2019 (10) TMI 1396 - HC - Companies Law

Jurisdiction of entertaining winding up petition - Seeking direction for winding up of Company and appointing Official Liquidator as Liquidator of Company - Jurisdictional issue raised is that winding up petition was within the jurisdiction of Judges sitting at Lucknow and not at Allahabad therefore there is an inherent lack of jurisdiction in respect of subject matter of winding up hence order of winding up is illegal and void - Jurisdiction conferred in respect of Company Judge . Whether Permanent Seat and Principal Seat is one and the same thing and can it be said that there is no Permanent Seat as well as Principal Seat of this High Court at Allahabad and Lucknow? - HELD THAT - New High Court created by U. P. High Courts (Amalgamation) Order 1948 did not declare any Permanent Seat of New High Court but considering the fact that Chief Justice of High Court of Judicature at Allahabad i.e. existing High Court became Chief Justice of New High Court also we have no manner of doubt to observe that Principal Seat of Allahabad remained at Allahabad . This is also evident from the fact that the number of Judges to sit at Lucknow would not be less than two but how much beyond that has to be decided by Chief Justice. All other judges would sit at Allahabad. Similarly territorial jurisdiction of New High Court at Lucknow is subject to determination of Chief Justice which power could have been exercised for once. In respect of remaining areas jurisdiction remained with New High Court at Allahabad. Further in a pending case Chief Justice may transfer the matter for hearing to Allahabad but not vice versa. This shows that High Court at Allahabad has residuary authority. It can hear matters within jurisdiction of Judges sitting at Lucknow but not vice versa. All this go to show that New High Court at Allahabad can be termed as Principal Seat of High Court - Allahabad or Lucknow cannot be said to be a Permanent Seat of High Court and no such permanence in respect of seat has been visualized or provided by U.P. High Courts (Amalgamation) Order 1948 as held by Constitution Bench in Sri Nasiruddin (supra) but Principal Seat of High Court of Judicature at Allahabad is at Allahabad . Jurisdiction conferred in respect of Company Judge - Whether issue of jurisdiction in the matter of winding up of a company goes to the root of the matter inasmuch as Judges sitting at Allahabad on the subject of winding up of a company have no jurisdiction at all or considering peculiar facts and circumstances in the matter dealing with winding up of company matters can it be said that jurisdiction to Judges sitting at Allahabad is not completely barred? - Whether in the facts of this case where Reference made by BIFR on 23.04.1999 was received by this Court at Allahabad on 03.05.1999 and thereafter first order was passed by Company Judge at Allahabad on the statement made by appellant s counsel on 14.10.1999 and subsequent proceedings held for almost eight years without any objection to territorial jurisdiction would prevent appellant from raising the issue of lack of jurisdiction after almost eight years or objection being inherent and going to the root of the matter has to be upheld irrespective of conduct of appellant and whether entire proceedings which had gone for the last eight years are without jurisdiction? - HELD THAT - Certain Notifications under Article/Clause 14 have been issued in exercise of powers under U. P. High Courts (Amalgamation) Order 1948 and relevant Notifications are dated 26.07.1948 15.07.1949 02.07.1954 05.08.1975 04.01.2003 and 14.01.2003 - If part of the cause of action had arisen within the territorial jurisdiction of both i.e. Lucknow and Allahabad litigant has choice to invoke jurisdiction at one of the two places. Entertaining the Suit on 09.12.1988 a Single Judge of Delhi High Court granted interim injunction. In written statement filed by Builder on 29.03.1989 though claim on merit was objected but jurisdiction of Delhi High Court was admitted in paras 18 and 19. Later due to change of pecuniary jurisdiction suit was transferred to District Court on 12.07.1993. On 17.02.1997 District Court framed issues but no issue with regard to territorial jurisdiction was framed since there was no dispute between parties. It is only on 22.08.1997 i.e. after more than eight years of filing of written statement Builder filed an application under Order 6 Rule 17 C.P.C. seeking amendment in the written statement by raising objection with regard to jurisdiction of Delhi Court and claimed that since property in dispute situate in Gudgaon District State of Haryana therefore vide Section 16 C.P.C. suit for recovery of property could be instituted within local jurisdiction where disputed property situated and Delhi Court had no jurisdiction. Amendment was allowed and Trial Court framed an issue on the question of territorial jurisdiction. The issue of jurisdiction was decided as a preliminary issue in favour of Builder. It was challenged in High Court but failed thereat. Buyer thereafter brought matter in appeal before Supreme Court. Court considered scheme of Sections 15 to 20 C.P.C. and observed that Section 16 C.P.C. recognizes well established principle that actions against res or property should be brought in the forum where such res is situate. Court had no jurisdiction over a dispute over which it cannot give an effective judgment. With respect to Section 20 C.P.C Court said that it is a residuary provision and covers those cases not falling within the limitations of Sections 15 to 19 C.P.C. Court also held that normally if there is an agreement between parties regarding territorial jurisdiction such agreement can be enforced but not in cases where Court has no jurisdiction at all. In other words Court said that such agreement can be implemented only when two or more Courts have jurisdiction to try a suit or proceeding and parties decide and agreed for jurisdiction to one of such Courts. If the objection regarding jurisdiction and the above questions are answered against appellant whether on merits also winding up order passed by Company Judge is justified? - HELD THAT - The objection of jurisdiction in the matter of winding up of company having registered Office at a place which is within territorial jurisdiction of Lucknow Bench goes to the root of the matter and any order passed at Allahabad ignoring the above jurisdiction is a nullity. Mere delay in raising objection will not validate the order since such an order lacks patent jurisdiction. It cannot be said that winding up petition at Allahabad in respect of Defaulting Company/Appellant was maintainable at Allahabad since registered office of Company is at A/2 Site No.2 Industrial Area Rae Bareli having its territorial jurisdiction with Judges sitting at Lucknow. Therefore order passed by learned Single Judge for winding up of company at Allahabad is patently without jurisdiction - Lastly it has to be seen as to what ultimate order should be passed since order of winding up was not passed on a winding up petition but it is on a Reference made by BIFR. Here winding up proceedings have been initiated not at the instance of an individual party but on a Reference made by BIFR under Section 20 (1) of Act 1985 which was received at Allahabad. It was enjoined upon Registrar General to remit Reference to Lucknow for further action but he committed mistake by placing it before Company Judge at Allahabad. Thus appropriate order would be to direct Registrar General to forward Reference received from BIFR to Registrar at Lucknow for placing it before Company Judge sitting at Lucknow for considering the matter of winding up of Defaulting Company/Appellant and pass necessary order in accordance with law. The Registrar General is directed to forward Reference received from BIFR to Registrar at Lucknow for placing it before Company Judge sitting at Lucknow for considering the matter of winding up of Defaulting Company/Appellant in accordance with law - appeal allowed.

Summary

Issues Involved
1. Jurisdiction of the Allahabad Bench vs. Lucknow Bench for winding up petitions.
2. Validity of the winding up order passed by the Allahabad Bench.
3. Objection to jurisdiction raised after a significant delay.
4. Merits of the winding up order.

Detailed Analysis

1. Jurisdiction of the Allahabad Bench vs. Lucknow Bench for Winding Up Petitions
The primary issue was whether the Allahabad Bench had jurisdiction to entertain the winding up petition for a company whose registered office was within the territorial jurisdiction of the Lucknow Bench. The court noted that the jurisdiction of the High Court of Judicature at Allahabad is governed by the U.P. High Courts (Amalgamation) Order, 1948, which stipulates that Judges sitting at Lucknow shall exercise jurisdiction over cases arising in specified areas of Oudh/Avadh. The court referred to various notifications, particularly the Notification dated 05.08.1975, which allowed the Lucknow Bench to entertain winding up petitions up to the stage of proceedings under Section 439 of the Companies Act, 1956. The court concluded that the Allahabad Bench lacked jurisdiction to entertain the winding up petition for a company whose registered office was within the jurisdiction of the Lucknow Bench.

2. Validity of the Winding Up Order Passed by the Allahabad Bench
The court held that the order passed by the Allahabad Bench for winding up the company was without jurisdiction and thus a nullity. The court emphasized that jurisdictional issues go to the root of the matter, and any order passed without jurisdiction is invalid. The court also noted that the Registrar General should have forwarded the Reference received from BIFR to the Registrar at Lucknow for further action.

3. Objection to Jurisdiction Raised After a Significant Delay
The court addressed the issue of whether the objection to jurisdiction could be raised after a significant delay. It held that objections to territorial and pecuniary jurisdiction must be raised at the earliest possible opportunity. However, the court distinguished this case by noting that the issue involved a lack of jurisdiction over the subject matter, which can be raised at any stage. The court found that the objection to jurisdiction was valid despite the delay, as it involved a fundamental issue of jurisdiction over the subject matter.

4. Merits of the Winding Up Order
Given the court's decision to set aside the winding up order on jurisdictional grounds, it did not address the merits of the winding up order. The court directed that the matter be placed before the Company Judge sitting at Lucknow for consideration in accordance with the law.

Conclusion
The appeal was allowed, and the judgment dated 19.09.2007 passed by the Company Judge at Allahabad was set aside. The Registrar General was directed to forward the Reference from BIFR to the Registrar at Lucknow for further proceedings.