Case Note & Summary
The Official Liquidator of M/S. NGEF Ltd. (in liquidation) filed an application under Section 446(2)(b) of the Companies Act, 1956, seeking recovery of Rs.2,72,38,000/- from the Managing Director of Karnataka Power Transmission Corporation Limited (KPTCL) for supply, erection, and commissioning of two 50 MVA transformers. The respondent withheld payment alleging that NGEF failed to repair a 20 MVA transformer. The Official Liquidator later conceded that only two invoices (Serial Nos. 3 and 6) were due. The respondent contended that the claim was barred by limitation under Section 458A of the Companies Act, 1956. The winding up petition was filed on 2.9.2002, and the winding up order was made on 3.8.2004. The amounts under the two invoices became due on 6.10.2002. The application was filed on 11.9.2008. The court held that even after excluding the period from the date of filing of the winding up petition to the date of the winding up order (as per Section 458A), the claim was filed beyond the limitation period. The court distinguished the Supreme Court decision in Karnataka Steel and Wire Products v. Kohinoor Rolling Shutters, noting that in that case the claim was filed within time. Accordingly, the application was dismissed as barred by limitation.
Headnote
A) Limitation - Section 458A Companies Act, 1956 - Computation of Limitation Period - The claim by the Official Liquidator for recovery of dues must be filed within the period of limitation as extended by Section 458A, which excludes the period from the date of filing of the winding up petition to the date of the winding up order. In this case, the winding up petition was filed on 2.9.2002 and the winding up order was made on 3.8.2004. The amounts claimed became due on 6.10.2002. The application was filed on 11.9.2008, which is beyond the extended limitation period. Held that the claim is barred by limitation (Paras 5-7).
Issue of Consideration
Whether the claim of the Official Liquidator against the respondent is barred by limitation under Section 458A of the Companies Act, 1956.
Final Decision
The Company Application is dismissed as barred by limitation.
Law Points
- Limitation period for claims by Official Liquidator
- Section 458A of Companies Act
- 1956
- Computation of limitation from date of winding up order
- Application of general law of limitation
Case Details
2015 LawText (KAR) (06) 6
Company Application No.780 of 2008 in Company Petition No.154/2002
K.S.Mahadevan, V.Jayaram (for applicant), S.Sriranga (for respondent)
M/S. NGEF LTD (in liqn) Reptd. By Official Liquidator
The Managing Director, Karnataka Power Transmission Corporation Limited
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Nature of Litigation
Application by Official Liquidator for recovery of dues from a debtor of the company in liquidation.
Remedy Sought
Decree against respondent to pay Rs.2,72,38,000/- with interest at 18% p.a. from 3.8.2004 and future interest.
Filing Reason
Respondent withheld payment for supply of transformers, claiming non-repair of a 20 MVA transformer.
Previous Decisions
Company Petition No.154/2002 filed on 2.9.2002; winding up order made on 3.8.2004.
Issues
Whether the claim of the Official Liquidator is barred by limitation under Section 458A of the Companies Act, 1956.
Submissions/Arguments
Applicant: Claim is within time as per Supreme Court decision in Karnataka Steel and Wire Products v. Kohinoor Rolling Shutters, computing limitation from date of winding up order.
Respondent: Claim is barred by limitation; amounts became due on 6.10.2002, application filed on 11.9.2008, beyond extended period under Section 458A.
Ratio Decidendi
Under Section 458A of the Companies Act, 1956, the period from the date of filing of the winding up petition to the date of the winding up order is excluded for computing limitation. However, even after such exclusion, the claim must be filed within the remaining limitation period. In this case, the amounts became due on 6.10.2002, and the application was filed on 11.9.2008, which is beyond the limitation period even after excluding the period from 2.9.2002 to 3.8.2004.
Judgment Excerpts
The respondent had filed objections to the same denying the liability and contended that even if the liability could be established, it was barred by limitation in terms of Section 458A of the Companies Act, 1956.
The claim in fact, is filed on 11.9.2008 and hence it was clearly barred by time.
Procedural History
Company Petition No.154/2002 filed on 2.9.2002 for winding up of M/S. NGEF Ltd. Winding up order made on 3.8.2004. Official Liquidator issued notice on 12.10.2004 to respondent. Company Application No.780/2008 filed on 11.9.2008 under Section 446(2)(b) for recovery of dues. Respondent filed objections. Hearing concluded on 23.6.2015.
Acts & Sections
- Companies Act, 1956: Section 446(2)(b), Section 458A
- Companies (Court) Rules, 1959: Rule 9
