Leave under Companies Act clause 171 not required for defensive execution application challenging court sale in liquidation proceedings.

An application under Order 21 Rule 91 CPC to set aside a court sale in execution of a decree held by a company in liquidation did not require prior leave under clause 171 of the Companies Act, 1913. The court read clause 171 in its ordinary and contextual sense and held that it bars only original proceedings against the company, not defensive steps or applications arising within proceedings already instituted by the company as decree-holder. Because the application was a defensive measure in existing execution proceedings, no leave of the winding-up court was necessary and the objection failed.

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Issues: Whether an auction-purchaser's application under Order 21, Rule 91 of the Code of Civil Procedure, 1908 to set aside a court sale in execution of a decree held by a company in liquidation required prior leave under clause 171 of the Companies Act, 1913.

Analysis: The application was made within the execution proceedings initiated by the company as decree-holder and was directed to resisting the effect of the sale on the ground that the judgment-debtor had no saleable interest. Such an was treated as a defensive step taken in the course of proceedings already commenced by the company, not as the commencement of an independent suit or other legal proceeding against the company. The expression in clause 171 was read in its ordinary and contextual sense, so as to bar only original proceedings against the company and not defensive applications or appeals arising out of litigation already instituted by it. On that basis, no prior leave of the winding-up Court was necessary.

Conclusion: The objection based on clause 171 of the Companies Act, 1913 failed, and the application to set aside the sale was maintainable without leave.

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