# AJAY G. PODAR v. OFFICIAL LIQUIDATOR OF J.S. & W.M. AND ORS

- **Citation:** [2008] 11 S.C.R. 145
- **Court:** Supreme Court of India
- **Decided:** 2008-07-22
- **Case number:** Civil Appeal No.4597 of 2008
- **Bench:** S.H. Kapadia, 8. Sudershan Reddy
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/ajay-g-podar-v-official-liquidator-of-j-s-w-m-and-ors-23542
- **Pages:** 16

## Headnote

Companies Act, 1956 - ss. 458A and 543 - Misfeasance
proceedings filed by Official Liquidator - Question of limitation and its computation qua such proceedings - Held:s.458A · c
dealing with computation of the period of limitation has to be
read with s. 543(2).
On 2.12.83, order of winding up of company was
passed by the High Court. The Official Liquidator (O.L)
was appointed on that day. Misfeasance proceedings were D
· filed by the O.L. under s.543(1) of the Companies Act on
J
1.12.89, though the limitation period of five years referred
to in s.543(2) of the said Act had expired on 1.12.1988.
Contention has been raised by the appellant in the
present appeal that the said misfeasance proceedings E
filed on 1.12.89 stood barred by limitation as prescribed
under s.543(2) and that it was not open to the 0.L. to rely
upon and take resort to general limitation provision contemplated by s.458A of the said Act.
Alternatively, the Appellant contended that even if one
F
is to read harmoniously 5. 458A with s;543(2), the former
is enacted to over.ride the provisions of the Limitation Act,
1963 and not the provision of the Companies Act, 1956.
In this connection, the Appellant submitted that since
s.543(2) specifically provides for limitation of five years, it G
is not open to read the said section with s.458A so as to
extend the period of limitation from five years to six years·
by adding one more year to the specific period of limitation of five years prescribed by s.543(2).
145
H
146
SUPREME COURT REPORTS
[2008] 11 S.C.R.
~
A
Appellant next contended that s.458A, in any event,
is not applicable as misfeasance proceedings instituted
by the O.L. cannot be said to be proceeding instituted in
the name and on behalf of the company.
~
iB
Dismissing the appeal, the Court
t
HELD:~.1. On reading the provisions of s.458A and
~ ..
s.543(2) of the Companies Act, it is found that there is a
clear dichotomy between the concept of the "period of
limitation" on one hand and the concept of "computation
c of that period". 5.543(2) limits the time after which misfeasance or breach of trust proceedings, retainer proceedings and misapplication proceedings becomes time
barred. This dichotomy finds place not only in the above
provisions of the Companies Act but also under the proD visions of Limitation Act. Under s.2(f) of the Limitation Act,
the period of limitation is required to be computed in accordance with the provisions of that Act. Further, the Limitation Act not only prescribes the period of limitation for
different types of suits and applications but it also further
E
provides for computation. If any period of limitation is to
be excluded from the prescribed period of limitation the
party has to satisfy any of the appropriate provisions in
ss. 4 to 24 of the Limitation Act. The law of limitation is a
procedurai law. It is addressed to the commencement of
F
a proceeding. [Para 9] [154-G & H; 155-A,B & C]
f
1.2. Although s.543(1) & (2) of the Companies Act pro-
/.- I
vides for locus and forum, there is no provision for computation of the period of limitation. However, s.543(2) does
not rule out the applicability of ss. 12 to 24 in Part Ill of the
G Limitation Act. Part II of the Limitation Act deals with limitation of suits, appeals and applications whereas Part Ill
deals with the computation of period of limitation. Similarly, s.543(2) deals with limitation for applications/claims
>-
mentioned in s.543(1) which includes misfeasance proH ceedings whereas the computation of the period of five
AJAY G. PODAR v. OFFICIAL LIQUIDATOR OF
147
J.S. & W.M. & ORS.
years is contemplated by s.458A of the Companies Act.
A
[Para 11] [155-F,G & H; 156-A]
1.3. There is no merit in the contention of the appellant that by virtue of s.458A, the period of limitation is extended by one year. Part Ill of the Limitation Act excludes B
J
certain circumstances mentioned in ss.12 to 24 for computation of the period of limitation. Similarly, s.458A provides for an additional

## Text

.
[2008] 11 S.C.R. 145
"
~
A
AJAY G. PODAR
v.
OFFICIAL LIQUIDATOR OF J.S. & W.M. AND ORS.
(Civil Appeal No.4597 of 2008)
JULY 22, 2008
B
~
[S.H. KAPADIA AND 8. SUDERSHAN REDDY, JJ.]
Companies Act, 1956 - ss. 458A and 543 - Misfeasance
proceedings filed by Official Liquidator - Question of limitation and its computation qua such proceedings - Held:s.458A · c
dealing with computation of the period of limitation has to be
read with s. 543(2).
On 2.12.83, order of winding up of company was
passed by the High Court. The Official Liquidator (O.L)
was appointed on that day. Misfeasance proceedings were D
· filed by the O.L. under s.543(1) of the Companies Act on
J
1.12.89, though the limitation period of five years referred
to in s.543(2) of the said Act had expired on 1.12.1988.
Contention has been raised by the appellant in the
present appeal that the said misfeasance proceedings E
filed on 1.12.89 stood barred by limitation as prescribed
under s.543(2) and that it was not open to the 0.L. to rely
upon and take resort to general limitation provision contemplated by s.458A of the said Act.
Alternatively, the Appellant contended that even if one
F
is to read harmoniously 5. 458A with s;543(2), the former
is enacted to over.ride the provisions of the Limitation Act,
1963 and not the provision of the Companies Act, 1956.
In this connection, the Appellant submitted that since
s.543(2) specifically provides for limitation of five years, it G
is not open to read the said section with s.458A so as to
extend the period of limitation from five years to six years·
by adding one more year to the specific period of limitation of five years prescribed by s.543(2).
145
H
146
SUPREME COURT REPORTS
[2008] 11 S.C.R.
~
A
Appellant next contended that s.458A, in any event,
is not applicable as misfeasance proceedings instituted
by the O.L. cannot be said to be proceeding instituted in
the name and on behalf of the company.
~
iB
Dismissing the appeal, the Court
t
HELD:~.1. On reading the provisions of s.458A and
~ ..
s.543(2) of the Companies Act, it is found that there is a
clear dichotomy between the concept of the "period of
limitation" on one hand and the concept of "computation
c of that period". 5.543(2) limits the time after which misfeasance or breach of trust proceedings, retainer proceedings and misapplication proceedings becomes time
barred. This dichotomy finds place not only in the above
provisions of the Companies Act but also under the proD visions of Limitation Act. Under s.2(f) of the Limitation Act,
the period of limitation is required to be computed in accordance with the provisions of that Act. Further, the Limitation Act not only prescribes the period of limitation for
different types of suits and applications but it also further
E
provides for computation. If any period of limitation is to
be excluded from the prescribed period of limitation the
party has to satisfy any of the appropriate provisions in
ss. 4 to 24 of the Limitation Act. The law of limitation is a
procedurai law. It is addressed to the commencement of
F
a proceeding. [Para 9] [154-G & H; 155-A,B & C]
f
1.2. Although s.543(1) & (2) of the Companies Act pro-
/.- I
vides for locus and forum, there is no provision for computation of the period of limitation. However, s.543(2) does
not rule out the applicability of ss. 12 to 24 in Part Ill of the
G Limitation Act. Part II of the Limitation Act deals with limitation of suits, appeals and applications whereas Part Ill
deals with the computation of period of limitation. Similarly, s.543(2) deals with limitation for applications/claims
>-
mentioned in s.543(1) which includes misfeasance proH ceedings whereas the computation of the period of five
AJAY G. PODAR v. OFFICIAL LIQUIDATOR OF
147
J.S. & W.M. & ORS.
years is contemplated by s.458A of the Companies Act.
A
[Para 11] [155-F,G & H; 156-A]
1.3. There is no merit in the contention of the appellant that by virtue of s.458A, the period of limitation is extended by one year. Part Ill of the Limitation Act excludes B
J
certain circumstances mentioned in ss.12 to 24 for computation of the period of limitation. Similarly, s.458A provides for an additional circumstance which is not there in
/
the Limitation Act which is required to be taken into account as an item of exclusion in the matter of computa- c
tion of the period of limitation of five years prescribed by
s.543(2). That circumstance is a period spent between the
date of commencement of winding up of the company
and the date on which the winding up order is passed
plus one year therefrom. If this period of limitation is to
D
stand excluded it is only by virtue of s.458A which cir-
·'
cumstance is not contemplated by ss. 12 to 24 of the Limitation Act. Just as a different period of limitation is prescribed for misfeasance proceedings vide s. 543(2) so also
vide S. 458A a special circumstance is indicated as an
item of exclusion of certain time in computing the period E
of limitation. Therefore, there is no conflict between s.
458A and s.543(2) of the Companies Act. If so read, there
is no extension of the period of limitation of five years as
contended on behalf of the appellant. S.458A excludes
the period between the date of commencement of windF
ing up of the company and the date on which the winding up order is passed plus one year therefrom. Therefore, it is a case of exclusion and not extension of the
period of limitation of five years prescribed under s.543(2)
of the Companies Act. [Para 12] [156-8,C,D,E,F]
G
1.4. If book-debt is assigned by the company to a
-_.,
bank which fails to file a suit for recovery of money within
the time prescribed under the Limitation Act, it would not
be open to O.L. to institute the suit under s.458A because
in that event the 0.L. is said to have filed a suit not on
H
148
SUPREME COURT REPORTS
[2008] 11 S.C.R.
A
behalf of the company but on behalf of the bank. It is to
such cases that s.458A will not apply. ·in the present case,
the O.L. was authorized to take steps to recover: assets
both financial and other assets by the company court
under the winding up order. It is pursuant to that authors ity that the O.L. has instituted the misfeasance proceedings for recovery on 1.12.89. The said proceedings have
been initiated in the name of the company and on behalf
of the company to be wound up. The name of the applicant, shows that the O.L. has filed misfeasance proceedC ings in the name of the company and on behalf of the
company. Therefore, s.458A is squarely applicable to misfeasance proceedings instituted by the O.L. in the name
of the company and on behalf of the company in liquidation. [Para 15] [157-H; 158-A,B,C & D]
D
1.5. Once an application is made in the name and on
behalf of the company, s.458A would become applicable.
On this aspect more provision needs to be mentioned.
5.457 deals with powers of liquidator. Under s.457(1) the
liquidator, in a winding up by the Court, has the power
E with the sanction of the Court to institute any suit prosecution or legal proceedings in the name and oh behalf Of
the company. In the present case the winding up order indicates that the company court had granted such a sanction and the misfeasance proceedings have been instituted
F by the O.L. in terms of s.457(1 )(a) of the Limitation Act. The
clai·m on behalf of a company (in liquidation) filed by the
O.L. is in the form of application though it is really a plaint
and hence it cannot be stated that the misfeasance proceedings are proceedings instituted by the O.L. in his own
G independent right. Once it is held that the said application
is in the nature of a plaint then s.457 of the Companies Act
would apply. [Para 15] [158-D,E,F & G]
1.6. SA58A of the Companies Act is intended to extend the limitation period for the benefit of the company
H (in liquidation) and the 0.L. appointed to carry on its wind-
-
AJAY G. PODAR v. OFFICIAL LIQUIDATOR OF
149
J.S. & W.M. & ORS.
ing up process by collecting the assets and distributing A
the same among those entitled to the same. The underlying object in extending the limitation is to enable the O.L.
to take charge of the affairs of the company, to examine
the records, account books, to study the annual statements and accordingly proceed tc> recover and collect the B
assets. He has also to find resources for conducting the
proceedings. The proceedings initiated by him by way of
judge's summons or suit for enforcement of the recoveries, cannot but be on behalf of the company having regard to his source of authority, viz., the provisions of the c
Companies Act and the statutory obligation in discharge
of which he has to act in this behalf. The said Act does
not contemplate his acting in the matter of recoveries
excepting as O.L. and excepting on behalf of the company. [Pa.ra 15] [158-G & H; 159-A,B & C]
o
1.7. Therefore, s.458A of the Companies Act, dealing
with computation of the period of limitation, has to be read
with s.543(2) of that Act. [Para 17] [160-8]
Kabini Papers Ltd. v. M.D. Shivananjappa and Ors.
E
(1999) 98 CompCas 675 and B. Pattnaik Mines (Pvt.) Ltd. v.
Bijoyananda Pattnaik and Ors. (1994) 80 CompCas 237 -
overruled.
Fabrimats (Madras) P. Ltd. (In Liquidation), In re. Official
Liquidator vs. Best and Crompton Engineering Ltd. (1982) 52
F
CompCas 501; Gleitlargor (India) P. Ltd. and H.S. Kam/ani,
Official Liquidator v. Mazagaon Dock Ltd. and Ors. (1985) 57
CompCas 742 and Official Liquidator v: TJ. Swamy and
Ors.(1992) 73 CompCas 583 - approved.
Kosana Ranganayakamma v. Pasupulati Subbamma -
G .
AJR 1967 AP 208 - referred to.
Case Law Reference
AIR 1967 AP 208
referred to
Para 10
H
A
B
150
SUPREME COURT REPORTS
[2008) 11 S.C.R.
(1999) 98 CompCas 675
overruled
Para 13
(1982) 52 CompCas 501
approved
Para 14
(1994) 80 CompCas 237
overruled
Para 16
(1985) 57 CompCas 742
approved
Para 16
(1992) 73 CompCas 583
approved
Para 16
CIVILAPPELLATE JURISDICTION: Civil Appeal No. 4597
of 2008
C
From the final Judgment and Order dated 21.9.2005 of
D
the High Court of Judicature for Rajasthan at Jaipur Bench,
Jaipur in D.B. Special Appeal (Companies Act) No. 32 of 1991
Shyam Divan, Gaurav Goel, Mahesh AgarvJal, Neha
Aggarwal, Rishi Agrawala and E.C. Agrawala for the Appellant.
Puneet Jain, Archana Tiwari, Ashwin V. Koth Math and
Sushil Kumar Jain for the Respondents.
The Judgment of the Court was delivered by
E
S.H. KAPADIA, J. Leave granted.
2. A short question which arises for determination in this
civil appeal is : whether misfeasance proceedings filed by .the
Official Liquidator on 1 .12 .89 under Section 543( 1) of the Companies Act stood barred by limitation provided for in Section
F
543(2) of the said Act.
3. The facts of this case lie in a very narrow compass.
"-
4. On 2.12.83 order of winding up was passed by the High
Court. Official Liquidator ("O.L.", for short) was appointed on
G that day. The period of five years referred to in Section 543(2)
of the Companies Act, 1956 ("companies Act". for short) expired on 1.12.1988. As stated above, misfeasance proceedings were filed by the O.L. on 1.12.89. Therefore, contention
has been raised by the appellant that the said procc 0::dings filed
H
on 1.12.89 stood filed beyond limitation as prescribed under
AJAY G. PODAR v. OFFICIAL LIQUIDATOR OF
151
J.S. & W.M. & ORS. [S.H. KAPADIA, J.]
~
A
Section 543(2) of the said Act. Under the said section the period is five years from the date of the order for winding up or of
the first appointment of the liquidator in the winding up.
5. Mr. Shyam Divan, learned senior counsel appearing on
behalf of the appellant, submitted at the outset that since limitaB
tion is specifically provided for of five years under Section 543(2)
"
of the said Act, it was not open to the 0. L. tO rely upon and take
-
resort to general limitation provision contemplated by Section
458A of the said Act. He further contended that the non-obstante
clause in Section 458A refers to laws other than the Campanies Act and consequently Sections 543(1) and (2) constituted c
a separate Code by itself and, therefore, the said section was
not required to be read with Section 458A. Alternatively, he contended that even if one is to read harmoniously Section 458A
with Section 543(2), the former is enacted to override the provisions of the Limitation Act, 1963 (for short, "Limitation Act") D
and not the provision of the Companies Act, 1956. In this connection, learned counsel submitted that since Section 543(2)
of the Companies Act specifically provides for limitation of five
years, it is not open to read the said section with Section 458A
of the Companies Act so as to extend the period of limitation E
from five years to six years by adding one more year to the
specific period of limitation of five years prescribed by Section
543(2). According to learned counsel Section 543 is a standalone provision as it contemplates a right to recover, a forum
locus and computation of the period of and, therefore, the said
section need not be read with Section 458A and even if it is to
F
be read harmoniously learned counsel submitted that the two
sections operate in different spheres, inasmuch as for all nonmisfeasance proceedings Section 458A would apply whereas
for misfeasance proceedings Section 543(2) alone would apply and if this dichotomy is kept in mind then the period of limiG
tation under Section 543(2) will remain as five years which pe-
-----"\
riod cannot be extended by invoking Section 458A of the said
,..
'
Act. In Section 543 there is a reference to other proceedings
I
~
but in this case we are concerned with the question of limitation
-
.,,,,.
and its computation qua only the misfeasance proceedings.
H
152
SUPREME COURT REPORTS
[2008] 11 S.C.R.
A
6. Learned senior counsel, next contended that Section
_..
458A, in any event, is not applicable as misfeasance proceedings instituted by the O.L. cannot be said to be proceeding instituted in the name and on behalf of the company. In this connection, learned counsel submitted that the intention of the ParB
liament in enacting Section 458A is to keep out Section 543(2)
from its ambit. That, the non-obstante clause in Section 458A
).-
refers to a potential conflict between the provisions of the Companies Act and the Limitation Act or to a potential conflict be-
--
tween Companies Act and any other law for the time being in
c force. In this connection, learned counsel invited our attention
to Section 408(4) of the Companies Act in support of his contention that the words "notwithstanding anything contained in
the Companies Act" which find place in the said sub-section do
not find place in Section 458A which indicates the intention of
D the Parliament to treat Section 543(2) as a stand:-alone provision applicable to only misfeasance proceedings whereas Section 458A in the matter of computation of limitation would apply
J
to all other non-misfeasance proceedings. Therefore, according to learned counsel, the Parliament did not intend to overE
ride vide Section 458A any other provisions of the Companies
Act. On the contrary, according to learned counsel, the Parliament vide Section 458A intended to override potential conflict
between the Companies Act and the Limitation Act on one hand
and any other law for the time being in force.
F
7. Mr. Puneet Jain, learned counsel appearing on behalf
of the Official Liquidator, submitted that Section 458A of the
Companies Act supplementsPart Ill of the Limitation Act. He
~
submitted that Section 458A does not extend the period of limitation of five years mentioned in Section 543(2). Learned counG sel submitted that on the contrary Section 458A only provides
for exclusion in the matter of computation of a period of five
years. limitation under Section 543(2). Learned counsel subI
mitted as and by way of illustration that if a contributor moves
·,
an application in his own name and not in the name of the com-
>-
H pany and on behalf of the company then Section 458A is not
,,,,____
I
L
AJAY G. PODAR v. OFFICIAL LIQUIDATOR OF
153
J.S. & W.M. & ORS. [S.H. KAPADIA, J.]
applicable and in such a situation what would apply is Part Ill A
alone of the Limitation Act. Therefore, according to learned
counsel, there is no merit in the argument advanced on behalf
of the appellant that if Section 458A is read with Section 543(2)
we are extending the period of limitation from five years to six
years. In support of his contention, mentioned hereinabove,
B
learned counsel placed reliance on Sections 3 and 29(2) of the
Limitation Act.
8. Before dealing with the arguments advanced on both
sides it would be necessary for us to quote hereinbelow the
relevant provisions of the Companies Act, 1956 as it stood at C
the relevant time which reads as under :
"Powers of liquidator
457. (1) The liquidator in a winding up by the Court shall
have power, with the sanction of the Court, -
D
(a)
to institute or defer.id any suit, prosecution, or other
legal proceeding, civil or criminal, in the name and
on behalf of the company;
(b)
to (d)
.xxx
.xxx
xxx
(e)
to do all such other things as may be necessary for
winding up the affairs of the company and distributing
its assets.
E
Exclusion of certain time in computing periods of F
limitation.
458A. 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 G
and on behalf of a company which is being wound up
by the Court, the period from the date of
commencement of the 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 H
154
SUPREME COURT REPORTS
[2008] 11 S.C.R.
A
following the date of the winding up order shall be
excluded.
Power of Court to assess damages against delinquent
directors, etc.
B
543. (1) If in the course of winding up a company, it appears
that any person who has taken part in the promotion or
')..
formation of the company, or any past or present director,
managing agent, secretaries and treasurers, manager,
liquidator or officer of the companyc
(a)
has misapplied, or retained, or become liable or
accountable for, any money or property of the
company; or
(b)
has been guilty of any misfeasance or breach of trust
D
in relation to the company;
the Court may, on the application of the Official Liquidator,
,.l
of the liquidator, or of any creditor or contributory, made
within the time specified in that behalf in sub-section (2),
examine into the conduct of the person, director, managing
E
agent, secretaries and treasurers, manager, liquidator or
officer aforesaid, and compel him to repay or restore the
money or property or any part thereof respectively, with
interest at such rate as the Court thinks just, or to contribute
such sum to the assets of the company by way of
F
compensation in respect of the misapplication, retainer,
misfeasance or breach of trust, as the Court thinks just.
,..
(2)
An application under sub-section (1) shall be made
within fiv~ years from the date of the order for winding
G
up, or of the first appointment of the liquidator in the
winding up, or of the misapplication, retainer,
misfeasance or breach of trust, as the case may be,
.....
whichever is longer."
)>.
9. On reading the provisions of Section 458A and Section
H 543(2) of the Companies Act, we find that there is a clear diL
AJAY G. PODAR v. OFFICIAL LIQUIDATOR OF
155
J.S. & W.M. & ORS. [S.H. KAPADIA, J.]
chotomy between the concept of the "period of limitation" on
A
one hand and the concept of "computation of that period". Section 543(2) limits the time after which misfeasance or breach of
trust proceedings, retainer proceedings and misapplication
proceedings becomes time barred. This dichotomy finds place
not only in the above provisions of the Companies Act but also
B
under the provisions of Limitation Act. Under Section 2(f) of the
Limitation Act, the period of limitation is required to be computed in accordance with the provisions of that Act. Further, the
Limitation Act not only prescribes the period of limitation for
different types of suits and applications but it also further pro- c
vides for computation. If any period of limitation is to be excluded from the prescribed period of limitation the party has to
satisfy any of the appropriate provisions in Sections 4 to 24 of
the Limitation Act. The law of limitation is a procedural law. It is
addressed to the commencement of a proceeding.
o
10. In the case of Kosana Ranganayakamma vs.
Pasupulati Subbamma - AIR 1967 AP 208, it has been held
that though the schedule to the Limitation Act did not prescribe
any period of limitation for an application under Section 417(3)
Cr.P.C. 1898 and even though Section 417(4) of that Code preE
scribed a different limitation within the meaning of Section 29(2)
of the Limitation Act still by virtue of Section 3, the other Sections 4 to 24 of the Limitation Act applied to all applications
under Section 417(3) of the 1898 Code.
11. Coming to the provisions of the Companies Act, we
F
find that although Section 543(1) & (2) provides for locus and
forum, there is no provision for computation of the period of
limitation. We are proceeding on the basis that Section 543(2)
provides for a different limitation than the limitation prescribed
under Article 137 of the Limitation Act. However, Section 543(2) G
does not rule out the applicability of Sections 12 to 24 in Part 111
of the Limitation Act. Part II of the Limitation Act deals with limitation of suits, appeals and applications whereas Part Ill deals
with the computation of period of limitation. Similarly, in our view
Section 543(2) deals with limitation for applications/claims H
156
SUPREME COURT REPORTS
[2008) 11 S.C.R.
A
mentioned in Section 543(1) which includes misfeasance proceedings whereas the computation of the period of five years
is contemplated by Section 458A of the Companies Act.
12. In our view, there is no merit in the contention advanced
B on behalf of the appellant that by virtue of Section 458A the
period of limitation is extended by one year. Part II I of the Limitatioo Act excludes certain circumstances mentioned in Sections 12 to 24 for computati_on of the period of limitation. Similarly, Section 458A provides for an ad~itional circumstance
which is not there in the Limitation Act which is required to be
C taken into account as an item of exclusion in the matter of computation of the period of Limitation of five years prescribed by
Section ·543(2). That circumstance is a period spent between
the date of commencement of winding up of the company. and
the date· on which the winding up order is passed plus one year
D
therefrom. If this period of limitation is to stand excluded ·it is
only by virtue of Section 458A which circumstance is not cor.-
templated by Sections 12 to 24 of the Limitation Act. Just as a
different period of limitation is prescribed for misfeasance proceedings vide-section 543(2) so alsovide Section 458Aa speE cial circumstance is indicated as an item of exclusion of certain
time in computing the period of .limitation. Therefore, there is
no conflict between Section 458A and Section 543(2) of .the
Companies Act. If so read, there is no extension of the period
of limitation of five years as contended on behalf of the appelF
lant. In our view, Section 458A excludes the period bt~tween the
date of commencement of winding up of the company and the
.dat_e on which the winding up order is passed p'lus one year
therefrom. Therefore, it is a case of exclusion and not extension of the period of limitation of five years prescribed uhder
G Section 543(2) of the Companies Act.
13. Learned counsel for the appellant placed heavy reliance on the judgment of the Kamataka High Court in the case
of Kabini Papers Ltd. vs. M. D. Sh1vananjappa and others -
1999 (98) CompCas 675, in which it has been held thatthe
H period of five years, prescribed under Section 543(2) of the
.L
AJAY G. PODAR v. OFFICIAL LIQUIDATOR OF
157
J.S. & W.M. & ORS. [S.H. KAPADIA, J.]
Companies Act for initiation of proceedings by O.L., cannot be
A
extended by adding periods mentioned in Section 458A. In our
view, the judgment of the Karnataka High Court, with respect, is
not correct. It has failed to take into account the dichotomy between the two concepts, namely, "the period of limitation" and
"its computation". Moreover, as stated above, Section 458A B
provides for exclusion of the period between the commencement of winding up proceedings and the date when the winding
up order is passed plus one year therefrom. This is the circumstance of exclusion. Therefore, as stated above, there is no
question of extension of the· period of limitation of five years as c
prescribed by Section 543(2).
14. In the case of Fabrimats (Madras) P Ltd. (In Liquidation), In re./Official Liquidator vs. Best and Crompton Engineering Ltd. - 1982 (52) CompCas 501, it has been held by
the Madras High Court that Section 458A of the Companies D
Act is of universal application and does not contemplate any
qualification or exception to the calculation indicated therein
regarding exclusion of the aggregate of two periods mentioned
therein, namely, the period from the date of commencement of
winding up proceedings to the date of the order of winding up E
and one year immediately following such date of order of winding up. We are in agreement with the view expressed by the
Madras High Court in the said judgment.
15. One of the contentions advanced on behalf of the appellant is that Section 458A is not applicable to misfeasance
F
proceedings instituted by the O.L. as such proceedings are not
in the name and on behalf of a company which is being wound
up by the Court. In this connection, reliance is placed on Section 458A which prescribes the mode of computation of the
period of limitation for any suit or an application in the name G
and on behalf of a company which is being wound up by the
Court. Therefore, it is sought to be argued that misfeasance
proceedings instituted by the O.L. is neither a suit nor an application in the name and on behalf of a company which is being
wound up by the Court. We find no merit in this argument. If H
158
SUPREME COURT REPORTS
[2008] 11 S.C.R.
A
book-debt is assigned by the company to a bank which fails to
file a suit for recovery of money within the time prescribed under the Limitation Act, it would not be open to O.L. to institute
the suit under Section 458A because in that event the O.L. is
said to have f_iled a suit not on behalf of the company but on
B behalf of the bank. It is to such cases that Section 458A will not
apply. In the present case, the O.L. was authorized to take steps
to recover assets both financial and other assets by the company court under the winding up order. It is pursuant to that authority that the O.L. has instituted the misfeasance p~oceedC ings for recovery on 1.12.89. The said proceedings have been
initiated in the name of the company and on behalf of the company to be wound up. The name of the applicant, indicated at
page no.27 of the appeal paper book, shows that the O.L. has
filed misfeasance proceedings in the name of the company and
o on behalf of the company. Therefore, in our view, Section 458A
is squarely applicable to misfeasance proceedings instituted
by the O.L. in the name of the company and on behalf of the
company in liquidation. Once an application is made in the name
and on behalf of the company, Section 458A would become
E
applicable. On this aspect more provision needs to be mentioned. Section 457 deals with powers of liquidator. Under Section 457(1) the liquidator, in a winding up by the Court, has the
power with the sanction of the Court to institute any suit prosecution or legal proceedings in the name and on behalf of the
F
company. In the present case the winding up order indicates
that the company court had granted such a sanction and the
misfeasance proceedings have been instituted by the O.L. in
terms of Section 457(1 )(a) of the Limitation Act. The claim on
behalf of a company (in liquidation) filed by the O.L. is in the
form of application though it is really a plaint and hence it canG not be stated that the misfeasance proceedings are proceedings instituted by the O.L. in his own independent right. Once it
is held that the said application is in the nature of a plaint th.en
Section 457 of the Companies Act wuuld apply. Section 458A
of the Companies Act is intended to extend the limitation peH riod for the benefit of the company (in liquidation) and the O.L.
AJAY G. PODAR v. OFFICIAL LIQUIDATOR OF
159
J.S. & W.M. & ORS. [S.H. KAPADIA, J.]
appointed to carry on its winding up process by collecting the A
assets and distributing the same among those entitled to the
same. The underlying object in extending the limitation is to
enable the O.L. to take charge of the affairs of the company, to
examine the records, account books, to study the annual statements and accordingly proceed to recover and collect the asB
sets. He has also to find resources for conducting the proceedings. The proceedings initiated by him by way of judge's summons or suit for enforcement of the recoveries, cannot but be
on behalf of the company having regard to his source of authority, viz., the provisions of the Companies Act and the statutory c
obligation in discharge of which he has to act in this behalf. The
said Act does not contemplate his acting in the matter of recoveries excepting as O.L and excepting on behalf of the company.
16. Before concluding, we may state that learned counsel D
_;
for the appellant placed reliance on the judgment of the Orissa
High Court in the case of B. Pattnaik Mines (Pvt.) Ltd. vs.
Bijoyananda Pattnaik and others - 1994 (BO) CompCas 237,
in which it has been held that when the liquidator or a creditor or
a contributory makes an application under Section 543 he does E
not do so as representing the company but in his own independent right. As against this judgment, learned counsel for the respondents (O.L.) cited before us the judgment of the Bombay
High Court in the case of G/eitlargor (India) P Ltd. and H. S.
Kamlani, Official Liquidator vs. Mazagaon Dock Ltd. and othF
ers - 1985 (57) CompCas 7 42, which has taken the view that
the proceedings initiated by the O.L. for recovery cannot but be
on behalf of the company and that the Companies Act does not
contemplate his acting in the matter of recoveries excepting as
O.L. and excepting on behalf of the company. In our view, in the G
light of what is stated above we approve the judgment of the
Bombay High Court in the case of Gleitlargor (India) P Ltd.
~
(supra) and we further hold that the judgment of the Orissa High
Court in the case of B. Pattnaik Mines (Pvt.) Ltd. (supra) is not
correct. We may further state that the view taken by the Bombay H
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[2008] 11 S.C.R.
A
High Court also finds support in the case of Official Liquidator
vs. TJ. Swamy and others- 1992 (73) CompCas 583 in which
theAndhra Pradesh High Court has held that misfeasance proceedings are proceedings initiated by the O.L. in the name of
B
and on behalf of the company (in liquidation).
17. Therefore, in our view, Section 458A of the Companies Act, dealing with computation of the period of limitation,
has to be read with Section 543(2) of that Act.
18. For the aforestated reasons, we find no merit in this
C civil appeal and the same is accordingly dismissed with no order as to costs.
B.B.B.
Appeal dismissed. -
-,
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