Plaintiffs can file suit without court sanction before winding-up order. No approval needed till liquidator appointed.

The court held that the plaintiffs did not require court sanction to file the suit before the winding-up order. The suit was validly initiated in the trial court and transferred to the company court for disposal. The court rejected the defendants' argument that court approval was necessary, emphasizing that no sanction is needed until the appointment of a provisional liquidator or the winding-up order. The case was adjourned for further proceedings and evidence on the specific issue.

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Issues:
Sanction requirement for filing or continuing the suit without court approval during winding-up petition.

Analysis:
The judgment involves the issue of whether the plaintiffs required court sanction to file or continue a suit during a winding-up petition process. The court outlined the timeline of events, starting with the winding-up petition filed in 1968, the appointment of a provisional liquidator, and subsequent proceedings. The plaintiffs filed a suit in the civil court before the winding-up order was passed. The court addressed the argument raised by the defendants that the suit could not be continued without the court's sanction. The court referred to Section 446(1) of the Companies Act, stating that court approval is necessary only after the appointment of a provisional liquidator or the winding-up order. If neither of these orders is in place, no court approval is required to commence or continue legal proceedings. The court emphasized that once a winding-up order is passed, all pending proceedings in other courts must be stayed until the company court's approval is obtained.

The court rejected the defendants' argument that the suit filed before the winding-up order was invalid, citing Section 441(2) as a deeming provision. The court clarified that Section 446 of the Act prevails over the deeming provision, allowing creditors to initiate legal actions during a winding-up petition without court approval until a winding-up order or appointment of a provisional liquidator occurs. The court emphasized that the date of the winding-up order refers to the actual order date, not the petition date. Therefore, the plaintiffs were not required to seek court approval to file the suit before the winding-up order was issued. The court highlighted that once a suit is transferred to the company court for disposal, no further approval is needed to continue the proceedings.

In conclusion, the court ruled that the plaintiffs did not need court sanction to file the suit before the winding-up order. The suit was rightfully initiated in the trial court and transferred to the company court for disposal. The court dismissed the defendants' arguments, stating that the suit should continue without the need for additional court approval. The judgment adjourned the case for further proceedings and evidence on the specified issue.

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