Unpaid share capital recovery fails where the call pre-dates winding up and the claim has been assigned to a mortgagee.

Unpaid call money on partly paid shares, where the call was made before winding up, was treated as money payable by virtue of a call in pursuance of the Indian Companies Act, 1913, so it did not fall within the liquidator's proposed recovery under section 186 in the manner adopted. The Court also held that the right to enforce the unpaid share capital had been assigned by mortgage to the Industrial Finance Corporation of India, making the claim an actionable claim vested in the assignee. In the absence of authority showing that the liquidator could act as the assignee's agent, he had no locus standi to recover the amount independently under section 186.

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Issues: (i) Whether unpaid call money on partly paid shares, where the call was made before winding up, could be recovered by the liquidator under section 186 of the Indian Companies Act, 1913. (ii) Whether the liquidator could proceed to recover the amount after the right to receive the unpaid capital had been assigned by mortgage to the Industrial Finance Corporation of India.

Issue (i): Whether unpaid call money on partly paid shares, where the call was made before winding up, could be recovered by the liquidator under section 186 of the Indian Companies Act, 1913.

Analysis: The liability to pay unpaid share capital arises from the Act and the articles, but the power to demand payment shifts according to the stage of the company. The exclusion in section 186 covers money payable by virtue of any call in pursuance of the Act, and a call made by the directors before winding up is still a call in pursuance of the Act. The Court distinguished authorities relied on for the liquidator and held that the statutory liability on a call made before winding up does not cease to be money payable by virtue of such a call merely because liquidation has intervened.

Conclusion: The unpaid call money could not be recovered under section 186 in the manner adopted by the liquidator.

Issue (ii): Whether the liquidator could proceed to recover the amount after the right to receive the unpaid capital had been assigned by mortgage to the Industrial Finance Corporation of India.

Analysis: The right to enforce the reserve liability of a shareholder was treated as an actionable claim. By the mortgage deed, the right to receive the balance unpaid on the shares had been assigned to the Industrial Finance Corporation, and the Corporation had indicated that it was a secured creditor standing outside the winding up. The Court found no sufficient authority in the Corporation's letter empowering the liquidator to act as its agent, and held that if the Corporation had assigned the claim, recovery had to proceed on that footing and not by the liquidator acting independently under section 186.

Conclusion: The liquidator had no locus standi to recover the amount after the assignment.

Final Conclusion: The application to strike the applicant's name off the list of contributories succeeded, as the liquidator's proposed recovery was not maintainable on either ground.

Ratio Decidendi: Where the right to call up unpaid share capital has been assigned to a mortgagee and the mortgagee stands outside the winding up, the liquidator cannot recover the amount under section 186 of the Companies Act as though he were acting independently of the assignee's rights.

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