1993 (8) TMI 268 - HC - Companies Law

Legal clarity on suits against individuals in company liquidation under Section 446

The court held that leave from the court is not required to maintain a suit against individuals other than the company in liquidation under Section 446 of ... Winding up – Suits stayed on winding-up order Issues:1. Suit against persons other than the company in liquidation2. Payment of ad valorem court feeAnalysis:Issue 1: Suit against persons other than the company in liquidationThe judgment addresses the question of whether a suit can be maintained in the court against individuals other than the company in liquidation without obtaining leave from the court. The court refers to Section 446 of the Companies Act, which outlines that no suit can be initiated against the company without court permission once a winding-up order is issued. However, the court clarifies that no such leave is required for suits against persons other than the company in liquidation. The court emphasizes that the court handling the winding-up process has the jurisdiction to entertain suits against the company and other parties involved. It is established that the present suit can be maintained against the guarantors as well, as they are jointly and severally liable under the same contract. The court highlights the importance of avoiding multiplicity of suits and contradictory decisions, supporting the inclusion of all relevant parties in a single suit. The judgment grants leave to proceed with the suit against the company and the guarantors, provided the deficiency in court fee is rectified within a specified timeframe.Issue 2: Payment of ad valorem court feeThe judgment also delves into the requirement of paying ad valorem court fee for suits filed under Section 446 of the Companies Act. The court explains that while the official liquidator, acting in a statutory capacity, can file a claim petition without paying ad valorem court fee, a creditor seeking to recover money from the company must pay the full court fee on an ad valorem basis. The court emphasizes that merely labeling the suit as a claim petition does not exempt the petitioner from paying the prescribed court fee. The court clarifies that the special jurisdiction granted to the company court under Section 446 aims to facilitate cost-effective and efficient resolution of matters related to the winding-up process. Therefore, the court upholds the objection raised by the official liquidator regarding the payment of ad valorem court fee and stresses the importance of complying with legal requirements, regardless of the court forum in which the suit is filed.In conclusion, the judgment clarifies the legal principles surrounding suits against individuals other than the company in liquidation and the payment of ad valorem court fee in cases governed by Section 446 of the Companies Act. It underscores the significance of adhering to procedural and jurisdictional rules to ensure fair and efficient resolution of disputes within the framework of company liquidation proceedings.