1965 (5) TMI 28 - HC - Companies Law

Winding up Delivery of property to liquidator and Payment of debts due by contributory and extent of set off

Summary

Issues:
1. Competency of the application under section 185 of the Companies Act.
2. Time limitation for the liquidator's application under section 185.

Analysis:
The judgment by the High Court of Punjab involved a dispute where the official liquidator applied under section 185 of the Indian Companies Act against the appellant, a former manager of a branch of a company ordered to be wound up. The liquidator alleged that the appellant held company money amounting to Rs. 9,226-6-5, which he had not handed over. The appellant argued that the account was settled, and he had executed a pronote for the due amount. The court found that a total sum of Rs. 9,226-6-5 remained with the appellant, belonging to the company, based on detailed account analysis by Tek Chand J.

Regarding the competency of the application under section 185, the appellant contended that the section only applied to certain specified roles, which he was not at the time of the application. However, the court held that the status of the appellant when the money was received was crucial, not his status at the time of the application. The court cited a Madras High Court decision supporting this interpretation, emphasizing that the purpose of section 185 was to compel company officers to deliver company money to the liquidator.

On the issue of time limitation, the appellant argued that the application was time-barred, challenging the applicability of section 10 of the Limitation Act. The court agreed that section 10 did not apply to the case but held that there was no specified limitation period for an application under section 185. The court interpreted the language of section 185 to allow the application after a winding-up order without reference to any past cause of action, emphasizing the summary nature of the remedy to protect company property.

The judgment clarified the distinction between sections 185 and 186 of the Companies Act, highlighting that section 186 dealt with ordinary debts while section 185 focused on money received by an officer of the company. The court rejected the argument that the same limitation rule should apply to both sections, affirming that the liquidator's application was not time-barred and was legally competent. The appeal was dismissed by the court, upholding the decision against the appellant with costs.