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2017 DIGILAW 218 (ALL)

J. R ORGANICS LTD. v. JUPITER DYECHEM PVT. LTD.

2017-01-17

A.P.SAHI, SANJAY HARKAULI

body2017
JUDGMENT By the Court.—This company appeal has been preferred questioning the correctness of the order dated 6.1.2017 passed by the learned Single Judge in Company Petition No. 8 of 2013 filed by M/s. Jupiter Dyechem Private Limited through it’s authorized signatory for winding up of the appellant No. 1 company. The Company Petition has been entertained and for the first time by the impugned order, after four years of filing of the Company Petition, an interim arrangement has been made restraining the appellant No. 1 from alienating or transferring the assets of the Company till the next date of listing. The appeal has been filed on the ground that such an interim order could not have been passed without even considering the objections filed in the counter-affidavit and also the facts that would establish that such an interim order in the background of the litigation was unjustified. 2. It was urged by Sri Jaideep Narain Mathur, learned counsel for the appellant that even assuming for the sake of argument that an order could have been passed, the same ought to have been done after consideration of the objections that had already been filed and were on record and also after studying the impact of the earlier orders through judicial intervention passed from time to time in this respect. He, therefore, submits that the interim order deserves to be set aside for which this appeal has been filed under the provisions of Section 483 of the Companies Act, 1956, that still survives after promulgation of the Companies Act, 2013. 3. Opposing the appeal, Sri Sudeep Seth has urged that the appeal is not maintainable keeping in view the provisions as pointed out by him and the notifications relied upon contending that the jurisdiction of this Court to hear the appeal being no longer specifically available, should be treated to have been impliedly taken away in view of the various provisions of the Companies Act, 2013 and the notifications issued in this regard from time to time. 4. 4. He has also invited the attention of the Court to the merits of the matter contending that the answering respondents have been deprived of their benefits to which they were entitled and, therefore, necessity of the filing of the winding up petition had arisen that required passing of an interim order, inasmuch as the appellants under the garb of certain orders passed by this Court, were alienating the property and the assets of the Company without there being any security against such dispensation. He has therefore, urged that the appeal deserves to be dismissed and the matter can be heard by the Company Judge where the matter is already proceeding after exchange of affidavits. 5. The background in which the present appeal has been filed is that the respondent Nos. 2 and 3 who are indicated as Directors of the appellant No. 1 Company, are stated to have been nominated by Aditya Jhunjhunwala and Sanjay Jhunjhunwala. 6. It is further contended by Sri Mathur that two company petitions had been filed earlier one by M/s. Banaras Inorganic Pvt. Ltd. and the other by Marval Business Private Ltd. through Sri Aditya Jhunjhunwala and Sanjay Jhunjhunwala investors which petitions were for winding up for appellant No. 1 Company and had been dismissed being Company Petition Nos. 12 and 13 of 2008. 7. M/s. Balrampur Chini Mills also filed a Company Petition for winding up of the appellant No. 1 Company being Company Petition No. 3 of 2010 where an impleadment was sought by Somaiya Organic Employees Association and the Punjab National Bank that was allowed by this Court and a request for withdrawal of the Company Petition was rejected by the order dated 15.2.2011. Questioning the correctness of the said order, Company Appeal No. 1 of 2011 was filed where the Division Bench proceeding to hear the appeal, referred the matter for mediation. 8. During pendency of this mediation, a Civil Suit No. 487 of 2012 was filed for specific performance by the aforesaid two investors Sri Aditya Jhunjhunwala and Sanjay Jhunjhunwala on the strength of Memorandum of Understanding for realization of certain sums of money. The said Suit is still stated to be pending. 9. Another development took place in between when the respondents Nos. 2 and 3 moved an application for registration of the company under the BIFR. The said Suit is still stated to be pending. 9. Another development took place in between when the respondents Nos. 2 and 3 moved an application for registration of the company under the BIFR. An order was passed in the said proceedings on 3.12.2012 registering the said application with a further restraint order dated 5.12.2012 for not alienating the assets of the Company. 10. Company Appeal No. 1 of 2011, where the Division Bench had sent the matter for mediation, was taken up after the report of the Mediator indicating that a compromise had been entered into, and the said appeal was disposed of in terms of the said compromise on 4.1.2013. What is noticeable is that the impleadment application filed by M/s. Jupiter Dyechem Private Limited, the respondent No. 1 remained pending and no orders were passed thereon in spite of the fact that the appeal was finally disposed of as M/s. Jupiter Dyechem Private Limited did not show any inclination to resolve the dispute through mediation. 11. A review application was filed for review of the judgment dated 4.1.2013 that remained pending, and in between two other company petitions were filed through M/s. K.M. Vyapar Pvt. Limited, owned by the same persons, namely, Aditya Jhunjhunwala and Sanjay Jhunjhunwala. Company Petition No. 16 of 2012 was disposed of on 5.10.2012 calling upon the applicants to approach for mediation, but Company Petition No. 19 of 2012 was entertained and an interim order was passed on 8.2.2013 restraining the Directors of the appellant No. 1 Company from alienating or changing the nature of the assets of the company. 12. The review that was filed against the final order dated 4.1.2013 came to be rejected on 1.7.2013. 13. A modification of the stay order dated 8.2.2013 had been filed by the appellant No. 1 in Company Petition No. 19 of 2012 which was rejected on 21.5.2013. Against the orders dated 8.2.2013 and 21.5.2013, Company Appeal No. 2 of 2013 was filed by the appellant No. 1 and a stay order was passed on 1.7.2013 staying further proceedings as well as operation of both the orders. The said Company Appeal No. 2 of 2013 is still pending. 14. Against the orders dated 8.2.2013 and 21.5.2013, Company Appeal No. 2 of 2013 was filed by the appellant No. 1 and a stay order was passed on 1.7.2013 staying further proceedings as well as operation of both the orders. The said Company Appeal No. 2 of 2013 is still pending. 14. Another important development is that against the order dated 4.1.2013 and the rejection of the review application on 1.7.2013, the respondents 2 and 3 filed a Special Leave to Appeal before the Apex Court wherein an interim order was passed on 1.8.2013 staying the operation of the impugned orders. 15. vide order dated 6.11.2013, the BIFR declared the company to be a sick company with a further direction not to dispose of the assets of the company without the prior approval of the Board. 16. The Special Leave to Appeal filed by the respondents 2 and 3 came to be ultimately dismissed on 7.5.2014, as a result whereof the order dated 4.1.2013 revived and the stay orders passed in the Company Appeal No. 2 of 2013 continued. 17. It has been informed by Sri Sudeep Seth, learned counsel for the respondent Nos. 2 and 3 that the proceedings before the BIFR have terminated with the passing of the order dated 2.8.2016 with a declaration to the effect that the Company is not a sick industry as it has already lost it’s industrial character. He also alleges that an F.I.R. has also been lodged in relation to the said allegations about selling the assets and also siphoning the funds. 18. It is in this background that the issues involved have to be considered by us and the first question is with regard to the maintainability of the Appeal under Section 483 of the Companies Act, 1956. 19. Sri Sudeep Seth, learned counsel for the respondent Nos. 2 and 3 has urged that the 2013 Act now contains certain provisions that have been enforced under the notification dated 1.12.2016 w.e.f. 15.12.2016 whereby the filing of an appeal would not now be governed by the provisions of Section 483 of the 1956 Act. He has invited the attention of the Court to Sections 303, 410, 434(1)(c) of the Companies Act, 2013 to buttress his submissions. He contends that Section 303 is now the corresponding provision to Section 483 and is independent of Section 434(1)(c) of the 2013 Act. He has invited the attention of the Court to Sections 303, 410, 434(1)(c) of the Companies Act, 2013 to buttress his submissions. He contends that Section 303 is now the corresponding provision to Section 483 and is independent of Section 434(1)(c) of the 2013 Act. With the enforcement of Section 303 w.e.f. 15.12.2016 only an order has passed prior to 15.12.2016 by the learned Company Judge would be appealable before the Division Bench of the High Court and not otherwise. He submits that the order impugned in the present writ petition is dated 6.1.2017 having been passed after 15.12.2016 and, therefore, this Division Bench may not have the jurisdiction to hear this appeal. 20. To further explain the aforesaid position, Sri Seth has invited the attention of the Court to the Companies Transfer of Pending Proceedings Rules, 2016 particularly, Rule 5 to contend that such proceedings would stand transferred only where the petition has not been served or the respondent is not available, but in the instant case the company petition had been filed in 2013 and the respondents had been served. Hence, in view of this provision whether appeal under Section 483 of the 1956 Act would be maintainable has to be looked into. 21. He has then invited the attention of the Court to the Removal of Difficulties 4th Order, 2016 that provides for a procedure relating to the winding up a company that has not been transferred from the High Court. He submits that even the said provisions under the Removal of Difficulty Order do not indicate or stipulate the availability of a right of an appeal under Section 483 of the 1956 Act, particularly after 15.12.2016, this is the date of the enforcement of Section 303 of the 2013 Act. 22. Replying to the aforesaid submissions of Sri Seth, Sri Jaideep Narain Mathur, learned Senior Counsel for the appellant has urged that the provisions of Section 483 would continue to be available as it would not stand repealed either expressly or impliedly on the facts of this case and consequently, the right of an appeal which is a statutory right against the order passed by an Hon’ble Single Judge of this Court cannot be presumed to have been taken away, more so, when there is no such express provision or clarification contained under the 2013 Act or the Rules or the Notifications issued thereunder. He submits that even otherwise after the company appellate Tribunal has been constituted, the Tribunal cannot sit in appeal over the order of a High Court and he therefore submits that a Tribunal being an inferior adjudicatory Forum under the supervisory control of the High Court and the Supreme Court itself, cannot be presumed to have been conferred with a power to entertain an appeal in relation to an order passed by a learned Single Judge of this Court in a company matter which is pending consideration. To substantiate his submissions on this issue, he has invited the attention of the Court to the constitutional provisions for creating Tribunals as well as the ratio of the decisions of the Full Bench of the Allahabad High Court and that of the Cullucta High Court to contend that it is settled that the Tribunal cannot be treated to be a substitute for a constitutional Court nor does the constitution envisage so as to bring the High Court under the control or subject to any orders being passed by the Tribunal. He has invited the attention of the Court to the Full Bench decision of this Court in the case of W Ex Sigman Nand Kishore Sahoo v. Chief of Army Staff, New Delhi and others, Special Appeal (Defective) No. 610 of 2002, reference wherein was decided on 21st of December, 2012. He has also invited the attention of the Court to the decision of the Full Bench of the Calcutta High Court in the case of C.K. Agarwal v. Union of India and others (A.P.O. 49 of 2015 and W.P. No. 1532 of 2006) answering a similar proposition decided on 8th of May, 2015. 23. In both the aforesaid decisions, the issue of transfer of an intraCourt appeal, a special appeal under Chapter VIII Rule 5 as described in the High Court Rules, 1952 of Allahabad and a Letters Patent Appeal under Clause 15 of the Letters Patent of Calcutta High Court, were considered that provide for intraCourt appeals against the orders of learned Single Judges. The issue raised was as to whether in matters arising out of disciplinary proceedings and Court Marshal proceedings under the Armed Forces Act, a special appeal filed against the judgment of a learned Single Judge would also stand transferred to the Armed Forces Tribunal that was created under the constitutional provisions. 24. The issue raised was as to whether in matters arising out of disciplinary proceedings and Court Marshal proceedings under the Armed Forces Act, a special appeal filed against the judgment of a learned Single Judge would also stand transferred to the Armed Forces Tribunal that was created under the constitutional provisions. 24. Both the Full Benches categorically answered the issue in the negative holding that a special appeal or a Letters Patent Appeal being an intraCourt appeal, the same cannot be transferred to the Tribunal, inasmuch as the Tribunal does not have the authority to sit in appeal over the judgment of the High Court in the exercise of jurisdiction under Article 226 of the Constitution of India. 25. Having considered the aforesaid submissions raised, what we find is that so far as the issue relating to the Armed Forces Tribunal is concerned, the same was answered vis-a-vis the exercise of authority by the High Court under Article 226 of the Constitution of India, whereas in the present case the exercise of authority by a learned Single Judge in a company petition is in the discharge of statutory powers conferred under the provisions of the Companies Act, 1956. Thus, this is not a case arising out of a writ petition under Article 226 of the Constitution of India. 26. Nonetheless, the issue is that the power which is being exercised by the learned Company Judge is as a judge of the High Court and not of any inferior Tribunal. Consequently, to that extent, we are of the opinion that once the power is being exercised by a learned Single Judge of the High Court in exercise of the authority conferred under the Companies Act, 1956 in a Company Petition of 2013, an order passed therein cannot be subjected to appeal before a Tribunal created under the 2013 Act. Even otherwise, the High Court has a supervisory jurisdiction under Article 227 of the Constitution of India. Applying the principles thereof the question of conferring the authority of appeal on a subordinate Tribunal would be contrary to this constitutional scheme. 27. Even otherwise, the High Court has a supervisory jurisdiction under Article 227 of the Constitution of India. Applying the principles thereof the question of conferring the authority of appeal on a subordinate Tribunal would be contrary to this constitutional scheme. 27. The enforcement of Section 303 w.e.f. 15.12.2016 would not repeal the right or abrogate the right of a person to file an appeal against the order of a learned Single Judge in a company petition for which this Court continues to have jurisdiction to decide the matter as indicated above and in the present context keeping in view the impact of the legal provisions pointed out here-in-above. The company appellate Tribunal has not been conferred with any such authority specifically as an alternative, granting a right of appeal as against an order of a learned Single Judge passed in a Company Petition as is presently involved. In the absence of any such specific conferment of power on the Company Appellate Tribunal, the argument of Sri Seth that the powers statutorily granted under Section 483 of the Companies Act would stand impliedly revealed, cannot be repealed. The doctrine of implied repeal, therefore will have no application in view of the aforesaid background of the legislation as no such express intention can be gathered from the same. 28. There is yet another reason for holding that the right of appeal is available to the appellant and that is based on the principles that have been deduced as discussed in the latest case of M/s. Videocon International Limited v. SEBI, (2015) 4 SCC 33 , where a right of appeal has been understood to be a substantive right and not a mere procedural right so as to affect it’s applicability upon any amendment moreso when the lis in the present case had been instituted earlier. The right of appeal under Section 483 of the Companies Act was therefore available on the date of the institution of the Company Petition itself giving rise to this appeal. The forum of appeal as provided under Section 483 of the Companies Act would not stand altered as no such provision in such a situation is contemplated so as to transfer the right of appeal before the Company Appellate Tribunal. 29. The forum of appeal as provided under Section 483 of the Companies Act would not stand altered as no such provision in such a situation is contemplated so as to transfer the right of appeal before the Company Appellate Tribunal. 29. Moreover in the absence of any such provision denuding this Court of it’s power to hear an appeal against an order passed by the learned Company Judge in the aforesaid background, we are of the opinion that the appeal is maintainable and we accordingly hold so. 30. Having said so, coming to the merits of the case, what we find is that the attempt made on all previous occasions for seeking an injunction against the appellant has already witnessed three stages of the proceedings. 31. The first is the compromise judgment dated 4.1.2013 against which the review petition that was filed was dismissed on 1.7.2013 and the Special Leave Petition filed against the same by the respondent Nos. 2 & 3 has been ultimately dismissed on 7th of May, 2014 thereby dislodging the effect of the interim order dated 1.8.2013. 32. The second stage of litigation was against the order passed in Company Petition No. 19 of 2012 where a stay order had been granted on 8.2.2013 restraining the appellant-company from disposing of it’s assets. This was also stayed by the order passed in Company Appeal No. 2 of 2013 on 1.7.2013 and which order is still intact till today. 33. The third is the status of the BIFR proceedings which according to the learned counsel for the respondent Nos. 2 & 3 has terminated on 2.8.2016. 34. The learned Single Judge while passing the interim order does not appear to have noticed these facts or even referred to it for arriving at any conclusion. Secondly, the objections that had been filed in the shape of a counter-affidavit and supplementary counter-affidavit on 7.8.2013 and 13.4.2015 respectively being the ingredients thereof have also not been discussed on the well known parameters for grant of interim injunction. 35. Consequently, the impugned order dated 6.1.2017 cannot be sustained. We allow the appeal and set aside the order dated 6.1.2017 with liberty that the matter can be re-considered by the learned Single Judge in view of what has been observed here-in-above and then, pass appropriate orders in accordance with law.