A secured creditor can continue a suit against a company in liquidation with the leave of the winding up court, subject to such terms as the court may impose.

( 1 ) THE above-noted application (A-18) has been filed by the Industrial Development Bank of india (hereinafter referred to as "the applicant-bank"), under Sections 446 (1), 453 and 537 of the companies Act, 1956, inter alia, seeking the following reliefs : (1) To grant leave under Section 446 (1) of the Act for continuation of Suit No. 2945 of 1990 pending in the High Court of Judicature at Bombay. (2) To grant leave under Section 453 of the Act for appointment and continuation of the receiver of the High Court of Bombay regarding the mortgaged and hypothecated properties of the respondent-company. (3) To grant leave under Section 537 of the Act for recovery of the applicants dues by sale of the movable and immovable properties of the respondent-company charged in favour of such dues and enforcement and other execution and distress proceedings as the Bombay High Court may direct in the above-noted suit.

( 2 ) THE relevant facts in brief as set out in this application are that the applicant-bank granted term loans to the respondent-company for modernisation of its textile mills at Hastinapur in the state of U. P. , which was secured by the respondent-company and its guarantors, by hypothecation of movable and immovable properties of the company and deposit of title deeds, which charge was duly registered with the Registrar of Companies, Kanpur, under Section 132 read with Section 125 of the Act. Respondent No. 2 also personally guaranteed payment of the applicants dues. The applicant-bank made demands against the respondent-company and respondent No. 2 for making payment of the amounts due but they failed and neglected to make the payment, hence the applicant had no option but to file Suit No. 2945 of 1990 before the bombay High Court for enforcing the mortgaged, hypothecated and other securities. Subsequently, by the order dated December 8, 1993, the Bombay High Court appointed the court receiver as the receiver of the companys properties in pursuance whereof physical possession of the companys properties was taken by the receiver on February 3, 1994. It appears that the company became a sick industrial company within the definition of Section 3 (1) (o) of the Sick industrial Companies (Special Provisions) Act, 1985, and made a reference to the Board for industrial and Financial Reconstruction ("the BIFR" in short), which recommended the winding up of the company, vide its order dated April 17, 1990. On the said recommendation, this court had vide its order dated March 27, 1991, passed in Company Petition No. 3 of 1990 ordered the winding up of respondent No. 1. Subsequently, by the order dated July 10, 1991, this court had directed that the winding up order dated March 27, 1991, be put in abeyance until further orders, as an appeal had been preferred by the respondent-company before the Appellate Authority for industrial and Financial Reconstruction ("the AAIFR" in short ). As the appeal preferred before the AAIFR was dismissed on May 13, 1993, this court vide its order dated April 12, 1994, directed the official liquidator appointed, vide the order dated March 27, 1991, to proceed with the winding up of the respondent-company. The present application has been filed thereafter by the applicant-bank for the reliefs mentioned above.

( 3 ) COPY of this application was served on the official liquidator who was has filed a counter-affidavit to the same. A rejoinder-affidavit to the said counter-affidavit has been filed on behalf of the applicant. I have heard Shri R. P. Agarwal, learned counsel for the applicant-bank and the official liquidator. It has been contended by Sri Agarwal on behalf of the applicant that the suit was filed much prior to the winding up order and is pending before the Bombay High court, consequently, permission to continue the proceedings of the suit should be granted by this court as a matter of course. He has further contended that grant of leave is the rule and refusal the exception.