United Hire Purchase and Land Finance (P.) Ltd. (In Liquidation) vs Kartar Singh

Ashok Bhan, J.—The present claim petition has been filed u/s 446(2), read with Section 468 of the Companies Act, 1956, referred to as "the Act", by the official liquidator of United Hire Purchase and Land Finance (P) Ltd. (company in liquidation) (hereinafter referred to as "the company"). A claim petition has been filed for releasing the unpaid called amount together with interest thereon from the respondent.

The company was doing business to purchase, sell, hire out or sell on hire purchase system all kinds of vehicles, motor cycles, rickshaws, gramophones, pianos and musical instruments, machines, etc., house equipment and all other articles that the company may deem fit.

Company Petition No. 10 of 1980 was filed in this court on January 15, 1980, for winding up of the company. The company was ordered to be wound up under the orders of this court on August 22, 1985. Ex-managing director filed the statement of affairs with the official liquidator and books of account were handed over to him. On the scrutiny of accounts and from the statement of affairs, it was found that a sum of Rs. 16,245 was due against the respondent and realizable by the petitioner. That notice, vide No. UHIF/12 Liqn./1762, dated July 10, 1987, was sent to the respondent by registered as well as ordinary post by the official liquidator asking him to pay a sum of Rs. 16,245 plus interest at 18 per cent. per annum within a period of 15 days from the date of the issue of notice, failing which the amount shall be recovered through the process of the court. These notices were duly served. Acknowledgment due receipt was returned which has been exhibited as exhibit PW-2/2. The respondent did not make any payment and thereafter the present petition was filed on April 29, 1991, with a prayer that an order be passed against the respondent for payment of Rs. 16,245 plus interest at 18 per cent. per annum from the date of the last transaction, i.e., August 6, 1985, till its payment.

Upon service of the petitioner, written statement was filed by the respondent. The respondent denied his liability to pay any amount. It was stated in the reply, that no copy of any agreement or of any document showing any advance of loan has been attached with the petition.

Replication to the written statement was filed in which the allegations made in the written statement were controverted and the averments made in the petition were reiterated.

Upon the pleadings, the following issues were framed :

(i) Whether the amount along with interest as claimed in the petition is due from the respondent ?

(ii) Whether the present petition is within limitation ?

(iii) Relief.

Parties led their evidence. On behalf of the company, PW-1, Sh. Paramjit Singh ex-managing director, and PW-2, Sh. K. G. Chawla, an official of the official liquidator, were produced. On behalf of the respondent, Kartar Singh, himself appeared as RW-1. No other evidence was led. By way of documentary evidence, the petitioner produced accounts of the respondent as per ledger maintained by the company in due course of its business as exhibit PW-1/2. Exhibit PW-2/2 is the acknowledgment due receipt showing service of the notice sent by the official liquidator to the respondent.

It has been stated by PW-1, Paramjit Singh, ex-managing director of the company, that Kartar Singh, respondent, took a sum of Rs. 20,400 as loan. After taking into consideration the repayment made by him a sum of Rs. 16,245 is still payable by him as debt to the company, which has been shown outstanding against Kartar Singh in the statement of accounts filed before the official liquidator. In the cross-examination the veracity of the accounts maintained by the company was not challenged. PW-2, official from the official liquidator, is a formal witness, who has simply stated that according to the statement of affairs and the accounts filed with the official liquidator, a sum of Rs. 16,245 is due from Kartar Singh. Kartar Singh in his statement as RW-1, denied that he had taken a loan of Rs. 20,400 from the company in the year 1983 ; that in fact he had only taken a committee, of Rs. 4,000 for which he used to pay Rs. 100 every month. The working of such like "committees" is that a member of the "committee" can take the "committee" amount by giving a bid and the bid amount is deducted from the total amount of the "committee" and the balance is paid to the highest bidder. On a perusal of the pleadings, the statements of the parties and the statement of accounts, it is clear that the respondent had taken a loan of Rs. 20,400 from the company and as per the statement of accounts, exhibit PW-1/2, it is clear that the respondent had been paying the various amounts on different dates to the company. After giving him credit for the amounts paid still a sum of Rs. 16,245 remains payable by him to the company. The books of account maintained by the company are in the regular course of business and the veracity of these accounts has not been challenged by the respondent. PW-1, Paramjit Singh, has stated in categorical terms that a sum of Rs. 16,245 remains due towards him. The company has been able to discharge onus on issue No. 1 that a sum of Rs. 16,245 remains payable by the respondent and further that he is also liable to pay interest upon it. The second issue is with regard to the limitation. According to counsel for the respondent, the present petition has been filed beyond limitation. The loan was taken in the year 1983 and the petitioner was ordered to be wound up in August, 1985. According to him, after excluding one year from the date of winding up order u/s 458A of the Companies Act and another three years which are given under Article 157, the limitation expired in the year 1989 whereas the present petition was filed in the year 1992, making it clearly time barred. As against this, the case of the company is that the liquidator is entitled to add both the period specified in Section 458A of the said Act, namely, the period of pendency of the winding up petition and one year following the winding up order to the three years period prescribed under Article 137 of the Limitation Act. According to him, the limitation in this case would expire after nine years of the passing of the winding up order, i.e., three years under Article 137 plus the duration of pendency of winding up proceedings and another year from the date of the passing of the winding up order.

Section 458A of the Companies Act is as follows :

458A. Exclusion of certain time in computing periods of limitation.--Notwithstanding anything in the Indian Limitation Act, 1908 (9 of 1908), or in any other law for the time being in force, in computing the period of limitation prescribed for any suit or application in the name and on behalf of a company which is being wound up by the court, the period from the date of commencement of the winding up of the company to the date on which the winding up order is made (both inclusive) and a period of one year immediately following the date of the winding up order shall be excluded."

I do not find any force in the submission of counsel appearing for the respondent. The petition is not barred by limitation as contended by him. After excluding the period during which the proceedings were pending in this court and adding to it the period of one year given u/s 458A of the Act and the period of limitation of three years under Article 137 of the Limitation Act, which would accrue from the date of the winding up order, the present petition is within time. Section 458A starts with a non-obstante clause, that is, notwithstanding anything contrary to the Indian Limitation Act, 1908.

The point in issue is not res integra. The matter has been considered in Unico Trading and Chit Funds (India) P. Ltd. v. S.H. Lohati [1982] 52 Comp Cas 340 by the Karnataka High Court, wherein it was held as under (page 344) ;

"Applying the law to the facts of the case on hand I see that the claim of the official liquidator against the respondents was a legally enforceable claim on October 3, 1975, the date on which the petition for winding up was presented to this court as the pronote was executed on October 8, 1973. Winding up order was made on February 4, 1977, and, therefore, the clock of the law of limitation would come to a stop between October 3, 1975, and February 4, 1977, and for a further period of one year in terms of Section 458A of the Act.

Column 3 of Article 137 of the Indian Limitation Act states that time begins to run when the right to apply accrues. In the case of the present claimant right to apply accrued on February 4, 1977. Thus, the official liquidator had three years plus the maximum advantage of Section 458A of the Act which would be the exclusion of one year plus another year and four months. Thus, the official liquidator could have presented the application within five years and four months from February 4, 1977. Therefore, the application filed on August 22, 1980, is well within time and is not barred by time."

The point was again considered in New Kerala Roadways P. Ltd. v. K.K. Nanu [1989] 66 Comp Cas 715 by the Kerala High Court, wherein it was held as under (page 717) :

"The right of the official liquidator to recover the dues of the company accrues only on and from the date of the winding up order. Under Article 137 of the Limitation Act, the period of limitation, namely, three years, begins to run from the date on which the right to apply, accrues, namely, the date of the winding up order. Thus, on a plain reading of Section 458A of the Companies Act, the exclusion that is to be made u/s 458A of the Companies Act is the period commencing from the date of winding up order. Sections 12 to 15 of the Limitation Act provide for exclusion of time under certain circumstances. It is well-settled that in applying those provisions, the periods excluded have to be added to the prescribed period (see AIR 1935 85 (Privy Council) and Bhagwan Swarup Vs. Municipal Board, Ujhani and Others, .)"

The petition is accordingly held to be within limitation and issue No. 2 is decided against the respondent and in favour of the petitioner.

In view of the findings recorded above, I pass an order that a sum of Rs. 16,245 be recovered from the respondent. No evidence has been led regarding the agreed rate of interest. Keeping in view the circumstances of the case and the rate of interest which was prevalent in the year 1983 when the amount was taken by the respondent, I fix the rate of interest at 12 per cent. per annum which the respondent shall pay from the last date of the transaction, i.e., August 6, 1985, till its payment. There shall be no order as to costs.