Awards to be obeyed. Agreements, arbitrations 119. Except only so far as the Companies bound by any award in accordance with this Act from time to time otherwise agree, all things by every award in accordance with this Act lawfully required to be done, omitted or suffered shall be done, omitted or suffered accordingly. Sec. 92 of the Indian Companies' Act X. of 1866, verby. tim; corresponding with sec. 25 of the Railway Companies' Arbitration Act (22 and 23 Vic., c. 59), 1859. 120. Full effect shall be given by the Courts and awards according to their respective jurisdictions, and by to have effect. the Companies respectively, and otherwise, to all agreements, references, arbitrations and awards in accordance with this Act; and the performance or observance thereof may, where the Courts think fit, be compelled by any process against the Companies respectively or their respective property that the Courts or any Judge thereof shall direct, and where requisite frame, for the purpose. Costs of arbitration and award. Payment of costs. Sec. 93 of the Indian Companies' Act X. of 1866, verbaim; corresponding with sec. 26 of the Railway Companies' Arbitration Act (22 and 23 Vic., c. 59), 1859, which provides or "distress infinite on the properties of the Companies respectively, or by any other process," &c. 121. Except where and as the Companies otherwise agree, the costs of and attending the arbitration and the award shall be in the discretion of the arbitrator, and the arbitrators and the umpire respectively. Sec, 94 of the Indian Companies' Act X. of 1866, verbatim; corresponding with sec. 27 of the Railway Companies' Arbitration Act (22 and 23 Vic., c. 59), 1859. 122. Except where and as the Companies otherwise agree, and if and so far as the award does not otherwise determine, the costs of and attending the arbitration and the award shall be borne and paid by the Companies in equal shares, and in other respects the Companies shall bear their own respective costs. Sec. 95 of the Indian Companies' Act X. of 1866, verbaTim; corresponding with sec. 28 of the Railway Companies' Arbitration Act (22 and 23 Vic, n. 59), 1869. to arbitration 123. On the application of any party interested, Submission the submission to any such arbitration may be filed to be filed in in the High Court, and an order of reference may be Court. made thereon, with any directions the Court thinks fit; and the provisions of the Code of Civil Procedure shall, so far as the same are applicable, apply to every such order and to all proceedings thereunder. Sec. 96 of the Indian Companies' Act X. of 1866, verbatim; corresponding with sec. 29 of the Railway Companies' Arbitration Act (22 and 23 Vic., c. 59), 1859, mutatis mutandis. As to the provisions of the Civil Procedure Code on the point see Chap. XXXVII., secs. 596-526 of Act XIV. of 1832. PART IV. WINDING-UP OF COMPANIES AND ASSOCIATIONS Preliminary. tory." 124. The term "contributory" shall mean every Meaning of person liable to contribute to the assets of a Com- "contribupany under this Act in the event of the same being wound up); it shall also, in all proceedings for determining the persons who are to be deemed contributories, and in all proceedings prior to the final determination of such persons, include any person alleged to be a contributory (iii). Sec. 74 of the English Companies' Act (25 and 26 Vic., c. 89), 1862; and sec. 97 of the Indian Companies' Act X. of 1866, verbatim. (i) As to Companies registered under Acts XIX. of 1857, and VII. of 1850, see secs. 221-223 post; as to Companies registered but not formed under this Act secs. 240-242 post; as to unregistered Companies ss. 243243 post. (ii) ss. 61 supra, 125, 127 infra. (ii) ss. 240 (e) and 244 post. Cf. sec. 64 of Act XIX. of 1857. See sec. 61 supra as to the liability of present and past members of a Company and the cases in the note thereto. As to what persons the term "contributory" has been held to includesee Buckley, 4th ed., p. 174. As to what will constitute an election on the part of a shareholder to claim in the winding-up of a Company a rescission of his contract to take shares so as to render him unable to bring a suit for that purpose: see Cargill v. Bower, 10 Ch. D., 502. Nature of liability of contributory. An effectual surrender of shares operates from the date thereof to discharge the surrenderer from liability as a contributory. IN RE Dronfield Silkstone Coal Co., 17 Ch. Div., 76, supra. See also in the case of an assignment under the articles of association in IN RE Albion Assurance Society, Brown's case, 18 Ch. D., 639, even although no other person had been made liable to contribute in the place of the assignor of the policy. As to the non-liability of a Parsee husband's estate in respect of shares held by his wife who had been accepted by the Company as a shareholder without any fraud or concealment on the part of the husband: see IN RE London Bombay and Mediterranean Bank, 18 Ch. D. 581, supra. The resignation of his trusteeship alone does not terminate the liability of a trustee as a contributory: see Alexander Mitchell's case, 4 Ap. Ca. 572. Per Baggallay, L. J., IN RE Scottish Petroleum Co., 23 Ch Div. 429:"Every person who has agreed to become a member of a Company, and whose name has been entered on the register of members, is liable as a contributory in the event of the Company being wound up. This is in substance the combined effect of the 23rd, 38th and 74th sections of the Companies Act, 1862. " In a suit against a contributory who had been described in the balance order (as to which see post rule 35 and note thereto) as holding the shares in his own right," the plaintiffs were not allowed to give evidence that the shares were in fact held by a firm consisting of two persons. London. Bombay, and Mediterranean Bank v. Bhanji Zutani, I. L. R. 2 Bom. 116. As to laches on the part of the vendor in not taking the necessary steps to get his shares transferred from himself rendering him liable as a contri butory see IN Re East Indian Trading Co., Jamnadas Savaklal's Cuse, 3 Bom. H. C. O. C. J., and IN RE The Mercantile Credit and Financial Association ex parte M. R. Dilvi, 3 Bom H. C. O. C. J. 125, and as to what constitutes an acceptance of shares, and what is sufficient evidence of registration as a member, IN RE Alliance Financial Association, Blaney's Case, 3 Bom. H. C. O. C. J. 106. See these respectively more fully set out supra. cases 125. The liability of any person to contribute to the assets of a Company under this Act in the event of the same being wound up shall be deemed to create a debt accruing due from such person at the time when his liability commenced, but payable at the time or respective times when calls are made as hereinafter mentioned(i), for enforcing such liability; and it shall be lawful, in the case of the insolvency of any contributory, to prove against his estate the estimated value of his liability to future calls, as well as calls already made. No claim founded on the liability of a contributory shall be cognizable by any Court of Small Causes situate outside the towns of Calcutta, Madras and Bombay. Sec. 75 of the English Companies' Act (25 and 26 Vic., c. 99), 1662, save that after the words "create a debt" there followed "in England and Ireland in the nature of a specialty," and substituting "bankruptcy" for "insolvency"; and sec. 98 of the Indian Companies' Act X. of 1866, verbatim. (i) See sec. 151 post. Cf. also 21 Vic., c. 14, s. 13. The last paragraph is new. Mr. Stokes, in moving the adoption of the Report of the Select Committee on the Companies' Act, 1882, said (23rd February 1882), with reference to this paragraph:-"This has been held to be the effect of sec. 6 of Act XI. of 1865, but it would be well to have the law on the point expressly stated." 66 66 By sec. 243 this section is applicable to unregistered Companies. "The effect of omitting the words which make the debt a specialty debt appears to be that in administering the estate of a deceased contributory, whether he has or has not retained his English domicile, no distinction "will be made between this liability and any other simple contract debt. 'If so, the law in India stands as it was in England, when Robinson's "Executor's case, 6 D. M. G. 572, was decided."--(Stokes on the Indian Act X. of 1866). See also Welland Ry. Co. v. Blake, 6 H. and N. 415, 30 L. J., Ex. 161, and supra p. 28, where the effect of the abolition in India of the distinction between specialty and simple contract debts is referred to; and as to the administration of estates, see Part XXXIV., and especially sec. 282 of the Indian Succession Act, and Chapter VII, especially, sec. 104 of the Probate and Administration Act V. of 1881, and see Asiatic Banking Corporation v. Amador Viegas, 8 Bom. H. C. 20, and Henderson's Succession Act, p. 286. The effect of sec. 40 of the Indian Insolvent Act II., and 12 Vic, c. Proof in case of insolvency of 21 (post appendix), is to apply the provisions of the English Bankruptcy contributory. Act, 1869 32 and 33 Vic., e 71), and also the English Bankruptcy Act of 1883 (46 and 47 Vic., c. 52), to India as regards the proof of debts under the Indian Act. In Lindley on Partnership (3rd ed., p. 1218; 4th ed., 1180), it is stated that "under the 31st Section of the Bankruptcy Act, 1869, all the difficulties and distinctions which formerly existed with respect to the proof for calls against the estate of a bankrupt shareholder appear to be removed; and when a shareholder becomes bankrupt, all calls in arrear are provable as debts, and his liability to future calls may be estimated and proved as well when the Company is being wound up as when it is not." Mr. Buckley, however, at p. 178 (4th ed.), submits whether this proposition is consistent with Furdoonjee's case, 3rd Ch. D. 264. In that case The East India Cotton Agency Co., Ld., was registered in England in 1861 under the Joint Stock Companies' Act 1856 (19 and 20 Vic., c. 47). Amongst other shares allotted in India, 100 shares were, in or about 1863, allotted to Ardasir C. Furdoonjee, of Bombay. On the 12th October 1866, at a meeting of Furdoonjee's creditors held at Bombay under the provisions of Act XXVIII. of 1865 of India, it was resolved that his estate be wound up under the management of trustees; and by an order of the High Court at Bombay dated the 13th October, 1866, it was ordered that the resolutions be confirmed, and the estate wound up under management accordingly. In the statement of the debtor's assets and liabilities, these shares were mentioned as involving a possible liability against his estate. On the 29th July 1867 the Company was ordered to be wound up On the 10th October 1868 the debtor obtained his order of discharge. It was held by Bacon, V. C., that the liability of the insolvent in respect of the shares was not a debt provable in the insolvency proceedings, and hence not barred by the order of discharge, and the name of the late insolvent was ordered to be put on the list of contributories. The learned Vice-Chancellor treated the case of Punnett v. Vinayak Pandurung, (infra) as having proceeded upon the Indian Statute XXVII of 1865, sec. 24, and consequently considered himself not bound to differ from that case. In Punnett v. Vinayak Pandurang, 9 Bom. H. C. 27, the following was the order of dates:- 14th November 1866, Pandurang's estate ordered to be wound up under Act XXVIII. of 1865; 8th August 1867 Pandurang placed on the list of contributores; 26th February 1870 Pandurang's discharge under Act XXVIII. of 1865; 9th November 1871 call made upon Pandurang. It was held that he was not liable in respect of such cali. Westropp. C. J., adopts the reasoning of Lindley, J. ubi supra), and at p. 30 and 31 of 9 Bom. II. C., says, Now Section 40 of the Indian Insolvent Debtors' Act (see appendix post), provides that all such debts as might be proved under a fiat of bankruptcy according to the provisions of the 6th Geo. IV., c. 16, or any other statute or statutes then in force, or thereafter to be passed relating to bankrupts may be proved under the Indian Insolvent Debtors' Act. The provision in sec. 75 of the English Companies' Act is, in our opinion, an enactment relating to bankruptcy, and a debt falling within the purview of that section is a debt that as provable under a fiat in bankruptcy, is also provable under a petition in insolvency." And after considering the sections of the Indian Act XXVIII. of 1865, he concludes, “That any debt which might be proved under the Indian Insolvent Debtors' Act might also have been proved under Act XXVIII of 1865," and held that under Act XXVIII. of 1865, the contingent liability of Pandurang to calls in respect of the shares held by him was a matter which might have been estimated and proved, and that the liquidator would have been entitled to dividends in respect of that estimated liability; and further that a call made after an Insolvent trader's discharge was a liability from which he was protected by sec 24 of Act XXVIII. of 1865. "The liability of a shareholder within the meaning of sec. 75 of the English Act is a liability incurred by him upon becoming a member of the company. His liability is a liability in respect of the contract he thereby enters into, and does not merely arise when a call is made to enforce that contract." The two cases above cited would appear to be directly conflicting, but the case of IN RE Mercantile Mutual Marine Association, 25 Ch. D. 415, supports the decision of the Bombay High Court. In that case Chitty, J., held that the liability in respect of calls of a liquidating member of a Company when the liquidation proceedings commence prior to the windingup, and are pending at the time of the winding-up, is a debt or liability which is not incapable of being fairly estimated," and which is therefore provable in the liquidation. When, therefore, under these circumstances, a Company winding-up has failed to carry in a proof in the liquidation proceedings of a member of the Company for calls, and the liquidating member obtains his discharge, he cannot afterwards be placed on the list of contributories. The learned Judge declined to follow Furdoonjee's case (3 Ch. D. 264). But an insolvent, who, after he had obtained his personal discharge under sec. 47 of the Indian Insolvent Act (post appendix), continued to hold shares in a Company which was ordered to be wound up after the insolvent's discharge, was held liable to pay calls on his shares. IN RE The Mercantile Credit and Financial Association, Baiba Saheb Damaskar's case, & Bom. H. C. 117. Nor would see. 24 of Act XXVIII. of 1865 protect him, see Punnett y. Vinayak Pandurang, 9 Bom. H. C. 30. It is to be observed that in Baba Saheb Damaskar's case (ubi supra), the Official Assignee had not elected to take the shares belonging to the insolvent. "The Official Assignee cannot be compelled to take upon himself the burden of an onerous undertaking;" per Bayley, J., 8 Bom. H. C. 123; nor does the order of discharge operate as a statutory transfer of the shares to the Official Assignee, ibid. See also Hastie's case, L. R. 7, Eq. 3; 4 Ch. 294. But quære, whether the definition of "liability" in see 31 of the English Bankruptcy Act, 1869, is not wide |