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Issues Involved:
1. Whether the expression "suit or other legal proceedings" in section 446(1) and the expression "suit or proceedings" in section 446(2) of the Companies Act, 1956 encompasses criminal proceedings against the company or not. 2. Whether the appellant ought to have been given an opportunity of being heard in terms of rule 117 of the Company (Court) Rules, 1959 before passing of the impugned order. Summary: Issue 1: Scope of "suit or other legal proceedings" in Section 446 The court examined whether the expressions "suit or other legal proceedings" in section 446(1) and "suit or proceedings" in section 446(2) of the Companies Act, 1956 include criminal proceedings against the company. The court referred to various provisions of the Act and relevant case law to interpret these expressions. It was noted that sections 442 and 446 use the terms "suit or other legal proceedings" without mentioning "prosecution" or "criminal case," indicating that these sections do not intend to cover criminal proceedings. The court emphasized that the object of section 446 is to protect the assets of the company during winding up proceedings and avoid wasteful expenditure, which does not logically extend to criminal proceedings. The court cited the Supreme Court's decision in S.V. Kondaskar v. V.M. Deshpande (AIR 1972 SC 878), which held that the expression "other legal proceedings" in section 446 does not extend to income-tax proceedings, as these cannot be appropriately dealt with by the company court. Similarly, the court found that criminal proceedings cannot be appropriately dealt with by the company court. The court also referred to Rabindra Chamrior v. Registrar of Companies (1992 (Supp.) (2) SCC 10) and Jeswantrai Manilal Akhaney v. State of Bombay (AIR 1956 SC 575), which supported the view that criminal proceedings are not included in the expressions used in sections 446(1) and 446(2). The court concluded that the expressions "suit or other legal proceedings" in section 446(1) and "suit or proceedings" in section 446(2) do not include criminal proceedings. Therefore, no permission was required from the Company Court for filing a criminal complaint against the company or its directors. Issue 2: Opportunity of Being Heard under Rule 117 Given the conclusion on the first issue, the court found it unnecessary to address whether the appellant should have been given an opportunity of being heard under rule 117 of the Company (Court) Rules, 1959. Conclusion The appeal was dismissed, and the court held that the expressions "suit or other legal proceedings" in section 446(1) and "suit or proceedings" in section 446(2) do not encompass criminal proceedings. Consequently, no permission from the Company Court was required for the criminal complaint against the company or its directors.
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