1999 (8) TMI 811 - HC - Companies Law

Summary

Issues Involved:
1. Jurisdiction of the Debt Recovery Tribunal (DRT) versus the Company Court under section 446 of the Companies Act, 1956.
2. The applicability of sections 17, 18, and 34 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (Act of 1993).
3. The quantification of workmen's wages under section 529A of the Companies Act.
4. The transfer of proceedings from DRT and Subordinate Court to the Company Court for consolidation.

Detailed Analysis:

Jurisdiction of Debt Recovery Tribunal vs. Company Court:
The primary issue was whether the Debt Recovery Tribunal (DRT) has exclusive jurisdiction over matters involving the recovery of debts from companies in liquidation, or if the Company Court retains jurisdiction under section 446 of the Companies Act, 1956. The applicant argued that the Company Court should handle all matters concerning the winding-up of the company to avoid conflicting orders and for the sake of convenience. The respondent countered that the DRT has exclusive jurisdiction under sections 17 and 18 of the Act of 1993, and section 34 of the same Act overrides section 446 of the Companies Act.

Applicability of Sections 17, 18, and 34 of the Act of 1993:
The respondent's counsel argued that sections 17 and 18 of the Act of 1993 grant exclusive jurisdiction to the DRT, and section 34's non obstante clause prevails over section 446 of the Companies Act. They cited various judgments to support their claim that the DRT should handle the recovery proceedings, while the Company Court should focus on the winding-up process and quantification of workmen's dues.

Quantification of Workmen's Wages:
The official liquidator is responsible for quantifying the wages of the workmen of Mopeds India Ltd., which is in liquidation. This quantification is crucial as per section 529A of the Companies Act, which ensures that workmen's dues rank pari passu with secured creditors. The applicant argued that all proceedings should be transferred to the Company Court to ensure the proper distribution of assets, including the settlement of workmen's dues.

Transfer of Proceedings:
The applicant sought to transfer the proceedings from the DRT and the Subordinate Court to the Company Court to consolidate all matters related to the liquidation. The rationale was to avoid conflicting orders and ensure a streamlined process. However, the respondent opposed this, citing the exclusive jurisdiction of the DRT and the potential for conflicting interests between secured creditors and workmen.

Conclusion:
The court dismissed the applications, holding that the DRT has exclusive jurisdiction over debt recovery matters under the Act of 1993, and the Company Court should not interfere with these proceedings. The court emphasized that the non obstante clause in the Act of 1993 prevails over section 446 of the Companies Act. The court also noted that the official liquidator is responsible for quantifying workmen's wages, and there was no need to transfer the proceedings to the Company Court. The court concluded that the interests of all parties, including secured creditors and workmen, would be adequately protected under the existing legal framework.