1936 (5) TMI 19 - HC - Companies Law

Summary

Issues:
1. Liability of a contributory for unpaid calls after shares were forfeited.
2. Interpretation of Section 156 of the Indian Companies Act regarding contribution liability.
3. Applicability of interest on the payment order under Section 156.
4. Requirement to exhaust contributions from existing members before calling upon other contributories.

Analysis:
The judgment by the High Court of Lahore involved a dispute regarding the liability of a contributory for unpaid calls after shares were forfeited. The Liquidator of a company sought a payment order against a contributory for a principal amount and interest. The District Judge made a payment order against the contributory, disallowing future interest, based on the interpretation of Section 156(1)(i) of the Companies Act. The single Judge of the High Court upheld the liability under Section 156, stating that it created a new liability for contribution. However, the single Judge disallowed interest as it was not provided for under Section 156.

The High Court addressed the issue of exhausting contributions from existing members before calling upon other contributories. It was found that no call had been made on existing members apart from a previous call per share. The Liquidator had not exhausted contributions from existing members listed under list A before seeking payment from other contributories. The Court emphasized that contributories on list B could only be called upon after those on list A had fulfilled their obligations under the Companies Act.

The Court ruled in favor of the contributory, setting aside the payment order against them and ordering the claim to be kept pending until it was established that existing members could not meet their contributions. Consequently, the Liquidator's appeal was dismissed. The Court concurred with the single Judge's decision on disallowing interest, emphasizing that Section 156 did not provide for interest on the payment order. The parties were directed to bear their own costs, and the deposited sum by the contributory was to be refunded to them.