1994 (6) TMI 177 - HC - Companies Law

Summary

Issues:
1. Grant of leave under section 446(1) of the Companies Act, 1956 to continue suits in the Bombay High Court.
2. Grant of leave under section 537 of the Companies Act, 1956 for the court receiver to put up hypothecated properties for sale.
3. Opposition by directors regarding the continuation of suits and appointment of receiver.
4. Entitlement of secured creditors to stand outside winding up proceedings.
5. Objections regarding the Sick Industrial Companies (Special Provisions) Act, territorial jurisdiction, limitation, and guarantors' discharge.
6. Transfer of suits from the Bombay High Court to another court.
7. Grant of leave for sale of properties while suits are pending in the Bombay High Court.

Analysis:
The judgment pertains to Company Applications filed by the Industrial Credit and Investment Corporation of India Limited (ICICI) and the Industrial Development Bank of India, Bombay (IDBI) seeking leave under the Companies Act, 1956. The applications involve continuing suits in the Bombay High Court and appointing a court receiver for hypothecated properties. The opposition from directors, including objections related to winding up proceedings, territorial jurisdiction, and limitation, was addressed. The court rejected objections regarding the entitlement of secured creditors to stand outside winding up proceedings, emphasizing the right to realize security with or without court intervention. The objections based on the Sick Industrial Companies Act were dismissed, clarifying that the suits were filed before winding up orders. The court also ruled against objections related to territorial jurisdiction, limitation, and guarantors' discharge, stating they should be raised in the suits. The request for transferring suits to another court was denied, considering the time elapsed and expenses incurred. The court granted leave to continue the suits in the Bombay High Court, subject to certain conditions regarding workmen's liabilities and progress updates to the official liquidator. The applications were allowed without costs, emphasizing the need for further directions from the Bombay High Court regarding the sale of hypothecated properties.