1939 (6) TMI 13 - HC - Companies Law

Summary

Issues:
1. Whether a suit against a company, filed after a compulsory liquidation order without obtaining leave from the Court, should be dismissed.
2. Jurisdiction of the Court to grant leave to continue a suit instituted without leave subsequent to the winding-up order.
3. Authority of previous judgments in similar cases from different High Courts.
4. Power of the Court to dismiss a suit on an interlocutory application in such circumstances.

Analysis:
1. The judgment dealt with the issue of whether a suit filed against a company after a compulsory liquidation order without obtaining leave from the Court should be dismissed. The plaintiff in this case had filed a suit against a company without being aware of the order for compulsory liquidation. The liquidator applied for the suit to be dismissed due to the plaintiff's failure to seek leave under Section 171 of the Companies Act to sue the company.

2. The Court discussed the jurisdiction to grant leave to continue a suit filed without leave subsequent to the winding-up order. Referring to a previous case, the Court stated that leave to proceed with a pending legal proceeding can only be granted if the proceeding was instituted prior to the winding-up order. The Court expressed that it did not have the jurisdiction to grant leave for a suit instituted without leave after the winding-up order.

3. The judgment highlighted the differing views in different High Courts regarding this issue. While the Allahabad and Bombay High Courts had taken an opposite view, the Lahore High Court had aligned with the opinion expressed in the present case. The Court noted that there was no binding authority compelling a modification of its opinion based on the previous case.

4. The Court addressed the argument that there was no specific rule empowering the Court to dismiss a suit on an interlocutory application in such circumstances. However, the Court asserted its inherent jurisdiction to dismiss a suit where there was no jurisdiction to entertain it. The Court emphasized the importance of ensuring that the absence of leave under Section 171 did not harm the proceedings, leading to the decision to dismiss the suit against the company with costs.

In conclusion, the judgment clarified the legal position regarding suits filed against companies after compulsory liquidation orders without obtaining necessary leave from the Court, ultimately deciding to dismiss the suit against the company due to the plaintiff's failure to seek such leave.