Leave to sue a company in liquidation granted where the claim was prima facie maintainable and not barred by law.

Leave under section 446 of the Companies Act, 1956 may be granted to enable proceedings against a company in liquidation where the claim is prima facie maintainable, not shown to be barred by law, and the official liquidator raises no objection. The court applied the settled liquidation principle that claims should proceed expeditiously without unnecessary expense while protecting the company's assets. Leave was granted to the petitioner-bank to institute and pursue its claim before the Debt Recovery Tribunal, subject to the condition that execution against the company's assets and properties could not proceed without further leave of the court.

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Issues: Whether leave under section 446(1) and (2) of the Companies Act, 1956 should be granted to institute and pursue proceedings against the company in liquidation.

Analysis: The claim was found to be prima facie maintainable and not shown to be barred by law. The official liquidator raised no objection. In such circumstances, leave under section 446 is to be granted consistently with the settled principles governing company liquidation, so that claims against the company may proceed expeditiously and without unnecessary expense, while protecting the assets of the company in liquidation.

Conclusion: Leave was granted to the petitioner-bank to institute and pursue its claim before the Debt Recovery Tribunal, Jaipur, subject to the condition that execution against the assets and properties of the company would not proceed without leave of the Court.

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