BANSIDHAR SHANKARLAL versus MOHD. IBRAHIM & ANR.

Citation: [1971] 2 S.C.R. 476 · Decided: 25-09-1970 · Supreme Court of India · Bench: J.C. SHAH · Disposal: Dismissed

Judgment (excerpt)

-4 7 6 
BANSIDHAR SHANKARLAL 
v. 
MOHD. IBRAHIM & ANR. 
September 25, 1970 
[J. C. SHAH AND A. N. GROVER, JJ.J 
Constiturion of India, Art. 133 (!) (/>) and (c)-Supreine Court will 
not certif:, appeal when on merirs it agrees with High Court. 
Companies Acr, 1913, ss. 171 and 179-Company in liquidation-
Liqutdators joining in second cppeal against decree ordering ejectment of 
company from land-Landlord filing application for execurion of decree 
wilhom obtaining permission under s. 171 of Companies Act from Com• 
pany Judge-Application whether maintainable. 
The tirst respondent instituted an action in the Court of the Subordi· 
nate Judge Alipore for a decree of ejectment in respect of land occupied by 
a company. 
The suit was decreed. 
Before the decree was passed the 
company took a loan from the appellant and mortgaged its fixed assets in 
favour of the appellant. 
After the passing of the decree the company 
exe~ted a second mortgage of its fixe? assets in favour of the appellant 
agamst another loan. The decree obtamed by the first respondent against 
the company was confirmed in first appeal. Thereupon the company and 
the first appellant filed Second Appeal No. 1380 of 1954 in the High 
Court of Calcutta. The appellant also filed a suit in the ~aid High Court 
on its original side to enforce the two mortgages in his favour and 
obtained a preliminary mortgage decree in the suit. Another creditor ot 
the company applied for and obtained an order directing that the com· 
pany be wound up. 
The liquidators of the company and the appellant 
prosecuted Second Appeal No. 1380 of 1954. 
The decree of the first 
appellate court was confirmed by the High Court. 
The first respolldent 
then instituted an application for enforcemen! of the decree in ejectment 
against the company. The appellant resisted the application on the ground 
that the same was not maintainable since leave of nhe High Court under 
s. J 71 of the Companies Act, 1913 had not been obtained.. Thereafter 
on the motion of the first respondent the Company Judge granted leave 
to execute the decree in Second Appeal No. 1380 of 1954 .. The Subordi· 
nate Judge before whom the · proceedinj!S were. pending dismissed the 
objections of the appellant against excution of the decree and the o~er 
of dismissal was confirmed by the first appellate court and the High 
Court. The appellant's applications for a certificate for leave to appeal to 
this Court was also rejected. 
In appeal by special leave shallenging the 
refusal of certificate. 
' 
HELD : (i) The object of s. 171 is plain. It is intended to ensure 
that the assets ~f a company ordered to be ~ound up by the Coutt ~hall 
be administered for the benefit of all the creditors and. th~t s~me creditors 
only shall not obtain an advantage over others by .mstit~tm.g or prose-
cuting proceedings against the company. 
The secl!on 
lS mtended to 
maintain control of the Court which has made an order of winding up 
on proceedings which may be pending against the company or. may. be 
initiated after ·the order of winding up, and the Court may i;emam sem;d 
of all those matters so the.I its affairs are administered eqmtably and in 
an orderly fashion. [480 B.C) 
A 
B 
c 
)) 
F 
G 
B 
A 
B 
c 
D 
r 
G 
B 
BANSIDHAR v. IBRAHIM (Shah,/.) 
477 
If sanction of the Court under s. 179 to prosecute the appeal before 
the High Court was obtained by the liquidators in the present case-and 
it must be so assumed-the contention raised on behalf of the appellant 
lost all significance for an execution application is only a• continuation 
of the suit and the control of the High Cou'rt enures during tho execution 
proceedings also. 
It would be giving effect to a technicaliiy divorced 
tram the object of s. 171 of the Companies A.ct to hold that even in a 
suit filed or prosecuted with the sanction of the Court the decree may 
not be enforced by a successful party without' leave under that section. 
[480 B-0] 
. 
Even granting that . sanction under s. 179 does not dispense with the 
leave under s. 171 of the Act, to institute a proceeding in eicecution 
apimt a company ordered to be wound up, there is nothing in the Act 
which makes the leave a condition precedent to the institution of a pro-
ceeding in execution of a decree against the company and 'failure to 
obtain leave b(lfore the institution of the proceedings entails dismissal of 
the proceedina. 
The suit or proceeding mstituted without leave of the 
Court may be rega

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