The Brihan Maharashtra Sugar Syndicate vs Janardan Ramchandra Kulkarni And Ors.

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Not extracted

Decision Date: 22 February 1960

Coram: A.K. Sarkar, M. Hidayatullah, S.K. Das

The case was titled The Brihan Maharashtra Sugar Syndicate versus Janardan Ramchandra Kulkarni and others, and it was decided on 22 February 1960 by the Supreme Court of India. The judgment was recorded by a bench consisting of Justices A. K. Sarkar, M. Hidayatullah and S. K. Das, and the author of the judgment was Justice Sarkar.

Respondents numbered one through four were identified as shareholders in the company that was the appellant in this litigation. These shareholders had filed an application against the appellant company and its directors invoking section 153‑C of the Companies Act of 1913. The application sought certain reliefs, the specifics of which were not deemed necessary to recite in the judgment. For convenience, the Court referred to the Companies Act of 1913 simply as “the Act of 1913.” The shareholders had instituted the proceedings before the Court of the District Judge of Poona, which court had been authorised to exercise jurisdiction under the Act of 1913 by a notification issued by the Government of Bombay pursuant to section 3(1) of that Act. Before the District Judge could dispose of the application, the Act of 1913 was repealed and replaced on 1 April 1956 by the Companies Act of 1956, hereafter called “the Act of 1956.”

On or about 28 June 1956, the appellant company lodged an application before the District Judge of Poona requesting an order to dismiss the shareholders’ application under section 153‑C of the Act of 1913. The appellant argued that the repeal of the Act of 1913 had terminated the court’s jurisdiction to hear the matter, and therefore the application should be thrown out. The District Judge of Poona rejected the appellant’s request and allowed the shareholders’ application to proceed. The appellant subsequently appealed this dismissal to the High Court of Bombay, but the High Court also dismissed the appeal. As a result, the appellant brought the present appeal before this Court.

Section 644 of the Act of 1956 expressly repealed the Act of 1913 along with certain other statutes relating to companies. The saving provisions were contained in sections 645 to 657 of the Act of 1956. Counsel appearing for the appellant, Mr Banaji, contended that none of those saving provisions rescued the pending proceeding before the District Judge of Poona that had been instituted under section 153‑C of the Act of 1913. The Court held that it was unnecessary to decide that precise question because the proceeding could lawfully continue despite the repeal of the Act of 1913, owing to the operation of section 6 of the General Clauses Act. Section 658 of the Act of 1956 was specifically highlighted, stating that any reference to particular matters in sections 645 to 657 or elsewhere in the Act would not prejudice the general application of section 6 of the General Clauses Act, 1897 (Act X of 1897), with respect to the effect of repeals. Mr Banaji observed that section 658 had been enacted “ex abundante cautela,” i.e., with abundant caution. The Court accepted that observation and affirmed that, notwithstanding the repeal, section 6 of the General Clauses Act remained applicable to determine the effect of the repeal of the Act of 1913.

Section 6 of the General Clauses Act provides that when an enactment is repealed, the repeal shall not affect any right or liability that was acquired or incurred under the repealed enactment, nor shall it affect any legal proceeding relating to such right or liability, unless the repealing legislation expresses a contrary intention. The Court reiterated that the provision safeguards existing rights, liabilities, and ongoing proceedings, allowing them to continue as if the repealing statute had not been passed, unless a clear intention to the contrary is evident in the repealing legislation.

The Court explained that Section 6 of the General Clauses Act provided that when an enactment was repealed, the repeal would not affect any right or liability that had been acquired or incurred under the repealed law, nor would it affect any legal proceeding concerning that right or liability; such a proceeding could continue as if the repealing statute had never been enacted. There was no dispute that Section 153‑C of the 1913 Act conferred specific rights on shareholders of a company and imposed corresponding liabilities on the company, its directors and its managing agents. The application made under that provision sought to enforce those rights and liabilities. Accordingly, Section 6 would preserve the rights and liabilities created by Section 153‑C and would permit the continuation of the proceeding despite the repeal of the 1913 Act, unless a different intention could be discerned. The Court then referred to the decision in State of Punjab v. Mohar Singh, which held that Section 6 applied even where the repealing statute introduced fresh legislation on the same subject, but that the new statute had to be examined to determine whether it manifested a contrary intention. The 1956 Act both repealed the 1913 Act and introduced new legislation on the matters previously covered. The Punjab case further observed that the inquiry was not whether the new Act expressly preserved the old rights, but whether it showed an intention to destroy them. The issue therefore became whether the 1956 Act indicated an intention to destroy the rights created by Section 153‑C. Counsel for the petitioner argued that Section 647 of the 1956 Act signaled such an intention. The Court found no support for that argument. Section 647 merely stated that where the winding‑up of a company began before the commencement of the 1956 Act, the winding‑up would proceed as if that Act had not been passed, and that Section 555(7) of the 1956 Act would apply to monies paid into the Companies Liquidation Account. This provision simply made the repealed Act’s rules applicable to the winding‑up notwithstanding its repeal; the reference to Section 555(7) was irrelevant to the present question. Consequently, Section 647 did not reveal any intention to extinguish the rights established by Section 153‑C, and it could not be argued that because Section 647 expressly applied the repealed Act to winding‑up, it implicitly barred the use of the repealed Act in other matters.

The Court observed that, with respect to matters other than those directly dealt with in section 647, the repealed Act could not be invoked. It explained that, in view of section 658 of the 1956 Act, a reference to a particular matter in section 647 would not prejudice the operation of section 6 of the General Clauses Act. In other words, nothing in section 647 should be read as showing an intention to displace the application of section 6 of the General Clauses Act. The Court further noted that the parties were agreed that the provisions of section 153‑C of the 1913 Act had been substantially re‑enacted by the 1956 Act. This agreement, the Court said, demonstrated a clear intention not to destroy the rights created by section 153‑C of the 1913 Act.

Counsel then drew the Court’s attention to section 10 of the 1956 Act and section 24 of the General Clauses Act. Section 10 of the 1956 Act corresponds to section 3 of the 1913 Act and deals with the jurisdiction of courts. Under section 10, the Central Government may empower a District Court to exercise jurisdiction under the Act, but this does not include the jurisdiction conferred by sections 397 to 407, nor does it include jurisdiction over the winding up of companies whose paid‑up share capital is not less than one hundred thousand rupees. The Court accepted that sections 397 to 407 of the 1956 Act contain, in substance, the provisions of section 153‑C of the 1913 Act. It was also noted that the appellant’s paid‑up capital exceeded one hundred thousand rupees and that the application made under section 153‑C of the 1913 Act contained a prayer, in the alternative, for the winding up of the appellant.

Section 24 of the General Clauses Act provides that when any Act is repealed and re‑enacted, with or without modifications, any notification issued under the repealed Act shall, so far as it is not inconsistent with the re‑enacted provisions, continue to be in force and shall be deemed to have been issued under the re‑enacted provisions unless it is superseded by a new notification. Counsel pointed out that, in view of section 10 of the 1956 Act, a District Court could no longer be empowered to entertain an application like the one presented to the District Judge of Poona. That application sought reliefs akin to those contemplated by sections 397 to 407 of the 1956 Act and also sought the winding up of a company whose paid‑up capital exceeds one hundred thousand rupees, matters for which a District Court no longer has jurisdiction. Consequently, counsel submitted that the notification issued under the 1913 Act, which had empowered the District Judge of Poona to consider the application, was inconsistent with the provisions of the 1956 Act and, under section 24 of the General Clauses Act, could not be deemed to continue in force.

After the repeal of the Act of 1913, the petitioner contended that the notification issued under that Act had lost all effect and that, as a result, the District Judge of Poona no longer retained any jurisdiction to hear the application filed under section 153‑C of the 1913 Act. It was further submitted that the enactment of the 1956 Act demonstrated that all rights acquired under the 1913 Act would terminate automatically upon its repeal. The Court was unable to accept these contentions. Section 10 of the 1956 Act was explained to deal solely with the jurisdiction of courts. That provision shows that, after the 1956 Act came into force, District Courts could no longer be empowered to deal with applications that fell within the ambit of section 153‑C of the 1913 Act. However, the Court observed that this limitation on jurisdiction did not indicate that the substantive rights created by section 153‑C of the 1913 Act were intended to be extinguished. Referring to the earlier decision in State of Punjab v. Mohar Singh, the Court noted that a repealing statute must expressly show an intention to destroy the rights conferred by the earlier law in order to avoid the operation of section 6 of the General Clauses Act. The argument was advanced that section 24 of the General Clauses Act terminated the notification that gave the District Judge of Poona the power to entertain the application under section 153‑C, on the ground that such a notification conflicted with section 10 of the 1956 Act and therefore the Judge could not continue to deal with the matter. The Court held that section 24 does not purport to terminate any notification; rather, it merely preserves a notification in force when the enactment under which it was issued is repealed, provided the circumstances specified in the notification remain satisfied. Consequently, section 24 did not cancel the earlier notification that conferred jurisdiction on the District Judge of Poona under the 1913 Act. Moreover, under section 6 of the General Clauses Act, proceedings relating to an application under section 153‑C may lawfully continue even after the repeal of the 1913 Act. In view of this, the Court concluded that the District Judge of Poona retained jurisdiction to entertain the pending application; to hold otherwise would render section 6 ineffective. For these reasons, the Court found that the appeal could not succeed and ordered that the appeal be dismissed with costs. The appeal was therefore dismissed.