Defensive proceedings against a company in liquidation do not require leave when the company itself initiated the suit and obtained a decree.

Section 171 of the Companies Act, 1913 bars suits or other proceedings against a company in liquidation without leave, but that bar does not extend to defensive steps taken by a defendant in litigation originally instituted by the company. Where the company has filed the suit and obtained a decree, an appeal, revision, review, or application to set aside an ex parte order brought by the defendant is treated as part of the defence and not as a proceeding against the company. Leave of the company court is therefore not required unless the step is itself intended to fasten liability on the company or its assets.

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Issues: Whether, after a winding up order is made against a company that had instituted the original suit and obtained a decree, the defendant can file an application for review of the appellate judgment without obtaining leave of the company court under section 171 of the Companies Act, 1913.

Analysis: Section 171 bars the institution or continuance of a suit or other legal proceeding against a company in liquidation without leave. The expression "other legal proceeding" is not confined to original proceedings of the nature of a suit, but the controlling consideration is whether the proceeding is one against the company, meaning a proceeding intended to fasten liability on the company or its assets. Where the company itself has instituted the proceeding and obtained a decree, any step taken by the defendant by way of defence, including appeal, revision, review, or setting aside of an ex parte order, is not a proceeding against the company. Such defensive action merely seeks to escape liability claimed by the company and does not require leave under section 171.

Conclusion: An application for review in these circumstances is not a legal proceeding commenced against the company, and no leave of the company court is required.

Ratio Decidendi: A defensive proceeding taken by a defendant in litigation instituted by a company in liquidation does not fall within the prohibition in section 171 of the Companies Act, 1913 unless it is itself a proceeding to fasten liability on the company or its assets.

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