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2023 (12) TMI 1372 - HC - Companies LawRecovery of amount u/s 446 of the Companies Act, 1956 against a debtor of the company in liquidation - time limitation u/s 458A of the Act - HELD THAT - A careful perusal of the Section 458A of the Companies Act, 1956 would show that it has overriding effect over the provisions of the Limitation Act and in proceedings under the Act, the period of limitation would commence from the date of passing of order on winding up and excluding a period of one year immediately following the date of winding up order. The Supreme Court in the case of KARNATAKA STEEL WIRE PRODUCTS VERSUS KOHINOOR ROLLING SHUTTERS ENGG. WORKS 2002 (11) TMI 355 - SUPREME COURT held that 'The legislature, by way of an amendment, brought into force the provisions of Section 458-A, so that an official liquidator, who is supposed to be in custody of the assets and liabilities of the company, would be able to file a claim on behalf of the company, which was legally enforceable on the date of the winding up, after excluding the period, indicated under Section 458-A of the Companies Act, so that the company or its shareholders will not suffer any loss. But by no stretch of imagination, the said provisions contained in Section 458-A can be construed to mean that even a barred date (sic debt) or a claim which was not enforceable on the date of the winding up, would stand revived, once a winding-up application is filed and order is made by virtue of Section 458-A of the Companies Act.' Reverting to the instant matter, evidently, the order for winding up was passed by this court on 03.06.2011, whereby an OL was appointed as Provisional Liquidator. It is uncontroverted that the payment was made to the respondent company on 10.04.2008, and therefore, the initial period of limitation for re-claiming the amount was three years i.e., 10.04.2011, which of course was before the order of winding up was passed. On a careful perusal of Section 458A of the Act, subsequent to the Provisional Liquidator being appointed and taking over the charge, the period of limitation for claiming the recovery of such amount commenced on 03.06.2011 and extended by another year, eventually, by all means expired on 03.06.2015. It is also borne out from the record that the present application by the OL has been filed on 26.10.2017. Ex-facie, the application moved on behalf of the applicant / OL for recovery of the amount claimed alongwith interest is barred by limitation in terms of Section 458A of the Act. The instant application moved by the OL is hereby dismissed.
Issues:
Recovery of amount under Section 446 of the Companies Act, 1956 against a debtor of the company in liquidation. Application opposed on grounds of limitation under Section 458A of the Act. Analysis and Decision: The judgment pertains to an application under Section 446 of the Companies Act, 1956 seeking recovery of an amount from a debtor of a company in liquidation. The Official Liquidator (OL) sought to recover Rs. 80,00,000/- along with interest and administration expenses. The respondent company, in opposition, claimed that the payment was made for modular kitchens/wardrobes, but the goods were not delivered due to the company's failure to take delivery. The respondent contended that the claim was barred under Section 458A of the Act, citing the limitation period starting from the date of payment. The court analyzed Section 458A, which excludes certain time in computing periods of limitation for claims by a company in liquidation. It was noted that the limitation period for the recovery claim commenced from the date of the winding-up order and extended by one year thereafter. The court referred to the Supreme Court's interpretation of Section 458A in Karnataka Steel & Wire Products v. Kohinoor Rolling Shutters & Engg. Works, emphasizing that the provision excludes the period from the commencement of winding up till the order of winding up and an additional year thereafter. In the present case, the winding-up order was passed on 03.06.2011, while the payment was made on 10.04.2008. The initial limitation period for the claim expired before the winding-up order. Considering the provisions of Section 458A, the period for claiming recovery started from the date of the winding-up order and expired on 03.06.2015. The application by the OL was filed on 26.10.2017, well beyond the extended limitation period, thus rendering the claim time-barred. Consequently, the court held that the application by the OL for recovery of the amount, along with interest, was barred by limitation as per Section 458A of the Companies Act, 1956. Therefore, the court dismissed the application on the grounds of being time-barred.
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