TMI Blog1998 (6) TMI 524X X X X Extracts X X X X X X X X Extracts X X X X ..... g the official liquidator from recovering" the amount through revenue recovery proceedings without obtaining leave of this court as required under section 446(1) of the Companies Act. Therefore, according" to the official liquidator that suit is liable to be stayed. The respondent has contended that the permission of this court under section 446(1) of the Companies Act is only necessary whenever legal proceedings are instituted or continued against the company where a liability is intended to be fastened on the company or its assets. According to him, a suit or proceeding commenced by a person with the object of escaping from the liability arising out of a proceeding commenced by the company itself does not require permission of this court as provided under section 446(1) of the Companies Act. He has also contended that the Kerala Revenue Recovery Act is applicable only within the State of Kerala and is not applicable beyond the limits of Kerala. He has also contended that since the decree against him is clearly barred by limitation and not enforceable in law, he has filed the suit in the Munsiff's Court, Belgaum only to establish the legally sustainable pleas. He has further con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntentions of the respondent, they support the contentions of the applicant herein. In the decision reported in Jiwan Dass v. Peoples Bank of Northern India, AIR 1937 Lahore 926, the contention raised was that the defendant in a suit filed by the company under liquidation cannot institute an appeal without obtaining the leave of the court under section 171 of the Companies Act. In that context the Division Bench of the Lahore High Court observed as follows (page 929): "In this case also, it was the bank which had instituted the suit in the first instance and had come out successful in the litigation. The appellant cannot, in these circumstances, be said to have proceeded with or commenced any legal proceedings against the company." In that judgment the Division Bench of the Lahore High Court relied upon the judgment of the House of Lords reported in Humber v. Griffiths [1901] 85 LT 141 and quoted the observations of Lord Davey in that judgment as follows (page 929) : "When once an action by the company itself has been proceeded with, there is no necessity for the defendants in the action to obtain leave for any defensive proceeding on their behalf, and further remark ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a liability is intended to be fastened on the company or its assets and not a proceeding commenced by a person with the object of escaping liability arising out of a proceeding commenced by the company itself. It would probably be useful to clarify the position a little further. If a person wants to file a suit to escape liability on the ground that the company's claim against him is unfounded, it is a proceeding against the company, but where the company has started the proceeding, that is, put forward its claim in a court of law, any remedy available by way of defence to escape liability, which the company wants to fasten on him, should not be deemed to be a proceeding" commenced or continued against the company and in such a case the question, whether the claim was put forward or the suit was filed by the company before or after the winding up order, should make no difference." The Full Bench further observed as follows (page 172) : "If, however, the proceedings in a court of law are started by a person other than the company, either with the object of fastening a liability on the company or with the intention of escaping a liability in respect of a claim which has not been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en by him to escape from the liability arising out of the proceedings commenced by the company and as such no permission of this court is necessary under section 446(1) of the Companies Act, is absolutely unsustainable. The argument advanced by counsel for the respondent that the provisions of section 446 of the Companies Act should be construed liberally so that defensive actions of this nature will not come within the ambit of the section is not sustainable since by any liberal interpretation the provisions of section 446(1) of the Companies Act cannot be stretched to exclude from its ambit independent proceedings initiated by a person against whom a decree for money is obtained by the company either prior to or after the winding up order to restrain the company from resorting to the steps available under law for recovery of the decree debt. It is vehemently argued by counsel for the respondent that the decree obtained by the company against him is barred by limitation since long back and, therefore, the amount cannot be claimed by resorting to the provisions of the Revenue Recovery Act against him. In the decision in Kerala Fisheries Corporation v. P.S. John [1996] 1 K ..... 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