TMI Blog1985 (5) TMI 207X X X X Extracts X X X X X X X X Extracts X X X X ..... deemed inability to pay the debts, forming the subject-matter of the petitions, raise a common question, whether a claim, which became barred by time during the pendency of a petition at the show-cause stage, could be a legitimate basis for winding up proceedings, even if it was within time when the petition was filed. During the hearing of the matter on the aforesaid common question, some of the learned counsel, appearing for the creditors or the companies concerned, did not maintain the distinction between "maintainability "of a petition, the " locus standi " of a creditor and the extinction of the remedy on the claim becoming out of time. It is, therefore, necessary at the outset to clear the ground for a proper consideration of the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... debt could be a valid basis for the petition and the winding-up order only if the debt that remains unpaid, notwithstanding statutory notice, is both "due "and recoverable. The word "due "in section 434 of the Companies Act must be reasonably construed to mean a debt which is due, as well as recoverable in law. To hold to the contrary would lead to the anomalous result that the creditors of a joint stock company would be immune to the bar of limitation and have a preferential right as compared to an ordinary creditor. This was also not seriously disputed on behalf of the various petitioners. It was, however, contended that the claims in each of these cases were within time when the petitions were instituted and the deemed inability of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for winding up cannot be equated with the institution of a suit. Once a suit has been filed within the period of limitation, there is no question of the claim being hit by the law of limitation. The action for which there is limitation has already been taken before the expiry of the period provided by the Limitation Act. The filing of a winding-up petition is not analogous to the filing of a suit. Section 14 of the Limitation Act would also be of no assistance to the petitioners because the petitions for winding-up and the eventual suit for which the exclusion may be claimed could not be said to "relate to the same matter in issue". The object of a winding-up petition is to have the company wound up. Winding-up petition is not a forum for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, the defence of the company that the claim became barred by time during the pendency of the petition would, on any reckoning, be bona fide, as well as, substantial so as to render the petitions liable to be dismissed on that ground alone. A winding-up petition, solely based on a claim which was barred by time at its inception, or which was allowed to be barred during its pendency, would be a gross abuse of the process of this court and would be a misuse of the special jurisdiction under the Companies Act created for an entirely different purpose. This forum is already sufficiently misused by creditors of the corporate sector to enforce claims of doubtful validity partly because the proceedings are not as time-consuming and dilatory as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India [1923] ILR 4 Lah. 109 ; AIR 1924 Lah. 53, but, unfortunately, none of these cases dealt with the question before me. It is, therefore, unnecessary to dilate on these cases. The petitions are, by and large, based on the ground of deemed inability of the companies to pay the claims which became barred by time during the pendency of the petitions even though in one or two petitions there is the additional ground of "commercial insolvency" but the additional ground in no case goes beyond the use of that expression and it was not seriously disputed that the real ground on which the company was sought to be wound up was the deemed inability to pay the claims which have, during the pendency of the petitions, become barred by time. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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