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Sunday, February 26, 2017

The Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as “the SICA”) had been repealed by the SICA Repeal Act, 2003.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 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Bankruptcy Code of 2016 (hereinafter referred to as “the Code”) and provisions have been made therein akin to those in repealed Section 4(b) except that reference by a company in respect of an abated proceeding is to be made to the National Company Law Tribunal within 180 days of the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.

                                                                  REPORTABLE



                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NO.3055 OF 2017
                 (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  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 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 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.”

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 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:—

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;

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

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;

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.”



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
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.

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  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
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 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 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, 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  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.—

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 on in one or more factories by  any  company  but
does not include-

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

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.
(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  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:—

the summoning and enforcing the attendance of any witness and examining  him
on oath;
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,  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  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  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  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 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  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  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  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 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
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 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 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 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).

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.

-----------------------
[1]   [2] (1998) 5 SCC 554
[3]   [4] (2000) 5 SCC 515
[5]   [6] (2003) 4 SCC 257


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