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TMI Blog1962 (1) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... ding up proceedings of the Pioneer Board Mills Ltd., Dindigul. He advanced a sum of Rs. 375 on January 12, 1952, and a further sum of Rs. 50 on March 1, 1952. The application for winding up was preferred on November 22, 1954. The company was ordered to be wound up on October 14, 1955. Reckoning the period of three years from the dates of the debts, the claim was barred by limitation on October 14, 1955, but not on November 22, 1954. The learned District Judge held that the claim was barred by limitation and the appellant preferred this appeal. Rajagopalan J. referred the matter for decision to a bench as stated. The claim itself was put in on March 26, 1956. The matter has to be decided with reference to the Indian Companies Act (VII of 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be entitled to prove for and receive dividends out of the assets of the company may come in under the winding up, and make such claims against the company as they respectively are entitled to by virtue of this section." It will be seen that under section 229 the provisions of the Provincial Insolvency Act (V of 1920) are made automatically applicable in the matter of proofs. Section 34(2) of the Provincial Insolvency Act reads: "Save as provided by sub-section (1) all debts and liabilities, present or future, certain or contingent, to which the debtor is subject when he is adjudged an insolvent, or to which he may become subject before his discharge by reason of any obligation incurred before the date of such adjudication, shall be de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ems to us in these circumstances that the principle laid down in the cases decided under the Provincial Insolvency Act will apply equally to the case before us and the claim would therefore be in time. This position emerges from a natural and normal interpretation of the provisions of the Provincial Insolvency Act and likewise the Companies Act. Sri A.R. Krishnaswami, learned counsel for the respondent, however, contends that the Explanation to section 3 of the Limitation Act creates a difficulty. Section 3 of the Limitation Act runs : "Subject to the provisions contained in sections 4 to 25 (inclusive), every suit instituted, appeal preferred, and application made, after the period of limitation prescribed therefor by the First Sched ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sending in the claim to the official liquidator as the date of the institution of the suit. As pointed out by the Privy Council in Hansraj Gupta v. Official Liquidators of the Dehra Dun Mussourie Electric Tramway Co. Ltd. [1903] 3 Comp. Cas. 207 ; [1932] LR 60 IA 13,19 (though in dealing with a different argument): "The ordinary rule is stated by the Explanation to be that the suit is instituted when the plaint is presented, but to this two exceptions are prescribed, viz ., (1) in the case of a suit by a pauper, the time at which that suit is (for purposes of section 3) instituted, is to be taken as an earlier date, viz ., the date when the application for leave to sue as a pauper was made; and (2) in the case of a suit against a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er words, it may happen that the date on which the creditor sends in the claim is beyond the period of three years from the date of the debt, and if the creditor is relegated to a suit, the suit would be time-barred, but it may not be time-barred if the claim is investigated in the company court itself, on account of the fact that the presentation of the petition for winding up was within three years from the date of the debt. In this view, therefore, there is no conflict between the view which we are taking under the provisions of the Companies Act read with the provisions of the Provincial Insolvency Act and the Explanation to section 3 of the Limitation Act relied on by the learned counsel for the respondent. We have so far indicated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the creditor must obviously file a suit in time. But there is no reason why in a case where the winding up order is made, the creditor should not be allowed to wait and should be forced to file a suit wasting money. In fact it may happen that even if he files and obtains a decree he may not be able to execute it in view of the terms of section 171 of the Companies Act, 1913 (section 446). It is needless to add that the creditor cannot file any claim in the winding up proceedings till after the winding up order is made and if retrospective effect is not given to the claim the usefulness of the winding up proceedings would be considerably lost. These aspects of the matter have also been pointed out in Byramji Bomanji Talati v. Official Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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