Case: Stridewell Leathers (P) Vs. Bhankerpur Simbhaoli Beverages (P) Ltd

3. The material facts giving rise to the above question are only a few, as stated hereafter. A petition under Sections 397/398 of the Companies Act, 1956 was filed on behalf of the appellant, Stridewell Leathers Pvt. Ltd. before the Company Law Board in respect of the company known as Shoe Specialities Pvt. Ltd. having its registered office at Madras. On May 28, 1993, the Company Law Board in the Principal Bench at Delhi made an order in that petition against which an appeal was filed under Sectionin the Delhi High Court by a shareholder, respondent 1. The Company, Shoe Specialities Pvt. Ltd. also filed an appeal against the same order of the Company Law Board in the Madras High Court (CMA No. 793 of 1993) which is pending. A preliminary objection to maintainability of the appeal in the Delhi High Court was raised by the present appellants in the appeal filed in the Delhi High Court. The Delhi High Court rejected the preliminary objection on July 29, 1993 and admitted that appeal. This appeal by special leave is against the Delhi High Courts order dated July 29, 1993 rejecting the preliminary objection and holding the appeal to be maintainable in the Delhi High Court

Court's reasoning:
10. There can be no doubt that in case the forum of appeal was indicated in Sectionby use of the expression "the Court" instead of "the High Court" then by virtue of the definition of the expression "the Court" in Section 2(11), the court concerned would have to be determined as provided in Section 10 but there may have been some ambiguity whether that expression means "the High Court" or "the District Court" mentioned in clause (a) or clause (b) of(1) of Section 10. This ambiguity is removed by use of the expression "the High Court" in Sectionwhich unmistakably points to clause (a) of(1) of Section 10 and this appears to be the reason for use of the expression "the High Court" instead of "the Court" in SectionThere is nothing in any of these provisions to exclude the application of Section 10(1)(a) for construing the meaning of the expression "the High Court" in Sectionsince the context does not require otherwise and such a construction prevents a hiatus. Care was taken to define the expression "the Court" in Section 2(11) of the Act providing clearly that the meaning is as provided in Section 10 unless the context otherwise requires; and Section 10 providing for the jurisdiction of courts then says that the court having jurisdiction under the Act would be the High Court or the District Court indicated therein. It is unlikely that with such care taken in the principal Act to define "the Court" and also specify the court having jurisdiction under the Act, any ambiguity would be left while amending the principal Act in this manner for any doubt about the forum of appeal if it was intended to be different from the existing appellate forum indicated by Section 10(1)(a). We have no doubt that express provision would have been made in the amendment to indicate a different or substituted appellate forum than the existing appellate forum if that was the intention of the amendment or jurisdiction of the court for the purpose of appeal had been altered in any manner. 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 High Court concerned continued to be the forum of appeal notwithstanding transfer of the original jurisdiction from the High Court concerned 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 High Court concerned, 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 effect11. Use of the word the before High Court is clearly intended to specify a particular High Court identified by Sectionitself and, therefore, it cannot be a High Court indicated by the subsequent act of the Company Law Board choosing the place of its sitting for making the order under appeal. It is also indicative of the clear intention of the legislature that the indication of the particular High Court has to be found in the existing provisions of the enactment and not by inference from any outside provision or any subsequent act of the Company Law Board or any other authority. It further lends assurance to the view that it excludes the possibility of any ambiguity in the expression and refers to a particular High Court envisaged by other provisions of the Act12. The provision in Sectionfor the Company Law Board to have more than one bench and the Company Law Board Regulations, 1991 framed under Sectionof the Act providing for sitting of the benches at different places in the country does not give any clue to the construction of the expression "the High Court" in SectionOn behalf of the respondents it was urged, that all appeals under Sectionwould lie to the Delhi High Court where the Principal Bench of the Company Law Board ordinarily sits but if the order under appeal is made at any other place in the country where the bench sits, then the High Court having jurisdiction over that place can entertain the appeal. In our opinion, this is too nebulous a concept for deciding the question of jurisdiction and determination of the forum of appeal and, if accepted would tend to empowered the Company Law Board to determine the forum of appeal by the choice of place of sitting under the Regulations for making the order. We have no doubt that the forum of appeal indicated in Sectionis a definite forum determined by the provisions of the Act and not by the Regulations framed by the Company Law Board under Sectionor the place of its sitting under the Regulations. These Regulations framed by the Company Law Board to regulate its own procedure are, therefore, of no assistance for decision of the controversy13. It may be mentioned that the original jurisdiction to try a petition for winding up of a company continues to remain in the High Court concerned even though the original jurisdiction in respect of a petition under Sections 397 and 398 is transferred to the Company Law Board. It is obvious that the appeal against an order made by the Company Judge of the High Court in apetition continues to lie before a Division Bench in the same High Court. If the construction suggested on behalf of the respondents be correct then that High Court would have no jurisdiction no entertain an appeal against the Company Law Boards order while appeal from the Company Judges order in apetition in respect of the same company would lie there. This appears to be incongruous. A possible anomaly of this kind would be prevented by taking the view which we haveIt is also noteworthy that the jurisdiction of the High Courts under Article 226, if it be exercisable in respect of an order made by the Company Law Board, would be determine by the place where the cause of action, or any part of it arises and the Delhi High Court alone would not be the High Court for that purpose. The High Court, within whose jurisdiction the registered office of the company concerned lies giving rise to at least a part of the cause of action, would be entitled to exercise the writ jurisdiction under Article 226 of the Constitution. It is a different matter that the existence of the efficacious remedy of statutory appeal under Sectionwould justify refusal of interference under Article 226. The Parliament could not have been unaware of this situation. This being so, it is difficult to accept that even though the High Court having jurisdiction in relation to the place at which the registered office of the company concerned is situate may be entitled to entertain a writ petition against an order made by the Company Law Board, it would have no jurisdiction to entertain the statutory appeal under Sectionof the Companies Act in respect of the same company, except in the case of the Delhi High Court. No such distinction between the High Courts can be envisaged. It was precisely to remove such an anomaly in respect of the orders made by the Central Government or the other authorities situate in Delhi that the amendment was made in Article 226 as originally enacted in the Constitution. It is difficult to accept that, after that experience, a retrograde step was taken while enacting Sectionas suggested by the respondents16. Both sides have placed reliance on Section 54 of the Foreign Exchange Regulation Act, 1973 (for short "FERA") which provides an appeal to the High Court from any decision or order of the Appellate Board constituted under the Act. An explanation has been added therein to give the meaning of the expression "High Court". The absence of a similar explanation in Sectionof the Companies Act is relied on by both sides to support the rival contentions. In our opinion, the absence of a similar explanation in Sectiondoes not support the respondents contention. In the absence of provisions like Sections 2(11) and 10(1)(a) of the Companies Act in the FERA, addition of explanation in Section 54 of the FERA appears to have been considered necessary to remove any possible ambiguity. The other provisions in the Companies Act, 1956 and the historical background did not require any such explanation in SectionWe are also not impressed by the argument of Shri Shanti Bhushan based on clause 11 of the Letters Patent of the Lahore High Court. In the first place any general provision for appeal must give way to the special provision made in the Companies Act. The provision of appeal by insertion of Sectionis in substitution of the provision in the Letters Patent or similar enactment providing for appeal against orders of the Company Judge when the original jurisdiction was in the High Courts. If the construction made by us of Sectionand the other relevant provisions of the Companies Act is correct, the provision in the Letters Patent of the Lahore High Court would not be material for deciding which High Court has jurisdiction to entertain the appeal since the appeal would lie by virtue of the specific provision in Sectionof the Companies Act. In this context, any further discussion of the provision in the Letters Patent of any High Court cannot have any significance