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In Re: Alleppey Chit Fund (Private) Ltd. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtKerala High Court
Decided On
Case NumberCompany Petn. No. 45 of 1960
Judge
Reported inAIR1962Ker64; [1961]31CompCas641(Ker)
ActsCompanies Act, 1956 - Sections 2(11), 10(2) and 437
AppellantIn Re: Alleppey Chit Fund (Private) Ltd.
Appellant Advocate Mani J. Meenattur, Adv.
Respondent Advocate V. Balakrishna Eradi, Adv. as Amicus Curiae
DispositionPetition dismissed
Cases ReferredC) and Minakshi v. Subramanya
Excerpt:
.....having regard to the subject matter of the proceeding. subramanya, ilr 11mad 26 (pc)--so that, in the absence of express statutory provision for the purpose, there can be no question of validating them, whereas, the proceedings of a court which has inherent jurisdiction but lacks only territorial or such other incidental jurisdiction are operative until set aside, and can be set aside even by a superior court only if certain conditions are satisfied......jurisdiction with respectto the subject matter of tbe proceeding, ' in other words, that it had no inherent jurisdiction, as distinguished from a mere lack of territorial jurisdiction. therefore its order was void; and, in this view, expressly so stated, the petitioner applied to this court by c. p. 31/60 for a fresh winding up order. subsequently he seems to have thought; better of it for he has now come seeking a direction that the district court, alleppey, do retain and continue the proceedings; and he would have it that section 437 of the companies act. 1956 warrants such a direction.2. section 437 rung as follows :'437. power of high court to retain winding up proceedings in district court--- the high court may direct that a district court in which proceedings for winding up a.....
Judgment:
ORDER

P.T. Raman Nayar, J.

1. On the 2nd July 1959, the petitioner herein applied to the District Court, Alleppey for a winding up order against a company ofwhich he was a contributory, and winding up wasordered by that court on the 16th October of thesame year. The very institution of the; 'petitionwas after the issue of Notification, G. S. R. 663,dated 29th May 1959, by the Central. Governmentunder Section 10(2) of the Companies Act,, 1956. Thisnotification was in supersession of, all Previous notifications issued by the Provincial and State Governments under the proviso to Sub-section (1) of Section 3 of the-Indian Companies Act, 1913, and itdid not confer on District Courts the jurisdiction to order 'Winding up.

It is therefore not disputed that the District Court, Alleppey no jurisdiction with respectto the subject matter of tbe proceeding, ' in other words, that it had no inherent jurisdiction, as distinguished from a mere lack of territorial jurisdiction. Therefore its order was void; and, in this view, expressly so stated, the petitioner applied to this court by C. P. 31/60 for a fresh winding up order. Subsequently he seems to have thought; better of it for he has now come seeking a direction that the District Court, Alleppey, do retain and continue the proceedings; and he would have it that Section 437 of the Companies Act. 1956 warrants such a direction.

2. Section 437 rung as follows :

'437. Power of High Court to retain winding up proceedings in District Court--- The High Court may direct that a District Court in which proceedings for winding up a company have been commenced, shall retain and continue the proceedings, although it may not be the Court in which they ought to have been commenced.'

At first sight it might appear that, in view of the last Clause thereof, the language of the section is capable of the construction which the petitioner places upon it. But a more careful reading of the , section shows otherwise. The term 'the Court' has been defined in Section 2 (11) of the Act as meaning :

'With respect to any matter relating to a company, the Court having jurisdiction under this Act with respect to that matter in relation to that company, as provided in Section 10.'

Now, in respect of a matter regarding which no jurisdiction whatsoever has been conferred on a District Court under Section 10 (2) of the Act, a District Court can never, be 'the Court'' within the meaning of that term as defined in Section 2 (11) and as used in Section 437. So there can never be any question of a District Court being 'the Court' in which the proceedings ought to have been commenced, and when Section 437 says 'although it may not be the court in which they ought to have been commenced' it clearly contemplates a court in which they could have been commenced having regard to the subject matter of the proceeding.

In my view Section 437 can apply only to a case where there is a defect of territorial jurisdiction and not a case where there is an inherent want of, competence regarding the subject matter of the proceeding. The section does no more than what Section 3 (3) of the Indian Companies Act, 1913 which says, 'Nothing in this section shall invalidate a proceeding by reason of its being taken in a wrong Court', did, excepting that it contemplates a direction by the High Court for the retention and continuance of the proceedings in the wrong court. The words 'wrong Court' in Section 3 (3) of the Companies Act 1913, it seems to me, cannot apply to a court which could never be the right court, in other words, to a court which has no inherent jurisdiction. It can only apply to a court which does not suffer from a lack of inherent jurisdiction, but only of what I might call incidental jurisdiction such as territorial jurisdiction. That seems to be how the provision has been understood.

The text hooks cite Re Southsea Garage, Ltd., (1911) 27 TLR 295 dealing with the identical language of the corresponding section of the English Act then in force, as authority for this proposition See also Canara Bank v. Official Liquidator. 4 DLR (TC) 105 at p. 110 and In the matter of General Assurance Society Ltd., AIR 1956 Raj 61 at p. 63.

3. Section 219 (1) of the English Act of 1948 which combines Sections 430 and 437 of our Act says that the winding up, or any proceedings therein, may

'be transferred from one court to another court, or may be retained in the court in which the proceedings were commenced although it may not be the court in which they ought to have been commenced'.

And Sub-section (2) of the section specifies the authorities by whom the powers of transfer given by Sub-section (1) may be exercised. Apparently Sub-section (2) uses the word, 'transfer' to include also the retention for which Sub-section (1) provides -- See also the marginal note which speaks only, of transfer of proceedings and not of retention. It will be noticed that with regard to retention in the court in which the proceedings have been commenced, the language employed in subsection (1), 'although it may not be the court in which they ought to have been commenced' is identical with the language of Our Section 437.

It is regarded as settled law that the 'another court' to which proceedings may be transferred must be a court which has itself jurisdiction to wind up (See Palmer's Company Precedents, 16th Edition, Part 2, page 542 and Buckley 13th Edition, page 447). The law wag thug settled by In re Real Estates Co,, (1893) 1 Ch 398 with reference to the identical language of Section 3 of the Companies (Winding-up) Act, 1800. It follows by parity of reasoning that the court in which proceedings may be retained 'although it may not bo the court in which they ought to have been commenced'' must likewise be a court which has such jurisdiction.

4. As a general proposition I think it would' be correct to say that the proceedings of a court which has no inherent jurisdiction are completely void and inoperative -- see Ledgard v. Bull, ILK 9 All 191 (PC) and Minakshi v. Subramanya, ILR 11Mad 26 (PC)--so that, in the absence of express statutory provision for the purpose, there can be no question of validating them, whereas, the proceedings of a court which has inherent jurisdiction but lacks only territorial or such other incidental jurisdiction are operative until set aside, and can be set aside even by a superior court only if certain conditions are satisfied.

The provisions of Sections 530 and 531 of the Criminal Procedure Code and of Section 21 of the Civil Procedure Code seem to be based on this principle. Therefore if what the legislature meant by Section 437 of the Companies Act, 1956, was that a proceeding could be validly retained and continued in a court lacking inherent jurisdiction if the High Court makes a direction, in that behalf, one would have expected it to state so in clear and unambiguous terms. The actual language of Section 437, as I have already shown, seems to indicate the contrary. It would be strange if, after having conferred jurisdiction primarily on the High Court, and having empowered only the Central Government to confer jurisdiction on District Courts, the legislature thought that a person should be allowed to institute proceedings in a court on which the Central Government did not think it fit to confer jurisdiction and then come to the High Court and have the proceedings validated.

5. I dismiss the petition.

6. I am grateful for the able assistance rendered to me by Mr. V. Balakrishna Eradi as amicus curiae.


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