IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 21-7-2008 CORAM THE HONOURABLE MR.JUSTICE M.CHOCKALINGAM AND THE HONOURABLE MR.JUSTICE K.VENKATARAMAN O.S.A.No.180 of 2003 M/s.Shree Krishna Woollen Mills Private Limited 5-6, Regent Chambers 12th Floor, Nariman Point Bombay 400 021 .. Appellant vs Official Liquidator High Court, Madras as the Official Liquidator of M/s.F.D.Stewart Private Limited (In liquidation) .. Respondent Original side appeal preferred under Clause 15 of Letters Patent read with Order XXXVI Rule 11 of O.S. Rules against the order passed by this Court in Company Application No.1126 of 1989 in Company Petition No.73 of 1985. For Appellant : Mr.T.K.Bhaskar For Respondents : Mr.B.Dhanraj Official Liquidator JUDGMENT
(Judgment of the Court was delivered by M.CHOCKALINGAM, J.)
This appeal challenges an order of the learned Single Judge in Company Application No.1126 of 1989 in Company Petition No.73 of 1985 whereby the appellant was directed to pay the Official Liquidator a sum of Rs.1,47,797.60 with interest at 12% per annum from 30.8.1984 till the date of payment.
2.The Court heard the learned Counsel on either side.
3.The claim was made by the Official Liquidator by making the instant application stating that a sum of Rs.1,47,797.60 along with interest of Rs.1,53,298.65 from 30.8.1984 thus totalling to Rs.3,01,096.25, along with interest till date of payment is payable by the appellant herein; that the company in liquidation was ordered to be wound up by an order dated 7.9.1987, in Company Petition No.73 of 1985; that the erstwhile Managing Director of the company has delivered the statement of affairs on 14.3.1988; that the Official Liquidator has taken into custody all the books and records of the company which were handed over to him, on 21.1.1988; that after receipt of those documents and also looking into the same, the Liquidator came to know that on the date of winding up, the appellant was liable to pay Rs.1,47,797.60 to Bombay branch of the company in liquidation; that the company had released an advertisement in newspapers on behalf of the appellant herein and raised 63 bills for services rendered from March 1983 to August 1984; that the aggregate amount was Rs.2,55,533.85 out of which a sum of Rs.1,07,736.25 was paid in 14 instalments; that a sum of Rs.1,47,797.60 was due and payable along with interest; that the details of bills raised by the company and the payments made by the appellant, were enclosed and marked in annexure ‘A’; and that 20% was claimed towards interest. It is further averred that the claim was within time in view of the provisions under Article 137 of the Limitation Act read with Sec.18/19 of the said Act and also Sec.458-A of the Companies Act, and thus, it was to be ordered.
4.Contrary to the above, two contentions were raised by the appellant that the claim was barred by time, and there was a bonafide dispute, and hence, the present proceedings were to be rejected.
5.The learned Single Judge after raising two questions as found in the order, and after hearing the submissions made and looking into the materials available, has taken the view and passed the order referred to above, which is the subject matter of challenge.
6.The only question that would arise for consideration would be whether the claim made by the respondent Liquidator was barred by time as contended by the appellant and whether the respondent was entitled for the claim as made by him.
7.Advancing arguments in support of the appeal, the learned Counsel for the appellant in short would submit that the entire claim was barred by limitation; that there is nothing to show that the transactions were continuous, mutual, open and current account; that there was no acceptable documentary evidence; that what was all filed was only the details given in annexure ‘A’; that at no stretch of imagination, it can be taken that the transactions were continuous, mutual, open and current account; that each of the transaction was to be taken as an independent transaction; that the last date of the bill was 30.8.1984 and the last date of payment was 27.3.1984; that in the absence of anything to indicate that the transactions were continuous, mutual, open and current account, it is thoroughly barred by limitation; and that the learned Single Judge without any proof whatsoever has construed it as continuous, mutual, open and current account.
8.The learned Counsel would further add that in the instant case, a specific and certain claim was made by the Official Liquidator; but, he has not produced any invoices raised for every one or all of the claims made; that even as per the averments in the application, these particulars were gathered from the ledgers and account books which he took custody, and thus, it would be quite clear that in the instant case, the principal documentary evidence namely the invoices under which the claim was made, was not filed; and that in the absence of any proof, such a claim could not have been entertained.
9.Added further the learned Counsel that under the provisions of the Companies Act, in a case where the situation arises both the Civil Procedure Code and the provisions of the Evidence Act have got to be followed; that in the instant case, such a procedure for filing the documents in order to prove the claim should have been followed, but not done; that under the circumstances, the entire claim should have been rejected, and hence, the order of the learned Single Judge has got to be set aside.
10.Contrary to the above, it is contended by the respondent Official Liquidator that it is an admitted position that the company went on liquidation; that actually there was a winding up order that was passed on 7.9.1987; that the Liquidator took possession; that the erstwhile Managing Director of the company delivered statement of affairs in the year 1988; that the only available materials which came to his custody were account books and records of the company in liquidation; that in any case, whenever a claim is made, the independent invoices if not taken into custody, could not be filed; that what were all available were actually gone into by the Official Liquidator; that he has given all the necessary particulars; that in the instant case, the total aggregating amount of the liability of the appellant was Rs.2,55,533.85 out of which on 14 occasions a sum of Rs.1,07,736.25 was paid, and it has been given credit to; that the balance was the present claim; that the annexure was filed only after looking into all the particulars found in the ledgers; that under the circumstances, the claim was actually made as per the available records; that they have been scrutinised by the auditors; that the learned Single Judge has also pointed out the same; that further, as far as the limitation was concerned, it is quite clear that what was actually between the parties was a running account; that on number of occasions, invoices were raised, and the liability has also been found; that on 14 occasions, different payments have been made; that they have been given credit to; that all would indicate that it was continuous, mutual, open and current account; that for the purpose of escaping the liability, these contentions were raised; that the learned Single Judge has thoroughly rejected the same, and hence, the appeal has got to be dismissed.
11.The Court paid its anxious consideration on the submissions made. It is not in controversy that a claim has been made for a sum of Rs.1,47,797.60 alleging that the company in liquidation was making advertisement in newspaper on behalf of the appellant from March 1983 to August 1984 which fact was not disputed by the appellant; that the company went on liquidation, and winding up orders were passed on 7.9.1987; that while the Official Liquidator took over possession, he received the statement of affairs from the erstwhile Managing Director on 14.3.1988; and that he also got custody of certain books and records of the company in liquidation on 21.1.1988. Now, at this juncture, it is pertinent to point out that the main contentions that were raised by the appellant’s side, were twofold. Firstly, it was barred by limitation, and secondly, the main and principal documentary evidence was not filed. The learned Single Judge did not agree with either of the contentions and in the considered opinion of this Court, rightly too.
12.As far as the contention that the principal documentary evidence was not filed was concerned, it has got to be discountenanced. According to the learned Counsel for the appellant, as far as these claims were concerned, they were all independent claims, and invoices in respect of independent transactions would have been available, and thus, the Official Liquidator should have recovered the same and produced before the Court in order to prove the claim. Now, at this juncture, it is pertinent to point out that the company went on liquidation, and it was also wound up. What was handed over to him by the erstwhile Managing Director was only the statement of affairs of the company, and also certain books and records of the company were handed over. The Court could expect the best what was available in the hands of the Liquidator, which came to his hands at the time when he took over possession of the company affairs, and the same he could produce before the Court. In the instant case, much comment was made by the appellant’s Counsel on the non-production of the invoices in respect of the particular claim which, in the opinion of the Court, could not be expected from the hands of the Official Liquidator. The Official Liquidator has actually taken into custody certain books and records, and he has also made clear in the course of the affidavit that those were the documents which came to his hand, and if any further documents come to his hands pending the proceedings, he would produce so which would talk of the bonafide. Further he has also gone through all those documents and they were all subjected to the audit of the company. The learned Single Judge has pointed out that the available documents were actually gone into. Once the Official Liquidator has come forward with a specific case to state that claims were made from March 1983 to August 1984, and the aggregating balance was Rs.2,55,533.85, and the appellant has paid Rs.1,07,736.25, this particular part payment as to the aggregated amount on 14 occasions was not disputed. What was available in the hands of the Official Liquidator by way of account books have been perused, and a claim has been made. So long as those particular facts which were made specifically were not denied, and the best available evidence in the hands of the respondent has also been produced, the claim could be accepted. In a given case like this, once the Official Liquidator comes forward with a claim, the Court has to look into whether the claim is bonafide and the claim was made producing sufficient materials in his hands pointing to the claim. In the instant case, as held by the learned Single Judge, it has been correctly done.
13.As far as the question as to the point of limitation was concerned, in the instant case, the contention of the appellant was that each and every transaction was an independent transaction, and the last bill was raised on 30.8.1984, and hence, it was barred by time. The learned Single Judge has clearly pointed out that it was not so. The learned Single Judge has also relied on Sec.19 of the Limitation Act, and further, the period of one year was also available. From the available materials, it could be seen that item 63 was the last bill that was dated 30.8.1984, and item 14 refers to last payment made on 27.3.1984. The provisions of Sec.137 of the Limitation Act and Sec.458-A of the Companies Act were relied on by the Official Liquidator. The last payment was made on 27.3.1984. The period of limitation was available till 8.4.1990, and the application was filed on 7.11.1989, and thus, it was well within time. Both the contentions as to the point of limitation and sufficient proof was not adduced by the Liquidator have been rightly rejected by the learned Single Judge which finding, in the opinion of the Court, is a reasoned one. Nothing requires interference in the order of the learned Single Judge. Accordingly, this original side appeal fails, and the same is dismissed. No costs.
(M.C.,J.) (K.V.,J.)
21-7-2008
Index: yes
Internet: yes
nsv/
M.CHOCKALINGAM, J.
AND
K.VENKATARAMAN, J.
nsv/
OSA No.180 of 2003
Dt: 21-7-2008