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Present: Wood Benton C.J. .and Pe Sampayo j.
&ANEABA IYEB n. VANPEBSTBAATEN.
445—D. C. Colombo, 43,044.
Indian Companies Act, 1882—Serving of orders on persons living outside
India—Service by post office.
In the proceedings for the compulsory winding up of a JointStock Company incorporated under the IndianCompanies Act,
the District Court of Tinnevelly (India) settled the list of contri-butories, and ordered that the contributories (including defendant)should within four days after service of that order pay the amountof the contribution.
Held, that the posting of the order to defendant, who was livingin Ceylon; was not due service of the order.
“ The rules under the Indian Companies Act do not, so far asI can sep, refer to the specific case of foreign shareholders, and Idoubt whether, when rule 83 spoke of ‘ due course of deliveryby the pbst office ’ it contemplated the post office of any othercountry than India."
fjp HIT facts are set out in the judgment.
A St. V. Jayawardene (with him Mahadeva), for plaintiff,appellant.
Drieberg (with him F. H. B. Koch), for defendant, respondent.
Cut. adv. vult^
Pecember 14, 1916. Pe Sampayo J.—
The plaintiff is the official liquidator of the Swadeshi SteamNavigation Co., Ptd., which was incorporated under the IndianCompanies Act of 1882, and which is being compulsorily wound1*up by the Pistrict Court of Tinnevelly in India. He sues thedefendant for the recovery of Bs. 431.45, being the balance principaland interest due one 15 shares which had been allotted to the defend-ant on his application. In the winding-up proceedings the plaintiffincluded the defendant in the list of contributories, of which it isadmitted the defendant had notice. On the application of theplaintiff the Court on October 9, 1912, settled the list of contri-butories, and ordered that the contributories, including the defend-ant, should within four days after service of that order pay intoCourt or to the official liquidator the amount of their contributions.According to Company law such an order creates a new liabilityon the part of the shareholders, and it is not disputed that thenecessary preliminary to the enforcement of the liability is notice
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of the order. The defendant denies that the order was served on IMS.him, or that he had any other notice thereof. The issue in this Stm-Avaoase accordingly is whether the order of the Tinnevelly Court was J.duly served on the defendant. The plaintiff’s case is that a copy SankaraIyerof the order was sent by post to the defendant. This raises two v. Vender -questions: (1) Whether the mere posting of the order is due service, straatenand (2) whether a copy of the order was in fact posted to thedefendant as alleged.
On the first point the plaintiff depends ort rule 83 of the rulesunder the Indian Companies Act of 1882, which is to the followingeffect: —
“ Services upon contributories and creditors shall be effected,except when personal service is required, by sending thenotice or a copy of the summons or order or other pro-ceedings through the post in a prepaid letter addressed tothe attorney or vakil of the party to be served, if any, or
otherwise to the party himself, and such notice or
copy, summons, order, or other proceeding shall be con-sidered as served at the time the same ought to be deliveredin due course of delivery by the post office, and notwith-standing the same may be returned by the post office."
Reference was also made to Article No. 188 of the Articles ofAssociation of the Company, which also provided for service ofnotice through the post. But this article obviously refers' tonotices required in the ordinary course of business of the Company,and has nothing to do with winding-up proceedings in Court. Theplaintiff must, therefore, justify the service of the Court’s order, ifat all, by rule 83 under the Indian Companies Act. When aperson becomes a shareholder in a foreign company, he no doubtthereby submits himself to be governed by the articles of the Com-pany, but with regard to proceedings in a foreign Court differentconsiderations apply. The rules under the Indian CompaniesAct do not, so far as I can see, refer to the specific case of foreignshareholders, and I doubt whether, when rule 83 spoke of " duecourse of delivery by the post office," it contemplated the postoffice of any other country than India. IfT am right here, then therule does not assist the plaintiff in the contention that the CeylonPost Office must be taken to have delivered the notice to thedefendant. This rule is similiar to rule 23 under the EnglishCompanies Acts, and . the question of its applicability to service outof the jurisdiction has been discussed in the English Courts. TheJoint Stock Companies (Winding-up) Act of 1848, section 108,provided for service of summons, notices, or orders ; upon any partyby being sent by the post, though the party might be out of thejurisdiction of the Court. But this provision was repealed in 1862,and no similar provision has been substituted by that Act or by the
^l&ie.Actof 1890.In re The Gen. Intern. Agency Co.,1 an application
D$b Saxpato wasmade toCourt for leave to serve through the post thesummons
J. for wmlring a call upon certain shareholders resident abroad. TheSankara Iyer Master of the Bolls had doubts about the jurisdiction of the Court,v. Fonder*andreferredthe matter to the Court' of Appeal. TheirLordships
straaUnajsothoughtthere was a risk that such service might bedefective,
but considered that it ought not to be made an impediment to themaking of thecalluponall the contributories,and theyallowed
the application,observingthat themaking thecall wouldbe onlj
the foundationofproceedings inthe foreignCourts toenforce
payment of the call, and that, of course, in those proceedings thequestion mightberaisedwhetherthe servicewas goodor not.
It will be seen that the question was practically left undecided,except so far as the Court thought that the summons to show causewhy the call should not be made might be served through the post.The fact that the summons which was authorized to be so served wasone for that limited purpose only was emphasized in In ye Anglq-African Ship Co.,* which commented on and distinguished that cake,
' and where the application was for leave to serve the order for thecall itself out of the jurisdiction by sending the same through theGeneral Post Office, the Court refused the application, and laid downbroadly that the Court had no jurisdiction to give leave to servenotices of orders and other proceedings in the winding up of aCompany on persons residing out of the jurisdiction. For theprinciple governing this subject the Court referred to the earlier.case of In re Bus field,3 where Cotton L.J. said: “ Service out ofthe jurisdiction is an interference with the ordinary course of thelaw, for generally Courts exercise jurisdiction only over personswho are within the territorial limits of their jurisdiction. If anAct of Parliament gives them jurisdiction over British subjectswherever they may be, such jurisdiction is valid, but, apart fromstatute, a Court has no power to exercise jurisdiction over any onebeyond its limits.” In the present case leave of the Tinnevelly'Court was not even asked for or given, and the method of servicethrough the post appears to have been adopted by the officialliquidator himself. It seems to me obvious that if, according td.the principle enunciated by the above decisions, the Court itselfhad no jurisdiction to authorize that method of service, the act’ ofthe official liquidator, in adopting it could have no greater validity.Mr. A. St. V. Jayawardene, for the plaintiff, conceding that theservice might be bad if the Tinnevelly Court itself was trying torecover the money, suggests that as this wsfs an independent actionin the defendant's own forum it did not matter what the form ofservice was. I do not think that this advances the plaintiff’s case.The liability of a contributory a6 such arises from the order of the
i (1867) 16 L. T. 726.* (1886) L. R. 22 Ch. D. 348.
* (1886). L. R. 82 Ch. D. 123.
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Court making the call, and it appears to me to follow that the order 191&must be communicated to the contributory in a legally regular pj, gAKPA.roform.
However the law on this subject may be, the plaintiff failed toprove the actual posting of the order. The posting was said to atraatenhave been effected,' not by the official liquidator himself, but byhifl clerk, who was the only witness' called in the case,, but whoseevidence the District Judge did not credit. I see no reason todisagree with the finding of the District Judge that the order ofthe Tinnevelly Court was not posted to the defendant.
I tbinlr this appeal should be dismissed with costs.
Wood Bbnton C.J.—I agree.
SANKARA IYER v. VANDERSTRAATEN