Winding-up contributory liability remains enforceable despite limitation, while discharge or set-off must be clearly proved.

In company winding up, unpaid calls remained enforceable as a statutory liability against contributories even though the company's original claim might otherwise have been time-barred, and Article 112 of the Limitation Act did not govern the liquidator's claim under section 187. Relief under section 19 of the Displaced Persons (Debts Adjustment) Act was unavailable because the statutory period had expired and liquidation did not revive it. A contributory's call liability could be discharged by valid adjustment of fixed deposit receipts accepted by the bank, but only to the extent proved; a separate set-off also had to be clearly established on evidence. The payment order was therefore confined to the balance due after adjustment.

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Issues: (i) whether contributory No. 88 had discharged the call liability by adjustment of the bank's liability under fixed deposit receipts; (ii) whether the contesting contributories were entitled to the benefit of section 19 of the Displaced Persons (Debts Adjustment) Act; (iii) whether the contributories were liable to pay the amount claimed notwithstanding limitation; (iv) whether contributory No. 92 was entitled to set-off against the bank.

Issue (i): whether contributory No. 88 had discharged the call liability by adjustment of the bank's liability under fixed deposit receipts.

Analysis: The call notice required payment at the bank's Rawalpindi office, and the contributories tendered discharged fixed deposit receipts which the bank retained without objection. The Court treated the transaction as a valid appropriation and held that objections regarding form of tender, partial payment, and the later confidential letter by the erstwhile managing director could not defeat the adjustment. It further held that the bank had not proved any fraudulent preference or other ground to undo the appropriation.

Conclusion: The call debt of contributory No. 88 stood discharged to the extent of the fixed deposit receipts, and only the balance remained payable.

Issue (ii): whether the contesting contributories were entitled to the benefit of section 19 of the Displaced Persons (Debts Adjustment) Act.

Analysis: Section 19 was held to apply only while the company was a going concern and within the statutory period of ten years from 15 August 1947. No application was made within that period, and the later liquidation proceedings did not revive the remedy. Sub-section (6) could not be used to enlarge the expired statutory period.

Conclusion: The contributories were not entitled to relief under section 19 of the Displaced Persons (Debts Adjustment) Act.

Issue (iii): whether the contributories were liable to pay the amount claimed notwithstanding limitation.

Analysis: The Court held that once winding up commences, a new statutory liability arises against contributories under the company law regime, and unpaid calls may be enforced by the liquidator even if the company's original remedy had become time-barred. Article 112 of the Limitation Act did not govern the liquidator's claim under section 187.

Conclusion: The contributories remained liable to contribute the amounts claimed against them.

Issue (iv): whether contributory No. 92 was entitled to set-off against the bank.

Analysis: On the evidence, no request for adjustment of his deposits against the call was proved and no completed set-off was established.

Conclusion: Contributory No. 92 was not entitled to set-off.

Final Conclusion: A payment order was made against contributory No. 88 for the balance after adjustment, and against the remaining contributories for the amounts shown in the list, with the excluded contributories unaffected by this order.

Ratio Decidendi: In winding up, contributory liability for unpaid calls is a statutory liability enforceable by the liquidator even where the company's earlier claim would be time-barred, and a valid set-off or discharge must be clearly established by evidence and cannot be undone by unproved unilateral objection after acceptance of payment in money's worth.

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