1983 (11) TMI 242 - HC - Companies Law

Summary

Issues:
1. Jurisdiction of the court to try the suit after winding-up proceedings were permanently stayed.
2. Whether the suit should be retransferred to the Alipore Court for disposal.

Analysis:
The Central Bank of India filed a suit claiming a money decree and enforcement of a mortgage against defendant No. 1, Atlas Works P. Ltd. The suit was transferred to the High Court from the District Court of Alipore during winding-up proceedings initiated by a creditor. Defendant No. 1 paid off the creditor during the winding-up process, leading to a permanent stay of the winding-up proceedings. The plaintiff sought retransfer of the suit to Alipore Court, arguing that the High Court lacked jurisdiction to try a suit for land located outside its jurisdiction due to the winding-up order being stayed.

In response, defendant No. 2 contended that the suit, primarily for money lent, was lawfully transferred to the High Court and should not be retransferred to avoid delays and unnecessary costs. The manager of the plaintiff's branch affirmed that the suit was lawfully instituted in Alipore Court and properly transferred to the High Court under legal provisions. The defendants indicated they would not object to the High Court's jurisdiction during trial.

The court considered the provisions of Section 446 of the Companies Act, 1956, which grant jurisdiction to the winding-up court to entertain suits against the company and transfer suits pending in other courts. The absence of a provision for retransfer in case of ineffective winding-up was noted. Referring to a Supreme Court decision, the court agreed with the Rajasthan High Court's view that the end of winding-up proceedings did not affect the High Court's jurisdiction over the pending suit against defendant No. 1.

The court emphasized that retransferring the suit would lead to delays, additional costs, and procedural complexities. Therefore, the court decided not to order retransfer and awarded costs in the suit.