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TMI Blog1991 (1) TMI 364X X X X Extracts X X X X X X X X Extracts X X X X ..... the company under liquidation. A few facts relevant for considering the contention raised on behalf of the appellant are that the company under liquidation had borrowed from the appellant-bank several amounts of money which, on the date of the application, totalled to Rs. 21,07,251.57 plus interest of Rs. 11,66,178.74. The said loans taken by the company under liquidation from the appellant-bank were guaranteed by Debrata Das, a resident of Bombay and also the ex-director of the company. Since the said guarantor was a resident of Bombay, the appellant-bank intended to file a civil suit in Bombay against the company and the said guarantor. The appellant, therefore, filed an application under section 446 of the Companies Act seeking leave of the company court to file a civil suit against the company and the said guarantor in the High Court of Bombay on its original side. The said application is registered as Company Application in Liquidation Proceedings No. 8 of 1989 in Company Petition No. 1-S of 1987. The appellant raised a contention before the learned company judge in the said application that, since a third person, viz., a guarantor, was also a defendant in a suit which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or disposed of by the company court. Construing section 446(2) of the Companies Act it may be seen that, in its present form, it was substituted by the Companies (Amendment) Act, 1960, with a view to sub-serve the object of the winding up of a company. The winding up of a company by a court is to facilitate the protection and realisation of its assets with a view to ensure an equitable distribution thereof among those entitled and to prevent the administration from being embarrassed by a general scramble among creditors and others. Consequently, once the court has taken the assets of a company under its control or has passed an order for its being wound up, it will not be proper to allow proceedings to be started or continued against the company and embarrass the administration of its affairs. The present section is intended to safeguard the assets of a company in winding-up against wasteful or expensive litigation in regard to matters capable of being determined expeditiously and cheaply by the winding-up court itself. The Supreme Court has, in para 7 of its judgment in the case of Sudarsan Chits (India) Ltd. v. G. Sukumaran Pillai [1985] 58 Comp Cas 633 , considered the histori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve subsisting claims and to realise these claims, the liquidator will have to file suits. To avoid this eventuality and to keep all incidental proceedings in winding-up before the court which is winding up the company, its jurisdiction was enlarged to entertain a petition, amongst others, for recovering the claims of the company. In the absence of a provision like section 446(2) under the repealed Indian Companies Act, 1913, the official liquidator, in order to realise and recover the claims and subsisting debts owed to the company, had the unenviable fate of filing suits. These suits, as is not unknown, dragged on through the trial court and courts of appeal resulting not only in multiplicity of proceedings but in holding up the progress of the winding up proceedings. To save the company, which is ordered to be wound up, from this prolix and expensive litigation and to accelerate the disposal of winding up proceedings, Parliament devised a cheap and summary remedy by conferring jurisdiction on the court winding up the company to entertain petitions in respect of claims for and against the company. This was the object behind enacting section 446(2) and, therefore, it must receive s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls Co. [1970] 40 Comp Cas 10 shows that, relying upon the observations in the judgment of the Madras High Court in the case of Purushottam and Co. v. Subhodhaya Publications Ltd. [1955] 25 Comp Cas 49 , it has held that when there are defendants in a suit other than the company in liquidation whose rights are affected, leave should be normally granted to proceed with the suit subject to the condition that the decree, if any, obtained should not be enforced against the company under liquidation without leave of the company court. It is clear from the above judgments that the suits where there are defendants other than the company under liquidation are contemplated under section 446(1) of the Companies Act. If the suit that is already filed against the company along with other defendants, where particularly the company under liquidation is the principal defendant is under the control of the company court in the sense that, for filing of the suit or when the suit is already filed, for proceeding with it, leave of the company court is necessary which can be granted subject to the terms or conditions which it may impose, it is difficult to see why such a suit where there are defendants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here is no merit in the above submission because what the learned company judge is deciding is a suit which he has entertained and which he is empowered to entertain under section 446(2) of the Companies Act. It is a different case when the issue is such which can be exclusively decided by a special court or tribunal constituted for a particular purpose such as a rent court under the Rent Act, etc. The question of liability of a guarantor is a question which any court of general jurisdiction can decide. Moreover, the above judgment is rendered prior to the amendment of section 446(2) of the Companies Act when, for the first time, the provision was introduced enabling the company court to entertain and dispose of the suit which is by or against the company. The above contention raised on behalf of the appellant must, therefore, fail. Learned counsel for the appellant has relied upon the decision of the Mysore High Court in the case cited supra as also the decision of the Madras High Court cited supra in support of his submission that in a suit where there are other defendants in addition to the company under liquidation, the provisions of sub-section (2) of section 446 of the Compa ..... 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