9911796707
TMI Blog1987 (3) TMI 441X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 449 of the Companies Act, 1956, the official liquidator attached to this court became the official liquidator of the company. Company Application No. 1060 of 1984 was filed on December 4, 1984. Though the respondent did not de the claim, it claimed a set-off to the extent of a sum of Rs. 653 due to from the company in liquidation as per the bill dated November 22, 1971. The respondent also claimed that the application filed by the liquidator is barred by limitation. The counter-claim put forward by the respondent was found to be out of time. The learned single judge who heard t application felt that the questions raised in the application need to considered by a larger Bench, and, accordingly, he referred the follow two questions for decision : (1)Whether the claim by or against the company in liquidation, which is ordinarily enforceable by means of a suit, has to be initiated before the company court by means of a suit under clause ( a ) of sub-section (2) of section 446 of the Companies Act, or by means of an application under clause ( b ) of the said sub-section ? and (2)What is the article of the Limitation Act that is applicable if the claim is held to be enforceable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 22 days, referred to above, should be excluded and, if it is so excluded, the application could be filed on or before December 17, 1984, and this application, filed on December 4, 1984, is in time. We shall first refer to the statutory provisions before we deal with some of the cases cited at the Bar. Section 446 of the Companies Act, 1956, reads as follows : " Suits stayed on winding-up order . (1) When a winding up order has been made or the official liquidator has been appointed as provisional liquidator, no suit or other legal proceeding shall be commenced, or if pending at the date of the winding up order, shall be proceeded with, against the company, except by leave of the court and subject to such terms as the court may impose. (2) The court which is winding up the company shall, notwithstanding anything contained in any other law for the time being in force, have jurisdiction to entertain, or dispose of ( a )any suit or proceeding by or against the company ; ( b )any claim made by or against the company (including claims by or against any of its branches in India); ( c )any application made under section 391 by or in respect of the company ; ( d )any que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany court to entertain or to dispose of any suit or other legal proceeding, which has already been instituted, on being transferred to it under sub-section (3). The Code of Civil Procedure contemplates suits and original petitions as the broad division of legal proceedings. An original petition is denned as meaning a petition whereby any proceeding other than a suit is instituted in a court. Though an application is denned in the Civil Rules of Practice, as including an execution application, execution petition and interlocutory application, the words, "applications" and "petitions" convey the same meaning. A suit is instituted by the presentation of a plaint or in such other manner as may be prescribed. Though original petitions are not considered as plaints, the cause-title and other details and particulars which they have to contain are similar to those in the plaints and these petitions are also required to be heard and determined in the same manner as original suits. The question for consideration in this case is, as to in what matters suits have to be instituted before the company court and in what matters mere applications could be filed. The learned single judge, in his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s secured by pledge of movables or recovery of money or those matters which are, under the specific provisions in the Act, to be summarily dealt with, and not other types of claims by or against the company. Section 456 refers to the 'liquidator taking into custody or under his control all the property, effects and actionable claims to which the company is or appears to be entitled. Section 457 enables the liquidator, with the sanction of the court, to institute or defend any suit, prosecution or other legal proceeding, civil or criminal, in the name and on behalf of the company. Section 468 confers power on the court to require any contributory and any trustee, receiver, banker, agent or other officer of the company to pay deliver forthwith or within such time as the court directs, to the liquidator any money, property, books or papers in his custody or under his control to which the company is prima facie entitled. Under section 46 the court also could direct any contributory to pay any money due to the company. Under section 477, the court can summon any person who known or suspected to be indebted to the company. And under section 528, all debts payable on a contingency, and al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... powering the court, as in exercise of insolvency jurisdiction, to decide all claims made by or against the company and other questions whatsoever, so that the winding up proceedings might be expedited." Thus, in our opinion, the provisions contemplate that in the case of money claims or debts, the normal procedure of filing a suit for recovery of the same need not be resorted to and the official liquidator, at his option, could file a claim application before the company court for recovery of the amount due to the company. A Full Bench of the Delhi High Court in the decision in Jaimal Singh Makin v. Official Liquidator [1978] 48 Comp Cas 419, has taken a similar view. The ratio of the judgment has been brought out clearly in the headnote, which reads as follows : "A money claim by the official liquidator of a company in winding up against any person has not necessarily to be made by a suit; it can be made by a petition. The right to file a suit under clause ( a ) or a petition under clause ( b ) of section 446(2) of the Companies Act, 1956, is an option conferred by the statute and these rights do not militate one against the other." Though the provisions of the Banking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust be taken to be one left to the judgment and discretion of the court, having regard to the nature of the claim and of the questions therein involved." Again, after referring to the provisions of section 45B, the Supreme Court further observed (at page 23): "It is to be remembered that section 45B is not confined to claims for recovery of money or recovery of property, movable or immovable, but comprehends all sorts of claims which relate to or arise in the course of winding up. Obviously, the normal proceeding that the section contemplated must be taken to be a summary proceeding by way of application." But, what is relevant for our purpose is that section 45B was wide and, therefore, the Supreme Court observed that even with regard to the recovery of property, movable or immovable, summary proceedings by way of applications could be resorted to by the liquidator. Even there, the learned judges have definitely stated that the procedure must be taken to be one left to the judgment and discretion of the court having regard to the nature of the claim and the questions therein involved. The Full Bench of the Delhi High Court in the decision in Jaimal Singh Makin v. Offici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill be the appropriate article in the First Schedule to the Limitation Act, 1963, dealing with suits. However, where an application is filed instead of a plaint, the said application, as already stated, will have to be treated as a suit, and, therefore, will be governed by that article of the Limitation Act applicable to suits of that nature. Otherwise, there would be an anomaly of the same claim having two different periods of limitation according to the form in which the proceeding is initiated at the option of the liquidator. Under section 3 of the Limitation Act, 1963, every suit instituted, appeal preferred and application made after the prescribed period shall be dismissed although limitation has not been set up as a defence. For the purposes of the Act, a suit is instituted, in an ordinary case, when the plaint is presented to the proper officer, in the case of a pauper when his application for leave to sue as a pauper is made and in the case of a claim against a company which is being wound up by the court, when the claimant first sends his claim to the official liquidator. Sections 4 to 24 contain the provisions for making the computation of the period of limitation and ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the time when the right to apply accrued, which time would not be earlier than the date of winding up order, namely March 26, 1926, the application of the liquidators, made on March 26, 1928, was well within three years. But, the Privy Council went into the question as to when "the money was due" within the meaning of section 186. This was because the three items of claims related to three different dates and it was necessary for the purpose of seeing whether if, on March 26, 1928, the liquidators acting under the powers conferred upon them by section 179( a ) of the Indian Companies Act, 1913, had in the name of the company, instituted a suit against the testator's executors for recovery of any of those items, that suit would, of necessity, have been dismissed by reason of the Indian Limitation Act, 1908. In respect of the first of the claims dated September 13, 1922, the period within which the company could have instituted a suit under article 62 of the First Schedule was three years from that date. The debt was accordingly time-barred on the date of the winding up order, viz ., March 26, 1926. In regard to the second item dated July 1, 1923, under article 51 of the Limitation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le to the suit or proceeding and exclude, from the total period provided under that article, the periods contemplated under section 458A, and find out whether, on the date when the application or suit was filed, it was in time. Having regard to the conclusion, which we have already referred to, that concurrent jurisdiction has been conferred both on the civil court as also on the company court, and the option given to the liquidator to make the claim by way of an application or a suit in respect of money claims, and the need to treat this as a suit, though in form an application, in view of the special provisions in the Companies Act, that when a claim is made it has to be decided whether it could have formed a claim in a regular suit and, if that is so, the limitation applicable to that proceeding will have to be applied. If such a claim could not by the subject-matter of a suit, but could be claimed by way of an application only, then the corresponding article applicable to such an application should be determined. In either case, in computing the period of limitation, the two periods referred to in section 458A will have to be excluded. The Privy Council's decision referred to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imitation. Therefore, whether the claim was barred or was enforceable has to be determined with reference to the cause of action arising and the date of the filing only and all the other provisions will only enable the computation of the period. We are, therefore, of the view that though the application is filed in exercise of the option provided to the liquidator, if the claim has to be considered as in the nature of a suit, the provisions in the Limitation Act for such suits only would govern the case, and not article 137. Again, we have to make it clear that in each case, the application of the liquidator will have to be considered with reference to the nature of the claim and not the article applicable in the Limitation Act and then only the computation could be done in order to find out whether the claim was in time or not. Two other decisions cited at the Bar may now be noticed and they are, a decision of the Delhi High Court in Liberty Finance P. Ltd., In re, [1979] 49 Comp Cas 287, and a decision of the Karnataka High Court in Union Trading and Chit Funds v. S. H. Lahatti [1982] 52 Comp Cas 340 . Each of these decisions is by a single judge, and both have followed a ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
