By: Justice Ferdino I. Rebello, Chief Justice.
A preliminary objection has been raised on behalf of the respondent-Company that the Letters Patent Appeals, as filed would not be maintainable. It is submitted that considering Section 483 of the Companies Act, an appeal would lie only in respect of the order made or decision given in the matter of winding up. In the instant case, it is pointed out that the appeals arise not from an order in winding up, but an order for reconstruction of debts and in these circumstances, the appeals ought to be dismissed.
2. On the other hand, on behalf of the appellant and respondent no.2, it is sought to be contended that merely because there is no appeal provided under Section 483 of the Companies Act, would not oust the jurisdiction of this Court to entertain an appeal under Rule 5 Chapter VIII of the Allahabad High Court Rules. It is, therefore, submitted that the appeals as filed are maintainable and the preliminary objection ought to be rejected. We may reproduce Rule 5 Chapter VIII of the Allahabad High Court Rules, which reads as under:-
"5. Special appeal.-- An appeal shall lie to the Court from a judgment (not being a judgment passed in the exercise of appellate jurisdiction) in respect of a decree or order made by a Court subject to the superintendence of the Court and not being an order made in the exercise of revisional jurisdiction or in the exercise of its power of superintendence or in the exercise of criminal jurisdiction or in the exercise of jurisdiction conferred by Article 226 or Article 227 of the Constitution in respect of any judgment, order or award--(a) of a tribunal, Court or statutory arbitrator made or purported to b e made in the exercise or purported exercise of jurisdiction under any Uttar Pradesh Act or under any Central Act with respect to any of the matters enumerated in the State List or the Concurrent List in the Seventh Schedule to the Constitution, or (b) of the Government or any Officer or authority, made or purported to be made in the exercise or purported exercise of appellate or revisional jurisdiction under any such Act or one Judge."
It is also not necessary to trace the history of the said Rule considering that the matter has been considered at length in a Full Bench judgment of this Court in the case of The Notified Area Committee and another Vs. Sri Ram Singhasan Prasad Kalwar, reported in AIR 1970 Allahabad 561. We may gainfully refer to paragraphs 11, 12, 13 and 14 of the said judgment, which are as under:-
"11. In the former High Court of Allahabad, upto July 25, 1948, an appeal from the judgment of a single Judge passed in the exercise of original civil jurisdiction lay to a Division Bench under Cl. 10 of the Letters Patent. On July 26, 1948 the said High Court and the Chief Court of Oudh were amalgamated and a new High Court was constituted. The new High Court was named the Allahabad High Court. The amalgamation of the two Courts was brought about by the U.P. High Courts (Amalgamation) Order, 1948. This order was issued by the Governor-General under Section 229 of the Government of India Act, 1935.
12. From July 26, 1948 the Letters Patent ceased to have effect in virtue of Cl. 17 (a) of the Order. Clause 9 of the Order, however, provided that the law in force on July 25, 1948 ''with respect to practice and procedure' in the former High Court would apply in relation to the new High Court. Clause 13 of the Order provided that the law in force on the said date ''relating to the powers of..................division Courts' of the former High Court would apply in relation to the new High Court. Clause 9 or Cl. 13 preserved Cl. 10 of the Letters Patent for the new High Court. National Sewing Thread Co. Ltd. v. James Chadwick, 1953 SCR 1028 = (AIR 1953 SC 357) till the commencement of the Constitution.
13. Article 225 of the Constitution provides that the jurisdiction of and the law administered in any High Court and the powers of the Judges thereof in relation to the administration of Justice in the Court shall be the same as immediately before the commencement of the Constitution. Article 225 keeps alive the U.P. High Courts (Amalgamation) Order and consequently Cl. 10 of the Letters Patent.
14. Rule 5 of Chapter VIII of Rules of Court now provides for a special appeal from the judgment of a single Judge in the exercise of original civil jurisdiction. Evidently Rule 5 is a reproduction of Cl. 10 of the Letters Patent, and not a new provision. A Single Judge hearing a writ petition under Art. 226 of the Constitution exercises original jurisdiction. His order deciding the petition is generally a judgment. So an appeal will lie from his judgment before a Bench of two Judges under Rule 5."
Rule 5 of the Allahabad High Court Rules provides that an appeal shall lie against the judgment. As to what is the judgment, is also in our opinion, no longer res integra.
3. A learned Division Bench of this Court in the case of Prof. Y.C. Simhadri, Vice Chancellor, B.H.U. and others Vs. Deen Bandhu Pathak, Student, reported in 2001 (4) AWC 2688 was considering this very Rule in the context of exercise of the contempt jurisdiction. While considering the issues involved, the learned Division Bench was pleased to hold as under:-
"17. It appears that on 26.3.2001, when the learned Judge passed the said order, he was allotted and assigned the determination with regard to the following matters by the Chief Justice as appears from the printed cause list:
"Fresh writs in educational matters (except service writs) for orders, admission and hearing and all Single Judge writ-C for order, admission and hearing including bunch cases."
The learned Judge on the face of the record, therefore, had no determination assigned to him by the Chief Justice with regard to the matters relating to contempt and the said jurisdiction had been assigned to another Hon'ble single Judge.
18. In view of the rule as already noted that the power to constitute Benches and allotment of work to learned Judges vests absolutely in the Chief Justice and the Rules 1, 6 and 17 of Chapter V and Rules 2 of Chapter VIII of the Allahabad High Court Rules also clearly provide for the same. In that view of the matter, the order passed by the learned single Judge in the instant case appears to us to be without jurisdiction and void.
19. As noted above, arguments have been advanced by the learned counsel for the respondent-petitioner that the special appeal is not maintainable. More-over it has also been submitted that the direction issued in the instant case by the learned single Judge, is in the nature of a proceeding initiated by virtue of the power vested in the High Court to punish for contempt and it does not amount to a judgment or a final order."
The issue involved in that case was answered and for that purpose, paragraphs 24 and 25 of the said judgment are relevant, which read as under:-
"24. In the instant case, admittedly, the question of jurisdiction is involved and, as such, the order falls within the meaning of ''judgment' under the relevant clause of Rule 5 of Chapter VIII of the High Court Rules and accordingly appears to us to be appealable.
25. In the instant case, since the order passed by the learned single Judge was beyond his competence or jurisdiction to pass such order, it is void and non-est and is accordingly appealable. The appellant being Vice Chancellor of the Banaras Hindu University, who is holding a responsible position, issue of notice by the order impugned, which is without jurisdiction, has adversely affected his rights and the rights of the appellant having been adversely affected, the appeal appears to be maintainable."
It will, thus, be clear that in a matter where there is wrong assumption of jurisdiction, in other words, the Court has no jurisdiction, Rule 5 Chapter VIII of the Rules will be applicable and an appeal would be maintainable, even if remedy by way of an appeal is maintainable, in some circumstances under the Contempt of Courts Act especially against interlocutory orders. This position has now been settled by the Supreme Court.
In the case of Midnapore Peoples' Coop. Bank Ltd. Vs. Chunilal Nanda and others, reported in (2006) 5 SCC 399. Under the Contempt of Courts Act, an appeal lies under Section 19 against the order passed in the contempt proceedings. The question was in respect of the order, which may not fall under Section 19 of the Contempt of Courts Act and whether an intra court appeal would lie, especially against an interlocutory order. Three questions were framed for consideration, of which questions 1 and 2 are relevant and we may gainfully refer to the same from paragraph 9 of the judgment, which read as under:-
"9. On the aforesaid facts and the contentions urged, the following questions arise for consideration:
(i)Where the High Court, in a contempt proceeding, renders a decision on the merits of a dispute between the parties, either by an interlocutory order or final judgment, whether it is appealable under Section 19 of the Contempt of Courts Act, 1971? If not, what is the remedy of the person aggrieved?
(ii)Where such a decision on merits is rendered by an interlocutory order of a learned Single Judge, whether an intra-court appeal is available under clause 15 of the Letters Patent?
(iii)............"
After considering the first question, the Court was pleased to hold that the law could be summarized and we may gainfully refer to paragraph 11 of the said judgment, which reads as under:-
"11. The position emerging from these decisions, in regard to appeals against orders in contempt proceedings may be summarized thus:
I. An appeal under Section 19 is maintainable only against an order or decision of the High Court passed in exercise of its jurisdiction to punish for contempt, that is, an order imposing punishment for contempt.
II. Neither an order declining to initiate proceedings for contempt, nor an order initiating proceedings for contempt nor an order dropping the proceedings for contempt nor an order acquitting or exonerating the contemnor, is appealable under Section 19 of the CC Act. In special circumstances, they may be open to challenge under Article 136 of the Constitution.
III. In a proceeding for contempt, the High Court can decide whether any contempt of court has been committed, and if so, what should be the punishment and matters incidental thereto. In such a proceeding, it is not appropriate to adjudicate or decide any issue relating to the merits of the dispute between the parties.
IV. Any direction issued or decision made by the High Court on the merits of a dispute between the parties, will not be in the exercise of "jurisdiction to punish for contempt" and, therefore, not appealable under Section 19 of the CC Act. The only exception is where such direction or decision is incidental to or inextricably connected with the order punishing for contempt, in which event the appeal under Section 19 of the Act, can also encompass the incidental or inextricably connected directions.
V. If the High Court, for whatsoever reason, decides an issue or makes any direction, relating to the merits of the dispute between the parties, in a contempt proceedings, the aggrieved person is not without remedy. Such an order is open to challenge in an intra-court appeal (if the order was of a learned Single Judge and there is a provision for an intra-court appeal), or by seeking special leave to appeal under Article 136 of the Constitution of India (in other cases).
The first point is answered accordingly."
4. As to what is the judgment, is also no longer res integra inasmuch the issue has been considered in the context of the Letters Patent of Bombay High Court in Shah Babulal Khimji v. Jayaben D. Kania, reported in (1981) 4 SCC 8. That judgment was noted and quoted by the Supreme Court in (2001) 2 SCC 588: Central Mine Planning and Design Institute Ltd. Vs. Union of India and another. We may gainfully refer to paragraphs 12 and 13 of the said judgment, which read as under:-
"12. The next question which needs to be considered is, what does the expression "judgment" mean? That expression is not defined in Letters Patent. It is now well settled that definition of "judgment" in Section 2 (9) of the Code of Civil Procedure has no application to Letters Patent. That expression was interpreted by different High Courts of India for purposes of Letters Patent. In Asrumati Debi v. Kumar Rupendra Deb Raikot (AIR 1953 SC 198), a four-Judge Bench of this Court considered the pronouncements of the High Court of Calcutta in Justices of the Peace for Calcutta v. Oriental Gas Co. (1872) 8 Beng LR 433), the High Court of Rangoon in Dayabhai Jiwandas v. A.M.M. Murugappa Chettiar (ILR (1935) 13 Rang 457, the High Court of Madras in T.V. Tuljaram Row v. M.K. R.V. Alagappa Chettiar (ILR (1912-13) 35 Mad 1), the High Court of Bombay in Sonbai v. Ahmedbhai Habibhai [(1872) 9 Bom HCR 398] as also the High Court at Nagpur, the High Court at Allahabad and Lahore High Court and observed as follows:-
"In view of this wide divergence of judicial opinion, it may be necessary for this Court at some time or other to examine carefully the principles upon which the different views mentioned above purport to be based and attempt to determine with as much definiteness as possible the true meaning and scope of the word ''judgment' as it occurs in clause 15 of the Letters Patent of the Calcutta High Court and in the corresponding clauses of the Letters Patent of the other High Courts."
13. Such an exercise was undertaken by a three-Judge Bench of this Court in Shah Babulal Khimji v. Jayaben D. Kania. Fazal Ali, J., speaking for himself and Varadarajan, J., after analyzing the views of different High Courts, referred to above, observed as follows: (SCC p. 55, para 113) "The intention, therefore, of the givers of the Letters Patent was that the word ''judgment' should receive a much wider and more liberal interpretation than the word ''judgment' used in the Code of Civil Procedure. At the same time, it cannot be said that any order passed by a trial Judge would amount to a judgment; otherwise there will be no end to the number of orders which would be appealable under the Letters Patent. It seems to us that the word ''judgment' has undoubtedly a concept of finality in a broader and not a narrower sense."
It was pointed out that "judgment" could be of three kinds:
(1)A final judgment.--In this category falls a judgment by which suit or action brought by the plaintiff is dismissed or decreed in part of full;
(2)A preliminary judgment.--This category is sub-divided into two classes:
(a)where the trial Judge by an order dismisses the suit, without going into the merits of the suit, only on a preliminary objection raised by the defendant/respondent on the ground of maintainability;
(b)where maintainability of the suit is objected on the ground of bar of jurisdiction, e.g., res judicata, a manifest defect in the suit, absence of notice under Section 80 and the like; and (3) Intermediary or interlocutory judgment.--In this category fall orders referred to in clauses (a) to (w) of Order 43 Rule 1 and also such other orders which possess the characteristics and trappings of finality and may adversely affect a valuable right of the party or decide an important aspect of the trial in an ancillary proceeding.
Elucidating the third category, it is observed: (SCC Headnote) "Every interlocutory order cannot be regarded as a judgment but only those orders would be judgments which decide matters of moment or affect vital and valuable rights of the parties and which work serious injustice to the party concerned."
5. In Midnapore People's Coop. Bank (Supra) dealing with question no.2, the Supreme Court was pleased to note various kinds of orders and for that purpose, we may gainfully refer to paragraphs 15, 16 and 17 of the said judgment. They are as under:-
"15. Interim orders/interlocutory orders passed during the pendency of a case, fall under one or the other of the following categories:
(i)Orders which finally decide a question or issue in controversy in the main case.
(ii)Orders which finally decide an issue which materially and directly affects the final decision in the main case.
(iii)Orders which finally decide a collateral issue or question which is not the subject-matter of the main case.
(iv)Routine orders which are passed to facilitate the progress of the case till its culmination in the final judgment.
(v)Orders which may cause some inconvenience or some prejudice to a party, but which do not finally determine the rights and obligations of the parties.
16. The term "judgment" occurring in clause 15 of the Letters Patent will take into its fold not only the judgments as defined in Section 2 (9) CPC and orders enumerated in Order 43 Rule 1 CPC, but also other orders which, though may not finally and conclusively determine the rights of parties with regard to all or any matters in controversy, may have finality in regard to some collateral matter, which will affect the vital and valuable rights and obligations of the parties. Interlocutory orders which fall under categories (i) to (iii) above, are, therefore, "judgments" for the purpose of filing appeals under the Letters Patent. On the other hand, orders falling under categories (iv) and (v) are not "judgments" for the purpose of filing appeals provided under the Letters Patent."
After so holding, the Court held that against an order, which finally decides rights and obligations, appeal under clause 15 of the Letters Patent was available.
6. A learned Single Judge of this Court in Ashok Kumar Gupta Vs. M/s. Metal Goods Pvt. Ltd., reported in Allahabad Rent Cases, 1992 (1) 508, only noted that there cannot be a special appeal under the Rules of the Court, which is not against a judgment. There was also a case arising out under the Company Court and it was contended that Section 483 of the Companies Act was available. The learned Judge, on the fact, found that it was not a judgment and as such the special appeal would not be maintainable. The issue as to whether an appeal would be maintainable in respect of an order not falling under Section 483 of the Companies Act was not under consideration.
7. In Kamal Kumar Dutta and another V. Ruby General Hospital Ltd. and others, reported in (2006) 7 SCC 613, the issue again was as to whether an intra-court appeal would lie against the order of a learned Single Judge, who had heard an appeal from an original order. The Court noted that this power had been taken away by amendment of Section 100-A of CPC. An objection had been raised before the Supreme Court that the appeal filed was not maintainable, as the appellants had remedy by way of filing Letters Patent under clause 15. The Court noted the provisions of the Companies Act, the amendment in the Companies Act in Section 483 and then observed that where appeal has been decided from an original order by a Single Judge, no further appeal has been provided and that power which used to be there under the Letters Patent of the High Court has been subsequently withdrawn. In that case, the Court noted in its own judgment in Arati Dutta v. Eastern Tea Estate (P) Ltd., reported in (1988) 1 SCC 523, that the power was exercised by the learned Single Judge under Sections 397 and 398 of the Companies Act and against that order appeal lay to the Division Bench of the High Court under Section 483 of the Companies Act. There were no rules and in that context, the Court held that mere absence of procedural rules would not deprive the litigant of the substantive right conferred by the statute.
The law, therefore, from this judgment would be that in respect of an interim/interlocutory order in the course of proceedings, if it amounts to a judgment, and in respect of original proceedings before the Court, an intra-court appeal would lie and not otherwise. Having held that an intra-court appeal would lie against an order, the only issue is, whether considering that the Companies Act has only provided for an appeal under Section 483 in a category of cases, that would oust the jurisdiction of the Court in entertaining the appeal under other orders passed under the Companies Act, which may not be under Sections 397 and 398 of the Companies Act. It may be mentioned that our attention is invited to the judgment in Kamal Kumar Dutta (supra) for that purpose. We have already adverted to and quoted from that judgment. That judgment does not really answer the issue raised before us. The Supreme Court, therefore, noted that the appeal would not lie and more so bearing in mind Section 100-A of C.P.C., which begins with non obstante clause. Insofar as to entertain the appeal under the Companies Act is concerned, though an appeal is provided under Section 483, it does not begin with non obstante clause, nor is there any ouster of jurisdiction of other Courts and Tribunals irrespective of the remedy, if not provided under the Act. In our opinion, therefore, in the absence of exclusion of jurisdiction and though remedy has been provided only in certain categories of cases by way of an appeal, that would not mean the other orders in respect of which, remedy of an appeal is not provided under the Companies Act, if otherwise they are judgments, an intra-court appeal would not lie.
8. The argument sought to be advanced was that once the field is occupied and in the occupied field, remedy is provided, then no other remedy would be available against orders for which no appeal is provided. In our opinion, that would not be the test. The test would be, on a Court exercising jurisdiction in respect of a subject matter whether it had jurisdiction to pass an order; if it had no jurisdiction to pass an order, then considering the authorities cited earlier in Central Mine Planning and Design Institute Ltd. (supra) and Midnapore Peoples' Coop. Bank Ltd. (supra), a Division Bench of the High Court, which was assigned to hear special appeals, could entertain the special appeal as it is maintainable under Rule 5 of Chapter VIII of the Allahabad High Court Rules.
9. The next question, therefore, would be whether the learned Single Judge could have entertained or had jurisdiction to entertain the application for re-construction under the provisions of the Companies Act.
We may set out a few facts, which may be relevant for the purpose of deciding the controversy involved in the present case. The Company (Shamken Multifeb Limited and others) had applied under Section 15 (1) of the SICA before BIFR and the said reference was registered as Case No.181 of 2004; the same was rejected on 4.9.2006 as not maintainable and appeal filed was dismissed by AAIFR. The Company thereafter filed a fresh case on 1.4.2007; that was also rejected, but the rejection order was set aside in appeal by AAIFR, vide order dated 29.11.2007 and the matter was remanded for reconsideration to BIFR and on remand, the matter could not proceed, as respondent no.2 challenged the order of AAIFR by filing a Writ Petition before the Delhi High Court, wherein the BIFR has been restrained from proceeding further, In the impugned order of 9.8.2010, the learned Single Judge recorded a finding that the proceedings are pending before the BIFR, though the same may be lying in abeyance on account of interim order passed by the Delhi High Court. The learned Single Judge also noted another order dated 18.1.2010 passed by the learned Company Judge, wherein it was observed that it cannot be said that the reference is not pending before the BIFR. It is, thus, clear that the proceedings before the BIFR are pending.
10. The next question is, if the proceedings before the BIFR are pending, would the Company Court have jurisdiction in respect of the subject matter. The learned Single Judge by the impugned order has held that there would be jurisdiction. Relying on that order, another order of 9.8.2010 was passed in the matter of Shamken Spinners Ltd. also rejecting the objection raised as to the jurisdiction of the Company Court for hearing the matter.
Earlier before the Company Court in the case of Shamken Multifeb Ltd. an objection has been raised to the maintainability of the application under Section 391-394 of the Companies Act for convening a meeting of the secured creditors of the Company for approving the proposed Scheme of arrangement between the Company and Mr. Rajiv Raina, Strategic Investor of M/s. SDR Capital Ltd. The learned Judge, after considering the various aspects, was pleased to hold that though the proceedings were pending before the BIFR, nonetheless the jurisdiction of the Company Court in the matter was not ousted. In an appeal preferred, being Special Appeal No.281 of 2010, the learned Division Bench disposed of the Special Appeal by holding that the objection could be raised before the learned Single Judge. No objection was raised about the maintainability of the special appeal under Rule 5 Chapter VIII of the Allahabad High Court Rules. The effect of the judgment of the Division Bench dated 9.3.2010 was that, it was open to the Bank to raise objection before the learned Single Judge, which the Bank did and the objection was rejected.
11. The issue then is, when the proceedings are pending before the BIFR, is it open to a party to move under Sections 391-394. In Tata Motors Ltd. v. Pharmaceutical Products of India Ltd and anther, reported in (2008) 3 Comp. LJ 91 (SC), the issue of Sections 391-394 was under consideration before the Supreme Court. After analyzing the various provisions, the Court was pleased to hold that the SICA was enacted to secure the principles specified in Article 39 of the Constitution of India, to give effect to the larger public interest and to be given primacy because of its higher public purpose. Section 26 of SICA bars the jurisdiction of the civil courts. The Court further held that the provisions of SICA would prevail over the provisions of the Companies Act. In other words, in matters pertaining to a Scheme proposed under Sections 391-394 of the Companies Act and if proceedings are pending before the BIFR, the Company Court would have no jurisdiction. In that case, the Company had filed an application before the High Court of Bombay in terms of Sections 391 of the 1956 Act and a Scheme was presented. The appellant before the Supreme Court applied for intervention and filed an objection to the said Scheme on some of the following grounds:
"(i). That the revival/rehabilitation of the company was under consideration of a specialized body formed under the Sick Industries Act which is a special legislation and would prevail over the provisions of the Companies Act.
(ii) That the non obstante clause contained in the Sick Industries Act will have the effect of overriding and excluding the provisions of the Companies Act more so where there is an overlapping between the two Act.
(iii) That considering the scheme of the Sick Industries Act, the revival/restructuring of the company cannot be considered by two separate forums separately.
(iv) That the scheme involved financial reconstruction, sale of assets of the company and merger/takeover by Wanbury: These issues expressly fall within the domain of the BIFR under Section 18 of the Sick Industries Act."
The Supreme Court proceeded to hold that it is not possible to harmonize the provisions of Sections 391-394 of the 1956 Act with the provisions of SICA. The Court held that the High Court would have no jurisdiction to entertain the application when the proceedings are pending before the BIFR.
12. A similar view has been taken by a Division Bench of the Bombay High Court in Ashok Organics Industries Ltd. V. Dena Bank, reported in (2008) 3 Comp. LJ 61 (Bom). This judgment was noted by the Supreme Court in paragraph 26.2 of Tata Motors (Supra). The Bombay High Court held that the provisions of SICA have overriding effect on other Acts, which would include the Companies Act, 1956. The Court further held that until the mandatory and complete process under the SICA, 1985 is exhausted, no other authority or court would have jurisdiction to pass any order in respect of the sick industrial company, particularly such orders as to provide for its financial restructuring or for a compromise or arrangement with its members and creditors-something expressly covered by section 18 (1) (2) of the SICA, 1985.
13. We have no reason to defer with the view taken in Ashok Organic Industries Ltd. (Supra), which view has now been affirmed by the Supreme Court in Tata Motors (supra).
14. Thus, the position would be that the Company Court would have no jurisdiction to entertain the application, which was moved under Sections 391-394 of the Companies Act, which it entertained. Applying the law laid down earlier, the impugned order would be a ''judgment' within the meaning of Rule 5 Chapter VIII of the Allahabad High Court Rules. The order has been passed by a Court without jurisdiction and, considering the law declared by the Supreme Court in Midnapore People's Coop. Bank Ltd. (supra), the special appeals, as filed, are maintainable.
15. Considering the aforesaid findings, the special appeals, as filed by the Bank, will have to be allowed. Accordingly, they are allowed. The impugned orders passed by the learned Single Judge are set aside. The Company Applications filed under Sections 391-394 of the Companies Act, are dismissed.
Date:8th September, 2010 RKK/-
(F.I. Rebello, CJ) (A.P. Sahi, J) Hon'ble Ferdino I. Rebello, CJ.
Hon'ble A.P. Sahi, J.
This special appeal is allowed.
For orders, see order of date passed on separate sheets.
Dt/-8th Sept., 2010 RKK/-(1395/10) (F.I. Rebello, CJ) (A.P. Sahi, J)