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TMI Blog1942 (3) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... he application being made before the period of limitation for a declaratory suit of this kind had expired. Leave was eventually granted but not until after the period of limitation prescribed for the suit had run out. The question is whether the failure of the plaintiffs to obtain specific leave either before the suit was instituted or before limitation had expired is a sufficient ground for dismissing the suit as already instituted. The necessity for obtaining leave is prescribed by section 171, Companies Act, 1913, which runs as follows: "When a winding up order has been made or a provisional liquidator has been appointed, no suit or other legal proceeding shall be proceeded with or commenced against the company except by leave of the Court, and subject to such terms as the Court may impose". This section was admittedly borrowed from the English statute law on the same subject. The only difference is that the word "suit" has been substituted for the word "action". The case law relating to the question under reference is best stated by Mr. Solomon Judah at pp. 280 and 281 of his Commentary on the Act: "If a suit is continued without leave obtained under the section the decre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re to obtain leave was treated as a sufficient ground for dismissal of the suits, but it does not appear that in either of these cases there was any question of granting leave, so that it would be immaterial whether the suit was dismissed or stayed indefinitely. With regard to cases of this kind in general, there are some relevant observations in Rendall v. Blair [1890] 45 Ch D 139 a case relating to proceedings under the Charitable Trusts Act, (although the proceedings were under a different Act, the relevant provisions were not greatly different): "Now, first of all, I come to that conclusion upon the language of the section. We are all of us familiar with the way in which Acts of Parliament are drafted to prevent actions being brought at all or writs being issued unless some condition precedent has been fulfilled. The language of such sections, we are all familiar with, and the draftsman or the Legislature requires no obscure language if they desire to enact such laws. But this section is not framed in the way in which sections are framed when it is intended that some preliminary steps should be taken before the action is maintainable at all. On the contrary, both from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifferent phrase: "Now when words of such familiar use in the English law are adopted in an English legal instrument such as the Letters Patent constituting this Court or in a legislative enactment of the Governor-General's Council in India it is, I think, reasonable to suppose that they have been used in the sense which has been assigned to them by the decision of the English Courts; and as it seems to me we ought to be guided in our interpretation of them by those decisions". There are many cases in which the technical meaning attached to legal terms in England should not be introduced into the construction of the wording of Indian statutes, but there is no question here of introducing any unnecessary complication from English law. On the contrary, it is a question of avoiding an unnecessary hardship which will ensue in attaching an entirely new meaning to words which had not hitherto had placed upon them an interpretation involving any such consequence. The hardship is obvious: the treatment of leave as a nullity, if it is granted out of the period of limitation, even though leave may be requisitioned in good time, would make the right claimed entirely dependent on the time w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... If the correct procedure for the liquidator is merely to apply for the stay of proceedings and it cannot be used as a complete bar to the suit, as already instituted, then it ceases to matter whether the leave is granted before or after the period of limitation prescribed for the institution of the suit has run out or not. As already stated, the period of limitation under section 3, Limitation Act, dates back to the time of the actual presentation of the plaint unless the suit is regarded as in substance a claim against a company in liquidation, in which case the position will be much the same. For these reasons I would answer the reference by saying that a suit instituted against a company in liquidation without leave should not be dismissed on that ground alone; and, if leave is subsequently obtained, limitation should be calculated in the same way as if the suit had originally been instituted with leave. Ram Lall, J. I have had the advantage of reading the judgment of my brother Beckett and I am in general agreement with what he has Said. The facts leading up to this reference to a Full Bench briefly are that the Peoples Bank of Northern India Ltd., obtained a decree agains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d appear therefore that the interpretation placed on this provision by Judges in England would have very great weight. If the words of the English statute had been given a particular meaning by the Courts there, and such an interpretation had become a recognized rule of practice, it should be assumed that the same meaning was assigned to those words by statute which borrowed the language of the English statute. Reference may be made in this connexion to the observations of Bittleston, J., in DeSouza v. Coles [1867] 3 M.H.C.R. 384, at p. 390 . That being the case, it is desirable at the outset to consider in what sense the provision of section 177, English Companies Act, has been interpreted in that country. It would appear that the rule there is well established that when an action is commenced without leave against a company in liquidation an application for stay is made to enable leave to be obtained and the action continued. Buckley at page 400 of Edn. 11 of his work on the Companies Act says that "before the Judicature Act, 1873, it was held at law that omission to obtain leave to proceed with an action could not be pleaded as a bar to the further maintenance of the action ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty to obtain, if he can, the sanction of the Court supervising the liquidation before the suit can be proceeded. The fact that this practice is well established accounts for the paucity of the case law on the subject. In Rendall v. Blair [1890] 45 Ch D 139 , the matter was directly brought under discussion. There a school master had been dismissed by the managers of a charitable trust under the discretionary power conferred on them under section 17, Charitable Trusts Act, and he sued for an injunction restraining the managers from dismissing him or appointing any other person to the office held by him. Section 17, Charitable Trusts Act, enacted that "before any suit, petition, or other proceeding concerning or relating to any charity, or the estate, funds, property or income thereof, shall be commenced, presented, or taken, by any person whatsoever, there shall be transmitted by such person to the said board, notice in writing of such proposed suit," and the said board would, in their discretion, grant a certificate authorizing the suit or other proceeding and no suit, petition, or other proceeding for obtaining any such relief, order, or direction as last aforesaid "shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same as that obtaining in this country. Under the County Courts Act, 1888, an action is defined to include suits and means all proceedings commenced by a plaint. Words and phrases "suit" and "action" are interchangeable terms so far as the procedure in India is concerned, and when the draftsman borrowed the language of the English section, he substituted the word "suit" for the word "action" because "action" is a term not commonly used in this country. By doing so he was not seeking to introduce a change in the law or to vary its settled meaning which the word of the section so borrowed had acquired in England. When the section was borrowed, the meaning that a uniform course of authority had attached to the words of that section should be taken to have been borrowed with it. In this view of the matter, English authorities on the subject would be a safe guide to the interpretation of this and other analogous sections. Turning now to the authorities which have construed this and other analogous provisions of law in this country, the first conclusion that emerges is that there is a certain amount of conflict in the various High Courts. I will deal first with the authorities whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Comp. Cas. 146 , the same Judge again considered this question. Without any discussion the learned Judge followed the view he had previously expressed in In re Steel Construction Co., Ltd., [1935] 40 CWN 312 and regarding decisions of other Courts on the subject he observed as follows: "It has been pointed out to me that the opposite view has been taken in the Allahabad High Court and in the Bombay High Court, though it seems to me that my view has commended itself to the Lahore High Court. There is clearly no authority binding on me which compels me to modify the opinion I expressed in In re Steel Construction Co. Ltd. [1936] 3 Comp Cas 48 . On the authority of that case I feel constrained to accede to the liquidator's application." It appears to me that the Lahore High Court has not so far fully endorsed this view and in any case the dictum of the learned Judge without the slightest attempt at discussion is not helpful in solving this problem. In the Lahore High Court the only decision under the Companies Act that deals with the matter is reported in Peoples Bank of Northern India Ltd. v. Fateh Chand Co. [1930] 52 All. 430. Here, leave to appeal to the Privy Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank of Northern India Ltd. v. Fateh Chand Co. [1936] 6 Comp. Cas 48 , has been wrongly decided. There are no other cases that deal directly with the Companies Act. It would seem from the above discussion that whereas the Calcutta view is in conflict with the Allahabad view, the former Court has given no reasons in support of its view and in Lahore the grant of subsequent leave has not been treated as a nullity though the distinction drawn between the grant of leave before or after the limitation had run out has no logical basis. In no decision of the three Courts given under the Companies Act was reference made to English authority on the recognized practice of the English Courts. It appears to me that had the Calcutta and the Lahore Courts considered this practice, the decision would have been in conformity with the Allahabad view. There are a number of decisions under other provisions which require the sanction of some authority before the institution of, or proceeding with, suits. In dealing with these analogous provisions I will first deal with the decisions under the Presidency Towns Insolvency Act and the Provincial Insolvency Acts. In the Bombay Court, decisions u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich was followed by Black-well, J., in Maya Ookeda v. Kuverji Kurpal [1932] AIR 1932 Bom. 338 . In Jahangir Cursetjee v. Kastur Pannaji [1939] 39 Bom. 493, Beaumont, C.J., preferred the view of Davar, J., to that of Tyabji, J., in Bhimaji Bhibhutmal v. Chunilal Jhaverchand [1932] 57 Bom. 623 , but based himself like Davar, J., on a construction of the language of section 28, Provincial Insolvency Act, without attempting to meet the arguments and the reasoning advanced by Tyabji, J. Before leaving the Bombay Court decisions, reference may be made to a decision by Fawcett, J., reported in Bheraji Samrathji Co. v. Vasantrao Govindrao [1929] AIR 1929 Bom. 398 , where the learned Judge stayed a creditor's suit against an insolvent filed after the order of adjudication even though no leave had been obtained previously. Reference may also be made in this connexion to Mahomed Haji Essack v. Abdul Rahiman [1916] 41 Bom. 312 , where Scott, C.J., delivering the judgment of the Division Bench hold that the language of section 18, Presidency Towns Insolvency Act, was wide enough to justify a stay of proceedings in an action which was not pending at the time of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s followed largely on the basis that the plain construction of the section was consistent only with this view. In the Allahabad Court a conflict is reflected in Peoples Industrial Bank v. Ram Chandra [1930] 52 All. 430 , noticed already, and in Sarju Prashad Bhagwati Prasad Sah Firm v. Rajendra Prasad [1937] ILR 1937 All. 344 . In the latter case a distinction was made in cases where limitation had and those Where it had not expired. But as I have said already in discussing the Lahore case reported in Peoples Bank of Northern India Ltd. v. Fateh Chand Co. [1936] 6 Comp Cas 48, such a distinction is illogical and unsound. Reference was made prominently in the course of arguments to a decision of the Lahore High Court reported in Panna Lal Tassaduq Hussain v. Hira Nand Jiwan Ram [1928] 8 Lah 593, where a suit was brought without leave three years after the order of adjudication but in ignorance of this order, it was held that the suit had been rightly dismissed because it had been brought without the permission of the Insolvency Court. It was contended that the Lahore view was that this authority laid down that leave was to be regarded as a condition precedent to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idu v. Raja Manika Mudaliar [1937] AIR 1937 Mad. 767 and in Radha Charan Saha v. Matilal Saha [1937] 41 CWN 334 . In some cases the grant of leave has been regarded as the foundation of jurisdiction and a condition precedent to the institution of a suit and subsequent leave has been held not to validate proceedings. Where the remedy is barred till the happening of an event like the grant of leave, subsequent leave when granted will lift that bar. It seems to me that even under the Partnership Act the better opinion is that as a matter of procedure the remedy which is available is withheld till a condition is complied with and that the grant of leave by the Court is such a condition. The right to enforce a claim is granted by a decree and if the condition for the enforcement of that remedy is complied with before the grant of a decree, it makes no difference whether this condition is complied with before or after the institution of a suit so long as it is complied with before the decree is made. It is of course for the Court granting leave to decide whether the conduct of the applicant or other circumstances are such that leave should, not be granted. Once, however, leave ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the plaint itself would appear to be barred and so the plaint has to be rejected under order 7, rule 11(d), of the Code. In this view of the matter, no useful analogy can be drawn from decisions under section 80, Civil Procedure Code. Section 86, Civil Procedure Code, requires the consent of the Governor General before any Indian Prince, Ambassador or Envoy can be sued. The analogy drawn from the language of this section is not helpful because in the first place no case has been cited where consent has been given subsequent to the institution of a suit and has been held not to validate proceedings previous to the grant of that leave. In Narayana Moothad v. The Cochin Sircar [1916] 39 Mad. 661, the only authority referred to in arguments, no subsequent consent was either applied for or refused. Further it is debatable whether want of consent can be waived. If it can be waived, the provision ceases to be a condition precedent that goes to the root of the jurisdiction of the Court, for neither the waiver by, nor consent of, a party can confer on a Court jurisdiction which does not otherwise exist. Then again under section 92, Civil Procedure Code, two or more persons intereste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... words which may be said to have acquired a special meaning before their being interpreted in a statute was not discussed in either of the two decisions cited above under the Pensions Act and the Deccan Agriculturists Relief Act and therefore no useful analogy can be afforded by these decisions. The same applies to decisions such as Ram Gopal Chunnilal v. Ram Swarup Baldevdas [1934] AIR 1934 Bom. 91 and Suprokash Chandra Mitra v. Amullya Chandra Ghosh [1910] 44 CWN 604, given under clause 12, Letters Patent of the Presidency High Courts, which requires the leave of the Court in certain cases before the Court can " receive, try and determine " certain classes of suits. In these two cases where a plaint was presented without leave it was held that the suit had been validly instituted within the period of limitation though leave was obtained subsequently after the period of limitation for the institution of the suit had expired. On the whole, it seems to me that having regard to the course of decisions in England under the English Companies Act and under the English Bankruptcy laws and the fact that the provisions of section 171, Indian Companies Act, an analogous provision ..... X X X X Extracts X X X X X X X X Extracts X X X X
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