Post-suit leave in company liquidation can validate proceedings and make the suit effective from the grant date.

Leave to proceed against a company in liquidation under section 446 of the Companies Act, 1956 may be granted after a suit has already been instituted, and the proceeding becomes effective from the date leave is granted. The provision was compared with section 171 of the Indian Companies Act, 1913 and the English counterpart, and the change in wording was treated as a drafting expansion rather than a substantive departure. The leave requirement serves to keep the winding-up court informed of proceedings against the company and to secure equitable administration of its assets. A suit filed without prior leave is not automatically dismissed for that reason alone.

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Issues: Whether leave under section 446 of the Companies Act, 1956 can be granted after institution of a suit against a company in liquidation, so as to render the suit effective.

Analysis: The provision was compared with section 171 of the Indian Companies Act, 1913 and the corresponding English provision. The object of the leave requirement is to ensure that the winding-up court ls proceedings against the company and secures equitable administration of its assets. The change in phraseology in section 446 was held to be a drafting expansion and not a substantive departure from the earlier law. A suit instituted without prior leave is not liable to automatic dismissal merely for that reason, and leave may be sought and granted later so that the proceeding becomes effective from the date leave is granted.

Conclusion: Leave could validly be granted after the suit had already been instituted, and the application for leave was competent.

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