Andhra HC (Pre-Telangana)
Official Liquidator, High Court Of ... vs Chepur Ratnakar Rao And Anr. on 16 June, 1992
Equivalent citations: 1992(2)ALT643, [1995]84COMPCAS465(AP)
JUDGMENT Parvatha, J.
1. In this application the official liquidator states that there was a delay of 33 days in filing Company Application No. 7 of 1989 and seeks condonation of the said delay under section 5 of the Limitation Act, 1963.
2. Company Application No. 7 of 1989 was filed on January 16, 1989, by the official liquidator against the two respondents herein under sub-section (1) of section 543, read with section 458A of the Companies Act, 1956 (hereinafter referred to as "the Act"), alleging that they were guilty of misfeasance and breach of trust in relation to the company in liquidation, i.e., Kalpa Advertising and Marketing Company Private Limited, against which a winding-up order was passed by this court in Company Petition No. 9 of 1980 on February 20, 1981. The said company petition was filed on April 25, 1979. By virtue of section 449 of the Act, the official liquidator became the liquidator of the company from the date of the winding-up order.
3. In the affidavit filed in support of the present company application, the official liquidator states that though under sub-section (2) of section 543 an application under sub-section (1) of that section has to be filed within five years from the date of the order for winding-up, by virtue of section 458A of the Act in computing the period of limitation the period from the date of commencement of the winding-up of the company to the date on which the winding-up order is made and the period immediately following the date of winding-up order shall be excluded and, therefore, the last date for filing Company Application No. 7 of 1989 was December 15, 1988. But the said company application was filed on January 16, 1989, as he was under the bona fide belief that the last date for filing the same was January 16, 1989, due to miscalculation in computing the period of limitation and that, therefore, the said delay of 33 days was neither intentional nor deliberate. On that basis he seeks condonation of the said delay. He further states that this court was closed on December 31, 1988, January 1, 1989, January 13, 1989, January 14, 1989, and January 15, 1989, as they were all declared as holidays and also from January 2, 1989, to January 12, 1989, for Sankranthi vacation.
4. In the counter-affidavits filed by the first and second respondents the calculation adopted by the official liquidator is disputed and it is contended that the delay was more than 33 days. According to them, the limitation for filing Company Application No. 7 of 1989 would commence from the date of the winding-up order, i.e., February 20, 1981, and "any exclusion of time for limitation is the time after the order of liquidation and not earlier." They contend that "if at all any time mentioned in section 458A is liable to be excluded, it is only the period of one year after the order of liquidation and not the period anterior to the date of liquidation" and on that basis they say that the delay in filing the said Company Application No. 7 of 1989 is one year, ten months and twenty-two days, and not 33 days as stated by the official liquidator. They also submit that the delay of even 33 days was not at all explained and that, therefore, there is no proper and acceptable explanation for condoning the same.
5. In his reply the official liquidator submits that the periods to be excluded under section 458A of the Act are one year, nine months, and twenty-five days being the period from the date of commencement, i.e., April 25, 1979, when Company Petition No. 9 of 1980 was filed till the date of the winding-up order, i.e., February 20, 1981, and in addition one year. Taking into consideration the five-year period under sub-section (2) of section 543, the last date for filing Company Application No. 7 of 1989 was December 15, 1988. He once gain reiterates that he was under the impression that the last date was January 16, 1989, because of miscalculation in computing the said period which was neither intentional nor deliberate.
6. It is not seriously disputed by the respondents that section 5 of the Limitation Act, 1963, can be invoked by the official liquidator. Sub-section (2) of section 29 of the Limitation Act provides as follows :
"(2) Where any special or local law prescribes for any suit, appeal or application a period of limitation different from the period prescribed by the Schedule the provisions of section 3 shall apply as if such period were the period prescribed by the schedule and for the purpose of determining any period of limitation prescribed for any suit, appeal or application by any special or local law, the provisions contained in sections 4 to 24 (inclusive) shall apply only in so far as and to the extent to which they are not expressly excluded by such special or local law."
7. It cannot be disputed that section 543 of the Act is a special law and that it provides for a period of limitation different from that prescribed under the Limitation Act, 1963. The Companies Act, 1956, does not expressly exclude the application of section 5 of the Limitation Act. Therefore, the requirements of sub-section (2) of section 29 of the Limitation Act, 1963, are satisfied and section 5 of that Act can be invoked by the official liquidator for having the delay in filing the present application condoned on sufficient cause being shown. I am supported in this view by the decision of the Kerala High Court in Official Liquidator, Central Banking Corporation of Travancore Ltd. v. Dr. K. Ramakrishna Pillai [1970] 40 Comp Cas 441. Also in Phirojshah Pestonji v. Ramnath Janardan [1965] 2 Comp LJ 16, a Division Bench of the Gujarat High Court dealing with sub-section (2) of section 29 of the Indian Limitation Act, 1908, and the applicability of section 18 of that Act to proceedings under section 235 of the Indian Companies Act, 1913 (which is the corresponding provision for section 543 of the Companies Act, 1956), held as follows :
"We are, therefore, of the view that section 235 of the Indian Companies Act, 1913, provides a period of limitation for an application under that section and since no period of limitation for such an application is provided by the First Schedule to the Limitation Act, the Indian Companies Act, 1913, is a special law providing for such an application, a period of limitation different from the period of limitation provided therefor by the First Schedule to the Limitation Act and the condition requisite for the applicability of section 29(2) is consequently satisfied. Section 18 must accordingly be held to be applicable to such an application by reason of clause (a) of section 29(2)."
8. The same reasoning applies on all fours to the applicability of section 5, by reason of section 29(2) of the Limitation Act, 1963, to Company Application No. 7 of 1989 filed under section 543 of the Act.
9. As regards the exclusion of the period from the date of commencement of winding-up to the date on which the winding-up order was made under section 458A of the Act, the official liquidator relied on the decisions of this court in Arkay Chit and Commercial Trading Co. P. Ltd., In re [1982] 52 Comp Cas 174, Official Liquidator v. T. J. Swamy [1992] 73 Comp Cas 583 (AP) which was confirmed by a Division Bench in T. J. Swamy v. Official Liquidator [1992] 1 ALT 467 (AP) and also on the decision of a Division Bench of the Bombay High Court in Gleitlargor (India) P. Ltd. v. Mazagaon Dock Ltd. [1985] 57 Comp Cas 742. These decisions support the stand of the official liquidator as regards the exclusion of the said period from me date of commencement of the winding-up of the company to the date on which the winding-up order is made. Learned counsel for the respondents, however, relies on a decision of a learned single judge of the Kerala High Court in Official Liquidator, Central Banking Corporation of Travancore Ltd. v. Dr. K. Ramakrishna Pillai [1970] 40 Comp Cas 441, wherein it is observed as follows (at p. 445) :
"How anybody could have thought that the exclusion of a period anterior to the starting point for limitation and which could, therefore, never be included, could have the effect of postponing the date within which a proceeding has to be instituted, I am quite unable to understand."
10. This decision of the Kerala High Court was not referred to in any of the three decisions of this court, referred to above, and anyhow the contention as advanced now was not advanced in those cases and, therefore, there was no occasion to consider the matter from this angle. The language of section 458A seems to support the contention of learned counsel for the respondents. A reading of section 458A makes this clear :
"458A. Exclusion of certain time in computing periods of limitation. - Notwithstanding anything in the Indian Limitation Act, 1908 (9 of 1908), or in any other law for the time being in force, in computing the period of limitation prescribed for any suit or application in the name and on behalf of a company which is being wound up by the court, the period from the date of commencement of the winding-up of the company to the date on which the winding-up order is made (both inclusive) and a period of one year immediately following the date of the winding-up order shall be excluded."
11. Apart from the use of the expression "shall be excluded", the emphasis in the section is not on extension of time but exclusion of two periods : (i) the period from the date of commencement of the winding-up of the company to the date on which the winding-up order is made (both inclusive); and (ii) a period of one year immediately following the date of the winding-up order. The words "immediately following the date of the winding-up order" indicate that what is intended by the section is not the addition of one year and thereby extending the period of limitation, but the exclusion of a particular period, i.e., one year period, immediately following the date of the winding-up order. Because of the clear specification of the two periods by clarifying when they should commence and when they should end and also because of the clarification that in the case of the first period the date of commencement and the date of ending - not any two days - are both to be included, it follows that the said periods to be excluded should be after the date of commencement of the running of the limitation. It is to be noted in this connection that by virtue of sub-section (2) of section 441 of the Act, the date of commencement of the winding-up of the company is the date when the winding-up petition is presented. In the present case, that date is April 25, 1979. As admittedly time starts running for the filing of Company Application No. 7 of 1989 from February 20, 1981, there is no question of excluding April 25, 1979, or the period prior to February 20, 1981, in computing the period of limitation in the present case. Therefore, the official liquidator is not right in seeking to exclude the number of days between the date of commencement of the winding-up of the company and the date on which the winding-up order was made. However, in view of the decisions of this court, referred to earlier, it cannot be said that the official liquidator had no basis for excluding "the period", i.e., the number of days between the said two dates - one year, nine months and twenty-five days. In Arkay Chit and Commercial Trading Co. P. Ltd., In re [1982] 52 Comp Cas 174, 176, this court held as follows :
"By virtue of the provisions of section 458A in computing the period of limitation of five years prescribed by section 545(2) the period from the date of the commencement of the winding-up of the company to the date of the winding-up order (both inclusive) and a period of one year from the date of the winding-up over should be excluded. The winding-up proceedings commenced with the filing of the application on April 6, 1972, and the order of winding-up was made on October 27, 1972, and that period which comes to six months and 22 days should be excluded. In addition, the period of one year from October 27, 1972, to October 26, 1973, has also to be excluded. Thus, in all, one year, six months and 22 days has to be excluded in computing the period of limitation for filing the application. If so computed the last date for filing the misfeasance application under section 543(1) in the instant case will be May 19. 1979. The present application was filed on February 23, 1979, and is. therefore, well within time and is not barred by limitation.
I am unable to agree with the contention of Shri N. Seshachary that only one year from the date of the winding-up order has to be excluded for an application under section 543(2) read with section 458A. The provisions of section 458A are clear and both the periods, i.e., the period from the commencement of the winding-up of the company to the date of the order of winding-up and also the period of one year from the date of the order of winding-up have to be excluded in computing the period of limitation."
12. The correctness of this view was not questioned in Official Liquidator v. T. J. Swamy [1992] 73 Comp Cas 583 (AP). The argument advanced in that case was that the exclusion provided for in section 458A applied only to suits or applications in the name and on behalf of the company filed after obtaining the sanction of the court and not to applications under section 543 of the Act, and that contention was rejected on a finding that applications filed by the official liquidator under section 543 were also in the name and on behalf of the company and that section 458A applied to all applications in the name and on behalf of the company whether instituted with or without the sanction of the court. In the case of T. J. Swamy v. Official Liquidator [1992] 1 ALT 467 also the Division Bench only held "that the benefit of section 458A will be applicable for an application by the official liquidator under section 543 of the Act" and that that section "extends the period not only in respect of the period for a suit or application fixed by the Limitation Act but even by any other law and is not confined to civil courts". But no argument was advanced before the Division Bench on the basis of the language of section 458A as regards the scope and extent of the benefit under the said section. In the circumstances, I am inclined to condone the delay of one year, nine months and twenty-five days occasioned on this account, under section 5 of the Limitation Act, 1963.
13. Then there remains the delay of 33 days. The official liquidator states that due to mistaken calculation he was under the impression that the last date for filing Company Application No. 7 of 1989 was January 16, 1989. He submits that in totalling instead of the twelfth month he got the first month, i.e., instead of December, January. There is no reason to disbelieve the official liquidator and "there is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides". In the circumstances, I am satisfied that there is sufficient cause for the delay of 33 days in filing the said application and that the said delay has to be condoned, keeping in view the following observations of the Supreme Court in Collector, Land Acquisition, Anantnag v. Katiji (Mst.) [1987] 62 Comp Cas 370, 371 (SC). :
"The Legislature has conferred the power to condone delay by enacting section 5 of the Limitation Act, 1963, in order to enable the courts to do substantial justice to parties by disposing of matters on 'merits'. The expression 'sufficient cause' employed by the Legislature is adequately elastic to enable the courts to apply the law in a meaningful manner which subserves the ends of justice that being the life-purpose of the existence of the institution of courts. It is common knowledge that this court has been making a justifiably liberal approach in matters instituted in this court. But the message does not appear to have percolated down to all the other courts in the hierarchy."
14. It is also to be noted in this con section that this court was closed from December 31, 1988, to January 15, 1989, because of holidays and Sankranthi vacation.
15. In the circumstances, the company application is allowed. No costs.