TMI Blog2004 (4) TMI 328X X X X Extracts X X X X X X X X Extracts X X X X ..... a was maintainable in law or established in fact. The opinion of the Division Bench that this "agreements/assurances/guarantees" as claimed by the respondent-bank which was alleged to have been entered into between respondent-bank, respondent No. 2 and the appellant State was a continuation of the agreement which was between the appellant State and the respondent-bank alone is in any event unsustainable. From this major premise, by a leap of faith and not of logic, the Division Bench came to the wholly fallacious conclusion that the provisions of section 122 did not apply. - CIVIL APPEAL NOS. 4414-15 OF 1997 - - - Dated:- 22-4-2004 - MRS. RUMA PAL AND S.H. KAPADIA, JJ. Ashok Mathur for the Appellant. A.K. Raina, R.K. Bhartiya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Jammu and Kashmir State Financial Corporation to the manager of the respondent-bank which records the terms of this proposal. 4. The proposals were to the effect that the respondent-bank would advance an amount of Rs. 6 lakhs to the company and these funds would be placed at the disposal of the Forest Department. The Forest Department would supervise the operation of the felling of trees for the remaining period of the lease and would sell the timber. Out of the sale proceeds the appellant would be entitled to recover its royalty up to 50 per cent of the sale proceeds and the balance would be used for paying the various creditors of the company. It was the respondent-bank s further case that the Conservator of Forests raised certain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sues on the pleadings. Of these we are concerned with issue Nos. 1, 6, 7 and 8 which read as under: (1)Whether suit is not maintainable as no leave has been obtained under section 446 of the Companies Act? OPR (6)Whether the suit is barred by time? OPR (7)Whether defendant Nos. 2 to 5 are not liable for the suit amount because the management of forest lease was handed over to defendant Nos. 1 to 6 at the instance of the petitioner-bank? OPR (8)Whether the petitioner is entitled to any decree against respondent NO.1? OPR 8. As far as issue No.1 is concerned, the trial court held that since no leave hand been obtained under section 446 of the Companies Act when the suit was instituted, the suit would be deemed to have been institu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imed by the respondent-bank. The liability, according to the trial court was that of the appellant State alone. However, in view of the finding on the question of limitation, the suit was dismissed against all the defendants. 12. Appeals were preferred by the respondent-bank from the decision of the Single Judge before the Division Bench. The appellant herein also preferred separate appeals challenging the findings of the trial court on issue Nos. 7 and 8. The appellant again specifically raised the issue that there was no agreement in fact or in law which could be pleaded by the respondent-bank and which could be enforced against the appellant. 13. On the issue of leave under section 446 and limitation, the Division Bench distingui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had been arrived at. Accordingly, the appeal preferred by the respondent-bank was decreed against the appellant for the principal amount advanced by the bank together with 6 per cent interest and costs. 15. The decision of the Division Bench has been impugned before us in these appeals. Unfortunately we have been deprived of any assistance from learned counsel appearing on behalf of the appellant. Nevertheless, we are of the opinion that in view of the glaring errors in the impugned judgment these appeals must be allowed. 16. Section 446(1) of the Companies Act reads as follows: "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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also we are unable to sustain the decision of the courts below as far as section 122 of the Constitution is concerned. Section 122, which is in terms materially identical with provisions of article 299 of the Constitution of India, provides: "122. (1) All contracts made in the exercise of the executive power of the State shall be expressed to be made by the Governor and all such contracts and all assurance of property made in the exercise of that power shall be executed on behalf of the Governor by such persons and in such manner as he may direct or authorise." 19. The Division Bench negatived the arguments of the appellant on the basis of section 122 (incorrectly referred to as article 299) by holding that the arrangement pleaded b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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