Bombay High Court
Central Bank Of India vs Elmot Engineering Co. Pvt. Ltd. And ... on 26 March, 1992
Equivalent citations: 1992(3)BOMCR309, [1994]81COMPCAS10(BOM), 1993(1)MHLJ771
JUDGMENT S.M. Jhunjhunuwala, J.
1. The applicants have applied for leave under section 446 of the Companies Act, 1956, to continue to prosecute the Original Suit No. 7 of 1986 and Original Suit No. 507 of 1989 filed in the Court of the Additional Subordinate Judge, Ranga Reddy District at Saroor Nagar in Andhra Pradesh.
2. According to the applicants, the applicants are secured creditors of respondent No. 1 and the said Suit No. 7 of 1986 filed by the applicants is a mortgage suit and as secured creditors, the applicants are entitled to file proceedings in order to realise the mortgage debt and other securities created by respondent No. 1 in favour of the applicants.
3. The Premier Automobiles Ltd. had filed a winding-up petition against respondent No. 1, being the Company Petition No. 645 of 1988. By an order dated June 23, 1990, Respondent No. 1 was ordered to be wound up and an official liquidator has been appointed as liquidator of respondent No. 1 company. In view of the said order passed on June 23, 1990, the applicants have filed the present application for leave as aforesaid.
4. Mr. Sanghavi, learned counsel appearing for the applicants, has submitted that the applicants are the secured creditors of respondent No. 1 and as such, outside the scope of the winding up of respondent No. 1. Mr. Sanghavi has further submitted that, ordinarily, leave to sue is granted by the court unless there are special grounds to refuse the same. In the submission of Mr. Sanghavi, there exists no special ground for refusal of such leave and as such, the leave as sought be granted by this court.
5. Even if the applicants are outside the scope of the winding up, no realisation of dues by the applicants can take place without the leave of this court. Section 446 of the Companies Act, 1956, is wide in its terms and is not restricted to any category of suits or any class of plaintiffs. It is wide enough to cover all suits and other legal proceedings whoever may be the plaintiff. The object of the section is to see that the assets of the company are brought under the control of the winding up court to avoid, wherever possible, expensive litigation and to see that all matters in dispute which are capable of being expeditiously disposed of by the winding up court are taken up by that court. The section is intended to safeguard the assets of a company in winding up against wasteful or expensive litigation in regard to matters capable of being determined expeditiously and cheaply by the winding up court itself. The leave of the court is not granted as a matter of course or merely for the asking. On examination of the facts and circumstances of the case, I am of the opinion that defending at a far distance in the Court of Additional Subordinate Judge, Ranga Reddy District at Saroor Nagar in Andhra Pradesh is going to be more expensive than if the said suits are continued and tried in this court on the same being transferred to this court. It is neither convenient nor proper that the official liquidator appointed liquidator of respondent No. 1 should be asked to defend the said suits in that court since wasteful expenditure is to be avoided.
6. I pass the following order :
Applicants are granted leave under section 446 of the Companies Act, 1956, to continue to prosecute Original Suit No. 7 of 1986 as also Original Suit No. 507 of 1989 filed against respondent No. 1 and others. However, these suits are ordered to be transferred from the Court of Additional Subordinate Judge, Ranga Reddy District at Saroor Nagar, Andhra Pradesh, to this court for being tried by this court.
7. Mr. Sanghavi applies that the operation of order transferring the said suits for trial to this court be stayed for a period of four weeks. Since the order passed is a composite one, on the application of Mr. Sanghavi, the operation of the entire above order is stayed for a period of four weeks.
8. Issuance of copy expedited.