The applicant, Al Shams Global BVI, filed an urgent chamber application seeking a mandamus to compel the third respondent, Equity Properties (Pvt) Ltd, to surrender a replacement Deed of Transfer. The third respondent owned property held under title deed 9068/2008 which it had hypothecated as security for a loan from Interfin Banking Corporation (the Bank). The Bank was subsequently placed under liquidation with the first respondent, Deposit Protection Corporation, appointed as liquidator. The second respondent was the liquidator's company secretary. The applicant claimed the Bank had surrendered the original title deed to it as security against amounts borrowed from the applicant. The applicant alleged the replacement deed had been wrongfully obtained. Two prior cases were relevant: SC 23/2020 where the Supreme Court held that leave was required to sue a company in liquidation, and SC 101/2021 where a previous replacement deed obtained via defective default judgment was prevented from use. The liquidator contended that the debt owed by the third respondent had been paid and there was no reason to hold the title deed.
The application was struck off the roll with costs on a higher scale.
Where a company is under liquidation, leave of court must be obtained before instituting any proceedings against the company or its liquidator, regardless of whether the action is characterized as against the liquidator's administrative conduct or official capacity. A liquidator's actions in obtaining a replacement title deed after a debt has been satisfied to the liquidator constitutes action in official capacity as liquidator, not merely administrative action, and therefore proceedings challenging such actions require prior leave of court. The requirement for leave to sue exists to protect companies in liquidation from unnecessary litigation and to ensure the orderly distribution of assets among creditors under court supervision, preventing any creditor from altering the rights and interests of other creditors without court approval.
The court noted that under an application for leave to sue, issues such as whether a foreign company is registered locally would be considered under prospects of success in determining whether leave should be granted. The court observed that there was no basis for citing the company secretary (second respondent) in her personal capacity, as she was acting on behalf of the entity under liquidation. The court also observed that SC 101/2021 was distinguishable because in that case the Supreme Court was concerned with a replacement deed obtained through a defective default judgment, whereas in the present case the debt had been paid to the liquidator.
This case reinforces the principle that leave of court is mandatory before instituting proceedings against a company in liquidation, even when the applicant frames the action as being against the liquidator's administrative conduct. It clarifies that where a liquidator acts in discharge of official duties (such as obtaining a replacement deed after debt satisfaction), this falls within the scope of actions requiring prior leave. The decision protects the insolvency process by ensuring all creditors are treated equally under court supervision and prevents individual creditors from circumventing established procedures by holding onto security after debts have been satisfied. It demonstrates the courts' strict approach to enforcing procedural requirements in insolvency matters and protecting companies under liquidation from unauthorized litigation.