OFFICIAL RECEIVER HIGH COURT Vs. AR RM RAMANATHAN CHETTIAR

JUDGEMENT

(1.) THIS is an appeal against the judgment of Baiakrishna Aiyar J. directing the deletion of the first respondent's name from the list of contributories, the question raised in the appeal being whether the existence of a mortgage (English mortgage) over the call money precludes the liquidator from including the name of the shareholder who is in arrears in respect of such money in the list of contributories. The facts giving rise to this appeal have been set out in our judgment in O. S. A. No. 23 of 1957. But we shall, however, recapitulate such of the facts as are necessary for the purpose of the present appeal.

(2.) THE Link industries Ltd. , which is now under liquidation, was incorporated in 1946. On 13-8-1947, the company issued 50,009 shares of the nominal value of rs. 10 each. The respondent subscribed for 36,555 shares and paid to the company at the time of the application and allotment of a sum of Rs. 5 for each share. The balance of share money was payable under the Articles of Association on a call being made therefor by the Directors. But no call was made till the year 1953. On 27-7-1949, the company had to borrow a sum of Rs. five lakhs from the industrial Finance Corporation of India, for the purpose of its business. To secure the amount advanced by the Corporation, the company executed a deed of English mortgage, securing its properties as well as the uncalled share money due from its members. It will be convenient at this stage to refer to the relevant portions of the document:

(3.) BALAKRISHNA Aiyar J. was of opinion that the probabilities of the case showed that the Managing directors of the company must have given some assurance of the kind pleaded by the respondent while he subscribed for the shares; but the learned judge found it unnecessary to decide finally as to how far such assurance, even if made out, could be held to bind the company. On the other question, the learned Judge accepted the position taken on behalf of the respondent, namely, the right in respect of unpaid share money having been assigned over to the corporation by virtue of the execution of an English mortgage in its favour in respect of the call money, the claim in respect of the call money would be outside the liquidation proceedings and the Official liquidator could not include the name of the respondent In the list of contributories settled by him. The Official liquidator has appealed.