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TMI Blog2014 (1) TMI 1962X X X X Extracts X X X X X X X X Extracts X X X X ..... exercising jurisdiction under the Companies Act, 1956. In other words, it is RDB Act,1993 Vs. Companies Act,1956. 3. O.S.A.NO.389 of 2013 has been filed by respondents 1 & 2 in Comp.Appl.No.160 of 2013 in C.P.No.23 of 2003 wherein, the Company Court had transferred Appeal Nos. 1 & 2 of 2013 from Debt Recovery Tribunal [DRT] No. III, Chennai to the Company Court. 4. O.S.A.NO.390 of 2013 has been filed by applicants in Transfer C.A.No.1108 of 2013 in C.P.No.23 of 2003, to set aside the order dated 24.01.2013 passed in I.A.No.40 of 2012 in R.P.No.57 of 2008 in D.R.C. No.53 of 2008 in O.A.No.269 of 2007 by the Recovery Officer, DRT No. III, Chennai and stay the auction sale scheduled on 30.1.2013, which was dismissed by the Company Court by its common order dated 5.11.2013. 5. O.S.A.No.391 of 2013 has been filed by the applicants in Transfer C.A.No.1109 of 2013 in C.P.No.23 of 2003, to set aside the order dated 24.11.2013 passed in I.A.No.41 of 2012 in R.P.No.57 of 2008 in DRC No.53 of 2008 in O.A.No.269 of 2007 by the Recovery Officer, DRT No. III, Chennai and stay the auction sale scheduled on 30.1.2013, which was dismissed by the Company Court by its said common order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le deed in their favour in pursuance of the sale agreements dated 23.2.2005 and 22.1.2007. In C.A.No.216 of 2008, they have sought for injunction to protect their possession of the said property. On 20.12.2010, the Company Court taking note of the fact that already the State Bank of India has taken steps to sell the property by initiating proceedings before D.R.T-III, Chennai and the Official Liquidator also has no objection for this, dismissed C.A.Nos.215 & 216 of 2008, however observing that the applicants necessarily have to go before D.R.T.-III, Chennai and file appropriate applications. (vi) In 2008, in O.A.Nos. 297, 269 and 277 of 2007, D.R.T.-III, Chennai issued Recovery Certificates D.R.C.Nos.40/2008, 53/2008 and 63/2008 respectively as against the directors of M/s. Kaushik Switch Gears (P) Ltd. to recover the bank dues. In D.R.C.No.53 of 2008, the Tribunal directed sale of the properties including the 3 grounds of property situate in Mogappair, which was agreed to be sold to the appellants by the said directors. (vii) On 11.2.2011, the Recovery Officer, D.R.T-III, Chennai directed attachment of the said property. The appellants herein have filed I.A.No.427 of 2011 in A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Debts Recovery Tribunal, will stand a better chance by having the appeals transferred to this court. 9 Hence, this application is allowed and the appeals in A.Nos.1 and 2 of 2013 pending on the file of the Presiding Officer, Debts Recovery Tribunal-3, Chennai shall stand transferred to this Court. Office is directed to send a copy of this order to the Debts Recovery Tribunal-3, Chennai for the transfer. List all the applications for hearing on 27.6.2013. The prayer made by the learned Official Liquidator for a direction to the respondents 1 and 2 to pay occupation charges is kept aside to be decided along with other applications." (xi) In the Company Court, the appellants have filed Transfer C.A.Nos.1108 and 1109 of 2013 to set aside the orders passed by the Recovery Officer, D.R.T-III, Chennai, on 24.1.2013 in I.A.Nos.40 & 41 of 2013 in R.P.No.57 of 2008 in D.R.C.No.53 of 2008 in O.A.No.269 of 2007 on 24.1.2013 and sought for stay of the auction fixed on 30.1.2013. (xii) On 5.11.2013, the Company Court took up C.A.No.160 of 2013 and the Transfer C.A.Nos.1108 and 1109 of 2013 and dismissed the Transfer Applications observing that the appellants, who are third party agreeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, learned counsel appearing for the Official Liquidator submitted that after filing the winding up petition before the Company Court, the appellants have entered into sale agreements, dated 23.2.2005 and 21.1.2007 with the directors of the Company, which is a fraudulent preference. It is hit under section 531 of the Companies Act, 1956. The appellants have created many hurdles preventing the bank from recovering its dues from the company in liquidation. The appellants have also placed many bottlenecks on the various steps taken by the Official Liquidator to carry out the orders of the Company Court passed in C.P.No.23 of 2003. The only motive of the appellants is to drag on the proceedings. In such circumstances, direction has been sought for from the Company Court under section 460(4) of the Companies Act, 1956 to transfer Appeal Nos.1 and 2 of 2013 from D.R.T-III, Chennai to the Company Court so as to have a comprehensive disposal of all the matters in C.P.No.23 of 2013 and also a declaration that the sale agreement in favour of the appellants is a fraudulent preference under section 531 of the Companies Act. In such circumstances, the order of the Company Court transferring the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt by its common [impugned] order dated 5.11.2013. 17. On the arguments advanced by both sides, question arises, whether the Company Court on the petition filed under the provisions of the Companies Act, 1956 can transfer the proceedings under RDB Act from D.R.T.-III, Chennai to the Company Court, whether the Company Court has such jurisdiction, in other words, it is, Companies Act, 1956 vs. RDB Act, 1993? 18. Exactly such a tangle was posed before the Hon'ble Apex Court in ALLAHABAD BANK vs. CANARA BANK AND ANOTHER [2000(4) SCC 406]. 19. In the said case, Allahabad Bank obtained money decree against its debtor, namely, M/s. M.S. Shoes (East) Co. Ltd. from the Debts Recovery Tribunal, Delhi under the RDB Act. A claim of Canara Bank as secured creditor as against the said company was also pending before the said Tribunal. Winding up petition was filed before the Delhi High Court to wound up the said company under section 442 and 537 of the Companies Act. Allahabad Bank initiated sale proceedings before the Recovery Officer under RDB Act to recover its dues. It was contended by Canara Bank that leave of the Company Court under section 446(1) of the Companies Act have to be ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has to issue a certificate under Section 19(22) (formerly under Section 19(7)) to the Recovery Officer for recovery of the debt specified in the certificate. The question arises as to the meaning of the word 'recovery' in Section 17 of the Act. It appears to us that basically the Tribunal is to adjudicate the liability of the defendant and then it has to issue a certificate under Section 19(22). Under Section 18, the jurisdiction of any other court or authority which would otherwise have had jurisdiction but for the provisions of the Act, is ousted and the power to adjudicate upon the liability is exclusively vested in the Tribunal. (This exclusion does not however apply to the jurisdiction of the Supreme Court or of a High Court exercising power under Articles 226, 227 of the Constitution). This is the effect of Sections 17 and 18 of the Act. 23. Even in regard to 'execution', the jurisdiction of the Recovery Officer is exclusive. Now a procedure has been laid down in the Act for recovery of the debt as per the certificate issued by the Tribunal and this procedure is contained in Chapter V of the Act and is covered by Sections 25 to 30. It is not the intendment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overy Officer. 25. Thus, the adjudication of liability and the recovery of the amount by execution of the certificate are respectively within the exclusive jurisdiction 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. 31. It may also be noticed that in the L.I.C. Act of 1956, there was no provision like Section 34 of the RDB Act giving overriding effect to the provisions of the L.I.C. Act. Still this Court upheld the exclusive jurisdiction of the LIC Tribunal observing as follows: the provisions of the special Act i.e. the L.I.C. Act will override the provisions of the general Act, the Companies Act which is an Act relating to Companies in general. We are of the view that the appellant's case under the RDB Act - with an additional Section like Section 34 -is on a stronger footing for holding that leave of the Company Court is not necessary under Section 537 or under Section 446 for the same reasons. If the jurisdiction of the Tribunal is exclusive, the Company Court c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and working out priorities, the special provisions made in the RDB Act have to be applied. Special law v. general law: 38. At the same time, some High Courts have rightly held that the Companies Act is a general Act and does not prevail under the RDB Act. They have relied upon Union of India v. India Fisheries (P) Ltd. 40. Alternatively, the Companies Act, 1956 and the RDB Act can both be treated as special laws, and the principle that when there are two special laws, the latter will normally prevail over the former if there is a provision in the latter special Act giving it overriding effect, can also be applied. Such a provision is there in the RDB Act, namely, Section 34. A similar situation arose in Maharashtra Tubes Ltd. v. State Industrial and Investment Corporation of India where there was inconsistency between two special laws, the Finance Corporation Act, 1951 and the Sick Industries Companies (Special Provisions) Act, 1985. The latter contained Section 32 which gave overriding effect to its provisions and was held to prevail over the former. It was pointed out by Ahmadi, J. that both special statutes contained non-obstinate clauses but that the "1985 Act being a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ARFAESI Act is a Special Act, and the Code of Criminal Procedure being a General Act, held that the Special Act will prevail over General Act. 27. Considering the exclusive jurisdiction of the Debts Recovery Tribunal constituted under the RDB Act, the order passed by the Company Court transferring Appeal Nos.1 and 2 of 2013 from D.R.T-III to itself under the provisions of the Companies Act,1956 is without jurisdiction is clear from the provisions of the RDB Act, 1993 and the General enactment, namely, Companies Act, 1956 and also the decisions seen supra. Thus, the consequential orders passed in the impugned order, dated 5.11.2013 permitting the Official Liquidator to take steps for selling the property is also without jurisdiction. 28. As we have decided the matter on legal issues, we need not go into the merit aspects of the case raised by both sides. Necessarily, they must be raised before D.R.T.-III, Chennai, which is having exclusive jurisdiction over the matter. 29. In view of the foregoings, the orders of the Company Court in C.A.No.160 2013 in C.P.No.23 of 2003 and in Transfer C.A.Nos.1108 and 1109 of 2013 permitting the Official Liquidator to proceed further with the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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