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TMI Blog2010 (7) TMI 282X X X X Extracts X X X X X X X X Extracts X X X X ..... bruary 14, 2008 to the effect that the petitioning creditor was entitled to recover a sum of a little more than Rs. 17,00,00,000 from the company. The company preferred an appeal against such order before the Debts Recovery Appellate Tribunal at Allahabad, which, on December 15, 2008, affirmed the said final order of the said Tribunal while dismissing the appeal for default. 3. This winding up application has been filed on the ground that the company is unable to pay the said sum mentioned in the certificate of the said Tribunal. 4. The company has taken no point regarding the merits of the claim. It has taken two technical points. The first is that the claim on which the winding up application is founded is barred by the laws of limitation on the ground that the claim of the petitioning creditor necessarily arose before the notice dated September 18, 2003. Since the winding up application had been filed in 2009, the debt had become barred by limitation. The certificate or decree by the Debts Recovery Tribunal should not be the basis of the claim. The underlying debt should be the basis. When the period of limitation for a right to sue is computed, the time when the right f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is a provision that a company would be deemed to be unable to pay its debts when an execution process has been returned unsatisfied, then without taking recourse to execution and without an unsatisfied decree in execution this winding up application could not have been filed. Hence the company is not to be deemed to be unable to pay its debts. 9. I am unable to accept this contention. In my opinion, sub-section ( a ) refers to a general class of creditors and sub-section ( b ) refers to a special class, being the judgment creditor. The general includes the special. Further, sub-section ( a ) also refers to a particular creditor's right in that general category of creditors. Sub-section ( c ) refers to a larger body or the entire body of creditors of the company. The only difference is that while a general creditor making a winding up application has to give notice to the company of such debt and make a demand for payment and wait for three weeks before filing a winding up application, the special creditor, being the judgment creditor is not required to give any such notice. In the case of Unique Cardboard Box Mfg. Co. (P.) Ltd., In re [1978] 48 Comp Cas 599 (Cal) cited by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It would only be treated as a bad debt if the suit was dismissed. A judgment debt which has been obtained by a creditor is always a good debt. It would become a bad debt if no steps are taken to execute the decree. The period for filing an execution application is twelve years. Therefore such debt is good if the execution application is filed within 12 years and would be good for the entire twelve years. It would become bad if the application is not filed by such time or such application dismissed after filing. Therefore, a judgment debt would continue to be good debt as long as it is recoverable. After having obtained a judgment or decree, there is no question of obtaining a further judgment or decree. Therefore, the winding up application should not be treated as if it was a suit and had to be filed within a period of limitation to obtain another judgment or decree on the existing judgment or decree. That would be a wholly illogical state of affairs. The court has only to see that the judgment debt is a good debt, on the above principle. But since a winding up proceeding is made by application, article 137 of the Limitation Act will apply. It has to be filed within three years o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of new rights to realise such debt as confirmed in a decree or certificate of a competent court. A fresh period of limitation is to run from the date of accrual of such subsequent right. For the reasons given by me above, on the date of filing the application the debt was a realisable debt. Since it was a realisable debt the winding up application was competent. 15. Recourse has been taken by learned counsel for the respondent-company to section 34 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993. That section says that the Act will have an overriding effect over all Acts except the Acts mentioned in sub-section (2). The Supreme Court in Unique Butyle Tube Industries (P.) Ltd. v. U. P. Financial Corporation [2003] 113 Comp Cas 374 ; [2003] 2 SCC 455 held that after coming into force of the above Act of 1993 recourse could not be taken for recovery of debts, to the provisions of the U. P. Public Moneys (Recovery of Dues) Act, 1972 because the U. P. Act does not find mention in section 34(2) of the 1993 Act, which has overriding effect. This decision was followed in A. P. T. Ispat (P.) Ltd. v. U. P. Small Industrial Corporation Ltd. [2010] 155 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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