V RAJAGOPAL Vs. SALEM PROVIDENT SOCIETY LTD

JUDGEMENT

(1.) THESE appeals arise out of liquidation proceedings in the Salem Provident society Ltd. , which was formed as a private limited company and registered both under the Insurance-Act and the Indian Companies Act, 1913, on 12-2-1935 with its head office at Salem. The-society originally had 2000 shares of which 1020 shares were thrown open for subscription and 980 shares were not allotted to anybody. At the time of the formation of the company the petitioner V. Rajagopal had taken 50 shares. When the company was in difficulties the Board of directors passed a resolution that the remaining 980 shares should be made available to the public. At that time V. Rajagopal took 45 shares of Rs. 10 each, but the remaining shares were not allotted to anybody; nor any member of the public offered to take them. By another resolution Rajagopal allotted to himself 406 shares and allotted to his wife 160 shares. In the first instance he paid a sum of eight annas for each share. Thus Rajagopal became possessed of 501 shares of this company.

(2.) AT the itme of the formation of the company the petitioner Rajagopal constituted himself as Chairman of the Board.

(3.) AS the affairs of the company were far from satisfactory the Superintendent of insurance presented a petition O. P. No. 26 of 1948 on 23rd March, 1948, in the district Court, Salem, to liquidate the company on the ground that there has been a technical defect in the finances of the company and it failed to implement within the time fixed for the purpose, the proposals suggested to it, viz. , either write down the policy contracts for putting the company on a sound financial basis and prevent the company from working at a deficit, by which is meant reducing the amount payable on the insured amounts under each policy or bringing about a revised premium table increasing the premium payable in respect of the several policies so that the company might not work at a loss in deficit in working the company. This petition was stoutly opposed not only by V. Rajagopal, but also by other directors of the company. It was during the pendency of the liquidation proceedings that V. Rajagopal allotted to himself and his wife 566 shares. The allotment was made on 30th March, 1948. The winding up order was passed on 4th August, 1950, and it was finally confirmed on 21st November, 1951. The official liquidator started proceedings under Section 184 for the settlement of contributories. He followed the procedure laid down in Rule 92 to 107. On 14-51952 he gave notice to all the contributories. Rajagopal was one such contributory and he took objections to the inclusion of his name in the list of contributories, as the allotment of shares to him was made after the filing of petition for winding up the company and the allotment itself was irregular and invalid. The Official Liquidator overruled his contentions and settled the contributory list including Rajagopal's name in the list and thus making ham liable to pay the call money in respect of the shares held by him. After the settlement of the list of contributories under Rule 98 of the Company rules the Official liquidator once again served a notice on V. Rajagopal informing him the number of shares held by him in the company and stating that if he had any objection, he was at liberty to file an application either to the Judge or the Registrar within 21 days from the date of the service of the notice. But V. Rajagopal did not avail himself of the opportunity of removing himself from the list of contributories by filing an application as set forth in the notice. After the prescribed period mentioned in the Rule 98 notice the Official Liquidator made an application I. A. No. III of 1954 praying the Court to grant the Official liquidator special leave to make a call on each and every member of the entire amounts due as mentioned in the list attached to the petition. The learned District judge passed an order on 23-3-1954, granting permission to the Official liquidator to make a call on each and every contributory as prayed for. As stated above, before this order was passed, the Official liquidator followed the procedure laid down both under the Insurance Act and the Companies Act. It has been proved that notice was served on Rajagopal in pursuance of the order passed by the learned District Judge, Salem. Time was given to all the contributories till 1st June, 1954. As no payment was made by Rajagopal and others the Official liquidator filed an application I. A. No. 343 of 1954 under Section 187 and Section 246 (2) of the Companies Act and Sections 91 (2) and 12 of the Insurance Act praying for an order directing the contributories set out in the schedule to the affidavit to pay the unpaid share amounts noted against each as due and payable within two weeks from the date of the order or within four days of service of the order of the court. An order was made accordingly on 15th July, 1954, by the District Judge, salem. In pursuance of the direction made by the District Judge notice was served upon v. Rajagopal calling upon him to pay the amount due and payable by him to the company. As V. Rajagopal did not pay the amount, the Official Liquidator began to execute the order passed by the District Judge, Salem, under Section 190 of the companies Act. It was only then that V. Rajagopal filed an application along with four others for stay of further proceedings in regard to the calling up of the unpaid share capital. That application was numbered as I. A. No. 389 of 1954. It was alleged in the affidavit in support of that application that the allotment of shares to rajagopal was itself illegal and invalid as it was subsequent to the filing of O. P. No. 26 of 1948 and that even assuming that the shares were allotted to Rajagopal validly, the allotment was subsequently cancelled at a meeting of the new Board of directors and that Rajagopal had already raised objections on 2nd April, 1954 before the Official liquidator and the Official liquidator failed to give him notice at the time of settling the final list of contributories. The Official Liquidator strenuously opposed this application and denied all the allegations made by Rajagopal in the affidavit. He categorically stated in his counter affidavit that notices were given to each and every contributory before drawing up the final list of contributories, that as a matter of fact notices were taken to each of the petitioners that the first notice was dated 14th May, 1952, fixing 31st May, 1952, as the date to settle the list of contributories that in that notice the character and the number of shares of each of the petitioners were mentioned, that the objections filed by the first petitioner (Rajagopal) and others before the Official Liquidator were rejected, that the second notice was dated 16th june, 1952, and it intimated the settlement of the list of contributories and the list contained the names of the petitioners, that petitioners 2 to 5 were served by registered post, that the notices sent to the first petitioner by registered post was returned on the ground that he was absent, though his wife was served personally on the very same address, that by way of abundant caution another similar notice was sent by ordinary post to his address given to the company and found in its registers and that letter was not received back, that certificate of posting has been taken on 19th June, 1952, for this notice, that in that notice 21 days time was given to the petitioners in accordance with law to move the Court for the exclusion of their names from the list of contributories, but no steps were taken by the petitioners for deletion of their names, that the list of contributories became final after the date fixed, that again a third notice dated 2nd April, 1954, was sent after taking the permission of the Court to make calls on the contributories and this notice was served on all the petitioners by registered post on 9th April, 1954, separately and that in addition a notice by ordinary post was sent to the first petitioner, that in that notice it was specifically mentioned that the Court had granted special leave to make a call on the contributories and that the payment had to be made on or before 1-6-1954 and a copy of the order was attached to each of the said notices, and that the petitioner did not do anything to have the proceedings set aside. It was further stated in the affidavit of the liquidator that he filed I. A. No. 343 of 1954 requesting the Court to direct the contributories to pay the unpaid share amounts and when the application was ordered on 15-7-1954 once again the official liquidator sent a fourth notice to the petitioner and that the petitioner had admitted that he received this notice. The Official liquidator therefore contended that it was not open to the petitioner to avoid payment of the money due to the company in respect of the shares held by him, as he did not take proceedings to delete his name from the list of contributories even though he knew fully well that his name was in the list. When the petition filed by Rajagopal and others (I. A. No. 389 of 1954) came before the learned District Judge he dismissed the petition holding that the petitioners are not entitled to stay of the proceedings taken by the Official liquidator to collect the unpaid capital amount. V. Rajagopal and others preferred an appeal C. M. A. No. 207 of 1955 against that order. The appeal came up before ramaswami J. and the learned Judge dismissed the appeal holding that it was too late for the petitioners to come and ask for relief. The petitioners had also filed C. M. P. No. 6756 of 1956 in the said appeal for leave to file additional grounds, viz, that the claim is barred by limitation etc. Ramaswami J. while dealing with that C. M. P. observed,