Recovery notice against a company in liquidation without leave amounts to contempt, though an unconditional apology may avoid punishment.

Issuing a recovery notice under section 46(5A) against a company in winding up, without first obtaining leave of the winding-up court, was treated as the commencement of a legal proceeding against property in the court's custody and therefore as contempt. The court held that the statutory bar protected the company in liquidation and that the notice interfered with that custody and authority. Withdrawal of the notice and an unconditional apology did not erase the contempt, although the apology was accepted as showing good faith and absence of intent to defy the court. The contemner was found guilty of technical contempt, but no punishment was imposed.

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Issues: Whether issuing a notice under section 46(5A) of the Income-tax Act against the official liquidator of a company under winding up, without obtaining leave of the court, amounted to contempt of court, and whether an unconditional apology entitled the contemner to have the contempt proceeding dropped.

Analysis: After a winding-up order, the company's property is deemed to be in the custody of the court, and no suit or other legal proceeding can be commenced or proceeded with against the company except by leave of the court. A notice under section 46(5A) was treated as a recovery step amounting to the commencement of a legal proceeding against the company in liquidation. The Court held that such action, taken without leave, interfered with the court's custody and authority and therefore constituted contempt. The subsequent withdrawal of the notice and the tender of an unconditional apology did not erase the contempt, though the apology was accepted as showing good faith and absence of intention to defy the court.

Conclusion: The opposite party was held guilty of technical contempt of court, but no punishment was imposed in view of the unconditional apology.

Final Conclusion: The contempt was established on merits, but the proceeding ended without penal consequence because the court accepted the apology and disposed of the matter by refraining from punishment.

Ratio Decidendi: A recovery notice issued against a company in liquidation without leave of the winding-up court amounts to commencement of a legal proceeding in violation of the statutory bar, and an unconditional apology does not negate guilt though it may justify discharge without punishment.

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