Balaji Petakar v. Official Liquidator And Others Opposite Parties.

J.N Takru, J.:— This application by Balaji Patekar under Sec. 446 of the Indian Companies Act seeks the leave of this Court to commence his suit against Firm Mathuraram Beniram (in Liquidation) through the Official Liquidator.

2. It appears that Balaji Patekar, claiming himself to be a prior mortgagee, filed suit No. 4 of 1965 in the court of the Civil Judge, Varanasi on 8-10-1964. The suit was for the enforcement of his mortgage against the mortgagors who were arrayed as defendants Nos. 1 and 2. In this suit Finn Mathuraram Beniram (In Liquidation) through the Official Liquidator was impleaded as defendant No. 3 on the allegation that it was a subsequent mortgagee. As the order for the winding up of Firm Mathuraram Beniram had been made on the 20th May, 1964, an objection was taken by the official Liquidator in his written statement that the suit could not proceed against the said defendant without the leave of this court. Thereupon the applicant made the aforesaid application in this court on the 22nd September, 1966.

3. Now on the applicant's own showing the application for leave to commence the suit against Firm Mathuraram Beniram was made several months after the institution of the suit. It is an admitted fact that the date on which the suit was filed was the last date of limitation. Hence the first question which arises is whether this court can grant the desired leave on an application which was filed on a date on which the suit was barred by limitation. Sec. 446 of the Indian Companies Act, in so far as it is material for the present purpose, reads thus:

“When a winding-up order has been made or the Official Liquidator has been appointed as Provisional Liquidator no suit or legal proceeding shall be commenced …. against the Company except by leave of the Court ……”

4. In the present case the winding-up order was, as stated earlier, made on the 20th May, 1964. The suit against the Finn, i.e defendant No. 3, could not, therefore, be commenced on the 8th October, 1964 without obtaining the leave of the court. A literal interpretation of the aforesaid section would therefore have barred the suit since the requisite leave had not been obtained prior to its commencement. However, there is abundant authority for the proposition that the leave of the court can be obtained even after the filing of the suit; (see Peoples Industrial Bank Ltd. v. Ram Chandra Shukla A.I.R 1930 Alld. 503.. The Gorakhpur Electric Supply Co. v. Amarnath Jaitly I.L.R 1951 Alld. 191. and Suresh Chandra Khasanabish v. The Bank of Calcutta Ltd. 54 C.W.N p. 832.). The question, which however, still survives is whether the court can give leave to commence a suit which on the date the leave is applied for is time-barred. In my opinion the answer to this question must be given in the negative, because of the law of Limitation. Under Sec. 446, a suit against a company which has been ordered to be wound up cannot commence without the leave of the court, but if it has been instituted without that leave it remains dormant and can come to life only when the leave of the court is sought for and given. It follows therefore that the leave must be sought for at a time when the suit is still within time, otherwise the court would be granting leave to commence a time-barred suit which it clearly cannot do. It is noteworthy that in all the cases referred to above although the suit was filed without leave, the leave itself was sought for while the suit was still within time and hence there were no bar of limitation in the way of the court granting the necessary leave. The learned counsel for the applicant was unable to bring a single authority to my notice in which leave was granted by the court even after the period of limitation for filing the suit had expired. On the contrary the decision in Industrial Bank Ltd. impliedly supports the view taken by me. The facts of that case are that the Industrial Bank Ltd. went into liquidation and was being wound up under the supervision of the District Judge. The District Judge passed an order against two persons requiring them to pay a certain amount. Thereupon the sons of one of those persons instituted a suit in the court of the Munsif for a declaration that the order of the District Judge against his father was not binding on him. In this suit he made the liquidator a party. One of the objections taken by the liquidator was that as the leave of the court under Sec. 171 (now Sec. 446) of the Companies Act had not been obtained the suit could not be commenced against the Bank. The learned Munsif sustained the Liquidator's objection and dismissed the suit, notwithstanding the fact that the requisite leave was granted by the District Judge during the pendency of the suit and on a date on which the suit was still within time. The lower appellate court reversed the decision of the learned Munsif. The Bank filed a second appeal and this court upheld the judgment of the lower appellate court on the ground that as on the date on which the leave was granted a fresh suit could have been commenced and no plea of limitation could have been successfully taken in it, the rejection of the Liquidator's objection was correct. This view was followed in the Gorakhpur Electric Supply Co.. It will thus be seen that in both these cases leave was granted when the suits were still within time and the filing of fresh Suits after the grant of the leave would have been as observed on People Industrial Bank Ltd., a ‘mere technicality’. I am therefore satisfied that as the present application was filed on a date on which the suit was time-barred no leave on its basis can be granted.

5. On behalf of the applicant reliance was also placed on the decisions in J.A Dixit… v. Official Liquidator…. A.I.R 1963 Alld. 284. and Simplex Manufacturing Co. Ltd. v. The Hindustan Tools Mfg. Co. Ltd. A.I.R 1960 East Punjab 464., but as these decisions have not the remotest bearing upon the question involved in the present case, it is not necessary to comment upon them.

6. The result therefore is that this application fails and is dismissed.

Application dismissed.