COMPANY APPEAL No.2 OF 2001 Against the order dated 2.2.2001 within item No.(IX)passed by the learned single Judge in Company Petition No. 3 of 1984 ------- SAHU JAIN LTD.,‟Times House‟, 4th Floor, 7, Bahadur Shah Zafar Marg, New Delhi ------- Appellant Versus 1. Rohtas Industries Limited , Dalmia Nagar, Dist. Rohtas at Sasaram, Bihar. 2. The Official Liquidator,Patna High Court, having its office at Block „A‟,4th Floor, Mauryalok Complex, Dakbunglow Road,Patna 3. State Bank of India, 24, Park Street, Calcutta. 4. United Bank of India, 16, Old Court House Street, Calcutta-1 5. Ajit Kumar Singh Kashiwa son of late S.K. Kashiwa, resident of near Shitala Mata Mandir, P.S. Sadar Indaur, Dist. Indaur -----Respondents. ------- For The Appellant : Mr.Chitranjan Sinha, Senior Advocate Mr. Amit Prakash, Advocate. For The Respondents : Mr. Kaushlendra Kumar Sinha Advocate for S.B.I. Mr. Ajay Kr. Sinha, Advocate for U.B.I. -------- P R E S E N T THE HON'BLE MR. JUSTICE CHANDRAMAULI KR. PRASAD THE HON'BLE DR. JUSTICE RAVI RANJAN Prasad & Ranjan,JJ: This appeal under section 483 of the Companies Act has been preferred against the order dated 2nd of February, - 2 - 2001 passed by the Company Judge, in Company Petition No. 3 of 1984 under Item No. (IX). Short facts giving rise to the present appeal are that in the year 1984 a winding-up petition was filed before this Court which was numbered as Company Petition No. 3 of 1984. Prior to the institution of the winding-up proceeding, the State Bank of India and the United Bank of India granted certain credit facility to the Company namely, M/s. Rohtas Industries Limited. The two Banks filed separate suits for recovery of amount outstanding against M/s. Rohtas Industries Limited (hereinafter referred to as the “Company”) in which the appellant herein i.e. M/s. Sahu Jain Limited being the guarantor was impleaded as the defendant. By an order dated 22nd May, 1986 the Company Judge passed order directing winding-up the Company. During the pendency of the - 3 - winding-up proceeding the workmen of the company resorted to a writ petition under Article 32 of the Constitution of India before the Supreme Court. By order dated 24.10.1989, the Supreme Court stayed the winding-up order passed by the Company Judge dated 22nd May, 1986 and directed the State of Bihar to appoint an Officer from amongst the members of the Indian Administrative Service as Administrator of the Company. The Administrator so appointed was directed to constitute a committee to examine the claims of various parties including the Banks and financial institutions. In the light of the aforesaid order, a Claim Committee was constituted which issued notice and in response thereof the State Bank of India and the United Bank of India filed their claim before the said Committee. The Supreme Court in the petition filed by the workmen made attempt to revive the company - 4 - but ultimately, found it difficult to do and passed order on 18.10.1995 disposing of the writ petition with a direction that the winding-up proceeding be resumed by the Company Judge. On resumption of the proceeding by the Company Judge, the State Bank of India and the Union Bank of India filed application under section 446 of the Companies Act praying for grant of leave for proceeding with the suits bearing T.A 256 of 1996 and T.A. No. 45 of 1996 pending before the Debt Recovery Tribunal at Calcutta. The Company Judge by order dated 22.8.1997 granted leave sought for by the Banks. However, the appellant was not heard by the Company Judge when the leave sought for by the Banks was granted. The appellant filed application for recall of the aforesaid order but the said prayer was rejected by the Company Judge by order dated 30th October, 1998. - 5 - Aggrieved by the same, the appellant preferred LPA No. 1293 of 1998 before this Court. A Division Bench of this Court by judgment dated 24th March, 2000, set aside the order of the Company Judge dated 30th October, 1998 and remitted the matter back before it for reconsideration in accordance with law. It is relevant here to state that the Division Bench while remitting the matter back to the Company Judge observed that the order passed by the Company Judge, dated 30th of October, 1998 is an appealable order under section 483 of the Companies Act but no objection having been taken, the appeal was decided as a Letters Patent Appeal. While setting aside the order dated 30th of October, 1998, the Division Bench has found the said order illegal as the appellant was not heard though had locus. The relevant portion of the Judgment of the Division Bench in this - 6 - regard is as follows:- ”In the instant case, there is an express statutory requirement of hearing and admittedly the appellant has not been heard while leave was granted. Therefore, the initial order of the learned Company Judge which was passed ignoring this statutory mandate suffers from an infirmity and the appellant has sufficient locus to complain against the same”. The Division Bench while remitting the matter back to the Company Judge, further observed that the grant of leave depends upon the facts and circumstances of each case and for that various factors and circumstances require to be considered. Relevant portion of the Judgment of the Division Bench reads as follows:- “The Judgment of the Supreme Court, as discussed above, would show that the Company Judge will have to decide the question of grant of leave on the facts and circumstances of each case and must take into account various factors and considerations discussed above. There can be no strait jacket formula but - 7 - unfortunately the approach of the learned Company Judge has been just like that. The finding of the learned Company Judge that in view of the provisions of the R.D.B.F.I. Act no application, even for leave, is necessary cannot be sustained in view of the reasons given in Industrial Credit and Investment (Supra). Therefore, the learned Company Court should not have acted as if His Lordship‟s jurisdiction under section 446(2) of the said Act has been frozen just because of the provisions of sections 17, 18, 31 and 34 of the R.D.B.F.I. Act. It is well settled principle of construction that ouster of Court‟s jurisdiction is not to be readily inferred”. As regards the order of the Supreme Court directing for constitution of the Committee and the Banks and Fiancial Institution giving liberty to approach the Committee, the Division Bench observed as follows:- “These directions by the Hon‟ble Supreme Court are binding on the Company Judge, but the learned Company Judge has unfortunately assumed that those directions have been given by the Hon‟ble Supreme Court without consideration of the relevant - 8 - provisions of the Debt Recovery Act and His Lordship observed “perhaps it appears to me that the Debt Recovery Tribunal had not been established by that time, and therefore, there was no occasion for the Court to consider the same”. This Court is humbly of the opinion that there is no warrant for these assumptions in as much as the R.D.B.F.I Act, as an Act of 1993 must have been on the Statute book much before 18.10.1995 when the said judgment was delivered. Apart from that the finding of the learned Company Judge that the direction of the Hon‟ble Supreme Court upon the learned Company Judge to consider the report of the Claims Committee cannot override the mandatory provisions of R.D.B.F.I. Act also cannot be sustained.” The Company Judge, considered the matter after remand and taking into consideration the ratio laid down by the Supreme Court in the case of Allahabad Bank Vs. Canara Bank & Another (2000)4, SCC, 406, came to the conclusion that no leave of Company Court is necessary for initiating proceeding for recovery of the money - 9 - before the Debt Recovery Tribunal constituted under the provisions of Recovery of Debts due to Banks and Financial Institution Act, 1993 and accordingly, rejected the application filed for recall of the order granting leave. Mr. Chitranjan Sinha, Senior Advocate, appearing on behalf of the appellants submits that the decision of the Division Bench is binding inter se between the party and therefore, the learned Company Judge was bound by that and it ought not to have held that no leave is required for initiating proceeding before the Debt Recovery Tribunal. In support of his submission, he placed reliance on a Judgment of the Supreme Court, in the case of Mohammad Anis Vs. Union of India and Ors.(1994 (1) SCC Supplement SCC 145) and our attention has been drawn to the following passage:- “That is so far the - 10 - obvious reason that statutory provisions cannot override constitutional provisions and Article 142(1) being a constitutional power cannot be limited or conditioned by any statutory provision. It, therefore, seems clear to us that the power of the Apex Court under Article 142(1) of the Constitution cannot be diluted merely because the statute, namely, the Delhi Special Police Establishment Act, stipulates that the State Government‟s permission will be necessary if the CBI is to investigate any offence committed within the territorial jurisdiction of a State Government. That may be a statutory obligation governing the relations between the Central Government and the State Government but it cannot control this Court‟s power under Article 142(1). In both the aforesaid cases reference was made to the decision in A.R. Antulay v. R.S. Nayak and it was distinguished by pointing out that the violation of constitutional provisions and constitutional rights was in issue. Here as pointed out earlier no such right is infringed. Besides the decision in that case turned on its peculiar facts. The statute does not prohibit investigation by CBI but only requires certain formalities to be completed which have no relevance when the Apex Court makes an order in exercise of its power under Article - 11 - 142(1). Therefore, we do not think that merely because a question is referred to a larger Bench this Court is prohibited from exercising the powers conferred on it by Article 142(1) of the Constitution. In any case so far as the powers of the Apex Court under Article 142(1) are concerned, the position in law is now well settled by the aforementioned Constitution Bench rulings and hence if the reference includes the Apex Court it must be taken as impliedly answered.” He points out that the Division Bench held that leave is required to be granted for initiating the proceeding and only issue which the Company Judge required to decide was as to whether the facts of the case justify grant of leave or not. The Company Judge, in the submission of Mr. Sinha was bound by the order of remand and it ought not to have come to the conclusion that no leave is required and consequently, dismissed the application for recall of the order granting leave. Reliance has been placed on a decision of the learned Single - 12 - Judge of this Court in the case Sarju Rai and Ors. Vs. Sri Bhagwan Rai, (1975, BBCJ, 203) and our attention has been drawn to paragraph-10 of the Judgment, which reads as follows:- “In my opinion, not only the matter already decided by the order of remand cannot be reopened, but the lower court where the case goes after remand is bound to carry out all the directions given by the superior court as also by the findings which are affirmed by that Court. In the case Konappa Mudaliar v. Kusalaru alias Munuswami Pillai and others it was held that it was not open to the lower Court, when an appellate Court remanded the case to it, to do anything but to carry out the terms of the remand even if it considered that the order of remand was not in accordance with law. The lower court cannot apply what it might consider the correct position of the law. I feel myself in respectful agreement with the view expressed by the Madras High Court and overrule the contention of the learned Counsel for the appellants that in spite of the confirmation of some of the findings by this Court, the court of appeal below was authorized to hear the parties on those questions to - 13 - come to its own decision. It is not necessary to multiply the decisions, but I would refer to one decision of the Supreme Court in Satyadhyan Ghosal and others v. Smt. Deorajin Debi and another where it was held that the principle of res judicata applied also as between two stages in the same litigation to this extent that a court whether the trial court or a higher court having at an earlier stage decided a matter in one way would not allow the parties to re- agitate the matter again at a subsequent stage of the same proceedings.” There is no difficulty in accepting the broad submission of Mr. Sinha that decision of Court of Law on a question of fact or law is binding inter se between the parties but the question herein as to whether the Division Bench while setting aside the order of the Company Judge and remitting the matter back to it, had finally adjudicated the matter ? The Division Bench found the order of the Company Judge illegal on the ground that the appellant was not heard - 14 - while the leave was granted though it has locus to complain against that. The Division Bench in unequivocal term observed that the Company Judge will decide the question of grant of leave on the facts and circumstances of each case and must take into account various factors and consideration and there can be no strait jacket formula to adjudicate the question of grant of leave. In the face of the aforesaid observation, there is no escape from the conclusion that the Division Bench did not adjudicate the matter finally and that was left to be decided by the Company Judge. When the matter went back to the Company Judge, after remand, in view of the decision of the Supreme Court in the case of Allahabad Bank (Supra), it had no option than to hold that the leave of Company Court is not necessary for initiating proceeding before the Debt - 15 - Recovery Tribunal. Therefore, it cannot be said that the Company Judge while passing the impugned order, sat over the Judgment of the Division Bench. Mr. Sinha, then points that in view of the Judgment of the Supreme Court directing for constitution of a Committee to examine the claims of the Banks and Financial Institution, the Company Judge ought to have recalled the leave granted to the Banks for continuing the proceeding before the Debt Recovery Tribunal.We do not find any substance in the submission of Mr. Sinha. As observed earlier the Supreme Court directed appointment of an Administrator and the Administrator so appointed to constitute a Committee to examine the claim of Banks and Institution. In fact, while doing so, the Supreme Court stayed the Winding-up order passed by the Company Judge. However, later on, the Supreme Court - 16 - disposed of the matter observing that it is difficult to revive the Company and for resumption of the winding-up proceeding before the Company Judge. In that view of the matter, it cannot be said that the Company Judge while refusing to recall the order granting leave, has acted in breach of the order of the Supreme Court. In the result,we do not find any merit in the appeal and it is dismissed accordingly but without any order as to cost. Patna High Court The 24th Nov.2008 Rahman/NAFR (Chandramauli Kr. Prasad, J.) (Dr.Ravi Ranjan, J.)