1984 (3) TMI 344 - HC - Companies Law

Issues Involved:
1. Applicability of Section 446 of the Companies Act, 1956.
2. Applicability of Section 537 of the Companies Act, 1956.
3. Competence of the fourth respondent to act without attaching the property.
4. Validity of execution proceedings and sale of property.
5. Locus standi of the applicant to challenge the proceedings.
6. Conduct of the applicant in the execution proceedings.

Detailed Analysis:

1. Applicability of Section 446 of the Companies Act, 1956:
The applicant contended that the fourth respondent's actions were void under Section 446 of the Companies Act, 1956, due to the winding-up order and appointment of a provisional liquidator. However, the court noted that the winding-up order was held in abeyance by the Division Bench's judgment, and the provisional liquidator was directed to function without affecting the continuance of pending proceedings. The court cited B.V. John v. Coir Yarn and Textiles Ltd., emphasizing that the appointment of a provisional liquidator does not affect the continuance of pending proceedings, and leave of the court is required only for commencing new proceedings. Hence, Section 446(1) was not attracted in this case.

2. Applicability of Section 537 of the Companies Act, 1956:
The applicant's reliance on Section 537 was found to be without substance. The court clarified that Section 537 applies only if a company is being wound up by or subject to the supervision of the court, which was not the case here. The company was not being wound up, and thus, the provisions of Section 537 read with Section 446(2) were inapplicable.

3. Competence of the Fourth Respondent to Act Without Attaching the Property:
The applicant argued that the fourth respondent was incompetent to act as he did not attach the property before bringing it to sale. The court dismissed this argument, stating that the winding-up order was held in abeyance, and the provisional liquidator's appointment did not necessitate obtaining leave to continue the execution proceedings.

4. Validity of Execution Proceedings and Sale of Property:
The court found no infirmity in the execution proceedings in O.S. No. 1 of 1972 and O.S. No. 349 of 1979. The property was lawfully brought to sale, purchased by the fourth respondent, and the sale was confirmed. The court emphasized that orders passed at different stages in the execution proceedings were valid and legal until set aside by a competent authority.

5. Locus Standi of the Applicant to Challenge the Proceedings:
The court held that the applicant had no locus standi to challenge the proceedings based on the absence of leave under Section 446(1). The right to invoke Section 446(1) read with Section 537 was available only to the liquidator, not the applicant.

6. Conduct of the Applicant in the Execution Proceedings:
The court noted that the applicant and the third respondent were parties in the execution proceedings and took part at various stages. The applicant's conduct, including seeking adjournments and remitting amounts, disentitled her from moving the court at this stage. The court viewed the application as lacking bona fides and intended to delay the execution of a lawfully obtained decree.

Conclusion:
The court dismissed MCA No. 44 of 1983 as groundless and filed without bona fides, with costs awarded to the fourth respondent. MCA No. 47 of 1983 was also dismissed as no further orders were necessary. The court upheld the validity of the execution proceedings and sale of the property, emphasizing that the applicant had no valid grounds to challenge them.

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