Forfeiture of shares can create a fresh contractual claim for unpaid call money despite limitation on the original demand.

Forfeiture of shares under the articles of association was treated as creating an independent contractual liability to pay amounts owing at the time of forfeiture, even where recovery of the original call money was already time-barred. The Court distinguished a company's call claim from a contractual claim under the articles, holding that the latter fell within the limitation rule applicable to breach of contractual obligation. Limitation was said to bar the remedy rather than extinguish the debt, except where section 28 of the Limitation Act, 1908 applied. On that basis, forfeiture gave rise to a fresh cause of action and the unpaid amount remained enforceable.

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Issues: Whether the claim for unpaid call money against a forfeited shareholder was barred by limitation, and whether forfeiture of the shares gave rise to a fresh cause of action under the articles of association.

Analysis: The relevant question was whether the demand fell within Article 112 of the Limitation Act, 1908 as a call by a registered company, or within Article 115 as a claim for compensation for breach of a contractual obligation created by the articles of association. The Court held that after forfeiture the shareholder ceased to be liable merely as a contributory, and the liability under the articles to pay money owing at the time of forfeiture constituted an independent contractual obligation. Limitation was held to bar only the remedy and not extinguish the debt, save in cases covered by section 28 of the Limitation Act, 1908. On that basis, even if recovery of the original call money had become time-barred, the sum remained owing at the date of forfeiture and the forfeiture created a fresh cause of action for enforcement of the contractual liability.

Conclusion: The claim was not barred by limitation and was held maintainable under Article 115 of the Limitation Act, 1908.

Final Conclusion: The shareholder's liability survived the bar of limitation on the original call, and forfeiture validly enabled enforcement of the unpaid amount as a fresh contractual claim.

Ratio Decidendi: Where the articles of association impose liability to pay amounts owing at the time of forfeiture, forfeiture creates a new contractual cause of action, and a time-barred debt remains recoverable under that independent liability because limitation extinguishes the remedy, not the debt.

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