THE HON’BLE SRI JUSTICE V.ESWARAIAH AND THE HON’BLE SRI JUSTICE B.CHANDRA KUMAR O.S.A.Nos.21 and 36 of 2011 Dated:- 25th July, 2011 O.S.A.No.21 of 2011 Between:- Tropicana Properties Limited …Appellant AND The Official Liquidator High Court of A.P. and others …Respondents O.S.A.No.36 of 2011 Between:- Gopal L.Raheja …Appellant AND The Official Liquidator High Court of A.P. and others …Respondents THE HON’BLE SRI JUSTICE V.ESWARAIAH AND THE HON’BLE SRI JUSTICE B.CHANDRA KUMAR O.S.A.Nos.21 and 36 of 2011 COMMON JUDGMENT:- (Per Hon’ble Sri Justice B.Chandra Kumar) Since both these appeals are directed against the same order, common arguments have been advanced and points involved are also common, both these appeals are being disposed of by this common order. 2. Both O.S.A.Nos.21 and 36 of 2011 are directed against the order dated 06.07.2010 passed in Company Application No.856 of 2009 in Company Petition No. 4 of 1999 by the learned single Judge of this Court. The appellant in O.S.A.No.21 of 2011 is respondent No.3 and the appellant in O.S.A.No.36 of 2011 is respondent No.6 in Company Application No.856 of 2009 in Company Petition No.4 of 1999. 3. For the sake of convenience, we will refer to the facts of the case as averred in Company Application No.856 of 2009. 4. The Official Liquidator, representing M/s.ITC Agrotech Finance and Investment Limited (hereinafter referred to as the ‘company in liquidation’), filed Company Application No.856 of 2009 under Section 446(3) of the Companies Act, 1956 (‘the Act’, for brevity) seeking transfer of Summary Suit Nos.6782 of 1999, 428 of 2000, 3710 of 2000 and 3453 of 2000 pending on the file of the Bombay High Court to this Court. Company Application No.4 of 1959 has been filed for winding up the company in liquidation and this Court, by its order dated 28.06.2001, while ordering the winding up of the company in liquidation, appointed the Official Liquidator attached to this Court as Liquidator of the company in liquidation. The second respondent – M/s.K.Rajeha Private Company Limited filed the above referred Summary Suit Nos.6782 of 1999, 428 of 2000, 3710 of 2000 and 3453 of 2000 before the Bombay High Court against the company in liquidation. Summary Suit No.3710 of 2000 is filed by the company in liquidation. Admittedly, in Summary Suit No.428 of 2000, M/s.K.Raheja Private Company Limited claimed a sum of Rs.6,21,59,041.10 ps with interest at the rate of 27% per annum. 5. According to the Official Liquidator, one of the ex-directors filed statement of affairs with the Official Liquidator on 03.05.2006 and the said statement of affairs does not reveal any liability towards the three companies which filed the above referred summary suits before the Bombay High Court. It is also his case that the Regional Director, Southern Region, Ministry of Corporate Affairs, submitted his report on 19.05.2008 as per the orders of the Bombay High court dated 10.07.2007 in O.S.A.No.21 and 23 of 2006 and the said report reveals that the company in liquidation had already settled dues of inter- corporate deposits with M/s.K.Raheja Private Company Limited /Nectar Properties Private Limited during the period between 01.04.1988 and 30.09.1999. Thus, the claim putforth by the appellants in the above referred Summary Suits have been specifically denied by the Official Liquidator and it appears that the company in liquidation had filed the written statement on 09.03.2001 before the Bombay High Court in Summary Suit No.428 of 1999 denying its liability. Then, the Official Liquidator filed I.A.No.807 of 1999 before this court seeking leave to contest the above referred four Summary Suits before the Bombay High Court. The case of the Official Liquidator is that the matters involved complicated questions of fact and it is necessary to contest the above referred four Summary Suits in order to avert any undue liability on the company in liquidation and in turn to protect the interest of the body of creditors and contributors of the company in liquidation. It is also the case of the Official Liquidator that the company in liquidation is having only a sum of Rs.2,82,728.96 ps to its credit and, therefore, it is in dearth of funds and, therefore, it is not feasible to appoint an advocate at Mumbai and to effectively contest the above referred four Summary Suits before Bombay High Court and, therefore, he sought transfer of the above referred four Summary Suits pending on the file of the Bombay High Court to this Court. 6. The respondent No.3 filed a counter mainly contending that the application filed by the Official Liquidator is barred by limitation under Article 137 of the Limitation Act, 1963. It is also contended that the above referred four Summary Suits pending before the Bombay High Court are interrelated and that the appellant sought a declaration that the loans stand validly assigned and transferred in favour of the appellants. It is also the case of the appellant that since the cause of action arose at Mumbai, material witnesses are residents of Mumbai and the records are also available at Mumbai, the above referred four Summary Suits should be retained in the Bombay High Court. 7. By his order dated 06.07.2010, the learned single Judge of this Court, having considered the contentions of both the parties and holding that this Court has jurisdiction to pass orders under Section 446(2) & (3) of the Act and that the company in liquidation is starved of funds either in prosecuting the suit filed by it or defending any suit filed against it in Bombay High Court, allowed the application filed by the Official Liquidator and ordered transfer of the above referred four Summary Suits from the file of the Bombay High Court on to the file of this Court. The said order is under challenge in this appeal. 8. Heard the learned senior counsel and the learned counsel appearing for the appellants and the learned counsel appearing for the respondents in both these appeals. 9. The main submission of the learned counse appearing on behalf of the appellants in both the cases are that substantial evidence and witnesses, who are to be examined in the above referred four Summary Suits are the residents of Mumbai and that the learned Single Judge ought to have considered the convenience of the parties before allowing the application filed by the Official Liquidator for transfer of the above referred four Summary Suits. It is also thei submission that the appellants are ready to deposit the amount to meet the expenses to be incurred by the Official Liquidator in prosecuting or defending the suits at Mumbai. It is further submitted tha institution or continuing the legal proceedings against a company in liquidation can be continued with the leave o the Court and it is not compulsory that all the suits have to be transferred to the Company Court under Section 446 o the Act. In support of their contentions, learned counse have relied upon the judgment of the Apex Court in the case between Central Bank of India Vs. Elmo Engineering Co.[1], wherein, it was held convenience o the Official Liquidator alone should not be the concern in transferring the company case from one Court to another. 10. Per contra, learned counsel for the Official Liquidator/first respondent submitted that the claims of M/s.K.Raheja Private Company Limited in Summary Suit No.428 of 2000 in claiming a sum of Rs.6,21,59,041.10 ps against the company in liquidation has no basis and it is clear from the report submitted by the Regional Director, Southern Region, Ministry of Corporate affairs dated 19.05.2008. Referring to the decision relied upon by the learned counsel for the appellants in Central Bank of India (1 supra), it is submitted that in the said case, the creditor was a secured creditor but in the case on hand, the creditors are not secured creditors and, therefore, they cannot resist the transfer of the above referred four Summary Suits from one Court to another and that they cannot continue the legal proceedings against the company in liquidation without the leave of the Company Court. Relying on the judgments in the cases between Smt.Gian Devi and another Vs. Bachan Motor Financiers (Pvt) Ltd.,[2]; Central Bank of India Vs. Atlas Works P. Ltd.,[3]; Deutsche Bank Vs. S.P.Kala and another[4]; Kerala State Financial Enterprises Ltd., Vs. Official Liquidator, High Court of Kerala[5]; and Kerala State Financial Enterprises Ltd., Vs. Official Liquidator, High Court of Kerala[6], learned counsel for the Official Liquidator submits that the claim against the company in liquidation must be proved before the Official Liquidator in accordance with the law as per the procedure prescribed in the Company (Court) Rules, 1959, and that no petition by the unsecured creditor of the company can be entertained under Section 446(2) of the Act. 11. In reply, Sri S.Ravi, learned senior counsel submitted that the decisions relied upon by the Official Liquidator are not applicable to the facts of the case on hand and no law has been laid down in those decisions that the Company Court cannot grant leave to institute or defend a suit at the place of their institution itself. 12. In view of the above rival contentions, the only point that arises for consideration in both these appeals is whether there are any grounds to allow the appeal. 13. Section 446 of the Companies Act, 1956, reads as follows:- (1) When a winding up order has been made or the Official Liquidator has been appointed as provisional liquidator, no suit or other legal proceeding shall be commenced, or if pending at the date of the winding up order, shall be proceeded with, against the company, except by leave of the [Tribunal] and subject to such terms as the [Tribunal] may impose. (2) [Tribunal] shall, notwithstanding anything contained in any other law for the time being in force, have jurisdiction to entertain, or dispose of-- (a) any suit or proceeding by or against the company; (b) any claim made by or against the company (including claims by or against any of its branches in India); (c) any application made under section 391 by or in respect of the company; (d) any question of priorities or any other question whatsoever, whether of law or fact, which may relate to or rise in course of the winding up of the company; whether such suit or proceeding has been instituted or is instituted or such claim or question has arisen or arises or such application has been made or is made before or after the order for the winding up of the company, or before or after the commencement of the Companies (Amendment) Act, 1960 (65 of 1960).] (3) [***] (4) Nothing in sub-section (1) or sub- section (3) shall apply to any proceeding pending in appeal before the Supreme Court or a High Court.] 14. A reading of the above provision makes it clear that the Company Court (learned single Judge) is empowered to order transfer of all pending suits to on its file. In Central Bank of India’s case (1 supra), which was relied upon by the learned counsel for the appellant, the appellant company filed an application seeking leave to prosecute the original suit and prosecute the said suits in Hyderabad. However, learned Single Judge directed that the suits be tried by Bombay High Court. Aggrieved by the same, the appeal was filed before the Apex Court. Holding that the appellant was secured creditor and that the suit is for the enforcement of the equitable mortgage and that the parties are from Ranga Reddy District and that it may be not only just and convenient but also proper if the suits be conducted there, the Apex Court observed as follows:- “Without intending to lay down the law broadly but confining only to the facts of this case, we feel that the order of transfer of the suits to the High Court of Bombay cannot be supported. We are unable to uphold the finding of the High Court when it observed: “on examination of facts and circumstances of the case, I am of the opinion that defending at a far distance in the Court of Additional Subordinate Judge, Ranga Reddy District at Saroornagar in Andhra Pradesh is going to be more expensive than if the said suits are continued and tried in this Court on the same being transferred to this Court. It is neither convenient nor proper that the Official Liquidator appointed Liquidator of the Respondent I should be asked to defend the said suits in that Court since the wasteful expenditure is to be avoided.” 15. In that case, it has to be seen that it is the appellant company which sought leave to prosecute the two suits on the file of the Additional Subordinate Judge, Ranga Reddy District and the appellant specifically contended that it will be just and convenience to continue the suits in Hyderabad. Admittedly, in the instant case, no such application was filed by the appellants herein. Moreover, in view of the specific observation of the Apex Court that without intending to lay down the law broadly but confining only to the facts of that case the orders were passed by the Apex Court. In view of the same, the said decision cannot be taken as a precedent. 16. The legal position appears to be well settled. The principles laid down in the decisions relied upon by the learned counsel for the Official Liquidator are as follows:- 17. In Smt.Gian Devi’s case (2 supra), it was held as follows:- “…a petition by an unsecured creditor against the company would not be competent under Section 446(2)(b) of the Act and his remedy is only to prove his debt before the Official Liquidator in accordance with the provisions of Section 528 of the Act and the Rules referred to above.” 18. In Central Bank of India’s case (3 supra), it was held as follows:- “Section 446 of the Companies Act, 1956 provides that when a winding up order has been made, the Court which is winding up the company would notwithstanding anything contained in any other law, have jurisdiction to entertain or dispose of any suit or proceeding by or against the company. The section further provides that notwithstanding anything contained in any other law, any suit against the company pending in any Court other than the winding up Court may be transferred to and disposed of by latter Court. There is no corresponding provision for retransfer of such a suit where ultimately the winding up of the company is not effective.” 19. In Deutsche Bank’s case (4 supra) it was held as follows:- “…once the Court has taken the assets of a company under its control or has passed an order for its being would up, it will not be proper to allow proceedings to be started or continued against the company and embarrass the administration of its affairs. The present section is intended to safeguard the assets of a company in winding up against wasteful or expensive litigation in regard to matters capable of being determined expeditiously and cheaply by the winding up Court itself. In the same case, it was further observed as follows:- “…In the absence of a provision like Section 446(2) under the repealed Indian Companies Act, 1913, the official liquidator, in order to realise and recover the claims and subsisting debts owed to the company, had the unenviable fate of filing the suits. These suits, as is not unknown, dragged on through the trial Court and Courts of appeal resulting not only in multiplicity of proceedings but in holding up the progress of the winding up proceedings. To save the company, which is ordered to be wound up, from this prolix and expensive litigation and to accelerate the summary remedy by conferring jurisdiction on the Court winding up the company to entertain petitions in respect of claims for and against the company. This was the objective behind enacting Section 446(2) and, therefore, it must receive such construction at the hands of the Court as would advance the object and at any rate not thwart it.” 20. In Kerala State Financial Enterprises Ltd.,’s case (5 supra), it was held as follows:- “It is not in dispute that the charge created on the properties of the company had not been registered with the Registrar of Companies under Section 125 of the Act. This being so, the appellant has to be considered as an unsecured creditor and has to stand in queue with the other creditors to receive its dues as and when the assets of the company are collected by the official liquidator for their distribution in accordance with law.” 21. In Kerala State Financial Enterprises Limited’s case (6 supra), the same principles which are enunciated in the above referred decisions have been reiterated. 22. Admittedly, the appellant is an unsecured creditor. The appellant seems to have not filed any application seeking the leave of the Company Court either to prosecute the suits against the company in liquidation or to defend the suit filed by the company in liquidation, as the case may be. Section 446 of the Companies Act provides that when a winding up order is made or the official liquidator is appointed, no suit or legal proceedings should be commenced, or if pending, shall be proceeded with, against such company except with the leave of the Court. The company Court shall alone have jurisdiction to entertain or dispose of any suit. Thus, the jurisdiction is vested with the Company Court without any kind of restriction, of course, subject to the discretionary power of the Company Court to grant leave. Thus, there cannot be any iota of doubt to say that the Company Court is empowered to withdraw all the cases or proceedings by or against the company in liquidation to try and dispose of those cases. 23. In the instant case, it has to be seen that it is the Official Liquidator, who sought transfer of the above referred four Summary Suits from the file of the Bombay High Court to this Court and having regard to the facts and circumstances of the case and the huge claims involved in the matter and the claim of M/s.K.Raheja Private Company Limited, claiming a decree of Rs.6,21,59,041.10 ps, the learned single Judge seems to have exercised his jurisdiction and ordered the transfer of the above referred four Summary Suits on to the file of this Court. Merely because the witnesses are residents/staying at Mumbai or the voluminous evidence is at Mumbai, it is not a ground to allow the appeal. Similarly, the proposal of the appellant that it is prepared to deposit the amount to meet the legal expenses of the Official Liquidator in defending or prosecuting the suit at Mumbai also cannot be accepted and the same does not appears to be a healthy legal practice i.e., permitting a party to meet the expenses of the opposite party in defending or prosecuting a case. 24. Having considered the decisions cited by the learned counsel for the Official Liquidator and in the light of the above discussion and having regard to the facts and circumstances of the case, we are of the view that the learned Single Judge of this court has rightly exercised his discretionary powers in ordering transfer of the above referred four Summary Suits from Bombay High Court to this Court and there is no need to interfere with the same. Both the appeals lack merits and are liable to be dismissed. 25. Accordingly, both the appeals are dismissed. There shall be no order as to costs. ____________________ Justice V.Eswaraiah _________________________ Justice B.Chandra Kumar 25th July, 2011 Bvv [1] 1994 SCC (4) 159 [2] (1988) 64 Company Cases 766 (P&H) [3] (1985) 58 Company Cases 243 (Cal) [4] (1992) 74 Company Cases 577 (Bom) [5] (2006) 133 Comp Cas 912 (Ker) [6] (2006) 133 Comp Cas 915 (SC)