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TMI Blog2000 (3) TMI 1026X X X X Extracts X X X X X X X X Extracts X X X X ..... e suits were re-numbered as T.A. No. 256 of 1996 and T.A. No. 45 of 1996 respectively. 2. Certain facts, which are relevant to the issue, are noted below : In 1984, one Ajit Kumar Kasliwal filed a winding-up petition against the said Company in Patna High Court and it was numbered as Company Petition No. 3 of 1984. Prior to the initiation of winding-up proceedings, both the S.B.I and U.B.I. granted certain credit facilities to the said Company and as the said Company failed to repay its dues the aforesaid two Banks filed two separate suits for recovery of their amount allegedly outstanding. Sahu Jain Limited, the guarantor of the said Company and the appellant herein has been made a defendant in both the suits. By an order dated 22-5-1986 the Company Court passed an order directing winding-up of the said Company. When the winding-up proceeding was pending before the Company Court, the workmen of the said Company filed a writ petition under article 32 of the Constitution of India before the Hon ble Supreme Court of India and the said petition was numbered as Writ Petition (c) No. 5222 of 1985. In the said petition by an order dated 24-10-1989 the Hon ble Supreme Court st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said Tribunal and the Hon ble Company Judge by an order dated 22-8-1997 gave leave to the Banks in question for proceeding with T.A. No. 256 of 1996 and T.A. No. 45 of 1996 before the said Tribunal at Calcutta. It is an admitted position that the said leave was obtained by the Banks without any notice to the appellant. It is further stated that the S.B.I. filed an application before the said Tribunal at Calcutta for proceeding with T.A. No. 256 of 1996 and the appellant filed an affidavit in opposition to the said application, inter alia , contending that the said Tribunal has no jurisdiction in the matter. The said Tribunal by an order dated 4-3-1998 rejected the objection of the appellant in view of the order passed by the learned Company Judge of this Court dated 22-8-1997. Against the said order dated 4-3-1998 passed by the said Tribunal, the appellant filed a revision application before the Hon ble Calcutta High Court and the Hon ble Calcutta High Court by an order dated 22-4-1998 dismissed the said revision application of the appellant in view of the order of the Company Judge of Patna High Court. 3. In the background of these facts, the appellant filed an applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be sold without permission of the Company Court, in the event the suits are decreed in favour of the Banks. 6. The order of the learned Company Judge dated 30-10-1998 was far more detailed whereby His Lordship held that there is no justification for recalling the earlier order dated 22-8-1997. 7. Assailing the order dated 30-10-1998 of the learned Company Judge, the learned counsel for the appellant raised the following broad points : ( i )The judgment and order dated 30-10-1998 passed by the learned Company Judge refusing to recall the order granting leave has been passed without proper appreciation of the peculiar facts of this winding-up proceeding in which the Hon ble Supreme Court intervened on the basis of a writ petition filed by the workers and while disposing of the said writ petition, Supreme Court gave certain directions as a result of which the learned Company Judge should have proceeded to adjudicate the Bank s claim in the suits in this winding-up proceeding itself. ( ii )On a harmonious construction of the provisions of the said Act, and the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (the RDBFI Act) and also the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the leave and that the provisions of the Companies Act and that of RDBFI Act are not in conflict with each other but they operate in different fields. 11. These being the rival contentions, this Court proposes to examine each of them separately. 12. Before proceeding to deal with the rival contention this Court proposes to note the findings made by the learned Company Judge in His Lordship s Order dated 30-10-1998 against which the instant appeal is directed. 13. From the facts narrated by the learned Judge in the said order, it appears that in the order of the Hon ble Supreme Court dated 18-10-1995 disposing of the writ petition under article 32, a direction was given for resumption of winding-up proceeding by the learned Company Judge of Patna High Court. Pursuant to that direction, the Company Judge passed on 24-11-1995 the winding-up order in respect of the said Company and the Official Liquidator was appointed. It also appears that the attempts to revive the said Company failed and were set at rest on 23-5-1997. Noting these facts, the learned Company Judge considered the order of the Hon ble Supreme Court dated 18-10-1995 by which, according to the learned Judg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant has been impleaded in the suits filed by the Banks and decree has also been prayed for against the appellant by the Banks. Therefore, the appellant has right to take a defence in the suits. Since the appellant has a right to defend the suit, the appellant has also a right to raise objection and be heard in support thereof in connection with any question about deciding the issue of forum in which the claim against the appellant by the Bank ought to be adjudicated. It is well known that the guarantor s contract can be invoked when the claims against the principal debtor fail. 16. Against the background of these facts, it is difficult for this Court to hold that the appellant has no locus standi to file the instant proceeding for revocation of leave which was granted by the learned Company Judge without hearing the appellant. 17. The next question which is inextricably linked up with the question of locus is whether the appellant has a right of being heard when leave has been applied for by the Banks from the Company Judge. 18. In this connection, reference may be made to rule 117 of the Companies (Court) Rules, 1959. Rule 117 has been framed in connection wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oard v. Taramani Devi AIR 1992 SC 61 ( See paragraph 5). 24. In the instant case, there is an express statutory requirement of hearing and admittedly the appellant has not been heard while leave was granted. Therefore, the initial order of the learned Company Judge which was passed ignoring this statutory mandate suffers from an infirmity and the appellant has sufficient locus to complain against the same. 25. On a reference to the provisions of section 446 of the said Act, this Court finds that sub-section (2) of section 446 of the said Act also starts with a non obstante clause and as a result of the said clause, section 446(2) of the said Act has been given an overriding effect over any other law for the time being in force but the learned Company Judge has, in view of the provisions of section 34 of the RDBFI Act has held that sections 17 and 18 of that Act will have an overriding effect over section 446(2) of the said Act. 26. The ambit and purport of section 446 of the said Act has been considered in the context of the object and scope of RDBFI Act by the Hon ble Supreme Court in the case of Industrial Credit Investment Corpn. of India Ltd. v. Srinivas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are virtually faced with almost identical questions. 30. In answering those questions, the Hon ble Supreme Court traced the historical evolution and present setting of section 446(2) of the said Act in paragraph 8 of the said judgment. 31. The learned Judges of the Apex Court also took note of the provisions of sections 17 and 18 of the RDBFI Act in paragraph 10 of the judgment. Even after noticing the provisions of sections 17 and 18 of the RDBFI Act, the learned Judges of the Hon ble Apex Court did not hold that provisions of RDBFI Act bring about a total and automatic ouster of the jurisdiction of the Company Court under section 446(2) of the said Act, but held that that Company Court will have to exercise its jurisdiction depending on the facts of each case and there cannot be any strait-jacket formula. The principles have been succinctly put in paragraph 13 of the judgment and which are quoted below : "We are, therefore, of the view that the approach to be adopted in this regard by the company court does not deserve to be put in a strait-jacket formula. The discretion to be exercised in this regard has to depend on the facts and circumstances of each case. While ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urisdiction is not to be readily inferred. 33. For the reasons aforesaid this Court, with great respect to the learned Company Judge, cannot affirm His Lordship s views that in view of provisions of RDBFI Act even no application for leave is necessary and the suits are automatically transferred to the Tribunal. 34. This Court also, with respect, cannot sustain the view taken by the learned Company Judge about the directions of the Supreme Court in connection with the present winding-up proceeding. Those directions are contained in the reported judgment in the case of Workmen of Rohtas Industries v. Rohtas Industries [1996] 86 Comp. Cas. 1. 35. From a perusal of the said judgment it appears that the Hon ble Supreme Court has issued various directions in the said judgment and obviously those directions were aimed at an attempt by the Hon ble Supreme Court to revive the said Company but when the said attempt did not materialise it was only after on the order of the Hon ble Supreme Court in that judgment that winding-up proceeding before the Company Judge of Patna High Court was resumed. It is also a fact that when the Supreme Court was in seisin of the matter it stayed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jurisdiction under article 32 and possibly also under article 142 of the Constitution passes positive directions on the Company Court, those directions are binding on the Company Court and must be considered by the Company Judge. The provisions of section 18 of the RDBFI Act expressly save the jurisdiction of Supreme Court in its entirety. It is common ground that while passing the impugned order, the Hon ble Company Judge was considering the matter specified in section 17 of the RDBFI Act. 40. In the context of these statutory provisions, the Hon ble Company Judge s order to the contrary cannot be sustained. 41. One aspect was noticed by this Court. The impugned order of the learned Company Judge dated 30-10-1998 is appealable under section 483 of the said Act. But the appellant has filed this appeal as a Letters Patent Appeal. Since no objection has been taken on that score by the respondents, this Court is not called upon to decide that issue and specially when the said objection is technical in nature. 42. Therefore, considering the matters from all possible angles this Court cannot sustain the impugned order dated 30-10-1998 passed by the learned Company Judge. Th ..... 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