1998 (2) TMI 525 - HC - Companies Law

Summary

Issues:
- Petition filed by State Bank of Patiala seeking leave to prosecute original application before Debts Recovery Tribunal
- Default in repayment by company in liquidation leading to legal action by the bank
- Requirement of permission from the company court under section 446 of the Companies Act
- Consent of respondents and official liquidator for granting permission
- Exercise of discretion by the company court in granting permission
- Jurisdiction of the company court to grant permission at any stage

Analysis:
The State Bank of Patiala filed a petition seeking permission under section 446(1) of the Companies Act to prosecute an original application before the Debts Recovery Tribunal against a company in liquidation. The company had defaulted in repaying the loan amounts, leading the bank to seek recovery through legal means. The petition detailed the financial assistance provided to the company and the involvement of various directors, guarantors, and financial institutions in the loan agreements. The bank claimed a specific sum in its application before the Debt Recovery Tribunal, which was filed before the winding-up order of the company. The official liquidator was appointed, and the bank needed permission from the company court to continue the recovery proceedings.

The company court's discretion under section 446 of the Companies Act is crucial in granting permission for legal actions against a company in liquidation. In this case, all respondents, including the official liquidator, did not oppose the bank's request for permission. The court emphasized the need to protect the company's assets while ensuring the expeditious disposal of legal proceedings. The court cited the absence of legal impediments and the prima facie due amount in the bank's claim as reasons for granting permission. The court highlighted a previous judgment to support its decision, emphasizing the bank's obligation to seek permission despite the timing of the winding-up order.

Ultimately, the court granted permission to the bank to proceed with its application before the Debts Recovery Tribunal, subject to certain conditions. The court directed that any decree or recovery certificate issued by the Tribunal should not be executed against the company's assets without specific permission from the court. The decision was made to allow the bank to continue its legal action while safeguarding the interests of the company in liquidation. The court concluded the judgment by stating that there would be no order as to costs, indicating the resolution of the matter without any additional financial burden on the parties involved.