N. M. KASLIWAL, J. - (1.) THIS special appeal is directed against the order of learned Single Judge, dated August 5,1981 on an appplication moved under Section 446 of the Companies Act, 1956, (here-in after referred to as the Companies Act. ).
(2.) BRIEF facts of the case are that by an order dated March 3, 1970 M/s Madhu Industries Private Ltd, came under liquidation. The official liquidator attached to the court was appointed as liquidator of the company. Proceedings for acquisition of the land of the company were taken under the Rajasthan Land Acquisition Act, 1953 Land the and Acquisition Officer, Jaipur passed an award on January 30,1979. The official liquidator of the company filed and application under Section 446 of the Companies Act, and contended that no notice of the acquisition proceedings was given by the Land Acquisition Officer to the official liquidator. It was further submitted that no permission had been obtained from the companies court before passing the award and as such the entire acquisition proceedings were liable to be quashed as the same were illegal and void ab-initio. The appellant Rajasthan State Electricity Board submitted in its reply that the State Government issued a notification under sec. 4 and Section 17 (4) of the Rajasthan Land Acquisition Act on May 29,1978. By another notification dated June 15,1978, the description of the area sought to be acquired was corrected. Thereafter, a notice was published in the News-paper "rajasthan Patrika" dated November 8,1978 to all interested persons to file their claims if any to the L. A. O. by November 25,1978. The L. A. O. then passed an award for a sum of Rs. 4,99,275. 17 on January 30,1979. It has been submitted by the Board that this amount was deposited and the Board came into possessions of the land and put their material and stores on the land in dispute. It was also contended by the Board before the learned Company Judge that a notice published in the Rajasthan Gazette and newspaper, Rajasthan Patrika were public notices meant for all concerned including the official liquidator. In case the official liquidator wanted to contest or challenge the acquisition proceedings then he ought to have raised such objection before the Land Acquisition Officer. It was also submitted by the Board that the proceedings taken under the Land Acquisition Act are not covered under the provisions of Section 446 of the Companies Act. In the alternative it was also argued that even if the obtaining of permission from the Company Court is considered necessary, the same can be granted now and such irregularity can be cured. Reply was also filed on behalf of the State of Rajasthan in which it was contended that it was not in their knowledge that M/s Madhu Industries (p) Ltd. was under liquidation. It was further contended that the non-petitioners were not aware that the property in dispute was belonging to the petitioner, and hence, no notice was given to the official liquidator and M/s Madhu Industries (P) Ltd. It was also contended that the Tehsildar, Jaipur was ordered to take possession of the land bearing Khasra Nos. 54 to 60,207 and 208 of village Sodala (Jaipur) from Khatedar Seth Gopal Lal, Durgalal, Seduram Daulat Chand. The land in dispute was not entered in the name of M/s Madhu Industries Pvt. Ltd. and as such the non-petitioners were justified in taking recourse of the acquisition proceedings. It was further contended that no award has been given in respect of assets of M/s Madhu Industries (P) Ltd. as such the question of taking prior permission of the Company Court under sec. 446 of the Companies Act did not arise at all. It was also submitted that the Tehsildar, Jaipur has taken possession of the land in dispute and the possession memo was prepared which bears the signatures of Durgalal, Seduram, Daulat ram and Nathu Singh, Chottulal who signed on behalf of Gopal. The Rajasthan State Electricity Board officials and the local patwari also signed the possession memo. The official liquidator filed a re-joinder and contended that the non-petitioners were fully aware that the property in dispute belonged to M/s Madhu Industries (p) Ltd. , (in liquidation), and that the assets, of the company were under the charge of the official liquidator. It was further contended that the non-petitioners failed, to notice that the land in dispute was not agricultural land and it belonged to M/s Madhu Industries (P) Ltd. and was an industrial land. It was also submitted that the non-petitioners have not seen their own record before filing the reply. The winding up proceedings of the company were taken after wide publications and the State of Raj. as well as the other non-petitioners should be presumed to have knowledge of the Gazette dated March 3,1970 in which winding up proceedings were published. It was also submitted in the rejoinder that the Rajasthan State Electricity Board had full knowledge even earlier to the land - acquisition proceedings, as assets of M/s Madhu Industries (p) Ltd. were auctioned and Rajasthan State Electricity Board had taken part in the proceedings for auction sale and was the highest bidder. The sale was subsequently cancelled by the company court on a petition moved by the company. It was thus contended that sec 446 of the Companies Act was mandatory in character and admitted of no exception. Learned Company Judge held that the facts on record clearly established that the Rajasthan State Electricity Board had full knowledge of winding up order and also know that the land in question belonged to the company (in liquidation ). It was further observed by the learned Company Judge that the sale which was conducted by the official liquidator at the request of the Rajasthan Financial Corporation was set-aside at the request of the Ex-Management of the company. In this sale proceeding the highest bid of the Rajasthan State Electricity Board was accepted. The Rajasthan State Electricity Board had deposited Rs. 4,76,000/- and when the sale was set-aside the Rajasthan Electricity Board withdrew the said amount and 5% of the purchase money. At the time when Rajasthan State Electricity Board sought to acquire the land, it was the duty of the Electricity Board to have brought these facts to the notice to the State Government. Learned Company Judge further observed that the most surprising fact was that the Land Acquisition Officer in his award dated January 30, 1979 described the land belonging to M/s Madhu Industries (P) Ltd. In the reply the non-petitioners took the stand which was contrary to facts on record. To say the least such facts should not have been suppressed by the non-petitioners. The only inference in such circumstance was that the non-petitioners had scant regard for truth and they were bent upon acquiring this land as the same might urgently needed by the Rajasthan State Electricity Board. Learned Company Judge further observed that it was a matter of serious concern that the land in control and custody of the High Court, should have been so dealt with by the non-petitioners. As long time has passed it did not appear reasonable to initiate proceeding of contempt of court against the non-petitioners. However by their conduct, the non-petitioners had disentitled them for any indulgence being given to them under section 446 of the Companies Act in granting the ex post facto Sanction. Learned Company Judge also held that the land acquisition proceedings being under State Law cannot, in any circumstances, over ride the provisions of a Central Act. i. e. the Indian Companies Act, 1956. The acquisition proceedings are quasi-judicial and determine the claims of the various interested persons including the compensation claims. These proceedings cannot by any stretch of imagination be excluded from proceeding under section 446 of the Companies Act. Learned Company Judge in these circumstances passed the following operative order:- "under these circumstances, the award passed by the Land Acquisition Officer, dated 30th January, 1979 being absolutely void, without jurisdiction and in serious contempt of the orders of this court is hereby quashed. The State Electricity Board is hereby directed to vacate the land in dispute and remove whatever stock or material they have placed on the land in dispute. If the State Electricity Board does not remove entire material and the stores from the land in dispute, the official liquidator shall bring this fact to the notice of the court upon which necessary steps would be taken and such directions or proceedings shall be initiated against the non-petitioners which are available and permissible under the law. As the non-petitioners contested this petition unnecessarily and without any justification the petitioner would be entitled to costs from the non-petitioners. "
(3.) MR. Singhvi, learned counsel for the Rajasthan State Electricity Board, contended that under section 446 of the Companies Act the prohibition was only against filing of and/or continuation of suit or legal proceedings without the leave of the court. The land acquisition proceeding could neither held as suit nor can it be termed as legal proceedings. The company court as such had no jurisdiction to entertain an application under section 446 of the Companies Act in regard to proceedings taken under the Land Acquisition Act. It was also argued that the acquisition proceedings were perfectly valid and award had also been given and if official liquidator wanted to challenge the award, he could do so only by moving an application for reference under section 18 of the Land Acquisition Act. It was also submitted that if the official liquidator wanted to challenge the entire acquisition proceeding being illegal and void ab-initio, then he could do so by filing a writ petition before this court and not by moving a petition under Sec. 446 of the Companies Act. It was further argued that the Learned Company Judge was only entitled to protect the interest of the company and its assets from frivolous suits or legal proceedings and only in such eases leave of the court was necessary. However, no application could be maintained under Section 446 of the Companies Act, in respect of acquisition proceedings taken under the Land Acquisition Act which is self contained law with regard to acquisition proceedings and remedies if any can only be resorted to under the said Act. On the other hand Mr. Keshote learned counsel for the official liquidator submitted that proceedings under Land Acquisition Act were also "legal proceeding" as contemplated under Section 446 of the Companies Act. It was submitted that the import and scope of the term "legal proceeding" under section 446 of the Companies Act cannot be given a restricted meaning. It includes every kind of legal proceedings and the legislative has provided this salutary provision in order to safeguard the assets of the company under liquidation. It was argued by Mr. Keshote that the only restriction provided under Section 446 of the Companies Act was that the leave of the Company Court was necessary and mandatory before initiating acquisition proceeding of any property of the company under liquidation. As an alternative argument it was submitted that even if such leave may not be necessary at the stage of issuing notification under Section 4 and 6 of the Land Acquisition Act, the leave of the court was necessary when the compensation was to be determined and the final award was given by the Land Acquisition Officer. We have given our thoughtful consideration to the arguments advanced by learned counsel for both the parties and have thoroughly perused the record. The only important and legal question which calls for determination in the present case is whether the proceedings taken under the Rajasthan Land Acquisition Act fall within the perview of other "legal proceeding" mentioned in Section 446 of the Companies Act and whether leave of the court is necessary before taking such proceeding under the Land Acquisition Act, Sub-section (1) of Section 446 of the Companies Act relevant for our purpose reads as under : "1. When a winding up order has been made or the official liquidator has been appointed as provisional liquidator, no suit or other legal proceeding shall be commenced or, if pending at the date of winding up order, shall be proceeded with, against the company, except by leave of the court on subject to such terms as the court may impose. " ;