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TMI Blog2019 (2) TMI 1050X X X X Extracts X X X X X X X X Extracts X X X X ..... , on being satisfied that a non-banking financial company,- (a) is unable to pay its debt; or (b) has by virtue of the provisions of section 45-IA become disqualified to carry on the business of a non-banking financial institution; or (c) has been prohibited by the Bank from receiving deposit by an order and such order has been in force for a period of not less than three months; or (d) the continuance of the non-banking financial company is detrimental to the public interest or to the interest of the depositors of the company, may file an application for winding up of such non-banking financial company under the Companies Act, 1956. (2) A non-banking financial company shall be deemed to be unable to pay its debt if it has refused or has failed to meet within five working days any lawful demand made at any of its offices or branches and the Bank certifies in writing that such company is unable to pay its debt. (3) A copy of every application made by the Bank under subsection (1) shall be sent to the Registrar of Companies. (4) All the provisions of the Companies Act, 1956 relating to winding up of a company shall apply to a winding up proceeding initiated on the application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the RBI Act. By the nature of its business SIFCL is classified as RNBC, which receives deposits under any scheme/arrangements by way of contributions or subscriptions or by sale of units or certificates or other instruments or in any other manner. SIFCL was issued a certificate of registration for the said purpose under Section 45-IA of the RBI Act. The same is required for its business activities, which are to be conducted in compliance with the provisions of RBI Act and the directions, instructions, guidelines and circulars issued by RBI from time to time, either generally or specifically. 7. RBI caused inspection of SIFCL, at annual intervals, under Section 45-N of RBI Act. It was found that deposits taking activities of SIFCL were not in conformity with the prudent practice and RBI directions, guidelines etc. Since the viability of the business of the SIFCL was being negatively affected, RBI by various meetings and letters, in an around the year 2007, advised it to plan its alternate business and move out of RNBC model and complete such transition within a period of three years from 1.4.2007. SIFCL, though, initially agreed to move out of the business of acceptance of deposi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eedings. It shall not be construed as if we have stated so to be applicable in all cases. Because of the peculiar nature of the case, we are directing to be so done. We, therefore, direct that Respondent No.1 shall appear without any further notice before the designated authority of the Reserve Bank of India on 12.06.2008 when the matter shall be heard. It is open to Respondent No.1 to place such material on which it proposes to rely upon. Needless to say the authority shall consider all the relevant aspects of the case and pass a fresh order. Till the matter is disposed of afresh by the Reserve Bank of India, the order dated 04.06.2008 shall not be given effect to. At the same time, the interim protection given by the High Court to Respondent No.1 shall also not be operative. Since the entire matter is being disposed of in this appeal, there is no need for the High Court to deal with the writ petition. We make it clear that we have not expressed any opinion on merits. 6. The appeal is disposed of accordingly." 10. By the said order, Supreme Court required SIFCL to appear before RBI without further notice and permitted RBI to pass a fresh order after hearing SIFCL. In compliance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comply with all the requirements of the applicable provisions of the Reserve Bank of India Act and the directions, guidelines, instructions and circulars issued thereunder." 7. The RBI had by its letter of April 16, 2007, advised SIFCL to plan an alternate business and move out of the RNBC model and to complete the process of transition within a period of 3 years commencing from April 1, 2007. SIFCL did not give any positive plan for an exit which was satisfactory for over a year. This fact together with non-observance of various RBI's directions made the RBI to issue a show cause notice on May 9, 2008 to prohibit acceptance of further deposits by SIFCL. SIFCL has now submitted its difficulties in making an exit by 2010 and submitted a request for an orderly exit for RBI's consideration. 8. After a careful consideration of the present proposals of SIFCL and the assurances given by it to comply with the directions of the RBI, RBI passes the following fresh order in partial modification of its order of June 4, 2008. ORDER 9. In view of the above, on being satisfied that to protect the interests of depositors and in public interest, it is necessary and expedient so to do, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ensuring Annual General Meeting of the company and continue the said arrangement till such time as all depositors are repaid in full, and (c) appoint statutory auditors from the panel of auditors suggested by Reserve Bank of India at the ensuring Annual General Meeting of the company envisaged by August 31, 2008 and continue to appoint statutory auditors each year from the panel suggested by Reserve Bank of India till all depositors are repaid in full. The said undertaking of SIFCL shall form a part of this order. 11. A copy of this Order be served on SIFCL with instructions to comply with the Order. The attention of SIFCL shall be drawn to the provisions of Sections 45K(4), 58B and 58C of the RBI Act as to the consequences of not complying with this Order. For the benefit of the depositors and the members of the public, this Order shall be given reasonable publicity. sd/- illegible (Gopalakrishna) Executive Director 17.06.2008" 11. SIFCL, however, continued to run the Company in illegal manner, violating different directions and policies declared by RBI. Some of violations were noticed by the statutory auditors of SIFCL and were duly reported by them in their reported dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007 which restrict lending of funds to single party not exceeding fifteen percent of its Owned Funds. B. Latest position of Directed Investments and Aggregate Liability to Deposit (ALD) holders as per Residuary Non-Banking Companies (Reserve Bank) Directions, 1987 to find out the ALD gap after the subsequent event. Statement of Directed Investments and ALD (Rs. In Crores) Investment 31.03.2014 30.06.2014 31.07.2014 30.09.2014 45-IB 203.91 206.54 196.86 112.61 6(1)(a) 36.95 45.03 45.39 46.04 6(1)(b) 701.30 581.22 585.27 128.84 Total 942.16 832.79 827.52 287.49 Secured Loan (Note 1) 729.59 728.35 727.99 727.30 (Note 2) Total Directed Investments 1,671.75 1,561.14 1,555.51 1,014.79 Position of ALD (Note 1) 1,492.27 1,479.52 1,476.26 (Note 3) 2nd Proceeding Quarter 30.09.2013 31.12.2013 31.03.2014 31.03.2014 ALD Position as per above 1,538 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ters relating to insolvency status were pending and orders with regard to all sister concern were passed therein restraining Sahara group from selling its properties. On application of SIFCL Supreme Court passed detail order on 24.2.2015. Relevant portion of the order dated 24.2.2015 reads thus:- "In the circumstances, we allow Reserve Bank of India to initiate such action as may be otherwise legally permissible under the provisions of the Reserve Bank of India Act and the Regulations framed thereunder and to pass appropriate orders on the subject after hearing the parties. A copy of the order so passed shall be placed on record." 13. By the same order, Supreme Court further directed:- "In the light of the controversy raised before us in relation to the utilisation of the maturity amount/sale value of the "directed securities", we deem it fit to direct that the Saharas will not transfer, alienate or encumber the remaining "directed securities" if any provided by Sahara India Financial Corporation Limited (SIFCL)." 14. In the said background, on 10.3.2015, RBI issued a detail show cause notice to SIFCL pointing out all the violation being committed by it and thereafter calling u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as on 31.03.2015, Company has to maintain Directed Investments of Rs. 500 Crores even the ALD as on 31.03.2015 is Zero. The compliance of RNBC directions is must while Company is running its business activities but when it is winding its business activities as per RBI directions, it should only ensure that repayment of depositors are being done without any delay or default which we are doing and also maintaining Directed Investments against ALD on point to point basis which was sufficient to make the payment to depositors by the Company. You will appreciate that RNBC Directions were made to regulate operating Companies which in most cases are suppose to grow and therefore rules were made that RNBC Companies maintain Directed Investments equal to Aggregate Deposit Liability of second preceding quarter. We have already communicated to Reserve Bank of India vide our letter No.SIFCL/STAT./AS/FEB.- 15/06 dated 23.02.2015 that the Company has been making repayment of the deposits without failed to its esteemed depositors. As at 31st Dec, 2014, the aggregate deposit liability net off secured loan against deposit was Rs. 698 Crores approximately against which the book value of directed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of salaries to its employees since last 6 months and therefore many concerned Officials have submitted their resignations from the services of the Company including the Chief Financial Officer of the Company who has submitted his resignation w.e.f. 01.02.2015. The Company had intimated to RBI about such resignations from time to time. We are in the process of appointing new Officials including Chief Financial Officer at the earliest and shall be able to file Statutory and Supervisory returns to RBI. 8. As regard to the appointment of Independent Directors as advised by Reserve Bank of India in the meeting held on 9.4.2014 with the officials of RBI and Company Secretary, we will be submitting the name of 5 persons for consideration of RBI to appoint any 2 of them as Independent Directors in the Board of the Company. 11. The Reserve Bank of India vide its order dated 17.6.2008 has directed the Company to bring down its deposit liability to Zero by 30.6.2015. As per the provisions of Company Act, 2013, any amount will be unclaimed, only after 7 years from the date of maturity, if it remains as unclaimed, then thereafter it will be transferred to Investor Education and Protection Fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RBI being satisfied that the SIFCL failed to fulfill the conditions of the order dated 17.6.2008, issued to it under Section 45- K (3) of RBI Act, and there exist grounds, as mentioned in Section 45-1A (6A) of the RBI Act, for cancellation its registration, proceeded to pass order dated 3.9.2015 whereby Certificate of Registration (CoR) of SIFCL was cancelled under Section 45-1A. The relevant portion of the order dated 3.9.2015 reads as follows:- "26. Taking into consideration all the relevant facts, developments and affairs of the company, the Bank is satisfied that the company has failed to fulfill the conditions of the Speaking Order dated June 17, 2008 issued to it under the powers vested in the Bank under section 45-K (3) of RBI Act, 1934 and there exist the grounds as mentioned in section 45-IA (6) of the RBI Act, 1934 for cancellation of the CoR issued to the company. No purpose would be served by giving time upto June 30, 2018 as requested by the company. It would be prejudicial to public interest and interest of its depositors and stakeholders if the company is allowed to continue with its registration as Non Banking Financial Company. The company has been given adequat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant Chandra, counsel for RBI is that there is no necessity of passing a separate order, as the details given and record, filed with the winding up petition itself, shows satisfaction of the RBI for filing present winding up petition. He submits that RBI can place record before this court to satisfy it about need for filing the present winding up petition. He further submits that in fact SIFCL is not disputing that on merits the present petition could be filed. The objection is raised on technicality only, that there does not exist any prior decision of RBI, recording a categorical decision, for filing the present winding up petition. Sri Prashant Chandra places reliance upon the judgments in case of Reserve Bank of India Vs. Krishi Export Com. Corpn. Ltd., 2000 SCC OnLine All 1150: 2001 All L J 506 and State of Haryana Vs. Hari Ram Yadav and others, (1994) 2 SCC 617. 21. Lets first consider judgments relied upon by SIFCL. So far as the case of Indian Nut Products (supra) is concerned, the same relates to the Kerala Cashew Factories (Acquisition) Act, 1974. Section 3 (1) of the said Act of 1974 provides as follows:- "Order of acquisition.- (1) The Government may, if they are satis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the present case, the notice issued to the petitioners with the so-called grounds was not in accordance with the requirement of the provisions of sub-section (1) of Section 3 of the Act. The notices issued to different petitioners are, therefore, declared to be null and void. Consequent thereto, the order dated 6-7- 1988 is also quashed. 23. Again, the case of Aryaverth Chawal Udyog (supra), relates to U.P. Trade Tax Act, 1948. Section 21 of the U.P. Trade Tax Act provides that if the Assessing Authority has reasons to believe that the whole or any part of the turnover of the dealer, for any assessment year or part thereof, has escaped assessment to tax, it would have power to re-visit the same. The relevant paragraphs 16, 17 and 19 of the said judgment read as under:- "16. The relevant section of the Act is reproduced hereunder for convenience of our discussion: "21. Assessment of tax on the turnover not assessed during the year. -(1) If the assessing authority has reason to believe that the whole or any part of the turnover of the dealer, for any assessment year or part thereof, has escaped assessment to tax or has been assessed to tax at a rate lower than that at which it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the dealer and making such inquiry as it considers necessary, assess or reassess the dealer to tax according to law. 19. Under section 21(1) of the Act, the reassessment proceedings can only be initiated if the assessing authority has "reason to believe" that there is a case of escaped assessment and not otherwise. It is now trite law that whenever a statute provides for "reason to believe", either the reasons should appear on the face of the notice or they must be available on the materials which have been placed before him. (See Aslam Mohd. Merchant v. Competent Authority [2008] 14 SCC 186)." 24. I find that the aforesaid judgments are about cases, where, on being satisfied, the authority had power to pass such order, which would impact any settled right of the petitioner and the same would either divest him of property, as in the case of Indian Nut Products (supra) where the factory would stand vested in the Government, or would cause reopening of the assessment proceedings which stand concluded and adjudicated between the parties and where their rights stand settled, or would have any other serious consequence upon their established rights. 25. In the present case, the on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petition of RBI under section 45MC of the RBI Act is concerned, it is not that the RBI shall file a petition on the grounds mentioned in section 433 of the Companies Act. On the contrary, sub-section (1) of section 45 MC of the RBI Act lists four circumstances under which the RBI can file such a petition. Apart from the ground of inability to pay the debt, which is common with section 433 of the Companies Act, other grounds are peculiar to nonbanking financial institutions. These grounds relate to the malfunctioning of such NBFCs, namely, (b) has by virtue of the provisions of section 45-IA become disqualified to carry on the business of a nonbanking financial institution; (c) has been prohibited by the bank from receiving deposit by an order and such order has been in force for a period of not less than three months; and (d) the continuance of the non-banking financial company is detrimental to the public interest or to the interest of the depositors of the company. 17. Therefore, if any of these conditions exist in a particular case, Legislative considered it proper that (a) such a company should be wound up (b) rather than conferring power on another agency/authority like Regis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a detour by coming out with a plea that it is ready to do some business other than nonbanking financial business and should be permitted to do so and under such a cloak file a scheme of arrangement,. A company which is essentially a non-banking financial company and has suffered winding up order because it violated the financial discipline provided under the RBI Act, as it has no right to exist as NBFC and is to be wound up. When any of the conditions for winding up, as laid down in subsection (1) of section 45MC is satisfied, it is obvious that irregularities committed by it are serious enough justifying its winding up. In the process it is normally established that the depositors are either duped or the actions of such a company were detrimental to the public interest. Would it be wise to allow such a company to continue to function by diverting its business activity? More so, when its incorporation and existence was, hitherto as a non-banking financial institution? The regulatory regime provided by the Legislature by way of amendments in the RBI Act is applicable to non-banking financial companies and section 45-I (f) provides definition of NBFC in the following terms: "(f) & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed scheme. 29. In the aforesaid case, the issue was different and not as is being raised in the present case, i.e. as to whether, without there being a reasoned order, winding up petition can be filed. The dispute in the said case was that whether, on there being a feasible scheme for revival available, the power under Section 45-MC could be exercised for winding up. The Court while discussing the matter came to the conclusion that the RBI is a regulator, which is empowered by the Parliament, in the specific circumstances, to file a winding up petition, as it is the best judge. Therefore, the aforesaid judgment also does not support the case of petitioner in any manner. 30. Now lets consider the judgments relied upon by Sri Prashant Chandra, counsel for RBI, on this issue. In Krishi Export (Supra) case an issue was raised, as to whether, without there being a reasoned order passed, winding up petition under Section 45 MC could be filed by RBI. This court in paragraphs 18 and 19 of the said judgment held:- "18. Another broad argument of the learned counsel for the respondent is that before filing a winding up petition under Section 45-MC of the Reserve Bank of India Act it (Bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der this provision. Section 443 of the Companies Act relates to the powers of the Court hearing a winding up petition. On hearing a winding up petition, the Court may dismiss it, make any interim order that it thinks fit; or make an order for winding up of a company or any other order that it thinks fit. It is thus clear that many options are open to the Court depending upon the facts and circumstances of each case. The point that I wish to emphasize is that ultimately it is the Court hearing winding up petition which has to come to a decision as to what order is to be passed in a particular case. The truth of the matter is that the winding up petition in question has been found to be entertainable and maintainable as discussed in the earlier part of this order. It is, however, a different question that the Court would examine in subsequent discussion the merits of the winding up petition as per the requirements of Section 45-MC of the Act in the light of the material placed before it. But the respondent's contention is liable to be rejected that the petition has been filed without satisfying the requirement of satisfaction of the Bank which is a pre-condition for the filing of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amble to the order the defect can be remedied by showing by other evidence in proceedings where challenge is made to the validity of the order, that in fact the order was made after such opinion had been formed and was thus a valid exercise of the power conferred by the law. The only exception to this course would be where the statute requires that there should be a recital in the order itself before it can be validly made. * * * We cannot accept the extreme argument of Shri Aggarwala that the mere fact that the order has been passed is sufficient to raise the presumption that conditions precedent have been satisfied, even though there is no recital in the order to that effect. Such a presumption in our opinion can only be raised when there is a recital in the order to that effect. In the absence of such recital if the order is challenged on the ground that in fact there was no satisfaction, the authority passing the order will have to satisfy the court by other means that the conditions precedent were satisfied before the order was passed. We are equally not impressed by Shri Pathak's argument that if the recital is not there, the public or courts and tribunals will not know ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... making a reference under section 10 (1) without satisfying itself on the facts and circumstances brought to its notice that an industrial dispute exists or is apprehended in relation to an establishment or a definite group of establishments engaged in a particular industry, and it is also desirable that the Government should, wherever possible, indicate the nature of the dispute in the order of reference.s. The observations in some of the decisions in Madras do not appear to have kept this distinction in view." M/s. Avon Services Production Agencies (P) Ltd. Vs. Industrial Tribunal, Haryana and others. "6. ... The power conferred on the appropriate Government is an administrative power and the action of the Government in making the reference is an administrative act. The formation of an opinion as to the factual existence of an industrial dispute as a preliminary step to the discharge of its function does not make it any the less administrative in character. Thus the jurisdictional facts on which the appropriate Government may act are the formation of an opinion that an industrial dispute exists or is apprehended which undoubtedly is a subjective one, the next step of making re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t difficult for the beneficiaries of a public trust to obtain urgent interim orders from the court even though the circumstances might warrant such relief being granted. Keeping in mind these considerations, in our opinion, although, as a rule of caution, court should normally give notice to the defendants before granting leave under the said section to institute a suit, the court is not bound to do so. If a suit is instituted on the basis of such leave, granted without notice to the defendants, the suit would not thereby be rendered bad in law or non-maintainable. The grant of leave cannot be regarded as defeating or even seriously prejudicing any right of the proposed defendants because it is always open to them to file an application for revocation of the leave which can be considered on merits and according to law." Govindbhai Gordhanbhai patel and others. Vs. Gulam Abbas Mulla Allibhai and others:- "13. The answer to the second question turns on the answer to two subsidiary questions (i) whether in according or declining to accord permission under the proviso to section 63(1) of the Act, the Collector or the officer authorised by the State Government in that behalf acts in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent. The act of the Committee of the Central Board is to be taken as of Central Board itself except for matters specifically reserved by the Act for Central Government or Central Board. Under valid authority, the Committee of Central Board of the Bank has issued notification dated 11.9.1998, relevant provisions whereof have been reproduced above to clear the mist. It is not ultra vires. Hyper-technical objection based on hairsplitting has been advanced by the respondent to challenge the maintainability of this winding-up petition which has been filed by the Bank through Deepak Singhal, Deputy General Manager, DNBS. On scrutiny, the hollowness of this objection is exposed. I, therefore, reject the preliminary objection raised by the respondent attacking the maintainability of this winding-up petition. The Rulling of Hukum Chand v. Union of India, (1972) 2 SCC 501: AIR 1972 SC 2427 referred to above also has no application here." 37. Thus, this Court categorically found that the petition cannot be thrown out only on the ground that the same is signed by the Deputy General Manager. In the present case, further, as is already referred to above, the show cause notice was issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l give an opportunity to such company on such terms as the bank may specify for taking necessary steps to comply with such provisions or fulfillment of such condition: PROVIDED FURTHER that before making any order of cancellation of certificate of registration, such company shall be given a reasonable opportunity of being heard. (7) A company aggrieved by the order of rejection of application for registration or cancellation of certificate of registration may prefer an appeal, within a period of thirty days from the date on which such order of rejection or cancellation is communicated to it, to the Central Government and the decision of the Central Government where an appeal has been preferred to it, or of the bank where no appeal has been preferred, shall be final: PROVIDED that before making any order of rejection of appeal, such company shall be given a reasonable opportunity of being heard." 39. Sri Mathur in support of his submissions, places reliance upon paragraph 23 of Krishi Export (supra) case which reads:- "23. It is not disputed by the petitioner that the respondent has preferred an appeal against the order of the Bank dated 17.9.1998 before the Central Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall be final, in case an appeal is filed against the same, on the appeal being finally decided. But, that is a case with any appeal, whether such a line is there or not in the statue. If an appeal is filed against an order, the impugned order becomes final only on final disposal of the appeal. But the same would not mean that such an order will not be given effect during the pendency of appeal, unless stayed by the appellate court. If this interpretation, as submitted by Sri Mathur, is accepted, than no stay order would be required in any appeal, as the order under appeal will become final only on final disposal of the appeal and, thus, a stay order will have to be presumed. Such can not be the interpretation of sub section 7. Thus this submission of Sri Mathur is also rejected. The order of RBI remains operative, as there is no stay order passed in the appeal of SIFCL, till now. 41. Further, Sri Prashant Chandra, learned counsel for RBI submits that till date, the said appeal is not even entertained and has not been heard even for admission and the notices on the said appeal are not issued as yet. SIFCL, except for filing of said appeal, has not taken any steps for arguing the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing was started by Sri Prashant Chandra, learned Senior Advocate assisted by Sri Pritish Kumar, learned counsel for petitioner on 21.08.2018 when counsel for petitioner submitted his arguments for the petitioner-Reserve Bank of India. Thereafter from 23.08.2018, 24.08.2018, 28.08.2018, 29.08.2018 and 30.08.2018 Sri Jaideep Narain Mathur, learned Senior Counsel assisted by Sri Kumar Ayush, learned counsel for the respondent Company M/S Sahara India Financial Corporation Ltd. continued his submissions. Since arguments could not be completed, as Mr. J.N. Mathur was going out of country, hence, on his request, the matter was fixed for today. It was assured that the matter would be concluded either today or latest by tomorrow. Today Sri Vikas Singh, learned Senior Advocate has stood up submitting that he would be making submissions on an application which the respondent company has filed yesterday in the registry and this Court should summon the said application. On being informed to him that Sri J.N. Mathur, learned Senior Advocate has nearly concluded his arguments and he is supposed to argue the matter today, he submits that Sri J.N. Mathur is no more having instructions in the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certified copy of the impugned order is allowed. Having regard to the order that is proposed to be passed we are of the view that no prejudice will be caused to the respondent if it is directed that the petitioner may be allowed to file written arguments before the High Court within seven days from today. We, therefore, order accordingly. On consideration of the written arguments to be filed, if the High Court is of the view that further arguments would be required it will be open for the High Court to hear the learned counsel for the petitioner. Until the aforesaid exercise is completed, judgment in the matter reserved for pronouncement may not be pronounced. Special Leave Petition is disposed of in the above terms." 45. On 8.10.2018 an application along with the written submissions, signed by Sri Kumar Ayush advocate, earlier instructing counsel, who on the last date had informed that he had withdrawn from the case, came up before the court on which following order was passed:- "(Order on C. M. Application No. 108880 of 2018) No one is present for the applicant/opposite party to press or argue this application. Judgment in this case is already reserved. Put up with record. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Division Bench in appeal from the said judgment in APO No.112/2017 dated 5.9.2018. 48. Second ground taken, in paragraph 9 and 10 of the said application, is that Insolvency and Bankruptcy Code (Second Amendment) Act 2018 has, with effect from 6.6.2018, inserted another proviso to Section 434 (1) (c) and now, under the same, a party can file an application for transfer of proceedings and Court may transfer such proceedings to NCLT. Thus SIFCL prays, under the said proviso, for transfer of the present petition to NCLT. 49. So far as the first ground is concerned, the same, on the face of it, cannot stand for more than one reason. Firstly, the submission that the proceedings shall stand transferred from 15.11.2016, is in itself misconceived. Different provisions of Companies Act, 2013 were enforced, by separate notifications, on different dates. Section 434 of the Companies Act, 2013 was also enforced, in parts, on different dates. Section 434 (1)(a) and 1(b) were enforced w.e.f. 01.06.2016 by notification number 1934(E) dated 01.06.2016. Sub clause 1(a) and 1(b) are not applicable with regard to winding up proceedings and it is only Section 434 (1)(c) which relates to winding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribed by the Central Government: Provided further that any party or parties to any proceedings relating to the winding up of companies pending before any Court immediately before the commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018 (ord. 6 of 2018), may file an application for transfer of such proceedings and the Court may by order transfer such proceedings to the Tribunal and the proceedings so transferred shall be dealt with by the Tribunal as an application for initiation of corporate Insolvency resolution process under the Insolvency and Bankruptcy Code, 2016 (31 of 2016): Provided further that only such proceedings relating to cases other than winding up, for which orders for allowing or otherwise of the proceedings are not reserved by the High Court shall be transferred to the Tribunal. Provided also that- (i) all proceedings under the Companies Act, 1956 other than the cases relating to winding up of companies that are reserved for orders for allowing or otherwise such proceedings; or (ii) the proceedings relating to winding up of companies which have not been transferred from the High Courts; shall be dealt with in accordance with provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than voluntary winding up, pending under the old Act. Therefore, Rule 5 and Rule 6, being of relevance to our case, are being quoted below:- "5. Transfer of pending proceedings of Winding up on the ground of inability to pay debts.- (1) All petitions relating to winding up of a company under clause (e) of section 433 of the Act on the ground of inability to pay its debts pending before a High Court, and where the petition has not been served on the respondent as required under rule 26 of the Companies (Court) Rules, 1959 shall be transferred to the Bench of the Tribunal established under sub-section (4) of section 419 of the Companies Act, 2013, exercising territorial jurisdiction and such petitions shall be treated as applications under Sections 7, 8 or 9 of the Code, as the case may be, and dealt with in accordance with Part II of the Code: Provided that the petitioner shall submit all information, other than information forming part of the records transferred in accordance with rule 7, required for admission of the petition under sections 7, 8 or 9 of the Code, as the case may be, including details of the proposed insolvency professional to the Tribunal within six months from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fect from 15 December, 2016. The said Order provides as follows:- "In the Companies Act, 2013, in Section 434, in sub- Section (1), in Clause (c ), after the proviso, the following provisos shall be inserted, namely;- 'Provided further that only such proceedings relating to cases other than winding up, for which orders for allowing or otherwise of the proceedings are not reserved by the High Courts shall be transferred to the Tribunal: Provided further that- (i) All proceedings under the Companies Act, 1956 other than the cases relating to winding up of companies that are reserved for orders for allowing or otherwise such proceedings; or (ii) The proceedings relating to winding up of companies which have not been transferred from the High Courts; Shall be dealt with in accordance with provisions of the Companies Act, 1956 and the Companies (Court) Rules,1959'." 24. It is clear that with effect from 1 June, 2016, all applications complaining of oppression and mismanagement of a company have to be made before the NCLT. The question is what happens to a proceeding like the present one being an application complaining of oppression and mismanagement under Secs. 397 and 398 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on." 55. The aforesaid clearly shows that the petition before the Calcutta High Court was with regard to mismanagement of the affairs of the company filed under the Companies Act, 1956. The same was not a winding up petition filed under Section 433 of the Companies Act, 1956. The same was not at all a winding up petition filed under Section 45MC of the RBI Act, as is the present case. Thus, the Calcutta High Court never considered the issues involved in the present case, in the aforesaid judgments. Thus, on facts and the issues involved, the judgments, of Single Judge and of the Division Bench in Special Appeal, of Calcutta High Court cannot be applied to the present case as are clearly distinguishable. 56. In view thereof, as per first proviso to Section 434 (1)(c), only such winding up proceedings are to be transferred which are covered by the Transfer Rules, 2016 and since, the present winding up proceedings, as already found, are not covered by the aforesaid rules, the same are saved from being transferred. 57. Coming to the second leg of submission for transfer, that, the second proviso to Section 434 (1)(c) provides that any party to winding up proceedings, pending before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viso is rejected. 59. In paragraph 2.1 of the written submissions dated 01.10.2018, counsel for SIFCL has referred to four applications filed by it. So far as application bearing C.M. Application No.99993 of 2018, dated 12.09.2018, with regard to transfer of case is concerned, the same is already considered above and is rejected. The rest of the applications are being considered now. 60. The second application bearing C.M. Application No.7683 of 2016, dated 18.01.2016 is filed for vacating the order dated 16.09.2015 passed by this Court. The third application being C.M. Application No.94843 of 2018 dated 28.08.2018 is filed seeking partial modification of ex-parte order dated 16.09.2015 passed in the present petition, to enable respondent company to deposit the amount of ALD in the Escrow Account. Both the applications are filed almost for the same relief, that is for vacation or modification of the same order dated 16.09.2015. In view therefore, both the applications are being considered together. The order dated 16.09.2015 reads as follows:- Heard Sri Anil Tiwari, learned Senior Counsel assisted by Sri Pritish Kumar, learned counsel for the petitioner. Considering the order o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness of a stock broker or sub-broker holding a valid certificate of registration obtained under Section 12 of the Securities and Exchange Board of India Act, 1992 (No.15 of 1992)." The relevant portion of Notification dated 06.03.1997 reads as follows:- "Notification DFC.(COC) No.99/ED(JRP)-97 dated March 6, 1997:- The Reserve Bank of India, on being satisfied that it is necessary so to do, in exercise of its powers conferred under Section 45NC of the Reserve Bank of India Act, 1934 (2 of 1934) hereby declares that:- (1) the provisions of Section 45IA, 45IB, 45IC, 45MB and Section 45MC of the Reserve Bank of India Act, 1934 (2 of 1934) shall not apply to any non-banking financial company. (a) doing the business of insurance, holding a valid certificate of registration issued under Section 3 of the Insurance Act, 1938 (IV of 1938) (b) being a stock exchange, recognised under Section 4 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956; and (c) doing the business of a stock-broker or subbroker holding a valid certificate of registration obtained under Section 12 of the Securities and Exchange Board of India Act, 1992 (No.15 of 1992)." 63. The Certificate of Registr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eeding, an issue has arisen as to whether this Hon'ble Court has jurisdiction after 15.12.2016 to deal with the present Winding Up petition which need to be adjudicated first, as a 'Preliminary Issue' before any adjudication on the merits of the winding up petition. 5.7. Since, the issue relating to jurisdiction was raised for the first time by way of an application filed on 12.09.2018, in consonance with the principle of natural justice and fair play, it is imperative if the arguments relating to jurisdiction and consequent transfer of the petition to NCLT are heard in open Court. The applicant respondent prays accordingly. The applicant respondent assures this Hon'ble Court that no repeated arguments would be made and the submissions will be made only on those aspects which have not been argued as yet. 5.8. The applicant further submits that if this Hon'ble Court reaches to the conclusion, after hearing the oral submissions of the respondent on the issue of jurisdiction and maintainability of the Winding Up petition, then this Hon'ble Court may grant an opportunity of detail hearing on the merit of the petition, as the opportunity of hearing was suddenly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conduct of SIFCL when on 13.09.2018 in the morning its counsels appearing in the case, more particularly its instructing counsel, withdraw from the case, but came and sat in Court post lunch to note the rejoinder arguments of petitioner and after a few days filed written submissions under his own signatures and again appeared to seek adjournment when the written submissions came before the Court. Can it be said that the statement made by the instructing counsel of withdrawal from case on 13.09.2018 was true and bona fide? The answer that comes to me is, No. Proceedings were stage managed on 13.09.2018 only to get the matter lingered and keep the same pending. This Court is suffering from one of the highest pendency of cases in this country. The luxury to hear the matter again and again is not available. There are large numbers of litigants waiting for their turn to get their matter taken up. Their right to get their matter heard and decided from this Court is of equal importance to this Court as that of the respondent SIFCL. 68. It would also be relevant to look into the previous conduct of the respondent SIFCL in this case. In this case, hearing was started earlier by another Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioner insisted to press the application for appointment of Official Liquidator as Provisional Liquidator. Sri Arohi Bhalla, learned counsel for the opposite party (Company) has submitted that this Court has already restrained the Company from alienating its assets and diverting its funds subject to any order passed or to be passed by Hon'ble Supreme Court in any proceeding before it. He further submits that Reserve Bank of India vide order dated 03.09.2015 has already cancelled the licence of the Company and, therefore, the Company cannot accept any deposit from the public. The order dated 03.09.2015 is pending consideration in an Appeal before the Central Government and as such the Company is not in a position to accept any deposit from any one. Sri Arohi Bhalla has also brought to the notice of the Court that Sri Kapil Sibbal, Senior Advocate, who is to argue the matter, on account of his personal difficulty could not attend the Court today, therefore, some other date may be fixed sometime in the month of August, 2016. He proposed 17th, 18th, 24th, 25th & 26th, August, 2016. Sri Prashant Chandra, Senior Advocate vehemently opposed the request of Sri Arohi Bhalla for adj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... newspapers namely 'Hindustan Times' in English and in "Hindustan' in Hindi in their Lucknow editions. The petition shall also be published in the official gazette of the State fixing 02.04.2019 as the next date of hearing of the petition. The petitioner shall also file an affidavit of service in compliance of the aforesaid directions by the next date fixed. 74. Looking into the aforesaid facts and circumstances of the case, to preserve the assets of the company, the Official Liquidator attached to this Court is appointed Liquidator provisionally of Sahara India Financial Corporation Limited (SIFCL) together with all its assets, papers, books of accounts, documents and files etc. He is directed to proceed forthwith and take charge of all properties and effects of the company and its management. SIFCL and officers of SIFCL/all persons concerned are restrained from operating any bank account of SIFCL and its funds without leave of this Court till Official Liquidator takes charge. SIFCL is directed to fully co-operate with the Official Liquidator in smooth and immediate handover, as directed above. 75. List this case on 02.04.2019. 76. A copy of this order shall be supp ..... 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