TMI Blog1988 (9) TMI 269X X X X Extracts X X X X X X X X Extracts X X X X ..... cember 20, 1973. The claim in all these cases was filed on February 28, 1978. There is no dispute that the claim was alive on the date of the winding-up order. According to the appellants, the exclusion of time for the purpose of limitation under section 458A of the Companies Act cannot relate to any period prior to the winding-up order. The learned company judge, following the decision in Official Liquidator v. Kadir [1977] KLT 39, has held that a claim under section 446(2)( b ) of the Companies Act is an application falling under article 137 of the Limitation Act and that the starting point of limitation is the date on which the winding-up order is passed and the official liquidator is appointed as the liquidator of the company. Adverting to section 458A of the Companies Act, the learned judge held : "The claim here is an 'application in the name and on behalf of a company which is being wound up', and, therefore, in computing the period of limitation, two periods are to be excluded: ( i )the period from the date of commencement of winding up to the date on which winding-up is ordered; ( ii )a further period of one year immediately following the date of the winding-up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n him to sell the properties, both movable and immovable of the company, and to realise the assets of the company and this was to be done for the purpose of distributing the assets of the company amongst the claimants. Now, at a stage when a winding-up order is made, the company may well have subsisting claims and to realise these claims, the liquidator will have to file suits. To avoid this eventuality and to keep all incidental proceedings in winding-up before the court which is winding up the company, its jurisdiction was enlarged to entertain a petition, amongst others, for recovering the claims of the company. In the absence of a provision like section 446(2) under the repealed Indian Companies Act, 1913, the official liquidator, in order to realise and recover the claims and subsisting debts owed to the company, had the unenviable fate of filing suits. These suits, as is not unknown, dragged on through the trial court and courts of appeal resulting not only in multiplicity of proceedings but in holding up the progress of the winding-up proceedings. To save the company, which is ordered to be wound up, from this prolix and expensive litigation and to accelerate the disposal of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter giving full benefit of section 458A of the Act." Section 458A, as adverted to earlier, excludes two periods in computing the period of limitation and a claim, according to the Full Bench of the Delhi High Court, referred to above, can be filed within three years after the winding-up order, excluding also the two periods under section 458A of the Act. In Kadir's case [1977] KLT 39, G. Viswanatha Iyer J. held that a claim application is not a suit, that it would fall under article 137 of the Limitation Act and that the starting point of limitation is the date on which the winding-up order has been passed. The learned judge states at page 42: "The Limitation Act has prescribed periods of limitation to file suits and applications. A claim application is not a suit. In Bank of Deccan Ltd. ( In liquidation ) v. E.K. John, this court had occasion to consider whether a claim is in the nature of a suit or a suit itself and it was held that it is not. That was in connection with the interpretation of section 3 of Act 30 of 1975. The same principle applies to the expression 'suit' used in the Limitation Act. In Hansraj v. Dehra Dun M.E.T. Co., AIR 1933 PC 63, their Lordsh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b ) has been considered in two Full Bench judgments of this court, Faridabad Cold Storage and Allied Industry v. Official Liquidator, Ammonia Supplies Corporation P. Ltd. [1978] 48 Comp. Cas. 432 and R.C. Abrol and Co. ( P. ) Ltd. v. A.R. Chadha and Co. [1979] 49 Comp. Cas. 77 (Delhi) [FB], confirming the decision in Official Liquidator of R.C. Abrol and Co. P. Ltd. v. A.R. Chadha and Co. [1973] 43 Comp. Cas. 376 (Delhi) and the decision of Anand J. in Official Liquidator, Security and Finance P. Ltd. v. Pushpa Wati Puri [1978] 48 Comp. Cas. 385 (Delhi). The effect of these decisions can be summarised as follows : ( a )The expression 'any claim' occurring in section 446(2)( b ) means a claim which is legally enforceable. A claim which had become time barred on the date of presentation of the winding-up petition cannot be described as a legally enforceable claim and the provisions of section 446(2)( b ) do not enable the official liquidator to receive claims which had quietened by the lapse of time. ( b )Where there is an enforceable claim as on the date of the winding-up petition, the official liquidator can make an application under section 446(2). Such an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laim is alive on the date of the commencement of the winding-up proceedings and that the relevant date for computing the period of limitation would be the date of the winding up order made by the company court as the liquidator does not acquire any right to enforce such claim under section 446(2)( b ) on any date prior to the date of the winding-up order. It is also held that article 137 of the Limitation Act applies to such claims and the claimant is entitled to the full benefits of section 458A of the Companies Act. Section 446(2)( b ) is a new machinery provided for the enforcement of claims for the first time by the Companies (Amendment) Act, 1960. The amendment by way of addition of clauses ( b ), ( c ) and ( d ) to sub-section (2) was brought about in the light of the report of the Companies Act Amendment Committee headed by Shri A.V. Viswanatha Sastri. The committee, at page 160 of its report, made the following recommendation : " Section 446 : Suits and proceedings : 164. A suggestion has been made that the court winding up the company should have full power to decide all claims made by or against any company and all questions of priorities and all other questions w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding up order is made and a further period of one year are to be excluded in computing the period of limitation. It is clear on the terms of the section itself that both the periods referred to above are to be excluded in computing the period of limitation. The decisions in Liberty Finance P. Ltd.'s case [1979] 49 Comp. Cas. 287 (Delhi), Punjab Finance Pvt. Ltd.'s case [1978] 48 Comp. Cas. 271 (P H), Faridabad Cold Storage's case [1978] 48 Comp. Cas. 432 (Delhi) [FB] and Unico Trading and Chit Fund's case [1982] 52 Comp. Cas. 340 (Kar), referred to above, and also the decisions in Fabrimats ( Madras ) P. Ltd., In re : Official Liquidator v. Best and Crompton Engineering Ltd. [1982] 52 Comp. Cas. 501 (Mad) and Arkay Chit and Commercial Trading Co. P. Ltd., In re : Official Liquidator v. P. V. R. Kutty [1982] 52 Comp. Cas. 174 (AP), take the view that the aggregate of the two periods referred to in section 458A is to be excluded in computing the period of limitation. The. decision in Brahmayya and Co. v. Mohammedsa Rowther, AIR 1959 Mad 366, relied on by counsel for the appellants, does not, in any way, advance the appellants' case that the period of pendency of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitation Act provides that when the period limited to a person for instituting a suit for possession of any property has expired, his right to such property is extinguished. And the authorities have held and rightly, that when the property is incapable of possession, as for example, a debt, the section has no application, and lapse of time does not extinguish the right of a person thereto. Under section 25(3) of the Contract Act, a barred debt is good consideration for a fresh promise to pay the amount. When a debtor makes a payment without any direction as to how it is to be appropriated, the creditor has the right to appropriate it towards a barred debt. (Vide section 60 of the Contract Act). It has also been held that a creditor is entitled to recover the debt from the surety, even though a suit on it is barred against the principal debtor. Vide Mahant Singh v. U Ba Yi [1939] 66 Ind App 198; AIR 1939 PC 110 (F); Subramania Aiyar v. Gopala Aiyar [1910] ILR 33 Mad 30 (G) and Dil Muhammad v. Sain Das, AIR 1927 Lah 396 (H). And when a creditor has a lien over goods by way of security for a loan, he can enforce the lien for obtaining satisfaction of the debt, even though ..... X X X X Extracts X X X X X X X X Extracts X X X X
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