2018 (9) TMI 337 - HC - Companies Law

Mismanagement and oppression - transfer of the present proceedings to the NCLT - Held that - It has to be noted that any amendment or coming into force of a new law in place of the earlier law can always result in ouster of the jurisdiction that was conferred on the High Court by the earlier law. The jurisdiction of the High Court in company matters not being a jurisdiction of the civil jurisdiction under the Code of Civil Procedure, 1908, the same can always be ousted by the amendment of the enactment that conferred the said jurisdiction. Such ouster need not be express as the same is not a civil jurisdiction of the High Court. Accordingly, hold that the ouster of the jurisdiction of the High Court in relation to company matters does not need to be express and the same can be implied. The parties to a lis cannot insist on continuing the dispute in the forum the same was initiated. If and when there is an amendment to the special statute conferring the jurisdiction on the High Court, the same can be transferred to a Tribunal. It may be further noted that wholesale transfer of the proceedings in relation to the subject matter of the enactment has been validated by the Supreme Court in the Madras Bar Association s case (2010 (5) TMI 393 - SUPREME COURT OF INDIA). True and correct interpretation of Section 434(1)(c) of the 2013 Act - Held that - The appellants have no case, as the words used in Section 434 (1)(c), preceding the word including , are all proceedings under the Companies Act, 1956 . Hence, the axiomatic conclusion has to be that anything and everything under the Companies Act, 1956 is intended to be included. Reading the words in an exhaustive sense would also lead to an interpretation that proceedings under Sec. 397 to 405 of the 1956 Act would come within the fold of all proceedings under the Companies Act, 1956 used in Section 434(1)(c) of the 2013 Act. As come to the irrefutable conclusion that including in Section 434 (1)(c) is extensive and expansive and not restrictive in nature. Ergo, Section 434(1)(c) of the 2013 Act that states all proceedings under the Companies Act 2013 including proceedings relating to . would include all matters, without any exception, pending before the District Courts and High Court and all such matters would have to be transferred to the NCLT. Whether Section 68 of the Amendment Act, 1988 continues to subsist after coming into force of Section 434 (1)(c) of the 2013 Act - Held that - preamble of the 2013 Act that states an Act to consolidate and amend the law relating to companies as also Section 1, sub-section 4(a) of the 2013 Act that states that the provisions of this Act shall apply to companies incorporated under this Act or under any previous company law leads me to the conclusion that the legislature intended to bring all matters under the gambit of the new enactment. It is also to be noted that Section 434(1)(c) of the 2013 Act, in no unspecific terms, directs transfer of all proceedings of the Companies Act, 1956 to the NCLT. As I have already held that Section 434(1)(c) deals with all proceedings under the 1956 Act, there is a clear inconsistency between the said provision and Section 68 of the Amendment Act, 1988. Following the principles enunciated in the Apex Court judgments discussed above, I am bound to hold that Section 68 has been impliedly repealed. Having answered the four issues, it is of the opinion that the issue raised by Mr. Pal with regard to taking aid of the notes on clauses need not be gone into in great detail as I have already held above that Section 434(1)(c) is absolutely lucid and unambiguous. Furthermore, it is clear that the removal of doubts or difficulties in the present case does not contradict the main provision in any manner whatsoever. The moment a new enactment comes into the statutory books, dealing with the same subject matter and specifically dealing with the same issue, and the transitional provision becomes inconsistent with the new enactment, the transitional provision has to go due to repugnancy. As held in (c) above, Section 434(1)(c) deals with all proceedings under the 1956 Act. Therefore, there is a clear inconsistency between the said provision and Section 68 of the Amendment Act, 1988. Consequentially, since the transitional provision is inconsistent with the new provision, it is impliedly repealed.

Summary

Issues Involved:
1. Ouster of the jurisdiction of the High Court in relation to company matters.
2. Whether parties to a lis can insist on continuing their dispute in the forum the same was initiated.
3. Interpretation of the terms "all" and "including" in Section 434(1)(c) of the Companies Act, 2013.
4. Continuation of Section 68 of the Amendment Act, 1988 after the coming into force of Section 434(1)(c) of the Companies Act, 2013.

Detailed Analysis:

First Issue:
The court held that the jurisdiction of the High Court in company matters, conferred by the Companies Act, 1956, can be ousted by an amendment to the said legislation. This ouster need not be express as it is not a civil jurisdiction under the Code of Civil Procedure, 1908. The court cited various judgments to support this view, emphasizing that the jurisdiction conferred by a special act can always be taken away by an amendment.

Second Issue:
The court ruled that the choice of forum is a matter for the legislature to decide, not the parties. It referred to the judgment in *Gajula Rajaiah v. State of A.P.* which stated that change of forum is procedural and does not affect substantive rights. The court also cited the Delhi High Court's judgment in *ATV Projects (India) Ltd. v. Union of India* and the Supreme Court's decision in *Union of India v. Madras Bar Association*, which validated the wholesale transfer of company law matters to tribunals when a new forum is created by the legislature.

Third Issue:
The court interpreted the terms "all" and "including" in Section 434(1)(c) of the Companies Act, 2013, as expansive and not restrictive. It emphasized that the legislature's intent was to transfer all proceedings under the Companies Act, 1956, to the NCLT. The court analyzed various judgments, including *South Gujarat Roofing Tiles Manufacturing Association v. State of Gujarat* and *N.D.P. Namboodripad (Dead) By Lrs. v. Union of India*, to conclude that "including" is used in an extensive manner in this context.

Fourth Issue:
The court held that Section 68 of the Amendment Act, 1988, has been impliedly repealed by Section 434(1)(c) of the Companies Act, 2013. It cited the Supreme Court's judgment in *Union of India v. Filip Tiago De Gama of Vedem Vasco De Gama* which stated that transitional provisions are temporary and become spent when the new enactment dealing with the same subject matter comes into force. The court also referred to *Britnell v. Secretary of State for Social Security* and *State of Kerala v. Mar Appraem Kuri Company Limited* to support this view.

Conclusion:
The court upheld the judgment of the Single Judge, directing the transfer of all company matters to the NCLT. The appeal was disposed of with no order as to costs.