1997 (9) TMI 468 - HC - Companies Law

Court allows revisions, remits matters for disposal, upholding company's legal actions during winding-up proceedings.

Sudarshan Trading Co. Ltd. Versus Veeranna

The court allowed the revisions, setting aside the lower court's orders dismissing the company's applications as time-barred. The matters were remitted to ... Winding up – Exclusion of certain time in computing periods of limitation Issues Involved:1. Applicability of Section 458A of the Companies Act, 1956.2. Validity of the delay in filing applications under Order 9, rules 3 and 4, and Order 21, rule 10 of the Civil Procedure Code, 1908.3. Interpretation of the Limitation Act, 1963, in the context of pending winding-up proceedings.Detailed Analysis:Issue 1: Applicability of Section 458A of the Companies Act, 1956The primary issue was whether the company could invoke Section 458A of the Companies Act to claim exemption from the Limitation Act due to the commencement of winding-up proceedings. The court noted that the company was under winding-up proceedings initiated by creditors' petitions, with a winding-up order dated October 13, 1981, held in abeyance by the Kerala High Court's order dated October 8, 1982. The court emphasized that Section 458A provides for the exclusion of time in computing periods of limitation for suits or applications filed by a company being wound up. The prerequisites for Section 458A's applicability include:1. A prescribed period of limitation under the Limitation Act or any other law.2. The suit or application must be filed in the name and on behalf of a company being wound up by the court.The court concluded that these prerequisites were satisfied, as the company's winding-up proceedings commenced on January 16, 1981. Therefore, Section 458A was applicable, and the period from the commencement of the winding-up to one year after the winding-up order should be excluded from the limitation period.Issue 2: Validity of the Delay in Filing ApplicationsThe company filed applications under Order 9, rules 3 and 4 of the Civil Procedure Code in Misc. Cases Nos. 433 and 435 of 1988, and under Order 21, rule 10 in Ex. Case No. 51 of 1991, which were dismissed as time-barred by the lower court. The company argued that the delay was due to the winding-up proceedings and subsequent legal actions, including the retrieval of documents from the provisional liquidator. The court found that the winding-up proceedings and the Kerala High Court's order keeping the winding-up in abeyance justified the delay. Hence, the company's applications were not time-barred, as the Limitation Act was inapplicable during the period covered by Section 458A.Issue 3: Interpretation of the Limitation Act, 1963The court addressed whether the Limitation Act's provisions applied to the company's legal actions during the winding-up proceedings. The court highlighted that Section 458A suspends the operation of the Limitation Act for the period from the commencement of winding-up proceedings to one year after the winding-up order. The court rejected the respondents' argument that Section 458A only applies after an effective winding-up order. The court clarified that the Limitation Act remains suspended for the company's claims enforceable before the commencement of winding-up proceedings until the specified period under Section 458A expires.Conclusion:The court allowed the revisions, setting aside the lower court's orders dismissing the company's applications as time-barred. The matters were remitted to the lower court for disposal on their merits, with parties bearing their own costs. The court's interpretation ensured that the company's legal actions taken during the winding-up proceedings were not barred by the Limitation Act, upholding the applicability of Section 458A of the Companies Act.