1981 (4) TMI 13 - HC - Income Tax

Summary

Issues Involved:
1. Whether the Life Insurance Corporation (LIC) is required to seek leave of the winding-up court under Section 446 of the Companies Act, 1956, before initiating proceedings under Sections 4 and 7 of the Public Premises (Eviction of Unauthorised Occupants) Act, 1971.

Issue-wise Detailed Analysis:

1. Applicability of Section 446 of the Companies Act, 1956:
The court examined whether the LIC must seek leave under Section 446 of the Companies Act before initiating proceedings under the 1971 Act. Section 446(1) states that no suit or other legal proceeding shall be commenced against a company in winding-up except with the leave of the court. Section 446(2) extends the court's jurisdiction to entertain any suit or proceeding by or against the company, including claims and questions of property. The court noted that the term "legal proceedings" should be interpreted broadly and includes proceedings before the Estate Officer under the 1971 Act.

2. Nature of Proceedings under the 1971 Act:
The 1971 Act provides a mechanism for the eviction of unauthorized occupants from public premises and the recovery of rent or damages. The court emphasized that the 1971 Act is not a distinct code creating new rights and liabilities but provides a new forum and remedy for existing rights under ordinary law. Thus, proceedings under the 1971 Act are legal proceedings that fall within the purview of Section 446 of the Companies Act.

3. Objective of Section 446:
The court discussed the objective of Section 446, which is to protect the company's assets from unnecessary litigation and ensure equitable distribution among creditors. The court cited various judgments, including Governor-General in Council v. Shiromani Sugar Mills Ltd., to emphasize that all claims against a company in winding-up should be handled by the winding-up court to prevent a scramble for assets.

4. Precedents and Analogous Cases:
The court referred to several precedents, including J.K. (Bombay) P. Ltd. v. New Kaiser-I-Hind Spg. & Wvg. Co. Ltd., which held that once a winding-up order is passed, the company's assets are under the control of the liquidator, and no new rights can be created. The court also cited cases like In re Oak Pits Colliery Co. and General Share and Trust Co. v. Wetley Brick and Pottery Co., highlighting that the winding-up court can order the delivery of possession to the landlord in appropriate cases.

5. Special vs. General Legislation:
The court addressed the argument that the 1971 Act is a special legislation and should override the Companies Act. The court held that while the 1971 Act deals with public premises, it does not override the Companies Act when the company is under winding-up. The court applied the legal maxim generalia specialibus non derogant, meaning that a general statute does not derogate from a special statute unless there is a conflict.

6. Conclusion and Decision:
The court concluded that proceedings under the 1971 Act are legal proceedings within the meaning of Section 446(1) of the Companies Act. Therefore, the LIC must obtain leave from the winding-up court before initiating or continuing proceedings before the Estate Officer under the 1971 Act. The court emphasized that it was not expressing any opinion on the merits of the leave application, which should be decided by the single judge handling the application.

Final Note:
The matter was directed to be listed before the learned single judge for appropriate proceedings, and the court expressed gratitude to the counsel and amicus curiae for their assistance.