The judgment establishes that the law of limitation applies to claims made by the Official Liquidator, with the possibility of exclusion of time under Section 458A of the Companies Act, 1956, and emphasizes the need for appropriate measures to have a transfer declared as void.

Heard the Counsel for the Official Liquidator and the learned Senior Advocate Sri K.G. Raghavan, appearing for the Counsel for the respondent.

2. It is the case of the Official Liquidator that the company in liquidation, M/s. Mysore Kirloskar Limited, had been ordered to be wound up by this Court, by an order dated 1-4-2004 in Company Petition No. 166 of 2001 and he has been appointed as the Official Liquidator by virtue of Section 449 of the Companies Act, 1956 (hereinafter referred to as the 'Act', for brevity).

3. The present application is filed seeking cancellation of a lease deed entered into between the erstwhile management of the company in liquidation and M/s. Kirloskar Institute of Advanced Management Studies Limited (hereinafter referred to as the 'KIAMSL', for brevity).

It is alleged that the erstwhile management had executed the lease agreement for a period of 28 years commencing from 22-1-2000, on a lease rent of Rs. 1250/- per month in respect of land measuring 6.29 acres. In terms of Section 531-A of the Act, the lease agreement entered into between the company in liquidation and the said 'KIAMSL' is invalid and void against the liquidator and is also prejudicial to the interest of the creditors, workers and contributories of the company in liquidation. In this regard, it is pointed out that the factory premises of the company in liquidation has been closed on 31-12-2000 and the winding up petition was filed on 14-3-2000 and the order of winding up was passed on 1-4-2004. A lease deed was said to have been entered into between the parties on 22-1-2000, which is 1 month and 22 days before the presentation of the winding up petition and therefore in terms of Section 531-A of the Act, it was clearly void and hence, the present application.

4. The learned Counsel for the Official Liquidator would submit that the lease deed, on the face of it, is executed only to defeat the object of winding up and to ensure that the assets of the company are kept out of the hands of the Official Liquidator. As seen from the terms of the lease deed, the lease amount is a paltry sum of Rs. 1,250 per month in respect of a vast extent of land measuring over 6.29 acres and that the transaction having been entered into, just prior to the presentation of the winding up petition, would fall within the mischief of Section 531-A of the Act.

The application is hotly contested by the respondent-lessee and in view of which, this Court had directed that the parties tender evidence in support of their respective claims. The evidence has also been recorded in the present case on hand to demonstrate that even prior to the lease deed, the respondent had been put in possession as a licensee and even if the lease deed were to be cancelled, the possession having been continued as a licensee over a period of time, the respondent could not be disturbed otherwise than under due process of law etc.

5. The learned Senior Advocate Sri Raghavan, appearing for the Counsel for the respondent would however insist that the application could be disposed of on a preliminary objection as regards limitation. In this regard, he would point out that having regard to the very tenor of Section 458-A and giving the benefit of exclusion of time in computing the period of limitation, it was incumbent on the Official Liquidator to demonstrate that the present application was filed in time. In this regard, he would point out that the lease deed is dated 22-1-2000 and the petition for winding up was filed on 14-3-2000 and the winding up order was passed on 1-4-2004 and the present application is filed as on 27-7-2011. Therefore, accommodating the period during which the petition was filed and the winding up order was passed, would be 5 years and 15 days. And giving the benefit of the period of 1 year from the date of the winding up order, within which time, the application could be filed and also the period of limitation prescribed in Article 58 of the Schedule to the Limitat