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Rama Krishna Toshniwal and ors. Vs. Maha Laxmi Mills Co. Ltd. and ors. - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtRajasthan High Court
Decided On
Case NumberCompany Petition No. 22 of 1966
Judge
Reported in1969WLN525
AppellantRama Krishna Toshniwal and ors.
RespondentMaha Laxmi Mills Co. Ltd. and ors.
Cases ReferredBharat General & Textile Industries Ltd. v. Muir Mills Co
Excerpt:
.....the said act. - now section 18e clearly provides that where the management of an industrial undertaking, being a company and defined in the companies act, is taken over by the central government, than the provision of that section shall apply 'notwithstanding any thing contained' in the companies act. this purpose of the statute will obviously be defeated if a petition for the winding up of a. 549 where it has been observed as follows at page 554. at the same time, if the choice is between two interpretation the narrower of which would fail to achieve the manifest purpose of the legislation, we should avoid a construction which would reduce the legislation to futility, and should rather accept the holder construction, based on the view that parliament would legislate only for the..........9, 1967 for a period of 5 years. it was also pointed out that the government of rajasthan had issued notification (ex, a. 2) no. f. 1 (5) ind (a)/67 dated january 10, 1967 under the rajasthan relief undertaking (special provision) act, 1961 declaring the company as a relief undertaking for a period of one year from january 10, 1967 and directing that no legal proceeding shall be instituted or, commenced or, if pending, shall be proceeded with against the company for the period during which it remained a relief undertaking it was therefore urged that the petition for the winding up of the company could not be proceeded with and may be dismissed. notification ex. a. 2 was published in the state gazette on january 16, 1967 and it is not disputed that the period of the relief granted by.....
Judgment:

P.N. Shinghal, J.

1. This petition for the winding up of the Maha Lakshmi Beawar hereinafter referred to as 'the. Company'' public company limited by shares, has been filed on September 30 1966, alleging that the Company is 'unable to pay its debts and that on account of mismanagement of its affairs it is just and equitable that it should be wound up. An order was made by this Court on October 25, 1966 for the issue of notices and the advertisement of the petition, The Company filed a reply disputing the allegations regarding its financial position and mismanagement. A reply was also filed on behalf of the Authorited Controller in which it was pointed out, inter alia, that the 'Central Government had taken over the management of the Company under Section 18A of the Industries Development and Regulation Act, 1951, hereinafter referred to as 'The Act', and had appointed him as the Authorized Controller by notification (Ex.A 1) No. F. 1(24) Tax (B)/65 dated January 9, 1967 for a period of 5 years. It was also pointed out that the Government of Rajasthan had issued notification (Ex, A. 2) No. F. 1 (5) IND (A)/67 dated January 10, 1967 under the Rajasthan Relief Undertaking (Special Provision) Act, 1961 declaring the Company as a relief undertaking for a period of one year from January 10, 1967 and directing that no legal proceeding shall be instituted or, commenced or, if pending, shall be proceeded with against the Company for the period during which it remained a relief undertaking It was therefore urged that the petition for the winding up of the Company could not be proceeded with and may be dismissed. Notification Ex. A. 2 was published in the State Gazette on January 16, 1967 and it is not disputed that the period of the relief granted by the Government of Rajasthan has been extended by two subsequent notifications dated December 13, 1967 and December 17, 1968. The petitioner has filed replies challenging the validity and effectiveness of the notifications.

2. I am, at this stage, not required to consider the validity of the notifications issued by the Government of Rajasthan an under the provisions of the Rajasthan Relief Undertaking (Special Provision) Act, 1961 for it has f been argued by Mr. Bhargavn, learned Counsel for the Company, that the petition cannot be proceeded with after the issue of the aforesaid notification Ex. 1 under Section 18A, of the Act because of the provisions of Section 18E(1)(c). The learned Counsel has supported his argument by reference to Bharat General & Textile Industries Ltd. v. Muir Mills Co. Ltd. and Ors. 1968 (38) Comp. Cas. 53, On the other hand, Mr Gupta learned Counsel for the petitioner, has argued that as the winding up petition has already been filed before the issue of the notification under Section 18A of the Act, Section 18E(1)(c). could not bar the maintainability of that petition which had to be decided on the merits. The learned Counsel has tried to support his argument by reference to a judgment of the Madhya Pradesh High Court In Re: Swadeshi Cotton and Flour Mils Limited, Indore (Company petition No. 1 of 1966) decided on April 4, 1966 The learned Counsel has also argued it that any other view of the matter will give rise to a conflict between the provisions of the Indian Companies Act, 1956 and the Act. He has also argued that as the petitioner had a right to institute the petition at the time when it was filed, the right to proceed with it could not be taken away by any subsequent notification. For this submission the learned Counsel has made a reference to Garikapati Veerya v. N. Subbiah Choudhry and Ors. : [1957]1SCR488 .

3. In examining the controversy it may be stated that it is not in dispute that the petitioner has not obtained the consent of the Central Government under Section 18E(1)(c) of the Act, The short point for decision therefore is whether by virtue of notification/order Ex. A. 1 the petition for the winding of the Company cannot be maintained and must be dismissed under Section 18E(1)(c)of the Act.

4. The relevant provision of Sub-section (1) of section 18E of the Act, reads as follows:

18E. Application of Act 7 of 1913:

(1) Where the management of an industrial undertaking, being a company as defined in the Indian Companies Act, 1913, is taken over by the Central Government, then, notwithstanding anything contained in the said Act or in the memorandum or articles of association of such undertaking:

(a)....

(b)....

(c) no proceeding for the winding up of such undertaking or for the appointment of a receiver in respect thereof shall lie in any Court except with the consent of the Central Government.

It will thus appear that the word 'Proceeding' has been used in Clause (a) and not be word 'Petition' and while it was has been stated, inter alia, that no proceeding for the winding up on of an industrial undertaking taken over by the Central Government shall lie in any court, it has not expressly been stated that if the proceeding is already pending on the date of the notified order issued under Section 18A it shall not be proceeded with without the consent of the Central Government. This is why it has been argued by Mr. Gupta that as the winding up petition had already been filed before the issue of the notified order under Section 18A it cannot fall within the mischief of Section 18E(1)(c) and must be proceeded with and decided according to law,

5. It appears however that the word 'proceeding' may be used synonmously with 'petition' 'action' or 'suit' to describe the entire course of an action at law, and it may be used to describe every step required to be taken in any cause by either party. It has been defined as follows in Black's Law Dictionary,-

In a general sense, the form and manner of conducting judicial business before a court of judicial officer regular and orderly progress in form of law; including all possible steps in an action from its commencement to the execution of the judgment, Erwin v. U.S. D.C. Ga., 37 1470, 488 2 L.R.A. 299

Thus, speaking generally, the proceedings of a case cover all the stages of its judicial progress, as also the first stage of presentation of the initial suit or petition. It cannot therefore be argued with any justification that the presentation of a suit or petition is not a 'proceeding' within the meaning of Section 18E(1)(c) of the Act. So also, it cannot be argued with any justification that the prosecution of a petition in states subsequent to its presentation is not proceeding towards its final disposal. It appears to me therefore that the toward 'Proceeding' used in Clause (c) above refers not only to an original proceeding but also to the subsequent steps or stages in its trial or disposal, and there is no real justification for the argument that Section 18E(1)(c) will not apply to the present case merely because the winding up petition was filed before the issue of the notification order Ex. A. 1.

6. It is true that the word 'lie' has been used in the aforesaid Clause (c) and it has been argued that it does not, in terms state expressly that the prohibition mentioned in it will apply to a pending proceeding. It has been pointed out in this connection that the legislature has made frequent use of the word 'lie' as for instance in Sections 80, 100, 101, 102, 104, and 105 of the Code or Civil Procedure, and that it refers only to the right to institute the suit or the appeal, as the case may be. It appears to me. however, that the word has been used generally for the purpose of granting the right to sustain or maintain a suit or an appeal and not merely its initiation, or filation. Here again a reference to Black's law Dictionery shows that the word 'lie' has been defined as follow,-

LIE: v. To subsist; to exist; to be sustainable; to be proper or available, Thus the phrase 'an action will not lie' means that an action cannot be sustained, or that there is no ground upon which to find the action.

It follows therefore that by virtue of the bar of Section 18E(1)(c) no proceeding for the winding up of an industrial undertaking which has been ' taken over by the Central Government shall subsist, or exist, or shall be sustainable after the issue of a notification under Section 18A of the Act even if the winding up petition has been filed before the issue of that notification,

7. This is in fact quite apparent from the wording of Section 18E of the Act. Section specifically deals with the application of the Act to the Indian Companies Act, 1913 (Act 7 of 1913). That Act having been supplanted by the Indian Companies Act of 1956, the latter Act wilt fall within the mischief of Section 18E by virtue of Section 8 of the General Clauses Act. Now Section 18E clearly provides that where the management of an industrial undertaking, being a Company and defined in the Companies Act, is taken over by the Central Government, than the provision of that Section shall apply 'notwithstanding any thing contained' in the Companies Act. The express bar of Section 18E(1)(c) must therefore be raised against the substistence, existence or sustainability of the present winding up petition ignoring the provisions of the Companies Act. In other words, it will not be permissible for the court to proceed with the' winding up petition until the duration of the notified order issued under'' Section 18A of tin Act.

8, But even if it is assumed, for the sake of argument, that the wording of Section 18E(1)(c) are capable of more than one interpretations, namely, the interpretation, put forward by Mr. Gupta and other inter pretations advanced by Mr. M.B.L Bhargava, It is settled law that the object and purpose of the statute can justifiably induce a court to adopt that interpretation which is more consistent with its under line purpose. The State of Rajasthan v. Mrs. Leela Jain and Ors. : [1965]1SCR276 , The purpose of the Act is to provide for the development and regulation of certain industries and Chapter IIIA has been inserted in it to give effect to that purpose in the case of a delinquent industrial undertaking, as long as necessary. This purpose of the statute will obviously be defeated if a petition for the winding up of a. Company carrying on the industrial undertaking is allowed to be instituted or proceeded with, ft could not therefore be the underlying purpose of the Act to permita petitioner in a winding petition to prosecute it even after the issue of a notification under Section 18A of the Act. The narrower inter-proration suggested by Mr. D.P. Gupta cannot therefore be upheld as correct. Reference in this connection may be made to Nokes v. Doncaster Amalgamated Collieries Ltd. 1940(3)All. E.R. 549 where it has been observed as follows at page 554.

At the same time, if the choice is between two interpretation the narrower of which would fail to achieve the manifest purpose of the legislation, we should avoid a construction which would reduce the legislation to futility, and should rather accept the holder construction, based on the view that Parliament would legislate only for the purpose of bringing about an effective result.

Reference may also be made to the State of Punjab v. Okara Grain Buyers Syndicate Ltd, Okara and Anr. : [1964]5SCR387 in which also it has been held that in considering the true meaning of words or expression used by the legislature, the court must have regard to the aim, object and scope of the statute to be read in its entirety.

9. If any view of the case there, it appears to me that it is not permissible for this Court to hold that the winding up petition can subsist or exist or be held to be sustainable after the issue of the notified order mentioned above. I am fortified in this view by the decision in Bharat General & Textile Industries Ltd. v. Muir Mills Co, Ltd. and Ors. 1968 (38) Comp. Cas. 533 cited by Mr. Bhargava.

10. Mr. Gupta has however argued further that as there was no notified order under Section 18A of the Act on the date of the presentation or institution of the winding up petition, a vested right had accrued in favour of the petitioner to proceed with the petition and it could not be taken away or lost by the issue of the notified order under Section 18A of the Act on a subsequent date. He has tried to find support for this submission from the decision. In Garikapati Veeraya v.N. Subbiah Choudhary and Ors. AIR 1957 SC 540. a perusal of the judgment shows however that such a right can be taken away by a subsequent express provision in the statute or by necessary intendment. As I have taken the view that the right to maintain the winding up petition has been taken away by the express provision in section 18E(1)(c) of the Act, and also by necessary intendment the argument of the learned Counsel can be of no avail to the petitioner.

11. Mr. Gupta has been at pains in pointing out that if his interpretation is not upheld that may, in a given case, lead to a conflict between some of the provisions of the Act and the Companies Act of 1956, The learned Counsel has made specific reference to case in which a provisional liquidator has been appointed before the issue of a notified order under Section 18A of the Act and has pointed out that the issue of such an order will run counter, to the provision of Sections 456 and 457 of the Companies Act, 1956, His argument is however misconceived because, as has been explained above, Section 18E having amended or overridden the provisions of the Companies Act whether they are in conflict with what has been provided in that section, there can be no question of a conflict between the provisions of the two Acts.

12. Mr. Gupta has also relied on the judgment In re: Swadeshi Cotton and Flour Mills Limited, Indore (Company Petition No 1 of 1966 before the Madhya Pradesh High Court). It appears to me however that case arose in quite different circumstances and the Central Government did not issue a notification under Section 18A of the Act without the prior permission of High Court. So even though there are certain observations in that judgment on which Mr. Gupta has placed reliance, it appears to me that they have no real application in a case like the present.

13. In the result, I am of the opinion that the winding up petition cannot subsit or exist and cannot be sustained after the issue of notified order Ex. A 1, It is therefore dismissed. It well however be permissible for the petitioner to file another petition with the consent of the Central Government or after the expiry of the period of validity of the aforesaid notified order. In the circumstances of the case, there will be no order as to the costs.


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