M/S DIMENSION INVESTMENT & SECURITIES LTD v. M/s Grandeur Interiors (P) Ltd.

1. The present application has been moved under Section 446 of the Companies Act, 1956[1] on behalf of the Official Liquidator[2] against a debtor of the company (in liquidation) i.e., M/s Grandeur

1 The Act 2 OL Interiors (P) Ltd., seeking recovery of an amount of Rs 80,00,000/- as principle, with interest @18% per annum till the date of realization, along with the Administration Expenses incurred by the Official Liquidator.

BRIEF FACTS:

2. Shorn of unnecessary details, in the instant matter arising out of an application under section 433 & 434 of the Act, respondent namely, M/s Dimension Investment & Securities Ltd., was ordered to be wound up vide order of this court dated 03.06.2011, and thereby an Official Liquidator attached to this court has been appointed as its Liquidator.

3. Pursuant to the directions of this court, the Serious Fraud Investigation Office[3] embarked on an investigation into the monetary transactions undertaken by the company (in liquidation), and submitted its report in this regard on 07.03.2012 with the office of the OL, which inter alia brought to the notice of the OL that the company (in liquidation) had paid a sum of Rs. 80,00,000 /-, as advance payment to the respondent/debtors – M/s Grandeur Interiors (P) Ltd., for the purchase of certain modular kitchens and wardrobes. It was reported that no such kitchens or wardrobes were supplied by the debtor M/s Grandeur Interiors (P) Ltd. to the company (in liquidation) and neither was the amount of Rs. 80,00,000/- refunded. Further, it was the case of the applicant/OL that such amount was illegally transferred to the debtor company, by the Ex-Director of the company (in liquidation) – Mr. Uday Dutt, who did not have the authority to do so. It was brought out that there was no evidence to suggest that the company (in liquidation) required such kitchens/wardrobes and since the same were not supplied by the respondent/debtor, the respondent/debtor is not entitled to retain the amount paid to it as advance payment, and should therefore, refund the sum of Rs. 80,00,000/- along with interest @ 18 per cent per annum till the date of realization. SUBMISSIONS:

4. On behalf of the applicant/OL, it has been submitted that although a notice was served upon the respondent/debtor company on 12.07.2012, and thereafter, on 01.06.2017 to pay the amount of Rs. 80,00,000/-, the debtor M/s Grandeur Interiors (P) Ltd. has failed to do the needful and has neglected to refund the said sum to the applicant company.

5. On the other hand, a reply has been filed on behalf of M/s Grandeur Interiors (P) Ltd. along with supporting affidavit of its Director dated 26.09.2018 wherein the application is opposed. It stated on behalf of the respondent/debtor that the order for the supply of modular kitchens/wardrobes was placed in the month of April 2018 and the payment in this regard was made on 10.04.2008; and thereafter, an order for the goods was placed by the respondent company with its counter-part in Italy, and it has been averred in the the reply filed by the respondent/debtor the Director of the company (in liquidation) failed to take delivery of the goods. Thus, claiming that there was no breach of contract by the debtor/respondent, it is 3 SFIO submitted that the period of limitation for the claim of recovery would begin from the date the payment was made, and that such period expired on 10.04.2011, which was even prior to the order dated 03.06.2011, vide which the company (in liquidation) was ordered to be wound up, and thus, the claim is barred under Section 458A of the Act

ANALYSIS AND DECISION:

6. Having heard the parties and on perusal of the record, in view of the chronological sequence of events leading to filing of this application, it would be expedient to refer to Section 458A of the Companies Act, 1956, which reads as under: “458A. Exclusion of certain time in computing periods of limitation.- Notwithstanding anything in the Indian Limitation Act, 1908 (9 of

1908) or in any other law for the time being in force, in computing the period of limitation prescribed for any suit or application in the name and on behalf of a company which is being wound up by the [Tribunal], the period from the date of commencement of winding up of the company to the date on which the winding up order is made (both inclusive) and a period of one year immediately following the date of the winding up order shall be excluded.

7. A careful perusal of the aforesaid provision would show that it has overriding effect over the provisions of the Limitation Act and in proceedings under the Act, the period of limitation would commence from the date of passing of order on winding up and excluding a period of one year immediately following the date of winding up order. The Supreme Court in the case of Karnataka Steel & Wire Products v. Kohinoor Rolling Shutters & Engg.Works[4] held as under:

8. Reverting to the instant matter, evidently, the order for winding up was passed by this court on 03.06.2011, whereby an OL was appointed as Provisional Liquidator. It is uncontroverted that the payment was made to the respondent company on 10.04.2008, and therefore, the initial period of limitation for re-claiming the amount was three years i.e., 10.04.2011, which of course was before the order of winding up was passed.

9. On a careful perusal of Section 458A of the Act, subsequent to the Provisional Liquidator being appointed and taking over the charge, the period of limitation for claiming the recovery of such amount commenced on 03.06.2011 and extended by another year, eventually, by all means expired on 03.06.2015. It is also borne out from the record that the present application by the OL has been filed on 26.10.2017.

10. Ex-facie, the application moved on behalf of the applicant / OL for recovery of the amount claimed alongwith interest is barred by limitation in terms of Section 458A of the Act.