Karnataka High Court
M/S United Breweries (Holdings) ... vs Offilical Liquidator on 16 June, 2025
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IN CA No.3 of 2017
IN COP No.57 of 2012
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 16TH DAY OF JUNE, 2025
BEFORE
THE HON'BLE SMT. JUSTICE LALITHA KANNEGANTI
COMPANY APPLICATION NO. 434 OF 2024
IN
COMPANY APPLICATION NO. 3 OF 2017
IN
COMPANY PETITION NO.57/2012
BETWEEN:
M/S UNITED BREWERIES (HOLDINGS) LIMITED
A PUBLIC LIMITED COMPANY
IN CORPORATED UNDER THE COMPANIES ACT, 1956
HAVING ITS REGISTERED OFFICE
AT 12TH FLOOR, UB TOWER, UB CITY
NO.24, VITTAL MALLYA ROAD
BANGALORE-560 001
REPRESENTED BY ITS AUTHORISED
SIGNATORY
Digitally MR.KAUSHIK MAJUMDER
signed by
...APPLICANT
MEGHA
MOHAN AND:
Location:
1. OFFICIAL LIQUIDATOR
HIGH COURT
OF M/S KINGFISHER AIRLINES LIMITED
KARNATAKA A PUBLIC LIMITED LIABILITY
COMPANY INCORPORATED UNDER
THE COMPANIES ACT. 1956
HAVING ITS REGISTERED OFFICE
AT 12TH FLOOR, UB TOWER, LEVEL 12
UB CITY, 24, VITTAL MALLYA ROAD
BANGALORE-560 001
2. IAE INTERNATIONAL AERO ENGINES AG,
HOMBURGER AG, PRIME TOWER,
HARSTRASSE 201, CH 8005 ZURICH,
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SWITZERLAND AND ITS PRINCIPAL PLACE
OF BUSINESS AT 628 HEBRON AVENUE,
SUITE 400, GLASTONBURY,
CONNECTICUT- 06033, USA
REPRESENTED BY ITS PRESIDENT
3. ROLLS ROYCE PLC,
65, BUCKINGHAM GATE,
LONDON SW1E 6AT, UNITED KINGDOM
REPRESENTED BY ITS PRESIDENT
4. PRATT AND WHITNEY,
A DIVISION OF UNITED TECHNOLOGIES
CORPORATION,
ORGANISED UNDER THE LAWS OF USA
OFFICE AT 400, MAIN STREET,
EAST HARTFORD, CONNECTICUT- 06108, USA,
REPRESENTED BY ITS PRESIDENT
5. JAPANESE AERO ENGINES CORPORATION,
A CORPORATION ORGANISED
UNDER THE LAWS OF JAPAN AND
HAVING ITS PRINCIPAL PLACE,
OF BUSINESS AT NO.30, MORI BUILDING,
2-2, 3-CHROME, TORANOMON, MINATO-KU,
TOKYO 105-0001, JAPAN.
REPRESENTED BY ITS PRESIDENT
6. MTU AERO ENGINES GMBH,
A CORPORATION ORGANISED UNDER
THE LAWS OF GERMANY AND HAVING
ITS PRINCIPAL PLACE OF
BUSINESS AT DACHAUER STR. 665,
80995 MUNCHERI, GERMANY,
REPRESENTED BY ITS DIRECTOR
...RESPONDENTS
(BY SRI.SHRISHAIL NAVALGUND, ADVOCATE FOR OL
SRI.PRAMOD NAIR, SENIOR COUNSEL A/W
SRI.MRINAL SHANKAR
SRI.DHARMA TEJ KONERU, ADVOCATE FOR R2, R4-R6)
THIS APPLICATION IS FILED UNDER SECTION 446 (2) (a) &
(b) OF THE COMPANIES ACT, 1956 R/W RULES 6 AND 9 OF THE
COMPANIES (COURT) RULES, 1959, PRAYING TO CONSIDER THE
APPLICATION AND TRANSFER THE EXISTING O.S. VIDE O.S.
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NO.6406/2012 AND TO PASS SUCH OTHER OR DIRECTIONS AS IT
MAY DEEM FIT IN THE FACTS AND CIRCUMSTANCES OF THIS
APPLICATION.
THIS APPLICATION HAVING BEEN HEARD AND RESERVED ON
20.03.2025, COMING ON FOR PRONOUNCEMENT OF ORDER THIS
DAY, THE COURT PRONOUNCED THE FOLLOWING:
CORAM: HON'BLE SMT. JUSTICE LALITHA KANNEGANTI
CAV ORDER
The Official Liquidator has filed C.A.No.434/2024 in
C.A.No.3/2017 in COP No.57/2012 & others seeking following
reliefs:
a) To be pleased to consider this application and
transfer the existing Original Suit vide O.S 6406
of 2012 to this Hon'ble Court.
And
b) to pass such orders or directions as it may
deem fit in the facts and circumstances of this
Application.
2. Learned counsel appearing on behalf of the Official
Liquidator submits that M/s. United Breweries (Holdings)
Limited (hereinafter referred to as 'UBHL' for short) was
ordered to be wound up by the order dated 07.02.2017 passed
in Company Petition No.57/2012 and the Official Liquidator has
been appointed as Liquidator of the Company by virtue of
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Section 449 of the Companies Act, 1956 (hereinafter referred
to as the 'Act' for short). It is stated that the Company in
liquidation prior to the winding up order had filed an original
suit i.e., O.S.No.6406/2012 before the City Civil Court,
Bengaluru against respondent Nos.2 to 6 and M/s.King Fisher
Airlines Ltd. The reliefs that are sought in the suit are as
follows:
(a) That this Hon'ble Court may be pleased to order
and declare that the corporate guarantees
dated 10.11.2010 and 01.08.2011 issued by the
Plaintiff in favour of Defendant No.1 stand
vitiated and are void, non-est and of no legal
effect;
(b) That this Hon'ble Court may be pleased to
permanently restrain IAE by a permanent order
and injunction from taking any further steps to
enforce the corporate guarantees dated 10th
November 2010 and 1st August, 2011 executed
by the Plaintiff in favour of Defendant No.1
and/or take any further steps to enforce any
judgment, order or decree that may be passed
by any court pursuant to the said corporate
guarantees dated 10.11.2010 and 01.08.2011;
(c) That this Hon'ble Court may be pleased to order
and decree that Defendant Nos. 1 to 5 jointly
and/or severally, do pay to the Plaintiff an
aggregate sum of U.S dollars $210,400,000/-
(Approx Rs. 1,431 crores) or the rupee
equivalent at the rate of exchange on the date
of the decree plus Rs.162,10,00,000/- as and
by way of damages; as per the detailed
particulars of claim set out Document No.10
annexed herewith, together interest thereon at
the rate of 18% per annum from the date of
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filing of this suit till payment and/or realization
thereof; and
(d) That this Hon'ble Court may be pleased to
orders and decree that Defendant Nos. 1 to 5
do jointly and/or severally contribute to or
indemnify the Plaintiff in respect of any and all
claims that may be raised against and/or
devolve upon the Plaintiff under the various
corporate guarantees executed and furnished
by the Plaintiff on behalf of Defendent No.6 to
any of the lessors of aircraft, financiers, or any
other parties. And pass such other orders in the
interest of equity and justice.
3. Defendant No.6 i.e., Kingfisher Airlines Limited in
the Original Suit was ordered to be wound up by the order
dated 18.11.2016 passed in C.P.No.214/2012 and the Official
Liquidator is appointed as Liquidator of the Company by virtue
of Section 449 of the Act. It is stated that in the Company
Petition No.57/2012 this Court had directed the Company-UBHL
for wound up, thereby invoking jurisdiction of this Court to
entertain any suit filed by or against the Company in
Liquidation. It is stated that by the winding up order dated
07.02.2017, this Court had directed the Official Liquidator to
administer and take charge of, all the affairs of the Company in
Liquidation and directed to appear in all matters filed before the
Hon'ble Courts by or against the Company in Liquidation.
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Hence, the Official Liquidator has come up along with this
petition to transfer the pending suit to this Court.
4. Learned counsel had relied on Sub-Sections (2)(a)
& (b) of Section 446 of the Act and submits that this Court has
jurisdiction to entertain any claim made by or against the
Company in Liquidation. It is submitted that in the light of
Section 446(2)(a) & (b) of the Act, this Court has jurisdiction to
withdraw and transfer the case from the City Civil Court to this
Court. It is stated that the Official Liquidator being in-charge of
the Company in Liquidation considers that if the pending O.S. is
transferred and presented before this Court which had passed
previous orders to wound up the Company in liquidation, then
the trial of the pending case can result in providing directions in
accordance to the liquidation process of the Company in
liquidation. He submits that the application may be allowed.
5. This Court on 23.01.2025, has passed an order,
wherein it is observed that respondent No.1 was represented
by the Official Liquidator, respondent Nos.2 and 3 were
represented by the counsels and in respect of respondent
Nos.4, 5 and 6, Official Liquidator shall serve hand summons on
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the learned counsel appearing for the respondents before the
trial Court and an order was passed on 30.01.2025, the Official
Liquidator had served the hand summons on respondent Nos.4,
5 and 6 and he had filed a memo before this Court and this
Court had held that notice to respondent Nos.4, 5 and 6 is held
sufficient.
6. On 20.03.2025, learned Senior Counsel Mr. Pramod
Nair, representing respondent Nos.2 & 4 to 6 submits that
section 446(2) of the Companies Act 1956, specifies that - 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) any suit or
proceeding by or against the company; (b) any claim made by
or against the company. It is submitted that any and all such
applications which came to be filed after the appointment of the
Official Liquidator alone and not by the Company which is under
liquidation in his own name. Therefore, for the applicant to file
his application which is signed by an Officer of the Applicant
Company is against the relevant provisions of the Act and on
that ground, the application is liable to the dismissed.
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7. It is submitted that they have questioned the
maintainability of suit and also filed an application for rejection
of plaint and that came to be dismissed. They have questioned
the said order before this Court by filing CRP Nos.290, 291,
293, 294, 307 to 309, 328-331/2016 and the entire trial Court
records have been called for and the same are placed before
the High Court. It is submitted that to decide the Civil Suit it
requires lot of evidence and in a summary manner, it cannot be
disposed of before this Court in the Company Petition. The Civil
Revision Petitions which are pending before this Court goes to
the root of the matter which are pending consideration and at
this point of time, the suit cannot be transferred to this Court.
8. Learned Senior Counsel had relied on Section
446(3) which reads as follows:
446(3) Any suit or proceeding by or against
the company which is pending in any Court other
than that in which the winding up of the company is
proceeding may, notwithstanding anything
contained in any other law for the time being in
force, be transferred to and disposed of by that
Court.
Relying on Section 446(3) of the Act, he submits that as
the same is deleted from the provision, the suit cannot be
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transferred to this Court. He had relied on the judgment of the
Hon'ble Apex Court in the case of Harihar Nath v. State Bank
of India1. He relied on paragraph Nos.18 and 20 of the
judgment which reads as under:
18. The object of Section 446 of the Act is not
to cancel, nullify or abate any claim against the
company. Its object is to save the company which
has been ordered to be wound up, from
unnecessary litigation and from multiplicity of
proceedings and protect the assets for equitable
distribution among its creditors and shareholders.
This object is achieved by compelling the creditors
and others to come to the court which is winding up
the company and prove their claims in the winding
up. For this purpose, all suits and proceedings
pending against the company are also stayed
subject to the discretion of the winding-up court to
allow such suits and proceedings to proceed. When
a winding-up order is passed, the effect is that all
the affairs pertaining to the company in liquidation,
including all suits/proceedings by or against the
company, come within the control and supervision
of the winding-up court. The winding-up court has
to decide whether it will let the suit/proceeding to
continue in the court where it is pending, or it will
itself adjudicate the suit/proceeding. Thus, under
Section 446(1), the winding-up court only decides
about the forum where the suit has to be tried and
disposed of. The Limitation Act which prescribes the
periods within which a party can approach a court
seeking remedies for various causes of action, is
not attracted to such applications under Section
446(1) of the Act. However, as elaborate arguments
were advanced on this issue, we will deal with them
in some more detail.
1
(2006) 4 SCC 457
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20. It is now well settled that if any winding-
up order is passed during the pendency of a suit
against the company, and if the suit is continued
without obtaining leave in spite of that bar
contained in Section 446(1), the decree passed is
only voidable at the instance of the liquidator, and
not void ab initio. In fact, where such decree has
been passed against the company and others, the
only person who can avoid the decree on the
ground of non-compliance with Section 446(1) of
the Act, is the Official Liquidator of the company
and not the other defendants. A suit/proceeding
filed against a company, prior to the order of its
winding up, does not come to an end on the passing
of an order of winding up. The order of winding up
merely stays further proceedings in the
suit/proceeding. The suit/proceeding becomes
dormant. Various alternatives are possible when a
suit gets so stayed. The plaintiff in the suit can
move an application under Section 446(1) of the
Act, and when leave is granted, proceed with the
suit. If the leave is refused, the suit may be
transferred to the Company Court for being tried
and disposed of under Section 446(2)(a) of the Act.
The plaintiff may also file an application for transfer
of the suit to the Company Court for disposal under
Section 446(2)(a). Alternatively, the plaintiff may
get the suit dismissed with liberty to make a claim
under Section 446(2)(b) of the Act. Even if the suit
is proceeded with, without obtaining leave of the
Company Court, either not being aware of the order
of winding up or ignoring the provisions of Section
446(1), the resultant decree will not be void, but
only be voidable at the instance and option of the
Official Liquidator of the company. It is also
possible that the court passing the winding-up
order may at any time, on the application either of
the liquidator or of any creditor or contributory,
make an order staying the winding up either
altogether or for a limited time on such terms and
conditions as the court deems fit, under Section 466
of the Act. When the winding up is so stayed, a suit
against the company (filed before the winding-up
order) which stood stayed under Section 446(1)
could be proceeded with, even though leave had not
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been obtained to proceed with the suit. We have
referred to these alternative possibilities to show
that having regard to the nature of an application
under Section 446(1) of the Act, it does not attract
Article 137.
9. He had relied on the judgment of Madras High Court in
the case of AL Rostamani International Exchange,
represented by its Head International Operations,
Mr.V.V.Subramaniam, P.O. Box No.10072, Dubai United
Arab Emirates vs. Official Liquidator & Ors.2. He relied on
paragraph Nos.14 to 16 which reads as under:
14. Upon careful consideration of the
judgements referred to above, Section 446(2) and
the findings of the learned single Judge, we agree
with the decision of the learned Judge that in the
winding up proceedings of a Company, claims by or
against the company can alone be decided. Third
party claims against a bidder in the auction cannot
be decided by the company court. The power to
decide on incidental claims must also be relating to
the winding up proceedings. Just because, the
second respondent is an auction purchaser, it
cannot be said to be either the debtor or creditor of
the company, falling within the definition of 'claim'.
The Word "Company" employed in Section 446(2)
would mean only the company in liquidation. The
section has been enacted to ensure complete justice
in the course of winding up proceedings of the
company in liquidation.
15. Insofar as the judgments relied on by
either side are concerned, in 1985 SCR (1) 511
(cited supra) cited by both the counsels, the
2
2016 SCC OnLine Mad 9988
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Hon'ble Supreme Court clearly lays down the
proposition that the claims can only be relating to
the company under liquidation. The other decisions
relied upon by the counsel for the first respondent
also lay down the same ratio. Regarding the
judgements cited on the side of the appellant i.e.,
AIR 1998 SC 3153, AIR 1999 Bom 240 and AIR
1996 SC 489 (cited supra), they all deal with the
scope and power of the court under Section 155 and
not under 446. The observation of the Apex Court in
para 34 of the judgment reported in AIR 1998 SC
3153 (cited supra), cannot be the 'ratio', but can
only be an 'obiter' in the peculiar and differential
facts of the case, as the Apex Court itself has
recorded that it is dealing only with section 155.
Also, the powers of the court under section 155 and
procurement of shares pending winding up
proceedings, only came up for adjudication.
Therefore, the above judgements will not come to
the aid of the appellant. Insofar as Dr. Mahesh
Bhatra's Case is concerned, it is infact against the
appellant. In that case, the Company Law Board has
held that the disputed questions cannot be decided
under summary jurisdiction.
16. Therefore, we come to an irresistible
conclusion that the role of the Company Court,
while dealing with the winding up proceedings, is
restricted to claims by or against the company in
liquidation. In the present case, except for the fact
that the demand drafts were issued in favour of the
official liquidator, there is no nexus between the
appellant and the company in liquidation. There is
also no privity between the appellant and the
second respondent. The company court in the
course of winding up proceedings cannot be
converted as a writ court under Article 226 of the
Constitution of India or exercise the inherent
powers under the Criminal Procedure Code.
Wherein Madras High Court has held that claims by or
against the company can alone be decided, but the third party
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claims against the bidder in the auction cannot be decided by
the company court and while dealing with the winding up
proceedings, it is restricted to claims by or against the
company in liquidation. Relying on this judgment, learned
Senior counsel submits that the suit cannot be transferred. He
has also relied on the judgment of the Hon'ble Apex Court in
case of Sudarshan Chits (I) Ltd. v. O. Sukumaran Pillai3 .
He relied on paragraph No.8 which reads as under:
8. Before we advert to the question of
construction of Section 446(2)(b), it would be
advantageous to notice the historical evolution of
the provision as well as its present setting. Section
171 of the Indian Companies Act, 1913, the
predecessor of Section 446(1) did not contain any
provision similar or identical to that of Section
446(2). Section 171 only provided for stay of suits
and proceedings pending at the commencement of
winding-up proceeding, and embargo against the
commencement of any suit or other legal
proceedings against the company except by the
leave of the court. This provision with little
modification is re-enacted in Section 446(1). There
was no specific provision conferring jurisdiction on
the court winding up the company analogous to the
one conferred by Section 446(2). Sub-section (2)
was introduced to enlarge the jurisdiction of the
court winding up the company so as to facilitate the
disposal of winding-up proceedings. The provision
so enacted probably did not meet with the
requirement with the result that the Committee
appointed for examining comprehensive
amendment to the Companies Act in its report
3
(1984) 4 SCC 657
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recommended that "a suit by or against a company
in winding up should notwithstanding any provision
in law for the time being be instituted in the court
in which the winding-up proceedings are pending [
See para 207 of the Company Law Committee
Report] ". To give effect to these recommendations,
sub-section (2) was suitably amended to bring it to
its present form by Companies (Amendment) Act,
1960. The Committee noticed that on winding-up
order being made and the Official Liquidator being
appointed a Liquidator of the company, he has to
take into his custody company property as required
by Section 456. Section 457 confers power on him
to institute or defend any suit, prosecution, or other
legal proceeding, civil or criminal, in the name and
on behalf of the company. Power is conferred upon
him to sell the properties both movable and
immovable of the company and to realise the assets
of the company and this was to be done for the
purpose of distributing the assets of the company
amongst the claimants. Now at a stage when a
winding-up order is made the company may as well
have subsisting claims and to realise these claims
the Liquidator will have to file suits. To avoid this
eventuality and to keep all incidental proceedings in
winding-up before the court which is winding up
the company, its jurisdiction was enlarged to
entertain petition amongst others for recovering the
claims of the company. In the absence of a
provision like Section 446(2) under the repealed
Indian Companies Act, 1913, the Official Liquidator
in order to realise and recover the claims and
subsisting debts owed to the company had the
unenviable fate of filing suits. These suits as is not
unknown, dragged on through the trial court and
courts of appeal resulting not only in multiplicity of
proceedings but would hold up the progress of the
winding up proceedings. To save the Company
which is ordered to be wound up from this prolix
and expensive litigation and to accelerate the
disposal of winding up proceedings, the Parliament
devised a cheap and summary remedy by conferring
jurisdiction on the court winding up the company to
entertain petitions in respect of claims for and
against the company. This was the object behind
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enacting Section 446(2) and therefore, it must
receive such construction at the hands of the court
as would advance the object and at any rate not
thwart it.
10. He had also relied on the judgment of the Delhi High
Court in the case of Anil Gupta v. Delhi Cloth and General
Mills Co. Ltd.4. He relied on paragraph Nos.17, 20 and 21
which reads as under:
17. Before parting I might notice an argument
which was raised on behalf of the respondent to the
effect that complicated questions of law and fact
ought not to be gone into and decided in a petition
under s. 155 of the Companies Act. In support of
this contention the learned counsel relied upon Smt.
Soma Vati Devi Chand v. Krishna Sugar Mills Ltd.,
AIR 1966 Punj 44, which was approved by a
Division Bench of this court in Punjab Distilling
Industries Ltd. v. Biermans Paper Coating Mills Ltd.,
[1973] 43 Comp Cas 189, and a subsequent
decision in Kaushalya Devi's case, [1977] Tax LR
1928.
20. The observations in the Gujarat case
([1978] 48 Comp Cas 438) are clearly contrary to
the decision of the Division Bench of this court in
Punjab Distilling Industries' case, [1973] 43 Comp
Cas 189.
21. I am bound by the Division Bench decision
of this court and, in case disputed or complicated
questions of fact and law arise, it must be held that
recourse cannot be had to s. 155 of the Companies
Act. The learned counsel for the petitioner has
contended that in the present case no complicated
questions of law and fact have arisen. This is not
4
1981 SCC OnLine Del 263
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correct. It is the case of the petitioner that shares
were not given to Sant Ram Dhuper for the purpose
of sale and no consideration was received.
According to Sant Ram Dhuper, on the other hand,
the shares were sold to him. Which of the two
versions is correct would require detailed
investigation into the facts and would amount to
deciding a dispute between an alleged purchaser
and an alleged seller of the shares and such
questions cannot be decided in these proceedings
under s. 155 of the Companies Act. If there is any
fraud played upon the petitioner by Sant Ram
Dhuper, as a result of which shares which were
standing in the petitioner's name have been
transferred, the remedy of the petitioner would lie
by way of a suit and not by filing the present
petition. Another factor which is to be taken into
consideration is that a very large number of
transactions of sale of these very shares have taken
place. None of the purchasers are parties to these
proceedings. The exercise of jurisdiction under s.
155 by ordering rectification of register of members
would create all sorts of complications affecting
persons who have not had an opportunity to
represent their case here and who are admittedly
bona fide purchasers for value without notice of this
dispute. Under the circumstances, the objection
raised by the counsel for the respondents must
prevail.
11. He submits that as the proviso to Section 446(3) is
deleted as per the amendment made to the Companies Act.
Now the Court has no such power to transfer the case from the
City Civil Court to this Court.
12. Learned counsel appearing for the Official Liquidator
submits that as per the amendment i.e., amendment to the
Companies Act, 1956 by Act 11/2003, dated 13.1.2003 Clause 3
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of Section 446 of the old Act is omitted. Learned counsel
submits that the said amendment is not carried out by the
Central Government and even as of now that remains to be in
the statute and he has placed before this Court the Act
11/2003, dated 13.1.2003. He had also relied on the
judgement of Madras High Court in the case of Salem Textiles
Limited v. Authorized Officer, Phoenix ARC Private Ltd.,5
wherein the Court dealt with the amendment to the Companies
Act. He relied on paragraph No.42 which reads as under:
42. The amendment made by the 2004 Act to
the Companies Act, 1956 makes it clear that the
intention of the Parliament was to make the third
proviso to section 424-A (1) of the Companies Act,
1956, in pari materia with the third proviso to
section 15(1) of SICA. While making it so, the law-
makers also ensured that the principle of
abatement would apply even if the reference had
been submitted along with a draft scheme for
revival and rehabilitation as required by section
424-A(1). It may be seen that unlike under section
15(1) of SICA, the industrial company making a
reference is itself bound to submit a scheme under
section 424-A. Therefore, along with the expression
"reference", the third proviso to section 424-A
included the phrase "and a scheme for revival and
rehabilitation submitted before the commencement
of the Enforcement of Security Interest and
Recovery of Debts Laws (Amendment) Act, 2004".
Another important feature to be taken note of, is
that the National Company Law Tribunal is
conceived under the Companies (Second
5
(2013) 3 LW 105
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Amendment) Act, 2002 to be a forum higher in
status, powers and responsibilities, than that of
BIFR and AAIFR. It is actually a substitute for the
Company Court (this court). Still, the principle of
abatement was made applicable, even to a
reference made to such a Tribunal by virtue of the
third proviso to section 424-A. What is more
significant, is the fact that atleast under SICA, the
industrial company was afforded protection from
any proceedings for recovery in terms of section
22(1) of the Act, if a reference was pending before
BIFR. But under section 424-A to H, no such
protection is given to a company, whose reference
is pending before the National Company Law
Tribunal. Therefore, the rights of the secured
creditors to proceed for the recovery of dues is not
curtailed, when a reference is pending before the
National Company Law Tribunal, irrespective of the
stage at which such reference is. This is a clear
signal to the fact that the right conferred upon
secured creditors under the third proviso to section
15(1) was intended to be absolute.
13. Relying on this judgment, he submits that as the
same is not given effect to and is still part of the statute, this
Court has got the power to transfer the suit. He has also relied
on the judgment of the Delhi High Court in the case of Gopal
Krishan vs. Super Cassettes Industries Ltd. and Others 6.
He relied on paragraph Nos.18 & 19 which reads as under:
18. The above submissions have been
considered. It is to be noticed that the approval of
the scheme of amalgamation was under Section 391
of the Act and not Section 394 of the Act. The
corresponding provision in the Companies Act, 2013
6
2019 SCC OnLine Del 8392
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('2013 Act') is Section 230. However, at the
relevant time when the appeal was filed, the
provision relevant for that purpose was Section
391(7) of the Act. Although in terms of the
Companies (Second Amendment Act) 2002 ('2002
Amendment'), Section 391(7) stood omitted, the
said amendment was to take effect only from date
notified by the Central Government.
19. The purpose behind omitting the Section
391(7) of the Act was to provide jurisdiction in
respect of the matters in relation to mergers and
amalgamations to the National Company Law
Tribunal ('NCLT') which was constituted under the
2002 Amendment. Till such time the NCLT was not
constituted, there was no question of matters
involving Section 391 of the Act being transferred
to it. The NCLT came into being finally when the
2013 Act came into force 1st June 2016. The fact
remained that when the appeal was filed on 18th
February 2013, Section 391(7) of the Act continued
in the statute book. The entire 2002 Amendment
omitting Section 391(7) of the Act stood repealed
finally only on 14th May 2015 with the passing of
the Repealing and Amendment (Second) Act, 2015.
14. Basing on this judgment, he submits that the
amendment is not notified by the Central Government and this
Court has the power to transfer the suit from the Civil Court.
15. The learned senior counsel relied on the judgment of
the Hon'ble Apex Court in Raghunath Rai Bareja and
another Vs. Punjab National Bank and others7 and submits
that at Paragraph No. 27 the Court observed that:
7
(2007) 2 SCC 230
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In this connection, it may be mentioned
that Section 446(3) of the Companies Act was
omitted by Companies (Second Amendment) Act,
2002 and evidently the High Court has overlooked
this Amendment. As a result in our opinion the High
Court has no power to transfer the Execution
Petition to the Debts Recovery Tribunal. At any
event as held in Allahabad Bank vs. Canara Bank &
Anr.(supra), Section 446 has no application once the
RDB Act applies because Section 34 expressly gives
overriding effect to the provisions of the RDB
Act. Also, the RDB Act is a special law and hence will
prevail over the general law in the Companies Act as
8
held in Allahabad Bank vs. Canara Bank & Anr.
16. Relying on this judgments, he submits that though it
is submitted by the Official Liquidator that the amendment is
not given effect, still in the light of the law laid down by the
Hon'ble Apex Court in the case of Raghunath Rai Bareja and
another Vs. Punjab National Bank and others referred
supra, this Court is bound by the said order and the suit cannot
be transferred from the City Civil Court to this Court.
17. Learned Senior Counsel had relied on the judgment
of the Hon'ble Apex Court in the case of South Central
Railway Employees Coop. Credit Society Employees
8
(2000) 4 SCC 406
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Union v. B. Yashodabai9. He relied on paragraph No.15 which
reads as under:
15. If the view taken by the High Court is
accepted, in our opinion, there would be total chaos
in this country because in that case there would be
no finality to any order passed by this Court. When
a higher court has rendered a particular decision,
the said decision must be followed by a subordinate
or lower court unless it is distinguished or
overruled or set aside. The High Court had
considered several provisions which, in its opinion,
had not been considered or argued before this Court
when CA No. 4343 of 1988 was decided [South
Central Railway Employees Coop. Credit Society
Employees' Union v. Registrar of Coop. Societies,
(1998) 2 SCC 580 : 1998 SCC (L&S) 703] . If the
litigants or lawyers are permitted to argue that
something what was correct, but was not argued
earlier before the higher court and on that ground if
the courts below are permitted to take a different
view in a matter, possibly the entire law in relation
to the precedents and ratio decidendi will have to
be rewritten and, in our opinion, that cannot be
done. Moreover, by not following the law laid down
by this Court, the High Court or the subordinate
courts would also be violating the provisions of
Article 141 of the Constitution of India.
18. He relied on the judgement of the Hon'ble Apex Court
in the case of Suganthi Suresh Kumar v. Jagdeeshan10. He
relied on paragraph No.9 which reads as under:
9
(2015) 2 SCC 727
10
AIR 2002 SC 681
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9. It is impermissible for the High Court to
overrule the decision of the Apex Court on the
ground that the Supreme Court laid down the legal
position without considering any other point. It is
not only a matter of discipline for the High Courts in
India, it is the mandate of the Constitution as
provided in Article 141 that the law declared by the
Supreme Court shall be binding on all courts within
the territory of India. It was pointed out by this
Court in Anil Kumar Neotia v. Union of India
[(1988) 2 SCC 587 : AIR 1988 SC 1353] that the
High Court cannot question the correctness of the
decision of the Supreme Court even though the
point sought before the High Court was not
considered by the Supreme Court.
19. Having heard the submissions on behalf of both the
parties, perused the entire material on record. It is appropriate
to have a look at Section 446, as it stood before amendment,
which reads as under:
446. (1) When a winding up order has been
made or the Official Liquidator has been appointed
as provisional liquidator, no suit or other legal
proceeding shall be commenced, or if pending at
the date of the winding up order, shall be
proceeded with, against the company, except by
leave of the Court and subject to such terms as the
Court may impose.
(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) any suit or proceeding by or against
the company;
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(b) any claim made by or against the
company (including claims by or against
any of its branches in India);
(c) any application made under section 391
by or in respect of the company;
(d) any question of priorities or any other
question whatsoever, whether of law or
fact, which may relate to or arise in course
of the winding up of the company;
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.
(3) Any suit or proceeding by or against the
company which is pending in any Court other than
that in which the winding up of the company is
proceeding may, notwithstanding anything
contained in any other law for the time being in
force, be transferred to and disposed of by that
Court.
(4) Nothing in subsection (1) or sub-section
(3) shall apply to any proceeding pending in appeal
before the Supreme Court or a High Court.
20. A bare perusal of the provision shows that power
under Section 446 of the Act includes the power to entertain or
dispose of any suit or proceedings by or against the company
where such suit or proceedings have been initiated, before or
after the order of winding up of the company. The primary
object of such provision is to ensure that interest of the
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Company in liquidation is not sacrificed in any manner. Before
amendment to Section 446(3) of the Act, Section 446(3)
stipulates that any suit or proceeding by or against the
Company which is pending in a Court other than the one,
where the Company was being wound up, it has to be
transferred to and disposed of by the Court conducting the
winding up proceedings. The whole purpose of said provision
was to consolidate the proceedings and facilitate the winding up
process and also to prevent parallel legal proceedings against
the Company, during its liquidation and also to ensure all the
litigation pertaining to the Company be dealt with by the Court
overseeing the winding up. This was omitted by the Companies
(Second Amendment) Act, 2002. It is the arguments of the
learned senior counsel is that insofar as Section 446(3) as it
now stands deleted, this Court has no power to transfer. This
Court has perused the Companies (Second Amendment) Act,
2002, Sections 1 and 2 stipulating that it shall come into force
on such date as the Central Government may, by Notification in
the Official Gazette, appoint provided that different dates may
be appointed for different provisions of the Act and any
reference in any such provision to the commencement of this
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Act shall be construed as a reference to the commencement of
that provision. Learned Senior Counsel also does not dispute
the fact that the amendment to Section 446 of the Act, will
come into effect only after the Central Government notifies in
the Official Gazette. There is no dispute about the fact that it is
not notified by the Central Government. In that case, the new
Act whereby Section 446(3) is deleted has not come into effect.
In that case Court has to look at the Act which was prior to the
amendment.
21. In all fairness, if the case is transferred from the
City Civil Court to this Court, no prejudice would be caused to
the respondents. In fact, it would be convenient to all the
parties to appear before this Court and agitate their case. The
judgments that are relied on by the senior counsel that this
Court cannot declare a particular judgment of the Hon'ble Apex
Court as per curiam, this Court is not able to appreciate the
said submission as this Court is not declaring the judgment of
the Hon'ble Apex Court as per incuriam. It is an admitted fact
that the amendment is not given effect to and it was not
notified by the Central Government.
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22. In that view of the matter, in the light of Section
446(3) of the Companies Act, 1956, and in the interest of both
the parties, this Court deems it appropriate to pass the
following:
ORDER
(i) C.A.No.434/2024 in C.A.No.3/2017 in CO.P.
No.57/2012 filed by the Official Liquidator is
allowed. O.S.No.6406/2012, pending on the
file of the City Civil Court, Bengaluru is
withdrawn and transferred to this Court.
SD/-
(LALITHA KANNEGANTI)
JUDGE
KA/-
