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United Commercial Bank Vs. State of Jammu and Kashmir and ors. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtPunjab and Haryana High Court
Decided On
Case NumberCompany Petition No. 48 of 1981
Judge
Reported in[1986]60CompCas653(P& H)
ActsCompanies Act, 1956 - Sections 446; Indian Companies Act, 1913 - Sections 171
AppellantUnited Commercial Bank
RespondentState of Jammu and Kashmir and ors.
Appellant Advocate J.S. Narang, Adv.
Respondent Advocate Munishwar Puri,; K. Chhibber and; G.S. Bhatra, Advs.
Cases ReferredShankar Service Station v. Associated Industrial and Engineering Corporation Ltd.
Excerpt:
.....the order of refusal passed to the persons concerned, the period of limitation for filing an appeal would commence from the date when the parties concerned acquire knowledge of passing of the said order. - 's case [1971] 41 comp cas 43 (bom), and the importance of the question involved, i feel that this matter would better be settled by an authoritative pronouncement by a division bench......the suit under the said section was moved in this court on march 8, 1976. instead of granting the leave, the suit was transferred to this court, vide orders dated august 1, 1980, and the petition for leave was dismissed on the agreement of the parties. this order necessarily implies that the post facto permission to institute the suit was duly granted as otherwise the petition would not have been dismissed because of the transfer of the suit to this court. a similar view was taken by b.r. tuli j. in punjab national bank v. punjab finance pvt. ltd. [1973] 43 comp cas 350 (p& h). the question still remains as to whether the post facto sanction could be granted and the suit filed prior thereto would be deemed to be a validly instituted suit. on this matter, there is a lot of conflict.....
Judgment:
ORDER

Goyal, J.

1. This order will dispose of the following issue which was treated as a preliminary issue being purely one of law :

Whether the suit is not maintainable as no leave has been obtained under Section 446 of the Companies Act OPR

2. Voluntary liquidation of respondent No. 2 (hereinafter called ' the company') took place on November 8, 1974. The present suit was filed on June 16, 1975, without obtaining any leave under section 446 of the Companies Act. The application for permission to continue the suit under the said section was moved in this court on March 8, 1976. Instead of granting the leave, the suit was transferred to this court, vide orders dated August 1, 1980, and the petition for leave was dismissed on the agreement of the parties. This order necessarily implies that the post facto permission to institute the suit was duly granted as otherwise the petition would not have been dismissed because of the transfer of the suit to this court. A similar view was taken by B.R. Tuli J. in Punjab National Bank v. Punjab Finance Pvt. Ltd. [1973] 43 Comp Cas 350 (P& H). The question still remains as to whether the post facto sanction could be granted and the suit filed prior thereto would be deemed to be a validly instituted suit. On this matter, there is a lot of conflict between the various High Courts prior to the enforcement of the present Companies Act, but the same was settled by the Supreme Court in Bansidhar Shankarlal v. Mohd. Ibrahim [1971] 41 Comp Cas 21 (SC) wherein it was held that the suit or proceeding without leave of the court may be regarded as ineffective until the leave is obtained. But once the leave is obtained, proceedings will be deemed to be instituted on the date of the grant of the leave. Under the present Act of 1956, some change has been made in the phraseology and the wording of section 446(1) as compared to the provisions contained in Section 171 of the earlier Act. On the basis of the changed phraseology of Sub-section (I) of Section 446, the Division Bench of the Bombay High Court in Eastern Steamship P. Ltd. v. Pucto P. Ltd. [1971] 41 Comp Cas 43 (Bom) held that with regard to the suits against a company in liquidation, leave to continue a suit or to proceed with it 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. This decision was followed by Palaniswami J. of the Madras High Court in Shankar Service Station v. Associated Industrial and Engineering Corporation Ltd. [1974] 44 Comp Cas 488 (Mad). However, I am of the view that there is no substantial and material change in the phraseology of the provisions contained in Sub-section (1) of Section 446 of the Companies Act as compared with the provisions contained in Section 171 of the previous Act. But, in view of the Division Bench decision of the Bombay High Court in Eastern Steamship P. Ltd.'s case [1971] 41 Comp Cas 43 (Bom), and the importance of the question involved, I feel that this matter would better be settled by an authoritative pronouncement by a Division Bench. This case may, therefore, be put up before my Lord the Chief Justice for referring the question stated above to a larger Bench.


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