THE BRIHAN MAHARASHTRA SUGARSYNDICATE LTD. vs. JANARDAN RAMCHANDRA KULKARNI AND OTHERS

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

Court: supreme-court

Case Number: Civil Appeal No. 513 of 1958

Decision Date: 22 February 1960

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

The Supreme Court of India delivered its judgment on 22 February 1960 in the matter of The Brihan Maharashtra Sugarsyndicate Ltd. versus Janardan Ramchandra Kulkarni and others. The judgment was authored by Justice A.K. Sarkar, and the bench was composed of Justices S.K. Das and M. Hidayatullah. The petition was filed by The Brihan Maharashtra Sugarsyndicate Ltd., which is described as the petitioner, and the respondents were Janardan Ramchandra Kulkarni together with other parties. The case is reported in the official law reports as 1960 AIR 794 and 1960 SCR (3) 85, and it also appears in the citation reference R 1992 SC 180 (3). The substantive issue before the Court concerned company law, specifically whether legal proceedings that were pending under the Indian Companies Act of 1913 could continue after that Act had been repealed and replaced by the Companies Act of 1956. The statutory provisions expressly mentioned in the record include section 153‑C of the 1913 Act, sections 10 and 647 of the 1956 Act, and sections 6 and 24 of the General Clauses Act, which were all relevant to determining the survival of jurisdiction and the effect of the repeal.

The headnote of the judgment explains that the respondent had filed an application under section 53‑C of the Companies Act, 1913, with an alternative prayer for the winding up of the appellant company, before the District Judge of Poona, who had been authorised by a government notification to exercise jurisdiction under the 1913 Act. While this application was still pending, the Parliament enacted the Companies Act of 1956, which repealed the 1913 Act. In response to the repeal, the appellant company filed a motion before the same District Judge seeking dismissal of the pending application, arguing that the Judge no longer possessed any jurisdiction to entertain the matter after the repeal of the earlier Act. The Supreme Court held that section 6 of the General Clauses Act preserved the District Judge’s jurisdiction to deal with the application under section 153‑C of the 1913 Act, despite the repeal. The Court further observed that section 647 of the 1956 Act did not express any intention to affect the rights that had arisen under the 1913 Act, and that section 658 of the 1956 Act made the provisions of section 6 of the General Clauses Act applicable notwithstanding anything contained in section 647. Moreover, the Court pointed out that section 24 of the General Clauses Act does not terminate any earlier notification, and therefore the notification issued under the 1913 Act continued to empower the District Judge to exercise jurisdiction under section 153‑C, even though section 10 of the 1956 Act removed the power of a District Judge to act under the corresponding provisions (sections 139‑7 to 407 of the 1956 Act) or in respect of the winding up of a company with a paid‑up share capital of not less than Rs 1,00,000, which described the appellant company.

The matter before the Supreme Court was filed as Civil Appeal No. 513 of 1958 under the civil appellate jurisdiction of the Court. The appeal was taken by special leave from the judgment and order dated 20 November 1957 of the Bombay High Court in First Appeal No. 600 of 1956. That High Court judgment arose from the judgment and order dated 17 October 1956 of the District Judge, Poona, in Miscellaneous Petition No. 2 of 1956. The judges of the Bombay High Court who had decided the earlier appeal were H.D. Banaji, S.N. Andley, J.B. Dadachanji, Rameshwar Nath and an additional member whose name is not fully recorded in the text. The Supreme Court’s decision therefore addressed the procedural and substantive question of whether the jurisdiction to adjudicate the pending application survived the statutory repeal, and it clarified the operation of the General Clauses Act in preserving such jurisdiction.

P. L. Vohra represented the appellant, while A. V. Viswanatha Sastri, Sorab N. Vakil, B. K. B. Naidu and I. N. Shroff appeared for respondents Nos. 1 and 2. The judgment was delivered on 22 February 1960 by Justice Sarkar. Respondents Nos. 1 to 4 were shareholders of the company that was the appellant in this proceeding. They had filed an application against the appellant and its directors invoking section 153‑C of the Companies Act 1913, hereinafter referred to as the Act of 1913, seeking certain reliefs whose substance was not essential to set out. This application was lodged 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 1956, hereinafter referred to as the Act of 1956. Around 28 June 1956 the appellant applied to the District Judge of Poona for an order dismissing the pending application under section 153‑C of the Act of 1913 on the ground that the repeal of that Act had extinguished the Court’s jurisdiction. The District Judge rejected the appellant’s request, and the appellant’s subsequent appeal to the High Court of Bombay was also dismissed, leading to the present appeal. Section 644 of the Act of 1956 repealed the Act of 1913 and related company legislation, while sections 645 to 657 contained various saving provisions.

Mr Banaji, appearing for the appellant, argued that none of the saving provisions in sections 645 to 657 preserved the proceeding before the District Judge of Poona under section 153‑C of the Act of 1913. The Court deemed it unnecessary to decide that precise question because it considered that the proceeding could lawfully continue despite the repeal, relying on section 6 of the General Clauses Act. Section 658 of the Act of 1956 expressly stated that references to matters in sections 645 to 657 or any other provision of the Act would not prejudice the general operation of section 6 of the General Clauses Act 1897 (X of 1897) concerning the effect of repeals. Although Mr Banaji observed that section 658 had been enacted ex abundante cautela, the Court affirmed that section 6 nonetheless applied to the repeal of the Act of 1913. Section 6 provides that when an Act is repealed, unless a contrary intention appears, the repeal shall not affect any right or liability that was acquired or incurred under the repealed enactment, nor any legal proceeding relating to such right or liability, which may continue as if the repealing Act had not been enacted.

The Court observed that Section 6 of the General Clauses Act provides that, when an enactment is repealed, the repeal does not affect any right or liability that had been acquired or incurred under the repealed enactment, and it does not affect any legal proceeding relating to that right or liability; consequently the proceeding may continue as if the repealing Act had never been passed. It further noted that there is no dispute that Section 153‑C of the Act of 1913 conferred specific rights on the shareholders of a company and, at the same time, placed the company together with its directors and managing agents under certain liabilities. The application made under that provision was intended to enforce those rights and the corresponding liabilities. Because of the operation of Section 6 of the General Clauses Act, the rights and liabilities created by Section 153‑C of the Act of 1913 would be preserved, and a suit or other proceeding concerning them could lawfully continue despite the repeal of the 1913 Act, unless a contrary intention could be discerned from the later legislation. The Court then referred to its earlier decision in State of Punjab v. Mohar Singh, where it held that Section 6 applies even when the repealing statute contains fresh legislation on the same subject, but that in such circumstances one must examine the provisions of the new Act to determine whether they reveal a different intention. The Act of 1956 not only repealed the Act of 1913 but also introduced fresh provisions on the matters previously covered by the 1913 Act. The Court also recalled that, in State of Punjab v. Mohar Singh, it was observed that the test for a contrary intention is not whether the new Act expressly keeps old rights and liabilities alive, but whether the new legislation manifests an intention to destroy them. Accordingly, the question before the Court was whether the Act of 1956 was intended to destroy the rights created by Section 153‑C of the Act of 1913. Counsel for the petitioner contended that Section 647 of the Act of 1956 indicated such an intention. The Court found no support for that contention. Section 647 merely provides that if the winding‑up of a company begins before the commencement of the 1956 Act, the winding‑up shall proceed as if the 1956 Act had not been enacted; it also refers to Section 555(7) of the 1956 Act for the treatment of monies paid into the Companies’ Liquidation Account. In effect, Section 647 merely makes the provisions of the repealed Act applicable to the winding‑up notwithstanding the repeal and does not intend to extinguish the rights created by Section 153‑C of the 1913 Act. The Court further held that the argument that, because Section 647 expressly makes the repealed Act applicable to a winding‑up, it therefore implies that the repealed Act cannot be relied upon for other matters, is untenable, for, in view of the overall scheme of the legislation, no such implication can be drawn.

In this portion of the judgment, the Court observed that the reference made in section 647 of the 1956 Act to a specific matter does not prejudice the operation of section 6 of the General Clauses Act; in other words, the language of section 647 cannot be read as expressing an intention to exclude the application of section 6. The parties, however, unanimously agreed that the provisions of section 153‑C of the 1913 Act have been substantially reproduced in the 1956 Act, and that this reproduction reflects a clear intention not to destroy the rights that were created under section 153‑C. Counsel then directed the Court’s attention to section 10 of the 1956 Act and to 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 power does not extend to the jurisdiction conferred by sections 397 to 407, nor does it cover the winding up of companies whose paid‑up share capital is not less than one hundred thousand rupees. It was further accepted that sections 397 to 407 of the 1956 Act contain substantially the same provisions that were previously found in section 153‑C of the 1913 Act. The Court also noted that the appellant’s paid‑up capital exceeds one hundred thousand rupees and that the application made under section 153‑C of the 1913 Act included, as an alternative, a prayer for the winding up of the appellant.

Section 24 of the General Clauses Act provides that when any Act is repealed and reenacted, whether with or without modifications, any notification issued under the repealed Act shall, to the extent that it is not inconsistent with the re‑enacted provisions, continue in force and be deemed to have been issued under the new provisions until such a notification is superseded by a fresh one issued under the re‑enacted provisions. Counsel argued that, in view of section 10 of the 1956 Act, a District Court can no longer be empowered to entertain an application of the sort that was presented before the District Judge of Poona, because that application seeks reliefs that fall within the scope of sections 397 to 407 of the 1956 Act and also seeks the winding up of a company whose paid‑up capital exceeds one hundred thousand rupees, a matter that cannot now be assigned to a District Court. Accordingly, counsel maintained that the notification issued under the 1913 Act, which empowered the District Judge of Poona to deal with the application, is inconsistent with the 1956 Act and, pursuant to section 24 of the General Clauses Act, cannot be deemed to continue in force after the repeal of the 1913 Act. Hence

It was contended that the notification granting jurisdiction to the District Judge of Poona had lost all force and that, consequently, the Judge no longer possessed authority to hear the application. It was also asserted that this circumstance demonstrated that the provisions of the 1956 Act implied the termination of rights acquired under the 1913 Act upon its repeal. The Court was unable to accept these submissions. Section 10 of the 1956 Act concerns only the jurisdiction of courts and merely indicates that District Courts can no longer be empowered to deal with applications under the 1956 Act that relate to matters covered by section 153‑C of the 1913 Act. This limitation does not convey an intention to destroy the rights created by section 153‑C of the 1913 Act. As noted earlier from the decision in State of Punjab v. Mohar Singh, a repealing statute must expressly show that the rights under the repealed enactment were intended to be destroyed in order to prevent the operation of section 6 of the General Clauses Act. The present argument, however, failed to demonstrate such a contrary intention.

The submission further claimed that section 24 of the General Clauses Act terminated the notification empowering the District Judge of Poona to hear the application under section 153‑C of the 1913 Act because that notification conflicted with section 10 of the 1956 Act, thereby removing the Judge’s authority to continue with the proceeding. The Court observed that section 24 does not purport to end any notification; its purpose is not to cancel a notification but to allow a notification that remains in force to continue to operate in the circumstances specified, even after the enactment under which it was issued has been repealed. Accordingly, section 24 does not cancel the notification that authorises the District Judge of Poona to exercise jurisdiction under the 1913 Act. Since section 6 of the General Clauses Act permits the continuation of proceedings relating to an application under section 153‑C of the 1913 Act after that Act’s repeal, it follows that the District Judge of Poona retains jurisdiction to entertain the application. Were this not the case, section 6 would become ineffective. For these reasons, the Court concluded that the appeal must fail and ordered the appeal dismissed with costs, thereby dismissing the appeal.