Judgement Appeal (No. 86 of 1930) from a decree of the High Court (May 14, 1929) made in the winding-up of the Dehra Dun-Mussoorie Electric Tramway Company, Ld. Law Rep. 60 Ind. App. 13 ( 1932- 1933) Hansraj Gupta v. Official Liquidators of Dehra Dun-Mussoorie 190 The above-named company was ordered to be wound up by an order made on March 26, 1926, upon a petition presented on January 26, 1926. The present appeal arose out of an application made by the respondents, the official liquidators, on March 26, 1928, under s. 186, sub-s. 1, of the Indian Companies Act, 1913, praying that the appellants, who as executors of Lala Raghumal were in the list of contributories, should be ordered to pay three sums of Rs. 27,000, Rs. 35,000, and Rs. 7703-13-0, as moneys due from the deceased to the company. By the above-named sub-section " The Court may, at any time after making a winding-up order, make an order on any contributory for the time being settled on the list of contributories to pay, in manner directed by the order, any money due from him or from the estate of the person whom he represents to the company exclusive of any money payable by him or the estate by virtue of any call in pursuance of this Act. The facts giving rise to the three claims are fully stated in the judgment of the Judicial Committee in Hansraj Gupta v. Asthana (reported supra, p. 1). The application was heard by Mukerji and Young JJ., who made an order for payment of the three sums with interest. Upon grounds which appear in the judgment of the Board (Supra at p. 9.) in Hansraj Gupta v. Asthana, the learned judges held that suits by the company to recover the sums in question would not have been barred by the Indian Limitation Act, 1908, before the winding-up order. With regard to the sum of Rs. 35,000 they held that the claim being to recover money paid under a contract which had been discovered to be void, the time would ordinarily have run from the date of the agreement and a suit would have been barred on September 13, 1925 ; but that the company had been kept uninformed of the payment and that therefore art. 95 or art. 95 or art. 120 applied, and accordingly a suit would not have become barred until September 13, 1928, or later. The learned judges held that as the three claims were not time-barred at the commencement of the winding-up, the liquidators, representing the creditors as well as the company, were entitled to an order for payment under s. 186, sub-s. 1, of the Indian Companies Act, 1913. They attached particular weight to the words " at any time " in the sub-section, and rejected the view of the Lahore High Court in Sri Narain v. Liquidator, Union Bank of India (( 1922) I. L. R. 4 Lah. 109.), that under s. 186, sub-s. 1, an order could not be made for payment of a debt which was time-barred at the date of the application. The present appeal was argued together with appeal No. 127 of 1930 (reported supra, p. 1), but by the judgment in that appeal was ordered to be further argued. 1932. June 16, 17, 20, 21 ; Nov. 24. Lionel Cohen K.C. and Wallach for the appellants. Neither of the sums Rs. 27,000 and Rs. 35,000 were recoverable by the company at any time. They were paid as earnest money and were to be set off against sums becoming due from the company; the company having failed to order the goods could not recover the payments. If, however, the Rs. 35,000 was ever recoverable the cause of action arose at the date of the agreement, and was time-barred even before the winding-up. The High Court was wrong in holding that the company did not know of the payment and that consequently the commencement of the period was postponed. The payment was made by the manager of the company who negotiated the contract on its behalf. Each of the claims being time-barred at the date when the application was made the liquidators were not entitled to an order under s. 186 of the Indian Companies Act. It was rightly held in Sri Narain v. Liquidator, Union Bank of India(( 1922) I. L. R. 4 Lah. 109.), that s. 186 does not create a new liability but merely provides a summary method by which the liquidators can enforce existing liabilities. It was rightly held in Sri Narain v. Liquidator, Union Bank of India(( 1922) I. L. R. 4 Lah. 109.), that s. 186 does not create a new liability but merely provides a summary method by which the liquidators can enforce existing liabilities. The sub-section corresponds with s. 101 of the (English) Companies Act, 1862 (now s. 205 of the Act of 1929), and that has been so interpreted Stringers Case (( 1869) L. R. 4 Ch. 475, 483.) ; In re Duckworth (( 1867) L. R. 2 Law Rep. 60 Ind. App. 13 ( 1932- 1933) Hansraj Gupta v. Official Liquidators of Dehra Dun-Mussoorie 191 Ch. 578, 580.); so, too, as to a claim in bankruptcy In re Mansell. (( 1892) 66 L. T. 245.) As there is no period of limitation prescribed the rule of justice, equity, and good conscience applies ; that is particularly so, as s. 186 says merely that the Court " may " make an order Letters Patent of Allahabad High Court, art. 13 ; Bengal, N.-W. P. and Assam Civil Courts Act, 1887, s. 37, sub-s. 2. That rule in this case corresponds with English law Waghela Rajsangji v. Shekh Masludin (( 1886) L. R. 14 I. A. 89, 96.); Muhammad Raza v, Abbas Bandi Bibi. (( 1932) L. R. 59 I. A. 536, 546.) The High Court relied upon Jagannath Prasad v. U. P. Flour and Oil Mills Co. (( 1916) I. L. R. 38 A. 347.), but that case is distinguishable, as the claim there was in respect of calls and was under s. 151 of the Companies Act, 1882, which corresponded with s. 187, not with s. 186 of the Act of 1913. Peoples Industrial Bank v. Mahah Charan Sinha (( 1926) I. L. R. 1 Luck . 153.) also related to a claim for money due in respect of shares allotted. If the liquidators had sued in the name of the company under s. 179 (a) of the Indian Companies Act, instead of applying under s. 186, the Court would have been bound to dismiss the suit under the Indian Limitation Act; it would be anomalous if under s. 186 the Court could order payment, although under s. 179 (a) it could not. A series of decisions in India support the view that the application in this case was not one to which the Indian Limitation Act, 1908, Sch. A series of decisions in India support the view that the application in this case was not one to which the Indian Limitation Act, 1908, Sch. I., art. 181, applies Bai Manekbai v. Manekji Kavasji (( 1880) I. L. R. 7 B. 213.) ; Rahmat Karim v. Abdul Karim (( 1907) I. L. R. 34 C. 672.) ; Jhan Bahadur Singh v. Bailiff of District Court of Tangoo (( 1927) I. L. R. 5 Ran. 384.) ; Shankar Appaji v. Gangaram Bapuji. (( 1928) I. L. R. 52 B. 360.) Pritt K.C. and A. R. Thomas for the respondents. There is nothing in s. 3, or elsewhere, in the Indian Limitation Act which excludes the view that the application now in question was an " application " within art. 181 and accordingly was barred only if made more than three years after the time when the right accrued. If that article applies the application was not barred, as the right could not have accrued before the winding-up order. The words " at any time " in s. 186 cannot be construed so as to exclude the operation of art. 181 and yet as leaving an application under that section subject to limitation. The words in s. 186, sub-s. 1, are " money due " not " money due and recoverable." Money may be " due " although a suit to recover is barred by limitation Nursing Doyal v. Hurryhur Saha (( 1880) I. L. R. 5 C. 897.) ; Sheo Saran Singh v. Mohabir Pershad Shah (( 1905) I. L. R. 32 C. 576.) ; Ex parte Cawley. (( 1889) 34 Sol. Jo. 29.) It is not unreasonable that a person who is not a contributory should be treated under s. 179 of the Act of 1913 more favourably as to limitation than a contributory is upon an application under s. 186. In Sri Narain v. Liquidator, Union Bank of India (I. L. R. 4 Lah. 109.), the claim may have been time-barred at the date of the winding-up ; if, however, the decision was adverse to the respondents contention it was erroneous. In any case the respondents are entitled to succeed as to the item Rs. 35,000, because the cause of action did not arise unti May 14, 1929, when the Court declared that the agreement under which it was paid was void Harnath Kuar v. Indar Bahadur Singh. In any case the respondents are entitled to succeed as to the item Rs. 35,000, because the cause of action did not arise unti May 14, 1929, when the Court declared that the agreement under which it was paid was void Harnath Kuar v. Indar Bahadur Singh. (( 1922) L. R. 50 I. A. 69.) Lionel Cohen K.C. in reply. In Annada Mohan Roy v. Gour Mohan Mullick (( 1922) L. R. 50 I. A. 239.) it was held by the Board that the cause of action to recover a payment made under an agreement discovered to be void arises at the date of the agreement in the absence of special circumstances, which it was pointed out existed in Harnath Kuars case. (( 1922) L. R. 50 I. A. 69.) That the jurisdiction under s. 186 of the Companies Act is merely permissive was recognized in Lahore Bank, Ld. v. Kedar Nath ( 1908, P. R. No. 95.); see also In re Home and Colonial Insurance Co. ([ 1930] 1 Ch. 102, 135.) Dec. 16. The judgment of their Lordships was delivered by LORD RUSSELL OF KILLOWEN. For the facts relevant to this appeal their Lordships refer to the judgment which was delivered in July last in the Privy Council Appeal No. 127 of 1930 Hansraj Gupta Law Rep. 60 Ind. App. 13 ( 1932- 1933) Hansraj Gupta v. Official Liquidators of Dehra Dun-Mussoorie 192 v. Asthana. (Supra, p. 1.) The re-argument, therein foreshadowed, of the appeal No. 86 of 1930, has taken place, and their Lordships now proceed to consider whether all or any of the three sums in question in that appeal (namely, Rs. 27,000, Rs. 35,000 and Rs. 7703), are or is recoverable. The principal and most difficult points turn upon the true construction and effect of the Indian Limitation Act, 1908, because their Lordships are of opinion that, apart from any questions of limitation, the three sums in question are all recoverable by the liquidators. This is obviously so as regards the Rs. 7703. 35,000 and Rs. 7703), are or is recoverable. The principal and most difficult points turn upon the true construction and effect of the Indian Limitation Act, 1908, because their Lordships are of opinion that, apart from any questions of limitation, the three sums in question are all recoverable by the liquidators. This is obviously so as regards the Rs. 7703. As regards the other two sums, it was contended by the appellants that these were not recoverable upon the ground that in each case the sum was paid as a deposit or earnest to secure the due fulfilment of a contract, and that since the company in each case made default and failed to carry out the contract, the executors were entitled to retain the moneys. Their Lordships are unable to accept this contention, which depends upon a true view of the construction of the respective contracts. Suffice it to say that, having heard the arguments adduced, and having considered the relevant documents, their Lordships are of opinion that the sums of Rs. 27,000 and Rs. 35,000 were not, nor was either of them, paid as a deposit or earnest money. They were payments in advance or anticipatory payments, and nothing else. Their Lordships now proceed to consider the questions of limitation, the solution of which depends, in their view, upon the true construction and effect of the Indian Limitation Act, 1908, alone. Decisions in relation to English statutes do not appear to be of assistance. The material section of the Indian Act is s. 3, which rung thus " Subject to the provisions contained in ss. 4 to 25 (inclusive), every suit instituted, appeal preferred, and application made, after the period of limitation prescribed therefor by the first schedule, shall be dismissed, although limitation has not been set up as a defence. The material section of the Indian Act is s. 3, which rung thus " Subject to the provisions contained in ss. 4 to 25 (inclusive), every suit instituted, appeal preferred, and application made, after the period of limitation prescribed therefor by the first schedule, shall be dismissed, although limitation has not been set up as a defence. " Explanation.—-A suit is instituted, in ordinary cases, when the plaint is presented to the proper officer ; in the case of a pauper, when his application for leave to sue as a pauper is made ; and, in the case of a claim against a company which is being wound up by the Court, when the claimant first sends in his claim to the official liquidator." Unless the application which the liquidators made on March 26, 1928, was a "suit instituted " or an " application made," for which a period of limitation is prescribed by the first schedule, no question of limitation in regard thereto can arise. There is no definition of suit in the Act, beyond the provision, contained in s. 2, that unless there is anything repugnant in the subject or context, "suit" does not include an appeal or an application. The word "suit" ordinarily means, and apart from some context must be taken to mean, a civil proceeding instituted by the presentation of a plaint. The application of the liquidators would not be a suit within s. 3, if that section stood alone, unaccompanied by the explanation. An argument, however, was addressed to their Lordships, founded upon the explanation, to this effect That the explanation shows by its concluding sentence that a claim against a company in compulsory liquidation (even though made by a proceeding not instituted by the presentation of a plaint) is considered to be a u suit instituted " within those words in s. 3, and that a claim similarly made by or on behalf of such a company must necessarily, or may similarly, be treated as a " suit instituted " within the section. Their Lordships are unable to accede to this contention. Even if such a claim against such a company could be held by virtue of the explanation to be a “suit instituted" within s. 3, there is nothing in the explanation to justify a similar holding in regard to a claim by such a company. Their Lordships are unable to accede to this contention. Even if such a claim against such a company could be held by virtue of the explanation to be a “suit instituted" within s. 3, there is nothing in the explanation to justify a similar holding in regard to a claim by such a company. But their Lordships do not accept the view that a claim against such a company (not made by a proceeding instituted by the Law Rep. 60 Ind. App. 13 ( 1932- 1933) Hansraj Gupta v. Official Liquidators of Dehra Dun-Mussoorie 193 presentation of a plaint) is by virtue of the explanation to be considered to be a " suit instituted " within the section. The explanation is not concerned with the question of what is a suit, or is to be considered a suit, within s. 3. It is addressed to quite a different subject-matter. It assumes the existence of a suit which has been instituted by the presentation of a plaint, and is concerned only with the point of time at which that suit is for the purpose of s. 3 to be treated as being instituted. The ordinary rule is stated by the explanation to be that the suit is instituted when the plaint is presented ; but to this two exceptions are prescribed—namely, (1.) in the case of a suit by a pauper, the time at which that suit is (for the purposes of s. 3) instituted, is to be taken as an earlier date, namely, the date when the application for leave to sue as a pauper was made ; and (2.) in the case of a suit against a company which is being wound up by the Court, the institution of the suit is (for the purposes of s. 3) advanced also to an earlier date—namely, the date when the claim was first sent in to the official liquidator. Their Lordships are unable to find in an explanation, which on its face only deals with the point of time at which suits are instituted within the meaning of s. 3, any sufficient justification for extending the meaning of the word "suit" in that section. The application by the liquidators cannot therefore be dismissed as being a " suit instituted " after the prescribed period of limitation. The application by the liquidators cannot therefore be dismissed as being a " suit instituted " after the prescribed period of limitation. The application of the liquidators must therefore be treated as an " application made " under s. 3 ; and the next inquiry must be whether any period of limitation is " prescribed therefor by the first schedule " to the Indian Limitation Act. It is common ground that the only article in that schedule which could apply to such an application is art. 181 but a series of authorities commencing with Bai Manekbai v. Manekji Kavasji (I. L. R. 7 B. 213.) has taken the view that art. 181 only relates to applications under the Code of Civil Procedure, in which case no period of limitation has been prescribed for the application. But even if art. 181 does apply to it, the period of limitation prescribed by that article is three years from the time when the right to apply accrued, which time would be not earlier than the date of the winding-up order, March 26, 1926. The application of the liquidators was made on March 26, 1928, well within the three years. The result is that from either point of view the application by the liquidators, if otherwise properly made under and within the provisions of s. 186 of the Indian Companies Act, is not one which must be dismissed by reason of s. 3 of the Indian Limitation Ace. It is either an application made within time, or it is an application made for which no period of limitation is prescribed. The case may be a casus omissus. If it be so, then it is for others than their Lordships to remedy the defect. There is, however, another aspect of the case in which the last-mentioned Act plays a most important part, and that is in considering whether the three sums which the liquidators seek by their application to recover from the appellants were at the date of that application " money due " within the meaning of s. 186. If they were not, then the section had no application and the Court would have had no power to make the order which it made. If they were not, then the section had no application and the Court would have had no power to make the order which it made. From this point of view it is necessary to treat the three items separately, for the purpose of seeing whether if on March 26, 1928, the liquidators acting under the powers conferred upon them by s. 179 (a) of the Indian Companies Act had in the name of the company instituted a suit against the testators executors for the recovery of any of those items, that suit would of necessity have been dismissed by reason of the Indian Limitation Act. As regards the Rs. 35,000, this sum, whether paid under a void agreement with the company, or paid without the companys knowledge or authority, was (subject to a point to be mentioned later) immediately after payment, recoverable by the company as money had and received. In other words, it was repayable on September 13, 1922. The period within which a suit by the company to recover the Law Rep. 60 Ind. App. 13 ( 1932- 1933) Hansraj Gupta v. Official Liquidators of Dehra Dun-Mussoorie 194 amount would have to be instituted is, under art. 62 of the first schedule, three years. The debt was accordingly time-barred both before the date of the winding-up order (March 26, 1926) and before March 26, 1928. In regard to the item Rs. 27,000, the company could have recovered this by a suit instituted before the expiry of the period of three years named in art. 51 in the first schedule, a period which in their Lordships view began to run on July 1, 1923, when the second shipment of goods fell to be delivered under the relevant contract. This debt was accordingly not time-barred by suit at the date of the winding-up order, but was so time-barred when the liquidators made their application under s. 186. In regard to the item Rs. 7703, balance of account, a suit by the company to recover it would fall within art. 85 of the first schedule and would have to be dismissed if not instituted within three years of March 31, 1924, being the end of the last accounting year on which the last item admitted or proved was entered in the account. This item is in the same situation for the matter now under consideration as is the second item. 85 of the first schedule and would have to be dismissed if not instituted within three years of March 31, 1924, being the end of the last accounting year on which the last item admitted or proved was entered in the account. This item is in the same situation for the matter now under consideration as is the second item. The important feature for this purpose is the fact that all three items were statute-barred by suit when the liquidators made their application under s. 186. If on March 26, 1928, the liquidators, instead of proceeding in their own name as applicants under s. 186, had in pursuance of their powers under s. 179 (a) already referred to instituted a suit in the name of the company by the presentation of a plaint, the Court must of necessity have dismissed that suit under the Indian Limitation Act. Now, in considering the meaning and effect of s. 186 it is impossible to overlook the fact that it is verbatim identical with the corresponding section in the legislation of this country, a section which dates back some seventy years to 1862, and which has appeared in our company legislation ever since. It is therefore a section with an ancestral history. Three features of the section call for notice (1.) It is concerned only with moneys due from a contributory, other than money payable by virtue of a call in pursuance of the Act. A debtor who is not a contributory is untouched by it. Moneys due from him are recoverable only by suit in the companys name. (2.) It is a section which creates a special procedure for obtaining payment of moneys ; it is not a section which purports to create a foundation upon which to base a claim for payment. It creates no new rights. (3.) The power of the Court to order payment is discretionary. It may refuse to act under the section, leaving the liquidator to sue in the name of the company, and it will readily take that course in any case in which it is made apparent that the respondent under this procedure, if continued, would be deprived of some defence or answer open to him in a suit for the same moneys. The old s. 101 of the English Act of 1862 has ever since 1866 been judicially interpreted and administered in accordance with the views expressed in Stringers Case (L. R. 4 Ch. 475, 484.)—namely, that the section is one which provides summary pro ceedings against debtor-contributories to avoid proceedings in different Courts and to permit a single proceeding in the winding-up Court—but " In those summary proceedings every objection is just as open to the person sought to be charged as it would have been if a bill had been filed." In this country it is difficult to conceive a case in which, so far as limitation is concerned, the section should so operate as to deprive a man of a defence to a claim made by the liquidator which would have been effective against the same claim brought against him by an action in the companys name. Whether, in view of the particular terms of the Indian Limitation Act already referred to, such a case could happen in India depends upon the meaning to be attributed to the words in the section " any money due from him or from the estate of the person whom he represents to the company." And their Lordships are satisfied that the position in this respect is, in India, the same as in this country, for the reason that in view of the place and context in which these words are found, they must be confined in Law Rep. 60 Ind. App. 13 ( 1932- 1933) Hansraj Gupta v. Official Liquidators of Dehra Dun-Mussoorie 195 their Lordships judgment to money due and recoverable in a suit by the company, and they do not include any moneys which at the date of the application under the section could not have been so recovered. Their Lordships are glad to find that this view has already prevailed in India. In the case of Sri Narain v. Liquidator, Union Bank of India (I. L. R. 4 Lah. 109.) it was held that a debt time-barred (and therefore unenforceable in a suit) could not be enforced by a summary order under s. 186, on the ground that the section does not create new liabilities or confer new rights, but merely creates a summary procedure for enforcing existing liabilities. 109.) it was held that a debt time-barred (and therefore unenforceable in a suit) could not be enforced by a summary order under s. 186, on the ground that the section does not create new liabilities or confer new rights, but merely creates a summary procedure for enforcing existing liabilities. It is true that so far as can be gathered from the report it would seem probable that the debt there in question had become time-barred before the liquidation began, but the decision is not based upon that fact, but upon a view of the section coinciding with the views expressed long ago in Stringers Case. (L. R. 4 Ch. 475.) The learned judges, in the present case, took the erroneous view that once the winding-up commenced there could be no further application of the rule of limitation in regard to any debt due to the company and not then already time-barred. Their Lordships know of no justification for this view. In this respect there is no analogy between the position of a debtor to, and a creditor of, a company in liquidation. The learned judges also considered that the Lahore case was in conflict with a decision in the Allahabad Court, Jagannath Prasad v. U. P. Flour and Oil Mills Co., Ld. (I. L. R. 38 A. 347.) This, however, is a misconception. The last-mentioned case had no relation to s. 186. It was a case relating to money due on shares in the company which was in liquidation, the liability for which on a winding-up became a statutory liability under s. 156 of the Indian Companies Act, 1913. In their Lordships opinion the case of Sri Narain v. Liquidator, Union Bank of India (I. L. R. 4 Lah. 109.) was rightly decided, and accordingly there was no power in the Court under s. 186 to order payment to the liquidators of any of the three items in question. The liquidators made a new submission upon the occasion of the re-argument in regard to the sum Rs. 35,000. They claimed that under s. 65 of the Indian Contract Act (IX. of 1872) they only became entitled to recover the Rs. The liquidators made a new submission upon the occasion of the re-argument in regard to the sum Rs. 35,000. They claimed that under s. 65 of the Indian Contract Act (IX. of 1872) they only became entitled to recover the Rs. 35,000 when the agreement under which it was paid was discovered to be void, and that this discovery was not made until the litigation which culminated in the judgment of May 14, 1929, so that this right never became time-barred. Their Lordships cannot accede to this contention. In the absence of special circumstances (and none exist here) the time at which an agreement is discovered to be void within the meaning of s. 65 is the date of the agreement, September 13, 1922 see Annada Mohan Roy v. Gour Mohan Mullick. (L. R. 50 I. A. 239.) Their Lordships are of opinion that this appeal should be allowed and that the decree of May 14, 1929, should be set aside, and that in lieu thereof a decree should be made dismissing the application of the liquidators with costs and they will humbly advise His Majesty accordingly. The respondents must pay the appellants costs of this appeal.