TMI Blog1994 (9) TMI 268X X X X Extracts X X X X X X X X Extracts X X X X ..... mpanies Act, 1956, praying for a direction to the appellant pay a sum of Rs. 39,561.92 plus interest of Rs. 9,428.57 totalling in all Rs. 48,990.49 with subsequent interest at 6 per cent. per annum from the date of application till the date of realisation. The report of the official liquidator filed in support of the application merely stated in paragraph 7 thereof that the claim was not barred by limitation in view of the provisions contained in section 458A of the Companies Act, 1956, and sections 18 and 19 of the Limitation Act, 1963. Apart from that sentence, the report did not contain any particulars as to how the claim was in time. In the counter filed by the appellant it was contended that the claim was barred by limitation and that the company was bound to give credit to certain payments made by the appellant and also to the value of certain articles returned by the appellant to the company. The learned single judge, who heard the application, passed an order on September 21, 1984, rejecting the plea of limitation. On the other plea, the learned judge found that there was no evidence regarding return of certain items to the company by the appellant ; but accepted that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of limitation is the date of the order of winding up. After stating categorically that the period of limitation has to be reckoned from December 31, 1976, the learned judge stated as follows : "It is true that in Fabrimats ( Madras ) Pvt. Ltd., In re [1982] 52 Comp. Cas. 501 (Mad.), I have held that the period of limitation in respect of any suit or application, not only in the name of, but also on behalf of, the company, is the usual period prescribed under the Limitation Act, 1963, plus an aggregate of the two periods mentioned in section 458A of the Companies Act, 1956. But, it is relevant to point out that the decision of the Delhi High Court Full Bench was not brought to my notice. I had an occasion to consider the said decision of the Full Bench of the Delhi High Court in C. A. No. 191 of 1983. On the strength of the Full Bench decision of the Delhi High Court, I have held that at first it has to be ascertained as to whether the debt was alive on the date of the presentation of the winding up order and that if the debt were to be alive then the period from the date of commencement of the winding up proceeding to the date on which the winding up order is made and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e winding-up proceedings to the date of the order of the winding-up ; and ( ii ) one year immediately following such date of order of winding-up, that shall be excluded in reckoning the period of limitation." After extracting the above passage, the Division Bench said : "The above in our view is the correct approach, which will permit addition of the period of the pendency of the proceedings as well as one year from the date of the winding up order thus making available to any applicant or plaintiff this additional period to be computed along with the period of limitation prescribed under the Limitation Act. No error has been committed by the court below in this behalf." When the present matter came up before the same Division Bench their decision in O.S.A. No. 34 of 1984, referred to above, was not brought to their notice. Without making any reference to the said judgment, the Bench passed the following order: "The sole but a question of far-reaching consequence in the instant appeal is as to what will be the reckoning date of the period of limitation of a claim under section 446(2)( b ) of the Companies Act. There is no dispute that the period of limitation for the purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the dates on which it shall be enforceable. Section 446(2)( b ) only enables the liquidator to make the claim by way of an application in the company court. The question whether the claim is enforceable or not, is to be determined with reference to the provisions in the Limitation Act, and that could be decided only with reference to the cause of action and the date on which the suit or application is filed. As already stated, section 458A is only a computation provision for the purpose of limitation. Section 446 confers jurisdiction on the company court and enables the liquidator to file a suit or an application before the company court in respect of a money claim. No claim is wiped out except by payment and discharge. Only the enforceability of that claim for recovery may be barred. Whether the claim is barred or not, is only a question of limitation.' The restricted meaning given by the Bench in which the Full Bench judgment of the Delhi High Court cited above, was referred to, however, has not been fully endorsed by another Division Bench of this court in the case of V. Radhakrishnan v. P.R. Ramakrishnan [1993] 78 Comp. Cas. 694 . In this case, it is observed as follows ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereof and substantially in the same field in which sub-section (4) to section 446 shall operate, finally restricting the role which section 446(2) has been intended to play. The Bench deciding O.S.A. No. 210 of 1991, has gone in some detail into the scheme of section 446(1) and (2) and referred to various judgments on the subject to hold that the scope of an application under section 446(2) is different from that of any proceeding under sections 446(1) and 446(2)( b ) and other clauses thereof of the legality and the jurisdiction of the company judge. We, however, are of the opinion that the Bench decision in Official Liquidator, Radel Services P. Ltd. v. Southern Screws P. Ltd. [1988] 63 Comp. Cas. 749 requires reconsideration. Accordingly, we refer the case to a Full Bench." We are told that the statement contained in the order of reference that there is no dispute that the period of limitation for purpose of the claim shall be as under article 137, Limitation Act, 1963, is erroneous, and that the said matter was very much in dispute. Learned counsel for the official liquidator agrees that the appellant disputed the applicability of article 137 of the Limitation Act. If t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e shall proceed to consider the relevant statutory provisions on the interpretation of which the question of limitation has to be decided. Section 446 of the Companies Act, 1956, is in the following terms : "(1)When a winding up order has been made or the official liquidator has been appointed as provisional liquidator, no suit or other legal proceeding shall be commenced, or if pending at the date of winding-up order, shall be proceeded with, against the company, except by leave of the court and subject to such terms as the court may impose. (2)The court which is winding-up the company shall, notwithstanding anything contained in any other law for the time being in force, have jurisdiction to entertain, or dispose of ( a )any suit or proceeding by or against the company ; ( b )any claim made by or against the company (including claims by or against any of its branches in India) ; ( c )any application made under section 391 by or in respect of the company ; ( d )any question of priorities or any other question whatsoever, whether of law or fact, which may relate to or arise in course of the winding-up of the company ; whether such suit or proceeding has been institut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses notwithstanding anything contained in any other law for the time being in force. Section 446(2) thus conferred special jurisdiction on the court winding up the company which otherwise it may not have enjoyed. . . Sub-section (2) of section 446 confers jurisdiction on the court which is winding up the company to entertain and dispose of proceedings set out in clauses ( a ) to ( d ). The expression 'court which is winding-up the company' will comprehend the court before which a winding-up petition is pending or which has made an order for winding-up of the company and further winding-up proceedings are continued under its directions. Undoubtedly, a look at the language of section 446(1) and (2) and its setting in Part VII, which deals with winding-up proceedings, would clearly show that the jurisdiction of the court to entertain and dispose of proceedings set out in sub-clauses ( a ) to ( d ) of sub-section (2) can be invoked in the court which is winding up the company." There is no dispute before us that under section 446(2), the official liquidator can file an application before the company court for recovery of money due to the company in liquidation from their parties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that if the company was not entitled to an actionable claim on the date when the application for winding-up was filed, the official liquidator cannot make any claim thereto. The only question which is argued before us related to the starting point of limitation for a claim which was not barred on the date of the filing of the petition for winding-up. Now, we shall advert to the provisions of section 458A of the Companies Act. The section is in the following terms : "Notwithstanding anything in the Indian Limitation Act, 1908 (9 of 1908), or in any other law for the time being in force, in computing the period of limitation prescribed for any suit or application in the name and on behalf of a company which is being wound-up by the court, 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 a period of one year immediately following the date of the winding-up order shall be excluded." It is obvious on a reading of the section that it does not prescribe a period of limitation. It is only a provision for computing the period of limitation which is prescribed elsewhere. There is no dispu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of limitation for taking out the same was the date of misfeasance and not the date of the winding up order passed by the company court. In that view, the court held that even under the residuary article 120 of the Limitation Act, 1908, the application was barred. When the matter came before a single judge, he dismissed the application as barred by limitation. On this aspect of the matter, the learned judge referred to the various rulings of the English court and said : "This statement, he argued, gives the official liquidator a new right and that the right of action only accrues when he is appointed official liquidator or at any rate at the winding-up of the company. But, it has been pointed out in the cases to which I have referred that the corresponding section in the English Companies Act is merely one of procedure and gives no new right to the official liquidator. I think it must be clear that what the official liquidator has at his disposal is a summary method of enforcing such rights as the company could have enforced or shareholders could have enforced before winding-up of the company and no more. If proceedings had been taken against the directors before the winding-up b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , because it has been most authoritatively settled that the corresponding provision in section 215 of the English Act, the Companies Consolidation Act, 1908, is a procedure section only and gives no new rights : See City Equitable Fire Insurance Co. Ltd., In re [1925] 1 Ch 407 at page 507. Sir Earnest Pollock M. R. says with reference to this section : 'I desire to say, though this is not the first time that it has been said, that that section deals only with procedure and does not give any new rights. It provides a summary mode of enforcing existing rights.' To the same effect is the judgment of Sargant L.J., at page 527. This ruling is decisive of the question, and has been regarded as conclusive of it by a Bench of the Lahore Court in Bhim Singh v. Basheshar Nath Goehla [1926] ILR 8 Lah. 167 ; AIR 1927 Lah. 433. In my opinion, therefore, it is impossible to hold that the liquidator acquired a new right from the winding-up order to enforce against the directors a claim which had already become time barred whether under article 36 or article 120 of the Limitation Act." The ruling of the Division Bench was followed and the reasoning was adopted with respect to an applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n from this provision that in computing the period of limitation, the time during which the company petition for liquidation was pending, as also a period of one year from the date of the winding-up order will have to be excluded. Therefore, we have to first find out that article of limitation under the Limitation Act applicable to the suit or proceeding and exclude, from the total period provided under that article, the periods contemplated under section 458A, and find out whether, on the date when the application or suit was filed, it was in time. Having regard to the conclusion, which we have already referred to, that concurrent jurisdiction has been conferred both on the civil court as also on the company court, and the option given to the liquidator to make the claim by way of an application or a suit in respect of money claims, and the need to treat this as a suit, though in the form an application, in view of the special provisions in the Companies Act, that when a claim is made it has to be decided whether it could have formed a claim in a regular suit and, if that is so, the limitation applicable to that proceeding will have to be applied. If such a claim could not be the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough the application is filed in exercise of the option provided to the liquidator, if the claim has to be considered as in the nature of a suit, the provisions in the Limitation Act for such suits only would govern the case, and not article 137. Again, we have to make it clear that in each case, the application of the liquidator will have to be considered with reference to the nature of the claim and not the article applicable in the Limitation Act and then only the computation could be done in order to find out whether the claim was in time or not. Two other decisions cited at the Bar now be noticed and they are, a decision of the Delhi High Court in Liberty Finance P. Ltd., In re [1979] 49 Comp. Cas. 287 and a decision of the Karnataka High Court in Unico Trading Chit Funds ( India ) P. Ltd v. S.H. Lohati [1982] 52 Comp. Cas. 340 . Each of these decisions is by a single judge, and both have followed a Full Bench decision of the Delhi High Court in Faridabad Cold Storage Allied Industry v. Ammonia Supplies Corporation P. Ltd. [1978] 48 Comp. Cas. 432, which decision, in turn, had referred to the Full Bench decision of the Delhi High Court in Jaimal Singh Maki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cle in the Limitation Act, as applicable to the nature of the claim and not with reference to the form by which the claim is enforced or by or through whom it is enforced. In a given case, if the claim does not fall under any one of the relevant articles in the Schedule to the Limitation Act, the residuary article 137 will be applicable. The expression 'when the right to apply accrues' has to be decided with reference to the right of the company and the nature of the claim. In other words, as to when the right to recover the claim accrued to the company, and not on the basis that the 'right to apply accrues only on the date the winding up order is passed or the official liquidator is appointed as provisional liquidator' as the liquidator enforces the claim of the company. In computing the period of limitation, for claims to be made under section 446(2)( b ) of the Act, firstly the applicability of the relevant article with reference to the nature of the claim has to be decided and then the question as to whether such period of limitation had or had not expired on the date the petition for winding up was filed or the winding up proceeding commenced has to be determined. In the event ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The contention is that under article 137, the starting point of limitation is the date on which the right to apply accrues. According to learned counsel, the right to apply for the official liquidator can accrue only when the order of winding up is passed and he is appointed as the liquidator. It is submitted that the application for enforcement of such a right cannot become barred even before it accrues. For this purpose, reliance is placed on the following observation of a Division Bench of the Punjab and Haryana High Court in Maruti Ltd. v. Parry Co. Ltd. [1989] 66 Comp. Cas. 309 , 314 : "It was observed in General Rolling Stoch Co., In re [1872] Ch. 646 that the effect of a winding up order is to stop the running of the statute of limitation in the company's favour. On a winding up order having been passed, the company's supervision vests in the court and all proceedings like a petition under section 446(2) stem from the winding up order. It has no independent existence. The company court's jurisdiction to determine the claim arises only on the passing of the winding up order. Thus, the remedy of claim arises only on the passing of the winding up order. If the const ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. On the passing of the winding up order, the right of the official liquidator is to file an application and, therefore, it will be governed only by article 137 and not by article 1, which relates to a suit. There is no merit in this contention. The reasons which we have given earlier are sufficient to reject this contention. Further, though the proceeding instituted by the official liquidator is in the form of an application, it can be said that in substance it is a suit and the provisions of the Limitation Act relating to suits will apply. The question has been considered by a learned single judge of the Calcutta High Court in Indian Iron Steel Co. Ltd. v. Shish Ram [1979] 2 LLJ 94 ; [1980] 57 FJR 11, a case under the Workmen's Compensation Act. While holding that a claim petition under the Act would tantamount to a "suit" within the meaning of the Limitation Act, the learned judge said (at page 20 of 57 FJR) : "The word 'suit' has not been defined in the Code of Civil Procedure but in legal parlance it means any legal proceeding of a civil kind brought by one person against another. Under the code a suit is instituted when the plaint, which is nothing other than a stat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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