JUDGMENT
N.K. Sud, J.
1. This appeal is directed against the judgment and order of the learned Company Judge dated 17.5.1994 whereby the petition of the appellant under Sections 433(e), 434 and 439 of the Companies Act, 1956 (for short ‘the Act’) for winding up of the respondent-company, M/s Hemco Industries Private Limited, Jalandhar (hereinafter called the Company) has been dismissed.
2. Before adverting to the controversy raised in the appeal, the relevant facts may first be noticed.
3. The Company wanted to float some shares with a view to increase its capital. The appellant applied for allotment of 110 shares in his name and sent a duly filled share application to the Company alongwith a sum of Rs. 1.10 lacs vide cheque No. 219479 dated 10.5.1982. The cheque was encashed and receipt admitted by the Company. This amount is also reflected in its balance sheet as share application money. The company, however, did not float any fresh shares and, therefore, none was allotted to the appellant. According to the appellant, the share money paid by him continued to remain with the Company for a few years and it was in the year 1990 that he demanded the return of his money. For this purpose he is said to have written some letters to the Company. Not receiving any response, he sent a registered letter dated 6.12.1990 demanding the return of amount paid by him as share application money alongwith interest. The Company though admitted the receipt of the registered envelope, denied the receipt of this letter claiming that the envelope was empty. This fact was communicated to the appellant by a registered letter dated 13.12.1990. At any rate, the appellant sent another registered letter dated 20.12.1990 calling upon the company to return the amount with interest. The receipt of this letter is admitted by the company. However, in the written statement, it has taken the stand that a reply to this letter was sent on 2.1.1991. The receipt of this reply is, however, denied by the appellant in the replication. Since the share application money was not refunded to the appellant, he sent a registered notice though Counsel under Section 434 of the Act in January 1991 in which three weeks time was given to it for making the refund. Since the company failed to refund the application money even in the said period of three weeks, the appellant filed the present petition under Section 433(c), 434 and 439 of the Act for winding up of the company on the ground that it is unable to pay its debts.
4. The respondent company contested the petition and contended that it had Refunded the share application money of Rs. 1.10 lacs to the appellant in the year 1988. It claimed that the appellant, his wife and children had filed a suit against the company in the Court of Senior Sub Judge, Jalandhar claiming various amounts due to them. However, the suit was compromised on 15.9.1988 and company had paid a consolidated sum of Rs. 1.50 lacs to settle all claims whatsoever of the appellant and his family. The case of the company was that the sum of Rs. 1.50 lacs paid on 15.9.1988 while settling the disputes in the suit included the amount of Rs. 1.10 lacs claimed by the appellant in the present petition. It, therefore, denied that the company was unable to pay its debts. The company also maintained that it had duly sent replies to the statutory notices received from the appellant as per its letter dated 11.2.1992 and 1.10.1993. The petition was also contested on the ground that the claim of the appellant was barred by time and petition for winding up, therefore, it was liable to be dismissed on that ground as well. On the pleadings of the parties, the learned Company Judge formulated the following two questions;-
1. “Whether the amount of Rs. 1.10 lacs which was admittedly lying in deposit with the Company was paid back to the petitioner as alleged by the Company?
2. Whether the claim of the petitioner has become barred by time.” As regards the first question, the learned Company Judge has held that the amount of Rs. 1.10 lacs on account of share application money paid by the appellant to the company had not been refunded as claimed by the company. The learned Company Judge has observed that the dispute in the suit had nothing to do with the sum of Rs. 1.10 lacs that was lying in deposit as share allotment money as the compromise effected in the civil Court was only in respect of amount due against 62 equity shares held by the plaintiffs. The learned Company Judge further observed that the “…. net result is that the appellant kept on claiming the refund of his money and no replies were sent to him and it was the first time that the defence was taken that the amount had been repaid to the appellant in terms of the compromise..”
5. On the question of limitation, the learned Company Judge has accepted the stand of the company that the claim of the appellant is barred by limitation. It has been held that the claim for refund of share application money would be governed by Article 24 of the Limitation Act, 1963 (for short “the 1963 Act”) and not by Article 70 of the said Act as claimed by the appellant. According to the learned Company Judge Article 70 applies to the recovery of movable property deposited or pawned from a depository or pawnee. On the other hand, Article 24 is a provision which specifically deals with the refund of money payable by the defendant to the plaintiff for money received by the defendant for the plaintiffs use. The learned Company Judge, therefore, held that the share application money had been advanced for appellant petitioner’s own use as it was meant for allotment of shares to him and thus the claim of the appellant would be governed by Article 24 of the 1963 Act. Since the period of limitation prescribed in this Article is 3 years from the date when the money is received, the claim made by the appellant by filing the present petition in 1993 was barred by time. Since the Company Judge did not accept the claim of the petitioner that his case was governed by Article 70 of the 1963 Act, he did not go into the question as to when the demand for refund had been refused.
6. Mr. Rajesh Garg, Counsel for the appellant, has contended that since the money advanced by the appellant was a movable property, the claim was to be considered under Article 70 of the 1963 Act and, therefore, the period of limitation had to be computed from the date of refusal after demand. He pointed out that in the present case the date of refusal by the Company would be the date when it failed to respond to the legal notices sent by the appellant in January 1991 and September 1992 demanding the refund. Thus, the learned Counsel contended that the claim of the appellant was within the period of limitation prescribed under Article 70 of the 1963 Act. He also contended that even if the stand of the Company that it had sent replies to the notices vide letters dated 11.2.1991 and 1.10.1993 were to be accepted, the dates of those letters would be the date of refusal after demand and limitation of 3 years under Article 70 of 1963 Act would start from the said dates. Counsel for the appellant has placed reliance on the following authorities as under-
i) Zila Parishad, Ambala v. Banarsi Dass Kapur .
ii) The Central Warehousing Corporation, New Delhi v. Central Bank of India Ltd. .
iii) Union of India v. Gangadhar Mimraj and Anr. A.I.R. 1962 Patna 372.
7. We have heard the Counsel for the parties and have perused the relevant provisions of the 1963 Act and the authorities cited before us. Description of suits as per Articles 24 and 70 is as under:
Article 24.- “For money payable by the defendant to the plaintiff for money received by the defendant, for the plaintiffs use”.
Article 70.- “To recover movable property deposited or pawned for a depository or pawnee.”
8. It is not in dispute that the sum of Rs. 1.10 lacs had been advanced by the appellant for allotment of shares in his name. Thus, the learned Company Judge has correctly held that the money was never meant to be kept by the Company as a deposit and was for the appellant’s own use i.e. for allotment of shares. The claim is, therefore, clearly governed by Article 24 of the 1963 Act. Article 70 applies to the recovery of movable property deposited or pawned. As already observed, the amount was never advanced to the Company as a deposit. The decision of this Court in Banarsi Dass Kapur ‘s case (supra) does not support the claim of the appellant. It has been rightly distinguished by the learned Company Judge as under-
“In Banarsi Dass Kapoor’s case (supra), the plaintiff had filed a suit for the return of security which he had deposited for the due performance of a works contract whereas in the present case, there is no question of any deposit, but the money had been paid to the Company for the use of the petitioner for allotting the shares in his name. The question of the applicability of Article 62 of the Old Act which is equivalent to Article 24 of the Act 1963 Act did not arise for the consideration of the learned Judges. The judgment is therefore, of no help to the petitioner. I, therefore, hold that the claim in the instant case is governed by Article 24 of the 1963 Act and the same is barred by time.”
9. The decisions in Gangadhar Mimraj and Central Warehousing Corporation’s cases (supra) have been cited in support of the contention that the money advanced was a movable property within the meaning of Article 70 of the 1963 Act. This issue is purely of academic interest in view of our finding that Article 70 applies to the recovery of movable property deposited or pawned whereas Article 24 governs a claim of refund of money advanced for plaintiffs own use. Thus, even if the money is assumed to be movable property, the Article 70 would still have no applicability.
10. In view of the above, it is not necessary for us to go into the question as to when the Company had refused to make the refund.
11. In the light of the above discussion, we do not find any merit in this appeal and dismiss the same.