Winding up leave requirement bars enforcement of an arbitral award obtained without company court permission

After a winding up order and appointment of the official liquidator, no proceeding against the company can be continued or enforced without leave of the company court under section 446(1). Because the arbitration and ex parte award proceeded without obtaining prior leave, the award was unenforceable against the company and treated as a nullity. The later sanction of a scheme of arrangement did not cure the earlier absence of permission, so execution was held not maintainable and the decree holder was left to pursue remedies according to law.

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Issues: Whether arbitral proceedings and the resulting ex parte award could be enforced against a company that was in winding up without obtaining leave of the company court under section 446(1) of the Companies Act, 1956.

Analysis: The company had already been placed in winding up and the official liquidator was in seisin of its affairs when the arbitration continued and the award was made. In such circumstances, any further legal proceeding against the company could proceed only with the leave of the court supervising the winding up. No application for such leave was moved before the Madras High Court. The later sanction of a scheme of arrangement did not cure the absence of prior permission.

Conclusion: The ex parte award could not be enforced against the judgment debtor and was treated as a nullity for want of leave under section 446(1).

Final Conclusion: Execution was not maintainable, and the decree holder was left at liberty to pursue remedies in accordance with law.

Ratio Decidendi: After a winding up order and appointment of a liquidator, no proceeding against the company can be continued or enforced without leave of the company court, and any adjudication obtained in breach of that mandate is unenforceable.

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