2001 (3) TMI 895 - HC - Companies Law

Winding up - Suits stayed on winding up order Avoidance of certain attachment execution etc. in winding up

Issues Involved:
1. Transfer of surplus amount deposited by Andhra Pradesh State Financial Corporation (APSFC) to the Official Liquidator.
2. Validity of payments made to decree holders without the leave of the court.
3. Requirement of obtaining leave of the court under Sections 446 and 537 of the Companies Act.
4. Applicability of the Limitation Act to the application filed by the Official Liquidator.

Detailed Analysis:

1. Transfer of Surplus Amount:
The Official Liquidator filed an application to direct the Subordinate Judge, Adoni, to transfer Rs. 1,68,260.60 deposited by APSFC along with accrued interest to the account of the Official Liquidator, subject to the rights of mortgages if any. The assets of the company in liquidation were sold by APSFC in 1980, and the surplus amount after satisfying APSFC's claim was deposited with the Sub Judge, Adoni. The Official Liquidator sought the transfer of this amount, arguing that it should be part of the company's assets in liquidation.

2. Validity of Payments to Decree Holders:
The court noted that payments were made to decree holders Khemji Poonja Ginning & Pressing Factory (P.) Ltd. and Thoban Devji & Co. without the leave of the court. The Official Liquidator contended that these payments should not have been made and should have been remitted to the Official Liquidator. The court had earlier directed notices to be issued to the decree holders and APSFC to deposit the amounts with the Official Liquidator with interest at 12% per annum.

3. Requirement of Leave Under Sections 446 and 537:
The court examined whether the decree holders were required to obtain leave under Sections 446 and 537 of the Companies Act. Section 446 stipulates that no suit or legal proceedings shall be commenced or proceeded with against the company without the leave of the court after a winding-up order is passed. Section 537 specifies that any execution put in force without the leave of the court after the commencement of winding-up proceedings is void. The court concluded that the execution proceedings initiated by the decree holders without the leave of the court were void under Section 537, as the winding-up proceedings commenced with the filing of the winding-up petition in 1982, before the execution proceedings were initiated in 1984.

4. Applicability of the Limitation Act:
The court addressed the issue of whether the application by the Official Liquidator was barred by limitation. The Official Liquidator argued, based on a Gujarat High Court judgment, that the Limitation Act did not apply to such applications. However, the respondents contended, citing judgments from the Bombay High Court and the Supreme Court, that the application was barred by limitation. The court noted the Supreme Court's judgment in Kerala S.E. Board v. T.P. Kunhaliumma, which held that Article 137 of the Limitation Act applies to any application under any Act made to a court. The court concluded that the provisions of the Limitation Act apply to proceedings taken by the Official Liquidator under Section 446. Since the application was filed more than a decade after the cause of action arose, it was held to be barred by limitation under Article 137.

Conclusion:
The court dismissed the application filed by the Official Liquidator, holding that it was barred by limitation. The payments made to the decree holders without the leave of the court were deemed void under Section 537, but the application to recover these amounts was not maintainable due to the limitation period prescribed under Article 137 of the Limitation Act.

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