OFFICIAL RECEIVER HIGH COURT MADRAS AND LIQUIDATOR OF LINKING Vs. AR RM RAMANATHAN CHETTIAR

JUDGEMENT

(1.) THIS is an appeal from the judgment of Balakrishna Aiyar, J. , rejecting a claim made on behalf of the Link Industries Ltd. , (which is now under liquidation) in respect of certain calls made upon the respondent by the directors at a time when the company was a going concern. A few facts must be stated in order to appreciate the point on controversy in this appeal. The Link Industries Ltd. , was incorporated in 1946 as a public limited company. There was no adequate response for the taking up of its shares even in the initial stages. On 13-8-1947, the company issued 50,000 shares on the nominal value of Rs. 10 each. Ramanathan Chettiar the respondent applied for and was allotted 36,555 shares. On allotment he paid a sum of Rs. 5/-for each share the balance being uncalled at the time. On 27-7-1949 the Link Industries Ltd. , created a security by way of English mortgage to the Industrial Financial Corporation of India go cover an advance made by the latter in a sum of Rs. 5,00,000/ -. The company assigned inter alia their rights to receive the balance of Rs. 5/-on each share of uncalled share money in respect of the shares issued by the company. On 8-8-1956,the company was directed to be wound up the order of this Court. We are informed that the industrial Financial Corporation has filed a suit on the basis of the mortgage executed in its favour on the Original Side of this Court. This suit is still pending.

(2.) THERE was a change in the meeting agency of the company during the year 1953. The directors of the company in pursuance of a covenant entered into with the mortgagee decided at their meeting held on 15-4-1953 to call up the balance in the party paid shares giving two months' time to the share-holders to pay the money. The new managing agents intimated this fact to the respondent and made a demand on him in respect of the balance due from him. The respondent protested stating that he took up the shares with a view to boost them in the market and that it was expressly agreed between him and the previous managing agents at the time of the allotment of shares, that he should not be called upon to pay the unpaid share money till he was able to sell three-fourths of his holding to outsiders.

(3.) THIS defence was not perhaps a new one, as the respondent raised the same objection when there was an earlier attempt on the part of the then managing agents to call upon share-holders to pay up their unpaid share capital. But neither the managing agents nor the mortgagee agreed to this.