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TMI Blog1961 (9) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... he paid a sum of Rs. 5 for each share the balance being uncalled at the time. On July 27, 1949, the Link Industries Ltd. created a security by way of English mortgage to the Industrial Financial Corporation of India to cover an advance made by the latter in a sum of Rs. 5,00,000. The company assigned, inter alia , their rights to receive the balance of Rs. 5 on each share of uncalled share money in respect of the shares issued by the company. On August 8, 1956, the company was directed to be wound up by an order of this court. We are informed that the Industrial Financial Corporation has filed a suit on the basis of the mortgage executed in its favour on the original side of this court. This suit is still pending. There was a change in the managing agency of the company during the year 1953. The directors of the company in pursuance of a covenant entered into with the mortgagee decided at their meeting held on April 15, 1953, to call up the balance on the partly paid shares giving two months' time to the shareholders to pay the money. The new managing agents intimated this fact to the respondent and made a demand on him in respect of the balance due from him. The respondent pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he respondent's application 1598 of 1956 was allowed and his name was deleted from the list of contributories. The official liquidator has filed OSA Nos. 23 of 1957 and 24 of 1957 respectively against the judgment of Balakrishna Aiyar J. on the said two applications. We shall first consider OSA No. 23 of 1957 which concerns the maintainability of Appln. No. 1342 of 1956. That application though purporting to be one filed under section 187 of the Indian Companies Act was really made under section 186 of the said Act. This is conceded by the official liquidator. The objection that on an application filed under section 186 the court could not order payment of the call money is not a mere technicality. Under section 186 of the Indian Companies Act, the official liquidator can recover a debt due to the company. If the claim is well founded the court has no option but to make an order for payment of the amount claimed. Under section 187, however, the amount to be called does not depend on the claim made by the official liquidator. The court will have to fix the amount which the shareholder should be called upon to pay and in fixing the amount it will have to ascertain the amount nece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assets of the company, make calls on and order payment thereof by all or any of the contributories for the time being settled on the list of contributories to the extent of their liability, for payment of any money which the court considers necessary to satisfy the debts and liabilities of the company and the costs, charges and expenses of winding up, and for the adjustment of the rights of the contributories among themselves. (2) In making the call the court may take into consideration the probability that some of the contributories may partly or wholly fail to pay the call." These two sections provide summary remedies for realising the monies due from the contributories. The former confers an alternative to the remedy of the liquidator to resort to the ordinary courts for recovery of monies, while the latter in terms prescribes a procedure for realisation of the calls due from the contributories either individually or with respect to the estate in his hands. A liability of a contributory to the company may arise in one of the three ways : ( i ) on account of a debt due to the company, (2) on account of unpaid share money in respect of which calls had been made even befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to include a claim made in respect of call money that had already been demanded by the company while it was functioning and (2) unpaid share money after the call has been made before the company was wound up is not an amount payable by virtue of any call in pursuance of the Act, as the latter category would include only cases coming under section 187 which according to the learned counsel will comprise only amounts not called for by the company itself but for the first time called up at the instance of the official liquidator. Section 186 in terms excludes from its operation a claim for money payable by the contributory by virtue of any call under the Act. It is necessary to ascertain first what is call money, whether it comprises amounts of share monies only which have not been called up before, or will include amounts due in respect of shares for which call had already been made by the directors. In a limited liability company which has issued shares but in respect of such shares the entire share money has not been paid up, the shareholder will be liable to the company to pay the balance of share money when a call is made. The right to make the call belongs to the company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an existing debt although money will not be payable until a call is made., i.e. debitum in presenti but solvendum in future The mere fact that the money due after the call is mentioned in section 21(2) as debt, does not mean that it ceases to be call money. Indeed as we have pointed out earlier even a claim made by the liquidator in respect of uncalled share amount would be a debt (see section 159). Therefore the exception contained in section 186 would cover both the share money which had at the time of liquidation become exigible and that outstanding but not yet payable. The provisions of section 186 which exclude from its operation any money payable by virtue of any call in pursuance of the Act is sufficiently wide to include a case where money has already been called by the directors while the company was a going concern. If the legislature intended that the exception in section 186 should relate only to cases where the official liquidator wished to make a call in respect of unpaid share money which had not earlier been called by the directors, it would have certainly employed appropriate language and in clearer terms. The second aspect of the contention of the learned counse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claims for share money other than those covered by section 187. This, however, is not correct. What we are concerned with in the present case is whether section 186 applies to a claim for share money, and if by the terms of that section that claim is not included the fact that section 187 (even assuming that to be so) would not be available to the official liquidator would be hardly relevant. Mr. Raman contends that the procedure prescribed by section 186 would be available to all contractual liabilities of the contributory in respect of which action could be laid in a court and as the liability of the shareholder in respect of the share money which has been called but not paid is in the nature of a debt, a suit would lie for recovery of the same. Section 186 being an alternative to a suit, would therefore include all claims which could be enforced by means of a suit. In other words, the contention is that section 186 would apply to the enforcement of all liabilities in the nature of a debt and as the claim in respect of the share money called by the directors is a debt under the provisions of section 21(2) of the Act such a claim would be comprehended by section 186. On the other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y section 187 could be resorted to by the official liquidator for the purpose of realising monies due from a contributory in respect of calls made by the company itself while it was functioning. It stands to reason, therefore, that section 186 would relate only to the other liabilities of the contributory. There is yet another principle of statutory interpretation by the application of which the same conclusion is reached, namely, the history of the section. In Hansraj Gupta v. Official Liquidators of the Dehra Dun Mussourie Electric Tramway Co. Ltd. [1933] 3 Comp. Cas. 207 , 215-16 ; ILR 54 All. 1067., Lord Russell of Killowen observed : "...in considering the meaning and effect of section 186 it is impossible to overlook the fact that it is verbatim identical with the corresponding section in the legislation of this country," Section 186 corresponds to section 259 of the English Companies Act, 1948. As observed by the Privy Council in the above case that is a section with ancestral history. "(1) It is concerned only with monies due from a contributory other than money payable by virtue of a call in pursuance of the Act. ...(2) It is a section which creates a special p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alance order he may still bring an action in the name of the company for the amount of the calls." Authority for that proposition is the decision reported in Westmoreland Green and Blue State Co. v. Feilden [1891] 3 Ch. D. 15 . In In re Whitehouse Co. [1878] 9 Ch. D. 595 , a contributory sought to set off a debt due to him from the company against calls made against him by the company before the winding-up. It was held that he could not do so as the right sought to be enforced was a new one in favour of the liquidator. Jessel M.R. observed at page 600 : "As I said before, it is as much unpaid if he had not paid the calls made before the winding-up as it is in respect of the amount unpaid on the shares in respect of which no call has been made before the winding- up. It seems to me that the contributory's liability created by the 38th section being only limited to the amount unpaid, it is immaterial, for the purpose of this section, whether the call was made before or after the winding-up, provided the amount is unpaid. That being so, it is a liability to contribute which, in the case of an ordinary winding-up, is of course enforceable by the court........." Referr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g with claims other than those in respect of calls made and section 187 dealing with claims under section 156 of the Companies Act. Learned counsel relies on the decision in Chandiok v. Pearey Lal ILR [1942] All. 26; AIR 1942 All. 136, 135 where it was held that a call validly made by the directors prior to liquidation which remained unpaid became a debt due from the shareholder to the company, and if the liquidator applied under section 186 of the Companies Act for realisation of such debt the court would have no power to question whether it is necessary for the liquidator to realise it, or not. Braund J. referring to a call made by the directors prior to the winding-up observed: " They have lost their character as calls and have become debts and, as such, are realisable by the liquidator just as any other debt or asset is realised." With great respect to the learned judge, the proposition, in our opinion, has been stated rather broadly. We have pointed out earlier that the calls already made and which were still in arrear would nevertheless be calls. The fact that they are treated as debts does not alter their essential character as call money. Indeed even the contributory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted out earlier, Jagannath Prasad's case ( supra ) was a case in respect of a claim regarding calls made prior to the winding-up. It was held that section 187 would apply. In Mahomed Akbar's case ( supra ) a suit was filed by the liquidator of a company for recovering money due in respect of calls made prior to the winding up by the directors. There was a plea of limitation by the contributory. It was contended on behalf of the liquidator that the plea of limitation was not available having regard to the statutory right given to him. The learned judges held that a claim under section 156 of the Act could not be agitated by means of a suit and the exclusive remedy provided under the Act was an application under section 187, and that, therefore, it was not open to the liquidator to base his cause of action on the statutory rights created by section 156 to sustain his claim. The learned judges held that as the statute which created a right under section 156 also provided for a remedy under section 187 that remedy should be considered as an exclusive remedy. We are unable with great respect to share that view. As pointed out earlier, section 187 provides a procedure for obtaining ..... X X X X Extracts X X X X X X X X Extracts X X X X
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