1981 (2) TMI 156 - HC - Companies Law

Winding up Exclusion of certain time in computing periods of limitation, Effect of supervision order

Summary

Issues:
- Determination of the time limitation for filing a claim by the official liquidator in a voluntary winding up case.
- Interpretation of sections 522, 523, 526, and 458A of the Companies Act in relation to the computation of limitation periods.
- Application of legal fiction in deeming an order for winding up subject to court supervision as an order for winding up by the court.

Analysis:
The judgment involves an appeal against a decision where the learned single judge held that the application filed by the official liquidator was within the time limit. The company had decided on voluntary winding up by a special resolution in April 1973, which was later ordered to continue under court supervision in November 1975. The official liquidator filed a claim in 1978, demanding payment from the appellant, who argued that the application was time-barred. The appellant contended that limitation should start from April 1973, making the 1978 application invalid under Article 137 of the Limitation Act.

The court analyzed sections 522, 523, 526, and 458A of the Companies Act to determine the applicability of the limitation period. Section 526(2) creates a legal fiction deeming an order for winding up subject to court supervision as an order for winding up by the court. This legal fiction triggers section 458A, which excludes certain periods in computing the limitation period for suits or applications in the name of a company being wound up by the court. The court held that the exclusion of time from the commencement of winding up to the date of the winding-up order and one year thereafter applied in this case, making the 1978 application timely filed.

The court emphasized the importance of the deeming provision in section 526(2) and cited precedents to support the concept of legal fiction. The court concluded that despite no formal order for winding up by the court, the order for supervision effectively triggered the application of section 458A, ensuring that the claim filed in 1978 was within the limitation period. Consequently, the court upheld the decision of the learned single judge, dismissing the appeal and directing the parties to appear for further proceedings as scheduled.