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2017 (3) TMI 823 - Tri - Companies LawPermission for withdrawing the suit with liberty to file a fresh suit - proviso to section 634A of the Companies Act, 1956 provides that the said section shall not apply on or after the commencement of the Companies (Second Amendment) Act, 2002 and he claims that he has filed the Company Petition under provisions of Section 634A of the Companies Act, 1956 - Held that - Petitioner s claim that he had filed the petition under Section 634A of the Companies Act, 1956, which was effective only till the implementation of the Companies (Second Amendment) Act, 2002. Since Companies (Second Amendment) Act, 2002 was never implemented and corresponding provisions of Section 634A of the Companies Act, 1956 is Section 465 of the Companies Act 2013, which has been repealed with certain enactments and savings. As per provisions of savings clause of Section 465 of the Companies Act, 2013 Part IXA of the Companies Act, 1956 shall be applicable mutatis mutandis in a manner as if the Companies Act, 1956 has not been repealed. Therefore, the ground which the petitioner has taken, that he is withdrawing the petition because he has filed the petition under Section 634A of the Companies Act, 1956, which has become ineffective on the ground of implementation of 2013 Act, is incorrect. It is also true that a person is entitled to withdraw a petition, but the ground which the petitioner has taken and on which he has sought liberty to file fresh petition is not justified. Therefore, there is no justification for allowing the petitioner to withdraw this petition with liberty to file fresh petition. The prayer of the petitioner for withdrawal of Company Petition deserves to be allowed.
Issues:
1. Permission to withdraw C.P.No. 285/2013 and refile under Companies Act, 2013. 2. Interpretation of Section 634A of the Companies Act, 1956. 3. Applicability of Companies (Second Amendment) Act, 2002. 4. Comparison of Section 634A of the Companies Act, 1956 with Section 465 of the Companies Act, 2013. 5. Consideration of withdrawal of the suit under Order XXIII, Rule 1. Analysis: 1. The petitioner sought permission to withdraw C.P.No. 285/2013 and refile under the Companies Act, 2013 due to the dissolution of the Company Law Board and the transfer of matters to the National Company Law Tribunal. The petitioner claimed that Section 634A of the Companies Act, 1956, under which the petition was filed, became ineffective after the Companies (Second Amendment) Act, 2002. However, the Tribunal clarified that the Companies (Second Amendment) Act, 2002 was never implemented, and the corresponding provision in the Companies Act, 2013, Section 465, has been repealed with savings clause, allowing the application of Part IXA of the Companies Act, 1956. 2. The Tribunal delved into the details of Section 634A of the Companies Act, 1956, which pertained to the enforcement of orders by the Company Law Board. The provision stated that it would not apply after the commencement of the Companies (Second Amendment) Act, 2002. However, since the Companies (Second Amendment) Act, 2002 was never enforced and was subsequently repealed, the Tribunal concluded that Section 634A was applicable until the implementation of the Companies Act, 2013. 3. The Tribunal clarified that the Companies (Second Amendment) Act, 2002 was repealed by the Companies Act, 2013, and as the provisions of Section 465 of the Companies Act, 2013 had not been notified, it was presumed that the Companies Act, 1956 had not been repealed. Therefore, the petitioner's argument that the petition was filed under an ineffective provision was deemed incorrect, as the relevant provisions were still applicable. 4. By comparing Section 634A of the Companies Act, 1956 with Section 465 of the Companies Act, 2013, the Tribunal highlighted that the latter had been repealed with certain enactments and savings. The Tribunal emphasized that the petitioner's justification for withdrawal based on the supposed ineffectiveness of Section 634A was unfounded, as the provisions of the Companies Act, 1956 were still valid until the enactment of the Companies Act, 2013. 5. In considering the withdrawal of the suit under Order XXIII, Rule 1, the Tribunal referred to a case law from the Hon'ble Calcutta High Court, emphasizing the importance of exercising discretion cautiously. The Tribunal concluded that the petitioner's grounds for withdrawal were not justified, and hence, the petition was allowed to be withdrawn without liberty to file a fresh petition. Conclusion: The Tribunal allowed the petitioner to withdraw C.P.No. 285/2013 without the liberty to file a fresh petition, based on the incorrect justification provided by the petitioner regarding the ineffectiveness of Section 634A of the Companies Act, 1956. The Tribunal clarified the applicability of the relevant provisions and emphasized the preservation of rights under the Companies Act, 1956 until the enactment of the Companies Act, 2013.
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