management of the Respondent Company, seeking approval of this Court to the Scheme of Compromise and Arrangement between the Respondent Company and its members & creditors.

4. The issue that arises for consideration is whether the Company Court has the exclusive jurisdiction to adjudicate applications instituted under the provisions of Section 391 of the Companies Act, 1956, in relation to the revival of a Respondent Company in provisional liquidation, subsequent upon coming into force of the subject notification, w.e.f. 15.12.2016.

5. At the outset, it would be necessary to briefly advert to the backdrop in which the question of law that requires determination has arisen.

6. This Court by way of its order dated 08.03.2016 admitted winding up petition, being Company Petition No. 704 of 2014, instituted against the Respondent Company- A.N. Buildwell Private Limited, and appointed the Official Liquidator attached to this Court as the Provisional Liquidator, to inter alia, take possession of the assets, books of accounts and records etc. of the Respondent Company.

7. As regards the steps taken by the Official Liquidator, appointed as the Provisional Liquidator of the Respondent Company in compliance to the directions contained in the said order dated 08.03.2016, the Official Liquidator has filed a report being OLR No. 197 of 2016. The relevant averments made in the said report, are encapsulated as follows:

a) It has been stated by way of the said OLR that pursuant to the appointment as Provisional Liquidator in terms of order dated 08.03.2016, the Official Liquidator sent notices dated 25.04.2016 under the provisions of sections 454 and 456 of the Companies Act, 1956 and Rule 130 of the Companies (Court) Rules, 1959, to the Ex-Directors of the Respondent Company, namely, Mr. Surender Kumar Hooda, Mr. Michael Brian Collins, Mr. Vipin Kapur, Mr. Harish Chander Mehrotra, Mr. Arun Kumar Kotwal, Mr. Rakesh Kumar Nagpal and Mr. Sunil Gandhi.

b) It has further been stated that the statements under Rule 130 of the Companies (Court) Rules, 1959 of Mr. Surender Kumar Hooda, Mr. Arun Kumar Kotwal, Mr. Rakesh Kumar Nagpal and Mr. Sunil Gandhi have been recorded on 08.06.2016 and 22.07.2016. It has however been stated that the Statement of Affairs in relation to the respondent company in provisional liquidation has not yet been filed, by the concerned officers.

c) Further, it has been stated that in compliance to the directions in the said order of this Court dated 08.03.2016, a team from the office of the Official Liquidator visited the registered office of

the Respondent Company located at 504, Fifth Floor, Bhikaji Cama Bhawan, Bhikaji Cama Place, New Delhi on 06.04.2016. Upon reaching the said premises, no signboard/name-plate pertaining to the Respondent Company was found and the said premises was found locked. Upon conducting some inquiry, the team of the Official Liquidator was informed that the registered office of the Respondent Company was at 504, Fifth Floor, Bhikaji Cama Bhawan, Bhikaji Cama Place, New Delhi itself. Consequently, the team sealed the premises and deployed three security guards at the premises.

d) Further, it has been stated that the team from the office of the Official Liquidator visited the site project/office of the Respondent Company at World Trade Centre, CP-4, Sector-8, IMT Manesar, Gurgaon, Haryana on 11.04.2016 to take over possession of the assets/records of the Respondent Company. The team sealed the entire premises except two shops, namely, Dominos and Roller Coaster, after receiving an undertaking from the Area Manager, Dominos and the owner of Roller Coaster, to the effect that they shall pay the lease rent to the Official Liquidator, in accordance with law. It has however been stated that the inventory of the site could not be prepared since the site is stated to be under construction but security guards of the security agency empanelled with the Official Liquidator have been employed at the site.

e) Furthermore, it has been stated by way of the present report that the team from the office of the Official Liquidator visited the

site project/office at Sector-103, Daultabad, Gurgaon, Haryana on 29.04.2016 to take over possession of the assets/records of the Respondent Company. It has been stated that the said project is an unfinished one spread over an area of approximately 11 acres. Inspection of the site was conducted and the possession thereof has been taken, as stated. Two offices and five rooms therein have been sealed, and security guards for the watch and ward of the premises have been deployed, as stated.

f) It has further been stated that the office of the Official Liquidator issued a letter dated 01.06.2016 to the Manager, Punjab National Bank, Sector-29, Gurgaon, Haryana seeking information regarding any account of the Respondent Company with the Bank or any other branch of the Bank. It has been also stated that Punjab National Bank is holding charge over the assets of the Respondent Company as per Form 8 filed by the Respondent Company with the Registrar of Companies. However, as has been stated, no reply/response has been received from the Bank.

8. It is at this point of time that Company Application No. 2615 of 2016 and Company Application (Main) No. 115 of 2016 came to be filed.

9. When the proceedings in the present applications were pending adjudication before this Court, the subject notification dated 07.12.2016 came to be issued. It would be relevant to reproduce the said notification dated 07.12.2016 and the same reads as follows:

"MINISTRY OF CORPORATE AFFAIRS

Notification

New Delhi, the 7th December, 2016

Companies (Transfer of Pending Proceedings) Rules,

G.S.R. 1119(E).- In exercise of the powers conferred under sub-sections (1) and (2) of section 434 of the Companies Act, 2013 (18 of 2013) read with sub-section (1) of section 239 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016) (hereinafter referred to as the Code), the Central Government hereby makes the following rules, namely:-

1. Short title and Commencement. - (1) These rules may be called the Companies (Transfer of Pending Proceedings) Rules, 2016.

(2) They shall come into force with effect from the 15th December, 2016, except rule 4, which shall come into force from 1st April, 2017.

2. Definitions.- (1) In these rules, unless the context otherwise requires-

(a) "Code" means the Insolvency and Bankruptcy Code, 2016 (31 of 2016);

(b) "Tribunal" means the National Company Law Tribunal constituted under section 408 of the Companies Act, 2013.

(2) Words and expressions used in these rules and not defined, but defined in the Companies Act, 1956 (1 of

1956)(herein referred to as the Act), the Companies Act, 2013 (18 of 2013) or the Companies (Court) Rules, 1959 or the Code shall have the meanings respectively assigned to them in the respective Act or rules or the Code, as the case may be.

3. Transfer of pending proceedings relating to cases other than Winding up.-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.

4. Pending proceeding relating to Voluntary Winding up: All applications and petitions relating to voluntary winding up of companies pending before a High Court on the date of commencement of this rule, shall continue with and dealt with by the High Court in accordance with provisions of the Act.

5. Transfer of pending proceedings of Winding up on the ground of inability to pay debts.- (1) All petitions relating to winding up under clause (e) of section 433 of the Act on the ground of inability to pay its debts pending before a High Court, and where the petition has not been served on the respondent as required under rule 26 of the Companies (Court) Rules, 1959 shall be transferred to the Bench of the Tribunal established under sub-section (4) of section 419 of the Act, exercising territorial jurisdiction and such petitions shall be treated as applications under sections 7, 8 or 9 of the Code, as the case may be, and dealt with in accordance with Part II of the Code:

Provided that the petitioner shall submit all information, other than information forming part of the records transferred in accordance with Rule 7, required for admission of the petition under sections 7, 8 or 9 of the Code, as the case may be, including details of the proposed insolvency professional to the Tribunal within sixty days from date of this notification, failing which the petition shall abate.

(2) All cases where opinion has been forwarded by Board for Industrial and Financial Reconstruction, for winding up of a company to a High Court and where no appeal is pending, the proceedings for winding up initiated under the Act, pursuant to section 20 of the Sick Industrial Companies (Special Provisions) Act, 1985 shall continue to be dealt with by such High Court in accordance with the provisions of the Act.

6. Transfer of pending proceedings of Winding up matters on the grounds other than inability to pay debts.-All petitions filed under clauses (a) and (f) of section 433 of the Companies Act, 1956 pending before a High Court and where the petition has not been served on the respondent as required under rule 26 of the Companies (Court) Rules, 1959 shall be transferred to the Bench of the Tribunal exercising territorial jurisdiction and such petitions shall be treated as petitions under the provisions of the Companies Act, 2013 (18 of 2013).

7. Transfer of Records.-Pursuant to the transfer of cases as per these rules the relevant records shall also be transferred by the respective High Courts to the National Company Law Tribunal Benches having jurisdiction forthwith over the cases so transferred.

8. Fees not to be paid.-Notwithstanding anything contained in the National Company Law Tribunal Rules,

2016, no fee shall be payable in respect of any proceedings transferred to the Tribunal in accordance with these rules.

[F. No. 1/5/2016- CL-V]

AMARDEEP SINGH BHATIA, Jt. Secy."

(Emphasis supplied.)

10. The issue that has arisen for consideration relates predominantly to clauses 3 and 5 of the subject notification.

11. Learned counsel appearing on behalf of the Applicants as well as the Ex-Management, would urge that in view of the expression 'other than proceedings relating to winding up' employed in the said clause 3, and further, in view of the circumstance that the winding up proceedings against the Respondent Company have been admitted by this Court, the proceedings qua revival of the Respondent Company cannot be construed as being independent of the pending winding up proceedings. In other words, learned counsel would urge that the winding up proceedings and the proceedings qua the revival of the Respondent Company are inextricably linked and that all the matters in relation to the revival of the respondent company are 'proceedings relating to winding up', inasmuch as, inter alia, the powers that the Company Court would exercise in relation to the Respondent Company, under the provisions of Companies Act, 1956 pursuant to the admission of the winding up petition, would also take within its sweep the power of sanctioning a Scheme of Compromise and/or Arrangement between the

Respondent Company and its members and/or creditors. It would, therefore, be submitted that, the Applications seeking sanctioning of the Compromise and/or Arrangement between the creditors and/or members of the Respondent Company and its Ex-Management should be dealt with by the Company Court as the Company Court would have exclusive jurisdiction over the same.

12. In other words, it would be submitted that the proceedings seeking sanctioning of the Compromise and/or Arrangement of the Respondent Company, for the revival of the Respondent Company, in the facts and circumstances of the instant case ought not to be transferred to the National Company Law Tribunal, in terms of the subject notification.

13. Mr. P. V. Kapoor, Sr. Advocate, Mr. Kailash Vasdev, Sr. Advocate, Mr. Krishnendu Dutta, Advocate, & Mr. Saurabh Kashyap, Advocate, the learned counsel appearing on behalf of the applicants support the retention of the proceedings relating to Compromise and/or Arrangement of the Respondent Company before this Court by asserting that Clause 3 of the subject notification carves out a clear and unequivocal exception to the transfer of proceedings under the subject notification, by employing the expression 'other than the proceedings relating to winding up'. Learned counsel would urge that the expression 'other than the proceedings relating to winding up', which is of the widest amplitude, would take within its sweep, the proceedings for the revival of the Respondent Company.

14. Attention of this Court has been invited to the provisions of Section 446 of the Companies Act, 1956, and in particular sub-section 2(c) thereof, to urge that the Company Court has exclusive jurisdiction to consider and

determine any application, within the meaning of the provisions of section 391 of the Companies Act, 1956, by or in respect of a company, once a winding up order has been made in relation thereto, or a Official Liquidator has been appointed as the Provisional Liquidator in that behalf. The provisions of sub-section 2(c) of Section 446 of the of the Companies Act, 1956 are extracted hereinbelow for the sake of convenience:

"446. Suits stayed on winding up order.

(1) ***

(2) The Court which is winding up the company shall, notwithstanding anything contained in any other law for the time being, in force, have jurisdiction to entertain, or dispose of-

(a) ***

(b) ***

(c) any application made under section 391 by or in respect of the company;

(d) ***

whether such suit or proceeding has been instituted or is instituted, or such claim or question has arisen or arises or such application has been made or is made before or after the order for the winding up of the company, or before or after the commencement of the Companies (Amendment) Act, 1960. (65 of 1960.)"

(Emphasis Supplied.)

15. In order to buttress the submission, that the proceedings seeking sanctioning of the Compromise and/or Arrangement of the Respondent

Company, for the revival of the Respondent Company, ought not to be transferred to the National Company Law Tribunal, learned counsel would place reliance on the following decisions:

(i) Renusagar Power Co. Ltd. v. General Electric Company & Anr., reported as (1984) 4 SCC 679;

(ii) Mansukhlal Dhanraj Jain & Ors. v. Eknath Vithal Oagle, reported as (1995) 2 SCC 665;

(iii) Associated Banking Corporation of India Limited (In Liquidation) v. M/s Nazaralli Kassambhai & Co., reported as AIR 1952 Bom 223;

(iv) Meghal Homes (P) Ltd. v. Shree Niwas Girni K.K.

Samiti and Others, reported as (2007) 7 SCC 753;

(v) GSL (India) Ltd. v. Bayer ABS Ltd., in Company Application No.228/1998 in Company Petition No.295/1996, decided on 28.09.1998 by the Hon'ble High Court of Gujarat;

(vi) West Hills Realty Private Ltd. v. Neelkamal Realtors Towers Pvt. Ltd., in Company Petition No.331/2016, decided on 23.12.2016 by the Hon'ble High Court of Judicature at Bombay;

(vii) KSL & Industries Limited v. Arihant Threads Limited & ors., reported as (2015) 1 SCC 166;

(viii) Associated Cement Companies Limited v. State of Bihar & ors., reported as (2004) 7 SCC 642.

16. On the contrary, it would be urged by learned counsel appearing on behalf of the Petitioners in Company Petition No. 704 of 2014, that the express mandate of the subject notification is indicative of the legislative intent, inasmuch as, the proceedings relating to Compromise and/or Arrangement of a company stand transferred to the Benches of the National Company Law Tribunal w.e.f. from the date the said notification came into force i.e., 15.12.2016.

17. I have heard learned counsel appearing on behalf of the parties.

18. For effective determination of the issue, it would be relevant to advert to the decisions relied upon by the learned counsel for the parties.

19. In Renu Sagar Power Company (supra), the Hon'ble Supreme Court whilst determining the scope and ambit of the expression 'arising out and relating to' inter alia, came to the following finding:

"(2) Expressions such as "arising out of" or "in respect of" or "in connection with" or "in relation to" or "in consequence of" or "concerning" or "relating to" the contract are of the widest amplitude and content and include even questions as to the existence, validity and effect (scope) of the arbitration agreement."

(Emphasis supplied.)

20. In Mansukhlal Dhanraj Jain (supra) the Hon'ble Supreme Court, whilst determining the difference between the expression 'relating to the recovery of possession' on the one hand, and terminology for 'recovery of possession of immovable property' on the other, has observed as hereunder:-

"11. In order to resolve the controversy posed for our consideration, it will be appropriate to note the relevant statutory provision having a direct bearing on this question. Section 41(1) of the Small Cause Courts Act reads as under:

"41. (1) Notwithstanding anything contained elsewhere in this Act or in any other law for the time being in force but subject to the provisions of sub-section (2), the Court of Small Causes shall have jurisdiction to entertain and try all suits and proceedings between a licensor and licensee, or a landlord and tenant, relating to the recovery of possession of any immovable

property situated in Greater Bombay, or relating to the recovery of the licence fee or charges or rent thereof, irrespective of the value of the subject-matter of such suits or proceedings."

xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx

14. So far as the first condition is concerned, a comprehensive reading of the relevant averments in the plaints in both these cases leaves no room for doubt that the plaintiffs claim relief on the basis that they are licensees on monetary consideration and the defendants are the licensors. The first condition is clearly satisfied. Then remains the question whether the third condition, namely, that the suits must relate to the recovery of possession of immovable property situated in Greater Bombay is satisfied or not. It is not in dispute that the suit properties are immovable properties situated in Greater Bombay but the controversy is around the question whether these suits relate to recovery of possession of such immovable properties. The appellants contended that these are suits for injunction simpliciter for protecting their possession from the illegal, threatened acts of the respondents/defendants. Relying on a series of decisions of this Court and the Bombay High Court, Guttal, J., Pendse, J. and Daud, J. had taken the view that such injunction suits can be said to be relating to the possession of the immovable property. Sawant, J. has taken a contrary view. We shall deal with these relevant decisions at a later stage of this judgment. However, on the clear language of the section, in our view, it cannot be said that these suits are not relating to the possession of the immovable property. It is pertinent to note that Section 41(1) does not employ the words "suits and proceedings for recovery of possession of immovable property". There is a good deal of difference between the words "relating to the recovery of possession" on the one hand and the terminology "for recovery of possession of any immovable property". The words 'relating to' are of wide import and can take in their sweep any suit in which the grievance is made that the defendant is threatening to illegally recover possession from the plaintiff-licensee.

Suits for protecting such possession of immovable property against the alleged illegal attempts on the part of the defendant to forcibly recover such possession from the plaintiff, can clearly get covered by the wide sweep of the words "relating to recovery of possession" as employed by Section 41(1). In this connection, we may refer to Blacks' Law Dictionary, Super Deluxe 5th Edition. At page 1158 of the said Dictionary, the term 'relate' is defined as under:

"to stand in some relation; to have bearing or concern; to pertain; refer; to bring into association with or connection with; 'with to'."

It cannot be seriously disputed that when a plaintiff-licensee seeks permanent injunction against the defendant-licensor restraining the defendant from recovering the possession of the suit property by forcible means from the plaintiff, such a suit does have a bearing on or a concern with the recovery of possession of such property. In the case of Renusagar Power Co. Ltd. v. General Electric Co. [(1984) 4 SCC 679 : (1985) 1 SCR 432] a Division Bench of this Court had to consider the connotation of the term 'relating to', Tulzapurkar, J. at page 471 of the report (SCC pp. 703-04, para 25) has culled out propositions emerging from the consideration of the relevant authorities. At page 471 proposition 2 has been mentioned as under: (SCC p. 704, para 25)

"Expressions such as 'arising out of' or 'in respect of' or 'in connection with' or 'in relation to' or 'in consequence of' or 'concerning' or 'relating to' the contract are of the widest amplitude and content and include even questions as to the existence, validity and effect (scope) of the arbitration agreement."

15. In Doypack Systems (P) Ltd. v. Union of India [(1988) 2 SCC 299], another Division Bench of this Court consisting of Sabyasachi Mukherji (as he then was) and G.L. Oza, JJ. had an occasion to consider this very question in connection with the provisions of Sections 3 and 4 of the Swadeshi Cotton Mills Co. Ltd. (Acquisition and Transfer of Undertakings)

Act, 1986. Sabyasachi Mukherji, J. speaking for the Court, has made the following pertinent observations in paras 49 and 50 of the report: (SCC p. 329)

"The words 'arising out of' have been used in the sense that it comprises purchase of shares and lands from income arising out of the Kanpur undertaking. We are of the opinion that the words 'pertaining to' and 'in relation to' have the same wide meaning and have been used interchangeably for among other reasons, which may include avoidance of repetition of the same phrase in the same clause or sentence, a method followed in good drafting. The word 'pertain' is synonymous with the word 'relate', see Corpus Juris Secundum, Vol. 17, page 693. The expression 'in relation to' (so also 'pertaining to'), is a very broad expression which presupposes another subject-matter. These are words of comprehensiveness which might have both a direct significance as well as an indirect significance depending on the context, see State Wakf Board v. Abdul Azeez [AIR 1968 Mad 79 :

(1967) 1 MLJ 190] , following and approving Nitai Charan Bagchi v. Suresh Chandra Paul [66 CWN 767] , Shyam Lal v. M. Shyamlal [AIR 1933 All 649 : 1933 All LJ 728] and 76 Corpus Juris Secundum 621. Assuming that the investments in shares and in lands do not form part of the undertakings but are different subject-matters, even then these would be brought within the purview of the vesting by reason of the above expressions. In this connection reference may be made to 76 Corpus Juris Secundum at pages 620 and 621 where it is stated that the term 'relate' is also defined as meaning to bring into association or connection with. It has been clearly mentioned that 'relating to' has been held to be equivalent to or synonymous with as to 'concerning with' and 'pertaining to'. The expression 'pertaining to' is an expression of expansion and not of contraction."

16. It is, therefore, obvious that the phrase "relating to recovery of possession" as found in Section 41(1) of the Small Cause Courts Act is comprehensive in nature and takes in its sweep all types of suits and proceedings which are concerned with the recovery of possession of suit property from the licensee and, therefore, suits for permanent injunction restraining the defendant from effecting forcible recovery of such possession from the licensee-plaintiff would squarely be covered by the wide sweep of the said phrase. Consequently in the light of the averments in the plaints under consideration and the prayers sought for therein, on the clear language of Section 41(1), the conclusion is inevitable that these suits could lie within the exclusive jurisdiction of Small Cause Court, Bombay and the City Civil Court would have no jurisdiction to entertain such suits.

17. We may now refer to the relevant decisions of this Court and other courts to which our attention was invited by learned counsel for both the sides. As some of the decisions referred to a pari materia provision as found in Section 28 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 (hereinafter referred to as "the Bombay Rent Act"), it will be necessary to refer to the said provision. Section 28(1) of the Bombay Rent Act reads as under:

"28. Jurisdiction of courts.--Notwithstanding anything contained in any law and notwithstanding that by reason of the amount of the claim or for any other reason, the suit or proceeding would not, but for this provision, be within its jurisdiction,--

(a) in Greater Bombay, the Court of Small Causes, Bombay, (aa) in any area for which, a Court of Small Causes is established under the Provincial Small Cause Courts Act, 1887, such Court and

(b) elsewhere, the Court of the Civil Judge (Junior Division) having jurisdiction in the area in which the premises are situate or, if there is no such Civil Judge, the Court of the Civil Judge (Senior Division) having ordinary jurisdiction, shall have jurisdiction to entertain and try any suit or proceeding between a landlord and a tenant relating to

the recovery of rent or possession of any premises to which any of the provisions of this Part apply...."

(Emphasis Supplied)

21. The question that came up for consideration before a Division Bench of the Hon'ble High Court of Judicature at Bombay in Associated Banking Corporation of India Limited (supra) was whether the jurisdiction of City Civil Court has been ousted and whether special jurisdiction has been conferred upon the Court by reason of the suit having been filed by the Official Liquidator in the course of the winding up of the Associated Banking Corporation of India Ltd. The Court has observed as under:-

" The question that we have to consider is whether the jurisdiction of the City Civil Court has been ousted and whether special jurisdiction has been conferred upon the High Court by reason of the suit having been filed by the Official Liquidator in the course of the winding up of the Associated Banking Corporation of India, Ltd. An Act was passed by the Dominion Legislature, being the Banking Companies Act, 1949, (Act X of 1949), to amend the law relating to Banking Companies, and Part III of that Act deals with suspension of business and winding up of banking companies. When one turns to some of the provisions in that part it is clear that the object of the Legislature was as far as possible to expedite the disposal of winding up of banking companies. For instance, s. 41 provides that the liquidator must make his report within two months to the Court from the date of the order giving the information required by s. 177B of the Indian Companies Act, 1913. Section 42 provides that meetings of creditors may be dispensed with. Section 43 provides for a special mode of proof of amounts deposited by depositors with banks. This Act was amended by the Banking Companies (Amendment)

Act, 1950 (Act XX of 1950), and s. 45A, which falls in part IIIA, the heading of which is "Special provisions for speedy disposal of winding up of proceedings" defined the "Court" in Part IIIA and in part III of the earlier Act as the High Court exercising jurisdiction in the place where the registered office of the banking company which is being wound up is situated or, in the case of a banking company incorporated outside India which is being wound up, where its principal place of business is situated, and s. 45A further provided that notwithstanding anything to the contrary contained in the Indian Companies Act or in any notification, order or direction issued thereunder or in any other law for the time being in force, no other court shall have jurisdiction to entertain any matter relating to or arising out of the winding up of a banking company. Therefore, jurisdiction of all Courts other than the High Court as defined in s. 45A was clearly ousted with regard to all matters which relate to or arise out of the winding up of a banking company. Then s. 45B conferred power upon the High Court to decide all claims made by or against any banking company, including claims by or against any of its branches in India, and all questions of priorities and all other questions whatsoever, whether of law or fact, which may relate to or arise in the course of the winding up of the banking company, coming within the cognizance of the Court.

Now, the narrow question that we have to consider is whether a suit filed by the Official Liquidator to recover a claim due to a banking company from its debtor is a matter relating to or arising out of the winding up of a banking company. It may be pointed out that the Legislature has used a slightly different expression in s. 45B. The expression used in s. 45B is "which may relate to or arise in the course of the winding up." It is difficult to hold that the Legislature intended to convey something different by the use of the expression in s. 45A "arising out of the winding up" from the use of the expression in s. 45B "arise in the course of

the winding up." Sections 45A and 45B are co-related. Section 45A ousts the jurisdiction of Courts other than the High Court, and s. 45B confers a special jurisdiction upon the High Court. There can be no doubt that by reason of these two sections extra-territorial jurisdiction has been conferred upon the High Court which it did not possess or enjoy before. Wherever the party may be resident, wherever the cause of action may have arisen, if the matter satisfies the test laid down, viz. that it relates to or arises out of the winding up of a banking company, then the High Court is invested with the jurisdiction to decide that matter. The view taken by the learned Judge below was that there must be a direct connection or a nexus between the winding up and the matter which comes for the decision of the Court before s. 45A or s. 45B would be applicable, and the view taken by the learned Judge was that the present suit arises out of contractual relations between the bank and the debtor, that the suit does not arise out of the winding up, that it is not by reason of the supervention of the winding up that the Official Liquidator became entitled to recover this amount, that the cause of action was already there, and the cause of action did not arise by reason of the banking company being wound up. According to the learned Judge these provisions only apply when a right is conferred upon the banking company by reason of the winding up. The claim must arise directly by reason of the supervention of the winding up. But if the claim does not so directly arise and the claim already existed, the mere winding up does not make that claim a matter relating to or arising out of the winding up of a banking company. The learned Judge has further taken the view that the mere fact that the Official Liquidator is dominus lite by reason of the winding up does not in any way affect the question to be decided. I must frankly confess that there is considerable force in the view taken by the learned Judge below and the matter we have to consider is by no means entirely free from doubt or difficulty.

Now, it is necessary to consider in the first place s. 179 of the Companies Act. That section deals with the powers of the Official Liquidator and it provides that "The official liquidator shall have power, with the sanction of the Court, to do the following things:" and among those things one is to institute or defend any suit or prosecution, or other legal proceeding, civil or criminal, in the name and on behalf of the company. Clause (i) of s. 179 provides: "to do all such other things as may be necessary for winding up the affairs of the company and distributing its assets." It may be contended, as has been contended by Mr. Daji, that the Court sanctions the filing of the suit in the course of the winding up and the sanction to file the suit does arise out of the winding up. But the actual filing of the suit has nothing whatever to do with the winding up. Mr. Daji says that once the sanction of the Court is given, the official liquidator must resort to the ordinary Courts of the land in order to enforce the claim of the banking company against its debtors. But this argument overlooks one or two important considerations. It is one thing to say that the company before it is wound up is enforcing its contractual right and the contractual obligation of the debtor in filing a suit to recover the debt due to the banking company. It is entirely a different thing to say that the official liquidator with the sanction of the Court is recovering the debt due by the debtor to the company under s. 179 because the official liquidator is not concerned with the contractual rights or obligations. He is primarily concerned to wind up the affairs of the company and to distribute its assets. Therefore, in filing the suit what he is doing is helping to wind up the affairs of the company and also assisting the ultimate distribution of the assets of the company. Even the Court when it gives sanction approaches the matter from the same point of view. It has got to consider what are the possibilities of Recovering the debt, what costs are likely to be incurred, whether from every point of view it is advisable to prosecute the claim, and so on and so forth; whereas the company

before it is wound up would not be in any way fettered by the considerations which would weigh with the liquidator or with the Court under s. 179. Therefore, a suit filed after the company goes into liquidation by the official liquidator under s. 179 must have a relationship with the winding up of the company. It is also to be borne in mind that the Legislature has not merely used the expression "arising out of the winding up", but it also used the expression "relating to the winding up", and in my opinion the expression "relating to the winding up" is much wider and much more extensive than the expression "arising out of the winding up." If the Legislature had restricted itself to the use of the expression "arising out of", then it may possibly have been argued that there must be a direct connection between the winding up and the matter which is to be determined under s. 45A or s. 45B. But if the matter is merely related to the winding up, no such direct connection is necessary. One must also look to the object with which these provisions were incorporated into the law. If the official liquidator is compelled to file suits to recover debts in different places in India against the debtors where they might be residing or where the cause of action might have arisen, then a speedy disposal of winding up proceedings would be impossible. The liquidator and the Court would have to wait till all these suits are disposed of before the Court would be in a position to wind up the affairs of the company and distribute its assets. Therefore, if the sole purpose and the whole object of this legislation is to wind up the affairs of banking companies as expeditiously as possible, then it stands to reason that the Legislature must have intended that the assets should be realised as quickly as possible, and when the official liquidator files a suit against a debtor of the banking company, all he is doing is to attempt to realise part of the assets of the company."

(Emphasis Supplied)

22. In Meghal Homes (P) Ltd (supra) the Hon'ble Supreme Court whilst dealing with the issue whether Section 391 of the Companies Act, 1956 would apply to a company, which has already been ordered to be wound up, observed as hereunder:

"33. The argument that Section 391 would not apply to a company which has already been ordered to be wound up, cannot be accepted in view of the language of Section 391(1) of the Act, which speaks of a company which is being wound up. If we substitute the definition in Section 390(a) of the Act, this would mean a company liable to be wound up and which is being wound up. It also does not appear to be necessary to restrict the scope of that provision considering the purpose for which it is enacted, namely, the revival of a company including a company that is liable to be wound up or is being wound up and normally, the attempt must be to ensure that rather than dissolving a company it is allowed to revive. Moreover, Section 391(1)(b) gives a right to the liquidator in the case of a company which is being wound up, to propose a compromise or arrangement with creditors and members indicating that the provision would apply even in a case where an order of winding up has been made and a liquidator had been appointed. Equally, it does not appear to be necessary to go elaborately into the question whether in the case of a company in liquidation, only the Official Liquidator could propose a compromise or arrangement with the creditors and members as contemplated by Section 391 of the Act or any of the contributories or creditors also can come forward with such an application.

xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx

37. Learned counsel argued before us whether in the case of a company which had been ordered to be wound up, a compromise or arrangement made under Section 391 of the Act could be accepted on the basis that the said arrangement

has been approved by the relevant meeting of the creditors, members and so on and whether the court was concerned with anything more than such a decision taken by the members and creditors of the company concerned. In the case of a company ordered to be wound up, a compromise or arrangement that could normally be accepted by the Company Court could be either paying off all dues by liquidation of assets or an arrangement for revival of the company and its business. That is the rationale of the order dated 4-4-1995 by which the Division Bench directed consideration of the various aspects pointed out therein.

xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx

47. When a company is ordered to be wound up, the assets of it are put in possession of the Official Liquidator. The assets become custodia legis. The follow-up, in the absence of a revival of the company, is the realisation of the assets of the company by the Official Liquidator and distribution of the proceeds to the creditors, workers and contributories of the company ultimately resulting in the death of the company by an order under Section 481 of the Act, being passed. But, nothing stands in the way of the Company Court, before the ultimate step is taken or before the assets are disposed of, to accept a scheme or proposal for revival of the Company. In that context, the court has necessarily to see whether the scheme contemplates revival of the business of the company, makes provisions for paying off creditors or for satisfying their claims as agreed to by them and for meeting the liability of the workers in terms of Section 529 and Section 529-A of the Act. Of course, the court has to see to the bona fides of the scheme and to ensure that what is put forward is not a ruse to dispose of the assets of the company in liquidation."

(Emphasis Supplied)

23. The Hon'ble High Court of Gujarat, in GSL (India) Limited (supra) whilst dealing with the issue of the stay of proceedings pending before various Metropolitan Magistrates filed by the company, observed as under, in relation to the scope and ambit of the provisions under section 446 of the Companies Act, 1956:

"60. Here it must be cleared that on a plain reading of two sections, viz., 442 and 446, they cannot be put at par while considering their respective construction. Section 442 operates in much smaller field and is applicable only in respect of any suit or proceedings pending against the company in the Supreme Court or in any High Court or any other courts. It does not apply to any other proceedings pending elsewhere except before a court. In clear contrast, on making of a winding up order or appointment of provisional official liquidator section 446(1) applies to all such and other proceedings against the company wherever pending and operates as stay against commencement of new proceedings or progress in pending proceedings except with the leave of the court. Under section 446(2), the Company Court by a non obstante clause gets jurisdiction to entertain or dispose of any suit or proceedings, or claim made by or against the company, any application under section 391 proposing a scheme in respect of the company or any question of priorities or any other question whatsoever whether of law or of fact which may relate to or arise in course of the winding up of the company, whether such suit, proceedings, claim, application or question has arisen before or after the order of winding up has been made. Sub-section (3) envisages again by a non obstante clause that apart from and in spite of any other provision in any other law for the time being in force, any suit or proceeding pending in other courts can be transferred to itself and disposed of by it. Sub-section (3) confines itself to

transfer of pending proceedings in a court only. Thus, it is clear that field of operation of section 446 is much wider and though sub-section (3) is confined to pending proceedings in a court, other provisions are not confined to proceedings before a court only, but extend to proceedings before any other authorities as well. In sub- section (2) there is some enumeration of proceedings covered by it. Thus, the scope of interpretation in construing two provisions cannot be identical, nor by use of expression, 'any suit or other proceedings' in two provisions by itself place one as synonym for the other. Yet reading of sections 442 and 446(3) makes it clear that if as per ratio of Kondaskar's case test of a case appropriately by Company Court is applied, the test supports the view that term 'proceedings' in both provision embraces within it both civil and criminal proceedings pending in court, because all pending cases by or against company irrespective of its class are liable to be transferred and disposed of by the Company Court, in contrast if compared with proceedings whit are not pending or instituted in a court."

(Emphasis Supplied)

24. The Hon'ble High Court of Judicature at Bombay recently in West Hills Realty Private Limited (supra) whilst observing that the court was conscious of the controversy which would commonly arise in number of petitions pending before the Court in view of the subject notification, rendered the following observations:

"13. In the premises, it follows that every winding up petition under clause (e) of Section 433 which is pending before the High Court and which is not served by the petitioner on the respondent company shall stand transferred to NCLT under Rule 5 of the Companies (Transfer of Pending Proceedings) Rules, 2016. If such pending petition is served

by the petitioner on the respondent, the petition will continue to be dealt with by this court and the applicable provisions will be the provisions of 1956 Act."

25. In KSL & Industries (supra) the Hon'ble Supreme Court observed as under:

"51. We might add that this conclusion has been guided by what is considered to be one of the most crucial principles of interpretation viz. giving effect to the intention of the legislature. The difficulty arose in this case mainly due to the absence of specific words denoting the intention of Parliament to cover applications for recovery of debts under the RDDB Act while enacting Section 22 of SICA. As observed earlier, the obvious reason for this absence is the fact that SICA was enacted earlier. It is the duty of this Court to consider SICA, after the enactment of the RDDB Act to ascertain the true intent and purpose of providing that no proceedings for execution or distraints or suits shall lie or be proceeded with. Undoubtedly, in the narrower sense an application for the recovery of debt can be giving a restricted meaning i.e. a proceeding which commences on filing and terminates at the judgment. However, there is no need to give such a restricted meaning, since the true purpose of an application for recovery is to proceed to the logical end of execution and recovery itself, that is by way of execution and distraint. We thus have no hesitation in coming to the conclusion that Section 22 clearly covers and interdicts such an application for recovery made under the provisions of the RDDB Act. We might remind ourselves of the oft quoted statement of the principles of contextual construction laid down by this Court in RBI v. Peerless General Finance and Investment Co. Ltd. [(1987) 1 SCC 424 : AIR 1987 SC 1023] , wherein this Court has observed: (SCC p. 450, para 33)

"33. Interpretation must depend on the text and the context. They are the bases of interpretation. One may well say if the text is the texture, context is what gives the colour. Neither can be ignored. Both are important. That interpretation is best which makes the textual interpretation match the contextual. A statute is best interpreted when we know why it was enacted. With this knowledge, the statute must be read, first as a whole and then section by section, clause by clause, phrase by phrase and word by word. If a statute is looked at, in the context of its enactment, with the glasses of the statute-maker, provided by such context, its scheme, the sections, clauses, phrases and words may take colour and appear different than when the statute is looked at without the glasses provided by the context. With these glasses we must look at the Act as a whole and discover what each section, each clause, each phrase and each word is meant and designed to say as to fit into the scheme of the entire Act. No part of a statute and no word of a statute can be construed in isolation. Statutes have to be construed so that every word has a place and everything is in its place."

26. In Associated Cement Companies (supra) the Hon'ble Supreme Court whilst determining the question of liability under the Bihar Finance Act, 1981 has observed with respect to the interpretation of the term 'exemption' operating as an exception, as hereunder:

"12. Literally "exemption" is freedom from liability, tax or duty. Fiscally it may assume varying shapes, specially, in a growing economy. In fact, an exemption provision is like an exception and on normal principle of construction or interpretation of statutes it is construed strictly either because

of legislative intention or on economic justification of inequitable burden of progressive approach of fiscal provisions intended to augment State revenue. But once exception or exemption becomes applicable no rule or principle requires it to be construed strictly. Truly speaking, liberal and strict construction of an exemption provision is to be invoked at different stages of interpreting it. When the question is whether a subject falls in the notification or in the exemption clause then it being in the nature of exception is to be construed strictly and against the subject but once ambiguity or doubt about applicability is lifted and the subject falls in the notification then full play should be given to it and it calls for a wider and liberal construction. (See Union of India v. Wood Papers Ltd. [(1990) 4 SCC 256 : 1990 SCC (Tax) 422] and Mangalore Chemicals and Fertilisers Ltd. v. Dy. Commr. of Commercial Taxes [1992 Supp (1) SCC 21] to which reference has been made earlier.)"

(Emphasis supplied.)

27. On a conspectus of the above decisions, the following legal position emerges:

(i) That the expression 'proceedings relating to winding up' is of the widest amplitude and content.

(ii) The expression 'relating to' which is used synonymously with the expression 'pertaining to' is an expression of expansion and not of contraction.

(iii) The expression 'relating to the winding up' is much wider and much more expansive than the expression 'arising out of'.

(iv) That the argument, that subsequent to the subject notification coming into force on 15.12.2016, an application under section 391 of the Companies Act, 1956, would stand transferred to the NCLT automatically, even in the circumstance that a winding up petition against the same company has been admitted by the company court, is fallacious, and nothing stands in the way of the Company Court from exercising jurisdiction and considering, a revival scheme proposed in relation to a company ordered to be wound up. The Company Court has powers vested in it under the Companies Act, 1956 to accept a scheme for revival of a company including a company that is being wound up until the ultimate step is taken or before the assets are disposed of, pursuant to liquidation.

(v) Section 446 of the Companies Act, 1956 is wide in its scope and under the provisions of section 446(2), the Company Court, by virtue of a non obstante clause has the jurisdiction to entertain and dispose of an application under section 391 proposing a scheme in respect of the company, whether such application has been filed before or after the order of winding up has been made.

(vi) The scheme of the Companies Act, 1956 empowers the Company Court to consider and approve a scheme of compromise and/or arrangement proposed by way of an application moved by the liquidator under the provisions of section 391 of the Act, in the case of a company which is being wound up. This manifestly indicates that in case of a company

which has been ordered to be wound up by the Company Court, a scheme proposed for its revival, would be exclusively dealt with by the Company Court itself.

(vii) All pending proceedings in relation to the revival of a Company in provisional liquidation, as in the present case, will continue to be dealt with by the Company Court under the applicable provisions of the Companies Act, 1956 including Section 446 of the Companies Act, 1956.

(viii) The expression employed in clause 3 of the subject notification, 'other than proceedings relating to winding up' would operate as an exception to the subject notification. The rules of interpretation qua an exception require a strict construction in terms of the legislative intention. However, once the ambiguity or doubt about the applicability has been lifted, then the exception has to be given a wide and liberal construction.

28. Coming to the solitary submission made on behalf of the petitioners, in relation to the legislative intent qua the proceedings relating to revival of the Respondent Company, it would be pertinent to observe as follows:

i. The winding up petition has been admitted and Provisional Liquidator has been appointed in terms of the order of this Court dated 08.03.2016.

ii. Pursuant to the order dated 08.03.2016, the Official Liquidator has complied with the directions contained in the said order and taken over the possession of the assets,

books, records etc., of the Respondent Company in provisional liquidation.

iii. Applications being Company Application No. 2615 of 2016 and Company Application (Main) 115 of 2016, for revival of the Respondent Company have been pending adjudication before this Court, prior to coming into effect of the subject notification.

iv. A bare reading of the subject notification itself and in particular Clause 5 thereof, shows that where the respondent has been served, the proceedings shall be retained by the Company Court and would not be transferred to the National Company Law Tribunal. v. Most significantly, the proceedings that are subject to transfer, within the meaning of the subject notification, would be independent proceedings relating to arbitration, compromise, arrangement and reconstruction, other than proceedings relating to winding up under the Companies Act, 1956.

vi. In the proceedings relating to winding up, as in the present case, applications under the provisions of section 391 of the Companies Act, 1956, for the revival of the company in provisional liquidation, would constitute an exception, and would a fortiori fall outside the purview of independent proceedings which ought to be transferred to the National Company Law Tribunal, under clause 3 of the subject notification.

29. It would also be pertinent to observe that even otherwise, nothing that has been brought to the notice of this Court that requires proceedings in relation to a company that has been admitted to be wound up, and revival applications in relation thereto, to be transferred to the National Company Law Tribunal. In my view, it could not have been the intention of the Legislature in its infinite wisdom, to create a situation where, the scheme relating to the revival of company in provisional liquidation, pending consideration before the Company Court would be required to be transferred to and dealt with by the National Company Law Tribunal; leading to multiplicity of proceedings with the real possibility of conflicting decisions on the dissolution/winding up and/or revival of the respondent company.

30. In view of the foregoing, the issue that arose for consideration before this Court, is answered in the affirmative. The Company Court would exercise exclusive jurisdiction for adjudicating applications, in relation to the revival of the Company in provisional liquidation.

31. Ordered Accordingly.

32. Consequently, Company Application No. 2615 of 2016 and Company Application (Main) No. 115 of 2016 be determined by this Court, in accordance with law, and will not stand transferred to the National Company Law tribunal as posited by learned counsel appearing on behalf of the petitioners in Company Petition No. 704 of 2014, in terms of the provisions of the Companies Act, 1956, read with the subject notification.

33. At request of counsel appearing on behalf of the parties, list for further proceedings on 30.03.2017.

CO.PET.704/2014, CO.APPL.2813/2016, CO.PET.948/2016, CO.PET.1061/2016 & CRL.O.(CO) 11/2016

Renotify on the date fixed above, i.e. 30.03.2017.

The parties are directed to complete the pleadings in the meantime.

SIDDHARTH MRIDUL, J MARCH 15, 2017 dn