1980 (6) TMI 93 - HC - Companies Law

Winding up Suits stayed on winding-up order and Avoidance of certain attachments, executions, etc.

Issues Involved:
1. Validity of eviction order without the sanction of the liquidation court under Section 446 of the Companies Act.
2. Jurisdiction of the subordinate judge to entertain a revision petition against the order of the munsiff in execution of the eviction order.

Detailed Analysis:

1. Validity of Eviction Order Without Sanction of the Liquidation Court Under Section 446 of the Companies Act:
The primary contention revolves around the necessity of obtaining the liquidation court's sanction under Section 446(1) of the Companies Act for initiating or continuing legal proceedings against a company in liquidation. Section 446(1) states that no suit or other legal proceeding shall be commenced or continued against the company in liquidation without the leave of the court. The petition before the Rent Control Court, R.C.P. No. 27 of 1978, was initiated after the official liquidator was appointed, and no leave was obtained from the liquidation court.

The court examined the interpretation of "other legal proceeding" as discussed in Governor-General in Council v. Shiromani Sugar Mills Ltd. and other relevant case laws. It was held that the term "other legal proceeding" includes distress and execution proceedings in ordinary courts and legal proceedings taken in the manner prescribed by law.

The court emphasized that the object of Section 446 is to bring the company's assets under the control of the winding-up court to avoid expensive litigation and ensure expeditious disposal of disputes. However, not all disputes involving a company in liquidation fall under the exclusive jurisdiction of the winding-up court. Matters outside the purview of the winding-up court and those within the exclusive jurisdiction of other statutory bodies may not require the liquidation court's leave.

The court referred to various judgments, including Damji Valji Shah v. LIC of India, S.V. Kondaskar v. V.M. Deshpande, and B.V. John v. Coir Yarn and Textiles Ltd., which elucidated that proceedings not involving the collection or distribution of assets or those capable of being dealt with by the winding-up court do not necessitate leave under Section 446(1).

Applying this reasoning, the court concluded that eviction proceedings under the Kerala Buildings (Lease and Rent Control) Act, which fall within the exclusive jurisdiction of the Rent Control Court, do not require the liquidation court's leave. Therefore, the order for eviction passed in R.C.P. No. 27 of 1978 was not void for lack of sanction under Section 446(1).

2. Jurisdiction of the Subordinate Judge to Entertain a Revision Petition Against the Order of the Munsiff in Execution of the Eviction Order:
The second issue concerns whether the subordinate judge had jurisdiction to entertain the revision petition against the munsiff's order in execution of the eviction order. The objection was based on the interpretation of the proviso to Section 14 of the Kerala Buildings (Lease and Rent Control) Act, which states that an order passed in execution shall be subject to revision by the court to which appeals ordinarily lie against the decision of the munsiff.

The court examined Section 13 of the Kerala Civil Courts Act, which provides that appeals from the decrees and orders of a munsiff's court ordinarily lie to the district court, unless directed otherwise by the High Court. In this case, a notification had been issued directing that appeals from the munsiff's court, Cochin, be filed before the subordinate judge, Cochin.

The court referred to judgments from the Madras and Patna High Courts, which interpreted similar provisions in the context of the Cr. PC, and concluded that the subordinate judge, Cochin, had jurisdiction to entertain the revision petition.

However, the court also considered the Supreme Court's interpretation in Kuldip Singh v. State of Punjab, which suggested that the court to which appeals ordinarily lie should be determined apart from special notifications. Applying this reasoning, the court acknowledged that the subordinate judge, Cochin, may not have had jurisdiction to entertain the revision petition.

Despite this, the court held that the munsiff's refusal to execute the eviction order was a refusal to exercise jurisdiction vested in him under law. The court emphasized that it has the power under Section 115 of the CPC to set aside orders of subordinate courts suo motu in the interests of justice. Therefore, the court decided to interfere in revision suo motu and set aside the munsiff's order dismissing E.P. No. 262 of 1978.

Conclusion:
The revision petitions were disposed of, and the munsiff was directed to restore the execution petition to file and dispose of it according to law. The court held that the absence of leave under Section 446(1) did not render the eviction order void but voidable at the instance of the liquidator. The subordinate judge's conclusions on the merits were confirmed, and the munsiff's order was set aside to ensure justice.

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