2005 (9) TMI 315 - HC - Companies Law

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

Summary

Issues:
- Interpretation of section 543(2) of the Companies Act, 1956 regarding the period of limitation for applications related to misconduct.
- Application of section 458A of the Act in computing periods of limitation for suits or applications in the name of a company being wound up.
- Determination of whether the exclusion of time under section 458A is in addition to the period of limitation provided under section 543(2) of the Act.

Analysis:
The judgment in question pertains to a special appeal filed against an order overruling a preliminary objection raised by the appellant regarding the filing of an application under section 543(1) of the Companies Act, 1956, being time-barred. The application was made by the official liquidator seeking direction for inquiry and appropriate orders against the non-applicants for misconduct and loss compensation. The appellant contended that the application was filed after the five-year limitation period from the date of the winding-up order. However, the company judge, considering section 543(2) read with section 458A of the Act, concluded that the application was within the limitation period.

The judgment extensively discusses the provisions of section 458A, which excludes certain time in computing periods of limitation for suits or applications on behalf of a company being wound up. Section 458A mandates the exclusion of the period from the commencement of winding up till the winding-up order and an additional one-year period following the order. The judgment emphasizes the non obstante clause in section 458A for computing limitation periods in such cases.

Furthermore, the judgment delves into the interpretation of section 543(2) of the Act, which provides a five-year limitation for applications related to misconduct or breach of trust. It clarifies that the period of limitation commences from the date of the winding-up order or the first appointment of the liquidator, whichever is longer. The court also refers to a previous decision highlighting the legislative intent behind section 458A to protect the interests of the company and its shareholders.

Ultimately, the court concurs with the company judge's decision, stating that the exclusion of time under section 458A is additional to the five-year limitation period under section 543(2). The judgment affirms that the benefit of the additional one-year period provided by section 458A is applicable to proceedings under section 543 of the Act. Consequently, the special appeal is dismissed, upholding the company judge's ruling without any order as to costs.