The Jayabharat Credit Limited vs Jalgaon Re-Rolling Industries Ltd.

V.S. Sirpurkar, J.—The question that has to be decided in this Company Petition is as to whether it deserves to be admitted or not. Since the admission of the petition for winding up of the Company is followed by the devastating results in terms of reputation of the Company, the matter was heard extensively on the question of admission itself.

The petitioner Company is itself a registered company. It is essentially a Financial Company. It was previously known as ''The Jayabharat Credit and Investment Co. Ltd. However, the name was changed to ''Jayabharat Credit Ltd.''. The company, which is sought to be wound up is Jalgaon Re-rolling Industries Ltd., which has its Registered Office at Nagpur and it has been incorporated and registered on 30.10.1964. The said Company approached the petitioner by letter dated 18.3.1983 and made a proposal for obtaining material handling equipment under the leasing scheme of the petitioner. The said proposal was accepted by the petitioner and, the petitioner called upon the said Company to select and chose the said material (forklift) and the said forklifts were selected by the Company under winding up and a lease agreement for hire of the same was entered into by the petitioner and the Company under winding up. Under the said agreement, machinery was to be given on lease for a period of 96 months at the monthly rent of Rs. 8,906/-, on the terms and conditions mentioned in the said agreement. Under the terms and conditions of the said agreement, the total period of lease was being 96 months commencing on 15th August, 1983. The monthly rental was to be paid in advance on the 1st day of each month. There was to be a protanto raise in case of the increase in the Bank interest rate. Punctuality of payments of installments was agreed to be the essence of the lease and if any installment remained unpaid for more than fourteen days after it''s becoming due, it was to be held as a default and under Clause 3(b) of the Agreement, the lessee Company was liable to pay compensation on overdue rentals at the rate of 3% per month until payment thereof. It was also agreed that such compensation was to run from day to day and to accrue after as well as before any judgment. It was further agreed that after the determination of the lease by efflux of time, unless a renewal or extension of the same was agreed to, the lessee was to deliver the equipment to the lessor. Under Clause 18 of the Agreement, it was agreed that a particular amount would be a residual value and after the determination of the lease, the lessee could purchase the equipment by paying such residual value. It seems that the lessee Company paid about 40 installments and did not pay the rest. The total amount, which the lessee Company defaulted to pay is claimed to be Rs. 1,88,200/-. It is further claimed that as per the compensation clause, the lessee had made itself liable to pay the compensation aggregated to Rs. 4,30,395/-. After the defaults were started, the petitioner did not do anything but chose to wait till the last installment was due, which was due on 15.7.1991. It is only thereafter that a statutory notice u/s 434 of the Companies Act came to be served on 14.6.1994. However, since the said notice was not complied with, petition came to be filed for winding up. In the petition, the petitioner has claimed that the lessee company was indebted to the petitioner to the tune of Rs. 6,26,275/- and since the said amount has remained unpaid, in spite of the statutory notice, the lessee company was liable to be wound up.

Initially, this Court issued a notice before admission on 16.12.1994, in pursuance of which the lessee company made its appearance before this Court and filed an affidavit in reply. The petitioner Company thereafter has filed an affidavit by way of rejoinder supporting the petition for winding up.

Mainly the defence raised by the Company-under-liquidation is three-fold. According to the learned Counsel, firstly, the claim of the debt against the Company-under-liquidation is barred by limitation and, therefore, it did not remain a debt within the meaning of Section 433 of the Companies Act. On that count, the petition for winding up has, therefore, become meaningless and has to be dismissed on the count of limitation. The second contention of the learned Counsel is that the claim was exaggerated and the compensation could never have been claimed as it was nothing but penal interest, and unless the said penal liability was ascertained and decided upon by a Court of Law, it could not have been deemed to be a debt. The learned Counsel relied upon Section 74 of the Indian Contract Act. Thirdly, the contention of the learned Counsel is that this was nothing but a money lending transaction as there is ample evidence on record to suggest that this was nothing but a finance made by the petitioner Company to the lessee Company and, in fact, this agreement of lease was only as eye-wash and, in fact, it was the advancement of a sum and as such the civil suit itself has barred u/s 10 of the Bombay Money lending Act, as admittedly, the petitioner Company did not have a money lending licence.

It will have, therefore ,to be found as to whether firstly the petition itself is within limitation. In this behalf, Shri S.A. Bobde, learned Counsel appearing on behalf of the petitioner Company, contended that it is not necessary for lodging a petition u/s 434 of the Companies Act for winding up of company, the liability should be recoverable by a suit. He contended that if it is proved that the company was indebted, meaning thereby that there was a debt against the company, even if the debt is not recoverable by reason of bar of limitation or otherwise, the debt remains the debt and the company would still be liable to be wound up, if it ignores or neglects to pay the same. He, therefore, contended that it is not necessary that the debt should be recoverable by way of a suit. The legal position in this behalf is no more res Integra. In a decision reported in 1985 Tax LR 2090, the Division Bench of this Court has taken a view that if the debt itself was barred by general law of limitation, then the petition for winding up on account of that debt would be barred. Of course, the controversy in this case was entirely different. Here, on the date of filing the debt was not barred by the ordinary law of limitation, but before the company was ordered to be wound up, the debt became barred. The Division Bench took the view that once the petition was filed in time, the fact that subsequently the debt became barred because of the limitation, would not render the petition for winding up defective, in any manner. The Division Bench went on to hold in that behalf that if the petition, which was maintainable on the date of its filing, was to become non maintainable because of the debt becoming barred by limitation of the date of hearing, over which the creditor had no control, for no fault of his, that would be to the great prejudice of the creditor. It was, therefore, not possible to give such interpretation to the expression "unable to pay its debts" appearing in Section 433A of the Companies Act. The Division Bench also overruled an earlier decision of this Court only reported in 1979 Tax LR 2116, wherein a view was taken that if the debt was barred by limitation on the date of order, or if the creditor has not preserved its claim against the bar of limitation by filing a suit, the petition for winding up would have to be dismissed.

Shri Bobde then argued that in case of debts becoming barred by limitation, what was barred was remedy but the debt was not wiped off, and, therefore, the inability of the debtor company to pay its debt which existed at the date of the petition would equally continue to exist even thereafter. Shri Bobde has died upon the observations in para-23 of the above ruling. There are undoubtedly such observations in para-23; however, the said observations are being read out of context. In para-17, the Division Bench quotes:

It is not disputed that to maintain a petition for winding up on the ground of inability to pay the debt, the debt must be recoverable, i.e. due and payable and not barred by limitation at the date of the petition. This was so because u/s 439 quoted above, one of the persons, inter alia, entitled to file a petition for winding up, was a creditor and in order that a person could qualify himself to be a creditor, he must be able to satisfy the Court that at the date of the petition, there was a debt irrevocable or due and payable to him, which he could claim.

In the present case also, the situation is no different. Shri Bobde suggest that these observations in para-17 are on account of the agreement between the parties, and the proposition that he wished to canvass was not contested. The contention of the learned Counsel is not right, as a look at para-17 itself suggests that the Division bench has given the approval to the proposition which was not contested on account of the express language of Section 439.

Shri Bobde then argued that the predominent purpose for presenting the petition for winding up was not a recovery of debt but it was to restrain such company which could not pay its debt from operating in that field and thereby saving the other persons dealing with such company. This argument is clearly untenable in law, for the simple reason that in the scheme of winding up such remedy is not available to a person who has got nothing to do with the company. If the contention is held to be correct, then the winding up could be achieved by any person and for any other reason. That is clearly not the import of Section 434 and the winding up of the company could be ordered for those reasons alone covered in Clause (a) to (f). The present finding up is being sought on account of Section 433(e) and, therefore it will have to be shown that the company concerned was not able to pay its debt and for that purpose it will have to be held that the said debt was recoverable on the date of filing of the petition, meaning thereby that it had not become time barred on the date of filing of the petition.

The Division Bench has also relied upon a ruling reported in Harinagar Sugar Mills Co. Ltd. Bombay v. Court Receiver, High Court Bombay AIR 1996 SC 1707. There, the Supreme Court had recognised that the petition for winding up was one of the legitimate methods for reailsing the amount due. The Supreme Court had also approved the observations to the following effect:

Winding up petition was perfectly proper remedy for enforcing payment of a just debt.

And it was held that filing a winding-up petition was a mode of execution which the court gives to the creditor against a company unable to pay its debts and, therefore, there was no question of the creditor, who filed a winding up petition, being driven to file a suit pending hearing of the petition with a view to keep alive the debt becoming barred by limitation. The contention raised by the learned Counsel, therefore, has to be rejected.

The Supreme Court has, in a different context, made the following observations in a reported decision in Pradeshiya Industrial and Investment Corporation of U.P. Vs. North India Petrochemical Ltd. and Another, , the observations are to the following effect:

A debt under this section must be a determined or a definite sum of money payable immediately or at a future date.

What then is inability when the section says ''unable to pay its debts''? That should be taken in the commercial sense. In that, it is unable to meet current demands. As stated by William James, V.C. it is plainly and commercially insolvent - that is to say, that its assets are such, and Us existing liabilities arc such, as to make it reasonably certain - as to make the Court feel satisfied - that the existing and probable assets would be insufficient to meet the existing liabilities.

The Supreme Court further went on to quote in para 28 as under:

Two rules are well settled. First, if the doubt is bona fide disputed and the defence is a substantial one, the court will not wind up the company. The court has dismissed a petition for winding-up where the creditor claimed a sum for goods sold to the company and the company contended that no price had been agreed upon and the sum demanded by the creditor was unreasonable. Again, a petition for winding-up by a creditor who claimed payment of an agreed sum for work done for the company when the company contended that the work had not been done properly was not allowed.

Where the debt is undisputed the court will not act upon a defence that the company has the ability to pay the debt but the company chooses not to pay that particular debt. Where, however, there is no doubt that the company owes the creditor a debt entitling him to a winding-up order but the exact amount of the debt is disputed the court will make a winding-up order without requiring the creditor to quantify the debt precisely. The principles on which the Court acts arc first that the defence of the company is in good faith as one of substance, secondly, the defence is likely to succeed in point of law, and, thirdly, the company adduces prima facie proof of the fact on which the defence depends.

It will be clear from these observations that if there is a bona fide dispute to the claim - and bar of limitation would always be a bona fide dispute - the winding-up petition would not be granted. The observations above quoted in paragraph 26 of the ruling show that the debt must be a determined or a definite sum of money payable immediately or at a future date. Once the debt becomes unrecoverable on account of the suit therefore becoming barred by limitation, it would no more remain a payable debt. The dispute raised here is on account of the limitation which would be perfectly justifiable and would be a bona fide dispute by the Company under winding up against the claim of the debtor. It will have, therefore, to be held that where the debt itself has become barred by limitation, a petition for winding up of the company, on account of such debt, would not be liable to be admitted and will have to be dismissed as such. The question however, remains as to whether in the present case, the said debt had actually become barred by limitation.

In that behalf Shri Bobde was at pains to point out that a suit for recovery of the whole amount would be well within limitation. According, the learned Counsel, though apparently, this was a leasing contract or contract for hire, in effect, what the petitioner Company had sought was of the whole sum covered by the 96 installments, each installment being Rs. 8.906/-. Shri Bobde also very heavily relied on the term of the agreement which is reproduced earlier, whereby if any installment is defaulted, the petitioner Company become entitled to charge 3% per month interest thereupon, According to the learned Counsel, the petitioner Company was, therefore, well justified to wait till the last installment became due on 14.8.1991, and the whole amount, i.e., the amount covering the amount of defaulted installments, alongwith the interest at 3% on such defaulted installment would be recoverable only on the date on which the last installment became due; according to the learned Counsel, the limitation would start from that date. The learned Counsel relied on Article 12 and Article 55 of the Limitation Act.

It will be, therefore, worthwhile to see as to whether a suit could have been filed under those Articles. Article 12 pertains to the hire of animals, vehicles, boats or household furniture. The limitation provided therefore is three years from the date when the hire becomes payable. Shri Bobde submitted that such hire would become payable and would remain payable even after the last installment was defaulted. According to him, therefore, the limitation of three years would be starting on 14.8.1991 for the hire charges as well as the so-called compensation. The argument that the period of three years would commence from the last date for an installment, is obviously incorrect. The liability to pay the hire charges or lease charges as per the agreement arises with each installment and therefore, every installment would give rise to an independent cause of action. It will have to be held that by a suit the installments defaulted for three years only could be recovered under this Article. In the present case also the last installment, as per the agreement, had fallen due on 15.7,1991, while petition has been filed on 13.7.1994 and, therefore, it is obvious that the period of three years prior to it only could be taken into consideration for the purposes of a suit. If that is so, the last installment alone would be taken into consideration which was of Rs. 280/- per month. It would be seen that out of 96 monthly installments, first sixty installments where of Rs. 8,906/- each, while remaining balance of Rs. 10,080/- was to be paid in 36 monthly equal installments of Rs. 280/- each. In this way, the last installment would be only of Rs. 280/-. It is difficult to accept that because of Article 12, there could be a proper suit for the whole amount of the defaulted installments, or that even for that matter Article 12 applies to the present situation. Strictly speaking, Article 12 would not apply, as the present suit could not have been described as a suit for recovery of the hire charges of animals, vehicles, boats or household furniture. It is not even distantly suggested that the forklifts could be termed to be such an article as could be covered by Article 12.

Shri Bobde then tried to draw support from Article 52 of the Limitation Act. Article 52 provides for a suit for arrears of rent. The limitation provided therefore is three years starting from when the arrears become due. It is an established legal position that the arrears only of three years last could be recovered, because even if the present lease money is held to be a rent within the meaning of Article 52, the rent will become due with every installment and in that view, even there it is only three years of rent that could be recoverable. Here also the petitioner has to draw a blank, as on 13th July, 1994 when the petition was filed, the petitioner Company could have claimed the rent only between 13.7.1991 to 13.7.1994. Article 52 would also be of no help to the petitioner.

Shri Bobde then invited my attention to Article 55 of the Limitation Act, which covers suit for compensation for the breach of any contract express or implied not specially provided for. The limitation provided is again of three years from the date when the contract is broken or where there are successive breaches in respect of which the suit is instituted occurs or where the breach is continuing when it ceases. The learned Counsel tried to suggest that Article 55 would save the situation for him as the liability to pay the compensation was a continuing liability and the said liability came to an end only on the last date of the installment, i.e., in July or August, 1991 and, therefore, the whole compensation could be recovered. Now, strictly speaking, it is difficult to hold that the suit can fall under Article 55 of the Limitation Act. If the agreement is to be seen closely, it is a leasing agreement, whereby the respondent Company had agreed to pay the whole leasing charges by installments. The agreement, thus, apparently was a leasing agreement. Now, the suit, therefore, could not be for the compensation of the breach of agreement. A compensation covered under Article 55 is for the ascertained sum of compensation. Even if it is held for the argument sake that the suit could be filed for compensation, it will have to be held that the starting point of the limitation was when the breaches occured, because in this case the payment of the hire charges was to be made by installments. Every default of an installment in itself would give rise to the cause of action. Here, every breach is distinct and every default of the installment would be covered under the term "successive breaches".

Shri Bobde then contended that, in fact, this agreement, though apparently appeared to be a leasing agreement, yet the language was clear enough to suggest that it was a liability to pay a fixed amount which was arrived at taking into consideration the price of the forklifts and the 12% interest, and the ultimate figure then was divided and fixed into the installments. He, therefore, contended that right from the beginning, it was well understood by the parties that the agreement was for recovery of certain amount. In that view of the fact, according to the learned Counsel, the liability to pay every installment could not be said to be an independent liability and it could be said to be only a genuine liability and, therefore, Article 55 of the Limitation Act would be squarely applicable. Seeing the language of the agreement, it can never be said that the whole liability was a genuine liability. Shri Bobde invited my attention to the Schedule attached to the agreement and tried to canvass that in that Schedule a final figure was mentioned. A mention of the final figure of the amount by itself cannot suggest that the liability to pay whole amount was a genuine liability and, therefore, the limitation would start after the said liability ceased.

Shri Bobde thereafter feebly tried to argue that the matter fell under the residuary Article 113 of the Limitation Act and relied on two reported decisions; one of Patna High Court reported in Mukhdeo Singh and Another Vs. Harakh Narayan Singh and Others, and the other of Madras High Court reported in V. Alagar Thevar Vs. The Madurai Municipality, .

There, in the Patna case, it is held that where an installment mortgage bond fixes time generally which the entire principal money and interest thereon are to be paid, and a clause is inserted for the benefit of the mortgagee that if any of the installments due is not paid in time the mortgagee would be at liberty to call in the entire money, the effect of such a stipulation is that under the terms of the bond, the mortgagee has successive or recurring causes of action and it is left to his option to avail himself of any one of these cause of action and base his suit upon any of them. This was a case under Article 132 of the Limitation Act, 1908. Now, in the said case, the Patna High Court was concerned with a mortgage where there was a condition that on failure of payment of any installment, all the installments, which had expired or not expired, would be paid by mortgagor and he was to pay interest hereon. The situation is clearly different here as there is no such clause entitling the petitioner Company to sue for the whole sum covered by all the installments of default of an installment. The learned Counsel has taken me through the agreement extensively. However, even a close scrutiny does not show that there is such a clause. A careful reading of Clauses 3 and 4 would show that there is no such term, though there is a clearcut effect shown of a default of the installment in Clause 3(b) which only provides for the rate of 3% per month interest.

Shri Mehadia, learned Counsel appearing on behalf of the respondent Company, pointed out that there could not have been such a clause, for the simple reason that all the interest which was calculated by the petitioner company was calculated in advance and was payable through those installments. He, therefore, pointed out that there could not have been such an agreement as such clause would have meant realisation of interest which never fall due. The agreement appears to be right.

The Madrags case also is on the residuary Article 113 of the Limitation Act. Shri Bobde relies on the following observations:

When the purpose of a contract is spread over a period and during such a period the injury which is continuing inflicts damages on the party who files the suit ultimately for realisation of damages then the action is maintainable only in respect of the total damage suffered by reason of the wrong of the wrong-doer at the end of the contract period.

This was a case where the auction was held by the Municipality and the highest bid was that of the defendant which was accepted by the Municipality. The defendant was put in possession of the market in pursuance of the acceptance of the bid. The petitioner under the agreement could remain in the market for the purpose of collecting the fees therefrom for a period of one year. There was a specific clause in the agreement that if the contractor failed to perform or observe any of the covenants in the said agreement, it would be lawful for the Municipal Council in addition to and without prejudice to its other rights and remedies, to determine the agreement and also it was mentioned that the licence granted to the defendant would cease. It was in the backdrop of these facts that the said observations were made. The facts involved are entirely different and there is no tangible principle laid down by the Madras High Court in this case which could be applicable to our case.

Thirdly, Shri Bobde relied upon a decision reported in Rup Narain Bhattacharya Vs. Gopi Nath Mandol and Others . However, even this case can be distinguished as even here there was a clause which provided that all the installments would become recoverable, if even a single installment was defaulted. Maclean, C.J. had, however, his own reservations while holding as he did. However, on the facts itself this case is not applicable to the present facts.

Shri Bobde then contended that there was promissory note executed by the respondent Company. He pointed out that this promissory note was on the record. From this promissory-note, he suggested that, in fact, this was an agreement to return the whole money. In the first place, the argument is incorrect, because it is not on the basis of the promissory-note that the suit could have been filed, as the payment terms were already fixed up by and agreement. Even if it is held to be a good promissory-note and even if it is held that on that basis of the same a suit could have been filed, it would be Articles 36 and 37 of the Limitation Act which would come into play. Now, the petitioner Company would certainly have got a limitation on the basis of Article 37 to wait till the last default by waiving its right to sue on the first default of the installment. However, as has already been pointed out, for that there should have been a term in the agreement that even if one default was made, all the amount involved in the transaction would become payable and recoverable. In the absence of that, even Article 37 cannot be availed of by the petitioner Company. If we read Article 36, it is clear that since the time starts running on the first term of payment or on the expiry of the respective terms of the payment, the suit would be clearly barred by limitation as regards all the defaulted installments and, therefore, Article 36 would also be of no avail to the petitioner Company

The distinction between Articles 36 and 37 of the Limitation Act has been well brought about by the Allahabad High Court in Arjun Sahai Vs. Pitamber Das and Others, , where it is specifically held that the mere fact that a bond contains a default clause of that nature would not necessarily make Article 75 (old) applicable, and that Article applies only to those cases where the provision relating to default clause laid down that on default being made in payment of one or more installments, the whole amount has to fall due. It would not apply in cases where a default may exist in a different form, for example, where the right of bringing the suit is confined to recovering the amount of each installment in respect of which default may have been committed. It will be seen that in Clause 3(b) of the Agreement, all that is provided is that on a default, the defaulting Company would be liable to pay the interest at the rate of 3% per month. There is no clause suggesting that whole of the amount would become due and recoverable on a single or more defaults. I respectfully agree with the law laid down in the above mentioned ruling.

The end result of all this discussion would be that a suit would clearly be barred by limitation on the date on which the petitioner u/s 433 of the Companies Act was filed. In that view, the petition itself would be of no consequence and will be required to be dismissed as there is a valid and bona fide defence of limitation available to the respondent Company.

Shri Mehadia then submits that under no circumstances could the whole amount as claimed by way of the present petition be deemed to be a debt. He submits that u/s 74 of the Indian Contract Act what is provided by the penal interest is only a limit, but that does not mean that a defaulting party makes itself liable in terms of the penal clause. According to the learned Counsel, Clause 3(b) is clearly a penal clause and unless it was ascertained and defined, such claim could never have been made, treating it to be a debt. The learned Counsel has relied upon the reported decision of the Supreme Court in Union of India (UOI) Vs. Raman Iron Foundry, . In para-7 commenting on Clause 18 of the agreement involved in that case, the apex Court has held as under:

The heading of Clause 18 clearly suggests that this clause is intended to deal with the subject of recovery of sums due. Now a sum would be due to the purchaser when there is an existing obligation to pay it in praesenti. It would be profitable in this connection to refer to the concept of a ''debt'' for a sum due is the same thing as a debt due. The classical definition of debt is to be found in Webb v. Stenton (1883) 11 QBD 518 where Lindley, L.J., said: ''...a debt is a sum of money which is now payable or will become payable in the future by reason of a present obligation. There must be debitum in praesenti; solvendum may be in praesenti or in futuro - that is immaterial. There must be an existing obligation to pay a sum of money now or in future.

The learned Counsel relies on these observations and invite my attention to the following observations in para-9:

Now the law is well settled that a claim for unliquidated damages does not give rise to a doubt until the liability is adjudicated and damages assessed by a decree or order of a Court or other adjudicatory authority. When there is a breach of contract, the party who commits the breach does not eo instanti incur any pecuniary-obligation, nor does the party complaining of the breach becomes entitled to a debt due from the other party. The only right which the party aggrieved by the breach of the contract has is the right to sue for damages. That is not an actionable claim and this position is made amply clear by the amendment in Section 6(3) of the Transfer of Property Act.

The learned Counsel, therefore, contends that the petitioner Company could not have calculated the whole interest as per Clause 3(b) of the Agreement and claimed it as a debt unless that liability was ascertained by a competent Court of Law. Really speaking, the consideration of this question would be academic since I have already held that the suit itself was barred by limitation. Had the suit not been barred by limitation, the question would have been different, as in that case at least the principal amount, which was more than 500 rupees could have been recovered and in that case the petition for winding up could have been perfectly justified, but it will have to be held, in pursuance of the law laid down, that the petitioner Company could not have included the amount of interest amounting to approximately Rs. 4,00,000/- in its present petition as a debt payable by the respondent Company. Similarly such observations are to be found in Union of India (UOI) Vs. Vasudeo Agarwal and Another, and State of Gujarat Vs. M.K. Patel and Co. and Another, .

The last submission of the learned Counsel for the respondent Company objecting to the tenability of the winding-up petition was that the whole transaction was, in fact, a loan transaction which would be covered by the Bombay Money lending Act, and since the petitioner Company did not have any moneylending licence, any suit would be barred u/s 10 of that Act. Shri Mehadia pointed out that there was a promissory-note executed by the respondent Company, which clearly went on to show that this was not a leasing contract but a simple moneylending transaction, for which unless there was a proper licence under the Moneylending Act, the suit for the realisation of the same would not be possible. In this behalf, Shri Mehadia drew my attention towards the rejoinder filed by the petitioner Company, and more particularly to para-3 thereof where there is a clear admission that the total rental amount agreed to be paid by the respondent Company was Rs. 5,46,504/- payable in 96 monthly installments. However, the interest was calculated on Rs. 3,59,566/- for eight years al nominal rate of interest so as to arrive at the figure of Rs. 5,46,504/-. From this, Shri Mehadia, pointed out that not only was the money advanced but the interest has also calculated thereupon and, therefore, the whole thing becomes a moneylending transaction which was barred u/s 10 of the Moneylending Act. Shri Mehadia further contended that, at any rate, this could be a bona fide defence in the forthcoming suit and, therefore, the winding up petition was not liable to be admitted on this count.

It would not be proper to go into the nature of the transaction, in view of the agreement. The agreement does not suggest by itself that this was a moneylending transaction. The agreement is out and out a leasing transaction. However, whether this was a moneylending transaction at all, could not be decided on the basis of the available material and in the absence of any proper evidence. The transaction as reflected from the agreement does not prima facie, seems to be a money lending transaction. The execution of the promissory-note by itself would not make this to be a moneylending transaction because the promissory-note could be viewed as a collateral security for insuring the regular payment of installments also. In short, in the absence of proper evidence, it could not be straightaway held to be a moneylending transaction. This defence will, therefore, have to be rejected.

However, as regards the question of limitation, I have already held that since the suit for recovery of this amount would itself have been barred by limitation, the winding-up petition would have to be dismissed.

In that view of the matter, the instant winding petition is dismissed, but in the circumstances, there shall be no orders as to the costs.