Anil Partap Singh Chauhan vs Onida Savak Ltd. Etc.
2003 Latest Caselaw 116 Del

ORDER

Manmohan Sarin, J.

1. By this common judgment, I would be deciding applications made under Section 14 of the Limitation Act in the abovementioned five suits and passing consequential orders regarding the maintainability of the suits. These IAs and suits are being decided by this common judgment as the relevant facts and legal issues involved are common. Besides, the suits have been instituted by the same plaintiff.

2. Before proceeding to decide the applications under Section 14 of the Limitation Act in each of these suits, application for extension of time for payment of Court-fee is being taken up. The plaintiff has paid requisite Court-fee in Suits Nos. 2150/02, 2151/02 and 17/03. The plaintiff has moved I.A. 33/03 dated 21-12-2002 in Suit No. 2 of 2003 for extension of time for making payment of Court-fee in Suit No. 20/2003. The application seeks ten days time to make payment of Court-fees. This time has already expired. Mr. R. P. Sharma, learned Counsel, however, prays that time be extended to make payment of the Court-fees. Mr. Sharma submits that even if the decision goes against the plaintiff, the plaintiff intends to prefer an appeal, time to make payment of Court-fee is extended up to 25th January, I.A. 33/03 is allowed in the above terms.

3. Plaintiff has moved similar application, I.A. No. 36/03 in Suit No. 3/2003 seeking extension of time to make payment of the court-fee. Here also the period for which extension was sought has expired. Mr. Sharma submits that further one week's time be granted to pay the Court-fees. Mr. Sharma states that even if the decision goes against the plaintiff, he intends to prefer an appeal. The application is allowed. Time up to 25th January, 2003 is granted to the plaintiff to pay the Court-fees.

4. At the very threshold, it may be noticed that the plaintiff is seeking to recover monies relating to services provided for advertisement and display boards and other allied services rendered by the plaintiff to the respective defendants in these five suits. The plaintiff has raised invoices for the services during the period 1992 to 1996 to all the five defendants. It would not be necessary to go into specific bills and the invoices raised in each of these suits. A common plea urged by Mr. Sharma is that the defendant had acknowledged their liability by issuance of Tax Deduction Certificates. Mr. Sharma submits that if the acknowledgment of liability and conferment of credit as recorded in the TDS certificates is given effect, the period of limitation for institution of suits, had not expired when the plaintiff instituted the Company Petitions Nos. 61/98, 62/98, 63/98, 489/98 and 99/98. Plaintiff therefore seeks exclusion of time taken in prosecution of winding up petitions under Section 14 of the Limitation Act, 1963 as also the further time in obtaining legal advice, prior to institution of suits.

5. It is the admitted position that all the aforesaid five company petitions have been dismissed by the learned Company Judge by reasoned judgments holding that the defendants in these cases had made out a bona fide defense.

6. The question arising for consideration in IAs No. 12141/02 in Suit No. 2150/ 02; IA No. 14142/02 in Suit No. 2151/02, 32/03 in Suit No. 2/2003, 35/03 in Suit No. 3/03 and 97/03 in Suit No. 17/2003 under Section 14 of the Limitation Act, 1963, in all the aforesaid five suits, is whether the plaintiff is entitled to exclusion of the period when the petitions for winding up were instituted till the date of judgments in the said winding up petitions ?

Additionally, exclusion of time is sought for about four months, when the plaintiff sought legal advice on whether a suit could be instituted or not ? Mr. Sharma submits that if the above periods are excluded and the issuance of TDS certificates are treated as acknowledgments of liability, extending the limitation, the suits would be within time.

7. This brings to fore the question of applicability of Section 14 of the Limitation Act, 1963 in cases where the plaintiff/petitioner institutes petition for winding up of the defendant companies and upon not being successful, institutes suits for recovery of the amounts claimed to be due. Before considering this legal issue, it would be appropriate to take note of certain factual aspects as urged by the counsel for the plaintiff.

(i) Mr. Sharma, learned Counsel submits that the plaintiff Mr. Anil Pratap Singh Chauhan and one Baldev Raj Sachdeva had joined as partners and carried on business under the name and style of Angad Communication India. The said partnership concern had been dealing with the products of 'Onida' Group of Companies. The plaintiff claims that the said partnership firm was dissolved on 17-12-1990. A dissolution deed was duly executed. As a result of the dissolution, the plaintiff took over the business of advertisement and display of hoardings and carried out the same under the name and style of M/s. Angad Communications (India) as a sole proprietor.

(ii) Mr. Baldev Raj Sachdeva, another partners, set up three concerns, namely, Angad Panasonic Pvt. Ltd., Angad Electronics and Angad Enterprises. Baldev Raj in these concerns was dealing with the distribution and marketing of the electronic and TV Products of Onida group of companies. It is claimed that the plaintiff had nothing to do with the sale, distribution or marketing of the products of Onida group of the companies, as he was dealing only with the advertisement and display of the hoardings of the Onida group of companies. He had nothing to do with the actual sale of the Onida products. It is claimed that the plaintiff never purchased, sold or distributed any product of the Onida group of companies, after dissolution of the earlier partnership firm.

8. Mr. Sharma submits that the plaintiff had written to Onida group of companies demanding payment of the outstanding amounts that were due for advertisement and display of hoardings for various companies. This letter appears at page 29 in the paper book of Suit No. 2150/02. One of the group companies in response, (at page 36), stated that the amount was subject to reconciliation of the amount payable by Angad Panasonic to Onida group and modus operandi could be discussed with Angad Panasonic. At this stage, it would be appropriate to notice that the learned Company Judge, while deciding the company petitions had taken note of letter dated 24-4-1995, written by the plaintiff to M/s. Adonis India Ltd., which is one of the group companies of Onida group. The letter is in the following terms :

"Dear Sir,

This has reference to our discussions at your office on 20th April, 1995 regarding the Hoarding sites in Delhi Metro. As decided and agreed mutually between you and us, we would like to inform you that we will not accept any sort of deductions or adjustments on our bills beyond 1st April, 1995 against goods supplied or any outstanding on our sister concerns (such as M/s. Angad Panasonic Pvt. Ltd., M/s. Angad Electronics and M/s. Angad Enterprises).

We will appreciate a line of confirmation on the above to maintain your Hoardings effectively and provide prompt service,

Thanking you and assuring you of our best services at all times.

Yours truly

for ANGAD COMMUNICATION (INDIA)     

Sd/-                

Anil Pratap Singh Chauhan         Chief Executive.            

9. The Company Judge duly took notice of this letter to reach a conclusion that the plaintiff himself was amenable to deductions and adjustments on account of other group companies. The plaintiffs own position was that no deductions/adjustments on account of goods or outstandings of sister concerns, will be permitted after April, 1995 for the amount owed by Angad Panasonic Pvt. Ltd., Angad Electronics and Angad Enterprises, which are the concerns of the erstwhile partner Shri Baldev Raj Sachdeva. This would show that prior to 1995, such adjustments were exigible up to 1-4-1995 as payment to plaintiff. The Company Judge therefore held that there was a bona fide dispute raised by the defendants who had claimed adjustment and amounts being owed by Angad Panasonic and Angad Electronics and Angad Enterprises, etc. Mr. Sharma seeks to explain that the aforesaid letter had been written by the plaintiff under pressure to somehow secure his payments. In any case, in my view the aforesaid facts urged by way of background by the learned Counsel would not be determinative of the issue regarding the applicability or otherwise of Section 14 of the Limitation Act, for exclusion of time. Mr. Sharma submits that the plaintiff was bona fide pursuing his remedy in an improper forum by filing company petition and the time spent in pursuing the said remedy should be excluded. He submitted that time spent in pursuing the said remedy should be excluded on the analogy of exclusion of time, as made applicable in arbitration cases, where despite non-applicability of the Limitation Act, 1963 to arbitration proceedings, the time taken in pursuing those proceedings has been excluded for the purpose of institution of a suit and computing the period of limitation therefore. He placed reliance on Ramdutt Ram Kishan Dass v. El Sanoon Co AIR 1929 PC 103 as also on Nitya Nand v. Karam Chand AIR 1939 PC 128.

10. Learned Counsel also attempted to urge that Court could consider directing reconciliation under Section 89 of CPC as amounts were admittedly due.

11. Mr. Sharma, next placed reliance on Chalisgaon Shri Laxrni Narayan Mills Co. Ltd. v. Armit Lal Kalidas Kanji, reported at . In the cited case, the plaintiff lodged claim for damages for breach of contract against a company which was being wound up by the court. The application had been filed before the Joint Liquidators. The liquidators referred the claim to the District Judge who was dealing with the winding up. He investigated and dismissed it on 30-4-1955, holding that the claim could not be disposed of summarily in liquidation proceedings. The District Judge gave leave to file a suit and plaintiff filed a suit for damages. On an objection as to the suit being barred, it was held that the application before the joint liquidators could be considered to be civil proceedings instituted in a Court of first instance, within the meaning of those words in Section 14 of the Limitation Act and the time taken in those proceedings before the liquidators i.e. 14-6-1992 to 30-4-1995 must be excluded for computing the period of limitation for the suit. The rejection of the plaintiffs claim lodged before the Liquidator was held to be liable to be rejected though not on the ground of jurisdiction but as being on a cause of like nature, within the meaning of the phrase under Section 14.

Counsel next relied on Pavan Om Parkash Kejriwal v. Partap Steel Rolling Mills (1935) Ltd., reported at 1992 (2) PLR 640. In the above cited case, a winding up petition had been filed. The Company Court came to the conclusion that the debt was bona fide disputed and that it could not be said that the company was unable to pay the debt. An appeal was preferred. The company was directed to furnish security of immovable property to the satisfaction of the Registrar. The petitioner thereafter was relegated to the remedy of civil suit. The Division Bench also gave the following directions :

"However, it is made clear that the appellant will be entitled to claim benefit under Section 14 of the Limitation Act for the period during which the petition was pending in the Court.

12. Mr. Sharma relies on the above Division Bench judgment of Punjab High Court to submit that the time spent in pursuing the winding up petition before the company court, should be excluded under Section 14 of the Limitation Act.

13. As noticed earlier, the amount being claimed under these five suits are in respect of invoices raised between 1992 to 1996, it is admitted position before me that unless the period during which winding up petitions relating to the subject-matter of the respective suits were being prosecuted is excluded for the purpose of limitation, the five suits would be barred by limitation. This is the position even if the plaintiffs were to receive the benefit of an extension of limitation by the TDS certificates being treated as acknowledgement of liability extending limitation. The net position is that unless the period during which the winding up petitions were pending is excluded, the suits would still be barred by limitation.

14. The question, therefore, to be considered is whether the period spent in pursuing the winding up petition is liable to be excluded or not?. The submissions made by the learned counsel for the plaintiff have already been noted and his reliance has been on Chalisgaon Shri Laxmi Narayan Mills Co. Ltd. v. Armit Lal Kalidas Kanji (supra) and Pavan Om Parkash Kejriwal v. Partap Steel Rolling Mills (1935) Ltd. (supra). As I had heard Mr. R. P. Sharma, Counsel for the plaintiff at length, I considered it appropriate to take assistance from Mr. Manmohan, advocate, who was appointed amices in the matter. Mr. Manmohan has rendered valuable assistance in this matter.

15. Let me notice the legal position with regard to applicability of Section 14 of the Limitation Act, for exclusion of time, especially when exclusion is sought for the period of pendency of winding up petitions.

(i) The first judgment to be noticed is Yeshwant Deorao v. Walchand Ramchand . The Supreme Court considered the question whether the time occupied in insolvency proceedings against the J.D. can be excluded in computing the period of limitation for executing a decree against him. The Court answered the question in the negative, holding that as the proceedings were not for obtaining the same relief. It may be that ultimately in the insolvency proceedings, the decree-holder may be able to realise his debt wholly or in part, but this is a mere consequence or result. Not only is the relief of a different nature in the two proceedings, but the procedure is also widely different. In an action for insolvency, an adjudication of the debtor as insolvent is sought as preliminary to the vesting of his estate and its administration by official receiver for the benefit of creditor, but in an action for execution the money due is sought to be realized for the benefit of decree holder alone by processes such attachment of property and arrest of person/judgment debtor. It would be seen that the position is almost the same as for a petition of winding up and an action for insolvency. It may be noted that a party which preferred a winding up petition is able to recover the monies during the said proceedings, as the company may pay to avoid an order for winding up. The action for winding up is to ensure that a company which is unable to pay its debts is wound up. It is for the benefit of all the creditors. However, the reliefs sought in a petition for winding up and the procedures are totally different from that for a suit for recovery.

(ii) Reference may also be made to Jai Parkash v. Satnarain Singh reported at 1994 Suppl; (1) Supreme Court Cases 153 : (1993 AIR SCW 2946). One of the essential conditions for application of Section 14 of the Limitation Act is that the time spent on earlier proceedings should relate to the same matter which is in issue in the suit. If it was otherwise, exclusion of time would not be permitted, in the instant case, the subject-matter of the winding up petition would be the prayer for winding up of the company for its inability to discharge legitimate debts. while the suit is for recovery of money damages owed to the plaintiff. A learned Single Judge in Diwan Chand Kapoor v. The New Rialto Cinema Pvt. Ltd., reported at (1985) 28 Delhi Law Times 310 very succinctly summed up the legal position as regards the nature of action in a winding up petition and that of eventual suit that may be filed and applicability of Section 14 of the Limitation Act for exclusion of time. It was observed that, "Filing of a winding up petition is not analogous to filling a suit. Section 14 of the Limitation Act would also be of no assistance to the petitioners because the petitions for winding up and the eventual suit for which cause of action may be claimed could not be said to "relate to the same matter in issue." The object of winding up petition is to have the company wound up. Winding up petition is not the forum for adjudication of disputes between the parties nor is it an ordinary mode for recovery of money. The only question with which the winding up Court is concerned is if the company is liable to be wound up.........."

The Supreme Court in Zafar Khan v. Board of Revenue, UP considered the meaning of the expression "same matter in issue" as appearing in Section 14 of the Limitation Act. The Court held that proceedings for restitution under Section 144, CPC, could not be said to be relating to the "same matter in issue" as involved in a subsequent suit for possession under the UP Zamindari Abolition and Land Reforms Act, 1950, for the purposes of Section 4 of the Limitation Act. The Court noted the three essential conditions for application of Section 14 of the Limitation Act. Section 14(1) of the Limitation Act is as under :--

"14(1) In computing the period of limitation for any suit the time during which the plaintiff has been prosecuting with due diligence another civil proceedings, whether in a Court of first instance or of appeal or revision, against the defendant shall be excluded, where the proceeding relates to the same matter in issue and is prosecuted in good faith in a Court which, from defect of jurisdiction or other cause of a like nature, is unable to entertain it."

"In order to attract the application of Section 14(1) the parties seeking its benefit must satisfy the Court that (i) that the party as the plaintiff was prosecuting another civil proceeding with due diligence; (ii) that the earlier proceeding and the later proceeding related to the same matter in issue and (iii) the former proceeding was being prosecuted in good faith in a Court which from defect of jurisdiction or other cause of a like nature is unable to entertain it."

The Court also held that the expression, "cause of a like nature" has to be read ejusdem generis with the expression defect of Jurisdiction. Accordingly, the expression, "other cause of a like nature" must be so interpreted as to convey something analogous to preceding word from defect of jurisdiction. The defect of Jurisdiction goes to the root of the matter as the Court is Incompetent to entertain the proceedings. A party thus seeking benefit of the provision of Section 14 of Limitation Act would not be so entitled, if it failed to get relief in the earlier proceeding not with regard to anything communicated (connected) with the jurisdiction of the Court or some other defect of a like nature. Where therefore, the party failed in the earlier proceedings on merit and not on defect of jurisdiction or other causes of a like nature, it would not be entitled to the benefit of Section 14 of the Limitation Act. The Supreme Court again in Deena v. Bharat Singh while noticing the precondition in application of Section 14 and laying emphasis on the earlier proceedings having been prosecuted the due diligence and good faith reiterated that the words "or other cause of a like nature" are to be construed ejusdem generis. The Court observed "Obviously Section 14 will have no application in a case where the suit is dismissed after adjudication on its merits and not because the Court was unable to entertain it."

16. Let us apply the legal principles enunciated in the foregoing authorities as also the pre-condition, set out before the benefit under Section 14 of the Limitation Act can be claimed. Even in the benefit having in good faith and diligently prosecuting the winding up petition is assumed in favor of the plaintiff, the remaining requirements of Section 14 are not satisfied. As held by the Supreme Court in Yeshwant Deorao v. Walchand Ramachand (supra), the relief sought in an insolvency or in the present case the winding up proceedings and that for a suit for recovery and the procedure are widely different. In Diwan Chand Kapoor v. The New Rialto Cinema Pvt. Ltd. (supra), the learned single Judge of this Court has succinctly brought out the difference in the nature of an action for winding up petition and that of eventual suits, which may be brought out the proceedings cannot be said to "relate to the same matter in issue." I am in respectful agreement with the view expressed in Diwan Chand Kapoor v. The New Rialto Cinema Pvt. Ltd. (supra). The object in a winding up petition is to have a company which is unable to meet its legitimate debts wound up, the same is neither a forum for adjudication of disputes between the parties nor is it the ordinary mode for recovery of money. This apart the three conditions of the earlier proceedings, having been failed on account of defect of jurisdiction or a cause of the like nature is not made in the instant case. A perusal of the order passed, dismissing the winding up petition clearly shows that the winding up petitions in all the cases have been dismissed upon the learned Judge finding that a bona fide defense had been set up by the respondents. The learned Company Judge found that there was a clear admission that between the two groups of companies on either side there have adjustments of claims and counter claims were freely made. The plaintiff was only seeking that there would be no adjustment after 1-4-1995. The Company Judge also noted the submission of the respondent that the petition had been filed as a counter blast to certain suits that had been instituted by the defendant group of companies. There is no doubt upon a perusal of the order passed In winding up petition that the same were dismissed on merit and not on account of any defect in jurisdiction or a defect or objection of a like nature. This being the position the benefit of Section 14 of the Limitation Act cannot be availed of by the plaintiff. Before parting with the case, it would be appropriate to take note of the two decisions relied on by the learned counsel for the plaintiff. In Chalisgaon Shri Laxmi Narayan Mills Co. Ltd. v. Armitlal Kalidas, Kanji (supra), the District Judge had rejected the claim of the liquidator on the ground that it could not be disposed of summarily in the proceeding by way of claim. It appears that the dismissal or rejection was not on merits rather it was on account of a cause of a like nature as defect of jurisdiction. In any case, it was not a dismissal on merits while the present case is wholly distinguishable. In a later decision of the Bombay High Court in Rajan Products v. Jayant Vegoiles and Chemicals Pvt. Ltd. reported at 1990-(CC2)-GJX-0008-(sic) Bom, the Court declined to give benefit of Section 14 of the Limitation Act on the ground that the earlier proceedings for winding up of the company had been initiated relying on the judgment of the Supreme Court in Yeshwant Deorao v. Walachand Ramchand. The Court held that in the Company Petition the plaintiffs had asked for winding up of the company and, therefore, the observations made in the said decision by the Supreme Court definitely would apply and, therefore, the contention tried to be raised that the plaint tiffs are entitled to the exclusion of time under Section 14 of the Limitation Act cannot be considered as having substance. The Court further held that, "even if the plaintiff pursuing a remedy for winding up under the Company Law, they ought to have filed a suit for recovery of the amount due to them within the period of limitation."

17. In view of the foregoing, plaintiff cannot seek any advantage from the decision of the Supreme Court In Chalisgaon Shri Laxmi Narayan Mills Co. Ltd. v. Armitlal Kalidas, Kanji (Supra). Reliance had also been placed by the learned counsel for the plaintiff on the observations made by the High Court of Punjab in Pavan Om Prakash Kejriwal v. Partap Steel Rolling Mills (1935) Ltd. (supra), wherein the Division Bench while deciding an appeal from a decision of the Company Judge on a petition for winding up had directed that the appellant would be entitled to claim benefit under Section 14 of the Limitation Act for the period during which the petition was pending in the Court. A perusal of the said judgment of the Division Bench of the Punjab High Court shows that there I is neither any discussion whatsoever in the said judgment with regard to the satisfaction of the conditions before the benefit under Section 14 of the Limitation Act can be extended nor any legal principle is enunciated based on which the said directions had been given. With respect the aforesaid decision is one which falls under the category of sub silentio and it cannot be treated as a binding precedent. The Supreme Court in Municipal Corporation of Delhi v. Gurnam Kaur had occasioned to deal with the concept of sub silentio. It quoted with the approval the discretion of Professor P.J. Fitzgerald of the concept of sub silentio. "A decision passes sub silentio, in the technical sense that has come to be attached to that phrase, when the particular point of law involved in the decision is not perceived by the Court or present to its mind..............."

The Court further went on to observe, "Precedents sub silento and without argument are of no moment. This rule has ever since been followed. One of the chief reasons for the doctrine of precedent is that a matter that has once been fully argued and decided should not be allowed to be reopened. The weight accorded to dicta varies with the type of dictum. Mere casual expressions carry no weight at all. Not every passing expression of a judge, however, eminent can be treated as an ex cathedra statement having the weight of authority." The judgment of the Division Bench of the Punjab High Court, which has no discussion on as to why the benefit under Section 14 of the Limitation Act is to be given cannot be a binding precedent.

In view of the foregoing discussions, it is held that the plaintiff is not entitled to the benefit of exclusion of time during which the winding up petitions relating to each of the five suits were pending for the purposes of computing the limitation for the suits instituted by the plaintiffs. The essential conditions of Section 14 of the Limitation Act are not fulfillled, as discussed earlier. The winding up petitions having been dismissed on merits and not on account of any defect of jurisdiction or a defect of a like nature. Section 14 cannot be pressed into service. Besides, the nature of the relief in a winding up petition is entirely different and distinct from that in a suit for recovery.

I.A. Nos. 12141/2002, 14142/2002, 32/2003, 35/2003 and 97/2003 are, accordingly, dismissed. The suits are held to be barred by limitation and are, accordingly, dismissed, with no order as to costs.