9911796707
TMI Blog2004 (10) TMI 341X X X X Extracts X X X X X X X X Extracts X X X X ..... ile the Statement of Affairs which was filed only on 17-7-1986. On going through the Statement it was noted by the Official Liquidator that there were certain trade debtors and certain other debtors to whom company had given the loan and advances. In addition company has also enormous liability towards various banks being secured creditor who are to be paid, apart from certain preferential creditors and unsecured creditors. However, during the life time of the company, no action was taken to recover these debts which had become "bad debts". In these circumstances, prayer is made that respondents should pay these monies to the Official Liquidator. 3. Respondents 1 and 2 entered appearance after notices were issued. Respondents 3 and 4 have died. On behalf of respondents 1 and 2 preliminary objection is taken about the maintainability of this application and the objection is that the same is barred by limitation. 4. Some of the dates which may be relevant for deciding this issue may be noted. Winding up petition was filed on 26-5-1979. The Provisional Liquidator was appointed on 4-11-1980 and final winding up order was passed on 20-5-1981. Present application was filed on 18- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period of 5 years would start after the expiry of one year from the date of order of winding up was passed i.e. 20-5-1982 and thus 5 year period would expire on 19-5-1987 and as present application was filed on 18-5-1987 the same would be within limitation. However, it is the contention of learned counsel for the respondents that section 458A has no application in the present case. 6. It is thus clear that there is no dispute about the dates mentioned above. There is also no dispute that as per provisions of section 543(2) of the Companies Act, application has to be made within 5 years of the date of winding up order. The only aspect which, therefore, requires consideration is as to whether benefit of one year as provided under section 458A would be available in the present case or not. If that benefit is available, the present application is within time. If section 458A has no application, the present application would be barred by limitation. 7. To appreciate the rival contention, we will have to look into the provisions of section 458A which is couched in the following language: "458A. Exclusion of certain time in computing periods of limitation. Notwithstanding a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 543 read with section 458A are interpreted differently by different courts. The Andhra Pradesh High Court in the case of Official Liquidator v. T.J. Swamy [1992] 73 Comp. Cas. 583 has taken the view as projected by the Official Liquidator. On the other hand, contrary view is taken by some other High Courts holding that section 543 being special provision which contains specifically the period of limitation, benefit of section 458A would not be available and 5 years period will have to be counted with effect from the date of winding up orders. These judgments are : 1. B. Pattnaik Mines (P.) Ltd. v. Bijayananda Pattnaik 1994 (80) Comp. Cas. 237 (Ori.) 2. Kabini Papers Ltd. v. M.D. Shivananjappa 1999 (98) Comp. Cas. 675 (Kar.) 3. Official Liquidator, Palai Central Bank Ltd. v. Joseph Augusti [1966] Kerala Law Times 411. 12. As the courts in the two sets of judgments have taken diametrically opposite views, it would be in the fitness of things to find out the reasons for holding the divergent views as given in these judgments. Let me first take up the judgments which lend credence to the contentions advanced by the respondents. 13. In B. Pattnai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it overrides the general provision of law. In the opinion of the court, section 458A contained a general provision and provides for certain exclusons. On the other hand, section 543 was specific provision providing for starting point i.e. culmination of the winding up proceedings, namely, the date when the winding up order is passed or the date when OL was appointed as Liquidator as section 543 specifically provided starting point for 5 year period in the aforesaid manner, the provisions of section 458A could not be read into this. Relevant portion where this discussion crops up is as under: "In my considered view, there is absolutely no warrant for this to be done as it is well-settled law as far as the interpretation of statutes is concerned that where the provision is clear and unambiguous it is not permissible to seek to graft on anything from another provision as this would be doing violence to the section. In the instant case, as I have already observed, a more than sufficient period of time stretching as long as five years is provided to the official liquidator, and if there had been any intention on the part of the Legislature to extend this period by even a single min ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is contention was rejected by the Supreme Court holding that the liquidator really represented the company and that claim made by liquidator, therefore, a claim "by the Banking Company". The Andhra Pradesh High Court in this judgment, therefore, concluded that misfeasance proceedings initiated by the Official Liquidator under section 543 of the Act were in the name and on behalf of the Company. 16. I may state at the outset that the reasoning given by Karnataka High Court may not be sound. No doubt section 543(2) of the Act provides for 5 year period of limitation to be counted with effect from the date when Company is wound up or Official Liquidator is appointed. However, section 458A specifically provides for exclusion of certain time in computing the periods of limitation and is a non obstante clause as it starts with the expression "notwithstanding anything in the Indian Limitation Act, 1908 (9 of 1908) or in any other law for the time being in force". It mandates that the period from the date of commencement of winding up of the company to the date on which the winding up order is made (Both inclusive) and a period of one year immediately following the date of the windin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourts. Therefore, I am inclined to conclude that section 458A of the Act would be applicable and benefit of additional one year as provided in the said provision would be available in proceedings under section 543 of the Act. 19. Be that as it may, on the second aspect respondent deserves to succeed. The Official Liquidator in the application has not given any details in support of the allegation in the petition about the so called acts of misfeasance on the part of the respondent/Ex-Directors. What is stated in para-5 of the application is that as per the Statement of Affairs filed, book value of the assets is Rs. 14,66,438.57p. but for all practical purposes the actual realization value is absolutely nil . Rs. 11,11,154.17 out of the aforesaid amount, comprises the trade debtors and Rs. 2,47,917.42 represents the loan and advances. It is alleged that as no action was taken by the Directors in time against the said trade debtors to realize the money, the claims have become time barred and, therefore, "bad debts" and, there- fore, Ex-Directors are to be squarely blamed for the same. It is also stated that except for few, no addresses of the persons from whom the trade debts or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed or become liable or accountable for any money or property of the company; or he has been guilty of any misfeasance or breach of trust in relation to the company and, where any such conduct is found attributed to any such person, then, to compel him to repay and restore the money or property, or any part thereof to the company. In other words, under this section, the court is to examine the conduct of an individual director or officer and to pass an order against him, if such a person is personally found to be liable for misapplication, etc., of the money or property of the company or, otherwise, is guilty of any misfeasance or breach of trust in relation to the company. It is thus clear that, to enable the court to examine the conduct of an individual director or officer and to pass an effective order to make him personally liable for misapplication, etc., of the money or the property of the company, there has to be positive and specific evidence and pleadings in respect of the individual director of an act of the nature contemplated by the section. In the absence of such specific allegations and positive evidence, it is not possible or proper for the court to indulge in a f ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
