Leave in company liquidation proceedings may extend to cheque dishonour prosecution against ex-directors, but not the liquidator absent allegations.

Section 446 of the Companies Act was treated as a safeguard bringing proceedings touching a company in liquidation under the Company Court's supervision to protect and realise assets. Criminal prosecution under section 138 of the Negotiable Instruments Act, arising from dishonoured cheques issued for the company, was regarded as connected with the conduct of the ex-directors, so leave could be granted to continue proceedings against them. No such leave was justified against the official liquidator because no allegation was made against him. Leave was therefore granted only for prosecution of the ex-directors, and refused as against the liquidator.

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Issues: Whether leave under section 446 of the Companies Act was required and could be granted to continue criminal proceedings under section 138 of the Negotiable Instruments Act against the ex-directors of a company in liquidation, and whether such leave could also be granted against the official liquidator.

Analysis: Section 446 is intended to bring proceedings touching the affairs of a company in liquidation under the supervision of the Company Court so that the assets of the company may be protected and properly realised. Criminal proceedings arising out of dishonoured cheques issued on behalf of the company were treated as proceedings concerning the conduct of the directors and as matters which the liquidation court ought to be informed about. The Court held that permission would not unduly restrict prosecution and that, where directors have acted for the company and committed acts giving rise to prosecution, leave may be necessary to effectively liquidate the company. At the same time, no allegation was made against the official liquidator himself.

Conclusion: Leave was granted to proceed against the ex-directors, but permission to proceed against the official liquidator was refused.

Final Conclusion: The application succeeded only to the extent of enabling prosecution against the ex-directors, while the request against the official liquidator was rejected.

Ratio Decidendi: In liquidation matters, leave under section 446 of the Companies Act may be required for criminal proceedings connected with the affairs of the company, and such leave can be granted against persons alleged to have acted for the company, but not against a liquidator in the absence of allegations against him.

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