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1960 Supreme(P&H) 116
PUNJAB & HARYANA HIGH COURT
G.D.Khosla and Gurdev Singh JJ.
Ram Chand Puri
Versus
Lahore Enamelling, Stamping Co.Ltd.
Letter Patent Appeal No. 39 of 1958,
Decided On : JULY 18, 1960
A debt, which is provable on the date of the filing of a winding up petition, is not barred by limitation, even if it becomes barred by time before the order of winding up is made.
Headnote:
COMPANY - WINDING UP - LIMITATION - DEBT PROVABLE ON DATE OF FILING WINDING UP PETITION - NOT BARRED BY LIMITATION - COMPANIES ACT, 1956, SECTIONS 168, 171, 229 - PROVINCIAL INSOLVENCY ACT, 1920, SECTIONS 28(7), 34(2).
Fact of the Case:
A petition for winding up of a company was presented on 21st April 1952 and the company was ordered to be wound up on 23rd September 1953. A creditor's debt of Rs. 2,359-7-9 was found to be due from the company, but the Company Judge rejected the claim on the ground that it was barred by limitation.
Finding of the Court:
The court held that the debt was not barred by limitation and allowed the creditor's appeal. The court held that the date of the winding up petition is the relevant date for computing limitation, and not the date of the winding up order. The court relied on the provisions of Section 168 of the Companies Act, which provides that a winding up of a company by the Courts shall be deemed to commence at the time of the presentation of the petition for the winding up.
Issues: Whether a debt, which was recoverable and provable on the date of the filing of a winding up petition and becomes barred by time before the order of winding up is made, is a debt which can be proved under the provisions of the Companies Act.
Ratio Decidendi: The court held that the provisions of Section 168 of the Companies Act are analogous to the provisions of Section 28(7) of the Provincial Insolvency Act, which provide that an order of adjudication shall relate back to, and take effect from, the date of the presentation of the petition on which it is made. The court held that the provisions of Section 229 of the Companies Act provide that the same rules shall prevail and be observed with regard to the respective rights of secured and unsecured creditors and to debts provable as are in force for the time being under the law of insolvency with respect to the estates of persons adjudged insolvent.
Final Decision: The court allowed the creditor's appeal and held that the debt of Rs. 2,359-7-9 was provable and not barred by limitation.
Khosla, J.
1. This appeal under Clause 10 of the Letters Patent is directed against an order made by the learned Company Judge on a petition by the Official Liquidator for the settlement of the list of creditors. We are concerned with only one creditor, namely, M/s. Ram Chand Puri and Sons. It has been found as proved that a sum of Rs. 2,359-7-9 was due from the Lahore Enamelling and Stamping Co., Ltd., (in liquidation), to M/s. Ram Chand Puri and Sons. It was, however, contended before the learned Company Judge that this debt was barred by time.
The Company Judge allowed this contention and rejected the claim of the creditor. M/s. Ram Chand Puri and Sons have come up in appeal under Clause 10 of the Letters Patent, and the only question for our consideration is whether the claim is barred by time or not.
2. The petition for winding up was presented on the 21st of April. 1952 and the Company was ordered to be wound up by an order of this Court on the 23rd of September, 1953. It is admitted on all sides that on the date the winding up petition was filed, the debt was within limitation and was, therefore, recoverable by means of a civil suit. The debt became barred during the period which expired between the filing of the application and the order of winding up. The question, therefore, is whether a provable debt is one which is provable on the date on which the winding up order is made or on the date when the application for winding up is made. The learned Judge has taken the view that the date of the winding up petition is not the relevant date. He has come to this conclusion for a number of reasons which he has stated in his judgment. He says, in the first place, that there is no bar against the presentation of a plaint or the institution of other proceedings against a company in respect of which a petition for liquidation has been made until the winding up order is made. He goes on to say:
"A creditor will be incurring risk if he were to speculate on the success of the winding up petition and allow the suit to become barred by efflux of time, hoping that the winding up order would be made."
Therefore, the learned Judge concludes that since a creditor can bring a suit for the recovery of his debt after the winding up petition is made, the limitation against him cannot stop. He took the view that the provisions of Section 168 of the Indian Companies Act cannot be held to control the bar of limitation with respect to suits and other proceedings and, therefore, the claim, which becomes barred by time before the winding up order is made, must be held to be barred by time. Finally, the learned Judge observes:
"There is no principle of law outside the Limitation Act under which limitation can be suspended and exceptions, which ire not provided by the statute, cannot be assumed either on grounds of hardship or of reasonableness." The learned Judge has referred to a number of cases, although he felt that there was no reported case exactly in point, namely, a case in which it has been held that a debt, which was recoverable and provable on the date of the filing of a winding up petition and becomes barred by time before the order of winding up is made, is not a debt which can be proved under the provisions of the Companies Act.
3. In considering the question of limitation, a reference may be made to the provisions of Section 229 of the Companies Act. The relevant portion of this section after omitting unnecessary phrases reads as follows:
"In the winding up of an insolvent company the same rules shall prevail and be observed with regard to the respective rights of secured and unsecured creditors and to debts provable.........as are in force for the time being under the law of insolvency with respect to the estates of persons adjudged insolvent; and all persons who in any such case would be entitled to prove for and receive dividends out of the assets of the company may come in under the winding up and make such claims against
