A winding up petition cannot be maintained on the basis of a claim barred by time.

( 1 ) THESE petitions, being C. P. 60/81, C. P. 15/8 3, C P. 102/83, C. P. 117/83, C. P. 47/84, C. P, 59/84 and C. P. 84/84, by different creditors, seeking to wind up several companies, on the ground of their deemed inability to pay the debts, forming subject-matter of the petitions, raise a common question, if a claim which became barred by time during the pendency of a petition at the show cause stage, could be a legitimate basis for winding up proceedings, even if it was within time when the petition was filed.

( 2 ) DURING the hearings of the matter on the aforesaid common question, some of the learned Counsel, appearing for the creditors or the companies concerned, did not maintain the distinction between "maintainability" of a petition, the "locus standi of a creditor and the extinction of the remedy on the claim becoming out of time. It is, therefore, necessary at the outset to clear the ground for a proper consideration of the common question.

( 3 ) THE distinct terms "right" and the "remedy" to enforce it are conceptually, as well as qualitatively, different. When a claim becomes barred by time under the law of limitation, the remedy is extinguished but the right survives such extinction. The only exception is provided by Section 27 of the Limitation Act, where the extinction of the remedy also extin guishes the right itself. Where, therefore, a claim against a Company becomes barred by time, the claimant does not cease to be the creditor of the company, and a petition by such a creditor to wind up the company is maintainable, and such a creditor would have the necessary locus standi to move the court for a winding up order as also to seek to prove his debt before the Official Liquidator in the course of winding up. This is so because notwithstanding the bar of limitation, he continues to be a creditor and there is nothing to prevent either a creditor to claim the debt or the company to pay it, even after it has become barred by time. But such a creditor must have a legitimate basis for the winding up order and a justifiable reason for the winding up proceedings. If he has such a basis and the reason or ground for the order and the proceedings, he would be entitled to lay the petition and seek a winding up order.

( 4 ) BUT can a creditor seek a winding up order on the basis of the company s deemed inability to pay the debt which is barred by time ? The answer to this question has to be in the negative. The debt could be a aalid basis for the petition and the winding up order only if the debt that remains unpaid, notwithstanding statutory notice, is both "due" and recoverable. The word "due" in Section 434 of the Companies Act must be reasonably construed to mean a debt which is due, as well as recoverable in law. To hold to the contrary would lead to the anamolous result that the creditors of a joint stock company would be immune from the bar of limitation and have a preferential right as compared to an ordinary creditor. This was also not seriously disputed on behalf of the various petitioners.

( 5 ) IT was, however, contended that the claims in each of these cases were within time when the petitions were instituted and the deemed inability of the Company to pay the debts as on the aforesaid dates would not be affected merely because the claims became barred by time during the pendency of the proceedings. It was further urged that once the petitions were filed, the limitation in relation to the clami ceased to run as if the Suit on the basis of the claim had been filed. The crucial date according to the petitioners was the date of the filing of the petitions and this was sought to be reinforced with reference to the provisions of Section 441 (2) of the Companies Act, according to which, once a winding up order is made, the winding up fo a company shall be deemed to commence at the time of the presentation of the petition for the winding up. This provision, it was urged, embodied the principle of re