(Firm) Pars Ram-Brij Kishore v. Jagraon Trading Syndicate, Ltd.

(Firm) Pars Ram-Brij Kishore v. Jagraon Trading Syndicate, Ltd.


 A petition was pub in by the liquidator of the Jagraon Trading Syndicate, Ltd., under Sections 187, 156 and 225, Companies Act, for a payment order against Rai Sahib L. Pars Ram Brij Kishore as a contributory of the Company for certain sum and interest thereof. The petition went on to state that the respondent’s name had been duly placed on list B of contributories and that he was liable to pay the amount applied for. The shares of the respondent were forfeited on two earlier occasions and a petition was filed in Court for the liquidation of the Company under the supervision of the Court.


The District Judge, dealing with the liquidation, framed no issues, but made a payment order against the respondent before him for that certain sum with interest. It was objected before him that as the shares had been forfeited the respondent was not liable. He repelled this contention by stating that the winding up took place within one year of the order of forfeiture and the respondent therefore could not escape liability under Section 156 (1) (i), Companies Act. He further stated that as the application was in respect of a call made by the Directors before the Company went into liquidation no question arose of the applicability of Section 156 (1) (iii).

Against this decision there was an appeal by Rai Sahib L Pars Ram-Brij Kishore before Single Judge. The contention raised by the appellant was that the claim sought to be enforced was for the payment of a debt in respect of calls before the Company went into liquidation which was barred by limitation. Argument for the liquidator was that his claim was not on foot of the debt, but was for contribution under Section 156, which, it was well settled created a new liability.


If the liquidator was forced to rely on the debt created by the original call on the shares in 1928 the argument of the appellant would prevail. Appellant came within the terms of Section 156, and that the only question which might arise was whether existing members were unable to satisfy their contributions: see Section 156 (1) (iii). District Judge had gone into the accounts and had found that the liabilities could not be met from the existing members and that therefore, the appellants’ appeal should fail. It was also also distinctly held that the only liability was that created by Section 156.

The single judge disallowed interest on the ground that as the claim was under Section 156 and not on the footing of the original call the Articles of Association did not apply and thus interest cannot be allowed under the provisions of Section 156.

Again, appeal filed by both the parties for payment/non-payment of the interest. Rai Sahib Lala Pars Ram-Brij Kishore claimed that they were not liable to pay until it had been shown that the existing members, that is those on list A, were unable to satisfy the contributions required to be made by them in pursuance of the Companies Act, [Section 156(1), (iii)]


Section 156 (1) (iii) does apply. It was never the case of the liquidator before the District Judge that he had exhausted list A and no opportunity was thus given to Rai Sahib L Pars Ram-Brij Kishore to adduce evidence on the point. On the given facts the court opined that- It may be the case that the existing members may not be able to satisfy the contributions required to be made by them in pursuance of the Act and then the other members on list B, such as the appellant before us, can be called upon to contribute but not until list A has been exhausted. Admittedly this has not been done. The appeal of Rai Sahib L. Pars Ram-Brij Kishore must therefore succeed, the order against them set aside.

They agreed with the decision of the learned Single Judge with respect to interest and held that the liability created by Section 156 is a new liability and no provision is made for interest therein.

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