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of <h1>Court dismisses appeal, orders costs payment. Testator liable as contributory under Indian Companies Act. Recovery of specified sums allowed.</h1> The appeal (No. 127 of 1930) was dismissed, and the appellants were ordered to pay the costs of the appeal. The court upheld the liability of the testator ... Winding up – Liability as contributories of present and past members Issues Involved:1. Legality of the contract dated 12th August, 1922, and 13th September, 1922.2. Liability of the executors as contributories.3. Recovery of sums of Rs. 27,000, Rs. 35,000, and Rs. 7,703-13-0.4. Limitation period for the recovery of the sums.5. Validity of the application to remove the executors' names from the list of contributories.Detailed Analysis:1. Legality of the Contract Dated 12th August, 1922, and 13th September, 1922The court examined the legality of the contract entered into on the 12th August, 1922, and the 13th September, 1922. It was previously adjudicated that the contract was illegal under section 105 of the Indian Companies Act, 1913. This illegality rendered the agreement void, and hence, no damages could be recovered for its breach. However, the court in this judgment did not fully concur with the previous finding of illegality but assumed it for the sake of argument.2. Liability of the Executors as ContributoriesThe executors were included in the list of contributories for the shares held by the testator. The court upheld that the testator's liability as a contributory was absolute under section 156 of the Indian Companies Act, 1913, due to his name being on the register of shareholders at the commencement of the winding-up. This liability was ex lege (by law) and not ex contractu (by contract). Therefore, the executors could not have their names removed from the list of contributories, nor could they reclaim the application and allotment moneys.3. Recovery of Sums of Rs. 27,000, Rs. 35,000, and Rs. 7,703-13-0The liquidators sought to recover these sums from the executors. The court found that:- The sum of Rs. 27,000 was an advance towards the price and not a deposit or earnest money, entitling the liquidators to recover it, subject to the set-off of damages awarded to the executors.- The sum of Rs. 35,000 was also an advance towards the price and recoverable by the liquidators.- The balance of Rs. 7,703-13-0 was recoverable as it was shown to be due on an account in the company's books.4. Limitation Period for the Recovery of the SumsThe court determined the limitation periods for the sums as follows:- Rs. 27,000: The limitation period began on 1st July, 1923, and expired on 1st July, 1926, under Article 51 of the Limitation Act.- Rs. 35,000: The limitation period began on 13th September, 1922, and expired on 13th September, 1925, under Article 62, but the court found that the company was unaware of the payment, thus applying Article 95 or 120, extending the period to 13th September, 1928.- Rs. 7,703-13-0: The limitation period began on 31st March, 1924, and expired on 31st March, 1927, under Article 85.The court concluded that the limitation periods had not expired at the commencement of the winding-up on 29th January, 1926, making all three sums recoverable.5. Validity of the Application to Remove the Executors' Names from the List of ContributoriesThe executors' application to remove their names from the list of contributories was dismissed on the grounds that:- The application was out of time, not made within 30 days of the court's refusal on 19th July, 1927.- There existed a valid contract to take the shares, to which the illegal agreement was only collateral.The court emphasized that the liability of the testator (and thus the executors) arose from being on the register of shareholders at the commencement of the winding-up, making the application to remove their names invalid.ConclusionThe appeal (No. 127 of 1930) was dismissed, and the appellants were ordered to pay the costs of the appeal. The court advised that the liability of the testator as a contributory was absolute under section 156 of the Indian Companies Act, 1913, and the sums of Rs. 27,000, Rs. 35,000, and Rs. 7,703-13-0 were recoverable by the liquidators.
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