Statutory liability on winding-up permits recovery of unpaid calls despite time-bar restrictions; accepted adjustments count as payment unless shown fraudulent.

On compulsory winding up a statutory liability arises enabling the liquidator to recover unpaid calls notwithstanding that company remedies would be time-barred; courts treat the winding-up statutory liability as distinct from pre-winding-up rights and permit enforcement by the liquidator. An accepted adjustment effected by delivery and retention of value instruments constitutes payment or set-off unless the creditor timely objects or proves fraud or preference. Relief under the Displaced Persons (Debts Adjustment) Act is unavailable where no application was made within the statutory ten-year window and does not extend to companies in liquidation as contended.

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Issues: (i) Whether the debt of contributory No. 88 had been discharged in 1948 and, if so, to what extent; (ii) Whether the contesting contributories are entitled to the benefit of section 19 of the Displaced Persons (Debts Adjustment) Act, 1951; (iii) Whether the contributories are liable to pay amounts claimed by the official liquidator or barred by limitation; (iv) Whether contributory No. 92 can claim set-off and, if so, to what extent.

Issue (i): Whether the debt of contributory No. 88 (S. Taranjit Singh and Shrimati Ram Khetri) was discharged in 1948 by adjustment of fixed deposit receipts and what effect that has on the payment order sought.

Analysis: The respondents produced evidence of six fixed deposit receipts tendered and delivered to the bank in accordance with the call notice. The bank retained those receipts and there is documentary evidence (exhibit C.21) showing credit of Rs. 2,57,267-10-0. Objections by the bank to the form, timing or partial nature of the tender were not raised at the time and therefore are treated as waived. Letters relied upon by the bank (including exhibit C.31) were private communications and, given circumstances including alleged vacancy of office of the author, do not overturn the adjustment. There is no proven dominant intent to prefer that would render the adjustment a fraudulent preference.

Conclusion: The court holds that contributory No. 88's liability is discharged to the extent of Rs. 2,57,267-10-0 and a payment order is passed against them for the balance of Rs. 17,732-6-0 in favour of the official liquidator.

Issue (ii): Whether the contesting contributories are entitled to relief under section 19 of the Displaced Persons (Debts Adjustment) Act, 1951.

Analysis: Section 19 operated for ten years from 15 August 1947 and required applications within that statutory period. No application under section 19 was made by the shareholders during the statutory ten-year period. The court's prior decisions and statutory scheme treat section 19 as applicable to going concerns and not to companies in liquidation; subsection (6) does not extend the statutory right to apply beyond the ten-year period in the manner contended for.

Conclusion: The contributories are not entitled to the benefit of section 19; this issue is decided against them.

Issue (iii): Whether contributories' liability to calls is barred by limitation or is recoverable by the liquidator under section 156 and section 187 of the Indian Companies Act, 1913.

Analysis: On winding up, section 156 imposes a new statutory liability on members for unpaid calls distinct from pre-winding-up company rights. Authorities establish that calls recoverable by the liquidator under section 187 give rise to rights enforceable notwithstanding that a company's direct suit would be time-barred under article 112; article 120 applies to proceedings by liquidators for such contributions. The word "liable" in section 156(1)(iv) is not confined to rights enforceable at the moment pre-winding-up but embraces the statutory liability created in liquidation.

Conclusion: The contributories are liable to pay the amounts claimed; limitation under article 112 does not bar recovery in these winding-up proceedings.

Issue (iv): Whether contributory No. 92 (Shri Prem Chand Bhasin) can claim set-off against the call liability.

Analysis: The evidence does not establish that Mr. Bhasin procured adjustment of his deposits against the call. His testimony and the evidence of the managing director do not show a completed or accepted adjustment sufficient to constitute set-off.

Conclusion: Issue decided against contributory No. 92; no set-off is allowed.

Final Conclusion: The court grants payment orders in favour of the official liquidator against all contributories listed except where prior payment orders or pending appeals exclude them; contributory No. 88 receives partial credit for Rs. 2,57,267-10-0 and a payment order is passed for the balance; claims under section 19 of the Displaced Persons Act are rejected and limitation does not bar recovery in winding-up under the statutory scheme.

Ratio Decidendi: On compulsory winding up a statutory liability under section 156 arises which permits the liquidator to recover unpaid calls notwithstanding that company remedies would be time-barred; an accepted adjustment by delivery and retention of value instruments operates as payment or set-off unless the creditor timely objects or proves fraud.

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