Leave under section 446 is not a condition precedent for suits against a company in liquidation, and later leave does not bar limitation.

Leave under section 446 of the Companies Act, 1956 is not a condition precedent for instituting a suit against a company in liquidation, and it may be granted ex post facto. A suit filed without prior leave is not ineffective for limitation purposes merely because leave is obtained later; the statutory fiction operates only against the official liquidator and does not render a timely suit time-barred. An application for leave is not barred by limitation under article 137 of the Limitation Act, 1963, since no specific period is prescribed and extension may be available. The result is that the suit could continue and refusal of leave was unsustainable.

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Issues: (i) Whether leave under section 446 of the Companies Act, 1956 is a condition precedent to the institution of a suit against a company in liquidation and whether such leave can be granted ex post facto. (ii) Whether a suit instituted without such leave is to be treated as ineffective until leave is granted so as to make the suit time-barred. (iii) Whether the application for leave was barred by limitation under article 137 of the Limitation Act, 1963.

Issue (i): Whether leave under section 446 of the Companies Act, 1956 is a condition precedent to the institution of a suit against a company in liquidation and whether such leave can be granted ex post facto.

Analysis: The statutory scheme protects the company in liquidation and places pending and proposed proceedings under the control of the winding-up court, but section 446 does not expressly make prior leave a condition precedent or declare proceedings without leave void. The language is contrasted with provisions where the Legislature has used express words of prohibition. The earlier Supreme Court view was read as supporting the position that leave is not a condition precedent and may be granted after institution.

Conclusion: Leave under section 446 is not a condition precedent and may be granted ex post facto.

Issue (ii): Whether a suit instituted without such leave is to be treated as ineffective until leave is granted so as to make the suit time-barred.

Analysis: The expression that such a proceeding is ineffective until leave is obtained was held to mean ineffective only qua the official liquidator, not nonexistent for limitation purposes. The legal fiction cannot be extended to defeat a suit that was otherwise within limitation when filed, and no limitation bar can be read into section 446 by implication.

Conclusion: A suit filed without leave is not rendered time-barred merely because leave is obtained later.

Issue (iii): Whether the application for leave was barred by limitation under article 137 of the Limitation Act, 1963.

Analysis: Section 446 prescribes no period for seeking leave. Article 137 is a residuary provision, and section 5 of the Limitation Act permits enlargement of time for applications. The court found no basis to treat the leave application as barred.

Conclusion: The application for leave was not barred by limitation.

Final Conclusion: The appellant was entitled to continue the suit against the company in liquidation, and the refusal of leave was unsustainable in law.

Ratio Decidendi: Leave under section 446 of the Companies Act, 1956 is not a condition precedent to suit against a company in liquidation, and a later grant of leave does not by itself make an otherwise timely suit time-barred.

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