Procedural Amendment to Limitation: winding-up courts may investigate and recover for director misfeasance despite former limitation bar.

The 1936 amendment to Section 235(1) replaces the prior limitation-importing subsection with an express three-year procedural code, vesting the winding-up court with inquisitorial and equitable jurisdiction to examine past conduct and compel repayment or contribution where just. Consequently the amended procedural regime governs liquidations commenced after the amendment and permits Official Liquidators to investigate and claim compensation for director or officer misfeasance discovered in such inquiries even if a company suit would previously have been time barred, subject to the amended section's express time limit and the court's discretion to refuse relief where delay makes relief unjust.

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Issues: Whether the amendment of Section 235(1) of the Companies Act, 1913 (1936 amendment) permits Official Liquidators, in a winding up begun after the amendment, to investigate and claim compensation for acts of misfeasance by past or present directors or officers even where a cause of action in the company's name would previously have been barred by the law of limitation prior to the amendment.

Analysis: The Court examined the effect of the 1936 amendment which introduced an express three year time limit in subsection (1) and removed the old subsection (3) that imported the Indian Limitation Act, 1908. Section 235(1), as amended, is a procedural provision entrusting to the winding up Court an inquisitorial and equitable jurisdiction to "examine" past conduct and to compel repayment or contribution where the Court thinks it just. Laws of limitation are adjective (procedural) rather than substantive; consequently an amendment of procedure may, when clearly manifested by the Legislature's terms and context, be applied to govern subsequent liquidations and to affect past transactions. The deliberate removal of the old subsection (3) and substitution of the new procedural code indicates a legislative intention that the amended procedure govern investigations and remedies in windings up instituted after the amendment. The amended section preserves the Court's discretionary power to refuse relief where lapse of time would render exercise of the jurisdiction unjust; thus the amendment does not abolish all protections but subjects limitation defences to the Court's discretion. In light of the language of the amended subsection and the circumstances of the amendment, the Court held that the amended procedural scheme applies to liquidations falling under it and may be invoked to inquire into and award compensation for misfeasance discoverable thereafter, even if the underlying cause would previously have been time barred.

Conclusion: The Official Liquidators are entitled, under Section 235(1) of the Companies Act, 1913 as amended in 1936, to have the conduct of promoters, past or present directors, managers or officers examined and to claim compensation for wrongful acts discovered and proved in such inquiry notwithstanding that a suit by the company itself would have been barred by limitation prior to the amendment, subject nevertheless to observance of the express limitation provisions contained in the amended Section 235(1) and to the Court's discretion.

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