1974 (7) TMI 95 - HC - Companies Law

Summary

Issues Involved:
1. Transfer and continuation of the suit.
2. Inspection of properties.
3. Compliance with Section 446 of the Companies Act, 1956.
4. Prima facie case for the return of goods.
5. Jurisdiction and merits of granting leave to proceed with the suit.

Detailed Analysis:

1. Transfer and Continuation of the Suit:
The applicant sought permission to proceed with Long Cause Suit No. 254 of 1972 against the company in liquidation or alternatively to transfer the suit to the High Court of Gujarat. The suit was initially filed in the High Court of Bombay without obtaining leave from the court that passed the winding-up order, thus violating Section 446 of the Companies Act, 1956.

2. Inspection of Properties:
The applicant also requested an inspection of the properties of the company in liquidation. This request was part of the broader application to proceed with the suit.

3. Compliance with Section 446 of the Companies Act, 1956:
Section 446 states that no suit or legal proceeding shall be commenced or continued against a company in liquidation without the leave of the court. The applicant argued that even though the suit was initially filed without leave, it could be validated by obtaining leave subsequently. The court examined precedents and found that the substance of Section 446 remained the same as the earlier Section 171 of the Indian Companies Act, 1913, emphasizing that leave should be obtained before proceeding with any suit against a company in liquidation.

4. Prima Facie Case for the Return of Goods:
The applicant's claim was limited to goods mentioned in exhibit "C" to the plaint. The court noted that the goods were supplied on an approval or return basis, and the property in the goods would pass to the buyer if not rejected within a reasonable time. The court observed that the applicant had treated the goods as sold and claimed their value in correspondence with the company, indicating that the property in the goods had passed to the company under liquidation. Therefore, no prima facie case was made out for the return of the goods.

5. Jurisdiction and Merits of Granting Leave to Proceed with the Suit:
The court considered whether the claim could be investigated within the winding-up proceedings. It was noted that the court handling the winding-up had jurisdiction to entertain claims against the company. The court found that the applicant's claim could be addressed in the winding-up proceedings without incurring unnecessary litigation costs. The court emphasized that leave should not be granted if there is no prima facie case or if the claim can be resolved within the winding-up process.

Conclusion:
The judge's summons was dismissed with costs, and the leave sought was refused. The court held that the applicant had not made out a prima facie case and that the claim could be addressed within the winding-up proceedings. An oral application for leave to appeal to the Supreme Court was also rejected, as the court did not find the issue to involve a substantial question of law of general importance.