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TMI Blog1954 (11) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... of a large sum of money on the allegation that the principal debtor was the father and the son had guaranteed repayment of the debt. During the pendency of the suit the bank had applied for and had got certain aeroscraps attached before judgment. Rahmat Ali Fatehulla had claimed that those aeroscraps belonged to him exclusively and that he had been carrying on a separate business. The objection to attachment of the property was, however, dismissed. The learned Judge ultimately decreed the suit against the father but, on a finding that it had not been proved that the son was a guarantor, the suit against Rahmat Ali Fatehullah was dismissed. When in execution of the decree the bank proceeded to sell up the aeroscraps which had been attached Rahmat Ali Fatehullah filed an objection in the execution court claiming the property to be his own. He also filed an application in the suit that, since the suit had been dismissed against him, the attachment before judgment stood discharged, as the property had belonged to him. Both these applications were disposed of by the same order, the decision being in favour of Rahmat Ali Fatehullah. The bank filed an appeal which was allowed by a Bench ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany Judge under section 171 is required. Section 171 does not bar the institution or continuation of a suit or other legal proceeding by the company but against the company. Some difficulty has arisen with regard to the meaning of the words "or other legal proceeding". They have been interpreted in some cases to mean "other original proceedings like a suit in the court of first instance." In Benaras Bank Ltd. v. Sashibhushan Misra [1948] 18 Comp. Cas. 279 Manohar Lall and Mukherji JJ. followed the view of Tek Chand J. in the Full Bench decision of the Lahore High Court in Shukantla v. Peoples' Bank of Northern India Ltd [1941] 11 Comp. Cas. 309 that: "This expression 'legal proceeding' in this section (section 171) is coupled with 'suit' and obviously means proceedings ejusdem generis, that is to say, original proceedings in a court of first instance, analogous to a suit initiated by means of a petition similar to a plaint. It does not include proceedings taken in the course of the suit nor proceedings arising from the suit and continued in a higher court like an appeal from an interlocutory or final order passed in the suit." The other view which was taken by Braund J. in R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made to work in co-ordination, unless all creditors (except such secured creditors as are 'outside the winding up' in the sense indicated by Lord Wrenbury in his speech in Food Controller v. Cork [1923] A.C. 647 at 671) are subjected as to their actions against the property of the company to the control of the court. Accordingly, in our judgment, no narrow construction should be placed upon the words 'or other legal proceeding' in section 171. In our judgment, the words can and should be held to cover distress and execution proceedings in the ordinary courts. In our view, such proceedings are other legal proceedings against the company, as contrasted with ordinary suits against the company." In view of the observations of Spens C.J. in Shiromani Sugar Mill's case [1946] 16 Comp. Cas. 71 it is no longer necessary to refer to various decisions in which a contrary view was taken. Since, however, they were cited at the Bar we may briefly refer to them. In Milawa Ram v. Peoples' Bank of India [1916] AIR 1916 Lah. 24, it was held that a revision application filed against a company was "other legal proceeding" and it was not maintainable without the permission of the company Judge. Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny has come to court and has instituted the proceeding, which it can do without the leave of the company Judge, the defendant will be required to take his permission to institute or continue any legal proceeding to defend himself. To hold that would put the defendant in a difficult position and it would be necessary, before he can take any proceeding against the company even by way of defence or to disprove the company's claim or to get some order passed in favour of the company vacated, to take the permission of the company Judge. The words "against the company" must mean a proceeding where a liability is intended to be fastened on the company or its assets and not a proceeding commenced by a person with the object of escaping liability arising out of a proceeding commenced by the company itself. It would probably be useful to clarify the position a little further. If a person wants to file a suit to escape liability on the ground that the company's claim against him is unfounded, it is a proceeding against the company, but where the company has started the proceeding, that is, put forward its claim in a court of law, any remedy available by way of defence to escape liability, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iles a suit for a declaration that the company owes to him a certain sum of money or that he does not owe the company any sum of money, the permission of the company Judge is necessary. If, however, the company has instituted a suit or other proceeding to enforce a claim, any action taken by the defendant or the opposite party by way of defence, or if the company has obtained a decree or order, any defensive action by way of appeal, revision, review or setting aside of an ex parte decree or order should not require the permission of the company Judge. If the proceedings have been instituted or continued on behalf of the company after the winding up order, according to the view taken by Braund J. the subsequent prodeedings by way of defence would come under the rule laid down by Lord Davey. There does not appear to us, with great respect to the learned Judge, to be any good reason for coming to the conclusion that the result should be otherwise where the proceedings had been instituted and continued by the company before the winding up order, specially as under section 171 of the Companies Act the company is not required to obtain the permission of the company Judge for the institu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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