Post-commencement company payments need court validation only for bona fide ordinary-course transactions; refund jurisdiction was upheld.

Post-commencement dispositions of company property are void unless the company court validates them under section 536(2), and validation is confined to bona fide transactions made in the ordinary course of the company's current trade. On the facts, the payments were not shown to fall within that category, so they were not validated and the claimed sum was not treated as company property. The application for refund was not barred by limitation because section 536(2) contains no express limitation period and Article 137 did not apply in the winding-up context. The company court was held to have jurisdiction, with rule 9 preserving inherent powers to order repayment in appropriate liquidation cases.

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Issues: (i) Whether payments made after commencement of winding up were void and liable to be refunded or validated under section 536(2); (ii) whether the application for refund was barred by limitation; (iii) whether the company court had jurisdiction to order refund in winding-up proceedings.

Issue (i): Whether payments made after commencement of winding up were void and liable to be refunded or validated under section 536(2).

Analysis: Payments made after the commencement of winding up are within the statutory prohibition against dispositions of company property, unless the court otherwise orders. Transactions may be validated only if they were bona fide, honest, and made in the ordinary course of the company's current trade. On the facts, the payments of Rs. 1,000 and Rs. 12,000 were treated as payments by the company towards its debt, but they were not shown to be part of any current business activity. The amount of Rs. 12,417.15 was found to be an asset of a director personally and not of the company.

Conclusion: The payments were not validated as transactions in the ordinary course of business, and the company could not claim the Rs. 12,417.15 as company assets.

Issue (ii): Whether the application for refund was barred by limitation.

Analysis: The application was treated as governed by section 536(2), which contains no express period of limitation. Article 137 of the Limitation Act, 1963 was held not to bar the application in the context of pending winding-up proceedings.

Conclusion: The application was not barred by limitation.

Issue (iii): Whether the company court had jurisdiction to order refund in winding-up proceedings.

Analysis: The court held that section 536(2), read with the inherent powers preserved by rule 9 of the Companies (Court) Rules, 1959, empowered the company court to direct repayment in appropriate cases arising in liquidation. The contrary view was not accepted.

Conclusion: The company court had jurisdiction to order refund.

Final Conclusion: The winding-up court affirmed its power to refuse validation of unauthorised post-commencement payments and to direct refund where the money was company property, while rejecting the limitation objection.

Ratio Decidendi: Post-commencement dispositions of a company's property are void unless validated by the court, validation is confined to bona fide transactions in the ordinary course of current trade, and the company court may direct refund in winding-up proceedings.

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