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Date of Decision: 4th February, 2013 INTERACTIVE MEDIA AND COMMUNICATION
SOLUTION PRIVATE LIMITED ..... Appellant
Through Mr. Nikhil Magithia, Advocate.
Through Mr. Darpan Wadhwa, Ms. Meghna Mishra & Mr. Varun Kumar, Advocates.
HON'BLE MR. JUSTICE SIDDHARTH MRIDUL SANJIV KHANNA, J. (ORAL):
This intra-Court appeal impugns order dated 7th December, 2012 passed by the Company Court dismissing the winding up petition under Section 433(e) read with Sections 434 and 439 of the Companies
Act, 1956 (Act, for short) on the ground that the claim was based on the debt, recovery of which is barred under the law of limitation.
JUDGMENT
2. In the grounds of appeal, it is averred that the Limitation Act, 1961 does not apply to a winding up petition under Section 433(e) read with Sections 434 and 439 of the Act. The contention is legally untenable and has to be rejected. Section 433(e) and Section 434(1)(a)of the Act read as under: 2013:DHC:547-DB
3. Section 433(e) is applicable in case a company is unable to pay its debt. A debt will be something which a person is obliged to pay. A right which can be enforced in law. Section 434(1)(a) incorporates a deeming provision. It creates a fiction which gets attracted in case a creditor serves a notice as stipulated in sub-clause (a). The requirement of the said clause that the company in question should be indebted in the sum of Rs.[1] lac then due and requires the said company to pay the sum so due and in case the company neglects to pay the sum etc. within three weeks, a winding up petition under the deeming clause is maintainable. In Niyogi Offset Printing Press Limited versus Doctor Morepen Limited, (2009) 149 Company Cases 467 (Delhi), a similar contention was raised as is apparent from paragraphs 13 and 14:
4. What is stated in the said paragraphs is that no period of limitation has been prescribed under the Limitation Act for filing of a winding up petition. However, Section 433(e) stipulates that a winding up petition is maintainable when a company is unable to pay the debt which is due and payable. We have already interpreted Section 434(1)(a), which incorporates the deeming provision. The debt should be one which is legally recoverable and is not barred under the law of limitation. In Niyogi Offset Printing Press Limited (supra), in paragraph 27, it was accordingly held as under:
5. In the present case, the appellant herein had last raised 39 invoices for Rs.67,86,255/- between April, 2007 to March, 2008. Payment of Rs.38,02,495.11 was made by the respondent on or before 12th January, 2009. Tax at source was also deducted on the payments and the tax deduction at source certificate was made available on 12th January, 2009. The winding up petition in the Delhi High Court was filed on 30th November, 2012. It was returned under office objection and was re-filed on 4th December, 2012. In the winding up petition, there is no allegation that the outstanding amount of Rs.23,54,853/was admitted by the respondent as due and payable to the appellant in their books of accounts or in the annual returns, which was filed with the Registrar of Companies. The company petition was, therefore, filed for recovery of a time barred debt. The company petition does not elaborate and state why and for what reason the debt for which the winding up petition was filed was still due and payable and not barred by limitation.
6. Learned counsel for the appellant has submitted that they should be permitted and allowed to file an application under Section 14 of the Limitation Act as the appellant herein had filed company petition for winding up before the Bombay High Court on 15th January, 2011 and the said company petition was dismissed as withdrawn vide order dated 11th November, 2011, which reads as under: “At the request of Mr. Pandey, allowed to be withdrawn with liberty to file fresh petition after statutory notice is addressed to the respondent and duly served at its registered office.”
7. There are several reasons why we cannot accept the said request. The respondent had filed response to the company petition before the Bombay High Court in the month of June, 2011. In the said reply, they had raised objection to the jurisdiction of the Bombay High Court and had stated as under:
8. We may further record that the company petition which was filed before the Bombay High Court had relied upon notice of demand dated 29th July, 2009, which was issued to the then corporate office and not to the registered office of the respondent company.
9. Thus even after the reply was filed by the respondent in June, 2011, pointing out that the notice under Section 434(1)(a) had not been served at the registered office, the appellant waited till November 11, 2011 when the company petition before the Bombay High Court was withdrawn. The period after the filing of the reply by the respondent in June, 2011 till 11th November, 2011, cannot ex-facie be treated or regarded as a period spent in prosecution of the proceedings in good faith.
10. Even if we exclude the entire period between 15th January, 2011 and 11th November, 2011 spent before the Bombay High Court, the winding up petition would be for a claim beyond the period prescribed. As noticed above, the last payment was received by the appellant and made by the respondent on 12th January, 2009. The period of 3 years, therefore, expired on 12th January, 2012. The appellant at best is entitled to exclusion of 301 days for the period between 15th January, 2011 and 11th November, 2011. The company petition before the Delhi High Court was filed on 30th November, 2012 or after 3 years and 323 days (2012 being a leap year). The claim which is made subject matter of the winding up proceedings would still be barred by limitation as the winding up petition in the Delhi High Court was filed belatedly by 22 days.
11. After the company petition before the Bombay High Court was withdrawn on 11th November, 2011, notice under Section 434(1)(a) was issued on 15th December, 2011 at the registered office of the respondent company. Section 434(1)(a) requires issue of 21 days notice for deeming fiction created by the provision to apply. However, Section 434(1)(a) cannot be strictly equated with mandatory statutory notice like the one required under Section 80 of the Code of Civil Procedure, 1908, when a suit is to be filed against the Government. For initiating civil proceedings for recovery of a debt, no notice under Section 434(1)(a) is required to be issued. Treating the notice under Section 434(1)(a) as equivalent to Section 80 CPC and to give benefit of Section 15(2) of the Limitation Act would, therefore, lead to analogous and somewhat incongruous situation where the creditor cannot sue a company in civil proceedings as time barred debt but can by invoking the exclusion under Section 15(2) of the Limitation Act, sue a company for winding up of company on account of deeming fiction that the company is unable to pay the same debt. However, we need not further dwell and give an affirmation opinion on the said aspect because even if we exclude this period of 21 days under Section 15(2) of the Limitation Act, the winding up petition would still be barred on the date of filing by 1 day. Being in the nature of original proceedings, Section 5 of the Limitation Act would not apply. Even otherwise, we have noticed that the company petition before the Bombay High Court was withdrawn on 11th November, 2011 and then notice dated 15th December, 2011 was issued under Section 434(1)(a). Thereafter, the appellant waited for a year and filed the proceedings before the Delhi High Court on 30th November, 2012. Thus, the appellant is to be blamed for the lapse and delay in filing the company petition and, therefore, has to bear the consequences.
12. In view of the aforesaid position, we do not find any merit in the present appeal and the same is dismissed. At this stage, learned counsel for the appellant requests and prays that the costs of Rs.10,000/- imposed by the learned Single Judge may be made easy. Learned counsel for the respondent, on instructions has stated that he has no objection if the costs are waived. This statement is taken on record. The costs are waived. The appeal is disposed of accordingly. (SANJIV KHANNA) JUDGE (SIDDHARTH MRIDUL)
JUDGE FEBRUARY 04, 2013 VKR/kkb