Sanction under Section 171 is required before continuing execution proceedings after a winding up order.

After a winding up order and appointment of a liquidator, Section 171 must be read to cover continuation of execution proceedings and not only independent originating suits; therefore the court that ordered winding up must sanction further execution to protect collective creditor interests and to enable directions to the liquidator. Prevailing authorities distinguishing "proceeding" narrowly are inapposite where a decree affects the rights of a puisne mortgagee, who cannot be treated as a mere formal party; consequence: execution against such parties post winding up engages the Section 171 protection and requires prior sanction.

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Issues: Whether, after a winding up order and appointment of a liquidator, sanction of the Court which ordered the winding up under Section 171 of the Indian Companies Act is necessary for continuing execution proceedings against the company.

Analysis: Section 171 must be read to include execution proceedings and not only independent originating suits; precedent interpreting "proceeding" narrowly is distinguishable. Authorities support that "proceeding" may include supplemental or execution proceedings and that the court which ordered winding up should be able to control continuation of execution to protect collective interests and to instruct the liquidator. A puisne mortgagee may be a defendant against whom relief is granted and cannot be treated as a mere pro forma party where the decree affects its rights; consequently execution against such a party after winding up engages the protection of Section 171.

Conclusion: Section 171 requires obtaining the sanction of the Court which ordered the winding up before continuing execution proceedings; this conclusion is in favour of the appellant.

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