- (1.) New Central Jute Mills Company Limited has gone into liquidation pursuant to an order passed by the company Court on a creditor's winding-up petition. The company is in appeal, suggesting that a scheme be accepted for the running and functioning of the company. The State of West Bengal was the principal shareholder of the company, having more than 40% share, prior to its liquidation and the State has taken steps to ensure that interested parties may apply to fund the further functioning of the company (in liquidation) and take over its debts and liabilities. In the midst of such process, two of the secured creditors of the company (in liquidation), IIBI Limited and IFCI Limited raise a point of order on the basis of a recent judgment of this Court delivered on September 5, 2018 on an appeal arising out of a petition under Sections 397 and 398 of the Companies Act, 1956 in APO No.112 of 2017 (Prasanta Kumar Mitra vs. India Steam Laundry (P) Limited). According to such secured creditors, in view of the answer to the third issue rendered in such judgment and the expansive manner in which the words "all" and "including" have been interpreted at paragraph 49 of the report, it implies that the company Court in a High Court has no further jurisdiction to adjudicate on matters pertaining to the Companies Act, 1956 or the Companies Act, 2013.
(2.) It appears from the order impugned before the Division Bench in the India Steam Laundry (P) Limited case that the limited order that was passed by the company Court was in respect of the particular petition under Section 397/398 of the 1956 Act by holding that "with effect from 15 December, 2016 this Court lost jurisdiction to hear and dispose of the present proceeding which stands transferred to the NCLT by operation of law." In course of the appeal in India Steam Laundry (P) Limited, the following four issues were framed at paragraph 30 of the report: "(a) Whether the ouster of the jurisdiction of the High Court in relation to company matters needs to be express or the same may be ousted by implication? (b) Whether parties to a lis can insist on continuing their dispute in the forum the same was initiated or have to bow down to the wishes to the legislature for transfer of the said jurisdiction to another forum? (c) Whether the term "all" and "including" in Section 434(1)(c) of the 2013 Act are expansive in nature or the same is to be read in a restrictive manner? (d) Whether Section 68 of the Amendment Act, 1988 continues to subsist regardless of the coming into force of Section 434(1)(c) of the 2013 Act in relation to matters that were filed in the High Court prior to coming into force of the Amendment Act, 1988?" The first issue was answered at paragraph 31 to the effect that the ouster of the jurisdiction of the High Court in relation to company matters may not be express and may be implied. In respect of the second issue, the answer is found at paragraph 36 of the report: that the parties to a lis cannot insist on continuing the dispute in the forum where it was initiated, notwithstanding any amendment transferring such class of proceedings to another forum.
(3.) The third issue, which is relevant for the present purpose, was answered thus at paragraph 49 of the report: "In the light of the discussion above, I come to the irrefutable conclusion that "including" in Section 434(1)(c) is extensive and expansive and not restrictive in nature. Ergo, Section 434(1)(c) of the 2013 Act that states "all proceedings under the Companies Act 2013 including proceedings relating to..." would include all matters, without any exception, pending before the District Courts and High Court and all such matters would have to be transferred to the NCLT." Though the fourth issue may not be relevant for the present purpose, however, for the purpose of completeness, it is recorded that the fourth issue was answered at paragraph 57 of the report by holding that Section 68 of the Amending Act of 1988 stood repealed by implication. In addition, to the discussion on the several issues and the conclusions expressed on them, there is a summary of the answers pertaining to the four issues captured at paragraph 59 of the report: "59. In summary, the four main issues are answered as follows: (a) Whether the ouster of the jurisdiction of the High Court in relation to company matters needs to be express or the same may be ousted by implication? The jurisdiction of the High Court in company matters being a special jurisdiction conferred by the 1956 Act, and not being a civil jurisdiction under the Code of Civil Procedure, 1908, the same can always be ousted by the amendment of the enactment that conferred the said jurisdiction. Hence, no express repealing is required and the same can be repealed by implication. (b) Whether parties to a lis can insist on continuing their dispute in the forum the same was initiated or have to bow down to the wishes to the legislature for transfer of the said jurisdiction to another forum? Change of forum is not a choice of parties, but is the choice of the legislature. The parties cannot contend that they have a vested right to continue in the forum the lis was initiated. The legislature can always change the forum. Forum is a matter of procedure and change of the same does not result in change of substantive rights of parties. (c) Whether the term "all" and "including" in Section 434(1)(c) of the 2013 Act are expansive in nature or the same is to be read in a restrictive manner? The term '?ncluding' in Section 434(1)(c) of the 2013 Act is extensive and expansive and not restrictive in nature. Accordingly, Section 434(1)(c) of the 2013 Act that states "all proceedings under the Companies Act, 1956 including proceedings relating to ...." would include all matters, without any exception, pending before the District Courts and High Court and all such matters would have to be transferred to the NCLT. (d) Whether Section 68 of the Amendment Act, 1988 continues to subsist regardless of the coming into force of Section 434(1)(c) of the 2013 Act in relation to matters that were filed in the High Court prior to coming into force of the Amendment Act, 1988? The moment a new enactment comes into the statutory books, dealing with the same subject matter and specifically dealing with the same issue, and the transitional provision becomes inconsistent with the new enactment, the transitional provision has to go due to repugnancy. As held in (c) above, Section 434(1)(c) deals with all proceedings under the 1956 Act. Therefore, there is a clear inconsistency between the said provision and Section 68 of the Amendment Act, 1988. Consequentially, since the transitional provision is inconsistent with the new provision, it is impliedly repealed." Again, it is the answer to issue (c) as recorded in paragraph 59 of the report that is at the heart of the present discussion. The aforesaid secured creditors of the present company (in liquidation) seem to suggest that by the wide words used in the answer to issue (c) at paragraph 59 of the report, there is almost no business that the company Court has in adjudicating any matter pertaining to a company. The management of the company (in liquidation) and a private creditor by the name of Siddha Griha Nirman Private Limited have also participated in the discussion, particularly, the impact of the judgment in India Steam Laundry (P) Limited on the present proceedings. The parties refer first to Section 434 of the Companies Act, 2013 as amended in 2016. The parties next refer to a notification published by the Union Ministry of Corporate Affairs on December 7, 2016 in accordance with the then sole proviso to Section 434(1)(c) of the Act of 2013. ;