TMI Blog1932 (12) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... s made by the Official Liquidators on the 26th March 1928 under Section 186 of the Indian Companies Act to recover from the appellants (the testator's executors) three items of money namely, Rs. 27,000, Rs. 35,000, and Rs. 7,703-13-0. The High Court having decreed the claim, the executors appealed to His Majesty in Council. The period of limitation for each of the above three items was three years, and it was practically conceded on both sides that the cause of action in respect of them accrued on the 1st July 1923, 13th September 1922 and 31st March 1924 respectively. The question before the Board was, whether having regard to the above dates, the application of the Official Liquidators under section 186 of the Companies Act was within time. Cohen, K.C. (with W. Wattach) for appellants. The two sums of Rs. 27,000 and Rs. 35,000 were in the nature of earnest money, and as the company was primarily responsible for the failure of the contract, the testator Lala Raghumal was not liable to refund them. On the date of the liquidator's application, the three items were barred by limitation. The Court will not, under section 186, enforce by summary order a time-barred debt: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 of the Limitation Act. "Money due" in section 186 does not mean "money recoverable." Limitation merely bars the remedy but does not extinguish the debt. Money may be due, though barred by the statute of limitation: Ex parte Cawley [ 1889, 34 S.J. 29 ] . The words "at any time" in section 186 are emphatic. The Lahore case is erroneous and should be overruled by the Board. The statute of limitation ceases to run on a winding-up order being made: Ex parte Lancaster Banking Corporation: in re Westby ( 10Ch. D. 776 ). [ Lord Blanesburgh. The case does not deal with debtors to the company.] In any event, we submit that as regards the item of Rs. 35,000, our claim was within time, as the company had no notice or knowledge of the transaction, and the date of the agreement could not be taken as the time when it was discovered to be void: Harnath Kunwar v. Indar Bahadur Singh ( 50 I.A. 69 ). Cohen, K.C. replied. 16 December, 1932. Their Lordships' judgment was delivered by Lord Russell of Killowen. For the facts relevant to this appeal their Lordships refer to the judgment which was delivered in July last in the Privy Council Appeal No. 127 of 1930, Hansraj G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his claim to the official liquidator." Unless the application which the liquidators made on the 26th March, 1928, was a "suit instituted" or an "application made," for which a period of limitation is prescribed by the First Schedule, no question of limitation in regard thereto can arise. There is no definition of suit in the Act, beyond the provision, contained in section 2, that unless there is anything repugnant in the subject or context, "suit" does not include an appeal or an application. The word "suit" ordinarily means, and apart from some context must be taken to mean, a civil proceeding instituted by the presentation of a plaint. The application of the liquidators would not be a suit within section 3, if that section stood alone, unaccompanied by the Explanation. An argument, however, was addressed to their Lordships, founded upon the Explanation, to this effect: That the Explanation shows by its concluding sentence that the claim against a Company in compulsory liquidation (even though made by a proceeding not instituted by the presentation of a plaint) is considered to be a "suit instituted" within those words in section 3, and that a claim similarly made by or on beh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which could apply to such an application is Art. 181: but a series of authorities commencing with Bai Manekbai v. Manekji Kavasji [1880] I.L.R. 7 Bom. 213 has taken the view that Art. 181 only relates to applications under the Code of Civil Procedure, in which case no period of limitation has been prescribed for the application. But even if Art. 181 does apply to it, the period of limitation prescribed by that Article is three years from the time when the right to apply accrued, which time would be not earlier than the date of the winding-up order, the 26th March, 1926. The application of the liquidators was made on the 26th March, 1928, well within the three years. The result is that from either point of view the application by the liquidators, if otherwise properly made under and within the provisions of section 186 of the Indian Companies Act is not one which must be dismissed by reason of section 3 of the Indian Limitation Act. It is either an application made within time, or it is an application made for which no period of limitation is prescribed. The case may be a causus omissus. If it be so, then it is for others than their Lordships to remedy the defect. There is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same situation for the matter now under consideration as is the second item. The important feature for this purpose is the fact that all three items were statute-barred by suit when the liquidators made their application under section 186. If on the 26th March, 1928, the liquidators, instead of proceeding in their own name as applicants under section 186, had in pursuance of their powers under section 179( a ) already referred to instituted a suit in the name of the company by the presentation of a plaint, the Court must of necessity have dismissed that suit under the Indian Limitation Act. Now, in considering the meaning and effect of section 186 it is impossible to overlook the fact that it is verbatim identical with the corresponding section in the legislation of this country, a section which dates back some 70 years to 1862, and which has appeared in our company legislation ever since. It is therefore a section with an ancestral history. Three features of the section call for notice: (1) It is concerned only with moneys due from a contributory, other than money payable by virtue of a call in pursuance of the Act. A debtor who is not a contributory is untouched by it. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -barred (and therefore unenforceable in a suit) could not be enforced by a summary order under section 186, on the ground that the section does not create new liabilities or confer new rights, but merely creates a summary procedure for enforcing existing liabilities. It is true that so far as can be gathered from the report it would seem probable that the debt there in question had become time-barred before the liquidation began, but the decision is not based upon that fact, but upon a view of the section coinciding with the views expressed long ago in Stringer's case. The learned Judges, in the present case, took the erroneous view that once the winding-up commenced there could be no further application of the rule of limitation in regard to any debt due to the company and not then already time-barred. Their Lordships know of no justification for this view. In this respect there is no analogy between the position of a debtor to, and a creditor of, a company in liquidation. The learned Judges also considered that the Lahore case was in conflict with a decision in the Allahabad Court, Jagannath Parsad v. The United Provinces Flour and Oil Mills Company, Limited. This, ho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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