P P RAMABHADRAN, LIQUIDATOR Vs. TSMANICKKAM

JUDGEMENT

(1.) The appellant is the liquidator of the Mahalakshmi Studios Limited, which went into voluntary liquidation on the 5 of November, 1939. The appellant, as it was his duty to do, settled a list of contributories, and, as nineteen of the persons on the list did not comply with the calls made upon them, he applied to this Court for an order under Section 216 of the Indian Companies Act. Of the nineteen respondents, respondents 1 to Sand the father of the nineteenth respondent signed the memorandum of association in respect of the shares subscribed for by them, but had not paid for their shares. The other respondents to the petition were not signatories to the memorandum of association, but had not paid what was due by them on the allotment of their shares. The application was heard by Mockett, J., who refused to make any order against the respondents and directed the liquidator to file suits to recover the amounts which he claimed. In dismissing the petition, the learned Judge held that the appellant was not entitled to make calls on the respondents and it is this part of the judgment which has really occasioned the present appeal, because if it stands this decision of the learned Judge will in an important respect govern the suits to be filed. The appellant contends that this finding is erroneous and he asks this Court to direct the respondents to pay the amounts claimed without requiring him to file suits.

(2.) In holding that the amounts due from the respondents could not be made the subject of calls, the learned Judge relied on Alexander V/s. Automatic Telephone Company (1900) 2 Ch.D. 56, Croskey V/s. The Bank of Wales (1863) 4 Giff. 314 : 66 E.R. 726 and Mohun Lall V/s. Sri Gungaji Cotton Mills Co (1900) 4 C.W.N. 369, but all these cases concerned companies which were not in liquidation and this makes a vast difference. We agree with the learned Judge that the directors could not have made calls in respect of the amounts alleged to be due by the respondents and that until the company went into liquidation, these amounts could only be classified as debts due to the company. Directors can make calls only when shares have been issued as partly paid. In such circumstances they can make calls for what is due by shareholders, bearing of course, in mind the conditions of the contract under which they were issued and the articles of association. But where a shareholder has failed to pay for shares allotted to him as a signatory to the memorandum of association or on application he can, in the event of the company going into liquidation, be placed upon the list of contributories and the liquidator can make a call upon him for what is due, in which case the Court can enforce the call without requiring the liquidator to institute a suit.

(3.) Section 156 (1) of the Indian Companies Act says: In the event of a company being wound up, every present and past member shall, subject to the provisions of this section, be liable to contribute to the assets of the company to an amount sufficient for payment of its debts and liabilities and the costs, charges and expenses of the winding up, and for the adjustment of the rights of the contributories among themselves, with the qualifications following.