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TMI Blog2002 (10) TMI 696X X X X Extracts X X X X X X X X Extracts X X X X ..... favour of Mr. David A. Tait has been adjudicated for payment of Stamp Duty of Rs. 110 which has been deposited in the office of the Collector of Stamps, New Delhi. The objection, therefore, has no merit. 3. Mr. Nayar has thereafter contended that on a perusal of its sundry clauses, the Power of Attorney does not empower or authorise Mr. Tait to file a suit or application or petition. It is his contention that there ought to have been a clause which specifically empowers the Attorney to institute a winding-up petition, in contradistinction to other acts such as defending such actions. In this regard Mr. Nayar has relied on the decision in Shantilal Khushaldas & Bros. (P.) Ltd. v. Smt. Chandanbala Sughir Shah [1993] 77 Comp. Cas. 253 . In that case the Learned Single Judge had rejected the argument that the class of persons who can file a petition under section 439 cannot be represented by their authorised agents or duly constituted Attorneys. In the opinion of the Learned Judge, the reference to 'court' in rule 1 of Order III of the Code of Civil Procedure includes the Company Court. Having held so, it was held that proceedings under section 433 of the Companies Act cannot be equat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e corporation who is able to depose to the facts of the case might sign and verify on behalf of the company. Reading Order 6 rule 14 together with Order 29 rule 1 of the Code of Civil Procedure it would appear that even in the absence of any formal letter of authority or power of attorney having been execute a person referred to in rule 1 of order 29 can, by virtue of the office which he holds, sign and verify the pleadings on behalf of the corporation. In addition thereto and de hors Order 29 rule 1 of the Code of Civil Procedure, as a company is a juristic entity, it can duly authorise any person to sign the plaint or the written statement on its behalf and this would be regarded as a sufficient compliance with the provisions of Order 6 rule 14 of the Code of Civil Procedure. A person may be expressly authorised to sign the pleadings on behalf of the company, for example by the Board of Directors passing a resolution to that effect or by a power of attorney being executed in favour of any individual. In absence thereof and in cases where pleadings have been signed by one of its officers a corporation can ratify the said action of its officer in signing the pleadings. Such ratific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Traders Bank Limited v. Kwick Travels Pvt. Ltd. reported as [1988] 2 Com. L.J. 56, that case does not help the respondent. That was a case where the suit had been filed earlier and during the pendency of the suit the petition for winding up was filed by the petitioner. In fact the Court itself had acknowledged as correct the views expressed in the case of Central Bank of India v. Sukhani Mining & Engg. Industries (P.) Ltd. [1977] 47 Comp. Cas. 1 wherein Patna High Court had come to the conclusion that the winding up petition which had already been filed would not be stayed merely because the creditor had filed a suit against the company. It was observed in that case as under : There is no provision in the Act which ousts the jurisdiction of the Court in continuing and deciding the winding up proceeding in spite of the fact that there is a suit by creditor for the realisation of his debt. If the Legislature had intended that on account of the fact that a suit or proceeding has been filed in another Court, the court in seisin of the winding up application will stay the winding up proceeding on that ground alone, there would have been a provision to that effect in the Companies Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (except the Supreme Court, and a High Court exercising jurisdiction under articles 226 and 227 of the Constitution) in relation to the matters specified in section 17. 34. Act to have overriding effect.-(1) Save as provided in sub-section (2), the provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act. (2) The provisions of this Act or the rules made thereunder shall be in addition to, and not in derogation of, the Industrial Finance Corporation Act, 1948 (15 of 1948), the State Financial Corporations Act, 1951 (63 of 1951), the Unit Trust of India Act, 1963 (52 of 1963), the Industrial Reconstruction Bank of India Act, 1984 (52 of 1984) and the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986), and the Small Industries Development Bank of India Act, 1989 (39 of 1989)." 9. The facts in Allahabad Bank's case (supra) were that the claim of Allahabad Bank against M.S. Shoes (East) Company Limited had been decreed by the Debt Recovery Tribunal under section 19 of the RDB Act, in respect of which it in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction of the Tribunal and the Recovery Officer and no other court or authority, much less the civil court or the Company Court can go into the said questions relating to the liability and the recovery except as provided in the Act. Point 1 is decided accordingly." 10. The Hon'ble Supreme Court reiterated the view expressed by it earlier in Damji Valji Shah v. Life Insurance Corpn. of India AIR 1966 SC 136. In that case it had observed that "in view of section 41 of the Life Insurance Corporation of India's Act, the Company Court has no jurisdiction to entertain and adjudicate upon any matter which the Tribunal is empowered to decide or determine under that Act". This finding was recorded even though there is no provision in the Life Insurance Corporation of India Act akin to section 34 of the RDB Act giving overriding effect to those statutory provisions. The Hon'ble Supreme Court gave its imprimatur to the view of some High Courts, which had treated the Companies Act as a general statute, and the RDB Act as a special statute overriding the general statute. The Apex Court overruled the decision of this Court in Mayur Syntex Ltd. v. Punjab & Sind Bank [1997] 67 DLT 836 and of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of inability to pay its debts could be drawn against the Company. After holding that Allahabad Bank's case (supra) could not be understood to have held that merely because the petitioning creditor before the Company Court is a financial institution or because an application has already been filed before the Debt Recovery Tribunal under the provisions of the RDB Act, the petition for winding up would not be maintainable. Section 434 of the Companies Act would not have been mentioned had the Court not come to the conclusion, after a preliminary adjudication or consideration of the facts of the case, that the Respondent Company was unable to pay its debts - Wimco Ltd. v. Widvink Properties (P.) Ltd. [1996] 86 Comp. Cas. 610 . A Division Bench of this Court in Gautam Electric Motors v. Firm Shantilal ILR 1969 Delhi 708, has opined "that the word 'neglected' used in section 434(1)(e) is not necessarily equivalent to 'omitted'. It really means 'omitted' to pay without reasonable cause". 12. The following observations in Amalgamated Commercial Traders (P.) Ltd.'s case (supra) are apposite : "It is well-settled that 'a winding up petition is not a legitimate means of seeking to enfor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt the jurisdiction to wind up a company, inter alia, under clause (e), if the company is unable to pay its debts. Section 434 creates a statutory fiction that if the creditor has issued a prescribe notice to the company to pay up the debt and the company fails to do so or fails to secure the said debt within the prescribed time, the company shall be deemed to be unable to pay its debt. Once such a contingency has arisen, and the statutory fiction has come into play, it is perfectly open to the Company Court to entertain the petition under section 433(e). 6. The argument of Mr. Shah that what could be done by the Company Court can equally be done by the DRT under the RDB Act is erroneous. There is no provision in the RDB Act empowering the Tribunal to wind up a company which owes the debt to the applicant financial institution. The jurisdiction of the Tribunal under the RDB Act is only to adjudicate the liability of the respondent before it, ascertained the 'debt' due to the bank/financial institution and issue a certificate for recovery thereof. Once such a certificate of recovery is issued to the Recovery Officer, the Recovery Officer is empowered to execute the same in the mann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y been passed by the Debt Recovery Tribunal. In such cases the Company Judge would immediately proceed to the second limb of his duties under sections 433 and 434 of the Companies Act, that is post-admission of the petition. At this stage he would appoint a Liquidator and decide on the distribution of the proceeds of the Company. It is only in the second limb of jural activity that an actual difference between recovery proceedings and winding-up proceedings becomes manifest. In the Viral Filaments Ltd.'s case (supra) the Division Bench had meaningfully used the phrase "on first principles" in paragraph 5 of its judgment, extracted above, once adjudication of the disputes has been removed from the purview of Company Court and has been reposited with the Debt Recovery Tribunal, it is inappropriate, except in exceptional cases, for the Company Judge to exercise its powers under section 433 of the Companies Act. This is the only manner in which I can understand the pronouncements of the Hon'ble Supreme Court in Allahabad Bank's case (supra). The Division Bench has also noticed the pronouncements of the Apex Court in Haryana Telecom Ltd. v. Sterlite Industries (India) Ltd. [1995] SCC 68 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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