SANKARA AYAR v. BECKET

128-NLR-NLR-V-18-SANKARA-AYAR-v.-BECKET.pdf


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1910.
Present: De Sampayo J.
SANKARA AYAR v. BECKET.33—C. R. Colombo, 47,802.
Joint Stock ocompany—Coil made by directors from shareholders'—Com-pulsory winding-up proceedings—Prescription.
, The directors of a joist stoch company registered in° India underthe Indian Companies Act, 1882, made a call in 1008 for the balance• dne on defendant's shares, but the defendant did not pay it. In1911 an order was made for the compulsory winding ud of thecompany by the District Court of Tinnevelly (India), On October9.1912, the Courtmadeorder thatthedefendant should pay
the balance due on his shares within four days of. the service ofthe order. The defendant not having paid the amount,, this actionwas instituted on October 7, 1915.
Held, that the claim was not. barred by prescription. Theordinary liability of a shareholder to contribute bis share of capitaf *arises under- the articles, but on a winding up it is converted intoastatutory liabilityundersection 01ofthe Indian ‘ Companies
Act, 1882.
The amount of contribution ordered by the Court can he' re-covered, though the claim on the basis of calls originally made by thedirectors may have been barred by limitation before the winding jap.
A. 8t. Y. Jayewordene (with him Mahadeva), tor plaintiff,appellant.
Keunemon, for defendant, respondent.
Cur. adv. viM.
March I, 1916. Ds Sampayo J.—
The plaintiff, as the official liquidator of the Swadeshi SteamNavigation Company, sues the defendant, who is the holder of threeshares in the company, for the recovery pf Rs. 86.29 as the amountof contribution, with interest, due by him towards the assets in &ewinding up of the company. Though the amount claimed is small,the case involves an important point in the law relating to limitationof actions.
The Swadeshi Steam Navigation Company is a company regis-tered in India under the Indian Companies Act, 1E©2. In September,1907, the defendant was, on his application, allotted three sharesof Rs. 25 each, lor whieh he made the initial payment* of Bs. 15.In 1808 the directors made a call for the balance due on the shares,but ^ the defendant did not pay it. In 1911, the Company beingin difficulty, the District Court of Tinnevelly made an order for itscompulsory winding up, and the plaintiff was appointed ~ official
fJiHE facts are set out in the judgment.
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liquidator. In September, 1012, (lie Court settled the list of ® 1816.contributors, and in the list tbp 'defendant was included as a eon* insninsotributory in respect of thcr balance due by hint'on bis shares. i3n J-October 9, 1912, (be Court made order that the defendant should ®pay the amount to (he plaintiff within f&ur day/ of the service ofe Ayarv.the' order. The evidence is, and the Commissioner is satisfied, that ***-(he order was served .on the defendant cm October 10' or 11,
1912, and the defendant not having paid the amount this aotionwas instituted on October 7, 1915.°
If the date of the order or. of its service is taken as (he time when(he. cause of action arose, this aotion cannot be said to have beenprescribed. The Commissioner, however, on the footing that thecause of action arose in 1908, when the directors made the call,held that the action was barred by prescription, and dismissed .it.
He is clearly wrong in taking no account of the winding-up proceed-tigs. Section 61 of’the Indian Companies Act, 1882, which corre-sponds to section 88 of the English Companies Act of 1862 and tosection 123 of the Companies (Consolidation) Act, 1908, enaotg“ Iq the event of the company, formed under this Act being,wound up, every present and past member of such -company shallbe liable to contribute to the assets of the company,” &o.
It is true that the ordinary liability of a shareholder to contributeliia share of capital arises under the articles, but on a winding upit is converted into a statutory liability under the above section.
The liability of a contributory as such is distinct from bis previousliability as a shareholder. It is a new liability under the statute.
In re Wkitehouse & Co.,1 In re West of England Bank* Burgess’scase.3 This interpretation of the statute has been adopted in India.
The Pared Spinning and Weaving Co. v. Manek Haft,* Sorabii Jemsetjiv. Ishwardas Jugiwandae.* It is therefore clear that the circumstancethat the directors made a call in 1908 before the winding-up ordermakes no difference as regards the defendant’s present liability.
From the fact that the statutory liability is a new one, it followsthat" the amount of contribution ordered by the Court to be paidcan be recovered, though the claim on the basis of calls originallymade by the directors may have been barred by limitation before(lie winding up. Vaidiswara Ayyan t. Siva Svbramania Mudaliyar.*
Section 125 of the English Companies (Consolidation) Act, 1908,corresponding to section 125 of the Indian Companies Act, 2882,emphasizes the nature and extent of the liability by declaring (hat“ the liability of a contributory shall create a debt accruing duefrom him at .the time when his liability commenced, but payableat the time when calls are made enforcing the liability.” Now,, the
way in which calls are made for enforcing the liability is by order
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i (1874) L. R. 9 Ch. D. at page 599.*I.L,R. JO Bombay,488.
(1879) 48 L. J. Ch. at page 464.*I.L.R. SO Bombay064.
(1880) L. R. Ch. D. at page 6U.«I.L.R. 81 Madras 60.
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1010. c *of Court under section 166 of the Engliih Act, corresponding toZte al^AYo ***#0X1 161 of the Indian Act. Consequently the cause of action,*• against the defendant arose Vhen thd ordqr of the Tinnevelly CourtSankara #was* served on the defendant, and when, therefore, the debt became.Ijfeefcet ^y*^6* As regards the period of prescription, the cause of action..
not being otherwise provided for by the Ordinance No. 22 of 1871# 'section 11 of e the Ordinance governs, and as this action has beeijinstituted within three years from the time when the cause of action,accrued, it is jiot barred by prescription.
I may note that counsel for the defendant contended that noliability arose under the statute so far as the defendant was*concerned,because the liquidator had not given him notice in connection with%he settlement of, the list of contributors. But this point was notraised in the Court below, and no evidence was directed to it. Thedefendant,, for the purpose of proving that he had not received theorder of Court, did swear generally that be had not received anynotice or communication from the company or the liquidator sincehis application for shares, but the Commissioner did not believe himthere. Moreover, if the defendant was wrongly put on the list of• contributories, his remedy, I think, is to apply in that behalf to the'Court'in the winding-up proceedings.
The appeal is allowed, and judgment will be entered for theplaintiff as claimed, with costs of the action and of this appeal.
Appeal allowed.
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