9911796707
TMI Blog1958 (9) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... r has been made, no suit or other legal proceeding shall be commenced against the company except by leave of the court and subject to such terms as the court may impose. The opposite party, the Income-tax Officer, Titlagarh, without obtaining the leave of the court before starting proceedings for attachment of the assets in the custody of the court in the hands of the official liquidator issued a notice under section 46, clause (5A), on the official liquidator under the following circumstances. As in the statement of affairs furnished by the ex-managing director no information regarding assessments, payments and cases, if any, pending either with the Income-tax Officer or the Appellate Assistant Commissioner or the Tribunal in connection with the income-taxes pertaining to the Koraput Swadhin Motor Transport Company Limited was available, a reference, as directed by the court, was made in the matter to the Income-tax Officer by the official liquidator, on January 6, 1958, informing him that a winding up order had been made with regard to the said company ; that he was appointed official liquidator to administer the affairs of the company; and that no information relating to asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver is less. Further if you fail to make payment in pursuance of this notice to me as Income-tax Officer, Titlagarh, further proceedings may be taken by and before the Collector on the footing that this notice has the same effect as an attachment by the Collector in exercise of his powers under the proviso to sub-section (2) of section 46." This clearly shows that the Income-tax Officer, by issuing the above notice, started a legal proceeding against the official liquidator when he was asked to supply the information required, without the consent of the court as required by law. Under section 446, clause (1), of the Indian Companies Act, 1956: "When a winding up order has been made or the official liquidator has been appointed as provisional liquidator, no suit or other legal proceeding shall be commenced or if pending at the date of the winding up order shall be proceeded with, against the company, except by leave of the court and subject to such terms as the court may impose." This is a mandatory direction of law. This provision applies also to the proceedings started by the State. The notice of attachment under section 46(5A) amounts to starting a legal proceeding. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law and in pursuance of law or legal enactment, cannot properly be described as a 'legal proceeding'. Accordingly the words 'other legal proceeding' in section 171 comprise any proceeding by the Revenue Authorities under section 46(2), income-tax Act, and before forwarding the requisite certificate under section 46(2) to the Collector, which would put the machinery for the collection of the arrears of income-tax as arrears of land revenue into motion, the Income-tax Department should apply in the liquidation under section 171 for leave of the winding up court." These observations clearly apply to a proceeding under section 46(5A) also. In the case of Bank of Bihar Ltd. v. Secretary of State [1931] 1 Comp Cas 349 , a Division Bench of the Patna High Court consisting of Courtney Terrell C.J. and Kulwant Sahay J. held that: "There is no exception to section 171 [section 446 of the present Act] and the leave of the court is essential for the purpose of proceeding to execution even in case of decree obtained by the Government. The Crown debts have no priority over other debts. It was not the intention of the Legislature that the court should be given discretion to permit proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to do any such act that might amount to contempt of court. He stated that his sole purpose in issuing the notice under section 46(5A) was to afford facility to the official liquidator to make the payment on the conclusion of the winding up proceedings when funds would be available with him. In paragraph 9 he also stated that the Central Government was protected under section 537(2) of the (Indian) Companies Act and that the notice under section 46(5A) of the Income-tax Act was not an attachment until certificate proceedings would be started by the Collector of the District in exercise of his powers under the proviso to sub-section (2) of section 46 of the Indian Income-tax Act. He further stated that it was under this impression and with a view to help the official liquidator to make the payment at the conclusion of the winding up proceedings, he issued the notice acting bonafide and in good faith; and that he very much regretted that he was not aware that leave of the court was to be taken before any such notice could be issued under section 46. He also stated that the above facts were stated to appraise this court all the circumstances under which the said notice had been issu ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
