9911796707
|
Home
Issues:
Whether the decree-holder needs the Court's sanction to continue execution proceedings against a bank under liquidation. Analysis: The judgment revolves around the issue of whether the decree-holder must seek the Court's approval to proceed with execution proceedings against a bank in liquidation. The appeals stemmed from execution proceedings initiated by the decree-holders, where the bank, now under liquidation, was added as a party due to subsequent mortgages on the properties sought for sale. The primary contention was whether the execution could proceed without the Court's sanction following the bank's winding-up order and the appointment of a liquidator. The lower courts initially ruled that as the bank was a puisne mortgagee with no liability to pay, the sanction was unnecessary, citing a previous judgment. However, a subsequent decision overruled the earlier ruling, establishing that a puisne mortgagee is liable to pay under the mortgage decree and entitled to debt scaling under relevant laws. Therefore, the bank was not merely a pro forma defendant, warranting the need for Court sanction to continue execution proceedings. Moreover, the interpretation of "proceedings" under Section 171 of the Companies Act was crucial. While the respondents argued that it referred to original proceedings akin to a suit, the judgment disagreed. Citing precedents, the judgment clarified that "proceedings" encompassed not only independent originating actions but also supplementary actions like execution under a judgment. The purpose of Section 171 was to inform the Court overseeing liquidation about the need to continue execution or resolve matters outside Court, necessitating instructions to the liquidator. Consequently, the Court found the lower courts erred in deeming the sanction unnecessary for continuing execution against the bank post-liquidation. The appeals were allowed, remanding the petitions for obtaining the essential Court sanction. The decree-holders were directed to bear the appellant's costs in both appellate and lower courts, with leave refused.
|
