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The Meaning Of The Expression "Legal Proceedings" And Its Judicial Interpretation

Dormaan Dalal
17 Nov 2020 8:30 AM GMT
The Meaning Of The Expression Legal Proceedings And Its Judicial Interpretation
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The expression "legal proceeding/s" finds place in several Union and State statutes in India. The expression is most commonly used in negatively worded sections that bar the filing of "legal proceedings" against certain official or judicial functionaries. Examples of such sections are For instance, sections such as Section 98 of the Consumer Protection Act, 2019[1] Section 157 of the Central Goods and Services Tax Act, 2017,[2] Section 42B of the Arbitration and Conciliation Act, 1996,[3] Section 69 of the Narcotic Drugs and Psychotropic Substances Act, 1985 etc. prohibit a suit, prosecution or "other legal proceedings" from being filed against the Government or its officials, Judicial Officers, Arbitrators etc. The said expression is also commonly used in "Repeal and Saving" Clauses of new statutes that save pending proceedings that may have been initiated under a previous statute. Some examples of such clauses are Section 6 of the General Clauses Act[4] or Section 126 (6) of the Multi-State Cooperative Societies Act, 2002.[5] But what does this expression mean and what is its scope? Does it apply to purely judicial proceedings in a court of law or can its scope expand beyond to other proceedings that are not court proceedings but have trappings of court proceedings? Is the meaning of the expression standardized or is it contextualized based on the statute in which it is found? The purpose of column is to examine the meaning of this expression and analyze its nature and scope through certain judicial decisions that have been delivered on this aspect.

  1. MEANING AND SCOPE OF "LEGAL PROCEEDINGS"
  1. Black's Law Dictionary[6] defines a "Legal Proceeding" as "any proceedings in court of justice, whether law or equity, interlocutory or final, by which property of debtor is seized and diverted from his general creditors." The definition goes on to state that "this term includes all proceedings authorized or sanctioned by law and brought or instituted in a court of justice or legal tribunal, for the acquiring of a right or the enforcement of a remedy."
    [7]
  1. As per P. Ramanatha Aiyar, Concise Law Dictionary[8],

"Legal proceeding means, -

  • any proceedings or inquiry in which evidence is or may be given.
  • an arbitration; and
  • any investigation or inquiry under the CrPC, 1973 (2 of 1974), or under any other law for the time being in force for the collection of evidence, conducted by a police officer or by any other person (not being a magistrate) authorised in this behalf by a magistrate or by any law for the time being in force. [Banker's Books Evidence Act (18 of 1891), S. 2(4)]

'LEGAL PROCEEDING' means any proceeding under any law before any Court, tribunal, officer, authority, arbitrator, stated on a plaint, petition of appeal, application, reference, or otherwise. [Rajasthan Relief Undertakings (Special Provision) Act (9 of 1961), S. 4 (1)(b) Expln.]

Legal proceeding means a proceeding regulated or prescribed by law in which a judicial decision may or must be given.

Legal proceeding mean any proceedings authorised by law for redressal of a legal grievance of for violation of a legal right."

  1. One of the earliest decisions that dealt with the expression was delivered by the erstwhile Federal Court of India in The Governor-General in Council v. Shiromani Sugar Mills Ltd. (In Liquidation)[9] (hereinafter referred to as "Shiromani Sugar Mills"). The issue before the Federal Court was whether the leave of the Company Court/Winding-up Court was necessary to be obtained by the Income- Tax officer under Section 171
    [10]
    of the erstwhile Companies Act, 1913 for initiating recovery proceedings under Section 46 (2) of the Indian Income Tax Act 1922.[11] As per Section 171, "no suit or other legal proceeding" could be proceeded with or commenced against the company except by the leave of the Court when a winding up order had been made or a provisional liquidator had been appointed.[12] According to the Federal Court, the term " other legal proceedings" could not be confined to "original proceedings in a Court of first instance, analogous to a suit initiated by means of a petition similar to a plaint."
    [13]
    The Court stated that Section 171 had to be construed with reference to other sections of the Act.[14] The Court further opined that "no narrow construction" should be placed upon the words "or other legal proceedings" and the said words were held to cover distress and execution proceedings in ordinary courts.[15] One of the questions before the Federal Court was whether recovery proceedings under Section 46 of the Indian Income Tax Act, 1922 were covered by the phrase "other legal proceeding."
    [16]
    In the Court's opinion it saw no reason why "in British India no " legal proceeding" can be taken otherwise than in an ordinary Court of law, or why a proceeding taken elsewhere than in an ordinary Court of law, provided it be taken in a manner prescribed by law and in pursuance of law or legal enactment, cannot properly be described as a "legal proceeding." " The Court eventually held that proceedings under Section 46 (2) of the aforesaid Act were "other legal proceedings."
  1. Shiromani Sugar Mills was subsequently relied on and followed in a series of decisions which are briefly enumerated below:
  • In Binod Mills Co. Ltd. Ujjain ( M.P.) v. Suresh Chandra Mahaveer Prasad Mantri, Bombay[17](hereinafter referred to as "Binod Mills"), the Supreme Court was dealing with the interpretation of Section 5 of the M.P. Sahayata Upkram (Vishesh Upbandh) Adhiniyam, 1978 as per which "no suit or other legal proceeding" could be instituted, commenced or proceeded against an industrial undertaking during the period in which it remained "a relief undertaking under any law, usage, custom, contract, instrument, decree, order, award, settlement" or as per any other provision.[18] The question before the Supreme Court was whether execution proceedings/petitions would fall within "other legal proceedings" under Section 5 of the aforesaid Act and once the decree was passed by the Bombay High Court and transferred to an executing court in Madhya Pradesh (the District Judge Ujjain), could the plea of suspension of decree under Section 5 of the Act be entertained by the executing Court?[19] The Supreme Court held that execution proceedings would fall within the purview of "other legal proceedings", as not doing so "would render Section 5 of the Act nugatory" and destroy the benefits conferred.[20]
  • Shiromani Sugar Mills was also followed in a decision of the Bombay High Court in Amravati Growers Co-operative Spinning Mills Ltd. v. Sheshrao K. Ingale and others[21] in which the court held that the expression "other legal proceedings" under Section 107 of the Maharashtra Cooperative Societies Act, 1960[22] would include proceedings initiated under Section 28 of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971.[23]
  • In a recent 2016 judgement delivered by the Supreme Court in Ludocivo Sagrado Goveia v. Cirila Rosa Maria Pinto and others,[24] the Court relied on both Shiromani Sugar Mills and Binod Mills[25] to hold that the expression "any legal proceeding" pending in any court found in the Repeal and Saving Clause in Section 126 (6) of the Multi-State Cooperative Societies Act, 2002[26] would include pending execution proceedings that had been initiated under Section 85 (c) of the repealed Multi-State Cooperative Societies Act, 1984.[27]
  1. Shiromani Sugar Mills was however distinguished by the Supreme Court in S.V. Kandekar v. V.M. Deshpande and another[28] (hereinafter referred to as "Kandekar"). In this case, the question that required consideration was whether it was necessary for Income Tax Officer to obtain leave of the liquidation court under Section 446 of the Companies Act, 1956[29] in order to re-assess a company for escaped income in respect of past years.
    [30]
    The Court distinguished Shiromani Sugar Mills on the ground that the proceedings initiated by the Income Tax Department were recovery proceedings after the company had been wound up, whereas in the present case before it, the Court was dealing with assessment proceedings.[31] According to the Supreme Court, in Shiromani Sugar Mills, it was held that the expression "other legal proceedings" covered distress and execution proceedings but "the expression was not held to cover assessment proceedings" under the Income Tax Act, 1961
    [32]
    and therefore according to the Supreme Court, Shiromani Sugar Mills would not apply.[33] The Supreme Court eventually held that the Income Tax Officer does not "perform the functions of a Court as contemplated by Section 446 (2) of the Companies Act[34] and since the Income Tax Act is "a complete code" assessment proceedings under Section 446 of the Companies Act could not be held to be "other legal proceedings" and therefore, the leave of the liquidating court was not required.
    [35]
  1. Dealing with the same provision of the previous Companies Act, 1956, the Bombay High Court in Ion Exchange Finance Ltd. and Bombay Leasing Co. Pvt. Ltd.[36] had to decide whether the expression "suit or other legal proceedings in Section 446 (1) and "suit or proceedings" in Section 442 of the Companies Act would include criminal complaints filed under Section 138 of the Negotiable Instruments Act.
    [37]
    It was contended by the Petitioners in the said case that the expression "legal proceedings" or "other legal proceedings" had to be read ejusdem generis with the expression "suit" which meant that the expression would apply only to civil proceedings and not criminal proceedings.[38] The High Court was of the view that wherever Parliament choose to confer power on the Company Court to try criminal offences, it had done so,
    [39]
    like it did in Section 457 (1) (a) of the Companies Act which used the expression "suit", "prosecution" or other legal proceedings".[40] Therefore in this context when the word "prosecution" is used, the expression "other legal proceedings" or "legal proceedings" would include "criminal proceedings".[41] However, when it came to Section 446, the Court held that the expression "legal proceedings" in the said section meant "only those proceedings which have a bearing on the assets of a Company in winding up or have some relation with the issue in winding up."
    [42]
    It did not mean "each and every civil proceedings" having no bearing on winding up proceedings or "criminal offence where the Company was liable to be prosecuted for".[43] The Court eventually held that it was "impossible to contend that the Company Court in winding up would have jurisdiction to stay the criminal prosecution or that permission of the Company Court is required to prosecute the Company for offences committed before a provisional Liquidator is appointed or an order of winding up is made."
    [44]
  1. The principle of ejusdem generis was also applied by the Hon'ble Supreme Court in Assistant Collector of Central Excise, Guntur v. Ramdev Tobacco Company[45] (hereinafter referred to as "Ramdev Tobacco") while interpreting the expression "other legal proceedings" in Section 40 (2) of the Central Excises and Salt Act, as it stood prior to its amendment in 1973. As per Section 40 (2),

"No suit, prosecution or other legal proceeding shall be instituted for anything done or ordered to be done under the Act after the expiration of six months from the accrual of the cause of action or from the date of the act or order complained of."

The issue before the Supreme Court was whether the issuance of a show cause notice and the initiation of consequential adjudication proceedings could be described as "other legal proceedings" within the meaning of sub-section 40(2) of the said Act.[46] By applying the principal of ejusdem generis, the Court held that "there can be no doubt that 'suit' or 'prosecution' are those judicial or legal proceedings which are lodged in a court of law and not before any executive authority," even if it were a statutory one.[47] The Supreme Court then stated that "the wide expression 'other legal proceeding' must be read ejusdem generis with the preceding words 'suit' and 'prosecution' as they constitute a genus." The Court ultimately held that "penalty and adjudication proceedings" did not fall within the expression "other legal proceedings."[48] Incidentally, Shiromani Sugar Mills has not been referred to in Ramdev Tobacco.

  1. The aforesaid decision along with Binod Mills and Kandekar was referred to and relied upon by a later Bench of the Supreme Court in General Officer Commanding, Rashtriya Rifles v. Central Bureau of Investigation and another[49] (hereinafter referred to as the "CBI case") in which the Court was dealing with the interpretation of Section 6 of the Armed Forces (Special Powers) Act, 1958[50] and the
    pari materia[51]
    provision in Section 7 of the Armed Forces (Jammu and Kashmir) Special Powers Act, 1990[52] that prohibited institution of any "prosecution, suit or other legal proceeding" without previous sanction of the Central Government. After explaining the difference between "prosecution" and "civil suit",[53] the Supreme Court examined the expression "legal proceeding." The relevant portion of the judgment reads thus,

"The phrase 'legal proceeding' connotes a term which means the proceedings in a court of justice to get a remedy which the law permits to the person aggrieved. It includes any formal steps or measures employed therein. It is not synonymous with the 'judicial proceedings'. Every judicial proceeding is a legal proceeding but not vice-versa, for the reason that there may be a 'legal proceeding' which may not be judicial at all, e.g. statutory remedies like assessment under Income Tax Act, Sales Tax Act, arbitration proceedings etc. So, the ambit of expression 'legal proceedings' is much wider than 'judicial proceedings'. The expression 'legal proceeding' is to be construed in its ordinary meaning but it is quite distinguishable from the departmental and administrative proceedings, e.g. proceedings for registration of trade marks etc. The terms used in Section 7 i.e. suit, prosecution and legal proceedings are not inter-changeable or convey the same meaning. The phrase 'legal proceedings' is to be understood in the context of the statutory provision applicable in a particular case, and considering the preceding words used therein."

The Court then referred to Ramdev Tobacco and another judgment delivered by it in Maharashtra Tubes Ltd. v. State Industrial & Investment Corpn. of Maharashtra Ltd.[54] and further held that "Legal proceedings" do not include administrative proceedings, departmental proceedings or proceedings before a statutory authority.

  1. This has been further reiterated in a judgment delivered by the Bombay High Court in 2019 in
    Prabhakar Ramchandra Desai and others v. State of Maharashtra and Another
    [56] (hereinafter referred to as "Prabhakar Ramchandra Desai"). The issue before the High Court was whether Departmental Proceedings are "other legal proceedings" [see Section 3(p)[57]] under Section 14A of the Scheduled Caste and Scheduled Tribe (Prevention of Atrocities) Act, 1980.[58] The Court in this case held that department proceedings are not "other legal proceedings."[59] The Court referred to Ramdev Tobacco and the CBI case and set out the following precedential aspects in relation to the expression which are as under:

"(1) If particular words of a certain genus precede a wide expression, that wide expression must be limited to things ejusdem generis; that is, it takes colour from the preceding words. It must receive a limited meaning.

(2) "Suit" or "prosecution" are those judicial or legal proceedings before a Court of law-but not before any executive authority, even if a statutory one.

(3) The phrase "legal proceedings" is to be understood in the context of the statutory provision applicable in a particular case, and by considering the preceding words if any.

(4) A departmental proceeding stands outside the scope of "legal proceedings."

(5) In the departmental proceedings, the "consequential adjudication proceedings by the appellate authority" would not fall within the expression "other legal proceedings".

(6) The "legal proceedings" are the proceedings in a court of justice to get a remedy which the law permits to the person aggrieved.

(7) And the legal proceedings quite differ from the departmental and administrative proceedings."

A reading of the judgments delivered by the Supreme Court and Bombay High Court show that the expression "legal proceedings" cannot be assigned a fixed meaning and it varies depending on the context and manner in which it is used in a provision. The principles of statutory interpretation have to be used in order to interpret the expression in the absence of a particular statute defining it. However, the Supreme Court and High Court judgments hold that "legal proceedings" are proceedings in a court of law and cannot be extended to departmental and administrative proceedings. The judgment of the Bombay High Court in Prabhakar Ramchandra Desai has helped simplify and consolidate the meaning, nature and scope of the expression. This would in turn certainly be of great assistance to both judges and advocates in dealing with this innocuous, yet complicated expression.

Views are personal.

(The author is a practicing Advocate at the Bombay High Court and the National Company Law Tribunal.)

Reference: -

[1] Sec 98. Protection of action taken in good faith. No suit, prosecution or other legal proceeding shall lie against the Presidents and members of the District Commission, the State Commission and the National Commission, the Chief Commissioner, the Commissioner, any officer or employee and other person performing any duty under this Act, for any act which is in good faith done or intended to be done in pursuance of this Act or under any rule or order made thereunder.

[2] Sec 157. Protection of action taken under this Act (1) No suit, prosecution or other legal proceedings shall lie against the President, State President, Members, officers or other employees of the Appellate Tribunal or any other person authorised by the said Appellate Tribunal for anything which is in good faith done or intended to be done under this Act or the rules made thereunder.

(2) No suit, prosecution or other legal proceedings shall lie against any officer appointed or authorised under this Act for anything which is done or intended to be done in good faith under this Act or the rules made thereunder.

3 Sec 42B Protection of action taken in good faith.- No suit or other legal proceedings shall lie against the arbitrator for anything which is in good faith done or intended to be done under this Act or the rules or regulations made thereunder."

[4] Section 6. Effect of repeal.—Where this Act, or any Central Act or Regulation made after the commencement of this Act, repeals any enactment hitherto made or hereafter to be made, then, unless a different intention appears, the repeal shall not—

(e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid; and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed as if the repealing Act or Regulation had not been passed

[5] Section 126. Repeal and Savings-

(6) Save as otherwise provided in this Act, any legal proceeding pending in any court or before the Central Registrar or any other authority at the commencement of this Act shall be continued to be in that

court or before the Central Registrar or that authority as if this Act had not been passed.

[6] Black's Law Dictionary, Fourth Edition, p. 1041

[7] Ibid

[8] P. Ramanatha Aiyar Concise Law Dictionary, Third Edition Reprint 2006 Wadhwa Nagpur, p. 677

[9] (1946) 8 FCR 40: 1946 SCC OnLine FC 5

[10] Section 171 Suits stayed on winding-up order: When a winding up order has been made or a provisional liquidator has been appointed no suit or other legal proceeding shall be proceeded with or commenced against the company except by leave of the Court, and subject to such terms as the Court may impose.

[11] 46. Mode and time of recovery.—

(2) The Income-tax Officer may forward to the Collector a certificate under his signature specifying the amount of arrears due from an assessee, and the Collector, on receipt of such certificate, shall proceed to recover from such assessee the amount specified therein as if it were an arrear of land revenue:

Provided that without prejudice to the powers conferred by this sub-section, the Collector shall, for the purpose of recovering the amount specified in the certificate, have also all the powers which—

(a) a Collector has under the Revenue Recovery Act, 1890 (I of 1890),

(b) a Civil Court has under the Code of Civil Procedure, 1908 (V of 1908), for the purpose of the recovery of an amount due under a decree.

[12] The section corresponds to the present-day Section 279 of the Companies Act, 2013.

[13] Supra note 9 p. 55

[14] Ibid

[15] Ibid p. 56

[16] Ibid

[17] (1987) 3 SCC 99. Referred to at pp. 109-111, para 18 to 20

[18] Section 5. Suspension of suits or other legal proceedings against relief undertakings. As from the date of specified in the notification under sub-section (1) of section 3 no suit or other legal proceedings shall be instituted or commenced or if pending, shall be proceeded with against the industrial undertaking during the period in which it remains a relief undertaking any law, 4 usage, custom, contract, instrument, decree, order, award, settlement or other provisions whatsoever, notwithstanding.

[19] Supra note 17 p. 107, 108 and 111, para 14 and 21

[20] Ibid

[21] 1992 SCC OnLine Bom 502 para 3

[22] Section 107. Bar of Suit in winding up and dissolution matters.

Save as expressly provided in this Act, no Civil Court shall take cognizance of any matter connected with the winding up or dissolution of a society, under this Act; and when a winding up order has been made no suit or other legal proceedings shall lie or be proceeded with against the society or the Liquidator, except by leave of the Registrar and subject to such terms as he may impose :

Provided that, where the winding up order is cancelled the provisions of this section shall cease to operate so far as the liability of the society and of the members thereof to be sued is concerned but they shall continue to apply to the person who acted as Liquidator.

[23] Section 28. Procedure for dealing with complaints relating to unfair labour practices

[24] (2016) 9 SCC 615

[25] Ibid pp. 623, 624 para 14 to 19

[26] (6) Save as otherwise provided in this Act, any legal proceeding pending in any court or before the Central Registrar or any other authority at the commencement of this Act shall be continued to be in that court or before the Central Registrar or that authority as if this Act had not been passed.

[27] 85.Execution of decisions, etc

Every decision of order made under section 30, section 31, section 73, section 76, section 90, section 92 or section 93 shall, if not carried out,-

( c ) be executed by the Central Registrar or any person authorised by him in writing in this behalf, by attachment and sale or sale without attachment of any property of the person or a multi-State Co-operative society against whom the decision or order has been made.

[28] (1972) 1 SCC 438.

[29] Section 446. Suits stayed on winding up order (1) When a winding up order has been made or the Official Liquidator has been appointed as provisional liquidator, no suit or other legal proceeding shall be commenced, or if pending at the date of the winding up order, shall be proceeded with, against the company, except by leave of the Court and subject to such terms as the Court may impose.

(2) The Court which is winding up the company shall, notwithstanding anything contained in any other law for the time being in force, have jurisdiction to entertain, or dispose of-

(a) any suit or proceeding by or against the company;

(b) any claim made by or against the company (including claims by or against any of its branches in India);

(c) any application made under section 391 by or in respect of the company;

(d) any question of priorities or any other question whatsoever, whether of law or fact, which may relate to or arise in course of the winding up of the company;

whether such suit or proceeding has been instituted, or is instituted, or such claim or question has arisen or arises or such application has been made or is made before or after the order for the winding up of the company, or before or after the commencement of the Companies (Amendment) Act, 1960.

(3) Any suit or proceeding by or against the company which is pending in any Court other than that in which the winding up of the company is proceeding may, notwithstanding anything contained in any other law for the time being in force, be transferred to and disposed of by that Court.

(4) Nothing in sub-section (1) or sub-section (3) shall apply to any proceeding pending in appeal before the Supreme Court or a High Court.

[30] Supra note 28 p. 441 para 3

[31] Ibid p. 443 para 8 and p. 446 para 10

[32] Ibid pp. 443-444 para 8

[33] Ibid p. 448 para 13

[34] Supra note 29

[35] Supra note 28 p. 449 para 17

[36] 1998 SCC OnLine Bom 689

[37] Ibid para 3

[38] Ibid para 5

[39] Ibid para 7

[40] Section 457. Powers of liquidator

(1) The liquidator in a winding up by the Court shall have power, with the sanction of the Court,-

(a) to institute or defend any suit, prosecution, or other legal proceeding, civil or criminal, in the name and on behalf of the company;

[41] Supra note 36 para 7

[42] Ibid para 22

[43] Ibid

[44] Ibid para 24

[45] (1991) 2 SCC 119

[46] Ibid p. 123 para 4

[47] Ibid p. 124 para 6

[48] Ibid p. 126 para 8

[49] (2012) 6 SCC 228

[50] Section 6. Protection to persons acting under Act.―No prosecution, suit or other legal proceeding shall be instituted, except with the previous sanction of the Central Government, against any person in respect of anything done or purported to be done in exercise of the powers conferred by this Act.

[51] Except for the use of the word "good faith" in the marginal note to Section 7 of the Jammu and Kashmir Act, the provisions are identical.

[52] Section 7. Protection of persons acting in good faith under this Act.—No prosecution, suit or other legal proceeding shall be instituted, except with the previous sanction of the Central Government, against any person in respect of anything done or purported to be done in exercise of the powers conferred by this Act.

[53] Supra note 49 p. 243 para 28

[54] (1993) 2 SCC 144

[55] Supra note 49 p. 244 para 30 to 32

[56] 2019 SCC OnLine Bom 1081

[57] Section 3. Punishments for offences atrocities.—(1) Whoever, not being a member of a Scheduled Caste or a Scheduled Tribe,—

(p) institutes false, malicious or vexatious suit or criminal or other legal proceedings against a member of a Scheduled Caste or a Scheduled Tribe;

[58] 14A. Appeals.—(1) Notwithstanding anything contained in the Code of Criminal Procedure,1973 (2 of 1974), an appeal shall lie, from any judgment, sentence or order, not being an interlocutory order, of a Special Court or an Exclusive Special Court, to the High Court both on facts and on law.

(2) Notwithstanding anything contained in sub-section (3) of section 378 of the Code of Criminal Procedure, 1973 (2 of 1974), an appeal shall lie to the High Court against an order of the Special Court or the Exclusive Special Court granting or refusing bail.

(3) Notwithstanding anything contained in any other law for the time being in force, every appeal under this section shall be preferred within a period of ninety days from the date of the judgment, sentence or order appealed from: Provided that the High Court may entertain an appeal after the expiry of the said period of ninety days if it is satisfied that the appellant had sufficient cause for not preferring the appeal within the period of ninety days: Provided further that no appeal shall be entertained after the expiry of the period of one hundred and eighty days.

(4) Every appeal preferred under sub-section (1) shall, as far as possible, be disposed of within a period of three months from the date of admission of the appeal.

[59] Supra note 56 para 84


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