Leave of the court is a condition precedent to the execution of a decree against a company in liquidation, even if leave has already been obtained for continuing the suit.

( 1 ) THIS is an appeal against the order of Subordinate Judge, Eluru, overruling the objection of the Official Liquidator, the Godavary Sugars and Refineries Ltd. , Madras, in an, execution petition filed by the respondents (Decree holders) for sale of the appellants property.

( 2 ) THE Execution petition was opposed by the appellant, the Official Liquidator, on the ground that permission under Sections 171 and 232 of the Indian Companies Act was necessary before the decree could be put into execution.

( 3 ) THE circumstances that have led up to this appeal may be briefly stated. The respondents sold Ac. 1-91 cents of land to the Godavary Sugars and Refineries Ltd. , for a sum of Rs. 3,800. 00 under a registered sale deed. Since the vendor failed to pay the sale price, the respondents instituted O. S. No. 2 of 1950 on the file or the Subordinate Judges Court, Eluru, for recovery of the money due to them. Pending the suit, the company was wound up on a creditors petition by the High Court of Madras (Original Side) on 29/09/1952 and one Sri K. R. Vepa was appointed the Official Liquidator. Thereupon, the first respondent filed application No. 3425 of 1953 (Original Side) for leave to continue the suit against the company in liquidation on 10/09/1953. This Petition was ordered on the 29/09/1953. The suit ultimately ended in a decrees for the amount prayed for on 18/03/1954. Execution was taken out by the decree-holders in E. P. No. 130 of 1954 on 16/09/1954. The petition was resisted by the Official Liquidator on the ground stated above.

( 4 ) THE only question for consideration in this appeal is whether leave of the court is a condition precedent to the respondents proceeding with the execution. The answer to this turns upon the true interpretation of Sections 171 and 232 of the Indian Companies Act. Section 171 reads thus:"when a winding up order has been made or a provisional Liquidator has been appointed no suit or other legal proceeding shall be proceeded with or commenced against the company except by leave of the court, and subject to such terms as the court may impose. "section 232 is in these terms:"where any company is being wound up by or subject do the supervision of the Court, any attachment, distress or execution put in force, without leave of the court against the estate or effects or any sale held without leave of the court of any of the properties of the company after the commencement of the winding up shall be void. "it is seen that it is Section 171 that requires the obtaining of the permission of court for purposes indicated in that Section, while Section 232 only states the consequence of the failure to obtain leave as mentioned in Section 171. Thus, Section 232 is only supplementary to Section 171. It visits the non-observance of the conditions mentioned in Section 171 with penal consequence, in that it renders the sale void. Section 171 requires permission not only for the filing of a suit against a company which has been wound up by a court but in regard to all other proceedings, be they original proceedings or those analogous to suit. It applies to proceedings of all kinds. This is made clear by the judgment of the Federal Court in Governor-General in Council v. Shiromani Sugar Mills. Ltd. , 1946-1 Mad LJ 415; (AIR 1946 FC 16 ). There, their Lordships have unequivocally laid down that execution petitions are also within the contemplation of Section 171 of the Indian Companies Act.

( 5 ) THE crucial question is whether the fact that leave has been obtained for institution of the suit makes any difference. We feel that the leave obtained under that Section for continuing the suit would not ensure to the execution of the decree. What is prohibited by Section 171 is the institution of not only a suit but all other proceedings. In considering whether fresh leave is necessary at the stage of execution, it is useful to bear in mind that Section 232 plainly says that "any attachment, distress or