Lien on Uncalled Capital preserved: agent's receipt and financier's conduct did not discharge or ratify surrender of the claim.

Financier retained a lien on the company's uncalled share capital because the finance agreement expressly granted rights to call and forfeit uncalled capital on default and the agent's authority was limited to the agreement's terms; the District Judge's recognition of that lien is upheld. The agent's receipt and the financier's subsequent letter did not effect a full discharge or ratification because agency powers must be strictly construed, the agent exceeded no authorised authority for broader relinquishment, and only a limited ex gratia concession was recorded; therefore the financier's broader claim to uncalled capital remains enforceable.

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Issues: (i) Whether the financier (Amrit Rai Sood) retained a lien on the uncalled capital of the company and whether the District Judge's order recognising that lien should be upheld; and (ii) Whether the receipt and subsequent conduct of the financier or his agent operated as a full discharge or ratification extinguishing the financier's claim to the uncalled capital.

Issue (i): Whether the financier retained a lien on the uncalled capital of the company and whether the District Judge's order recognising that lien should be upheld.

Analysis: The Court examined the financier agreement dated 8 February 1947, the board resolution of 9/12 April 1947, the letter of 10 December 1946 appointing an agent, and the liquidator's proceedings. The agreement expressly granted the financier rights over proceeds and, under clause 10, a right to call and forfeit uncalled share capital on default. The agent's authority in the 10 December 1946 letter was to be read subject to the terms of that agreement; general powers granted to an agent are confined to the special purpose of the authority. The receipt signed by the agent on 12 April 1947 acknowledged possession of certain assets and an ex gratia release of part of the uncalled capital, but the Court held that the agent's powers were limited and that the financier's later letter of 21 April 1947 did not amount to ratification extinguishing the full claim. Further, because the winding-up petition had been presented and proceeded without challenge to the financier's status as creditor, the question of his being a creditor for the purposes of the petition was effectively determined in earlier proceedings and could not be reopened.

Conclusion: The financier retained a lien on the uncalled capital; the District Judge's order recognising the financier's lien and directing the Official Liquidator accordingly is upheld.

Issue (ii): Whether the receipt and subsequent conduct of the financier or his agent operated as a full discharge or ratification extinguishing the financier's claim to the uncalled capital.

Analysis: The Court applied principles of strict construction of agency powers and authority to the agent's receipt. It held that the agent's receipt and the later letter of the financier did not evidence an authorised or complete discharge of the financier's claim to the uncalled capital beyond the limited ex gratia concession recorded. The agent's acts were to be measured against the agreement and the limited authority granted; the financier did not ratify any broader relinquishment of rights.

Conclusion: The receipt and subsequent conduct did not amount to a full discharge or ratification extinguishing the financier's claim to the uncalled capital; this limb of the appeal fails in favour of the respondent.

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