2000 (3) TMI 922 - HC - Companies Law

Summary

Issues Involved:
1. Jurisdiction of the High Court to issue directions to the Court Receiver for suits where the Court Receiver was appointed before 16th July 1999.
2. Empowerment of the High Court to direct the Court Receiver regarding properties in custody until the DRT/Central Government sets up an alternate infrastructure.

Issue-wise Detailed Analysis:

Issue 1: Jurisdiction of the High Court to Issue Directions to the Court Receiver
The Recovery of Debts Due to Banks and Financial Institutions Act, 1993, aims to expedite the adjudication and recovery of debts due to banks and financial institutions. Under Section 2(c), the 'appointed day' refers to the day the Tribunal is established, which in this case is 16-7-1999. Section 31(1) mandates that every suit or proceeding pending before any court before the establishment of the Tribunal, which would fall under its jurisdiction if it arose after the establishment, shall stand transferred to the DRT. This includes all suits, execution proceedings, and interim applications.

The Court Receiver, High Court, Bombay, was appointed to manage properties custodia legis, and the management of these properties is an ongoing process requiring continuous directions from the High Court. The Court Receiver's duties flow from the order appointing them, and these duties do not cease merely because the main suit is transferred to the DRT. The High Court concluded that all suits and pending proceedings, including those involving the Court Receiver, stand transferred to the DRT. The Court Receiver shall continue to manage the properties until the DRT appoints its own receiver.

Issue 2: Empowerment of the High Court to Direct the Court Receiver Regarding Properties in Custody
Despite the transfer of jurisdiction to the DRT, the High Court retains the authority to issue directions to the Court Receiver regarding the properties in custody until the DRT establishes the necessary infrastructure. The DRT lacks the current infrastructure to manage properties worth Rs. 2,000 crores, which are in the custody of the Court Receiver, High Court, Bombay. The Court Receiver, an establishment of the High Court, is responsible for protecting these properties and maintaining accounts of royalties and expenses.

The High Court emphasized that the properties would remain custodia legis with the Court Receiver until the DRT appoints its receiver. The Court Receiver's authority continues until they are formally discharged by the High Court, and there is no need for a fresh application to the DRT for the appointment of a receiver. The High Court can issue directions to the Court Receiver regarding the management and protection of assets until the DRT appoints its receiver.

The Supreme Court judgments in United Bank of India v. DRT and State Bank of Bikaner & Jaipur v. Ballabh Das & Co. support the view that all suits and proceedings stand transferred to the DRT, and the High Court should not ascertain the legality of debts before transfer. The Court Receiver's role continues until the DRT appoints its receiver, ensuring the protection and management of properties during the transitional period.

Conclusion
The High Court has jurisdiction to issue directions to the Court Receiver for suits where the Court Receiver was appointed before 16-7-1999. The High Court is also empowered to direct the Court Receiver regarding properties in custody until the DRT/Central Government sets up an alternate infrastructure. The properties will remain custodia legis with the Court Receiver until the DRT appoints its receiver, ensuring the protection and management of assets during the transitional period.