Time-barred debt cannot support winding up where the claim is no longer enforceable in court.

A winding up petition cannot be founded on a debt that is no longer enforceable in a civil suit. The Court held that a claim arising from payment for a rights issue fell under article 47 of the Limitation Act, 1963, because the right to share certificates accrued on failure of the consideration. Once three years expired from that accrual, the claim became time-barred for enforcement. Although limitation does not extinguish the debt, the creditor must still show a legally enforceable debt to invoke winding up. The company's non-payment of the time-barred claim therefore did not amount to neglect to pay a debt due under section 434(1)(a).

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Issues: Whether a winding up petition under sections 433, 434 and 439 of the Companies Act, 1956 is maintainable on the basis of a debt that had become time-barred under the Limitation Act, 1963, and whether the company's alleged non-payment after statutory notice could be treated as neglect to pay a sum due.

Analysis: The claim arose from money paid for a rights issue, and the Court held that the applicable limitation provision was article 47 of the Limitation Act, 1963, because the payment was made for an existing consideration which later failed when the company did not issue the share certificates. On that basis, the cause of action for enforcing the claim expired after three years from the date the right to the share certificates accrued. The Court further held that although limitation bars the remedy and does not extinguish the debt, a creditor seeking winding up must be able to enforce the debt in a court of law. A debt which is no longer enforceable by suit cannot be used as the foundation for a winding up petition, and the company's refusal to pay such a time-barred claim does not amount to neglect to pay a debt due within section 434(1)(a).

Conclusion: The winding up petition was not maintainable on the basis of the time-barred claim, and the finding against the appellant was upheld.

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