TMI Blog1976 (4) TMI 153X X X X Extracts X X X X X X X X Extracts X X X X ..... uit for realisation of the money, being Title Suit No. 320 of 1975, in the court of the subordinate judge at Patna. In view of that the company has come up with the present application. In this application it has been stated, and this was stated earlier too, that the account of the dues submitted by the bank is not correct and that the bank is not entitled to charge compound interest. Further, it has been stated that this being a disputed matter it should be gone into in a regular civil suit. Then it is said that the bank has already filed a suit and the matter relating to the correctness of the account has become sub judice on that account. In view of these reasons a prayer has been made that the petition for winding up be dismissed. At the hearing, I may add, the counsel for the company prayed that, if not dismissed, the hearing may be adjourned until the decision of the suit aforesaid. The point for decision thus is whether the institution of a suit by a creditor in the civil court for the realisation of the debt is or ought to act as a bar to the continuance of a winding-up proceeding. The point is one of first impression and counsel for the parties have failed in spite o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may stay or restrain the proceedings accordingly, on such terms as it thinks fit". And section 446 lays down : "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. (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 applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, provides the court with power to stay or restrain proceedings against a company during the period of presentation of the petition for winding up and before the passing of a winding-up order. And then comes section 443. It will be important to bear in mind that the wordings of section 443 begin with "on hearing a winding-up petition..". The order under section 443, therefore, in my view, is to be the order which has to be passed on the hearing of the winding-up petition itself. It may either result in dismissal of an order for winding up or adjournment of the hearing or any other interim order deemed fit by the court. The rules relating to the procedure of the hearing of a petition for winding up are to be found in Part III of the Companies Court Rules, 1959. The application has thus to be heard on its merits and then the court is entitled to pass any of the orders under section 443. What is important to be noticed next is that the legislature has provided for the situation where there is a suit pending before a winding-up order has been passed or even thereafter, as will appear from sections 442 and 446. The provision of section 442 shows that where the suit or proceeding i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... point at issue was whether the court should order the winding up of the company which had not yet commenced its business, Lord Justice Cairns was invited to adjourn the hearing of the petition and he observed as follows: "I am averse to adjourning or suspending the petition, for this reason, that I think it is always a very inconvenient thing for a company to have a pending petition for a winding-up order hanging over their heads. I think the court should, as far as possible, either make an order upon the petition for the winding up of the company, if it is a fit case, or, if not, dismiss the petition". His Lordship further observed : "....because it is well known if the petition is adjourned, it is adjourned with the consequences imminent over the company, if the winding-up order is made, the winding up will date back to the presentation of the petition, and avoid, therefore, or imperil anything that is being done by the company in the meantime". It will be noticed that section 443 of the Indian Companies Act is equivalent to section 225 of the English Companies Act, 1948. I have not been able to lay my hands on any case directly on the point. There are, however, a few cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e company, the colliery, was subject to a large mortgage and it appeared that if it was so it would not realise enough to pay the mortgage and there would be nothing left for the debenture-holders. Lord Justice Baggallay held that in that case the petitioner would not be in a better position by obtaining a winding-up order. His Lordship rejected the prayer for a postponement on the ground that it would do the company great harm, for, it would almost paralyse the company and the order of winding up, if at all passed, would relate back. Their Lordships, Cotton and Bowen L. JJ., agreed. There is thus no decision either of the Indian or of English courts which I could lay my hands on or which could be brought to my notice to show that the mere fact that a creditor files a suit for the realisation of the debt could debar him from proceeding with his petition for winding up the company. There is nothing either to show that the court in such circumstances has no jurisdiction to proceed with the winding-up proceeding or that it would even be proper to stay the winding-up proceeding itself or dismiss the petition for that reason alone. What am I asked in this case to do ? I am asked to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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