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The Official Liquidator of Liberty Finance Pvt. Ltd. (In Liquidation) Versus Radha Mohan and Ors.

1978 (8) TMI 236 - DELHI HIGH COURT

Company Appeal Nos. 137 of 1974 and 518 of 1977 - Dated:- 21-8-1978 - S. Ranganathan, J. JUDGMENT S. Ranganathan,. (1) C. A. 137 of 1974 is an application taken out by the Official Liquidator under Sections 446 and 447 of the Companies Act for a payment order for ₹ 33,173.87 jointly and severally against the three respondents. C.A. No. S. 137/74 & 518/77 Respondents I and 3 have been set ex parte but respondent No. 2 has appeared through counsel. He filed a reply on 25th April, 1977 in .....

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37 of 1974. The facts alleged in the application are as follows: (2) M./S. Liberty Finance (P) Ltd. (now in liquidation and hereinafter referred to as the company) was carrying on the business of receiving deposits from the public and investing the same by financing the purchases vehicles by individuals on the basis of hire-purchase agreements. The company financed the purchase of a Tata Mercedes Benz by respondent No. 1 on the basis of hire-purchase agreement. Respondents No. 2 and 3 were guara .....

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mber, 1964 and the subsequent Installments were payable on the 7th of each and every succeeding month. In case of default of payment the respondents were also liable to pay interest at 2 per cent per mensem on the hire monies and the other sums payable under the agreement. It is stated that as per the account of the first respondent with the company a sum of ₹ 16,140.00 remained due to the company towards the hire money. Ever since 7-8-1966 on which date there was default on the part of th .....

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unpaid inspire of the notice of demand therefore. The winding up proceedings were started against the company on 29-8-1966 and the winding up order was passed by this Court on 13-2-1967. The Official Liquidator thereupon took charge of the company and thereafter has filed this application on the 19th February, 1974. It is prayed in the application that: (I)Respondents No. 1 to 3 be summoned and examined on oath under Section 477 of the Act, and they one or two or all of them, be ordered to pay .....

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entation of this Application till the final order and thereafter at the rate of ₹ 6 per cent per annum fill realization be awarded to the Applicant; (v) the Applicant be allowed costs of this Application; (vi) any other relief which this Hon'ble Court deems just and reasonable in the circumstances of the case be granted to the applicant. (3) In the reply of the second respondent it was stated as follows: PARA 3 of the application is not admitted. The vehicle in question was in fact. pu .....

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pondent No. 1 and transferred it to some one else, having got the Hire Purchase endorsement in the Registration book of the vehicle cancelled by the R. T. O., Agra. The Claim of the Official Liquidator is unfounded and no amount whatsoever, is payable by any of the respondents in respect of the vehicle in question. The accounts relied upon by the Official Liquidator are altogether false and fabricated. The entries made by the Company in its Books of Accounts are altogether false. In any case, th .....

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tatement of affairs of the company was filed on 17-4-1971 and thereafter the applicant scrutinized the accounts and hire-purchase records to locate the debtors and the amount due from them: (iii) the applicant was advised that there was no period of limitation for filing claims under Section 446 of the Companies Act and was under this bonafide belief until the position was clarified by a recent decision of the Supreme Court; and Civ) the claim was within time at the commencement of the winding u .....

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r application under Section 5 of the Limitation Act? 3. Was the hire-purchase agreement signed in blank, and if so, what is the effect on the transaction? 4. Was the vehicle taken back by the company a year after the agreement and are the accounts of the company fabricated? 5. What amount, if any, is due to the company from the respondents or any of them? 6. Relief. (6) In addition to the documents filed Along with the application the oral evidence of the 3rd respondent who had appeared earlier .....

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Liquidator of Ammonia Supplies Corporation (P) Ltd.,: AIR1978Delhi158 and Abrol & Co. (P) Ltd. Vs A. R. Chadha & Co.AIR1978Delhi167 (confirming the decision reported in 1973 Comp Cas 376 and the decision of Anand J. in Official Liquidator of Security & Finance (P) Ltd. Vs. Pushpawati Puri 1977 R.L.R. 391. The effect of these decision 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 w .....

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imitation Act, 1963 in view of the decision of the Supreme Court in the case of Kerala State Electricity Board, Trivandrum Vs . T. P. Kundaliumma,: [1977]1SCR996. ( c) The right of the Official Liquidator to make an application under Section 446 arises on the date when the winding up order is passed. Reading Section 458-A of the Act and Article 137 of the Limitation Act together, such an application by the Official Liquidator should be filed within a period of four years from the date of the win .....

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Therefore, an enforceable claim in respect of the amounts due from the respondents for which the Official Liquidator could file an application under Section 446. But such an application should have been presented within four years from the date of the winding up order i.e. on or before 12-2-1971. In the present case, the application was filed only on 19-2-1974. The application is, Therefore, clearly barred by time. The first issue has, Therefore, to be answered against the Official Liquidator. ( .....

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he applicant seeks condensation of delay is that he was under a bona fide impression that there was no period of limitation for filing claims under Section 446 of the Companies Act and that it was only after the position was recently clarified by a decision of the Supreme Court that it was realised that Article 137 would apply in the case of such applications and that Therefore C.A. 137/74 was likely to be treated as time barred. The judgment of the Supreme Court referred to is the judgment in t .....

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applicant only about this lime. The question is whether these circumstances would justify the condensation of delay in the filing of the application. This issue has been touched upon by Anand J. in the decision earlier preferred to in para 12: The first of these subsidiary question is as to whether in the rather nebulous state of the law of limitation in relation to proceedings under the Act even after the Act of 1963 in view of the decision of the Supreme Court in the case of Town Municipal Cou .....

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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 (Supra) in the decision of the Supreme Court in the case of Nityanand M. Joshi (Supra) in the year 1970 but the earlier decision held unchallenged sway, The true legal position was however, restored only with the decision in the of Kerala State Ele .....

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eaning of the Section. The answer to the question appears prima facie to be obvious. But the consideration of the question may perhaps be deferred until the provision of Section 5 is invoked in any case and the parties affected have been heard. (10) I am inclined, after hearing the parties, to agree with the prima facie view expressed by Anand J. The decision of the Supreme Court in the Case of Town Municipal Council, Athani vs . Presiding Officer Labour Court, Hubli and others etc., (1969)IILLJ .....

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ion beyond the period of limitation prescribed in Article 137 of the Limitation Act. The second issue is, therefore decided in favor of the applicant. (11) In view of my conclusion on the above issues, it is not necessary to consider the argument of Shri Shastry that since it is a claim for recovery of a vehicle given on hire-purchase, no period of limitation will start running until the respondents refuse to redeliver the vehicle, relying on a decision of Kapur J. in C.A. 670/73. I Therefore tu .....

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tated that this was not the original of the hire-purchase agreement which had been completed and signed by every one. whereas Annexure 'A-1' is not signed by him. The suggestion on behalf of the applicant is that the original hire-purchase agreement which had been signed by all has been lost or misplaced. It is. however, seen that the respondents have admitted the hire purchase transaction. Murlidhar, respondent No. 3 has. stated that the truck was purchased by Radhey Mohan on hire-purch .....

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respondents was that the accounts of the company have been fabricated and the vehicle had been taken back by the company a year after the agreement. The respondents have not led any evidence to show that the accounts were fabricated. It is a bare allegation that has been made by them which is unsubstantiated. The allegation that the company had taken back the vehicle has also not been established. Murlidhar, the respondent No. 3, stated: I think that the hire purchase agreement was cancelled an .....

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did not show any authority from the company and he did not know whether they were employed by the company. According to him. they also got the endorsement on the certificate of registration cancelled by presents" the documents to R.T.O. But no evidence has been adduced on behalf of the respondents to show that there was any such cancellation. In my opinion, the version put forward by the two guarantors is totally unacceptable and unbelievable and there is no finding that the company had tak .....

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unts due to the company in respect of this transaction. I have held earlier that there is no substance in the contention that the accounts of the company were fabricated or false. At the same time, there is an onus on the applicant to prove that a sum of ₹ 16,640.00 had been advanced to the principal debtor in connection with the hire-purchase of the truck. Apart from the opening entry in the statement of account (Annexure B) on 7-8-74 to the effect that an amount of ₹ 16,640.00 was .....

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