Surendra Commercial Syndicate Pvt. Ltd. vs Pawan Kumar

Indira Banerjee, J.—The appeal is against a judgment and order dated 22nd July, 2015 passed by the learned Company Court, whereby the winding-up petition being C.P. No. 309 of 2013 filed by the respondent petitioning creditor against the appellant company has been admitted for a sum of Rs.48,47,000/- with interest thereon at the rate of 18% per annum.

It is not in dispute that the petitioning creditor lent a total sum of Rs.1,09,50,000/- to the appellant company by issuing eleven cheques particulars whereof are given herein below �

Date

Cheque No.

Bank

Amount[Rs.]

03/02/10

399340

Bank of Rajasthan

24,00,000

18.02.2010

399382

Bank of Rajasthan

10,00,000

19.02.2010

925149

State Bank of Bikaner and Jaipur

2,00,000

24.02.2010

399391

Bank of Rajasthan

5,00,000

24.02.2010

399392

Bank of Rajasthan

5,00,000

25.02.2010

399393

Bank of Rajasthan

10,00,000

10/03/10

399405

Bank of Rajasthan

5,00,000

11/03/10

399407

Bank of Rajasthan

10,00,000

15.03.2010

399417

Bank of Rajasthan

3,50,000

15.03.2010

964774

Punjab National Bank

10,00,000

16.03.2010

394419

Bank of Rajasthan

25,00,000

Total

Rs.1,09,50,000

The appellant company repaid Rs.61,03,000/- to the respondent petitioning creditor. Particulars of the payments made by the respondent petitioning creditor to the appellant company are as follows �

Date

Cheque No.

Bank

Amount[Rs.]

03/04/10

RTGS

Kotak Mahindra Bank [A/c - K.S.Motors Pvt. Ltd., Jaipur]

6,03,000

09/04/10

RTGS

Bank of Rajasthan

15,00,000

21.04.2010

RTGS

Axis Bank

15,00,000

23.04.2010

RTGS

Axis Bank

25,00,000

Total

Rs.61,03,000

According to the respondent petitioning creditor the balance sum of Rs.48,47,000/- remained outstanding from the appellant company to the respondent petitioning creditor.

It is alleged that in spite of repeated demands, the appellant company did not pay the balance Rs.48,47,000/- to the respondent petitioning creditor. The statutory notice under Section 434 of the Companies Act, 1956 sent by the respondent petitioning creditor to the appellant company by registered post was returned undelivered with the postal remark "refused". The respondent petitioning creditor, therefore, filed the application for winding�up of the appellant company.

The appellant company filed its affidavit in opposition to the windingup petition, inter alia taking the defence that the claim of the respondent petitioning creditor was barred by limitation.

The operative part of the order under appeal is set out herein below for convenience �

"There is no defence to the claim and the petition is admitted for the principal sum of Rs.48,47,000/- together with interest thereon at the agreed rate of 18 per cent per annum from April 24, 2010, which is the day following the last repayment made by the company to the petitioner. If the company pays off the entire amount, together with interest and costs assessed at 2000 GM, within a fortnight from date, the petition will remain permanently stayed.

In default of the payment as aforesaid being made, the petitioner will advertise the petition once in "The Statesman" and once in "Bartaman" and indicate that the petition will appear before the Court on the first working day after the expiry of four weeks from the date of the publications. Publication in the Official Gazette shall stand dispensed with."

The short question involved in this appeal is whether the defence of the appellant company of the balance amount of Rs.48,47,000/- claimed by the respondent petitioning creditor in the winding-up petition being barred by the laws of limitation, was no defence at all or a totally sham defence.

The learned Company Court found that a single loan for a sum of Rs.1,09,50,000/- had been released to the petitioner in several tranches. This finding is contrary to the pleadings of the respondent petitioning creditor in paragraph 6 of the winding-up petition set out herein below �

"6. In or about the month of February 2010, the company approached the petitioner for financial assistance by way of short term loans and advances repayable on demand. The company also agreed to pay interest @ 18% per annum on the loan advanced."

The learned Company Court found that since payments were made in part and since the last payment was made on 23rd April, 2010, limitation would begin on and from that day. The learned Court observed that it was equally possible to regard the claim being governed by residuary Article 113 of the Schedule to the Limitation Act and the last date of payment in respect of the loan reckoned to be the date from which the clock of limitation would begin to run.

The learned Company Court held �

"Since the last date of the payment made by the petitioner to the company was March 16, 2010 and the last repayment made by the company to the petitioner was on April 23, 2010, it does not appear that the petition filed on April 23, 2013 is barred by limitation in view of Section 19 of the said Act of 1963 that gives a fresh period of limitation upon any part payment being made.

Article 19 of the Schedule to the said Act of 1963 applies to a claim on account of money payable for money lent and the period of limitation begins when the loan is made. It is judicially accepted that since the law of limitation is in the nature of a prescription that goes against the natural order of things and prohibits the realisation of a claim, any construction, whether of the statute or of facts, has to be made to the benefit of the claimant, Article 19 can be seen to imply that the period of limitation or the time would begin to run from the date of completion of the payment in respect of the loan. Since the last payment in this case was made on March 16, 2010 and a part repayment was made on April 23, 2010, by virtue of Section 19 of the said Act of 1963, a fresh period of three years would be available to the petitioner reckoned from April 24, 2010. Article 20 of the Schedule to the said Act of 1963 would apply in a case where the entirely of the loan was made by a single cheque. Even Article 21 would suggest that the period of limitation would begin when the payment in respect of the loan is completed. It is equally possible to regard the claim being governed by residuary Article 113 of the Schedule to the Limitation Act for the last date of payment in respect of the loan reckoned to be the date from which the clock of limitation would begin to run."

There can be no doubt that a harsh statute which causes hardship, by barring remedy in respect of an otherwise legitimate claim, on the technical ground of delay, should liberally be interpreted to avoid undue hardship to a litigant, but provided there is some ambiguity in the statute. If a provision of statute is capable of more than one meaning, the Court would construe that provision to avoid undue hardship to any class of litigants. However, when the words of the statute are plain, clear and unambiguous, the Court cannot in its anxiety to give relief against hardship, rewrite the statute.

Mr. Sabyasachi Choudhury, learned Counsel appearing on behalf of the appellant company, argued that the respondent/petitioning creditor had paid eleven separate cheques to the appellant company, the last of which was issued on 16th March, 2010. The entire claim was, therefore, barred by limitation, since the winding up petition had been filed on 23rd April, 2013.

Mr. Choudhury referred to Articles 19, 20 and 21 of the Schedule to the Limitation Act prescribing the period of limitation for filing of suits. Articles 19, 20 and 21 are set out herein below for convenience:

Description of suit

Period of limitation

Time from which period begins to run

For money payable for money lent.

Three years

When the loan is made.

Like suit when the lender has given a cheque for the money.

Three years

When the cheque is paid.

For money lent under an agreement that it shall be payable on demand.

Three years

When the loan is made.

In case of money lent, the period of limitation is three years from the date on which the loan is made. In a case where money is lent by issuing a cheque, the period of limitation is three years from the date on which the cheque is paid and in a case where money is lent under an agreement that it should be paid on demand, the period of limitation is three years from the date on which the loan is made. Article 113 applies where no period of limitation is prescribed anywhere else in the Schedule.

In this case, there can be no dispute, and there is no dispute that all the eleven cheques were paid on or before 16th March, 2010. The cheques were encashed long before 22nd /23rd April, 2010.

In this case it is immaterial whether there was a single loan paid by eleven several cheques, or whether there were separate loans, since in all cases of money lent, the period of limitation is three years from the date when the loan is disbursed. It, therefore, prima facie appears that the appellant company had a good defence to the claim of the petitioning creditor. It is well settled that the defence of limitation is a valid limitation.

It is equally true that limitation is a mixed question of law and facts. Mr. Choudhury was right when he argued that Article 113 applies in case of any suit for which no period of limitation is provided elsewhere in the schedule. However, whether any circumstances exist, for example, an agreement for deferred payment, within a specific time period from the date of demand, to attract Article 113 is a factual issue, which might have to be decided upon evidence in a suit. Whether the claim of the petitioning creditor would be outside the purview of Articles 19, 20 and 21, may have to be decided in a properly instituted suit upon evidence. The Company Court is not a debt collecting Court. Since it cannot be said that the appellant company has no defence at all to the claim of the petitioning creditor, the order admitting the winding up proceeding cannot be sustained.

The appeal is allowed. The order under appeal is set aside. The winding up proceedings are permanently stayed. The petitioning creditor is, however, relegated to a suit.

It is made clear that any observations made in this order are prima facie observations. The question of limitation and all other questions shall be adjudicated on merits. The petitioning creditor would also be entitled to the benefit of Section 14 of the Limitation Act, 1963, of exclusion of the period of time during which the winding up proceedings, as also this appeal, was pending in this Court.

The appeal and the connected applications are disposed of.