Syed Mohiddin (3rd party) vs Official Liquidator, Madras, Liquidator of Gannon Dunkerly and Co. (now in liquidation)

Gokulakrishnan, J.—This is an application filed for the purpose of getting permission to implead the Official Liquidator, High Court, Madras,

as party respondent in Claim Petition No. 229 of 1969, which is now pending before the Additional Labour Court, Madras. The application is by

one of the labourers of the liquidated company called Gannon and Dunkerly. It is under the administration of the Official Liquidator, High Court,

Madras. The petition has been filed under S. 446 (1) of the Companies Act, 1956. It states as follows:-

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.

The applicant herein has admittedly filed the claim petition before the Labour Court subsequent to the winding up order. According to the Official

Liquidator, obtaining sanction from this court to proceed against the liquidated company is a condition precedent and as such, the application has

to be dismissed. According to the applicant, getting sanction from this court is not a condition precedent and he can get the sanction from this court

in order to ratify the action. In the decision given by Palaniswamy, J. in Company Appn. No. 328 of 1970 in C. P. No. 2 of 1970 and Company

Appn. No. 404 of 1970 in C. P. 83 of 1968 dated 23rd February 1971, the learned Judge after adverting to the decision reported in Bansidhar

Sankarlal v. Mohd Ibrahim and another (1971) 1 C. C. 21 , held that the Supreme Court decision arises under S. 171 of the Companies Act,

1913, while the present petition is under S. 446(1) of the Companies Act I of 1956, that the wordings in both these Sections are completely

different and that according to S. 446 (1) of the Companies Act getting leave of the court is a condition precedent for riling any legal proceedings

against the liquidated company. But the Supreme Court in the decision reported in Bansidhar Sankarlal v. Mohd Ibrahim (1971) 1 C. C. 21, has

held that ""Failure to obtain leave before institution of the proceeding did not entail dismissal of the proceeding. The suit or proceeding instituted

without leave of the court would be ineffective until leave was obtained, but once leave was obtained the proceeding would be deemed instituted

on the date of granting leave."" If the Supreme Court decision has to be applied, according to the learned counsel for the application their in, the

leave has to be granted. According to the Official Liquidator the decision rendered by Palaniswami, J. is not contrary to the Supreme court

decision, since Palaniswamy, J.''s decision is based upon the Companies Act I of 1956, while that of the Supreme Court is based upon the

Companies Act, 1913. According to the Official Liquidator, getting leave of this court is a condition precedent for taking proceedings against the

liquidated company and as such, the petition has to be dismissed.

For the purpose of disposing of the present application, I do not think it is necessary for me to scrutinise both the judgements. According to S.

446 of the Companies Act, leave of this court has to be given for taking legal proceedings against the liquidated company. The present application

is for getting one such leave. The claim petition was filed by one of labourers of the company before the Labour Court. If leave is granted it would

open the flood gate of litigation before Labour Court and every one of the labourers will be filing petitions before the Labour Court and draw the

Official Liquidator to each of these Labour Courts for the purpose of defending the case of the company. The purport and intention of the

Legislation seems to be that all these types of claims have to be decided by the Official Liquidator, who is the responsible officer and is vested with

the powers to decide such claims. Taking the intendment of the Companies Act, I am of the view that such type of petitions have to be filed only

before the Official Liquidator and, if aggrieved, the party concerned has ample opportunity and scope to file an appeal to this court. Taking all

these aspects into consideration, I am of the view that the prayer for getting leave of this court to proceed with the petition before the Labour

Court is misconceived. In these circumstances, this application is dismissed. It is open to the applicant to withdraw the proceedings before the

Labour Court and file the same before the Official Liquidator to get appropriate reliefs.