2018 (4) TMI 1569 - HC - Companies Law

Court Dismisses Winding Up Petition Due to Time-Barred Debts

The court dismissed the winding up petition filed under sections 433(e), 434(1)(a), and 439(1)(b) of the Companies Act, 1956 due to unpaid debts, ... Winding up petition - period of limitation - Held that:- A perusal of the petition would show that the entire dues which are being claimed are based on the invoices of 2008. The present winding up petition has been initiated some times in May, 2016. On the face of it, the limitation period for filing a suit for recovery of dues has lapsed in view of the fact that the present petition has been filed almost 7 years after raising the invoices. The limitation period would be three years. The alleged claim by the petitioner is barred by limitation on the face of record. I see no reason to allow the present petition. The same is accordingly dismissed. Issues:Winding up petition under sections 433(e), 434(1)(a) and 439(1)(b) of the Companies Act, 1956 based on unpaid debts; Respondent's defense of debt being time-barred; Interpretation of limitation period under Article 14 of the Limitation Act; Precedents regarding the maintainability of winding up petitions for debts barred by limitation.The judgment involved a winding up petition filed under sections 433(e), 434(1)(a) and 439(1)(b) of the Companies Act, 1956 seeking to wind up the respondent company due to unpaid debts. The petitioner alleged that the respondent had failed to pay for video and broadcasting equipment supplied, amounting to a total of 3 69,090.45 USD through various invoices sent between 2008. The respondent, however, argued that the debts claimed were barred by limitation as the petition was filed almost 7 years after the invoices were raised. The court noted that the limitation period for such claims is three years under Article 14 of the Limitation Act.The respondent relied on the judgment in Interactive Media & Communication Solution Pvt. Ltd. v. Go Airlines Ltd., where it was held that a winding up petition is maintainable only if the debt is legally recoverable and not barred by limitation. The court emphasized that the machinery for winding up cannot be used to recover debts that are time-barred. Additionally, the court referred to the case of Fourseasns Marketing Pvt. Ltd. v. The Indure Ltd., where a claim was deemed barred by limitation since it was raised beyond the specified period.Ultimately, the court found that the alleged claim by the petitioner was indeed barred by limitation as it was filed well beyond the three-year limitation period. Consequently, the court dismissed the winding up petition, stating that there was no valid reason to allow it. The judgment highlighted the importance of adhering to limitation periods in debt recovery cases and emphasized that winding up proceedings cannot be utilized to recover debts that are time-barred.