1991 (12) TMI 249 - HC - Companies Law

Winding up - Powers of liquidator, Exclusion of certain time in computing periods of limitation, Power of court to assess damages against delinquent, directors, etc.

Summary

Issues:
- Question of limitation in filing an application under section 543 of the Companies Act, 1956.
- Interpretation of sections 543 and 458A of the Act regarding the period of limitation for applications by the official liquidator.
- Whether the application under section 543 filed by the official liquidator qualifies as being in the name and on behalf of the company.
- Consideration of an application to amend the description of the applicant in the cause title.

Analysis:

The judgment addressed the issue of limitation in filing an application under section 543 of the Companies Act, 1956. The application was filed by the company under liquidation, represented by the official liquidator, seeking to assess damages against a delinquent director for misfeasance and breach of trust leading to the company's liquidation. The contention raised was that the application was barred by limitation as it was filed after the prescribed period. The limitation period for such applications is five years from the date of the winding-up order, appointment of the liquidator, or the occurrence of misfeasance or breach of trust, whichever is longer.

The judgment delved into the interpretation of sections 543 and 458A of the Act concerning the period of limitation for applications by the official liquidator. Section 543 empowers the court to examine the conduct of relevant individuals and order repayment or restoration of assets in cases of misfeasance or breach of trust. The court clarified that the official liquidator, when applying under section 543, does not act on behalf of the company but in their own right for the company's benefit. Section 458A, providing an additional year for suits and applications on behalf of the company, was deemed inapplicable to applications under section 543 as they are not considered to be made on behalf of the company.

The judgment scrutinized whether the application under section 543 filed by the official liquidator could be deemed as being in the name and on behalf of the company. It referenced previous decisions emphasizing that the official liquidator acts independently, not as a representative of the company. The court rejected the argument that every action of the official liquidator should be considered on behalf of the company, as this would grant the official liquidator an extended limitation period not available to other parties.

Furthermore, the judgment considered an application to amend the description of the applicant in the cause title. The court allowed the amendment to reflect the official liquidator as the applicant, but clarified that such an amendment would not affect the limitation issue. Ultimately, the court concluded that the application under section 543 was barred by limitation and dismissed it accordingly.