MANEKCHOWK AND AHMEDABAD MANUFACTURING CO. LTD. Vs. STATE

JUDGEMENT

(1.) THE applicant herein who is the Provident Fund Inspector, Ahmedabad, has taken out this summons for direction to grant leave to the applicant to continue 22 criminal cases against the erstwhile directors and other officers of the Manekchowk and Ahmedabad . (in liquidation), pending on the file of Metropolitan Magistrate, Ahmedabad. The leave is sought under s. 446(1) of the Companies Act, 1956.

(2.) SECTION 446(1) of the Companies Act, 1956, provides as under : '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 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.'

(3.) IN S. V. Kondaskar, Official Liquidator and Liquidator of the Colaba Land and Mills Co. Ltd. (In liquidation) v. V. M. Deshpande, ITO : [1972]83ITR685(SC) , the Supreme Court had occasion to consider the exact import of the expression 'other legal proceeding' in sub -ss. (1) and (2) of s. 446 of the Companies Act, 1956. In the opinion of the Supreme Court, the said expression takes within its sweep those proceedings only which can appropriately be dealt with by the winding -up court. Dua J., speaking for the court, held as under after reviewing the entire case law on the point (at p. 180 of 42 Comp Cas) : 'Looking at the legislative history and the scheme of the Indian Companies Act, particularly the language of section 446 read as a whole, it appears to us that the expression 'other legal proceedings' in sub -section (1) and the expression 'legal proceeding' in sub -section (2) convey the same sense and the proceedings in both the sub -sections must be such as can appropriately be dealt with by the winding -up court ....'