RAMANLAL AMRATLAL SHODHAN Vs. STATE OF GUJARAT
LAWS(GJH)-1979-6-10
HIGH COURT OF GUJARAT
Decided on June 20,1979

RAMANLAL AMRATLAL SHODHAN Appellant
VERSUS
EMPLOYEES STATE INSURANCE CORPORATION AHMEDABAD Respondents

JUDGEMENT

S.H.SHETH - (1.) Employees State Insurance Corporation (hereinafter referred to as `the plaintiff) has filed in the City Civil Court at Ahmedabad Civil Suit No. 2831 of 1972 against defendant No. 1 who is the Official Liquidator of Anant Mills Limited and defendant No. 2 who was the Managing Director of that company for recovering a sum of Rs. 2 80 268 p. which according to the plaintiff are recoverable as a special contribution from Anant Mills Limited under the Employees State Insurance Act. Anant Mills Ltd. is a company under liquidation. Defendant No. 2 has been joined as a party to the suit because he is the guarantor. The Official Liquidator representing the company has not filed the written statement in the suit. Defendant No. 2 has filed his written statement and inter alia raised the contention that the trial Court has no jurisdiction to entertain the suit. Issue No. 6 raised by the learned trial Judge relates to the jurisdiction of the Court to entertain and try the suit. It was tried by the learned trial Judge as a preliminary issue. Reliance was placed upon sec. 446 of the Companies Act 1956 in support of the contention that the trial Court has no jurisdiction to proceed with the suit. The learned trial Judge negatived the contention and held that he has jurisdiction to try the suit.
(2.) It is that order which is challenged by defendant No. 2 in this civil revision application.
(3.) Mr. M. M. Shah who appears on behalf of defendant No. 2 has invited my attention to sub-sec (1) of sec. 446 of the Companies Act which according to him bars the jurisdiction of the Court to try the suit. It provides as follows :- "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 Court and subject to such terms as the Court may impose." It is not in dispute that the winding up order has been made in respect of Anant Mills Ltd. and that Official Liquidator has been appointed. It is also not in dispute that when the winding up order was made the present suit was pending in the City Civil Court against both the defendants. The contention which Mr. M. M. Shah has raised is that except by leave of the Court which made the winding up order that suit cannot proceed against the company as well as against the guarantor. Sub-sec. (1) of sec. 446 expressly provides that except by the leave of the Court and subject to such terms as the Court may impose a pending suit shall not be proceeded with against the company only. The guarantor of the company is not the company itself. they are two different and distinct legal persons. Therefore merely because the Official Liquidator representing the company has been joined as a party to the suit it cannot be said that the suit cannot proceed against the other defendant. To include a guarantor in the expression the company used in sub-sec. (1) of sec. 446 is to unduly widen its connotation and to introduce in the section what the Parliament has not intended to introduce.;


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