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Bharat General and Textile Industries Ltd. Vs. Muir Mills Co. Ltd. and ors. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtAllahabad High Court
Decided On
Case NumberCompany Petition No. 15 of 1965
Judge
Reported in[1968]38CompCas533(All)
ActsCompanies Act, 1956 - Sections 439; Industries (Development and Regulation) Act, 1951 - Sections 18E
AppellantBharat General and Textile Industries Ltd.
RespondentMuir Mills Co. Ltd. and ors.
Appellant AdvocateB.L. Gupta, Adv.
Respondent AdvocateJagdish Swarup, Adv.
DispositionPetition dismissed
Excerpt:
.....must consequently fail. 5. now it will be noticed that sub-section (c) quoted above opens with the words 'no proceeding for the winding-up of such undertaking'.a proceeding for the winding-up of a company begins, as is only too well-known, with the filing of a winding-up petition, and it continues through various stages till the passing of the winding-up order. if this is the meaning which is to be given to these words and i am unable to see how any other meaning can be given to them--then they clearly prohibit the maintainability of any proceeding for the winding-up of a company irrespective of whether the petition was filed before or after the relevant date. the correctness of this contention can hardly be questioned but, as held above, section 18e(c) on its own terms is clearly..........the act, but the observations made by their lordships of the supreme court, while interpreting the word 'sued' in section 86, civil procedure code read with section 87b, civil procedure code, in mohan lal v. his highness maharaja sri sawai man singhji, ex ruler of jaipur, a.i.r. 1962 s.c. 73 might be usefully quoted in this connection. the material facts of that case were that one mohan lal jain filed a suit on the 28th february, 1951, for the recovery of a certain sum of money from the ruler of jaipur state. the ruler of jaipur state who had become an ex-ruler by that time raised the plea that the suit was incompetent as the consent of the central government under section 87b of the civil procedure code had not been obtained. section 87b, be it noted, had made the provisions of section.....
Judgment:

J.N. Takru, J.

1. This petition by M/s. Bharat General and Textile Industries Ltd., under Section 439 of the Companies Act, seeks the grant of an order for the winding-up of Messrs. Muir Mills Co., Ltd.--the opposite party--on the ground that it failed to pay the former's dues amounting to over one lakh of rupees, despite notice, and waiting for the statutory period under Section 434(1)(a) of the Companies Act.

2. It is unnecessary to set out the allegations on which this winding-up petition is based, since it is likely to fail on the preliminary objection--to be indicated presently--of the opposite party. I shall, therefore, mention only such of the facts as are relevant for the appreciation of the preliminary objection. It is common ground that the aforesaid petition was filed on the 15th November, 1965, and notice was issued on it on the 22nd November, 1965. Thereafter, on the 22nd December, 1965, the Central Government passed an order under Section 18E of the Industries (Development and Regulation) Act of 1951--hereinafter called the Act--taking over the management and running of the opposite party, and on the 1st January, 1966, it appointed Sri P.N. Kapoor as its authorised controller for a period of five years to begin with. Accordingly, when the opposite party received notice of this petition, it put in appearance, and filed a counter-affidavit through Sri B.N. Chopra, its secretary, giving the aforesaid facts, and on their basis Sri Jagdish Swarup, its learned counsel at the very first hearing of the petition raised the preliminary objection that as under Section 18E(c) of the Act no petition for the winding-up of the opposite party could lie after the taking over of the management and running of the opposite party by the Central Government except with the leave of the latter, and as no such consent had been obtained, the petition was liable to dismissal. After hearing Sri Jagdish Swarup for the opposite party, and Sri B.L. Gupta for the petitioner, I am satisfied that the preliminary objection is well founded and this petition must consequently fail.

3. Now Section 18E, on which Sri Jagdish Swarup relied, in so far as it is relevant for the present enquiry, reads thus :

' 18E, (1) Where the management of an industrial undertaking being a company as defined in the Indian Companies Act, 1913 (7 of 1913), is taken over by the Central Government, then, notwithstanding anything contained in the said Act............

(c) no proceeding for the winding up of such undertaking......shall lie in any court except with the consent of the Central Government. '

4. The contention of Sri Jagdish Swarup was that the word ' lie ' in the aforesaid sub-section is of sufficient amplitude to include not only the filing of a petition for the winding-up of a company but also its maintainability after the Central Government takes over its management, while on behalf of the petitioner Sri Gupta argued that the said word only meant the institution of a winding-up petition after the management of the company was taken over by the Central Government. After giving the matter my anxious consideration, I am, however, of the opinion that the construction contended for by Sri Jagdish Swarup is to be preferred. I shall, therefore, proceed forthwith to record my reasons for coming to that conclusion.

5. Now it will be noticed that Sub-section (c) quoted above opens with the words ' no proceeding for the winding-up of such undertaking'. A proceeding for the winding-up of a company begins, as is only too well-known, with the filing of a winding-up petition, and it continues through various stages till the passing of the winding-up order. In my judgment, therefore, the words ' no proceeding for the winding-up of an undertaking' must be held to refer to any and every proceeding connected with the winding-up of the company starting with the filing of the petition and ending with the winding-up order. If this is the meaning which is to be given to these words and I am unable to see how any other meaning can be given to them--then they clearly prohibit the maintainability of any proceeding for the winding-up of a company irrespective of whether the petition was filed before or after the relevant date. If Parliament had intended to put a bar only upon the filing of a winding-up petition after the relevant date, then it could have much more appropriately, not to say simply, expressed its intention by just saying that no petition for the winding up of an undertaking, whose management and running has been taken over by the Central Government, shall be filed in any court except with the consent of the Central Government. The fact that it did not do so, but preferred to use words of much wider amplitude as 'no proceeding for the winding up of an undertaking' leaves no room for doubt in my mind that Parliament intended to impose a ban on all proceedings for the winding up of a company whose management and running was taken over by the Central Government except with the consent of the latter. I feel fortified in my interpretation as it is also in consonance with the aims and objects of the Act, viz., of affording a chance to the Central Government to rehabilitate an industrial undertaking in the larger interest of the society, and to prevent its winding-up unless absolutely necessary.

6. There is no direct authority on the interpretation of Sub-section (c) of Section 18E of the Act, but the observations made by their lordships of the Supreme Court, while interpreting the word 'sued' in Section 86, Civil Procedure Code read with Section 87B, Civil Procedure Code, in Mohan Lal v. His Highness Maharaja Sri Sawai Man Singhji, ex Ruler of Jaipur, A.I.R. 1962 S.C. 73 might be usefully quoted in this connection. The material facts of that case were that one Mohan Lal Jain filed a suit on the 28th February, 1951, for the recovery of a certain sum of money from the Ruler of Jaipur State. The Ruler of Jaipur State who had become an ex-ruler by that time raised the plea that the suit was incompetent as the consent of the Central Government under Section 87B of the Civil Procedure Code had not been obtained. Section 87B, be it noted, had made the provisions of Section 86, Civil Procedure Code applicable to the Rulers of any former Indian States. The plaintiff attacked the applicability of Section 87B, on two grounds, (1) that it was unconstitutional under article 13(2) of the Constitution, and (2) that, in any case, it did not apply to pending suits. The trial court repelled both these grounds and adjourned the case to enable the plaintiff to obtain the requisite sanction. The plaintiff filed a revision in the court of the Judicial Commissioner challenging the said order. The learned Judicial Commissioner agreed with the trial court's view on both the grounds and dismissed the revision as also the petition for leave to appeal to the Supreme Court. The plaintiff filed an appeal in the Supreme Court by special leave. The Supreme Court upheld the view taken by the courts below and dismissed the appeal, holding that the word 'sued' in Section 87B meant :

' not only the filing of the suit or civil proceedings but also their pursuit through courts. A person is sued not only when a plaint has been filed but is sued also when the suit is pending against him. The word 'sued' covered the entire proceeding in any action and the person proceeded against is sued throughout the duration of the action. It follows that the consent is necessary not only for filing of the suit against the ex-ruler but also for its continuance from the time the consent is required.'

7. It may be mentioned that although the opening words of Section 87B are that 'no ruler of a former State may be sued in any court', the Supreme Court did not confine the necessity of the consent of the Central Government, to the filing of a suit against an ex-ruler, but also held it to be necessary for its continuance. The same reasoning, in my opinion, applies with equal force to the interpretation of the word 'proceeding' in Section 18E(c), and thus construed a proceeding for winding-up starts with the filing of a winding-up petition and continues throughout the duration of that proceeding, with the result that the consent of the Central Government is required even to the continuance of the said proceeding from the time the consent is required.

8. Sri Gupta contended that the use of the word 'proceeding' in the singular in the opening part of Section 18E(c) showed that Parliament intended to make the consent of the Central Government necessary for one 'proceeding' only, and not for all the proceedings in a winding-up petition and as such the only proceeding it could have had in mind was the proceeding connected with the tiling of the winding-up petition. In my opinion this contention has no force, for the simple reason that in the context in which that word is used the singular must be deemed to include the plural. It will be noticed that in the passage from the Supreme Court judgment which has been cited above, that court also used the word 'proceeding' in the singular in connection with the word 'sued' although a number of proceedings have to be gone through between the filing of a suit and its final disposal. Thus, the fact that the section uses the word 'proceeding' in the singular does not affect the interpretation of that section as urged by Sri Gupta.

9. Sri Gupta also contended that as at the time when the order under Section 18E of the Act was passed, the petitioner has acquired a vested right to pursue his petition in this court without the leave of the Central Government, unless Section 18E(c) expressly or by necessary implication deprived him of that right the consent of the Central Government was not necessary in this case. The correctness of this contention can hardly be questioned but, as held above, Section 18E(c) on its own terms is clearly retrospective in its effect. The second contention also therefore fails.

10. Thus, for these reasons stated above, I am of the opinion that this petition could not be maintained without the consent of the Central Government after it passed the order under Section 18E of the Act on the 22nd December, 1965, and as the petitioner has not obtained the requisite consent, his petition is liable to be, and, is hereby, dismissed with costs.


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