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Unico Trading and Chit Funds (India) P. Ltd. (In Liquidation) Vs. S.H. Lohati and ors. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtKarnataka High Court
Decided On
Case NumberCompany Application No. 403 of 1980 in Company Petition No. 7 of 1975
Judge
Reported in[1983]54CompCas811(Kar)
ActsCompanies Act, 1956 - Sections 186, 446(2), 458, 458A and 469
AppellantUnico Trading and Chit Funds (India) P. Ltd. (In Liquidation)
RespondentS.H. Lohati and ors.
Appellant AdvocateS. Vijayashankar, Adv.
Respondent AdvocateChandrasekhar V. Joshi, Adv.
Excerpt:
.....and arbitrariness, the court must exercise its discretionary power under article 226 of the constitution of india. the said power under article 226 shall be exercised with the great caution and also in furtherance of public interest and not merely on the making out of a legal point. - 137 of the limitation act, the limitation commences from the time the right to sue accrues and the right accrued to the official liquidator only on the date the court made the winding-up order on february 4, 1977 and the application having been filed on august 22, 1980, is well within time as the official liquidator, in the instant case, had 5 years, 4 months and 1 day from february 4, 1977 to present the application. thus, the official liquidator could have presented the application within five years..........for the purpose of computing the period of limitation despite provisions to the contrary in the indian limitation act or any other law for the time being in force for presenting a suit or an application in the name and on behalf of a company which is being wound up by the court and as such the official liquidator could only exclude the period between the presentation of the petition and the making of the winding-up order by the court plus one year in computing the period of limitation under the indian limitation act for enforcing a money claim under a promissory note or even under art. 137 of the indian limitation act, which is only 3 years. according to the learned counsel, the periods to be excluded are the period between october 3, 1975, and february 4,1977, plus one year which.....
Judgment:

Chandrakanta Raj Urs, J.

1. This is an application by the official liquidator under s. 446(2)(b) of the Companies Act, 1956 (hereinafter referred to as 'the Act'), praying for an order directing the respondents to jointly and severally pay to him the sum of Rs. 2,323.50, being the debt due by them to M/s. Unico Trading and Chit Funds (India) (P.) Ltd. (in liquidation).

2. The aforementioned company was ordered by this court to be wound up on February 4, 1977, in Company Petition No. 7/1975 filed on October 3, 1975.

3. The details of the claim of the official liquidator and the resistance to the same by the respondents may be briefly stated as follows :

4. The 1st respondent, S. H. Lohati of Poona (Pune), was a member of the chit group, P.E. 1, having Chit No. 15. The value of the chit was Rs. 2,500. At the auction held for that chit group in the Pune branch of the company in liquidation he was the highest bided on August 23, 1973. He received the prize amount on October 8, 1973, and on the same date executed a promissory note for Rs. 1,437.50 agreeing to pay interest at 12 per cent. per annum. Respondents Nos. 2 and 3 as sureties joined in the execution of the promissory note and other documents connected therewith. The official liquidator issued notices to the respondents calling upon them to pay the sum or Rs. 2,323.50 on May 1, 1980. The respondents appear to have replied to the notice denying their liability. In the result, this application is filed by the official liquidator on August 22, 1980. The claim is as follows :

'Chit Value Rs.2,500.00Les : Subscription paid up to 8-10-1973 1,062.50----------Balance 1,437.50Add :Interest at 12 per cent. per annum from8-10-19783 to 3-2-1972 (sic) 573.50Interest at 6 per cent. per annum from4-2-1977 to 5-8-1980, the date of thisapplication 302.50Notice charges 10.00----------Total 2,323.50==========

5. The respondents have entered appearance and filed their objection statement through counsel. They do not admit the claim based on the promissory note dated October 8, 1973. The 1st respondent denies receipt of consideration. The respondents have questioned the jurisdiction of this court as they all reside at Pune and the cause of action admittedly arose at Pune. The respondents have also contended that the application is barred by time and, therefore, the application is liable to be dismissed with costs.

6. In the light of the pleadings as above the matter was set down for enquiry on March 6, 1981. On that day, Shri Chandrasekhar V. Joshi, of the Pune Bar, appearing for respondents, submitted that the respondents give up all their defence except the one relating to the question of limitation and the application, therefore, may be disposed of solely on that question. Accordingly arguments were heard on the question of limitation assuming that the respondents had no other defence against the claim.

7. Therefore, the only point for determination is whether the application filed on August 22, 1980, 6 years 10 months and 14 days after the date of the pronote, would be within time, regard being had to s. 458A of the Act and art. 137 of the Limitation Act, 1963.

8. Shri Joshi has argued that all that s. 458A of the Act provides, having regard to the clear and unambiguous language of the section, is the exclusion of specified periods mentioned in the section for the purpose of computing the period of limitation despite provisions to the contrary in the Indian Limitation Act or any other law for the time being in force for presenting a suit or an application in the name and on behalf of a company which is being wound up by the court and as such the official liquidator could only exclude the period between the presentation of the petition and the making of the winding-up order by the court plus one year in computing the period of limitation under the Indian limitation Act for enforcing a money claim under a promissory note or even under art. 137 of the Indian Limitation Act, which is only 3 years. According to the learned counsel, the periods to be excluded are the period between October 3, 1975, and February 4,1977, plus one year which would only be 2 years 4 months and 1 day. Thus, he has contended the application should have been filed within 5 years 4 months and 1 day from the date of pronote which would be on or before February 9, 1979, and not on August 22, 1980, which would be far beyond the prescribed period of limitation.

9. On the other hand, Shri Vijayashankar, learned counsel for the applicant-official liquidator, has contended that the application under s. 446(2)(b) of the Act not being a suit for recovery of money due under a pronote or under any other cause of action, only the residuary art. 137 of the Indian Limitation Act is attracted and under that article the official liquidator may present the application within 3 years from the date of the winding-up order made by the court plus the periods to be excluded under s. 458A of the Act. The thrust of his argument is that under art. 137 of the Limitation Act, the limitation commences from the time the right to sue accrues and the right accrued to the official liquidator only on the date the court made the winding-up order on February 4, 1977 and the application having been filed on August 22, 1980, is well within time as the official liquidator, in the instant case, had 5 years, 4 months and 1 day from February 4, 1977 to present the application.

10. In the case of Faridabad Cold Storage & Allied Industry v. Official Liquidator, Ammonia Supplies Corporation P. Ltd. : AIR1978Delhi158 , the scope of s. 446(2)(b) of the Act, ss. 458A and 469 of the Act and the applicability of the Indian Limitation Act came up for consideration before a Full Bench of the Delhi High Court. In that case, the official liquidator filed a claim under s. 446(2) of the Act before the additional district judge, Delhi, against the Faridabad Cold Storage and Allied Industry to recover certain sums due to the company in liquidation. One of the defence taken by the company was that the claim was barred by limitation. The learned district judge while decreeing the claim on merits held that the claim under s. 446(2) of the Act not being a suit did not attract the provisions of the Indian Limitation Act. On appeal by the defendant-company, a Division Bench of the Delhi High Court referred the appeal for decision by a Full Bench.

11. The Full Bench, after considering in detail the legislative history of the relevant sections of the Act aforementioned, has held :

(1) The power exercised by the company court under s. 469 of the Act (corresponding to s. 186 of the Companies Act, 1913) could be so exercised only if the 'Money due' to the company was recoverable on the date of application in a suit and did not inside any money which was not so recoverable. (Reliance was placed on the Privy Council decision in the case of Hansraj Gupta v. Dehra Dun Mussourie Electric Tramway Co. Ltd. .

(2) The expression 'any claim' occurring in s. 446(2)(b) of the Act should be interpreted as any claim enforceable at law.

(3) 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 official liquidator or other claimants would not have acquired the right to enforce such claim or claims under s. 446(2)(b) on any date prior to the date of the winding-up order and that the claimant would be entitled to the full benefit of s. 458A of the Act.

(4) Article 137 of the Indian Limitation Act was not confined to suits and applications under the Code of Civil Procedure but applied also to applications made under special Acts. (Reliance was placed on the decision of the Supreme Court in the case of Kerala State Electricity Board v. T. P. Kunhaliumma : [1977]1SCR996 and, therefore, claim petitions under s. 446(2)(b) of the Act were covered by art. 137 of the Indian Limitation Act.

12. Though I have summarised the findings of the Full Bench, cannot claim the precision and clarity with which the Full Bench has explained the law. I am in full agreement with the same.

13. Applying the law to the facts of the case on hand I see that the claim of the official liquidator against the respondents was a legally enforceable claim on October 3, 1975, the date on which the petition for winding up was presented to this court as the pronote was executed on October 8, 1973. Winding-up order was made on February 4, 1977, and, therefore, the clock of the law of limitation would come to a stop between October 3, 1975 and February 4, 1977, and for a further period of one year in terms of s. 458A of the Act.

14. Column 3 of art. 137 of the Indian Limitation Act states that time begins to run when the right to apply accrues. In the case of the present claimant right to apply accrued on February 4, 1977. Thus, the official liquidator had 3 years plus the maximum advantage of s. 458A of the Act which would be the exclusion of 1 year plus another year and 4 months. Thus, the official liquidator could have presented the application within five years and four months from February 4, 1977. Therefore, the application filed on August 22, 1980, is well within time and is not barred by time.

15. The respondents not having pressed or proved the other defences pleaded, are liable to pay to the official liquidator the sum of Rs. 2,323.50 together with costs and current interest at 6 per cent. Per annum on Rs. 1,437.50 from the date of the application till date of realisation.

16. The application is allowed with costs and the order will accordingly issue.


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