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TMI Blog1930 (7) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... wo appellants their liability, if any, should be limited to the extent of the assets of the deceased shareholders (whose representatives they are) coming to their hands. The principal question is that raised by the first contention and it is necessary in the first place to ascertain the facts. The shares in question are shares of Rs. 100 each, payable in four instalments of Rs. 25. The first two instalments were paid. It appears from the minute-book of the company that as far back as 4th February, 1920, it was "resolved that the third call upon the shares at 25 per cent. be made according to law and due notices of at least three weeks be given to this shareholders for payment thereof (Ex. 1)." Nothing seems to have followed from this resolution. On 9th September, 1922, a notice was issued for payment of the third call which stated that "in case of failure in payment the directors will be obliged to take other steps for its realisation by forfeiture or otherwise as the case may be (Ex. A-1)." Then comes the notice upon which the appellants rely (Ex. B) dated 1st September, 1923. It runs as follows: "Dear Sir, please take notice that as per resolution of the directors of the Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of which the notice has been given may at any time thereafter, before the payment required by the notice has been made, be forfeited by a resolution of the directors to that effect." It seems to follow, therefore, from its terms themselves that the notice had not, by its own force, the effect of forfeiting the shares. Something more was necessary, viz., a subsequent resolution of the directors. It will be seen that the notice quoted above refers to a meeting of the directors held on 21st February, 1923, and to an annual general meeting of the shareholders held on 14th March, 1923. The minute-book shows that at the first of these meetings, i.e., of 21st February, 1923, the directors resolved: "that the shareholders who have not yet paid up their call with interest may be asked to pay up the same within a period to be fixed by the managing directors according to law, and failing which their shares may be held to be liable to be forfeited. But this notice to be issued and the step to be taken after sanction of the shareholders at the general annual meeting to be held is obtained and not otherwise. The question of taking other steps to realize the call be also considere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all." The ordinary rule is that there is no binding forfeiture unless it be declared by the directors: see Edinburgh, Leith and Newhaven Ry. Co. v. Hebblewhite [1840] 6M. W. 707. This case was followed in Birmingham Bristol and Thames Junction Railway Co. v. Locke [1841] 1 QB 256; 2 Rail. Cas.867, where Lord Denman, C.J., said: "It was also objected that the company had precluded itself from treating the defendant as a proprietor by declaring (through its directors) his shares forfeited for non-payment of former calls. But the forfeiture dues not attach till it has been reported to, and sanctioned by a general meeting of the proprietors and the Court of Exchequer has held that notice of forfeiture does not excuse from payment of calls." In London and Brighton Ry. Co. v. Fairclough [1841] 2 Man. G. 674; 3 Scott NR 68; 10 LJCP 133; 2 Rail. Cas. 44; 58 RR 520 it was conceded that the objection that the defendant had ceased to be a shareholder, his shares having been declared to be forfeited, was answered by the case of Edinburgh, Leith and Newhaven Ry. Co. v. Hebblewhite ( supra p. 90). That being the general rule, Woollaston's case ( supra p. 90) may now ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares. A notice was duly given in these terms. Bigg paid the calls on some of his shares and stated at the company's office that as to the remaining shares he would submit to the forfeiture as provided by the notice. The directors subsequently decided that the shares of the shareholders who were solvent were not forfeited and among these was Bigg. It was held in that case that Bigg was liable to contribute. Page Wood, V.C., said: "I will first remark that the operation of these clauses of forfeiture must be considered to see whether or not some determination on the part of the directors is not first necessary. I apprehend that some direction on the part of the directors is necessary as regards the company, although no operation on the part of the directors is necessary as regards the shareholder beyond giving him the notice." Woollaston's case ( supra p. 90) was distinguished on the ground that the notice there was not merely a notice to pay on pain of forfeiture but also a notice of the resolution of the directors that the shares would be forfeited, and on the ground that the notice was accompanied by a copy of the resolution itself which, as the Vice-Chancellor pointed out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been a gross breach of duty, or something worse, on the part of the officers who made the entries. On the other hand, if they were made with authority that authority would be, in substance if not actual form, the expression of the resolution of the directors to forfeit the shares for non-payment of calls. I, therefore, think that whatever objection there may be in form, there is none in substance to the forfeiture of the shares on the ground of the mode in which the resolution of the directors to forfeit the shares is expressed." It is obvious that the decision in that case turned on the existence of facts which are not present in this case. I hold, therefore, that the present case is not within either Woollaston's case ( supra p. 90) or Knight's case ( supra p. 90), but falls under the general rule. It follows that the shares of the appellants have not been forfeited and that they are liable to contribute. This concludes the question of limitation also. Once it is held that the appellants are contributories, then the case is governed by the decision in Jagannath Parshad v. U.P. Flour and Oil Mills Co., Ltd. 35 Ind. Cas. 159; 38 A. 357; 14 ALJ 349, Sorabji v. Iss ..... X X X X Extracts X X X X X X X X Extracts X X X X
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