SARDARNI RAM KHETRI Vs. HIND IRAN BANK LTD

JUDGEMENT

(1.) THESE are two connected Letters Patent Appeals, but Letters Patent Appeal No. 215 of 1959 has since been compromised and is, therefore, not being pressed, with the result, that the said appeal is dismissed without any order as to costs.

(2.) IN so far as Letters Patent Appeal No. 123 of 1959 is concerned, it is necessary to state in brief the salient facts out of which it has arisen. The Hind Iran Bank limited (in liquidation), is being would up by this Court. The Liquidator applied under section 45 (E) of the Banking Companies Act read with Section 187 of the indian Companies Act, praying for payment orders against some contributories. Several persons contested the liquidator's claim, including the present appellant on various grounds. The learned Liquidation Judge, in a very detailed and exhaustive judgment disposed of the liquidator's application of 19-3-1959. Shrimati Ram Khetri and S. Taranjit Singh were, however, held liable to pay to the bank a sum of Rs. 17,732/6/- as against Rs. 2,75,000/-claimed by the official liquidator, the balance having been allowed to them as a set-off. The learned judges repelled the contention that the liquidator's claim was barred by time under Art. 112 of the Indian Limitation Act and also disallowed their prayer for giving them benefit of Section 19 (4) of the Displaced Persons Debts Adjustment act. In the present appeal, it is only these two points which have been re-agitated before us. In so far as the question of limitation is concerned, it is not disputed that before going into liquidation, the Company made a call on its share-holders which was payable on 7-8-1947. It is also clear that the petition for compulsory winding up of the Company was presented on 1-10-1953. According to the appellants, the period of 3 years prescribed by Art. 112 had long since expired with the result that the appellants, as members of the Company, could not be called upon to pay anything towards the unpaid amount of the call money. The learned Liquidation Judges has, after considering the case-law on the point, come to the conclusion that the liability of a member to contribute under Section 156 of the Indian Companies Act is ex lege and arises by reason of the fact that his name appears on the register of members. This liability, according to the learned Judge, is not ex contractor and has been imposed as a new liability by statute on the share-holders after the company goes into liquidation in respect of unpaid calls made whether before or after the winding up. Such calls can be recovered even though they are barred by limitation when the winding up order was made. In support of this view, the learned Judge placed reliance on the following decisions: vaidiswara v. Siva Subramania Mudaliar ILR 31 Mad 66, Mahomed Akbar abulla v. Official Liquidator, AIR 1950 Bom 217; In re, East Bengal sugar Mills Ltd. , AIR 1941 Cal 143 and Webb v. Whiffen, (1872) 5 HL 711 (717 ). That these decisions support the view of the learned Liquidation Judge is not disputed. It has, however, been strongly urged that these decisions do not lay down the law correctly. The counsel has emphasized that in section 156 (1) (iv), the liability of a contributory is limited to the amount unpaid on the shares in respect which he is liable as a present or a past member, it is argued that the expression "is liable" has not been noticed in the authorities mentioned above. Therefore, they do not lay down good law. It is urged that if a call has been made by a company and the call money has remained unpaid for more than 3 years, it becomes barred by time and the member cannot be considered to be liable to pay that amount.

(3.) THIS contention raises the question, which has frequently been agitated in courts of law, of the effect of expiry of the period of limitation prescribed by the indian Limitation Act on the right for the enforcement of which the period is prescribed. In the case before us, if the expiry of the prescribed period for enforcing the call made by the Company completely extinguished or discharges the liability itself, then there may be something to be said in justification of the contention, but if the liability is not destroyed, then the argument would obviously be lacking in merit.