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TMI Blog1971 (6) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... cessary directions in respect of certain legal proceedings, which have been initiated by the respondent, the Income-tax Officer, Companies Circle, Ernakulam, against the applicant. The respondent has issued to the applicant the following notices under the Income-tax Act, 1961 : " 1. Notice under section 156 demanding payment of Rs. 57,070 being the income-tax assessed against the company for the year 1970-71 ; 2. Notices under section 274 read with section 271 relating to the assessment years 1963-64 to l970-71 requiring the applicant to show cause why an order imposing penalty under section 271 should not be made ; 3. Notices under section 274 read with section 273 relating to the assessment years 1963-64 to 1968-69 requiring the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the same grounds which have been somewhat elaborately discussed in those decisions. I shall only refer briefly to the decisions cited at the Bar in chronological order in the light of the opposing views canvassed for by counsel for the applicant and the respondent. Before doing so, it is necessary to read section 446 of the Companies Act : " 446. (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. (2) The court which is winding up the company sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any proceeding taken under any law ; but counsel for the respondent submits that, in the context it occurs in the above section, " legal proceeding " means a proceeding which, under law, a court has jurisdiction to entertain and dispose of. The first decision to be considered is that of the Federal Court in Governor-General in Council v. Shiromani Sugar Mills Ltd. (In liquidation). In that case the question was whether an Income-tax Officer was entitled to take proceedings against an official liquidator under section 46(2) of the Indian Income-tax Act, 1922, to recover arrears of income-tax due from the company in liquidation as an arrear of land revenue, without the leave of the winding-up court under section 171 of the Indian Companies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than in an ordinary court of law, or why a proceeding taken elsewhere than in an ordinary court of law, provided it be taken in a manner prescribed by law and in pursuance of law or legal enactment, cannot properly be described as a ' legal proceeding ' ?" The next decision cited before me is that of a learned single judge of this court in B. V. John v. Coir Yarn Textile Ltd. One of the questions that arose for consideration in the above case was whether an adjudication on a reference made under section 10 of the Industrial Disputes Act, 1947, was a legal proceeding falling within the ambit of section 446 of the Companies Act, 1956. The learned judge held that only a proceeding in the nature of an action against the property of the com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Damji Valji Shah v. Life Insurance Corporation of India. It was contended in that case that the Life Insurance Tribunal constituted under the Life Insurance Corporation Act had no jurisdiction to proceed with a proceeding under section 15 of that Act against a company in liquidation without the leave of the company court under section 446 of the Companies Act, 1956. Section 41 of the Life Insurance Corporation Act provides that no civil court shall have jurisdiction to entertain or adjudicate upon any matter which a Tribunal is entitled to decide or determine under that Act. The Supreme Court held that, in view of this provision, the Tribunal had exclusive jurisdiction to decide matters arising in a proceeding under section 15 of the Life I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment proceedings against a company which is ordered to be wound up without the leave of the court. This decision was set aside by the Division Bench which held that the decision of the Supreme Court in Damji Vaiji Shah's cases applied to proceedings under the Income-tax Act and that such proceedings were not affected by section 446(1) of the Companies Act. The last decision cited before me is a Single Bench decision of the Calcutta High Court in Offcial Liquidator v. Commissioner of Income-tax. There is an elaborate and useful discussion of the whole case law in this decision ; and the learned judge held that an assessment proceeding under the Income-tax Act would not come within the scope of section 446(1) of the Companies Act. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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