2018 (7) TMI 1762 - HC - Companies Law

Winding up petition - period of limitation - Held that - For acknowledgement of a debt it must be an acknowledgment of liability in respect of such amount made in writing signed by the parties. It would be clear that what the Form-C indicates is a statutory averment which is given under the Central State Tax Act. It merely shows delivery of goods as per invoice. It cannot be termed to be an acknowledgement of debt within the meaning of Section 18 of the Limitation Act. Thus the claim which is subject matter of the present winding up petition was barred by limitation when the present winding up petition was filed. In view of the said facts the present petition has no merits and is liable to be dismissed.

Summary

Issues:
1. Winding up petition filed under Companies Act, 1956 for unpaid invoices.
2. Objection raised on the basis of limitation for the claim.
3. Interpretation of C-Form as an acknowledgement of debt for extending limitation period.

Analysis:
1. The petitioner filed a winding up petition under Sections 433(e), 434(1)(a) & 439 of the Companies Act, 1956 due to unpaid invoices by the respondent company for paper supplied in 2010. Despite partial payments, a significant amount remained outstanding, leading to the petition. The respondent did not file a reply but raised a limitation objection, citing the filing of the petition in 2015 for 2010 invoices. The respondent relied on precedents to support the limitation argument.

2. The court examined the limitation issue, referring to the legal position outlined in previous judgments. It cited Article 14 of the Limitation Act, emphasizing the three-year limitation period for claims. The court highlighted that a winding up petition is maintainable only for debts not barred under the law of limitation. Referring to relevant case laws, the court emphasized that a claim barred by limitation cannot be a basis for a winding up petition.

3. The crucial question revolved around whether the C-Form could be considered an acknowledgment of debt to extend the limitation period. The court analyzed Section 18 of the Limitation Act, which outlines the effect of acknowledgment in writing. It referenced judgments that clarified a C-Form does not constitute an acknowledgment of debt. The court emphasized the necessity of a written acknowledgment signed by the parties to extend the limitation period. Ultimately, the court dismissed the petition, stating that the claim was barred by limitation when filed, as the C-Form did not meet the criteria for acknowledgment under the law.

In conclusion, the court dismissed the winding up petition due to the claim being time-barred, emphasizing that the C-Form did not serve as an acknowledgment of debt to extend the limitation period. The judgment underscores the importance of adhering to limitation periods and the legal requirements for acknowledging debts to maintain the validity of claims in such cases.