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TMI Blog2022 (3) TMI 333X X X X Extracts X X X X X X X X Extracts X X X X ..... edings reserved for orders, all other proceedings pending before the Companies Court are liable to be transferred. On the basis of this Rule, both Mr.Goklaney and Mr.Subramanian contended that since none of the pending applications are reserved for orders, they are liable to be transferred. Pursuant to the amendment to Section 434 by the introduction of the last proviso thereto, a party to the proceedings is entitled to file an application for transfer in retained matters. Applications for transfer were filed in those cases by resorting to such proviso. In contrast, in the present case, as indicated above, the Scheme was sanctioned by this Court and several applications were dealt with thereafter under Section 392 of CA 1956. Indeed, it bears repetition that the cut-off, as regards schemes of arrangement, is fixed at the advanced stage of reserving orders in the proceedings. Consequently, there is no provision analogous to the last proviso to Section 434(1) of CA 2013 to seek transfer of retained matters. In fine, these applications are completely misconceived and premised on the mistaken notion that CA 2013 provides for transfer of applications. The order dated 05.01.2017 do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 2013 under Sections 402,420,120-B,468,471,409 IPC read with Section 109 IPC and Section 5 of the Tamil Nadu Protection of Interests of Depositors (in Financial Establishments) Act,1997( the TNPID Act). The accused in such proceedings, in order, were Viswapriya(A1), Akshaya Boomi Investment Private Limited(A2), Quatrangle Trading Services Limited(A3), Mr.Subramanian(A4), Mr.Narayanan(A5), Mr.Rajarathinam(A6) and Mr.T.S.Raghavan(A7). Subsequently, Mr.Subramanian was arrested on 19.09.2015, and several persons were added as accused in course of investigation. Upon completion of investigation, a charge sheet was filed before the TNPID Court, Chennai on 17.07.2019 and the same was taken on file in C.C.No.6 of 2020 dated 16.10.2020. Orders were obtained from the Government in relation to the attachment of movable and immovable properties. A petition to quash the proceedings is pending at the instance of the 15th and 17th accused in the proceedings. A status report dated 26.10.2021 has been filed by the Deputy Superintendent of Police, Economic Offences Wing -II, Guindy, Chennai - 32 in such regard. 3. Several applications were filed by debenture holders of the Company seeking relie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the High Court in accordance with the pre-amended Section 434. (iii) Action Ispat and Power Private Limited v. Shyam Metalics and Energy Limited, (2021) 2 SCC 641, wherein, at paragraphs 7 8, the Hon'ble Supreme Court referred to the judgment in Jaipur Metals. Mr.Prakash Goklaney also contended that the order passed by this Court in C.A.No.1175 of 2016 in C.P.No.15 of 2014 on 05.01.2017 would not operate as res judicata as regards the present request for transfer. Although this Court concluded in the said order that the pending applications are not liable to be transferred to the NCLT, Mr. Prakash Goklaney contended that the said order did not notice Section 231(3) of CA 2013 and, therefore, the order does not preclude the filing of an application for transfer of these proceedings to the NCLT. For this proposition, the judgment in Canara Bank v. N.G.Subbaraya Setty and Another (2018) 16 SCC 228 was relied upon. In particular, reliance was placed on paragraph 34.2.1 of the judgment wherein the Hon'ble Supreme Court held that an erroneous decision in a former suit or proceeding does not qualify as res judicata in a subsequent suit or proceeding between the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same judgments as those relied upon by Mr.Prakash Goklaney. In addition, he pointed out that an application was filed by Viswapriya before the NCLT under Section 231(3) of CA 2013. By such application, modifications to the Scheme were prayed for. The final contention of Mr.Subramanian is that CA 1956, including Section 391 thereof, has been repealed by Section 465(1) of CA 2013. Consequently, this Court lacks the authority and jurisdiction to consider and adjudicate these applications. For all these reasons, he submitted that these applications should not be dealt with by this Court and should instead be transferred to the NCLT. 7. These contentions were refuted by Mr.H.Karthik Seshadri, learned counsel for the depositors/ debenture holders. Mr.Karthik Seshadri pointed out that a petition was filed under Section 391 of CA 1956 by Analog seeking sanction for a scheme of arrangement / compromise. Upon considering the draft scheme propounded by Analog, this Court sanctioned the Scheme by order dated 30.04.2014. The admitted position is that the Scheme could not be implemented because Analog and Viswapriya failed to honour the commitments and obligations undertaken under the Sche ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll 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 the provisions of the Companies Act, 1956 and the Companies (Court) Rules, 1959.... The other provision of relevance, in this regard, is Section 465 of CA 2013, which, in relevant part, is as under: ''65(1) The Companies Act, 1956 (1 of 1956) and the Registration of Companies (Sikkim) Act, 1961 (Sikkim Act 8 of 1961) (hereafter in this section referred to as the repealed enactments) shall stand repealed: .... Provided further that until a date is notified by the Central Government under sub-section (1) of section 434 for transfer of all matters, proceedings or cases to the Tribunal, the provisions of the Companies Act, 1956 (1 of 1956) in regard to the jurisdiction, powers, authority and functions of the Board of Company Law Administration and court shall continue to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Court had sanctioned the Scheme and had initiated action pursuant thereto by also appointing an Administrator. This order is the subject matter of O.S.A.SR.No.26384 of 2017. Although an appeal was filed, the said appeal is stated to be at the stage of consideration of an application to condone the delay in filing thereof. Notwithstanding the above position, both Analog and Mr.Subramanian contend that the order dated 05.01.2017 does not preclude the reiteration of a request for transfer because the order dated 05.01.2017 is erroneous and, therefore, does not operate as res judicata. 11. In this regard, both Analog and Mr.Subramanian rely upon Section 231(3) of CA 2013. Sub Section 3 of Section 231 reads as under:- ''3. The provisions of this section shall, so far as may be, also apply to a company in respect of which an order has been made before the commencement of this Act sanctioning a compromise or an arrangement'' Section 231 of CA 2013 mirrors Section 392 of CA 1956. These provisions are enabling provisions whereby the Court under Section 392 of CA 1956 or the NCLT under Section 231 of CA 2013, as the case may be, may consider applications relating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng respective territorial jurisdiction: provided that all those proceedings which are reserved for orders for allowing or otherwise of such proceedings shall not be transferred.'' From the above Rule, it is evident that except proceedings reserved for orders, all other proceedings pending before the Companies Court are liable to be transferred. On the basis of this Rule, both Mr.Goklaney and Mr.Subramanian contended that since none of the pending applications are reserved for orders, they are liable to be transferred. 13. In the specific context of the Scheme, Analog, the propounder, initially filed applications to convene meetings of stakeholders to consider the draft scheme, and thereafter filed a petition to sanction the draft scheme upon approval by its stakeholders. By this process, the Scheme was sanctioned by order dated 30.04.2014 in C.P.No.15 of 2014. Subsequent thereto, applications were filed under Section 392 of CA 1956 in C.P.No.15 of 2014 by various stakeholders. From the above narration, there is no doubt that all the applications and the petition under Section 391 are closely interconnected. The power under Section 392 of CA 1956 is a consequential ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o to Section 434(1)(c) of CA 2013 is applicable. This proviso uses the expression only such proceedings...shall be transferred to the Tribunal and makes it clear that if orders are reserved in the proceedings, the proceedings shall not stand transferred. Thus, in contrast to service of notice under Rule 26 (i.e. pre-admission), the cut-off is fixed further down the road at the point of reserving orders in the proceedings. Significantly, the cut-off criterion is if orders are reserved in the proceedings, and not in an application in the proceedings. In the case at hand, orders were passed in the petition under Section 391 as early as on 30.04.2014 and only consequential applications under Section 392 of CA 1956 are pending. If an analogy is drawn to winding up proceedings, once the Scheme was sanctioned, the applications under Section 392 of CA 1956 are similar to applications filed after a winding up order is passed under Section 433 read with 443 of CA 1956. Thus, this Court is dealing with applications at the post-sanction stage of proceedings initiated under Section 391 of CA 1956. In an appropriate case, where no applications are pending after the sanction of a scheme of arra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed matters. In fine, these applications are completely misconceived and premised on the mistaken notion that CA 2013 provides for transfer of applications. 17. For reasons set out above, the order dated 05.01.2017 does qualify as res judicata and is not erroneous in any respect. In any event, for reasons set out in the preceding paragraphs, the specific applications and, indeed, the proceedings relating to the Scheme are not liable to be transferred to the NCLT. Except for the assertion that this Court has no jurisdiction, no reasons are set out in Comp.A.No.313 of 2021 to dismiss Comp.A.No.56 of 2021. For these misadventures, in the face of the earlier order of this Court, each set of applicants should be suitably rewarded. 18. As a corollary, Company Application Nos. 413 and 414 of 2019 and Company Application No.313 of 2021 are dismissed. Each set of applicant/s shall pay costs of ₹ 1,00,000/- to the Tamil Nadu State Legal Services Authority within two weeks from the date of receipt of a copy of this order. All the other pending applications shall be retained in this Court. List all pending applications on 11.02.2022. The Registry is directed to communicate a copy ..... X X X X Extracts X X X X X X X X Extracts X X X X
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