- 1 - HC-KAR NC: 2025:KHC:35342-DB OSA No. 8 of 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 9TH DAY OF SEPTEMBER, 2025 PRESENT THE HON'BLE MR. JUSTICE D K SINGH AND THE HON'BLE MR. JUSTICE VENKATESH NAIK T ORIGINAL SIDE APPEAL NO. 8 OF 2024 BETWEEN: M/S. COMPUTEK INDIA LTD., A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956, AND HAVING ITS REGISTERED OFFICE AT NO. 29, KKH ROAD, NANJAPPA MANSION, BENGALURU - 560 027. REPRESENTED BY ITS MANAGING DIRECTOR, MR. SHASHANK M. SHAH …APPELLANT (BY SRI. ABHINAV RAMANAND, ADVOCATE) AND: 1. KOTAK MAHINDRA BANK LTD., A BANKING COMPANY WITHIN THE MEANING OF THE BANKING REGULATION ACT, 1949 AND REGISTERED UNDER THE COMPANIES ACT, 1956, HAVING ITS REGISTERED OFFICE AT NO. 36-38A, NARIMAN BHAVAN 227, NARIMAN POINT, MUMBAI-400 021, Digitally signed by VASANTHA KUMARY B K Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2025:KHC:35342-DB OSA No. 8 of 2024 AND HAVING ITS BRANCH OFFICE AT 1ST FLOOR, HEERA PARADISE 487, 9TH MAIN ROAD, 4TH BLOCK, JAYANAGAR, BENGALURU-560 011. REPRESENTED BY ITS SENIOR MANAGER, MR. H.RAMESH KUMAR, 2. STATE BANK OF INDIA ASSET RECOVERY MANAGEMENT BRANCH, RESIDENCY ROAD, BENGALURU-560 001, REPRESENTED BY ITS MANAGER. …RESPONDENTS (BY SRI. ACHAL ANAND, ADVOCATE FOR R1; VIDE ORDER DATED 05.09.2024, NOTICE TO R2 IS HELD SUFFICIENT; SRI. K.S.MAHADEVAN, ADVOCATE FOR R3) THIS ORIGINAL SIDE APPEAL IS FILED UNDER SECTION 483 OF COMPANIES ACT, 1956 READ WITH SECTION 4 OF THE KARNATAKA HIGH COURT ACT, 1964 PRAYING TO SET ASIDE THE ORDER DATED 09.02.2024 PASSED BY LEARNED SINGLE JUDGE IN COMPANY PETITION NO.231/2011 ORDERING WINDING UP OF THE APPELLANT COMPANY AND ETC. THIS ORIGINAL SIDE APPEAL, COMING ON FOR ADMISSION, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE D K SINGH and HON'BLE MR. JUSTICE VENKATESH NAIK T - 3 - HC-KAR NC: 2025:KHC:35342-DB OSA No. 8 of 2024 ORAL JUDGMENT (PER: HON'BLE MR. JUSTICE D K SINGH) 1. The present Original Side Appeal has been filed impugning the judgment and order dated 09.02.2024 passed in Company Petition No.231/2011 whereby the learned Company Court has allowed the company petition filed under section 433 (e) and (f) and 434(1) read with Section 439 of the Companies Act, 1956 (Hereinafter referred to as the 'Act, 1956' for short). 2. The Appellant Company had taken loan (cash credit), letter of credit and bank guarantee from the SBI Bank for a sum of Rs.1,05,00,000/- (Rupees One Crore Five Lakhs only). The Appellant Company failed to discharge its loan liability. The outstanding amount rose to a sum of Rs.3,91,50,487/- (Rupees Three Crore Ninety One Lakh Fifty thousand Four hundred and Eighty seven only) as on 10.10.2011. - 4 - HC-KAR NC: 2025:KHC:35342-DB OSA No. 8 of 2024 3. The said loan liability was assigned by the SBI vide the agreement dated 23.03.2006 in favour of the Kotak Mahindra Bank. 4. It appears that the SBI has also filed an original application in O.A.No.525/2002 before the DRT, Bengaluru. The said OA is still pending for final adjudication. 5. When the said OA was pending, respondent No.1-the Kotak Mahindra Bank has filed the company petition No.231/2011 for winding up of the Appellant Company on the ground that the Appellant Company has failed to discharge its liability towards the loan advanced by the SBI. 6. The only question which arises for consideration in this appeal is whether the company petition filed by the respondent-Bank is within the limitation as prescribed under Article 137 of the Limitation Act, 1963 i.e., within - 5 - HC-KAR NC: 2025:KHC:35342-DB OSA No. 8 of 2024 the three years from the date of right to file company petition. 7. Section 238A of the Insolvency And Bankruptcy Code, 2016 specifically provides that provisions of Limitation Act would apply to the Company Petition as well. 8. Section 238A of the Insolvency And Bankruptcy Code, 2016, on reproduction reads as hereunder: 238A. Limitation. "The provisions of the Limitation Act, 1963 (36 of 1963) shall, as far as may be, apply to the proceedings or appeals before the Adjudicating Authority, the National Company Law Appellate Tribunal, the Debt Recovery Tribunal or the Debt Recovery Appellate Tribunal, as the case may be." 9. The Supreme Court has an occasion to consider the applicability of the Limitation Act, 1963, in proceedings under Section 433 of Companies Act, 1956, in the case of - 6 - HC-KAR NC: 2025:KHC:35342-DB OSA No. 8 of 2024 JIGNESH SHAH AND ANOTHER VS UNION OF INDIA AND ANOTHER reported in (2019) 10 SCC 750. 10. Paragraphs 13, 21 and 28 of the said judgment which are relevant are extracted hereunder: "13. Dr Singhvi relied upon a number of judgments in which proceedings under Section 433 of the Companies Act, 1956 had been initiated after suits for recovery had already been filed. These judgments have held that the existence of such suit cannot be construed as having either revived a period of limitation or having extended it, insofar as the winding up proceeding was concerned. Thus, in Hariom Firestock Ltd. v. Sunjal Engg. (P) Ltd., a Single Judge of the Karnataka High Court, in the fact situation of a suit for recovery being filed prior to a winding-up petition being filed, opined: (SCC OnLine Kar para 8) "8. …To my mind, there is a fallacy in this argument because the test that is required to be applied for purposes of ascertaining whether the debt is in existence at a particular point of time is the simple question as to whether it would have been permissible to institute a normal recovery proceeding before a civil court in respect of that debt at that point of time. Applying this test and dehors that fact that the - 7 - HC-KAR NC: 2025:KHC:35342-DB OSA No. 8 of 2024 suit had already been filed, the question is as to whether it would have been permissible to institute a recovery proceeding by way of a suit for enforcing that debt in the year 1995, and the answer to that question has to be in the negative. That being so, the existence of the suit cannot be construed as having either revived the period of limitation or extended it. It only means that those proceedings are pending but it does not give the party a legal right to institute any other proceedings on that basis. It is well-settled law that the limitation is extended only in certain limited situations and that the existence of a suit is not necessarily one of them. In this view of the matter, the second point will have to be answered in favour of the respondents and it will have to be held that there was no enforceable claim in the year 1995, when the present petition was instituted." 21. The aforesaid judgments correctly hold that a suit for recovery based upon a cause of action that is within limitation cannot in any manner impact the separate and independent remedy of a winding-up proceeding. In law, when time begins to run, it can only be extended in the manner provided in the Limitation Act. For example, an acknowledgment of liability under Section 18 of the Limitation Act would certainly extend the limitation period, but a suit for recovery, which is a separate and independent - 8 - HC-KAR NC: 2025:KHC:35342-DB OSA No. 8 of 2024 proceeding distinct from the remedy of winding up would, in no manner, impact the limitation within which the winding-up proceeding is to be filed, by somehow keeping the debt alive for the purpose of the winding-up proceeding. 28. A reading of the aforesaid provisions would show that the starting point of the period of limitation is when the company is unable to pay its debts, and that Section 434 is a deeming provision which refers to three situations in which a company shall be deemed to be "unable to pay its debts" under Section 433(e). In the first situation, if a demand is made by the creditor to whom the company is indebted in a sum exceeding one lakh then due, requiring the company to pay the sum so due, and the company has for three weeks thereafter "neglected to pay the sum", or to secure or compound for it to the reasonable satisfaction of the creditor. "Neglected to pay" would arise only on default to pay the sum due, which would clearly be a fixed date depending on the facts of each case. Equally in the second situation, if execution or other process is issued on a decree or order of any court or tribunal in favour of a creditor of the company, and is returned unsatisfied in whole or in part, default on the part of the debtor company occurs. This again is clearly a fixed date depending on the facts of each case. And in the third situation, - 9 - HC-KAR NC: 2025:KHC:35342-DB OSA No. 8 of 2024 it is necessary to prove to the "satisfaction of the Tribunal" that the company is unable to pay its debts. Here again, the trigger point is the date on which default is committed, on account of which the company is unable to pay its debts. This again is a fixed date that can be proved on the facts of each case. Thus, Section 433(e) read with Section 434 of the Companies Act, 1956 would show that the trigger point for the purpose of limitation for filing of a winding-up petition under Section 433(e) would be the date of default in payment of the debt in any of the three situations mentioned in Section 434." 11. Thus, in Para 28 of the aforesaid judgment, it has specifically been held that the triggering point to count the limitation for filing of the winding up of petition would be the date on which the default is committed by the borrower or the debtor. 12. We are of the view that the default would have been committed prior to 2002 inasmuch as the original application came to be filed by the SBI way back in 2002 to recover the outstanding dues of the Bank loan advanced - 10 - HC-KAR NC: 2025:KHC:35342-DB OSA No. 8 of 2024 in respect of Appellant Company, before the DRT, Bengaluru, in 2002 which is still pending. 13. The Company Petition has been filed in the year 2011 and therefore, we are of the prima facie view that the Company Petition was barred by limitation. 14. However, this aspect has not been dealt by the learned Company Judge and therefore, we set aside the judgment impugned in this Original Side Appeal and remand the matter back before the learned Company Judge for fresh consideration of the Company Petition particularly on the question of limitation. 15. The parties are at liberty to advance their submissions on law and facts before the learned Company Judge and the observation made by us, is only prima facie and the Company court would not be bound by our prima facie observation. - 11 - HC-KAR NC: 2025:KHC:35342-DB OSA No. 8 of 2024 16. With the aforesaid, we allow this Original Side Appeal and set aside the impugned judgment dated 09.02.2024 passed in Company Petition No.231/2011 and remand the matter to the learned Company Judge, for fresh consideration. SD/- (D K SINGH) JUDGE SD/- (VENKATESH NAIK T) JUDGE DHA List No.: 1 Sl No.: 35