1978 (8) TMI 153 - HC - Companies Law

Summary

Issues Involved:
1. Is the claim not barred by time?
2. If the claim is barred by time, is there any reason to condone the delay as per application under section 5 of the Limitation Act?
3. Was the hire-purchase agreement signed in blank, and if so, what is the effect on the transaction?
4. Was the vehicle taken back by the company a year after the agreement and are the accounts of the company fabricated?
5. What amount, if any, is due to the company from the respondents or any of them?
6. Relief?

Issue-wise Detailed Analysis:

1. Is the claim not barred by time?
The court examined whether the claim was time-barred under section 446(2)(b) of the Companies Act. The judgment referenced two Full Bench decisions and a Supreme Court ruling which clarified that a claim must be legally enforceable and not time-barred at the time of the winding-up petition. The application, filed on February 19, 1974, was determined to be time-barred as it should have been filed within four years from the winding-up order dated February 13, 1967. Therefore, the first issue was decided against the official liquidator.

2. If the claim is barred by time, is there any reason to condone the delay as per application under section 5 of the Limitation Act?
The court considered the applicant's plea for condonation of delay, citing incomplete accounts, late filing of the statement of affairs, and a bona fide belief that no limitation period applied. The court noted that the Supreme Court's decision in Kerala State Electricity Board v. T.P. Kunhaliumma clarified the applicability of article 137 of the Limitation Act to such cases. Given the confusion in the law and the explanation provided, the court found sufficient cause to condone the delay and decided the second issue in favor of the applicant.

3. Was the hire-purchase agreement signed in blank, and if so, what is the effect on the transaction?
Despite the hire-purchase agreement being signed in blank, oral evidence confirmed the transaction. The former managing director testified that the original signed agreement was lost, but the respondents admitted to the hire-purchase transaction. Thus, the blank agreement did not affect the validity of the claim, and the transaction was deemed valid.

4. Was the vehicle taken back by the company a year after the agreement and are the accounts of the company fabricated?
The respondents alleged that the company seized the vehicle and fabricated accounts. However, they failed to provide evidence to substantiate these claims. The court found the respondents' testimonies inconsistent and unconvincing. Consequently, the court rejected the allegations of seizure and fabrication.

5. What amount, if any, is due to the company from the respondents or any of them?
The court scrutinized the accounts and evidence presented. It determined that the respondents received Rs. 10,000 from the company for the hire-purchase, not Rs. 16,640 as claimed. The court accepted the incidental charges detailed in the accounts. Ultimately, it concluded that Rs. 21,850 was due to the company, including hire-money, interest, and incidental charges.

6. Relief?
The court issued a claim order in favor of the applicant for Rs. 21,850, to be recovered jointly and severally from the three respondents. No order as to costs was made.

Conclusion:
The court found the claim time-barred but condoned the delay due to the applicant's bona fide belief based on prior legal interpretations. The hire-purchase transaction was validated despite the blank agreement. Allegations of vehicle seizure and account fabrication were dismissed due to lack of evidence. The court ordered the respondents to pay Rs. 21,850 to the applicant.