Skip to content


In Re: the British India Banking and Industrial Corporation Ltd. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtMumbai
Decided On
Case NumberI.C. No. 21 of 1922
Judge
Reported in(1934)36BOMLR1002
AppellantIn Re: the British India Banking and Industrial Corporation Ltd.;vithaldas Dhanji and Co.
Respondent;shiva Chedumbariah
DispositionAppeal dismissed
Excerpt:
.....companies act (vii of 1913 ), section 160 - company-voluntary liquidation-shareholder dying before list of contributories is settled-name of deceased shareholder included in list of contributories-order of court for payment of balance-liability of legal representative and heir of deceased shareholder for such payment-administration of estate of deceased shareholder.; where a shareholder of a company, which has gone into voluntary liquidation, dies before the list of contributories is settled, and his name is included in the list in liquidation proceedings, and an order is made by the court for payment of the balance, such balance can be recovered from his legal representative and heir, under section 160 of the indian companies act, 1913, by taking proceedings for the administration of..........of the company in its liquidation. the company not being aware of his death put his name on the list of contributories in the liquidation proceedings, and in due course the court made the balance order for payment. after the liquidator realised such amounts as he could in liquidation, he sold the rest of the claims, and the present assignees purchased the claim payable by contributory no. 136. the assignees now seek for an order againt the respondent, shiva chedumbariah, as the heir and legal representative of the deceased contributory no. 136, for payment of the amount appearing against the name of the deceased contributory in the balance order. on behalf of the assignees it is contended that until the company was informed of the death of the contributory the deceased continued to be.....
Judgment:

Kania, J.

1. The facts briefly are that contributory No. 136, Macherla Ramanna Shiva Chedumbariah, was a shareholder of the company and as such had become liable to contribute to the assets of the company in its liquidation. The company not being aware of his death put his name on the list of contributories in the liquidation proceedings, and in due course the Court made the balance order for payment. After the liquidator realised such amounts as he could in liquidation, he sold the rest of the claims, and the present assignees purchased the claim payable by contributory No. 136. The assignees now seek for an order againt the respondent, Shiva Chedumbariah, as the heir and legal representative of the deceased contributory No. 136, for payment of the amount appearing against the name of the deceased contributory in the balance order. On behalf of the assignees it is contended that until the company was informed of the death of the contributory the deceased continued to be liable as a member and the company was not bound to take notice of the death otherwise. Therefore, the proceedings adopted by the company, in the name of the deceased, are good and are not a nullity as would otherwise be the case under the ordinary law. In this connection reliance is placed on New Zealand Gold Exhibition Co. (Newbery Vautin Process) v. Peacock [1894] Q.B. 622, and in particular on the observations of Lord Davey at p. 633.

2. The principle of that decision, I believe, cannot be disputed.

3. The difficulty in the way of the applicants, however, is that the application is not correct in form. Part V of the Indian Companies Act, 1913, deals with the winding up of the companies and Sections 156 to 161 define the various kinds of contributories. The term 'contributory' is defined in Section 158 as follows:-

The term contributory means every person liable to contribute to the assets of a company in the event of its being wound up

4. Then comes Section 160 which runs as under:

160 (I). If a contributory dies either before or after he has been placed on the list of contributories, his legal representatives and his heirs shall be liable in a due course of administration to contribute to the assets of the company in discharge of his liability and shall be contributories accordingly.

(2) If the legal representatives or heirs make default in paying any money ordered to be paid by them, proceedings may be taken for administering the property of the deceased contributory, whether moveable or immoveable, or both, and of compelling payment there out of the money due.

5. Sections 162 and onwards deal with winding up of the company by the Court, and under the heading 'Ordinary Powers of Court' Section 184 lays down the manner in which the list of contributories is to be settled. Sub-clause (2) of that section provides that in settling the list of contributories the Court shall distinguish between persons who are contributories in their own right and persons who are contributories as being representatives of or are liable for the debts of others. Under Section 186, the Court has the power, at any time after the winding up order, to make an order on any contributory for the time being settled on the list of contributories to pay, in the manner directed by the order, any money due from him or from the estate of the person whom he represents to the company exclusive of any money payable by him or the estate by virtue of any call in pursuance of the Indian Companies Act. That section necessarily contemplates an order made against a person named in the order and whose name appears in the list of the contributories settled under Section 184. The material words in connection with the present issue are contained in Section 160. On looking to the terms thereof, it appears to me that it contemplates the case of a person dying even before the list of contributories is settled. The section provides that in all cases where the contributory (i.e., one who is ordinarily liable to contribute to the assets of the company as defined in Section 158) dies either before or after he is placed on the list of contributories, his legal representatives and heirs will be liable. The section then provides the way in which that liability is to be brought home, and mentions that they shall be liable in a due course of administration to contribute to the assets. Lastly, the first sub-clause of Section 160 recites that by reason of their liability (of the heirs and legal representatives) as such ' they shall be contributories accordingly.' In my opinion, the last words do not exclude the case which has. arisen before me, viz., of a person having died before the list of contributories came to be settled and in whose name the order for payment is made by the Court. The last mentioned words in the first sub-section of Section 160 only make clear the position of the legal representatives who are to pay in due course of administration of the estate, and specify that by reason of the liability of such heirs and legal representatives in due course of administration they become contributories. If the company or the liquidator obtain an order for the payment against such heirs or legal representatives, by reason of their name being put on the list of contributories under Section 184(2), the method of recovering the amount is again provided in Section 160(2). It is there expressly provided that when an order for payment is made against a contributory, who is an heir or legal representative only, proceedings should be taken for administering the property of the deceased person. This sub-section in terms makes it clear that, even when an order for payment is made against such contributory, the proper procedure for the company or the liquidator to enforce payment is to adopt proceedings for the administration of the estate of the deceased and not seek an order for payment personally against the contributories as is. attempted to be done in the present application. Section 160(1) which is, in my opinion, applicable here lays down that when no such order for payment is made, the liability of the heir and legal representative is only in the course of administration, and either in execution of the original balance order made by the Court against the deceased contributory, or otherwise, an order for payment against him personally is not justified by the words of the section.

6. The assignees strongly rely on the decision of B.J. Wadia J. in In the matter of the Dharamsi Morarji Woolen Mills, Ltd. (1932) I.C. NO. 25 of 1928, where it was urged that an order made against a deceased contributory was void and a nullity. In considering that argument the learned Judge had occasion to refer to Section 160. Perusing that judgment, however, it appears that the learned Judge's attention was not drawn to the question of the form of the order as contemplated and provided for in Section 160. Under the circumstances, I am unable to consider that judgment as laying down any principle as to the form in which the order should be made in execution.

7. In my opinion the application must fail. The proper remedy of the assignees is to proceed as provided under Section 160, viz., to take proceedings to recover the amount in a due course of administration of the estate of the deceased. The application is, therefore, dismissed. As, however, the present application fails on a point of law, which is not covered by any authority, I think the applicant should not be made liable to pay the costs. Under the circumstances, I make no order as to costs. Counsel certified.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //