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1969 (9) TMI 68 - SC - Companies LawWhether the plaintiff (bank) is not entitled to file this suit as against the defendant No. 1 (the company) without obtaining the leave of the company judge as alleged ? If so, its effect ? Whether the court has no jurisdiction to decide on the merits of the plaintiff's claim in view of the facts as alleged in para. 12(A) of the written statement ? If so, its effect ? Whether the suit against defendant No. 2 (Ranjit Singh) is not maintainable as pleaded under paras. 7,13 and 14 of the written statement ? Held that:- Unable to agree with the High Court that the suit filed was premature. The bank was, under the terms of the bond executed by Ranjit Singh, entitled to claim at any time the money due from the company as well as Ranjit Singh under the promissory note and the bond. The suit could not, therefore, be said to be premature. The High Court, instead of dismissing the suit, should have stayed it till "the ultimate balance" due to the bank from the company was determined. We deem it necessary to observe that a binding obligation created under a composition under section 391 of the Companies Act, 1956, between the company and its creditors, does not affect the liability of the surety unless the contract of suretyship otherwise provides. The High Court, in our judgment, should have stayed the suit and after "the ultimate balance" due by the company was determined, the court should have proceeded to decree the claim according to the provisions of clause 4 of the bond. We accordingly modify the decree passed by the trial court. Liability of Ranjit Singh being only for payment of "the ultimate balance" which remains due on the cash credit account with the bank in favour of the company, the court will, when such ultimate balance is determined, proceed to pass a decree in favour of the bank.
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