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TMI Blog2019 (6) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... er. The Appellant cannot be held responsible for the transfer. However, now when the issue appears to be going to the root of jurisdiction, although we propose to remand back the matter to the NCLT, it appears to us that the present proceedings in NCLT should remain stayed giving opportunity to the Appellant to move the Hon ble High Court to ensure that Scheme filed in Liquidation/winding up proceeding and Liquidation/winding up proceeding should be before same forum. A scheme of compromise and arrangement can be filed even when liquidation proceeding is pending but if such application/petition is filed, it would be a proceeding relating to the winding up going on and the same has to be in the same forum. The Impugned Order of NCLT is set aside and TCSP 1 of 2017 restored on the file of the National Company Law Tribunal, Mumbai Bench with a further direction that the NCLT will give one opportunity to the Appellant to move the Hon ble High Court of Bombay Company Court to ensure that the Scheme and Liquidation/winding up proceedings are before one and same forum. Interim Order dated 01.10.2018 passed in this appeal at the stage of admission shall stand lapsed. - Compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. After the above Orders dated 9th December, 1998, the winding up proceedings started. The Appellant has relied on Annexure - A4 Order of the Hon ble High Court dated 14th February, 2008 in CP 895/1998 which shows the Hon ble High Court considering inventory report of the valuer which mentioned assets still available at the site. Hon ble High Court gave certain directions to the Official Liquidator with respect to sale of movable assets and for the purpose to issue advertisement in newspapers. The present Appellant appears to have raised some issues which in the Order dated 14th February, 2008, Hon ble High Court said would be considered at the appropriate stage. It is now stated that the Appellant proposed to the High Court that Appellant along with co-investors was in a position to revive the Company. For this, the Appellant is relying on para 4 of the Order dated 14th February, 2018 (Annexure - A4) where it was observed:- It is also made clear that it will be open to the Mr. Mardia to submit revival scheme, if he so desires, which request will be considered on its own merits. The Appellant is relying on this observations of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, namely whether the petition filed by ex-management was maintainable. 7. The Respondent No.1 Company through the Official Liquidator has filed Reply and opposed the Appeal trying to justify the view taken by NCLT that when the Company is in liquidation, only the Official Liquidator could apply for scheme of arrangement/compromise. The Respondent is trying to show as to how the Appellant has been protracting the proceedings over the years and in the Reply, raised grounds relating to the merits of the scheme of arrangement/compromise to demonstrate as to how the same could not be accepted. 8. The learned Counsel for the Appellant has argued that when the Hon ble High Court vide Order passed in 2008 had given liberty to the Appellant to submit a scheme, NCLT could not have reopened the issue whether or not the Appellant was competent to file the scheme when the Company was already in liquidation. According to him, even in the First Motion, no such objections were raised and in the meanwhile, the matter got transferred to NCLT. The Counsel has relied on certain Judgements to show that even when the Company is in liquidation, it is not that only the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne through the matter and heard the Counsel for both sides. The Impugned Order shows that in NCLT the Official Liquidator; Regional Director; seven workmen; a secured debenture holder; Mazdoor Congress Union; one Amritlal Chemaux Private Limited, shareholder and promoter of the Company, all have raised objections to the scheme proposed by the Appellant. The Impugned Order referred to the details of the objections raised but did not go into the merits of the same as in para 10 of the Impugned Order, it raised a point for consideration as under:- Now the point for consideration is as to whether or not the promoter directors or some of the shareholders of a company in liquidation can file an application under Section 391(1) of the Companies Act, 1956/Section 230(1) of the Companies Act, 2013 seeking arrangement as sought in this application. In para 12 of the Impugned Order, NCLT observed that since the Petitioner/shareholder of the Company, which was in liquidation, has filed the Petition seeking revival of the Company in liquidation through a compromise with creditors, a legal conundrum had come up whether the petition filed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter of Rajendra Prasad Agarwalla Ors. Versus The Official liquidator, High Court reported in 1977 SCC OnLine Cal 189, which Judgements along with others were considered by the Hon ble High Court of Delhi in the matter of National Steel General Mills Versus Official Liquidator reported in 1989 SCC OnLine Del 118. The Judgements dealt with the above provision under Section 391 of the old Act. In para 10 of the Judgement of Division Bench of the Hon ble High Court of Delhi, it was observed:- 10. The consensus view of the various High Courts, therefore emerges is that the liquidator is the additional person and not the exclusive person who can move an application under Section 391 of the Act. In para 18, it was mentioned:- 18. There does not seem to be much substance in this argument. As already discussed above, the liquidator is an additional person who can make an application under Section 391 of the Act for compromise or settlement of the scheme and under Section 457 of the Act the liquidator has been given a general power in the company being wound up with the sanction of the Court to institute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... power need not be restricted to a motion only by the liquidator. For the purpose of this case, we do not think that it is necessary to examine this question also in depth. We are inclined to proceed on the basis that the Somanis, as contributories or the members of the Company, are entitled to make an application to the Company Court in terms of Section 391 of the Act for the purpose of acceptance of a compromise or arrangement with the creditors and members. Against the above Judgements relied on by the learned Counsel for the Appellant, the learned Counsel for Respondent No.1 relined on the Judgement in the matter of Rajiv Sachdeva Vs. Rajhans Steel Ltd. (In Liquidation) reported in AIR2011Jhar139 and submitted that when the proceedings had been initiated initially before BIFR, it becomes matter of record that rehabilitation was not possible and consequently, the Company was required to be wound up. He referred to para 17 to 21 of the Judgement:- 17. In this case, in the garb of the scheme of rehabilitation, the promoters are basically trying to question the order of the BIFR which says that rehabilitation is not possible and cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we have a difficulty which the learned Counsel for Respondent No.1 has raised in the present Appeal. It is a legal question and we have to examine the same. The Notification dated 7th December, 2016 (Page 78 of the Appeal) which framed the Rules mentioned has been discussed by the Hon ble High Court in the matter of Sunil Gandhi . In this Judgement, the Hon ble High Court dealt with the following issue:- 4. The issue that arises for consideration is whether the Company Court has the exclusive jurisdiction to adjudicate applications instituted under the provisions of Section 391 of the Companies Act, 1956, in relation to the revival of a Respondent Company in provisional liquidation, subsequent upon coming into force of the subject notification, w.e.f. 15.12.2016. The Hon ble High Court then referred to the facts of that matter to observe that the winding up Petition had been admitted and official liquidator had been appointed as provisional Liquidator. Further developments in the said matter were noted. The Hon ble High Court then reproduced the Notification. We reproduce Rules 3 and 5 of the said Notification which read as under:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments observed in para 27 as follows:- 27. On a conspectus of the above decisions, the following legal positon emerges: ( i) That the expression proceedings relating to winding up is of the widest amplitude and content. ( ii) The expression relating to which is used synonymously with the expression pertaining to is an expression of expansion and not of contraction. ( iii) The expression relating to the winding up is much wider and much more expansive than the expression arising out of . ( iv) That the argument, that subsequent to the subject notification coming into force on 15.12.2016, an application under section 391 of the Companies Act, 1956, would stand transferred to the NCLT automatically, even in the circumstance that a winding up petition against the same company has been admitted by the company court, is fallacious, and nothing stands in the way of the Company court from exercising jurisdiction and considering, a revival scheme proposed in relation to a company ordered to be wound up. The Company Court has powers vested in i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vi. In the proceedings relating to winding up, as in the present case, applications under the provisions of section 391 of the Companies Act, 1956, for the revival of the company in provisional liquidation, would constitute an exception, and would a fortiori fall outside the purview of independent proceedings which ought to be transferred to the National Company Law Tribunal, under clause 3 of the subject notification. The Hon ble High Court answered the issue (referred supra in para 4) in affirmative and recorded that the Company Court would exercise exclusive jurisdiction for adjudicating application, in relation to the revival of the Company in provisional liquidation. The Hon ble High Court declined to transfer the matter it had before itself to the NCLT. Considering the view taken by the Hon ble High Court and the law as it appears to us considering the facts of the present matter, the NCLT could not exercise jurisdiction for adjudicating the application for scheme of compromise/arrangement which had been moved by the Appellant, in liquidation proceeding on being divorced from the liquidation/winding up proceeding. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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