This appeal, brought under Clause 10 of the Letters Patent, challenges an order of the learned Company Judge made on a petition by the Official Liquidator for the settlement of the list of creditors. The dispute concerns a single creditor: M/s. Ram Chand Puri and Sons. It was found that a sum of Rs. 2,359-7-9 was due from the Lahore Enamelling and Stamping Co., Ltd. (in liquidation) to M/s. Ram Chand Puri and Sons. The learned Company Judge accepted the contention that the debt was barred by limitation and rejected the creditor's claim. M/s. Ram Chand Puri and Sons appealed; the sole question before the appellate court was whether the creditor's claim was barred by time (i.e., by limitation).

Relevant dates recorded in the opinion: the winding up petition was presented on 21 April 1952; the Company was ordered to be wound up by the Court on 23 September 1953. It was admitted by all parties that on the date the winding up petition was filed the debt was within limitation, but the debt became barred during the interval between the filing of the petition and the making of the winding up order.

Legal Issues Presented

Whether a debt that was recoverable (within limitation) on the date of the filing of a winding up petition but became time-barred before the winding up order is made is nonetheless a "provable debt" under the Companies Act (i.e., whether the relevant date for provability/limitation is the date of filing the petition or the date of the winding up order).
Whether the provisions of Section 168 of the Companies Act (that a winding up by the Courts shall be deemed to commence at the time of presentation of the petition) operate to preserve a creditor's right to prove a debt which was within limitation on the date the winding up petition was filed.

Arguments of the Parties

Learned Company Judge's Reasoning (as recorded in the opinion)

The learned Company Judge held that the date of the winding up petition is not the relevant date for the purpose of limitation; rather, limitation continues to run until the winding up order is made.
He reasoned that there is no statutory bar to presenting a civil suit or instituting other proceedings against a company after a petition for liquidation has been made and before the winding up order is made; therefore limitation against such suits continues to run during that period.
He considered that Section 168 of the Companies Act could not be held to control or suspend the bar of limitation with respect to suits and other proceedings, and that there is no principle of law outside the Limitation Act by which limitation can be suspended except where the statute provides such an exception.
He expressed concern that a creditor would be incurring risk if he speculated on the success of a winding up petition and allowed his remedy in a civil court to become barred in the meantime.

Respondent's (Opposing) Reliance and Arguments (as recorded)

Mr. Bhagirath Das (for the respondents) relied on authorities such as Hem Raj v. Krishan Lal (AIR 1928 Lah 361) and other decisions distinguishing the effect of Section 28(7) of the Provincial Insolvency Act — arguing that certain specific insolvency provisions could not be altered by the deemed-date provisions.
He drew attention to observations in various cases (notably some Lahore and Bombay decisions) which were argued to support the Company Judge's reluctance to extend limitation by extraneous circumstances.

Appellant's Position (as recorded)

The appellant (M/s. Ram Chand Puri and Sons) appealed the Company Judge's rejection of their claim on the ground that the debt should not be treated as time-barred because it was within limitation when the winding up petition was filed. The opinion frames the appeal as turning on that question, but the text does not elaborate a detailed line-by-line account of the appellant's submissions beyond that central contention.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Nizam v. Babu Ram, AIR 1933 Lah 688	Held that s.34 of the Provincial Insolvency Act is governed by sub‑section (7) of s.28: a debt becoming barred between filing and adjudication was treated as provable because the adjudication relates back to the filing date.	Approved as authority that debts within limitation at the date of filing the insolvency petition are provable; used to support treating the date of filing as relevant under analogous Companies Act provisions.
Byramji Bomanji v. Official Assignee, AIR 1936 Bom 130	Applied the Presidency Towns Insolvency Act (order relates back to act of insolvency); observed that from the date of insolvency the Indian Limitation Act has no application.	Relied on to show that under insolvency law limitation is displaced from the date the insolvency is treated as commencing, supporting the filing-date rule.
Ex Parte Ross; In the matter of Coles, (1827) 2 Gl & J 330	Observation that when a trust for creditors is created (by vesting of property in assignee) debts not already barred at creation are not thereafter affected by lapse of time.	Quoted as an early authority illustrating the principle that vesting/creation of the insolvency event protects debts not yet statute-barred at that event.
Subramania Iyer v. Meenakshisundaram Chettiar, AIR 1937 Mad 577	Division Bench held that date for computing limitation is the date when the application for insolvency is filed; acknowledged pre-existing authority to that effect.	Adopted as supporting the view that limitation stops on filing the application; noted as part of the weight of authority favoring the filing-date rule.
Jwala Prasad v. Jwala Bank Ltd., AIR 1957 All 143	Allahabad High Court held relevant date for limitation was the date of filing the winding up application; part of claim held provable accordingly.	Considered directly analogous and described as "on all fours" with the present case; relied upon to hold that the Companies Act (via s.168) should be treated similarly.
Hem Raj v. Krishan Lal, AIR 1928 Lah 361	Interpreted provisions of s.53 of the Provincial Insolvency Act as clear and not modifiable by s.28(7).	Cited by respondents; the court distinguished this authority as concerning different provisions (s.53) whose wording did not admit modification by s.28(7), and thus not controlling on s.34-type issues.
Magandas Bhukandas v. Bhalchandra Ramrao, AIR 1954 Bom 436	Considered s.78(2) of the Provincial Insolvency Act which prescribes a specific period to be excluded from limitation; held that such specific wording admits no modification by s.28(7).	Distinguished by the court on the basis that s.53 and s.78(2) differ materially in wording and effect from s.34 and cannot be treated as analogous to the present issue.
Fatma Bi v. Nagoorkhan, AIR 1932 Mad 287 (FB)	Facts involved holidays affecting dates; the particular point whether filing-date rule applied to provability was not argued and thus the case was not authority for the contrary proposition.	Rejected as not directly in point: the court recorded that this case does not support the view that the date of adjudication (rather than filing) is the relevant date for limitation under insolvency law.

Court's Reasoning and Analysis

The court approached the issue by analysing the Companies Act provisions and their relationship to insolvency law, and by examining the relevant case law interpreting analogous insolvency statutes.

Key statutory provisions examined in the opinion:

Section 229 of the Companies Act — provides that in winding up of an insolvent company the same rules as under the law of insolvency (regarding rights of secured and unsecured creditors and debts provable) shall prevail; the court treated this as a direct link between company winding up procedure and insolvency principles.
Section 168 of the Companies Act — "A winding up of a company by the Courts shall be deemed to commence at the time of the presentation of the petition for the winding up." The court emphasised this provision as analogous to s.28(7) of the Provincial Insolvency Act.
Section 28(7) of the Provincial Insolvency Act — "An order of adjudication shall relate back to, and take effect from, the date of the presentation of the petition on which it is made." This provision had been judicially held in a number of insolvency cases to make the filing-date the relevant date for provability where s.34(2) is read together with s.28(7).
Section 34(2) of the Provincial Insolvency Act — makes debts "provable" if they are liabilities to which the debtor was subject when adjudged insolvent; the court noted that s.34(2) refers to the date of adjudication but that judicial interpretation had read s.28(7) together with s.34(2) to preserve claims which were within limitation on the filing date.
Section 167 and Section 171 of the Companies Act — s.167 deems the winding up order to operate in favour of all creditors as if made on the joint petition of a creditor and contributory; s.171 places an embargo on certain proceedings after the winding up order; both provisions were used to show the statutory architecture that treats a winding up as operative in relation to creditors from filing-date in important respects.

The court observed that under insolvency law courts have consistently held that where an order of adjudication relates back to the date of presentation of the petition (by virtue of s.28(7)), debts which were within limitation on the date of presentation are to be treated as provable even if they become barred in the interval before the formal adjudication. The court cited multiple authorities (Lahore, Bombay, Madras and Allahabad decisions) applying that principle.

The court considered but distinguished cases where particular insolvency provisions (for example, s.53 or s.78(2) of the Provincial Insolvency Act) were worded such that they could not be altered by the deemed‑date rule in s.28(7). Those cases were held not to be in point because their statutory language differed materially from the s.34 context.

Addressing the Company Judge's concern that the Limitation Act is a self-contained code that should not be affected by "extraneous circumstances", the court explained that the deeming provisions in both the Companies Act (s.168) and the insolvency statutes (s.28(7)) are not mere fictions but specific statutory rules that legitimately affect the date from which limitation must be calculated. The court reasoned that it is coherent and logical for the law to allow a creditor to await the outcome of winding up proceedings without being penalised by lapse of time where statute expressly makes the winding up relate back to the petition date.

Having found a close analogy between the insolvency law and the Companies Act through Section 229, and given the weight of authority under the insolvency statutes, the court concluded that the same rule applies under the Companies Act: a debt which was within limitation on the date of filing the winding up petition is provable and is not barred merely because it became time‑barred before the formal winding up order was made.

Holding and Implications

Holding:

The appeal is allowed. The order of the learned Company Judge is set aside and the claim of M/s. Ram Chand Puri and Sons in respect of Rs. 2,359-7-9 is held to have been proved and not barred by limitation. The appellant is awarded costs in the appeal.

Implications:

Direct effect on parties: The appellant's claim against the company in liquidation is allowed to be proved; the Company Judge's dismissal on the ground of limitation is overturned and the appellant recovers costs in the appeal.
Broader legal implication described by the court: The court held that, by virtue of Section 229 of the Companies Act taken together with Section 168, the rule applied in insolvency cases (that the order relates back to the filing date and preserves claims which were within limitation at the filing date) should apply to company winding up as well. The opinion thus applies the filing-date rule (as recognised under insolvency law) to the provability of debts under the Companies Act in the circumstances presented.
Nature of precedent: The judgment rests upon statutory construction (linking Companies Act provisions with insolvency law provisions) and a line of previous authorities; the text does not purport to state whether a new broad precedent is being created beyond the application to like cases, but the decision applies and confirms the filing-date rule to the facts before the court.

Judge(s): Chief Justice (author of the judgment) and Gurdev Singh, J. (concurred).

Show all summary ...

1. This appeal under Clause 10 of the Letters Patent is directed against an order made by the learned Company Judge on a petition by the Official Liquidator for the settlement of the list of creditors. We are concerned with only one creditor, namely, M/s. Ram Chand Puri and Sons. It has been found as proved that a sum of Rs. 2,359-7-9 was due from the Lahore Enamelling and Stamping Co., Ltd., (in liquidation), to M/s. Ram Chand Puri and Sons. It was, however, contended before the learned Company Judge that this debt was barred by time. The Company Judge allowed this contention and rejected the claim of the creditor. M/s. Ram Chand Puri and Sons have come up in appeal under Clause 10 of the Letters Patent, and the only question for our consideration is whether the claim is barred by time or not.

2. The petition for winding up was presented on the 21st of April. 1952 and the Company was ordered to be wound up by an order of this Court on the 23rd of September, 1953. It is admitted on all sides that on the date the winding up petition was filed, the debt was within limitation and was, therefore, recoverable by means of a civil suit. The debt became barred during the period which expired between the filing of the application and the order of winding up.

The question, therefore, is whether a provable debt is one which is provable on the date on which the winding up order is made or on the date when the application for winding up is made. The learned Judge has taken the view that the date of the winding up petition is not the relevant date. He has come to this conclusion for a number of reasons which he has stated in his judgment. He says, in the first place, that there is no bar against the presentation of a plaint or the institution of other proceedings against a company in respect of which a petition for liquidation has 'been made until the' winding up order is made. He goes on to say:

"A creditor will be incurring risk if he were to speculate on the success of the winding up petition and allow the suit to become barred by efflux of time, hoping that the winding up order would be made."

Therefore, the learned Judge concludes that since a creditor can bring a suit for the recovery of his debt after the winding up petition is made, the limitation against him cannot stop. He took the view that the provisions of Section 168 of the Indian Companies Act cannot be held to control the bar of limitation with respect to suits and other proceedings and, therefore, the claim, which becomes barred by time before the winding up order is made, must be held to be barred by time. Finally, the learned Judge observes:

"There is no principle of law outside the Limitation Act under which limitation can be suspended and exceptions, which ire not provided by the statute, cannot be assumed either on grounds of hardship or of reasonableness."

The learned Judge has referred to a number of cases, although he felt that there was no reported case exactly in point, namely, a case in which it has been held that a debt, which was recoverable and provable on the date of the filing of a winding up petition and becomes barred by time before the order of winding up is made, is not a debt which can be proved under the provisions of the Companies Act.

3. In considering the question of limitation, a reference may be made to the provisions of Section 229 of the Companies Act. The relevant portion of this section after omitting unnecessary phrases reads as follows:

In the winding up of an insolvent company the same rules shall prevail and be observed with regard to the respective rights of secured and unsecured creditors and to debts provable.........as are in force for the time being under the law of insolvency with respect to the estates of persons adjudged insolvent; and all persons who in any such case would be entitled to prove for and receive dividends out of the assets of the company may come in under the winding up and make such claims against the company as they respectively are entitled to by virtue of this section.

Where, therefore, there is nothing in the Companies Act which is repugnant to considerations of limitation etc., relating to debts recoverable under the insolvency law, the provisions of the Provincial Insolvency Act or the Presidency Towns Insolvency Act, as the case may happen to be, may with advantage apply to the case which is being considered under the Companies Act, Section 168 of the Companies Act provides:

"A winding up of a company by the Courts shall be deemed to commence at the time of the presentation of the petition for the winding up."

This is analogous to the provisions of Section 28(7) of the Provincial Insolvency Act which are in the following terms:

"An order of adjudication shall relate back to, and take effect from, the date of the presentation of the petition on which it is made."

The provisions of Section 171 of the Companies Act are somewhat similar to the provisions of Section 28(2) of the Provincial Insolvency Act. Section 171 of the Companies Act places an embargo On certain types of proceedings after the winding up order is made. Similarly, under the Provincial Insolvency Act a similar embargo is placed on legal proceedings when an order of adjudication has-been made. One other section of the companies act may be referred to before discussing the question of limitation on merits. This is section 167 which reads:

"An order for winding up a company shall operate in favour of all the creditors and of all the contributories of the company as if made on the joint petition of a creditor and of a contributory."

4. The implication of this section is that even though a certain creditor was not a party to the petition for winding up, he would be deemed to be a party to the proceedings. He, therefore, enjoys all the benefits and suffers all the liabilities of a party.

5. Under the insolvency law those debts are provable which could be proved on the date the order of adjudication was made. This provision has been interpreted to mean that debts, which were within limitation on the date the application for insolvency was made, shall be deemed to be provable because of the operation of section 28(7). It has been held in a number of cases that the provisions of section 28(7) govern the provisions of Section 34 of the Provincial Insolvency Act which makes provision for the proving of debts. Section 34(2) reads in the following terms:

"Save as provided by Sub-section (1) all debts and liabilities, present or future, certain or contingent to which the debtor is subject when he is adjudged an insolvent, or to which he may become subject before his discharge by reason of any obligation incurred before the date of such adjudication, shall be deemed to be debts provable under this Act."

6. If Section 34(2) is to be read entirely independently of Section 28(7), then it cannot be said that a debt which was provable on the date the application for insolvency was made but not on the date the order of adjudication was made, is provable under the Act, for Section 34(2) makes a specific reference to the date of adjudication and not to the date when the application is filed. But Section 28(7) is also to be read together with Section 34(2), and that feeing so, it has been held in a number of cases that debts, which are provable on the date the application for insolvency is filed, can be proved after the order of adjudication is made.

The first of these cases is Nizam v. Babu Ram, AIR 1933 Lah 688. In this case it was held by a Division Bench of the Lahore High Court that Section 34 is governed by Sub-section (7) of Section 28. In that case a debt had become barred during the period which elapsed between the filing of the petition for insolvency and the making of the order of adjudication. The Lahore High Court held that the debt was within time and was provable. The Bombay High Court came to a similar decision in Byramji Bomanji v. Official Assignee, Bombay, AIR 1936 Bom 130. The Bombay High Court was, in that case, applying the provisions of the Presidency Towns Insolvency Act, and the provision in that Act was to the effect that the order of adjudication relates back to the act of insolvency. While considering the question of limitation, the learned Judges observed:

"Under Section 17 and Section 51, Presidency Towns Insolvency Act, the insolvency commences on the commission of the act of insolvency, and at that date the property of the insolvent vests in the Official Assignee, whose duty it is to administer it, and distribute it amongst the creditors who prove their debts. As from that date the Indian Limitation Act has no application, and the relationship of debtor and creditor ceases to exist.''

7. The learned Judges derived assistance from an observation of the Lord Chancellor of England in Ex Parte Ross; In the matter of Coles, (1827) 2 Gl and J 330:

"Whatever may be the technical objection, the effect of the commission clearly is to vest the property in the assignee for the benefit of the creditors; they are therefore, in fact, trustees: and it is an admitted rule, that unless debts are already barred by the statute of limitations when the trust is created, they are not afterwards affected by lapse of time."

The third case arose in Madras. In that case the provisions of the Provincial Insolvency Act were considered by a Division Bench of the Madras High Court (Subramania Iyer v. Meenakshisundaram Chettiar, AIR 1937 Mad 577). In that case, too, it was held that the date for the purpose of computing limitation is the date when the application for insolvency is filed. Mr. Bhagirath Das, who appeared on behalf of the respondents, drew our attention to certain observations made by Varadachariar, J., in his judgment which, he contended, appeared to show that the opinion of the learned Judge was not entirely in agreement with his decision. These observations are contained in column 2 at p. 577 of the report and are in the following terms:

''Having heard the point fully argued we think it right to say that if the matter were res integra we should have hesitated to come to the conclusion reached or suggested in the cases above referred to." The Division Bench, however, after fully considering the matter, came to the conclusion that the decisions cited before them, including the Lahore and the Bombay cases, to which I have already made a reference, were correct and that limitation stopped on the filing of an application for insolvency. In Jwala Prasad v. Jwala Bank Ltd., (S) AIR 1957 All 143, which came before the Allahabad High Court, the point for consideration was similar to the one before us. The learned Judges observed that the date of the filing of the application for winding up was the relevant date for computing limitation. The question in that case related to the claim for the recovery of the salary of the Managing Director. That part of the claim in respect of the salary, which was within limitation on the date the application for winding up was filed, was held to be provable. In paragraph 5 of the report the following passage appears:

"In order that the claim may be made before the Official Liquidator it should be within time at the date of the order of winding up. The date of the winding up would be treated as the 1st of August, 1949, when the application for winding up was made. The claim for the past salary from 1-7-1939 to 30-6-1943 would be barred by limitation even if the period of limitation be considered as six years under Art. 116 of the Limitation Act."

8. This case seems to me on all fours with the case before us, and the Allahabad High Court held that for the purposes of limitation the date when the application for winding up is made is to be considered the date when the order for winding up is made. This is, in effect, what Section 168 of the Companies Act provides.

9. On the other side Mr. Bhagirath Das relied upon the observations of the Lahore High Court in Hem Raj v. Krishan Lal, AIR 1928 Lah 361. This was a case in which the provisions of Section 53 of the Provincial Insolvency Act were being considered by the Lahore High Court. The learned Judges came to the conclusion that the provisions of section 53 were quite definite and admitted of no ambiguity. There could be no question of modifying these provisions by the provisions of Section 28(7).

The learned Judges also drew attention to the provisions of section 54 which deals with a somewhat similar matter. Similarly, in Magandas Bhukandas v. Bhalchandra Ramrao, AIR 1954 Bom 436, the provisions of Section 78(2) of the Provincial Insolvency Act were considered. In this section, too, it is specifically laid down that the period which must be excluded from limitation is the period which elapses between the making of the order of adjudication and the annulment of that order. This admits of no modification by the provisions of Section 28(7).

The provisions of Sections 53 and 78(2) of the Provincial Insolvency Act are, in no way, similar to the provisions of section 34. under section 34 certain debts are provable on the making of the order of adjudication. Section 28(7) provides that the order of adjudication is to be deemed to have become effective on the date the application for insolvency was filed. sections 34 and 28(7) can be read together, whereas the wording of Sections 53 and 78(2) does not admit of any further modification by any other section.

Our attention was drawn to another case reported as Fatma Bi v. Nagoorkhan, AIR 1932 Mad 287 (FB). In this case the order of adjudication was made on the 22nd of October 1928. The debt, which was under consideration, had become barred on 20-10-1928. This day was a Saturday and a holiday. The following day was a Sunday and on the 22nd the order of adjudication was made as I have already said. The question arose whether the debt was provable or not.

The point, whether the debt was provable because the claim was within limitation on the day the application for insolvency was made, was not raised before the Judges and it was held that because the 20th and 21st were holidays and the order of adjudication was passed on the 22nd of October, the claim was within limitation. Since the point which is under consideration before us was not raised in that form, this decision cannot be said to be an authority for the view that even under the insolvency law the date of adjudication is the relevant date for determining limitation. The volume of authority to the contrary is much greater, and as I have already drawn attention to the fact, the learned Judges of the Madras High Court felt that there was overwhelming weight of authority in favour of the view that the date of the filing of the application was the date from which limitation must be computed.

10. There is nothing novel or undesirable in an extraneous circumstance affecting the Law of Limitation. The learned Single Judge in this case felt reluctant to give effect to the provisions of section 168 in the matter of proving debts because he took the view that the law of limitation is a complete law by itself, and once limitation begins to run, no extraneous circumstance should be allowed to affect it. He observed:

"It seems to be logical, that in the absence of any specific provisions, the determination of period of limitation cannot depend upon an extraneous circumstance, whether the winding up order is going to be passed on a petition, or, on the doubtful fact, whether the petition is going to be pursued or withdrawn"

Under the Insolvency law and also under the Companies Act the order of adjudication or the order of winding up is an extraneous circumstance which affects the question of limitation. Under both laws the final order dates back to the filing of the original petition. This is not a legal fiction but the result of a specific provision of law and must be given full effect to. There is nothing extraordinary or questionable in the fact that limitation is extended by virtue of Section 28(7) in the case of insolvency law and Section 168 in the case of company law.

The creditor may well take the risk to pursue his remedy in a civil court or wait for the decision of the winding up proceedings. He may well say to himself that if the order of winding up is going to be made, it would be so much waste of rime and money on his part to pursue a remedy in a civil Court. The financial state of the company may be such that it may be inadvisable to pursue the ordinary remedy in a Court of law and he may well decide to await the decision of the Company Court and take his chance on receiving a portion of the dividends which would be paid out to creditors. Simply because there is no specific embargo on the filing of the civil suit after the winding up peti tion is presented, it does not mean that he is com pelled to pursue that remedy. The company law specifically provides that once the winding up order is made, no further proceedings or suits can be filed without the leave of the Court, and because the winding up order dates back to the day when the winding up petition was filed, it can be argued quite logically that a creditor is entitled to await the final issue in the matter instead of hurrying to a Court and risking his money and time in pursuing an elusive remedy.

The remedy is, no doubt, elusive because if the order is made, he cannot proceed further with that remedy, and if during the pendency of the winding up petition he obtains a decree, he cannot stand in any better circumstances. His position is no better than it was before, and that being so, there does not seem to me anything anomalous in the limitation being extended in such a way that the creditor can prove his claim if he can show that his debt was not barred on the day the application for winding up was made.

11. It seems to me that there is a close analogy between the insolvency law and the law under the; Companies Act by virtue of the provisions of Section 229 of the Companies Act, and since in a large number o£ cases Courts have held that under the insolvency law a debt, which is provable on the date of the filing of the application for insolvency, is to be deemed a provable debt within the meaning of Section 34(2), it must be held that the same rule would apply to cases under the Companies Act, and that being so, I would hold that the debt of the appellant is provable, and not barred by limitation,

12. I would, therefore, allow this appeal and setting aside the order of the learned Company Judge hold that the claim of the appellant in respect of Rs. 2,359/7/9 has been proved. The appellant will recover costs in appeal.

Gurdev Singh, J.

13. I agree with my Lord the Chief Justice.