Successor State liability and winding up powers: unpaid call money survived, but monetary directions for interest and rent failed.
A successor State was treated as liable for unpaid call money attached to shares formerly held by the predecessor State, because the liability travelled with the shareholder rights it continued to assert. However, the liquidator's attempt to recover the call money and interest failed in winding up proceedings since the application did not satisfy the statutory requirements for recovery of debts or for making calls, and there was no legal basis for interest. An order for rent against the State also failed because the court's power to require payment of company money or property did not extend to rent merely from departmental use of the premises.
Issues: (i) whether the successor State remained liable for the unpaid call money on the company shares originally held by the former State; (ii) whether the liquidator's claim for recovery of the unpaid call money and the related request for interest could be sustained under the winding up provisions; (iii) whether an order could be made requiring payment of rent in respect of the company property in the State's possession.
Issue (i): whether the successor State remained liable for the unpaid call money on the company shares originally held by the former State.
Analysis: Liability attached to the rights which the former State had acquired as shareholder. The successor State entered into possession of the property and did not repudiate the obligation. The liability could not be separated from the benefits asserted under the arrangement. In the absence of transfer of the shares to the alleged purchaser, the original shareholder's liability continued, and that liability passed to the successor State.
Conclusion: The successor State was liable for the unpaid call money.
Issue (ii): whether the liquidator's claim for recovery of the unpaid call money and the related request for interest could be sustained under the winding up provisions.
Analysis: The application could not be treated as one under the provision dealing with ordinary recovery of debts because it was not founded on the board resolution and the statutory requirements for that route were not satisfied. It also did not contain the particulars required for an application under the provision empowering calls to be made in winding up. As to interest, there was no statutory basis and no demand for interest in the liquidator's letter.
Conclusion: The order for payment of the unpaid call money and the award of interest were set aside.
Issue (iii): whether an order could be made requiring payment of rent in respect of the company property in the State's possession.
Analysis: The provision empowering the court to require a contributory to pay money or property prima facie belonging to the company did not authorise an order for rent merely because the State had put the premises to use by one of its departments. The State had not been shown to be holding rent collected from an outside entity as company money.
Conclusion: The order for payment of rent was not sustainable and was set aside.
Final Conclusion: The successor State's liability as contributory was affirmed, but the monetary directions for unpaid call money, interest, and rent were deleted, leaving the appeal substantially allowed and the cross-objections dismissed.
Ratio Decidendi: A successor State may be bound by the liabilities attached to rights it adopts or continues to assert, but in winding up proceedings monetary directions can be made only within the specific statutory provisions and on the conditions prescribed by them.
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