M.ANAND vs ANAND PRATAYABHOOT VIT NIGAM LTD

THIS appeal has been filed by Mr. M. Anand (hereinafter referred to as the Company), Director of M/s. Anand Pratayabhoot Vit Nigam Limited, respondent No. 1, against the order of the District Forum dated 30.10.91, by which the preliminary objection raised by him that the proceedings under Section 446 of the Companies Act, should be stayed and that in any event he should not be directed to defend the proceedings on behalf of the company in view of the appointment of the Provisional Liquidator by the High Court, was dismissed.

BRIEFLY the facts are that Shri R.N. Sharma, respondent No. 2 filed a complaint against M/s. Anand Pratayabhoot Vit Nigam Ltd. for recovery of Rs. 20,000/- . The complaint was resisted by the respondent. The written statement was filed by Mr. M.S. Anand, a Director, on behalf of the Company. He also filed an application before the District Forum that a company petition had been filed by Mrs. Rama Arora for winding up of the company in which the Official Liquidator had been appointed as the Provisional Liquidator under Section 446 and after his appointment the proceedings could not continue. He prayed that the proceedings be stayed. He further prayed that if the proceedings were ordered to continue he should not be directed to defend the same, as it was the duty of the Provisional Liquidator to do so. The application was rejected by the learned District Forum, and it was held that it was not established mat any winding-up petition had been filed against the Company before the High Court by a creditor and that Mr. M.S. Anand was the only person, who could reply to the allegations and defend the complaint. Mr. Anand has come up in appeal against the said order to the Commission.

The main question that arises for determination is, whether after appointment of Provisional Liquidator under Section 446, the proceedings before the District Forum should be stayed. In order to determine the question it is necessary to read Section 446 which is as follows:- "Sec. 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 proceedings shall be commenced, or if pending at the date of winding-up order, shall be proceeded with, against the company, except by leave of the Court and subject to such terms as the Court may impose." (2) xxx xxx xxx xxx (3) xxx xxx xxx xxx (4) xxx xxx xxx xxx

FROM the reading of Sub-section (1) it is evident that no proceedings against a company after the appointment of a Provisional Liquidator can be commenced except by the leave of the Court. However, if any proceedings are pending on such date these can continue till the date when winding-up order is passed by the Court. After passing of the winding-up order, such proceedings shall be stayed; but with the leave of the Court, they can continue. It is well-settled that the legislature does not waste words in a statute. It is also well-settled, that if the language of a statute is clear and unambiguous, the Court has to expound the words in their natural and ordinary sense and give effect to the intention of the legislature as expressed in the words used in a statute. Under Subsection (1) the pending proceedings are liable to be stayed, only if the winding-up order has been passed and not otherwise. In the petition pending before the High Court, admittedly, the winding-up order has not been passed. Consequently we are of the view that the proceedings before the District Forum can continue inspite of the appointment of a Provisional Liquidator by the High Court. The next question that arises for determination is, whether liquidation proceedings against the company are pending before the High Court or not. It is not disputed by the parties that the proceedings for winding-up against the company have been initiated in the High Court and a Provisional Liquidator has been appointed in these proceedings. Thus the finding of the District Forum in this regard is not correct, and liable to be set-aside.

THE last question that arises for determination is, whether the appellant can be directed by the District Forum to defend the proceedings. A Provisional Liquidator has the same powers as are possessed by the Official Liquidator in winding-up of a Company. In Section 45 7(1) it is provided that the liquidator in winding-up by the Court shall have power to institute or defend the proceedings in the name and on behalf of the company. Taking into consideration the aforesaid Sub-section, we are of the opinion that it is the Provisional Liquidator who has to defend the proceedings on behalf of the company before the District Forum and not the appellant. For the aforesaid reasons we partly accept the appeal and hold that the present proceedings can continue before the District Forum, that the Provisional Liquidator is duty bound to defend the proceedings and that the Forum could not direct the appellant to defend the same. In view of the partial success in the appeal, we leave the parties to bear their own costs. Appeal partly allowed.