9911796707
|
Home
Issues Involved:
1. Validity of the allotment of shares. 2. Defendant's liability for payment under Article 45 of the company's articles of association. 3. Applicability of the Limitation Act to the defendant's liability. 4. Whether the defendant ceased to be a member of the company upon forfeiture of shares. 5. Interpretation of the terms "money owing" and "money due" in the context of the company's articles of association. Issue-wise Detailed Analysis: 1. Validity of the Allotment of Shares: The plaintiffs claimed that the defendant applied for 600 shares on 23rd August 1919, paid Rs. 1,500, and was allotted the shares on 3rd August 1920. The court found that there was no evidence of any notice of allotment given to the defendant. It was established that an allotment of shares must be made within a reasonable time, as per the precedent set in Ramsgate Victoria Hotel Co. v. Montefiore. The delay from August 1919 to August 1920 was deemed unreasonable. Since there was no communication about the allotment, the defendant was entitled to repudiate it in this suit. The court concluded that the defendant never became a shareholder in the company due to the unreasonable delay in allotment. 2. Defendant's Liability for Payment Under Article 45: Article 45 of the company's articles of association states that any shareholder whose share may be forfeited shall, notwithstanding the forfeiture, be liable to pay all moneys owing upon the shares at the time of forfeiture. The trial judge interpreted "all moneys owing" to mean moneys owing and recoverable in law, and since the moneys were time-barred at the date of forfeiture, the defendant was not liable. However, the appellate court disagreed, stating that "money owing" in its primary sense denotes an existing debt, whether or not the right to recover is barred under the Limitation Act. 3. Applicability of the Limitation Act to the Defendant's Liability: The court noted that under the Indian Limitation Act, a debt is not destroyed; only the remedy to recover it is barred. The decision of the Privy Council in Hansraj Gupta v. Official Liquidators was discussed, where "money due" was interpreted as "due and recoverable in law" under section 186 of the Companies Act. However, the court found that Article 45 imposes a new liability and does not merely deal with the procedure for enforcing payment. Therefore, "money owing" in Article 45 should be interpreted as an existing debt, irrespective of its recoverability under the Limitation Act. 4. Whether the Defendant Ceased to Be a Member of the Company Upon Forfeiture of Shares: The trial judge held that upon forfeiture, the defendant ceased to be a member of the company and was not liable to pay further moneys as a shareholder. The appellate court agreed that the forfeiture was valid under Article 42, which provides that shares can be forfeited if moneys due are not paid. However, the court found that the defendant's liability under Article 45 continued despite the forfeiture, as it created an independent contractual obligation to pay the moneys owing at the time of forfeiture. 5. Interpretation of the Terms "Money Owing" and "Money Due": The court discussed the interpretation of "money owing" and "money due" in the context of the company's articles. It was determined that these terms denote an existing debt, irrespective of whether the right to recover it is barred by the Limitation Act. The court emphasized that Article 45 imposes a new liability, and the terms should be interpreted in their primary sense, meaning an existing debt. Conclusion: The court dismissed the appeal, concluding that the allotment of shares was invalid due to unreasonable delay, and the defendant never became a shareholder. However, the court disagreed with the trial judge's interpretation of Article 45, stating that the defendant's liability for moneys owing at the time of forfeiture continued as an independent contractual obligation, irrespective of the Limitation Act. The appeal was dismissed with costs.
|
