Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding
  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

Home Case Index All Cases Companies Law Companies Law + HC Companies Law - 1958 (5) TMI HC This

  • Login
  • Referred In
  • Summary

Forgot password       New User/ Regiser

⇒ Register to get Live Demo



 

1958 (5) TMI 28 - HC - Companies Law

Issues Involved:
1. Whether the claim is within time.
2. Whether the call is justified.

Issue-wise Detailed Analysis:

1. Whether the claim is within time:
The respondents contended that the claim was barred by time, arguing that the first call dated 15th October 1948 was outside the limitation period. The court examined the applicability of Article 112 and Article 115 of the Limitation Act. Article 112 provides a three-year period for a call by a registered company starting from the day when the call is payable. The court found that Article 112 was not applicable to this case. Instead, Article 115, which provides a three-year period for a suit for compensation for breach of any contract, was applicable. The breach in this case occurred after the forfeiture on 24th March 1954, and the claim was instituted within three months, thus within the limitation period.

The court referred to Section 186(1) of the Indian Companies Act of 1913, which allows the court to make an order on any contributory to pay money due to the company. The court emphasized that a debt does not cease to be due simply because it is time-barred; the right subsists although the remedy is no longer available. The court cited several precedents, including Hans Raj Gupta v. Mussoorie Electric Tramway Company Ltd. and Indian Co-operative Navigation and Trading Co. Ltd. v. Padamsey Premji, to support its view that the liability for a time-barred debt remains.

The court concluded that the forfeiture of shares gave rise to a new cause of action, and the claim was within limitation under Article 115. The respondents' liability had not become extinct despite the remedy by way of suit for the recovery of the money due on the first call being time-barred.

2. Whether the call is justified:
The second issue was given up by the counsel for the respondents, and no arguments were addressed regarding the justifiability of the calls. Therefore, the court did not delve into this issue.

Conclusion:
The court dismissed the objections of the respondents, holding that the claim was within the limitation period under Article 115 of the Limitation Act. The forfeiture of shares on 24th March 1954 gave rise to a new cause of action, and the liability for the amount due on the first call remained despite being time-barred. The court passed a payment order against the respondents for the respective amounts claimed by the bank, inclusive of interest, and allowed future interest till realization. There was no order as to costs.

 

 

 

 

Quick Updates:Latest Updates