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of <h1>Court dismisses application by official liquidator as barred by limitation, sets aside judgment, and allows appeal.</h1> <h3>Best & Crompton Engineering Ltd. Versus Official Liquidator</h3> Best & Crompton Engineering Ltd. Versus Official Liquidator - [1995] 82 COMP. CAS. 77 (MAD.) (FB) Issues Involved:1. Limitation period for filing an application by the official liquidator.2. Applicability of Section 458A of the Companies Act, 1956.3. Interpretation of Article 137 of the Limitation Act, 1963.4. Starting point of limitation for claims by the official liquidator.5. Jurisdiction and procedural aspects under Section 446(2) of the Companies Act, 1956.Detailed Analysis:1. Limitation Period for Filing an Application by the Official Liquidator:The primary issue in this case was whether the application filed by the official liquidator was barred by limitation. The appellant contended that the application was time-barred as the cause of action arose on December 31, 1976, and the application was filed only on March 2, 1982. The official liquidator argued that the starting point of limitation should be the date of the winding-up order, i.e., March 2, 1978. The court concluded that the application was barred by limitation, as the starting point of limitation should be December 31, 1976, and not the date of the winding-up order.2. Applicability of Section 458A of the Companies Act, 1956:Section 458A of the Companies Act, 1956, was discussed extensively. This section provides that in computing the period of limitation for any suit or application in the name and on behalf of a company being wound up by the court, the period from the date of commencement of the winding-up to the date of the winding-up order and a period of one year immediately following the date of the winding-up order shall be excluded. The court emphasized that Section 458A does not prescribe a period of limitation but only provides a method for computing the period of limitation.3. Interpretation of Article 137 of the Limitation Act, 1963:The court examined whether Article 137 of the Limitation Act, 1963, which prescribes a three-year limitation period for applications, was applicable. It was argued that the right to apply accrues only when the winding-up order is passed. However, the court held that the starting point of limitation should be the date when the right accrued to the company, not the date of the winding-up order. The court also noted that Article 137 applies to all applications before a civil court, but the limitation period must be determined with reference to the nature of the claim.4. Starting Point of Limitation for Claims by the Official Liquidator:The court clarified that the right of the official liquidator is not a new right but the same right that the company had before going into liquidation. Therefore, the starting point of limitation should be the date when the right accrued to the company. The court rejected the argument that the right to apply accrues only on the date of the winding-up order. The court emphasized that the period of limitation should be computed from the date the cause of action arose, which in this case was December 31, 1976.5. Jurisdiction and Procedural Aspects under Section 446(2) of the Companies Act, 1956:The court discussed the jurisdiction conferred on the company court under Section 446(2) of the Companies Act, 1956, to entertain and dispose of claims by or against the company. The court noted that the provision was introduced to save the company in liquidation from long-drawn-out and expensive litigation and to accelerate the disposal of winding-up proceedings. The court held that the official liquidator could file an application before the company court for recovery of money due to the company, but the limitation period for such an application should be the same as that for a suit.Conclusion:The court concluded that the application filed by the official liquidator was barred by limitation. The judgment of the learned single judge was set aside, and the application was dismissed. The appeal was allowed, and there was no order as to costs. The court reiterated that the correct period of limitation for claims made under Section 446(2)(b) of the Companies Act should be determined with reference to the relevant article in the Limitation Act applicable to the nature of the claim.
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