Legal ruling: Claims in liquidation cases can be pursued through suit or application. Understanding limitations on debt claims.

The court held that claims by or against a company in liquidation can be initiated by either a suit or an application. The court clarified that claims in the context of an application generally refer to debts or money claims. The court concluded that the application filed by the official liquidator was maintainable. Regarding the applicable article of the Limitation Act, it was determined that the application should be treated as a suit and governed by the relevant article based on the nature of the claim. The court found the application was out of time and dismissed it as barred by limitation, with costs to come out of the estate.

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Issues Involved:
1. Whether the claim by or against the company in liquidation, which is ordinarily enforceable by means of a suit, has to be initiated before the company court by means of a suit u/s 446(2)(a) of the Companies Act, or by means of an application u/s 446(2)(b)Rs.
2. What is the article of the Limitation Act applicable if the claim is held to be enforceable by means of an applicationRs.

Summary:

Issue 1: Initiation of Claims by or Against the Company in Liquidation

The court examined whether claims by or against a company in liquidation, typically enforceable by a suit, must be initiated by a suit u/s 446(2)(a) or by an application u/s 446(2)(b) of the Companies Act. The court held that the liquidator has the option to file either a suit or an application for money claims or actionable claims. The court emphasized that "claims" in clause (b) generally refer to debts or money claims and not to property or title claims. The court noted that the amendment to section 446(2)(b) was intended to expedite the winding-up process by allowing claims to be made through applications rather than suits. The court concluded that the application filed by the official liquidator is maintainable.

Issue 2: Applicable Article of the Limitation Act

The court addressed the issue of the applicable article of the Limitation Act for claims enforceable by means of an application. It was determined that the application should be treated as a suit and governed by the article of the Limitation Act applicable to suits of that nature. The court stated that the relevant article must be determined based on the nature of the claim and the provision of law under which it is claimed. In this case, the relevant article was Article 18, which prescribes a period of three years from when the work is done. The court also noted the exclusion periods provided u/s 458A of the Companies Act for computing the limitation period.

Conclusion:

The court found that the application filed by the official liquidator was out of time. The claim for labor charges dated January 8, 1979, should have been filed on or before May 30, 1983, after excluding the periods u/s 458A. Since the application was filed on December 4, 1984, it was dismissed as barred by limitation. The costs of the application were ordered to come out of the estate.

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