1988 (2) TMI 395 - HC - Companies Law

Court Jurisdiction of, Winding up Suits stayed on winding-up order, Exclusion of certain time in computing periods of limitation, Principles for interpretation of statutes

Issues Involved:
1. Relevant date for determining if a petition under section 446(2) of the Companies Act, 1956, is barred by limitation.
2. Applicability and interpretation of section 446(2) and section 458A of the Companies Act, 1956.
3. Interaction between the Companies Act and the Limitation Act, specifically article 137.

Issue-wise Detailed Analysis:

1. Relevant Date for Determining Limitation under Section 446(2):

The primary legal question addressed was whether the relevant date for determining if a petition under section 446(2) of the Companies Act, 1956, is barred by limitation is the date on which the winding-up order was passed or the date on which the petition under the said section was moved.

2. Applicability and Interpretation of Section 446(2) and Section 458A of the Companies Act, 1956:

M/s. Maruti Limited was sought to be wound up by a petition dated May 16, 1977, with a provisional liquidator appointed on July 22, 1977, and the final winding-up order passed on March 6, 1978. The official liquidator filed a claim petition under section 446(2) on October 28, 1982, against M/s. Parry and Co. Ltd., with the last transaction occurring on January 14, 1976. The respondent argued that the claim was barred by limitation, contending that the limitation period started on January 14, 1976, and the claim was time-barred even before the winding-up order was passed.

The petitioner argued that the limitation should commence from the date of the winding-up order, as section 446(2) provides a specific jurisdiction to the company court to determine claims, and the right to seek a remedy accrues only when the winding-up order is passed. Section 458A excludes the period from the commencement of winding up to the date of the winding-up order and one year following the order from the limitation period.

3. Interaction between the Companies Act and the Limitation Act, Specifically Article 137:

The court emphasized the need for a harmonious construction of different statutory provisions to avoid redundancy. It was noted that the law of limitation is procedural, barring the remedy but not the right. The court highlighted that the remedy under section 446(2) arises only upon the passing of the winding-up order, and thus, the limitation period should commence from that date.

Section 446(2) provides jurisdiction to the company court to entertain claims from the date of the winding-up order, and article 137 of the Limitation Act, which provides a three-year limitation period, applies. The period from the commencement of winding up to the date of the winding-up order and one year following the order should be excluded under section 458A.

The court referenced the judgment in Faridabad Cold Storage's case, which stated that limitation for a petition under section 446(2) commences from the date of the winding-up order, and the time provided by section 458A must be excluded.

The court concluded that the period of limitation for an application under section 446(2) starts from the date of the winding-up order, and the period from the commencement of winding up to the date of the order and one year following the order should be excluded. This interpretation ensures that the right to prefer a claim is not destroyed before it arises.

Conclusion:

The court answered the question by stating that the period of limitation for an application making a claim under section 446(2) of the Companies Act, 1956, on behalf of a company being wound up shall commence from the date of the winding-up order. The period from the commencement of winding up to the date of the winding-up order, both inclusive, and one year immediately following the date of the winding-up order shall be excluded in computing the three-year period provided by article 137 of the Limitation Act. The case was sent back to the learned single judge for further proceedings based on this interpretation.

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