Page 1

1

REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.3055 OF 201  7

(Arising out of S.L.P.(C) No.1587 of 2015)

BANK OF NEW YORK MELLON LONDON BRANCH        ...APPELLANT

VERSUS

ZENITH INFOTECH LIMITED         ...RESPONDENT

JUDGMENT

RANJAN GOGOI, J.  

1. Leave granted.

2. At the very outset, it will be necessary to take note of the relevant statutory enactments and changes that have come about after hearing of the case had been concluded. The said enactments and

Page 2

2

the changes in the existing enactments give rise to a somewhat altered scenario, as will be noticed hereinafter,  though  essentially  the  core  of  the question  that  has  arisen  remains  substantially unaffected.

3. The  Sick  Industrial  Companies  (Special Provisions) Act, 1985 (hereinafter referred to as “the SICA”) had been repealed by the SICA Repeal Act,  2003.  However,  it  is  only  by  Notification dated 25.11.2016 that the repeal has been given effect  to  on  and  from  1.12.2016.  Under  Section 4(b) of the repeal Act, all proceedings before the B.I.F.R. or the Appellate Authority, as the case may be, stood abated and in respect of such abated proceedings  provisions  have  been  made  to  enable the company to seek a reference as per provisions of Part VI-A of the Companies Act, 1956 within 180 days  from  the  date  of  the  repeal  Act. Interestingly, the provisions of Part VI-A of the Companies Act, 1956 which, though brought about by

Page 3

3

the  Companies  (Second  Amendment)  Act  of  2002 had/have  not  been  made  effective.  In  fact, effective 1.11.2016 Section 4(b) of the Repeal Act has been amended by Section 252 of the Insolvency and Bankruptcy Code of 2016 (hereinafter referred to as “the Code”) and provisions have been made therein  akin  to  those  in  repealed  Section  4(b) except that reference by a company in respect of an abated proceeding is to be made to the National Company Law Tribunal within 180 days of the Code coming into force. Such a reference is required to be dealt with in accordance with the provisions of the  Code.  The  code  has  been  enacted  and  given effect  to  w.e.f.  1.12.2016.   Relevant  details thereof will be noticed hereinafter.

4. At this stage, it will also be necessary to take note of the fact that the National Company Law Tribunal envisaged under the Companies (Second Amendment)  Act  of  2002  has  been  authorized  to exercise  and  discharge  its  powers  and  functions

Page 4

4

with  effect  from  1.6.2016  and,  in  fact,  the Tribunals with Benches throughout the country have since  been  constituted  and  are  presently functioning.

5. Having noticed the above position, we may now turn  to  the  provisions  of  the  Insolvency  and Bankruptcy Code, 2016. It is a comprehensive Code enacted as the Preamble states, to  

“consolidate and amend the laws relating to  reorganisation  and  insolvency resolution  of  corporate  persons, partnership  firms  and  individuals  in  a time  bound  manner  for  maximisation  of value  of  assets  of  such  persons,  to promote  entrepreneurship,  availability  of credit  and  balance  the  interests  of  all the  stakeholders  including  alteration  in the  order  of  priority  of  payment  of Government  dues  and  to  establish  an Insolvency and Bankruptcy Board of India, and  for  matters  connected  therewith  or incidental thereto”.

6. Section 3(8) defines a ‘Corporate Debtor’ to mean “a corporate person who owes a debt to any person.”

Page 5

5

Section 5(1) of the Code defines “Adjudicating Authority”  to  means  the  National  Company  Law Tribunal  constituted  under  Section  408  of  the Companies Act, 2013. The definition of “corporate applicant” in Section 5(5) includes a “corporate debtor.”  Under  Section  6,  amongst  others,  a “corporate debtor” who has committed a default may file  an  application  with  the  Adjudicating Authority  for  initiating  a  corporate  insolvency resolution  process.  Such  a  process  may  also  be initiated  by  others,  including  a  financial creditor, against the corporate debtor in respect of  default  committed  by  the  corporate  debtor. Under Section 7 (Explanation-1), default includes “a default in respect of a financial debt owed not only to the applicant financial creditor but to any  other  financial  creditor  of  the  corporate debtor.  Under  Section  13  once  the  Adjudicating Authority admits the application of the corporate applicant  [defined  by  Section  5(5)]  filed  under

Page 6

6

Section  10,  the  said  Authority  may  proceed  to declare a moratorium for the purposes referred to in  Section  14.  Section  14  is  in  the  following terms:

“14(1)  Subject  to  provisions  of sub-sections (2) and (3), on the insolvency commencement date, the Adjudicating  Authority  shall  by order  declare  moratorium  for prohibiting all of the following, namely:—  

(a) the  institution  of  suits  or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court  of  law,  tribunal, arbitration  panel  or  other authority;

(b) transferring,  encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein;

(c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any  action  under  the Securitisation  and  Reconstruction of  Financial  Assets  and Enforcement  of  Security  Interest Act, 2002;

Page 7

7

(d) the recovery of any property by an owner  or  lessor  where  such property is occupied by or in the possession  of  the  corporate debtor.

(2) The supply of essential goods or services to the corporate debtor as may be specified shall not be terminated  or  suspended  or interrupted  during  moratorium period.

(3) The provisions of sub-section (1) shall  not  apply  to  such transactions as may be notified by the  Central  Government  in consultation  with  any  financial sector regulator.

(4) The order of moratorium shall have effect from the date of such order till  the  completion  of  the corporate  insolvency  resolution process:

Provided that where at any time during the  corporate  insolvency  resolution process  period,  if  the  Adjudicating Authority approves the resolution plan under sub-section (1) of section 31 or passes  an  order  for  liquidation  of corporate debtor under section 33, the moratorium shall cease to have effect from  the  date  of  such  approval  or liquidation  order,  as  the  case  may be.”

Page 8

8

Section  16  of  the  Code  visualizes  the appointment of an interim resolution professional to  manage  the  affairs  of  the  corporate  debtor. Such appointment is to be made by the Adjudicating Authority.

Under  Section  20  of  the  Code,  the  interim resolution professional appointed under Section 16 is  to  manage  the  operations  of  the  corporate debtor as a going concern and make every endeavour to protect and preserve the value of the property. Section  25  which  enumerates  the  duty  of  the resolution professional is in the following terms:

“25(1) It  shall  be  the  duty  of  the resolution  professional  to  preserve and  protect  the  assets  of  the corporate  debtor,  including  the continued  business  operations  of  the corporate debtor.

   (2) For  the  purposes  of  sub-section (1), the resolution professional shall undertake  the  following  actions, namely:—  (a) take immediate custody and control

of all the assets of the corporate

Page 9

9

debtor,  including  the  business records of the corporate debtor;

(b) represent and act on behalf of the corporate  debtor  with  third parties, exercise rights for the benefit of the corporate debtor in judicial,  quasi-judicial  or arbitration proceedings;

(c)raise interim finances subject to the approval of the committee of creditors under section 28;

(d)appoint  accountants,  legal  or other professionals in the manner as specified by Board;

(e)maintain  an  updated  list  of claims;

(f)convene and attend all meetings of the committee of creditors;

(g)prepare the information memorandum in accordance with section 29;

(h)invite  prospective  lenders, investors, and any other persons to put forward resolution plans;

(i)present  all  resolution  plans  at the meetings of the committee of creditors;

(j) file application for avoidance of transactions  in  accordance  with Chapter III, if any; and  

(k) such  other  actions  as  may  be specified by the Board.

Page 10

10

Section 30 of the Code contemplates submission of a resolution plan and approval thereof by the Adjudicating  Authority  failing  which  the liquidation  process  of  the  corporate  debtor  as contemplated in Chapter III of the Code would be required to be initiated.

7. The  above  provisions  of  the  Code  have  been noticed in some detail and the provisions thereof, so far as the same are material for the purposes of the present case, have also been extracted and highlighted. We may now proceed to examine and see what has happened in the present case.

8. Briefly the facts relevant are as follows.

On  23.07.2013  the  respondent  No.  1 company-Zenith  Infotech  Ltd.  filed  a  Reference before  the  Board  for  Industrial  and  Financial Reconstruction (hereinafter for short “the Board”) under Section 15 of the SICA. The said application was refused registration by the Registrar of the

Page 11

11

Board on 12.08.2013 on the ground that respondent No.1 company is not an industrial company within the meaning of Section 3(e) and 3(f) of the SICA. An  appeal  was  filed  by  the  respondent  No.  1 company before the Secretary of the Board against the  order  of  Registrar  which  was  dismissed  on 13.09.2013.   There  was  a  further  appeal  to  the Chairman  of  the  Board  against  the  order  of  the Secretary.   Though  the  maintainability  of  the second  appeal  before  the  Chairman  of  the  Board would  be  in  serious  doubt  in  view  of  the provisions  of  Regulation  19(4)  read  with  sub Regulation 8 (1) and (2) of Regulation 19 of the Board for Industrial and Financial Reconstruction Regulations,  1987  (hereinafter  for  short  “the Regulations”)  it  will  not  be  necessary  to  deal with the said question in the present proceedings except  to  state  that  the  Chairman  of  the  Board also  dismissed  the  second  appeal  filed  by  the

Page 12

12

respondent  No.  1  company  by  order  dated 03.04.2014.   

9. What would be of significance is the events that had transpired while the matter was before the  authorities  of  the  Board,  namely,  the Secretary and Chairman of the Board. It appears that on 30.07.2013 a petition for winding up of the respondent No.1 company was admitted by the High Court of Bombay and the order of admission was affirmed by the Division Bench in appeal.  The approach  to  this  Court  also  was  not  successful with  the  Special  Leave  Petition  filed  by  the respondent No.1 company having been dismissed on 30.09.2013.  Thereafter,  it  appears  that  on 13.12.2013 the High Court of Bombay passed orders for winding up of the respondent No. 1 which was upheld in appeal by the Division Bench of the High Court on 23.04.2014.  Though, a stay was ordered by the High Court of its winding up order till 31.08.2014, it would appear that the High Court

Page 13

13

understood  the  said  interim  order  to  have  been vacated by efflux of time, in the absence of any specific  order  of  extension.   Thereafter  the Official Liquidator came to be appointed by the High Court on 02.09.2014.   

10. The orders of the Secretary and Chairman of the Board rejecting the application for Reference filed  by  the  Respondent  No.1  company  were subjected to a challenge in a writ petition filed by  the  respondent-company  before  the  Delhi  High Court out of which the present proceedings have arisen.   

11. Two questions arose before the High Court of Delhi in the writ petition.   

The  first  was  whether  the  dismissal  of  the application  for  Reference  by  the  Registrar, Secretary and Chairman of the Board was within the jurisdiction of the said authorities. The second question, which was implicit if there was to be a

Page 14

14

positive answer to the first, is whether in view of the order of winding up passed by the Company Court, and affirmed by the Division Bench of the Bombay High Court, there is any further scope for registration of the Reference sought for by the respondent No. 1 company under the provisions of the SICA if the order declining registration by the aforesaid authorities is to be understood to be non est.   

12. The High Court, by the impugned order, took the  view  that  under  the  provisions  of  the  SICA read with the Regulations, the Registrar and the other  authorities  like  the  Secretary  and  the Chairman of the Board have not been conferred any power of adjudication which would necessarily be involved in determining the question as to whether the  respondent  No.1  company  is  an  industrial company  within  the  meaning  of  Section  3(e)  and 3(f) of the SICA.  Since an adjudicatory function and  role  has  been  performed  by  the  Registrar,

Page 15

15

whose order has been affirmed by the Secretary and the Chairman of the Board and as registration of the Reference sought for by the respondent No. 1 company was refused on that basis the said orders are  non  est in  law.   Regarding  the  second question, the High Court of Delhi relying on the decisions of this Court in  Real Value Appliances Ltd. Vs. Canara Bank and Others  1 and Rishabh Agro Industries Ltd. Vs.  P.N.B. Capital Services Ltd.  2

came to the conclusion that the winding up order passed by the Company Court would not foreclose the proceedings under the SICA and registration of a Reference under Section 15 and the inquiry under Section 16 can still be made.  The question that was  agitated  in  the  present  appeal  is consequential  to  the  above  determination  and revolve around the application of Section 22 of SICA  to  bar  further  steps  in  the  winding  up proceeding  before  the  High  Court.  The  above 1 (1998) 5 SCC 554 2 (2000) 5 SCC 515

Page 16

16

question would no longer survive in the context of the provisions of the now repealed Act but would still require an answer from the stand point of the  provisions  of  the  Insolvency  and  Bankruptcy Code in force with effect from 1.12.2016.

13. The  first  question,  namely,  the  one  with regard  to  the  power  and  jurisdiction  of  the Registrar and Secretary to refuse registration of the  application  for  reference  made  by  the respondent company on the grounds mentioned above may  now  be  taken  up.  To  answer  the  aforesaid question, the following provisions of SICA may be noticed:

“3.Definitions.— (1) In  this  Act,  unless  the  context

otherwise requires,— (e) “industrial  company”  means  a

company which owns one or more industrial undertakings;

(f) “industrial undertaking” means any undertaking pertaining to a  scheduled  industry  carried

Page 17

17

on in one or more factories by any  company  but  does  not include- (i) any ancillary industrial

undertaking  as  defined in  clause  (aa)  of Section  3  of  the Industries  (Development and  Regulation)  Act, 1951 (65 of 1951); and

(ii) a small scale industrial undertaking  as  defined in  clause  (j)  of  the aforesaid section 3;

(n) “scheduled industry” means any of  the  industries  specified for  the  time  being  in  the First  Schedule  to  the Industries  (Development  and Regulation)  Act,  1951  (65  of 1951);   

12. Constitution  of  Benches  of  Board or Appellate Authority.— (1) The  jurisdiction,  powers  and

authority of the Board or the Appellate  Authority  may  be exercised by Benches thereof.

(2) The  Benches  shall  be constituted  by  the  Chairman and  each  Bench  shall  consist of not less than two Members.

Page 18

18

(3) If  the  Members  of  a  Bench differ  in  opinion  on  any point,  the  point  shall  be decided  according  to  the opinion  of  the  majority,  if there  is  a  majority,  but  if the  Members  are  equally divided, they shall state the point or points on which they differ,  and  make  a  reference to the Chairman of the Board or, as the case may be, the Appellate Authority who shall either  hear  the  point  or points  himself  or  refer  the case for hearing on such point or points by one or more of the  other  Members  and  such point  or  points  shall  be decided  according  to  the opinion of the majority of the Members  who  have  heard  the case including those who first heard it.

13. Procedure of Board and Appellate  Authority.—

(1) Subject to the provisions of this  Act, the Board or, as the case may be, the Appellate Authority, shall have powers to regulate— (a) the  procedure  and  conduct  of

the business; (b) the procedure of the Benches,

including the places at which

Page 19

19

the  sittings  of  the  Benches shall be held;

(c) the delegation to one or more Members  of  such  powers  or functions as the Board or, as the case may be, the Appellate Authority may specify.

(2) In particular and without prejudice to the generality of the foregoing provisions,  the  powers  of  the Board or, as the case may be, the Appellate Authority, shall include the power to determine the extent to  which  persons  interested  or claiming to be interested in the subject-matter  of  any  proceeding before  it  may  be  allowed  to  be present or to be heard, either by themselves  or  by  their representatives  or  to cross-examine  witnesses  or otherwise  to  take  part  in  the proceedings.

(3) The  Board  or  the  Appellate Authority shall, for the purposes of  any  inquiry  or  for  any  other purpose under this Act, have the same  powers  as  are  vested  in  a civil  court  under  the  Code  of Civil Procedure, 1908 (5 of 1908) while trying suits in respect of the following matters, namely:— (a) the  summoning  and  enforcing

the attendance of any witness and examining him on oath;

Page 20

20

(b) the  discovery  and  production of document or other material object producible as evidence;

(c) the  reception  of  evidence  on affidavit;

(d) the  requisitioning  of  any public  record  from  any  court or office;

(e) the issuing of any commission for  the  examination  of witnesses;

(f) any other matter which may be prescribed.

14. Proceedings  before  Board  or Appellate Authority to be judicial proceedings.— The  Board  or  the  Appellate Authority shall be deemed to be a civil  court  for  the  purposes  of section  195  and  Chapter  XXVI  of the  Code  of  Criminal  Procedure, 1973  (2  of  1974)  and  every proceeding before the Board or the Appellate  Authority  shall  be deemed to be a judicial proceeding within the meaning of sections 193 and  228  and  for  the  purposes  of section  196  of  the  Indian  Penal Code (45 of 1860).

15. Reference to Board.— (1) When  an  industrial  company  has

become a sick industrial company,

Page 21

21

the  Board  of  Directors  of  the company, shall, within sixty days from the date of finalisation of the duly audited accounts of the company for the financial year as at  the  end  of  which  the  company has  become  a  sick  industrial company, make a reference to the Board  for  determination  of  the measures  which  shall  be  adopted with  respect  to  the  company: Provided  that  .....   ..... ..... “               

14. In addition, Section 16 deals with the inquiry to be made by the Board for determining whether an industrial  company  has  become  sick,  whereas Section 17 deals with the power of the Board to make suitable orders on completion of inquiry.

15. Under Section 13 of the SICA the Board has enacted a set of Regulations, namely, the Board for  Industrial  and  Financial  Reconstruction Regulations, 1987. Chapter II of the Regulations deals with References sought under Section 15 of the Act (SICA) and contains provisions as to how such References are required to be made and dealt

Page 22

22

with.  Regulation 19 would need to be extracted to show what is contemplated to be the role of the Registrar  and  the  Secretary  on  receipt  of  a Reference.   The  said  provision  therefore  is extracted below.

“19.(1) Every reference to the Board under sub-section (1) of section 15 shall be made— (i) in  Form  A  in  respect  of  an

industrial  company  other  than  a Government Company;

(ii)in  Form  AA  in  respect  of  a Government Company,]

   and shall be accompanied by five further  copies  thereof  alongwith four  copies  each  of  all  the enclosures thereto.

[(2) Every reference to the Board under sub-section (2) of section 15 shall be made— (i) in  Form  B  in  respect  of  an

industrial  company  other  than  a Government Company;

(ii)in  Form  BB  in  respect  of  a Government Company,] and  shall  be  accompanied  by  five further  copies  thereof  alongwith

Page 23

23

four  copies  each  of  all  the enclosures thereto.

(3) A reference may be filed either by delivering  it  at  the  office  of  the Board  or  by  sending  it  by  registered post. [(4) On  receipt  of  a  reference,  the Secretary, or as the case may be, the Registrar shall cause to be endorsed on each reference, the date on which it is filed or received in the office of the Board.

(5) If  on  scrutiny,  the  reference  is found  to  be  in  order,  it  shall  be registered,  assigned  a  serial  number and  submitted  to  the  Chairman  or assigning  it  to  a  Bench. Simultaneously,  remaining  information/ documents  required,  if  any,  shall  be called for from the informant.

(6) If  on  scrutiny,  the  reference  is not found to be in order, the Secretary or, as the case may be, the Registrar may, by order, decline to register the reference  and  shall  communicate  the same to the informant.

(7) A  reference  declined  to  be registered shall be deemed not to have been made.] (8) (1) An appeal against the order of the Registrar declining to register a reference  shall  be  made  by  the aggrieved  person  to  the  Secretary

Page 24

24

within fifteen days of communication to him of such an order.

(2) An appeal against the order of the Secretary  declining  to  register  a reference  shall  be  made  by  the aggrieved person to the Chairman within fifteen days of communication to him of such  an  order  and  the  Chairman's decision thereon shall be final.”

16. From  the  provisions  of  Regulation  19(5)  it would appear that on receipt of a Reference under Regulation 19(4) the Secretary or the Registrar, as may be, after making an endorsement of the date on which the same has been received in the office of the Board is required to make a scrutiny and, thereafter, if found to be in order, to register the same; assign a serial number thereto and place the same before the Chairman for being assigned to a  Bench.   After  completion  of  the  aforesaid exercise under Regulation 19(5) the later part of the  said  Regulation  contemplates  that simultaneously,  remaining  information/documents required,  if  any,  may  be  called  for  from  the

Page 25

25

applicant.  Regulation 20 contained in Chapter III and  Regulation  21  contained  in  Chapter  IV  deal with  the  manner  in  which  the  proceedings  of inquiry after registration of the Reference is to be made.

17. Regulation 19(5) extracted above, requires the Registrar or the Secretary, as may be, to make an endorsement  of  the  date  of  receipt  of  the Reference  [Regulation  19(4)]  and  thereafter  on scrutiny thereof to register the same and place before  the  Chairman  for  being  referred  to  the Bench.   When  the  Regulations  framed  under  the statute vests in the Registrar or the Secretary of the Board the power to “scrutinize” an application prior  to  registration  thereof  and  thereafter  to register and place the same before the Bench, we do  not  see  how  such  power  of  scrutiny  can  be understood  to  be  vesting  in  any  of  the  said authorities the power to adjudicate the question as to whether a company is an industrial company

Page 26

26

within the meaning of Section 3(e) read with 3(f) and 3(n) of the SICA.  A claim to come within the ambit of the aforesaid provisions of the SICA i.e. to be an industrial company, more often than not, would be a contentious issue. In the present case, it  certainly  was.  The  specific  stand  of  the respondent No. 1 company in this regard need not detain the Court save and except to state that by a  detailed  description  of  the  manufacturing process the respondent No. 1 company had sought to contend that it is an industrial company.  Surely, the rejection of the above stand could have been made only by a process of adjudication which power and jurisdiction clearly and undoubtedly is vested by the SICA and the Regulations framed thereunder in a Bench of the Board and not in authorities like  the  Registrar  and  the  Secretary.  In  this regard,  one  can  only  be  reminded  of  the observations made by this Court in paras 13 and 14 in the case of  Jamal Uddin Ahmad Vs.  Abu Saleh

Page 27

27

Najmuddin  and  Another  3 which  may  be  extracted below.

“13. The functions discharged by a High Court can be divided broadly into  judicial  and  administrative functions.  The  judicial  functions are to be discharged essentially by the Judges as per the Rules of the Court  and  cannot  be  delegated. However,  administrative  functions need not necessarily be discharged by  the  Judges  by  themselves, whether  individually  or collectively or in a group of two or  more,  and  may  be  delegated  or entrusted  by  authorization  to subordinates  unless  there  be  some rule  of  law  restraining  such delegation or authorization. Every High  Court  consists  of  some administrative  and  ministerial staff which is as much a part of the  High  Court  as  an  institution and is meant to be entrusted with the  responsibility  of  discharging administrative  and  ministerial functions.  There  can  be “delegation” as also there can be “authorization”  in  favour  of  the Registry and the officials therein by  empowering  or  entrusting  them with authority or by permitting a few things to be done by them for and on behalf of the Court so as to aid  the  Judges  in  discharge  of

3 (2003) 4 SCC 257

Page 28

28

their  judicial  functioning. Authorization may take the form of formal conferral or sanction or may be  by  way  of  approval  or countenance.  Such  delegation  or authorization  is  not  a  matter  of mere convenience but a necessity at times.  The  Judges  are  already overburdened  with  the  task  of performing  judicial  functions  and the constraints on their time and energy are so demanding that it is in public interest to allow them to devote time and energy as much as possible  in  discharging  their judicial functions, relieving them of  the  need  for  diverting  their limited  resources  of  time  and energy  to  such  administrative  or ministerial  functions,  which,  on any principle of propriety, logic, or  necessity  are  not  required necessarily to be performed by the Judges.  Receiving  a  cause  or  a document and making it presentable to  a  Judge  for  the  purpose  of hearing  or  trial  and  many  a functions  post-decision,  which functions  are  administrative  and ministerial in nature, can be and are  generally  entrusted  or  made over to be discharged by the staff of the High Court, often by making a provision in the Rules or under the orders of the Chief Justice or by issuing practice directions, and at times, in the absence of rules, by  sheer  practice.  The  practice gathers the strength of law and the

Page 29

29

older the practice the greater is the  strength.  The  Judges  rarely receive  personally  any  document required  to  be  presented  to  the Court.  Plaints,  petitions, memoranda  or  other  documents required  to  be  presented  to  the Court  are  invariably  received  by the  administrative  or  ministerial staff, who would also carry out a preliminary  scrutiny  of  such documents so as to find that they are  in  order  and  then  make  the documents presentable to the Judge, so  that  the  valuable  time  of  the Judge  is  not  wasted  over  such matters as do not need to be dealt with personally by the Judge.

14. The judicial function entrusted to  a  Judge  is  inalienable  and differs  from  an  administrative  or ministerial  function  which  can  be delegated  or  performance  whereof may  be  secured  through authorization.

“The judicial function consists in  the  interpretation  of  the law and its application by rule or discretion to the facts of particular cases. This involves the  ascertainment of  facts in dispute according to the law of evidence. The organs which the State sets up to exercise the judicial  function  are  called courts  of  law  or  courts  of justice.  Administration

Page 30

30

consists  of  the  operations, whatever their intrinsic nature may be, which are performed by administrators;  and administrators  are  all  State officials  who  are  neither legislators nor judges.”

(See  Constitutional  and Administrative  Law,  Phillips  and Jackson,  6th  Edn.,  p.  13.)  P. Ramanatha  Aiyar’s  Law  Lexicon defines  judicial  function  as  the doing of something in the nature of or in the course of an action in court.  (p.  1015)  The  distinction between “judicial” and “ministerial acts” is:

If  a  Judge  dealing  with  a particular  matter  has  to exercise  his  discretion  in arriving at a decision, he is acting  judicially;  if  on  the other  hand,  he  is  merely required to do a particular act and is precluded from entering into the merits of the matter, he  is  said  to  be  acting ministerially. (pp. 1013-14)

Judicial  function  is  exercised under legal authority to decide on the  disputes,  after  hearing  the parties,  maybe  after  making  an enquiry,  and  the  decision  affects the rights and obligations of the parties.  There  is  a  duty  to  act

Page 31

31

judicially. The Judge may construe the  law  and  apply  it  to  a particular state of facts presented for  the  determination  of  the controversy. A ministerial act, on the other hand, may be defined to be one which a person performs in a given  state  of  facts,  in  a prescribed manner, in obedience to the mandate of a legal authority, without regard to, or the exercise of,  his  own  judgment  upon  the propriety  of  the  act  done.  (Law Lexicon,  ibid.,  p.  1234).  In ministerial duty nothing is left to discretion;  it  is  a  simple, definite  duty.  Presentation  of election petition to the High Court within the meaning of Section 81 of the Act without anything more would mean delivery of election petition to  the  High  Court  through  one  of its  officers  competent  or authorized to receive the same on behalf of and for the High Court. Receiving  an  election  petition presented under Section 81 of the Act  is  certainly  not  a  judicial function  which  needs  to  be performed by a Judge alone. There is  no  discretion  in  receiving  an election  petition.  An  election petition, when presented, has to be received. It is a simple, definite duty.  The  date  and  time  of presentation  and  the  name  of  the person  who  presented  (with  such other  particulars  as  may  be prescribed)  are  to  be  endorsed

Page 32

32

truly  and  mechanically  on  the document  presented.  It  is  a ministerial  function  simpliciter. It  can  safely  be  left  to  be performed  by  one  of  the administrative or ministerial staff of the High Court which is as much a part of the High Court. It may be delegated  or  be  performed  through someone  authorized.  The  manner  of authorization is not prescribed.”

18. The  High  Court,  in  view  of  what  has  been discussed  above,  was  correct  in  coming  to  the conclusion that the refusal of registration of the reference sought by the respondent Company by the Registrar,  Secretary/Chairman  of  the  Board  was non-est in  law.  The  reference  must,  therefore, understood to be pending before the Board on the relevant date attracting the provisions of Section 252 of the Insolvency and Bankruptcy Code.

19. The second question arising before the High Court,  namely,  whether  the  reference  before  the Board stood foreclosed by the order of winding up of the  respondent Company and  the  appointment

Page 33

33

of liquidator was answered in the negative relying on  Real Value Appliances Ltd. (supra) and  Rishab Agro Industries Ltd. (supra). The core principles laid  down  in  the  said  decisions  of  the  Court, namely,  that  immediately  on  registration  of  a reference under Section 15 of the erstwhile SICA, the  enquiry  under  Section  16  is  deemed  to  have commenced  and  that  the  winding  up  proceedings against  a  company  stood  terminated  only  after orders  under  Section  481  of  the  Companies  Act, 1956,  are  passed,  will  have  to  be  noticed  to adjudge the correctness of the said view of the High Court. In any event, the aforesaid question becomes redundant in view of our conclusion that the  reference  sought  by  the  respondent  Company must be deemed to have been pending on the date of commencement  of  the  Insolvency  and  Bankruptcy Code, particularly, Section 252 thereof (effective 1.11.2016).

Page 34

34

20. We,  therefore,  dispose  of  the  appeal  by holding  that  it  would  still  be  open  to  the respondent Company to seek its remedies under the provisions of Section 252 of the Code read with what is laid down in Sections 13, 14, 20 and 25. We make it clear that we should not be understood to  have  expressed  any  opinion  on  the  scope  and meaning of the said or any other provisions of the Code and the adjudicating authority i.e. National Company Law Tribunal would be free and, in fact, required to decide on the said questions in such manner as may be considered appropriate.

21. Appeal,  consequently,  is  disposed  of accordingly.

....................,J.            (RANJAN GOGOI)

....................,J.     (ABHAY MANOHAR SAPRE)

NEW DELHI FEBRUARY 21, 2017.