Limitation for Section 235 applications: winding up does not restart limitation, the relevant Limitation Act Article continues to govern.

A winding-up order and institution of liquidation do not create a new substantive cause of action resetting limitation for applications under Section 235; Sub section (3) merely applies the Indian Limitation Act to Section 235 proceedings as if they were suits. Consequently the Article of the Limitation Act applicable to the comparable suit governs the Section 235 application: where a special Article applies its starting point controls, and otherwise the residuary Article governing accrual of the right to sue governs. This result permits respondents to plead limitation successfully where the suit could have been brought pre-liquidation.

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Issues: Whether a winding-up order (and the institution of liquidation proceedings) gives a fresh start for the purposes of limitation for applications under Section 235 of the Indian Companies Act, 1913, and which Article of the Indian Limitation Act, 1908 applies to such applications.

Analysis: Section 235 provides a summary procedure enabling the court, on the application of the official liquidator, a creditor or a contributory, to investigate conduct and compel restitution or contribution; Sub-section (3) declares that the Indian Limitation Act, 1908 applies to an application under Section 235 as if such application were a suit. The Court examined the character of Section 235 (procedural rather than creating a substantive new right), compared it with Sections 156 and 186, and surveyed English and Indian authorities including the recent Privy Council decision. The majority held that Sub-section (3) preserves the operation of the Limitation Act but does not, by itself, create a new substantive right that would produce a fresh starting point for limitation upon the making of a winding-up order or upon appointment of a liquidator. Consequently, where a suit of the nature of the relief sought could have been brought before liquidation, the Article of the Limitation Act applicable to that suit continues to apply to the Section 235 application. If no special Article applies, the residuary Article 120 (when the right to sue accrues) will be applicable; where a special Article governs, its starting point controls.

Conclusion: The winding-up order does not give a fresh start to a liquidator, contributory or creditor for purposes of limitation; the appropriate Article of the Indian Limitation Act, 1908 applicable to the nature of the relief sought continues to govern applications under Section 235 of the Indian Companies Act, 1913. This outcome operates in favour of respondents who can successfully plead the relevant limitation defence.

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