Leave requirement for Rule 63 suits against a company in liquidation under company law was treated as mandatory before proceeding.

A suit under Order 21, Rule 63 CPC against a company in liquidation is treated as fresh proceedings, not a mere continuation of the Rule 58 claim inquiry, because Rule 58 is confined to possession while Rule 63 also determines title and may lie in a different forum. On that basis, Section 171 of the Indian Companies Act, 1913 was held to be express, mandatory and applicable, so leave had to be obtained before instituting or proceeding with the suit. The contrary authorities were distinguished on their facts and context.

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Issues: Whether a suit under Order 21, Rule 63 of the Code of Civil Procedure, 1908 against a company in liquidation can be instituted or proceeded with without obtaining leave under Section 171 of the Indian Companies Act, 1913.

Analysis: The suit under Order 21, Rule 63 was held to be in the nature of fresh proceedings and not merely a continuation of the investigation under Order 21, Rule 58. The scope of a Rule 58 inquiry is confined to possession, whereas a Rule 63 suit determines title as well and may lie in a different forum. The Court treated Section 171 as express, explicit and mandatory, drawing support from the Supreme Court's approach to analogous language in Section 80 of the Code of Civil Procedure, 1908, and rejected the argument that the suit was outside the statutory bar because it followed claim proceedings. The authorities relied upon for the contrary view were distinguished on their own context.

Conclusion: Leave under Section 171 was necessary before instituting or proceeding with the suit under Order 21, Rule 63, and the objection to the suit without such leave was upheld.

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