P L D 1972 Lahore 552 (PLP)

By amount received Rs. 225 signed. By amount advance Rs.

225. These two entries do not per se bear any date of payment and there are no signatures opposite the disputed entry relating to the second payment of Rs. 225 in advance. It appears in altogether different ink even to a naked eye. But the learned counsel for the appellant asserted that this entry must be considered as authentic and no separate signatures against it were necessary. The two entries are bracketed together and the signatures could, therefore, be attributed to and read as common for both these entries. In this connection P. W. 1 Ghulam Qadir, who was an Accountant in the Central Exchange Bank Ltd. Lahore, produced by the appellant, deposed that every payment of a new call entered on the back of a share‑scrip represents a new entry which should be signed by the recipient. According to him this entry in question is against the banking practice. But on the other hand R. W. 1, Sardar Muhammad Shaft, Ex -Manager of the Bank, deposed that according to the general practice if one or more entries are made on the back of the share‑scrip it may be authenticated by one signature. But we cannot help observing that the authenticity of the entry in question as it exists at the back of the scrip is not altogether free from reasonable doubt. The two entries are in different ink. The first entry and the signatures opposite are in the same ink while the second entry and the vertical bracket drawn against the two entries are in another ink. This gives the impression that these are afterwards inserted by interpolation. Normally one would expect the signatory to draw the bracket in question in his own hand with the same ink while signing at one place against the two entries. In this connection the learned 1972 Judge in Chambers has observed in his judgment under appeal that this second entry in question on the back of the scrip does not bear any date. 1t is in different handwriting and in different ink. It is an altogether fictitious entry and could be easily 1 interpolated.

13. For all the foregoing reason, we concur with the learned single Judge in holding that the appellant has failed to prove this payment of Rs. 225 in question towards the call money in advance in respect of these nine shares.

14. Issue No. 3.‑The dispute under this issue relates to a block of 200 shares of the face value of Rs. 50 each held by the appellant as specified in para. 6(c) of the petition. Their relevant share‑scrip is Exh. P. W. 1/2. The case of the appellant is that on the 27th of May 1943, he had paid Rs. 5,000 at the rate of Rs. 25 per share towards part of the call money. In addition to this it is alleged that on the same date he also paid Rs. 4,600 in advance towards the call money on these shares. In this connection the petitioner' has also claimed interest on this advance payment at the rate of Rs. 6% per annum. The official liquidator in his written statement admitted the receipt of Rs. 5,000 only but denied the payment of Rs. 4,600 in advance to the Company as alleged. He also denied his liability to pay any interest.

15. In this connection the endorsements, at the back of the share‑scrip (P. W. 1/2), in question are as under:‑ 27‑5‑43 by 200 share Rs. 5,000 ‑do‑ by amount of advance. Rs. 4,600 signed. In proof of this payment of Rs. 4,600 in advance to the Company the appellant relied on a counterfoil of the pay in slip dated the 27th of May 1943 (Exh. D. W. 2/5) issued by P. W. 3, Abdul Majid on behalf of the Bank. The witness deposed that he was a ledger keeper in the Central Exchange Bank Ltd., Lahore at the time. His duty was to keep the ledger accounts for the Bank. He remained in the service of the Bank up to 1943. According to him be received Rs. 4,600 for which he gave the receipt Exh. P. W. 2/5. In his examination‑in‑chief he was silent and did not disclose the capacity in which he received this money for the Bank. But in his cross‑examination he admitted that it was a rule in the Bank that the cashier also used to sip the counterfoils for the receipts of the money by the Bank He further admitted that the receipt P. W. 2/5 did not bear the signatures of the Cashier, as according to him, he was himself officiating as the Cashier in those days. He did not, however disclose in the pay‑in‑slip in question that he was acting as Cashier, the witness also admitted that he was arrested on charge of embezzlement and had to transfer his house to the Bank under pressure. In this connection a case under section 42 P.P.C. was also registered against him by the official liquidate for illegally realising the rent of this house. Admittedly the witness was employed as a ledger keeper only and there hardly any trustworthy evidence on this record to establish that on the 27th of May 1943, he was in fact posted on duty at the counter of the bank to receive cash and was officiating as the Cashier. In the absence of any independent corroboration in this behalf it is not safe to rely on his solitary statement to the effect that he was officiating as the Cashier at the time of this payment. He did not even sign the pay‑in‑slip in question (Exh. P. W. 2/5) in his capacity as a Cashier. It is also not possible to rely on the interested statement of P. W. 5, Allauddin, appellant in this connection. He has failed to summon the original pay‑in‑slip dated i.e. 27th of May 1943, from the custody of the Bank to prove this payment of Rs. 4,600 in cash to the Bank. The entry in question relating to the deposit of Rs. 4,600 in advance on 27‑5‑1943 endorsed at the back of the share‑scrip (Exh. P. W. 1/2) does not bear any signature against it. It was not authenticated, is easy to interpolate and on the very face appears to be doubtful. In this connection it was admitted by P. W. 1 Ghulam Qadir that this entry was against the banking practice as it was not signed by any official of the bank. In rebuttal R. W. 1 Sardar Muhammad Shafi, Ex‑Manager of the Bank and R. W. 2, Mr. Zahir‑ud‑Din Ahmad Qureshi have deposed with the help of the Capital Account Register. According to their evidence on 27th of May 1943 the appellant made a payment of Rs. 5,000 only towards these shares. Their testimony completely belies the case set up by the appellant to the effect that in addition to this he had also paid Rs. 4,600 in advance towards the call money for these shares on the 27th of May 1943.

16. The learned Judge In Chambers in his judgment under appeal observed that this entry concerning the payment of Rs. 4,600 in advance endorsed at the back of the share‑scrip (Exh. P. W. 1/2) was in a different ink and pen and that it could have been made subsequently. The Court was satisfied that the deposit receipt (Exh. P. W. 4/5) was not genuine. No such payment was also borne out from a copy of the Capital Account Exh. D. 6) of the appellant in the Bank. For the foregoing reasons as discussed above we have no reasons to differ with these conclusions and the appellant has failed to establish that he made any payment of Rs. 4,600 in question, in advance towards these shares.

17. Issue No. 4.‑The dispute under this issue is concerning the 160 shares of the Company of the face value of Rs. 50 each mentioned in Para. 6(d) of the main petition held by the appellant. He had paid its. 25 per share in all amounting to Rs. 4,000 towards the call money on these shares. His case is that in addition to this be has also paid Rs. 2,300 in advance cowards the uncalled capital of the Company on these shares on the 1st of July 1944. The petitioner has also claimed interest on this advance payment at the rate of Rs. 6% per month. In this connection the official liquidator while admitting the receipt of Rs. 4,000 has denied the advance payment of Rs. 2,300 in question to the Company.

18. The corresponding share‑strips relating to these 160 shares held by the petitioner are Exhs. P. W. 3/1 to 16 of 10 shares each. At the back of each of these share‑scrips (P. W. 3/1 to 16) the following payments, in all amounting to Rs. 4,000 were admitted to have been received by the Company and there is no dispute about them: Rs. 25‑4‑1944 By application money. 100 18‑5‑1944 By allotment money. 50 12‑6‑1944 By first call. M 50 1‑7‑1944 By second call. 50 Last of all there is another endorsement entered at the back of the share‑strips

1. W. 3/1 to 4 and P. W. 3/6 to 16 of Rs. 150 each and the scrip P. W. 3/5 of Rs. 50 as the payments made to the company in advance on 1‑7‑1944. The respondent denied the receipt of this total sum of Rs. 2,300 in advance on these shares by the Company

19. To prove this payment in dispute there is the solitary statement of the petitioner as his own witness (P. W. 5) to the effect that he had made all these payments mentioned on the back of the scrips. In rebuttal R. W. 1, Sardar Muhammad, Shafi, Ex‑Manager, Central Exchange Bank Ltd. (in liquidation) and P. W. 2, Mr. Zaheer‑ud‑Din Qureshi, Sub‑Accountant, State Bank of Pakistan, Lahore, have deposed with reference to the books of the Company and given an account of the payments received on account of these shares by the Company. They do not depose to these alleged payments made in advance by the petitioner. Similarly the copies of the Capital Account of the appellant (Exhs. D. 6 and R. W. 1/1) are sufficient to falsify the case of the petitioner in this behalf. These payments in question endorsed at the back of these share‑strips (P. W 3/1 to 16) are in a different ink and pen and are highly doubtful by appearance. These last entries in dispute are not separately countersigned. They are bracketed together with the preceding. entry in each case against a single signature against them in a. different, ink. In this connection the learned Single Judge observed that the last entry in each case is in different ink and in different hand-writings even to a naked eye. In conclusion we, therefore, agree in holding that the petitioner‑appellant has failed to prove this payment of Rs. 2,300 to the Company in, advance towards call money.

20. Issue No. 5.‑The dispute under this issue relates to the 380 shares (Exhs. P. W. 3/17 to 54) of the face value of Rs. 50 each mentioned in para. 6(e) of the main petition. Admittedly Rs. 25 per share in all amounting to Rs. 9,5C0 have been paid to the Company and the balance sum of Rs. 9,500 at the rate of Rs. 25 per share still remains due from the appellant in connection with these shares. There is hardly any dispute between the parties under this issue, The Earned Single Judge discussed issues Nos. 4 and 5 concerning 540 (160+380) shares (Exhs. P. W 3/1 to 54) together.

21. Additional Issues Nos, 7 and 8.‑A lot of confusion was created by the pleadings of the parties in this connection in para. 6 (d) of his written statement dated the 12th of November, 1953, the respondent submitted that the petitioner purchased 540 shares by means of application dated the 19th of March 1944 and that in respect of these shares the petitioner was debited with a sum of Rs. 8,100 under the head "Pronote Account" which was opened in his name on the 22nd of March 1944 and was finally adjusted on the 11th of July 1944. It was further averred that in this manner the petitioner has paid at the rate of Rs. 15 per share and was liable for the remaining uncalled capital. But during the course of the proceedings, on the 5th of May 1958, P. W. 5, Allauddin, petitioner‑appellant, when recalled as a witness, inter alia produced a receipt dated the 22nd of March 1944 for Rs. 8,100 (Exh. P. W. 5/13) received by the Central Exchange Bank Ltd., on account of the application money for 5,400 shares. In the light of this additional evidence the appellant applied before the learned Single Judge for permission to amend his main petition. Accordingly on the 3rd of October 1960, the Court allowed the amendment and the petitioner raised the additional pleas in para. 6‑A of his petition. He for the first time averred that in addition to the payments already mentioned under clauses (d) and (e) of Para. 6 of his petition he had also paid Rs. 8,100 to the Bank on the 22nd of March 1944 on account of the application money with respect of these 540 shares against the receipt (Exh. P. W. 5/13) issued by the Bank. In the amended written statement, the respondent denied the averments in Para. 6‑A of the amended petition. He denied that the petitioner had paid any other amount towards the 540 shares in question. The respondent further averred that the sum of Rs. 8,100 was collected by the petitioner as loan in his pronote Account on the 23rd of March 1944 and he did not pay this to the Bank towards the price of these shares. It was pointed out that before this the petitioner .did not claim the alleged payment. He has now claimed the amount as an afterthought on account of an erroneous admission made by the respondent in its original written statement. The respondent denied the genuineness of the receipt Exh. P. W. 5/13 in question produced by the petitioner. It was in the light of these averments in the amended petition that the Court framed these two additional issues in the case on the 9th of January 1961.

22. This receipt Exh. P. W. 5/13 in question is partly burnt at places. But from the portion left intact it appears that he received Rs. 8,100 from the petitioner‑appellant on 22nd of March 1944 on account of the application money for 540 shares vide O. C. No.

153. In this connection it appears that on 14‑3‑1944 the Central Exchange Bank Ltd., Lahore issued an "Option Certificate No. 153" and gave the option to the appellant to subscribe to 540 shares offered by the Company. On the 19th of March 1944, the petitioner by means of his application (Exh. D. 3) accepted the offer and exercised his option to subscribe to these shares allotted to him on payment of a total sum of Rs. 8,100 on account of the application money at the rate of Rs. 10 and premium at Rs. 5 per share. The necessary adjustment in this connection was made in the books of the company by means of the voucher dated the 22nd of March 1944 (D. 2) passed by the Central Exchange Bank Ltd. This shows that the sum of Rs. 8,100 was raised by the appellant by debit to his "Pronote Account" and the amount thus raped was credited to his share account, Rs. 5,400 on account of the application money and Rs. 2,700 as premium on these 540 shares vide O. C. No.

153. This voucher almost conclusively establishes that the sum of Rs. 8,100 raised by the petitioner under the pronote account was utilized by him towards the application money and the premium in respect of the 540 shares of the company for which he had subscribed. Exh. D. 7 is a copy of the Pronote Account of the petitioner and Exh. D. 5 is a copy of the details of the entries showing the disposal of Rs. 8,100 advanced by the Central Exchange Bank Ltd. to him on the 22nd of March 1944 for the purchase of 540 shares. This is further supported by a copy (Exh. D. 6) of his Capital Account. The position in this connection was eventually explained by Mr. Jafary, Sub‑Accountant, State Bank of Pakistan, Lahore in his evidence recorded on the 4th of December 1962 with reference to the books of account of the Company. His testimony finds support from the evidence of R. W. 1 Sardar Muhammad Shafi after he was recalled. There is no rebuttal worth the name to this overwhelmingly strong evidence. We are fully con vinced that the sum of Rs. 8,100 raised by the appellant under the "pronote account" with the Bank was utilized in the payment of Rs. 5,400 on account of the application money on the 540 shares (Exhs. P. Ws. 3/1 to 54) allotted to him and Rs. 2,700 as premium charged from him by the Company. This fully accounts for the receipt dated the 22nd of March 1944 (Exh. P. W. 5/13) issued by the Company in favour of the petitioner appellant. In this connection the appellant has failed to establish that the payments were made by the petitioner in cash from his own resources. Accordingly, we affirm the findings by the learned Single Judge on these two issues.

23. We are now left to dispose of, the last contention advanced before us relating to the interest claimed by the appellant on the alleged payments of the call money made in advance stated in paras. 6(b), (c) and (d) of the petition. But in this connection, from the above discussion, all that the appellant was able to establish under issue No. 2 that on the 16th of March 1943 the shareholder had paid Rs. 2,500 in advance towards the call money except from this the appellant has failed to establish that he had made any other payment to the Company in advance. The Company has already credited the account of the petitioner‑appellant with interest due on the advance payment of Rs. 2,500 up to 31st of May 1946.

24. The respondent maintains that the appellant was not entitled to any interest for the period after 1st of June 1946. In this connection he relied on a copy of the resolution (P. W. 1/1) passed in a meeting of the Board of Directors of the Central Exchange Bank Ltd., held on the 23rd of May 1946. In this meeting it was unanimously decided to discontinue future interest on calls in advance. An intimation of this resolution was also sent to the appellant (Exh. P. W. 5/9). In this connection Article 31 of the Articles of Association of this Company lays down that the Head Board may, if they shall think fit, receive from any member willing to advance the same, all or any part of the moneys for the time being remaining uncalled on his share beyond the call then actually made, on such terms as to interest and dividend as they may deem fit. Evidently it was in the exercise of this power vested in the Board of Directors that they decided fn their meeting held on 31‑5‑1946 to disj continue future interest on the calls In advance. Apparently the appellant submitted to this resolution and he did not raise any objection against it in spite of the timely intimation sent to him about it. Therefore, he cannot be permitted to turn round at this late stage to claim interest contrary to this resolution.

25. Before us the learned counsel for the respondent has raised another objection against the award of any interest to the appellant in these proceedings. He contended that in these proceedings for the settlement of the list of contributories the appellant was not entitled to any set off in respect of any of his claim, including interest against the Company. According to him, he appellant must establish his claim, if any against the Company separately and he could not be allowed any set‑off in these proceedings for settlement of his liabilities as a contributory of the Company. In re: White House & Company ((1878) 9 Ch. D 585), it was held that where a Company is under liquidation, a contributory cannot set off a debt due to him from the Company against calls made against him either by the Company before or by the liquidator after the resolution to wind up. Similarly In re: Law Car and General Insurance Corporation ((1912) 1 Ch. D 405), it was held that a contributory of a company is not entitled to such a set‑off against the company. In Palmer's Company Law (20th Edition) on page 718 it was observed that a contributory in a limited company who is also a creditor of the Company cannot on winding up set off his debt against a call made on him by the liquidator until all the creditors had been paid in full. The underlying principle is that where a person entitled to participate in a fund is also bound to make a contribution in aid of that fund, he cannot be allowed to participate until he has fulfilled his duty to contribute. Similarly in H. M. Ibrahim Saith v. South India Industries Ltd. (A I R 1938 Mad. 962), it was held that a shareholder is not entitled to set off against a company what he might receive on a winding‑up against the moneys due by him. This is implicit on a careful reading of section 186(2) of the Company's Act as interpreted by a Full Bench of the Allahabad High Court In re t Benares Bank Ltd. v. Official Liquidator (A I R 1940 All. 544) and it is not permissible to a contributory to set off a debt due to him against the call money due from him until all the creditors of the Company have been paid off.

26. But on a careful consideration we find that this argument is of no avail to the respondent. Actually in this case the appellant has not claimed any set‑off on any independent dealings or contract against the Company. His claim is merely that he should be allowed interest in his account on the advance payments of call money made by him. Thereby he is asking for a mere adjustment in the account and not for any set‑off on a separate or independent dealings. But in para. 24 above we have already held that the appellant was not entitled to any (interest and his claim in this respect was altogether rejected on the merits. Therefore, we find that he was not entitled to any relief in this connection.

27. For the reasons discussed above we find no force in this appeal. It is, therefore, dismissed with costs. Appeal dismissed.