Company dissolution by striking off bars an ordinary suit, while the saving clause preserves only pre-existing personal liability.
Striking a company's name off the register under section 247(5) of the Indian Companies Act, 1913 brings about dissolution, so an ordinary suit cannot continue against the dissolved company; the proper remedy is restoration to the register under section 247(6). The proviso to section 247(5) preserves only any personal liability that already existed before dissolution and does not create a new liability. Directors and subcommittee members were not shown to have undertaken any personal obligation, and their offices alone did not make them liable for the company's debt. The decree against them and the company was therefore set aside.
Issues: (i) Whether directors and subcommittee members of a dissolved company could be made personally liable for the plaintiff's claim. (ii) Whether the suit was maintainable against the company after its name had been struck off the register and the company stood dissolved.
Issue (i): Whether directors and subcommittee members of a dissolved company could be made personally liable for the plaintiff's claim.
Analysis: The proviso to section 247(5) of the Indian Companies Act, 1913 preserves only such liability of directors and members as already exists before dissolution. It does not create a new personal liability where none existed. The directors were not shown to have undertaken any personal obligation to pay the plaintiff, and the subcommittee members were only authorised to inquire into the accounts and report. Their positions as directors or subcommittee members did not, by themselves, make them liable for the company's debt.
Conclusion: The liability of the directors and subcommittee members could not be fastened personally on them; the decree against them was unsustainable and was set aside.
Issue (ii): Whether the suit was maintainable against the company after its name had been struck off the register and the company stood dissolved.
Analysis: Under section 247(5) of the Indian Companies Act, 1913, once the Registrar strikes off the company's name and the notice is published, the company stands dissolved. The statutory remedy for an aggrieved person is to seek restoration of the company to the register under section 247(6). The proviso to section 247(5) does not keep the dissolved company itself in existence for the purpose of an ordinary suit. Since the company had already been dissolved, the suit against it could not be maintained.
Conclusion: The suit against the company was not maintainable.
Final Conclusion: The appellate challenge succeeded, and the money decree was set aside in its entirety, with the suit dismissed against all defendants.
Ratio Decidendi: Dissolution of a company by striking its name off the register under section 247(5) of the Indian Companies Act, 1913 prevents an ordinary suit against it, and the saving proviso continues only pre-existing personal liability of directors or members, not liability newly fastened by reason of dissolution.
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