OFFICIAL LIQUIDATOR Vs. KADIR

JUDGEMENT

(1.) The claim is for recovery of Rs. 6,505.95 with future interest on the principal sum of Rs. 3,699.50. In a kuri conducted by the company with chit amount of Rs 5,000/- the 1st respondent was a subscriber. He bid the kuri at the 6th instalment and received the prize amount on 3-11-1970 on executing a pro-note for Rs 4,125/- along with respondents 2 and 3 as collateral security for the payment of the future subscriptions. Thereafter only a sum of Rs. 332.50 was paid as future subscriptions. In spite of demand made by the Liquidator the balance was not paid and hence the claim is filed by the Liquidator for a payment order to recover the above mentioned sum with future interest. The 3rd respondent alone contested the claim and the only contention is that the claim is barred by limitation. Therefore the question for consideration is whether it is bared.

(2.) Under S.446(2) of the Companies Act the Company Court is given special jurisdiction to entertain or dispose of any suit or proceeding by or against the company, any claim made by or against the company, any application made under S.391 of the Companies Act and any question of priorities or any other question whatsoever, whether of law or fact, which may relate to or arise in course of the winding up of the company The purpose and object of giving jurisdiction under the above section is to decide such matters as mentioned in S.446(2) in a speedy and cheap way because the companies in liquidation are generally unable to pay the heavy expenditure of liquidation. When a winding up order has been made or a provisional liquidator is appointed, all the property and effects of the company shall be deemed to be in the custody of the Court as from the date of the order for the winding up of the company, and the order for winding up operates in favour of all the creditors and all the contributories of the company. A winding up order operates as notice of discharge of the officers and employees of the company, and the Official Liquidator by virtue of his office becomes the Liquidator of the company. He has the statutory duty to conduct the proceedings in the winding up of the company to realise the assets and to distribute them to the creditors. That is why with the sanction of the Court he has got power to institute or defend any suit, prosecution or other legal proceeding in the name of and on behalf of the company. He may also apply to the court for any directions in relation to any particular matter arising in the winding up. S.446(2) of the Act and sub clause (b) of R.11 of the Companies Rules enable the High Court to entertain an application and grant relief to the Liquidator. In this connection the following passage from the judgment of the Gujarat High Court reported in Rajratna Naranbhai v. Mills New Quality Bobbin Works (1973 (43) Company Case 13 at 143), with respect, states the principle correctly:

(3.) From the above conclusion it follows that a right to resort to the summary procedure by way of an application accrues to the Liquidator representing the company only on the commencement of the winding up. Till then this is not a right available to the company. The Limitation Act has prescribed periods of limitation to file suit and applications. A claim application is not a suit. In Bank of Deccan Ltd. (in liquidation) v. E.K John & others this Court had occasion to consider whether a claim is in the nature of a suit or a suit and it was held that it is not. That was in connection with the interpretation of S.3 of Act 30 of 1975. The same principle applies to the expression 'suit' used in the Limitation Act. In Hansaraj v. Dehra Dun M. E. T. Co. ( AIR 1933 PC 63 ) their Lordships of the Privy Council had occasion to consider whether the periods of limitation provided for suits in the Limitation Act will apply to the applications made by the Liquidator under the Companies Act and their Lordships held that the Liquidator's application to realise an asset due to the company is not a suit. I respectfully agree with the principle laid down therein and applying it I hold that the periods of limitation prescribed by the Limitation Act for suits do not apply to the claim applications filed by the Liquidator.