OFFICIAL LIQUIDATORS PALGHAT WARIAR BANK LIMITED Vs. PADMANABHAN

JUDGEMENT

(1.) THE interesting question of law debated before me in this second appeal is whether when a company in winding up attaches certain property in execution of a decree in its favour as that its judgment debtor, any claim petition by a third party is to be regarded as "other legal proceeding" within the meaning of Section 171 of the Indian Companies Act which shall not be proceeded with or commenced against the company the company except by leave of the court THE appellant before me is the plaintiff in the original suit who sued to set aside an order on a claim petition filed by the first defendant on the basis of an assignment in his favour by the second defendant regarding the rents of certain properties which had been attached by the plaintiff. THE claim succeeded in the execution court, and the case of plaintiff is that the assignment was a sham transaction unsupported by consideration which was entered into by the second defendant with a view to defendant with a view to defeating the claim of the plaintiff in execution of its decree against the second defendant in O.S. No. 195 of 1936 on the file of the District Munsiff's Court at Palghat. Both the courts below have found against the case of the plaintiff in the attack made against the transaction on its merits, and the only question which arises for consideration is whether the claim proceeding started by the fast defendant and the order made on it by the execution court should be regarded as null and void on account of want of leave of the court in the winding up under Section 171 of the Indian Companies Act.

(2.) ON this latter question too the courts below have concurrently held against the plaintiff The argument for the appellant is that the claim proceeding constitutes an independent legal proceeding which cannot be proceeded with or commenced against the company except by leave of the court, while the contention for the respondents is that it is in the nature of a defensive proceeding in answer to the execution petition of the plaintiff, for which no leave is necessary under the Act. The learned counsel for the appellant says that as ruled by Kuppuswami Ayyar, J., in Calicut Bank Ltd. v. Nekkat, the word "proceeding" in the section of the Act applies to execution proceedings also ans is not confined to original proceedings, and that the claim petition is itself a proceeding in execution which falls within the mischief of the section. But as the lower court rightly puts the matter, "In the present case no execution proceedings were started by the 1st defendant against the Wariar Bank (in liquidation). ON the other hand, the Official Liquidators a representing the Wariar Bank (in liquidation) applied in I.A. No. 225 of 1943 for attachment of the mesne profits or of the rent payable by the 3rd defendant to the 2nd defendant the claim petition was filed by the 1st defendant as E.A. No. 506 of 1943 only in the attachment proceedings started by the liquidators".

(3.) JUDGED from the standpoint of the object and purpose of the statutory provision it is clear to my mind that the proceeding by way of a claim petition with which the first defendant intervened in the course of the execution proceeding of the plaintiff does not fall within the purview of the section of the Act It may be that where the language of the statute is sufficiently wide to cover case not within its professed or implied purpose and object the language must still be given effect to. But as pointed out in Rustomji's Company Law, 2nd edn., at page 396 :