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TMI Blog1932 (7) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... e agreed to supply large quantities of tramway construction material to the company. Clause 16 of the contract was in the following terms: "The company shall pay to the Contractors by way of advance when the Contractors have placed the order in accordance with the terms of paragraph No. 6 above, twenty-five per cent. of the value of such materials for which firm orders shall have been placed as aforesaid by the Contractors. Any amount of advance or advances so paid shall be deducted from the final payments for the respective meterials as in paragraph No. 13 above." On the same date a sum of Rs. 27,000 was paid to the testator, and a letter was written to him, signed by one Beltie Shah, as managing agent on behalf of the company in which it was stated that: "We have to-day paid you Rs. 27,000 (rupees twenty seven thousand) by way of an advance and this amount will be deducted from your bill for the second shipment. Your receipt for the above amount will be understood to have been given on acceptance of these terms." A receipt dated the 23rd February, 1922, was given on behalf of the testator for this sum of Rs. 27,000, "being the amount of advance for the order for rails pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve materials aforesaid." "It is understood that you will pay us now the application and allotment money for these shares and that the balance of money on these shares will be payable by you on or after April, 1923, either by giving us credit in the invoices for materials or by cash payments. The orders for the material aforesaid will not be placed by you unless and until our Consulting Engineers approve of the respective firms or suppliers. All other conditions relating to this arrangement will be the same as already exist between us by virtue of the agreement dated the 23rd February, 1922." "This arrangement includes orders to be placed by us for the proposed extension between our present terminus at Mussoorie and the Library. It is understood that the proposed extension will be carried out as and when the company decides." On the same day the company wrote two other letters to the testator, agreeing to give him 10 per cent. commission on certain tramcars and equipments for which orders had already been placed elsewhere. On the same day there was paid to the testator out of the company's funds a sum Rs. 35,000, for which a receipt was given in the following terms: Receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the contract was an illegal agreement being in contravention of section 105 of the Indian Companies Act, 1913, with the result that, although there had been a breach on the part of the company, the claimants could recover no damages. Meanwhile, on the 26th March, 1928, the official liquidators of the company had made an application in the winding up against the executors, by which they sought to recover from them as debtors to the company (amongst other sums) the said two sums of Rs. 27,000 and Rs. 35,000, and, in addition, a sum of Rs. 7,703-13-0 balance shown to be due on an account in the books of the company, which included as debits against the testator the said two sums of Rs. 27,000 and Rs. 35,000. Judgment on this application was delivered by the same learned Judges on the 14th May, 1929. They held, apart from. the question whether any part of the claim was barred by limitation, (1) that the sum of Rs. 27,000 was only an advance towards price and not a deposit or earnest money, that the liquidators were entitled to recover it but that the executors were entitled to set off against it the damages awarded to them as aforesaid; (2) that the sum of Rs. 35,000 was paid also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0-2-0) at 6 per cent. per annum until realisation. The next event was a petition presented to the High Court at Allahabad by the executors, praying that their names might be removed from the list of contributories of the company with regard to the shares now in question, and further praying that the sum of Rs. 31,250 paid as application and allotment moneys with regard thereto might be paid to the executors, with interest thereon at 12 per cent. per annum. The foundation for this application was (not unnaturally) the fact that the court had already adjudicated upon the agreement entered into on the 12th August, 1922, and the 13th September, 1922, and had in proceedings between the same parties pronounced it to be illegal and void. Judgment was pronounced by Mukerji and Young, J. J., on the 20th November, 1929. The learned Judges held that the application was out of time, not having been made within 30 days of the 19th July, 1927, being the date on which the court had refused the application of the executors to postpone the placing of their names upon the list of contributories until their suit in the High Court of Calcutta had been disposed of. This decision turned upon a quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, the appellants cannot, in their Lordships' view, succeed. Whatever may have been the rights and liabilities of the testator before the winding up intervened, the position was altered by the happening of that event. At the commencement of the winding up he was and had for over three years been entered on the register of shareholders as the holder of the shares now in question, with his full knowledge and assent. On the winding up, section 156 of the Indian Companies Act came into play. His liability under that section in respect of the shares was absolute and flowed from the facts of his being on the register in respect of those shares. The original contract may supply the reason for his name having been placed on the register in respect of the shares, but after the winding up his liability in respect of the shares arose ex lege and not ex contractu. It was conceded that the position of the executors was no better than that of the testator. In their Lordships' opinion, this point disposes of the first appeal, which should accordingly be dismissed. This view renders it unnecessary to consider whether the application was out of time. Their Lordships, however, think it right to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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