MAYUR SYNTEX LTD Vs. PUNJAB AND SIND BANK

JUDGEMENT

(1.) A very important and vital question has been raised in these petitions which requires immediate attention of this Court. The question raised is as to whether on conning into force of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, in short "Debt Recovery Act", setting up Debt Recovery Tribunals, "Tribunal" in short, for adjudicating upon the claims of the banks and financial institutions, the jurisdiction of the Company Court under Subsection 1) of Section 446 of the Companies Act to grant or refuse leave of any suit or legal proceedings and under Sub-section (3) of Section 446 of the Companies Act to transfer the suits or any proceedings to the Company Court has been taken away and that the said banks and the financial institutions need not apply for such leave either for filing new claims or proceeding with a pending claim, although the Company has gone into liquidation and has been wound up by the Company Court.

(2.) I have heard Mr. Sumant Batra, Mr. A. S. Chandoik, Mr. P. C. Khanna, Mr. Manmohan, Mr. B.N. Nayar, Mr. Rajiv Datta and other Counsels appearing for the various parties and record appreciation of their painstaking efforts in assisting the Court. On behalf of the banks and financial institutions, different facets arising out the aforesaid question were mooted before me. One of the submissions on their behalf was that in terms of the provisions of the Debt Recovery Act, the authority, power and jurisdiction to decide the claims of the banks and financial institutions for recovery of their debts and matters connected therewith or incidental thereto, is vested with the Tribunals constituted under the Debt Recovery Act, and therefore, the Company Court does not have the jurisdiction to decide the suit and/or to grant or refuse leave on any suit or legal proceedings filed by such financial institutions for recovery of debt. The further submission of the learned Counsel appearing for the financial institutions was that the provisions of the Debt Recovery Act specifically and categorically exclude the jurisdiction of any authority or Court including the High Court to decide and adjudicate upon the applications of banks and financial institutions for recovery of their debts and matters connected therewith or incidental thereto, and therefore, the Company Court shall not have any jurisdiction to decide such suits and/or to grant or refuse leave on any suit or legal proceedings instituted by the said financial institutions for recovery of debts in the Tribunal. It was further submitted that the Debt Recovery Act is a special legislation vesting special powers and special jurisdiction with the Tribunals constituted thereunder and also is later in point of time than the Companies Act, and as such, the provisions of the said Debt Recovery Act would override the provisions of the Companies Act which is a general legislation. Another submission of the learned Counsel was that the Debt Recovery Act is a complete enactment in itself and provides for adjudication of claims against a Company and therefore obtaining leave under Section 446 of the Companies Act cannot be made a condition precedent for initiating proceedings against a Company in case the said Company is in liquidation.

(3.) On the other hand, the Counsel appearing for the Official Liquidator as also on behalf of ex-Directors of the Company in liquidation as also on behalf of other creditors, it was submitted that the convenience of the Official Liquidator is paramount and that when a Company is in liquidation, all laws other than the Companies Act become general law qua matters which may be the subject-matter of ordinary civil Courts. It was also submitted that the Companies which have been wound up by the order of the Company Court shall stand on a different footing since the winding up powers under the law is vested with a wider jurisdiction when compared to a quasijudicial tribunal which has been incorporation only to deal with simplicitor suit involving recovery of dues. It was also submitted that the intention of the Legislature while enacting the Debt Recovery Act was never to supersede or override the provisions enacted under the Companies Act for winding up of a Company. It was pointed out that the intention of the Legislature while incorporating part VII of the Companies Act was to vest a High Court by way of its Company Court to exercise special jurisdiction with respect to the companies which had been directed to be wound up and, therefore, the Companies Act operates as a special Act in the case of a Company which is wound up and would prevail over the provisions of the Debt Recovery Act which in such matters would become a general law.