No sanction is required from the company court to file or continue a suit against a company during the pendency of a winding-up petition if no provisional liquidator has been appointed or winding-up order passed.

Bal Raj Tuli, J.

1. The case was faxed for arguments on issue No. 1 ; instead thereof, the learned counsel for some of the defendants have raised a plea that the sanction of this court having not been obtained for filing or continuing the suit by the plaintiffs, the suit cannot be proceeded with. The facts are that the winding-up petition was filed in this court on September 5, 1968. A provisional liquidator was appointed on March 3, 1969. That order was vacated on September 18, 1969, when a committee of two persons was appointed to collect the amounts due to the company. The plaintiffs filed the present suit in the civil court on October 5, 1970, and thereafter winding-up order was passed by this court on January 7, 1971. On March 10, 1971, an application was filed by the plaintiff in this court under Section 446(1) of the Companies Act, 1956 , for leave to continue the suit in the court of Shri A. C. Aggarwal, subordinate judge, 1st class, Jullundur City. That application was dismissed by Narula J. on December 3, 1971, so far as it related to the grant of permission to continue the suit in the court of the subordinate judge, 1st class, Jullundur, but it was directed :

" .........the suit shall be proceeded with in this court. Since the records have been received, the suit may be registered in this court and proceeded with........."

2. In my view this order of the learned judge amounts to sanction being given to the plaintiffs to continue with the suit in this court, if any such sanction was required. I am, however, of the opinion that no such sanction was required. Under Section 446(1) of the Companies Act, the leave of the court to file or continue any suit or legal proceedings is required only if an order for the appointment of a provisional liquidator has been made or an order for the winding-up of the company has been made. If none of these two orders has been made, no leave of the court is necessary either to commence or to continue any suit or other legal proceeding during the pendency of a winding-up petition. Once a provisional liquidator is appointed or the winding-up order is passed, the proceedings then pending in any other court shall be stayed till the leave of the company court is obtained. If the winding-up order is passed, action is to be taken under Section 446(3) of the Act, that is, every suit pending in any court other than the company court is to be transferred to that court for disposal.

3. That is what was done in the present case. The learned counsel for defendants Nos. 1, 7 and 11 has, however, emphasised that under Section 441(2) of the Companies Act the winding-up order is to be deemed to have been made on the date of the winding-up petition and the very institution of the suit in the civil court on October 5, 1970, without the leave of this court, was bad and that suit cannot be continued in this court in spite of the order passed by Narula J., transferring it to this court for disposal. I am not impressed by this argument as it has no substance. The provision of Section 441(2) is a deeming provision which does not apply to the cases for which a specific provision has been made in Section 446 of the Act. There is no provision in this section or any other section, under which the plaintiffs can seek the leave of the company court, wherein a winding-up petition against a company is pending, for filing a suit against it. The creditors are free to file their suits or other legal proceedings in the competent courts during the pendency of the winding-up petition to avoid those actions becoming barred by time and if that petition is dismissed, the suits or other legal proceedings shall continue in those courts but if the order for the winding-up petition is passed or the provisional liquidator is appointed, the provisions of Section 446, as explained above, shall come into play and action will be taken in accordance therewith. Thus, the very language of Section 446 does not permit the deeming pro