TMI Blog1965 (5) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... of transfer these share went only 10 per cent. paid. Subsequently respondent No. 1 acquired mom shares and his total holding came to be 4299 shares, Respondent No. 1, Haridhan Singh, became chairman of the company in 1940, and he was appointed as Managing director in 1943. He acted as such till the end of December, 1945. Thereafter, he continued as a director till 16th March, 1946. By 25th March, 1946, respondent No. 1 had transferred 1254 shares and thus a block of 3045 shares remained in his name. Two more calls of Rs. 10 per share each were made before 24th March, 1946, but these were not paid by respondent No. 1 with the result that on 23rd July, 1946, he was liable to payment of arrears of calls in the sum of Rs. 60,900- On the 23rd July, 1946, the company forfeited all the shares (3045) which stood in the name of respondent No. 1. According to the allegations contained in the application under section 184 and section 38 of the Act, which was filed by the official liquidator in April, 1958, the forfeiture of the shares belonging to respondent No. 1 was the result of collusion between him and Sardul Singh Caveeshar and his friends in the company who adopted the device of forfei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Most of the other facts which have been set out in the beginning of the judgment were admitted, but the case of respondent No. 1 was that he handed back the entire holding to Sardul Singh Caveeshar and then severed his connection with the company in March, 1946. At all relevant times these shares were the property of Sardul Singh Caveeshar, and respondent No. 1 says that he had no concern with them. The allegations relating to collusion and fraud were denied. It was also pleaded that call-money had not been paid because the shares were really the property of Sardul Singh Caveeshar. On these pleadings the learned company judge framed the following issues; "(1)Whether respondent No. 1 is not liable for the payment of the calls made during the period he was the registered holder of the shares in dispute? (2)Did respondent No. 1 ever surrender the shares in dispute to Sardul Singh Caveeshar and was the forfeiture and reallotment thereof bona fide and not collusive? (3)Were the payments of subsequent calls as shown in the books of the company invalid, fraudulent and ultra vires and of no effect? (4)Is respondent No. 9 a bona fide transferee and what is its effect? (5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raud, the standard of proof required is not satisfied by merely raising suspicion howsoever strong. One important fact in this case is that although the company was ordered to be wound up on 29th May, 1955, the present application against respondent No. 1 was made on 30th April, 1958. There is nothing forthcoming on the record that the official liquidator had been kept in the dark with respect to this matter. Under these circumstances, the bar of limitation stands in the way of the official liquidator and it has not been overcome by a definite proof of fraud on the part of respondent No. 1." It is apparent that the petition of the liquidator was decided more or less on the finding on issue No. 4-A that it was barred by limitation, and no firm decision was given on the other issues. According to Mr. D.D. Khanna, the learned judge had applied article 181 of the Limitation Act, and he has strenuously contended that that article was not applicable. It seems to me that so far as the applicability of article 181 is concerned, the matter stands concluded by pronouncement of their Lordships in Ska M ulchand and Co. v. Jawahar Mills Ltd. [1953] 23 Comp. Cas. 1; [1953] SCR 351. In tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccurred therein, we are not of opinion, as at present advised, that the subsequent amendment of articles 158 and 178 must necessarily and automatically have the effect of altering the long acquired meaning of article 181 on the sole and simple ground that after the amendment the reason on which the old construction was founded is no longer available." On the view expressed in this case it is difficult to say that the present application would be governed by article 181 of the Limitation Act. It may be mentioned that in the above case their Lordships held that the application of the official receiver was not barred by limitation even if article 181 applied, and further observed that if article 181 did not apply then the only article which could be applied by analogy was article 120 and the application was within time. In their view the application in that case could not be thrown out as barred by limitation. The teamed counsel for respondent No. 1 contends that in Sha Mulchand case ( supra ) the Supreme Court held that even if article 181 did not apply, article 120 would be applicable. Their Lordships did examine the bar of limitation in that case from the point of view of appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Allahabad High Court. The question which came up for consideration in Dehra Dun Mussourie Electric Tramway Co. Ltd.'s case ( supra ) was whether the three sums of Rs. 27,000, Rs. 35,000 and Rs. 7,703-13-0 were recoverable. Their Lordships proceeded to consider the question of limitation and referred to section 3 of the Limitation Act and observed that unless the application which the liquidators made for recovery of these amounts was a "suit instituted" or an "application made" within section 3, no question of limitation in regard thereto cowl arise. Section 2 of the Act contained the definition of suit, it being that unless there is anything repugnant in the subject or context, "suit" does not include an appeal or an application. In this connection their Lord ships proceeded to say that the word "suit" ordinarily means, and apart from some context must be taken to mean, a civil proceeding instituted by the presentation of a plaint. They were of the view that the application of the liquidators could not be dismissed as being a "suit instituted " after the prescribed period of limitation. The application was, therefore to be treated as an "application made" under section 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o as to attract the applicability of article 120 of the Limitation Act. The learned counsel for respondent No. 1 says that the rule which was prominently in the mind of their Lordships that if certain amount was not recoverable in a suit the recovery could not be enforced by a summary order under section 186 of the Act, would be applicable here also. It is pointed out that, if a suit for rectification of the register had to be filed, it would be governed by article 120 and it is urged that it could not possibly be held that merely because resort is to be had to the summary remedy provided by section 38 of the Act for rectification the bar of limitation would be eliminated. It is suggested that this would lead to most anomalous consequences inasmuch as if rectification of a register is sought under section 38 and it is held that there is no period of limitation prescribed for the same but if the court directs that owing to the complicated nature of the points involved a suit should be filed then the bar of limitation would operate and the court would have to dismiss the suit if it is beyond time under article 120 of the Limitation Act. There is a good deal of force in the submissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certiorari would, therefore, fall within the expression "sue " used in section 176, Government of India Act, 1935. These observations, however, were made in quite a different context as the learned judge was of the view that a writ of certiorari would lie against the Government of Bombay because section 306, read with section 176 of the Government of India Act, 1935, expressly preserved the right to sue in all cases where such a right could be exercised as against the East India Company. It is true that the Supreme Court in Sha Mulchand's case ( supra ) did not completely negative the applicability of article 120 to an application for rectification of the register under section 38 of the Act but, as has been pointed out before, no decision was given in the matter and although the question is not free from difficulty, I am inclined, as at present advised, to the view that article 120 would not be applicable to an application which cannot be called a suit and even if that article is applicable, the cause of action would arise only from the date of the order of the winding up of the company because the liquidator could ask for settlement of list of contributories only after the wind ..... X X X X Extracts X X X X X X X X Extracts X X X X
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