Limitation in winding-up petitions defeated a stale debt claim after prolonged delay and BIFR proceedings.

A winding-up petition based on a debt under a fresh agreement was held time-barred because the claimant delayed for years after the respondent company's BIFR proceedings ended. The court applied Article 137 of the Limitation Act, 1963 and the statutory concept of good faith under Section 2(h), finding that the petitioner knew of the BIFR proceedings, had itself participated before the BIFR, and failed to act with due diligence once the company was discharged from sickness. The late Section 434 notice, issued only in May 2010, could not revive a stale claim, and equitable grounds did not excuse the delay. The petition was therefore barred by limitation and dismissed.

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Issues: Whether the company petition for winding up was barred by limitation in view of the long delay, including the period during which the respondent company was before the BIFR.

Analysis: The petition was founded on a debt arising from a fresh agreement dated 18 August 1997. The respondent company was referred to the BIFR under the Sick Industrial Companies (Special Provisions) Act, 1985, declared sick, and later discharged from the purview of the Act on 28 June 2005. The Court found that the petitioner knew of the BIFR proceedings, had itself moved before the BIFR, and failed to act with due care and diligence after the respondent came out of sickness. The statutory notice under Section 434 of the Companies Act, 1956 was issued only in May 2010, long after the claim had become stale. Applying Article 137 of the Limitation Act, 1963 and the definition of good faith under Section 2(h) of that Act, the Court held that the petitioner had not established bona fide ignorance or diligence, and the delay could not be excused on equitable grounds.

Conclusion: The company petition was barred by limitation and was liable to be dismissed.

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