Benetton India Private Limited Vs Official Liquidator (Karnataka High Court)
The appeal before the Karnataka High Court arose from an order dated 14.03.2024 passed by the Company Judge holding that a recovery application filed by the Official Liquidator under Section 446(2)(b) of the Companies Act, 1956 was within limitation. The Official Liquidator represented a company in liquidation against which a demand notice had been issued to the appellant on 19.12.2011. Winding-up petitions were filed between 2012 and 2014, culminating in a winding-up order on 31.07.2015 and appointment of the Official Liquidator. The statement of affairs from the ex-directors was filed only on 01.07.2022. Relying on this statement and the old demand notice, the Official Liquidator filed a recovery application on 19.04.2023 claiming dues of over ₹6.48 crore.
The Company Judge held the application to be within limitation by applying Section 458A of the Act, reasoning that the Official Liquidator lacked knowledge of outstanding dues until receipt of the statement of affairs and that limitation stood excluded accordingly. The appellant challenged this finding, arguing that the order impermissibly extended limitation beyond statutory limits and relied on judicial precedents to contend that courts cannot enlarge limitation periods prescribed by law.
The High Court accepted the appellant’s submissions. It emphasized that Section 454(3) mandates filing of the statement of affairs within 21 days of the winding-up order, extendable only up to three months for special reasons. Section 458A provides a specific and limited exclusion of time, premised on timely compliance with Section 454. The Court noted that the statement of affairs had been filed after a delay exceeding 800 days, which had been condoned earlier and not challenged. However, such condonation could not be used to extend limitation for recovery proceedings.
