The expression 'legal proceedings' or 'other legal proceedings' in sections 442 and 446 of the Companies Act includes only civil proceedings which have a bearing on the winding up of the company, such as realisation of assets and discharge of liabilities.

JUDGMENT - F.I. REBELLO, J.:---Company Application No. 446 of 1998 has been moved by the applicants wherein they have prayed that they be allowed to prosecute the respondent Company and its Directors in Criminal Case No. 251/S of 1998 at Dadar Court and in Criminal Case No. 611/S of 1998 at Girgaum Court in respect of complaints which have been filed under the provisions of section 138 of the Negotiable Instruments Act. In a Company Petition filed against the Company by Minutes of Order dated 3rd January, 1997, it was provided that, in the event the Company failed to pay the instalments, the Official Liquidator in terms of Clause (3) of the Minutes of Order was to stand appointed as Provisional Liquidator. There was a failure by the Company to pay in terms of the Minutes of Order and consequently the Official Liquidator stood appointed as Provisional Liquidator of the Company's assets. By the present application permission is sought under section 446(2) of the Companies Act to prosecute the complaints against the Company only, as no permission is required to prosecute or continue the prosecution of the Officers involved.

Company Application (Lodging) No. 621 of 1998, has been taken out in Company Petition No. 220 of 1997 under section 442(b) of the Companies Act. The applicant is the Company. Two prayers have been made therein of which one is to stay proceedings against the Company filed under section 138 of the Negotiable Instruments Act and pending in the Court of Metropolitan Magistrate's 38th Court at Ballard Pier, Mumbai.

2.The applications filed in both the company petitions which are against different companies are being taken up together in view of the question of law involved. Similar questions in other petitions have also been heard and arguments in support or opposition to the points being decided here have been advanced by respective Counsel in those applications. The question of law is being decided in these two applications.

3.The question of law which arises is whether the expression 'suit or other legal proceedings' in section 446(1) and the expression 'suit or proceedings' in section 442, under Chapter II of Part VII of the Companies Act, include criminal complaints filed under section 138 of the Negotiable Instruments Act.

On behalf of the Companies involved, it is contended, that the expression legal proceedings or other legal proceedings should be given its widest amplitude and must therefore also include criminal proceedings. It is pointed out that if this is not so a company in winding up would be subject to criminal prosecution. This would defeat the object of sections 442 and 446 of the Companies Act. Reliance for the same has been placed on judgments of various High Courts as also on English Law as reported in 1982(1) All.E.R. 882.

On the other hand it is contended on behalf of the petitioners in these company petitions and others that the expression 'legal proceedings' or 'other legal proceedings' must be read ejusdem generis with the expression 'suit'. If so read it is pointed out, it can only refer to civil proceedings which have a direct bearing on proceedings for winding up of the company and consequently other legal proceedings must exclude criminal proceedings. Reliance has been placed on various authorities.

4.It would therefore in the first instance be necessary to consider the expressions/terminology used. Section 442 of the Companies Act uses the expression 'suit or proceedings' : Whereas section 446 of the Companies Act uses the expression 'suit or other legal proceedings'. Under section 454 sub-section (5) in the event any person, without reasonable excuse, makes default in complying with any of the requirements of the section such person is liable to be punished with imprisonment. For this purpose the Court by which the winding up order is made can take cognisance of an offence under sub-section (5-A). Therefore a specific power to entertain a criminal complaint has been conferred. Under secti

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