JOSEPH Vs. PAILY

JUDGEMENT

(1.) BY an order dated 15-8-1120 made in Company Petition no 1 of 1117, the District Judge, Anjikaimal, ordered the winding up of a company called the Gothuruthi Educational and Industrial Company Ltd. , registered on 23-9-1096 under the provisions of the Cochin Companies Act, IV of 1030, and at all material times, governed by the provisions of the Indian companies Act 1913. In M. P. No. 237 of 1123, the liquidator who happened also to be the managing director of the company at the time of the winding up order, applied to the court under S. 153 of the Companies Act for permission to convene a meeting of the members to approve a scheme for reconstituting the company and for consequential orders. This was opposed by 74 out of the 141 members of the company and, in view of this opposition, the application was summarily dismissed by the court. On appeal to this court in A S. 79 of 1123, this court took the view that the mere fact of 74 members opposed the scheme did not necessarily mean that some of them may not change their views when all aspects of the question were discussed at a meeting. Permission was accordingly granted for convening a meeting, and the official liquidator was directed to convene a meeting of the members of the company after taking necessary directions from the lower court. On the matter going back to the lower court, that court appointed a commissioner for the purpose of convening a meeting and ascertaining the views of the members on the question whether the company should be reconstituted. A meeting was accordingly held on 26-9-1954. Three resolutions were passed at this meeting. The first resolution to the effect that the company should be reconstituted was passed by a majority of 98 to 1. The second resolution stating that the court should be moved to give effect to the first resolution was passed by the same majority. The dissentient member, who is the appellant before us moved a third resolution which was carried unanimously and that was to the effect that the reconstitution should be without the liability imposed on the members by Clause. 4 of the memorandum of association of the company. (BY this clause the liability of each member was limited by guarantee to the sum of Rs. 500 and was to ensure for a period of 24 years, in case the company was wound up within that period. That the legal effect of this clause was, as has been pointed out by counsel on both sides, that there would be unlimited liability after this period of 24 years was probably not appreciated by the persons who founded the company and subscribed to the memorandum of association ).

(2.) IT seems to us quite clear that the purport of the resolutions was that the reconstitution to be effected should be without any liability whatsoever to the members. IT is now the common case that this is a resolution which, under the law, cannot be given effect to; and it would therefore follow that it is impossible to reconstruct the company in the manner in which the resolutions of the members demand. The court below however sanctioned the reconstitution leaving the question as to the precise legal effect of the third resolution to be decided when it arose.

(3.) IN M. P. No. 1836 of 1122 brought under S. 176 of the companies Act, the dissentient member who happened to be also a creditor, levelled 11 charges against the official liquidator and demanded his removal. The court below found in favour of the liquidator on all the charges and dismissed the petition. The appeal against that dismissal is A. S. No. 422 of 1954. We think it unnecessary to consider this appeal on the merits since both sides assure us that practically all the assets of the company have been brought into court and almost all the liabilities met leaving a balance of about Rs. 65000 in court deposit. Hardly anything remains to be done, and it would appear that the liquidator has little chance of acting to the detriment of the company in the future, whether or not he has done so in the past.