1950 (10) TMI 6 - HC - Companies Law

Summary

Issues:
1. Jurisdiction of the District Court to entertain a petition for winding up a company under the Indian Companies Act.
2. Validity of the proviso to Section 3 of the Indian Companies Act as delegated legislation.

Analysis:
1. The petition involved a challenge to the jurisdiction of the District Court to entertain a winding-up petition of a company. The applicant contended that the District Court lacked jurisdiction, while the District Judge held otherwise. The jurisdiction of the High Court in company matters is conferred by Section 3 of the Indian Companies Act, with a proviso allowing the Central Government to empower District Courts to exercise such jurisdiction for companies within their districts. The argument that the jurisdiction conferred by a 1916 notification had lapsed due to subsequent changes was rejected by both the District Judge and the High Court.

2. The main contention raised in the petition was the validity of the proviso to Section 3 of the Indian Companies Act, alleging it constituted delegated legislation. The applicant relied on a previous court decision to support this argument. The court analyzed a similar situation in a prior case concerning the Bombay City Civil Court Act, where a specific section was deemed invalid due to delegating the power to invest jurisdiction to the executive. However, in the current case, the court distinguished the situation by highlighting that the Legislature had indeed applied its judgment to empower District Courts with jurisdiction under the Companies Act. The court concluded that the proviso to Section 3 did not amount to delegated legislation as it established the policy of investing District Courts with jurisdiction, leaving the executive to implement it through notifications.

In the final judgment, the High Court dismissed the revision application, upholding the jurisdiction of the District Court to entertain the winding-up petition. The court affirmed the validity of the proviso to Section 3 of the Indian Companies Act, emphasizing that it did not constitute delegated legislation. The District Judge was directed to expedite the disposal of the petition before them.