Official Liquidator Being Liquidator Of Gujarat Steel Tubes vs. Steel Authority Of INDIA Limited (Sail)
Held
The High Court held that the expression 'suit or other legal proceedings' under Section 446(1) of the Companies Act, 1956, does not include 'criminal proceedings'. The Court reasoned that the phrase 'other legal proceedings' must be read in 'ejusdem generis' with 'suit', thereby limiting it to civil proceedings. Consequently, criminal proceedings have to be excluded. The Court found that the legislature's intention under these sections was not to provide jurisdiction to the Company Court over criminal proceedings, either against the company or its directors. The Court noted that specific provisions exist for the High Court's power to take cognizance of certain offenses and to transfer criminal complaints under Section 446(3) read with Section 407 of the Cr.P.C., but this does not grant general jurisdiction over all criminal matters. The Court disagreed with the interpretation that 'other legal proceedings' includes criminal proceedings, citing support from Bombay and Andhra Pradesh High Courts and the Apex Court in Pennar Paterson Ltd. vs. Shikshak Sahakari Bank Ltd. Therefore, the direction to transfer the criminal cases to the Company Court and the decision to entertain and dispose of them by the Company Court were found unsustainable. The impugned order was set aside, and the criminal cases were remanded to the concerned trial court for expeditious disposal.
Facts
The Official Liquidator of Gujarat Steel Tubes (GST) appealed against a Company Court judgment that directed the transfer and trial of four criminal cases (Nos. 1698-1701 of 2000) from the Metropolitan Magistrate's Court to the Company Court. These criminal cases were filed by Steel Authority of India Limited (SAIL) and its directors against the former Managing Director of GST and SAIL officers under Sections 120B, 34, 114, and 409 of the IPC. SAIL had filed these complaints after GST failed to pay for steel sheets supplied, leading to dishonoured cheques. The Company Court allowed SAIL's application to transfer and try these criminal cases, which the Official Liquidator challenged. The amount in dispute in the underlying civil suit filed by SAIL was Rs. 5,95,73,087.
Key Issues
1. Whether the expression 'suit or other legal proceedings' under Section 446(1) of the Companies Act, 1956, includes 'criminal proceedings'. 2. Whether the Company Court has the jurisdiction to transfer and try criminal proceedings filed under the Indian Penal Code against directors and officers of a company in liquidation. Petitioner's Arguments: The Official Liquidator argued that the expression 'other legal proceedings' in Section 446(1) of the Companies Act, 1956, should be interpreted broadly to include criminal proceedings, relying on the Gujarat High Court judgment in Harish C. Raskapoor and Ors. Vs. Jafebrhai Mohmedbhai Chhatpar and an earlier decision in Official Liquidator Vs. R.C. Abrol. They contended that the Company Court has the power to transfer and try such proceedings to ensure a comprehensive resolution of matters related to the company in liquidation. Revenue/State's Arguments: The judgment does not explicitly record arguments from the revenue or state. However, the Company Court's decision, which was challenged, implicitly supported the view that criminal proceedings could be transferred and tried by the Company Court. The judgment later discusses decisions from Bombay and Andhra Pradesh High Courts and the Apex Court that support a narrower interpretation of Section 446(1).
Sections Cited
Section 446, Section 120B, Section 34, Section 114, Section 409, Section 454, Section 407, Section 617
AI-generated summary — verify with the full judgment below
C/OJA/39/2013 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/O.J.APPEAL NO. 39 of 2013 With R/O.J.APPEAL NO. 40 of 2013 With R/O.J.APPEAL NO. 41 of 2013 With R/O.J.APPEAL NO. 42 of 2013
FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE K.M.THAKER and HONOURABLE MR.JUSTICE V.P. PATEL ========================================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ? YES 2 To be referred to the Reporter or not ? YES [except para 9 to 15.2] 3 Whether their Lordships wish to see the fair copy of the judgment ? NO 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India or any order made thereunder ? NO ========================================================== OFFICIAL LIQUIDATOR BEING LIQUIDATOR OF GUJARAT STEEL TUBES Versus STEEL AUTHORITY OF INDIA LIMITED (SAIL) & 5 other(s) ========================================================== Appearance: MR ABHIJIT P JOSHI(1330) for the Appellant(s) No. 1 MR DIVYESH D. BAIS, ADVOCATE FOR NANAVATI ASS
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