TMI Blog1973 (8) TMI 107X X X X Extracts X X X X X X X X Extracts X X X X ..... d that no leave of the court was obtained prior to the filing of the suit against the defendants. In the replication, the plaintiff submitted that no prior sanction was required for the institution of the suit by the plaintiff and went on to say that if any sanction is required the same can be granted even after the institution of the suit. On the pleadings of the parties, the following issue was framed on August 27, 1971 : "1. Whether this court has territorial jurisdiction to entertain and try the suit ?" On February 21, 1972, the following further preliminary issues were framed: 2. Whether the suit on behalf of the plaintiff, as framed, is competent? 3. Whether leave of the appropriate court was necessary before the institution of the present suit. If so, what is its effect on the present suit ? 4. If the plaintiffs have obtained or are granted sanction, from what date will the suit be deemed to have been instituted ? 5. Relief." By this order I propose to dispose of all the five issues. Issues 1, 3 and 4: These three issues can be decided together conveniently. The principal question as crystallized in these issues is : whether this court has territorial j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the hands of the liquidator whatever of his powers it thinks fit, and may exclude from his powers whatever matters it thinks ought to be reserved to the court. Section 523 reads as under : "A petition for the continuance of a voluntary winding-up subject to the supervision of the court shall, for the purpose of giving jurisdiction to the court over suits and legal proceedings, be deemed to be a petition for winding up by the court." What section 523 says is that for the purpose of determining jurisdiction of the court over suits and legal proceedings a petition for the continuance of a voluntary winding-up subject to the supervision of the court shall be equated to a petition for winding up by the court. The effect of the section is that the court to which application for a supervision order is made is given the same jurisdiction as regards suits and other legal proceedings as it has under section 446. This is the meaning of the word "deemed" as used in that section. Section 523 imports a fiction. It is a limited fiction. It is limited "for the purpose of giving jurisdiction to the court over suits and legal proceedings". In order to find out what courts are competent to e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be done except by leave of the court and subject to such terms as the court may impose. In my opinion section 446(1) has no application to the facts of the present case as the present suit is not a suit against the company in winding-up. In fact it is a suit by the company which is in voluntary winding-up subject to the supervision of the court. Sub-section (2) of section 446 clearly provides that 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 any suit or proceeding by or against the company. In the present case we are only concerned with sub-section (2)( a ) of section 446. That the court which is winding-up the company has jurisdiction to entertain every type of proceedings detailed in paragraphs ( a ) to ( d ), is not open to doubt. The only type of proceeding with which we are concerned is the suit by a company which is under voluntary winding-up subject to supervision of the court. A suit by the company under section 446(2) can be instituted in the court in which the winding-up proceedings are pending. In other words, the legislature has prescribed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sub-section (1) applies. Section 526(1) provides that the liquidator in the case of a company which is under winding-up subject to the supervision of the court may, subject to any restrictions imposed by the court, exercise all his powers, without the sanction or intervention of the court in the same manner as if the company were being wound up altogether voluntarily. This means that the liquidator has not to obtain the sanction of the court for the institution of the suits by him by or on behalf of the company. The only limitation on his powers may be such restrictions as are imposed by the court. Bat where restrictions are not imposed as in this case the liquidator will exercise the same powers as in a voluntary winding-up. A liquidator appointed by the court in winding-up subject to the supervision of the court shall have the same powers and be subject to the same obligations and in all respects stand in the same position as if he had been duly appointed in accordance with the provisions with respect to the appointment of liquidator in a voluntary winding-up: section 525. One advantage of having a supervision order is that the liquidator is allowed to occupy the same position an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill, hundi or note had been drawn, accepted, made or endorsed by or on behalf of the company in the course of its business ; ( iv )to take out, in his official name, letters of administration to any deceased contributory, and to do in his official name any other act necessary for obtaining payment of any money due from a contributory or his estate which cannot be conveniently done in the name of the company, and in all such cases, the money due shall, for the purpose of enabling the liquidator to take out the letters of administration or recover the money, be deemed to be due to the liquidator himself : Provided that nothing herein empowered shall be deemed to affect the rights, duties and privileges of any Administrator-General ; ( v )to appoint an agent to do any business which the liquidator is unable to do himself. (3) The exercise by the liquidator in a winding-up by the court of the powers conferred by this section shall be subject to the control of the court; and any creditor or contributory may apply to the court with respect to the exercise or proposed exercise of any of the powers conferred by this section". The defendant's counsel laid great stress on the words ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a special resolution of the company. The defendant has not taken any objection that the special resolution of the company was not passed. In fact his objection is confined only to two points, viz., that this court has no jurisdiction and sanction has not been obtained and this is why the question of special resolution, therefore, was never put in issue. It appears from the structure and scheme of the Companies Act that the legislature has approximated the winding-up subject to supervision of court to voluntary winding-up. Of course, there are important differences between the two. Sections 522 to 527 deal specifically with the cases of winding-up subject to the supervision of the court though Chapter V applies to every mode of the winding-up including winding-up subject to supervision of the court. The defendant's counsel contends that sanction of the court for winding-up the company is essential for the institution of the suit by the liquidator in the name of the company which is being wound up subject to supervision of the court. This argument is based on a confusion of thought. In winding-up by the court all proceedings are taken under the orders and directions of the cour ..... X X X X Extracts X X X X X X X X Extracts X X X X
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