Limitation under displaced persons debt relief law and share conversion rights were preserved despite liquidation

Section 19 relief under the Displaced Persons (Debts Adjustment) Act remained available because the application was filed within the ten-year statutory period, so limitation did not bar the claim. Section 20 was held to apply only where a company is actually in winding up; the deeming fiction in section 441 of the Companies Act, 1956, was not imported, and the doctrines of relation back and mutual exclusivity of sections 19 and 20 were recognised. On that construction, the petitioner could still seek conversion of partly paid-up shares into fully paid-up shares even though the company was in liquidation.

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Issues: (i) whether the application under section 19 of the Displaced Persons (Debts Adjustment) Act, 1951 was within time; (ii) whether the petition was maintainable and whether the petitioner was entitled to conversion of his partly paid-up shares into fully paid-up shares where the company was in liquidation.

Issue (i): Whether the application under section 19 of the Displaced Persons (Debts Adjustment) Act, 1951 was within time.

Analysis: Section 19(6) provides that the provisions of section 19 continue for ten years from 15 August 1947. The petitioner's application under section 19(2) was made on 6 February 1957, which was within that period. The statutory benefit therefore remained available.

Conclusion: The issue is decided in favour of the petitioner.

Issue (ii): Whether the petition was maintainable and whether the petitioner was entitled to conversion of his partly paid-up shares into fully paid-up shares where the company was in liquidation.

Analysis: Section 20(1) of the Displaced Persons (Debts Adjustment) Act applies only where a company is actually being wound up. The phrase used in that provision was construed in its natural sense, and the fiction in section 441 of the Companies Act, 1956, deeming winding up to commence on presentation of the petition, was held not to control section 20. The two enactments operate in different fields, sections 19 and 20 are mutually exclusive, and the doctrine of relation back has no application under the Displaced Persons (Debts Adjustment) Act. On that construction, the petitioner remained entitled to relief under section 19(2).

Conclusion: The petition was maintainable and the petitioner was entitled to conversion of the shares.

Final Conclusion: The application succeeded, and the company was directed to convert the petitioner's 280 partly paid-up shares into 210 fully paid-up shares with costs.

Ratio Decidendi: Section 19 relief under the Displaced Persons (Debts Adjustment) Act remains available where the application is made within the statutory period and section 20 applies only to a company actually in winding up, without importing the deeming fiction of section 441 of the Companies Act, 1956.

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