- The Honourable High Court in a general Application [G.A. NO. 7 & 8 of 2021] filed in the case of Concast Steel & Power Limited V. Sarat Chatterjee & Co. & Ors.[Civil Suit NO. 77 of 2013] has held that delay in substituting liquidator’s name in the file of the suit would not in any way lead to an abatement of the said suit.
- The decision came in light of Order 22 Rule 8 of Civil Procedure Code (CPC), 1908.It deals with situations where plaintiff’s insolvency bars suit. The Learned Judge was of the opinion that in case of a company that goes into liquidation, the suit shall not abate unless the liquidator declines to pursue the said suit and there should be a positive assertion to this effect.
- The defendant no.2 had filed an application seeking dismissal of the suit on the ground of abatement by liquidator and to direct the special officer appointed by the court to restrain from carrying out the valuation and sale of the concerned goods in the main suit.
- The petitioner company had gone into liquidation by an order dated September 26, 2018 passed by the National Company Law Tribunal, Kolkata Bench.
- In the meeting held by the Special Officer, appointed as receiver by the court, the learned Advocate for company in liquidation, informed the Special Officer that his client had gone into liquidation and would not be able to share any costs for the suits and proceedings since they do not have the funds to do so.
- The liquidator was present and took part in the said meeting and supported the submission made by the learned Advocate appearing for the company in liquidation.
- The Learned Counsel appearing for defendant no.2 emphasized on Order 22 Rule 8, and contended that the liquidator had declined or neglected to pursue the litigation. So, in light of the same, the suit had abated. It was further submitted that, the sale of property in question should be stayed.
- The Learned Counsel for the liquidator, had submitted that the liquidator was always acting in the suit as would be evident from the appearance of the liquidator before the special officer appointed by this Court with regard to the sale the property in question.
- The Honourable Court relied on the Judgement of Khunni Lal v. Rameshwar & anr. wherein it was held by the Hon’ble Allahabad High Court that till an order had been obtained under Order 22, Rule 8, of the Code of Civil Procedure the proceedings cannot abate and must be deemed to continue.
- In the present case, there had been no order of the appropriate Court seeking an explanation from the liquidator or seeking a security for the costs incurred by the defendants. It was very clear that the liquidator had been acting in the suit and had taken all necessary steps. Under these circumstances, it would be erroneous to hold that the liquidator had declined to continue the suit.
- Hence, the general appeal in the Civil Suit seeking abatement of the suit was dismissed amendment of the plaint to bring the liquidator on record was allowed.
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