HARIHAR NATH AND ORS. versus STATE BANK OF INDIA AND ORS.

HARIHAR NATH AND ORS. versus STATE BANK OF INDIA AND ORS.

Application under Section 446(1) of the Companies Act for leave to proceed with a suit is not an application for enforcement or adjudication of a claim, but interlocutory in nature and thus not subject to limitation under Article 137. The period of limitation is not attracted, as the right to apply accrues every moment the suit remains stayed. Condition imposing recovery from guarantors first deleted as contrary to law.

Parties
Appellants: Harihar Nath and Ors.; Respondents: State Bank of India and Ors.
Jurisdiction
India
Judgment Date
04 April 2006
Procedural Posture
Civil Appeal / Supreme Court Decision on Appeal From Order Dated 1.9.1997, Patna High Court, LPA No. 259/1996
Outcome
Appeal dismissed
Legal Topics
Winding Up of Company, Leave to Proceed With Suit, Limitation for Applications, Personal Guarantee, Mortgage Suit
Company Law Limitation Law Banking Law Winding Up of Company Leave to Proceed With Suit Limitation for Applications Personal Guarantee Mortgage Suit

Case Brief

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Parties

Harihar Nath and Ors.

Appellants

State Bank of India and Ors.

Respondents

Procedural Posture

Civil Appeal / Supreme Court Decision on Appeal From Order Dated 1.9.1997, Patna High Court, LPA No. 259/1996

Legal Issues

  1. 1 Whether Article 137 of the Limitation Act, 1963 applies to an application under Section 446(1) of the Companies Act, 1956 for leave to proceed with a pending suit after winding up order.
  2. 2 Whether the Company Court could condone delay suo moto under Section 5 of the Limitation Act in absence of an application.
  3. 3 Whether the condition imposed directing recovery from guarantors first is valid.

Ratio Decidendi

Application under Section 446(1) of the Companies Act for leave to proceed with a suit is not an application for enforcement or adjudication of a claim, but interlocutory in nature and thus not subject to limitation under Article 137. The period of limitation is not attracted, as the right to apply accrues every moment the suit remains stayed. Condition imposing recovery from guarantors first deleted as contrary to law.

Court Disposition

Appeal dismissed

Orders

  • Grant of leave to proceed with suit upheld; condition imposed by company court requiring recovery from guarantors first deleted.
  • Trial court to proceed with the suit with expedition.