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Petitioner: Sh. ALAUDDIN VS Respondent: THE OFFICIAL LIQUIDATOR, THE CENTRAL EXCHANGE BANK JUDGMENT
Court Name: Lahore High Court Judge(s): Sheikh Anwarul Haq, Muhammad Akram Title:Sh. ALAUDDIN vs THE OFFICIAL LIQUIDATOR, THE CENTRAL EXCHANGE BANK
JUDGMENT
Reported As: PLD 1972 Lahore 552 Result: Appeal dismissed Judgment JUDGMENT MUHAMMAD AKRAM, J.-It may be mentioned here at the-- very outset that one of us (Muhammad Akram, J.), before his elevation to the Bench, was a counsel against the appellant in an administration suit between him and his family members, in no, way connected with this matter before us. On this account, therefore, he had at one time, while sitting in Single Bench, expressed his reluctance to hear Civil Original No. 27 of 1953 out of which this appeal has arisen. In the circumstances in the beginning, at the hearing in this appeal, he enquired from the parties if they had any objection to his sitting on this Bench. Both sides had no objection and they expressed their confidence in him. We, therefore, decided to proceed with the hearing in this appeal. 1-A. This is a letters patent appeal directed against the judgment dated the 2nd of April 1965, delivered by the learned Company Judge of this Court setting the liability of the appellant as a contributory for the Central Exchange Bank. Ltd. (in liquidation) in the sum of Rs. 24,562.16 with interest. 2. The Central Exchange Bank Ltd., Lahore was ordered to be wound up by late Shabir Ahmed, J., as a Company Judge, on the 29th of October 1962 and the State Bank of Pakistan was appointed as its official liquidator. In the course of the proceedings for the winding up of the affairs of the Company, on the 11th of August 1953, the official liquidator sent a notice No. LIC-27-53/61, dated the 11th of August 1953, to Alauddin, appellant, to the effect that his name was included in the list of the contributories of the Company drawn up by him and that he was liable to contribute in the sum of Rs. 24,685-2-9 on account of the unpaid call money, uncalled liability and interest on account of the 1029 shares of the company of the nominal value of Rs. 50 each held by him. He was also
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informed that he could regularly apply to the High Court within 30 days for any change or alteration in the list of contributories of the Company. 3. In these circumstances, on the 12th of September 1951, the appellant filed a petition (C. O. No. 27 of 1953) against the official liquidator of the Company under section 184/38 of the Companies Act VII of 1913 denying his liability to contribute in the sum of Rs. 24,685-2-9 settled against him. 4. In its written statement the official liquidator controverted the allegation of the petitioner and asserted that his liability in this behalf was rightly settled against him in the list of the contributories. On the 23rd of November 1953, the learned Company Judge framed the following issues arising out of the pleadings of the parties in the case truly reflecting in nutshell the controversy between the parties:- (1) Were not the 180 shares, mentioned in paragraph 6(a) of the petition validly transferred to the petitioner and he is not liable to pay for them? (2) Is nothing payable by the petitioner with regard to, 109 shares mentioned in paragraph 6 (b) of the petition, and is petitioner entitled to any money in the share of interest on the amount alleged to have been paid by him? (3) Is nothing due from the petitioner with regard to the 200 shares mentioned in paragraph 6 (a) of the petition arid is any money due to the petitioner in this amount? (4) Is not the petitioner liable to pay more than Rs. 4307-0 with respect to the 150 shares mentioned in paragraph 6 (d) of the petition and is he entitled to any amount because he paid some money as advance? (5) Is the petitioner liable to pay more than Rs. 9,500 in respect of 380 shares mentioned in paragraph 6 (a) of the petition? (6) What is the amount due to the petitioner? In the course of the proceedings afterwards the petitioner was allowed to amend his petition. In the amended petition he raised an additional plea to the effect that he had also paid another sum of Rs. 8,100 by means of receipt (Exh. P. W.5/13) to the Central Exchange Bank Ltd. For which the necessary adjustment should be allowed to him in his account in this connection. But the respondent denied these allegations. Accordingly, on this, on the 9th of January 1961, the Court framed the following additional issues in the case:-- (7) Whether the petitioner paid Rs. 8,100 to the respondent bank in the share account in question? (8) Was the receipt (Exh. P. W. 5/13) for the said amount, produced by the petitioner, executed by an authorised agent of the respondent-bank, and was the amount mentioned in it credited m the fund of the bank? 5. After recording the evidence adduced by the parties the learned Judge in Chambers, on the whole, found against the appellant, in favour of the respondents, on all these issues and settled his total liability in the sum of Rs. 24,562.16 with interest at the rate of 6% per annum from 1st of April 1953 till payment, as a contributory of the Company. 6. In this appeal before us against the judgment we have heard the learned counsel for the parties at length. On behalf of the appellant his learned counsel has challenged the findings in the judgment under appeal on all the issues. It shall be convenient to discuss and dispose of these issues hereinafter separately. 7. Issue No. 1.-The dispute under this issue relates to the 180 shares specified in paragraph 6(a) of the petition. The -share-scrips for these shares are Exhs. P. W. 1/4, P. W. 4/1 and P. Ws. 5/1 to 8. All the scrips in question were issued by the Company in favour of the respective allottees in their names. But afterwards during 1945, according to the endorsement at the ba.-k of the respective share- scrips, they were transferred to the appellant. In respect of these shares the official liquidator settled the appellant with the liability for payment of the unpaid liability at the rate of Rs. 25 per share towards the capital of the Company. But the appellant has denied his liability in this respect
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in his petition, on the ground that these shares were never validly transferred to him as required under the Articles and Memorandum of Association of this Company and the Company Act VII of 1913. The allegations of the appellant in this respect are altogether vague. Similarly the statement of P. W. 5, Allauddin, appellant, as his own witness, is equally unhelpful and vague. He deposed that the transfer of these shares in his name was not according to law without elaborating the reasons for the opinion expressed by him. He even refused to admit that he has acquired these shares. Nor did he remember if he has made any payment in this connection. But he was obliged to admit that he himself produced all these share-scrips in dispute in Court from his own custody with the endorsements at the back in his favour as a transferee of these shares held by him. In this connection R. W. 1, Sardar Muhammad Shafi, Ex---Manager, Central Exchange Bank Ltd., with the help of the share register of the Bank, deposed that the appellant purchased all these shares in question from the respective shareholders of the Company and that his name was also registered as a trans--feree thereof. Similarly, R. W. 2, Zahir-ud-Din Ahmad, Sub---Accountant. State Bank of Pakistan, Lahore deposed with reference to the Capital Account Register of the Company that these shares are entered in the name of the appellant. Under section 40 of the Companies Act this furnished prima Tacit evidence of the transfer of these shares to the appellant. He has 9 failed to produce any trustworthy evidence in rebuttal. In fact in" his concluding argument before us, the learned counsel of the appellant did not seriously question the findings of the learned Judge in Chambers under this issue. 8. Issue No. 2.-Under this issue the dispute is confined to the 109 shares of the Company specified in para. 6(b) of the petition. The relevant share-scrips in this connection are P. W. 1/1 for the 100 shares of the nominal value of Rs. 50 each and P. W. 1/3 relating to the 9 shares of the face value of Rs. 50 each held by the appellant. According to the entries endorsed on the back of the share-scrip P. W. 1/1 two payments of Rs. 2,500 each were made to the Company on the 16th of March 1943, the first against the allotment of the 100 shares and the other in advance towards the call money. In his written statement the official liquidator admitted the payment of Rs. 5,000 to the Company in connection with these 100 shares, R. W. 1, Sardar Muhammad Shafi stated that these shares were fully paid up. There is hardly any dispute between the parties on this part of the case. 9. But in connection with these 100 shares the petitioner-- appellant has alleged in his petition that he was entitled to interest on the sum of Rs. 2,500 paid in advance to the Company towards the call at the rate of 6 % per annum. We shall deal with the question of interest separately towards the latter part of this judgment. 10. In connection with the remaining 9 shares under this issue the petitioner alleged that he had paid Rs. 225 @ Rs. 25 per share toward the call money and the uncalled balance amount of Rs. 225 in advance on the 14th of June 19-14 to the Company. The respondent in his written statement admitted the receipt of Rs. 225 only and denied the payment of Rs. 225 to the bank in advance on the 14th of June 1944. 11. The appellant did not adduce any direct evidence to formally prove this payment of Rs. 225 in dispute to the Company.P. W. 5, Allauddin appellant admitted that the endorsement on the back of the share-scrips were not made in his presence. He stated that in general he used to obtain separate receipts for the call money paid by him. But most of the documents were lost during the disturbances of 1947. R. W. Sardar Mohammad Shaft, the Ex-Manager of the Bank deposed on reference to the Capital Register of the Company about the payments made towards the call money. He did not admit the receipt of this sum of Rs. 225 in advance towards the call money on these shares. Likewise, R. W. 2, Zahir-ud-Din Qureshi, Sub-Accountant of the State Bank of Pakistan deposed with the help of the capital Account Register of the Company and did not admit this pay- -ment. In his cross-examination he deposed that on the back of share-scrip P. W. 1/3 there is an entry showing the advance of Rs. 225 but according to him this entry was not duly authenticated
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by any body. Exh, D. 6 and R. W. 1/1 are the true copies of the Capital Account of Allauddin regularly main--tained in the Ordinary course of business by the Company. The appellant paid Rs. 225 only towards the call money against these shares. 12. In this connection the appellant has mostly relied on the following endorsement entered at the back of the share-scrip (Ex. P. W. 13) in question:- By amount received Rs. 225signed. 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:- 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
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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: 27-5-43by 200 share Rs. 5,000 -do-by amount of advance.Rs. 4,600signed.
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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 12 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 inth
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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)…
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