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TMI Blog1970 (8) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... s decisions of this court, to which we shall refer later, by an order dated 12th January, 1970, the learned judge referred the matter to a Division Bench. This is how the matter comes up before us to-day. A petition for winding up Gill Amin Steamship Company Private Limited, the defendant No. 2, was filed in this court on 4th July, 1963. A provisional liquidator was appointed on 26th August, 1963, and an order of winding up was made on 23rd September, 1963. The plaintiffs claim to be creditors of the said company. The defendant No. 1 claim to be mortgagees of a ship named "S. S. Sheilla Margarette" belonging to the defendant No. 2 company under two deeds of mortgage dated 18th May, 1963, and 28th May, 1963, in the sums of Rs. 2,60,000 and Rs. 1,30,000 respectively. The plaintiffs wish to challenge the validity of the said mortgages and contend that the said mortgages are not binding on the official liquidator, inter alia, on the ground that they were made within a period of one year before the date of the order of winding up and further that the defendant No. 1 and defendant No. 2 have common directors and that the mortgages were fraudulent as well as without consideration. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s summons for leave to continue the suit already instituted by them on 24th February, 1969, viz ., Suit No. 252 of 1969. The said judge's summons, as we have already stated, was referred to a Division Bench and has come up for hearing before us today. The defendants have opposed the summons, inter alia, on the ground that leave to commence the suit could only be granted before the suit was commenced, and no leave could be granted under section 446 of the Companies Act, 1 of 1956, to continue a suit which has been instituted after the order of winding up. Section 416(1) of the Companies Act, 1 of 1956, reads as under: "446. Suits stayed on winding up order. (1) 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". A plain reading of the above sub-section would suggest that ( a ) no suit shall be commenced against the company after a winding up order has been made except by leave of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontinuation of the suit already filed. Mr. Justice Davar held that the leave contemplated under section 17 of the Presidency Towns Insolvency Act, 1909, was leave which ought to be obtained before the commencement of a suit and could not be granted after the same was filed. Two passages in the judgment read as under: "The words of the section are so clear and unambiguous that there is no possibility of construing them in any way other than that leave must be obtained before the commencement of the action. The words of the section are so clear and explicit that they leave no room for any construction other than the one I have placed upon them. No creditor shall 'commence' a suit except with leave. This provision clearly negatives the suggestion that a suit commenced without leave can be continued by obtaining leave, at any stage thereof". The same question again arose in the case of Maya Ookeda v. Kuverji Kurpal [1932] 34 BLR 649; AIR [1932] Bom. 388 . Mr. Justice Blackwell, following the judgment of Mr. Justice Davar in the case previously cited, decided that a creditor of an insolvent cannot bring a suit against the insolvent without first obtaining leave to sue from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1948, which is in terms similar to section 171, and the judgments of Indian High Courts in interpreting section 171, Section 171 reads as under : "171. When a winding up order has been made or a provisional liquidator has been appointed no suit or other legal proceedings 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". The language of section 171 would show that suits commenced before the winding up order or appointment of a provisional liquidator are not separated from suits commenced thereafter as has been done in section 446 of the Companies Act, 1956. In respect of both kinds of suits, section 171 provides that no such suits or other legal proceedings shall be proceeded with or commenced against the company except by leave of the court, indicating that there are two stages at which a plaintiff may seek the leave of the court. He may seek the leave of the court before the commencement of a suit or he may even choose to seek such leave after the winding up order or appointment of a provisional liquidator, when he wishes to proceed with the suit. In the case of suits commenced after the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 110; 54 CWN 832 The Allahabad High Court has also taken the same view in the case of People's Industrial Bank Ltd. v. Ram Chander Shukul" [1930] ILR 52 All 430; AIR [1930] All 503 . In another case in the Calcutta High Court, viz ., Roopnarain Ramchandra Private Ltd. v. Brahmapootra Tea Co. ( India ) Ltd. [1961] 65 CWN 1060; AIR [1962] Cal. 192, Mr. Justice A. N. Ray was dealing with a case under section 171 of the Indian Companies Act, 1913. That was, however, not a case of leave, but a contention based on section 1 71 was taken that a suit instituted without such leave was a suit without jurisdiction. The learned judge took the view that in suits or proceedings against the company in the course of liquidation the absence of leave to continue or to proceed does not deprive the court of the jurisdiction to pass any decree. The court had jurisdiction to hear such suits. The existence of jurisdiction did not depend upon any such leave. The learned judge was, however, not concerned with the problem that we have before us, nor has he expressed any view thereon. Mr. Tijoriwalla made an attempt to argue that a suit is not commenced within the meaning of section 446 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inding up order has been made except by leave of the court. In such cases leave could only be granted before the suit is commenced and no leave can be granted to continue it or to proceed with it if it is commenced after the date of the winding up order. We are also of the view that in India a suit is commenced on the presentation of a plaint in court. The provisions of section 17 of the Presidency Towns Insolvency Act, 1909, and section 28(2) of the Provincial Insolvency Act, 1920, are similar in respect of suits instituted after the winding up order to the provisions of section 446 of the Companies Act, 1 of 1956, and we take the same view as has been taken by Davar J., Blackwell J. and Beaumont C.J. in the cases referred to above. We are, therefore, of the view that leave to continue Suit No. 252 of 1969, which was instituted after the date of the winding up order, cannot be granted. Mr. Tijoriwalla made an attempt to argue before us at the stage of his reply that in fact the suit instituted by the plaintiffs was not against the company but was for the benefit of the company and that the relief asked for was in favour of the defendant No. 2, i.e , the company and not in f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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