683 446] {s- ‘ legal prog, di aings 0 suit or leg Procee ING can Commenced i the order, om leave of the Court a Subject to SUCH terms any excep If a suit or Proceeding 18 Pending at the date of impose. roceeded with except With the lea, 1 Brie filed from the date o} to CAVE Of the Courts f leave and Not from the date of for the purpose Of preserving the Vimitea, is is pai tesyale for distribution among all the pens he best ; inding w VISIONS is to put alt pany in tl “The object of win ae pr ri passe a em. ity and pay nem pa High jms a on an ae being frittered away in Vexatious itor comp: the : i Means only thos ceedings” in ey e are in winding u ion “legal proc on the assets o It does not mean ca We ve a bearing in winding up. on the winding “Teale th the ares has no bearing py was. table in ceding — where the compan} : ffence minal ©Legal Proceedings 683 [5 446 un is a : 9 suit or | ft og the OF er, no suit or legal proceed ays fre ay exee t by leave of the ar can be com ihe oi my jose." If a suit or proceedin i subject o sich em a ny DE proceeded with except et at the diese heh ire to be filed from the date of leave and Gin one ty te nis is necessary for the purpose of prese tom the date of - be empany in the best way for distribution aaa the ited ot eon te The object of winding up rst Nhe perso ie gitors UPOP an equality and pay them pari a neers | 5 _ 7 SU; ts of the company from being f gr ant assel ig frittered away in vexatious proceedings” in Section 446 es? ; means onl; Th 8s which have 2 bearing on the assets of a company in aut a relationship with the issues in winding up. It does not mean os civil proceeding which has no bearing on the winding up inal offences where the company was liable to be gi every F ing oF crimin cuted 7 The court in granting leave considers all the circumstances of the case snd decides as tO whether leave to sue the company should not be granted so tat the assets of the company may be preserved for the benefit of the gai oq iE expression legal 15.6, The provision is mandatory an also applies to attachment proceedings TTarubala Sala Ra Bank Lid, (1972) 42 Comp ‘Cas 588 Cal. : Ug), See G5, Setty & Sons VY. CME ris, 1970} 1 come er sae ery no further leave for execution 0 it be necessary. 5 an Sara ham or india, (1990) 69 Comp Cas 5 . See B f Deny ee Co, (1990) 69 Comp Cas 2 P&H, suit of price of § a beets Liquidator, (1997) 2 Ket LT 80, managing rector rf tase 0 under S, 138 of the Negotiable Instruments on LR 138 Bom wh court. Orkay Industries sate of Mah *eotable In om, where the company is in winding UP» pro’ ele Insiruments Act 188) oe Viability of the ¢ tad, epi over the provisions of the Companies i ation ) 131 Comp Cas 119 (SC), 3s lone the stay! cfectives! Keg Jak yO can apply at any time for leay® to continue the P eof 18K v UCO Bank, (2006) 129 Comp Cas s cart 0. -eomenl‘ of Caleutta Lid, (1950) 54 CWN 832, Foi Subject see Palghat Warrier Bank « Pednanaiy AR Is ‘al Mavi a es Nathdas, AIR 1971 Ough 322; Maneklat Mansullbaiv Saraspur Mfg Co Lia Aik es 16%; Hansraj v Official Liquidators, Deira Dan Mussoorie Electric Tramway Co, af 2 All 353; Hukuchand v Radhatissen, AIR 1925 Cale South Indian Mil Si ss AIR 1917 Mad 260; Rawat Raj Kumar Singh v Beneres bea AIR 1941 all 1s:6 Chandra Banerjee v Krishna Chandra Nath, AIR 1949 Cal 683, ese may be cba or after the institution of recedings, Vyasa Bank Ltd v Official Liquidator, Sreenivas Ce Mills Ltd, (1992) Mah LY 1239, i 49. Ananta Mills Led v City Deputy Collector, Ahmedabad, (1972) 42 Comp Cas 476 Gui, aki Trading Chit Funds, (1976) 46 Comp Cas 637 Mad. Rex 50. R. Ranganathan v Veerakunar Trading 5, m Bank of India v JVG Finance Ltd, (2006) 130 Comp Ca 16 Ds, 7 company spe a suit filed before the Bombay High Court aftr winding up omer sl : sco hep rive pace ‘levista Electronics (P) Ltd v Mass Communications & Mates ng | A ae (a Bacal Iso United India General Finance (P) Ltd, Re, ( Same cH Fund sag CoP) Lid v Essa Ismail Sait, (1980) 50 Comp Cas 801 Ker; H. i Trading Co I. : % Crees Fabricators, as) 48 Comp Cs 06 mb mcs, jarat Lease Financing Lid v OL of Aryan Pi soy SCC 322: (1992) 18 Ciara Le Baja vKhandesh pg and vg Mil Lid 9922500 ae eee aided Disileris (2) Lid San Talon, {93 gy ign one bathe Off Liquidator, (2006) i eaee 3 Beal ; rected 10 : of tenanted promises, was ae ea oats $5, Ramanlal Amratlal v ESL, Use (93 ops a ile : i ee ie ing transfer No stay may be al ui Lid B. G. S| tion proceeding Nosy 56. tiast) 51 Comp Cas 18 P&H, arbitra 61 Pay Dhartt Dhan (2 1977) 47 Comp Cas OF ry Dharti Dhan (P) gratin Industries, Re, (1972 47 Comp Fis Dhan (2) dpur Refrigeration Indust vin tactics §7, Maksud, a eriy Legal Proceedings 685 sor has the right to 7 yl creditor has proceed against tI eo he ‘company’s debts or against both. The Be company cre fot proper order that the guarantor should be prem Court held si ihe company their liability being co-equal. provseded against nse ut decree for recovery and attaches property Fea ety who ecome a ic is itor oA eo Court held in Kondaskar v ITO (C i income-tax officer can ania a a ave of the court.®! But leave would ve aa afc ‘ n of the amount of tax deducted by the saat i? eae ich was still lying with the company. Where a sum of ete ny, the payer cannot deduct tax at source calla Weave ‘ eit OF proceeding is pending in any court that may be meta 13 os ed of b the winding up court. The provision, however, does wid Wy(0 eals and cases pending before the Supreme Court or a Hi A rot om The ‘Madras High Court refused to grant permission to a waka Cout. claim pefore a labour court, for that would waste the time of the or in having to defend suits at so many places. The Calcutta High ae faced a case in which 23 suits were filed by DGSD on behalf of the Ee 19TH AT Come as 420, The court may ints diseretion require even @ 79 SCC passthrough te eave ofthe come paniculary where there. are i passu claims of others. Cotton Corpn of India v Radhakrishna Mills, sons G3 Mad, or where e as ins) proceedings at an inconveiest pace Oe) Lid (1994) # SCC 519: (1998 8 Come Cs =f of proceedings to Bombay which was sx ‘aside by the SC (1994) 4 SCC 519: (1994) 81 Comp Cas 13 mitted to continue the realisation redo ifn that he woud pay workmen's es sre in, dustrial Cedt & Ineseny COP "iy India v Hyderabad District Coop Sn (1995) 16 Corp LA 227 AP. Kilt at ar v Buckeye Batteries (P) Lid 2p Cas 70 All te proceedings fo reoyen, aefnsta guarantor ofthe COMP 14 Comey company’s winding uP wee allows eS rot necessary. par Nath v State Bank of India, (2006) 131 Comp Cas 119 SC. sidator, (2006) 4 CCC 346 (SC). ala Sate Financial Corpn Lid v Offical Ligu 60x ) 1 SCC 438 : (1972) 42 Comp Cas 168 : AIR 1972 SC 878. LOjeruling Colaba Land de Mills Co Ld. Re, (1968) 38 Comp Cas 26 Bom. MO v Oficial Liquidator, National Conduits (P) Lt (1981) 51 Comp Cas 174 Del ‘The court ‘of Kerala v Plai Cera Bank, Go conduc probe into the assessment proceedings State H. sa winding up court Gl?) 62 Comp Cas 742 Ker. Ge ater Mara Ld (1992) 75 Comp Cas 663 P&H, #466) Isat pending in another cow Fe continued without Teave Of he ; erat ais passed, it is voidable at the option of the liquidator, See Bhagwati iy i cee 1970) 1 Comp LI 71. Also see Punjab National Bank v Pana "Finance ( ‘omp Cas 350 Pui 16( a (4 and see Panjab Finance (P) Lid v Matlara itt (ag1s) 45 Comp C38 361 TO ) 43 . that a" hay without le pore ai s withou dine overing evel Chic Helidabaranahan v Gannon Dunterly Metco, (A973) 43 Come CHO sag ot by 8 SRE aBuinst a company can be challenged Om) by the company ive, a tat Gyele Inte ead that 88m) sholde ler or director personally. Vivek Kumar v Pearl Pee company 885 WN yp CST? ‘ " Del |. Leave eave was refused where the claim agai "Panchkula Malt Co. ( OC guarantor wa i eae ele ne“= 686 ‘ (Che Union of India, The Calcutta High Court ordered their transf D, winding up court, The balance of convenience lay in bringing a chronic type of cases before the winding up court,‘7 all Where a State Financial Corporation wanted to stay outside windi and applied for permission to dispose of the company’s assets held oy 8 up way of security, the Supreme Court said: PY ity “that realisation and distribution of proceeds are to take place o.), _ in association with the liquidator and under supervision of the come, court, The Debt Recovery Tribunal and the District Court under State Financial Corporation Act is to issue notice to the offic liquidator while ordering sale of properties of the debtor com Otherwise the secured creditors can approach company court.’’6. The creditor standing outside winding up has to submit a Valuation report to the court before disposing of the property. The court would rot confirm the sale without such report. Even for proceeding under Section 13 of the Securitisation etc, Ay prior permission of the court was held to be necessary.” It would not be necessary to obtain sanction of the court for prosecuting the company’s officers under the Employees’ Provident Fund Act.” Lene would be necessary for prosecuting the company under Section 58-C ior violating rules relating to acceptance of deposits.”* The court can have even, criminal matters transferred before it73 The court has jurisdiction 0 decide— | Winding Up © the those thea se any, 67. United Provinces Commercial Corpn, Re, (1983) 53 Comp Cas 441 Cal. Lok Vikas Ura Coop Bank Ltd v Lok Vikas Finance Corpn Lid, (2003) 114 Comp Cas 355 Raj, secur creditor's application to remain outside winding up for sale of assets, other creditors and contributories not likely to be affected, sale of assets permitted subject to certain conditions and also subject to confirmation, Shivalik Agro Poly Products Lud v Disco Electronics vO (2003) 114 Comp Cas 398 Del, sale by the secured creditor (corporation) not affected by te restraint order or appointment of provisional liquidator in winding up proceedings to whith! was not a party. 68. Rajasthan Financial Corpn v Official Liquidator, (2005) 128 Comp Cas 387 SC. 365, ise 2 eeTE Ay guit oF proceeding, by oF againat the cor Gn ) ; > COMPany.n 1 ity claim made by or against the company mph any taal} \ ays y application made for compromis Mh ne 4 pedi tOr under Section 391; OF Atrangeme ¢ 4, any question of ae OF any question whatsoeve iow Of fact, psn may relate to, or arige in th ae whether of winding UP- © SOUEKE of the MM with —qutaor v Kerala SED, (1990) 67 Comp © see afi ca sation for loss caused by an cmploves't ace wo M yal Tractor and Automobiles Corpn, (1990) 69 Comp Cas 59 Patt, where ane frst & of the company showing the respondent to be indebted to the company, affine Ry eficers 8 oath and not controverted by the respondent were held to be good evidence of the ipdbiedness. Summary eviction proceedings against trespassers on the company's premises aim against the were allowed, Pushpa Devi Jhunjhunwala v Official Liquidator, (1993) \ Cal LS 447, Squatters vere not allowed to claim possession by adverse title, the official liquidator is deemed to be in rossession, Yogamaya Ghosh v Official Liquidator, (1993) 1 Cal LJ 485. ; 4 claim for goods supplied can be so decided, Star Engg Works v Official Liquidator, (977) 47 Comp Cas 30 Guj. Whether a person in occupation of the company’s premises is a uespasser and, if so, liable to be evicted, can be decided under , 446, Vidyadhar Upadhaya ¥ Siri Shri Madan Gopal Jew, (1990) 67 Comp Cas 394 Cal, Tenancy matters pending before gecial tribunals can be Jeft to be decided by such tribunals, 5. P. Bhargava (Dr) v Haryana Elearie Steel Co, (1994) 2 Punj LR 406; Deutsche Bank v 8. P. Kala, (1992) 74 Come Coe H e Bom, court competent under S, 446 to pass orders against guarantor of the company's Oe MS Fashions Lid v BCC sa (No 2), (1993) 3 AIL BR 769 CA leave to Pe re a) Kuna Where the guarantor could not pay the whole amount due. Beni Carbon Co Le tobe Goel, (1993) 2 Punj LR 681, eviction with leave of court, execution of wees not omic Ll tied on the grounds rejected by the Rent Controller, UCO Bank v Cone (1996) 23 Corpt LA 256 Cal, recovery proceedings before Debt Re aaele orders for transfer transferred to the winding up court. The company court can pass Jesigned 10 safeguard. See Hatetwise after considering all the interests which S. ao i esl. A Bomb) se la Syutex Lid v Punjab & Sind Bank, (1997) 27 Corpt ay though the & Te i ted ceditor was allowed to continue his proceedings Boml of India Lid ¥ Hyder 1 ine ound up in AP, Industrial Credit & Investment Coat the winding UP ON i C0%P Central Bank, (1997) 27 Compt LA 26 AP A a Iemisgg company become vested in the con ings under the | en ince Cor The a Under §, 446 is necessary for initiating Pr rocee lings: Industri ay pew 7 eravad © proce eT ak of Here ui" fore, | fa MISSION Can alon ba taban after initiation98 Winding Up (Chap, 6 ‘overy Tribunal if ae coming into force of Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and the establishment of the Debts Recovery ' Tribunal (DRT) and in view of the clear provisions of Sections 17, 18 and 34 | of that Act, neither it is necessary to apply for leave to Prosecute the suits transferred to DRT in terms of Section 446(1) of the Companies Act Nor itis" 4 open to the company court to transfer the suit to itself for trial in Winding iB, proceedings in terms of Section 446(2) of that Act.77 A Winding UD petition is maintainable even if a Tecovery suit against the company has been file before the Debt Recovery Tribunal, 78 PROCEDURE OF Winninn rm nes = -