Winding-up execution needs leave, and post-liquidation rent in official occupation is payable in full with priority.

Execution against a company in winding up required leave of the company court under section 171 of the Indian Companies Act, and execution launched without such leave was incompetent. Rent accruing after the winding-up order while the official liquidator remained in occupation was not confined to a rateable dividend as an ordinary debt; the landlord could claim it in full under the proviso to Rule 97. That rent was also treated as payable in priority on the footing of costs of winding up under section 230(3).

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Issues: (i) Whether execution of a decree made by the company court required leave under section 171 of the Indian Companies Act; (ii) Whether rent accruing after the winding up order while the official liquidator remained in occupation was payable only pro rata as an ordinary debt or in full; (iii) Whether such rent ranked as costs of winding up.

Issue (i): Whether execution of a decree made by the company court required leave under section 171 of the Indian Companies Act.

Analysis: Section 199 enabled an order of the company court to be enforced as a decree of that court, but section 171 controlled the commencement and continuation of legal proceedings against a company in winding up. The section was held to apply to execution proceedings as well, and it made no distinction between an order originating in the company court and one made elsewhere. Leave of the company court was therefore necessary before execution could be launched in another court.

Conclusion: Execution without leave was incompetent and the attachment made in the execution proceedings was void.

Issue (ii): Whether rent accruing after the winding up order while the official liquidator remained in occupation was payable only pro rata as an ordinary debt or in full.

Analysis: Under sections 228 and 229, debts are generally valued as at the date of the winding up order and paid pro rata. Rule 97, however, preserved the landlord's right to claim rent for the period of occupation by the company or the official liquidator after winding up. The proviso was treated as creating a right to full payment for post-winding-up rent so long as the premises remained in occupation of the official liquidator.

Conclusion: The post-winding-up rent was payable in full and not merely rateably with pre-winding-up creditors.

Issue (iii): Whether such rent ranked as costs of winding up.

Analysis: Since the rent accruing during the official liquidator's occupation was protected by the proviso to Rule 97 and stood outside the ordinary pool of pre-winding-up debts, it was treated on the same footing as liabilities incident to the winding up and was payable in priority.

Conclusion: The rent could be claimed in full on the footing of costs of winding up under section 230(3) of the Indian Companies Act.

Final Conclusion: The appeal succeeded to the extent that the appellant was entitled to full payment of arrears of rent accruing from 1 October 1949 until termination of the tenancy, while the rest of the order remained undisturbed.

Ratio Decidendi: In winding up, execution against the company requires leave of the company court, and rent accruing during the official liquidator's occupation of demised premises is payable in full rather than rateably as an ordinary winding-up debt.

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