K V DESINGA RAJA Vs. D K RAJU

JUDGEMENT

(1.) IN this company application the applicants are seeking under section 476 of the Code of Criminal Procedure and rule 9 of the Company rules, for directions to deal with the respondent criminally or civilly for making false statements in his affidavit in Application No. 909 of 1957 and for being dealt with in accordance with law for having drawn amounts belonging to the company without authority and justification. Certain facts may be noted before considering the relevant contentions of the parties. This company which was an electricity undertaking company was taken over be the Government on September 20, 1951. On September 28, 1952 , the members of the company voluntarily liquidator thereto. It, however, transpired that the court exercising its jurisdiction under section 221 of the INdian Companies act, 1913 (hereinafter referred to as the Act) wound up the company in accordance therewith by exercising supervision over the voluntary winding up, which was by then sought by the members of the company and which was continuing. This order of court was made on April 1, 1959. The applicants stated that during November 11, 1952 and June 5, 1956, the respondent, as voluntary liquidator, drew moneys belonging to the company twice over, in the sense that he once drew such allowance as a member of the then Madras Legislative Assembly and at another time as the voluntary liquidator of the company in liquidation and appropriated both the amounts for the same journey or journeys and therefore the respondent is guilty of misapplication of the funds of the company. The applicants also state that in a counter affidavit, marked as exhibit A, in these proceedings, filed in Application No. 909 of 1957, the respondent has categorically admitted that he has incurred expenses for and on behalf of the company and recouped himself of such expenses from the funds belonging to the company. IN fact, the respondent would state that the travelling expenses, which are referred to in paragraph 5, were all incurred by him. This counter affidavit was filed in or about August, 1957. To a similar effect, though not as effective as above, references are made by the applicants as well as the respondent to ancillary proceedings in this winding up, viz. , application No. 595 of 1957. Based on such agreements of the respondent in Applications Nos. 909 of 1957 and 595 of 1957, the applicants are seeking to make out a case that the respondent has retained the funds of the company without authority or justification and therefore is guilty of misfeasance and liable to be dealt with accordingly under section 235 of the Act. This application is opposed by the respondent. I am not for the present adverting to the merits on which the respondent rests his countermand to the application of the petitioners, but suffice it, however, to consider the preliminary objection raised by the learned counsel for the respondent that this application is beyond time and therefore not maintainable. IN this context only, this application is being dealt with, though on an earlier occasion this court made an order that this application along with others have to be dealt with together and decided upon. Sri V. Thyagarajan, learned counsel for the respondent, raising the preliminary objection as above, states that under section 235 of the Act, which is the section applicable to the instant case of winding up, the claim made by the applicant under the aforesaid section is barred as having been made beyond three years from the date when the first liquidator was appointed in the course of winding up of the company. Even otherwise also his case is that this application is beyond time. Sri Manickavasagam, learned counsel for the applicants, on the other hand, raised four contention, the first amongst which mainly concerned itself with the point of limitation. His case is that under section 235 of the Act, the date which has to be taken for purposes of working out the period of limitation prescribed therein is the date on which the court acted under section 221 of the Act to wind up the company subject to its supervision. As already stated, the date on which the order under section 221 of the Act was made, was April 1, 1959. He therefore contends that the present application filed in November, 1959. He would elaborate his argument thus. IN section 235 the expression used while delimiting the period of limitation, is "within three years from the date of the first appointment of a liquidator in the winding up" *

(2.) WHILE emphasising the article the in the parenthesis excerpted above, the learned counsel states that the "winding up" referred to should have reference to the final order made by this court under section 221, when it assumed supervision over the voluntary liquidator in the course of voluntary winding up and it cannot have any reference to the liquidator voluntarily appointed at the general meeting of the company in the course of its voluntary winding up. Thus he would say that his application is within time. Incidentally, he referred to the decision of our court in parandhamiah v. Narasimha Rao in support of his contention that three distinct and separate modes of winding up of companies are provided for and contemplated in the Act and in the light of such an express provision like section 155 of the Act, it is but necessary that an order of court under each and every of such modes prescribed therein should be treated separately and dealt with accordingly. WHILEs so, the order of court under section 221 being therefore a severable, distinct and separate order, in exercise of the powers of this court to supervise the acts of the voluntary liquidator, such an order must be taken to its full length and interpreted as an order whereby and whereunder there was a first appointment of a liquidator for this company. I may at once state that the ratio in Parandhamiah v. Narasimha Rao does not support this contention. In fact, the only point that was decided in that case was that the company court has power to initiate misfeasance proceedings even in the case of voluntary liquidation either against the managing director or a liquidator. We are not concerned with the principle laid down in that case, as we are mainly considering in this application the rule of limitation as contained in section 235 of the Act. The third argument of the learned counsel is that under section 543 of the Indian Companies Act, 1956, the application is sustainable and maintainable as a larger period of limitation is envisaged therein. But the learned counsel, however, in all fairness, did not pursue this argument in view of section 647 of that Act. On a slightly different basis, Sri Manickavasagam wanted to sustain this application as in time; that was on the ground that the amounts expended illegally or unjustifiably by the respondent should be deemed to have been retained by him and continued to be retained by him as on date and therefore no question of limitation arises at all.