TMI Blog1936 (10) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... una" which was not very successful and did not bring in a great deal of money. In March 1935 some proceedings were instituted in this court for the winding up of the company and the Directors feared that as the result of these proceedings although in the end they were dismissed, it would be difficult for the company to obtain all the money it needed from calls. On the 19th of May 1935 a resolution was therefore passed, Ex. A. 1, whereby the Managing Agent Mr. Venkatrama Ayyar was authorised to raise money on the security of the assets of the company, not exceeding Rs. 25,000. Soon after this, according to the evidence of the claimant Mr. Sreenivasan, he was approached by Mr. Venkatarama Ayyar and the resolution shown to him. He was asked ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yyar and the Chairman Mr. K.R. Sreenivasa Ayyangar throw a great deal of light on the condition of the company and the circumstances under which this money came to be borrowed. Rs. 3,500 were paid by Mr. Sreenivasan without much delay; but it is contended that the remaining advances at the end of August and in September were made, not because of the promise of a charge, but because Mr. Sreenivasan was an old friend of Mr. Venkatarama Ayyar and was himself interested as a shareholder in the affairs of the company and also because all the directors of the company were his friends. With respect to the last two items, amounting to Rs. 5,000 it is argued that the affairs of the company at that time were in a very serious state. but that neverthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other assets of the company". In his reply letter Ex. J-1 Mr. Venkatrama Ayyar states that he has already issued the second call without caring to wait for the loan, that he had not heard from Mr. K. Sreenivasan about the loan and would write as soon as he did hear. In Ex. J-2, another letter by Mr. Venkatrama Ayyar, he pleads that the Chairman should not spoil the working of the company by over anxiety and draws the attention of the chairman to the fact that he (Venkatrama Ayyar) is the largest shareholder in the company and has got as great an interest as anybody else in seeing that the company functions properly. At that time it is clear that Mr. Venkatrama Ayyar had no fear that the company would go into liquidation, for he writes: "I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a suspicion that all the loans were not made in pursuance of or on the strength of the resolution dated 19-5-35, Ex. A-1. The evidence is to the same effect. The claimant has examined himself and the Chairman, while the appellant examined Mr. Venkatrama Ayyer who, in the chief examination, was inclined to support the case of the appellant by saying that the money was not advanced in contemplation of a charge on the company's assets. In cross examination he admitted all the facts narrated by the and his witness in their evidence. The claimant's evidence with regard to the circumstances under which the final Rs. 5,000 were advanced is corroborated by the Assistant Manger of Kodaks, Madras, examined for the appellant. Before the final Rs. 5, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no time promise to advance any specified sums of money, and the company had already informed him that they did not want a lump sum but would like him to advance the money as it was needed. There are therefore as far as we can see no suspicious circumstances about these transactions which would lead one to suppose that the loans were made on conditions other than those to which the witnesses speak. In view of the finding on the above point, it is unnecessary to consider whether the company immediately after the creation of the Charge was solvent. Whether the company was solvent or not would depend to a large extent upon whether the company was still a running concern at that time or whether the property in its possession would be worth onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the company. As already stated, the reason for the postponement was that it was uncertain how much money would be advanced, it being agreed that it was only after all the advances had been made that the charge deed would be executed. Another objection has been raised that the company was not entitled to borrow money in that one of the directors by name Ramanathan Chetty, had not paid the money payable on application and allotment. This seems to be true on the materials before us, though the point was not raised before the lower court; but as is seen from section 103 (2) a certificate issued by the Registrar is conclusive evidence that the company is entitled to commence business. Some distinction is sought to be drawn between the pow ..... X X X X Extracts X X X X X X X X Extracts X X X X
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