D. K. Kapur, J. - This appeal has been listed as F.A.O. 60/1969 though it is also shown as C.A. 133 of 1969. The appeal was subsequently directed to be placed before the Company Judge and that is how I hear the matter. The appeal is directed against the order of the official liquidator passed on 19th March, 1969 stating that the Income-Tax Department had not obtained the leave of the High Court at Delhi under Section 446 of the Companies Act, 1956 in spite of a letter pointing this out to the Income-Tax Officer.
2. No leave had been taken. It was also stated that the claim had been rejected. Against this order the Income-Tax Officer has taken out a common under Rule 164 of the Companies (Court) Rules, 1959. That Rule, in fact, provides for an appeal by the creditor against the decision of the liquidator which must be filed not later than 21 days from the date of service of the notice. The appeal was actually filed on 10th April, 1969, and seems to be within time. The affidavit in support of the appeal shows that the proceedings for the assessment year 1957-58 were reopened under section 147 of the Income-Tax Act, 1961 by a notice dated 23rd March, 1966. The Income-Tax Officer stated that notices were issued to the official liquidator who did not produce the books of account in spite of opportunity being given and hence an assessment order on the basis of an income Rs. 83,692/- was passed and further penalty proceedings were also started under Sec. 271 of the Income-Tax Act. When the Income-Tax Officer made a claim to the official liquidator as a creditor in relation to the assessment made, the official liquidator rejected the same on the ground that the Income-tax Department had not obtained the leave of the Court under section 446 of the Companies Act, 1956.
3. It is provided in Section 446(1) of the Companies Act, 1956, that no suit or legal proceedings can be instituted against a company which is being wound up except after leave has been obtained from the court. It is further provided that in case any such proceedings before the winding up order was passed, then such proceedings shall not be continued without such leave. The court is also empowered to impose conditions when granting such leave. There was some doubt at one time as to whether the Section was wide enough to include income-tax proceedings. There was a view that even assessment proceedings under the Income-Tax Act require the leave of the Court before they could be continued or initiated. This controversy has been set at rest by the judgment of the Supreme Court in S. V. Kondeskar etc. vs. V. M. Deshpande and Anr., : 83ITR685(SC) . In that case the Supreme Court had held that legal proceedings within the meaning of Sec. 446(1) do not include proceedings before an Income-Tax Officer, but only include that type of proceedings which can be tried by the Court. On the other hand, the Court has observed that as far as the recovery proceedings are concerned, the provisions of Section are attached. Thus, the assessment can be done by the Income-Tax Officer but the recovery of the tax due cannot be made except under the Companies Act. This is the net result of the legal position stated by their Lordships of the Supreme Court. In view of this decision, the view of the Official Liquidator expressed in March 1969, to the effect that the leave of the Court had to be obtained before the Income-tax proceedings under section 147 of the Income-Tax Act, 1961 could be initiated does not seem to the correct. In the circumstances, the reason for which the claim of the Income-Tax Officer has been rejected is erroneous and the order has to be set aside.
4. The Official Liquidator has not dealt with the claim on its merits at all I do not think I would be justified in upholding the claim without going into any of the facts. It is provided in Rule 164 of the Companies (Court) Rules, 1959, which is the Rule under which I am exercising jurisdiction, that the Court will have all the powers of an appellate court under the Code of Civil Procedure. Consequently, in deciding this appeal, this Court can exercise all the powers that it would have if this was an appeal under the Code of Civil Procedure. The provision of order 41 Rule 23 provide that when a suit has been decided upon a preliminary point and the decree is reversed in appeal the appellate court may remand the case for redecision. On a parity of reasoning this is the case which has been decided on a preliminary point by the official liquidator and, thereforee, the matter should be remanded back for a decision by the official liquidator concerning the claim of the Income-Tax Officer. The official Liquidator is present himself and has been informed that he can act under Rule 163 or any other provision of law relating to consideration of the claim by the Income-Tax Officer. The order of the official liquidator is set aside and the matter remanded in the manner just set out. There will be no order as to costs.