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TMI Blog1977 (4) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... ative change in the context in which the reference was made. The questions that arise for consideration are : "(a)Whether the Limitation Act, 1963 (for short, the Act of 1963), governs the proceedings under the Act by virtue of article 137 of the Schedule to it ? (b)Whether the expression 'claim' in section 446(2)(b) of the Act means a claim enforceable at law and would, therefore, exclude claims which had become barred by time before the commencement of winding-up? (c)Whether a claim against any person which had become barred by time at the commencement of the winding-up of a company could be made subject-matter of an application under sections 542 and 543 of the Act? (d)When would the 'right to apply' under sections 446(2)(b) and 542 of the Act be said to accrue for the purpose of article 137 of the Schedule to the Act of 1963?" As regards question at (a) above the legal position has since crystallised and does not admit of any further controversy. The Indian Limitation Act of 1908 (for short, "the Act of 1908") had no application to proceedings under the Act. Article 181 of the Schedule to that Act, which provided for limitation for applications, not otherwise provided, wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of Nityanand M. Joshi v. Life Insurance Corporation of India [1970] 36 FJR 324 ; AIR 1970 SC 209, Sikri J. (as he then was), and who spoke for the court, cast a veiled doubt on the correctness of the aforesaid decision but did not take the matter any further because it was not necessary to express a considered view on the question. The decision in the case of Town Municipal Council, Athani [1969] 36 FJR 177 ; AIR 1969 SC 1335, therefore, continued to hold the field until in the case of Kerala State Electricity Board v. Kunhaliumma [1976] 4 SCC 634 (SC), the Supreme Court ruled that, having regard to the change brought about by the Act of 1963, article 137 of the Limitation Act will apply to any petition or application filed under any Act to a civil court. It must, therefore, be held that the various applications and petitions under the Act would be governed by the Act of 1963, except in so far as the Act itself makes a provision for limitation such as section 543 of the Act and that these applications and petitions would be governed by article 137 of the Schedule to the Act of 1963. As for question at (b) above a long line of decisions dating back to the year 1924 and culm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in preference to a regular suit, the party against whom the application was made could not be deprived of his right to plead the statute of limitation. In the case of Malabar Petroleum Co. v. Thomas [1963] 33 Comp. Cas. 367 ; AIR 1963 Mad. 307, the expression "any money due" in section 469 of the Act was held to mean the amount due and such amount could not be due if under the law of limitation the claim had become barred by time. In the case of Jadeja Kiratsinhji Anandsinhji v. Patel Kana Vela, AIR 1969 Guj. 122 the word "liability" in the definition of the expression "debt" in section 2(5) of the Saurashtra Agricultural Debtors' Relief Act was held to mean a civil liability which could be enforced by a civil court. In the case of New Delhi Municipal Committee v. Kalu Ram, AIR 1976 SC 1637, the Supreme Court could be said to have put a seal of approval on this line of thinking when it held that the word "payable" in section 7 of the Public Premises (Eviction of Unauthorised Occupants) Act, 1958, must mean "legally recoverable". It was further observed that if the recovery of an amount was barred by the law of limitation, it was difficult to hold that the estate officer could stil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in the company court. It must, therefore, be held that the claim or liability sought to be enforced under the provisions of section 446(2)(b) must relate to an enforceable claim and a claim which is not legally enforceable could not be pursued under this section and the new jurisdiction has not been created by the Act to revive claims which had been quietened by lapse of time. In other words, the expression "claim" in section 446(2)(b) of the Act would exclude claims that had become barred by time before the commencement of winding up. In terms of section 441(2) of the Act in case of winding up by court the winding up shall be deemed to commence at the time of the presentation of the petition for the winding up. It may be useful to point out that under section 458A of the Act in computing the period of limitation for any suit or application in the name or on behalf of the company, which is being wound up, the period from the date of commencement of the winding up of the company to the date on which the winding-up order is made (both inclusive) and the period of one year immediately following the date of the winding-up order has to be excluded. As regards question at (c) above th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings under the Act, for which the Act does not prescribe any period of limitation would now be governed by article 137 of the Limitation Act of 1963. The article provides for applications for which no period of limitation is provided elsewhere in the division relating to the applications. It is not in dispute that the division relating to applications in the Limitation Act makes no provision for applications under the Act. Article 137 provides a limitation of three years for such applications and the time for such applications begins to run ' when the right to apply accrues'. It is a well-known common law principle that for the purpose of any proceeding time is to run from the moment the party first gets the right to initiate it. Ordinarily, therefore, the right would accrue when the cause of action for the procedure proceeding first arises. It is equally well known that by the words 'the right to apply' is intended the right to apply on a particular cause of action and where there are different causes of action, there would accrue the right to apply as and when the subsequent cause of action arises On an application of these principles ordinarily the right to apply under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ple reason that sub-section (2) of that section clearly provides that an application under sub-section (1) may be made within five years from the date of the order of winding up or of the first appointment of the liquidator in the winding up or of the misapplication, retainer, misfeasance or breach of trust, as the case may be, "whichever is longer". This clearly makes the limitation for the complained acts under the ordinary law of limitation irrelevant. This is so because the provisions of sub-section (2) of section 543 would prevail over the law of limitation, being a provision in a special statute. As regards question at (d) above, the answer to it would vary with the two provisions. In so far as an application for enforcement of a claim under section 446(2)(b) of the Act is concerned the right to apply would accrue only when an order for the winding up of the company is made because the court which has jurisdiction to entertain or dispose of such a claim is the court "which is winding up the company". The right to apply to such a court obviously would not arise unless the court was winding up the company. Now it is true that under section 441(2) the winding up of a company by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court in Kerala State Electricity Board's case [1976] 4 SCC 634, it could be said that a person applying under the provisions of the Act had sufficient cause for not preferring the application within the period of limitation provided by article 137 and he, therefore, was entitled to the extension of the period prescribed by that article. True, article 137 was wide enough to include within its ambit applications under the Act and any applicant, therefore, was bound, in terms of section 3 of the Act of 1963, to apply within the period allowed by law. However, only a veiled doubt was cast on the correctness of the decision in the case of Town Municipal Council, Athani, AIR 1969 SC 1335, in the decision of the Supreme Court in the case of Nityanand M. Joshi, AIR 1970 SC 209, in the year 1970, but the earlier decision held unchallenged sway. The true legal position was, however, restored only with the decision in the case of Kerala State Electricity Board [1976] 4 SCC 634, in 1976. Explanation to section 5 of the Act of 1963 lays down that the fact that the appellant or the applicant was misled by any order, practice or judgment of the High Court in ascertaining or computing th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cases would apparently be necessary and the question may perhaps have to be considered with a view to determine if any legislative action in that behalf would be called for. The only question that remains to be considered is as to whether the present application, under section 446(2)(b) of the Act is barred by time in view of the aforesaid conclusions. The respondent is the wife of the former managing director of the company and had taken advances from the company from time to time between the years 1957 and 1967. A total sum of Rs. 1,01,988.60 claimed from the respondent includes the value of shares sold to the respondent by the company which was not paid for by the respondent and the amounts were debited to her account on December 30, 1959. The respondent has been making payment to the company from time to time. The last payment was made by the respondent on March 31, 1967. The winding-up petition was filed on February 19, 1968, and the winding-up order was made on July 17, 1969. The present claim was filed on March 20, 1972. The claim had admittedly become barred by time when it was filed on March 20, 1972, even if the last payment on March 31, 1967, is taken to be an act of ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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