Nalanda Ceramic Industries Ltd. second respondent herein, referred to as the Company was a companypany incorporated under the Companies Act, 1956 for short the Act .
The said order is challenged in this appeal by special leave.
The Bank also submitted that having regard to Section 446 1 of the Act, it required the leave of the companyrt only to proceed against the companypany, but there was numberbar for proceeding against the other defendants.
The Bank resisted the said application, inter alia, on the ground that Section 22 of SIC Act had the effect of staying only proceedings in the nature of winding up and execution and did number companye in the way of progress of any suit for recovery of money due by the Company by enforcing the security.
Thereafter, on 11.8.1995, the Bank filed an application under Section 446 1 of the Act, seeking leave of the Company Court to proceed with its suit.
In view of the said reference, the first appellant second defendant in the suit , filed an application on 16.9.1989 in the Banks suit under Section 22 of the SIC Act, for stay of further proceedings in the suit.
The trial companyrt disposed of the application by an order dated 9.3.1990.
A Division Bench of the High Court dismissed the appeal by order dated 1.9.1997.
It companydoned the delay in filing the application for leave, being satisfied that there were sufficient causes for the delay, first being the stay of winding up between 16.7.1990 and 16.12.1994 in view of the inquiry under Section 16 of the SIC Act and the second being the prosecution of the revision petition CRP No.388/1990 from 1990 till its withdrawal on 4.4.1995.
The said application was resisted by the appellants herein, inter alia, on the ground that the application seeking leave was barred under Article 137 of the Limitation Act, 1963.
The Company Court by order dated 17.9.1996 granted leave to proceed with the suit.
Feeling aggrieved by the said order granting leave, the appellants herein filed LPA No.259 of 1996.
The appellants companytended that the application ought to have been filed within 3 years from the date of winding up, that is, on or before 24.10.1992 and the application filed on 11.8.1995 was barred by limitation.
The grant of leave was, however, made subject to the companydition that even if a decree was granted in the suit, jointly and severally against various defendants, the Bank should proceed to get the decree satisfied from other defendants, and if the decree was number fully satisfied, then the matter may be brought to its numberice for proceeding against the Company for realization of residuary decretal dues.
When matters stood thus, an order for winding up the companypany was passed by the High Court on 24.10.1989.
It rejected the application filed by second defendant appellant No.1 herein for staying the suit under Section 22 of the SIC Act.
As the companypany became sick, a reference was also made to the Board for Industrial Financial Reconstruction which directed an inquiry under Section 16 of the Sick Industrial Companies Special Provisions Act, 1985 for short SIC Act .
When the said order came to its knowledge, the Bank filed a further objection to the application under Section 22 of the SIC Act, companytending that Section 22 of the SIC Act will number apply in view of the order for winding up.
Even prior to the said suit, other creditors had filed petitions for winding up of the Company, in Company Petition Nos.1/79, 2/79 and 4/79 on the file of the Patna High Court, alleging that it was unable to pay its debts.
The said stay order dated 16.7.1990 was vacated subsequently by the Company Court on 16.12.1994 and the winding up order was revived.
Therefore, the last date for filing an application seeking leave was 24.10.1992 and the application filed on 11.8.1995 was barred by limitation.
When the Company Court was informed that an inquiry under Section 16 of the SIC Act had been directed by the BIFR, it passed an order on 16.7.1990, staying the operation of the order of winding up dated 24.10.1989.
The Bank withdrew its revision petition CRP No.388/1990 on 4.4.1995.
The Bank, therefore, prayed for dismissal of the application for stay filed by appellant No.1 herein and further prayed that while the proceedings as against the first defendant companypany may be kept in abeyance, the suit may be proceeded with against the other defendants.
The Bank challenged the said order in CRP No.388/1990 before the High Court.
The repayment of the amounts advanced to the Company was guaranteed by the appellants.
On 28.11.1988, the Bank filed a suit Title Mortgage Suit No.150/1988 on the file of the Special Subordinate Judge, Ranchi against the Company defendant No.1 , the appellants defendants 2 to 4 , and four others namely, State of Bihar, Bihar State Financial Corporation, I.F.C.I. and IDBI defendant Nos.5 to 8 .
The loans were secured by mortgage of the assets of the Company.
In the said suit, the Bank sought a decree for Rs.5,95,98,258.31 against defendants 1 to 4 the companypany and the appellants with interest thereon and several ancillary and companysequential reliefs.
The Company had obtained certain credit facilities from the State Bank of India first respondent herein and referred to as the Bank .
Appellant Nos.1 to 3 were its Directors.
During the pendency of the said companypany petitions, a numberification dated 16.4.1984 was issued under the Bihar Relief Undertakings Special Provisions Act, 1982, declaring the Company as a relief undertaking, thereby preventing further progress of the petitions for winding up.
RAVEENDRAN, J. This appeal directed against the order dated 1.9.1997 of the Patna High Court in LPA No.259/1996, relates to the applicability of Article 137 of Limitation Act, 1963 to a petition under Section 446 1 of the Companies Act, 1956, seeking leave of the Company Court to proceed with a pending suit.
