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TMI Blog1956 (9) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... creditors of the company filed M.P. No. 4 of 1953 in the Trichur District Court to wind up the company compulsorily in view of its involved circumstances. On 4th January, 1954, the District Court passed orders to wind up the company. Liquidators were appointed. The working of the mills was entrusted to the State Government under certain conditions as a provisional measure pending the liquidation proceedings as it was considered that that would facilitate the affairs of the company but there was not much progress in framing a scheme and the court directed sale by public auction of the company's assets. Then on 7th June, 1955, the present petitioner filed M.P. No. 973 of 1955 purporting to be one under section 153 of the Indian Companies Act of 1913 and rule 52 of the Rules framed by this High Court under the said Act for sanction of an arrangement between the company and its creditors. It was prayed that the court might order the convening of a meeting of the creditors of the company by the official liquidators for the consideration of the scheme proposed and pending the meeting the sale of the assets of the company directed to be conducted might be stayed. The court allowed the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransferred to this court. The petition is opposed by some of the parties to whom notice had been ordered. The objections of the party impleaded as per order on C.M.P. 292 of 1956 are as follows : He is a shareholder of the Sitaram Spinning and Weaving Mills Ltd., having been one of its directors for a long time. The prayer for transfer cannot stand as the provisions of the Companies Act 1 of 1956 relating to winding up of companies did not apply to pending proceedings and the Act did not deprive the District Court of Trichur of its jurisdiction to deal with the winding up proceedings pending before it. He had filed M.P. 2763 of 1956 in the District Court claiming that section 153 of the Indian Companies Act of 1913 would not apply to the instant case. No orders had been passed upon that. Before the question of applicability of that section is decided the prayer to enforce orders arising under section 391 of the Companies Act of 1956 cannot be entertained. Section 391 was not applicable to the proceedings in question. Before the sanctioning of a scheme under section 153 of the Companies Act of 1913 the court should be satisfied of certain conditions which have not been complied wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the District Courts may be empowered to exercise the jurisdiction vested in the High Court under the Act by a notification by the Central Government except with regard to jurisdiction conferred under the Act under the specific sections mentioned in sub-section (2)( a ) and with regard to companies with a paid-up capital of not less than one lakh of rupees as contemplated under sub-section (2)( b ). In the present case the company which is under liquidation is one having more than a paid-up share capital of one lakh of rupees and hence it comes under sub-section (2)( b ). So, if section 10(2)( b ) applies to pending liquidation proceedings, in view of the provisions in the said sub-section itself it is clear that the Trichur District Court has no jurisdiction to continue the liquidation proceedings. Then there is no need of going into the applicability of sub-section (2)( a ). So I will first of all deal with the applicability of sub-section (2)( b ). What is urged on behalf of the opposing counter-petitioner is that section 647 of the Companies Act of 1956 clearly shows that pending proceedings are not affected by the new provisions in the Act. The said section is as follows : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Indian Companies Act, 1882, shall be deemed to remain in full force." Counsel for the petitioner pointed out that in section 647( ii ) of the present Act it is not said that the Act of 1913 shall be deemed to remain in full force with regard to pending proceedings whereas in section 284 of the Act of 1913 it was specifically stated that the Act prior to that would apply. This difference in the drafting of the section, according to me, does not affect the legal effect of this sub-clause. Section 647(1) says that the sub-section (7) of section 555 shall apply with regard to the amounts paid into the companies liquidation accounts before or after such commencement. That makes it clear that that is the only sub-section in the Act of 1956 which would apply to pending proceedings. Khiali Ram v. People's Bank of India Ltd. AIR 1915 Lah. 415 and Daulat Rai v. Wazir Chand AIR 1914 Lah. 511 , deal with the effect of section 284 of the Companies Act of 1913. It was held that the said section clearly vested the District Courts with jurisdiction to continue the liquidation proceedings started before the coming into force of the Act of 1913. The following observations in Daulat R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and whether pending actions were intended to be affected by it. The question finally resolves itself into a matter of construction. In my judgment express words are not essential in order that a statute may apply to pending actions or proceedings. It is enough if that intention can be inferred, and for ascertaining the intention of the Legislature not only the meaning of words used in the enactment but also the object of the enactment must be kept in view. In fact the object of the enactment as gathered from its provisions would be a very important matter. In King v. General CIT for Southampton [1916] 2 K.B. 249., Lord Reading C.J. laid down the law thus: 'I cannot accept the contention of the applicant that an enactment can only take away vested rights of action, for which legal proceedings have been commenced, if there are in the enactment express words to that effect. There is no authority for this proposition, and I do not see why in principle it should be the law. But it is necessary that clear language should be used to make the retrospective effect applicable to proceedings commenced before the passing of the statute.' In Quilter v. Mapleson [1883] 9 Q.B.D. 672 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 1953, comes under the purview of sections 391 and 392 of the present Act and hence in view of section 10(2)( a ) whatever be the powers of the District Court to continue the liquidation proceedings initiated prior to the coming into force of the present Act it has no power at all to deal with matters coming under section 391 as in the Act it is specifically stated that with regard to such matters the High Court alone has jurisdiction and no delegation is possible. Section 391 deals with "power to compromise or make arrangements with creditors and members." Sub-section (1) is as follows : "Where a compromise or arrangement is proposed ( a )between a company and its creditors or any class of them ; or ( b )between a company and its members or any class of them; the court may, on the application of the company or of any creditor or member of the company, or in the case of a company which is being wound up, of the liquidator, order a meeting of the creditors or class of creditors, or of the members or class of members, as the case may be, to be called, held and conducted in such manner as the court directs." This provision is identical with section 153(1) of the Companies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n M.P. No. 933 of 1953 does not satisfy the requirements of the Rules framed by this High Court under the Companies Act of 1913 with regard to section 153 and hence cannot be dealt with as an order under that section also has no force at all. Here the question is not whether the particular order is in any way vitiated. What is to be considered is only as to under what section the order was passed. As pointed out before, the said order must be considered as one falling under section 153 of the Act of 1913. What is urged then on behalf of the petitioner is that when such is the case section 392 and section 10 of the present Act clearly affect the further implementation of the order approving the arrangement and in view of the provisions of the same, the District Court has no jurisdiction in the matter. Section 392 of the present Act is as follows : " 392. Power of High Court to enforce compromises and arrangement, etc : (1)Where a High Court makes an order under section 391 sanctioning a compromise or an arrangement in respect of a company, it ( a )shall have power to supervise the carrying out of the com promise or arrangement; and ( b )may, at the time of making such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chief Justice observes as follows : "For the reasons stated above I am satisfied that the doubts that I entertained when these applications came before me as the company judge were well founded. The conclusions I have come to may now be summarised : (1)When a scheme is sanctioned by the winding up court in course of winding up, the court may stay the winding up except for the purpose of giving effect to the scheme. In such a case the court may exercise the powers of the winding up court in matters arising under or out of the scheme as matters arising in winding up ; (2)When a scheme is of the kind mentioned in section 153A or section 153B of the Companies Act and is sanctioned even otherwise than in course of winding up, even then the court may by the order sanctioning the scheme or by any subsequent order make provision for all or any of the matters mentioned in the several clauses of sub section (10) of section 153A or section 153B ; (3)Where a scheme which is not of the kind mentioned in section 153 A or section 153B is sanctioned otherwise than in the course of winding up, the court sanctioning the scheme has no further seisin on the scheme and has no jurisdiction or po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idental or consequential orders. It will now be for the legislature to consider the desirability of amending section 153 by introducing a sub-section on the lines of clause ( f ) of sub-section (1) of section 153A." Now section 392 of the present Act specifically vests the High Court with the power of dealing with matters arising out of a scheme approved under section 391 corresponding to section 153 of the Act of 1913. The difficulty pointed out in the East Punjab case was only with regard to the absence of a provision vesting the court which passed the scheme when it is not during winding up proceedings to deal with the matters arising out of the sanctioning of such a scheme. As pointed out there, even under the Act of 1913 the jurisdiction of a court to deal with matters arising out of orders sanctioning an arrangement or a scheme during winding up proceedings was recognised. This decision makes it clear why sub-section (3) of section 392 was introduced in the present Act of 1956. That was intended only to vest in the High Court the jurisdiction to deal with incidental matters arising out of an order sanctioning a scheme by a District Court or a High Court as the case may be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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