1959 (3) TMI 30 - HC - Companies Law

Shares Power, to discount, Directors vacation of office by, Winding up - Liability as contributories of present and post members, Winding up Fraudulent preference

Issues Involved
1. Whether the debt of contributory No. 88 had been discharged in 1948 and if so, what is its effect?
2. Whether the contributories in this case are entitled to the benefit of section 19 of Act No. 70 of 1951?
3. Whether the contributories are not liable to pay the amount claimed against each?
4. Whether valid notice was issued to the contributories and if not, what is its effect?
5. Whether contributory No. 92 can claim set-off and if so, to what extent?

Detailed Analysis

Issue No. 1: Discharge of Debt for Contributory No. 88
This issue pertains to contributory No. 88, involving the unpaid amount of Rs. 2,75,000 on 5,500 shares. The bank had issued a notice on 19th September 1957, calling for payment by 20th October 1957. The respondents contended that they had tendered payment in 1948 through fixed deposit receipts, which were not returned by the bank. The court found that the bank had accepted the fixed deposit receipts as payment, citing exhibit C. 21, a letter from the bank's manager confirming the credit. The court dismissed the bank's objections regarding the form and completeness of the tender, emphasizing that no objections were raised at the time of tender. The court concluded that the debt of contributory No. 88 was discharged to the extent of Rs. 2,57,267-10-0.

Issue No. 2: Benefit of Section 19 of Act No. 70 of 1951
The contesting contributories claimed benefits under section 19 of the Displaced Persons (Debts Adjustment) Act, 1951. The court noted that no application under section 19 was made within the ten-year period from 15th August 1947 to 15th August 1957. The court reiterated its previous stance from Bhai Mohan Singh v. Hind Iran Bank Ltd., holding that section 19 applies only to companies that are going concerns, not those in liquidation. The court rejected the argument that the ten-year period could be extended under section 19(6), emphasizing that the provision was designed to provide relief within a fixed period.

Issue No. 3: Liability to Pay the Amount Claimed
The contributories argued that their liability was barred by limitation under article 112 of the Indian Limitation Act. The court, however, held that article 120 applied, providing a six-year limitation period for calls made by the liquidator. Citing various precedents, the court concluded that section 156 of the Indian Companies Act, 1913, imposed a new liability on shareholders in liquidation, recoverable even if the original debt was time-barred. The court held that the contributories were liable to pay the amounts claimed.

Issue No. 4: Validity of Notice Issued
This issue was not pressed by either party, and the court assumed that the notice issued to the contributories was valid and did not suffer from any infirmity.

Issue No. 5: Set-off Claim by Contributory No. 92
Contributory No. 92 claimed a set-off of Rs. 15,000 left in the bank against the call amount. The court found no evidence supporting the claim that the bank had agreed to this set-off. The court concluded that contributory No. 92 was not entitled to claim the set-off.

Conclusion
The court passed a payment order against contributory No. 88 for Rs. 17,732-6-0, considering the set-off allowed. Payment orders were also passed against all other contributories for the amounts shown in the attached list, except for those whose appeals were pending or whose cases had already been resolved.

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