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Judgment
In C.A. 780 of 2016:
This is an application for recording the death of one Basant Kumar Chirimar being the Petitioner No. 2, who died on 8th January, 2016 during the pendency of the instant application. After perusing the averments made in the said application, this Court does not find any ground to disallow the prayer made therein.
The application is thus allowed. There shall be an order in terms of prayer A to E of the Judges Summons. In C.A. 243 of 2014:
A fundamental issue, striking at the root of the jurisdiction of this Court to entertain an application for recalling the order passed under Section 560(6) of the Companies Act is involved in the instant application.
The salient features of case are adumbrated below:-
Admittedly, the name of the company was struck off from the register of the companies under Section 560 of the Companies Act, 1956. An application under Section 560(6) of the said Act was filed by one Suresh Agarwal claiming to be the Director of the said company for restoration of the name of the said company to the register. It is stated in the said petition that there has been a default in filing the annual return and balance sheet since 31st March, 2006 up to 31st March, 2012 and the moment it was brought to the notice of the said company, it was detected that the company''s name has already been struck off from the portal of the Ministry of Corporate Affairs, Government of India. It is further stated that though the company was active and doing business activities but the annual returns and the balance sheets could not be filed. The delay in filing those statutory documents occurred because of the company''s accountant, who was responsible therefor and failed to carry out his duties.
The said petition appeared on 12th August, 2013 and the learned Advocate appearing for the Registrar of Companies filed the statements indicating the filing fees, additional filing fees and the penalty which the company is liable to deposit in order to resurrect the company in the register. By an order of the even date, the said application being C.P. 537 of 2013 was allowed. Subsequently, an application being C.A. 243 of 2014 was filed by the present applicants for recalling an order dated 12th August, 2013 passed in a Company Petition No. 537 of 2013 with other consequential reliefs.
The said application was moved before me on May 13, 2014 and was dismissed with costs assessed at Rs. 25,000/- to be paid to the State Legal Services Authorities. It was observed in the said order that the present applicants who owed to the company and issued a cheque, which was subsequently dishonoured and is facing a proceeding under Section 138 of the Negotiable Instruments Act is in effect trying to wriggle out therefrom and therefore cannot be said to be a person aggrieved by an order restoring the name of the company in the register. The said order was assailed before the Division Bench in an Intra Court Appeal being ACO 105 of 2014. The said appeal appeared on 20th June, 2014 and the Division Bench set aside the order and directed the application for recalling to be heard by me. It was observed by the Division Bench that the application for recalling was dismissed solely on the ground that the present applicants are interested to stall the process of restoration of the company''s name to avoid the proceeding under Section 138 of the Negotiable Instruments Act. The order of the Division Bench would further reveal that the present applicant deposited a sum of Rs. 10 Lacs, the amount covered under the dishounoured cheque with the Registrar to show their bona-fide.
The Division Bench was of the opinion that the other points urged in the said application was not gone into and the sole basis for rejection of the application was that the present applicants are trying to wriggle out from the proceedings under Section 138 of the Negotiable Instruments Act, it would be proper that the said application should be heard on merits afresh. By way of supplementary affidavit the order of the Division Bench is disclosed before this Court. since the matter was remanded for consideration on merits afresh, this Court permitted the said Director to file Affidavit-in-Opposition and after the exchange of affidavits the matter was reserved for judgment.
Though the learned Advocate appearing for the present applicants have addressed this Court on the factual matrix but the matter took turn when the preliminary objection was taken by the learned Advocate appearing for the said Director that this Court had no jurisdiction to entertain the present application in view of Rule 3 of Companies (Transfer of Pending Proceedings) Rules, 2016, which came into effect on and from 15th December, 2016. This Court therefore permitted the respective counsels to address the said point first as it strikes at the root of the matter.
It is submitted by the learned Advocate appearing for the Director that by virtue of Rule 3 of the said Rules all proceedings including the proceedings relating to arbitration, compromise, arrangements and reconstruction except the proceeding relating to winding up shall stand transferred to the Benches of the National Company Law Tribunal (NCLT) constituted under Section 408 of the Companies Act, 2013. It is further submitted that proviso appended thereto kept those proceedings, which are reserved for orders for allowing or otherwise outside the purview of the enabling Rule. It is, thus submitted that the instant application for recalling the order by which the Company Petition for resurrection of the company was disposed of being not reserved for order for allowing or otherwise should be transferred to NCLT and therefore this Court has no jurisdiction to entertain the same.
On the other hand, the learned Advocate appearing for the present applicants submits that the application to recall the order passed by this Court disposing of the Company Petition is not covered under Rule 3 of the said Rules and therefore this Court has jurisdiction to entertain the said application. It is ardently submitted that the application for recalling an order is in the nature of procedural review which can only be entertained by the Judge, who passed an order and not otherwise. In this regard, it is submitted that the expression "or otherwise" in proviso to Rule 3 of the said Rules should be interpreted ejusdem generis in relation to the matter of the same clauses. In other words, it is contended that the expression "or otherwise" must be construed and interpreted in relation to the proceedings and cannot be stretched further to include the application for recalling of the order passed by this Court. It is thus submitted that the application for recalling of an order passed by this Court in a company proceeding is not covered under Rule 3 of the said Rules.
This Court feels apt and profitable to quote Rule 3 of the said Rules, which runs thus:- "3. Transfer of pending proceedings relating to cases other than Winding up.--- All proceedings under the Act, including proceedings relating to arbitration, compromise, arrangements and reconstruction, other than proceedings relating to winding up on the date of coming into force of these rules shall stand transferred to the Benches of the Tribunal exercising respective territorial jurisdiction:
Provided that all those proceedings which are reserved for orders for allowing or otherwise of such proceedings shall not be transferred."
It is axiomatic to record that the said Rules was framed in exercise of powers conferred under sub Sections 1 and 2 of Section 434 of the Companies Act read with sub Section 1 of Section 239 of the Insolvency and Bankruptcy Code, 2016. The NCLT is constituted under Section 408 of the Companies Act, 2013 and vested with the jurisdiction to deal with the company matters / affairs except the proceeding relating to winding up, which were pending before the High Court on the date of coming into force of the said Act. By virtue of the aforesaid Rules all proceedings under the said Act shall stand transferred to the Benches of the NCLT exercising respective jurisdiction. The proviso inserted in Rule 3 of the said Rules kept certain proceedings outside the purview of such transfer if those are reserved for orders for allowing or otherwise.
Admittedly, a Company Petition under Section 560(6) of the Companies Act, 1956 was filed before this Court and was disposed of by ordering resurrection of the company in the register maintained by the Ministry of Corporate Affairs. The first and foremost point which this Court feels required to be considered is the meaning of the "proceeding" in juxtaposition with the aforesaid Rule. Ordinarily, the ''proceeding'' is used to express the business done in Courts. It is more comprehensive than the word ''action'' and may imbibe in its general sense all steps taken or measures adopted in an action between the period from the date of filing of pleading and the judgment. In other words, it relates to a form of law to the modes in which the judicial transactions are conducted. Generally speaking the ''proceeding'' means a prescribed course of action for enforcing legal right and necessarily impresses the requisite steps by which a judicial action is invoked. In other words, it is a particular step or series of steps adopted for doing or accomplishing something in progress of the case. The word ''proceeding'' has different shades of meaning depending upon the nature and scope of the enactment to which it is used and in particular the context of the language of the enactment in which it appears. Different Statutes have used the said word and various Courts of this country have interpreted the same either giving a wider meaning or restrictive meaning depending upon the purpose, object and the context in which it is used.
The prefix used before the word ''proceeding'' in the provisions relates and controls the meaning of the said word. The word ''other'' before ''proceeding'' occurring in Section 115 of the Code of Civil Procedure had been interpreted to include the original proceeding or the proceedings which starts the lis by this Court in case of Mrityunjay Sen Vs Sikha Sen reported in AIR 2003 CALCUTTA 165. On the other, the aforesaid expression appearing in Article 132 of the Constitution of India should not be construed ejusdem generis with what it proceeds and the wider meaning was given by the Supreme Court in case of Pritam Singh -Vs- State reported in AIR 1950 SC 169.
In the aforesaid backdrop Rule 3 of the said Rules provides for transfer of all proceedings under the Companies Act to NCLT and expanded its horizon by giving an inclusive definition imbibing the proceeding related to arbitration, compromise, arrangements and reconstruction. The word ''proceeding'' appearing therein therefore must be interpreted to mean the original proceeding initiated for enforcement of the legal right or on invasion of such right and therefore include the interlocutory applications originating or flowing therefrom.
The other aspect which this Court feels pertinent in this regard because of the use of the expression ''or otherwise'' appearing in proviso to Rule 3 of the said Rules. In case of R&B Falcon (A) PTY Ltd. -V-s Commissioner of Income Tax reported in (2008) 12 SCC 466 the Apex Court interpreted the expression ''or otherwise'' as under:-
"24. The Advanced Law Lexicon defines "otherwise" as: "By other like means; contrarily; different from that to which it relates; in a different manner; in another way; in any other way; differently in other respects in different respects; in some other like capacity."
"Otherwise" is defined by Standard Dictionary as meaning "in a different manner; in another way; differently in other respects"; by Webster, "in a different way or manner; in other respects".
As a general rule, "otherwise" when following an enumeration, should receive an ejusdem generis interpretation (per Cleasby, B. Monck v. Hilton [(1877) 46 LJMC 163] .) The words "or otherwise", in law, when used as a general phrase following an enumeration of particulars, are commonly interpreted in a restricted sense, as referring to such other matters as are kindred to the classes before mentioned (Cent. Dict.).
It is now a well-settled principle of law that a statute should ordinarily be given a purposive construction. (See New India Assurance Co. Ltd. v. Nusli Neville Wadia [(2008) 3 SCC 279 : (2007) 14 Scale 556] ; Tanna & Modi v. CIT [(2007) 7 SCC 434 : (2007) 8 Scale 511] and Udai Singh Dagar v. Union of India [(2007) 10 SCC 306 : (2007) 7 Scale 278] .)"
The aforesaid interpretation was accepted and applied by the Supreme Court in a subsequent decision rendered in case of Union of India -Vs- Pijush Kanti Nandy reported in (2009) 8 SCC 605 as under:- "16. Contention of Mr Mehta is that the said word only takes within its purview those classes of cases which are noticed in Chapter IV of the Regulations and not for the purpose of extending the period of qualifying service. We agree. Service may not be actually rendered but must be otherwise rendered. This presupposes that the relationship of employer and employee must continue at all relevant times."
In the decision rendered in case of Animal Welfare Board of India -Vs- A. Nagaraja & Ors. reported in (2014) 7 SCC 547 the Apex Court interpreted the expression ''or otherwise'' by applying the doctrine of ejusdem generis. The word ''or'' in ''or otherwise'' is disjunctive that marks an alternative which generally corresponds to the word ''either''. Where the general words follow the designation of a particular thing or classes of persons or subjects, the general words will usually be construed to include only those persons or things of the same class or general nature as those specifically described. The Rule of ejusdem generis is founded upon the idea that if the legislature intended the general words to be used in an unrestrictive sense, the particular classes would not have been mentioned. It is a trite law that the Court should lean against a construction, which reduces the Statute to a futility. A Statute is designed to be workable and the interpretation thereof by a Court should be to secure that object. The plain and clear meaning of the words convening the legislative intent must be adopted and if the choice is between two interpretations, the one which achieve the manifest purpose of the legislation should be adopted over the one which would lead to obscurity or rendering the provision unworkable.
The proviso to Rule 3 of the said Rules conveys the legislative intent clearly that those proceedings, which are reserved for orders, for allowing or otherwise shall not be transferred. Therefore, the proceeding, which is original in nature if reserved for orders, for allowing or otherwise shall not be transferred and if the same do not confirm to the said proviso, it would stand transferred to the NCLT.
Admittedly, the original proceeding originating from a Company Petition filed under Section 560 of the Act is neither reserved for orders for allowing nor otherwise pending as on this date and therefore the application for recalling the order cannot come within the purview of Rule 3 of the said Rules. The power of recalling the order is a vested power upon the Company Court and emanates from Rule 9 of the Company Court Rules. it originates and / or arise from the original proceeding and there was no intention of the legislature to include such applications within the periphery of Rule 3 thereof. This Court therefore does not find any substance in the preliminary objection raised by the Director of the company and is therefore answered in negative.
This beings us to the merit of the application and it is required to be seen whether the order was obtained by suppressing the material facts and by committing fraud on the Court. The application for restoration of the company in the register contains the simplicitor statements that the company was active but because of the person responsible for filing the annual return and the balance sheet, the same could not be filed. In the instant petition, the present applicants disclosed that the company applied for voluntary winding up under EES (Easy Exit Scheme)-2011 before the Registrar of Companies and wanted the company to be wound up under Section 484 of the Companies Act, 1956 by passing a special resolution. A declaration duly verified by affidavit was also filed in compliance with Section 488 of the said Act declaring that the company had been inoperative since past three years. The said declaration contains the categorical statement that there is no litigation pending against or involving the company when in fact the Complaint Case being No. 5939 of 2003 was pending before the learned Metropolitan Magistrate at Kolkata involving the said company. It is further stated that the said application was filed under the said scheme disclosing that there are two Directors namely Subhas Dutta and Partha Dutta when it would appear that they were not the Directors.
The aforesaid facts having been specifically denied in the opposition. It is no longer res-integra that the Court can recall its order if obtained by suppression of the material fact or by practicing fraud. The Company Petition was silent on the above aspect and there is no hesitation to say that there was a conscious and deliberate suppression of those facts. On an identical fact the Co-ordinate Bench in case of Viswanath Agarwal -Vs- Registrar of Companies, West Bengal (C.P. No. 936 of 2014, C.A. No. 423 of 2015, decided on 21st July, 2015) held:- "8. Since it was the company which had applied to have its name struck off under the relevant scheme, the company could not have applied under Section 560(6) of the Act unless such application was made within a short time of its name being struck off and an obvious mistake on the part of the company to apply under the scheme was demonstrated. Though the company seeks to assert that the word "company" in Section 560(6) of the Act has to be given a wider meaning, it is not possible to accept that a company whose name had been struck off on its invitation six or seven years back would be permitted to apply under such provision for the striking-off to be undone. In such a situation, it would be only a creditor or a shareholder of the company who may apply within 20 years of the company''s name being struck off for its revival. In any event, the petition under Section 560(6) of the Act was not filed by the company."
In view of the above, the application being C.A. No. 243 of 2014 is hereby allowed.
The order dated 12th August, 2013 passed in C.P. 537 of 2013 is hereby recalled.
The C.P. No. 537 of 2013 is restored to its original file and number.