(1) The question referred to the Full Bench is whether before initiating proceedings under Section 4 and 7 of the Public Premises (Eviction of Unauthorised Occupants) Act 1,971 (hereinafter to be called the 1971 Act) the Life Insurance Corporation (hereinafter referred to as LIC) is required under law to seek leave of the winding up Court under Section 446 of the Companies Act 1956
(2) Winding up proceedings were started against M/s. Asia Udyog (P) Ltd. It is common case that an order for wading up had been passed on 2-2-1978 and the winding up proceedings are pending in this court. The company was admittedly a tenant of the premises at 8, Darya Ganj, Delhi. The said premises also admittedly belong to LIC. 1971 Act defines 'Public Premises' and it is common case of the parties that the premises in dispute are covered by the definition of Section 2(c) of 1971 Act.
(3) 'THE case of the Lic is that because of the various unlawful acts done by the company its possession was unauthorised and it was entitled to seek possession of the premises in dispute and that also these premises Were required for its own use. It asked for possession of the premises from the Official Liquidator. The Lic also claims that the company is in unauthorised occupation since 31-3-1976 and it is. thereforee. It able to pay damages to the applicant LIC. Apparently the Official Liquidator to whom request was made to vacate the premises advised the Lic to seek the leave of the Company Judge under Section 446 of the Companies Act for initiating the proceedings under 1971 Act. Hence an application under Section 446(1) was filed by LIC. As leave application was opposed by the Official Liquidator Lic made bold and urged before the single Judge that though it had filed the leave application in fact it was not necessary to do so as Section 446(1) was inapplicable to proceedings under 1971 Act. The learned Judge also felt that this matter was important enough to require consideration by the Full Bench arid that is how the matter has been placed before us.
(4) Section 446(1) provides that when a winding up order has been made no suit or other legal proceedings shall bu commenced........ against the Company excepting by leave of court and subject to such terms as the court may impose. Section 446(2) says that the Court which is winding up the company shall, notwithstanding anything contained in any other law for the time being in force, have jurisdiction to entertain, or dispose of (a) any suit or proceeding by or against the company, (b) any claim made by or against the company (including claims by or against any of its branches in India); It is no body's case that the proceedings before the Estate Officer under the 1971 Act are by way of suit. But what is urged by the Official Liquidator is that they are certainly legal proceedings and, thereforee, Section 446(1) is applicable. Before dealing with the meaning of the word 'legal proceedings' it will be proper to appreciate the nature of the proceedings under the Act of 1971. The Act of 1971 was enacted to provide for a speedy machinery for the eviction of unauthorised occupants from public premises. It also provides for recovery of rent or damages for unauthorised occupation. Public premises are defined to mean and include premises owned by any Corporation established by or under a Central Act and that is why the Lic which is constituted under the Lic Act is entitle to proceed under the Act of 1971 with regard to premises belonging to it. Section 4 provides for the Estate Officer if he is of the opinion that any person is in unauthorised occupation, to issue show cause notice and if he finds that public premises are in unauthorised occupation, to order eviction under Section 5. Section 7 also empowers the Estate Officer to require payment of rent or damages in respect of public premises. It is important to note that the 1971 Act was proceeded by a Public premises (Eviction of Unauthorised Occupants) Act 1958. The Supreme Court however, in : 3SCR399 Northern India Caterers (Pvt.) Ltd. and another V. State of Punjab and another. held the Act unconstitutional in as much it conferred an. additional remedy over and above the usual remedy by way of suit, and leaving it to the unguided discretion of the Collector to resort to one or the other of the procedures. In. order to remove this discrimination and arbitrariness 1971 Act was brought into force and Section 15 provides a bar of jurisdiction of Civil Courts to entertain any suit in respect of eviction of any person who is in unauthorised occupation of any public premises, or recovery of rent or damages thereof. Thus under the 1971 Act there is only one procedure available for eviction of person in unauthorised occupation of public premises and that procedure is to be found in 1971 Act. The other courts have no jurisdiction in these matters, vide : 1SCR515 Hari Singh and others V. Military Estate Officer, Delhi. It will be immediately clear that the 1971 Act deals with a very limited objective. It only means that if the Act of 1971 was not there, the Lic would have to file a Civil Suit or go before the Rent Controller for recovery of possession of premises or recovery of rent damages. What is important to be emphasised is that the Act of 1971 is not a distinct code which has created its own liabilities and rights and has brought forth a new set of rights and liabilities under the said Act not existing before. 1971 Act deals with the rights and liabilities of the parties under ordinary law but only a new forum and a remedy has been created in respect of Public Premises A. It is this limited nature of coverage by 1971 Act which must be borne in mind when answering the poser raised before us. No narrow construction should be placed upon the words 'or other legal proceedings'. See 1946 Fc 16 at 20 Governor General in Council v. Shirormani Sugar Mills Ltd. (in liquidation). But as there is no definition of it. It will have to be determined in each case whether the proceedings, are such which can be said to be legal proceedings within the meaning of section 446 of the Companies Act. The meaning of word legal proceedings' under Section 446 will naturally take colour from the object which is sought to be served by Section 446 Of the Act. Chapter Ii of part Vii of the Companies Act 1956 deals with the winding up by the Court. Section 446 falls under the sub-heading of consequences of winding up order. This provision broadly is analogous to Section 226 and 231 of the English Companies Act 1948. The object of these provisions is stated to be 'when a winding-up order is made, the court, acting by its officer the official receiver lays its hand upon the assets and says, no creditor or claimant must touch these assets or take proceedings by way of action, execution, or attachment pending the distribution by the court in due course of administration. This protection is indispensable equally in winding up and in bankruptcy to prevent a scramble for the assets, but it is not always enough. An even-handed justice requires that the court should have power to intervene at an earlier stage for the protection of the assets'. (See Palmers' Company Precedents, part Ii, 17 Ed., page 302). The object of S. 446 is to save the company, which is being wound up, from unnecessary litigation and to protect its assets for equitable distribution among its creditors and its shareholders. An application for leave is thereforee, made necessary by the order for winding up and in dealing with such application the court has necessarily to consider the interest of the company and to see that its assets are not wasted in frivolous and unnecessary litigation. (See : AIR1959Bom41 Balkrishshna Mahadeo Vartak and others V. Indian Association of Chemical Industries Ltd. This view of Bombay High Court was followed in (1977) 47 Comp. Cas 30 Star Engineering Works Ltd. v. Official Liquidator of the Krishnakumar Mills Company Ltd. (in liquidation) and others.
(5) Dealing with winding-up provisions of English Companies Act, 1862 the object was stated to put all unsecured creditors upon an equality, and to pay them pari passu. A landlord who has not put in a distress before the commencement of the winding-up is an unsecured creditor. He can prove against the company under Section 158 for all rent in arrears at the time of his proof, but his right to distrain is taken away by section 163, unless circumstances exist which, in the opinion of the Court, require it to give him leave to distrain under Section 87. Vide (21 Chancery Division page 322 at 329) In re: Oak Pits Colliery Company. It is thus well established that once a winding up order is passed the undertaking and the assets of the company pass under the control of the liquidator whose statutory duty is to realise them and to pay from out of the sale-proceeds its creditors. Such creditors acquire on such order being passed the right to have the assets realised and distributed among them pari passu. No new rights can thereafter be created and no uncompleted rights can be completed, for doing so would be contrary to the creditor's right to have the proceeds of the assets distributed among them pari passu. Vide (1970) 40 Comp. Cas 689 J. K. (Bombay) P. Ltd. V. New Kaiser-I-Hind Spg. and Wvg. Co. Ltd. and others.
(6) This being the object of Section 446 it is apparent that all those matters where the claim is of such a nature which can be investigated by the winding up Court would be within the purview of Section 446. It is a different matter whether in any particular case even if the case is one which is of a nature which is within the purview of a Company Judge leave may or may not be granted. We are not concerned with the question whether leave is to be granted or not because that is a matter for the Company Judge to .consider. We arc concerned only with the question whether proceedings under 1971 Act are such legal proceedings as are covered within the meaning of Section 446(1) of the Companies Act, In the present case what is being claimed is an order of eviction contemplates must be taken to be a summary proceeding by way of application. It further observed that, 'it appears to us that, consistently with this policy and with the scheme of the Amending Act, where the liquidator has to approach the Court under Section 446 for relief in respect of matters legitimately falling within the scope thereof elaborate proceedings by way of a suit involving time and expense, to the detriment of the ultimate interests of the company under liquidation, were not contemplated.'
(7) In ( : AIR1955Mad449 In the matter of Subhodbaya Publications Ltd. the tenants who had taken on lease the premises belonging to the company applied for fixation of standard rent before the House Rent Controller, Madras. In order to continue the proceedings before the Rent Controller he applied under Section 171 of the Companies Act 1913 (corresponding to Section 446) seeking leave of the Company Judge to continue the proceedings. Ramaswamy, J. held that this section prevents the commencement of new proceedings or the continuation of pending proceedings against the company after the appointment of a provisional liquidator or after the making of a winding up order, without the leave of the winding up Court. The learned Judge further held that this was a case where leave should be applied for and secondly a fit case where leave to proceed with the legal proceedings should be granted. No doubt the learned Judge observed that against the company which was a lessee and for recovery of damages for alleged unauthorised occupation. De horse the provisions of 1971 Act and Rent Control Act these proceedings will have to be initiated by a suit. Now it cannot be disputed that if the landlord was to proceed for recovery of possession of premises or for recovery of. damages against the company it would be proceeding against the company within the meaning of Section 446(2)(a) and would also amount to a claim against the company within Section 446(2)(b) of the Companies Act. Such a proceeding would normally, thereforee, be a matter which would be appropriate for the winding-up court to deal with and ipso facto such proceedings could not be commenced or continued except by leave of the court as required by Section 446(1) of the Act. That leave has to be obtained before filing a suit to recover arrears of rent on account of the premises which were on lease with the company, was recognised in : AIR1959Bom41 (supra).
(8) In (20 Chancery Division page 260) (8) General Share and Trust Company V. Wetley Brick and Pottery Company, the owner of a mine which had leased the same to the Company and against which an order of winding-up had been moved, applied for leave to diestrum or to re-enter. The Vice-Chancellor refused leave and held that he could not be allowed to re-enter without establishing his right by an action. The Court of Appeal disapproved of such an approach and while allowing the appeal Jessel M. R. observed as follows:
'I have often said both here and at the Rolls, that when in a winding-up a landlord comes to the Court asking for the possession of property which is under the control of the Court, and the claim is one against which the liquidator would have no defense, the right course is to order the liquidator to give up possession. It would be a cruel hardship to put the applicant to the expense of bringing an action when the Court can see that there is nothing to be tried.'
(9) Thus it was clearly recognised that during winding up proceedings the winding-up court can in a fit case order the delivery of possession back to the landlord. This authority highlights that the matter even of recovery of possession can in appropriate cases be dealt with by the Company Judge. Thus in : 1955CriLJ555 Dhirendra Chandra Pal V. Associated Bank of Tripura Ltd. a banking company having gone in liquidation the liquidator filed an application before the High Court under Section 45B of the Banking Companies Act for ejectment of a person, who had become a tenant of the bank of the land belonging to it prior to liquidation. The High Court ordered the ejectment. Thereafter the tenant filed a suit claiming that the High Court had no jurisdiction to pass an order of eject meat in summary proceedings initiated on an application and the same need only be done by a regular suit. Section 45B of the Banking Companies Act provided that notwithstanding anything contained in the Indian Companies Act and any other provision for the time being in force, the court shall have full power to decide all claims made by or against any banking company and all questions of properties and all other questions whatsoever which may arise in the course of winding up. The court held that in view of Section 45B the normal proceedings that the Section proceedings for a fair rent under the Madras Buildings L(Lease and Rent Control) Act are within the exclusive jurisdiction of the Rent Controller, and no such order could be passed by the winding up court, but he nevertheless held legal proceedings before the Rent Controller to be within the meaning of Section 171 of the Companies Act 1913. It is important to make a difference between the proceedings for recovery of possession or recovery of damages which are normally within the purview of ordinary civil courts but are now by a special Act included within the purview of Rent legislation and the right to have a standard rent fixed which is a right created only because of the rent laws and in not a right available under ordinary laws available to the tenant. It is because the right to have a fair rent determined is a special right created by a statute that it has to be held that these are not proceedings appropriate for a winding up court. The right of a landlord however, to recover damages in winding up proceedings if lease has been determined earlier has been recognised in (1879) 2 CD 572. In re Me EWAN. In (1970) 40 Comp. Cas 689 (supra) in which the company was in possession of the leased premises, it was held that the question of restoration of possession to the Lesser was a matter which could be decided in the summary manner without resort to the protracted procedure of a regular suit. But because of certain other litigation the order was not passed. But what is important is that it was recognised that even proceedings for restoration of possession are appropriate proceedings to be dealt with under section 446(2) of the ComPanies Act. In (1967) 37 Comp. Cas 306. In re Osler Electric Lamp . (in Liquidation) it was held that not with standing the exclusive jurisdiction conferred on Small causes Court under Bombay Rent Control Act 1947. owner of the premises would have to seek leave under Section 446(1) of Companies Act before proceeding against the Company. Thus there is no logical reason why the company Judge cannot entertain a matter for the realisation of arrears of rent or for the recovery of the premises. There is thus nothing peculiar or special about the nature of proceedings in the present case which would suggest that these proceedings and claim against the company should not be entertainable by the winding up court. But the counsel for the Ltc, Mr. Gupta contends that whatever be the position when a suit has to be filed for this purpose the position is different when proceedings are to be initiated under the 1971 Act. The validity of argument depends on the answer to two questions whether the proceedings for the recovery of premises and the recovery of arrears of rent can be considered to be legal proceedings within Section 446(1) of the Companies Act; and secondly whether the provisions of 1971 Act confer sole and exclusive jurisdiction on the authorities under the said Act to deal with 'public premises' even in case of a Company which is under winding up. In other words does the provisions of 1971 Act override the provisions of the Companies Act insofar as the latter provide for the tights and consequences flowing from winding up order.
(10) The plea of L.I.C. being that the Act of 1971 is an exclusive code to deal with the proceedings with regard to the public premises and it is also urged that they are not legal proceedings in the sense in which they should be understood under section 446(1) and, thereforee, the said Section was inapplicable.
(11) The meaning to be given to legal proceedings' in Section. 171 of Companies Act 1913 came up for consideration before the Federal Court in Governor General in Council v. Shiromani Sugar Mills Ltd. (in Liquidation where it was sought to be argued that the word 'Legal Proceedings' Should be confined to 'original proceedings in a court of first instance, analogous to a suit initiated by means of a petition similar to a plaint'. This was summarily rejected by the Federal Court and it was held that no narrow construction should be placed upon the words 'or other legal proceedings' under Section 171 and that the words can and should be held to cover distress and execution proceedings in the ordinary courts and that such proceeding are other legal proceedings against the Company, as contrasted with ordinary suits against the Company. In that case the Income Tax Officer had sought to recover arrears of tax through the instrumentality of Collector by resort to Section 46 of the Income Tax Act which would put the machinery for collection of arrears of Income Tax as arrears of land revenue in motion. The question for decision was whether Income Tax Officer should have obtained the leave of court under Section 171 of Companies Act prior to taking steps to put into action the machinery under Section 46 of Income Tax Act. The Federal Court in a detailed Judgment referred to the other provisions of the Companies Act which give only a limited priority to certain class of Crown debts and beyond that the Crown dues had to rank pan passu for payment with certain other debts, in respect of salary, wages, etc. and thereforee, on a general consideration derived from the whole scheme of the Act in regard to the administration of assets and the liquidation of the companies came to the conclusion that 'we have no hesitation in coming to a conclusion and holding that the Crown is bound by the provisions of the Indian Companies, Act, 1913, and is bound, in regard to the provisions relating to the liquidation of companies, 'to a statutory scheme of administration wherein the prerogative right of the Crown to priority no longer exists. (Lord Wrenbury in 1923 Ac 647'. The court further observed :
'THAT still leaves open the question whether action under S. 46, Income-Tax Act, is covered by the phrase 'other legal proceedings'. Clearly it is not a proceeding in an ordinary Court of law, but we see no reason why in British India no 'legal proceedings' can be taken otherwise than in an ordinary Court of law, or why a proceeding taken elsewhere than in an ordinary Court of law, provided it be taken in pursuance of law or legal enactment, cannot properly be described as a 'legal proceeding'.
(12) It was accordingly held that other legal proceedings under Section 171 of the Companies Act, 1913 would comprise proceedings by the Revenue Authorities under Section 46(2) of the Income Tax Act and that before forwarding the requisite certificate to the Collector for recovering arrears of Income-Tax the Government should have applied in liquidation under Section 171 of Companies Act for leave of the winding up Court.
(13) In : 57ITR331(SC) The Union of India and another v. India Fisheries Private Ltd., Bombay, the action of the Income Tax department in seeking to set off the amount to be refunded to the company which was under winding up against the tax which was still outstanding to be paid by the Company by invoking Section 49(E) of the Act which permitted that where a refund is found due to any person the Income Tax Officer may in lieu of the payment set off the amount to be refunded against the tax, if any, payable by the person was challenged. The Supreme Court held that though on the face of the provision there is no doubt that the Section (i.e. S. 49(E) is not subject to any other provision of law but it will be surprising if this power can be exercised in such a way as to defeat the provisions of Section 228 and 229 of Indian Companies Act, which provide that an unsecured creditor must prove his debts and all unsecured debts are to be paid pari pasau. The Court resolved the problem by holding that Section 49(E) is a general provision applicable to all the assesseds and in all circumstances while Sections 228 and 229 deal with the proof of debts and their payment in liquidation. Same is the position of unsecured creditors under the Companies Act, 1956, see Sections 528, 530. In : 83ITR685(SC) S. V. Kondaskar, Official Liquidator and Liquidator of the Colaba Land and Mills Co. Ltd., (in Liquidation) V. V. M. Deshpande, Income Tax Officer, Companies Circle 1(8) Bombay and another the court held that reassessment proceedings under Section 148 of the Income Tax Act are not such legal proceedings as to require that Income Tax Officer must obtain leave under Section 446(1) of the Act, before commencing such proceeding. It was so held because it was stated that the Income Tax Act is a complete code with respect to the assessment and reassessment of Income Tax and that it would lead to anomalous consequences if the winding up court could be held empowered to transfer the assessment proceedings to itself and assess the company to income-tax. It is however, significant to note that notwithstanding this finding the court did hold that after the assessment had been made the liquidation court would have full power to scrutinise the claim of revenue and it would be open to the liquidation court then to decide how far the amount of income-tax determined by the department should he accepted as lawful liability on the found of the company in liquidation. Thus the authorities clearly recognise that it is only in special jurisdictions like the Income Tax Act etc. that proceedings may be commenced without obtaining leave under Section 446 of the Companies Act. But here too it is accepted that no execution, distress or recovery can be made except after obtaining leave under Section 446(1) of the Companies Act. This authority cannot, however, be stretched to include as was the effort of Mr. Gupta appearing for Lic that no leave was necessary under Section 446(1) of the Companies Act for proceedings before the Estate Officer with regard to the Public Premises. The reason why we say so is that proceedings under the Income Tax Act are special kind of proceedings for which liabilities and rights have been created by the statute itself. Liabilities under the Income Tax Act are no incident of ordinary civil liabilities. But the rights and liabilities between the parties i.e. the Lic and the Company are the rights under general law ; only another remedy has been provided, in case the property is a public premises. When the Supreme Court says in Colaba case (supra.) the legal proceedings under sub-section (1) and the legal proceedings in sub-Section (2) of Section 446 convey the same sense and proceedings in both the sub-sections must be such as can appropriately be dealt with by the winding up court the question to be asked in each case is whether the proceedings are such which could be dealt with appropriately by the winding up court. Now here is the matter dealing with recovery of premises or for recovery of arrears of damages. If thus the answer is that the proceedings are of such a nature which can normally and appropriately be dealt with by winding up court then leave has to be obtained; of course if the proceedings are of a nature which are not normally to be dealt with by the civil courts then leave may not be necessary, like the proceeding for initiating assessment under Income Tax Act as in Colaba case (supra). To give an analogy borrowing from the Colaba case we can understand that if proceedings are taking place under the Excise Act or the Customs Act or the Foreign Exchange Regulation Act before the authorities constituted under those statutes then they would be proceedings which could not appropriately be dealt with by the winding up court, because rights, liabilities are created by special statutes, and are not rights under the ordinary law. That is why obtaining leave from a winding up court may not be necessary when a reference is made by the State Government under Section 10(1) of the Industrial Disputes Act because this power which is specially created by Industrial Disputes Act is given to the State Government and is not controlled by the Companies Act. See AIR 1957 Pat 722 S. K. G. Sugar Mills Ltd. v. Ali Hassen and others. To similar effect is : AIR1951Mad987 R. G. N. Price, Official Liquidator of the Andhra Paper Mills Co., Ltd., (in liqn.) v. M. Chandrashekharan, President of the Andhra Paper Mills Workers Union, where C. J. Rajamannar speaking for the Bench held that declaration made under Section 15(2) of Industrial Disputes Act cannot be held to be legal proceedings' within Section 171 of the Companies Act, because there is no proceeding by the government, and the order is a mere mechanical administrative act. On similar principle in : (1960)ILLJ311aKer B. V. John & Others v. Coir Yam and Textiles Limited, it was held that Section 446 of the Companies Act can have no application to proceedings pursuant to a reference under Section 10 of the Industrial Disputes Act. Even in these cases also so far as the question of recovery from the Company in liquidation is concerned prior leave of the winding up court to proceed in execution or distress would have to be obtained. Mr. Gupta had sought to argue that no leave was necessary at this stage to proceed against the company under the Act of 1971 and that the question of leave may be relevant when execution is sought in pursuance of any order that may be obtained from the authorities under the Act. We cannot agree. That leave will have to be obtained for execution, admits of no doubt in view of the Supreme Court decision in Colaba's case. But the decision of the Supreme Court in Colaba's case requiring leave under Section 446(1) only at the recovery stage must be understood to be restricted only to statutes which are analogous to proceedings like assessment under Income Tax Act; they cannot encompass proceedings which are normally and appropriately to be dealt with by ordinary courts .like in the present case.
(>14) One of the arguments urged by Mr. Gupta for the Life Insurance Corporation was that as Section 15 of the Act of 1971 laid down that no court shall have jurisdiction to entertain any suit or proceeding in respect of the eviction of any person who is in unauthorised occupation of any public premises or for recovery of rent or for damages, the said Act of 1971 conferred exclusive jurisdiction on the authorities under the said Act to deal with matters of Public Premises and, thereforee, Section 446 of the Companies Act being a general Act could not control those proceedings. Now it is no doubt true that Act of 1971 deals with the eviction of unauthorised occupants from public premises but that by itself does not mean that the Act of 1971 should be considered to be a special legislation when the company involved is one which is under winding up. The Act of 1971 deals generally with public premises. This only means that if there is dispute regarding eviction or recovery of rent proceedings with regard to the public premises it is a special Act so far as companies other then winding up are concerned, but will be general, if the company is under winding up where the Special Act would be the Companies Act on the analogy of : 57ITR331(SC) (supra.). It is true that in case the public premises were occupied by a company which was not under winding up then in view of Section 15 of the Act of 1971 proceedings could take place without leave before the authorities under the Act of 1971. But that position would not prevail in case a company under winning up was occupant of public premises. The legal maxim generalia specialibus non derogant is ordinarily attracted where there is a conflict between a special and a general statute and an argument of implied repeal is raised. See : (1981)ILLJ1SC L.I.C. of India v. D. J. Bahadur. The principle to be applied was said to be 'In determining whether a statute is a special or a general one, the focus must be on the principal subject matter plus the particular perspective. For certain purposes, an Act may be general and for certain other purposes it may be special and we cannot blur distinctions when dealing with finer points of law.' It was accordingly held that 'vis-a-vis 'industrial disputes' at the termination of the settlement as between the workmen and the Corporation the Industrial Disputes Act is a special legislation and the Lic Act is a general legislation. Likewise, when compensation on nationalisation is the question, the Lic Act is the special statute. An application of the generalia maxim as expounded by English text-books and decision leaves us in no doubt that the I.D. Act being special law', prevails over the Lic Act which is but general law. Similarly in the present case if Section 15 of the Act of 1971 was to be given undiluted and unrestricted sway it will mean that proceedings for the recovery of rent and damages could be taken by the Lic before the authorities under the Act of 1971 and recovery may be made in full notwithstanding that L.I.C. being an unsecured creditor will normally have to rank pari passu Along with other unsecured creditors by virtue of Section 530 of the Companies Act. It is well settled that the landlord is not a secured creditor. See (1881) CD 251. If the L.I.C. is, thereforee, permitted to recover its dues without obtaining leave of the winding up court it will thus derive undue benefits and advantage against other unsecured creditors This would defeat the Very object of the winding up provisions in the Companies Act, which is to make the court the custodian of the Companies which are being wound up. The legislature is wanting that all matters concerning them should be dealt with by the winding up courts under its supervision and by its leave so that the distribution of assets and liabilities are dealt with equitably and to the satisfaction of all concerned including company, creditors members. The only way to reconcile the Two provisions would be to read down the power of the authorities under the Act of 1971 to deal with the matter of Public Premises when they are occupied by companies in winding up except by leave of the court. This was the course adopted in : 57ITR331(SC) (supra.) and which we respectfully follow.
(15) We must however, also notice : 3SCR665 Damji Valji Shar and another v. Life Insurance Corporation of India and others. In that case on the nationalisation of the Life Insurance business Section 15 provided for claims to be made before a tribunal constituted under the nationalisation Act. Section 41 of the L.I.C. Act provided that no civil Court shall have jurisdiction upon a matter on which a tribunal was empowered to Act. The insurance company having gone in liquidation objection was taken to proceedings before the Tribunal on the ground that without taking the leave under Sec- corporation 446 of the Companies Act proceedings could not he started before the tribunal. This plea was negatived on the ground that as tribunal had been constituted under the L.I.C. Act to entertain the application of Corporation the Company Court had no jurisdiction to adjudicate on any matter which the tribunal is empowered to decide and that the provisions of the L.I.C. Act being special will over-ride the provisions of the Companies Act which is an Act relating to companies in general. The obvious distinguishing feature in that case is that the proceedings before the tribunal constituted under the L.I.C. Act were not in the nature of ordinary proceedings which are entertainable by ordinary courts. The L.I.C. Act had nationalised the Insurance business and had constituted a tribunal with regard to the claims with regard to the nationalisation business. Evidently a right had been created under a statute and also a special remedy created by a statute. These proceedings were analogous to the proceedings of assessment under the Income Tax Act where the Supreme Court in : 83ITR685(SC) (supra.) held that assessment proceedings are not within the purview of Section 446(1) and no leave is necessary. It was so held because as reiterated in L.I.C. case 1980 Sc 2181 (supra.) when compensation or nationalisation is the Question, Lic Act is a special statute. In the present case however, the nature of the proceedings is such that they are ordinarily exercisable by Civil Courts. Act of 1971 has only created a special forum and, thereforee, on the principles laid down in : (1981)ILLJ1SC (supra.) and : 57ITR331(SC) (supra.) the Act of 1971 would be treated to be a general provision applicable to all public premises while Section 446 of the Companies Act will be treated to be a special provision when public premises are occupied by Companies under winding up. An attempt was made to argue that because of the amendment in sub-section (2) in Section 537, the proposition that government dues did not have precedence over other dues in the matter of priorities in winding up proceedings no longer holds the field. We cannot agree. Section 537(1) provides that where any company is being wound up any attachment execution or any sale held after the commencement of winding up without leave of the court, will be void. Under Section 441 of the Companies Act the winding up is deemed to commence at the time of presentation of the petition of winding up, even though winding up order is passed much subsequently. Section 537(1) however, makes it clear that if any execution or sale takes place after the commencement of winding up petition without leave of the court the same shall be void. Sub-section (2) which was brought into force in 1960 excludes the rigour.of Section 537(1) to those proceedings only which are for recovery of any tax or dues payable to the government. All that it means is that if assuming that before the winding up order has been passed any sale had taken place without the leave of the court for recovery of any tax the same will not be deemed to be Void. But the moment winding up order is passed Section 446 of the Companies Act will become applicable, and no proceedings shall be continued or commenced except by leave of the court. The only effect of sub-Section (2) of Section 537, thereforee, is that the completed transaction whether by way of sale or in execution proceedings do not become void. But if any further proceedings are to be continued after the winding up order has been passed Section 446 will have to be complied with. The argument of Mr. Gupta, counsel for the Life Insurance Corporation that only proceedings before the ordinary courts are covered by Section 446 of the Companies Act stands negatived by the decisions in (supra.) and : 83ITR685(SC) (supra.). It is not thereforee, correct to say that if any proceedings are to take place before other than ordinary courts the same will be immune from the rigour of Section 446 of the Companies Act. It is no doubt true that in view of these decisions it is possible that a part of proceedings may be outside the purview of Section 446 of the Companies Act like the assessment proceedings under the Income Tax Act, but still proceedings for recovery of tax would fall within Section 446 of the Companies Act. At first blush it may seem that this dichotomy shows unsatisfactory state of affairs and such an interpretation should be avoided. Now it is true that if the interpretation inevitably leads to such an oddity it will be no reason not to give full effect to the statute if that is its plain meaning. Bat, as it is we do not find that there is any anomaly in the situation. The reason is that the legislature intended that the assets of the Company in liquidation should be dealt with at one place by the Company Judge who would on over all View of the matter be in the best position to distribute the funds of the companies equitably so that there is no unseemly scramble of various creditors to realise their dues from the company. For this purpose in cases like the proceedings under the Income Tax Act and some other analogous Acts the proceedings for determination of the rights and liabilities of the companies and the other persons may have to be determined initially by authorities which have been specially created under the specific statute; this is because the proceedings are such which are not normally appropriate for determination by ordinary courts. It is for this reason that such like proceedings for example Income Tax, Sales Tax, Excise etc. may in the first instance have to be decided by the authorities under the special Acts. As the said matters cannot be determined in the first instance by the winding up courts it is self evident that there is no need to obtain prior leave to proceed before the said authorities. However, when the time comes for realisation of dues from the. company in liquidation the court dealing with the winding up comes into picture and prior leave will have to be obtained for starting proceedings for recovery. The test, thereforee. according to us is whether the proceedings are such which can normally and appropriately be the subject matter of decision of ordinary courts. If they are not. leave need not be obtained excepting of course when recovery is to be made against the funds to the company. However, in matters in which proceedings even though before a different forum than the ordinary courts are contemplated like under the Act of 1971 or even under the Rent Control Act these proceedings which are for recovery of possession or for recovery of damages are normally and appropriately such which can be determined by the winding up courts. It is evident that but for the creation of separate forum the present proceedings are of such a nature which would ordinarily be dealt with by the ordinary courts of law. In such a case leave will have to be obtained even to initiate proceedings against the company.
(16) We are, thereforee, of the view that in the present case the proceedings before the Estate Officer under the Act of 1971 are such as can appropriately be proceeded with before the ordinary courts, and hence leave to initiate the proceeding's has to be obtained from the winding up court. Similar would be the situation in case the proceedings are sought to be initiated before the Rent Controller under he Rent Control Legislation.
(17) We would, thereforee, answer the reference accordingly and hold that leave has to be obtained from the winding up court by the Life Insurance Corporation before it can initiate or continue proceedings before the Estate Officer under the Act of 1971. We are saying nothing on the merits because the question whether the leave should be given, and if so on what terms, or refused are matters which necessarily have to be decided by the learned single Judge who is seized of the application filed by the Life Insurance Corporation under Section 446 of the Companies Act.
(18) Before parting with the case we must express our thanks to the counsel for the parties and especially to Mr. A. B. Saharya, D. P. Wadhwa (who were asked by the Bench to appear amices curiae) for the assistance rendered by. them. The matter will now be listed before the learned single Judge for appropriate proceedings.