2008 (3) TMI 481 - HC - Companies Law

Winding up - whether some of the claims of the appellant for payment of interest would be barred by limitation and some other claims would be within limitation? Held that - A perusal of the documents makes it clear that the fixed lease rentals were payable in 20 quarterly instalments covering a period of five years. There is also a stipulation that in the event of a default in the payment of the instalment either by short payment or delayed payment the appellant was entitled to recover from the respondent interest at 2 per cent per month after 30 days from the respective due date of payment until payment and short fall in the lease rental with interest at 2 per cent per month till the date of payment. On going through the records we also find that the finding of the learned Company Judge that the cause of action for default of each instalment arose separately is justified. The period of limitation for any recovery is three years commencing from the date on which the instalment becomes due. The learned Company Judge was therefore justified in holding that since the appellant has filed the company petition only on 17-3-2005 therefore the parties would go back three years from the said date with reference to the date when the instalment was belatedly paid by BHEL. So far as acknowledgements pointed out by the appellant in the letters dated 17-4-2001 and 11-10-2002 are concerned in our considered opinion the same could not be interpreted and construed to be any acknowledgement in any manner. The aforesaid letters only indicate that what was communicated was only a statement that the claim of the appellant would be looked into. No merit in appeal

Summary

Issues:
Challenge to legality of order on payment of interest, interpretation of clauses in agreement, acknowledgment of default, liability to pay instalments and interest, applicability of limitation period.

Analysis:
The appellant challenged the legality of an order passed by the Company Judge regarding the payment of interest under an agreement dated 11/12-11-1998. The dispute arose when the respondent failed to make payments, leading to a company petition for winding up. The agreement stipulated that interest would be payable for delays in payment of lease rentals. The Company Judge held that each default constituted a separate cause of action, leading to some claims being barred by limitation. The parties were directed to recalculate interest payable. The appellant relied on communications acknowledging defaults, clauses in the agreement, and a Supreme Court decision. However, the respondent argued that there was no acknowledgment of default, and the agreement did not extend the cause of action for payment of rentals and interest. The Court examined various clauses and documents, affirming that defaults gave rise to separate causes of action with a three-year limitation period. The Court dismissed the appeal, finding no merit, and directed the parties to appear before the Company Judge for further proceedings.

This judgment involved a detailed analysis of the agreement, acknowledgments of default, and the interpretation of clauses regarding payment obligations and interest. The Court emphasized the separate causes of action for each default, applying a three-year limitation period. The appellant's reliance on acknowledgments was deemed insufficient, and the agreement did not extend the cause of action. The Court distinguished the facts from a Supreme Court decision and upheld the Company Judge's order. The dismissal of the appeal highlighted the importance of adherence to contractual terms and limitations in such disputes.