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SITHARAM CHETTIAR v. UMBITCHY
NLR32V206
1931
Present: Akbar J.
SITHARAM CHETTIAR v. UMBITCHY.
207-C. R. Colombo, 58,481.
Joint Stock Company-Unpaid capital- Mortgage of debts-Sale in execution- Right
of purchaser to recover amount of unpaid shares-Ordinance No. 4 of 1861, ss. 25,
69, and 107.
Where a Joint Stock Company in Ceylon mortgaged " all the assets including all
the moneys now due or hereafter to become due to the company in respect of
shares sold" and in execution of a decree in an action on the mortgage the
following property was sold and conveyed to the purchaser " all the moneys
whatsoever due to the company by the several persons enumerated ",-
Held, that capital unpaid cannot be regarded as a debt due to the company from
a. shareholder, until a call has been
made in accordance with the Articles of Association or by the liquidator in the
case of a voluntary winding-up, and that consequently the amount of a call
unpaid does not fall within the liability created by the mortgage.
THE plaintiffs sued the defendant for the recovery of a sum of Rs. 250, alleged
to be a debt due from the defendant to the Indo-Ceylon Trading Company, which
debt the plaintiffs had purchased in execution against the company. The sum of
money represented the unpaid capital in respect of hundred shares of the company
purchased by the defendant. By bond P1 the company mortgaged to the plaintiffs
certain properties as security for the payment of a sum of Rs. 120,000. In
addition, the company mortgaged the stock-in-trade, good will, &c, together "
with all the assets of the company including moneys now due or hereafter to
become due in respect of shares sold ".
A mortgage action was instituted in respect of the bond in D. C, Colombo,
30,968, and in execution of the decree in the action certain property was sold
and purchased by the plaintiffs. The assignee appointed by Court in the action
executed a transfer in favour of the purchasers. The recitals in the document
are set out in the judgment. The operative part sells to the plaintiffs " all
the moneys whatsoever due to the company by the several persons enumerated in
the schedule ... . and the full benefit, profit, and advantage that now come or
shall or may hereafter be obtained by reason of any action now filed or
hereafter to be filed against any persons mentioned. "
The Commissioner of Requests gave judgment for the plaintiffs.
A. E. Keuneman (with him Sinnatamby), for defendant, appellant.
F. J. Soertsz (with him Gratiaen), for plaintiffs, respondents.
March 2, 1931. AKBAR J.-
This appeal raises an interesting point of law under the Joint Stock Companies
Ordinances. The plaintiffs sued the defendant for the recovery of a sum of Rs.
250 alleged to be a debt due from the defendant to the Indo-Ceylon Trading
Company, which debt plaintiffs stated they had purchased in execution against
this company, under decree entered in D. C, Colombo, No. 30,968. The defence
raised several points of law, but in the view that I take in this case I need
only discuss one point taken by the appellant's counsel and which is referred to
in issues 4, 5, 6, and 7. These issues are as follows :-
(4) Was there a debt of Rs. 250 due
from defendant to the said company
in respect of shares purchased.
(5) If not, can plaintiff acquire any
rights as against the defendant by
virtue of the execution sale in D. C,
Colombo, Case No. 30,968.
(6) Has a proper and valid call been made in respect of the uncalled for portion
of the shares purchased.
(7) If not, is defendant liable to pay for the same.
This debt of Rs. 250 was said to be due from the defendant in respect of 100
shares of the company purchased by the defendant at Rs. 10 per share. He had
already paid Rs. 5 per share on allotment and a further Rs. 2-50 on a call. The
Rs. 250 claimed in this case represent the Rs. 2-50 per share still due by the
defendant in respect of these shares. For the purpose of the point ref
