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B. Maharaj Kishore Khanna vs Benaras Bank Through Official ...

High Court Of Judicature at Allahabad|26 March, 1941


ORDER Braund, J.
1. This is an application under Section 171, Companies Act, which provides that, when a winding up order has been made...no suit or other legal proceeding shall be proceeded with or commenced against the company except by leave of the Court....
2. In this case the present applicant, prior to the liquidation, prosecuted certain proceedings under the Encumbered Estates Act against the Benares Bank Ltd. Those proceedings resulted in a decree being passed in favour of the Benares Bank. The present applicant was dissatisfied with the amount decreed and, within the time permitted by law, filed an appeal against it. Unfortunately, however, before the applicant filed his appeal, the Bank had gone into liquidation. Now, several months later, he applies to me, sitting as the winding up Court, for leave, as he calls it in his petition "to continue the appeal." It is plain, I think, that the effect of the applicant launching his appeal against the Bank at a time when the Bank was already in liquidation was that there was in reality no appeal at all. The Act says that no proceeding is to be commenced except by leave of the Court. This appeal was plainly a "proceeding." It was not commenced by leave of the Court. And, accordingly, as a valid and effective "proceeding" it did not exist. What the applicant is trying to do now is to obtain from me leave, not to "continue" a subsisting appeal,, but to commence an appeal, because until this moment there is no appeal in existence.
3. But the difficulty is that, if I am to regard his present application as an application to "commence" an appeal, I should, if I were to give him leave, be giving him leave to commence an appeal which is hopelessly out of time. A case in the Punjab High Court, People Bank of Northern India Ltd. v. Fateh Chand and Co. ('36) 23 A.I.R 1936 Lah 401, and a case in this Court, Sarju Prasad Bhagwati Prasad Sah v. Rajendra Prasad ('37) 24 A.I.R. 1937 All. 271, make this, at any rate, clear, namely that leave to commence a suit given under the Companies Act or under one of the Insolvency Acts, as the case may be, does not, where such leave is granted after the period of limitation, have the effect of re-constituting the suit jag a valid suit. My learned brother Allsop J. 'in a recent application before him (Misc. case No. 646 of 1940) refused to grant leave to commence a suit when such leave was applied for at a time beyond that at which the commencement of the suit would become time barred.
4. I think the same principle applies to the present application. It is true that in the Lahore and the Allahabad cases to which I have referred the objection was taken in the proceedings themselves that they were beyond time and ought, therefore, to be dismissed. Here the objection is not taken in the proceeding itself, but at the preliminary stage at which I am asked to give leave. I do not think that that makes any difference, because it ought surely to be a consideration which weighs with the Court in deciding if it will grant leave or not whether that leave, if granted, will have the effect of constituting a valid suit. Here it is plain that, even if I do give leave, the appeal does not become a valid appeal, because it will then be an appeal commenced far out of time. I do not think that the Court can be asked, as a mere gesture, to give leave to launch an appeal which cannot upon any footing be an effective appeal. For these reasons, I shall dismiss this application.
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B. Maharaj Kishore Khanna vs Benaras Bank Through Official ...


High Court Of Judicature at Allahabad

26 March, 1941