Baljit Kaur Vohra and ors. Vs. Dr. Vikramjit Singh Vohra and ors. - Court Judgment

Swatanter Kumar, J.

1. When this appeal came up for preliminary hearing for admission before us on April 26, 2000, we passed the following order : 'During the hearing of this appeal a question has arisen with regard to the maintainability of the present appeal before the Division Bench of this court. Mr. Suri, learned counsel for the appellants, has conceded that there will be a serious doubt to the very maintainability of the appeal before the Division Bench. Learned counsel expressed his inability to cite any judgment to support the view that an appeal against the order passed by the Company Law Board shall lie before the Division Bench of this court and not the learned company judge. Having heard learned counsel at some length and also keeping in view the fact that in one of the connected appeals being company Appeal No. 8 of 1998 titled as Kamal Oswal v. Vardhaman Spinning and General Mills Ltd. doubt was also expressed by another Division Bench of this court, wherein it passed the following order:

'At the commencement of the hearing Shri Narang pointed out that in the absence of any rules requiring laying of appeals filed under Section 10F of the Companies Act, 1956, before the court, which came into force on May 13, 1991, this appeal should not have been placed before the motion Bench and should have been treated as admitted automatically by the registry.

Since the point raised by learned counsel will affect other cases also, we deem it proper to direct the office to submit a comprehensive report in the matter.

Put up on August 3, 1998.

The question has not been answered by the Division Bench in that appeal as of today. Thus, after hearing learned counsel at some length, we reserve the order.'

2. Learned counsel appearing for the respective parties had submitted various judgments, the copies of which were given subsequent to the date of hearing. Resultantly, the matter was listed for re-hearing and then was finally reserved for orders on July 18, 2000, by us.

3. In order to squarely answer the controversy arising in the present case, reference to certain basic facts and relevant statutory provisions would be necessary. Dr. V. J. S. Bora and others had filed a petition under Sections 397, 398, 399 of the Companies Act, 1956, before the Company Law Board, New Delhi, praying that there was mismanagement exercised by Ms. Baljit Kaur Bora and others in relation to the affairs of Navedak Prosathetic Centre, a company duly registered under Section 25 of the Companies Act, 1956. The Principal Bench of the Company Law Board vide its order dated January 18, 2000, came to the conclusion that the Board was not able to recognise the majority status of the petitioner. During the pendency of the proceedings before the civil court, certain directions were issued and parties were left at liberty to approach the civil court in accordance with law. Aggrieved by the judgment of the Bench, Ms. Baljit Kaur and others have preferred an appeal under Section 10F of the Companies Act. In the above circumstances, the registry of this court has listed the appeal for preliminary hearing before the Division Bench.

4. Thus, the pertinent question that falls for determination is whether the appeal against the order of the Company Law Board would lie before the learned company judge exercising original jurisdiction of this court or before a Division Bench.

5. For answering this question we would hardly need to discuss in any further elaboration other facts which are in dispute between the parties with regard to oppression and mismanagement of the affairs of the company. Suffice to the above noted facts, reference to relevant provisions would be necessary. Vide notification dated May 31, 1991, Sections 10E and 10F amongst other provisions, were introduced in the Companies Act, 1956. Multiple amendments were introduced which specifically change the application of various provisions of the Companies Act and even with regard to the forum which were available to the aggrieved parties. Prior to these amendments a petition under Sections 397 and 398 could be filed only before the learned company judge. The order passed thereupon was appealable and appeal lay to the Division Bench of this court against the order passed by the learned company judge. In other words, prior to the amendment, the learned company judge was exercising original company jurisdiction and the orders were appealable to a Division Bench of this court under Letters Patent Act (Clause X) read with Volume V, Chapter 3, Part B of the Rules and Orders of Punjab and Haryana High Court. By virtue of the provisions of the amending Act of 1991, the very forum for institution of the petition under Sections 397 and 398 was changed or altered. Such petition could alone be filed before the Company Law Board under the amended provisions of Section 397 of the Companies Act, and it has to be disposed of by the duly constituted Board in accordance with the self-prescribed procedure and spirit of provisions of Section 10E of the Act. The order passed under Section 10E which involves a question of law is appealable to the High Court under Section 10F of the Act. Section 10F of the Act reads as under :

'10F. Any person aggrieved by any decision or order of the Company Law Board may file an appeal to the High Court within sixty days from the date of communication of the decision or order of the Company Law Board to him on any question of law arising out of such order : Provided that the High Court may, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within the said period, allow it to be filed within a further period not exceeding sixty days.'

6. A bare reading of the above provisions indicates that the appeal would lie to the High Court, within the prescribed period of limitation on any question of law arising out of such order. The mandate of the Legislature is limited in its natures and scope. The appeal is maintainable before the High Court. Part B of Chapter 3 of Volume 5 of the Rules and Orders of Punjab and Haryana High Court (Practice and Procedure) subject to the provisions specified in the said clauses of the Chapter, the classes of cases mentioned thereunder shall ordinarily be heard and disposed of by a judge sitting alone. In other words, the matters ordinarily would be heard by a learned judge sitting alone except for the exceptions stated in the said Chapter.

7. Under Part B of Chapter 3 of Volume 5 of the said Rules, appeals from commercial causes would be heard by a nominated Bench, which could be a judge sitting alone or in a Bench. Under Clause 3A all cases under the Companies Act, 1956, will be treated as 'commercial causes' and would normally be heard by a learned single judge as under Clause 2 the Chief Justice shall nominate one of the judges of the court to hear commercial causes from time to time. The heading of Part D clearly shows that appeals from decree and commercial causes, in relation to the Act in question, would mean an order passed under Sections 397 and 398 of the Act. On the basis of the above provisions, learned counsel for the appellant had contended that it is the learned company judge, sitting singly, who can hear the appeals against the Company Law Board and the appeal as such may not be maintainable before the Division Bench of the High Court. We do notice the substance in the submission more particularly keeping in, view the amended provisions of the Act, but we cannot lose sight of a specific rule which provides an exception to the general rule that cases would normally be heard by a single judge of this court. Clause 1 reads as under :

'Jurisdiction of a single judge and of Benches of the court.

Cases ordinarily to be heard by single judge.--Subject to the provisions hereinafter set forth, the following classes of cases shall ordinarily be heard and disposed of by a judge sitting alone :

(i) a motion for the admission of first appeal against decree of subordinate court regular first appeal under the Land Acquisition Act, regular second appeal, first appeal against orders, first appeal against order under Central or State Acts, unless otherwise provided in the Act, execution first appeals, execution second appeals, second appeal against orders, second appeal against order under Central or State Acts unless otherwise provided in the Act, civil revision petitions and any other application or petition under Code of Civil Procedure or under any Central or State Act, unless otherwise provided in the Code or Act.

Explanation.--The preliminary hearing for the admission of appeal against award rendered by the Motor Accidents Claims Tribunal, appeal against the decree or order passed under the Hindu Marriage Act, 1955, Letters Patent Appeals, Civil Appeals (Contempt), Company Appeals, Sales Tax cases and Gift-tax cases shall be before a Bench of two judges.'

8. It appears that as per the High Court Rules and Orders, as they stand today, such an appeal would be heard by a Bench of two or more judges for the purposes of preliminary hearing for admission of the appeal though thereafter such matter may be finally disposed of by company judge. Reference was made to a judgment of the Bombay High Court in the case of Minoo H. Mody v. Hemant D. Vakil [1997] 89 Comp Cas 456, where a Division Bench of Bombay High Court took a view that appeals from the orders passed by the Company Law Board under Sections 397 and 398 would lie to a single judge exercising original jurisdiction and not to the Division Bench.

9. We would refer to the observations of the Supreme Court of India in the case of Stridewell leathers (P.) Ltd. v. Bhankerpur Simbhaoli Beverages (P.) Ltd. [1994] 79 Comp Cas 139. Though the apex court was primarily concerned with a question relating to the territorial jurisdiction of the concerned High Court where the dispute mainly related to the maintainability of an appeal before a different High Court as a result of change in the forum, i.e., the Company LawBoard as a result of its Bench deciding the case under the jurisdiction of a different court. But their Lordships specifically observed that there was no change as a result of the amended provisions in the appellate forum. The following observations are material to be noticed (page 147) :

'The absence of any indication in the amendment to suggest any change or substitution in the appellate forum is a pointer in the direction that the same continued unaltered and the expression 'the High Court' instead of 'the court' was used for the reason indicated by providing that the concerned High Court continued to be the forum of appeal notwithstanding transfer of the original jurisdiction from the concerned High Court to the Company Law Board. It does appear to us that substitution of a new forum of appeal in place of the existing forum in the concerned High Court, as contended by the respondents cannot be inferred merely from the transfer of the original jurisdiction to the Company Law Board in the absence of clear provision to that effect.'

10. A Division Bench of this court in the case of Stephen Chemical Ltd. v. Innosearch Ltd. [1986] 60 Comp Cas 702, while pointing out the distinction between the Rules of the Bombay High Court and this court clearly held as under (pages 705 and 706) :

'The Bombay High Court Rules are not in pari materia with the Rules of the Punjab and Haryana High Court and, therefore, the ratio of Golcha Investment (P.) Ltd. v. Shanti Chandra Bafna [1970] 40 Comp Cas 1128 (SC) and Shanta Genevieve Pommerat v. Sakal Papers (P.) Ltd. [1985] 57 Comp Cas 469 (SC); AIR 1983 SC 269, is not attracted to the facts of the present case . . .

Rule 1 above stated clearly provides that a motion for the admission of matters mentioned in Clause (i) thereof shall ordinarily be heard and disposed of by a judge sitting alone. The Explanation is an exception to Clause (i) and by virtue of the Explanation, in matters including company appeals for the above purpose, that is, a motion for the admission, be set down before a Bench of two judges instead of a judge sitting alone. It would thus be evident that the relevant rules of this court expressly envisage a company appeal to be listed for motion hearing before a Division Bench. Once a matter comes up for admission purposes, it would be for the Division Bench while hearing the matter either to admit it for final hearing or to dismiss it, if it finds no merits therein.'

11. Company matters even if treated as a commercial cause are being heard by the judge nominated by the Chief Justice as the 'company judge'. We are unable to agree with the contention raised on behalf of the petitioner that as a necessary corollary thereto, a company appeal would also have to be heard by the learned company judge for the purposes of admission of the appeal. Particularly, in view of the Explanation to Clause (i) aforementioned the acceptance of such argument would run contrary to the specific provision of the HighCourt Rules and Orders. In view of the observations of the Supreme Court in Stridewell Leathers (P.) Ltd. v. Bhankerpur Simbhaoli Beverages (P.) Ltd. [1994] 79 Comp Cas 139, an unambiguous verdict of a Division Bench incorporating Clause (1) of Part B of Chapter 3 of Volume 5 of the Rules we have no hesitation in following the same view.

12. Law prescribes clear distinction between original and appellate jurisdiction of a court. The fields covered under these two concepts have well recognised limitations in law. A commercial cause would have to be heard by the learned company judge as per the nominations made by the Chief Justice. Nothing has been placed before us which would suggest that the existing appellate forum has been altered by any rule, regulation, notification or even nomination. The jurisdiction in a court necessarily must be vested by an appropriate legislation or the rules framed under the powers of delegated legislation. It is a settled principle that jurisdiction of a court cannot be inferred and it is an act of prescription. We are unable to trace the element of jurisdiction being vested in a learned single judge to hear the appeals against the orders of the Company Law Board backed by any legislative or other power particularly in the face of the afore-referred provisions.

13. Thus, we conclude that an appeal from the order passed in a petition under Sections 397 and 398 by the Company Law Board would be laid before a Bench consisting of two or more judges for a preliminary hearing for the purposes of admission of the said appeal. This rule does not postulate that the appeal itself should be disposed of on the merits on its regular hearing by a Bench of two or more judges. The necessary implication thereof would be that thereafter the matter after admission can be listed before the company judge for its disposal on the merits in accordance with the rules as they stand today. Such an interpretation would even further the cause of justice as it would provide a right of appeal to the appellant in consonance with the normal procedure of the court under the Letters Patent Act. It is the settled rule of interpretation that a provision should be interpreted so as not to take away a right which may otherwise be available to a litigant in the normal course of law. In this regard reference can be made to the judgment of this court in the case of H.S. Tuli and Sons Builders (P.) Ltd. v. Union of India [2000] 1 All Instant Judgments 541.

14. Conscious of the above reasoning, however, keeping in view the legal scenario emerging from the amended provisions of the Companies Act, their implication in law and effects on the prescribed procedure, we would consider it appropriate to emphasise the need for amending the existing relevant High Court Rules and Orders to provide an appropriate appellate forum against the orders of the Company Law Board. Amendments are certainly called for in view of the amendments to the Act. We are of the considered view that such amendments would not only save the time of the DivisionBenches of the court as appeals could well be heard by the company judge against the orders of the Company Law Board, but it will also help in expeditious disposal of appeals. Therefore, we direct the Registry to place the matter before the Chief Justice for his Lordship's consideration and possibility of considering the suggestions of the court.

15. We have emphasised the need for such exercise particularly keeping in view the fact that the Companies (Court) Rules have not been amended by the Supreme Court under Section 643 of the Companies Act despite the introduction of Sections 10E and 10F on the statute book. The above discussion further justifies the need to amend the relevant High Court Rules and Orders so that the appeal against the orders of the Company Law Board can be dealt with and disposed of by the company judge.

16. As of present, the appeal would lie before the Division Bench. Therefore, we direct the appeal to be listed for preliminary hearing before the appropriate Bench subject to orders of the Chief Justice.