Mere attempt to extinguish the fire will not take the case out of the clutches of clause fourthly of Section 300 of the IPC. Therefore, after pouring kerosene on the deceased and thereafter setting her ablaze, thereafter merely because the accused might have tried to extinguish the fire will not take the case out of the clutches of clause fourthly of Section 300 of the IPC. The act of the accused pouring kerosene on the deceased and thereafter setting her ablaze by matchstick is imminently dangerous which, in all probability, will cause death. Therefore, the High Court has rightly convicted the accused for the offence under Section 302 IPC.

 Mere  attempt  to extinguish the fire will not take the case out of the clutches of clause fourthly of Section 300 of the IPC.

Therefore, after pouring kerosene on the deceased and thereafter setting her ablaze, thereafter merely because the accused might have tried to extinguish the fire will not take the case out of the clutches of clause fourthly of Section 300 of the IPC. The act of the accused pouring kerosene on the deceased and thereafter setting her ablaze by matchstick is imminently dangerous which, in all probability, will cause death. Therefore, the High Court has rightly convicted the accused for the offence under Section 302 IPC.

 REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO. 443 OF 2020

NAGABHUSHAN …APPELLANT

VERSUS

THE STATE OF KARNATAKA …RESPONDENT

J U D G M E N T

M.R. SHAH, J.

1. Feeling aggrieved and dissatisfied with the impugned judgment

and order of conviction dated 11.10.2019 passed by the High Court of

Karnataka at Bengaluru in Criminal Appeal No. 525/2013, by which the

High Court has allowed the said appeal preferred by the respondent –

State of Karnataka and has reversed the judgment and order of acquittal

passed by the learned trial Court insofar as the appellant – original

accused no.1 is concerned for the offences punishable under Sections

498A and 302 read with 34 of the IPC and consequently convicted the

1

appellant herein – original accused no.1 for the aforesaid offences,

original accused no.1 has preferred the present appeal. However, the

High Court has confirmed the judgment and order of acquittal insofar as

original accused nos. 2 and 3 are concerned.

2. As per the case of the prosecution, original accused no.1 married

the deceased, the daughter of PW3 & PW4 nine years ago, prior to the

date of the incident. That the deceased was subjected to the mental

cruelty and there was demand of dowry from the parents of the

deceased Rekha. In that regard, mediation was also held and thereafter

PW3 & PW4 gave Rs. 10,000/- and Rs. 20,000/- on two occasions. On

24.06.2010 at about 9 p.m. in the matrimonial home, appellant herein –

original accused no.1 took up quarrel with his wife Rekha (deceased)

and at that time, he took kerosene and poured the same on her and lit

the fire. The deceased was taken to the hospital. That based on the

information, the investigating officer went to the hospital and recorded

her statement on 27.06.2010 (Exhibit P5). It is alleged that even earlier

also on 25.06.2010, the statement of the deceased was recorded by the

police (Exhibit D2). On conclusion of the investigation, the investigating

officer filed the chargesheet against all the accused for the offences

punishable under Sections 498A and 302 read with 34 of the IPC. The

case was committed to the Court of Sessions. The accused pleaded not

2

guilty and therefore all of them came to be tried by the learned Sessions

Court for the aforesaid offences.

2.1 To prove the case against the accused, the prosecution examined

in all 14 witnesses and brought on record the documentary evidences

including Exhibit P5 – dying declaration and the medical evidence. That

after closure of the evidence on the side of the prosecution, further

statements of the accused under Section 313 Cr. P.C. were recorded.

Appellant herein – original accused no.1 examined himself as DW1 and

also examined a witness as DW2. The accused relied upon the earlier

statement of the deceased (Exhibit D2). That on appreciation of the

evidence and not believing the dying declaration – Exhibit P5 and having

found contradictions in two dying declarations Exhibit P5 and Exhibit D2,

the learned trial Court acquitted all the accused for the offences for

which they were tried.

3. Feeling aggrieved and dissatisfied with the impugned judgment

and order of acquittal passed by the learned trial Court, the State of

Karnataka preferred appeal before the High Court. By the impugned

judgment and order, the High Court has reversed the order of judgment

and order of acquittal insofar as the appellant herein – original accused

no.1 is concerned and has convicted the appellant herein – original

accused no.1 for the offences punishable under Sections 498A and 302

3

read with 34 of the IPC. The judgment and order of acquittal for original

accused nos. 2 & 3 has been confirmed by the High Court.

3.1 Feeling aggrieved and dissatisfied with the impugned judgment

and order of the High Court reversing the judgment and order of acquittal

and convicting the appellant herein – original accused no.1 for the

offences punishable under Sections 498A & 302 read with 34 of the IPC,

original accused no.1 has preferred the present appeal.

4. Learned counsel appearing on behalf of the appellant has

vehemently submitted that in the facts and circumstances of the case,

the High Court has committed a grave error in reversing the wellreasoned judgment and order of acquittal passed by the learned trial

Court.

4.1 It is submitted that while reversing the order of acquittal passed by

the learned trial Court, the High Court has exceeded in its jurisdiction

vested in it under Section 378 of the Cr. P.C.

4.2 It is submitted that as there were material contradictions in two

dying declarations and Exhibit D2 was the dying declaration first in time

which came to be believed by the learned trial Court, the learned trial

Court committed no error in acquitting the accused.

4

4.3 It is submitted that the learned trial Court on appreciation of

evidence, more particularly two dying declarations, disbelieved the

subsequent dying declaration (Exhibit P5) and thereby acquitted the

accused, the same was not required to be interfered with by the High

Court in exercise of the appellate jurisdiction against the judgment and

order of acquittal.

4.3 It is further submitted that while believing the dying declaration

vide Exhibit P5, the High Court has not appreciated that the same was

recorded by PW10 in the presence of PW13, PW8 and parents of the

deceased.

4.4 It is submitted that the High Court ought to have appreciated that

the earlier dying declaration vide Exhibit D2, which was recorded on

25.06.2010, was recorded immediately on the next day of the incident

wherein deceased Rekha has specifically stated that it was an accidental

fire due to which she sustained burn injuries. It is submitted that even in

the history which was recorded in the hospital, when the deceased

Rekha was admitted, it was stated that the deceased had suffered

accidental burn injuries.

4.5 It is submitted that the High Court has not properly appreciated the

fact that the dying declaration (Exhibit P5) was recorded later on and

that too after the parents of the deceased reached to the hospital.

5

4.6 It is submitted that possibility of tutoring the deceased Rekha so as

to make statement against the accused persons cannot be ruled out. It

is submitted that therefore at least the appellant is entitled to the benefit

of doubt.

4.6 It is submitted that the High Court has not at all appreciated and/or

considered the defence version that on the date of incident there was no

power supply in the house and therefore the deceased went to the

kitchen to prepare the food and found that the gas was empty and

thereafter she told the appellant that she would use the kerosene stove

to prepare the food, and that while she was preparing the food with the

help of candle light and when the same was almost exhausted, she tried

to lit another candle but the same had fallen on the ground where the

kerosene was already spread while pouring the kerosene to the stove

and as a result of which the fire was caught on her clothes.

4.7 It is submitted that even thereafter when the deceased screamed,

the appellant – original accused no.1 rushed to the spot and tried to

extinguish the fire and while extinguishing the fire, he also sustained

burn injuries in his right hand. It is submitted that the aforesaid

circumstances which were considered by the learned trial Court while

acquitting the accused have not been considered and/or appreciated by

6

the High Court while reversing the order of acquittal passed by the

learned trial Court and convicting the accused – appellant herein.

4.8 It is submitted that as such when it was an appeal against the

judgment and order of acquittal, the High Court was not justified in

reappreciating the oral as well as documentary evidence. It is submitted

that only in a case where the findings recorded by the learned trial Court

are found to be perverse, the interference by the appellate court against

the order of acquittal is warranted. It is submitted that in the present

case, as such, the view taken by the learned trial Court was a plausible

view, which was on appreciation of the evidences on record and

therefore the High Court has committed a grave error in reversing the

judgment and order of acquittal passed by the learned trial Court and

convicting the accused -appellant herein.

5. We have heard the learned counsel appearing on behalf of the

appellant at length.

5.1 Being the statutory appeal against the judgment and order of the

High Court reversing the acquittal and thereby convicting the appellant

herein – original accused no.1, we have reappreciated the entire

evidence on record.

5.2 Before considering the appeal on merits, the law on the appeal

against acquittal and the scope and ambit of Section 378 Cr.P.C. and the

7

interference by the High Court in an appeal against acquittal is required

to be considered.

5.2.1 In the case of Babu v. State of Kerala, (2010) 9 SCC 189,

this Court had reiterated the principles to be followed in an appeal

against acquittal under Section 378 Cr.P.C. In paragraphs 12 to 19, it is

observed and held as under:

12. This Court time and again has laid down the guidelines for the High

Court to interfere with the judgment and order of acquittal passed by the

trial court. The appellate court should not ordinarily set aside a judgment of

acquittal in a case where two views are possible, though the view of the

appellate court may be the more probable one. While dealing with a

judgment of acquittal, the appellate court has to consider the entire

evidence on record, so as to arrive at a finding as to whether the views of

the trial court were perverse or otherwise unsustainable. The appellate

court is entitled to consider whether in arriving at a finding of fact, the trial

court had failed to take into consideration admissible evidence and/or had

taken into consideration the evidence brought on record contrary to law.

Similarly, wrong placing of burden of proof may also be a subject-matter of

scrutiny by the appellate court. (Vide Balak Ram v. State of U.P (1975) 3

SCC 219, Shambhoo Missir v. State of Bihar (1990) 4 SCC 17, Shailendra

Pratap v. State of U.P (2003) 1 SCC 761, Narendra Singh v. State of M.P

(2004) 10 SCC 699, Budh Singh v. State of U.P (2006) 9 SCC 731, State

of U.P. v. Ram Veer Singh (2007) 13 SCC 102, S. Rama Krishna v. S.

Rami Reddy (2008) 5 SCC 535, Arulvelu v. State (2009) 10 SCC 206,

Perla Somasekhara Reddy v. State of A.P (2009) 16 SCC 98 and Ram

Singh v. State of H.P (2010) 2 SCC 445)

13. In Sheo Swarup v. King Emperor AIR 1934 PC 227, the Privy Council

observed as under: (IA p. 404)

“… the High Court should and will always give proper weight and

consideration to such matters as (1) the views of the trial Judge as to the

credibility of the witnesses; (2) the presumption of innocence in favour of

the accused, a presumption certainly not weakened by the fact that he has

been acquitted at his trial; (3) the right of the accused to the benefit of any

doubt; and (4) the slowness of an appellate court in disturbing a finding of

fact arrived at by a Judge who had the advantage of seeing the

witnesses.”

14. The aforesaid principle of law has consistently been followed by this

Court. (See Tulsiram Kanu v. State AIR 1954 SC 1, Balbir Singh v. State of

Punjab AIR 1957 SC 216, M.G. Agarwal v. State of Maharashtra AIR 1963

SC 200, Khedu Mohton v. State of Bihar (1970) 2 SCC 450, Sambasivan

v. State of Kerala (1998) 5 SCC 412, Bhagwan Singh v. State of

8

M.P(2002) 4 SCC 85 and State of Goa v. Sanjay Thakran (2007) 3 SCC

755)

15. In Chandrappa v. State of Karnataka (2007) 4 SCC 415, this Court

reiterated the legal position as under: (SCC p. 432, para 42)

“(1) An appellate court has full power to review, reappreciate and

reconsider the evidence upon which the order of acquittal is founded.

(2) The Code of Criminal Procedure, 1973 puts no limitation, restriction or

condition on exercise of such power and an appellate court on the

evidence before it may reach its own conclusion, both on questions of fact

and of law.

(3) Various expressions, such as, ‘substantial and compelling reasons’,

‘good and sufficient grounds’, ‘very strong circumstances’, ‘distorted

conclusions’, ‘glaring mistakes’, etc. are not intended to curtail extensive

powers of an appellate court in an appeal against acquittal. Such

phraseologies are more in the nature of ‘flourishes of language’ to

emphasise the reluctance of an appellate court to interfere with acquittal

than to curtail the power of the court to review the evidence and to come

to its own conclusion.

(4) An appellate court, however, must bear in mind that in case of

acquittal, there is double presumption in favour of the accused. Firstly, the

presumption of innocence is available to him under the fundamental

principle of criminal jurisprudence that every person shall be presumed to

be innocent unless he is proved guilty by a competent court of law.

Secondly, the accused having secured his acquittal, the presumption of

his innocence is further reinforced, reaffirmed and strengthened by the trial

court.

(5) If two reasonable conclusions are possible on the basis of the evidence

on record, the appellate court should not disturb the finding of acquittal

recorded by the trial court.”

16. In Ghurey Lal v. State of U.P (2008) 10 SCC 450, this Court reiterated

the said view, observing that the appellate court in dealing with the cases

in which the trial courts have acquitted the accused, should bear in mind

that the trial court’s acquittal bolsters the presumption that he is innocent.

The appellate court must give due weight and consideration to the

decision of the trial court as the trial court had the distinct advantage of

watching the demeanour of the witnesses, and was in a better position to

evaluate the credibility of the witnesses.

17. In State of Rajasthan v. Naresh (2009) 9 SCC 368, the Court again

examined the earlier judgments of this Court and laid down that: (SCC p.

374, para 20)

“20. … an order of acquittal should not be lightly interfered with even if the

court believes that there is some evidence pointing out the finger towards

the accused.”

18. In State of U.P. v. Banne (2009) 4 SCC 271, this Court gave certain

illustrative circumstances in which the Court would be justified in

interfering with a judgment of acquittal by the High Court. The

circumstances include: (SCC p. 286, para 28)

9

“(i) The High Court’s decision is based on totally erroneous view of law by

ignoring the settled legal position;

(ii) The High Court’s conclusions are contrary to evidence and documents

on record;

(iii) The entire approach of the High Court in dealing with the evidence was

patently illegal leading to grave miscarriage of justice;

(iv) The High Court’s judgment is manifestly unjust and unreasonable

based on erroneous law and facts on the record of the case;

(v) This Court must always give proper weight and consideration to the

findings of the High Court;

(vi) This Court would be extremely reluctant in interfering with a case when

both the Sessions Court and the High Court have recorded an order of

acquittal.”

A similar view has been reiterated by this Court in Dhanapal v. State

(2009) 10 SCC 401.

19. Thus, the law on the issue can be summarised to the effect that in

exceptional cases where there are compelling circumstances, and the

judgment under appeal is found to be perverse, the appellate court can

interfere with the order of acquittal. The appellate court should bear in

mind the presumption of innocence of the accused and further that the trial

court’s acquittal bolsters the presumption of his innocence. Interference in

a routine manner where the other view is possible should be avoided,

unless there are good reasons for interference.”

(emphasis supplied)

5.2.2 When the findings of fact recorded by a court can be held to

be perverse has been dealt with and considered in paragraph 20 of the

aforesaid decision, which reads as under:

“20. The findings of fact recorded by a court can be held to be perverse if

the findings have been arrived at by ignoring or excluding relevant material

or by taking into consideration irrelevant/inadmissible material. The finding

may also be said to be perverse if it is “against the weight of evidence”, or

if the finding so outrageously defies logic as to suffer from the vice of

irrationality. (Vide Rajinder Kumar Kindra v. Delhi Admn (1984) 4 SCC 635,

Excise and Taxation Officer-cum-Assessing Authority v. Gopi Nath & Sons

1992 Supp (2) SCC 312, Triveni Rubber & Plastics v. CCE 1994 Supp. (3)

SCC 665, Gaya Din v. Hanuman Prasad (2001) 1 SCC 501, Aruvelu v.

State (2009) 10 SCC 206 and Gamini Bala Koteswara Rao v. State of A.P

(2009) 10 SCC 636).”

(emphasis supplied)

10

5.2.3 It is further observed, after following the decision of this

Court in the case of Kuldeep Singh v. Commissioner of Police (1999) 2

SCC 10, that if a decision is arrived at on the basis of no evidence or

thoroughly unreliable evidence and no reasonable person would act

upon it, the order would be perverse. But if there is some evidence on

record which is acceptable and which could be relied upon, the

conclusions would not be treated as perverse and the findings would not

be interfered with.

5.3 In the case of Vijay Mohan Singh v. State of Karnataka, (2019) 5

SCC 436, this Court again had an occasion to consider the scope of

Section 378 Cr.P.C. and the interference by the High Court in an appeal

against acquittal. This Court considered catena of decisions of this

Court right from 1952 onwards. In paragraph 31, it is observed and held

as under:

“31. An identical question came to be considered before this Court in

Umedbhai Jadavbhai (1978) 1 SCC 228. In the case before this Court, the

High Court interfered with the order of acquittal passed by the learned trial

court on re-appreciation of the entire evidence on record. However, the

High Court, while reversing the acquittal, did not consider the reasons

given by the learned trial court while acquitting the accused. Confirming

the judgment of the High Court, this Court observed and held in para 10 as

under: (SCC p. 233)

“10. Once the appeal was rightly entertained against the order of

acquittal, the High Court was entitled to reappreciate the entire

evidence independently and come to its own conclusion. Ordinarily, the

High Court would give due importance to the opinion of the Sessions

Judge if the same were arrived at after proper appreciation of the

evidence. This rule will not be applicable in the present case where the

Sessions Judge has made an absolutely wrong assumption of a very

material and clinching aspect in the peculiar circumstances of the case.”

11

31.1. In Sambasivan v. State of Kerala (1998) 5 SCC 412, the High Court

reversed the order of acquittal passed by the learned trial court and held

the accused guilty on re-appreciation of the entire evidence on record,

however, the High Court did not record its conclusion on the question

whether the approach of the trial court in dealing with the evidence was

patently illegal or the conclusions arrived at by it were wholly untenable.

Confirming the order passed by the High Court convicting the accused on

reversal of the acquittal passed by the learned trial court, after being

satisfied that the order of acquittal passed by the learned trial court was

perverse and suffered from infirmities, this Court declined to interfere with

the order of conviction passed by the High Court. While confirming the

order of conviction passed by the High Court, this Court observed in para

8 as under: (SCC p. 416)

“8. We have perused the judgment under appeal to ascertain whether

the High Court has conformed to the aforementioned principles. We find

that the High Court has not strictly proceeded in the manner laid down

by this Court in Ramesh Babulal Doshi v. State of Gujarat (1996) 9 SCC

225 viz. first recording its conclusion on the question whether the

approach of the trial court in dealing with the evidence was patently

illegal or the conclusions arrived at by it were wholly untenable, which

alone will justify interference in an order of acquittal though the High

Court has rendered a well-considered judgment duly meeting all the

contentions raised before it. But then will this non-compliance per se

justify setting aside the judgment under appeal? We think, not. In our

view, in such a case, the approach of the court which is considering the

validity of the judgment of an appellate court which has reversed the

order of acquittal passed by the trial court, should be to satisfy itself if

the approach of the trial court in dealing with the evidence was patently

illegal or conclusions arrived at by it are demonstrably unsustainable

and whether the judgment of the appellate court is free from those

infirmities; if so to hold that the trial court judgment warranted

interference. In such a case, there is obviously no reason why the

appellate court’s judgment should be disturbed. But if on the other hand

the court comes to the conclusion that the judgment of the trial court

does not suffer from any infirmity, it cannot but be held that the

interference by the appellate court in the order of acquittal was not

justified; then in such a case the judgment of the appellate court has to

be set aside as of the two reasonable views, the one in support of the

acquittal alone has to stand. Having regard to the above discussion, we

shall proceed to examine the judgment of the trial court in this case.”

31.2. In K. Ramakrishnan Unnithan v. State of Kerala (1999) 3 SCC 309,

after observing that though there is some substance in the grievance of

the learned counsel appearing on behalf of the accused that the High

Court has not adverted to all the reasons given by the trial Judge for

according an order of acquittal, this Court refused to set aside the order of

conviction passed by the High Court after having found that the approach

of the Sessions Judge in recording the order of acquittal was not proper

and the conclusion arrived at by the learned Sessions Judge on several

aspects was unsustainable. This Court further observed that as the

Sessions Judge was not justified in discarding the relevant/material

12

evidence while acquitting the accused, the High Court, therefore, was fully

entitled to reappreciate the evidence and record its own conclusion. This

Court scrutinised the evidence of the eyewitnesses and opined that

reasons adduced by the trial court for discarding the testimony of the

eyewitnesses were not at all sound. This Court also observed that as the

evaluation of the evidence made by the trial court was manifestly

erroneous and therefore it was the duty of the High Court to interfere with

an order of acquittal passed by the learned Sessions Judge.

31.3. In Atley v. State of U.P. AIR 1955 SC 807, in para 5, this Court

observed and held as under: (AIR pp. 809-10)

“5. It has been argued by the learned counsel for the appellant that the

judgment of the trial court being one of acquittal, the High Court should not

have set it aside on mere appreciation of the evidence led on behalf of the

prosecution unless it came to the conclusion that the judgment of the trial

Judge was perverse. In our opinion, it is not correct to say that unless the

appellate court in an appeal under Section 417 CrPC came to the

conclusion that the judgment of acquittal under appeal was perverse it

could not set aside that order.

It has been laid down by this Court that it is open to the High Court on an

appeal against an order of acquittal to review the entire evidence and to

come to its own conclusion, of course, keeping in view the wellestablished rule that the presumption of innocence of the accused is not

weakened but strengthened by the judgment of acquittal passed by the

trial court which had the advantage of observing the demeanour of

witnesses whose evidence have been recorded in its presence.

It is also well settled that the court of appeal has as wide powers of

appreciation of evidence in an appeal against an order of acquittal as in

the case of an appeal against an order of conviction, subject to the riders

that the presumption of innocence with which the accused person starts in

the trial court continues even up to the appellate stage and that the

appellate court should attach due weight to the opinion of the trial court

which recorded the order of acquittal.

If the appellate court reviews the evidence, keeping those principles in

mind, and comes to a contrary conclusion, the judgment cannot be said to

have been vitiated. (See in this connection the very cases cited at the Bar,

namely, Surajpal Singh v. State AIR 1952 SC 52; Wilayat Khan v. State of

U.P AIR 1953 SC 122) In our opinion, there is no substance in the

contention raised on behalf of the appellant that the High Court was not

justified in reviewing the entire evidence and coming to its own

conclusions.

31.4. In K. Gopal Reddy v. State of A.P. (1979) 1 SCC 355, this Court has

observed that where the trial court allows itself to be beset with fanciful

doubts, rejects creditworthy evidence for slender reasons and takes a view

of the evidence which is but barely possible, it is the obvious duty of the

High Court to interfere in the interest of justice, lest the administration of

justice be brought to ridicule.”

(emphasis supplied)

13

6. Applying the law laid down by this Court in the aforesaid decisions

to the facts of the case on hand and the findings recorded by the High

Court, the High Court has specifically observed and held that the finding

recorded by the learned trial Court discarding and/or not believing the

dying declaration (Exhibit P5) is perverse and contrary to the evidence

on record. The High Court has given cogent reasons while believing

dying declaration (Exhibit P5) and has also considered in detail what is

stated in the later dying declaration (Exhibit P5), vis-à-vis, the medical

evidence and the injuries sustained by the deceased. Therefore, as

such, the High Court has not committed any error in reappreciating the

entire evidence on record and thereafter interfering with the judgment

and order of acquittal passed by the learned trial Court, having found the

finding recorded by the learned trial Court perverse.

7. Now so far as the merits of the appeal are concerned, it cannot be

disputed that in the present case there are two dying declarations, (i)

Exhibit P5 and (ii) Exhibit D2. The High Court in the impugned judgment

and order has given cogent reasons to rely upon and believe the second

dying declaration – Exhibit P5. The High Court has also taken note of

the fact that the second dying declaration is reliable and the version in

the second dying declaration is supported by the circumstances, namely,

the injuries sustained by the deceased; no stove was found at the place

of occurrence. The High Court has also taken note of the fact that in the

14

second dying declaration, the deceased has explained her first

statement that it was a case of accident and she categorically stated in

the second dying declaration that at the time when she gave first

statement that it was a case of accident, she was given threats by the

appellant herein – original accused no.1 that he will kill her children also.

She also stated in the second dying declaration that after her parents

came, she got the courage to tell the truth. Therefore, as such, the High

Court rightly believed the second dying declaration – Exhibit P5.

8. At this stage, the decisions of this Court in the cases of Nallam

Veera Stayanandam v. Public Prosecutor (2004) 10 SCC 769; Kashmira

Devi v. State of Uttarakhand (2020) 11 SCC 343; and Ashabai v. State of

Maharashtra (2013) 2 SCC 224 are required to be referred to. In the

aforesaid decisions, this Court had an occasion to consider the cases

where there are multiple dying declarations. In the aforesaid decisions,

it is held that each dying declaration has to be considered independently

on its own merit as to its evidentiary value and one cannot be rejected

because of the contents of the other. It is also held that the Court has to

consider each of them in its correct perspective and satisfy itself which

one of them reflects the true state of affairs. When there are multiple

dying declarations, each dying declaration has to be separately

assessed and evaluated on its own merits.

15

9. Applying the law laid down by this Court in the aforesaid decisions

to the facts of the case on hand, and on evaluation of both dying

declarations independently, dying declaration recorded as Exhibit P5

reflects the true state of affairs and the contents are supported by the

medical evidence and the injuries sustained by the deceased. The plea

put forth by the defence that it was a case of an accident and while

pouring the kerosene from kerosene can to the bottle, the same had

fallen on the clothes placed on the ground and when the deceased tried

to remove the clothes from that place, the candle fell on the ground, as a

result, her clothes caught fire and she sustained burn injuries is

disbelieved by the High Court considering the circumstances noted by

the High Court that the deceased sustained injuries on the face, chest

and back and to the upper limbs. The main injuries are found on the

upper limbs of the body. Therefore, as rightly observed by the High

Court, the aforesaid injuries can be possible when the kerosene is

poured on the deceased. According to the defence and as per the

evidence of DW1-A1, while putting the kerosene into the stove,

accidentally the kerosene had fallen on the ground and also on her

clothes, and thereafter when the candle fell on the ground, the same had

come in contact with her clothes and kerosene. If that is the case, there

would have been injuries to her feet also. However, no burn injuries are

found on her feet. No stove was found at the place of occurrence.

16

Therefore, the defence came out with a false case of accidental fire,

which, as such, is not supported by any other reliable evidence. On the

contrary, this evidence speaks otherwise. Therefore, when A1 came

with a false defence and the dying declaration – Exhibit P5 is

corroborated by other surrounding circumstances and evidence and after

independent evaluation of Exhibit P5 and Exhibit D2, when the High

Court has found that Exhibit P5 is reliable and inspiring confidence and

thereafter when the High Court has convicted the accused, it cannot be

said that the High Court has committed any error.

10. Now so far as the submission on behalf of the accused that even

thereafter he tried to extinguish the fire and he also sustained injuries

and therefore it cannot be said that the appellant has committed an

offence punishable under Section 302 IPC is concerned, at the outset, it

is required to be noted that in the present case the prosecution is

successful in proving that the accused – appellant herein poured

kerosene on the deceased. As per dying declaration Exhibit P5, it has

been proved that the deceased was set ablaze by pouring kerosene on

her. The act of the accused falls in clause fourthly of Section 300 IPC. It

emerges from the evidence on record that the accused poured kerosene

on the deceased and not only poured kerosene but also set her ablaze

by the matchstick. Merely because thereafter the A1 might have tried to

17

extinguish the fire, that will not bring the case out of clause fourthly of

Section 300 IPC.

A somewhat similar submission was made before this Court in the

case of Santosh v. State of Maharashtra (2015) 7 SCC 641. In the case

before this Court, it was contended on behalf of the accused who poured

kerosene on the deceased and set her ablaze by matchstick that

thereafter they tried to save the deceased by pouring water on her and

therefore it was contended on behalf of the accused that by that conduct

it cannot be said that the intention of the accused was to cause death of

the deceased. The aforesaid has been negated by this Court by

observing in paragraphs 9 to 18 as under:

“9. Insofar as the first contention that the appellant is not responsible for

the death of deceased Saraswatibai, the defence made an attempt to

contend that the fire was accidental and that the appellant tried to

extinguish the fire in order to save her and in that process, he also

suffered burn injuries. The prosecution has adduced cogent evidence to

prove that the appellant has caused the death of deceased Saraswatibai.

The accused suspected the deceased of infidelity and picking up a fight

over it, he kicked her and inflicted fist-blows and further set her on fire by

pouring kerosene over her person. PW 6, doctor certified that the

deceased was in a fit mental condition to make the statement and PW 7,

the Executive Magistrate recorded the dying declaration Ext. 1. In the said

dying declaration, the deceased had categorically stated that on the date

of incident, the appellant poured kerosene over her person and set her on

fire. That accused poured kerosene on the deceased and set her on fire is

corroborated by the oral testimony of PW 3, Sindhu Sunil Ingole (sister-inlaw) of the deceased. PW 1 Raju Janrao Gavai, neighbour of the

deceased who accompanied the deceased to the hospital to whom the

deceased is said to have made a statement about the overt act of the

accused, had only stated that the deceased told him that the accused beat

her and also kicked her. PW 1 had not supported the statement of the

deceased in the dying declaration that the accused poured kerosene on

her and set her on fire. However, the prosecution has established the guilt

of the accused by Ext. 1 dying declaration and the oral evidence of the

18

mother (PW 2) and the sister-in-law (PW 3) and the same cannot be

doubted.

10. The learned counsel for the appellant contended that there was no

premeditation and the appellant had poured kerosene from the lamp

nearby and thereafter the appellant attempted to extinguish the fire by

pouring water on her and himself getting burn injuries in the process. It

was submitted that the conduct of the appellant in trying to extinguish the

fire immediately after the incident would clearly show that there was no

intention on the part of the appellant to commit the murder. In support of

his contention, he placed reliance on the judgment of this Court in Kalu

Ram v. State of Rajasthan [(2000) 10 SCC 324 : 2000 SCC (Cri) 86] .

11. The question falling for consideration is whether the act of the accused

pouring water would mitigate the offence of murder. Where the intention to

kill is present, the act amounts to murder, where such an intention is

absent, the act amounts to culpable homicide not amounting to murder. To

determine whether the offender had the intention or not, each case must

be decided on its facts and circumstances. From the facts and

circumstances of the instant case, it is evident that : (i) there was a

homicide, namely, the death of Saraswatibai; (ii) the deceased was set

ablaze by the appellant and this act was not accidental or unintentional;

and (iii) the post-mortem certificate revealed that the deceased died due to

shock and septicaemia caused by 60% burn injuries. When the accused

poured kerosene on the deceased from the kerosene lamp and also threw

the lighted matchstick on the deceased to set her on fire, he must have

intended to cause the death of the deceased. As seen from the evidence

of PW 5, panch witness, in the house of the appellant, kerosene lamp was

prepared in an empty liquor bottle. Whether the kerosene was poured from

the kerosene lamp or from the can is of no consequence. When there is

clear evidence as to the act of the accused to set the deceased on fire,

absence of premeditation will not reduce the offence of murder to culpable

homicide not amounting to murder. Likewise, pouring of water will not

mitigate the gravity of the offence.

12. After attending to nature's call, the deceased returned to the house a

little late. The accused questioned her as to why she was coming late and

he also suspected her fidelity. There was no provocation for the accused

to pour kerosene and set her on fire. The act of pouring kerosene, though

on the spur of the moment, the same was followed by lighting a matchstick

and throwing it on the deceased and thereby setting her ablaze. Both the

acts are intimately connected with each other and resulted in causing the

death of the deceased and the act of the accused is punishable for

murder.

19

13. Even assuming that the accused had no intention to cause the death

of the deceased, the act of the accused falls under clause Fourthly of

Section 300 IPC that is the act of causing injury so imminently dangerous

where it will in all probability cause death. Any person of average

intelligence would have the knowledge that pouring of kerosene and

setting her on fire by throwing a lighted matchstick is so imminently

dangerous that in all probability such an act would cause injuries causing

death.

14. Insofar as the conduct of the accused in attempting to extinguish fire,

placing reliance upon the judgment of this Court in Kalu Ram case [(2000)

10 SCC 324 : 2000 SCC (Cri) 86] , it was contended that such conduct of

the accused would bring down the offence from murder to culpable

homicide not amounting to murder. In Kalu Ram case [(2000) 10 SCC

324 : 2000 SCC (Cri) 86] , the accused was having two wives. The

accused in a highly inebriated condition asked his wife to part with her

ornaments so that he could purchase more liquor, which led to an

altercation when the wife refused to do as demanded. Infuriated by the

fact that his wife had failed to concede to his demands, the accused

poured kerosene on her and gave her a matchbox to set herself on fire.

On her failure to light the matchstick, the accused set her ablaze. But

when he realised that the fire was flaring up, he threw water on her person

in a desperate bid to save her. In such facts and circumstances, this Court

held that the accused would not have intended to inflict the injuries which

she sustained on account of the act of the accused and the conviction was

altered from Section 302 IPC to Section 304 Part II IPC.

15. The decision in Kalu Ram case [(2000) 10 SCC 324 : 2000 SCC (Cri)

86] cannot be applied in the instant case. The element of inebriation ought

to be taken into consideration as it considerably alters the power of

thinking. In the instant case, the accused was in his complete senses,

knowing fully well the consequences of his act. The subsequent act of

pouring water by the accused on the deceased also appears to be an

attempt to cloak his guilt since he did it only when the deceased screamed

for help. Therefore, it cannot be considered as a mitigating factor. An act

undertaken by a person in full awareness, knowing its consequences

cannot be treated on a par with an act committed by a person in a highly

inebriated condition where his faculty of reason becomes blurred.

16. Within three months of her marriage, the deceased died of burn

injuries. In bride burning cases, whenever the guilt of the accused is

20

brought home beyond reasonable doubt, it is the duty of the court to deal

with it sternly and award the maximum penalty prescribed by the law in

order that it may operate as a deterrence to other persons from committing

such offence.

17. This Court on various occasions has stressed the need for vigilance in

cases where a woman dies of burn injuries within a short span of her

marriage and that stern view needs to be adopted in all such cases.

In Satya Narayan Tiwari v. State of U.P. [(2010) 13 SCC 689 : (2011) 2

SCC (Cri) 393] , this Court in paras 3 and 9 has held as under : (SCC pp.

692 & 693)

“3. Indian society has become a sick society. This is evident from the

large number of cases coming up in this Court (and also in almost all

courts in the country) in which young women are being killed by their

husbands or by their in-laws by pouring kerosene on them and

setting them on fire or by hanging/strangulating them. What is the

level of civilisation of a society in which a large number of women are

treated in this horrendous and barbaric manner? What has our

society become—this is illustrated by this case.

***

9. Crimes against women are not ordinary crimes committed in a fit

of anger or for property. They are social crimes. They disrupt the

entire social fabric. Hence, they call for harsh punishment.

Unfortunately, what is happening in our society is that out of lust for

money people are often demanding dowry and after extracting as

much money as they can they kill the wife and marry again and then

again they commit the murder of their wife for the same purpose.

This is because of total commercialisation of our society, and lust for

money which induces people to commit murder of the wife. The time

has come when we have to stamp out this evil from our society, with

an iron hand.”

18. Upon analysis of the evidence adduced by the prosecution, the courts

below recorded concurrent findings that the accused caused the death of

deceased Saraswatibai and convicted the appellant. It is well settled that

concurrent findings of fact cannot be interfered with unless the findings are

perverse and unsupportable from the evidence on record. This view has

21

been reiterated in Dhananjay Shanker Shetty v. State of

Maharashtra [(2002) 6 SCC 596 : 2002 SCC (Cri) 1444] . In the totality of

the facts and circumstances, in our view, the concurrent findings of facts

recorded by the courts below are based on evidence and we see no

infirmity in the impugned judgment warranting interference”.

Therefore, after pouring kerosene on the deceased and thereafter

setting her ablaze, thereafter merely because the accused might have

tried to extinguish the fire will not take the case out of the clutches of

clause fourthly of Section 300 of the IPC. The act of the accused

pouring kerosene on the deceased and thereafter setting her ablaze by

matchstick is imminently dangerous which, in all probability, will cause

death. Therefore, the High Court has rightly convicted the accused for

the offence under Section 302 IPC.

11. In view of the above and for the reasons stated above, the present

appeal fails. We see no reason to interfere with the impugned judgment

and order of conviction passed by the High Court. The appeal deserves

to be dismissed and is accordingly dismissed.

……………………………………..J.

[Dr. Dhananjaya Y. Chandrachud]

New Delhi; …………………………………….J.

March 8, 2021. [M.R. Shah]

22

Whether original accused No. 2 can be convicted with the aid of Section 141 of the NI Act ? Section 138 of the NI Act does not speak about the joint liability. Even in case of a joint liability, in case of individual persons, a person other than a person who has drawn the cheque on an account maintained by him, cannot be prosecuted for the offence under Section 138 of the NI Act. A person might have been jointly liable to pay the debt, but if such a person who might have been liable to pay the debt jointly, cannot be prosecuted unless the bank account is jointly maintained and that he was a signatory to the cheque. Section 141 of the NI Act is relating to the offence by companies and it cannot be made applicable to the individuals. Learned counsel appearing on behalf of the original complainant has submitted that “Company” means any body corporate and includes, a firm or other association of individuals and therefore in case of a joint liability of two or more persons it will fall within “other association of individuals” and therefore with the aid of Section 141 of the NI Act, the appellant who is jointly liable to pay the debt, can be prosecuted. The aforesaid cannot be accepted. Two private individuals cannot be said to be “other association of individuals”. Therefore, there is no question of invoking Section 141 of the NI Act against the appellant, as the liability is the individual liability (may be a joint liabilities), but cannot be said to be the offence committed by a company or by it corporate or firm or other associations of individuals. The appellant herein is neither a Director nor a partner in any firm who has issued the cheque. Therefore, even the appellant cannot be convicted with the aid of Section 141 of the NI Act. Therefore, the High Court has committed a grave error in not quashing the complaint against the appellant for the offence punishable under Section 138 r/w Section 141 of the NI Act.

  Whether original accused No. 2 can be convicted with the aid of Section 141 of the NI Act ?

 Section 138 of the NI Act does not speak about the joint liability. Even in case of a joint liability, in case of individual persons, a person other than a person who has drawn the cheque on an account maintained by him, cannot be prosecuted for the offence under Section 138 of the NI Act. A person might have been jointly liable to pay the debt, but if such a person who might have been liable to pay the debt jointly, cannot be prosecuted unless the bank account is jointly maintained and that he was a signatory to the cheque. 

 Section 141 of the NI Act is relating to the offence by companies and it cannot be made applicable to the individuals. Learned counsel appearing on behalf of the original complainant has submitted that “Company” means any body corporate and includes, a firm or other association of individuals and therefore in case of a joint liability of two or more persons it will fall within “other association of individuals” and therefore with the aid of Section 141 of the NI Act, the appellant who is jointly liable to pay the debt, can be prosecuted. The aforesaid cannot be accepted. 

Two private individuals cannot be said to be “other association of individuals”. 

Therefore, there is no question of invoking Section 141 of the NI Act against the appellant, as the liability is the individual liability (may be a joint liabilities), but cannot be said to be the offence committed by a company or by it corporate or firm or other associations of individuals. The appellant herein is neither a Director nor a partner in any firm who has issued the cheque. 

Therefore, even the appellant cannot be convicted with the aid of Section 141 of the NI Act. Therefore, the High Court has committed a grave error in not quashing the complaint against the appellant for the offence punishable under Section 138 r/w Section 141 of the NI Act.

1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO. 258 OF 2021

Alka Khandu Avhad .. Appellant

Versus

Amar Syamprasad Mishra & Anr. .. Respondent

J U D G M E N T

M. R. Shah, J.

1. Feeling aggrieved and dissatisfied with the impugned judgment and order

dated 21.08.2019 passed by the High Court of Judicature at Bombay in Criminal

Writ Petition No. 2595 of 2019, by which the High Court has dismissed the said

application preferred by the appellant herein under Article 226 of the Constitution

of India and has refused to quash the complaint filed against the appellant for the

offences punishable under Section 138 r/w Section 141 of the Negotiable

Instruments Act, 1881 (hereinafter referred to as the ‘NI Act’), the original

accused No. 2 has preferred the present appeal.

2

2. That respondent No. 1 herein has filed a criminal complaint against the

appellant and her husband for the offences punishable under Section 138 r/w

Section 141 of the NI Act in the Court of the learned Metropolitan Magistrate, 43rd

Court at Borivali, Mumbai, which has been numbered as C.C. No. 2802/SS/2016.

That respondent No. 1 – original complaint (hereinafter referred to as ‘the original

complainant’) is a practicing advocate and partner in a solicitor firm in Mumbai.

As per the case of the complainant, both the accused who are husband and wife,

approached the original complaint in a legal matter. That the original complainant

assisted accused Nos. 1 and 2 in preparing replies and notice of motion,

conference, coordinating with counsel, filing Vakalatnamas and appearing through

advocates’ office and also as counsel in Summary Suit. That the original

complainant raised a professional bill for the legal work done by him to represent

accused Nos. 1 and 2 in the legal proceedings. That, thereafter, original accused

No. 1 – husband of the appellant herein handed over to the complainant a postdated cheque dated 15.03.2016 bearing No.227050 drawn on Union Bank of India

for Rs.8,62,000/-. The said cheque was presented for encashment and the same

came to be returned unpaid with the endorsement “funds insufficient”. That,

thereafter, the original complainant served a legal notice dated 21.05.2016 calling

upon the accused to pay the amount of Rs.8,62,000/- within 15 days from the date

of receipt of the said notice. That the said notice was duly served upon the

3

accused, however, the accused neither replied the said notice nor made the

payment of the aforesaid dishonoured cheque. Therefore, the complainant filed a

complaint against both the accused – husband and wife for the offence punishable

under Section 138 of the NI Act. That the learned Metropolitan Magistrate, 43rd

Court, Borivali, Mumbai directed to issue process against both the accused for the

offence punishable under Sections 138 r/w Section 141 of the NI Act.

2.1 That, thereafter, the appellant herein – original accused No. 2, wife of the

original accused No. 1 filed Criminal Writ Petition No. 2595 of 2019 in the High

Court to quash the criminal complaint filed against her mainly on the ground that

the appellant was neither a signatory to the cheque dishonoured nor there was a

joint bank account.

2.2 It was further submitted that the appellant cannot be prosecuted for the

offence punishable under Sections 138 r/w Section 141 of the NI Act.

2.3 However, it was the case on behalf of the original complainant that it was

the joint liability of both the accused Nos. 1 and 2 to pay the professional bill as

the original complainant represented both the accused and therefore considering

Section 141 of the NI Act, the appellant herein – original accused No. 2 is also

liable for the offence punishable under Section 138 r/w Section 141 of the NI Act.

2.4 By the impugned judgment and order, the High Court has refused to quash

the criminal complaint filed against the appellant, giving rise to the present appeal.

4

3. Learned counsel appearing on behalf of the appellant has vehemently

submitted that the dishonoured cheque was issued by her husband and not the

appellant and even the account in question was not a joint account and that the

appellant was neither the signatory to the cheque nor the cheque was drawn from

the bank account of the appellant and therefore the appellant cannot be prosecuted

for the offence punishable under Section 138 of the NI Act. It is vehemently

submitted that the ingredients of Section 138 of the NI Act are not satisfied, and

therefore, the High Court ought to have quashed the criminal complaint against the

appellant.

3.1 It is further submitted by the learned counsel appearing on behalf of the

appellant that, in the facts and circumstances of the case, even Section 141 of the

NI Act shall not be applicable as the cheque was issued by a private individual.

4. The present appeal is vehemently opposed by the learned counsel appearing

on behalf of respondent No. 1 – original complainant.

4.1 It is submitted that the liability to pay the debt towards the professional bill

was the joint liability of both the accused as the complainant represented both the

accused and, therefore, as rightly observed and held by the High Court, Section

141 of the NI Act shall be applicable.

4.2 It is submitted that when the Trial Court issued the summons against the

appellant for the offence punishable under Section 138 r/w Section 141 of the NI

5

Act after having come to the conclusion that a prima facie case has been made out,

the High Court has rightly refused to quash the criminal complaint.

4.3 It is further submitted that as the cheque was issued towards discharge of

legal liability of both the accused and thereafter when her husband issued the

cheque, the High Court has rightly refused to quash the complaint.

5. Learned counsel appearing on behalf of the State has supported the

impugned judgment and order passed by the High Court.

6. We have heard learned counsel appearing on behalf of the respective parties

at length, considered material on record and also considered the averments and

allegations in the complaint. It emerges from the record that the dishonoured

cheque was issued by original accused No. 1 – husband of the appellant. It was

drawn from the bank account of original accused No. 1. The dishonoured cheque

was signed by original accused No. 1. Therefore, the dishonoured cheque was

signed by original accused No. 1 and it was drawn on the bank account of original

accused No. 1. The appellant herein-original accused No. 2 is neither the signatory

to the cheque nor the dishonoured cheque was drawn from her bank account. That

the account in question was not a joint account. In the light of the aforesaid facts,

it is required to be considered whether the appellant herein – original accused No.

2 can be prosecuted for the offence punishable under Section 138 r/w Section 141

of the NI Act?

6

7. On a fair reading of Section 138 of the NI Act, before a person can be

prosecuted, the following conditions are required to be satisfied:

i) that the cheque is drawn by a person and on an account maintained by him

with a banker;

ii) for the payment of any amount of money to another person from out of that

account for the discharge, in whole or in part, of any debt or other liability; and

iii) the said cheque is returned by the bank unpaid, either because of the amount

of money standing to the credit of that account is insufficient to honour the cheque

or that it exceeds the amount arranged to be paid from that account.

Therefore, a person who is the signatory to the cheque and the cheque is

drawn by that person on an account maintained by him and the cheque has been

issued for the discharge, in whole or in part, of any debt or other liability and the

said cheque has been returned by the bank unpaid, such person can be said to have

committed an offence. Section 138 of the NI Act does not speak about the joint

liability. Even in case of a joint liability, in case of individual persons, a person

other than a person who has drawn the cheque on an account maintained by him,

cannot be prosecuted for the offence under Section 138 of the NI Act. A person

might have been jointly liable to pay the debt, but if such a person who might have

been liable to pay the debt jointly, cannot be prosecuted unless the bank account is

jointly maintained and that he was a signatory to the cheque. 

7

8. Now, so far as the case on behalf of the original complainant that the

appellant herein – original accused No. 2 can be convicted with the aid of Section

141 of the NI Act is concerned, the aforesaid has no substance.

8.1 Section 141 of the NI Act is relating to the offence by companies and it

cannot be made applicable to the individuals. Learned counsel appearing on behalf

of the original complainant has submitted that “Company” means any body

corporate and includes, a firm or other association of individuals and therefore in

case of a joint liability of two or more persons it will fall within “other association

of individuals” and therefore with the aid of Section 141 of the NI Act, the

appellant who is jointly liable to pay the debt, can be prosecuted. The aforesaid

cannot be accepted. Two private individuals cannot be said to be “other

association of individuals”. Therefore, there is no question of invoking Section

141 of the NI Act against the appellant, as the liability is the individual liability

(may be a joint liabilities), but cannot be said to be the offence committed by a

company or by it corporate or firm or other associations of individuals. The

appellant herein is neither a Director nor a partner in any firm who has issued the

cheque. Therefore, even the appellant cannot be convicted with the aid of Section

141 of the NI Act. Therefore, the High Court has committed a grave error in not

quashing the complaint against the appellant for the offence punishable under

Section 138 r/w Section 141 of the NI Act. The criminal complaint filed against

8

the appellant for the offence punishable under Section 138 r/w Section 141 of the

NI Act, therefore, can be said to be abuse of process of law and therefore the same

is required to be quashed and set aside.

8. In view of the above and for the reasons stated above, the present appeal

succeeds. The impugned judgment and order dated 21.08.2019 passed by the High

Court in Criminal Writ Petition No. 2595 of 2019 refusing to quash the criminal

complaint against the appellant for the offence punishable under Section 138 read

with Section 141 of the NI Act is hereby quashed and set aside. The complaint case

pending in the Court of the learned Metropolitan Magistrate filed by respondent

No. 1 – original complainant being C.C. No. 2802/SS/2016 is hereby quashed and

set aside. The appeal is allowed accordingly.

……………………………………J.

[Dr. Dhananjaya Y. Chandrachud]

………………………………….J.

[M. R. Shah]

New Delhi,

March 8, 2021

a discretionary jurisdiction under the fifth proviso to Section 434(1)(c) of the Companies Act, 2013 cannot prevail over the undoubted jurisdiction of the NCLT under the IBC once the parameters of Section 7 and other provisions of the IBC have been met.

 a discretionary jurisdiction under the fifth proviso to Section 434(1)(c) of the Companies Act, 2013 cannot prevail over the undoubted jurisdiction of the NCLT under the IBC once the parameters of Section 7 and other provisions of the IBC have been met.

1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOs.4230-4234 OF 2020

A. Navinchandra Steels Private Limited …Appellant

VERSUS

SREI Equipment Finance Limited & Ors. …Respondents

J U D G M E N T

R.F. Nariman, J.

1. This appeal arises out of the judgment dated 07.02.2020, as

corrected by order dated 21.09.2020, by the National Company Law

Appellate Tribunal [“NCLAT”]. The Appellant is an operational creditor of

Respondent No.2 herein – M/s. Shree Ram Urban Infrastructure Limited

[“SRUIL”], the company under winding up – and has a decree dated

07.10.2015 in its favour passed by the Bombay High Court in Summary

Suit No.626 of 2014. Vide order dated 06.10.2016, the Division Bench

stayed the order dated 07.10.2015 and directed SRUIL to deposit INR14 

2

crore with the Prothonotary and Senior Master of the High Court or furnish

a bank guarantee for the same, failing which the stay order would get

vacated. The said appeal is pending as on date. We are also informed that

an execution application, being Execution Application (L) No.934 of 2016

was filed by the Appellant before the Bombay High Court and the same is

also pending as on date.

2. Sometime in 2015, the Appellant had filed a winding up petition, being

Company Petition No.1039 of 2015 against SRUIL before the Bombay High

Court, the same being pending as on date.

3. A winding up petition, being Company Petition No.1066/2015 filed by

Respondent No.3 herein, M/s Action Barter Pvt. Ltd. [“Action Barter”]

against SRUIL, by a conditional order dated 05.10.2016, stood admitted on

the failure of SRUIL to deposit INR 5.90 crore. The appeal instituted by

SRUIL against this order was dismissed by the Division Bench of the High

Court on 17.01.2017, whereas the appeal instituted by Action Barter was

allowed vide the same order and the amount to be deposited by SRUIL was

enhanced from INR 5.90 crore to INR 18 crore. Vide order dated

27.02.2017, this Court disposed of SLP(C) No.5849/2017 filed by SRUIL,

after recording a statement by the counsel for SRUIL that SRUIL would 

3

deposit INR three crore the same day, and the balance of INR 15 crore

within six months from the date of the order. The parties then filed consent

terms before the Single Judge of the Bombay High Court on 22.03.2017,

wherein Action Barter agreed to accept a sum of INR 15 crore, payable in

instalments. Apart from the payment of the first instalment of INR 25 lakh,

no further instalment was paid, as a result of which the winding up petition

stood revived on 24.08.2017. On 17.04.2018, the provisional liquidator took

over the physical possession of the assets of SRUIL.

4. While this winding up petition was pending, Indiabulls Housing

Finance Ltd. [“Indiabulls”], a secured creditor of SRUIL, filed a petition

under Section 7 of the Insolvency and Bankruptcy Code, 2016 [“IBC”]

before the National Company Law Tribunal [“NCLT”], which was dismissed

by the NCLT vide order dated 18.05.2018 as being not maintainable as a

winding up petition had already been admitted by the Bombay High Court.

An appeal to the NCLAT suffered a similar fate as the appeal was

dismissed on 30.05.2018. However, on 06.08.2018, the Supreme Court

admitted a Civil Appeal from the NCLAT order, which is pending as on date.

5. An application filed by Indiabulls for the following relief:

“The Hon’ble Court be pleased to direct the Provisional

Liquidator to handover physical possession of the said

Mortgaged Property i.e. all the pieces and parcels of land 

4

bearing C.S. Nos. 288, 289 (part), 1/1540 (part), 2/1540 (part)

and 3/1540 (part), collectively forming Plot Nos.5B and 6

admeasuring approximately 28,409.57 square meters situated

at Worli Estate, Lower Parel Division, Mumbai to the Secured

Creditor herein, in accordance with and pursuant to the

provisions of the Companies Act, 1956 and the Securitisation

and Reconstruction of Financial Assets and Enforcement of

Security Interest Act, 2002 …”

resulted in an order dated 07.02.2019 by which the learned Company

Judge allowed the aforesaid application in favour of Indiabulls. Indiabulls is

a secured creditor who stood outside the winding up, and who sought to

realise its security outside such winding up proceeding, notices having

already been issued under Sections 13(2) and 13(4) of the Securitisation

and Reconstruction of Financial Assets and Enforcement of Security

Interest Act, 2002 [“SARFAESI Act”]. The Court referred to an order of

12.04.2018, by which the provisional liquidator was to take physical

possession of the assets of SRUIL within one week of the date of that order.

Importantly, paragraph 2 of the said order stated:

“2. Ms. Maitra states that the secured creditors have already

commenced proceedings under SARFAESI against the

company. As and when the banks may take out an application

for banks submissions to hand over that part of the assets

secured to the bank, appropriate orders will be passed.”

6. This being the case, the learned Company Judge allowed the

application in the following terms: 

5

“13. For the reasons aforesaid, the present Application is

allowed. The Provisional Liquidator is directed to forthwith

handover possession of the Mortgaged Property to the

Applicant. However, the Applicant shall conduct the sale of the

property in consultation with the Official Liquidator. The

Applicant shall also deposit the sale proceeds or part thereof

with this Court as and when the Court directs the Applicant to

do so, for the purpose of making payments to workers as

prescribed in section 529A of the Companies Act, 1956.”

7. As per the aforesaid order dated 07.02.2019, the provisional

liquidator handed over possession of the property mortgaged with

Indiabulls to Indiabulls, who then conducted a sale of the said property to

M/s. Honest Shelters Pvt. Ltd. [“Honest Shelters”], Respondent No.4

herein, for a sum of INR 705 crore, in which not only was the mortgaged

property sold, but also the superstructure standing thereon, together with

two other flats. We have since been informed that three sale certificates

were issued to Honest Shelters on 26.06.2019 by Indiabulls on receiving

the said payment of INR 705 crore. We have also been informed that the

ex-Directors of SRUIL had challenged the aforesaid sale in the Debt

Recovery Tribunal and the Debt Recovery Appellate Tribunal

unsuccessfully. The provisional liquidator has also challenged the said sale

in the Bombay High Court, alleging that the conditions of the order dated

07.02.2019 were flouted, and that what was sold was much more than what

was mortgaged to the secured creditor, and that too at a gross undervalue. 

6

We are informed that the next date in these pending proceedings is

23.03.2021.

8. Meanwhile, Respondent No.1 before us, i.e., SREI Equipment

Finance Limited [“SREI”] filed a petition under Section 7 of the IBC before

the NCLT, which petition was admitted by the NCLT on 06.11.2019. An

appeal was then filed by Action Barter against the aforesaid NCLT order in

which, after setting out this Court’s judgment in Forech (India) Ltd. v.

Edelweiss Assets Reconstruction Co. Ltd., (2019) 18 SCC 549

[“Forech”], the NCLAT dismissed the appeal with the following

observations:

“5. The case of the Appellant is covered by the decision of the

Hon’ble Supreme Court in Forech India Ltd (supra), therefore,

we hold that the Application under Section 7 of the I&B Code

filed by the Respondent – SREI Equipment Finance Limited is

not maintainable. In so far as pending winding up petition

before the Hon’ble Bombay High Court is concerned, the

Appellant in terms of the decision of the Hon’ble Supreme Court

in Forech India Ltd (supra) may move before the Hon’ble High

Court of Bombay.

The Appeal is dismissed with the aforesaid observations. No

costs.”

9. By an order dated 21.09.2020, the NCLAT corrected the order by

deleting the word “not” that occurred in paragraph 5 of the order dated

07.02.2020. 

7

10. An appeal was then filed to this Court by Action Barter on 08.10.2020,

in which this Court, by order dated 27.10.2020, issued notice and directed

the parties to maintain status quo qua the mortgaged property and also

stayed further proceedings before the NCLAT. An appeal was also filed by

the Appellant on 09.12.2020, in which this Court, by order dated

18.12.2020, issued notice and stayed further proceedings before the NCLT

and tagged the appeal with the appeal filed by Action Barter.

11. We have been informed that pursuant to a settlement between Action

Barter and the purchaser of the mortgaged property, i.e., Honest Shelters,

Action Barter has now withdrawn its appeal that was filed before this Court.

Thus, the only surviving appeal before us is Civil Appeal Nos.4230-4234 of

2020, filed by A. Navinchandra Steels Pvt. Ltd.

12. Dr. Abhishek Manu Singhvi and Shri Ranjit Kumar, learned Senior

Advocates appearing on behalf of the Appellant, argued that in view of the

judgment in Action Ispat and Power Pvt. Ltd. v. Shyam Metalics and

Energy Ltd., 2020 SCC OnLine SC 1025 [“Action Ispat”], this matter is

concluded in their favour inasmuch as irreversible steps have been taken

in a winding up petition that has already been admitted by the Bombay High

Court in that the plot on which a 72-storey building stands, has now been 

8

sold, as a result of which it is now clear that the Section 7 petition that was

filed by SREI on 30.05.2019 under the IBC, would have to be held to be

non-maintainable. They also argued that the effect of Section 446 of the

Companies Act, 1956 (which is equivalent to Section 279 of the Companies

Act, 2013) is that no suit or other legal proceeding can be initiated once

there is admission of a winding up petition. This being the case, post

admission of a winding up petition, no petition under Section 7 of the IBC

can be filed. They also argued that it is a misnomer to think that winding up

proceedings must result in corporate death. On the contrary, according to

them, Sections 391 to 393 of the Companies Act, 1956 would apply if the

company were to be restructured, as a result of which the winding up court

could then stay the winding up and order restructuring. The learned counsel

have also argued that there are gross malafides in the present case as

SREI was not only aware of the winding up petition before the Bombay High

Court, but has also participated in the winding up proceeding and filed its

claim before the provisional liquidator. All this has been suppressed in the

petition filed under Section 7 of the IBC. Further, the only route available to

SREI was really to ask for transfer of the company petition in winding up

from the Bombay High Court to the NCLT, which route has been 

9

circumvented by filing a Section 7 petition and suppressing the winding up

proceeding.

13. Shri Abhijeet Sinha, learned counsel appearing on behalf of SREI,

took us through various judgments of this Court, including the latest

judgment in Action Ispat (supra). According to him, a Section 7 proceeding

under the IBC is an independent proceeding, which can be initiated at any

time, even after a winding up order is made. He argued that this was a

result of our decisions and that Section 238 of the IBC, which contains a

non-obstante clause, clearly comes to his rescue as, if there is any conflict

between Section 446 of the Companies Act, 1956 / Section 279 of the

Companies Act, 2013 and the IBC, the IBC will prevail. According to him,

this point is no longer res integra. He also argued, in the alternative, that

there are no irretrievable steps that have been taken in the winding up

proceeding in the present case, as the provisional liquidator continues to

be seized of other assets of SRUIL. He further argued that a private sale

by a secured creditor outside the winding up is not the irretrievable step

that is spoken of in Action Ispat (supra), such step having to be taken by

the provisional liquidator himself in selling the assets of the company in the

process of winding up the company. He also added that, on facts, two

orders dated 28.11.2019 and 20.01.2020 of the Bombay High Court would 

10

indicate that the Company Court itself had directed the provisional

liquidator to hand over the records and assets of SRUIL to the interim

resolution professional [“IRP”] that had been appointed in the Section 7

proceeding. Doubtless, such assets had not been handed over because

they were only to the handed over two weeks after certain payments had

been made by the IRP to the provisional liquidator, which payments have

not yet been made.

14. Having heard learned counsel for all the parties, it is important to

restate a few fundamentals. Given the object of the IBC as delineated in

paragraphs 25 to 28 of Swiss Ribbons (P) Ltd. v. Union of India, (2019)

4 SCC 17 [“Swiss Ribbons”], it is clear that the IBC is a special statute

dealing with revival of companies that are in the red, winding up only being

resorted to in case all attempts of revival fail. Vis-à-vis the Companies Act,

which is a general statute dealing with companies, including companies

that are in the red, the IBC is not only a special statute which must prevail

in the event of conflict, but has a non-obstante clause contained in Section

238, which makes it even clearer that in case of conflict, the provisions of

the IBC will prevail. 

11

15. In Allahabad Bank v. Canara Bank, (2000) 4 SCC 406, this Court

had to deal with whether the Recovery of Debts Due to Banks and Financial

Institutions Act, 1993 [“RDB Act”] was a special statute qua the Companies

Act, 1956. This Court held that the Companies Act is a general Act and

does not prevail against the RDB Act, which was a later Act and which has

a non-obstante clause that clearly excludes the provisions of the

Companies Act in case of conflict. This was stated by the Court as follows:

“Special law v. general law

38. At the same time, some High Courts have rightly held that

the Companies Act is a general Act and does not prevail under

the RDB Act. They have relied upon Union of India v. India

Fisheries (P) Ltd. [AIR 1966 SC 35 : (1965) 3 SCR 679 : (1965)

57 ITR 331].

39. There can be a situation in law where the same statute is

treated as a special statute vis-à-vis one legislation and again

as a general statute vis-à-vis yet another legislation. Such

situations do arise as held in LIC of India v. D.J. Bahadur

[(1981) 1 SCC 315 : 1981 SCC (L&S) 111 : AIR 1980 SC 2181].

It was there observed:

“… for certain cases, an Act may be general and for

certain other purposes, it may be special and the

court cannot blur a distinction when dealing with the

finer points of law”.

For example, a Rent Control Act may be a special statute as

compared to the Code of Civil Procedure. But vis-à-vis an Act

permitting eviction from public premises or some special class

of buildings, the Rent Control Act may be a general statute. In

fact in Damji Valji Shah v. LIC of India [AIR 1966 SC 135 :

(1965) 3 SCR 665] (already referred to), this Court has

observed that vis-à-vis the LIC Act, 1956, the Companies Act, 

12

1956 can be treated as a general statute. This is clear from

para 19 of that judgment. It was observed:

“Further, the provisions of the special Act, i.e., the

LIC Act, will override the provisions of the general

Act, viz., the Companies Act which is an Act

relating to companies in general.”

(emphasis in original)

Thus, some High Courts rightly treated the Companies Act as

a general statute, and the RDB Act as a special statute

overriding the general statute.

Special law v. special law

40. Alternatively, the Companies Act, 1956 and the RDB Act

can both be treated as special laws, and the principle that when

there are two special laws, the latter will normally prevail over

the former if there is a provision in the latter special Act giving

it overriding effect, can also be applied. Such a provision is

there in the RDB Act, namely, Section 34. A similar situation

arose in Maharashtra Tubes Ltd. v. State Industrial and

Investment Corpn. of Maharashtra Ltd. [(1993) 2 SCC 144]

where there was inconsistency between two special laws, the

Finance Corporation Act, 1951 and the Sick Industries

Companies (Special Provisions) Act, 1985. The latter contained

Section 32 which gave overriding effect to its provisions and

was held to prevail over the former. It was pointed out by

Ahmadi, J. that both special statutes contained non obstante

clauses but that the

“1985 Act being a subsequent enactment, the non

obstante clause therein would ordinarily prevail

over the non obstante clause in Section 46-B of the

1951 Act unless it is found that the 1985 Act is a

general statute and the 1951 Act is a special one”.

(SCC p. 157, para 9)

Therefore, in view of Section 34 of the RDB Act, the said Act

overrides the Companies Act, to the extent there is anything

inconsistent between the Acts.”

13

16. Likewise, in Bakemans Industries (P) Ltd. v. New Cawnpore Flour

Mills, (2008) 15 SCC 1, this Court, in the context of the State Financial

Corporations Act, 1951 [“SFC Act”] and the Companies Act, 1956, held that

though the SFC Act was an earlier Act of 1951, yet, it would prevail over

the winding up proceedings before a Company Judge, given that the SFC

Act is a special statute qua the general powers of the Company Judge

under the Companies Act. This was stated as follows:

“37. The 1951 Act indisputably is a special statute. If a financial

corporation intends to exercise a statutory power under Section

29 of the 1951 Act, the same will prevail over the general

powers of the Company Judge under the Companies Act.

38. There cannot be any doubt whatsoever that the

proceedings under Section 29 of the 1951 Act would prevail

over a winding-up proceeding before a Company Judge in view

of the decision of this Court in International Coach Builders

Ltd. v. Karnataka State Financial Corpn. [(2003) 10 SCC 482]

wherein it has been held: (SCC p. 496, para 26)

“26. We do not really see a conflict between Section

29 of the SFC Act and the Companies Act at all,

since the rights under Section 29 were not intended

to operate in the situation of winding up of a

company. Even assuming to the contrary, if a

conflict arises, then we respectfully reiterate the

view taken by the Division Bench of this Court in

A.P. State Financial Corpn. Case [A.P. State

Financial Corpn. v. Official Liquidator, (2000) 7

SCC 291]. This Court pointed out therein that

Section 29 of the SFC Act cannot override the

provisions of Sections 529(1) and 529-A of the

Companies Act, 1956, inasmuch as SFCs cannot

exercise the right under Section 29 ignoring a pari

passu charge of the workmen.”

14

The view taken therein was reiterated by a three-Judge Bench

of this Court in Rajasthan State Financial Corpn. v. Official

Liquidator [(2005) 8 SCC 190] wherein it was stated: (SCC pp.

201-02, para 18)

“18. In the light of the discussion as above, we think

it proper to sum up the legal position thus:

(i) A Debts Recovery Tribunal acting under the

Recovery of Debts Due to Banks and Financial

Institutions Act, 1993 would be entitled to order the

sale and to sell the properties of the debtor, even if

a company-in-liquidation, through its Recovery

Officer but only after notice to the Official Liquidator

or the Liquidator appointed by the Company Court

and after hearing him.

(ii) A District Court entertaining an application

under Section 31 of the SFC Act will have the power

to order sale of the assets of a borrower companyin-liquidation, but only after notice to the Official

Liquidator or the Liquidator appointed by the

Company Court and after hearing him.

(iii) If a financial corporation acting under Section

29 of the SFC Act seeks to sell or otherwise transfer

the assets of a debtor company-in-liquidation, the

said power could be exercised by it only after

obtaining the appropriate permission from the

Company Court and acting in terms of the

directions issued by that court as regards

associating the Official Liquidator with the sale, the

fixing of the upset price or the reserve price,

confirmation of the sale, holding of the sale

proceeds and the distribution thereof among the

creditors in terms of Section 529-A and Section 529

of the Companies Act.

(iv) In a case where proceedings under the

Recovery of Debts Due to Banks and Financial

Institutions Act, 1993 or the SFC Act are not set in

motion, the creditor concerned is to approach the

Company Court for appropriate directions

regarding the realisation of its securities consistent 

15

with the relevant provisions of the Companies Act

regarding distribution of the assets of the companyin-liquidation.”

(See also ICICI Bank Ltd. v. SIDCO Leathers Ltd. [(2006) 10

SCC 452 : (2006) 5 Scale 27])”

17. In Madras Petrochem Ltd. v. BIFR, (2016) 4 SCC 1, this Court had

to deal with whether a predecessor statute to the IBC, which has been

repealed by the IBC, namely, the Sick Industrial Companies (Special

Provisions) Act, 1985, prevails over the SARFAESI Act to the extent of

inconsistency therewith. This Court noted that in the case of two statutes

which contain non-obstante clauses, the later Act will normally prevail,

holding:

“36. A conspectus of the aforesaid decisions shows that the

Sick Industrial Companies (Special Provisions) Act, 1985

prevails in all situations where there are earlier enactments with

non obstante clauses similar to the Sick Industrial Companies

(Special Provisions) Act, 1985. Where there are later

enactments with similar non obstante clauses, the Sick

Industrial Companies (Special Provisions) Act, 1985 has been

held to prevail only in a situation where the reach of the non

obstante clause in the later Act is limited—such as in the case

of the Arbitration and Conciliation Act, 1996—or in the case of

the later Act expressly yielding to the Sick Industrial Companies

(Special Provisions) Act, 1985, as in the case of the Recovery

of Debts Due to Banks and Financial Institutions Act, 1993.

Where such is not the case, as in the case of Special Courts

Act, 1992, it is the Special Courts Act, 1992 which was held to

prevail over the Sick Industrial Companies (Special Provisions)

Act, 1985.

16

37. We have now to undertake an analysis of the Acts in

question. The first thing to be noticed is the difference between

Section 37 of the Securitisation and Reconstruction of Financial

Assets and Enforcement of Security Interest Act, 2002 and

Section 34 of the Recovery of Debts Due to Banks and

Financial Institutions Act, 1993. Section 37 of the Securitisation

and Reconstruction of Financial Assets and Enforcement of

Security Interest Act, 2002 does not include the Sick Industrial

Companies (Special Provisions) Act, 1985 unlike Section 34(2)

of the Recovery of Debts Due to Banks and Financial

Institutions Act, 1993. Section 37 of the Securities and

Reconstruction of Financial Assets and Enforcement of

Security Interest Act, 2002 states that the said Act shall be in

addition to and not in derogation of four Acts, namely, the

Companies Act, the Securities Contracts (Regulation) Act,

1956, the Securities and Exchange Board of India Act, 1992

and the Recovery of Debts Due to Banks and Financial

Institutions Act, 1993. It is clear that the first three Acts deal with

securities generally and the Recovery of Debts Due to Banks

and Financial Institutions Act, 1993 deals with recovery of debts

due to banks and financial institutions. Interestingly, Section 41

of the Securitisation and Reconstruction of Financial Assets

and Enforcement of Security Interest Act, 2002 makes

amendments in three Acts—the Companies Act, the Securities

Contracts (Regulation) Act, 1956, and the Sick Industrial

Companies (Special Provisions) Act, 1985. It is of great

significance that only the first two Acts are included in Section

37 and not the third i.e. the Sick Industrial Companies (Special

Provisions) Act, 1985. This is for the obvious reason that the

framers of the Securitisation and Reconstruction of Financial

Assets and Enforcement of Security Interest Act, 2002 intended

that the Sick Industrial Companies (Special Provisions) Act,

1985 be covered by the non obstante clause contained in

Section 35, and not by the exception thereto carved out by

Section 37. Further, whereas the Recovery of Debts Due to

Banks and Financial Institutions Act, 1993 is expressly

mentioned in Section 37, the Sick Industrial Companies

(Special Provisions) Act, 1985 is not, making the above position

further clear. And this is in stark contrast, as has been stated

above, to Section 34(2) of the Recovery of Debts Due to Banks 

17

and Financial Institutions Act, 1993, which expressly included

the Sick Industrial Companies (Special Provisions) Act, 1985.

The new legislative scheme qua recovery of debts contained in

the Securitisation and Reconstruction of Financial Assets and

Enforcement of Security Interest Act, 2002 has, therefore, to be

given precedence over the Sick Industrial Companies (Special

Provisions) Act, 1985, unlike the old scheme for recovery of

debts contained in the Recovery of Debts Due to Banks and

Financial Institutions Act, 1993.”

18. Indeed, this position has been echoed in several judgments of this

Court. In Jaipur Metals & Electricals Employees Organization v. Jaipur

Metals & Electricals Ltd., (2019) 4 SCC 227 [“Jaipur Metals”], this Court,

in dealing with whether proceedings under the Sick Industrial Companies

(Special Provisions) Act, 1985 were to be transferred to the NCLT under

the IBC, held:

“19. However, this does not end the matter. It is clear that

Respondent 3 has filed a Section 7 application under the Code

on 11-1-2018, on which an order has been passed admitting

such application by NCLT on 13-4-2018. This proceeding is an

independent proceeding which has nothing to do with the

transfer of pending winding-up proceedings before the High

Court. It was open for Respondent 3 at any time before a

winding-up order is passed to apply under Section 7 of the

Code. This is clear from a reading of Section 7 together with

Section 238 of the Code which reads as follows:

“238. Provisions of this Code to override other

laws.—The provisions of this Code shall have

effect, notwithstanding anything inconsistent

therewith contained in any other law for the time

being in force or any instrument having effect by

virtue of any such law.”

18

20. Shri Dave’s ingenious argument that since Section 434 of

the Companies Act, 2013 is amended by the Eleventh

Schedule to the Code, the amended Section 434 must be read

as being part of the Code and not the Companies Act, 2013,

must be rejected for the reason that though Section 434 of the

Companies Act, 2013 is substituted by the Eleventh Schedule

to the Code, yet Section 434, as substituted, appears only in

the Companies Act, 2013 and is part and parcel of that Act. This

being so, if there is any inconsistency between Section 434 as

substituted and the provisions of the Code, the latter must

prevail. We are of the view that NCLT was absolutely correct in

applying Section 238 of the Code to an independent proceeding

instituted by a secured financial creditor, namely, the Alchemist

Asset Reconstruction Company Ltd. This being the case, it is

difficult to comprehend how the High Court could have held that

the proceedings before NCLT were without jurisdiction. On this

score, therefore, the High Court judgment has to be set aside.

NCLT proceedings will now continue from the stage at which

they have been left off. Obviously, the company petition

pending before the High Court cannot be proceeded with

further in view of Section 238 of the Code. The writ petitions

that are pending before the High Court have also to be

disposed of in light of the fact that proceedings under the Code

must run their entire course. We, therefore, allow the appeal

and set aside the High Court's judgment [Jaipur Metals and

Electricals Ltd., In re, 2018 SCC OnLine Raj 1472].”

19. Likewise, in Forech (supra), in a situation in which notice had been

issued in a winding up petition and the said petition was ordered to be

transferred to the NCLT, to be treated as a proceeding under the IBC, this

Court clearly held:

“22. This section is of limited application and only bars a

corporate debtor from initiating a petition under Section 10 of

the Code in respect of whom a liquidation order has been

made. From a reading of this section, it does not follow that until 

19

a liquidation order has been made against the corporate debtor,

an insolvency petition may be filed under Section 7 or Section

9 as the case may be, as has been held by the Appellate

Tribunal. Hence, any reference to Section 11 in the context of

the problem before us is wholly irrelevant. However, we decline

to interfere with the ultimate order passed by the Appellate

Tribunal because it is clear that the financial creditor's

application which has been admitted by the Tribunal is clearly

an independent proceeding which must be decided in

accordance with the provisions of the Code.”

20. In Duncans Industries Ltd. v. AJ Agrochem, (2019) 9 SCC 725,

this Court was faced with a situation of conflict between Section 16-G(1)(c)

of the Tea Act, 1953, under which winding up/liquidation proceedings were

to take place (and which could not take place without prior consent of the

Central Government), and a proceeding initiated under Section 9 of the

IBC. After relying upon the judgment of this Court in Innoventive

Industries Ltd. v. ICICI Bank, (2018) 1 SCC 407 and Swiss Ribbons

(supra), this Court held:

“7.4. Section 16-G(1)(c) refers to the proceeding for winding up

of such company or for the appointment of receiver in respect

thereof. Therefore, as such, the proceedings under Section 9

IBC shall not be limited and/or restricted to winding up and/or

appointment of receiver only. The winding up/liquidation of the

company shall be the last resort and only on an eventuality

when the corporate insolvency resolution process fails. As

observed by this Court in Swiss Ribbons (P) Ltd. [Swiss

Ribbons (P) Ltd. v. Union of India, (2019) 4 SCC 17 : AIR 2019

SC 739], referred to hereinabove, the primary focus of the

legislation while enacting IBC is to ensure revival and

continuation of the corporate debtor by protecting the corporate 

20

debtor from its own management and from a corporate debt by

liquidation and such corporate insolvency resolution process is

to be completed in a time-bound manner. Therefore, the entire

“corporate insolvency resolution process” as such cannot be

equated with “winding up proceedings”. Therefore, considering

Section 238 IBC, which is a subsequent Act to the Tea Act,

1953, shall be applicable and the provisions of IBC shall have

an overriding effect over the Tea Act, 1953. Any other view

would frustrate the object and purpose of IBC. If the submission

on behalf of the appellant that before initiation of proceedings

under Section 9 IBC, the consent of the Central Government as

provided under Section 16-G(1)(c) of the Tea Act is to be

obtained, in that case, the main object and purpose of IBC,

namely, to complete the “corporate insolvency resolution

process” in a time-bound manner, shall be frustrated. The sum

and substance of the above discussion would be that the

provisions of IBC would have an overriding effect over the Tea

Act, 1953 and that no prior consent of the Central Government

before initiation of the proceedings under Section 7 or Section

9 IBC would be required and even without such consent of the

Central Government, the insolvency proceedings under

Section 7 or Section 9 IBC initiated by the operational creditor

shall be maintainable.”

21. In Kaledonia Jute and Fibres Pvt. Ltd. v. Axis Nirman and

Industries Ltd., 2020 SCC OnLine SC 943 [“Kaledonia”], this Court

decided as to whether a winding up proceeding in the Company Court could

be transferred despite the fact that the winding up order had been passed

and then been kept in abeyance. This Court, in paragraph 27, held:

“27. Apart from providing for the transfer of certain types of

winding up proceedings by operation of law, Section 434(1)(c)

also gives a choice to the parties to those proceedings to seek

a transfer of such proceedings to the NCLT. This is under the

fifth proviso to Clause (c).”

21

The Court then went on to hold that in a winding up proceeding that has

been admitted, since all creditors would be parties to such proceeding in

rem, a secured creditor being such a party could, therefore, move the

Company Court under the fifth proviso to Section 434(1)(c) of the

Companies Act, 2013 to transfer the aforesaid proceeding to the NCLT to

be tried as a proceeding under Section 7 or Section 9, as the case may be.

22. In Action Ispat (supra), this Court was faced with a proceeding in

which a winding up petition had been admitted by the High Court and then

transferred to the NCLT to be tried as a proceeding under the IBC. After

referring to the judgments in Jaipur Metals (supra), Forech (supra), and

Kaledonia (supra), and after setting out various Sections dealing with

winding up of companies under the Companies Act, 2013, this Court then

held:

“20. What becomes clear upon a reading of the three

judgments of this Court is the following:

(i) So far as transfer of winding up proceedings is

concerned, the Code began tentatively by leaving proceedings

relating to winding up of companies to be transferred to NCLT

at a stage as may be prescribed by the Central Government.

(ii) This was done by the Transfer Rules, 2016 [Companies

(Transfer of Pending Proceedings) Rules, 2016] which came

into force with effect from 15.12.2016. Rules 5 and 6 referred

to three types of proceedings. Only those proceedings which 

22

are at the stage of pre-service of notice of the winding up

petition stand compulsorily transferred to the NCLT.

(iii) The result therefore was that post notice and pre

admission of winding up petitions, parallel proceedings would

continue under both statutes, leading to a most unsatisfactory

state of affairs. This led to the introduction of the 5

th proviso to

section 434(1)(c) which, as has been correctly pointed out

in Kaledonia [Kaledonia Jute & Fibres Pvt. Ltd. v. Axis Nirman

& Industries Ltd., 2020 SCC OnLine SC 943], is not restricted

to any particular stage of a winding up proceeding.

(iv) Therefore, what follows as a matter of law is that even

post admission of a winding up petition, and after the

appointment of a Company Liquidator to take over the assets

of a company sought to be wound up, discretion is vested in the

Company Court to transfer such petition to the NCLT. The

question that arises before us in this case is how is such

discretion to be exercised?”

xxx xxx xxx

“31. Given the aforesaid scheme of winding up under Chapter

XX of the Companies Act, 2013, it is clear that several stages

are contemplated, with the Tribunal retaining the power to

control the proceedings in a winding up petition even after it is

admitted. Thus, in a winding up proceeding where the petition

has not been served in terms of Rule 26 of the Companies

(Court) Rules, 1959 at a pre-admission stage, given the

beneficial result of the application of the Code, such winding up

proceeding is compulsorily transferable to the NCLT to be

resolved under the Code. Even post issue of notice and pre

admission, the same result would ensue. However, post

admission of a winding up petition and after the assets of the

company sought to be wound up become in custodia legis and

are taken over by the Company Liquidator, section 290 of the

Companies Act, 2013 would indicate that the Company

Liquidator may carry on the business of the company, so far as

may be necessary, for the beneficial winding up of the

company, and may even sell the company as a going concern.

So long as no actual sales of the immovable or movable

properties have taken place, nothing irreversible is done which

would warrant a Company Court staying its hands on a transfer 

23

application made to it by a creditor or any party to the

proceedings. It is only where the winding up proceedings have

reached a stage where it would be irreversible, making it

impossible to set the clock back that the Company Court must

proceed with the winding up, instead of transferring the

proceedings to the NCLT to now be decided in accordance with

the provisions of the Code. Whether this stage is reached would

depend upon the facts and circumstances of each case.”

23. A conspectus of the aforesaid authorities would show that a petition

either under Section 7 or Section 9 of the IBC is an independent proceeding

which is unaffected by winding up proceedings that may be filed qua the

same company. Given the object sought to be achieved by the IBC, it is

clear that only where a company in winding up is near corporate death that

no transfer of the winding up proceeding would then take place to the NCLT

to be tried as a proceeding under the IBC. Short of an irresistible conclusion

that corporate death is inevitable, every effort should be made to

resuscitate the corporate debtor in the larger public interest, which includes

not only the workmen of the corporate debtor, but also its creditors and the

goods it produces in the larger interest of the economy of the country. It is,

thus, not possible to accede to the argument on behalf of the Appellant that

given Section 446 of the Companies Act, 1956 / Section 279 of the

Companies Act, 2013, once a winding up petition is admitted, the winding

up petition should trump any subsequent attempt at revival of the company

through a Section 7 or Section 9 petition filed under the IBC. While it is true 

24

that Sections 391 to 393 of the Companies Act, 1956 may, in a given factual

circumstance, be availed of to pull the company out of the red, Section

230(1) of the Companies Act, 2013 is instructive and provides as follows:

“230. Power to compromise or make arrangements with

creditors and members.—(1) Where a compromise or

arrangement is proposed—

(a) between a company and its creditors or any

class of them; or

(b) between a company and its members or any

class of them,

the Tribunal may, on the application of the company or of any

creditor or member of the company, or in the case of a company

which is being wound up, of the liquidator, appointed under this

Act or under the Insolvency and Bankruptcy Code, 2016, as the

case may be, order a meeting of the creditors or class of

creditors, or of the members or class of members, as the case

may be, to be called, held and conducted in such manner as

the Tribunal directs.

Explanation.—For the purposes of this sub-section,

arrangement includes a reorganisation of the company’s share

capital by the consolidation of shares of different classes or by

the division of shares into shares of different classes, or by both

of those methods.

xxx xxx xxx”

What is clear by this Section is that a compromise or arrangement can also

be entered into in an IBC proceeding if liquidation is ordered. However,

what is of importance is that under the Companies Act, it is only winding up

that can be ordered, whereas under the IBC, the primary emphasis is on

revival of the corporate debtor through infusion of a new management.

25

24. On facts also, in the present case, nothing can be said to have

become irretrievable in the sense mentioned in paragraph 31 of Action

Ispat (supra).

25. It is settled law that a secured creditor stands outside the winding up

and can realise its security dehors winding up proceedings. In M.K.

Ranganathan v. Govt. of Madras, (1955) 2 SCR 374, this Court held:

“The position of a secured creditor in the winding up of a

company has been thus stated by Lord Wrenbury in Food

Controller v. Cork [1923 Appeal Cases 647]:

“The phrase ‘outside the winding up’ is an

intelligible phrase if used, as it often is, with

reference to a secured creditor, say a mortgagee.

The mortgagee of a company in liquidation is in a

position to say “the mortgaged property is to the

extent of the mortgage my property. It is immaterial

to me whether my mortgage is in winding up or not.

I remain outside the winding up” and shall enforce

my rights as mortgagee. This is to be contrasted

with the case in which such a creditor prefers to

assert his right, not as a mortgagee, but as a

creditor. He may say ‘I will prove in respect of my

debt’. If so, he comes into the winding up”.

It is also summarised in Palmer’s Company Precedents Vol. II,

page 415:

“Sometimes the mortgagee sells, with or without the

concurrence of the liquidator, in exercise of a power

of sale vested in him by the mortgage. It is not

necessary to obtain liberty to exercise the power of

sale, although orders giving such liberty have

sometimes been made”.

The secured creditor is thus outside the winding up and can

realise his security without the leave of the winding up Court, 

26

though if he files a suit or takes other legal proceedings for the

realisation of his security he is bound under Section 231

(corresponding with Section 171 of the Indian Companies Act)

to obtain the leave of, the winding up Court before he can do

so although such leave would almost automatically be granted.

Section 231 has been read together with Section 228(1) and

the attachment, sequestration, distress or execution referred to

in the latter have reference to proceedings taken through the

Court and if the creditor has resort to those proceedings he

cannot put them in force against the estate or effects of the

Company after the commencement of the winding up without

the leave of the winding up Court. The provisions in Section 317

are also supplementary to the provisions of Section 231 and

emphasise the position of the secured creditor as one outside

the winding up, the secured creditor being, in regard to the

exercise of those rights and privileges, in the same position as

he would be under the Bankruptcy Act.

The corresponding provisions of the Indian Companies Act

have been almost bodily incorporated from those of the English

Companies Act and if there was nothing more, the position of

the secured creditor here also would be the same as that

obtaining in England and he would also be outside the winding

up and a sale by him without the intervention of the Court would

be valid and could not be challenged as void under Section

232(1), Indian Companies Act.”

(at pages 383, 384)

This principle has been followed in Central Bank of India v. Elmot

Engineering Co., (1994) 4 SCC 159 (at paragraph 14), Industrial Credit

and Investment Corpn. of India Ltd. v. Srinivas Agencies, (1996) 4 SCC

165 (at paragraph 2), and Board of Trustees, Port of Mumbai v. Indian

Oil Corpn., (1998) 4 SCC 302 (at paragraph 12).

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26. Indiabulls, a secured creditor of the corporate debtor, viz. SRUIL,

has, in enforcement of its debt by a mortgage, sold the mortgaged property

outside the winding up. The aforesaid sale is the subject matter of

proceedings in the Bombay High Court filed by the provisional liquidator. If

the aforesaid sale is set aside, the asset of SRUIL that has been sold will

come back to the provisional liquidator for the purposes of winding up. If

the sale is upheld, equally, there are other assets of SRUIL which continue

to be in the hands of the provisional liquidator for the purposes of winding

up. We may also add that on the facts of this case, though no application

for transfer of the winding up proceeding pending in the Bombay High Court

has been filed, the Bombay High Court has itself, by the orders dated

28.11.2019 and 23.01.2020, directed the provisional liquidator to hand over

the records and assets of SRUIL to the IRP in the Section 7 proceeding

that is pending before the NCLT. No doubt, this has not yet been done as

the IRP has not yet been able to pay the requisite amount to the provisional

liquidator for his expenses.

27. Dr. Singhvi and Shri Ranjit Kumar have vehemently argued that SREI

has suppressed the winding up proceeding in its application under Section

7 of the IBC before the NCLT and has resorted to Section 7 only as a

subterfuge to avoid moving a transfer application before the High Court in 

28

the pending winding up proceeding. These arguments do not avail the

Appellant for the simple reason that Section 7 is an independent

proceeding, as has been held in catena of judgments of this Court, which

has to be tried on its own merits. Any “suppression” of the winding up

proceeding would, therefore, not be of any effect in deciding a Section 7

petition on the basis of the provisions contained in the IBC. Equally, it

cannot be said that any subterfuge has been availed of for the same reason

that Section 7 is an independent proceeding that stands by itself. As has

been correctly pointed out by Shri Sinha, a discretionary jurisdiction under

the fifth proviso to Section 434(1)(c) of the Companies Act, 2013 cannot

prevail over the undoubted jurisdiction of the NCLT under the IBC once the

parameters of Section 7 and other provisions of the IBC have been met.

For all these reasons, therefore, the appeal is dismissed and the interim

order that has been passed by this Court on 18.12.2020 shall stand

immediately vacated.

………………….......................J.

 [ ROHINTON FALI NARIMAN ]

………………….......................J.

 [ B.R. GAVAI ]

New Delhi;

March 01, 2021.