TMI Blog1973 (8) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... rnatively all other proceedings including advertisement of the said company petition be permanently stayed. On April 4, 1966, the application made by the appellant was disposed of by an order of B. C. Mitra J. by consent of parties in accordance with certain terms of settlement filed in court. It will be necessary for the purpose of this appeal to set out some of these terms in extenso: "( i ) The company admits that a sum of Rs. 38,000 on account of principal and Rs. 12,519 as interest up to October, 1965, is due to the petitioning-creditor. The company also admits that it is liable to pay the petitioning-creditor's interest on the principal amount at 9% per annum from November, 1965, till payment. The company hereby creates a floating charge on all its presents as per schedule below and future fixed assets as a first charge. ( ii ) The company will pay the entire dues of the petitioning creditor as aforesaid within 31st March, 1969. The company will pay Rs. 10,000 within 4th April, 1966, and in respect of the balance the company will pay a sum of not less than Rs. 6,000 every six months, first of such payment is to be made on or before the 31st October, 1966, but the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplication before the learned judge were: (1) that the petitioning-creditor having been a secured creditor was not competent to make an application for winding up unless he satisfied the court that the security was insufficient to cover his debt; (2) the claim of the petitioning-creditor had become at the material time barred by limitation and, in that view of the matter, the claim on the basis of which the winding-up application has been made is a claim not enforceable in law. The learned judge held on good authority that a secured creditor is entitled to make an application for winding up, and in doing so, it was not necessary for him to satisfy the court that the security was inadequate. On the other question, the learned judge held that the petitioning creditor was entitled to waive and had waived the stipulations for payment in installments on the due dates. In that view of the matter, the learned judge found that the date of limitation commenced from 31st March, 1969, by which date the company was liable to pay the entire dues of the petitioning-creditor in terms of the consent order. The application for winding up having been made on the 18th May, 1971, no question of limita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion really arises. The order dated April 4, 1966, in our opinion, an order by consent though it is, is fully enforceable like any decree or order for payment made by a civil court. The order was made in winding-up proceeding under the Companies Act, 1956. Section 634 of the Act of 1956 provides that any order made by the court under that Act may be enforced in the same manner as a decree made by the court in a suit pending therein. The order is, therefore, as we have indicated, fully enforceable by execution at any time within a period of 12 years from the date of default. So long as the respondent's claim under the order of April 4, 1966, is enforceable in law, the respondent on the basis of that claim is entitled to present and prosecute an application for winding up, which he has done. In our opinion, the question of waiver is immaterial in this case. The period of limitation being 12 years under article 136, the respondent in prosecuting the application for winding up is fully within the period of limitation irrespective of any waiver on the part of the respondent of any of the stipulations for payment of installments made in his favour in the terms of settlement. In other word ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een said that a winding-up proceeding is a mode of enforcing payment of a just debt. In Palmer's Company Precedents, Part II, 1960 edition, at page 125, it is said: "It is the mode of execution which the court gives to creditor against a company unable to pay its debts". This passage was cited with approval and relied on by the Supreme Court in Harinagar Sugar Mills Co. Ltd. v. M. W. Pradhan, Court Receiver, High Court of Bombay [1966] 36 Comp. Cas. 426 ; [1966] 60 I.T.R. 508; A.I.R. 1966 S.C. 1707 . In that view of the matter if an application is made for enforcement of payment of a debt by a winding-up application, and in an application by the company for stay of winding up a payment order is made by consent, on the basis of which a stay is granted, it can hardly be contended that the order for payment is not related to the application for stay of winding up. We are unable to agree that a consent order for payment in such an application is outside the scope of Order 23, rule 3, of the Code. In the Division Bench judgment to which reference has already been made, Banerjee J. observed with reference to the case of Manindra Nath Biswas v. Radhasyam Biswas A.I.R. 1953 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ettlement in accordance with which the consent order dated April 4, 1966, was passed by B. C. Mitra J. Mr. Sen also argued that the court in exercise of its discretion should have granted permanent stay of winding up because the winding-up proceedings are vexatious and mala fide . They are vexatious because two winding-up proceedings have previously been initiated and not proceeded with. Moreover, it was contended that instead of trying to execute the order for payment in the usual course, the respondent used the winding-up proceedings for the purpose of enforcing its claim under the order. We are unable to hold that the application is mala fide only because similar applications have been withdrawn by the respondent. To say so will be to render the leave of the court by which the petitioning-creditor was entitled to initiate fresh winding-up proceedings nugatory. As regards the argument that the respondent should have executed the order instead of coming to the winding-up court all that is necessary for us to say is that the choice is his. In that view of the matter, this contention of Mr. Sen must also fail. Finally, it was contended that the application for winding up is b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to have, as it were, added the words ' under the Code ' in the first column of that article". Article 181 reads as follows: Description of application Period of limitation Time from which period begins to run 181. Application for which no period of limitation is provided elsewhere in this Schedule or by section 48 of the Code of Civil Procedure, 1908. Three years When the right to apply accrues". The similarity between the text of article 181 of the Act of 1908 and article 137 of the Act of 1963, substantial though it is, has to be considered in the context of the respective Acts and the history of legislation on the law of limitation. The preamble to the Act of 1908 is in these terms: "Whereas it is expedient to consolidate and amend the law relating to the limitation of suits, appeals and certain applications to courts". The Act of 1963 has hardly any preamble. Its long title reads: "An Act to consolidate and amend the law for the limitation of suits and other proceedings and for purposes connected therewith". Under the provisions of section 2 of the Act of 1963 "applicant" includes "petitioner" and "applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... article standing as it does, in splendid isolation. Learned counsel for the appellant relied on an unreported decision of P. B. Mukharji J. in In re Turner Morrison Co. Ltd. (C.P. No. 274 of 1967, decided on June 23 and 24, 1970), where it was held that article 137 applied to applications under section 397 and section 398 of the Companies Act, 1956. Reference was also made to the decision in Ram Kumar Kajaria v. Chandra Engineering ( India ) Ltd. A.I.R. 1972 Cal. 381, where M. M. Dutt j. held that article 137 is not restricted to applications under the Code of Civil Procedure but also applies to applications and petitions under other enactments. Had the matter been res integra we should have had no hesitation in holding that article 137 is fully applicable to an application for winding up under the Companies Act. But it seems to us that we are not free to do so having regard to a decision of the Supreme Court in Town Municipal Council, Athani v. Presiding Officer, Labour Court [1969-70] 36 F.J.R. 177, 188; [1970] 1 S.C.R. 51; A.I.R. 1969 S.C. 1335 , to which attention of the learned single judges who decided those cases does not appear to have been drawn. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [1969-70] 36 F.J.R. 324, 325; [1970] 1 S.C.R. 396; A.I.R. 1970 S.C. 209 the court held that one of the grounds on which the above decision was founded was the interpretation of article 137. It was however observed: "....that it may require serious consideration whether applications to courts under other provisions, apart from the Civil Procedure Code, are included within article 137 of the Limitation Act, 1963, or not". To doubt the correctness of a decision is not to overrule it and the decision in Town Municipal Council's case ( supra ) still holds sway. It must, therefore, be held that the position at present is that article 137 does not apply to applications for winding up of a company under the Companies Act, 1956. In that view of the matter it is not necessary for us to consider the arguments advanced at the Bar as to when the right to apply accrues except to point out that a petition for winding up has to be presented within the period the debt is recoverable in law in cases where the ground for winding up is the inability of the company to pay its debts. An alternative argument was sought to be built up on the basis that an application for winding up of a company un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Civil Procedure. In that view of the matter article 137 of the Limitation Act will be attracted to an application for winding up under the Companies Act. Section 141 of the Code provides that the procedure provided in the Code in regard to suits shall be followed, as far as it can be made applicable, in all proceedings in any court of civil jurisdiction. The court administering the Companies Act is a court of civil jurisdiction. Section 144 of the Bengal Tenancy Act provides for jurisdiction in proceedings under the Act. In section 10 of the Companies Act provision had been made for jurisdiction of the court in proceedings under the Companies Act. The decision of the Special Bench, therefore, applies proprio vigore to proceedings under the Companies Act and, therefore, an application for winding up under the Companies Act is an application under the Civil Procedure Code. To deal with the contention raised on behalf of the appellant, it is necessary to refer to the relative provisions of the Bengal Tenancy Act: "143. (1) The High Court may, from time to time, with the approval of the Provincial Government make rules, consistent with the Act, declaring that any portions of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich was concerned with an application to which Order 9, rule 13, of the Code was held to be applicable mutatis mutandis for which the Code itself gave ample authority, an application for winding up is a creature of the Companies Act unknown to the Civil Procedure Code. A perusal of the relevant provisions will make it clear that under section 143(1) and (2) of the Bengal Tenancy Act the Code of Civil Procedure has been made applicable in toto subject to prohibition against applicability of any portion of the said Code. This provision led the Special Bench to hold that the Code of Civil Procedure is applicable to suits under the Act and by reason of section 141 of the Code, the entire proceeding under section 26F is regulated by the Code of Civil Procedure. In our judgment, section 141 of the Civil Procedure Code does not make an application made in any court of civil jurisdiction an application under the Code. If it were so, the application for rectification of the share register in Jawahar Mills Ltd.'s case ( supra ), to which we have already referred, and countless applications under special enactments made before courts of civil jurisdiction should have been treated as a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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