Case: Ajay G. Podar Vs. Official Liquidator Of J.S.&amp;W.M

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 that day. The period of five years referred to in Section 543(2) ofthe 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 proceedings filed on 1.12.89 stood filed beyond limitation as prescribed under 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.

Reasoning:
9. On reading the provisions of Section 458A and Section 543(2) of the Limitation Act, we find that there is a clear dichotomy between the concept of the "period of limitation" on 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 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 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 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.Coming to the provisions of the Companies Act, we 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) does not rule out the applicability of Sections 12 to 24 in Part III of the Limitation Act. Part II of the Limitation Act deals with limitation of suits, appeals and applications whereas Part III deals with the computation of period of limitation. Similarly, in our view Section 543(2) deals with limitation for applications/claims 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 on behalf of the appellant that by virtue of Section 458A the period of limitation is extended by one year. Part III of the Limitation Act excludes certain circumstances mentioned in Sections 12 to 24 for computation of the period of limitation. Similarly, Section 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 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 therefrom. If this period of limitation is to stand excluded it is only by virtue of Section 458A which circumstance is not contemplated 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 also vide Section 458A a special 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 appellant. In our view, Section 458A excludes the period 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. Therefore, it is a case of exclusion and not extension of the period of limitation of five years prescribed under Section 543(2) of the Companiesfind no merit in this argument. 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 Section 458A because in that event the O.L. is said to have filed a suit not on behalf of the company but on 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 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, 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 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 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 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 cannot 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 then Section 457 of the Companies Act would apply. Section 458A of the Companies Act is intended to extend the limitation period for the benefit of the company (in liquidation) and the O.L. appointed to carry on its winding up process by collecting the 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 assets. He has also to find resources for conducting the proceedings. The proceedings initiated by him by way of judges 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 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 theour view, in the 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 . Pattnaik Mines (Pvt.) Ltd. (supra) is not correct. We may further state that the view taken by the Bombay High Court also finds support in the case of Official Liquidator vs. T.J. Swamy and others - 1992 (73) CompCas 583 in which the Andhra Pradesh High Court has held that misfeasance proceedings are proceedings initiated by the O.L. in the name of 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.