1. This judge's summons had been taken out by the official liquidator of Alcock Ashdown and Company Ltd. (in liquidation), for a direction that Killick Nixon Ltd., respondent to the judge's summons, be ordered and decreed to pay to the official liquidator a sum of Rs. 28,295.41 with interest thereon at the rate of 6 per cent. per annum from the date hereof till payment. The claim of the official liquidator against Killick Nixon Ltd. (hereinafter called 'the respondent') is in respect of book debts payable by the respondent to said Alcock Ashdown & Company Ltd. (hereinafter referred to as 'the company').
2. On 24th April, 1971, Gleitlager (India) Private Ltd. presented a winding-up petition to this court, inter alia, for an order that the company be wound up by the under its directions under the provisions of the Companies Act, 1956. On the said petition an order for winding up was made by Nain, J. on 10th January, 1972. By the said order the official liquidator was appointed the liquidator of the company (hereinafter referred to as 'the liquidator') with all powers under section 457 of the Companies Act, 1956, and on terms and conditions mentioned in the said order. One of the terms and conditions of the said order material for the purposes of present summons was that :
'The official liquidator as such liquidator do deposit all moneys received by him herein to the credit of Public Accounts of India, in the Reserve Bank of India, Bombay, under section 552 of the said Act, within 7 days of the receipt thereof.'
3. It appears that the State Bank of India, a secured creditor of the company was, inter alia, entitled to the hypothecation of the book debts of the company. In enforcement of its claims as the secured creditor, the said State Bank of India filed in this court a suit being Suit No. 426 of 1973, against the liquidator and certain other persons connected with the company. The said suit was filed on 18th April, 1973. It appears that a notice was taken out by the State Bank of India, inter alia, praying for appointment of the court receiver as the receiver of the hypothecated assets. The said assets, it cannot be disputed, also included the book debts of the company. In connection with the claims in the said motion, the liquidator made a report dated 25th April, 1973, and obtained directions from this court. By an order made on the said motion on 4th May, 1973, Malvankar, J. appointed the court receiver as the receiver of the entire stock-in-trade, movables, iron and steel and other raw materials, work-in-progress, finished goods, etc., belonging to the company. The said order was modified by Malvankar, J. on 16th May, 1973, by which the court receiver was discharged, inter alia, as the receiver of 'book debts, outstanding monies receivable, claims rights, contracts and engagements of the company'. The interim order passed by Malvankar, J., as modified aforesaid, was confirmed by Gandhi J. on 11th July, 1973.
4. The debts which are the subject-matter of the present judge's summons relate to the repairing charges payable to the company in respect of the repairs of five ships. These repairs were made some time in the year 1971; the last payment in connection with the liability relating thereto was made to the company on 21st January, 1971. It is not in dispute that if the provisions of the Limitation Act alone were to apply the whole of the claim would be barred by limitation.
5. It appears that the State Bank of India was apprehensive that before any proceedings could be taken in that behalf a large proportion of the book debts of the company charged to them might become barred by limitation. With this backdrop, M/s. Crawford Bailey and Co., attorneys for the State Bank of India, had a meeting with the liquidator. At the said meeting, discussions centered round the question of recovering book debts. As to what happened at the said meeting, the liquidator himself stated in his report dated 20th August, 1973, as follows :
'The official liquidator was informed by them that the State Bank of India was agreeable to entrust the work of recovery of book debts to the official liquidator, particularly for the reasons that the official liquidator would get the advantage of extended limitation under section 458A of the Companies Act, 1956 (sic). The official liquidator pointed out that in case the learned company judge permits the official liquidator to undertake the work of recovery of book debts, the State Bank of India should agree to pay the official liquidator 10% out of the net amount recovered towards the commission, irrespective of recoveries made in contested matters and such percentage as may be allowed by the learned company judge in respect of recoveries made in uncontested cases.'
6. Further correspondence ensued between the attorneys of the State Bank of India and the liquidator in course whereof certain clarification were given and modifications made.
7. Pursuant to this arrangement between the State Bank of India and the liquidator, whereunder the liquidator, inter alia, was to be paid in contested matters besides costs, charges and expenses, etc., a further amount equivalent to 10% of the net recoveries of book debts hypothecated to the State Bank of India, the liquidator made a report to this court on 20th August, 1973. After setting out the relevant facts the liquidator sought directions of this court as to 'whether the official liquidator should undertake the work of recovery of book debts on behalf of the State Bank of India, who claimed to be secured creditors'. On the said report by an order made by Kania, J. on 23rd August, 1973, the liquidator was granted permission to undertake the work of recovering the book debts on behalf of the State bank of India.
8. The present judge's summons is taken out in pursuance of the sanction granted by this court to the liquidator to recover book debts on behalf of the State Bank of India. In the affidavit in support, the liquidator refers, inter alia, to facts leading up to the making of his report dated 20th August, 1973, and the sanction granted by this court in that behalf. The liquidator claims a sum of Rs. 28,295.41 on the footing that the same constitutes book debts. Several affidavits have been filed by and on behalf of the parties in respect of their rival claims and the contentions in the present judge's summons. It is unnecessary to advert to the various allegations and counter-allegations made in the said affidavits. Suffice it to observe that on the last occasion when the matter came before me a contention was raised by Shri B. A. Desai, the learned counsel for the respondent, to the effect that the claim made by the liquidator was barred by limitation inasmuch as, in the facts and circumstances of the case, the liquidator was not entitled to extension of time contemplated by section 458A of the Companies Act (hereinafter referred to as 'the Act'). In deference to my directions in that behalf, the liquidator, filed an affidavit dated 3rd October, 1975, inter alia, showing as to why and in what circumstances the book debts hypothecated to the State Bank of India are being recovered by the liquidator or whether or not such a recovery is on behalf of the State Bank of India.
9. On the merits of the claim not much can be said in favour of the respondent. In substance, the defence of the respondent is that they are entitled to a set-off in the sum of Rs. 26,658.56. Assuming that the defence of the respondent is a valid one, I am of the opinion, that its claim, being of a monetary nature, can be proved by the respondent before the liquidator in winding-up proceedings. In my opinion, the existence of a valid set-off is no answer to the claim made by the liquidator in the judge's summons. This, however, does not entitle the liquidator to the relief he seeks because I take the view that the liquidator is not entitled to the benefit of section 458A of the Companies Act, and the claim made in judge's summons is barred by limitation.
10. Shri J. I. Mehta, learned counsel for the liquidator, advances several arguments; the said arguments may be summarised as follows : (a) that upon a true construction of the arrangement made between the liquidator and the State Bank of India the liquidator is entitled to 10% of the net recoveries of book debts not by reason of the fact that the liquidator is acting as the agent of the State Bank of India in the matter of the recovery but by reason of the fact that the company, as owner of the book debts, was entitled to recover the book debts and that the State Bank of India gave the benefit of 10% on book debts recovered by the liquidator, so as to make substantial amounts available to the unsecured creditors; (b) that in substance the present proceeding by the liquidator is in the name of the company and on behalf of the company. Says the learned counsel, that it is true that 90% of the benefits or the fruits of the liquidator's exertions would go to the State Bank of India but that is incidental. The real benefit goes to the company in winding up inasmuch even though the book debts stood hypothecated to the State Bank of India and, therefore, were outside the winding-up, an amount equivalent to 10% of the recoveries would come to the company in liquidation and the said amount would be available to the general body of creditors in winding up; and (c) the liquidator is entitled to recover the debts in his own right by reason of the fact that under section 451 of the Act, the court has imposed a duty on the liquidator to recover the amount of these book debts. This imposition of the duty has reference to the sanction accorded by this court on the liquidator's report dated 30th August, 1973.
11. The argument on behalf of the respondent by Shri B. A. Desai is that the liquidator is a statutory authority. The duties and functions of the liquidator are provided for by the Act. Having regard to the relevant provisions of the Act, the liquidator is not entitled to lent his agency for the purposes of the recovery of the amounts which are recoverable by the secured creditors who stand outside winding-up. Says the learned counsel that the protection conferred by the provisions of the section 458A is the protection given to the liquidator only in regard to such proceedings as are adopted by him in the name of the company and on behalf of the company. According to the learned counsel, two conditions have to be fulfilled before the liquidator can invoke the provisions of section 458A of the Act. The two conditions are : (1) proceedings must be in the name of the company : (ii) the proceedings must be on behalf of the company. The submission of the learned counsel is that it is clear on the facts and circumstances of the case that the present proceedings are not on behalf of the company but are on behalf of the State Bank of India, which is not the 'company' and which is not even a creditor covered by the present winding-up proceedings.
12. In order to determine these questions an analysis of the relevant provisions of the Act will be necessary. Section 448 provides for appointment of official liquidator. Section 449 ordains that the official liquidator shall by virtue of his office become the liquidator of the company on a winding-up order being made in respect of the company. Section 451, inter alia, enjoins the liquidator to 'conduct the proceedings in winding-up proceedings and perform such duties as the court may impose.' Under section 456 the liquidator is not vested with the assets of the company but is merely given custody of the assets of the company. The said section provides that on a winding-up order being made, the liquidator shall take 'into his custody or under his control all the property, effects and actionable claims to which the company is or appears to be entitled.' Section 457 and 458 confer powers on the liquidator. Clause (a) of sub-section (1) section 457 confers powers upon the liquidator with the sanction of the court, 'to institute or defend any suit, prosecution or other legal proceeding, civil or criminal in the name and on behalf of the company.' Section 458 provides for discretionary powers where a blanket authority is conferred on the liquidator.
13. The key concepts in section 457(1)(a) are that a proceeding must be adopted by the liquidator 'in the name of' and 'on behalf of the company'. 'In the name' does not present any difficulty. The basic controversy is as to what is the true connotation of the expression 'on behalf of the company'. That expression and its import are at the heart of the matter. The expression 'on behalf of the company' is a term of settled legal acceptation. The expression 'on behalf' conceptually denotes existence of two persons; the one who acts and the other on whole behalf the former acts. It is, therefore, held by several courts that the expression contemplates benefits and liabilities or obligations attaching to the acting of one as the representative of the other. In my opinion, upon the plain and unambiguous language of the section, it is clear that the liquidator is authorised to act on behalf of the company and not on behalf of somebody else. Having regard to the enumeration of the powers of the liquidator, it must be held that matters which are not provided for by the said provision must be implied to be negatived : see Taylor v. Taylor  1 Ch D. 426 per Jessel M.R. at page 431. See also Patna Improvement Trust v. Lakshmi Devi : AIR1963SC1077 , dicta of Subba Rao, J. at page 1081 and Nazir Ahmed v. King Emperor .
14. I have not been shown any provisions of the Act which in terms authorise the official liquidator to act on behalf of the secured creditors. Reliance is, however, placed on rule 291 of the Companies (Court) Rules, 1959, by Shri Mehta. Shri Mehta, however, fairly concedes that the said rule cannot be regimented to construe the provisions of the Act. In my opinion, the non-conferment of the powers on the liquidator to act on behalf of the outsiders is in consonance with the historical development of his office, the nature thereof, as also the functions, the duties and the powers of the liquidator. It is settled law that winding-up is intended to benefit the body of unsecured creditors. A secured creditor stands outside the winding-up so long as he is not willing to abandon his security and join the ranks of ordinary unsecured creditors. In Food Controller v. Cork  AC 647, Lord Wrenbury observed as follows :
'The phrase 'outside the winding-up' is an intelligible phrase if used, as it often is, with reference to a secured creditor, say a mortgage. The mortgagee of a company in liquidation is in a position to say 'the mortgaged property is to the extent of the mortgage my property. It is immaterial to me whether my mortgage is in winding-up or not. I remain 'outside the winding-up' and shall enforce my rights as mortgagee. This is to be contrasted with the case in which such a creditor prefers to assert his right, not as a mortgagee, but as a creditor. He may say, 'I will prove in respect of my debt'. If so, he comes into the winding-up'.
15. This dichotomy between the creditor as a secured creditor and a creditor giving up security and participating as an ordinary creditor for the winding-up was noticed and legal assumption relating thereto approved by the Supreme Court in M. K. Ranganathan v. Govt. of Madras : 2SCR374 . In that case, a question arose as to whether a secured creditor was also liable to take the leave of the court under section 171 of the Companies Act, 1913. Bhagwati, J., delivering the judgment, noticed the above abstracted passage from the speech of Lord Wrenbury. The learned judge then observed at page 351 as follows :
'The secured creditor is thus outside the winding-up and can realise his security without the leave of the winding-up court, though if he files a suit or takes other legal proceedings for the realisation of his security he is bound under section 231 (corresponding with section 131, Indian Companies Act) to obtain the leave of the winding-up court before he can do so although such leave would almost automatically be granted.'
16. The learned counsel for the applicant calls attention to a judgment of the Calcutta High Court in India Electric Works Ltd., In re : AIR1970Cal398 . According to the learned counsel, the decision of the learned single judge of the said High Court is an authority for the proposition that a secured creditor is also the creditor for all intents and purposes in winding-up, because, as held by the said High Court, a secured creditor is entitled to present a petition for the winding-up of the company. It is true that the said decision helps the learned counsel but it helps him only in regard to the second part of his argument. In my opinion, the decision is an authority for the proposition, if indeed any authority is necessary having regard to the express provisions of sub-section (2) of section 439 of the Act, that a secured creditor can maintain a winding-up petition. I am unable to appreciate as to how this decision can be read as an authority for the proposition that a secured creditor is for all intents and purposes on par with unsecured creditors in winding-up. I take the view that only when a secured creditor accepts the alternative option and gives up security that he can rank as an ordinary creditor and can partake of all the benefits to which ordinary creditors are entitled in winding-up under the provisions of the Act. I am afraid, this is not the situation in the present case.
17. The aforesaid analysis clearly shows that it is not in the normal line of his duty that a liquidator recovers debts on behalf of the secured creditor. It, therefore, follows that in recovering the secured debts the liquidator performs a function not envisaged for him by the winding-up provisions of the Act. Such a function is performed by him de hors such provisions. The scheme of the law does not bring the action of the liquidator in recovering debts for a secured creditor within the ken of his statutory duties. Such an action, in undertaken, cannot in law, be said to be for or on behalf of the company or cannot in any way be considered as being within the essential scope of his duties, as the liquidator. That the liquidator can take up the work of such recoveries cannot be disputed. Rule 291 of the Companies (Court) Rules, 1959, contemplates such recoveries. The said rule, however, itself makes a distinction between recoveries for and on behalf of the company and recoveries for secured creditors. Separate provision are made in the said rule for these different eventualities. I am, however, not called upon to decide whether, a liquidator can legitimately do so or not. Indeed, having regard to the order made by Kania, J., such a question is concluded in favour of the liquidator. But that is not the issue. What is in issue is whether the present proceedings can be said to be one adopted by the liquidator on behalf of the company. The legal spectrum noticed above tends to render the contention of Shri Mehta untenable.
18. The facts of the case also do not support the claim that the liquidator is acting on his own or on behalf of the company. After the meeting between the liquidator and the attorneys of the State Bank of India and the correspondence which was exchanged, the arrangement that emerged was that,
(a) liquidator would be paid 10% out of the net amount recovered towards commission in respect of recoveries in contested matters;
(b) liquidator would receive such percentage of commission for uncontested matters as the company judge might permit;
(c) the attorneys of the State Bank of India would act for the liquidator in respect of the said work of recovery and their costs, charges and expenses would be borne, and paid by, the State Bank of India;
(d) that the amount of 10% offered to be paid for the benefit of unsecured creditor would be paid by the State Bank of India after deducting the costs, charges and expenses and the commission which is payable to the liquidator under rule 291(4) of the Companies (Court) Rules.
19. These terms are culled out by me from the correspondence exchanged between the parties in July and August, 1973, and from the averments made in para. 4 of the report dated 20th August, 1973. In an earlier report also, viz., report dated 20th April, 1973, made by the liquidator after the filing of the suit (being Suit No. 246 of 1973), by the State Bank of India, the liquidator in terms sought the direction (vide prayer (b) thereof) as to whether 'in the event of the State Bank of India entrusting' to him the work of recovering the debt he should undertake to do so upon the terms and conditions set out therein. The report dated 20th August, 1973, and order made thereon by this court on 23rd August, 1973, authorise the liquidator to recover the debts on behalf of the State Bank of India. Even in the notice dated 7th January, 1974, the burden of liquidator's song is the recovery of debts on behalf of the State Bank of India. The amounts received by liquidator are kept in a separate account and are received for the benefit of the State Bank of India. These amounts are not deposited in the Reserve Bank of India as provided in the winding-up order and as required by section 552 of the Act. It is the State Bank of India which pays to the liquidator 10% of the net recoveries. These amounts are receivable by or are paid to the liquidator not because these debts belong to the company but because, under the arrangement with the State Bank of India, they are payable to the liquidator. The balance of 90% of the recoveries goes to the State Bank of India. This balance is impressed with the claim of the State Bank of India. The attorneys appointed by the State Bank of India are paid by it for their work as the attorneys of the liquidator in the matter of these recoveries. This is the substance of the transaction. It invalidates the liquidator's contentions in that behalf.
20. In his affidavit-in-support the liquidator fairly admits that the report dated 28th August, 1973, was made by him 'at the request of the State Bank of India'. The liquidator further admits in the said affidavit that 'he was authorised by this Hon'ble Court to recover book debts on behalf of the State Bank of India'. Thus, the liquidator admits in categorical terms that the recovery of debts is on behalf of the State bank of India. This aspect of the matter is buttressed by the express language of the sanction accorded by this court to the liquidator on his aforesaid report. The relevant direction of this court reads as follows :
'Whether the official liquidator should undertake the work of recovery of book debts on behalf of the State Bank of the India who claim to be the secured creditor Yes'
21. There is no escape from the conclusion that this court sanctioned recovery of the debts on behalf of the State Bank of India and not on behalf of the company. The language of the direction is significant not only for what is expressly provided but also for what it does not provide. I have anxiously examined the material on record to find any cogent piece therein to support the contention that the recovery of the book debts is on behalf of the company. I was unable to find out any such material. Nor have I been shown anything to induce me to hold that the contention of the liquidator is well-founded. The averments in the reports, the language in which sanctions are obtained and all other relevant facts belie such a contention.
22. The learned counsel for the liquidator emphasises that the 'commission' which is the basis upon which the liquidator ventured into the undertaking of recovering the debts, must be construed not with reference to etymology of the said expression or its legal acceptation but must be so construed as to hold that 10% book debts recovered came to the hands of the liquidator in his own right and as and by way of realisation of assets by him for the benefit of the general body of unsecured creditors. Counsel's arguments is that the liquidator makes these recoveries on behalf of the company which it is entitled to, with the consent of the secured creditor, to recover the book debts which belong to it. I am afraid, this is a wrong reading of the situation. The expression 'commission' connotes a payment made to a person for the work done by him on behalf of the other. Davey L.J. in Drielsma v. Manifold  3 Ch D 100 observed as follows :
'Commission is, prima facie, the payment made to an agent for agency work, usually according to a scale - it may be an ad valorem scale, but not necessarily an ad valorem scale. It is in my opinion the most general word that can be used to describe the remuneration paid to an agent for an agency work other than a salary, .....'
23. It is true that the question there arose in a context which was somewhat different. It was a case where solicitors were employed in a sale of certain properties by auction. The solicitors conducted all business except accepting bids at auction for which they employed an auctioneer. The solicitors paid the auctioneer amounts in respect of the said work and claimed the amount as commission under rule 11 of Sch. 1, part 1 of the General Order. The difference in facts, however, does not change the legal parameter. The signification of the expression 'commission' remains unaltered. I have not been shown any judgment of any court which has taken a view that a commission can be considered as a realisation of part of hypothecated security or as realisation by a person of his own debts or parts thereof. The parties advisedly contemplated commission. The payment of 10% of the net realisation besides the payment of fees as provided by rule 291(4) of the Companies (Court) Rules is the payment made to the liquidator for his undertaking to recover and for recovering book debts for the on behalf of the State Bank of India. Such a payment must be held to be payment by way of a commission. It must be held that the footing upon which the liquidator undertook to recover the debts was the agency created in his favour by the State Bank of India. The State Bank of India agreed to pay the amount in consideration of the liquidator's reciprocal obligation to recover book debts hypothecated to the former and on its behalf.
24. Shri Mehta strongly relies upon the fact that, as a result of the recoveries, the coffers of the liquidator will be enriched by 10% of the book debts to recovered by the liquidator and consequently large amounts would be available for distribution amongst unsecured creditors. I have no quarrel with that assertion. Motivations leading to the liquidator's action might be laudable. I agree with Shri Mehta that the efforts of the liquidator must be appreciated but I am afraid that that is not material.
25. The question before me is whether debts are being recovered by the liquidator on behalf of the company or on behalf of the State Bank of India, a secured creditor who stands outside the winding-up. On the facts of the case, more particularly on the clear terms in which directions have been given by the court, the conclusion inevitably is that the present judge's summons is for the recovery of debts by the liquidator on behalf of the State Bank of India.
26. Invocation of rule 291(4) by Shri Mehta, in my opinion, is not relevant. The said sub-rule merely provides for a certain percentage which the liquidator is entitled to receive when he realises properties for the secured creditors. This provisions underpins the fact that the liquidator can realise the assets of the company on behalf of and for the benefit of the secured creditors and provides for fee that has to be paid in connection therewith. Rather than bolster Shri Mehta's argument, this provision bears intrinsic testimony against it. This sub-rule does not either by its express language or by any intendment support the submission that a recovery of a debt on behalf of or for the benefit of the company for the purpose of section 457(1) of the Act. On the contrary, read in the context of sub-rule (2), sub-rule (4) indicates an essential difference between the two situations.
27. The rationale of section 458A is very clear. It cannot be disputed that the said section is conceived in the interest of the winding-up proceedings so as to provide for the extension of time to the liquidator and thereby lessen the rigour of the Limitation Act. One of the essential requirements of the section, as I have already observed, is that the proceeding must be on behalf of the company. Having regard to the findings made by me that the proceedings are not on behalf of the company, it must be held that the claim in the present judge's summons does not come within the purview of section 458A of the Companies Act.
28. The present winding-up petition was presented on 24th April, 1971. The winding-up order was made on 13th January, 1972. Had section 458A applied to the present petition, the claim would not have been barred by limitation. But since the section does not apply and the claim arose on or before 21st January, 1971, the logical is that the claim is barred by limitation.
29. There is yet another reason which commends itself to me. It is well settled law that what a person cannot do directly, he cannot be permitted to do indirectly. (See M. K. Rappai v. John : 2SCR124 . This salutary legal principle acquires added significance when it is seen that the prohibition sought to be circumvented is contained in a statute based on public policy. The Limitation Act is based on public policy. Inexorable as its provisions are, they cannot be defeated by collateral devices. It is not disputed that if the State Bank of India were to recover the debts from the respondent its claim would have been barred by limitation. If the State Bank of India could not enforce the book debts having regard to the prohibition contained in the Limitation Act, the irresistible view is that it is not open to the State Bank of India to utilise the instrumentality of the liquidator to recover debts which in its hands are barred by limitation. In so far as the liquidator is a party, might be an unwitting party, to such contrivance, he cannot claim the benefit of section 458A of the Act. Denied such immunity, his endeavour to recover time-barred debts must be interdicted.
30. In the result, the judge's summons is dismissed. In the circumstances of the case, however, I make no order as to costs.