1935 (6) TMI 14 - HC - Companies Law

Court affirms liquidator's right to demand payment from appellants as contributories for call on shares.

Parsram Brij Kishore Versus Jagraon Trading Syndicate Ltd.

The Court affirmed the liquidator's right to demand payment from the appellants as contributories for a call on shares in a company under liquidation. The ... Winding up - Liability as contributories of present and post members Issues:- Enforcement of payment by appellants for a call on shares in a company under liquidation.- Interpretation of Section 187 of the Indian Companies Act, 1913 regarding the liability of contributories.- Application of Section 156 to create a new liability for past members.- Liability of appellants for interest on the unpaid shares.- Consideration of previous judgments regarding the liability of contributories in liquidation cases.Enforcement of Payment by Appellants:The judgment addresses an appeal against an order for the payment of a call on shares in a company under liquidation. The appellants, former shareholders, failed to pay the call, resulting in the forfeiture of their shares. The liquidation of the company was supervised by the Court, and the appellants were listed as 'B' contributories. The liquidator sought payment from the appellants under Section 187 of the Indian Companies Act, 1913, to cover the company's debts and liabilities. The Court affirmed the liquidator's right to demand payment from the appellants as contributories.Interpretation of Section 187:The judgment delves into the interpretation of Section 187 of the Indian Companies Act, 1913, which empowers the liquidator to make calls on and order payment by contributories for the company's debts and liabilities. The appellants argued that the claim was time-barred as it related to a debt from the call on shares. However, the Court held that the liquidator's claim was for contribution under Section 156, creating a new liability for the past members. The Court determined that the appellants were subject to this new liability and were rightfully called upon to pay the outstanding amount on their shares.Application of Section 156:The judgment clarifies the application of Section 156, which establishes a new liability for past members of a company in liquidation. The Court emphasized that the appellants fell within the scope of Section 156 and were obligated to pay the unpaid amount on their shares. Despite the appellants ceasing to be members due to share forfeiture, the Court affirmed their liability under Section 156, following precedents and legal principles.Liability for Interest on Unpaid Shares:An additional issue addressed in the judgment is the liability of the appellants for interest on the unpaid shares. The learned District Judge allowed the interest based on the company's Articles of Association. However, the Court determined that as the liability stemmed from Section 156, interest should be limited to the amount unpaid on the shares, referring specifically to the capital amount.Consideration of Previous Judgments:The judgment references previous cases, such as Jagannath Prasad v. U.P. Flour & Oil Mills Co. Ltd., to support the enforceability of the appellants' liability as contributories. The Court highlighted that despite the time-barred nature of the original debt, the liability under Section 156 could still be enforced. The judgment aligns with established legal principles and precedents in holding the appellants accountable for their contribution to the company's debts.In conclusion, the Court partially allowed the appeal by striking out the interest component from the payment order. The lack of precision in defining the claim led to a direction for the parties to bear their own costs.