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TMI Blog1932 (9) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... ound on which, in my opinion, it can be put, is this : a forfeiture of shares, which involves reduction of the company's capital, can only be carried out under the Articles of Association of the company where a call has been validly made and that call has not been paid ; in the present case no call was validly made ; the forfeiture was therefore outside the powers of the company and invalid, and the appellant has in fact never ceased to be a share-holder of the company. The first and principal question which we have to determine on this appeal is whether the second and third calls were validly made, and for that purpose it is necessary to look at the Articles of Association. The material articles, which appear to be founded on Palmer's Company Precedents, are Arts. 18, 10, 20 and 24, which are in the following terms : "18. The directors may from time to time make such calls as they think fit upon the members in respect of all money unpaid on the shares held by them respectively, and not by the conditions of allotment thereof, made payable at fixed times, and each member shall pay the amount of every call so made on him to the persons and at the times and places appointed by the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 Vic. c. 16), and it appears to me that the s. 22 of that Act is substantially in the same terms as Article 18 in the present case. In that case the directors had made a call, but the resolution contained no time or place for payment. The Court held that the call was validly made. Parke, B., who gave the leading judgment, expressly states that the resolution to make a call need not specify either the time or place for payment, but the directors must appoint a time and place which must be notified to the shareholder by a notice allowing him twenty-one days for the purpose of payment. There are two cases, The Great North of England Rly. Co. v. Biddulph [1840] 7 M. W. 243 ; 2 Rly. Cas. 401 ; 10 L.J. Ex. 17 and the other The Sheffield, Ashton under Lyne and Manchester Ry. Co. v. Woodcock [1841] 7 M. W. 574 ; 11 L.J. Ex. 26 in both of which the judgment was given by Parke, B., and which support to some extent the conclusion reached in the case of The Newry and Enniskillen Rly. Co. v . Edmunds but those cases are not, I think, direct authorities on the point at issue. The next case is Johnson v. Lyttle's Iron Agency [1877] 5 Ch. D. 687 ; 46 L.J. Ch. 786 ; 36 L.T. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctors. It appears to me that that case is a direct authority for the proposition that under such articles as we have in this case it is not necessary for the resolution making the call to specify the time for payment, and it would seem to follow a fortiori that it is not necessary to specify the person to whom or the place where the call is to be made. I need hardly say that the opinion of Sir George Jessel as to the construction of the Articles of Association is entitled to very great weight. The next case to which I wish to refer is In re Cawley Co [1889] 42 Ch. D. 209 ; 58 L.J. Ch. 633 ; 61 L.T. 601 ; 37 W.R. 692 ; 1 Meg. 261 . and it was on that case that the learned Judge in this case based his decision. In that case there had been a resolution of the directors making a call which left the date on which it was to be paid in blank. It was held by the Court of appeal that in fact the shareholder concerned had transferred his shares before the call was made, and it was not therefore necessary to consider whether the call was valid or not. But in the Court of Appeal the learned Judges did express opinions as to the validity of the call, although they recognized that it was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ches to the articles falling for construction a meaning other than they naturally bear in deference to a decision upon articles differently worded. The case of Bhagirath Spinning Weaving Co. v. Balaji, [1930] 54 Bom. 178 ; AIR 1930 Bom. 267 ; 125 IC 419, was also a case in which the amount of the call was not specified and the case does not really assist us, because the report does not show what were the Articles of Association which governed the company and neither of the learned Judges who decided the case mention the terms of the articles which the Court had to construe. It appears to me that the weight of authority is clearly in favour of the construction which I should myself put upon the articles in this case, and that we should hold that the second and third calls were validly made by the resolutions of 16th December 1921, and 7th November, 1922. But then Mr. Setalvad for the company says that that does not dispose of the matter. He says that the share-holder was not liable to pay a call until the person to whom and the place where it was payable were appointed by the directors ; and that no doubt is so. He says that these matters never were appointed by the direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irectors to the agents. But in my view the burden is upon the company to displace the presumption that the agents acted properly. In any event, the absence of evidence can hardly be matter of comment in view of the time which has elapsed since the resolutions in question. Directors or agents cannot be expected to remember exactly what happened eight or nine years ago. I would however hold further that even if it were necessary to have a formal resolution of the Board stating the names of the person to whom, and the place where, the call should be paid, that is a matter which it would be open to the parties to waive : see Ex parte Wollaston [1859] 28 L.J. Ch. 721 . It is in my opinion, clear that the appellant has waived any right he might have had to object to his liability for the calls and to challenge the forfeiture, and the company having enforced the forfeiture, for two years have waived any irregularity which it is within their power to waive. In my opinion to hold that a forfeiture solemnly resolved upon and enforced for two years without objection from the shareholder should be set aside as ultra vires the company on the ground that there had been no formal resolution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her point ; and although James, L.J., said that as at present advised he thought that the time for payment of the call could not properly be fixed by a mere verbal direction to the secretary, and that it ought to be fixed by a formal resolution of the directors, Mellish, L.J., and Baggallay, J., did not express any dissent from the opinion of Jessel, M.R., on this point. Mr. Setalvad also relied upon two decisions of this High Court, namely, Pioneer Alkali Works v. Amiruddin and Bhagirath Spinning Weaving Co. v. Balaji. In the first case the facts were in some respects different from those in the present case, but inasmuch as the learned Judge appears to have regarded the opinion of Jessel, M.R. in Johnson v. Lyttle's Iron Agency, as having been overruled by the Court of appeal although his judgment was in fact reversed upon another point and also based certain of his observations upon the obiter dicta of Esher, M.R., in In re Cawley Co., I am, with respect, not able to agree with those observations. In the second case the relevant articles are not set out ; that case therefore appears to me to be of no assistance in the present case. Construing Article 18 in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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