' These four petitions (C.
0. 37/73, 38/73, 39/73 and 40/73) arise out of the same winding-up proceedings and involve similar points. They are, therefore, being disposed of together.
2. The Official Liquidator in the matter of New Jhelum Transport Company Ltd. (in Liquidation) has by four separate petitions under section 186 of the Companies Act, made claim and prayed for the payment of Rs, 2,000. Rs, 1,474 10, Rs, 1,500 and Rs, 2,493.60 against the four respondents in these petitions respectively. Two of the respondents, in C. M. 37/73 and 39/73 have been the Directors of the Company. The others in C.
0. 38/73 and 4073 are merely contributories. Vide statements made by their counsel, the liability was admitted from the respondent's side in C.
0. 37/73 and 39/73 on 22-3-1974. In the written statement submitted in C. O. 38/73 and 40/73, however, the liability was denied. Accordingly the statement of the Official Liquidator was recorded on 10-6-1976 wherein he asserted and relied on : (a) the entries in the books of the Company; (b) the entries in the last balance-sheet; (c) admission from the respondents' side in general meeting held on 19-8-1971 to the effect that these entries are genuine and correct; (d) the minutes prepared for the said meeting to which was annexed a list of liabilities having been duly signed by Khawaja Dilawar Hussain respondent on his own behalf as also on behalf of his firm in token of correctness of those minutes and list of liabilities; (e) the list of contributories together with their respective liabilities filed in the Court was not objected to by said Khawaja Dilawar Hussain respondent; and lastly, (f) record of claims submitted from the respondents' side wherein affidavits were filed containing the admission of these liabilities. Opportunity was afforded to the learned counsel for the respondents to rebut the material relied upon by the Official Liquidator. He while denying, on instructions received from his client, that any admission was made in the general meeting held on 19-8-1971, showed lack of instructions or knowledge with regard to the signing of the minutes containing liabiliies of his clients or no objection having been raised on their behalf on the list of contributories and/or any affidavit having been submitted on their behalf admitting the liabilities.
When questioned as to when he will be able to answer these questions he replied "1 will be able to give the answers within a fort get as my client is now in U. K". The case was adjourned to 24.6-76: On the said date, learned counsel stated that "despite his best efforts and having sent a telegram, no one has given him fresh instructions with regard to the questions which were raised during the last hearing." He was allowed one more adjournment till 15-7-1976 to obtain instructions. It was further directed that if he is unable to obtain any instructions, he should come prepared for arguments on the basis of the facts already on record." The claims against the respondents, made in the petitions in addition to the material relied upon by the Official Liquidator is supported by his affidavits sworn in 1973 and placed on the record of these files. There is no rebuttal from the respondents' side worth the name. Even the written statements submitted by the learned counsel are without verifications. Thus, the claims made by the Official Liquidator stand established.
3. In this background; that in all the four cases the liabilities of the respondents either having been admitted or proved through admissions or otherwise, arguments were addressed from both the sides on legal questions. The three common objections to the petition raised from the respondent's side are-
(i) the petitions by the Official Liquidator and the claim made therein are time-barred;
(ii) that the amounts allegedly due to the respondents from the Company side should be permitted to be set off 'against the claim of the Company;
(iii) the decisions of these petitions should be postponed till the final dissolution of the Company; and lastly,
(iv) in C.
0. 38/73 and 40/73 plea was taken that suits for rendition of accounts having been filed from the side of the respondents, there is no justification for following the claim of the Company under section 186 of the Companies Act.
4. In so far as the first three points are concerned in similar circumstances in this very case, on the application of the Official Liquidator against several other individuals, the then learned Company Judge accepted/decreed the petitioner's claims and directed that the counter claim set up from the respondent's side, if any, would have their own course. The respondents may proceed accordingly, and the Official Liquidator might be moved by the claimants for any relief to which they might be entitled. These orders were passed on C. Os. 36/73, 41/73, 42/73, 43/73, 44/73 and 45/73. I respectfully follow the approach of the learned Company Judge in the said matters, in these petitions as well.
5. Before passing on to the next question I want to make a brief reference to the case-law cited at the bar. In Sh. Alauddin v. The Official Liquidator, The Central Exchange Bank Ltd. (In Liquidation) (1) and In the matter of Pindi-Kashmir Transport Ltd. (In Liquidation) (2), both pro-Division Bench authories, it was held that in proceedings under section 186 and/or 235 of the Companies Act, the claims of the creditors (contributories-Directors) cannot be allowed to be set-off against the amounts recoverable on behalf of the Company, from them.
6. Benares Bank Ltd. Benares Shri Nath Shah v. Official Liquidator (3), I. C. Chandiok, Liquidator of Public Benefit Provident Insurance Society Ltd. v . Pearey Lal and others (4) and Hansraj Gupta and others v. Dehra Dun Mussoorie Electric Tramway Co. Ltd. (5) were cited on question of Limitation and related controversy. It is not necessary to deal with the Allahabad cases because the Full Bench thereof purports to have followed the decision of the judicial committee in the above cited Privy Council case. It was held therein that a petition under section 186 of the Companies Act is not a suit nor is it an application covered under explanation to section 3 of the Limitation Act. The said provision, therefore, prima facie is not attracted. In so far as the filing of the claim under the Companies Act is concerned, however, even if it is an application referred to under section 3, Article 181 (Limitation Act) prescribes three years limitation "from the time when the rights, to apply accrue which time would be not earlier than the date of winding-up order". It was concluded that "from either point of view the application by liquidators, if otherwise properly made under and within the provisions of section 186, Companies Act, is not one which must be dismissed by reason of section 3, Limitation Act. It is either an application made within time, or it is an application made for which no period of B limitation is prescribed. The case may be a casus omissus", These observations are fully attracted to these matters. These petitions, in any case, having been moved within 3 years of the winding-up order, are not time barred. The other question dealt with in Privy Council case does not actively arise in this case. The foregoing discussion shows that the liability
(1) PLD 1972 Lah. 552 (2) PLD 1967 Lah. 811
(3) AIR 1940 All. 544 (4) AIR 1942 All. 136
(5) AIR 1933 P C 63 to pay the amounts claimed by the Official Liquidator has been admitted during the proceedings conducted by this Court any/or under its authority by the Official Liquidator. Thus, it is not necessary to examine the other question dealt with in the Privy Council case with regard to the connotation of the expressions "for the time being" and "money due from" employed in and understood in the context of the objects and intention underlying section 186 of the Companies Act.
7. After hearing the learned counsel I did not consider it necessary to stay the proceedings in these matters till either the final dissolution of the Company or on account of the filing of the suits for rendition of accounts from respondents' side in C. Os. 38/73 and 40/73. As observed in the case of Sh. Alauddin, the principle underlying the bar of set-off in such like case is that "where a person entitled to participate in a fund is also bound to make a contribution in aid of that fund, he cannot be allowed to participate until he has fulfilled his duty to contribute." Where as a result of the finalization of the winding-up proceedings or the suits for rendition of accounts, if the respondents are found entitled to recover any amount from the Company, they might then have the right, subject to other priorities and conditions, to rateable payment out of the entire assets and funds of the Company. Unless the matters and claims like the present one ate processed and finalized before the final dissolution, it may not be possible to determine the final assets and funds available for distribution.
8. In the light of the above discussion I find no merit in the objections raised and arguments advanced from the respondents' side. These four petitions are accordingly allowed. There shall be no order as to costs.
9. If any of the respondents wants to seek the facility of payment by instalments, application/s might be made to the Official Liquidator.