P. Chandra Reddy, C.J.
(1) This appeal is directed against the order of our learned brother Justice Satyanarayana Raju, dismissing a petition filed by the Liquidator of the Hyderabad Pictures Ltd. , Hyderabad (hereinafter referred to as the Company) under S. 518 of the Indian Companies Act (hereinafter called the Act for two reliefs, viz., to declare that the respondents, i.e. the District Collector of Hyderabad, Superintending Engineer, P. W. D. and the Estate Officer, Hyderabad have no right to distrain and sell the Projectors of the Company and to stay the sale of the Cinema Projectors pursuant to the notice published by the respondents in The Deccan Chronicle.
(2) The material facts which are not in dispute may be shortly stated. The Company was incorporated under the provisions of the Hyderabad Companies Act with an authorised capital of Rs. 2,80,000/-, the Government of the erstwhile Hyderabad State owning eighty per cent of the shares. Among the several objects set out in the Memorandum of Association of the Company, one was the promotion of visual education by means of exhibiting documentary films. For the exhibition of these films, a building belonging to the erst-while Hyderabad Government was taken on lease in March, 1952 on a monthly rental of O. S. Rs. 500/- for a period of 15 years. The Company abandoned the exhibition of pictures as it was not profitable to continue it. So, in April 1958, the theatre with the equipment and the furniture was leased out to one Gyan Sagar for a period of two years on a monthly rental of I. G. Rs. 600/-. That document contained a clause giving option to the lessee to renew the lease for a further period of one year.
After the formation of Andhra Pradesh, the Government appeared to have made a demand on the company for payment of a sum of Rs. 26,000/- towards arrears of rent, but no part of this amount was paid to the Government. Meanwhile the company was wound up by a special resolution of the creditors in April, 1960 and this was duly notified in the Andhra Pradesh Gazette. The main assets of the company are Cinema equipment furniture, fixtures and fittings. As the Government could not realise any portion of its dues from the company, on the 18th of May, 1960, they issued a notice to the company asking them to hand over possession of the building. But they did not succeed in getting delivery as the property was in possession of the leasee mentioned above. Thereafter, they distrained the cinema equipment, furniture etc., for the realisation of their dues. It is to prevent the Government from bringing the properties to sale that the application giving rise to this appeal was filed by the appellant.
(3) The two questions that were debated before us are whether the Government could claim preferential rights in regard to the rent payable to them and whether this Court could stay the proceedings started by the Government for the realisation of their dues.
(4) The first point has to be answered with reference to S. 530 of the Act, which sets out the order in which the debts due by the company could be paid. It is clause (a) of that section that is relevant for this enquiry and it says :
(1) In a winding up, there shall be paid in priority to all other debts.
(a) all revenues, taxes, cesses and rates due from the company to the Central or a State Government or to a local authority at the relevant date as defined in cl. (c) of sub-sec. (8), and having become due and payable within the twelve months next before that date.
(5) It is plain that the Government have priority in respect of revenues, taxes, cesses, rates due from the company. It does not extend this preferential treatment to a debt like the one involved in the present case. What follows is that as regards the claims other than those mentioned above, the Government has to rank as an ordinary creditor. That being the position, S. 530 does not entitle the Government to claim a priority as regards a debt like the present one. It is this proposition that is established by a judgment of the Federal Court in Governor General in Council v. Shiromani Sugar Mills, Ltd., AIR 1946 FC 16. It is not necessary to deal with this point elaborately as the provisions of S. 530 are clear and the Government Pleader appearing for the respondents does not contest the proposition that rent due to the Government by a company does not fall within the ambit of S. 530.
(6) Notwithstanding this, does S. 537 enable the Government to recover the amount as laid down in the order under appeal We have here to consider the impact of S. 537 of the Act on a debt like this. THAT section postulates :
(1) Where any company is being wound up by or subject to the supervision of the Court.
(a) any attachment, distress or execution put in force, without leave of the Court, against the estate or effects of the company, after the commencement of the winding up ; or
(b) any sale held, without leave of the Court, of any of the properties or effects of the Company after such commencement ;
shall be void ;
(2) Nothing in this Section applies to any proceedings for the recovery of any tax or impost or any dues payable to the Government .
(7) It may be mentioned here that the last clause in sub-sec. (2) viz., 'or any dues payable to the Government' was added by an amendment to this section introduced by Act 65 of 1960. The object of this amendment seems to be to nullify the effect of the judgment of Federal Court in AIR 1946 FC 16 which inter alia laid down that S. 537 does not enlarge the scope of S. 530 in so far as it relates to the dues payable to the Government and that applied only to such debts as were covered only by S. 530. This section would have been available to Government if it could come into operation even in regard to the voluntary winding up.
(8) That section commenced with these words : 'Where any company is being wound up by or subject to the supervision of the Court.' That being so, voluntary winding up is outside the pale of this section. So, this section is out of the way. It does not afford any protection to Government in regard to the recovery of this amount. It is for this reason, obviously, that the Government had recourse to S. 52 of the Madras Revenue Recovery Act. It enacts :
'All arrears of revenue other than land revenue due to the State Government, all advances made by the State Government for cultivation or other purposes connected with the revenue, and all fees or other dues payable by any person to or on behalf of the Village servants employed in revenue or police duties, and all ceases lawfully imposed upon land and all sums due to the State Government, including compensation for any loss or damage sustained by them in consequence of a breach of contract, may be recovered in the same manner as arrears of land revenue under the provisions of this Act, unless the recovery there of shall have been or may hereafter be otherwise specially provided for.'
(9) It is not disputed that the rent due to Government comes within the sweep of this section as it is comprehensive enough to take in all dues payable to Government .
(10) Can S. 518 of the Act be invoked to restrain the Government from recovering the money due to them in the manner laid down by S. 52 of the Madras Revenue Recovery Act. It is convenient to extract the terms of S. 518 of the Companies Act at this stage in so far as it is material for the purpose of this enquiry.
518. (1) * * * * * * * * * * * * * * (2) The liquidator or any creditor or contributory may apply to the Court specified in sub-sec. (3) for an order setting aside any attachment, distress or execution put into force against the estate or effects of the Company after the commencement of the winding up.
(3) An application under sub-sec. (2) shall be made -
(a) If the attachment, distress or execution is levied or put into force by a High Court, to such High Court ; and
(b) if the attachment, distress or execution is levied or put into force by any other Court, to the Court having jurisdiction to wind up the Company.
(11) It is manifest that sub-section (2) can be resorted to only in cases contemplated by sub-sec. (3) . In other hands, it is only when the attachment etc. is levied or put into force either in a High Court or in any other Court, the stay would be applied for in the High Court or in the other Court having jurisdiction to wind up the Company.
(12) Shri Ananta Babu, learned counsel for the appellants contends that this is not the effect of that Section, that sub-sec. (2) is independent of sub-sec. (3), that the width of the amplitude of the powers contemplated by sub-sec. (2) cannot be cut down by sub-sec. (3), that sub-sec. (3) is only illustrative of the powers vested in the Court by sub-sec. (2) and is not exhaustive thereof, and that, sub-sec. (3) does not in any way interfere with the exercise of the powers derived under sub-sec. (2).
(13) We cannot give effect to this submission. The language of sub-secs. (2) and (3) leaves no scope for that argument addressed by the learned counsel for the appellants. The intention of the legislature to make sub-sec. (2) subservient to sub-sec. (3) is manifested by the terms of both sub-secs. (2) and (3). Sub-section (2) envisages the liquidator, or any creditor or contributory applying to the Court concerned as specified in sub-sec. (3). Again, sub-sec. (3) begins with the words, 'an application under sub-sec. (2) shall be made'. It is thus clear that sub-sec. (2) is confined to situations contemplated by sub-section (3). Consequently , S. 518 does not come to the rescue of the liquidator in cases falling outside the purview of sub-sec. (3).
(14) The learned counsel cited to us a few decided cases in support of his contention that S. 518 empowers a Court to grant stay of proceedings initiated by a Government for the realisation of their dues, or any other authority irrespective whether they were pending in a Civil Court or before any Tribunal or an administrative authority. These rulings are : Yogashram Pharmacy Ltd., Dehra Dun, in the matter of, AIR 1928 All 265 ; Buta Singh and sons Ltd. v. Peoples' Bank of Northern India, Ltd., AIR 1931 Lah 589 and In re P. P. De and Co., : AIR1953Cal309 . What is laid down there is that Courts could issue an order staying execution even when the company is in voluntary liquidation, in order to secure a distribution of the effects of the company equitably amongst all the creditors.
(15) It is not necessary to make a detailed reference to these decisions for the reason that they have no bearing on the law as it stands today. The first two cases were rendered under S. 215 of the unamended Companies Act of 1913. It is true that the third case was decided under S. 216 of the Indian Companies Act, but it does not appear that the attachment, or distress or execution was in any forum other than a Civil Court. On the other hand, the indications are that it was pending in a civil court.
(16) Incidentally, it may be mentioned here that by Amendment Act 22 of 1936, some of the Sections - Sections 207 to 218 - were recast and S. 215 of the unamended Act took the shape of S. 216 with some variations. For the first time in S. 216 that restriction now found in S. 518 in the form of clause (3) was incorporated. Section 216 is the predecessor of S. 518. Of course sub-section (5) was not present in S. 216, while sub-section (4) corresponds to sub-section (3) of S. 216. That being so, the rulings called in aid by the learned counsel for the appellant do not give any assistance to him.
(17) Shri Ananta Babu then fell back upon the argument that the word 'Court' occurring in clause (b) of sub-secs. (3) is comprehensive enough to take in a District Collector functioning under S. 52 of the Revenue Recovery Act. The learned counsel urges that unless we give a wide meaning to the term 'Court' as used in sub-secs. (2) and (3), it would be frustrating the intendment of the Indian Companies Act for securing a distribution, of the effects of the company pari passu and that Courts should not adopt a construction which would retard this distribution. Learned counsel draws out attention to S. 2 (11) of the Companies Act which defines the word Court, and also S. 10 of the Act, which deals with the jurisdiction of Courts, as vouching his proposition.
(18) We fail to appreciate the argument of the learned counsel based on S. 2 (11) and S. 10 of the Act. According to S. 2 (11) the Court means, with respect to any matter relating to a company (other than any offence against this Act), the Court having jurisdiction under this Act with respect to that matter relating to that Company, as provided in S. 10, and with respect to any offence against this Act, the Court of a Magistrate of the First Class or as the case may be, a Presidency Magistrate, having jurisdiction to try such offence. We are unable to understand how this definition furnishes any support to the contention of the learned counsel.
(19) Likewise, S. 10 does not render any assistance to him. Section 10 is in the following terms :
10 (1). The Court having jurisdiction under this Act shall be -
(a) The High Court having jurisdiction in relation to the place at which the registered office of the company concerned is situate, except to the extent to which jurisdiction has been conferred on any District Court or District Courts subordinate to that High Court in pursuance of sub-sec. (2) ; and
(b) where jurisdiction has been so conferred, the District Court in regard to matters falling within the scope of the jurisdiction conferred, in respect of companies having their registered offices in the District.
(2) The Central Government may, by notification in the Official Gazette and subject to such restrictions, limitations and conditions as it thinks fit, empower any District Court to exercise all or any of the jurisdiction conferred by this Act upon the Court, not being the jurisdiction conferred -
(a) in respect of companies generally, by Ss. 237, 391, 394, 395 and 397 to 407, both inclusive ;
(b) in respect of companies with a paid-up shares capital of not less than one lakh of rupees, by Part VII (Sections 425 to 560) and the other provisions of this Act relating to the winding up of companies.
(3) For the purposes of jurisdiction to wind up companies, the expression 'registered Office' means the place which has longest been the registered office of the Company during the six months immediately preceding the presentation of the petition for winding up.
(20) On the other hand, the enumeration of Courts by this Section seems to exclude administrative authorities like a District Collector executing his duties under Section 52 of the Revenue Recovery Act. So the learned counsel cannot derive any support from Section 2 (11) and Section 10 of the Act.
(21) Nor is the case of Dhanalakshmi Ammal v. I. T. Officer, (S) : AIR1957Mad376 relied on by him is of any help to the appellant. All that was laid down there was that when the collector purports to act as a civil Court for purposes of realising the amount under a decree under the proviso to S. 46 (2) of the Income-tax Act and proceeds to attach properties standing ostensibly in the name of somebody as belonging to the assessee, he is bound to entertain a claim under Or. XXI, Rule 58 and dispose it of in the same way a Court would do it in the course of execution of a decree. We do not think that it has any analogy here. It is to be remembered that under the proviso to Sub-section (2) of Section 46 of the Indian Income-tax Act, the collector is invested with all the powers of a Civil Court for the purposes of recovering an amount due under a decree. So, when he exercises that function, in that capacity he has also to exercise the functions of a Civil Court in the execution of a decree. Consequently, the above case does not throw any light on this enquiry.
(22) We feel that it would be doing violence to the language of sub-secs. (2) and (3) if we interpret them as including administrative authorities like a District Collector. The collocation of the words in clause (b) of sub-section (3) furnishes a clue to the question raised here. It reads :
'If the attachment, distress or execution is levied or put into force by any other Court, to the Court having jurisdiction to wind up the company.'
(23) This gives an indication, in our opinion, that the Court contemplated by this sub-section is a Court of similar nature, that is, a Civil Court.
(24) Section 59 of the Revenue Recovery Act also gives some assistance in understanding the nature of the office held by the Collector under S. 52. That Section says :
'Nothing contained in this Act shall be held to prevent parties deeming themselves aggrieved by any proceedings under this Act, except as hereinbefore provided, from applying to the Civil Courts for redress ;
Provided that Civil Courts shall not take cognizance of any suit instituted by such parties for any such cause of action, unless such suit shall be instituted within six months from the time at which the cause of action arose.'
(25) It is clear from Ss. 52 and 59 that the functionary under S. 52 is altogether different from a Civil Court. By no stretch of imagination can a Collector acting under S. 52 of the Revenue Recovery Act be regarded as a Court before whom execution is levied, or attachment or distress is to be enforced. Even where a tribunal shares some of the characteristics of a Court, it cannot be called a Court. The basic, essential of a Court is that it is constituted by a State and invested with its inherent judicial power.
(26) This view of ours support from the authoritative pronouncement of the Supreme Court in Engineering Mazdoor Sabha v. Hind Cycles Ltd., : (1962)IILLJ760SC . Their Lordships inter alia laid down that apart from the importance of the trappings of a Court, the basic and essential condition which makes an authority or a body, a tribunal under Art. 136, is that it should be constituted by the State and should be invested with the State's inherent judicial power. It cannot be postulated that the District Collector was constituted by the State with inherent Judicial powers vested in him, nor can it be said that he has any trappings of a Court. It is also difficult to predicate that he is required to act judicially under S. 52. It was further observed by their Lordships in that case that where the executive or administrative bodies are not required to act judicially and are competent to deal with issue referred to them administratively, their conclusion cannot be treated as quasi-judicial conclusions. This pronouncement clearly indicates that an executive or administrative officer like a Collector cannot answer the description of a Court within the connotation of sub-secs. (2) and (3) of S. 518.
(27) In Jagannath Prasad v. State of U. P. , : 2SCR850 the Supreme Court held that a Sales Tax Officer functioning under the U. P. Sales Tax Act is not a Court within the meaning of S. 195 Cr. P. C. In Crl. A. No. 141 of 1962, Lalji Haridas v. State of Maharashtra, D/- 7-2-1964 : 1964CriLJ249 it was observed in the majority judgment of the Supreme Court, that in the absence of S. 37 (4) which said that proceeding before an Income-tax Officer shall be deemed to be a judicial proceeding within the meaning of Ss. 193 and 228 I. P. C. , the Income-tax Officer would not be Court for the purposes of S. 195 Cr. P. C. It is unnecessary to pursue this point any further, as we feel that it is not possible to bring a Collector within the mischief of S. 518 (2) (b) of the Companies Act. If that were so, S. 518 is unavailable to the appellant.
(28) Reliance was not placed on any other provision of the Companies Act, or on any other enactment which could give the appellant the relief asked for.
(29) In these circumstances , the order under appeal has to be upheld, though for different reasons.
(30) In the result, the appeal fails and is dismissed, but without costs. Advocate's fee Rs. 500/-.
(31) Appeal dismissed.