Judgement

HEGDE, J.:- This appeal by certificate is by the plaintiff-appellant, Turner Morrison Co. Ltd. (to be hereinafter referred to as Turner Morrison) from the decision of a Division Bench of the Calcutta High Court. The Division Bench affirmed the decision of the trial court dismissing the plaintiff s suit.

2. In the Suit Turner Morrison claimed a decree for a sum of Rupees 1,27,67,052/16 P. The claim was made on the ground that the plaintiff had paid either as an agent or on behalf of the defendant Hungerford Investment Trust Ltd. (in voluntary liquidation) (to be hereinafter referred to as the Hungerford) a sum of Rs. 79,70,802/- as super tax which it was entitled to be reimbursed. To that sum a sum of Rupees 47,96,250/16 P.was added as interest in the shape of damages. In respect of the claim the appellant claimed a paramount lien on the 2295 shares owned by the Hungerford in the plaintiff-company. The defendant resisted the suit on various grounds. It denied that the plaintiff had paid the amounts shown in the plaint-schedule or it was liable to be reimbursed the payments made, if any. It also denied its liability to pay interest on the amounts that might have been paid. Further it pleaded that the suit was barred by estoppel, waiver and acquiescence. It also pleaded the bar of limitation. In addition it pleaded that the lien claimed had been waived and that the suit was not properly instituted. According to the defendant, the suit was not a bona fide one. It was one of the manipulations of Haridas Mundhra to get at the defendants 2295 shares in the plaintiff-company without paying for them.

3. The trial court dismissed the plaintiff s suit holding that the claim in question was barred by "estoppel, waiver or acquiescence". It held that it was also barred by limitation. It opined that the liability to pay the tax in question was the joint liability of Turner Morrison as well as Hunger-ford and the same having been discharged by the former, it had no claim on Hungerford. It opened that the suit was a dishonest attempt on the part of Haridas Mundhra to absolve his liability for paying for the 2295 shares in respect of which he had obtained a decree for specific performance. The appellate court affirmed some of the findings of the trial court.

4. In order to appreciate the various contentions advanced before this Court, it is necessary briefly to refer to the history of the case. Hungerford was the owner of 100 per cent shares of Turner Morrison. John Geoffrey Turner and Nigel Frederic Turner (both since deceased) were the owners of the 100 per cent shares of Hungerford. As can be seen from the records. Turner Morrison was a prosperous company. Though that company was making enormous profits every year, it did not distribute and portion of those profits as dividends during the assessment years 1939-1940 to 1955-56. The profits that should have been available for distributing as dividends were kept back by the company and used as working capital. In all those years the income-tax authorities took proceedings under S. 23-A of the Indian Income-tax Act, 1922. Thereafter the deemed dividends were assessed in the hands of Hungerford. But year after year the Directors of Turner Morrison passes a resolution to the effect that it would be inequitable to ask Hungerford to pay the tax levied and that Turner Morrison itself should discharge that liability. These resolutions were duly implemented by Turner Morrison by paying all the taxes due from Hungerford. In about the middle of 1955. Haridas Mundhra entered into negotiation with Nigel Turner for purchasing all the shares of Turner Morrison. By exchange of letters in November and December of 1955, Hungerford agreed to steel and Mundhra agreed to purchase 49 per cent shares of Turner Morrison. The agreement also provided for an option to Mundhra to purchase from Hungerford the balance of 51 per cent shares of Turner Morrison within five years for the price agreed upon. A formal agre