Section 446 – The Companies Act,1956

The Companies Act, 1956

446. Suits stayed on winding up order.

(1) When a winding up order has been made or the Official Liquidator has been appointed as provisional liquidator, no suit or other legal proceeding shall be commenced, or if pending at the date of the winding up order, shall be proceeded with, against the company, except by leave of the 1[Tribunal] and subject to such terms as the 1[Tribunal] may impose.

2[(2) 3[Tribunal] shall, notwithstanding anything contained in any other law for the time being in force, have jurisdiction to entertain, or dispose of

(a)any suit or proceeding by or against the company;

(b)any claim made by or against the company (including claims by or against any of its branches in India);

(c)any application made under section 391 by or in respect of the company;

(d)any question of priorities or any other question whatsoever, whether of law or fact, which may relate to or rise in course of the winding up of the company,

whether such suit or proceeding has been instituted or is instituted or such claim or question has arisen or arises or such application has been made or is made before or after the order for the winding up of the company, or before or after the commencement of the Companies (Amendment) Act, 1960 (65 of 1960).]

4[***]

5[(4) Nothing in sub-section (1) or sub-section (3) shall apply to any proceeding pending in appeal before the Supreme Court or a High Court.]

comments

(i) The expression “Court which is winding up the company” will comprehend the Court before which a winding up petition is pending or which has made an order for winding up of the company and further winding up proceedings are continued under its directions. Such a Court ipso facto would have jurisdiction to entertain the proceedings enumerated in clauses (a) to (d) of sub-section (2) of section 446; Sudarsan Chits (I) Ltd. v. G. Sukumaran Pillai, 1984 (30) Com LJ 40: AIR 1984 SC 1579.

(ii) The expression “other legal proceeding” in sub-section (1) and the expression “legal proceeding” in sub-section (2) convey the same sense and the proceedings in both the sub-sections must be such as can appropriately be dealt with by the winding up Court; S.V. Kondaskar, Official Liquidator v. V.M. Deshpande, 1972 (42) Comp. Cas. 168: AIR 1972 SC 878.

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1. Subs. by Act 11 of 2003, sec. 61, for “Court”.

2. Subs. by Act 65 of 1960, sec. 165, for sub-section (2) (w.e.f. 28-12-1960).

3. Subs. by Act 11 of 2003, sec. 61, for “The Court which is winding up the company”.

4. Sub-section (3) omitted by Act 11 of 2003, sec. 61.

5. Ins. by Act 65 of 1960, sec. 165 (w.e.f. 28-12-1960).

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