Calcutta High Court
Rameswar Prosad Kejriwal & Sons Ltd. vs Garodia Hardware Stores on 21 November, 2001
Equivalent citations: (2002)2CALLT59(HC)
Author: A.K. Ganguly
Bench: Asok Kumar Ganguly
JUDGMENT A.K. Ganguly, J.
1. This company petition has been filed by M/s, Garodia Hardware Stores, a registered partnership firm under the Indian Partnership Act, 1932 against Rameshwar Prosad Kejriwal and Sons Ltd., a company incorporated under the provisions of Companies Act, 1956 as a private company limited by shares. The case of the petitioning creditor is that for the default of payment in Hardware and allied goods, the petitioning creditor filed a suit against the said company being Money Suit No. 13 of 1994 in the Court of Assistant District Judge, Golaghat (Assam) for the recovery of the prices of goods sold and delivered. On 10th February, 1997 the said money suit No. 13 of 1994 was decreed by the Assistant District Judge, Golaghat (Assam) against the company for an amount of Rs. 76,653/- with costs pendenti lite and future Interest at the rate of 18% per annum and also for Rs. 6,881.90p. as the costs of the suit. According to the calculation given by the petitioning creditor in para 8, a sum of Rs. 1,77,218.90p is still due and payable by the company to the petitioning creditor. The case of the petitioning creditor is that despite repeated reminders, the company failed and neglected to make the payment. As such the petitioning creditor gave a statutory notice of demand dated 26th February 2001 demanding the said sum of Rs. 1,77,218.90p together with Interest @ 18% per annum. The company duly received the said statutory notice.
2. In this matter, the learned counsel appearing for the company, without filing any affidavit, has raised certain preliminary objections on the maintainability of the winding up petition.
3. The learned counsel submitted that from the documents annexed to the winding up petition it appears that the said money suit was instituted in 1994 as the company refused to pay the price of the goods sold and delivered to it by the petitioning creditor in 1992. From the Judgment delivered in the suit, which is annexed to the petition, it appears that goods were last supplied on 30th April, 1992 and the lawyer's notice was sent on 29th September 1992. Therefore, according to the learned counsel the cause of action of the petitioning creditor arose in 1992, the suit was filed in 1994, the decree was obtained in 1997 and in respect of the same cause of action of 1992 statutory notice was issued in 2001 and the winding up petition was filed in 2001. Therefore, according to the learned counsel for the company the petitioner without executing the decree is trying to have the same executed through this winding up petition but the same is not permissible in view of the admitted time lag.
4. The learned counsel for the company highlighted the fact here cause of action admittedly arose out of alleged supply of goods and admittedly goods were last supplied on 13th April 1992 and the instant winding up petition has been filed before this Court on 30th March 2001. The learned counsel submitted that if it is assumed that the cause of action of the petitioning creditor has merged with the decree, the said decree is dated 10th February 1997. Even then this instant winding up petition is barred by limitation. In support of the said contention, the learned counsel Initially relied on two decisions. The learned counsel relied first on the decision reported in the case of Mazboot Packers and Engineers Company v. Himachal Pradesh Horticulture Produce Marketing and Processing Corporation Ltd., reported 95 Company Cases 579. In that case it was held that the dispute whether the security was deposited by the petitioner company with the respondent company and whether the same had been validly forfeited by the respondent company cannot be decided in a summary proceeding like winding up. Apart from that in the said case, it was also decided that the winding up petition was filed on 3rd November, 1997 which is after the expiry of the period more than six years from the date of refusal by the respondent company to refund the amount of security. As such it was held that there is no recoverable date within the meaning of Section 433(e) of the Companies Act.
5. The learned counsel also relied on the judgment reported in the case Hartom Firestock Limited v. Sunjal Engineering Put. Ltd, reported in 96 Company Cases 349. This is also reported in 1999(4) CLJ 469. In that case, it was held that a time barred debt could not be recovered on the basis of a winding up petition. The fact that the petitioner filed a civil suit before the filing of the winding up petition is immaterial because such a civil suit does not have the effect of extending the period of limitation. The learned Judge held at page 354 of the report that the simple test to find out whether the debt is in existence at a particular point of time is to put the simple question as to whether it would have been permissible to institute a normal recovery proceeding before a civil Court in respect of that debt at that point of time. The learned judge held that if this principle is applied, the debt is time bared and as such is not recoverable on the basis of winding up petition. In that case the loan was advanced to the company in 1987 and the winding up proceeding was Instituted in the year 1995.
6. There is another Judgment on this point also which was rendered in the case of Vjayalakshmi Art Productions v. Vtjaya Productions Put. Ltd, reported in 88 Company Cases 353. In that case it has been held by the learned Judge that it is the duty of the Court to dismiss claims made beyond the prescribed period of limitation as provided in Section 3 of the Limitation Act.
7. The learned counsel for the respondent has, however, relied on certain decisions to show that the Instant winding up petition is maintainable. He first relied on the decision in the case of Ko Ku La Ltd, reported in 23 Company Cases 81. In that case the learned judge held that where the execution of decree is admitted and that decree has remained unsatisfied and the statutory demand notice has been served and the sum due has not been paid within three weeks, it must be deemed that the company is unable to pay its debts and the winding up petition is maintainable. From the perusal of the facts of this case, tt appears that in that case, the petitioning creditor Instituted a title suit 47 in the subordinate judges' Court at Asansole. There are various facts relating the suit with which the Court is not concerned. One thing is clear that on 26th May 1949 in that suit a decree was passed in favour of the petitioning creditor and against the company for certain sums. It also appears from the facts of the said case that despite the demand the company did not pay the entire decretal sum and statutory notice was given on 29th August 1951. On those circumstances, the learned Judge held that the winding up proceeding is permissible under Section 163 of the Companies Act, 1913. It is clear from the facts stated above that the company proceeding initiated within a period of three years from the date of obtaining a decree. Therefore, the said case is clearly distinguishable. In the facts of the present case, the winding up proceeding is admittedly filed after the four years from the date of obtaining the decree.
8. The next case on which reliance was placed by the learned counsel was in the case of Unique Carboard Box Mfg. Co. P. Ltd., reported in 48 Company Cases 599. In that case it was held that a winding up petition is an equitable mode of execution in respect of the claim of a creditor of a company. There be no dispute with the aforesaid proposition but the question with which the Court is concerned here, namely the question of limitation was not present in that case. From the facts of that case, it appears that the petitioning creditor obtained an ex parte decree on 5th January 1973 and then by notice dated 26th May 1973 under Section 434 of the Companies Act, the petitioning creditor demanded the payment of the said decretal amount together with interest. The company having failed to pay the same, the company petition was presented by the petitioning creditor on 5th December 1973. So it was filed very much within time.
9. The learned counsel also relied on another Judgment reported in the same volume in the case between All India General Transport Corporation Ltd. v. Raj Kumar Mittal, reported in 48 Company Cases 604. In that case the learned Judge found that the company's conduct and attitude is wholly mala fide and the petitioning creditor has been harassed unnecessarily by the company. In that case also the winding up petition was presented after serving the statutory notice of demand in 1975 and the decree was obtained against the company on 18th October 1972 and the statutory notice was served on 26th March 1975. Therefore, the question of limitation was not present in that case. Therefore, factually the said case is clearly distinguishable from the present one.
10. The learned counsel also relied on a judgment in the case of Harinagar Sugar Mills Co. Ltd. v. M.W. Pradhan, reported in 36 Company Cases 426. The learned counsel relied on Palmer's Company Precedents which has been quoted in that Judgment that a winding up petition is a mode of execution which the Court gives to a creditor against a company which is unable to pay Its debts. There can be no dispute with the said proposition but from the facts of this case, it is clear that in the instant case, this company petition has been presented in 2001 in respect of decree which was passed in 1997.
11. The learned counsel for the respondent also relied on a decision in the case of Seethal Mills Ltd. v. N. Perumalsamy and Another, reported in 50 Company Cases 422. In that case it was held by the learned Judges of Madras High Court that 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) of the Companies Act alone but be may also take resort to the provision of Section 434(1)(a) as well. The learned Judges have also held that there is no dichotomy between the two sub-clauses. The learned judges further held that the fact that the original debt had merged in the decree and the person who was originally a creditor has become a decree-holder subsequently does not change his character as a creditor or the character of the money due to him from the company as a debt. These propositions are well settled and accepted by this Court. But in the facts of this case, it is clear that winding up petition in 2001 cannot be filed in respect of a debt which has been crystallized in a decree of 1997. Therefore, on the date of the filing of the winding up petition, the debt is no longer a recoverable debt under Section 434(1)(a) or 434(1)(b) of the Companies Act.
12. In view of the discussions aforesaid, this Court finds the objection taken by the learned counsel for the company is well founded in the facts of this case.
13. It is an admitted position that the cause of action of the company arose in 1992. The suit was filed in 1994 and the decree was obtained in 1997. But on the basis of the said debt which is said to be merged in the decree, the winding up petition cannot be filed after the period of limitation that means after a period of three years.
14. It is not in dispute that in the instant case, the period of limitation is covered by residuary article namely Article 137 of Limitation Act. A special Bench of this Court, in the case of Hari Mohan Dalai v. Parmeshwar Shau, reported in 56 Indian Law Reports, 61, has made certain observations on how the residuary article is to be construed.
15. Construing the provisions of Article 181 the residuary article under the old Act, Chief Justice Rankin, speaking for the Special Bench, held that "In Article 181 the legislature makes provisions not for any definite type of cases but for an unknown number of cases of all kinds. The provision which it makes specific as regard the period of limitation, but as regarded the terminus a quo it is content to state in general language and quite simply the fundamental principle that, for the purposes of any particular application, time is to run from the moment at which the applicant first had the right to make it."
16. This Court goes by the same principle and holds that period of limitation should be counted from 1992. But assuming it is not counted from 1992, it has to be counted from 1997. Therefore, considering the matter from all possible angles, this Court is of the view that Instant winding up petition has become barred on the date on which it is presented. It cannot be held that in case of winding up petition, limitation period will be 12 years which may be the case in matters of execution of a decree.
17. Therefore, this winding up petition is, therefore, dismissed but in the facts of this case, there will be no order as to costs.