Calcutta High Court
Bangur Foundation Limited vs Esjey Corporation on 20 March, 2003
Equivalent citations: 2004(1)CHN621
Author: Altamas Kabir
Bench: Altamas Kabir
JUDGMENT Altamas Kabir, J.
1. This appeal is directed against the order dated 7th January, 2003, passed by the learned Company Judge on an application filed by the appellant for recalling of an order of winding up passed by the learned Company Judge on 27th June, 2002. As will appear from the order impugned in the appeal, the application for recalling the order of winding up was made mainly on the grounds that (1) no notice of the winding up petition had been served upon the company which, as a result, could not represent itself when the order of winding up was passed and (2) the filing of the winding up petition was barred by limitation.
2. On the first ground the learned Company Judge observed that the order of winding up had been passed after giving public notice in two newspapers. The learned Judge further observed that even if it was assumed that the copy of the winding up petition had not been received by the appellant at the preadmission stage, the company could have appeared at the time of final hearing and raised the objections which it was raising in the application for recalling of the winding up of the order. Furthermore the winding up petition had already taken a representative character upon publication of notice.
3. On such considerations, the learned Company Judge rejected the first contention raised on behalf of the appellant relating to service of notice.
4. Regarding the second question, the learned Company Judge was of the view that under Section 433 of the Companies Act an unsecured creditor could apply for winding up provided he had a just claim, including a decretal claim. Repelling the submission made on behalf of the appellant that since no period of limitation had been prescribed under Section 434 of the above Act, Article 137 of the Limitation Act, 1963, would have application, the learned Company Judge held that since the decree was capable of being executed within a period of 12 years, the claim under the decree must be held to be a just claim which could be enforced within the said period in a winding up proceeding.
5. Apart from the question as to whether the appellant company had notice of the winding up proceedings before the winding up order was passed, this appeal raises an interesting question as to whether a winding up petition is maintainable on the basis of a decree of a Civil Court in respect of a money claim after a period of three years from the date of the decree but within 12 years thereof.
6. Appearing in support of the appeal, Mr. Mukti Ghosh reiterated the first point urged by him for recalling of the order of winding up and submitted that notice of the winding up petition had not been served on the company prior to the passing of the winding up order, thus depriving the appellant company of its right to dispute the claim as raised on behalf of the petitioning creditor. On the second question, Mr. Ghosh submitted that the learned Company Judge had misconstrued the provisions of Section 434 of the Companies Act, 1956, since it is well-established that in the absence of any period of limitation indicated in the said section, Article 137 of the Limitation Act, 1963, would apply to a proceeding thereunder.
7. Mr. Ghosh urged that a money decree was in the nature of a money claim which stood barred three years after the passing of the decree and could not be the basis of a winding up petition. Mr. Ghosh hastened to add that the said position would not prevent the decree-holder from putting such a decree into execution within a period of 12 years in proceedings for execution but not by way of a winding up petition.
8. In support of his aforesaid contention Mr. Ghosh firstly referred to the decision of the Hon'ble Supreme Court in the case of Kerala State Electricity Board, Trivandum v. T.P. Kunhaliumma, wherein it was held that Article 137 of the Limitation Act applies to any petition or application filed under any Act, which according to Mr. Ghosh would also include the Companies Act, 1956 and Section 434 thereof.
9. Mr. Ghosh then referred to a Single Bench decision of this Court in the case of Standard Brands Limited, reported in 79 Tax L.R. Page 1613, wherein a winding up application filed by the Additional Registrar of Companies, West Bengal after obtaining sanction under Section 439(5) of the Companies Act, 1956, was challenged on the ground that since the same had been filed more than five years after sanction had been obtained, the same was barred by limitation in view of the application of Article 137 of the Limitation Act, 1963, and such challenge was sustained.
10. Mr. Ghosh placed great emphasis on another Single Bench decision of this Court in the case of Rameswar Prosad Kejriwal and Sons Ltd. v. Garodia Hardware Stores, reported in 108 Company Cases Page 187, in which the learned Judge categorically held that since the debt had crystallised in a decree of the year 1997, the winding up petition could not be filed after a period of three years, that is after the period of limitation prescribed under Article 137 of the Limitation Act, 1963.
11. Mr. Ghosh urged that the learned Single Judge had taken into consideration various judgments dealing with the same question, including a decision relied upon by the respondent in the case of Ko Ku La Limited, reported in 23 Company Cases Page 81 (Cal.), which was distinguished by the learned Single Judge with the observation that the winding up proceedings had been initiated by the company within a period of three years from the date of obtaining the decree, which was permissible under Section 163 of the Indian Companies Act, 1913.
12. Similarly, the learned Judge distinguished various other decisions cited on behalf of the respondents and concluded that a winding up petition could not be filed in 2001 in respect of a debt which had crystallised in a decree of 1997, since on the date of filing of the winding up petition, the debt was no longer a recoverable debt under Section 434(1)(a) or 434(1)(b) of the Companies Act, 1956.
13. Mr. Ghosh urged that having regard to the above, since the winding up petition in the instant case had been filed more than throe years after the suit was decreed by the Bombay High Court on 3rd November, 1998, the same could not be recovered by way of a winding up petition and that the remedy of the petitioning creditor was by way of execution of the said decree.
14. Appearing on behalf of the petitioning creditor/respondent Mr. Utpal Basu, learned Advocate, firstly submitted that the appeal was not maintainable at the instance of the company itself after a winding up order had been passed and the company had gone into liquidation. It was urged that after a company goes into liquidation, it can only be represented either by the Official Liquidator or by the persons indicated in Section 466(1) of the Companies Act, 1956. Mr. Basu submitted that since the instant appeal had been filed by the company itself without being represented either by one of its erstwhile Directors or contributaries, the appeal was misconceived and was liable to be dismissed on such ground alone.
15. Regarding the point relating to service of notice of the winding up petition, Mr. Basu submitted that as will appear from the different orders passed in the proceedings from time to time, the learned Company Judge directed publication in the newspapers both before admitting the winding up petition and prior to passing of the winding up order. Mr. Basu submitted that despite publication at both the stages, the appellant company had failed to appear and contest the winding up petition which was ultimately admitted on 27th June, 2002.
16. Mr. Basu submitted that the learned Company Judge had rightly held that the objection taken on behalf of the appellant company regarding non-service of notice was completely untenable and without jurisdiction.
17. Regarding the second question raised by Mr. Ghosh, Mr. Basu submitted that it is now well-established that a winding up petition can be presented in respect of a money decree within the ambit of both Sections 434(1)(a) and 434(1)(b) of the Companies Act, 1956. Mr. Basu submitted that recovery of a money claim on a money decree by way of winding up proceedings was sanctioned by the provisions of Section 434 of the Companies Act, 1956 and had been so held in decisions rendered by various Courts in this regard. Referring to the provisions of Section 434 of the aforesaid Act, Mr. Basu urged that as had been held by a Division Bench of the Madras High Court in Seethai Mills Limited v. N. Perumalsamy & Anr,, reported in 50 Company Cases Page 422, a creditor who has obtained a decree against a company is not compelled to confine his remedy against the company under Section 434(1)(b) alone but he can resort to Section 434(1)(a) as well. Since there is no mutually exclusive dichotomy between the two sub-clauses even a decree-holder in respect of a money decree can institute proceedings under Section 434(1)(a) if the other requirements of that provision are satisfied. Mr. Basu submitted that the availability of remedy under Section 434(1)(b) of the Companies Act had been considered by a learned Single Judge of this Court in the case of All India General Transport Corporation Ltd. v. Raj Kumar Mittal, reported in 48 Company Cases Page 604, wherein it had been observed that a creditor of a company who has obtained a decree against it can serve a notice on the decree debt under Section 434(1)(b) of the Companies Act, 1956, at any stage after the decree is obtained, whether the decree is put into execution and remains unsatisfied or without putting the decree in execution or at any intermediate stage. Mr. Basu pointed out that in the said case while the petitioning creditor had obtained a decree on 18th October, 1972, from the Second Joint Civil Judge (Junior Division) at Baroda, the winding up petition was presented in this Court on 19th November, 1975, after the period of three years prescribed under Article 137 of the Limitation Act, 1963.
18. Mr. Basu urged that it had no doubt been laid down that since no period had been prescribed in respect of a proceeding under Section 434 of the Companies Act, the residuary provisions contained in Article 137 of the Limitation Act would apply in respect thereof. But in the instant case the position was different since a distinct period of 12 years had been prescribed under Article 136 for putting a decree into execution. Mr. Basu submitted that the said feature distinguished the present case from the other cases wherein it had been held that since no period of limitation had been prescribed for proceedings under Section 434, the provisions of Article 137 of the Limitation Act would apply.
19. Mr. Basu submitted that the decision in the Standard Brands Limited case (supra), relied upon by Mr. Ghosh, was distinguishable on such score as, in fact, the judgment in the said case and the judgment in the case of All India General Transport Corporation had been rendered by the same learned Judge.
20. Mr. Basu concluded by referring to a Single Bench decision of the Punjab and Haryana High Court in the case of Sarabhai Machinery v. Haryana Detergents Limited, reported in 60 Company Cases Page 169, wherein in a situation similar to that of the instant case, the learned Judge had held that the petitioner could without executing the decree claim the benefit of Section 434(1)(a) after serving requisite notice under the said section. The learned Judge also observed that Clause (a) of Section 434(1) is a general clause and applies to all sorts of debts, including a judgment debt, and that the decree-holder could take the benefit of both Clause (a) as well as Clause (b) of Section 434(1) in applying for winding up of the company on the basis of the said decree.
21. Mr. Basu submitted that the learned Company Judge had rightly dismissed the appellant/petitioner's application for recall of the winding up order and the instant appeal was also liable to be dismissed with costs.
22. As indicated hereinabove, this appeal raises an interesting question as to whether a winding up petition is maintainable on the basis of a decree of a Civil Court in respect of a money claim after a period of three years from the date of passing of the decree but within 12 years thereof.
23. It is now well-settled that a winding up petition is maintainable in respect of a money decree presented within three years from the date of passing of the decree. Mr. Ghosh's submission that a winding up petition presented on the basis of a money decree after three years from the date of passing of the decree is barred by limitation, having regard to the provisions of Article 137 of the Limitation Act, 1963, appears to be attractive, but such submission is based on the proposition that the provisions of Article 137 of the Limitation Act, 1963 would apply even in respect of a money decree for which a specific period of 12 years for execution has been provided for in Article 136 of the said Act.
24. Section 434 of the Companies Act, 1956, makes provision in relation to recoverable debts. According to Mr. Ghosh, since Section 434 does not itself provide for any period of limitation, Article 137 of the Limitation Act, 1963, would apply uniformly and as a consequence would also cover a winding up petition made on the basis of a money decree.
25. We are unable to agree with Mr. Ghosh's said submission since a claim under a money decree does not stand barred after a period of three years from the date of passing of the decree, as in the case of a money claim, but can be put into execution within a period of 12 years from such date. Accordingly, a money decree as a recoverable debt is not covered by Article 137 but by Article 136 of the Limitation Act, 1963.
26. In our view, there lies the basic fallacy in Mr. Ghosh's submission and vindicates Mr. Utpal Basu's submission.
27. Consequently, we are also unable to agree with the views expressed by the learned Single Judge in the case of Rameswar Prosad Kejriwal & Sons. (supra), relied upon by Mr. Ghosh, since the learned Judge has proceeded on the basis that the recoverable debt had crystallised in a decree of 1997 and the winding up petition could not have been filed after a period of three years from the date of such decree, having regard to the period of limitation prescribed under Article 137 of the Limitation Act, 1963. We respectfully repeat that the recoverable debt in respect of a money decree is not barred by limitation after a period of three years from the date of decree and that the same is executable within a period of 12 years thereof, and as such can form the basis for a winding up petition under Section 434(1)(a) and/or 434(1)(b) of the Companies Act, 1956.
28. On the question of non-service of notice of the winding up petition urged on behalf of the appellant, we are convinced that there is no substance in such allegation since the winding up petition was admitted only after publication in two newspapers. Such publication was also effected prior to the passing of the final winding up order and despite such publication, the appellant chose not to contest the proceedings at both the stages.
29. Apart from the above, we also agree with Mr. Utpal Basu that the appeal is not maintainable at the instance of the company alone after an order of winding up has been passed.
30. The appeal fails on all three counts and is dismissed accordingly, but without any order as to costs. All interim orders are vacated.
31. All parties to act on signed copy of the operative portion of this judgment on the usual undertakings.
Pray for stay is considered and refused.
Alok Kumar Basu, J.
32. I agree.