2002 (8) TMI 778 - HC - Companies Law

Issues Involved:

1. Entitlement for set-off of Rs. 3,920 against the outstanding loan amount.
2. Whether the application is barred by limitation.
3. Liability of the respondent as a defaulter due to the company's liquidation.
4. Liability of the company in liquidation to insure the vehicle and reimburse compensation for the MACT claim.

Detailed Analysis:

1. Entitlement for Set-off of Rs. 3,920:
The respondent claimed a set-off of Rs. 3,920 paid as service charges. However, the court noted that the respondent failed to produce any evidence of this payment. Additionally, the respondent did not provide details of the terms and conditions of the services for which the charges were paid. Consequently, the court rejected the claim for set-off, stating that the respondent's claim could not be accepted on these grounds.

2. Application Barred by Limitation:
The respondent argued that the claim was barred by limitation but did not specify how it was barred under the Limitation Act or the Companies Act. The court referred to Section 477 of the Companies Act, 1956, which does not prescribe a limitation period for proceedings. The court also referred to Section 458A of the Act, which excludes the period from the date of commencement of the winding-up to one year following the winding-up order from the limitation period. The winding-up order was made on 14-7-1995, and the application was presented on 16-2-2000. Given these provisions, the court concluded that the application was within the limitation period, and the burden of proving otherwise was on the respondent, who failed to do so.

3. Liability of the Respondent as a Defaulter:
The respondent contended that he was not a defaulter as the company went into liquidation. However, the court observed that the loan was advanced in March 1994, and the winding-up order was passed on 14-7-1995. The respondent did not make any payments towards the loan from April 1994 to July 1995. The court found this plea to be dishonest and without merit, stating that the respondent's liability to repay the loan did not end with the company's liquidation. Under Sections 446 and 477 of the Act, the official liquidator was entitled to recover the amount from the respondent.

4. Liability of the Company to Insure the Vehicle:
The respondent argued that the company was liable to insure the vehicle, and due to its failure, the company should reimburse any compensation awarded in the MACT claim. The court found no agreement or evidence to support the claim that the company was obligated to insure the vehicle. The court held that the respondent, as the owner of the vehicle, was legally required to insure it. The court also noted that the MACT case was still pending, and no compensation had been awarded yet. The court dismissed this point as dishonest and an afterthought, stating that the respondent should have taken necessary steps to insure the vehicle.

Interest and Costs:
The respondent contended that there was no liability to pay interest at 12% per annum. However, the court noted that the loan for the purchase of the tractor and trolley would naturally be subject to interest. The respondent failed to prove otherwise. Consequently, the court directed the respondent to pay Rs. 1,48,000 as the principal amount and interest at 12% per annum from 1-4-1994 until the date of payment. Additionally, the respondent was ordered to pay Rs. 2,000 as costs of the application, to be kept in the common pool of the companies.

Conclusion:
The court concluded that the respondent was liable to repay the loan amount with interest and costs, rejecting all defenses raised by the respondent. The application by the official liquidator succeeded in full.

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