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TMI Blog1980 (11) TMI 136X X X X Extracts X X X X X X X X Extracts X X X X ..... s ordered to be wound up. It has been alleged that the respondents have intentionally not handed over the records and books of the company and thus have violated the provisions of section 538 of the Act. An objection has been taken on behalf of the respondents that this court has no jurisdiction to try the complaint and in fact the complaint should have been filed before the Judicial Magistrate Ist Class. This matter came up before me sitting singly and I referred the same to a larger Bench for the reasons recorded in the reference order. This is how the question whether this court has the jurisdiction to try the complaint filed by the official liquidator against the respondents has been placed before us. With a view to appreciate the respective contentions raised by the learned counsel for the parties, the relevant provisions of the Act may be referred to. Section 2(11) of the Act is as follows: "2(11) "the Court" means,-- (a)with respect to any matter relating to a company (other than any offence against this Act), the court having jurisdiction under this Act with respect to that matter relating to that company, as provided in section 10; (b)with respect to any offence agains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms by or against any of its branches in India); (c)any application made under section 391 by or in respect of the company; (d)any question of priorities or any other question whatsoever, whether of law or fact which may relate to or arise in course of the winding-up of the company; whether such suit or proceeding has been instituted or is instituted, or such claim or question has arisen or arises or such application has been made or is made before or after the order for the winding-up of the company, or before or after the commencement of the Companies (Amendment) Act, 1960. (3) Any suit or proceeding by or against the company which is pending in any court other than that in which the winding-up of the company is proceeding may, notwithstanding anything contained in any other law for the time being in force, be transferred to and disposed of by that court. (4) Nothing in sub-section (1) or sub-section (3) shall apply to any proceeding pending in appeal before the Supreme Court or a High Court". The relevant portion of section 454(5A) is reproduced hereunder : "(5A) The Court by which the winding-up order is made or the provisional liquidator is appointed, may take cognizance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been vested in this court under section 10 of the Act, whereas jurisdiction with respect to any offence against the Act has been vested in the Magistrate, 1st Class, but the fact remains that the provision of section 446 is a special provision, which has vested the High Court with jurisdiction to entertain or dispose of any suit or proceeding by or against the company. The prosecution sought to be launched by the official liquidator on behalf of the company is certainly a proceeding by the company against the acts of the office-bearers. It has been vehemently contended by Mr. Bhagirath Dass, learned counsel for the respondents, that "any proceeding" would not include criminal proceedings and for this he relies on a Full Bench decision of the Lahore High Court in Smt. Shakuntala v. Peoples' Bank of Northern India Ltd. [1941] 11 Comp. Cas. 309 (Lah.); AIR 1941 Lah. 392. This judgment, in our opinion, is not of much help for determining the present question. In that case, the Full Bench held that the expression "legal proceeding" used in section 171 of the 1913 Act, which provision is analogous to the provisions of section 446 of the Act, means a proceeding in the court of first inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dation court under section 446 of the Act. The ratio of the judgment is that the provisions of the I.T. Act are a complete code by themselves for determining the income-tax payable by an assessee and thus the proceedings before the I.T. authorities under the said Act cannot be held to be proceedings as included in the "legal proceeding" as provided under sub-section (2) of section 446 of the Act. Their Lordships observed that the said words would include all proceedings where the court has jurisdiction to try the same. As already observed the jurisdiction to try causes with respect to any matter relating to the company vests in the High Court. The scheme of the Act would suggest that the provisions of sub-section (2) of section 446 of the Act have been enacted to clothe the High Court with wide jurisdiction to entertain and dispose of any suit or proceeding by or against the company when a winding-up order has been passed. It is, therefore, not correct to contend that this provision would not clothe this court with the jurisdiction to try criminal proceedings if it so chooses. It may be observed that it is the discretion of this court to transfer or allow the institution of the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (4) of section 454 of the Act are procedural, non-compliance of which is an offence under sub-section (5). Sub-section (5A) of the Act was enacted by the Legislature to give special jurisdiction to the High Court for the reasons enumerated above. Provisions of section 446(2) of the Act are general in character and deal with the vesting of jurisdiction to entertain or dispose of any suit or proceeding by or against the company. The provisions of section 454(5A) of the Act are special in nature, in addition to the jurisdiction vested in the High Court under the provisions of sub-section (2) of section 446 of the Act, which are general in nature. This aspect of the case has been overlooked in R. C Abrol's case [1977] 47 Comp. Cas. 537 (Delhi). It was, however, observed in that case that the High Court could take cognizance of the offence only under section 194 of the Code of Criminal Procedure, 1898. It may be observed that the provisions of section 194 of the old Code have been deleted in the Code of Criminal Procedure, 1973. There is no provision analogous to the provisions of section 194 of the old Code. That being the position, the inherent powers of the High Court as enshrined i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en the company has been ordered to be wound up. In such cases, the winding-up court may be the only appropriate court which could determine the disputes more appropriately. It, of course, goes without saying that if the jurisdiction had not been vested in the High Court under sub-section (2) of section 446 of the Act, in that case, in view of the provisions of section 2(11) read with section 10 of the Act, it had to be held that all the offences under the Act had to be tried by the Magistrate and not by any other court, but a special provision has been enacted in the background of the scheme of the Act to clothe the High Court with jurisdiction to entertain and dispose of any suit or proceeding by or against the company. Reference may also be made to the provisions of r. 9 of the Companies (Court) Rules, 1959, wherein it has been provided that nothing in the Rules shall be deemed to limit or otherwise affect the inherent powers of the court to give such directions or pass such orders as may be necessary for the ends of justice or to prevent abuse of the process of the court. This rule also saves the inherent power of the court to pass appropriate orders which may be necessary for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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