AI Structured Summary
Not yet generated for this judgment
Judgment
Govinda Menon, J.—C.M.P. No. 8180 of 1955 : It is contended by Mr. R. Narasimhachari for the respondents that even if the company
went into liquidation after the filing of the Second Appeal and during its pendency the Liquidators cannot be brought on record as the
representatives of the erstwhile company as appellants. The learned Counsel contends that according to Sections 155 and 156 of the Indian
Companies Act, the moment a Liquidation arises the rights, which the Liquidators have against the erstwhile shareholders who happen to be
contributories is a new statutory right created by the Companies Act and not a liability which the shareholders had to the company for the unpaid
share money. Reliance is placed upon the observations of Jessel M.R. in In re White House & Co. (1878) 9 Ch. 595 , as well as the observations
of their Lordships of the Judicial Committee in AIR 1933 63 (Privy Council) . The learned Counsel also contends that observation of Din
Mohammad, J., in Jagaron Trading Syndicate (in Liquidations) v. Manachand Roshan Lal I.L.R.(1935) Lah. 1055, as well as the dicta of Jardine,
J., in The Parell Spinning & Weaving Co., Ltd. v. Manek Haji I.L.R.(1886) 10 Bom. 483, convey the same principle. It seems to us that on a
reading of the sections as interpreted by these Judicial pronouncements the right which the Liquidator has against the contributory is a statutory one
and not a contractual one between the shareholders and the company. That being so, there is no cause of action which survives to the Liquidator in
a matter of this kind. But it has to be mentioned that since that right is a new one created by the statute as soon as the Liquidators make a call and
settle the list of contributories, a period of six years will enure in their favour for filing a suit for enforcing the liability. Mr. Narasimhachari does not
dispute this proposition of law. In these circumstances we are satisfied that since the Liquidators have another remedy which in our opinion is not
barred, there is no necessity to proceed with the Second Appeal. C.M.P. No. 8180 of 1955 is, therefore, dismissed.
In view of the fact that the Liquidators cannot come on record as legal representatives of the appellants, S.A. No. 1906 of 1951 abates and is
dismissed.