TMI Blog1972 (12) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd., Bangalore. The simple but subtle question that is raised for decision in this revision petition is whether under section 446 of the Companies Act, 1956 (1 of 1956) (hereinafter referred to as "the Act"), leave of the winding-up court is a condition precedent to the institution of any suit or legal proceedings against a company ordered to be wound up and whether failure to obtain such leave is fatal to the proceedings. The relevant facts may be briefly stated. The petitioner filed the suit against Reliable Corporation Private Ltd., Bangalore, for a declaration of her title and for possession of the plaint schedule properties. The Reliable Corporation was wound up by the High Court of Mysore on July 10, 1970, and the official liquid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ination is as to what shall be the consequence of non-compliance with the requirement of section 446 of the Act. It is therefore necessary to refer to section 446 of the Act. The relevant portion of the section reads as follows : Section 446 (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". A close and careful reading of the section will make it clear that leave of the court is not a condition precedent for the commencement of any suit or o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consent". Therefore, the observance of the formality in question is not a condition precedent to the institution of the proceedings. What then is the consequence of disregarding this procedural provision? The section does not expressly declare what shall be the consequence of non-compliance with the statutory injunction. Whenever the legislature intended to lay down an absolute prohibition, the legislature has expressly declared its intention in unambiguous terms. The provisions of section 537 of the Act may now profitably be compared with this section. Section 537 of the Act reads as follows: "537. Avoidance of certain attachments, executions, etc., in winding up by or subject to supervision of court. (1) Where any company is bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sary, by taking the proceeding afresh after leave has been granted". The learned judge further held that the bar is not against the party instituting the legal proceedings but against the court commencing the adjudication thereof by the issue of process. The Calcutta High Court in Suresh Chandra Khasnabish v. Bank of Calcutta Ltd. [1951] 21 Comp. Cas.110, 115 (Cal ) had occasion to consider the scope of section 171 of the Indian Companies Act, 1913, which is in terms analogous to section 446 of the Companies Act, 1956. After examining in some detail the decisions of the English courts, the learned judges concluded as follows : "The company law is not a part of the indigenous law of India. It has come from England. It is, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceeding instituted without the leave of the court would, however, be ineffective until leave was obtained. Therefore, both on principle, and authority, I have no hesitation in holding that the order of the learned munsiff dismissing the application filed by the petitioner as not maintainable is clearly without jurisdiction. He should have directed the petitioner to obtain the leave of the winding-up court keeping the application pending. The civil revision petition is, therefore, allowed. The lower court is directed to restore the Interlocutory Application No. 1169/70 to its file and proceed with the application after the leave of the winding-up court is obtained by the petitioner under section 446 of the Act. Since no one appeared to o ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
