2014 (5) TMI 974 - HC - Companies Law

Winding-up petition dismissed due to time-barred debt

The court dismissed the petition under Section 433 (e) of the Companies Act, 1956, as the debt claimed by the petitioner was deemed time-barred. Despite ... Winding up of company - Inability to pay debts - Bar of limitation - Whether the defence raised by the respondent that the claims of the petitioner are barred by limitation is a bona fide and substantial defence - Held that:- It is well settled that a petition under Section 433 (e) of the Companies Act, 1956, will not lie in respect of a debt which is barred by limitation and cannot be enforced. A debt which is not enforceable cannot be considered as an amount which is due and payable by the respondent. - there was no written acknowledgement that had been furnished by the respondent to the petitioner except a letter dated 29.12.2010 sent by K. Nath “General Manager Group Legal & Company Secretary” on behalf of Ashok Piramal Management Operation Ltd - Said letter cannot be accepted as an acknowledgement by the respondent company for the reasons that, neither the letter purports to be on behalf of the respondent company nor is it signed by an authorized signatory of the respondent company - The fact that the respondent has paid a sum of Rs.12 lakhs during the course of the present proceedings also would not extend limitation in favour of the petitioner. This is so because the said payment has been made after the period of limitation has expired and therefore the provisions of Section 19 of The Limitation Act, 1963, are not applicable - Decided against Appellant. Issues:- Petition filed under Section 433 (e) of the Companies Act, 1956 alleging respondent's inability to pay debts.- Dispute over goods supplied and invoices raised.- Respondent's defense of debt being time-barred.- Examination of the defense's bona fide nature.- Consideration of the impact of payment made during proceedings on limitation.Analysis:1. The petitioner filed a petition under Section 433 (e) of the Companies Act, 1956, claiming the respondent was unable to pay its debts due to goods supplied between June 2007 to October 2008. Invoices were raised, and a notice demanding payment was served. The respondent contested the claim, arguing the debt was time-barred.2. The respondent contended that the debt claimed by the petitioner was barred by limitation. The respondent was directed to provide a breakup of the amount owed, which revealed a sum of Rs.12 lakhs due to the petitioner. This amount was subsequently paid by the respondent during the proceedings.3. The main issue for consideration was whether the defense raised by the respondent regarding the debt being time-barred was legitimate. The court referred to a previous case where it was established that a winding-up petition cannot be based on a debt that is barred by limitation and cannot be enforced.4. The court noted that there was no written acknowledgment from the respondent except for a letter from the General Manager Group Legal & Company Secretary of Ashok Piramal Group. However, this letter was deemed insufficient to extend the limitation period in favor of the petitioner.5. Despite the respondent's payment of Rs.12 lakhs during the proceedings, the court held that this payment did not affect the limitation period as it was made after the expiration of the limitation period. Therefore, the court dismissed the petition as the debt was considered time-barred and not enforceable under the Companies Act, 1956.