Punjab United Forge Ltd. (In Liquidation) Vs. Punjab Financial Corporation and ors. - Court Judgment

Excerpt:
- sections 100-a [as inserted by act 22 of 2002], 110 & 104 & letters patent, 1865, clause 10: [dr. b.s. chauhan, cj, l. mohapatra & a.s. naidu, jj] letters patent appeal order of single judge of high court passed while deciding matters filed under order 43, rule1 of c.p.c., - held, after introduction of section 110a in the c.p.c., by 2002 amendment act, no letters patent appeal is maintainable against judgment/order/decree passed by a single judge of a high court. a right of appeal, even though a vested one, can be taken away by law. it is pertinent to note that section 100-a introduced by 2002 amendment of the code starts with a non obstante clause. the purpose of such clause is to give the enacting part of an overriding effect in the case of a conflict with laws mentioned with the non obstante clause. the legislative intention is thus very clear that the law enacted shall have full operation and there would be no impediment. it is well settled that the definition of judgment in section 2(9) of c.p.c., is much wider and more liberal, intermediary or interlocutory judgment fall in the category of orders referred to clause (a) to (w) of order 43, rule 1 and also such other orders which poses the characteristic and trapping of finality and may adversely affect a valuable right of a party or decide an important aspect of a trial in an ancillary proceeding. amended section 100-a of the code clearly stipulates that where any appeal from an original or appellate decree or order is heard and decided by a single judge of a high court, no further appeal shall lie. even otherwise, the word judgment as defined under section 2(9) means a statement given by a judge on the grounds of a decree or order. thus the contention that against an order passed by a single judge in an appeal filed under section 104 c.p.c., a further appeal lies to a division bench cannot be accepted. the newly incorporated section 100a in clear and specific terms prohibits further appeal against the decree and judgment or order of a single judge to a division bench notwithstanding anything contained in the letters patent. the letters patent which provides for further appeal to a division bench remains intact, but the right to prefer a further appeal is taken away even in respect of the matters arising under the special enactments or other instruments having the force of law be it against original/appellate decree or order heard and decided by a single judge. it has to be kept in mind that the special statute only provide for an appeal to the high court. it has not made any provision for filing appeal to a division bench against the judgment or decree or order of a single judge. no letters patent appeal shall lie against a judgment/order passed by a single judge in an appeal arising out of a proceeding under a special act. sections 100-a [as inserted by act 22 of 2002] & 104:[dr. b.s. chauhan, cj, l. mohapatra & a.s. naidu, jj] writ appeal held, a writ appeal shall lie against judgment/orders passed by single judge in a writ petition filed under article 226 of the constitution of india. in a writ application filed under articles 226 and 227 of constitution, if any order/judgment/decree is passed in exercise of jurisdiction under article 226, a writ appeal will lie. but, no writ appeal will lie against a judgment/order/decree passed by a single judge in exercising powers of superintendence under article 227 of the constitution. - it is well made out from the provisions contained in the proviso to section 529(2) of the companies act, 1956, that a direction can be issued to the concerned secured creditors who choose to remain outside the winding up and who do not relinquish their securities, to contribute towards the maintenance and safe-keeping of their securities as they are the ultimate beneficiaries and, in fact, that is precisely the legislative intention underlying the enactment of the proviso. keeping in view this object, it cannot be said that the winding up court cannot order a secured creditor, however far from the winding-up proceedings he may like to remain, to contribute towards the cost of actual preservation of his security by the liquidator.v.k.bali, j.1. this petition has been filed under the proviso to rule 292 read with rules 9 and 308 of the companies (court) rules, 1959. the prayer in the petition is that the respondents be summoned in this court and directed to make available to the petitioner rs. 12,763.85 per month towards salaries of the watch and ward staff apart from a sum of rs. 10,000 to meet the preliminary expenses which may be shared by them equally. permission has also been sought so as to appoint security guards and payment of their wages with effect from november 29, 1991. it is mainly pleaded in the petition that vide order dated november 29, 1991, passed in company petition no. 145 of 1987, messrs. punjab united forge limited, has been ordered to be wound up and the petitioner has been appointed as liquidator of the company. the petition for winding up was presented on december 16, 1987, by messrs. electrodes industrial corporation, mandi road, jalandhar city and the formal winding up order was received in the office of the petitioner on december 20, 1991. on receipt of the formal winding up order, the petitioner with his staff members visited the company, situated at s. c. o. no. 807-808, 2nd floor, sector 22-a, chandigarh, on december 20, 1991, and sealed the premises. the petitioner also deputed his junior technical assistant with a lower division clerk and peon to the factory site of the company situated at rail majra, district hoshiarpur, near ropar, on december 27, 1991, for the purpose of taking into possession the factory premises. the staff locked and sealed the premises on the said date. however, at the time of visit of the staff-members to the factory on december 27, 1991, it was found that three security guards were present there and they were posted by the ex-management of the company. on enquiry, it was revealed that there were ten security guards on the strength of the company in liquidation and they had been paid salary up to march, 1991. their names and emoluments have been detailed in paragraph 3 of the petition. on the aforesaid facts, it is the case of the petitioner that keeping in view the quantum of work and area of the factory site on a plot of about 13 acres, which is unbounded on two sides, it has become necessary to continue the services of the abovesaid security guards in the interest of the company and its creditors and the petitioner does not have any funds belonging to it to meet theabovesaid monthly expenditure of rs. 12,763.85 on account of watch and ward charges. in addition, it is stated that the petitioner is in urgent need of rs. 10,000 to defray the day to day petty expenses connected with the liquidation proceedings of the company. the matter regarding advancing of rs. 10,000 has already been taken up with the petitioning creditors, messrs. electrodes industrial corporation, vide letter dated december 30, 1991, but there is no response from them. it is pleaded in the petition that the funds so advanced by these secured creditors would be refunded to them in priority to other debts of the company and as soon as sufficient funds are available with the petitioner as envisaged under rule 292 of the companies (courts) rules, 1959. on the aforesaid facts, the relief, as indicated in the earlier part of this order has been sought by the petitioner. the petition is supported by an affidavit of shri h.s. bawa, official liquidator.2. in response to the notices issued, written statements by respondents nos. 1. 2 and 3 (although separate) have been filed. respondent no. 4 has not filed any written statement, but counsel appearing on his behalf has not opposed the prayer made in the petition. the other respondents have, however, opposed the prayer of the petitioner on similar grounds. it shall be sufficient if the facts are recapitulated from the written statement of respondent no. 3.3. by way of preliminary objection, it is submitted that rules 292 and 308 of the companies (court) rules are not applicable to the facts of the present case and no relief can be granted to the petitioner under the said provisions of law. in any case, the answering respondent is a secured financial institution outside the purview of the winding up and, therefore, it is pleaded that it is not liable to make payment towards security or any other expenses of the company under winding up. it is also pleaded that in any case an effort has been made by the respondent to find out regarding the present position of the company under liquidation and it is found that there is hardly any security arrangement made at the spot and as such no expenses are being incurred by the petitioners for which the respondents shall be liable. on merits, it is pleaded that 13 security guards were not required to look after the premises and that even though the answering respondents were secured creditors they are not liable to pay to the liquidator any fund to meet the expenses of the salaries of the workmen or preliminary expenses and there is no provision of law to that effect inasmuch as the respondents have already suffered a great deal of loss.4. i have heard learned counsel for the parties and am of the considered view that this application has merit and thus it deserves to succeed. it is well made out from the provisions contained in the proviso to section 529(2) of the companies act, 1956, that a direction can be issued to the concerned secured creditors who choose to remain outside the winding up and who do not relinquish their securities, to contribute towards the maintenance and safe-keeping of their securities as they are the ultimate beneficiaries and, in fact, that is precisely the legislative intention underlying the enactment of the proviso. in so far as the objection of learned counsel appearing for the respondents that the wrong section has been mentioned in the application is concerned, the same does not make any difference as it is not the label given on the application which is relevant rather it is the contents of the application and the prayer made therein which are material.5. in new swadeshi mills of ahmedabad ltd. and manjushri textiles, in re [1935] 58 comp cas 86 (guj), after noticing the objection, as has been raised in the present petition with regard to the secured creditors who stand outside the winding up, it has been held that (at page 93) :' it is obvious that when a secured creditor realises security outside winding-up, he gets all the benefits of the preservation of the security by the liquidator who might have been put in possession pursuant to the winding-up order. once he gets that benefit, in fairness and equity he must be made liable to reimburse the cost of actual preservation of security. it is for this reason that the proviso in question has been added. keeping in view this object, it cannot be said that the winding up court cannot order a secured creditor, however far from the winding-up proceedings he may like to remain, to contribute towards the cost of actual preservation of his security by the liquidator.'6. in view of the law laid down in the judgment aforesaid, the objection raised by mr. suri has, thus, to be repelled. in all fairness to counsel, it shall be appropriate to mention here that he has relied upon a judgment of the supreme court in m.k. ranganathan v. government of madras, [1955] 25 comp cas 344 ; air 1955 sc 604, but suffice it to say that all that was held in that case was that the secured creditor is outside the winding-up and that he can realise his security without the intervention of the court by effecting a sale of the mortgaged premises by private treaty or by public auction. it is only when the intervention of the court is sought either by putting in force any attachment, distress or execution within the meaning of section 232(1) or by proceeding with or commencinga suit or other legal proceedings against the company within the meaning of section 171 that leave of the court is necessary and if no such leave is obtained the remedy cannot be availed of by the secured creditor. this judgment cannot come to the rescue of the respondents and they shall be liable to share the running expenses that may be required to preserve the property.7. for the reasons recorded above, it is ordered that all the respondents would contribute proportionate to their credit the expenses towards salaries of the watch and ward staff which is stated to be rs. 12,763.85 per month as also rs. 10,000 which are required to defray the day to-day petty expenses connected with the liquidation proceedings of the company. the petitioner would work out the proportionate liability and would convey the same to the respondents within a week from today. it is from the said date that they will pay the amount proportionately with effect from november 29, 1991. the arrears as may be due shall be paid within a month from the date of receipt of the calculations made by the petitioner and thereafter on or before the 10th of every month.