Sudarshan Chits (I) Ltd. v. O. Sukumaran Pillai: 

It appears to have been contended before the Court that as there was no winding-up proceeding pending before the Company Judge or the Appellate Bench and as the Company is being managed under the scheme of compromise and arrangement, the Company Court will have no jurisdiction to entertain the claim petition under Section 446(2) of the Companies Act. This contention found favour with the Appellate Bench and the civil miscellaneous petition was rejected.

 In the course of implementation of the scheme, it became necessary to recover certain debts and claims due in favour of the Company. For this purpose Civil Miscellaneous Application No. 14913 of 1983 was moved before the Appellate Bench praying for a direction that the Provisional Liquidator be directed to file claim petitions under Section 446(2) of the Companies Act in the Company Court for realising the claims of the Company, which would further assist and facilitate the implementation of the scheme of compromise and arrangement as supervised by the Court. One G. Sukumaran Pillai was impleaded as the first respondent and the Provisional Liquidator was impleaded as the second respondent.

Before we advert to the question of construction of Section 446(2)(b), it would be advantageous to notice the historical evolution of the provision as well as its present setting. Section 171 of the Indian Companies Act, 1913, the predecessor of Section 446(1) did not contain any provision similar or identical to that of Section 446(2). Section 171 only provided for stay of suits and proceedings pending at the commencement of winding-up proceeding, and embargo against the commencement of any suit or other legal proceedings against the company except by the leave of the court. This provision with little modification is re-enacted in Section 446(1). There was no specific provision conferring jurisdiction on the court winding up the company analogous to the one conferred by Section 446(2). Sub-section (2) was introduced to enlarge the jurisdiction of the court winding up the company so as to facilitate the disposal of winding-up proceedings. The provision so enacted probably did not meet with the requirement with the result that the Committee appointed for examining comprehensive amendment to the Companies Act in its report recommended that “a suit by or against a company in winding up should notwithstanding any provision in law for the time being be instituted in the court in which the winding-up proceedings are. To give effect to these recommendations, sub-section (2) was suitably amended to bring it to its present form by Companies (Amendment) Act, 1960. The Committee noticed that on winding-up order being made and the Official Liquidator being appointed a Liquidator of the company, he has to take into his custody company property as required by Section 456. Section 457 confers power on him to institute or defend any suit, prosecution, or other legal proceeding, civil or criminal, in the name and on behalf of the company. Power is conferred upon him to sell the properties both movable and immovable of the company and to realise the assets of the company and this was to be done for the purpose of distributing the assets of the company amongst the claimants. Now at a stage when a winding-up order is made the company may as well have subsisting claims and to realise these claims the Liquidator will have to file suits. To avoid this eventuality and to keep all incidental proceedings in winding-up before the court which is winding up the company, its jurisdiction was enlarged to entertain petition amongst others for recovering the claims of the company. In the absence of a provision like Section 446(2) under the repealed Indian Companies Act, 1913, the Official Liquidator in order to realise and recover the claims and subsisting debts owed to the company had the unenviable fate of filing suits. These suits as is not unknown, dragged on through the trial court and courts of appeal resulting not only in multiplicity of proceedings but would hold up the progress of the winding up proceedings. To save the Company which is ordered to be wound up from this prolix and expensive litigation and to accelerate the disposal of winding up proceedings, the Parliament devised a cheap and summary remedy by conferring jurisdiction on the court winding up the company to entertain petitions in respect of claims for and against the company. This was the object behind enacting Section 446(2) and therefore, it must receive such construction at the hands of the court as would advance the object and at any rate not thwart it.

Having thus examined the matter from all angles, we are of the view that the High Court was in error in rejecting the application made on behalf of the appellant Company for directing the Provisional Liquidator to prefer claims petitions on the materials and expenses to be furnished by the Company. The amounts realised by the Provisional Liquidator on filing claim petitions shall be handed over to the Company and the appellant Company is under an obligation to use, spend, and appropriate them in the implementation of the scheme under the supervision of the Court.