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TMI Blog1959 (3) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... mounts due from each of these three contributories has been stayed by the Letters Patent Bench and therefore the order passed in this case shall not relate to the above named contributories Nos. 89, 93 and 94. Payment orders on the basis of compromises sanctioned by me have already been passed in case of contributories Nos. 17, 29, 69, 70, 72, 76 and 84 and these cases will not be affected by this order. Out of the remaining contributories, the petition of the bank has been contested on behalf of contributories Nos. 1 (Raizada Jagan Nath Bali), 16 (S. Balwant Singh), 82 (Shrimati Ram Khetri and her son S. Taranjit Singh), 85 (Shrimati Sant Kaur) and 88 (S. Taranjit Singh and Shrimati Ram Khetri). The above contributories are represented by Bakhshi Gurcharan Singh, advocate in this court. Contributories Nos. 82 and 88 are same persons but as contributory No. 82 they owe a sum of Rs. 10,000 on account of 200 shares and as contributory No. 88, the official liquidator has claimed Rs. 2,75,000 on account of 5,500 shares. The petition is also contested by contributories Nos. 43 (Messrs. Harnam Singh-Bishan Singh), 45 (S. Budh Singh), 74 (S. Kartar Singh son of S. Kishan Singh), who are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 20th of October, 1957, and that in default the official liquidator would move the court for a payment order being passed against them with interest. Before dealing with the case of these two respondents in support of the first issue, some important facts may be mentioned. The registered office of the bank was at Rawalpindi and on 18th of June, 1947, the board of directors decided to shift the registered office from Rawalpindi to Amritsar. On 20th of July, 1948, a meeting of the creditors of the bank was held at the registered office at Amritsar and it was resolved that the bank be voluntarily wound up under section 209 of the Indian Companies, Act, 1913. It was also resolved that Shri Tara Chand Anand be appointed the voluntary liquidator of the bank. A meeting of the shareholders was also called for on 2nd of September, 1948, but no meeting could be held for want of quorum and the meeting was then adjourned to 9th of September, 1948, which was attended by two shareholders and a resolution was passed for the voluntary winding up of the bank and for the appointment of Shri Tara Chand Anand as the voluntary liquidator. On 27th of December, 1950, Harnam Singh J. found that the two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r members of her family had shifted, to the manager of the Hind Iran Bank Limited, Kucha Sher Singh, Rawalpindi. It was stated in the letter that the fixed deposit receipts, details of which were given, had matured for payment and were enclosed as duly discharged and the amount due towards the call be adjusted. The six fixed deposit receipts were got attested by Shri Narindar Singh, Magistrate First Class, Lucknow, on 16th of December, 1947. Exhibit C. 21 is a communication dated 13th of February, 1948, sent by the Manager, Hind Iran Bank Limited, Rawalpindi, to the manager of the bank at Amritsar, which reads as under: "We beg to advise having credited you Rs. 2,57,267-10-0 (rupees two hundred and fifty-seven thousand two hundred and sixty seven and annas ten only) o/a payment by Shrimati Ram Khetri for 50 per cent. call on her shares." Exhibit C. 31 is letter dated 17th of February, 1948, from Shri Tara Chand, managing director, from Delhi, addressed to Hadi Hussain Shah, Manager, Hind Iran Bank Limited, Rawalpindi, and is reproduced below: "Confidential. My dear Shah Ji, Re: Your advice for Rs. 2,57,267-10-0 on a/c of payment by Sh. Ram Khetri on her unpaid call of 50% per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or Rs. 9,500 was 29th of February, 1948. It was also argued that the tender of the amount of the call money by means of the six fixed deposit receipts was not valid as it was not in the current coin of the realm and in any case that tender of part payment could not be considered as tender at all. The call amount on 5,500 shares was Rs. 2,75,000, besides interest which was payable at 7 per cent. per annum. The amount that was tendered on behalf of Shrimati Ram Khetri and her sons by means of fixed deposit receipts, came to Rs. 2,57,267, leaving a balance of Rs. 17,733 besides interest that had accrued. It was contended that under section 38 of the Indian Contract Act in order that the offer of performance should be valid it must be an offer of the whole payment or performance that is due. Reliance was placed upon Beharilal Biswas v. Nasimannessa Bibi AIR 1923 Cal. 527, where it was held that a creditor was not bound to accept less than his whole debt and there can be no valid tender of part of an entire and indivisible debt. It was also argued that the tender had not been accepted by the manager of the Rawalpindi branch and in any case he had no power to do so. I am afraid the abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d her sons as per exhibit C.1, dated 26th of January, 1948, enclosing six fixed deposit receipts duly discharged had been accepted by the bank. It has already been pointed out that the acceptance of the tender should be construed from the fact that no objection was raised and the fixed deposit receipts, which were valuable property were never returned by the bank. Besides that, there is a letter, exhibit C. 21, dated 13th of February, 1948, produced by the bank which was addressed by the manager of the Rawalpindi City branch to the manager at Amritsar, which has already been reproduced above. According to the notice, exhibit C. 30, dated 23rd of July, 1947, these respondents were required to pay the sum of Rs. 2,75,000 to the manager of the bank at its office in Rawalpindi City, and this had been done and the manager of Rawalpindi City branch advised to Amritsar branch that he had credited to Amritsar branch the amount due on account of call on the shares in question. I do not think it is open to the bank to object that the sum of Rs. 2,57,267-10-0 had not been credited on account of payment of the call money due on these shares. On behalf of the official liquidator of the bank, r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R [1873] 8 Ch. 407, 412, James L.J. stated the principle in the following words: "But if a transaction resulted in this, that there was on the one side a bona fide debt payable in money at once for the purchase of property, and on the other side a bona fide liability to pay money at once on shares, so that if bank notes had been handed from one side of the table to the other in payment of calls, they might legitimately have been handed back in payment for the property, it did appear to me in Fother-gill's case, and does appear to me now, that this Act of Parliament did not make it necessary that the formality should be gone through of the money being handed over and taken back again; but that if the two demands are set off against each other the shares have been paid for in cash.. If it came to this, that there was a debt in money payable immediately by the company to the shareholders, and an equal debt payable immediately by the shareholders to the company, and that each was accepted in full payment of the other, the company could have pleaded payment in an action brought against them, and the shareholder could have pleaded payment in cash in a corresponding action brought by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uced and it is not known if it is available. I cannot, from this, conclude that there had been no adjustment at all. In this case it cannot be urged on behalf of the bank that adjustment of the amount of the fixed deposit receipts towards the call money amounted to a fraudulent preference by the bank of the respondents, on 13th of February, 1948, the date of exhibit C. 21, over the other creditors of the bank within the contemplation of section 54 of the Provincial Insolvency Act read with section 231 of the Indian Companies Act, 1913. The resolution of the shareholders for sending the bank into voluntary liquidation is dated 9th of September, 1948. The adjustment had been done seven months previously in pursuance of the respondent's letter exhibit C. 1, dated 26th of January, 1948. Moreover, as found by Harnam Singh J. in his order dated 27th December, 1950, in C.O. No. 27 of 1950, the special resolution passed at a meeting of two shareholders, both of whom were in arrears in respect of the call money, was of no legal effect as they were not entitled to vote at the meeting. It was held in Chennakesava lyengar v, coimbatore Mahalakshmi Bank Ltd. [1942] 12 Comp. Cas. 268, that wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Shri Tara Chand Anand claimed the benefits of section 19 of the Displaced Persons (Debts Adjustment) Act. It was claimed on their behalf that they were displaced persons from West Punjab. The resolution for the voluntary winding up of the bank was passed on 20th of July, 1948. By order of Harnam Singh J. dated 27th of December, 1950, passed in C. 0. 27 of 1950, it was held that the bank had not been sent into voluntary liquidation in accordance with law, and that the appointment of Shri Tara Chand Anand as liquidator was not valid. On 20th of August, 1953, the Letters Patent Bench confirmed the order of the Single Judge. The petition for compulsory winding up was made on 1st of October, 1953. The Displaced Persons (Debts Adjustment) Act was extended to the Punjab on 10th of December, 1951. Section 19 enables a displaced person to apply to a company for conversion of partly paid up shares held by him into a smaller number of fully paid up shares in respect of which calls have been made. If such a request is refused by the company, the Tribunal -in this case, this court, in view of the provisions of the Banking Companies Act-may, on application, direct the company to convert the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to a case of a company or a co-operative society in liquidation and sections 19 and 20 are mutually exclusive. After hearing the arguments of the learned counsel, I have not been able to persuade myself to change my view that I had formed in Bhai Mohan Singh's case (supra). It was next argued that even after the lapse of ten years from the 15th day of August, 1947, section 19(6) kept the operation of section 19 alive "as respects things done or omitted to be done". In this case it was argued that if the shareholders had omitted to make an application under section 19 within the period of ten years, this period could be extended by virtue of sub-section (6). This argument is devoid of any sound principle. Sub-section (6) contemplates the taking of some steps during the statutory period. If after the machinery provided by law had been set in motion, there were left certain things unfinished they could be completed. The words of sub-section (6) cannot be stretched so as to defeat the very purpose of providing a fixed period of ten years during which the benefit of section 19 could be availed of. Any other interpretation would have the effect of defeating the clear intention of the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ability to contribute to the assets of the company; and when we look further into the Act it will be seen that it is a liability to contribution to be enforced by the liquidator. It is quite true that a call made before the winding-up-...is a debt due to the company, but that does not affect this new liability to contribution." The above view had been followed in a large number of decisions. In Pokhar Mal v. Flour and Oil Mills Co. Ltd. [1934] 4 Comp. Cas. 280 , Tek Chand J. said: "The question of limitation is concluded by authority. It is settled in a long course of decisions that a member of a company in liquidation is liable in respect of unpaid calls even though the calls were made by the company before it went into liquidation and the suit of the company for their realization had become barred by time under article 112 of the Indian Limitation Act: Sorabji v. Isher Das [1895] ILR 20 Bom. 654, Vaidiswara Ayyar v. Siva Subramania Mudaliar [1907] ILE 31 Mad. 66, Jagannath Prasad v. U.P. Flour and Oil Mills Co. Ltd. [1916] ILR 38 All. 347, Dehra Dun Mussourie Electric Tramway Co., In re" [1928] ILR 50 All. 476, Prayan Prasad v. Gaya Bank Ltd. [1931] Comp. Cas. 185, Delhi Woolle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by shares, no contribution shall be required from any member exceeding the amount (if any) unpaid on the shares in respect to which he is liable as a. present or past member." The argument in brief is that the liability contemplated above is in respect of claims which are enforceable in praesenti, i.e., which are not time-barred. He maintains that the words "he is liable" means at the present time when the provisions of section 156 are being invoked and the order is being passed under section 187. He wants to give to the word "liable" the restricted meaning of being legally responsible or bound in law and in praesenti. The word "liable" has a large and comprehensive significance and when so construed it means "obliged in law or equity, subject", vide Webster's New International Dictionary. The word "liable" has also a second definition and that is "exposed or subject to a given contingency, risk or casualty which is more or less probable" vide Black's Law Dictionary. The word is used in the sense of actually or potentially subject to an obligation. The word is not used in an absolute sense and does not exclude the idea of contingency. It refers to a possible or probable happenin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r adjustment of the fixed deposit amount against the call that had been made. He stated that he had not written any letter to Shri Tara Chand as he had spoken to him verbally and in view of his cordial relations with him, he believed that Tara Chand would do the needful. He also admitted that Tara Chand never told him that the adjustment asked for by him had been done. Tara Chand, who appeared as C.W. 1, stated that he could not remember if any request on behalf of Mr. Prem Chand Bhasin for adjustment of the call money against his deposits was ever made to him. From this evidence, no case is made out in favour of Mr. Prem Chand Bhasin entitling him to claim set-off against the bank. Issue No. 5 is, therefore, decided against him. In the result I hold that contributory No. 88, namely, S. Taranjit Singh and Shrimati Ram Khetri owe to the bank a sum of Rs. 17,732-6-0 that is to say, Rs. 2,75,000 claimed by the official liquidator, less Rs. 2,57,267-10-0 allowed by me as set-off. I, therefore, pass payment order againt contributory No. 88, S. Taranjit Singh and Shrimati Ram Khetri for Rs. 17,732-6-0. So far as contributories Nos. 17, 29, 69, 70, 72/76 and 84 are concerned, orders in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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