Appeal No 3 of 1951
 Appeal from the Judgment and Order dated March 11 1949 of the High Court of Judicature at Madras Satyanarayana Rao and Viswanatha Sastri JJ in Original Side Appeal No 3 of 1947 rising out of the Judgment and Order dated November 15 1946 of Clark J and made in the exercise of the Ordinary Original Civil Jurisdiction of the High Court in Application No 599 of 1946
M C Setalvad Attorney General for India A Balasubramanian with him for the appellant
N Baja Gopala Iyengar for the respondent
December 9
The Judgment of Mehr Chand Mahajan Das and Ghulam Hasan JJ was delivered by Das J Vivian Bose J delivered a separate Judgment
DAS J
This appeal arises out of an application made by the Official Receiver representing Sha Mulchand  Company Ltd in liquidation under section 38 of the Indian Companies Act for rectification of the register of the Jawahar Mills Ltd Sha Mulchand  Company Ltd hereinafter referred to as  the Company was incorporated in 354 1937 as a private limited company
At all material times it consisted of two members
T V T Govindaraju Chettiar and K N Sundara Ayyar
The Jawahar Mills Ltd hereinafter called  the Mills was also incorporated in 1937 with an authorised capital of Rs 1000000 divided into one lac shares of Rs 10 each
The Company was the managing agent of the Mills from its inception and applied for and was allotted 5000 ten rupee shares Nos 15048 to 20047 on which Rs 5 per share had been paid
The Company continued to act as the managing agent of the Mills till the 30th June 1939 on which date it resigned the managing agency
Prior to the Company s resignation the two members of the Company had entered into an agreement with one M A Palaniappa Chettiar a partner of the incoming managing agency firm up on certain terms which need not be referred to in greater detail
Within two months after the change of managing agents the Mills made two calls namely one on the 22nd August 1939 for Rs 2 per share payable on the 1st October 1939 and the other on the 1st October 1939 for Rs 3 payable on the 1st December 1939
The Company did not pay either of the calls
On the 23rd January 1940 Govindaraju Chettiar was adjudged insolvent on the application of Sundara Ayyar
This insolvency of Govindaraju Chettiar was eventually annulled in 1944
During this period Govindaraju Chettiar in law  ceased to be a director of the Company although it is alleged that he nevertheless continued to take part in the management of the Company
By a resolution of the Board of Directors of the Mills passed on the 12th August 1940 the new managing agents were empowered to give notices to such persons as had not paid the allotment money and the call money within the date fixed and to intimate them that in default their shares would be  forfeited
A notice was issued on the 16th September 1940 and two copies thereof are said to have been sent to Sundara Ayyar and Govindaraju Chettiar
355 No payment having been made the 5000 shares held by the Company were forfeited by a resolution of the Board of Directors of the Mills
The auditor of the Mills having pointed out that the purported forfeiture was irregular and illegal this forfeiture was cancelled
By a resolution passed by circulation on the 26th February 1941 the Board of Directors of the Mills resolved that a notice be sent to the Company informing it that it was in arrears with calls to the extent of Rs 25000 that the amount must be paid on or before the 31st March 1941 and that in default its shares would be forfeited
A notice dated the 15th March 1941 was accordingly addressed to the Company and sent by registered post with acknow ledgment due
It appears that the notice was actually posted on the 17th March 1941 and was received by Govindaraju Chettiar on the 20th March 1941
The Company did not pay the arrears of calls
On the 5th September 1941 the Board of Directors of the Mills resolved that  the 5000 shares Nos 15048 20047 standing in the name of the Company have been forfeited
 On the 10th September 1941 the Mills wrote a letter to the Company informing the latter that the Directors of the Mills bad at their meeting held on the 5th September 1941 forfeited the 5000 shares
There is no dispute that this letter which was sent by registered post was returned undelivered
On the 1st October 1941 an entry was made in the share ledger of the Mills recording that the 5000 shares of the Company had been forfeited
On the 16th November 1941 these 5000 shares were reallotted to 14 different persons and on the 17th November 1941 a letter was sent to the Company intimating that the forfeited shares had been reallotted and calling upon the Company to send back to the Mills all the documents relating to the original allotment of the 5000 shares to the Company
In the meantime on the 26th August 1941 by an order made by the Registrar of Joint Stock Companies the Company was struck off the register of companies under section 247 356 of the Indian Companies Act
This order of the Registrar was published in the Official Gazette on the 9th September 1941 ie four days after the shares were forfeited and one day before the notice intimating the fact of forfeiture was sent in a registered cover which was however returned undelivered
Under section 247 5 of the Indian Companies Act the Company stood dissolved on and from the date of such publication
The Mills having come to know of the dissolution of the Company applied to the High Court OP No 10 of 1942 praying that the name of the Company be restored to the register of companies and that after such restoration was duly advertised the Company be wound up by the Court
A similar application was made on the 11th December 1941 by the Income tax authorities OP No 11 of 1942
On the 23rd February 1942 Sundara Ayyar filed an affidavit contending amongst other things that the Directors of the Mills had no power to forfeit the shares
On the 2nd April 1942 however OP No 10 of 1942 was compromised and the Mills received Rs 11000 from Sundara Ayyar in full satisfaction of their claim against the Company
On the 25th June 1942 OP No 11 of 1942 was also compromised and Sundara Ayyar paid up the claim of the Income tax authorities
The two petitions for restoration of the Company were accordingly dropped
On the 27th June 1942 Sundara Ayyar filed a suit against the Mills and others including Palaniappa Chettiar claiming a declaration that the forfeiture by the Mills of the 5000 shares was illegal and inoperative and directing the Mills to pay to the plaintiff and the third defendant representing the estate of Govindaraju Chettiar the value of the forfeited shares with dividend or interest thereon and directing Palaniappa Chettiar to pay the plaintiff and the third defendant the sum of Rs 25000
This suit was dis missed on the 17th November 1943 on the ground that Sundara Ayyar who was only a member of the dissolved Company had no locus standi and could 357 have no relief personally
Sundara Ayyar filed an appeal therefrom which was dismissed as against the Mills but the case was remanded to the trial Court for the trial of his claim as against the fourth defendant Palaniappa Chettiar
During the pendency of Sundara Ayyar s appeal he on the 12th August 1944 filed OP No 199 of 1944 for the restoration of the Company
On that application an order was made on the 16th February 1945 that the name of the Company be restored to the register of companies that the Company be deemed to have continued in existence as if its name had never been struck off that such restoration be advertised and that the Company be wound up by the Court and the Official Receiver do forthwith take charge of the assets and liabilities of the Company
It was further ordered that the Official Receiver do recognise that as between the Mills and the Company the Mills should be regarded as having been duly paid only Rs 11000 out of the total debt of Rs 25550 due  to the Mills
By an order made on the 21st January 1946 leave was given to the Official Receiver to take appropriate steps regarding the 5000 shares purported to have been forfeited by the Mills
Accordingly on the 5th March 1946 the Official Receiver in the name of the Company took out the present summons calling upon all parties concerned to show cause why the share register of the Mills should not be rectified by restoring the name of the Company to the said register in respect of 5000 shares numbering 15048 20047 and why such other alternative or consequential relief should not be granted to the applicant as might be just and necessary in the circumstances of the case
The Mills contended in opposition to that application that the shares had been properly forfeited that the Company was on the principles of estoppel acquiescence and laches precluded from challenging the forfeiture that the application was barred by limitation and that the shares having already been allotted to other persons who had not been made 358 parties to the application order for rectification of the register in respect of those shares could be made
The summons came up for hearing before Mr Justice Clark
The learned Judge by his judgment dated the 15th November 1946 held that the notice dated the 15th March 1941 which was posted on the 17th March 1941 and delivered on the 20th March 1941 and on which the resolution of forfeiture passed on the 5th September 1941 was founded was not in conformity with the provisions of articles 29 and 30 of the articles of association of the Company which required 14 clear days  notice
The learned judge further held that the plea of estoppel acquiescence and laches was untenable that article 49 of the Limitation Act did not apply either expressly or by way of analogy to the present application and that article 120 which prescribed a period of six years from the date when the right to sue accrued would by analogy apply to the present proceedings and that so applied the present proceedings must be held to be within time
Having disposed of the controversy on the above points it remained to consider the form of the order which could properly be made on the application
It is quite clear that the specific shares having already been allotted to 14 different persons and those persons not being then before the Court the Court could not then and there direct rectification of the register by restoring the name of the Company to the share register of the Mills in respect of those identical shares
There was nevertheless nothing to prevent the Court even at that stage to give notice of the application to the persons to whom the shares had been reallotted andor those who were holding the shares at the time and after thus adding them as parties thereto to make the appropriate order of rectification and if thought fit to also award damages to the Company
There were however 16000 shares of Rs 10 each yet unissued
After discussing the matter with learned advocates on both sides to which discussion a reference will be made hereafter the 359 learned Judge in the belief that the advocates for the parties had agreed as to the form of the order directed that the Mills do rectify their register by inserting the name of the applicant Company as owner of 5000 shares out of the unissued shares of Rs 10 each and that on such insertion the Company do on or before the 15th January 1947 pay to the Mills Rs 25000 being the amount of calls in arrears
Pursuant to further directions given by the learned Judge on the 7th January 1947 the Mills on the 10th January 1947 received Rs 25000 and allotted 5000 shares
Although the Mills thus acted upon the order they nevertheless on the 6th February 1947 filed an appeal against the order
That appeal came up for hearing before a Bench consisting of Satyanarayana Rao and Viswanatha Sastri JJ
It was not disputed before the appeal Court that the forfeiture was invalid but the contentions urged were that by reason of the irregularity the forfeiture was only voidable and not void and that as the forfeiture was only voidable it was open to the Company to waive or abandon its right to dispute the validity of the forfeiture and that in fact by its conduct it had done so that the claim to rectify the register was barred by limitation and that in any event rectification was impossible because the shares were not available in specie the same having been reallotted to other persons
The learned Judges by their judgment dated the 11th March 1949 held that the forfeiture was invalid that the application was not barred by limitation for it was covered by article 120 of the Limitation Act
The learned Judges recognised that where a period of limitation was prescribed for a suit or a proceeding mere delay was no bar unless it was of such a character as would lead to an inference of abandonment of the right or unless it was established that the person against whom the action or proceeding was instituted was actually prejudiced by reason of such delay
The learned Judges agreed with the 47 360 trial Court that no plea of acquiescence waiver or estoppel had been established in the present case
The learned Judges nevertheless thought that the question of abandonment of the right and prejudice to the appellant by reason of the delay stood on a different footing
Then after referring to certain conduct on the part of Govindaraju Chettiar and Sundara Ayyar the learned Judges concluded that by reason of the long delay in reviving the Company and in taking proceedings under section 38 of the Indian Companies Act the Mills had been induced to put themselves in a situation in which it became impossible for them to restore the Company to the register in respect of those 5000 shares and that in view of this conduct if the applicants were Govindaraju Chettiar and Sundara Ayyar it would have been a case in which relief would have been refused in the light of the principles which the learned Judges deduced from the judicial decisions referred to by them
Then referring to the decision in Smith Stone  Knight vs Birmingham Corporation 1 and certain text books the learned Judges took the view that it was too late in the day to adhere to the strict formalism laid down in Salomon s case 2 and that as the tendency of modern decisions was to lift the veil of corporate personality and disregard the corporate form the conduct of its only two members had disentitled the company from claiming the relief of rectification
The learned Judges further held that there was no legal basis on which the form of the order could be supported
On reading the judgment of the trial Judge and after hearing the senior advocate appearing for the Mills the learned Judges felt unable to agree that the learned advocate had agreed to the substitution of the 6000 out of the unissued shares for the 5000 forfeited shares
The resilt was that the appeal was allowed and the order of the trial Judge was set aside
The Company by its Official Receiver has now come up before this Court with leave granted by the High Court 1 2  361 under sections 109 and 110 of the Code of Civil Procedure
The appeal Court it will be observed reversed the decision of the trial Judge and decided the appeal against the Company on two grounds only namely 1 that the Company had by the conduct of its two members abandoned its right to challenge the forfeiture and 2 that the form of the order could not be supported as one validly made under section 38 of the Indian Companies Act
The learned AttorneyGeneral appearing in support of this appeal has assailed the soundness of both these grounds
The learned Attorney General contends not without considerable force that having in agreement with the trial Coury held that no plea of acquiescence waiver or estoppel had been established in this case the appeal Court should not have allowed the Mills to raise the question of abandonment of right by the Company inasmuch as no such plea of abandon ment had been raised either in the Mills  affidavit in opposition to the Company s application or in the Mills grounds of appeal before the High Court
Apart from this the appeal Court permitted the Mills to make out a plea of abandonment of right by the Company as distinct from the pleas of waiver acquiescence and estoppel and sought to derive support for this new plea from the well known cases of Prendergast vs Turton1 Clark  Chapman vs Hart2 and Jones vs North Vancouver Land and Improvement Co3
A perusal of the relevant facts set out in the several reports and the respective judgments in the above cases will clearly indicate that apart from the fact that some of them related to collieries which were treated on a special footing those cases were really cases relating to waiver or acquiescence or estoppel
Indeed in Clarke s case 2 while Lord Chelms ford referred to the decision in Prendergast s case1 as a case of abandonment of right Lord Wensleydale read it as an instance of acquiescence and estoppel
Unilateral act or conduct of a person 1  3 1910 AC 317
2 6 HLC 632 10 ER I443
362 that is to sky act or conduct of one person which is not relied upon by another person to his detriment is nothing more than mere waiver acquiescence or laches while act or conduct of a person amounting to an abandonment of his right and inducing another person to change his position to his detriment certainly raises the bar of estoppel
Therefore it is not intelligible how having held that no plea of waiver acquiescence or estoppel had been established in this case the appeal Court could nevertheless proceed to give relief to the Mills on the plea of abandonment by the Company of its rights
If the facts on record were not sufficient to sustain the plea of waiver acquiescence or estoppel as hold by both the Courts we are unable to see how a plea of abandonment of right which is anaggravated form of waiver acquiescence or laches and akin to estoppel could be sustained on the self same facts
Further whatever be the effect of mere waiver acquiescence or laches on the part of a person on his claim to equitable remedy to enforce his rights under an executory contract it is quite clear on the authorities that mere waiver acquiescence or laches which does not amount to an abandon ment of his right or to an estoppel against him cannot disentitle that person from claiming relief in equity in respect of his executed and not merely executory interest
See per Lord Chelmsford in Clarke s case 1 at page 657
Indeed it has been held in The Garden Gully United Quartz Mining Company vs Hugh McLister2 that mere laches does not disentitle the holder of shares to equitable relief against an invalid declaration of forfeiture
Sir BarnesPeacook in delivering the judgment of the Privy Council observed at pages 56 67 as follows There is no evidence sufficient to induce their Lordships to hold that the conduct of the plaintiff did amount to an abandonment of his shares or of his interest therein or estop him from averring that he continued to be the proprietor of them
There certainly is no evidence to justify such a conclusion 1  6 HLC 632 2 L R1 App
39 363 with regard to his conduct subsequent to the advertisement of the 30th of May 1869
In this case as In that of Prendergast vs Turton1 the plaintiff s interest was executed
In other words he had a legal interest in his shares and did not require a declaration of trust or the assistance of a Court of Equity to create in him an interest in them
Mere laches would not therefore disentitle him to equitable relief Clarke and Chapman vs Hart2
It was upon the ground of abandonment and not upon that of mare laches that Prendergast vs Turton1 was decided
 Two things are thus clear namely 1 that abandonment of right is much more than mere waiver acquiescence or laches and is something akin to estoppel if not estoppel itself and 2 that mere waiver acquiescence or laches which is short of abandonment of right or estoppel does not disentitle the holder of shares who has a vested interest in the shares from challenging the validity of the purported forfeiture of those shares
In view of the decision of the Courts below that no case of waiver acquiescence laches or estoppel has been established in this case it is impossible to hold that the principles deducible from the judicial decisions relied upon by the appeal Court have disentitled the Company to relief in this case
The matter does not rest even here
Assuming
 but not conceding that the principle of piercing the veil of corporate personality referred to in Smith Stone  Knight vs The Birmingham Corporation 3 can at all be applied to the facts of the present case so as to enable the Court to impute the acts or conduct of Govindaraju Chettiar and Sundara Ayyar to the Company we have yet to inquire whether those acts or conduct do establish such abandonment of rights as would according to the decisions disentitle the plaintiff from questioning the validity of the purported declaration of forfeiture
There can be no question that the abandonment if any must be inferred from acts or conduct of the Company as such  or on the above principles of its two members subsequent to 1  3 2 6 HLC 632 10 ER I443
364 the date of the forfeiture for it is the right to challenge the forfeiture that is said to have been abandoned In order to give rise to an estoppel against the Company such acts or conduct amounting to abandonment must be anterior to the Mills  changing its position to its detriment
The resolution for forfeiture was passed on the 6th September 1941
The five thousand forfeited shares were allotted to 14 persons on the 16th November 1941 and it is such allotment that made it impossible for the Mill to give them back to the Company
In order therefore to sustain a plea of abandonment of right or estoppel it must be shown that the Company or either of its two members had done some act andor had been guilty of some conduct between the 6th September 1941 and the 16th November 1941
No such act or conduct during such period has been or can be pointed out
On being pressed advocate for the Mills refers us to the conduct of Sundara Ayyar in opposing OP No 10 of 1942 filed by the Mills and OP No 11 of 1942 by the Income tax authorities for restoring the Company to the register of companies and it is submitted that such conduct indicates that Sundara Ayyar had accepted the validity of the forfeiture
This was long after the Mills had reallotted the forfeited shares
Further a perusal of paragraph 9 of the affidavit in opposition filed by Sundara Ayyar in OP No 10 of 1942 will clearly show that he not only did not accept the forfeiture as valid but actually repudiated such forfeiture as wholly beyond the competence of the Board of Directors of the Mills
The reason for opposing the restoration of the Company may well have been that Sundara Ayyar desired at all cost to avoid his eventual personal liability as a shareholder and director of the Company
In any case Sundara Ayyar did make it clear that he challenged the validity of the purported forfeiture of shares by the Mills and in this respect this case falls clearly within the decision in Clarke s case 1 relied upon by the appeal Court
The only other conduct of Sundara Ayyar relied on by learned advocate for the Mills in 1  6 HLC 632 365 support of the appeal Court s decision on this point is that Sundara Ayyar proceeded with his suit against Palaniappa Chettiar even after his suit as well as his appeal had been dismissed as against the Mills
In that suit Sundara
Ayyar sued the Mills as well as Govindaraju Chettiar and the Official Receiver of Salem representing the latter s estate and Palaniappa Chettiar
In the plaint itself the validity of the forfeiture was challenged
The claim against Palani appa Chettiar was in the alternative and it was founded on the agreement of the 30th June 1939
The suit was dismissed as against the Mills only on the technical ground that Sundara Ayyar had no locus standi to maintain the suit
The contention of the Company that the forfeiture was invalid and the claim for rectification of the share register of the Mills by restoring the name of the Company cannot possibly have been affected by this decision
Sundara Ayyar s claim against Palaniappa Chettiar was based on the agreement of 1939 and it was formulated as an alternative personal claim
In view of the clear allegation in the plaint that the forfeiture was invalid and not binding on the Company the continuation of the suit by Sundara Ayyar to enforce his personal claim against Palaniappa Chettiar cannot be regarded as an abandonment by Sundara Ayyar of the right of the Company
It must not be overlooked that the Company stood dissolved on that date and Sundara Ayyar had no authority to do anything on behalf of the Company
In our opinion there is no evidence of abandonment of the Company s right to challenge the validity of the purported forfeiture
The second point on which the appeal Court decided the appeal against the Company was that the form of the order made by the trial Court could not be supported as one validly made under section 38 of the Indian Companies Act
It will be recalled that having disposed of all the points of controversy against the Mills and in favour of the Company the trial Judge had to consider the  form of the order Which could properly be made in favour of the 366 Company
In the summons the Company had asked for rectification of the register by restoring the name of the Company to the register in respect of 5000 shares numbering 15048 to 20047
It was agreed by learned advocates on both sides before the trial Court that it would in the circumstances be impossible to make an order for rectification with respect to those specific shares which as already stated had been reallotted to other persons who were not parties to the proceedings
The Mills had also reduced its capital by having the face value of the 84000 shares which had been issued reduced by repaying to the shareholders Rs 5 in respect of each of those shares
There were however 16000 unissued shares of Rs 10 each which were not affected by the reduction
While therefore it was clearly impossible for the Court to direct that the Company should be replaced on the register in respect of its original shares the Court could under section 38 give notice to the persons to whom the shares had been reallotted or those claiming under them and make them parties to the proceedings and then make an appropriate order for  rectification and if necessary also direct the Mills to pay damages under that section
This being the situation learned advocate for the Mills had to decide upon his course of action
What happened in Court will appear from the following extract from the judgment of the trial Court  It is agreed by both parties that the proper order will be for the applicant Company to be placed on the register in respect of 5000 of the unissued rupees 10 shares and I order accordingly
In this case as the parties consent to the matter being disposed of by allotting to the applicant unissued shares there can it seems to me be no order for payment of the dividends
Counsel for the respondent Company leaves the solution of this difficulty to me    
The suggestion of the applicant Company is that it is prepared to forego any claim to the accrued dividends if it is not required to pay interest on the outstanding call money
This seems to me to be a very 367 reasonable suggestion  
I direct accordingly that on insertion of the name of the applicant Company as owner of 6000of the unissued shares the applicant Company shall pay to the respondent company only Rs 25000 being the amount of calls in arrears
 The appeal Court however went behind this record of the proceedings that took place before the trial Court and heard the learned senior advocate as to what had happened in Court and after hearing the senior advocate for the Mills found itself unable to agree with the contention that the learned advocate for the Mills had agreed to the substitution of 5000 unissued shares for the shares forfeited
No affidavit of the learned senior advocate was filed before the trial Court for the rectification of what is low alleged to have been wrongly recorded by the trial Judge as suggested by the Privy Council in Madhu Sudan Chowdhri vs Musammat Chandrabati Chowdhrain 1 and other cases referred to in Timmalapalli Virabhadra Rao vs Sokalchand Chunilal  Others 2
While we do not consider it necessary or desirable to lay down any hard and fast rule we certainly take the view that the course suggested by the Privy Council should ordinarily be taken
It appears that at the time when the application was made for leave to appeal to the Federal Court an affidavit sworn by G Vasantha Pai the junior advocate for the Mills was filed before the Court dealing with that application
Paragraph 5 of that affidavit runs as follows During the trial every question was argued on behalf of the respondent company and no point was given up
This will be clear from the fact that till we reached the penultimate paragraph of the judgment beginning It now remains to consider etc  all the issues are dealt with by the learned Judge
The agreement was on the specific form of the order on the basis of his Lordship s judgment and without prejudice to the respondent company s rights
What 1 2 48 368 was agreed to was Proper order on the basis of his Lordship s judgment which by then had been dictated
The respondent company no more consented to the order that the appellant consented to have his application dismissed when its counsel agreed that it was impossible to make an order in terms of the Judge s summons
 The appeal Court understood the stand taken by the learned senior advocate as follows  He seems to have greed only as an alternative that if all his contentions were overruled and the learned Judge thought that notwithstanding the difficulty in the way of granting the relief for rectification the applicant company should be restored to the register the only shares available being the 16000 shares of Rs 10 each unissued the applicant company could be recognised as a shareholder in respect of 5000 out of those shares    It is quite clear from the judgment of the trial Court paragraph 5 of the junior advocate s affidavit and the statement of the learned senior advocate as recorded by the appeal Court that the agreement was solely and simply as to the specific form of the order without prejudice to the Mills  right to challenge the correctness of the findings of the trial Court on the material issues
In other words all that learned advocate for the Mills desired to guard himself against was that the agreement should not preclude the Mills from preferring an appeal against the decision of the learned Judge on the merits
The reservation was as to the right of appeal challenging the findings on the merits and the agreement was only as to the form of the order
This limited agreement certainly implied that the Mills agreed to be bound by the order only if the Mills failed in their appeal on the merits  In short the consent covered only the form of the order and nothing else so that if the Mills succeeded in their appeal the order would go although advocate has agreed to its form but that if the Mills failed in their contention as to the correctness of the findings of the learned trial Court on the 369 different questions on merits it would no longer be open to them to challenge the order only on the ground of the form of the order
In our judgment the Mills cannot attack the form of the order to which their counsel consented
Learned advocate for the Mills has raised the question of limitation
He referred us to articles 48 and 49 of the Limitation Act but did not strongly press his objection founded on those articles
We agree with the trial Court and the Court of appeal that those two articles have no application to this case
A claim for the rectification of the register simpliciter does not necessarily involve a claim for the return of the share scrips and in this case there was in fact no prayer for the return of shares or the scrips and therefore these two articles can have no application
Learned advocate however strongly relies on article 181 of the Limitation Act
That article has in a long series of decisions of most if not all of the High Courts been held to govern only applications under the Code of Civil Procedure
It may be that there may be divergence of opinion even within the same High Court but the preponderating view undoubtedly is that the article applies only to applications under the Code
The following extract from the judgment of the Judicial Committee in Hansraj Gupta vs Official Liquidators Dehra Dun Mussoorie Electric Tramway Company Limited 1 is apposite  It is common ground that the only article in that schedule which could apply to such an application is article 181  but a series of authorities commencing with Rai Manekbai vs Manekji Kavasji 2 have taken the view that article 181 only relates to applications under the Code of Civil Procedure in which case no period of limitation has been prescribed for the application
But even if article 181 does apply to it the period of limitation prescribed by that article is three years from the time when the right to apply accrued which time would be not earlier than the 1 1933 60 IA 13 at p 20
2 370 date of the winding up order March 26 1926
The application of the liquidators was made on March 26 1928 well within the three years
The result is that from either point of view the application by the liquidators if otherwise properly made under and within the provisions of section 186 of the Indian Companies Act is not one which must be dismissed by reason of section 3 of the Indian Limitation Act
It is either an application made within time or it is an application made for which no period of limitation is prescribed
The case may be a casus omissus
If it be so then it is for others than their Lordships to remedy the defect
 Learned advocate for the Mills however points out that the reason for holding that article 181 was confined to applications under the Code was that the article should be construed ejusdem generis and that as all the articles in the third division of the schedule to the Limitation Act related to applications under the Code article 181 which Was the residuary article must be limited to applications under the Code
That reasoning it is pointed out is no longer applicable because of the amendment of the Limitation Act by the introduction of the present articles 158 and 178
These articles are in the third division which governs applications but they do not relate to applications under the Code but to one under the Arbitration Act and therefore the old reasoning can no longer hold good
It is urged that it was precisely in view of this altered circumstance that in Asmatali Sharif vs Mujahar Ali Sardar1 a Special Bench of the Calcutta High Court expressed the opinion that an application for pre emption by a non notified co sharer should be governed by article 181 of the Limitation Act
A perusal of that case however will show that the Special Bench did not finally decide that question in that case
In Hurdutrai Jagadish Prasad vs Official Assignee of Calcutta2 a Division Bench of the Calcutta High Court consisting of Chief Justice Harries and Mr Justice Mukherjea who had delivered 1 2 371 the judgment of the Special Bench clearly expressed the view that article 181 of the Limitation Act applied only to applications under the Civil Procedure Code and did not apply to an application under section 56 of the Presidency Towns Insolvency Act Mukherjea J who also delivered the judgment of the Division Bench explained the observations made by him in the Special Bench case by pointing out that the entire procedure for an application under section 26 F of the Bengal Tenancy Act was regulated by the Civil Procedure Code and therefore an application for pre emption was as it were an application made under the Civil Procedure Code
Subsequently in Sarvamangala Dasi vs Paritosh Kumar Das1 GN Das J who was also a member of the Special Bench in the first  mentioned case expressed the opinion while sitting singly that article 181 was not confined to applications under the Code
His Lordship s attention does not appear to have been drawn to the case of Hurdutrai Tagadish Prasad2
It does not appear to us quite convincing without further argument that the mere amendment of articles 158 and 178 can ipso facto alter the meaning which as a result of a long series of judicial decisions of the different High Courts in India came to be attached to the language used in article 181
This long catena of decisions may well be said to have as it were added the words  under the Code  in the first column of that article
If those words had actually been used in that column then a subsequent amendment of articles 158 and 178 certainly would not have affected the meaning of that article
If however as a result of judicial construction those words have come to be read into the first column as if those words actually occurred therein
we are not of opinion as at present advised that the subsequent amendment of articles 158 and 178 must necessarily and automatically have the effect of altering the long acquired meaning of article 181 on the sole and simple ground that after the amendment the reason on which the old construction was founded is no longer available
We need 1 AIR 1952 Cal 689
2 372 not however on this occasion pursue the matter further for we are of theopinion that even if article 181 does apply to the present application it may still be said to be within time
The period of limitation prescribed by that article is three years from the time when the right to apply accrues
 It is true that a further notice after the shares are forfeited is not necessary to complete the forfeiture of the shares See Knight s case1 but it is difficult to see how a person whose share is forfeited and whose name is struck out from the register can apply for rectification of the register until he comes to know of the forfeiture
The same terminus a quo is also prescribed in Article 120 of the Limitation Act
In ORMO MSP
Firm vs Nagappa Chettiar2 which was a suit to recover trust property from a person who had taken it with notice of the trust by a transaction which was a breach of trust the Privy Council approved and applied the principles of the earlier Indian decisions referred to therein to the case before them and held that the time began to run under article 120 after the plaintiff came to know of the transaction which gave him the right to sue
On the same reasoning we are prepared to extend that principle to the present application under article 181
If article 181 applies then time began to run after the Company came to know of its right to sue
It is not alleged that the Company had any knowledge of the forfeiture between the 5th September 1941 when the resolution of forfeiture was passed and the 9th September 1941 when the Company became defunct
After the last mentioned date and up to the 16th February 1945 the Company stood dissolved and no knowledge or notice can be imputed to the Company during this period
Therefore the Company must be deemed to have come to know of its cause of action after it came to life again and the present application was certainly made well within three years after that event happened on the 16th February 1945
If article 181 does not apply then the only article that can 1 2 ILR 373 apply by analogy is article 120 and the application is also within time
In either view this application cannot be thrown out as barred by limitation
The result therefore is that this appeal must succeed
We set aside the judgment and decree of the High Court in appeal and restore the order of the trial Court
The appellant will be entitled to the costs of the appeal in the High Court as well as in this Court
BOSE J I agree with the conclusions of my learned brothers and also with their reasoning generally but lest it be inferred that I am assenting to a far wider proposition than is actually the case I deem it advisable to clarify my position about abandonment and waiver
Though the usage of these words in cases of the present kind has the sanction of high authority they are in my opinion inapt and mislead ing in this class of case
In order to appreciate this it will be necessary to hark back to first principles
In the first place waiver and abandonment are in their primary context unilateral acts
Waiver is the intentional relinquishment of a right or privilege
Abandonment is the voluntary giving up of one s rights and privileges or interest in property with the intention of never claiming them again
But except where statutory or other limitations intervene unilateral acts never in themselves effect a change in legal status because it is fundamental that a man cannot by his unilateral action affect the rights and interests of another except on the basis of statutory or other authority
Rights and obligations are normally inter twined and a man cannot by abandonment per se of his rights and interests thereby rid himself of his own obligations or impose them on another
Thus there can be no abandonment of a tenancy except on statutory grounds as for example in the Central Provinces Tenancy Act 1920 unless there is acceptance express or implied by the other side
It may for example in a case of tenancy be to the landlord s interest to keep the tenancy alive and so also in the case 374 of shares of a company
It may be to the interests of the company and the general body of shareholders to refrain from forfeiture if for example the value of unpaid calls exceeds the market value of the shares
Such a position was envisaged in Garden Gully United Quartz Mining Co vs Hugh McLister1
So also with waiver
A long catena of illustrative cases will be found collected in B B Mitra s Indian Limitation Act Thirteenth Edition pages 447 and 448
This fundamental concept brings about another repercussion
Unless other circumstances intervene there is a locus paenitentiae in which a unilateral abandonment or waiver can be recalled
It would be otherwise if the unilateral act of abandonment in itself and without the supervention of other matters effected a change in legal status
In point of fact it is otherwise when as in the statutory example I have quoted the law intervenes and determines the tenancy
It is therefore in my opinion fundamental that abandonment and waiver do not in themselves unilaterally bring about a change in legal status
Something else must intervene either a statutory mandate or an act of acceptance express or implied by another person or as Lord Chelmsford put it in Clarke  Chapman vs Hart1 acts which are equivalent to an agreement or a licence or an estoppel in cases where an estoppel can be raised
Next there is in my view a fundamental difference between an executory interest and an executed one
In the former it is necessary to resort to equitable reliefs to get enforced a right which is not at the date a vested right cases of specific performance and declaration of a trust are examples so also a prayer for relief from forfeiture
In cases of this kind conduct which would disentitle a person to equitable relief is relevant
No hard and fast rule can or should be laid down as to what such conduct should consist of but among the varieties of conduct which Courts have considered sufficient in this class of case is conduct which amounts to laches 1 at 57 2 1858 10 ER 1443 at 1452 and 1453
375 or where there has been a standing by or acquiescence or waiver or abandonment of a right particularly when this would prejudicially affect third parties
This sort of distinction is brought out by Lord Chelmsford in Clarke  Chapman vs Hart1
The position is different when the interest is executed and the man has a vested interest in the right that is to say when he is the legal owner of the shares with the legal title to them residing in him
This legal title can only be destroyed in certain specified ways
It is in my view fundamental that the legal title to property whether moveable or immoveable cannot pass from one person to another except in legally recognised ways and normally by the observance of certain recognised forms
Confining myself to the present case one of the ways in which the title to shares can pass is by forfeiture but in that case an exact procedure has to be followed
A second way is by transfer which imports agreement
There again there is a regular form of procedure which must be gone through
A third is by estoppel though when the position is analysed it will be found that it is not the estoppel as such which brings about the change
The expressions abandonment waiver and so forth when used in a case like the present are only synonyms for estoppel and despite hallowed usage to the contrary I prefer to call a spade a spade and put the matter in its proper legal pigeon hole and call it by its proper legal name
These other terms are in my view loose and inaccurate and tend to confuse when applied to cases of the present nature
A man who has a vested interest and in whom the legal title lies does not and cannot lose that title by mere laches or mere standing by or even by saying that he has abandoned his right unless there is something more namely inducing another party by his words or conduct to believe the truth of that statement and to act upon it to his detriment that is to say unless there is an estoppel pure and simple
It is only in such a case that the right can 1  at 1452 and 1453
376 be lost by what is loosely called abandonment or waiver but even then it is not the abandonment or waiver as such which deprives him of his title but the estoppel which prevents him from asserting that his interest in the shares has not been legally extinguished that is to say which prevents him from asserting that the legal forms which in law bring about the extinguishment of his interest and pass the title which resides in him to another were not duly observed
Fazl Ali J and I endeavoured to explain this in Dhiyan Singh vs Jugal Kishore 1
What happens is this
The person estopped is not allowed to deny the existence of facts namely the actings of the parties and so forth which would in law bring about the change in legal status namely the extinguishment of his own title and the transfer of it to another for estoppel is no more than a rule of evidence which prevents a man from challenging the existence or non existence of a fact
Once the facts are ascertained or by a fiction of law are deemed to exist then it is those facts which bring about the alteration in legal status it is not the estoppel as such nor is it the abandonment or waiver per se
I prefer therefore to adhere to what I conceive is the proper legal nomenclature
As I understand it estoppel was the basis of the decision in Clarke  Chapman vs Hart 2
See Lord Wensleydale s judgment at page 1458 and the Lord Chancellor s at page 1453  so also
in Garden Gully United Quartz Mining Company vs Hugh McLister 3
That there is no sufficient ground for estoppel in this case is shown by the facts set out in the judgment of my learned brothers
I agree that the appeal must succeed
Appeal allowed
1 1952 SCR 478 at 485
3 1 App


Summary:
A private limited company of which G and S were the only two members owned 5000 shares in a Mill
The company did not pay the calls and the 5000 shares held by them were forfeited on the 5th September 1941 and re allotted to other persons on the 16th November
Notice of the forfeiture was sent to the company on the 10th September but this was returned undelivered
In the meantime the company was struck off the Register under section 247 of the Companies Act with effect from 9th September
On the application of S the company was restored to the Register and an Official Receiver was appointed on 16th February 1945 to wind it up
On the 5th March 1946 the Official Receiver took out a summons calling upon all parties to show cause why the share register of the Mills should not be rectified by restoring the name of the company to the register in respect of the 5000 shares as the forfeiture thereof was invalid
The trial Judge held that the forfeiture was invalid for want of sufficient notice that the plea of estoppel acquiescence and laches raised by the Mills was untenable and that the application as governed by article 120 of the Limitation Act and was not time barred and ordered that as the advocates had agreed to such a course 5000 new shares may be issued to the company
The High Court on appeal found that the forfeiture was invalid that the application was not time barred and that no acquiescence waiver or estoppel had been established but held that the company had by the conduct of G and S and the long delay in reviving the company abandoned its right to challenge the forfeiture and that there was also no legal basis on which the order passed by the trial Judge could be supported
On further appeal Held i if the facts on record were insufficient to sustain a plea of waiver acquiescence or estoppel as held by both the lower Courts a plea of abandonment of right which is an aggravated form of waiver acquiescence or laches and akin to estoppel cannot be sustained on the same facts
46 352 ii Whatever be the effect of mere waiver acquiescence or laches on the part of a person on his claim to equitable remedy to enforce his rights under an executory contract mere waiver acquiescence or laches which does not amount to an abandonment of his right or to an estoppel against him cannot disentitle that person from claiming relief in equity in respect of his executed interests
Prendergast vs Turton 18411   Clarke and Chapman vs Hart 1858 6 HLC 632 Jones vs North Vancouver Land and Improvement Co 1910 AC 317 explained
Garden Gully United Quartz Mining Company vs Hugh Mclister 1875 1 App
Cas 39 relied on
iii There was no evidence in the case of any conduct on the part of S or G subsequent to the date of forfeiture and anterior to the Mills changing its position to its detriment upon which a plea of abandonment of the right to challenge the forfeiture could be based
Smith Stone and Knight vs Birmingham Corporation 1939 4 All ER 116 distinguished
iv On a proper construction of the statements made by the counsel the form of the order to which the counsel had agreed could not be challenged by the Mills
v The application was not governed by articles 48 or 49 of the Limitation Act as a claim for rectification of the register simpliciter does not necessarily involve a claim for the return of the share scrips and there was no prayer in the ease for return of the scrips
vi Article 181 applies only to applications under the Civil Procedure Code and even if the said article was applicable time began to run under the article only from the date on which the company knew of the forfeiture of the shares and as the company bad no knowledge until 9th September 1941 when it became defunct and the company came to life again only on 16th February 1945 knowledge could not be imputed to the company before the latter date and the application was therefore not barred under article 181
vii If article 181 does not apply the only article that could apply was article 120 and even under that article the application was not barred
Hansraj Gupta vs Official Liquidators Dehra Dun Mussoorie Electric Tramway Co 1933 60 IA 13 Hurdutrai Jagdish Prasad vs Official Assignee of Calcutta 1948 52 CWN 343 approved
Asmatali Sharif vs Mujahar Ali Sardar 1948 and Sarvamangal Dasi vs Paritosh Kumar Das AIR doubted
BOSE J Waiver and abandonment are in their primary con text unilateral sets and except where statutory or other limitations intervene unilateral acts in themselves cannot effect a change in legal status
Consequently it is fundamental that 353 abandonment and waiver cannot unilaterally bring about a change in legal status in the absence of either a statutory mandate or an act of acceptance express or implied by another person
There is also a fundamental difference between executed and executory interests in this connection
A man who has a vested interest and in whom the legal title lies does hot and cannot lose that title by mere laches or mere standing by or even by saying that he has abandoned his right unless there is something more namely inducing another party by his words or conduct to believe the truth of that statement and to act upon it to his detriment that is to say unless there is an estoppel pure and simple
It is only in such a case that the right can be lost by what is loosely called abandonment or waiver but even then it is not the aban donment or waiver as such which deprives him of his title but the estoppel which prevents him from asserting that his interest in the shares has not been legally extinguished that is to say which prevents him from asserting that the legal forms which in law bring about the extinguishment of his interest and pass the title which resides in him to another were not duly observed