NEW KERALA ROADWAYS (P) LTD. v. NANU — 1988 DIGILAW 311 (KER)

Judgment :- 1. Both these claims are filed by the Official Liquidator who is the Liquidator of New Kerala Roadways (P) Limited in liquidation. Both these claims are for realising unpaid call amounts together with interest thereon. In CC. No. 205 of 1987 the amount claimed is Rs. 1,088/- made up of the principal amount of Rs. 680/-and interest Rs. 408/-. In CC. No. 210 of 1987 the amount claimed is Rs. 3,008/- made up of the principal amount of Rs. 1,880/- and interest Rs. 1,128/-. 2. The contentions raised by respondents are similar. Since similar questions are raised, these claims are disposed of by this common judgment. 3. According to the respondents, the claims are barred by limitation. According to them, Art.137 of the Limitation Act applies and the prescribed period is 3 years from the date of the winding up order. There is a further contention that there was no proper resolution by the Board of Directors for making the call. 4. Date of commencement of the winding up is 20-2-1981. Winding up order was passed on 23-3-1982. These claims were filed on 7-4-1987. According to Sri T. V. Ramakrishnan, learned counsel for the Official Liquidator, the Liquidator is entitled to exclude two periods under S.458A of the Companies Act, namely (1) period of pendency of winding up petition and (2) one year immediately following the winding up order. The period of pendency of the winding up petition in this case was 1 year 1 month and 2 days. Therefore learned counsel submitted that I year 1 month and 2 days plus 1 year and the 3 years prescribed under Art.137 of the Limitation Act brings the last date of filing the claims to 24-4-1987, since the date of winding up order was 23-3-1982. On the other hand, the contention of learned counsel for the respondents was that if the period of pendency of the winding up is to be taken into account, time will have to be calculated from the date of filing of the winding up petition itself. In other words, the Liquidator is only entitled to 4 years from the date of winding up order. 5. Thus there is no dispute regarding the one year exclusion following the winding up order. In other words, the Liquidator is only entitled to 4 years from the date of winding up order. 5. Thus there is no dispute regarding the one year exclusion following the winding up order. The only controversy is whether the period of pendency of the winding up petition should be excluded from the period from the date of winding up order or the period from the date of filing of the winding up petition. 6. S.458 A of the Companies Act is as follows: "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 period of one year immediately following the date of the winding up order shall be excluded." 7. 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 Art.137 of the Limitation Act the period of limitation namely 3 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 S.458A of the Companies Act the exclusion that is to be made under S.458A of the Companies Act is the period commencing from the date of winding up order. S.12 to 15 of the Limitation Act provides 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 Maqbul Ahmad v. Onkar Pratap (AIR. 1935 P.C. 85) and Bhagwan Swarup v. Municipal Board Ujhani (AIR. 1970 Allahabad 652). 8. The Supreme Court in Kerala State Electricity Board v. T.P. Kunhaliumma (1976) 4 SCC. 634: AIR. 1977 SC. 282) held as follows: 1118 The words "any other application" under Art.137 cannot be said on the principle of ejusdem generis to be applications under the Civil Procedure Code other than those mentioned in Part I of the third division. 8. The Supreme Court in Kerala State Electricity Board v. T.P. Kunhaliumma (1976) 4 SCC. 634: AIR. 1977 SC. 282) held as follows: 1118 The words "any other application" under Art.137 cannot be said on the principle of ejusdem generis to be applications under the Civil Procedure Code other than those mentioned in Part I of the third division. Any other application under Art.137 would be petition or any application under any Act. But it has to be an application to a court for the reason that S.4 and 5 of the 1963 Limitation Act speak of expiry of prescribed period when court is closed and extension of prescribed period if applicant or the appellant satisfies the court that be had sufficient cause for not preferring the appeal or making the application during such period." Therefore the Article that is applicable in this case is 137. 9. Learned counsel for respondents relied on Mohamed Akbar v. Associated Banking Corpn. (1950 (XX) Com. Cases 325) where the Bombay High Court held as follows: "It is a well established principle of the law of limitation that once limitation begins to run no subsequent event will prevent the time from running and no authority has been cited, and there is nothing in principle to substantiate the proposition put forward by Mr, Seervai that although limitation began to run under Art.112 from the date when the call was made payable the subsequent order of winding up the company stopped limitation continuing to run and a new period of limitation has to be calculated from he date of the order of winding up". 10. However, in Voluntary Liquidator Bharat Traders Ltd. v. Rattan Singh (1978 (48) Com. Cases 427) the Punjab & Haryana High Court while considering as application under S.518 read with S.418 of the Companies Act, 1956 adopted the dictum laid down in Bharat Traders Ltd. (In Liquidation) v. Sadhu Singh (1968(38) Comp. Cases 537) and held as follows; "The main contention of the learned counsel for the respondent thus being negatived, the only other question that remains for consideration is whether there is any limitation period fixed for the court passing such an order and if so. what that provision is? Cases 537) and held as follows; "The main contention of the learned counsel for the respondent thus being negatived, the only other question that remains for consideration is whether there is any limitation period fixed for the court passing such an order and if so. what that provision is? The contention of the learned counsel for the respondent was that these proceedings are in the nature of a suit, for which he has to take the permission as laid dawn in S.512 and for a suit, limitation prescribed in the Limitation Act is three years and that this application was made more than three years after the date of winding up proceedings and even if the terminus a quo is taken to be the date of winding up, this application was barred by time, being in the nature of a suit. I do not find myself in agreement with this contention. Once the provisions of S.468 are found applicable, then that section provides that the court can pass an order 'at any time'. No limitation is laid and the matter is entirely left to the discretion of the court". On this reasoning the court reversed the finding chat the claim was barred by time. 11. In Official Liquidator v. Kadir (1977 KLT. 39) this Court held as follows: "3. From the above conclusion it follows that a right to resort to the summary procedure by way of an application accrues to the Liquidator representing the company only on the commencement of the winding up. Till then this is not a right available to the Company. The Limitation Act has prescribed periods of limitation to file suit and applications. A claim application is not a suit. In Bank of Deccan Ltd. (in liquidation) v. E. K. John & others this Court bad occasion to consider whether a claim is in the nature of a suit or a suit and it was held that it is not. That was in connection with the interpretation of S.3 of Act 30 of 1975. The same principle applies to the expression 'suit' used in the Limitation Act. In Hansaraj v. Hehra Dun M.E.T. Co. (AIR 1933 PC. That was in connection with the interpretation of S.3 of Act 30 of 1975. The same principle applies to the expression 'suit' used in the Limitation Act. In Hansaraj v. Hehra Dun M.E.T. Co. (AIR 1933 PC. 63) their Lordships of the Privy Council bad occasion to consider whether the periods of limitation provided for suits in the Limitation Act will apply to the applications made by the Liquidator under the Companies Act and their Lordships held that the Liquidator's application to realise an asset due to the company is not a suit. I respectfully agree with the principle laid down therein and applying it I hold that the periods of limitation prescribed by the Limitation Act for suits do not apply to the claim applications filed by the Liquidator. 4 The question is therefore when can the Liquidator's right to apply accrue; This right to apply accrues to him when the winding up order was passed or when a provisional liquidator is appointed. Previously the company's remedy was only by way of a suit. A new remedy to make a claim application accrued only when the company is wound up" 12. In Faridabad Cold Storage v. Official Liquidator of Ammonia Supplies Corporation (P) Ltd. (1978 Com. Cases 432: AIR. 1978 Delhi 158) a Full Bench of the Delhi High Court held as follows: "One of the basic principles for interpretation of statutes is that different provisions in the Act ought to be harmoniously construed so that they do not militate against each other. Keeping this principle of construction of statutes in view and for the purpose of avoiding anomalous situations, the expression "any claim" occurring in S.446 (2) of the Act will have to be interpreted as a claim which is legally enforceable. We are, therefore, of the considered opinion that the expression "any claim" in clause (b) of S.446 (2) of the Act means any claim enforceable at law. The next question which arises is as to the date on which it is to be seen whether the claim was enforceable at all or not. We are, therefore, of the considered opinion that the expression "any claim" in clause (b) of S.446 (2) of the Act means any claim enforceable at law. The next question which arises is as to the date on which it is to be seen whether the claim was enforceable at all or not. The right to avail of the remedy by filing a claim petition, as against the suit, conferred by clause (b) of S.446 (e) can be availed of only in a court which is winding up the company and, therefore, it goes without saying that the right to avail of the remedy provided by the aforesaid clause (b) will arise only after the passing of the winding-up order. So long as the winding-up order is not passed, no claim can be preferred under clause (b) of S.446 (2). Under S.458A. which we have already reproduced above, apart from the period between the date of the commencement of the winding up of the company and the date on which the winding-up order, a period of one year immediately following the winding-up order is also excluded for purposes of computing the limitation. As the right to avail of the remedy provided by clause (b) of S.446 (2) of the Act arises only after the passing of the winding-up order, the appropriate date to be seen for purposes of determining whether the claim was enforceable at law or not is the date of the winding-up order. Of course, the claimant will be entitled to the full benefit of S.458A of the Act." 13. I am in respectful agreement with the reasoning of this Court in Official Liquidator v. Kadir (1977 KLT. 39) and that of the Delhi High Court in Faridabad Cold Storage v. Official Liquidator of Ammonia Supplies Corporation (P) Ltd. (AIR 1978 Delhi 158- F.B.). Accordingly I hold that the liquidator is entitled to add both the periods specified in S.458A of the Companies Act to the 3 year period prescribed in Art.137 of the Limitation Act. Therefore I hold that the claims are not barred by limitation. 14. I am fortified in coming to the above conclusion by the following principles usually adopted in interpreting the provisions relating to limitation. Therefore I hold that the claims are not barred by limitation. 14. I am fortified in coming to the above conclusion by the following principles usually adopted in interpreting the provisions relating to limitation. It is well settled that the language of an enactment especially like the Limitation Act must receive its natural meaning (see for example Narendra Nath Sircar v. Basini Dasi, I.L.R. 23 Calcutta 563-P.C. and Abhiram Goswami v. Shyama Charan Nandi (I.L.R. 36 Calcutta 1003 at 1014 P. C.). The courts have noticed that the fixation of periods of limitation must always to some extent be arbitrary and may frequently result in hardship. However, the courts have held that in considering such provisions equitable considerations are out of place and strict grammatical meaning of the words is the only safeguide. (See Kunju Naina v. Eapen Chacko, (AIR 1954 TC. 499) Boota Mal v. Union of India (AIR 1962 SC 1716) and Siraj-ul-haq Khan v. Sunni Central Board of Wakf (1959 SCJ. 367.375). The courts have also held that where the language is dubious the construction should be that which favours the right to sue rather than that which bars the right. (See Jethmal v. Ambsingh (AIR 1955 Rajasthan 97-FB.) and Raghuraj Singh v. Sobhaman (AIR 1951 Allahabad 485 FB.). 15. In that view it is not necessary to consider the contention that in any case the Liquidator is entitled to approach this Court under S.470 of the Companies Act for making a call and that these claims may be treated as such a prayer. 16. On the merits the contentions raised by respondents cannot be accepted. In CC. 205 of 1987, where the claim is for an amount of Rs. 1,088/-out of which the principal amount is Rs. 680/-, the contention is that the 1st and 2nd calls were remitted by the respondent in full. According to the respondent, the call on 12-2-1977 was highly suspicious since no resolution was seen passed regarding the call on 12-2-1977 and directors have not signed the resolutions regarding the call made. The call made on 5-4-1977 is also suspicious. The respondent remitted a total sum of Rs. 3,156/- without there being proper calls. The calls made on 30-11-1976 and 5-4-1977 were subsequently cancelled in 1977 itself. It was therefore contended that no unpaid call amount is due from the respondent. The contention of the respondent in CC. The call made on 5-4-1977 is also suspicious. The respondent remitted a total sum of Rs. 3,156/- without there being proper calls. The calls made on 30-11-1976 and 5-4-1977 were subsequently cancelled in 1977 itself. It was therefore contended that no unpaid call amount is due from the respondent. The contention of the respondent in CC. No. 210 of 1987 is substantially the same, excepting for the fact that the amount paid by him varies. The respondent therein remitted a total sum of Rs. 9,080/-, according to him, without proper calls. 17. These claims were tried together. Ext. A-1(a) is the share ledger in respect of the respondent in C.C. No. 205 of 1987. He was the owner of 42 shares. Ext. A-1 (b) is the share ledger in the name of the respondent in CC. 210 of 1987 who was holding 120 shares. As per Ext. A-2(a) share transfer certain shares were transferred in the name of the respondent in CC. No. 210 of 1987. The minutes of the Board meeting held on 2-2-1977 is Ext. A-2 (c) and the resolution relating to the meeting held on 5-4-1977 wherein the Board decided to call Rs. 40/- per share is marked as Ext. A-2 (c). By Ext. A-3(a) resolution of the Board meeting held on 13-7-1978 the call for Rs. 40/- per share was cancelled. By Ext. A-2 (d) resolution dated 27-9-1978, Ext. A-3 (a) resolution was cancelled. Ext. A-2 (d) meeting was attended by the respondent in C. C. 210 of 1987, who was a director of this company. It is on this basis that the Liquidator filed these claims for arrears of call money. In C C. No. 205 of 1987 the total call amount was Rs. 3,836/-, out of which respondent paid Rs. 3,156/-. The claim is for the balance amount of Rs. 680/-and interest. The Liquidator has produced the notice as Annexure A to the replication which is marked as Ext. A-4. The notice in C. C. No. 210 of 1987 is marked as Ext. A-6. In Exts. A-1 (a) and A-1(b) the respective amounts paid by the respondents namely Rs. 3,156/- and Rs. 9,080/- are seen credited. Learned counsel for the respondents contended that there are certain corrections in Ext. A-2 (d) minutes book and two minutes books were maintained for the same period and that is highly suspicious. A-6. In Exts. A-1 (a) and A-1(b) the respective amounts paid by the respondents namely Rs. 3,156/- and Rs. 9,080/- are seen credited. Learned counsel for the respondents contended that there are certain corrections in Ext. A-2 (d) minutes book and two minutes books were maintained for the same period and that is highly suspicious. In this connection it may be mentioned that Ext. A-2 (d) and several other resolutions were passed in Board meetings attended by the respondent in C. C. No. 210 of 1987. It was up to him to explain all these matters in court. He did not go to the box. Therefore such contentions cannot be accepted. 18. In the claims 12 per cent interest from 23-3-1982 is claimed. There is no resolution in the minutes regarding payment of interest. Under the circumstances interest at the rate of 6 per cent per annum from the date of filing of the claim namely 7-4-1987 alone is allowed. The claims are decreed for the respective principal amounts together with interest at 6 per cent on the respective principal amounts from 7-4-1987 till date of payment with costs.