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TMI Blog2003 (6) TMI 392X X X X Extracts X X X X X X X X Extracts X X X X ..... es have been encashed in favour of the company. Despite receipt of the said amount of Rs. 4,87,200, the company did not allot the shares in favour of the petitioners. The petitioners wrote several letters to the company and its directors and also personally visited the offices of the company at Mumbai, Delhi and Shillong complaining of non-allotment of the shares. One Shri T.S. Bareh, Chairman of the company, Shri M.S. Jairam, managing director of the company and Shri Sukhram Verma, director of the company partly settled the claim of the petitioners by making payment to four petitioners of an amount of Rs. 1,90,400 by bank drafts dated 16-10-1996, drawn on Bank of Baroda, Parliament Street branch, New Delhi. The said three officers of the company assured petitioner No. 1 that they would settle the entire claim of the petitioners within a period of two months thereafter. Despite such assurance the balance amount of Rs. 2,96,800, which was paid as application money for the rights issue, was not refunded to the petitioners. The petitioners issued notice on 22-4-1998, under section 434 of the Companies Act to pay the balance amount of Rs. 2,96,800 together with interest at the rate of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the managing director of the company was not aware of the purpose for which such payments were made. It is further stated that no assurance was made by any authorised officer of the company to settle the amount alleged to be due to the petitioners. After submission of the written statement by the company an affidavit in rejoinder has been filed on behalf of the petitioners stating, inter alia , that Current Account No. 63 was opened in the State Bank of Indore by a resolution of the board of directors of the company on 23-3-1993 and that the application for opening up of the said current account was signed on behalf of the company by its director and that current account was opened in accordance with the procedure of the bank. On 9-8-1999, an additional affidavit was filed on behalf of the company that the Current Account No. 63 was an unauthorised account opened by one Vithal Jajoo and that the money that was deposited in that account was subsequently withdrawn in a fraudulent manner. 4. We need not go into the question as to whether Current Account No. 63 was opened with the concurrence or authority of the company, whether the amount of Rs. 4,87,200 or part thereof has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding up of the company was dismissed. Aggrieved by the said order the present appeal is filed before us. 5. It it contended by Mr. G.N. Sahewalla, learned senior counsel for the appellant that the learned single Judge has committed an error in dismissing the winding up petition on the ground that debt due to the petitioners was barred by limitation. That there is no provision in the Companies Act and particularly section 434 providing for a period of limitation for filing a winding up petition. The only requirement of section 434 of the Companies Act is that on service of statutory notice if the company is unable to pay its debt the creditor is entitled to file petition and the court gets jurisdiction to wind up the company. It is further submitted that the court was not right in applying article 24 of Schedule I to the Limitation Act. The limitation, if any, would apply under article 47 of Schedule I to the Limitation Act, 1963. Learned counsel has also contended that the learned single Judge could not have relied upon the balance sheet of the year 1998 alone for arriving at the conclusion that the company s position was not such whereby it can be held that the company is unab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y bound under law to issue share certificates within the period of three months after allotments of its shares. The proviso to section 113 of the Companies Act provides for extension of the period not exceeding nine months for delivery of the share certificates, if the company applies to the Company Law Board for extension of the period of three months, by which the share certificates can be issued. Therefore, under section 113 of the Companies Act on allotment of shares, which shall be the date on which the offer of allotment of rights issues has been accepted by the petitioners by depositing the amount, the company is bound to issue share certificates within the period of three months. If share certificate is not issued within the period of three month and if the company has not obtained the order of extension of period from the Company Law Board for issuance of share certificates, the period of limitation commences for enforcement of rights for issuance of shares and consequently on completion of three months from allotment of shares by the company period of limitation for recovery of the amount shall commence under article 47 of the Limitation Act, 1963. In the present case, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r service of notice for three weeks demanding payment of the debts due the company fails or neglects to pay the debts the presumption shall be drawn that the company is unable to pay its debts and the court gets jurisdiction to wind up the company, if in its discretion it is found that a case is made out for winding up of the company. 8. While considering the case for winding up by the court two rules are well settled. First, if the debt is bona fide disputed and the defence is a substantial one, the court will not wind up the company. But where the debt is undisputed the court will not act upon a defence that the company has the ability to pay the debt but the company chooses not to pay that particular debt A C ompany, In re [1894] 2 Ch. 349 (Ch. D.). Where there is no doubt that the company owes the creditor a debt entitling him to a winding up order but the exact amount of the debt is disputed the court will make a winding up order without requiring the creditor to quantify the debt precisely Tweeds Garages Ltd., In re [1962] 32 Comp. Cas. 795 (Ch. D.). While refusing relief for winding up of the company the principles on which the court acts are first that the def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ched and if a creditor whose debt is statute-barred has any means of enforcing his claim other than by action or set off, the Act does not prevent him from recovering by those means". The Court of Appeal in Curwen v. Milburn [1889] 42 Ch. 424, 434 Cotton L. J. Said -"statute-barred debts are dues, though payment of them cannot be enforced by action." 10. In Punjab National Bank v. Surendra Prasad Sinha [1992] 75 Comp. Cas. 699 the Apex Court stated that section 3 of the Limitation Act only bars the remedy but does not destroy the right which the remedy relates to. The right to the debt continues to exist notwithstanding the remedy is barred by limitation. Therefore, when the principle debtor did not repay the bank loan, the bank as creditor can adjust it at maturity of the fixed deposit receipts deposited by the guarantor with the bank as security, though the debt became barred by limitation at the time of maturity of the said fixed deposits receipts. This authority clearly indicates that the debt although time-barred the right to debt continues to exist the remedy is barred. If there are any other means by which the debt can be recovered that means can be adopted by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the company. 13 . Learned counsel for the appellant has placed strong reliance on two decisions of the Apex Court in Khadi Gram Udyog Trust v. Shri Ram Chandraji Virajman Mandir Sarsaiya Ghat AIR 1978 SC 287 and Punjab National Bank s case ( supra ) for his submission that the company petition can be filed even in regard to time barred dues. In the case of Khadi Gram Udyog Trust ( supra ) the defendant has claimed protection from ejectment on the ground that he was not required to pay entire arrears of rent which includes the time barred rent. The Apex Court has held that the landlord, under the statutory provision, has a right of ejectment if the tenant does not pay or deposit the arrears of rent within the time stipulated and the defendant has right to be protected if he has paid the rent. Thus, the statute has conferred a benefit on the tenant to avoid a decree for eviction by complying with the requirement of section 20(4). If he fails to avail himself of the opportunity and has not paid the entire rent which includes time- barred rent, the landlord under section 20(2) would be entitled to an order of eviction. It is a case, where the landlord was not enforcing its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e respondent." The Apex Court recognizes the right of a creditor to adjust the debt in the manner permissible under law and under the contract between the parties but does not say that the right can be exercised through court of law. Therefore, this case cannot be said to have laid down the principle of law that even the time barred debt can be enforced by filing a suit or petition in the court. The principle enunciated by this case is that the time-barred debt remains a debt and it can be adjusted by any other means except through the court of law. 15. Under section 439( b ) of the Companies Act, 1956, an application to the court for the winding up of a company shall be by a petition presented by any creditor or creditors, including any contingent or prospective creditor or creditors besides the parties the juristic persons mentioned in clauses ( a ), ( c ), ( d ), ( e ) and ( f ). The company petition for winding up can be filed by the creditor or creditors if the company is unable to pay its debts as mentioned in section 433( e ) of the Act. For the purposes of filing the winding up petition on the ground of the company being unable to pay its debts, debt should be enforce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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