Skip to content


A.M. Padmakshi Vs. Sudarsan Chits (India) Ltd. and ors. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtKerala High Court
Decided On
Case NumberMiscellaneous Application Nos. 44 and 47 of 1983 in Company Petition No. 9 of 1981
Judge
Reported in[1987]62CompCas637(Ker)
ActsCompanies Act, 1956 - Sections 446, 446(1), 450 and 537
AppellantA.M. Padmakshi
RespondentSudarsan Chits (India) Ltd. and ors.
Appellant Advocate T.A. Ramadasan and; V. Divakaran Poti, Advs.
Respondent Advocate K.P. Dandapani, Adv. for respondent No. 1,; T.V. Ramakrishnan, Adv. for respondent No. 2 and;
DispositionPetition dismissed
Cases ReferredRoopnarain Ramchandra P. Ltd. v. Brahmapootra Tea Co.
Excerpt:
.....or subject to supervision of court - same follows with section 446 (2) - in present case company not wound up - provisions of section 537 read with section 446 (2) cannot have any application - applicant incompetent to base any claim or right on ground of absence of leave under section 446 (1) - right if any to place reliance on section 446 (1) read with section 537 only available to liquidator and not to applicant - application devoid of any merit liable to be dismissed. - - 1. this is an application filed under section 446 of the companies act, 1956, read with rules 105, 117 and 118 of the companies (court) rules, 1959. the applicant as well as the third respondent herein are judgment-debtors in o. 349 of 1979) as well as the fourth respondent, were parties in e. till then, such..........of the provisional liquidator does not affect the continuance of a pending proceeding, and leave of the winding up court is required only for commencing a new proceeding. but, once a winding up order is made, even the continuance of a pending proceeding can only be by leave of the court and subject to such terms as the court may impose. '5. in this case, the winding up order is kept in abeyance. no doubt there is a ' provisional liquidator '. even so, i am of the view that the fourth respondent was not obliged to obtain the leave of this court to continue the execution proceedings in o.s. no. 1 of 1982 when he brought the property to sale. section 446(1) of the act is not attracted to the instant case. this follows from the decision in b.v. john. v. coir yarn and textiles ltd......
Judgment:

K.S. Partpoornan, J.

1. This is an application filed under Section 446 of the Companies Act, 1956, read with rules 105, 117 and 118 of the Companies (Court) Rules, 1959. The applicant as well as the third respondent herein are judgment-debtors in O.S. No. 1 of 1972 of the Sub-Court, Tellicherry, in the suit filed by the first respondent company for realising an amount of Rs. 8,636. It was decreed on July 31, 1975. By the decree, a charge was created over the landed property extending to 1 cents under Re. Sy. No. 407/3, 4 and 5 of Kannapuram amsom. The first respondent company filed E.P. No. 51 of 1975 and brought the property to sale. E.A. No. 126 of 1975 was filed by it seeking permission to bid the property in the auction. It was granted. In the meanwhile, the third respondent paid Rs. 3,000. The fourth respondent filed the suit against the first respondent company, O. S. No. 349 of 1979, of the Sub-Court, Tellicherry, for recovering a sum of Rs. 7,000 odd and obtained a decree on March 8, 1980. In the said suit, E.P. No. 85 of 1980 was filed by the fourth respondent on June 12, 1980, and he attached the decree obtained by the first respondent against the petitioner and the third respondent (O.S. No. 1 of 1972). E.P. No. 150 of 1980 was thereafter filed in O.S. No. 1 of 1972 for sale of the property involved in that suit. The property was brought to sale on June 2, 1983, and it was purchased by the fourth respondent. The sale was for Rs. 10,010 and after setting off the amount due under the decree, the balance of Rs. 3,010 was deposited in court which may go in satisfaction of the first respondent's decree against the applicant (decree holder in O.S. No. 1 of 1972). The sale was confirmed on August 10, 1983, and full satisfaction was entered in O.S. No. 349 of 1979 as per E.A. No. 296 of 1983. The applicant, the third respondent (co-judgment debtor), the first respondent-decree holder in 0. S. No. 1 of 1 972 (and the judgment-debtor in O. S. No. 349 of 1979) as well as the fourth respondent, were parties in E. P. No. 150 of 1980. That E. P. was filed by the fourth respondent herein for sale of the property involved in O.S. No. 1 of 1972, the property belonging to the applicant herein. There were several adjournments in those execution proceedings for payment. The property was brought to sale only on June 2, 1983. The amin went to the property on October 1, 1983, in pursuance of the order passed by the court in E.P. No. 149 of 1983 in O.S. No. 1 of 1972 on application by the fourth respondent dated September 14, 1983. After opening the locks, some of the rooms were delivered over to the fourth respondent. Two rooms could not be delivered due to some obstruction by one Govindan and Gangadharan. The amin filed a report to that effect on October 3, 1983, praying for police aid for completing the delivery. The fourth respondent also filed E.A. No. 382 of 1983 in O.S. No. 1 of 1972 making a similar request. That stood posted to October 4, 1983, and adjourned from time to time due to some objections raised by the applicant, the third respondent and other persons. In the meanwhile, this application was filed in this court on October 10, 1983, and interim orders were obtained on October 11, 1983.

2. The main objection of the applicant is that the first respondent company was wound up and the provisional liquidator was appointed in C.P. No. 9 of 1981 by order dated June 16, 1981. The second respondent was appointed as the provisional liquidator. The fourth respondent was incompetent to act as he did not attach the property on December 23, 1982, and still later when it was brought to sale. It is alleged that the purchase of the property by the 4th respondent, after the appointment of the provisional liquidator, is opposed to Section 446 of the Companies Act and the same is void under Section 537 of the Act. So, it is prayed that the pending proceedings in O.S. No. 1 of 1972 and O.S. No. 349 of 1979 should be transferred to this court as also E.P. No. 150 of 1980. This application is opposed by the fourth respondent. It is stated that the winding up order passed by this court dated June 16, 1981, has been kept in abeyance by the orders passed in MFA Nos. 578, 579 and 520 of 1991 by order dated October 8, 1982. Sudarsan Chits (India) Ltd. v. Sukumaran Pillai, ILR (1983) I Ker 700 ; [1985] 57 Comp Cas 88 (Ker). The provisions of Section 446 are totally inapplicable. No leave is required to continue the proceedings in O.S. No. 1 of 1972 and O.S. No. 349 of 1979 and no question of transferring the said proceedings to this court arises. It is also contended that mere appointment of a provisional liquidator does not affect the continuance of the pending proceedings and no leave of court is required. Thirdly, the fourth respondent'contends that Section 537 will apply only if there is a winding up order and Section 537 should be read along with Section 446(2) of the Act. In this case, it cannot be said that the company is being wound up. It is also the fourth respondent's plea that at any rate the applicant is not entitled to invoke the provisions of Section 537 of the Act and contend that the proceedings by way of sale in O.S. No. 1 of 1972 are void, illegal and, therefore, liable to be set aside, or that the proceedings in O.S. No. 349 of 1979 should be transferred to this court. This is all the more so, in view of the conduct of the applicant and the the third respondent in the execution proceedings. They took part in the entire proceedings after the original order of winding up and appointment of a provisional liquidator were passed by this court on June 16, 1981, and after which date the fourth respondent took appropriate steps to bring the property to sale and purchased it.

3. Sections 446 and 537 of the Companies Act, on which reliance was placed by counsel on both sides, may be quoted herein :

' 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 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 shall, notwithstanding anything contained in any other law for the time being in force, have jurisdiction to entertain, or dispose of--

(a) any suit or proceeding by or against the company ;

(b) any claim made by or against the company (including claims by or against any of its branches in India);

(c) any application made under Section 391 by or in respect of the company ;

(d) any question of priorities or any other question whatsoever, whether of law or fact, which may relate to or arise in course of the winding up of the company ;

whether such suit or proceeding has been instituted, or is instituted, or such claim or question has arisen or arises or such application has been made or is made before or after the order for the winding up of the company, dr before or after the commencement of the Companies (Amendment) Act, 1960.

(3) Any suit or proceeding by or against the company which is pending in any court other than that in which the winding up of the company is proceeding may, notwithstanding anything contained in any other law for the time being in force, be transferred to and disposed of by that court.

(4) Nothing in Sub-section (1) or Sub-section (3) shall apply to any proceeding pending in appeal before the Supreme Court or a High Court.

537. Avoidance of certain attachments, executions, etc., in winding up by or subject to supervision of court.--(1) Where any company is being wound up by or subject to the supervision of the court--

(a) any attachment, distress or execution put in force, without leave of the court, against the estate or effects of the company, after the commencement of the winding up ; or

(b) any sale held without leave of the court, of any of the properties or effects of the company after such commencement;

shall be void.

(2) Nothing in this section applies to any proceedings for the recovery of any tax or impost or any dues payable to the Government. '

4. It is true that an order of winding up was passed and a provisional liquidator was appointed by a learned single judge by order dated June 16, 1981. But it is seen that in the appeal, MFA Nos. 578, 579 and 520 of 1981--Sudarsan Chits (India) Ltd. v. Sukumaran Pillai [1983] ILR l.Ker 700, 737, 738 ; [1985] 57 Comp Cas 88 (Ker), the official liquidator was directed to function as the provisional liquidator and the winding up order was held in abeyance. It is common ground that the judgment of the Division Bench, whereby the winding-up order was ordered to be kept in abeyance, is still in force. If that is the position, the only question is, even assuming that the provisional liquidator was appointed for certain purposes as envisaged by Section 450 (1) and (3) of the Act, whether Section 446(1) will be attracted. In B.V. John v. Coir Yarn and Textiles Ltd. [1960] 30 Comp Cas 162, 166, Raman Nayar J. held:

' On the wording of Section 446(1) of the Companies Act, 1956 which, in this respect, makes a significant departure from the language of Section 171 of the Act of 1913, the appointment of the provisional liquidator does not affect the continuance of a pending proceeding, and leave of the winding up court is required only for commencing a new proceeding. But, once a winding up order is made, even the continuance of a pending proceeding can only be by leave of the court and subject to such terms as the court may impose. '

5. In this case, the winding up order is kept in abeyance. No doubt there is a ' provisional liquidator '. Even so, I am of the view that the fourth respondent was not obliged to obtain the leave of this court to continue the execution proceedings in O.S. No. 1 of 1982 when he brought the property to sale. Section 446(1) of the Act is not attracted to the instant case. This follows from the decision in B.V. John. v. Coir Yarn and Textiles Ltd. [I960] 30 Comp Cas 162, 166. In this view of the matter, there is no infirmity in the execution proceedings taken in O.S. No. 1 of 1972 and O.S. No. 349 of 1979 of the Sub-Court, Tellicherry, and the applicant cannot have any grievance in the matter.

6. The submission of the applicant's counsel placing reliance on Section 537 of the Companies Act is without substance. Section 537 of the Act will apply only if a company is being wound up by or subject to the supervision of the court. That goes along with Section 446(2) of the Act, Admittedly, in this case, the company is not being wound up. So, the provisions of Section 537 of the Companies Act read with Section 446(2) of the Act cannot have any application in this case. I am of the view that even if it is said that once the provisional liquidator is appointed under Section 450 of the Act, leave of court shall be obtained under Section 446(1), that is a plea which is available only to the official liquidator and the applicant is incompetent to base any claim or right on the ground of absence of leave under Section 446(1) of the Act. The applicant has no locus standi to sustain any plea on the ground of absence of leave under Section 446(1) of the Act. The right, if any, to place reliance on Section 446(1) read with Section 537 of the Act is only available to the liquidator and not to the applicant.

7. Lastly, I should also state that the conduct of the applicant disentitles her to move this court. The applicant and the third respondent were parties in E.P. No. 150 of 1980 in O.S. No. 1 of 1972. The petition was filed for sale of the property involved in O.S. No. 1 of 1972. The matter came up for consideration on many occasions, Adjournments were sought by remitting some amount. The property was brought to sale on December 23, 1982. The fourth respondent purchased the property after obtaining leave of court. The sale was confirmed. Full satisfaction was recorded. The amin went to the property to effect delivery. Part delivery was also effected. It is after all these that the applicant has chosen to move this court for transferring to this court all execution proceedings in respect of O.S. No. 1 of 1972 and O.S. No. 349 of 1979 of the Sub-Court, Tellicherry. The applicant took part in the execution proceedings at various stages. Her conduct, viewed as a whole, disentitles her to move this court at this distance of time. I am inclined to take the view that, on the facts, this application is filed without bona fides. I am of the view that this application is intended to delay the execution of a lawfully obtained decree. Orders have been passed at different stages in the execution proceedings and the property itself has been sold. These were done as per orders of courts. It is not permissible for the applicant either to ignore such proceedings or orders or to nullify them .collaterally as purported to be done at present. Such orders of courts are not void or 'of no effect'. They are valid and legal until set aside or avoided by competent persons, in the appropriate forum, as prescribed by law. Till then, such orders or proceedings and the steps taken therein, will hold good. In this view also, the applicant has no case.

8. Counsel for the fourth respondent brought to my notice the decision in Roopnarain Ramchandra P. Ltd. v. Brahmapootra Tea Co. (India] Ltd., AIR 1962 Cal 192, and contended that the fourth respondent was not aware of the appointment of the provisional liquidator or proceedings in C.P. No. 9 of 1981, and that if it is held that leave is necessary under Section 446 of the Act, this court may be pleased to grant leave retrospectively under Section 446 of the Act read with Section 547 of the Act. In this view of the matter, O.S. No. 1 of 1972 and O.S. No. 349 of 1979 of the Sub-Court, Tellictierry, may be permitted to be proceeded with. The fourth respondent has moved this court in that connection by way of MCA No. 47 of 1983. I heard counsel for the first respondent, counsel for the applicant as also counsel for the fourth respondent in this behalf. It is true that the dictum in Roopnarain Ramchandra P. Ltd. v. Brahmapootra Tea Co. (India) L'd., AIR 1962 Cal 192, supports counsel; and there is considerable force on the merits, as pleaded by counsel. But in view of the fact that there is no winding up order in force as on today, leave applied for is unnecessary. Even assuming that a provisional liquidator has been appointed for certain purposes, I do not think, it is open to the applicant herein to raise objections regarding want of leave under Section 446 of the Act. In this view of the matter, I do not pass any order on merits in MCA No. 47 of 1983 as no further orders are necessary in the matter.

9. The net result is that MCA No. 44 of 1983 is groundless and filed without any bona fides. The same is dismissed with costs of the fourth respondent. MCA No, 47 of 1983 is dismissed, since no further orders are necessary at present.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //