Transfer of company suits under the Companies Act must respect secured creditors and forum convenience; improper transfers set aside.

Transfer of suits under the Companies Act must be exercised to safeguard company assets and avoid wasteful or expensive litigation, but the winding up court must consider the position of secured creditors and the relative convenience and expense to parties; where transfer would not reduce overall expense and would impose avoidable burden on a secured creditor, such a transfer is inappropriate. On the facts examined, the direction to transfer pending suits to another high court was set aside and the appeal allowed, restoring the suits to their original forum.

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Issues: Whether the transfer of suits pending in the Subordinate Judge, Ranga Reddy District, to the High Court of Bombay under Section 446 of the Companies Act was proper.

Analysis: Section 446 permits the winding-up court to entertain or transfer proceedings to safeguard the company's assets and to avoid wasteful or expensive litigation; however, the statutory power must be exercised having regard to the position of secured creditors who are generally outside the winding up and to the relative convenience and expense of the parties. The Court examined the facts and held that transferring the suits to Bombay would not avoid greater overall expense and would impose avoidable burden on the secured creditor; accordingly the transfer direction could not be sustained on the facts of this case.

Conclusion: The order directing transfer of the suits to the High Court of Bombay is set aside and the appeal is allowed in favour of the appellant.

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