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THE BURMA CODE

VOLUME IX

y ^ G O O o S 9 ^ O ^ S c 0 3 ^ G |0 3 8 |9 3 6 |

Published under the Authority of the Government oi the

Union of Burma
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 TABLE OF CONTENTS.
3 a c S g O G O ( f2 ? ^ i D 3 0 3 0 ll

PART X __ TORTS TO PERSON.

sa^Ss Don S fo e o {|o :ii
PA G E

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1. The Fatal Accidents Act ... ... ... t

PART XI._CONTRACT.
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1. The Contract Act ... ... ... ... 3<

PART XII INSURANCE.

S9Si 9 jH n a o u s f SaijScpu

1> The Insurance Companies Act ... 56-

2. The Life Assurance Companies Act ... ... 59
3. The Provident Insurance Societies Act ... ... 88
4. The Provident Funds Act ... ... 94
5. The Contributory Provident Funds Act ... 98-
6. y^ecx)oS^a300S)^33^33c5goeo .... .... b oo
7- 3 3 0 0 3 0 ^ 0 ^ 0 ^ |6c^CSj58s33cBgoe3 .... .... 00^

PART XIII AGENCY.

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1. The Powers of Attorney Act ... ... ... 1091

Trusts-

1. The Trusts Act ... ... ... ... 110-

2. The Official Trustees Act ... ... ... 13&
3. The Administration of Public Funds Act .. ... 147
4. tfcS?}|{S6|ci>GgcSgOG3 .... . 090
5. 3300$t8e0$33cSg0GD .... 030-
ii Table o f Contents

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C h a r it ie s .

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PAGE
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1. The R eligious Societies A c t 154
2. The C haritable Endowments A c t 157
3. The C haritable and R eligious Trusts A c t 161
4. The Mussalman W a k f A c t ... ... 164

P A R T X I V A S S O C IA T IO N S .

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1. The P a rtitio n A c t ... 169

2. The Partnership A c t 171
3. The Societies R egistration A c t ... 191
4. The Co-operatives Societies A c t ... 195
5. The B urm a Companies A c t 210
<5. The Companies Foreign Interests A c t 406
7. The Compaines (W ar-T im e Provisions) A ct, 1945 407
S. O3aj?O^ga833c6g0G3.................. 90S
 PART X.TORTS TO PERSON.

s r a J jS s o o n n c o , f ^ d S c ^ ^ S ^ o c o j j j o 8#

THE FATAL ACCIDENTS ACT.

[ I n d ia A ct X I I I , 1855.] (27th M arch, 1855.J

W h e r e a s no action or suit is now m aintainable i n any C ourt against a P ream ble.

person who, by his w rongful act, neglect or default, may have caused the
death o f another person, and it is often-tim es rig h t and expedient th a t the
wrong-doer in such case should be answerable in damages fo r the in ju ry so
caused by h im ; I t is enacted as fo llow s :

1. Whenever the death o f a person shall be caused by w ro n g fu l act, Suit fo r

com pensa
neglect or default, and the act, neglect or default is such as w ould ( i f death tio n to the
had not ensued) have entitled the party in ju re d to m aintain an action and fa m ily o f a
person fo r
recover damages in respect thereof, the p a rty who w ould have been lia b le i f loss occa
death had n o t ensued shall be lia ble to an action o r s u it fo r damages, sioned to .it
b y bis death
notw ithstanding the death o f the person injured, and although the death shall b y actio n
have been caused under such circumstances as am ount in law to a crim e. able w ro n g .

Every such action or su it shall be fo r the benefit o f the w ife , husband,

parent and c h ild , i f any, o f the person whose death shall have been so
caused, and shall be brought by and in the name o f the executor,
adm inistrator or representative o f the person deceased ;
and in every such action the C o u rt may give such damages as i t may
th in k p ro portion ed to the loss resulting fro m such death to the parties
respectively, fo r whom and fo r whose benefit such action shall be b ro u g h t;
and the amount so recovered, a fte r deducting a ll costs and expenses,
including the costs n o t recovered fro m the defendant, shall be divided
amongst the beforementioned parties, or any o f them, in such shares as the
C o u rt by its judgm ent or decree shall direct.

2. Provided always th a t n o t more than one action or suit shall be N o t m ore

th a n one su it
b rought fo r and in respect o f the same subject-matter o f c o m p la in t: to be
b ro u g h t.

Provided th at, in any such action o r suit, the executor, adm inistrator or C la im fo r
loss to
representative o f the deceased may insert a claim fo r and recover any estate m ay
pecuniary loss to the estate o f the deceased occasioned by such w ro n g fu l act, be added.
neglect or default, w h ich sum, when recovered, shall be deemed p a rt o f the
assets o f the estate o f the deceased.
 2 Fatal Accidents.

Plaintiff shall 3. The p la in t in any such action o r suit shall give a fu ll particular o f
deliver the person o r persons fo r whom , or on whose behalf, such action or suit shall
particulars,
etc. be brought, and o f the nature o f the cla im in respect o f w hich damages
shall be sought to be recovered.

Interpreta 4. The lo llo w in g words and expressions are intended to have the
tion-!: lause.
meaning hereby assigned to them respectively, so fa r as such meanings are
n o t excluded by the context o r by the nature o f the subject-m atter ; th a t is to
say. the w ord person shall apply to bodies p o litic and corporate ; and
the w ord parent shall include father and m other and grand-father
and grand-m other ; and the w ord c h ild shall include son and daughter
and grand-son and grand-daughter and step-son and step-daughter.
 PART X ICONTRACT.
3 3 tjS s 0011 Il0 ^ ^ 0 s ^ 8 s p il

THE CONTRACT ACT.

CONTENTS.

Pream ble.

P r e l im in a r y .
Sections-
1 Saving.
2- In te rp re ta tio n clause-

C H A P T E R I.

O f the C o m m u n ic a t io n , A cceptance and R e v o c a t io n of Pro po sals*

3- Com m unication, acceptance and revocation o f proposals.

4- C om m unication when complete.
5- Revocation o f proposals and acceptances.
6- Revocation how made.
7- Acceptance must be absolute.
8- Acceptance by perform ing conditions, or receiving consideration.
9. Promises, express and im p lie d-

C H A P T E R II-

O f C ontracts, V o id a b l e C ontracts and V o id A greem ents.

10- W hat agreements are contracts.

11. W ho are competent to contract.
12. W hat is a sound m ind fo r the purposes o f contracting.
13. Consent defined.
14- Free consent defined.
15 Coercion defined.
16- Undue influence defined.
17. Fraud defined.
18. M isrepresentation defined.
19. V o id a b ility o f agreements w ith o u t free consent.
19.A . Power to set aside contract induced by undue influence.
20. Agreement void where both parties are under m istake as to m atter
o f fact.
21. Effect^of mistakes as to law-
4 Contract.

Sections.
22- C ontract caused by m istake o f one party as to m atter o f fact.
23- W hat considerations and objects are la w fu l, and what not.

V o id Agreements.

24. Agreements void, i f considerations and objects u n law ful in part.

25. Agreem ent w ith o u t consideration void, unless it is in w ritin g and
registered,
o r is a prom ise to compensate fo r something done,
o r is a prom ise to pay a debt barred by lim ita tio n law-
26. Agreem ent in re stra in t o f m arriage void.
21. Agreem ent in restraint o f trade void.
Saving o f agreement not to carry on business o f w hich g o od-w ill is
sold.
28. Agreements in restraint o f legal proceedings void.
Saving o f contract to re fer to a rb itra tio n dispute that may arise-
Suits barred by such contracts.
Saving o f contract to re fer questions that have already arisen.
29. Agreements v o id fo r uncertainty.
30. Agreements by way o f wager void.
E xception in favo ur o f certain prizes fo r horse-racing.
Section 294A o f the Penal Code n o t affected.

CHAPTER III.

O f C o n t in g e n t C o ntracts.

31. C ontingent contract defined-

32. Enforcem ent o f contracts contingent on an event happening.
33. Enforcem ent o f contract contingent on an event not happening.
34- When event on w hich contract is contingent to be deemed im p o s
sible, i f it is the fu tu re conduct o f a liv in g person.
35. When contracts become v o id w hich are contingent on happening
o f specified event w ith in fixed tim e.
When contracts may be enforced w hich are contingent on specified
event not happening w ith in fixed tim e.
36. Agreem ent contingent on im possible events void.

C H A P T E R IV .

O f the Perform ance of C o ntracts.

Contracts which must be performed.

37. O b lig a tio n o f parties to contracts.

38- E ffect o f refusal to accept offer o f perform ance.
39. E ffect o f refusal o f party to p erform promise w holly.
 Contract 5
Sections.
By whom Contracts must be performed.
49. Person by whom promise is to be perform ed-
41- E ffect o f accepting perform ance fro m th ird person-
42- D evolution o f jo in t lia b ilitie s .
43- A n y one o f jo in t prom isors may be compelled to perform .
Each prom isor may compel c o n tribution .
Sharing o f loss by default in c o ntribution .
44. Effect o f release o f one jo in t p ro m iso r.
45. D evolution o f jo in t rights.

Tim e and Place for Performance.

46- Tim e fo r perform ance o f promise where no application is to be

made and no tim e is specified.
47- Tim e and place fo r perform ance o f promise where tim e is specified
and no application to be made-
48- A p p lic a tio n fo r performance on certain day to be at proper tim e
and place.
49- Place fo r performance o f promise where no application to be made
and no place fixed fo r performance.
50. Performance in manner or at tim e prescribed o r sanctioned by
promisee.

Performance of Reciprocal Promises.

51. Prom isor not bound to perform unless reciprocal promisee ready
and w illin g to perform .
52. O rder o f performance o f reciprocal promises.
53. L ia b ility o f party preventing event on w hich contract is to take
effect.
54. Effect o f default as to th a t promise w hich should be first perform ed,
in contract consisting o f reciprocal promises.
55. Effect o f fa ilu re to perform at fixed tim e, in contract in which time
is essential.
Effect o f such fa ilu re when tim e is not essential.
E ffect o f acceptance o f performance at tim e other than th a t agreed
upon-
56. Agreement to do impossible act.
Contract to do act afterwards becoming im possible or unlaw ful-
Compensation fo r loss through non-perform ance o f act known to be
impossible or unlaw ful.
57. Reciprocal promise to do things legal, and also other things illegal-
58. A lte rn a tiv e prom ise, one branch being ille g a l.
6 Contract-

Appropriation of Payments.

Sections-
59. A p p lic a tio n o f paym ent where debt to be discharged is indicated.
60. A p p lic a tio n o f payment where debt to be discharged is n o t indicated.
61. A p p lic a tio n o f payment where neither p a rty appropriates.

Contracts which need not be performed.

62- Effect o f novation, rescission and alteration o f contract.

63. Promisee may dispense w ith or re m it performance o f promise.
64- Consequences o f rescission o f voidable contract.
65. O bligation o f person who has received advantage under void agree
ment or contract th at becomes void.
66- M ode o f com m unicating or revoking rescission o f voidable contract.
67. Effect o f neglect o f promisee to afford prom isor reasonable fa cilitie s
fo r perform ance.

CHAPTER V

O f c e r t a in R e l a t io n s r e s e m b l in g those created by C o ntract.

68. C laim fo r necessaries supplied to person incapable o f contracting,

or on his account.
69. Reim bursem ent o f person paying money due by another in payment
o f w hich he is interested.
70. O b lig atio n o f person enjoying benefit o f non-gratuitous act.
71. R esp on sib ility o f finder o f goods.
72. L ia b ility o f person to whom money is paid, or thing delivered, by
m istake or under coercion,

C H A P T E R V I.

O f the C onsequences of B reach of C o ntract.

73. Compensation fo r loss o r damage caused by breach o f contract.

Compensation fo r fa ilu re to discharge obligation resembling those
created by contract.
74. Compensation fo r breach o f contract where penalty stipulated for.
75. Party rig h tfu lly rescinding contract entitled to compensation.

C H APTER V II.

O f the Sa l e of G oods .

76-123. * * * *
 Contract. 7

CHAPTER V III.

O f I n d e m n it y and G uarantee.

Sections.
124. C ontract o f in d e m n ity defined.
125- Rights o f indem nity-holder when sued.
126. C ontract o f guarantee, surety, p rin cip a l debtor, and
cred itor.
127. Consideration fo r guarantee.
128- Suretys lia b ility .
129. C ontinuing guarantee.
130. Revocation o f continuing guarantee.
131. Revocation o f continuing guarantee by suretys death.
132. L ia b ility o f tw o persons, p rim a rily liable, not affected by arrange
ment between them tha t one shall be surety on others default.
133- Discharge o f surety by variance in terms o f contract.
134. Discharge o f surety by release or discharge o f prin cip a l debtor.
135. Discharge o f surety when creditor compounds w ith , gives tim e to,
or agrees not to sue, p rin c ip a l debtor.
136. Surety not discharged when agreement made w ith th ird person to
give tim e to p rin c ip a l debtor.
137- C re d ito rs forbearance to sue does not discharge surety.
138. Release o f one co-surety does not discharge others.
139. Discharge o f surety by c re d ito rs act or omission im p a irin g suretys
eventual remedy.
140. Rights o f surety on payment or performance-
141- Suretys rig h t to benefit o f c red itors securities.
142- Guarantee obtained by m isrepresentation in valid.
143- Guarantee obtained by concealment in valid.
144. Guarantee on contract tha t cre d ito r shall not act on it u n til co
surety jo in s.
145. Im plie d promise to ind em nify surety.
146- Co-sureties lia b le to contribute equally.
147. L ia b ility o f co-sureties bound in different sums.

C H A P T E R IX .

O f B a il m ent .

148. B a ilm e nt, b a ilo r and bailee defined.

149. D elivery to bailee how m'ade.
150. B a ilo rs duty to disclose faults in goods bailed.
151. Care to be taken by bailee.
152. Bailee when n o t lia ble fo r loss, etc., o f th in g bailed*
 Contract*

Sections.

153. T erm ination o f bailm ent by bailees act inconsistent w ith conditions.
154. L ia b ility o f bailee m aking unauthorized use o f goods bailed.
155- E ffect o f m ixture, w ith b a ilo rs consent, o f his goods w ith bailees.
156. Effect o f m ixture, w ith o u t b a ilo rs consent, when the goods can be
separated.
157- Effect o f m ixture, w ith o u t b a ilo rs consent, when the goods cannot
be separated.
158. Re-payment by b a ilo r o f necessary expenses.
159. R estoration o f goods le n t gratuitously.
160. R eturn o f goods bailed on expiration o f tim e or accom plishm ent o f
purpose.
161. Bailees re p o n s ib ility when goods are not duly returned.
162. T e rm in atio n o f gratuitous bailm ent by death.
163- B a ilo r e ntitled to increase or p ro fit from goods bailed.
164- B a ilo r s re sp o n sib ility to bailee.
165. B ailm ent by several jo in t owners.
166. Bailee n o t responsible on re-delivery to ba ilo r w ith o u t title .
167- R ig h t o f th ird person claim ing goods bailed.
168. R ig h t o f finder o f goods ; may sue fo r specific reward offered.
169. When finder o f th ing com m only on sale may sell it.
170. Bailee s p a rticu la r lien.
171. General lie n o f bankers, factors, wharfingers, advocates and p olicy-
brokers.

Bailments of Pledges.

172. Pledge, pawnor and pawnee defined.

173. Pawnees rig h t o f retainer.
174. Pawnee n o t to retain fo r debt or prom ise other than that fo r which
goods pledged.
Presum ption in case o f subsequent advances.
175. Pawnees rig h t as to e xtraordinary expenses incurred.
176. Pawnees rig h t where pawnor makes default-
177. D efaulting pawnors rig h t to redeem.
178. Pledge by m ercantile agent.
179. Pledge where pawnor has only a lim ite d interest.

Suits by Bailees v r Bailors against Wrong-doers.

180- Suit by b a ilo r or bailee against wrong-doer.

181. A pportion m e nt o f re lie f or compensation obtained by such suits.
 C ontract 9

CHAPTER X .

A gency.

Sections-
A ppointm ent and A uthority of Agents.
182. A gent and p rin c ip a l defined.
183- W ho may em ploy agent.
184- W ho may be an agent.
185. C onsideration not necessary.
186. A gents a u th o rity may be expressed or im plied.
187- D e finitio ns o f express and im p lie d authority.
188. E xte n t o f agents a uthority.
189. Agents a u th ority in an emergency.

Sub-agents.

190. When agent cannot delegate.

191. Sub-agent defined.
192- Representation o f p rin c ip a l by sub-agent properly appointed.
A gents responsibility fo r sub-agent.
Sub-agents responsibility.
193. A gents re p o n s ib ility fo r sub-agent appointed w ith o u t authority.
194.. R elation between p rin c ip a l and person duly appointed by agent to
act in business o f agency.
195. A gents duty in selecting such person.

Ratification.
196. R ig h t o f person as to acts done fo r him w ith o u t his authority.
Effect o f ratification.
197- R a tifica tio n may be expressed or im plied.
198. Knowledge requisite fo r va lid ratification.
199. Effect o f ra tify in g unauthorized act form ing part o f a transaction.
200. R atification o f unauthorized act cannot in ju re th ird person.

Revocation of Authority.
201. T erm in a tio n o f agency.
202. T erm ination o f agency where agent has an interest in subject-matter.
203. When p rin cip a l may revoke agents a uthority.
204. Revocation where autho rity has been p a rtly exercised.
205. Compensation fo r revocation by p rin cip a l, or renunciation by agent.
206. N otice o f revocation or renunciation-
207. Revocation and renunciation may be expressed or im plied.
208. When term ination o f age'nts a u thority takes effect as to agent, and as
to th ird persons.
209. A gents duty on term ina tion o f agency by p rin c ip a ls death or insanity.
210. T erm ination o f sub-agents a uthority.
10 Contract.

Sections-
Agent's D uty to Principal.
211. A gents duty in conducting p rin c ip a ls business.
212. S k ill and diligence required fro m agent.
213 A gent s accounts.
214. A gents duty to communicate w ith p rin cip a l.
215, R ig h t o f p rin c ip a l when agent deals, on his own account, in busi
ness o f agency w ith o u t p rin c ip a ls consent.
216- P rin cip a ls rig h t to benefit gained by agent dealing on his own
account in business o f agency.
217. A gents rig h t o f retainer out o f sums received on p rin c ip a ls account.
218. Agents duty to pay sums received fo r p rin cip a l.
219. When agents rem uneration becomes due.
220. A gent not entitled to rem uneration fo r business mis-conducted.
221. A gents lien on p rin c ip a ls property.

Principals Duty to A gent .

222- A gent to be indem nified against consequences o f la w fu l acts.
223. A gent to be indem nified against consequences o f acts done in good
fa ith .
224. N o n -lia b ility o f employer o f agent to do a c rim in a l act.
225. Compensation to agent fo r in ju ry caused by p rin c ip a ls neglect.

Effect of Agency on Contract with third Persons.

226 Enforcem ent and consequences o f agents contracts.

227- P rincip al how fa r bound when agent exceeds a uthority.
228- P rincipal not bound when excess o f agents a u th o rity is not separable.
229. Consequences o f notice given to agent-
230. Agent cannot personally enforce, nor be bound by, contracts on
behalf o f p rincipa l-
Presum ption o f contract to contrary.
231. R ights o f parties to a contract made by agent not disclosed.
232. Performance o f contract w ith agent supposed to be p rin cip a l.
233- R ig h t o f person dealing w ith agent personally liable.
234. Consequence o f inducing agent or p rin cip a l to act on b e lief that
p rin c ip a l or agent w ill be held exclusively liable.
235- L ia b ility o f pretended agent.
236. Person falsely contracting as agent not entitled to performance.
237- L ia b ility o f p rin c ip a l inducing b elief that agents unauthorized acts
were authorized.
238. Effect on agreement o f m isrepresentation or fra u d by agent.

C H A P T E R X I.
O f P a r t n e r s h ip .

239 266. * * * *
 11

THE CONTRACT ACT.i

[ I n d ia A ct IX , 1872] (1st September, 1872.)

W h e r e a s it is expedient to define and amend certain parts o f the law

relating to contracts ; I t is hereby enacted as follow s:

P r e l im in a r y .

1. N o th in g herein contained shall affect the provisions o f any Statute, sa vin g .

A c t or R egulation not hereby expressly repealed ,2 nor any usage or custom
o f trade, no r any incident o f any contract, n o t inconsistent w ith the provisions
o f this A ct.

2. In this A c t the fo llo w in g words and expressions are used in the in te rp re ta -

fo llo w in g senses, unless a contrary in te n tio n appears fro m the c o n te x t : tio n clause,

(a) When one person signifies to another his w illingness to do or to

abstain fro m doing anything, w ith a view to obtaining the assent
o f tha t other to such act o r abstinence, he is said to make a
proposal :
( b ) When the person to whom the proposal is made signifies his assent
thereto, the proposal is said to be accepted. A proposal, when
accepted , 3 becomes a promise :
(c) The person m aking the proposal is called the prom isor, and the
person accepting the proposal is called the promisee :
id) When, at the desire o f the prom isor, the promisee o r any other
person has done or abstained fro m doing, or does or abstains
fro m doing, or promises to do or to abstain fro m doing, some
thing, such act or abstinence or promise is called a consideration
fo r the promise :
(e) Every prom ise and every set o f promises, form ing the considera
tio n fo r each other, is an agreem ent:
(/) Promises w hich fo rm the consideration or p a rt o f the consideration
fo r each other are called reciprocal promises :
(g ) A n agreement not enforceable by law is said to be void :
( h) A n agreement enforceable by law is a c o n tra c t:
(i) A n agreement w hich is enforceable by law at the option o f one or
more o f the parties thereto, but n o t at the option o f the other
or others, is a voidable c o n tra c t:
(/) A contract w hich ceases to be enforceable by law becomes void
when i t ceases to be enforceable.

1 T h e Chapters arid sections o f the T ra n s fe r of P ro p e rty A c t w h ic h re la te to contracts are, in

places in w h ic h th a t A c t is in fo rce , to be taken as p a rt o f th is A c t ; see section 4 o f th e T ra n sfe r
o f P ro p e rty Act.
2 i.e., repealed b y the In d ia n C o n tra ct A ct (In d ia A c t I X , 1872).
3 As to w h e n co m m u n ica tio n o f acceptance becomes com plete, see section 4, illustration (b).
 12 Contract.

C H A P T E R I.

O f the C o m m u n ic a t io n , A cceptance and R e v o c a t io n of Pr o po sals.

C om m unica 3. The com m unication o f proposals, the acceptance o f proposals, and

tio n , accept the revocation o f proposals and acceptances, respectively, are deemed to
ance and
re vo c a tio n o f be made by any act or omission o f the party proposing, accepting or revoking
p ro p o s a ls . by w hich he intends to communicate such proposal, acceptance or revocation,
o r w hich has the effect o f com m unicating it.

C om m unica 4- The com m unication o f a proposal is complete when it comes to the

tio n w h e n
com plete. knowledge o f the person to whom it is made.

The com m unication o f an acceptance is complete,

as against the proposer, when it is p u t in a course o f transm ission to

h im , so as to be out o f the power o f the acceptor;

as against the acceptor, when it comes to the knowledge o f the

proposer.

The com m unication o f a revocation is complete,

as against the person who makes it, when it is put in to a course o f
transm ission to the person to whom it is made, so as to be out
o f the power o f the person who makes i t ;

as against the person to whom i t is made, when it comes to his

knowledge.

Illustrations.
() A proposes, b y le tte r, to se ll a house to B a t a c e rta in p ric e .
The c o m m u n ic a tio n o f the p ro p o sa l is com plete w h e n B receives the le tte r.
() B accepts / l s p ro p o sa l b y a le tte r sent b y post.
The c o m m u n ica tio n o f th e acceptance is c o m p le te ,
as ag a in st A, w h e n th e le tte r is posted ;
as a g a in st B, w h e n th e le tte r is received b y A.
(c) A revokes his p roposal b y te le g ra m .
T h e revo ca tio n is co m p le te as a g a in st A w h e n th e te le g ra m is despatched. I t is com plete
as against B w h e n B receives i t .
B revokes his acceptance b y te le g ra m . B s re vo ca tio n is c o m p le te as a g a in s t B w h e n the
te le g ra m is despatched, and as against A w h e n i t reaches h im .

Revocation 5. A proposal may be revoked at any tim e before the com m unication o f
o f proposals its acceptance is complete as against the proposer, b u t not afterwards.
and accept
ances. A n acceptance may be revoked at any tim e before the com m unication o f
the acceptance is complete as against the acceptor, b u t not afterwards.

Illustrations.
A proposes, b y a le tte r sent by post, to s e ll his house to B.
B accepts th e p ro p o sa l b y a le tte r sent b y post.
A m ay revo ke Jais p ro p o s a l at any tim e before o r a t th e m om ent w h e n B posts his le tte r o f
acceptance, b u t n o t a fte rw a rd s .
B m ay revoke h is acceptance a t any tim e before o r a t th e m om e n t w h e n th e le tte r
c o m m u n ic a tin g i t reaches A , b u t n o t a fte rw a rd s .
 Contract- 13

6. A proposal is revoked Revocation

how made.
( 1) by the com m unication o f notice o f revocation by the proposer to
the other p a r ty ;
( 2) by the lapse o f the tim e prescribed in such proposal fo r its
acceptance, or, i f no tim e is so prescribed, by the lapse o f a
reasonable tim e, w ith o u t com m unication o f the acceptance;
(3) by the fa ilu re o f the acceptor to fu lfil a condition precedent to
acceptance ; or
(4) by the death or insanity o f the proposer, i f the fact o f his death
or insanity comes to the knowledge o f the acceptor before
acceptance.

7. In order to convert a proposal in to a promise, the acceptance must Acceptance

m ust be
( 1) be absolute and unqua lified; absolute.
( 2) be expressed in some usual and reasonable manner, unless the
proposal prescribes the manner in which i t is to be accepted.
I f the proposal prescribes the manner in w hich i t is to be
accepted, and the acceptance is not made in such manner, the
proposer may, w ith in a reasonable tim e after the acceptance is
communicated to him , insist th a t his proposal shall be accepted
in the prescribed manner, and not otherw ise; but i f he fa ils to
do so, he accepts the acceptance.

8 . Performance o f the conditions o f a proposal, or the acceptance o f any Acceptance

consideration fo r a reciprocal promise w hich may be offered w ith a proposal, by p e rfo rm
in g co n d i
is an acceptance o f the proposal. tio n s, o r re
c e iv in g co n
sid e ra tio n .

9. In so fa r as the proposal or acceptance o f any promise is made in Prom ises,

words, the promise is said to be express. In so fa r as such proposal or express and
im p lie d .
acceptance is made otherwise than in words, the prom ise is said to be im plied.

CHAPTER II.

O f C o ntracts, V o id a b l e C ontracts and V o id A greem ents.

10. A ll agreements are contracts 1 i f they are made by the free consentW hoaf t agree
parties competent to contract, fo r a la w fu l consideration and w ith a la w fu l m ents are
co n tra cts.
object, and are n o t hereby expressly declared to be void.

N othing herein contained shall affect any law in force in the U nion o f
Burma, by w hich any contract is required to be made in w ritin g or in
the presence o f witnesses, or any law relating to the registration o f
documents.

1 See section 2, cl. (<),

 14 Contract-

W ho are 11. Every person is competent to contract who is of the age of

competent m a jo rity according to the law to w hich he is subject ,1 and who is o f
to contract.
sound m ind, and is not disqualified from contracting by any law to w hich
he is subject.

W hat is a 12. A person is said to be o f sound m ind fo r the purpose o f

sound mind m aking a contract if, at the tim e when he makes it, he is capable o f
for the pur
poses of con understanding i t and o f form ing a ra tio n a l judgm ent as to its effect upon
tracting. his interests.
A person who is usually o f unsound m ind, but occasionally o f sound
m ind, may make a contract when he is o f sound m ind.
A person who is usually o f sound m ind, but occasionally o f unsound
m ind, may not make a contract when he is o f unsound m ind.

Illustrations.

(a) A p a tie n t in a lu n a tic asylum , w h o is a t in te rv a ls o f sound m in d, m ay co n tra ct d u rin g

those in te rv a ls .
( b) A sane m an, w h o is d e lirio u s fro m fever o r w h o is so d ru n k th a t he cannot understand
th e term s o f a c o n tra ct o r fo rm a ra tio n a l ju d g m e n t as to iis effect on h is in te re sts, cannot contract
w h ils t such d e liriu m or drunkenness lasts.

13- Tw o or more persons are said to consent when they agree upon the
C o n sen t
defined. same thing in the same sense.

14. Consent is said to be free when it is not caused by

Free con
sen t de (1) coercion, as defined in section 15, or
fined. ( 2) undue influence, as defined in section 16, or
(3) fraud, as defined in section 17, or
( 4) | m isrepresentation, as defined in section 18, or
( 5) ' mistake, subject to the provisions o f sections 20, 21 and 22.

Consent is said to be so caused when i t w ould n o t have been given but

fo r the existence o f such coercion, undue influence, fraud, m isrepresentation
o r mistake.

15. Coercion is the com m itting, or threatening to com m it, any act fo r
Coercion
defined. bidden by the Penal Code, o r the unlaw ful detaining, o r threatening to detain,
any property, to the prejudice o f any person whatever, w ith the in te n tio n o f
causing any person to enter in to an agreement.
E xplanation . I t is im m aterial whether the Penal Code is or is n o t in
force in the place where the coercion is employed.

Illu stra tio n .

A , on board an E n g lis h s h ip on the h ig h seas, causes B to enter in to an agreem ent by an

a ct a m o u n tin g to c rim in a l in tim id a tio n under the Penal Code.
A a fte rw a rd s sues B for breaeh o f co n tra ct at R angoon.
A has em ployed coercion, a lth o u g h h is act is n o t an offence b y th e la w of E n g la n d , and
a lth o u g h section 506 of the Penal Code w as n o t in force at th e tim e w hen o r p la ce w here th e act
was done.

1 See the Majority Act.

 Contract. 15

16- (7) A contract is said to be induced by undue influence where undue

the relations subsisting between the parties are such that one o f the parties is g^ce
in a po sitio n to dom inate the w ill o f the other and uses th a t position to
obtain an u n fa ir advantage over the other.
( 2) In p a rticu la r and w ith o u t prejudice to the generality o f the foregoing
p rin cip le , a person is deemed to be in a po sitio n to dom inate the w ill o f
another
(a) where he holds a real or apparent a u th o rity over the other, or
where he stands in a fiduciary re la tio n to the o th e r; or
( b ) where he makes a contract w ith a person whose mental capacity is
te m po ra rily or perm anently affected by reason o f age, illness, or
mental or b o d ily distress.
(.?) Where a person, who is in a position to dominate the w ill o f
another, enters in to a contract w ith him , and the transaction appears, on the
face o f i t or on the evidence adduced, to be unconscionable, the burden o f
proving that such contract was not induced by undue influence shall lie upon
the person in a po sition to dominate the w ill o f the other.

N o thin g in this sub-section shall affect the provisions o f section 111 o f

the Evidence A ct.

Illu stra tio n s.

{a) A h a v in g advanced m oney to h is so:i, B, d u rin g his m in o rity , upon B s co m in g o f age

obtains, by misuse o f p a re n ta l influence, a bond fro m B fo r a greater am ount th a n the sum due in
respect of th e advance. A e m p lo ys undue influence.
(6) A, a m an enfeebled by disease o r age, is induced, by B s influence over h im as his
m edical attendant, to agree to pay B an unreasonable sum fo r h is professional services. B
em ploys undue influence.
(c| A, being in d e b t to B, th e m onev-lender o f his v illa g e , contracts a fresh loan on term s
w h ic h appear to be unconscionable. I t lie s on B to p ro ve t h a t the co n tra ct was n o t induced by
undue influence.
(d) A applies to a b a n ke r fo r a loan a t a tim e w h e n there is s trin g e n c y in the m oney
m arke t. T h e b a n k e r declines to m ake th e loan except a t an u n u sua lly h ig h ra te o f in te re s t A
accepts the loan on these term s. T h is is a tran sa ctio n in the o rd in a ry course o f business, and th e
c o n tra c t is n o t in d u ce d b y undue influence.

17. Fraud means and includes any o f the fo llo w in g acts com m itted F ra u d
by a party to a contract, or w ith his connivance, or by his agent,1 w ith in te n t defined,
to deceive another party thereto or his agent, or to induce him to enter into
the c o n tra c t:
( 1) the suggestion, as a fact, o f that which is n o t true, by one who
does n o t believe i t to be true ;
( 2) the active concealment o f a fa ct by one having knowledge o r belief
o f the fa ct ;
(3) a promise made w ith o u t any intention o f perform ing it ;
(4) any other act fitted to deceive;
(5) any such act or omission as the law specially declares to be
fraudulent.

1 Com pare section 238.

 16 Contract.

E xplanation . Mere silence as to facts lik e ly to affect the willingness o f

a person to enter in to a contract is n o t fraud, unless the circumstances o f the
case are such that, regard being had to them, i t is the duty o f the person
keeping silence to speak,1 or unless his silence is, in itse lf, equivalent to
speech.
Illu stra tio n s.
() A sells, by a u ctio n, to B, a horse w h ic h A know s to be unsound. A says n o th in g to B
about th e horse's unsoundness. T h is is n o t fra u d in A.
() B is 4 s d a u g h te r and has ju s t come o f age. Here, the r e la tio n betw een the p a rtie s
w o u ld make i t .4 s d u ty to te ll B i f th e horse is unsound.
(c) B says to A I f you do n o t deny it , I sh a ll assume th a t the horse is sound. A says
n o th in g . H ere, A s silence is equivalent to speech.
id) A and B, be in g tra d e rs, e n te r upon a c o n tra c t. A has p riv a te in fo rm a tio n o f a change
in p ric e s w h ic h w o u ld affect B s w illin g n e s s to proceed w it h the co n tra ct. A is n o t bound to
in fo rm B.

M is re p re 18. M isrepresentation means and includes

s e n ta tio n
defined. ( 1) the positive assertion, in a manner not warranted by the in fo rm a
tio n o f the person m aking it, o f th a t w hich is not true, though
he believes i t to be true ;
( 2) any breach o f duty which, w ith o u t an in te n t to deceive, gains an
advantage to the person com m itting it, or any one claim ing
under him , by m isleading another to his prejudice or to the
prejudice o f any one claim ing under h im ;
(3) causing, however innocently, a party to an agreement to make a
m istake as to the substance o f the thing w hich is the subject o f
the agreement.
V o id a b ility 19. When consent to an agreement is caused by coercion, fraud or
o f a g re e misrepresentation, the agreement is a contract voidable at the option o f the
m ents w it h
o u t free p a rty whose consent was so caused.
consent.
A pa rty to a contract, whose consent was caused by fraud or misrepresenta
tio n , may, i f he th in ks fit, insist that the contract shall be perform ed, and
th a t he shall be p u t in the p o sition in which he w ould have been i f the
representations made had been true.
Exception . I f such consent was caused by misrepresentation or by
silence, fraudulen t w ith in the meaning o f section 17, the contract, nevertheless,
is n o t voidable, i f the party whose consent was so caused had the means o f
discovering the tru th w ith ordinary diligence.
Explanation . A fraud or m isrepresentation w hich did not cause the
consent to a contract o f the party on whom such fraud was practised, or to
whom such misrepresentation was made, does not render a contract voidable.

Illustrations.
(cf) A, in te n d in g to deceive B, fa ls e ly represents th a t five h u n dre d m aunds of in d ig o are
made a n n u a lly at 4 s fa c to ry , a . d th e re b y induces B to b u y the fa c to ry . T he c o n tra c t is voidable
a t th e o p tio n o f B.
(6) A , by a m isre p re se n ta tio n , leads B erro n e o usly to believe th a t five hundred m aunds o f
in d ig o are m ade a n n u a lly at / l s fa c to ry . B exam ines th e accounts of th e fa cto ry, w h ic h show
th a t o n ly fo u r hundred m a u id s of in d ig o have been made. A fte r th is B buys th e fa c to ry . T h e
c o n tra ct is n o t Voidable on account o f -4s m isre p re se n ta tio n .

1 See section 143,

 Contract. 17

(c) A, fra u d u le n tly in fo rm s B th a t 4 s estate is fre e fro m in cu m b ra n ce . B th ereupon

buys th e esta te. T he estate is subject to a m ortgage. B m ay e ith e r avoid th e co n tra ct, o r m ay
in s is t on it s b e in g c a rrie d o u t and th e m oi tg a g e -d e b t redeem ed.
(d) B, h a v in g discovered a ve in o f ore on the estate oi A, adopts means to conceal, and
does conceal, th e existence o f th e ore fr o m A. T h ro u g h 4 s ig n o ra n c e B is enabled to buy th e
estate a t an u n d er-value. T he c o n tra c t is voidable at the o p tio n o f A.
{e> A is e n title d to succeed to an estate a t the death o f B ; B dies ; C, h a vin g received
in te llig e n c e o f B's death, prevents the in te llig e n c e rea ch in g A, and thus induces A to se ll h im his
in te re s t in the e sta te. T he sale is vo id a b le at th e o p tio n o f A.

19A. When consent to an agreement Is caused by undue influence, the Power to set
agreement is a contract voidable at the option o f the party whose consent was aside con
tract induced
so caused. by undue
A n y such contract may be set aside either absolutely or, i f the party who influence.
was entitled to avoid i t has received any benefit thereunder, upon such terms
and conditions as to the C ou rt may seem just.

Illustrations.
(a) i4 s son has forg e d S 's nam e to a p ro m isso ry note- B, under th re a t of p ro se cu tin g A 's
son, o btains a bond fro m A fo r th e a m o u n t o f the fo rg e d note. I f B sues on th is bond, th e C o u rt
m ay set the bond aside.
(6) A, a m on e y-le n d er, advances Rs. 100 to B, an a g ric u ltu ris t, and, b y undue influence,
induces B to execute a bond fo r Rs. 200 w ith in te re st a t 6 per cent, per m o n th . T h e C o u rt m ay
set the bond aside, o rd e rin g B to repay the Rs. 10D w ith such in te re s t as m a y seem ju s t.

20. Where both the parties to an agreement are under a m istake as to a A greem ent
m atter o f fact essential to the agreement, the agreement is void. vo id w h e re
b o th parties
Explanation. A n erroneous o p in io n as to the value o f the thing w hich are u n d e r
form s the subject-m atter o f the agreement is n o t to be deemed a m istake as ^ matter^
to a m atter o f fact. fact.

Illustrations.

() A agrees to sell to B a specific cargo o f goods supposed to be on its w a y fro m E n g la n d

to R angoon. I t tu rn s out th a t, before th e day of th e b a rg a in , th e sh ip co n ve yin g th e cargo had
been cast a w a y a nd the goods lost. N e ith e r p a rty was a w a re o f the facts. T h e agreem ent is
vo id .
() A agrees to bay fro m B a ce rta in horse. I t tu rn s out th a t the horse was dead at th e
tim e o f the b a rg a in , th o u g h n e ith e r p a rty was aw are o f the fa ct. T h e a greem ent is void.
(c) A , being e n title d to an estate fo r the life o f B, agrees to s e ll it to C. B was dead at
the tim e o f the agreem ent, b u t b o th p a rtie s w ere ig n o ra n t o f th e fa ct. T h e agreem ent is v o id .

21. A contract is n o t voidable because it was caused by a m istake as to Effect

any law in force in the U nion o f Burm a ; b u t a mistake as to a law n o t in m istakes
force in the U n io n o f Burm a has the same effect as a m istake o f fa ct. as to ,aw-

Illu stra tio n .

A and B make a contract grounded on th e erroneous belief that a particular debt is barred
by the law of lim itation : the contract is not voidable.

22. A contract is n o t voidable m erely because it was caused by one o f co n tract

the patties to i t being under a mistake as to a m atter o f fact. caused by
m istake of
one party
as to m atter
of fait.

2
 18 C ontract

W h a t co n 23. The consideration or object o f an agreement is la w fu l, unless

siderations
and objects i t is forbidden by law *; or
are la w fu l, is o f such a nature that, i f perm itted, i t w ould defeat the p ro v i
and w h a t
not. sions o f any la w ; o r
is fra u d u le n t; or
involves or im plies in ju ry to the person or property o f a n o th e r; or
the C o u rt regards i t as im m oral, or opposed to pu b lic p o licy.
In each o f these cases, the consideration o r object o f an agreement is
said to be un la w fu l. E very agreement o f w hich the object or consideration
is unlaw ful is void.

Illustrations.

la) A agrees to s e ll h is house to B fo r 10,000 rupees. H e re Ss p ro m ise to pay he sum o f

10,000 rupees is th e co n sid e ra tio n fo r A 's prom ise to se ll the house, and 4 s p ro m ise to se ll the
house is the co n sid e ra tio n fo r B s prom ise to pay th e 10,000 rupees. These are la w fu l co n sid e ra
tio n s .
(6) A prom ises to pay B 1,000 rupees at the end of six m onths, i f C, w h o owes th a t sum to
B , fa ils to pay i t B prom ises to g ra n t tim e to C a c c o rd in g ly . H ere th e p ro m ise o f each p a rty is
the co n s id e ra tio n fo r the p ro m ise o f the o th e r p a rty a n d th e y are la w fu l considerations
(c) A prom ises, fo r a ce rta in sum p a id to h im b y B , to m ake good to B th e value o f his
sh ip i f i t is w re cked on a c e rta in voyage. H e re ^4s p ro m ise is the co n sid e ra tio n fo r B s paym ent
and B s p a ym e n t is the co n sid e ra tio n fo r /4s p ro m ise and these are la w fu l co n sid e ra tio n s.
(d.) A prom ises to m a in ta in B s c h ild and B prom ises to pay A 1,000 rupees y e a rly fo r the
purpose. H ere the p ro m ise o f each p a rty is the co n sid e ra tio n fo r the p ro m ise o l the o th er p a rty .
T h e y are la w fu l considerations.
() A , B And C e n te r in to an agreem ent fo r the d iv is io n am ong th e m o f g a in s acquired, o r
to be acq u ire d , b y th e m by fra u d . T h e agre e m e nt is v o id , as its o b je ct is u n la w fu l.
( / ) A prom ises to o b tain fo r B an e m p lo ym e n t in the p u b lic service, and B p ro m ise s to
pay 1,000 rupees to A . T h e agreem ent is vo id , as the co n sid e ra tio n fo r it is u n la w fu l
{g) A. b e in g agent fo r a landed p ro p rie to r, agrees f o r m oney, w ith o u t the kn o w le d g e o*
h is p rin c ip a l, to o b ta in fo r B a lease o f la n d b e lo n g in g to h is p rin c ip a l. T h e agreem ent betw een
A and B is v o id , as it im p lie s a fra u d , b y concealm ent b y A , on h is p rin c ip a l.
(It) A prom ises B to d ro p a prosecution w h ic h he has in s titu te d pgainst B fo r rob b e ry, and
B prom ises to restore the value o f (he th in g s taken. T he agreem ent is v o id , as its ob je ct is
u n la w fu l.
() A fs estate is sold fo r arrears o f revenue u n d er the p ro visio n s o f an A c t o f the L e g is
la tu re , by w h ic h th e d e fa u lte r is p ro h ib ite d fro m p u rch a sin g th e estate. B, upon an u n derstand
in g w it h A, becomes the purchaser, and agrees to convey the estate to A upon re ce ivin g fro m h im
th e p rice w h ic h B has paid. T h e a greem ent is v o id , as it renders th e tra n sa ctio n , in effect, a
purchase b y the d e fa u lte r, and w o u ld so defeat the o b je ct o f the la w .
(j) A, w h o is B s pleader, prom ises to exercise his influence, as such, w ith B in fa vo ur o f
C, and C prom ises to pay 1,000 rupees to A . T h e agreem ent is v o id , because i t is im m o ra l.
( t) A agrees to le t her d a u gh te r to h ire to B fo r concubinage. T h e agreem ent is vo id ,
because i t is im m o ra l, th o u g h the le ttin g m ay n o t be p u n ish ab le u n d e r the Penal Code.

V oid Agreements.
Agreem ents
24. I f any p a rt o f a single consideration fo r one o r more objects, o r any
v o id , if con one or any p a rt o f any one o f several considerations fo r a single object, is
sid e ra tio n s
a n d objects
unla w fu l, the agreement is void.
u n la w fu l in
part. Illustration.
A prom ises to su p e rin te n d , on b e h a lf o f B, a le g a l m a n u fa ctu re o f in d ig o , and an ille g a l
tra ffic in other a rtic le s . B prom ises to pay to A a sa la ry o f 10,0J0 rupees a ye a r. T h e agreem ent
is void, the object o f A 's prom ise and the co nsideration fo r B s prom ise b e in g in p a rt u n la w fu l.

1 See sections 26,27, 28 and 30,

 Contract 19

25. A n agreement made w ith o u t consideration is void, unless A g rce m eit

w ithout con-
( 1) it is expressed in w ritin g and registered under the law fo r the tim e si deration
being in force fo r the registration o f documents, and is made void,
u n less it i s
on account o f natural love and affection between parties in w riting
standing in a near relation to each other ; or unless and register
ed, or is a
( 2) i t is a prom ise to compensate, w h o lly or in part, a person who prom ise to
has already v o lu n ta rily done something fo r the prom isor, or coir.pensate
for some
something w hich the prom isor was legally compellable to do, thing done,
or unless or is a pro
m ise to pay
(3) i t is a prom ise, made in w ritin g and signed by the person to be a debt barred
charged therew ith, or by his agent generally or specially by lim itation
law.
authorized in that behalf, to pay w h o lly or in p a rt a debt o f
w hich the cre d ito r m ig ht have enforced payment b u t fo r the law
fo r the lim ita tio n o f suits.
In any o f these cases, such an agreement is a contract.
Explanation 1.__N o th in g in this section shall affect the v a lid ity , as
between the donor and donee, o f any g if t actually made.
Explanation 2 A n agreement to w hich the consent o f the prom isor is
freely given is n o t v o id merely because the consideration is inadequate ; but
the inadequacy o f the consideration may be taken in to account by the C o u rt
in determ ining the question whether the consent o f the p ro m iso r was freely
given.
Illustrations.
(a) A prom ises, fo r no co n sid e ra tio n , to give to B Rs. 1,003. T h is is a vo id agreem ent.
(6) A, fo r n a tu ra l love and a ffe ction , prom ises to g ive h is son, B , Rs. 1,000. A puts
his prom ise to B in to w r it in g and registers it . T h is is a co n tra ct.
(c) A finds B s purse and gives i t to h im . B prom ises to g iv e A Rs. 50. T h is is a co n tra ct.
(rf) A supports f l s in fa n t son. B prom ises to pay A's expenses in s o d o in g . T h is is a co n tra ct.
|e) A owes B Rs. 1000, b u t the debt is b a rre d by the L im ita tio n Act. A signs a w ritte n
prom ise to pay B Rs. 500 on account o f th e deb t. T h is is a contract.
If) A agrees to se ll a horse w o rth Rs. 1,000 fo r Rs. 10. 4 s consent to the agreem ent
was fre e ly given. T h e agreem ent is a c o n tra c t n o tw ith s ta n d in g the inadequacy of th e c o n s id e ra tio n .
(g) A agrees to se ll a horse w o rth Rs. 1,000 fo r Rs. 10. A denies th a t his consent to
the agreem ent was fre e ly given. T h e inadequacy o f the considferation is a fa c t w h ic h the Court
should take in to account in co n sid e rin g w h e th e r o r n o t /4s consent was fre e ly g ive n .

26. E very agreement in re stra in t o f the m arriage o f any person, other Agreement
than a m in or, is void. in restrain t
of m arriage
void.
27. Every agreement by w hich any one is restrained fro m exercising a Agreement
law ful profession, trade o r business o f any k in d is to that extent void- in restraint
of trade
void.
Exception I. __One who sells the g o od -w ill o f a business may agree w ith Saving of
the buyer to re fra in fro m carrying on a s im ila r business, w ith in specified agreem ent
not to carry
local lim its , so long as the buyer, or any person deriving title to the good on business
w ill from him , carries on a lik e business therein : Provided th a t such lim its of w hich
good-w ill is
appear to the C o u rt reasonable, regard being had to the nature o f the sold.
business.
Exceptions 2 & 3 __ * * * *
 20 Contract.

Agreem ents 28. E very agreement by w hich any p a rty thereto is restricted absolutely
in re s tra in t fro m enforcing his rights under or in respect o f any contract, by the usual
o f le g a l pro
ceedings legal proceedings in the o rd in ary tribunals, o r which lim its the tim e w ith in
v o id . w hich he may thus enforce his rights, is void to th a t extent.
Saving o f Exception 1. T h is section shall not render ille g a l a contract by which
c o n tra c t to
re fe r to
two or more persons agree th a t any dispute w hich may arise between them
a rb itra tio n in respect o f any subject o r class o f subject shall be referred to a rb itra tio n ,
d is p u te th a t
and that o nly the am ount awarded in such a rb itra tio n shall be recoverable
m a y a rise.
in respect o f the dispute so referred.
S u its barred 1 When such a contract has been m ade, a suit may be brought for its
by such
contracts. specific performance, and if a suit, other than for such specific performance, or
for the recovery o f the amount so awarded, is brought b y one party to such
contract against any other such party in respect of any subject which they
have so agreed to refer, the existence of such contract shall be a bar to the suit.
Saving o f Exception 2 N o r shall th is section render ille g a l any contract in
c o n tra c t to
re fe r w ritin g by w hich tw o or m ore persons agree to refer to a rb itra tio n any
questions question between them w hich has already arisen, or affect any p rovision o f
th a t have
a lre a d y any law in force fo r the tim e being as to references to a rb itra tio n .
arisen.

Agreem ents 29. Agreements the meaning o f w hich is not certain, o r capable o f being
v o id f o r
u n c e rta in ty . made certain, are void.

Illustrations.

{a) A agrees to sell to B a hundred tons o f o il. T h e re is n o th in g w hatever to sh o w

w h a t k in d o f o il w as intended. T h e agreem ent is vo id fo r u n ce rta in ty.
(b) A agrees to sell to B one hundred tons o f o il o f a specified d e scrip tio n , k n o w n as an
a rtic le of com m erce. T h e re is no u n ce rta in ty here to make the agreem ent vo id
(cl A, w h o is a dealer in cocoanut-oil o n ly , agrees to se ll to B one hu n dre d tons o f o il.
T h e n ature o f A s trade affords an in d ic a tio n o f the m eaning o f the w o rd s, and A has entered
in to a co n tra ct fo r the sale o f one hundred tons o f cocoanut-oil.
(d) A agrees to s e ll B a ll the g ra in in m y g ra n a ry a t P r o m e . T h e re is no u n ce rta in ty
here to m ake the a greem ent void.
(f) A agrees to se ll to B one thousand m aunds o f ric e at a p ric e to be fixed b y C. " As
the p ric e is capable o f being m ade certain, there is no u n ce rta in ty here to make th e agreem ent
void.
if) A agrees to sell to B m y w h ite horse fo r rupees five hundred o r rupees one
thousand. T h e re is n o th in g to show w h ic h o f the tw o prices was to be g ive n . T h e agreem ent
is vo id .

Agreem ents 30. Agreements by way o f wager are void ; and no suit shall be brought
b y way o f
w a g e r vo id .
fo r recovering anything alleged to be won on any wager, or entrusted to any
person to abide the result o f any game or other uncertain event on which
any wager is made.
E x c e p tio n in T his section shall not be deemed to render unlaw ful a subscription or
fa v o u r o f
ce rta in p rizes
c o n trib utio n , o r agreement to subscribe or contribute, made or entered in to
fo r h o rse - fo r or tow ard any plate, prize or sum o f money, o f the value or am ount o f
racing .

1 T h is clause w a s repealed by th e Specific R e lie f Act, 1877 (In d ia A ct I , 1877), th ro u g h o u t

In d ia o r Pakistan in c lu d in g the U n io n o f B u rm a . T h e clause is, how e ve r, p rin te d here in ita lic s ,
because i t is operative in areas, i f any, w h e re th e C o n tra ct A c t is in fo rce and lo w h ic h the
Specific R e lie f A c t has n o t been app lie d ,
 Contract. 2l

five hundred rupees or upwards, to be awarded to the w inner or winners o f

any horse race . 1
N o th in g in this section shall be deemed to legalize any transaction Section 294A
o f th e Penal
connected w ith horse-racing to w hich the provisions o f section 294A o f the Code not
Penal Code apply. affected.

CHAPTER III.

O f C o n t in g e n t C o ntracts-

31. A contingent contract is a contract to do o r not to do something C o n tin g en t

c o n tra c t
i f some event, collateral to such contract, does or does n o t happen- defined.

Illu stra tio n .

A contracts to pay B Rs. 10,000 i f B s house is b u rn t. T h is is a c o n tin g e n t contract,

32. C ontingent contracts to do or not to do anything i f an uncertain E n fo rce m e n t

o f co n tra cts
fu tu re event happens cannot be enforced by law unless and u n til th a t event c o n tin g e n t
has happened. on an event
ha ppening.
I f the event becomes im possible, such contracts become void.

Illustrations.

() A makes a c o n tra c t w ith B to b u y B s horse i f A survives C. T h is co n tra ct cannot

be e n forced b y la w unless and u n til C dies in 4 s life tim e .
() A makes a co n tra ct w ith B to se ll a horse to B at a specified price, i f C, to w h o m the
horse has been offered, refuses to buy h im T h e co n tra ct cannot be enforced b y la w unless and
u n til C refuses to b u y the horse.
{c) A c o n tra cts to p a y B a sum of m oney w h e n B m arries C. C dies w ith o u t be in g m a rrie d
to B. T h e co n tra ct becomes vo id .

33. C ontingent contracts to do or not to do anything i f an uncertain E n fo rce m e n t

o f co n tra cts
fu tu re event does n o t happen can be enforced when the happening o f that co n tin g e n t
event becomes im possible, and n o t before. on an event
n o t happen
in g .

Illu stratio n .

A agrees to pay B a sum o f m oney i f a ce rta in sh ip does n o t re tu rn . T h e sh ip is sunk.

The co n tra ct can be e n fo rc e d w h e n the sh ip sinks.

34. I f the fu tu re event on w hich a contract is contingent is the way in W h e n event

on w h ic h
which a person w ill act at an unspecified tim e, the event shall be considered co n tra ct is
to become im possible when such person does anything w hich renders it co n tin ge n t to
be deemed
im possible th a t he should so act w ith in any definite tim e, o r otherwise than im p o ssib le , i f
under fu rth e r contingencies. i t is the
fu tu re con
duct o f a
Illu stra tio n . liv in g person.
A agrees to pay B a sum o f m on e y i f B m a rrie s C.
C m a rrie s D . T h e m a rria g e o f B to C m ust n o w be considered im p o ssib le , a lth o ug h
i t is possible th a t D m ay d ie and th a t C m a y a fte rw a rd s m a rry B.

1 C f. th e G am ing A c t, 1845 (8 and 9 V ie t. c. 109), section 108.

 22 Contract.

W h e n con 35. C ontingent contracts to do or n o t to do anything i f a specified

tracts become
v o id w h ic h
uncertain event happens w ith in a fixed tim e become void if, at the expira
are c o n tin tio n o f the tim e fixed, such event has not happened, or if , before the tim e
gent on
h appening c f
fixed, such event becomes im possible.
specified
event w ith in
fixed tim e

W h e n con C ontingent contracts to do or n o t to do anything i f a specified uncer

tra c ts may be
enforced
tain event does n o t happen w ith in a fixed tim e may be enforced by law when
w h ic h are the tim e fixed has expired and such event has n o t happened or, before the
c o n tin g e n t
on specified
tim e fixed has expired, i f i t becomes certain that such event w ill n o t happen.
event n o t
h a p pe n in g Illustrations.
w ith in fixed
tim e. (a) A prom ises to pay B a sum of m on e y i f a ce rta in sh ip returns w it h in a year. T he
c o n tra c t m a y be e n forced i f the s h ip re tu rn s w ith in the year, and becom es vo id i f th e sh ip is
b u rn t w ith in the year.
(b) A prom ises to pay B a sum o f m oney i f a ce rta in sh ip does n o t re tu rn w ith in a
year. T h e co n tra ct m ay be enforced i f the sh ip does n o t re tu rn w ith in the year, o r is b u rn t
w ith in the ye a r.

Agreem ent 36. C ontingent agreements to do or n o t to do anything, i f an impossible

c o n tin g e n t
on im possible
event happens, are void, whether the im p o s s ib ility o f the event is know n or
events v o id n ot to the parties to the agreement at the tim e when it is made.

Illu st rations.
(a) A agrees to pay B 1,000 rupees i f tw o s tra ig h t lin e s s h o u ld enclose a space. T h e
agreem ent is vo id .
(b) A agrees to pay B 1,000 rupees i f B w ill m a rry A 's d a u g h te r C. C w as dead at the
tim e o f the agreem ent. T he agree n e n t is v o id .

CHAPTER IV .

O f the P erfo rm ance of C ontracts.

Contracts which must be perform ed.

O b lig a tio n o f 37. The parties to a contract must either perform , or offer to perform ,
p a rtie s to
contracts.
th e ir respective promises, unless such performance is dispensed w ith or
excused under the provisions o f this A ct, or o f any other law.
Promises bind the representatives o f the prom isors in case o f the death
o f such prom isors before performance, unless a contrary intention appears
fro m the contract.

Illustrations.

() A prom ises to d e liv e r goods to B on a ce rta in d a y o n paym ent o f Rs. 1,000. A

dies b e fore th a t day. A s representatives are b o und to d e liv e r the goods to B, a nd B is bound
to pay the Rs. 1,000 to .4s representatives.
() A prom ises to p a in t a p ic tu re f o r B by a ce rta in day, a t a ce rta in price. A dies
before the day. T h e c o n tra ct cannot be e nforced e ith e r by i4 s representatives or by B.
 Contract.

38. W here a p rom isor has made an offer o f perform ance to Ethe
ffe ct o f
refu sa l to
promisee, and the offer has n o t been accepted, the prom isor is n o t respon accept offer
sible fo r non-perform ance, no r does he thereby lose his rights under the o f p e r
fo rm a n ce .
contract-
Every such offer must fu lfil the fo llo w in g conditions :
( 1) i t m ust be u n c o n d itio n a l;
( 2) i t m ust be made at a proper tim e and place, and under such
circumstances, th a t the person to whom it is made may have a
reasonable o p p o rtu n ity o f ascertaining th a t the person by whom
i t is made is able and w illin g there and then to do the whole
o f w hat he is bound by his promise to d o ;
(3) i f the offer is an offer to deliver anything to the promisee, the p ro
misee must have a reasonable opportun ity o f seeing that the
thing offered is the thin g w hich the prom isor is bound by his
promise to deliver-
A n offer to one o f several jo in t promisees has the same legal conse
quences as an offer to a ll o f them.

Illustration.

A contracts to d e liv e r to B at h is warehouse, on the fir s t o f M a rch , 100 bales o f co tto n o f

a p a rtic u la r q u a lity. I n o rd e r to m ake an o ffe r o f a p e rfo rm a n ce w ith the effect stated in th is
se ctio n , A m ust b rin g the co tto n to B s w arehouse on the a p p o in te d day, undejr such c irc u m
stances th a t B m ay have a reasonable o p p o rtu n ity o f s a tis fy in g h im s e lf th a t th e th in g offered is
co tto n o f the q u a lity con tra cte d fo r, a n d th a t th e re are 100 bales.

39- W hen a party to a contract has refused to perform , o r disabled hEim

ffe ct o f re
self fro m perform ing, his prom ise in its entirety, the promisee may p u t an fu sa l o f p a rty
to p e rfo rm
end to the contract, unless he has signified, by words o r conduct, his acquies prom ise
w h o lly .
cence in its continuance.

Illustrations.
() A, a sin g e r, enters in to a c o n tra ct w ith B , the m anager o f a th e a tre , to sing a t his
th e atre tw o n ig h ts in every w eek d u rin g the next tw o m onths, and B engages to p a y h e r 100
rupees fo r each n ig h ts perform ance. O n th e sixth n ig h t A w ilf u lly absents h e rs e lf fro m the
th e atre . B is at lib e rty to p u t an end to the co n tra ct.
() A, a singer, enters in to a co n tra ct w ith B, the m a n a g e r o f a theatre, to sing at h is theatre
tw o n ig h ts in every w e e k d u rin g the n e xt tw o m on th s, and B engages to pay h e r at the rate o f 100
rupees fo r each n ig h t. O n the sixth n ig h t A w ilf u lly absents h erself. W ith the assent o f B , A
sings on the seventh n ig h t. B has s ig n ifie d his acquiescence in the continuance o f the co n tra ct,
and ca n n ot n o w p u t an end to it, b u t is e n title d to com pensation fo r the dam age sustained by h im
th ro u g h i l s fa ilu re to sin g on the s ix th n ig h t.

B y whom Contracts must be perform ed .

40- I f i t appears fro m the nature o f the case th a t i t was the in te n tio n o f by
Person
w h o m p ro
the parties to any contract th a t any promise contained in it should be p e rfo r m ise is to be
med by the prom isor him self, such promise must be perform ed by the p e rfo rm e d .
prom isor. In other cases, the prom isor or his representatives may em ploy a
com petent person to p e rfo rm it.
 24 Contract.

Illustrations.
() A prom ises to pay B a sum o f m oney. A m ay p e rfo rm this p ro m ise e ith e r b y p e rs o n a lly
p a y in g the m oney to B or b y causing it to be p a id to B b y another ; and, if A dies before the tim e
appointed fo r paym ent, his representatives m ust p e rfo rm the prom ise, o r e m p lo y some p ro p e r
person to do so.
() A prom ises to p a in t a p ictu re fo r B . A m ust p e rfo rm th is p ro m ise p e rso n a lly.

E ffe ct o f ac 41. W hen a promisee accepts performance o f the promise fro m a th ird
ce p tin g per
form ance person, he cannot afterwards enforce i t against the prom isor.
fro m th ird
person.
D e v o lu tio n 42. W hen tw o or more persons have made a jo in t promise, then, unless
o f jo in t
lia b ilitie s . a contrary in te n tio n appears by the contract, a ll such persons during th e ir
jo in t lives, and after the death o f any o f them his representative jo in tly w ith
the survivor or survivors, and after the death o f the last survivor the represen
tatives o f a ll jo in tly , must fu lfil the promise.

A n y one o f 43. W hen two or more persons make a jo in t prom ise, the promisee may,
jo in t p ro
m iso rs m ay in the absence o f express agreement to the contrary, compel any one o r more
be c o m p e lle d o f such jo in t prom isors to perform the whole o f the promise.
t j p e rfo rm .

E a ch p ro Each o f two or more jo in t prom isors may compel every other jo in t

m is o r n>ay prom isor to contribute equally w ith him self to the performance o f the prom ise,
com pel c o n
trib u tio n . unless a contrary in te n tio n appears fro m the contract-
S h a rin g of I f any one o f tw o or more jo in t prom isors makes d e fault in such con
loss b y de
trib u tio n , the rem aining jo in t prom isors must bear the loss arising fro m such
fa u lt in
c o n trib u tio n . d e fa ult in equal shares.
Explanation. N o th in g in this section shall prevent a surety fro m
recovering fro m his p rin c ip a l payments made by the surety on behalf o f the
p rin cip a l, or entitle the p rin c ip a l to recover anything fro m the surety on
account of payments made by the p rin cip a l.

Illustrations.

() A ,B and C jo in tly p ro m is to pay D 3,000 ru p e e s.1 D m ay com pel e ith e r A o r B o r C to

pay h im 3,000 rupees.
() A , B and C jo in tly prom ise to pay D the su m o f 3,0C0 rupees. C is co m p e lle d to pay the
w h o le . A is in s o lv e n t, b u t his assets are su fficie n t to pay o n e -h a lf o f his debts. C is e n title d to
receive 500 rupees fr o m 4 s estate, and 1,250 rupees fro m B.
(c) A. B and C are u n d er a jo in t p ro m ise to pay D 3,000 rupees. C is unable to pay a n y th in g ,
and .4 is co m p e lle d to pay the w h o le . A is e n title d to receive 1,500 rupees Iro m B.
' (A) A, B and C are under a jo in t prom ise to pay D 3,000 rupees, A and B b e in g o n ly' sureties
fo r C. C fa ils to pay. A and B are com pelled to pay the w h o le sum. T he y a re e n title d to
recover i t fro m C.

E ffe c t o f re 44. Where tw o or more persons have made a jo in t promise, a release of

lease o f one one o f such jo in t prom isors by the promisee does n o t discharge the other jo in t
jo in t p ro
m iso r. prom isor or jo in t prom isors ; neither does i t free the jo in t prom isors so
released fro m responsibility to the other jo in t prom isor or jo in t prom isors -1

1 See section 138.

 C ontract 25

45. W hen a person has made a promise to tw o o r more persons jo in tly , Devolution of
then, unless a contrary in te n tio n appears fro m the contract, the rig h t to claim joint rights.
perform ance rests, as between him and them, w ith them during th e ir jo in t
lives, and a fte r the death o f any o f them w ith the representative o f such
deceased person jo in tly w ith the survivor or survivors, and after the death o f
the last survivor w ith the representatives o f a ll jo in tly -1

Illustration.
A, in co n sid e ra tio n o f 5,030 rupees le n t to h im b y B and C, prom ises B and C jo in tly to repay
them th a t sum w ith in te re s t on a day specified. B dies. T h e r ig h t to c la im p e rfo rm a n ce rests
w ith B s representative jo in tly w ith C d u rin g C s life , arid a fte r the death o f C w ith the represen
tatives o f B and C jo in tly .

Tim e and Place for Performance.

46. W here, b y the contra ct, a prom isor is to perform his prom ise w ith T im e fo r per
form ance o f
o u t applicatio n by the prom isee, and n o tim e fo r perform ance is specified, prom ise
the engagement m ust be perform ed w ith in a reasonable tim e. w here no ap
p lic a tio n is
Explanation . The question w hat is a reasonable tim e is, in each to be made
and no tim e
p a rtic u la r case, a question o f fact. is specified.

47. W hen a promise is to be perform ed on a certain day, and the, p ro T im e and

place fo r p e r
m isor has undertaken to perform i t w ith o u t application by the promisee, the form ance o f
prom isor may perform i t a t any tim e during the usual, hours o f business on p ro m ise
w here tim e
such day and a t the place at w hich the prom ise ought to be perform ed. is specified
and n o a p p li
Illu stra tio n . cation to be
A prom ises to d e liv e r goods a t B s warehouse on th e fir s t o f January. O n th a t day A b rin g s made.
th e goods to B s w arehouse, b u t a fte r th e usual h o u r fo r c lo s in g it , a nd th e y a re n o t received.
A has n o t p e rfo rm e d his p ro m ise .

48. W hen a prom ise is to be perform ed on a certain day, and the p ro A p p lic a tio n
m isor has n o t undertaken to p erform i t w ith o u t applicatio n by the promisee, fo r p e rfo rm
ance on cer
i t is the duty o f the promisee to apply fo r perform ance at a proper place and ta in day to
w ith in the usual hours o f business. be a t p ro p e r
tim e and
Explanation The question w hat is a proper tim e and place is, in place.
each p a rtic u la r case, a question o f fact.

49. When a prom ise is to be perform ed w ith o u t a p p lica tio n by the p ro Place fo r p e r
misee, and no place is fixed fo r the perform ance o f it, i t is the duty o f the fo rm a n ce o f
p ro m ise
pro m iso r to a pply to the promisee to appoin t a reasonable place fo r the w h e re no
performance o f the prom ise, and to perform it at such place. a p p lica tio n to
be made and
n o place
fix e d fo r
Illu stra tio n , perform ance.
A undertakes to d e liv e r a th o usa n d m aunds o f ju te to B on a fixed day. A m ust a p p ly to B to
a p p o in t a reasonable p la c e f o r th e purpose o f re c e iv in g it, and m ust d e liv e r i t to h im at such
p la c e .

1 F o r an exce p tion to le c tio n 45 in th e case of G overnm ent securities, see section 4 o f the
G overnm ent Securities A ct.
 26 Contract.

P e rfo rm a n ce 50. The perform ance o f any prom ise may be made in any manner, o r at
in m anner or any tim e, w hich the promisee prescribes o r sanctions.
at tim e
p re scrib e d or
sanctioned by Illustrations.
prom isee. () B ow es A 2,000 rupees A desires B to pay the a m o u n t to .ds a cco u nt w ith C> a banker.
B , w h o also banks w ith C, orders th e a m ount to be tra n s fe rre d fro m h is account to j4's c re d it,
a nd th is is done by C. A fte rw a rd s , and be fore A k n o w s o f the tra n s fe r, C fa ils . T h e re has been
a good paym ent by B
() A and B are m u tu a lly in d e b te d . A and B settle an account b y se ttin g off one ite m against
an o th e r, and B pays A the balance fo u nd to be due fro m h im upon such se ttle m e n t. T h is am ounts
to a paym ent b y A and B , re sp e ctive ly, o f th e sums w h ic h th e y ow e d to each o th e r.
(c) A owes B 2,000 rupees. B accepts some o f A s goods in re d u ctio n o f the debt. The
d e liv e ry o f the goods operates as a p a rt paym ent.
(d) A desires B, w h o owes h im Rs. 100, to send h im a n o te fo r Rs. 100 b y post. T h e d e b t is
discharged as soon as B puts in to the post a le tte r c o n ta in in g the note d u ly addressed to A.

Performance of Reciprocal Promises

P ro m is o r n o t 51. W hen a contract consists o f reciprocal promises to be sim ultaneously
bound to p e r perform ed, no p ro m iso r need perform his prom ise unless the promisee is
fo rm unless
re c ip ro c a l ready and w illin g to perform his reciprocal prom ise.
pro m ise e
rea d y and
Illustrations.
w illin g to
p e rfo rm . () A and B c o n tra ct th a t A sh a ll d e liv e r goods to B to be p a id f o r b y B on d e live ry.
A need n o t d e liv e r the goods unless B is rea d y and w illin g to p a y fo r th e goods on d e liv e ry .
B need n o t pay fo r th e goods unless A is rea d y and w illin g to d e liv e r th e m on paym ent.
() A a n d B c o n tra ct th a t A s h a ll d e liv e r goods to B a t a p ric e to be p a id b y in sta lm e n ts, th e
firs t in s ta lm e n t to be p a id on d e live ry.
A need n o t d e liv e r unless B is re a d y and w illin g to pay the fir s t in s ta lm e n t on d e liv e ry .
B need n o t pay the firs t in s ta lm e n t unless A is ready and w illi n g to d e live r th e goods on
p aym ent o f th e firs t in sta lm e n t.

O rd e r o f p e r 52. Where the order in w hich reciprocal promises are to be perform ed

fo rm a n ce of is expressly fixed by the contract, they shall be perform ed in that o rd e r; and,
re c ip ro c a l
prom ises. where the order is n o t expressly fixed by the contract, they shall be perform ed
in th a t order w hich the nature o f the transaction requires.

Illu stra tio n s.

() A and B co n tra ct th a t A sh a ll b u ild a house fo i B a t a fixed p ric e . A 's prom ise to b u ild
the house m ust be p e rfo rm e d before B s p ro m ise to p a y fo r it.
() A and B c o n tra ct th a t A s h a ll m ake over h is sto ck-in -tra d e to B a t a fixed p ric e , and B
prom ises to g ive s e c u rity f o r th e p aym ent o f the m oney. ./Ts prom ise need n o t be perfo rm e d u n til
the s e cu rity is g ive n , fo r th e nature o f the tra n sa ctio n req u ire s th a t A should have s e c u rity b efore
he d e live rs up his stock.

L ia b ilit y o f 53. W hen a contract contains reciprocal promises, and one party to the
p a rty p re contract prevents the other fro m perform ing his prom ise, the contract be
v e n tin g
event on comes voidable at the o p tio n o f the party so prevented; and he is entitled to
w h ic h the com pensation 1 fro m the other p a rty fo r any loss w hich he may sustain in
c o n tra c t is to
ta ke effect. consequence o f the non-perform ance o f the contract.

Illu stra tio n .

A and B c o n tra c t th a t B sh a ll execute c e rta in w o rk fo r A fo r a tho usa n d rupees. B is ready
and w illin g to execute th e w o rk a c c o rd in g ly , b u t A prevents h im fro m d o in g so. T h e co n tra ct is
v o id a b le a t th e o p tio n o f B ; and, i f he elects to re scin d it, he is e n title d to recover fro m A com
pensation fo r any loss w h ic h he has in c u rre d by its n o n -perform ance.

1 See section 73.

 Contract- 27

54. W hen a contract consists o f reciprocal promises, such th a t one o f E ffe ct o f de

fa u lt as to
them cannot be perform ed or th a t its performance cannot be claim ed t i l l the th a t p ro m is e
other has been perform ed and the prom isor o f the promise last m entioned w h ic h s h o u ld
be fir s t p e r
fa ils to perfo rm it, such prom isor cannot claim the performance o f the fo rm e d , in
reciprocal prom ise, and m ust make compensation to the other party to the co n tra ct con
sistin g o f
contract fo r any loss w hich such other p a rty may sustain by the non-perfor-
r e c ip ro c a l
mance o f the contract- prom ises.

Illustrations.
() A h ire s B s sh ip t >take in and convey, fro m Rangoon to C alcutta, a cargo to be p ro vid e d
b y A , B re c e iv in g a ce rta in fr e ig h t fo r its conveyance A does n o t p ro vid e any cargo fo r the
s h ip A ca n n ot c la im the perform ance o f B's prom ise, ana m ust m ake com pensation to B fo r the
loss w h ic h B sustains b y the n o n -p e rfo rm a n ce o f th e c o n tra c t.
() A c o n tra cts w ith B to execute ce rta in b u ild e rs w o r k fo r a fixe d p ric e , B s u p p ly in g the
scaffolding and tim b e r necessary fo r the w o rk . B refuses to fu rn is h a n y sc a ffo ld in g o r tim b e r,
and th e w o rk cannot be executed. A need not execute the w o rk , and B is bound to m ake com
pensation to A fo r any loss caused to h im b y the n o n -perform ance o f the contract.
(c) A co n tra cts w ith B to d e liv e r to h im , a t a specified p rice , ce rta in m erchandise on b o a rd a
ship w h ic h cannot a rriv e fo r a m o n th , and B engages to pay fo r the m erchandise w ith in a week
fro m the date o f the c o n tra ct. B does n o t pay w ith in th e week. A s p ro m ise to d e liv e r need n o t
be p e rfo rm e d , and B m ust m ake com pensation.
(dl A prom ises B to sell h im one hu n dre d bales o f m erchandise, to be d e live re d next day,
and B prom ises A to pay fo r them w ith in a m onth. A does n o t d e liv e r a cco rd in g to his prom ise.
B s p ro m ise to pay need n o t be p e rfo rm e d , and A m ust m ake com pensation.

55. W hen a party to a contract promises to do a certain thing at or E ffe c t of

fa ilu re to
before a specified tim e, or certain things at or before specified times, and p e rfo rm at
fa ils to do any such th in g at o r before the specified tim e, the contract, or so fix e d tim e
in contract
much o f i t as has not been perform ed, becomes voidable at the option in w h ic h
o f the promisee, i f the inte ntio n o f the parties was that tim e should be o f tim e is
essential.
the essence o f the contract.
I f i t was n o t the in ten tion o f the parties th a t tim e should be o f the E ffe c t of
such fa ilu re
essence o f the contract, the contract does not become voidable by the fa ilu re w h e n tim e is
to do such th in g at or before the specified tim e ; b u t the promisee is entitled n o t essential.
to compensation fro m the prom isor fo r any loss occasioned to h im by such
fa ilu re .

I f , in case o f a contract voidable on account o f the prom isors fa ilu re to E ffe ct o f

perform his prom ise at the tim e agreed, the promisee accepts perform ance acceptance of
perform ance
o f such prom ise at any tim e other than th a t agreed, the promisee cannot claim a t tim e other
compensation fo r any loss occasioned by the non-performance o f the promise than that
agreed upon.
at the tim e agreed, unless, at the tim e o f such acceptance he gives notice to
the prom isor o f his in te n tio n to do so .1

56. A n agreement to do an act im possible in itse lf is void. A greem ent

to do im pos
sible act.
A contract to do an act which, after the contract is made, becomes Contract to
impossible, or, by reason o f some event w hich the prom isor could not prevent, do act
a fte rw a rd s
u n la w fu l, becomes v o id when the act becomes impossible or u n la w fu l .2 becom ing
im possible or
u n la w fu l.
1 C om pare sections 62 and 63.
2 See se c tio n 65 o f th is A c t and se ctio n 13 o f the S pecific R e lie f A c t.
 28 Contract.

Com pensa- W here one person has prom ised to do something w hich he knew, Or, w ith
throuofTnon- reasonable diligence, m ig h t have known, and w hich the promisee did n o t know,
p e rfo rm a n ce to be impossible or un la w fu l, such prom isor must make compensation to
to be im p o s t suc^ promisee fo r any loss which such promisee sustains through the non-
s ib le o r u n - perform ance o f the prom ise,
la w fu l.
Illustrations.
[) A agrees w ith B to discover treasure b y m ag ic. T h e agre e m e nt is vo id .
() A and B co n tra ct to m a rry each o th e r. Before the tim e fixed fo r th e m a rria g e , A goes
m ad. T h e co n tra ct becomes vo id .
(c) A contracts to m a rry B, b e in g a lready m a rrie d to C, and be in g fo rb id d e n b y the la w to
w h ic h he is subject to practise p o lyg a m y. A m ust m ake com pensation to B fo r th e loss caused
to h e r b y th e n o n -p e rfo rm an ce o f his prom ise.
(d) A co n tra cts to take in cargo fo r B ait a fo re ig n p o rt. -4s G o ve rn m e n t a fte rw a rd s
declares w a r against th e c o u n try in w h ic h th e p o rt is situated. T h e c o n tra c t becomes vo id w hen
w a r is declared.
(e) A co n tra cts to act at a theatre fo r six m onths in c o n sid e ra tio n o f a sum p a id in advance
b y B. On several occasions A is too i l l to a ct. T h e co n tra c t to a ct on those occasions becomes
v o id .

R e cip roca l 57. W here persons reciprocally promise, firstly, to do certain things w hich
p ro m ise to are legal, and, secondly, under specified circumstances, to do certain other
do things
le g a l, and things w hich are ille g a l, the firs t set o f promises is a contract, but the second
also o ther is a vo id agreement-
th in g s
ille g a l.
lllu s tr a t ion.
A a nd B agree th a t A sh a ll se ll B a house fo r 10,000 rupees, b u t th a t, i f B uses i t as a
g a m b lin g house, he sh a ll pay A 50,000 rupees fo r it.
T he fir s t set o f re c ip ro c a l prom ises, nam ely, to s e ll th e house and to pay 10,000 rupees fo r
it, is a contract.
T h e second set is fo r an u n la w fu l o bject, n a m e ly, th a t B m a y use th e house as a g a m b lin g
house, and is a vo id agreem ent.

A lte rn a tiv e 58. In the case o f an alternative promise, one branch o f w hich is legal
prom ise, one
b ra n ch being
and the other ille g a l, the legal branch alone can be enforced.
ille g a l.
Illustration.
A and B agree th a t A s h a ll pay B 1,000 rupees fo r w h ic h B s h a ll a fte rw a rd s d e liv e r to A
e ith e r ric e or sm u g g le d o p iu m .
T h is is a v a lid co n tra ct to d e liv e r rice , and a v o id agreem ent as to th e Opium.

Appropriation of Payments.
Application Where a debtor, owing several distin ct debts to one person, makes
o f p aym ent a payment to him , either w ith express in tim a tio n or under circumstances
to^befdi^-h^ im p lyin g th at the payment is to be applied to the discharge o f some particular
charged is debt, the payment, i f accepted, must be applied accordingly-
in d ic a te d .
Illustrations.
() A owes B, am ong o th e r debts, 1,000 rupees upon a p ro m is s o ry note w h ic h fa lls due on
the firs t of June. H e owes B n o oth er debt o f th a t am ount. O n the firs t o f June A pays to B
1,000 rupees. T h e p a ym e n t is to be a p p lie d to the discharge o f the p ro m isso ry note.
() A owes to B, am ong o th e r d e b ts, th e sum o f 567 rupees. B w rite s to A a n d demands
pa ym e n t o f th is su m . A sends to B 567 rupees. T h is p aym ent is to be a p p lie d to the discharge
o f th e d e b t o f w h ic h B had demanded paym ent.
 Contract. 29

60. Where the debtor has om itted to intim ate and there are no other A p p lic a tio n
circumstances indicatin g to w hich debt the payment is to be applied, the o f paym ent
w h e re debt
credito r may apply i t at his discretion to any la w fu l debt actually due and to b e dis
payable to h im fro m the debtor, w hether its recovery is o r is not barred by ch a rg e d is
n o t in d i
the law in force fo r the tim e being as to the lim ita tio n o f suits. ca te d .

61. W here neither p a rty makes any appropria tion the paym ent shall be A p p lic a tio n
of paym ent
applied in discharge o f the debts in order o f tim e, whether they are or are not w h e re
barred by the law in force fo r the tim e being as to the lim ita tio n o f suits- I f n e ith er
p a rty
the debts are o f equal standing, the payment shall be applied in discharge o f appropriates.
each p ro p o rtio n a b ly .
Contracts which need not be perform ed.

62- I f the parties to a contract agree to substitute a new contract E ffe ct o f

nova tion ,
fo r it, o r to rescind o r alter it, the o rig in a l contract need not be per rescission
form ed. and a lte ra
tio n of
Illu stra tion s. co n tra ct.
() A owes m oney to B under a co n tra ct. I t is agreed betw een A, B and C th a t B s h a ll
th e n ce fo rth accept C as h is d e b to r, in ste a d o f A. T h e o ld debt of A to B is a t an end and a n e w
d e b t fro m C to B has been contracted.
() A ow es B 10,000 rupees A enters in to an a rra n g e m e n t w it h B, and gives B a m ortg a g e
o f his (i4s) estate fo r 5,000 rupees in place o f the debt o f 10,000 rupees. T h is is a n e w co n tra ct
and extinguishes the old.
( d A owes B 1,000 rupees u n d er a co n tra ct. B owes C 1,000 rupees. B orders A to c re d it
C w ith 1,000 rupees in his books, b u t C does n o t assent to the arrangem ent. B s t ill owes C 1,000
rupees, and no n e w co n tra ct has been entered in to .

63. Every promisee may dispense w ith or rem it, w h o lly or in part, the Prom isee
m ay dispense
perform ance o f the prom ise made to him , o r may extend the tim e fo r such w ith or
perform ance ,1 o r may accept instead o f i t any satisfaction w hich he th in ks fit. re jr.it p e r
fo rm a n ce
o f prom ise.
Illu stra tio n s.

(a) A prom ises to p a in t a p ic tu re fo r B. B a fte rw a rd s fo rb id s h im to do so. A is no

lo n g e r b o u nd to p e rfo rm th e prom ise.
(b) A ow es B 5,000 rupees. A pays to B , and B accepts, in sa tisfaction o f the w h o le debt,
2,000 rupees p a id a t the tim e and place at w h ic h the 5,000 rupees w e re payable. T h e w h o le
debt is discharged.
(e) A owes B 5,000 rupees. C pays to B 1,000 rupees, and B accepts them in sa tisfaction of
his c la im on A. T h is p aym ent is a discharge o f the w h o le c la im .
( d ) A owes B , under a co n tra ct, a sum o f m oney, th e am ount o f w h ic h has not been
ascertained. A w ith o u t a sce rta in in g the a m ount gives to B , and B in satisfaction th e re o f accepts,
th e Sam o f 2,000 rupees. T h is is a discharge o f the w h o le debt, w h a te v e r m ay be its a m ount.
( e) A owes B 2,003 rupees, and is also in d e b te d to o th e r c re d ito rs . A makes an a rra n g e m e n t
w ith h is c re d ito rs, in c lu d in g B, to p a y them a co m p o sitio n o f e ig h t annas in the rupee
upon th e ir respective dem ands. P aym ent t> B o f 1,000 rupees is a d ischarge o f B s dem and.

64. W hen a person at whose o p tio n a contract is voidable rescinds it, Conse
the other party thereto need n o t p erform any prom ise therein contained in quences
o f rescis
w hich he is prom isor. The party rescinding a voidable contract shall, i f he sio n o f v o id r
has received any benefit thereunder fro m another party to such contract, restore able contract.

such benefit, so fa r as m ay be, to the person fro m whom i t was received -2

1 B u t see section 135.

a See se ctio n 75.
 30 Contract.

O b lig a tio n o f 65. W hen an agreement is discovered to be void, or when a contract

person w h o
becomes void, any person who has received any advantage under such agree*
has received
advantage m ent o r contract is bound to restore it, o r to make compensation fo r it, to the
u n d e r v o id
person fro m whom he received it.
agreem ent
o r co n tra c t
th a t becomes
void. Illu stra tio n s.
() A pays B 1,000 rupees in co n sid e ra tio n o f B s p ro m is in g to m a rry C, A 's daughter. C
is dead at th e tim e o f th e p ro m ise . T h e agreem ent is vo id , b u t B m u st re p a y A th e 1,000
rupees.
() A contracts w ith B to d e liv e r to h im 250 m aunds o f ric e before th e fir s t o f M ay. A
d e liv e rs 130 m aunds o n ly be fore th a t day, and none a fte r. B reta in s the 130 m aunds after the
firs t o f M ay. He is bound to pay A fo r th e m .
(c) A, a s in g e : contracts w ith B, the m a n a g e r o f a th e atre , to s in g at h is th e a tre fo r tw o
n ig h ts in e ve ry w eek d u rin g the n e xt tw o m o n th s, and B engages to p a y her a hundred
rupees fo r each n ig h ts perform ance. On the s ix th n ig h t A w ilf u lly absents h e rs e lf fro m
the theatre, a nd B, in consequence, rescinds th e contract. B m ust p a y A fo r the five n ig h ts
on w h ic h she had sung.
( d ) A co n tra cts to sin g fo r B a t a concert fo r 1,000 rupees, w h ic h are p a id in advance. A
is too i l l to sin g . A is n o t b o und to m ake com pensation to B for th e loss o f th e p ro fits w h ic h
B w o u ld have m ade if A had been a b le to sin g , but m ust re fu n d to B th e 1,000 rupees
paid in advance.

Mode o f 66. The rescission o f a voidable contract may be communicated or

co m m u n ic a t revoked in the same manner, and subject to the same rules, as a pply to the
in g or
re v o k in g com m unication or revocation o f a proposal.
rescission of
v o id a b le
co n tra ct.
E ffe c t o f 67. I f any promisee neglects or refuses to afford the p ro m iso r reasonable
n e g le c t of fa c ilitie s fo r the perform ance o f his prom ise, the prom isor is excused by such
prom isee to
a ffo rd p ro neglect o r refusal as to any non-perform ance caused thereby.
m is o r re a
sonable
fa c ilitie s fo r Illustration.
perform ance.
A c o n tra cts w ith B to re p a ir B s house.
B n e g le cts o r refuses to p o in t o u t to A the places in w h ic h his house requires re p a ir.
A is excused fo r the n o n -p e rfo rm an ce o f th e c o n tra c t i f it is caused by such n e g le ct or
refu sa l.

CHAPTER V.

O f c e r t a in R e l a t io n s r e s e m b l in g tho se created by C o ntract.

C laim fo r 68. I f a person, incapable o f entering in to a contract, o r any one whom he

necessaries is legally bound to support, is supplied by another person w ith necessaries
s u p p lie d to
person in ca p suited to his co n d itio n in life , the person who has furnished such supplies is
able o f con e ntitled to be reim bursed fro m the property o f such incapable person.
tr a c tin g , o r
on his ac
count.

Illu stra tio n s.

() A supplies B , a lu n a tic , w it h necessaries suitable to h is co n d itio n in life . A is

e n title d to be reim b u rsed fro m B s p ro p e rty .
() A supplies th e w ife and ch ild re n o f B , a lu n a tic , w ith necessaries su ita b le to th e ir
c o n d itio n in life . A is e n title d to be reim bursed fro m B s p ro p e rty.
 Contract. 31

69. A person who is interested in the payment o f money w hich another Reim burse
is bound by law to pay, and who therefore pays it, is entitled to be reimbursed m en t o f
person
by the other. p a y in g
m oney due
Illu stra tio n . b y a n o th e r
B h o ld s la n d on a lease g ra n te d b y A. T h e revenue payable b y A to the G overnm ent being in in paym ent
o f w h ic h he
a rre a r, h is la n d is a d ve rtise d fo r sale b y the G overnm ent. U nder the revenue la w , the consequence
o f such sa le w i l l be th e a n n u l.n e n t o f B s lease. B, to p re v e n t th e sale and th e consequent is interested,
a n n u lm e n t o f h is o w n lease, pays to the G o ve rn m e nt the sum due fro m A. A is bound to m ake
good to B the a m o u n t so p a id .

70. Where a person la w fu lly does anything fo r another person, or delivers O b lig a tio n of
person en
anything to him , n o t intending to do so gra tu ito u sly, and such other person jo y in g
enjoys the benefit thereof, the la tte r is bound to make compensation to the benefit o f
non-gra-
fo rm e r in respect of, o r to restore, the th in g so done o r delivered. tu ito u s act.

Illu stra tio n s.

(a) A, a tradesm an, leaves goods a t B s house b y m istake. B treats th e goods as his o w n ,
H e is bound to pay A fo r them .
(b) A saves B s p ro p e rty fro m fire . A is not e n title d to co m p e n sa tio n fro m B , i f the
circum stances show th a t he in te n d e d to act g ra tu ito u s ly .

71. A person who finds goods belonging to another, and takes them into Responsibi-
his custody, is subject to the same re sp o n sib ility as a bailee . 1 l i t y o f fin d e r
of goods.

72. A person to whom money has been paid, o r anything delivered, by L ia b ilit y of
m istake o r under coercion 2 must repay or return it. person to
w h o m money
is p a id , o r
Illu stra tio n s. th in g I e l i ve-
ed, b y m is
(a) A and B jo in tly ow e 100 rupees to C. A a lo n e pays the a m ount to C, and B , not take o r under
k n o w in g th is fa ct, pays 100 rupees over ag lin to C. C is bound to rep a y the a m o u n t t o B. coercion.
(5 ) A r a ilw a y com pany refuses to d e liv e r up ce rta in goods to the consignee except upon
th e p a ym e n t o f an ille g a l charge fo r ca rriage. T h e consignee pays the sum charged in o rd e r
to obt iin the goods. H e is e n title d to recover so m uch o f th e charge as was ille g a lly exce:sive.

C H A P T E R V I.

O f the C onsequences of B reach of C o ntract.

73. W hen a contract has been broken, the party who suffers by such Com pensa
tio n fo r loss
breach is en title d to receive, fro m the p a rty who has broken the contract, or damage
compensation fo r any loss o r damage caused to h im thereby, w hich n a tu ra lly caused b y
b reach of
arose in the usual course o f things fro m such breach, or w hich the parties contract.
knew, when they made the contract, to be lik e ly to result fro m the breach
o f it.

Such compensation is n o t to be given fo r any remote and in d ire ct loss

or damage sustained by reason o f the breach.

* See sections 151 a nd 152.

8 F o r d e fin itio n o f co e rcio n see se ctio n 15.
 32 C ontract

Com pensa When an ob lig a tio n resembling those created by contract has been
tio n fo r incurred and has n o t been discharged, any person in jured by the fa ilu re to
fa ilu re to
discharge discharge i t is e ntitled to receive the same compensation fro m the party in
o b lig a tio n d efault as i f such person had contracted to discharge i t and had broken his
re s e m b lin g
those created contract.
b y c o n tra c t.
Explanation . In estim ating the loss or damage arising fro n j a breach o f
contract, the means w hich existed o f rem edying the inconvenience caused by
the non-perform ance o f the contract must be taken in to account.

Illustrations.
() A contracts to s e ll and d e liv e r 50 m aunds o f s a ltp e tre to B , a t a ce rta in p ric e to be
paid on d e live ry. A breaks h is prom ise. B is e n title d to receive fro m A , by w a y o f com pen
sa tio n , th e sum, i f any, by w h ic h the co n tra ct priee fa lls sh o rt o f the p rice fo r w h ic h B m ig h t
have o b ta in e d 50 m aunds o f sa ltp e tre o f lik e q u a lity at the tim e w h e n the sa ltp e tre o u g ht to
have been delivered.
() A h ire s B's sh ip to go to B o m b a y, and th e re take on board, on th e firs t o f January
a ca rg o w h ic h A is to p ro vid e and to b rin g it to Rangoon, the fr e ig h t to be p a id w hen earned.
B's sh ip does n o t go to B o m b a y, b u t A has o p p o rtu n itie s o f p ro c u rin g suitable conveyance fo r
the cargo upon term s as advantageous a3 those on w h ic h he had ch a rte re d the ship. A avails
h im s e lf o f those o p p o rtu n itie s, b u t is p u t to tro u b le and expense in d o in g so. A is e n title d to
receive com pensation fro m B in respect o f such tro u b le and expense.
(c) A co n tra cts to b u y o f B , a t a stated price, 50 m aunds o f rice , no tim e b e in g fixed fo r
d e live ry. A a fte rw a rd s in fo rm s B th a t he w ill n o t accept th e ric e i f tendered to h im . B is
e n title d to receive fro m A, b y w a y o f com pensation, th e am ount, i f any, b> w h ic h the co n tra ct
p ric e exceeds th a t w h ic h B can o b tain fo r the ric e at the tim e w h e n A in fo rm s B th a t he w i l l n o t
accept it.
(d) A contracts to buy B s ship fo r 60,000 rupees, b u t breaks his p rom ise. A m ust pay to
B , b y w a y o f com pensation, th e excess, i f a n y, o f the co n tra ct p rice over th e p rice w h ic h B can
o b ta in fo r th e sh ip at th e tim e o f th e breach of prom ise.
() A , the o w n e r o f a boat, contracts w ith B to take a ca rg o o f paddy to R angoon, fo r
sale a t th a t place, sta rtin g on a specified day. T h e boat, o w in g to some avoidable cause, does
n o t s ta rt a t the tim e app ointe d , w h e re b y thd a rriv a l o f th e cargo at Rangoon is delayed beyond
the tim e w hen it w o u ld have a rriv e d if the boat had sailed ;ic c o rd in g to the contract. A fte r th a t
date, and before the a rriv a l of the cargo, the p rice o f pa d dy f a lls . T h e m easure o f the compensa
tio n payable to B b y A is the diffe re n ce between the p ric e w h ic h B co u ld have o b taine d fo r the
ca rg o a t R an g o on at the tim e w hen i t w o u ld have a rriv e d i f fo rw a rd e d in due course, and its
m arket p rice a t the tim e w h e n i t a ctu a lly a rrive d .
(f) A contracts to re p a ir B s house in a ce rta in m anner, and receives p aym ent in advance.
A rep a irs th e house, but n o t according to co n tra ct. B is e n title d to recover fro m A th e cost o f
m a k in g th e epairs co n form to the contract.
(g) A contracts to le t h is ship to B fo r a year, fro m the firs t o f January, fo r a certain
price. F re ig h ts rise , and on the firs t o f January th e h ire o b taina b le fo r th e sh ip is h ig h e r th a n
the co n tra ct p rice . A breaks his prom ise. H e m ust pay to B , b y w a y o f com pensation, a sum
equal to th e d ifference between the contract p rice and the p rice fo r w h ic h B co u ld h ire a s im ila r
sh ip fo r a year on and fro m the fiis t o f January,
(h ) A contracts to su pply B w ith a ce rta in q u a n tity o f iro n at a fixe d p rice , b e in g a
h ig h e r p rice th a n th a t fo r w h ich A co u ld p ro cu re and d e liv e r the iro n . B w r o n g fu lly refuses to
receive the iro n . B m ust pay to A , b y w ay o f com pensation, the difference between th e contract
p ric e of the ir o n a nd th e sum f o r w h ic h A co u ld have o btained and d e liv e re d it .
(*) A d e live rs to B , a com m on c a rrie r, a m achine, to be conveyed w ith o u t d e la y to ^4s
m i l l , in fo r m in g B that b is m ill is stopped fo r w a n t of th e m achine. 8 unreasonably delays th e
d e liv e ry o f th e m a ch in e , and A in consequence loses a p ro fita b le c o n tra c t w it h th e G ove rn m e nt.
A is e n title d to rece ive fro m B b y w a y o f com pensation the average am ount o f p ro fit w h ic h
w o u ld have been mc.de b y the w o rk in g o f th e m i l l d u rin g th e tim e th a t d e liv e ry ol i t was delayed,
b u t n o t th e loss sustained th ro u g h th e loss o f th e G overnm ent contract.
(;) A , h a v in g co n tra cte d w it h B to s u p p ly B w it h 1,000 to n s o f iro n a t 100 rupees a to n , to
be d e live re d a t a stated tim e , contracts w ith C fo r th e purchase o f 1,000 to n s o f ir o n at 80 rupees
a ton, te llin g C th a t he does so fo r th e purpose o f p e rfo rm in g h is c o n tra c t w it h B . C fa ils to
p e rfo rm h is c o n tra ct w ith A, w h o cannot procure o th e r iro n , and B , in consequence, rescinds th e
contract. C m ust pay to A 20,000 rupees, being th e p ro fit w h ic h A w o u ld have m ad e b y th e
pe rform ance o f h is c o n tra c t w ith ff,
 Contract. 33

( k ) A contracts w ith B to make and d e liv e r to B , b y a fixed day, fo r a specified p rice, a

ce rta in piece of m a ch in e ry. A does n o t d e liv e r the piece o f m a ch in e ry a t the tim e specified, and
in o n s e q u e n c e o f th is B is ob lig e d to p ro cu re a n o th e r a t a h ig h e r p rice than th a t w h ic h he was
to have paid to A, and is prevented fro m p e rfo rm in g a co n tra ct w h ic h B had made w ith a th ir d
person a t th e tim e of his co n tra ct w ith A (bu t w h ic h had n o t been then com m unicated to A), and
is com pelled to m ake co m pensation fo r breach o f th a t co n tra ct. A m ust pay to B, by w a y o f
com pensation, the difference betw een the c o n tra c t p rice o f the piece o f m ach in e ry and the sum
paid b y B fo r an o th e r, b u t n o t the sum paid by B to th e th ird person b y w a y of com pensation.
(Zi A, a b u ild e r, co n tra cts to ere ct an d -fin ish a house b y the firs t o f January, in o rd e r th a t
B m ay g ive possession of it at th a t tim e to C, to w h o m B has contracted to le t it. A is in fo rm e d
o f the co n tra ct betw een B and C. A b u ild s the house so b a d ly th a t, b efore the firs t o f January, it
fa lls d o w n and has to be re - b u ilt by B, w h o in consequence loses th e re n t w h ic h he w a s to have
received fro m C, and is o b lig e d to m ake com pensation to C fo r th e breach o f his contract. A
m ust make com pensation to B fo r th e c o s t o f r e b u ild in g the house, fo r th e re n t lost, and fo r the
compensation made to C.
(m) A s e lls ce rta in m erch a n d ise to B , w a rra n tin g i t to be o f a p a rtic u la r q u a lity , and
B, in re lia n c e upon th is w a rra n ty , sells i t to C w ith a s im ila r w a rra n ty . T h e goods p ro ve to be
n o t a cco rd in g to the w a rra n ty , and B becomes lia b le to pay C a sum o f m oney b y w a y o f
com pensation. B is e n title d to be re im b u rs e d th is sum b y A.
(n) A c o n tra cts to pay a sum o f m on e y to B on a d a y specified. A does n o t pay the
m oney on th a t day. B in consequence o f n o t re c e iv in g th e m oney on th a t day is unable to pay
h is debts, and is to ta lly ru in e d . A is n o t lia b le to m ake good to B a n y th in g e xce p t the p rin c ip a l
sum he c o n tra c te d to pay, to g e th e r w ith in te re s t up to th e day o f paym ent.
(o) A co n tra cts to d e liv e r 50 m aunds o f sa ltp e tre to B on the firs t o f January, at a c e rta in
p rice. B a fte rw a rd s, be fore the firs t o f January, co n tra cts to s e ll the s a ltp e tre to C at a p ric e
h ig h e r th a n th e m arke t p ric e o f th e firs t o f January. A breaks his prom ise. In e s tim a tin g
the com pensation payable b y A to B, th e m a rk -t p ric e o f the firs t o f January, and not th e p ro fit
w h ic h w o u ld have a risen to B fro m th e sale to C, is to be ta ke n in to account.
( p) A c o n tra cts to se ll and d e liv e r 590 bales o f c o tto n to B on a fixed d a y. A know s
n o th in g o f B s m ode o f c o n d u c tin g h is business. A breaks h is prom ise, and B, h a v in g no
c o tto n , is o b lig e d to close h is m ill. A is n o t re s p o n s ib le t o B f o r the loss caused to B by th e
c lo s in g o f the m ill.
>q) A c o n tra c ts to sell and d e liv e r to B, On the firs t o f January, c e rta in c lo th w h ic h B
intends to m a n u fa ctu re in to caps o f a p a rtic u la r k in d , fo r w h ic h there is no dem and except
at th a t season. T h e c lo th is n o t d e liv e re d t i l l a fte r the a p p o in te d tim e , and too la te to be used
t h a t year in m a k in g caps. B is e n title d to rece ive fro m ^4, b y w a y o f com pensation, th e d iffe r
ence betw een th e c o n tra c t p ric e o f the c lo th and its m a rke t p ric e at th e tim e o f d e liv e ry , b u t
n o t th e p ro fits w h ic h he expected to o b ta in b y m a kin g caps, n o r th e expenses w h ic h he has
been p u t to in m a k in g p re p a ra tio n fo r the m an u fa ctu re .
( r) A, a s h ip -o w n e r, c o n tra c ts w ith B to convey h im fro m Rangoon to Sydney in ^4s
ship, s a ilin g on th e firs t o f January, and B pays to A, by w a y o f deposit, on e -h a lf of h is passage-
m oney. T he s h ip does n o t s a il on the firs t of January, and B , a lte r b e in g in consequence
detained in Rangoon fo r so m e tim e and th e re b y p u t to some expense, proceeds to Sydney
in another vessel, and in consequence, a r r iv in g too late in Sydney, loses a sum o f m oney. A
is lia b le to repay to B h is dep osit, w ith in te re s t, and the expense to w .ich he is p u t b y h is deten
tio n in Rangoon, and the excess, i f any, o f the passage-m oney p a id fo r the second s h ip o ve r th a t
agreed upon fo r th e firs t, but n o t the sum o f m oney w h ic h B lo s t by a rriv in g in Sydney too la te .

74. When a contract has been broken, if a sum is named in the con Compensa
tract as the am ount to be paid in case o f such breach, or i f the contract tio n fo r
breach o f
contains any other stip ulatio n by way o f penalty, the party com plaining o f co n tra ct
the breach is entitled, whether or not actual damage or loss is proved to have w h e re
penalty s tip u
been caused thereby, to receive fro m the party who has broken the contract lated fo r.
reasonable compensation not exceeding the amount so named or, as the case
may be, the penalty stipulated for-
E x p l a n a t i o n __A stip u la tio n fo r increased interest fro m the date o f
default may be a stipu la tio n by way o f penalty.
E x c e p t i o n . __When any person enters in to any bail-bond, recognizance
or other instrum ent o f the same nature, or, under the provisions o f any law or

3
 34 Contract .

under the orders o f the Government, gives any bond fo r the perform ance o f any
p u b lic duty o r act in w hich the p ublic are interested, he shall be lia b le , upon
breach o f the co n ditio n o f any such instrum ent, to pay the whole sum men
tioned therein.
Explanation . A person who enters in to a contract w ith Government
does not necessarily thereby undertake any p u b lic duty, o r promise to do an
act in w hich the p u b lic are interested.

Illu stra tio n s.

(a) A c o n tra c ts w it h B t o pay B Rs. 1,000 i f he fa ils to p a y B Rs. 500 on a g iv e n day

A fa ils to p a y B Rs. 500 on th a t day. B is e n title d to re c o v e r fro m A such com p e n sa tio n , not
exceeding Rs. 1,000, as the C o u rt con sid e rs reasonable.
(b) A c o n tra c ts w it h B th a t i f A p ra ctise s as a surgeon w ith in R angoon he w ill pay
B Rs. 5,000. A p ra ctise s as a surgeon in R angoon. B is e n title d to su ch co m p e n sa tio n , n o t
exceeding Rs. 5,000, as the C o u rt co n sid e rs reasonable.
(f) A g ive s a reco g n iza n ce b in d in g h im in a p e n a lty o f Rs. 500 to appear in C o u rt on a
c e rta in day. He fo rfe its his recognizance. H e is lia b le to pay th e w h o le p e n a lty.
(d) A g ive s B a b ond fo r th e re p a ym e n t o f Rs. 1,000 w ith in te re s t a t 12 per cent. ^ a tJ h e
end o f s ix m on th s, w it h a s tip u la tio n th a t in case o f d e fa u lt in te re s t sh a ll be paya ble a t the
o f 75 p e r c e n t.fr o m the date o f d e fa u lt. T h is is a s tip u la tio n b y w a y o f p e n a lty , and B is .c ffify
e n title d to reco ve r fro m A such co m p e n sa tio n as th e C o u rt considers reasonable.
(e) A, w h o ow es m oney to B, a m oney-lender, undertakes to rep a y h im by d e liv e rin g to
h im 10 m aunds o f g ra in on a c e rta in date, and stip u la tes that, in the event o f his n o t d e liv e rin g
the stipulated a m o u n t by th e s tip u la te d date, he shall be lia b le to d e live r 20 m iUnds T h is is a
s tip u la tio n b y w ay o f penalty, and B is o n ly e n title d to re a so n a b le com p e n sa tio n in case o f
b re a c h .
( / ) A undertakes to repay B a lo a n o f Rs. 1,000 b y five equal m o n th ly insta lm e n ts w ith
a s tip u la tio n th a t, in d e fa u lt o f paym ent o f any in s ta lm e n t, the w h o le sh a ll become due. T h is
s tip u la tio n is n o t by w a y o f p e n a lty, and th e co n tra ct m ay be e n forced a cco rd in g to its te rm s .
(g) A b o rro w s Rs. 100 fro m B and g ive s h im a b o n d fo r Rs. 200 paya ble by five y e a rly
in s ta lm e n ts o f Rs.. 40, w it h a s tip u la tio n th a t, in d e fa u lt o f paym ent o f any in s ta lm e n t, the
w h o le s h a ll become due. T h is is a s tip u la tio n b y w a y of p e n a lty.

P a rty r ig h t 75. A person who rig h tly rescinds a contract is entitled to compensation
f u lly re s c in d fo r any damage w hich he has sustained through the non fu lfilm e n t o f the
in g c o n tra c t
e n title d to contract.
com pensa
tio n . Illu stra tio n .

A, a sin g e r, co n tra cts w it h B, th e m anager o f a th e a tre , to sin g at h is th e a tre fo r tw o

n ig h ts in every week du in g th e n e xt tw o m on th s, and B engages to pay her 100 rupees fo r each
n iu h ts pe. form ance. O n the s ix th n ig h t A w i l f u l l y absents h e rs e lf fro m th e theatre, and B,
in consequence, re s c in d s th e c o n tra c t. B is e n title d to c la im co m pensation fo r the damage
w h ic h he has sustained th ro u g h the n o n -fu lfilm e n t o f the co n tra ct.

CHAPTER V II.

O f the Sa l e of G o o d s -1

76 123- * * * *

1 See now th e Sale of Goods Act.

 Contract. 35

CHAPTER VIII.

Of In d e m n ity and G u a ra n te e .

124. A contract by w hich one party promises to save the other fro m loss C o n tra ct
o f in d e m
caused to him by the conduct o f the prom isor him self, or by the conduct o f n ity de
any other person, is called a contract of indem nity. fined.

Illu stra tio n .

A contracts to inde m n ify B against the consequences o f any proceedings w h ic h C m ay
take against B in respect o f a ce rta in s u m o f 200 rupees. T h is is a c o n tra c t o f in d e m n ity .
125. The promisee in a contract o f indem nity, acting w ith in the scope of R ig h ts o f
his authority, is entitled to recover fro m the prom isor in d e m n ity -
h o ld e r w h e n
( 1) a ll damages w hich he may be compelled to pay in any suit in res sued.
pect o f any m atter to which the prom ise to indem nify applies ;
( 2) all costs which he may be compelled to pay in any such suit if, in
bringing or defending it, he did not contravene the orders o f the
prom isor, and acted as it w ould have been prudent fo r him to
act in the absence o f any contract o f indem nity, or i f the p ro
m isor authorized h im to bring or defend the s u it ;
(3) a ll sums w hich he may have paid under the terms o f any com pro
mise o f any such suit, i f the compromise was not contrary to
the orders o f the prom isor, and was one which it w ould have
been prudent fo r the promisee to make in the absence o f any
contract o f indem nity, or i f the prom isor authorized him to
compromise the suit-

126. A contract o f guarantee is a contract to perform the promise, C ontract of

or discharge the lia b ility , o f.a th ird person in case o f his default- The per guara n te e ,
su re ty,
son who gives the guarantee is called the surety, the person in respect o f p rin c ip a l
whose default the guarantee is given is called the p rin cip a l debtor, and the d e b to r
and
person to whom the guarantee is given is called the cre d ito r. A guarantee c re d ito r.
may be either oral or w ritte n .

127. A n yth in g done, or any promise made, fo r the benefit o f the p rin c i Consideration
pal debtor may be a sufficient consideration to the surety fo r giving the fo r guarantee
guarantee.

Illu stra tio n s.

(a) B requests A to se ll and d e live r to him goods on c re d it. A agrees to do so, p rovided C
w i ll guarantee the p a ym e n t o f the p ric e o f the goods. C prom ises to guarantee the p a ym e n t
in co n sid e ra tio n o f <4 s p ro m ise to d e liv e r the goods. T h is is a su fficie n t consideration fo r Cs
p ro m ise .
(i>) A se lls and d e live rs goods to B. C a fte rw a rd s requests A to fo rb e a r to sue B fo r the
d e b t fo r a year, and p ro m ise s th a t if he does so C w ill pay fo r them in d e fa u lt o f p a ym e n t b y B.
A agrees to fo rb e a r as requested. T h is is a sufficient c o n sid e ra tio n f o r Cs prom ise.
(c) A se lls and d e live rs goods to B. C a fte rw a rd s , w ith o u t co n sid e ra tio n , agrees to pay
o r them in d sf m I t of B. T h e agreem ent is vo id ,
 36 Contract.

Suretys 128. The lia b ility o f the surety is co-extensive w ith that o f the prin cip a l
liability. debtor, unless it is otherwise provided by the contract.
Illustration.
A guarantees to B the paym ent of a bill of exchange by C, the acceptor. T he bill is
dishonoured by C. A is liable not only for the am ount of the bill but also for any in terest and
charges w hich may have become due on it.

Continuing 129. A guarantee w hich extends to a series o f transactions is called a

guarantee.
continuing guarantee.

Illustrations.
(a) A, in consideration that B will employ C in collecting the ren t of B s estate,
prom ises B to be responsible, to the amount of 5,000 rupees, for the due collection and paym ent
by C of those rents. This is a continuing guarantee.
(61 A guarantees paym ent to B, a tea-dealer, to the am ount of 100, for any tea he may from
time to time supply to C. B supplies C w ith tea to above the value of 100, and C pays B for it.
Afterwards B supplies C w ith tea to the value of 200. C fails to pay. T he g u arantee given by A
was a continuing guarantee, and he is accordingly liable to B to the extent of 100.
(c) A guarantees paym ent to B of the price of five sacks of flour to be d elivered by B to
C and to be paid tor in a m onth. B delivers five sacks to C. C pays for them . A fterw ards B
delivers four sacks to C, w hich C does not pay for. The guarantee given by A was not a con
tinuing guarantee, and accordingly he is not liable for the price of the four sacks.

Revocation 130. A continuing guarantee may at any tim e be revoked by the surety,
of continuing as to future transactions, by notice to the creditor.
guarantee.
Illustrations.
(a) A, in consideration of B's discounting, at yls request, b ills of exchange for C,
guarantees to B, for tw elve m onths, th e due paym ent of all such b ills to the exten t of 5,000 rupees.
B discounts b ills for C to the extent of 2,000 rupees. A fterw ards, a t the end of th ree m onths, A
revokes the guarantee. T his revocation discharges A from all liability to B for any subsequent
discount. B ut A is liable to B for th e 2,000 rupees on default of C.
(fc) A guarantees to B, to the extent of 10,000 rupees, th a t C sh a ll pay all the b ills th a t
B sh all draw upon him. B draw s upon C. C accepts the bill. A gives notice of revocation. C
dishonours the bill at m a tu rity . A is liable rp o n his g u aran tee.

Revocation 131. The death o f the surety operates, in the absence o f any contract to
of continuing
guarantee by
the contrary, as a revocation o f a continuing guarantee, so fa r as regards
suretys future transactions.
d e a th .
Liability of 132. Where two persons contract w ith a th ird person to undertake a
tw o person*
prim arily certain lia b ility , and also contract w ith each other that one o f them shall be
liable not lia b le o n ly on the d efault o f the other, the th ird person not being a party to
affected by
arrangem ent such contract, the lia b ility o f each o f such two persons to the th ird person
betw een under the firs t contract is not affected by the existence o f the second contract,
them that
one shall be although such th ird person may have been aware o f its existence.
surety on
other's Illu stra tio n .
default. A and B make a joint and several prom issory note to C. A makes it, in fact, as surety
for B , and C knows this at the tim e when the note is made. The fact th a t A, to th e know ledge
of C, made the note as surety for B, is no answ er to a suit by C against A upon the note.

suretjH^y f 133. A n y variance, made w ith o u t the suretys consent, in the terms o f
variance in the contract between the p rin c ip a l debtor and the creditor discharges the surety
contract, as t0 transactions subsequent to the variance.
 Contract-

Illustrations.
fa) A becomes surety to C for Bs conduct as a m anager in Cs bank. A fterw ards B
and C contract, w ithout -4s consent, th a t B s salary shall be raised, and th a t he sh all become
liable for one-fourth of the losses on overdrafts. B allow s a custom er to overdraw, and the bank
loses a sum of money. A is discharged from his suretyship by the variance made w ithout his
consent, and is not liable to make good this loss.
(6) A guarantees C against th e m isconduct of B in an office to which B is appointed by
C, and of w hich the duties are defined by an Act of the Legislature. By a subsequent Act the
nature of the office is m iterially altered. A fterw ards B misconducts him self. A is discharged
by the change from future liability under his guarantee, though th e misconduct of B is in respect
of a duty not affected by the later Act.
(c) C agrees to appoint B as his clerk to sell goods at a yearly salary, upon / l s becoming
surety to C for Bs duly accounting for m oneys received by him as such clerk. Aftervvards> w ith
out 4 s know ledge or consent, C and B agree th a t B should be paid by a commission on the goods
sold by him and not by a fixed salary. A is not liable for subsequent misconduct of B.
(d) A gives to C a continuing guarantee to the extent of 3,000 rupees for any oil supplied
by C to B on credit. A fterwards B becomes em barrassed, and, w ithout th e know ledge of A, B,
and C contract th at C shall continue to supply B w ith oil for ready money, and that the payments
shall be applied to the th en existing debts betw een B and C. A is not liable on his g u arantee for
any goods supplied after this new arrangem ent.
(e) C contracts to lend B 5,000 rupees on the first of March. A guarantees repaym ent.
C pays the 5,000 rupees to B on the first of January. A is discharged from his liability, as the
contract has been varied inasm uch as C m ight sue B for the money before the first of March.

134. The surety is discharged by any contract between the creditor and D isch a rge of
surety by
the p rin c ip a l debtor by which the p rin c ip a l debtor is released, or by any act release o r
or om ission o f the creditor the legal consequence o f w hich is the discharge o f discharge
p rin c ip a l of
the p rin c ip a l debtor. d e b to r.

Illu stra tio n s.

() O gives a guarantee to C for goods to be supplied by C to B. C supplies goods to B
and afterw ards B becomes em barrassed and contracts w ith his creditors (including C) to assign
to them his property in consideration of their releasing him from th eir dem ands. H ere B is
released fK.m his d e b t bv the contract with C, and A is discharged from h is suretyship.
() A contracts w ith B to g ro w a crop of indigo on As land and to deliv er it to B at a
fixed rate, and C guarantees /4s perform ance of th is contract. B diverts a stream of w ater
w hich is necessary for irrigation of A's land and thereby prevents him from raisin g the indigo.
C is no longer liable on his guarantee.
(cl A con tracts w ith B for a fixed price to build a house for B w ithin as tipulated tim e,
B supplying the necessary timber. C guarantees .4s perform ance of the contract. B omits to
supply the tim b er. C is discharged fro n his suretyship.

135. A contract between the creditor and the p rin cip a l debtor, by which D ischarge of
surety w h e n
the creditor makes a com position w ith , o r promises to give tim e to, or n o t to c re d ito r co m
sue, the p rin c ip a l debtor discharges the surety, unless the surety assents to pounds w ith ,
gives tim e to,
such contract. o r agrees n o t
to sue,
p rin c ip a l
d ebtor.
136. W here a contract to give tim e to the p rin cip a l debtor is made Surety
by not
discharged
the creditor w ith a th ird person, and not w ith the p rin cip a l debtor, the surety w h e n agree
is not discharged- m e n t m ade
w ith th ird
person to
Illustration. g iv e tim e to
C, p rin c ip a l
the h o ld e r o f an overdue b ill o f exchange d ra w n by A, as su re ty fo r B , and accepted
b y B, co n tra cts w ith M to g iv e tim e to B. A is n o t d ischarged. d ebtor.
 38 Contract-

C re d ito r's 137. Mere forbearance on the p a rt o f the cre d ito r to sue the p rin cip a l
forbearance debtor or to enforce any other remedy against him does not, in the absence
to sue does
n o t discharge o f any p ro vision in the guarantee to the contrary, discharge the surety.
surety.
Illu st ration.
B owes to C a debt guaranteed by A. The d e b t becomes payable. C does not sue B for
a year after the debt has become payable. A i n o t discharged f. om his suretyship.

Release of 138. Where there are co-sureties, a release by the creditor o f one o f
one c o surety
does n o t
them does not discharge the others ; neither does it free the surety so released
discharge fro m his re spo nsib ility to the other sureties .1
others.
D ischarge 139. I f the cred itor does any act which is inconsistent w ith the rights o f
of surety by
c re d ito rs act
the surety, or om its to do any act w hich his duty to the surety requires him
o r om ission to do, and the eventual remedy o f the surety him self against the p rincipal
im p a irin g
s u re ty s
debtor is thereby im paired, the surety is discharged.
eve n tu a l
rem edy. Illustrations.
(a) B contracts to build a ship for C fo r a g iven sum, to be paid by inslalm ents as the
w ork reaches certain stages. A becomes surety to C for B s due perform ance of the contract.
C, w ithout the knowledge of A, prepays to B th e last tw o instalm ents. A is discharged by this
prepaym ent.
(b) C lends money to B on the security of a joint and sev eral prom issory note m ade in
Cs favour by B, and by A as surety for B, together w ith a bill of sale of B s furniture, w hich
gives pow er to C to sell the furniture and apply the proceeds in discharge of the note. Subse
quently C sells the furniture, but, owing to his m isconduct and w ilful negligence, only a sm all
price is realized. A is discharged from liability on the note.
(c) A puts M as apprentice to B, and gives a guarantee to B for M's fidelity. B promises
on his part th a t he w ill, at least once a month, see M make up the cash. B om its to see this done
as prem ised, and M embezzles. A is not liable to B on his g u arantee.
R ig h ts of 140. Where a guaranteed debt has become due, or default o f the principal
surety on
paym ent o r debtor to perform a guaranteed duty has taken place, the surety, upon pay
perform ance. ment or performance o f a ll that he is lia b le fo r, is invested w ith a ll the rights
w hich the cred itor had against the p rin cip a l debtor.

Suret> s 141. A surety is entitled to the benefit o f every security which the credi
r ig h t to
b e n efit of to r has against the p rin c ip a l debtor at the tim e when the contract o f suretyship
c re d ito i's is entered in to , whether the surety knows o f the existence o f such security or
securities',
n o t ; and, i f the creditor loses or, w ith o u t the consent o f the surety, parts
w ith such security, the surety is discharged to the extent o f the value o f the
security.
Illustrations.
() C advances to B, his tenant, 2,000 rupees on the guarantee of A. C has also a
further security for the 2,000 rupees by a m ortgage of Bs furniture. C cancels the m ortgage. B
becomes insolvent, and C sues A on his guarantee. A is discharged from liability to the amount
of the value of the furniture.
() C, a creditor, w hose advance to B is secured by a decree, receives also a guarantee
for th at advance from A. C afterw ards takes B s goods in execution under the decree, and then,
w ithout the know ledge of A, w ith d raw s the execution. A is discharged.
(c) A, as surety for B, makes a bond join tly w ith B (o C, to secure a loan from C to B.
A fterwards C obtains from B a further security for the same debt. Subsequently C gives up th e
further security. A is not discharged.

1 S ee section 44.
 Contract- 39

142. A n y guarantee which has been obtained by means o f misrepresenta Guarantee

tio n made by the creditor, or w ith his knowledge and assent, concerning a obtained by
m isrepre
m aterial p a rt o f the transaction, is in valid. sentation
invalid.
143. A n y guarantee which the c reditor has obtained by means o f keeping Guarantee
obtained b y
silence as to m aterial circumstances is in v a lid . concealment
invalid.
Illustrations.
(a 1 A engages B as clerk to collect money for him . B fails to account for some of his
receipts, and A in consequence calls upon him to furnish security for his duly accounting. C
gives his guarantee for B s duly accounting. A does n o t acq u ain t C w ith B s previous conduct.
B afterw ards makes default. T he guarantee is invalid.
(b) A guarantees to C paym ent for iron to be supplied by him to B to the am ount of 2,000
tons. B and C have privately agreed that B should pay five rupees per ton beyond the market
price, such excess to be applied in liquidation of an old debt. This agreem ent is concealed from
A. A is n o t liable as a surety.

144. Where a person gives a guarantee upon a contract that the creditor Guarantee on
c m tract that
shall not act upon it u n til another person has joined in i t as c o - s u r e t y , the creditor
guarantee is not va lid i f th at other person does not jo in . shall not act
on it until
co surety
joins.
145. In every contract o f guarantee there is an im p lie d prom ise by the Implied
prom ise to
p rin c ip a l debtor to indem nify the surety ; the surety is e n titled to recover indem nify
fro m the p rin c ip a l debtor whatever sum he has rig h tfu lly paid under the surety.
guarantee, but no sums w hich he has paid w rongfully.

Illustrations.
<a) B is indebted to C, and A is surety for the debt. C demands paym ent from A, and
on his refusal sues him for the amount. A defends the suit, having reasonable grounds
for doing so, but is compelled to pay the am ount of the debt with costs. He can recover from B
the amount paid by him for costs, as well as the principal debt.
(6) C lends B a sum of money, and 4, at the request of B, accepts a bill of exchange
draw n by B upon A to secure the amount. C, the holder of the bill, demands paym ent of it from
A, and on >4s refusal to pay sues him upon the bill. A, not having reasonable grounds
for so doing, defends the suit, and has to pay the amount of the bill and costs. He can recover
from B the am ount of the bill, but not the sum paid for costs, as there was no real ground for
defending the action.
(c) A guarantees to C, to the extent of 2,000 rupees, paym ent for rice to be supplied
by C to B. C supplies to B rice to a less am ount than 2,000 rupees, but obtains from A payment
of the sum of 2,000 rupees in respect of the rice supplied. A cannot recover from B more than
the price of the rice actually supplied.

146. Where tw o or more persons are co-sureties fo r the same debt or Co-sureties
liable to
duty, e ither jo in tly or severally, and whether under the same or different contribute
contracts, and whether w ith or w ith o u t the knowledge o f each other, the equally.
co-sureties, in the absence o f any contract to the contrary, are liable, as
between themselves, to pay each an equal share of the whole debt, or o f that
pa rt o f i t w hich remains unpaid by the p rin cip a l debtor. 1

Illustrations.
(a) A, B and C are sureties to D for the sum of 3,030 rupees lent to E. E makes default
in paym ent. A, B and C are liable, as betw een them selves, to pay 1,000 rupees each.

1 S e e section 43.
 40 Contract.

(6) A, B and C are sureties to D for the sum of 1,000 rupees lent to E, and th ere is a
contract between A, B and C that A is to be responsible to the extent of one-quarter, B to tlie
extent of OMC-qi:arter and C to the extent cf one-half. makes default in paym ent. As betw een
the sureties, A is liable to pay 250 rupees, B 250 rupees, and C 500 ru p ee s.

L ia b ilit y of 147. Co-sureties who are bound in different sums are liable to
co-sureties pay equally as'far as the lim its o f th e ir respective obligations perm it.
b ound in
d iffe re n t
sums. Illustrations.

(a) A, B and C, as suretifs for D, en ter into three several bonds, each in a different
penalty, namely, A in the penalty of 10,000 rupees, B in th a t of 20,000 rupees, C in that of 40,000
rupees, conditioned fo r D's duly accounting to E, D makes default to the extent of 30,000
rupees. A, B and C are each liable to pay 10,000 rupees.
(fc) A, B and C, as sureties for D, e n 'e r into three several bonds, each in a different
penalty, nam ely, A in th e penalty of 10,000 rupees, B in that of 20,000 rupees, C in th a t of
40.000 rupees, conditioned for D's duly accounting to E. D makes default to 'th e extent of
40.000 rupees. A is liable to pay 10,000 rupees, and B and C 15,000 rupees each.
(ic) A, B and C, as sureties for D, enter into th ree several bonds, each in a different
penalty, nam ely, A in the penalty of 10,000 rupees, B in th at of 20,000 rupees, C in that of
40.000 rupees, conditioned for D's duly accounting to E. D makes default to the extent of
70.000 rupees. A, B and C have to pay each the full penalty of his bond.

C H A P T E R IX .

O f B a il m e n t .

B a ilm e n t, 148. A b a ilm e n t is the delivery o f goods by one person to another

11 b a ilo r and
fo r some purpose, upon a [con tract that they shall, when the purpose
ba ile e
defined. is accomplished, be returned or otherwise disposed o f according to the
directions o f the person delivering them- The person delivering the goods
is called the b a ilo r. The person to whom they are delivered is called the
bailee.
Explanation . I f a person already in possession o f the goods o f another
contracts to ho ld them as a bailee, he thereby becomes the bailee, and the
owner becomes the b a ilo r, o f such goods although they may not have been
delivered by way o f bailm ent.
D e liv e ry to 149. The delivery to the bailee may be made by doing anything which
bailee h o w
m ade. has the effect o f p u ttin g the goods in the possession o f the intended bailee
or o f any person authorized to h old them on his behalf.

B a ilo r s d u ty 150. The b a ilo r is bound to disclose to the bailee faults in the goods
to disclose
fa u lts in bailed, o f w hich the b a ilo r is aware, and which m aterially interfere w ith the
goods ba ile d . use o f them, or expose the bailee to extraordinary risks ; and, i f he does not
make such disclosure, he is responsible fo r damage arising to the bailee
d ire ctly fro m such faults.
I f the goods are bailed fo r hire, the b a ilo r is responsible fo r such
damage, whether he was or was not aware o f the existence o f such faults in
the goods bailed;
 Contract- 41

Illustrations,
() A lends a horse, w hich he know s to b e vicious, to B. He does not disclose the fact
that the horse is vicious. The horse runs away. B is throw n and injured. A is responsible to B
for dam age sustained.
() A hires a c arriag e of B. The c arriag e is unsafe, though B is not aw are of it, and A
is injured. B is responsible to A for the inju ry .

151. In a ll cases o f bailm ent the bailee is bound to take as Care to be

much care o f the goods bailed to him as a man o f o rd in a ry prudence would, taken by
bailee.
under sim ila r circumstances, take o f his own goods o f the same
b u lk , q u a lity and value as the goods ba iled -1

152. The bailee, in the absence of any special contract, is not Bailee when
not liable for
responsible fo r the loss, destruction or deterioratio n o f the thing bailed i f he loss, etc.,
has taken the am ount o f care o f it described in section 151. of thing
bailed.
153- A contract o f bailm ent is voidable at the o p tio n o f the b a ilo r i f Term ination
of bailm ent
the bailee does any act w ith regard to the goods bailed inconsistent w ith the by bailees
conditions o f the bailm ent. act inconsist
en t w ith
conditions.
lllu st ration..
A lets to B, for hire, a horse for his own rid in g . B drives the horse in his carriage.
T his is, at the option of A, a ten n in ato n of th e bailm ent.

154'- I f the bailee makes any use o f the goods bailed, which is Liability of
bailee
not according to the conditions o f the bailm ent, he is lia b le to make making
compensation to the b a ilo r fo r any damage arising to the goods fro m or unauthorized
during such use o f them. use of goods
bailed.
Illustrations.
la) A lends a horse to B f )r his o,vn rid in g only. B allow s C, a member of his family
to ride the horse. C rides w ith care, but the horse accidentally falls and is injured. B is liable
to m ake com pensation to A for the injury done to the horse,
(b} A hires a horse in Rangoon from B expressly to m arch to Mandalay. A rid es
w ith due care, but m arches to Kalaw instead. T he horse accidentally falls and is injured. A
is liable to make compensation to B fo r the injury to th e horse.

155. I f the bailee, w ith the consent o f the b a ilo r, mixes the goods o f the Effect of
mixture, w ith
b a ilo r w ith his own goods, the b a ilo r and the bailee shall have an interest, bailors con
in p ro p o rtio n to th e ir respective shares, in the m ixture thus produced. sent, of his
goods w ith
bailees.

156. I f the bailee, w ith o u t the consent o f the b a ilo r, mixes the goods o f Effect of
m ixture,
the b a ilo r w ith his own goods, and the goods can be separated or divided, w ithout
the prop e rty in the goods remains in the parties respectively ; but the bailee b a ilo rs con
sent, when
is bound to bear the expense o f separation or division, and any damage th e goods
arising fro m the m ixture. can be
Illust ration. separated.
A bails 100 bales of cotton marked w ith a particular m ark to B. B , w ithout 4 s consent,
mixes the 100 bales with other bales of his own, b earin g a different mark. A is entitled to have
his 100 bales returned, and B is bound to b ear all the expense incurred in the separation of the
bales, and any other incidental damage.

1 As to railw ay contracts, see section 72 of the R ailw ays A c t ; as to the liability of common
E arriers, see section 8 of the C arriers Act.
 42 Contract-

Effect of 157. I f the bailee, w ith o u t the consent o f the b a ilo r, mixes the goods of
mixture the b a ilo r w ith his own goods, in such a manner th a t it is im possible
w ithout
b a ilo rs con to separate the goods bailed fro m the other goods and deliver them back, the
sent, when b a ilo r is e n title d to be compensated by the bailee fo r the loss o f the goods.
the goods
cannot be
separated. Illu stra tio n .
A bails a barrel of Cape flour w orth Ks. 45 to B. B, w ithout 4 s conscnt, mixes the flour
w ith country flour of his ow n, w o rth only Ks. 25 a barrel. B must com pensate A for the loss
of his flour.

Repayment 158. Where, by the conditions o f the bailm ent, the goods are to be kept
by bailor of
necessary ex o r to be carried, or to have w ork done upon them by the bailee fo r
penses. the b a ilo r, and the bailee is to receive no rem uneration, the bailor
shall repay to the bailee the necessary expenses incurred by him fo r
the purpose o f the bailm ent.

Restoration 159. The lender o f a thin g fo r use may at any tim e require its return,
of goods
le n t g ra i f the loan was gratuitous, even though he le n t i t fo r a specified tim e
tuitously. or purpose. B u t if, on the fa ith o f such loan made fo r a specified tim e or
purpose, the borrow er has acted in such a manner that the return o f
the thin g le n t before the tim e agreed upon w ould cause him loss exceeding
the benefit actually derived by h im fro m the loan, the lender must,
i f he compels the return, indem nify the borrower fo r the am ount in w hich the
loss so occasioned exceeds the benefit so derived-

Keturn of 160. I t is the duty o f the bailee to return, or deliver according to the
goods bailed
on expiration b a ilo rs directions, the goods bailed, w ith o u t demand, as soon as the
of tim e or tim e fo r w hich they were bailed has expired, or the purpose fo r w hich they
accom plish
ment of p u r were bailed has been accomplished.
pose.
B a ile e s 161. I f , by the default o f the bailee, the goods are not returned,
resp o n si
bility delivered or tendered at the proper tim e, he is responsible to the b a ilo r fo r
w hen goods any loss, destruction or deterioration o f the goods fro m that tim e.
are not duly
returned.
Term ination 162- A gratuitous bailm ent is term inated by the death either o f
of gratuitous the b a ilo r or o f the bailee.
bailm ent by
death.
Bailor 163- In the absence o f any contract to the contrary, the bailee is bound
entitled to
increase or to deliver to the b a ilo r, or according to his directions, any increase o r p ro fit
profit from w hich may have accrued fro m the goods bailed.
goods bailed.
Illustration.
A leaves a cow in the custody of B to be taken care of. The cow has a calf. B is bound
to deliver the calf as well as the cow to A.

Bailor's 164. The b a ilo r is responsible to the bailee fo r any loss which the
reeponsi- . .. . , ,
bility bailee may sustain by reason that the b a ilo r was not e n titled to make
to bailee. the bailm ent, or to receive back the goods or to give directions respecting
them.
 Contract. 43

165. I f several jo in t owners o f goods b ail them, the bailee may deliver B a ilm e n t by
them back to , or according to the directions of, one jo in t owner w ith o u t the several jo in t
ow ners.
consent o f a ll, in the absence o f any agreement to the contrary.

166. I f the b a ilo r has no title to the goods, and the bailee, in good Bailee n o t
fa ith , delivers them back to, or according to the directions of, the b a ilo r, responsible
on re
the bailee is n o t responsible to the owner in respect of such delivery. 1 d e liv e ry to
b a ilo r
w ith o u t
t itle .
167. I f a person, other than the bailor, claims goods bailed, he may R ig h t of
apply to the C o urt to stop the delivery o f the goods to the b a ilo r, t h ir d person
c la im in g
and to decide the title to the goods. goods b a ile d .

168. The finder o f goods has no rig h t to sue the owner fo r R ig h t of

fin d e r of
compensation fo r trouble and expense v o lu n ta rily incurred by h im to preserve goods;
the goods and to find out the owner, but he may retain the goods against the in ay sue fo r
owner u n til he receives such compensation ; and, where the owner has offered specific
rew ard
a specific reward fo r the re tu rn o f goods lost, the finder may sue fo r such offered.
reward, and may retain the goods u n til he receives it.

169. W hen a thing w hich is com m only the subject of sale is lost, if the W h e n fin d e r
of th in g com
owner cannot w ith reasonable diligence be found, or i f he refuses, m o n ly on
upon demand, to pay the la w fu l charges o f the finder, the finder may sell i t sale m ay
sell it.
( 1) when the th in g is in danger o f perishing o r o f losing the greater
p art o f its value, or,
( 2) when the la w fu l charges o f the finder, in respect o f the thing
found, am ount to tw o-thirds o f its value.

170. Where the bailee has, in accordance w ith the purpose o f the b a il B ailee's
p a rtic u la r
ment, rendered any service in vo lvin g the exercise o f labour or s k ill in respect lie n .
o f the goods bailed, he has, in the absence o f a contract to the contrary, a
rig h t to retain such goods u n til he receives due rem uneration fo r the services
he has rendered in respect o f them,.

Illustrations.
() A delivers a rough diamond to B , a jew eller, to be cut and poiished, w hich is
accordingly done. B is entitled to retain the stone till he is paid for th e services he has rendered.
() A gives cloth to B , a tailo r, to make into a coat. B prom ises A to deliver the coat
as soon as it is finished, and to give a three m onths cred it for th e price. B is not en title d to
retain the coat until h e is paid.

171. Bankers, tactors, wharfingers, advocates o f the H igh C ourt and General lie n
o f bankers,
policy-brkers may, in the absence o f a contract to the contrary, retain, as a fa cto rs,
security fo r a general balance o f account, any goods bailed to them ; but no w h a rfin g e rs,
ad vo cate s
other persons have a rig h t to retain, as a security fo r such balance, goods and p o lic y -
bailed to them , unless there is an express contract to th a t effect -2 brokers.

1 See se ctio n 117 o f th e E vid e n ce Act.

2 As to lien of an agent, see section 221 ; as to lien of a R ailway A dm inistration, see section
55 of the R ailw ays Act.
 44 Contract.

Bailm ent of Pledges.

P le d g e , 172. The bailm ent o f goods as security fo r payment o f a debt or p e rfo r

p a w n o r
mance o f a promise is called pledge. The b a ilo r is in this case called the
and
paw nee paw nor. The bailee is called the pawnee.
defined.

Pawnees 173. The pawnee may retain the goods pledged, not only fo r payment
r ib 'llt Of o f the debt or the perform ance o f the promise, but fo r the interest o f the debt,
re ta in e r.
and a ll necessary expenses incurred by him in respect o f the possession or fo r
the preservation o f the goods pledged.

Paw nee not 174. The pawnee shall not, in the absence o f a contract to th a t effect,
to re ta in for retain the goods pledged fo r any debt or promise other than the debt or
debt or pro
m ise other prom ise fo r w hich they are pledged ; but such contract, in the absence o f any
than th a t for thing to the contrary, shall be presumed in regard to subsequent advances
w hich goods
pledged. made by the pawnee-
Presum ption
in case of
subsequent
advances.

P a w n e e s 175. The pawnee is e n titled to receive fro m the pawnor extraordinary

r ig h t as to expenses incurred by him fo r the preservation o f the goods pledged.
e x tra
o rd in a ry
expenses
in c u rre d .

Paw nees 176. I f the pawnor makes d e fault in payment o f the debt or performance
rig h t w here
paw nor at the stipulated tim e o f the promise, in respect o f w hich the goods were
makes pledged, the pawnee may bring a suit against the pawnor upon the debt or
default. promise, and retain the goods pledged as a collateral security ; or he may sell
the th in g pledged on giving the pawnor reasonable notice o f the sale.
I f the proceeds o f such sale are less than the am ount due in respect o f
the debt or promise, the paw nor is s till lia b le to pay the balance. I f the
proceeds o f the sale are greater than the am ount so due, the pawnee shall
pay over the surplus to the pawnor.

D efaulting 177. I f a tim e is stipulated fo r the payment o f the debt or performance

paw nors o f the promise, fo r w hich the pledge is made, and the pawnor makes d efault
rig h t to
redeem . in paym ent o f the debt or performance o f the promise at the stipulated time,
he may redeem the goods pledged at any subsequent tim e before the actual
sale o f th e m ; b u t he must, in tha t case, pay in addition any expenses which
have arisen fro m his default.

Pledge by 178. Where a m ercantile agent is, w ith the consent o f the owner, in pos
m ercantile session o f goods or the documents o f title to goods, any pledge made by him ,
agent.
when acting in the o rd in ary course o f business o f a m ercantile agent, shall be
as v a lid as i f he were expressly authorized by the owner of the goods to
make the same : provided th a t the pawnee acts in good fa ith and has n o t at
the tim e o f the pledge notice th a t the pawnor has n o t a u thority to pledge.
 Contract- 45

Explanation. In this section, the expressions m ercantile agent and

documents o f title shall have the meanings assigned to them in the Sale
o f Goods A ct.

1 7 8 A . When the pawnor has obtained possession o f the goods pledged Pledge by
by h im under a contract voidable under section 19 or section 19A, but the pe^ on .in
' possession
contract has n o t been rescinded at the tim e o f the pledge, the pawnee under
acquires a good title to the goods, provided he acts in good fa ith and w ith o u t contract
notice o f the pawnors defect o f title .

179. Where a person pledges goods in w hich he has only a lim ite d Pledge
interest, the pledge is valid to the extent o f that interest. w here has
pawnor
only a
Suits by Bailees or Bailors against Wrong-doers. limited
interest.
180. I f a th ird person w ro n g fu lly deprives the bailee o f the use or Suit by
possession o f the goods bailed, or does them any in ju ry , the bailee is entitled ^)}g g r
to use such remedies as the owner m ight have used in the lik e case i f no aainst
bailm ent had been made ; and either the b a ilo r or the bailee may bring a vvr ns-der-
suit against a th ird person fo r such deprivation or in ju ry .

181. W hatever is obtained by way o f re lie f or compensation in any Apportion-

such suit shall, as between the b a ilo r and the bailee, be dealt w ith according m en t^frelie f
or compensa
to th e ir respective interests. tion
obtained by
CH A PTER X. such suits.

A gency.

A p p o in tm e n t and A u th ority o f A gents.

182. A n agent is a person employed to do any act fo r another or to Agent
represent another in dealings w ith th ird persons. The person fo r whom and prin-
such act is done, or who is so represented, is called the p rin c ip a l. defined

183. A n y person who is o f the age o f m a jo rity according to the law to W ho may
which he is subject, and who is o f sound m ind, may em ploy an agent, employ
agent.
184. As between the p rin c ip a l and th ird persons any person may Who may be
become an agent, but no person who is not o f the age o f m a jo rity and o f an ag en t,
sound m ind can become an agent so as to be responsible to his prin cip a l
according to the provisions in tha t behalf herein contained.

185. N o consideration is necessary to create an agency. considera-

tio n n o t
necessary.
186. The a u th o rity o f an agent may be expressed or im plied. A gents
a u th o rity
may be
expressed 0r
im plied.
 46 Contract-

Definitions 191. A n a u th o rity is said to be express when i t is given by words

of express
and im plied spoken or w ritte n . A n a u th o rity is said to be im plied when i t is to be
authority. inferred fro m the circumstances o f the case; and things spoken or w ritten, or
the o rd in ary course o f dealing, may be accounted circumstances o f the case.

Illu stra tio n .

A owns a shop in M andalay, living him self in Rangoon and visiting the shop occasionally.
The shop is m anaged by B, and he is in the h ab it of ordering goods from C in th e nam e of A for
the purposes of th e shop, and of paying for them out of / l s funds w ith A s knowledge. B has an
im plied authority from A to order goods from C in th e nam e of A for the purposes of th e shop.

E x ten t Of 188. A n agent having an a u th o rity to do an act has authority to do

ag e n ts
au thority. every la w fu l thing w hich is necessary in order to do such act.
A n agent having an a u th o rity to carry on a business has a u th o rity to do
every la w fu l thing necessary fo r the purpose, or usually done in the course
o f conducting such business.

Illustrations.
[a) A is employed by B, residing in London, to recover at Rangoon a debt due to B. A
m ay adopt any legal process necessary for the purpose of recovering the debt, and may give a
valid discharge for the same.
(i) A constitutes B his agent to carry on his business of a ship-b'iilder. B may purchase
tim ber and o th tr m aterials, and hire workmen, fo r t'ie purposes cf carrying on the business.

A gents 189. A n agent has a u th o rity, in an emergency, to do a ll such acts fo r the

a u th o rity in purpose o f protecting his p rin cip a l fro m loss as would be done by a person
an em er
gency. o f ordina ry prudence, in his own case, under sim ila r circumstances.

Illustrations.
() An agent for sale may have goods repaired if it be necessary.
() A consigns provisions to B at Rangoon, w ith directions 1 1 send them im m ediately to
C at Moulmein. B may sell the provisions at Rangoon, if th e y w ill not bear the journey to
M oulm einwithout spoiling.
Sub-Agents.
W hen agent 190. A n agent cannot la w fu lly employ another to perform acts which
c a n n o t'
delegate. he has expressly or im p lie d ly undertaken to perform personally, unless by
the ordinary custom o f trade a sub-agent may, or, fro m the nature o f the
agency, a sub-agent must, be employed.

Sub-agent. 191> A sub-agent is a person employed by, and acting under the
co n trol of, the o rig in a l agent in the business o f the agency.

Represen 192. Where a sub-agent is properly appointed, the prin cip a l is, so fa r as
ta tio n of
principal regards th ird persons, represented by the sub-agent, and is bound by and
b y sub responsible fo r his acts as i f he were an agent o rig in a lly appointed by the
agent pro-
perly p rin c ip a l.
appointed.
A gents re The agent is responsible to the p rin cip a l fo r the acts o f the sub-agent.
sponsibility
for su b
agent.
Sub-agents The sub-agent is responsible fo r his acts to the agent, b u t n o t to the
respon-
sibility. p rin cip a l except in case o f fraud o r w ilfu l wrong-
 Contract. 47

193. Where an agent, w ith o u t having a u thority to do so, has appointed a A g e n ts

person to act a a sub-agent, the agent stands towards such person in the [jtyporsibl"
relation o f a prin cip a l to an agent, and is responsible fo r his acts both to the sub agent
p rin c ip a l and to th ird persons ; the p rincip al is not represented by or respon- ^ th o u t^
sible fo r the acts o f the person so employed, nor is that person responsible to a u th o rity ,
the principal.

194. Where an agent, holding an expresss or im plied a u th o rity to name R e la tio n

another person to act fo r the p rin c ip a l in the business o f the agency, has p ^cip a l
named another person accordingly, such person is not a sub-agent, but an and p e rso n
agent o f the p rin c ip a l fo r such part o f the business o f the agency as is p |ntae^"by
entrusted to him . agent t o a ct
in business
of agency.
Illustrations.
(a) A directs B, his solicitor, to sell his estate by auction, and to em ploy an auctioneer
for the purpose. B names C, an auctioneer, to conduct the sa le . C is not a sub -ag en t, but is
^4s agent for the conduct of the sale.
(b) A authorizes B, a n e. chant in C alcutta, to recover the moneys due to A from C
& Co. B in stru cts D, a so licito r, to take legal proceedings against C & Co. for th i recovery of
th e money. D is not a sub-agent, but is so licito r for A.

195. In selecting such agent fo r his p rin cip a l, an agent is bound to A g e n ts duty
exercise the same am ount o f discretion as a man o f ordinary prudence would
exercise in his own case ; and i f he does th is he is not responsible to the
prin cipa l fo r the acts or negligence o f the agent so selected.

Illustrations.
(a) A instructs B, a m erchant, to buy a sh ip for him . B employs a ship surveyor of
good reputation to choose a ship for A. The su n ey o r makes the choice negligently and the ship
turns out to b e unseaw orthy and is lost. B is not, but th e surveyor is, resp o n sib le to A.
(b) A consigns goods to B, a m erchant, for sale. B , in due course, employs an auctioneer
in good credit to sell th e goods of A , and allow s th e auctioneer to receive th e proceeds of the
sale. The auctioneer afte w ards becomes insolvent w ithout b a \in g accounted for the proceeds.
B is not responsible to A for the proceeds.

Ratification.
196. Where acts are done by one person on behalf o f another, but R ig h t o f
w ith o u t his knowledge or a u th o rity, he may elect to ra tify or to disown such forascs as
acts- I f he ra tify them, the same effects w ill fo llo w as i f they had been done fo r h im
performed by his a u th o rity . ruUiodty1^
E ffe c t of
ra tific a tio n .

197. R a tifica tio n may be expressed or may be im plied in the conduct o f R a tific a tio n
the person on whose behalf the acts are done. may be .
expressed or
im p lie d .
Illustrations.
(a) A, w ith o u t a u th o rity , buys goods fo r B. A fte rw a rd s B se lls th them
e i to C on h is o w n
a c c o u n t; B s c o n d u ct im p lie s a r a tific a tio n o f purchase m ade fo r h im by A.
(b) A, w ith o u t B's a u th o rity , lends B s m oney to C. A fte rw a rd s B accepts in te re s t on the
money fro m C. B s co n d u ct im p lie s a r a tific a tio n o f th e loan.
 48 Contract-
Knowledge 198. N o v a lid ra tific a tio n can be made by a person whose knowledge o f
requisi te for
valid ra ti the facts o f the case is m a teria lly defective.
fication.

E ffect of 199. A person ra tify in g any unauthorized act done on his behalf ratifies
ratifying un
authorized the whole o f the transaction o f w hich such act form ed a part.
ac t form ing
part of a
transaction.

R atification 200. A n act done by one person on behalf o f another, w ith o u t such
o f un
authorized other persons a u th o rity , w hich, i f done w ith a u th o rity, w ould have the effect
act cannot o f subjecting a th ird person to damages, or o f term inating any rig h t or
injure third
person. interest o f a th ird person, cannot, by ra tifica tio n , be made to have such effect.

Illustrations.
(a) A, not bein'* authorized thereto by B, dem ands, on behalf of B, th e delivery of a chattel,
the property of B, from C, who is in possession of it. This demand cannot be ratified by B, so
as to make C liable for damages for his refusal to deliver.
( I)) A holds a lease from B, term inable on three m onths notice. C, an unauthorized person,
gives no ice of term in atio n to A. T he notice cannct be ratified by B, so as to be binding on A

R e v o c a tio n of A uthority.
Term ination 201. A n agency is term inated by the prin cip a l revoking his a u th o rity ;
of agency.
or by the agent renouncing the business o f the agency ; or by the business of
the agency being completed ; or by either the p rin cip a l or agent dying or
becoming o f unsound m ind ; or by the p rin cip a l being adjudicated an
insolvent under the provisions o f any A c t fo r the tim e being in force fo r the
re lie f o f insolvent debtors.
Term ination 202. Where the agent has him self an interest in the property w hich
of agency
w here agent form s the subject-m atter o f the agency, the agency cannot, in the absence
has an o f an express contract, be term inated to the prejudice o f such interest.
interest in
subject-
m atter. I llu s tr a tio n s .
(a) A gives authority to B to sell <4s land, and to pay him self, out of the
proceeds, the debts due to him from A. A cannot revoke this authority, nor can it be term inated
by his insanity or death.
(b) A consigns 1,000 bales of cotton to B, who has m ade advances to him on such cotton,
and desires B to sell the cotton, and to repav him self, out of the price, th e an ount of h is own
advances. A cannot revoke this auth o rity , nor is it term inated by his in san ity or death.

W hen p rin 203. The p rin c ip a l may, save as is otherwise provided by the last
cipal may
revoke preceding section, revoke the a u th o rity given to his agent at any tim e before
agents the a u th o rity has been exercised so as to bind the p rin cip a l.
au thority.

Revocation 204. The p rin c ip a l cannot revoke the a u th o rity given to his agent after
w h e re
the a u th o rity has been p a rtly exercised so fa r as regards such acts and o b lig a .
authority had
been partly tions as arise fro m acts already d rn e in tlje agency.
exercised.
 Contract. 49
Illu stra tio n s.
() A authorizes B to buy 1,000 bales of cotton on account of A, and to pay for it out of A s
money rem aining in B's hands. B buys 1,000 bales of cotton in his own name, so as to make
him self personally liab le for the price. A cannot revoke B s authority so far as regards
payment for the cotton.
() A authorizes B to buy 1,000 bales of cotton on account o f A, and to pay for it out of A s
moneys rem aining in Bs hands. B buys 1,000 bales of cotton in A's nam e and so as not to render
him self personally liable for th e p rice. A can revoke Bs authority to pay for the cotton.
205. Where there is an express or im plied contract th a t the agency Compensa
should be continued fo r any period of. tim e, the p rin c ip a l must make com tion for
revocation
pensation or the agent, or the agent to the p rin cip a l, as the case may be, fo r by principal,
any previous revocation or renunciation o f the agency w ith o u t sufficient or renuncia
tion by agent.
cause.
206. Reasonable notice m ust be given o f such revocation or renuncia N otice of
tio n ; otherwise the damage thereby resulting to the p rin cip a l or the agent, revocation or
renunciation.
as the case may be, must be made good to the one by the other.
207. Revocation and renunciation may be expressed or may be im plied Revocation
and
in the conduct of the p rin c ip a l or agent respectively. renunciation
may be
Illu stra tio n . expressed or
im plied.
A empowers B to let /ls house. A fterw ards A lets it him self. T his is an im plied
revocation of Bs authority.
208. The term in atio n o f the a u th o rity o f an agent does not, so fa r as W hen ter
m ination of
regards the agent, take effect before i t becomes known to him , or, so fa r as a g e n ts
regards th ird persons, before it becomes know n to them. authority
takes effect
as to agent,
and as to
third
persons.
Illustrations.
(a) A directs B to sell goods for him , and agrees to give B five p e rc e n t, com m ission on
the price fetched by the goods. A afterw ards, by letter, revokes B's authority. B, after the
letter is sent, but before he receives it, sells the goods for 100 rupees. The sale is binding on A,
and B is entitled to five rupees as his commission.
(b) A, at R?ngoon, by letter, directs B to sell for him some cotton lying in a w arehouse in
Myingyan, and afterw ard s, by letter, revokes his authority to sell, and directs B to send the
cotton to Rangoon. B, after receiving the second letter, en ters in to a con tract w ith C, who
knows of the first letter but not of the second, for the sale to him of th e cotton. C pays B the
money, w ith w hich B absconds. Cs paym ent is good as against A.
(c) A directs B, his agent, to pay certain money to C. A dies, and D takes out probate of his
will. B, after A s death, but before hearing of it, pays the money to C. The paym ent is good
as against D, the executor.

209. When an agency is term inated by the p rin cip a l dying or becoming Agents duty
o f unsound m ind, the agent is bound to take, on behalf o f the representatives on term ina
tion of
o f his late p rin cip a l, a ll reasonable steps fo r the protection and preservation agency by
o f the interests entrusted to him . p rincipals
d ealh or
insanity.

210. The term ination o f the a u thority o f an agent causes the te rm in a Termina'-on
tio n (subject to the rules herein contained regarding the term ination o f an of sub
a g e n ts
agent s authority) o f the a u th o rity o f a ll sub-agents appointed by him - authority.

4
 50 Contract.

Agents Duty to Principal.

Agents duty 2X1. A n agent is bound to conduct the business o f his p rin cip a l accord
in conduct ing to the directions given by the p rin cip a l, or, in the absence o f any such
ing prin
cipals directions, according to the custom w hich prevails in doing business o f the
business. same k in d at the place where the agent conducts such business. W hen the
agent acts otherwise, i f any loss be sustained, he m ust make it good to his
p rin c ip a l, and, i f any p ro fit accrues, he m ust account fo r it.

Illust rations.
(<i) A, an agent engaged in carrying on for B a buiiness in w hich it is the custom to invcs
from tin e to time, at interest, the moneys w hich n ay be in hand, om its to m ake such in v est
m ent. A must m?ke good to B the interest usually obtaii.ed by such investments.
(6) B, a b;oker, in whose business it is not th e custom to sell on credit, sells goods of A on
credit to C, w hose cred it at the tim e w as very high. C, before payment, becomes insolvent
B m ust m ake good the loss to A.

S kill and 212. A n agent is bound to conduct the business o f the agency w ith as
q u irfd Cfrom muc^ a s *s generally possessed by persons engaged in sim ila r business,
agent. unless the p rin c ip a l has notice o f his w ant o f s k ill. The agent is always
bound to act w ith reasonable diligence, and to use such s k ill as he possesses ;
and to make compensation to his p rin cip a l in respect o f the direct con
sequences o f his own neglect, want o f s k ill o r m isconduct, b u t n o t in
respect o f loss or damage w hich are in d ire ctly or rem otely caused by such
neglect, want o f s k ill o r misconduct.

Illustrations.
(a) A, a me. chant in R angoon, has an agen t, B, in London to w hom a sum of m oneyis paid
on ^4s account, w ith orders to rem it. B retain s the m oney for a co n sid erab le time. A, i n c o n
sequence of not receiving the money, becomes insolvent. B is liable to r the money and in terest
from th e day on w hich it ought to have been paid, according to the usual ra te , and for
any further d irect lo ssas, e.g.,-by vaiiation of rate of exchangebut n o t further.
(6i A, an agent for the sale of goods, h aving authority to sell on credit, sells to B on credit,
w ith o u t m aking the proper and usual enquiries as to th e solvency of B. B, at the tim e of such
sale, is insolvent. A must m ake com pensation to his principal in respect of any loss th ereby
sustained.
(c) A, an insurance-broker em ployed by B to effect an insurance on a ship, o m its to see that
th e usual clauses are inserted in th e policy. The ship is afterw ards lost. In consequence of the
om ission of the clauses nothing can be recovered from th e u nderw riters. A is bound to make
good the loss to B.
Id) A, a m erchant in E ngland, directs B, his agent a t Rangoon who accepts the agency, to
send him 100 bales of co tto n by a ce tain ship. B, h aving it in h is pow er to send th e cotton,
om its to do so. The ship arrives safely in E ngland. Soon after her arrival the price of cotton
rises. B is bound to make good to A the profit w hich he m ight have m ade by the 100 bales of
cotton at the time the ship arrived, but n o t any profit he m ig h t have made by the subsequent
rise.

Agent's 213. A n agent is bound to render proper accounts to his p rin cip a l on
accounts.
demand.

A gents duty 214. I t is the duty o f an agent, in cases o f d difficult;

ifficulty, to use a ll
cate vvit
cate w itn 1" " reasonable
------ diligence
** in com m unicating w ith his p rin cip a l, and in seeking to
principal. obtain his in structio ns . 1

} See gectipn 189,

 Contract- 51

when agent
knowledge on the deals on his
subject, the p rin c ip a l may repudiate the transaction, i f the case shows either ^business1
th a t any m aterial fa ct has been dishonestly concealed fro m him by the agent, of agency
or th a t the dealings o f the agent have been disadvantageous to him . w ithout
principals
co n sen t
Illustrations.
() A directs B to sell 4 s e state. B buys the estate for him self in the nam e of C. i4,on
discovering that B h a s bought the estate for him self, may repudiate th e sale, if he can show th a t
B has dishonestly concealed any m aterial fact, o r that the sale has been disadvantageous to him .
() A directs B to sell 4 s estate. B, on looking over th e estate before selling it, finds a
mine on the estate w hich is unknow n to A. B informs A th a t he w ishes to buy the e state for
him self, but conceals the discovery of the m ine. A allow s B to buy in ignorance of the existence
of the mine. A, on discovering th a t B knew of th e m ine at the tim e he bought the estate, may
either repudiate or adopt the sale at his option.

216. I f an agent, w ith o u t the knowledge o f his p rin cip a l, deals in the Principal's
business o f the agency on his own account instead o f on account o f his benefit0
p rin c ip a l, the p rin c ip a l is entitled to claim fro m the agent any benefit w hich gained by
may have resulted to h im fro m the transaction. dealing on
his own
Illustration, account in
A directs B, his agent, to buy a certain house for him . B tells A it cannot be bought, and business of
buys the house for h im self. A may, on discovering th at B has bought,the house, com pel him to agency,
sell i t to^4 a t the price he g av e for it.

217. A n agent may re ta in ,1 out o f any sums received on account o f the A g e n ts

p rin c ip a l in the business o f the agency, a ll moneys due to him self in respect ont
o f advances made or expenses properly incurred by him in conducting such of sums
business, and also such rem uneration as may be payable to h im fo r acting as principal's
agent. account.

218. Subject to such deductions, the agent is bound to pay to his A gents duty
p rin cipa l a ll sums received on his account. received for
principal.
219. In the absence o f any special contract, payment fo r the w h e n
perform ance o f any act is not due to the agent u n til the com pletion o f such * ^ ^gration
a c t ; b u t an agent may detain moneys received by him on account o f goods becomes due.
sold, although the whole o f the goods consigned to him fo r sale may not have
been sold, or although the sale may not be actually complete.

220. A n agent who is g u ilty o f misconduct in the business o f the Agent not
agency is not entitle d to any rem uneration in respect o f th a t p a rt o f the entitled to
, . , . , rem uneration
business w hich he has misconducted. for business
misconduc-
lllustrattons. ted.
(a) A employs B to recover 1,00,000 rupees from C, and to lay it out on good security. B
recovers the 1, 00,000 rupees and lays out 90,000 rupees on good security, b u t lays out 10,000
rupees on security w hich h e ought to have know n to be bad, w hereby A loses 2,000 rupees. B
is entitled to rem uneration for recovering the 1,00,00 ) rupees and for investing th e 90,000 rupees.
He is not entitled to any rem uneration for investing the 10,000 rupees, and he m ust make good
the 2,000 rupees to B.
1 ?e section ? 2J.
 52 C ontract

(b) A employs B to recover 1,000 rupees from C. T hrough B's m isconduct th e money is
not recovered. B is en titled to no rem un eratio n for his services, and must make good th e loss.

A gents lien 221. In the absence o f any contract to the contrary, an agent is entitled
on principals
property. to retain goods, papers and other property, w hether moveable or immoveable,
o f the p rin c ip a l received by him , u n til the am ount due to him self fo r com
m ission, disbursements and services in respect o f the same has been paid or
accounted fo r to him . 1

Principal's D uty to Agent-

Agent to be 222. The em ployer o f an agent is bound to indem nify him against the
indemnified
against con consequences o f a ll la w fu l acts done by such agent in exercise o f the a u th o rity
sequences of conferred upon him*
lawful acts.
Illustrations.

() B, at Singapore, under in stru ctio n s from^4 of Rangoon, co n tracts w ith C to deliver certain
goods to him . A does not send th e goods to B, and C sues B for breach of c o n tract. B in fo im s
A of th e suit, and A authorizes him to defend th e suit. B defends th e su it, and is compelled to
pay damages and costs, and incurs expenses. A is liable to B for such dam ages, co sts and
expenses.
() B, a broker at Rangoon, by th e orders of A, a m erchant there, co n tra cts w ith C for th e
purchase of 10 casks of oil for A. A fterwards A refuses to receive th e oil, and C sues B. B
inform s A, who rep u d iates the contract altogether. B defends, b u t unsuccessfully, and has to
pay damages and c o sts and incurs expenses. A is liable to B for su ch damages, costs and
expenses.

Agent to be 223. Where one person employs another to do an act, and the agent
indemnified does the act in good fa ith , the em ployer is lia b le to indem nify the agent
against con
sequences of against the consequences o f tha t act, though i t causes an in ju ry to the rights
acts done o f th ird persons.
in good faith.
Illustrations.

( ) A, a decree-holder and entitled to execution of B s goods, requires the officer of the

Court to seize c ertain goods, representing th em to be the goods of B. T he officer seizes the
goods, and is sued by C, th e true ow ner of th e goods. A is liab le to indem nify the officer for
the sum w hich he is com pelled to pay to C, in consequence of obeying ^4's directions.
() B, at th e request of A, sells goods in the possession of A, but w hich A had no rig h t to
dispose of. B does n o t know th is, and hands over the proceeds of the sale to A. A fterw ards C,
the tru e ow ner of th e goods, sues B and recovers th e value of th e goods and costs. A is liable to
indemnify B for w h at he has been compelled to pay to C and for Bs own expenses.
Non-liability 224. Where one person employs another to do an act which is crim inal,
of employer the em ployer is n o t lia b le to the agent, either upon an express or an im plied
of agent to do
a criminal prom ise, to ind e m nify h im against the consequences o f that act-
act.
Illustrations.

(a) A employs B to beat C, and agrees to indem nify him against all consequences of the a c t .
B thereupon beats C, and has to pay damages to C for so doing. A is not liable to indem nify B
for those damages.
(ft) B, th e proprietor of a new spaper, publishes, at / l s request, a libel upon C in the paper,
and A agrees to indemnify B against the consequences of the publication, and all costs and
dam ages of any r.ction in respect thereof. B is sued by C and has to pay dam ages, and also
incurs expenses. A is n o t liable to B upon the indem nity.

1 A sto th e general lien of an agent who is a banker, factor, advocate o r policy-broker, see
section 171.
 Contract. 53

i2 5 . The p rin c ip a l must make compensation to his agent in respect o f Com pen-
in ju ry caused to such agent by the p rin c ip a ls neglect or w ant o f s k ill. sation to
agent for
injury
Illu s tr a tio n caused by
principal's
A employs B as a b ricklayer in building a house, and p uts up the scaffolding himself. The neglect,
scaffolding is unskilfully p u t up, and B is in consequence hurt. A must make com pensation to B.

Effect of Agency on Contract with third Persons.

226. Contracts entered in to through an agent, and obligations arising E nforcem ent
fro m acts done by an agent, may be enforced in the same manner, and w ill and
have the same legal consequences, as i f the contracts had been entered in to of agelit"'"068
and the acts done by the p rin c ip a l in person. contracts.

Illustrations.

(a) A buys goods from B, know ing that he is an agent for th eir sale, b u t n o t know ing w ho
is the principal. B s principal is the person e n title d to claim from A th e p rice of th e goods, and
A cannot in a suit by th e p rin cip al set off against th a t claim a d eb t due to him self from B.
(i) A, being B s ag en t w ith a u th o rity to receive money on his behalf, receives from C a
sum of m oney due to B. C is discharged of his obligation to pay th e sum in question to B.

227. When an agent does more than he is authorized to do, and when Principal
the p a rt o f w hat he does w hich is w ith in his a u th o rity can be separated fro m boun^when
the p a rt w h ich is beyond his a u th o rity , so much only o f w hat he does as is agentexceeds
w ith in his a u th o rity is bind ing as between h im and his p rin c ip a l. authority.

Illusti ation .
A, being ow ner of a ship and cargo, authorizes B to procure an insurance for 4,000 rupees
on th e ship. B procures a policy for 4,000 rupees on th e ship, and an o th e r for th e like sum on
th e carg o . A is bound to pay th e prem ium fo r the policy on th e ship, b u t not the prem ium for
the policy on th e cargo.

228. Where an agent does more than he is authorized to do, and what principal not
he does beyond the scope o f h is a u th o rity cannot be separated fro m w hat is to u n d when
w ith in it, the p rin c ip a l is not bound to recognize the transaction. agents0
authority is
Illustration. notseparable.

A authorizes B to buy 500 sheep for him . B buys 500 sheep and 200 lam bs for one sum of
6,000 rupees. A may repudiate the w hole tran sactio n .
229. A n y notice given to or in fo rm a tio n obtained by the agent, provided conse-
it be given or obtained in the course o f the business transacted by him fo r quences
the p rin c ip a l, shall, as between the p rin c ip a l and th ird parties, have the same g iv ^ to
legal consequence as i f i t had been given to or obtained by the p rin cip a l. agent.

Illu stra tio n s.

(a' A is em ployed by B to buy from C certain goods, of w hich C is th e app aren t ow ner, and
buys them accordingly. In the course of th e tre a ty for th e sale, A learns th a t th e goods really
belonged to D, but B is ignorant of th a t fact. B is not en title d to set off a debt ow ing to him
from C against th e price of th e goods.
(6) A is employed by B to buy from C goods of w h ich C is th e apparent ow ner. A was,
before he was so employed, a serv an t of C, and then learnt th a t the goods really belonged to
D, but B is ignorant of th at fact. In sp ite of the know ledge of his agent, B m ay set off
against the price of th e goods a debt owing to him from C.
 54 Contract-

Agent cannot 230. In the absence o f any contract to that effect, an agent Cannot
personally personally enforce contracts entered in to by him on behalf o f his principal,
enforce, nor
be bound by, nor is he personally bound by them.
contracts on
behalf of
principal.

Presum ption Such a contract shall be presumed to exist in the fo llo w in g cases:
of contract to
contrary. ( 1) where the contract is made by an agent fo r the sale or purchase
o f goods fo r a merchant resident abroad ;
( 2) where the agent does not disclose the name o f his p rin c ip a l;
(3) where the p rin cip al, though disclosed, cannot be sued.

Rights of 231. I f an agent makes a contract w ith a person who neither knows,
parties to
a contract nor has reason to suspect, th at he is an agent, his prin cip a l may require the
made by performance o f the contract ; but the other contracting party has, as against the
agent not
disclosed. p rin c ip a l, the same rights as he w ould have had as against the agent i f the
agent had been p rin cipa l.

I f the p rin cipa l discloses him self before the contract is completed, the
other contracting party may refuse to fu lfil the contract, i f he can show that,
i f he had know n who was the prin cip a l in the contract, or i f he had known
that the agent was not a p rin c ip a l, he w ould not have entered in to the contract.

Perform ance 232- Where one man makes a contract w ith another, neither knowing
w ith 'ag en t nor having reasonable ground to suspect that the other is an agent, the
supposed to p rin cip a l, i f he requires the performance o f the contract, can only obtain
be p rin c ip a l. perf ormance subject to the rights and obligations subsisting between the
agent and the other party to the contract.

Illu stra tio n .

A, w ho owes 500 rupees to B, sells 1,000 rupees' w orth of ric e to B. A is acting as agent
for C in th e transaction, b u t B has no know ledge nor reasonable ground of suspicion th a t such
is the case. C can n o t compel B to take the rice w ithout allowing him to set-off i4s debt.

Right of 233. In cases where the agent is personally liable, a person dealing
person w ith h im may h old either him or his p rin cip a l, or both o f them, liable.
dealing
w ith agent
personally Illustration.
liab le.
A entei s in to a c o n tra ct w ith B to sell him 100 bales of cotton, and afterw ards discovers
th at B was actin g as agent for C. A may sue e ith e r B or C, or both, for th e price of th e co tto n .

Consequence 234. W hen a person who has made a contract w ith an agent induces
of inducing the agent to act upon the b e lie f that the prin cip a l only w ill be held liable, or
agent or
principal to induces the prin cip a l to act upon the b e lief that the agent only w ill be held
a c t on belief liable, he cannot afterwards hold liable the agent or prin cip a l respectively.
that principal
or agent
will be held
exclusively
lia b le .
 Contract- 55

235. A person u n tru ly representing him self to be the authorized agent Liability of
o f another, and thereby inducing a th ird person to deal w ith h im as such pretended
agent.
agent, is liable, i f his alleged employer does not ra tify his acts, to make
compensation to the other in respect o f any loss or damage w hich he has
incurred by so dealing.

236. A person w ith whom a contract has been entered in to in the Person
falsely con
character o f agent is n o t entitled to require the perform ance o f it i f he was in tracting as
re a lity acting, not as agent, b u t on his own account. agent not
entitled to
perform ance.

237. W hen an agent has, w ith o u t a uthority, done acts or incurred Liability of
principal
obligations to th ird persons on behalf o f his p rin cip a l, the p rin cip a l is bound inducing
by such acts or obligations i f he has by his words or conduct induced such belief that
agents un
th ird persons to believe tha t such acts and obligations were w ith in the scope authorized
o f the agents a u th o rity. acts w ere
authorized.
Illustrations.

() A consigns goods to B fo r sale, and gives h im in stru ctio n s not to sell under a fixed
price. C, being ignorant of Bs instructions, enters in to a contract w ith B to buy the goods at a
price low er than the reserved price. A is bound by the contract.
() A entrusts B w ith n eg o tiab le instrum ents endorsed in blank. B sells them to C in
violation of private orders from A. The sale is good.

238. Misrepresentations made, or frauds com m itted, by agents acting in Effect cn

agreem ent
the course o f th e ir business fo r th e ir principals, have the same effect on of m isrepre
agreements made by such agents as i f such misrepresentations or frauds had sentation
or fraud by
been made or com m itted by the p rin c ip a ls ; b u t misrepresentations made, or agent.
frauds com m itted, by agents in matters w hich do not fa ll w ith in th e ir a u th o rity
do not affect th e ir principals.

Illustrations.

(a) A, being B s agent for the sale of goods, induces C to buy them by a m isrepresentation,
w hich he was not authorized by B to make. The c o n tract is voidable, as between B and C, at
the option of C.
(I) .A, the captain of B s ship, signs bills of lading w ithout h av in g received on board the
goods m entioned therein. T h e bills of lading are void as betw een B and the pretended
consignor.

C H A P T E R X I.

Of P a r t n e r s h ip - 1

239266. * * * *

1 See now the P artnership Act.

 56

PART XII.INSURANCE.
3388 s o jii n s s o e s o ^ S s ^ S s p it

THE INSURANCE COMPANIES ACT.

[I n d ia A ct X X , 1928 .] (15th N o vem b er, 1928 .)

Whereas it is expedient to provide fo r the collection o f statistical

in fo rm a tio n in respect o f insurance business other than life assurance business ;
I t is hereby enacted as follow s :

P AR TS I I I .
J__* * * *

PART III.
Provisions as to Insurance Business other than Life Assurance Business-

Definitions. 6. In this Part, unless there is anything repugnant in the subject or

context,
(a) certified, in re latio n to any copy or translation of a document
required to be furnished by or on behalf o f an insurance
company, means certified by a responsible officer o f the
company to be a true copy or a correct translation, as the
case may be ;
( b ) insurance company means any person who transacts in the
U nion o f Burma the business o f effecting contracts of
insurance against any risk ;
(c) expressions used in this A c t and defined in the L ife Assurance
Companies A c t shall have the meanings assigned to them
respectively in that A c t.

D eposit of
7. Every insurance company which does not transact life assurance
accounts, business in the U nion o f Burm a shall, w ith in six months after the close of
etc., w ith
President.
each financial year or w ith in such fu rth e r period as the President o f the U nion
may in any case fo r special reasons allow , deposit w ith the President o f the
U nion fo u r copies o f every re port on the affairs o f the company, and o f
every balance sheet, revenue account and p ro fit and loss account in respect of
that year, w hich has been subm itted to its shareholders or policy-holders, and
also, in the case o f a company whose head office is situated outside the U n io n
o f Burm a, fo u r copies o f such o f the aforem entioned documents as are
required by law to be subm itted to the Government o f the country in which
the head office is situated.

Statements 8. The fo llow in g statements shall be appended to every revenue account

to be (other than a life assurance revenue account) deposited by an insurance
appended
company w ith the President o f the U n io n in compliance w ith section 7 or
 Insurance Companies . 57
With the provisions o f the L ife Assurance Companies A c t, as respects the year to reverme
and the class o f insurance business to w hich the revenue account relates,
namely, statements showing
(1) in respect o f prem ium income fo r w hich credit is taken in the
revenue account, the am ount o f premiums derived fro m business
effected in the U nion o f Burma,
(2) in respect o f claim s, the am ount o f the claims paid in the year o f
account under policies effected in the U n io n o f Burma
(a) to claim ants in the U n io n o f Burm a, and
(b) to claim ants outside the U n io n o f Burma.

9. There shall be appended to every balance sheet deposited by an statement

insurance company w ith the President o f the U n io n in compliance w ith section 7
a statement showing, in such fo rm as the President o f the U nion may prescribe, o r Pakistan
a classified summary o f the investments o f the company in the U nion o f Burm a assets*
and In d ia or Pakistan in government securities and in Burm an or [In d ia n or
P akistan]1 concerns and the other Burm an or [ Indian or Pakistan]1 assets held
by the company.

10. A t least one copy o f every document deposited by an insurance s ig n in g of

company w ith the President o f the U nion in accordance w ith the requirements docum ents,
o f section 7, section 8 or section 9 shall be signed in the manner provided in
section 11 o f the L ife Assurance Companies A ct.

11. I f any p o rtio n o f any document required to be deposited under c e rtifie d

section 7, section 8 or section 9 by an insurance company w ith the President cPies of
, ve rn a cu la r
o f the U nion is not w ritte n in the [B u rm ese]1 language, a certified translation docum ents,
thereof shall be furnished along w ith each copy o f the document.

12. Every insurance company w hich does not transact life assurance P a rticu la rs
business in the U n io n o f Burm a shall, before i t begins to carry on business, to be filed-
fu rn is h to the President o f the U n io n
( a) the f u ll address o f the prin cip a l office o f the company in the
U nion o f Burm a ;
( b ) the names o f the directors, p rin cip a l officer and the auditor o f the
company in the U n io n o f Burma ;
(c) a statement o f the classes o f insurance business carried on or
intended to be carried on by the company in the U nion o f Burm a ;
( d ) a certified copy o f the charter, status, deed o f settlement or
memorandum and articles o f the company, or other instrum ent
constituting or defining the constitution o f the company, and, if
the instrum ent is n o t w ritte n in the [Burm ese]1 language, a
certified translation thereof ;
(e) in the case o f any such company established outside the U nion
o f Burm a, the names and addresses o f sane one or more persons

1 Substituted by the Union of Burma (Adaptation of Laws) Order, 1948.

 58 insurance Companies.

resident in the U nion o f Burm a, authorized to accept on behalf

o f the company service o f process and any notice required to be
served on the company ;

and, in the event o f any a lteration being made in the address o f the p rin c ip a l
office or in such classes o f business or in any such instrum ent as aforesaid or
in the name o f any such person, the company shall fo rth w ith furnish to the
President of the U nion particulars o f the alteration.

C ustody and 13. Every document deposited w ith the President o f the U nion, in
inspection of com pliance w ith section 7, section 8 or section 9, or a certified copy o f such
docum ents.
document, shall be kept by the R egistrar, and any such documents or copies
shall be open to inspection, and any person may procure a copy o f any such
document or o f any p a rt thereof on payment o f a fee o f six annas fo r every
hundred words or fra ctio na l p a rt thereof required to be copied.

Evidence o f 14. ( / ) Every document deposited w ith the President o f the U n io n , in

documents.
compliance w ith section 7, section 8 or section 9, w hich has been certified by
the R egistrar to be a document so deposited, shall be deemed to be a
document so deposited-
(2) Every such document purporting to be certified by the Registrar to be
a copy o f a document so deposited shall be deemed to be a copy o f th a t
document, and shall be received in evidence as i f i t were the o rig in a l document,
unless some variation between i t and the o rig in a l document be proved*

S um m ary of 15. The President o f the U nion shall, fro m tim e to tim e, cause to be
accounts, published, in such manner as he may direct, a summary o f the accounts, balance
etc., to be
published. sheets and statements deposited w ith h im in compliance w ith section 7,
section 8 or section 9, and may append to such summary any note o f the President
o f the U n io n thereon and any correspondence in relation thereto.

P e n a lty 16. A n y insurance company w hich makes default in com plying w ith any
fo r non- o f the requirements o f this Part, and every director, manager or secretary, or
co m pliance
w it h A ct. other officer or agent of, or partner in , the company who is kn ow ingly a party
to the default, shall be punishable in the manner provided in section 34 o f the
L ife Assurance Companies. A ct.

Penalty fo r 17. I f any account, balance sheet, statement or other document required
fa ls ify in g
docum ents.
by the provisions o f section 7, section 8 or section 9 is false in any particular
to the knowledge o f any person who signs it, such person shall be punishable
in the manner provided in section 35 o f the L ife Assurance Companies A ct.

Cognizance 18. N o C ourt in fe rio r to th a t o f a Magistrate o f the first class shall try
o f offences.
any offence under this Act.
 insurance Companies-

i 9- A person transacting the business o f re-insuring contracts o f insurance

A p p lic a tio n
effected by any other person in the course o f any class o f business other than of P a rt I I I to
re-insurance
life assurance business shall not, by reason only o f that fact, be deemed to be business.
transacting insurance business o f th a t class-

20. The President o f the U n io n may, by n o tific a tio n in the Gazette, Exem
and ption.
subject to such restrictions and conditions as he thinks fit, exempt fro m a ll
or any of the provisions o f th is A c t any provident insurance society registered
under the P rovident Insurance Societies A ct.

THE LIFE ASSURANCE COMPANIES ACT.

CONTENTS-

Preliminary-
Sections-
| * * * *
2. D efinitions.
2A . * * * *
3. Companies to w hich A c t applies.

Deposits.
4- Deposits.
Accounts and Documents.

5. Separation o f funds.
6- A p p ro p ria tio n o f life assurance fund-
7, Accounts and balance-sheets.
8. A c tu a ria l rep o rt and abstract-
9'. A c tu a ria l abstract in case o f m utual company.
10- Statement o f life assurance business.
11. D eposit o f accounts, etc., w ith President.
12- D eposit o f report.
13. Exem ption fro m certain provisions o f the Burma Companies Act.
14- R ig h t o f shareholders, etc., to copies o f accounts, etc.
15. A u d it o f accounts.
16- L is t o f shareholders.
17- Deed o f settlement.
18- P ublication o f authorized as well as subscribed and paid-up capital.
19. Requirements as to companies established outside the U nion o f Burma.
66 Life Assurance Companies

Amalgamation or Transfer.

20. Am algam ation or transfer.

21. Statement in case o f am algam ation or transfer.

Winding-up.

22. Special provisions as to w inding-up o f assurance companies.

23. W inding-up o f subsidiary companies.
24. V a lu a tio n o f annuities and policies.
25. Rules o f valuation .
26. Power to C ou rt to reduce contracts.
26A - A p p lic a tio n o f surplus assets in liq u id a tio n .

Special Provisions relating to Accounts and Documents.

27. Custody and inspection o f documents deposited w ith President.

28. Accounts, etc., to be published.
29. Evidence o f documents.
30. Evidence o f copies o f documents.
31. A lte ra tio n o f form s.

Companies carrying on business in the United Kingdom.

sjs sft sfs sfc
32.
* * * *
33.

Penalties and Procedure.

34. Penalty fo r non-com pliance w ith A ct.

35. Penalty fo r fa ls ify in g statements, etc.
36. Cognizance o f offences.

Miscellaneous-

37. A pp o intm e n t o f inspectors.

38. Service o f notices.
39. rPower
u w c i to
i v make
m a K c irules.
u ic a
40. * * * *
41. Power o f President to exempt from the provisions o f the A ct.

T H E F IR S T S C H E D U L E . R e v e n u e A ccounts.

T H E SEC O N D S C H E D U L E . P r o f i t and L oss A ccount.

T H E T H IR D S C H E D U L E . B a l a n c e - s h e e t s -
THE FOURTH S C H E D U L E . S t a t e m e n t r e s p e c t in g V a l u a t io n of

L ia b il it ie s .
THE F IF T H S C H E D U L E . S t a t e m e n t of L if e A ssu ran ce and A n n u it y

B u s in e s s .
T H E S IX T H S C H E D U L E . R u l e s f o r v a l u in g A n n u it ie s , e t c .
 61

T H E L I F E ASSURANCE COMPANIES ACT.

[ I n d ia A c t V I, 1912.] (18th March, 1912.)

Preliminary.
* * * *

2- In this A ct, unless there is anything repugnant in the subject or context, D efinitions.

(1) actuary means an actuary possessing such qualifications as may

be prescribed by rules made by the President of the Union :
(2) chairman means the person for the time being presiding over the
board of directors or other governing body of a life assurance
company :
(3) Court means the principal civil Court of original jurisdiction in
a district, and includes the High Court in the exercise of its
ordinary original civil jurisdiction :
(4) financial year means each period of twelve months at the end
of which the balance of the accounts of the life assurance
company is struck, or, if no such balance is struck, then the
calendar year :
(5) life assurance business means the issue of, or the undertaking
of liability under, policies of assurance upon human life, or
the granting of annuities upon human life :
(6) policy of assurance on human life means any instrument by
which the payment of money is assured on death ( except death
by accident on ly) or the happening of any contingency dependent
on human life or any instrument evidencing a contract which is
subject to payment of premiums for a term dependent on
human life :
(7) policy-holder means the person who for the time being is the
legal holder of the policy for securing the contract with the life
assurance company :
(8) where a company grants' annuities upon human life, policy
includes the instrument evidencing the contract to pay such an
annuity, and policy-holder includes annuitant : and
(9) Registrar means any person who may be appointed by the
President of the Union to perform the duties of the Registrar
under this A ct.
12A. * * * *
3. Save as hereafter expressly provided, this A ct shall apply to all persons Com panies
to w hich A ct
or bodies of persons, whether corporate or unincorporate (which persons and applies.
bodies of persons are hereafter referred to as life assurance companies), who
carry on life assurance business within the Union of Burma.
Explanation. A company registered under the Burma Companies Act
which carries on life assurance business in any part of the world shall for the
purposes of this section be deemed to be a company carrying on such business
within the Union of Burma-
1 Om itted by the U nion of Burm a (Adaptation of L aw s) O rder, 1948.
 62 Life Assurance Companies.

Exception. N oth ing in this A c t shall apply to any society to w hich the
Provident Insurance Societies A c t applies or to any fund w hich the President
o f the U n io n may, by no tificatio n in the Gazette, exempt fro m the operation
o f this A ct.

Deposits-

D eposits. 4. 0 ) Every life assurance company shall, [ * * * *] l

before i t commences to carry on the business of life assurance, deposit and
keep deposited w ith the [U n io n Bank o f B u rm a ]2 or such other Bank as the
President o f the U nion may direct, fo r and on behalf o f the President o f the
U n ion , securities o f [ * * * * ] 3 the Government o f the U nion
o f Burm a, o f the face value o f twenty-five thousand rupees or o f a face value
equal to one-third o f the income derived fro m life assurance business as
shown in the revenue account fo r the last financial year, whichever is greater ;
and, u n til the company keeps deposited .securities o f the face value o f two
hundred thousand rupees, shall annually deposit and keep deposited in lik e
manner lik e securities o f a face value
(a) equal to one-third o f the income derived fro m life assurance
business as shown in the revenue account fo r the last financial
year, u n til the face value o f the securities deposited exceeds one
hundred thousand rupees ;
( b ) and thereafter equal in amount to one-third o f the increase to
the life assurance fund as shown in the revenue account fo r the
last financial year :
Provided that a company may at any tim e deposit securities o f a face value
o f two hundred thousand rupees or make up its deposit o f securities to
tha t value.
(2) The interest accruing due on the securities deposited under sub-section
( / ) shall be paid to the company, subject only to deduction o f the norm al
commission chargeable fo r the realisation o f interest.
(J) The deposit may be made by the subscribers o f the memorandum o f
association o f a company, or any o f them, in the name o f a proposed company
and, upon the incorporatio n o f the company, shall be deemed to have been
made by, and to be part o f the assets of, the company, and the R egistrar shall
n o t issue a certificate o f incorporation o f the company u n til the deposit has
been made.
(4) The deposit shall be deemed to fo rm part o f the life assurance fund
o f the company.

Separation 44A. A life assurance company w hich has deposited securities o f the
o f funds. Government o f In d ia before the commencement o f the L ife Assurance
Companies (Am endm ent) A c t, 1951, shall, w ith in six months fro m the date

1 O m itte d b y th e U n io n o f B u rm a (A d a p ta tio n of L a w s ) O rde r, 1948.

2 Substituted ibid.
3 Deleted b y A c t X X X I I , 1951.
4 In se rte d ibid.
 Life Assurance Companies- 63

o f commencement o f the said A ct, deposit and keep deposited, as provided in

sub-section ( / ) o f section 4, securities o f the Government o f the U nion o f Burm a
o f equal face value in lie u o f the said securities o f the Governm ent o f India.

>4B. A life assurance company w hich has been exempted, before the
commencement o f the L ife Assurance Companies (Am endm ent) A ct, 1951,
fro m the provisions o f section 4 and certain other sections, shall as fro m the
date o f commencement o f the said A c t be subject to a ll the provisions o f this
A c t ; and shall w ith in two months fro m the said date, deposit and keep deposited
securities o f the G overnm ent o f the U n io n o f Burm a as provided in sub-section
( / ) o f section 4 o f the face value o f two hundred thousand rupees :
2 Provided th a t i f a life assurance company has ceased, before the
commencement o f the said A c t, to enter in to any new life assurance contracts,
the company shall deposit and keep deposited securities o f the Governm ent o f
the U nion o f Burma o f the face value equal to the to ta l am ount o f its
lia b ilitie s in the U n io n o f Burm a, as certified by an actuary :
2 Provided fu rth e r that, i f in any case it is made to appear to the
President o f the U n io n that the circumstances are such that a longer period
should be allowed, he may extend the period prescribed in this section or in
section 4 A by such period as he may th in k fit.

14C. A life assurance company, w hich has ceased to carry on the business
o f life assurance in the U n io n o f Burm a, shall be entitled to the return o f the
securities deposited under section 4 or section 4 A or section 4B, when its
lia b ilitie s in the U n io n o f Burm a have been fu lly satisfied.

Accounts and Documents.

5. In the case o f a life assurance company transacting other business separation

besides th a t o f life assurance, a separate account shall be kept o f a ll receipts o f fu n ds,
in respect o f the life assurance business, and the said receipts shall be carried
to and fo rm a separate fund to be called the life assurance fund.
Explanation . N o th in g in this section shall be deemed to require any life
assurance fund to be invested in separate investments fro m any other, fund, but a
separate balance-sheet as prescribed under section 7 shall be kept in respect
o f the life assurance fund.
Exception . N o th in g in th is section shall apply to a life assurance
company established before the 18th M arch, 1912,3 by the terms o f whose
deed o f settlement the whole o f the profits o f a ll the business carried on by the
company are paid exclusively to the life policy-holders, and on the face o f whose
life policies the lia b ility o f the life assurance fund in respect o f the other
business d istin c tly appears.

1 In s e rte d by A c t X X X I I , 1951.
2 Provisos inserted b y A c t X X I I I , 1952.
:l Date o f com m encem ent o f th is A c t.
 64 Life Assurance Companies .
A p p ro p ria 6. The life assurance fund shall be as absolutely the security o f the life
tion o f life
assurance policy-holders as though it belonged to a company carrying on no other
fund. business than life assurance business, and shall not be liable fo r any contracts
o f the company fo r w hich it w ould not have been liable had the business o f the
company been only that o f life assurance, and shall not be applied, directly or
in d ire ctly, fo r any purposes other than those o f life assurance.
Exception N o thin g in this section shall affect the lia b ility o f the life
assurance fund, in the case o f a company established before the 18th M arch,
1912,1 fo r contracts entered in to by the company before such date.
Accounts 7. ( / ) Every life assurance company shall, at the e xp ira tio n o f each
and balance- financial year, prepare
sheets.
(a) a revenue account fo r the year in the fo rm or form s set fo rth in the
F irs t Schedule and applicable to the class or classes o f business
carried on by the company ;
( b) a p ro fit and loss account in the fo rm set fo rth in the Second
Schedule, except where the company carries on life assurance
business only and no other business ;
(c) a balance-sheet or balance-sheets in the fo rm or form s set fo rth in
the T h ird Schedule ;
(d) a statement containing the name o f every person who during the
year was a member o f the board o f directors or other governing
body or was manager or secretary or held any sim ila r office by
whatever name called ;
( e) a statement showing
(A ) as regards new policies o f life assurance in respect o f w hich a
prem ium has been paid in the year o f account,
(i) the number o f policies,
(ii) the sums assured,
( iii) the am ount received by way o f single prem iums (including
a ll premiums paid at the outset where no subsequent
prem ium is payable), and
(iv) the am ount o f yearly renewal prem ium income ;
(B) as regards to ta l life assurance business,
(i) the number o f policies in force at the end o f the year o f
account,
( ii) the sum assured (including reversionary bonus additions
thereto) under policies in force at the end o f the year o f
account, and
( iii) the prem ium income fo r which cre d it is taken in the
revenue a cc o u n t;
(C) as regards claims, the amount o f the claims paid in the year o f
account under policies effected in the U nion o f Burma
(i) to claim ants in the U nion o f Burm a, and
( ii) to claim ants outside the U nion o f Burma ;

1 D a te 'o f com m encem ent o f this A ct.

 Life Assurance Companies. 65
(/) a statement showing, in such form s as the President o f U nion may
prescribe, a classified summary o f the investments o f the
company in the U nion o f Burm a or In d ia or Pakistan in
government securities and in Burm an or [ In d ia n or
P a k is ta n ]1 concerns and the other Burman or [In d ia n or
Pakistan j 1 assets held by the company.

(2) F or the purposes o f clause (e) o f sub-section ( /) , a ll items required

to be stated shall be net amounts after deduction o f the re-insurances o f the
companys risks, and fo r the purposes o f sub-clauses (A ) and (B) o f that
clause__
(a) the statement shall show separately the numbers and amounts in
respect o f policies effected in, and policies effected outside,
the U nion o f Burm a ;
( b ) where a sum assured is payable p e riodically, whether by way o f
an annuity or otherwise, i t shall be stated separately from
lum p sum paym ents; and
(c) policies o f assurance upon the lives o f a group o f persons whereby
sums assured are payable in respect o f several persons
included in the group shall be excluded from the statement and
be shown in a separate statement containing the lik e particulars.

8. (1) Every life assurance company shall once in every five years, or at A c tu a ria l
re p o rt and
such shorter intervals as may be prescribed by the instrum ent constituting abstract.
the company or by its regulations or bye-laws, cause an investigation to be
made in to its financial cond ition , including a valuation o f its lia b ilitie s , by
an actuary, and shall cause an abstract o f the report o f such actuary to be
made in the fo rm set fo rth in the F o urth Schedule.
(2) The provisions o f sub-section ( / ) regarding the making o f an
abstract shall also apply whenever at any other tim e an investigation in to the
financial condition o f a life assurance company is made w ith a view to the
d is trib u tio n o f profits, or whenever the results of any such investigation are
made public.

9. In the case o f a m utual life assurance company whose profits are Actuarial
abstract in
allocated to members w h olly or m ainly by annual abatements o f premium, case of
the abstract o f the report o f the actuary on the financial condition o f the mutual
com pany.
company prepared in accordance w ith the F o u rth Schedule may, notw ithstand
ing anything in section 8, be made and returned a t intervals not exceeding five
years : Provided that, where such return is not made annually, i t shall include
particulars as to the rates o f abatement o f prem ium s applicable to different
classes or series o f assurances allowed in each year during the period which
has elapsed since the previous return under the F ourth Schedule.

1 Substituted by the Union of Burma (Adaptation of Laws) Order, 1948.

5
 66 Life Assurance Companies .
Statem ent o f 10. Every life assurance company shall, at the date to which the
life assur accounts o f the company are made up fo r the purposes o f the investigation
ance busi
ness. prescribed by section 8, prepare a statement o f its assurance business in the
fo rm set fo rth in the F ifth Schedule: Provided that, i f the investigation is
made annually by any company, the company may prepare such a statement at
any tim e so that it be made at least once in every five years.

D eposit of 11. ( / ) Every account, balance-sheet, abstract or statement hereinbefore

accounts, required to be made shall be printed, and fo u r copies thereof, one o f which
e tc ., w ith
P resident. shall be signed by the chairm an and two directors o f the company, and by
the p rin cip a l officer o f the company, and i f the company has a managing
director, by the managing director, shall be deposited w ith the President o f
the U nion w ith in six months in the case o f accounts and balance-sheets
required by section 7, and w ith in one year in other cases, after the close o f
the p e rio d to w hich the account, balance-sheet, abstract or statement relates '.
Provided that, i f in any case i t is made to appear to the President o f the
U nion that the circumstances are such that a longer period should be
allowed, he may extend that period by such period as he may th in k fit.
( 2 ) The President o f the U nio n shall consider any document deposited
in accordance w ith the provisions o f sub-section (l) and, i f any such document
appears to the President o f the U nion to be inaccurate or defective in any
respect, the President o f the U n io n may call upon the company to furnish
a furth e r statement correcting any such inaccuracies or supplying any such
deficiencies.

D e posit o f 12. There shall be deposited w ith every revenue-accoant and balance-
rep o rt. sheet o f a life assurance company every report on the affairs o f the com
pany subm itted to the shareholders or policy-holders o f the company in
respect o f the financial year to w hich the account and balance-sheet relate.

E xe m p tio n 13. Where a life assurance company registered under the Burma
fro m certain Companies A c t in any year deposits its accounts and balance-sheet in
p ro vision s
o f the
accordance w ith the provisions o f section 11, the company may, at the same
B u rm a tim e, send to the R egistrar o f Companies a copy o f such accounts and
Com panies
Act.
balance-sheet, and, where such copy is so sent, i t shall not be necessary fo r
the company to file a balance-sheet w ith the Registrar o f Companies as
required by the Burm a Companies A ct, and the copy o f the accounts and
balance-sheet so sent shall be dealt w ith in a ll respects as i f it were a balance-
sheet filed in accordance w ith th a t A ct.

R ig h t of 14 A printed copy o f the accounts, balance-sheet, abstract or state

share ment last deposited shall, on the application o f any shareholder or po licy
holders, etc.,
to copies holder o f the com pany, be forw arded to him by the company by post or
o f accounts, otherwise.
etc.

A u d it of 15. The accounts o f every life assurance company shall be audited

accounts.
annually in such manner as the.President o f the U nion may prescribe.
 Life Assurance Companies- 67
16. Every life assurance company w hich is not registered under the List of
share
feurma Companies A c t shall keep a lis t of the names and addresses o f its holders.
shareholders, and shall, on the application o f any shareholder or policy-holder
o f the company, fu rn ish to him a copy o f such lis t on payment o f a sum not
exceeding two annas fo r every hundred words required to be copied.

17. Every life assurance company which is n o t registered under the D eed of
settlement.
Burm a Companies A c t shall cause a sufficient num ber o f copies o f its deed o f
settlement or other instrum ent constituting the company to be printed, and
shall, on the applicatio n o f any shareholder or policy-holder o f the company,
furnish to him a copy o f such deed o f settlement or other instrum ent on
payment o f a sum not exceeding one rupee.

18. W here any notice, advertisement or other official publication o f a life Publication
of authorized
assurance company contains a statement o f the am ount o f the authorized as w ell as
capital o f the company, the pub licatio n shall also contain a statement o f the subscribed
and paid-up
am ount o f the capital which has been subscribed and the amount paid up. capital.

19. ( 7 ) Every life assurance company constituted outside the U nion o f Require
ments as to
Burm a, w hich establishes a place o f business w ith in the U nion of com panies
Burma, or appoints an agent in the U nion o f Burma w ith the object of established
outside the
obtaining life assurance business, shall, w ith in three months fro m the establish Union of
ment o f the place o f business or the appointm ent o f such agent, file w ith the B urm a.
Registrar
(a) a certified copy o f the charter, statutes or memorandum and
articles o f the company, or other instrum ent constituting or
defining the constitution o f the company, and, i f the in stru
ment is not w ritte n in the [Burm ese]1 language, a certified
translation th e re o f;
( b ) a lis t o f the directors o f the com pany;
(c) the names and addresses o f some one or more persons resident in
the U nion o f Burm a authorized to accept on behalf o f the
company service o f process and any notices required to be served
on the co m p a ny;
and, in the event o f any a lteration being made in any such instrum ent or in
the lis t o f directors or in the names and addresses o f such persons as
aforesaid, the company shall, w ith in such tim e as the President o f the
U nion may prescribe, file w ith the R egistrar a notice o f the alteration.
(2) A n y process or notice required to be served on the company shall be
sufficiently served if addressed to any person whose name has been so filed as
aforesaid and le ft at or sent by post to the address which has been so filed.
(5) There shall be paid to the R egistrar fo r registering any document,
required by this section to be filed, a fee o f five rupees or such smaller fee
as the President o f the U n io n may prescribe.
24( ) * * * #

1 Substituted by the U n io n o f B u rm a (A d a p ta tio n o f Law s) O rder, 1948.

2 O m itte d ibid.
 6& Life Assurance Companies-

Amalgamation or Transfer.

A m a lg a m a 20. ( / ) Where it is intended to amalgamate two or more life assurance

tio n or companies, or to transfer the life assurance business o f one company to
tran sfe r.
another, the directors o f any one or more o f such companies may apply to the
C ourt, by p e titio n , to sanction the proposed arrangement.
(2) Before any such application is made to the C ourt
(a) notice o f the intention to make the application shall be published
in the Gazette at least tw o months before the application is
m a d e;
( b ) a statement o f the nature o f the am algam ation or transfer, as the
case may be, together w ith an abstract containing the m aterial
facts embodied in the agreement or deed under w hich the
amalgamation or transfer is proposed to be effected, and copies
o f the actuarial or other reports upon w hich the agreement or
deed is founded, including a re p o rt by an independent actuary,
shall, unless the C ourt otherwise directs, be transm itted to each
policy-holder o f each company ; and
(c) the agreement or deed under which the amalgamation or
transfer is effected shall be open fo r the inspection o f the
policy-holders and shareholders at the offices o f the companies fo r
a period o f fifteen days after the last publicatio n o f the notice.
(5) The C ourt, after hearing the directors and other persons whom it
considers entitled to be heard upon the p e titio n , may sanction the arrange
ment i f i t is satisfied that no sufficient objection to the arrangement has been
established.
(4) The C ourt shall not sanction the amalgamation or transfer in any
case in which it appears to the C o urt that the life policy-holders representing
one-tenth or more o f the to ta l am ount assured in any company which i t is
proposed to amalgamate, or in any company the business o f w hich i t is proposed
to transfer, dissent fro m the amalgamation or transfer.
(5) N o life assurance company shall amalgamate w ith another, or
transfer its business to another, unless the amalgamation or transfer is
sanctioned by the C o u rt in accordance w ith this section-

Statement 21. Where an amalgamation takes place between any life assurance com
iu case of panies, or where any life assurance business o f one such company is transferred
amalgama
tion to another company, the combined company or the purchasing company, as the
or transfer. case may be, shall, w ith in one m onth fro m the date o f the com pletion o f the
am algam ation or transfer, deposit w ith the President o f the U nion
(a) certified copies o f statements o f the assets and lia b ilitie s o f the
companies concerned in such amalgamation or transfer, together
w ith a statement o f the nature and terms o f the amalgamation
or transfer ; and
(b) a certified copy o f the agreement or deed under which the
am algamation or transfer is effected ; and
 Life Assurance Companies. 69
(c) certified copies o f the actuarial or other reports upon which that
agreement or deed is founded ; and
( d ) a declaration under the hand o f the chairm an o f each company,
and the p rin c ip a l officer o f each company, th a t to the best o f
th e ir b e lie f every paym ent made or to be made to any person
whatsoever on account o f the am algam ation or transfer is
therein fu lly set fo rth , and th a t no other payments beyond
those set fo rth have been made or are to be made either in
money, policies, bonds, valuable securities or other property
by or w ith the knowledge o f any parties to the am algam ation
o r transfer*

Winding-up.

22. The C o u rt may order the w inding-up o f a life assurance company Special
p rovisions
in accordance w ith the Burm a Companies A c t and the provisions o f th a t A c t as to w in d
shall apply accordingly, subject, however, to the m odification th a t the com in g -u p of
assurance
pany may be ordered to be wound u p companies.
{a) on the p e titio n o f ten o r more policy-holders :
Provided th a t such a p e titio n shall n o t be presented except by the
leave o f the C ou rt, and leave shall not be granted u n til a prima
facie case has been established to the satisfaction o f the C ourt,
and u n til security fo r costs fo r such am ount as the C o u rt may
th in k reasonable has been given ; or
(b) on a p p lica tio n made on beh alf o f the President o f the U nion,
showing th a t fro m a consideration o f the documents deposited
w ith him under the provisions o f this A c t i t appears to him
th a t the company is insolvent.

23. (1) Where a life assurance business o r any part o f the life assurance winding-up
business o f a life assurance company has been transferred to another com- ot su b sidiary
pany under an arrangement in pursuance o f w hich the first m entioned companies-
company (in this section called the subsidiary company) or the creditors
thereof has or have claim s against the company to w hich such transfer was
made (in this section called the p rin c ip a l company), then, i f the prin cip a l
company is being wound up by or under the supervision o f the C ourt, the
C ourt shall (subject as hereinafter mentioned) order the subsidiary company
to be wound up in conjunction w ith the p rin cip a l company, and may by the
same or any subsequent order ap p oin t the same person to be liq u id a to r fo r
the tw o companies, and make provision fo r such other matters as may seem
to the C ourt necessary w ith a view to the companies being wound up as if
they were one company.
(2) The commencement o f w inding-up o f the prin cip a l company shall,
save as otherwise ordered by the C ourt, be the commencement o f the
winding-up o f the subsidiary company.
 70 Life Assurance Companies.

(3) In adjusting the rights and lia b ilitie s o f the members o f the several
companies between themselves, the C ourt shall have regard to the constitution
o f the companies and to the arrangements entered in to between the
companies, in the same manner as the C ourt has regard to the rights and
lia b ilitie s o f different classes o f contributories in the case o f the w inding-up
o f a single company, or as near thereto as circumstances adm it.
( 4 ) Where any company alleged to be subsidiary is n o t in process of
being wound up at the same tim e as the p rin cip a l company to which it is
subsidiary, the C o u rt shall not direct the subsidiary company to be wound up
unless, after hearing a ll objections ( if any) that may be urged by or on behalf
o f the company against its being wound up, the C o u rt is o f opinion that the
company is subsidiary to the p rin cip a l company, and that the w inding-up o f
the company in conjunction w ith the p rin cip a l com pany is just and equitable.
(5) A n application may be made in relation to the w inding-up o f any
subsidiary company in conjunction w ith a p rin c ip a l company by any creditor
o f, or person interested in, the prin cip a l or subsidiary company.
(6) Where a company stands in the relation o f a prin cip a l company to
one company, and in the re la tio n o f a subsidiary company to some other
company, or where there are several companies standing in the relation o f
subsidiary companies to one p rin cip a l company, the C o u rt may deal w ith any
num ber o f such companies together or in separate groups as it thinks most
expedient upon the principles la id down in this section.

V a lu a tio n of 24. Where a life assurance company is being wound up by the Court,
a n n u itie s
and policies. or subject to the supervision o f the C ourt, or vo lu n ta rily, the value o f a policy
or o f a lia b ility under a policy requiring to be valued in such winding-up
shall be estimated in manner applicable to policies and lia b ilitie s provided
by the Sixth Schedule.

Rules o f 25. The rules in the Sixth Schedule shall be o f the same force, and may be
va lu a tio n.
repealed, altered or amended as i f they were rules made in pursuance o f sec- IndiaVI
tio n 254 o f the In d ia n Companies A c t, 1882,1 and rules may be made under . 1882
that section fo r the purpose o f carrying in to effect the provisions of this A c t
w ith respect to the w inding-up o f life assurance companies.

Pow er to 26. The C ourt, in the case o f a life assurance company w hich has been
C o u rt to proved to be unable to pay its debts, may, i f it thinks fit, reduce the amount
reduce con
tracts. o f the contracts o f the company upon such terms and subject to such conditions
as it th in ks just, in place o f m aking a winding-up order.

A p p lic a tio n 26A. In the w inding-up o f a life assurance company in a case where
o f surplus
assets in
any p ro p o rtio n o f the profits o f the company was before the commencement o f
liq u id a tio n . the w inding-up allocated to policy-holders, i f when the assets and lia b ilitie s o f
the company have been ascertained there is found to be a surplus o f assets
over lia b ilitie s (hereinafter referred to as a prima facie surplus), there shall

1 Repealed b y the In d ia n Com panies A ct, 1913 (In d ia A c t V I I , 1913).

 Life Assurance Companies . 71
be added to the lia b ilitie s o f the company in respect o f its life assurance
business an am ount equal to such p ro p o rtio n o f the prima facie surplus as is
equivalent to such p ro p o rtio n o f the profits allocated to shareholders and
policy-holders as was allocated to policy-holders during the ten years
im m ediately preceding the commencement o f the w inding-up, and the assets
o f the company shall be deemed to exceed its lia b ilitie s only in so fa r as
those assets exceed those lia b ilitie s after such addition as aforesaid :
Provided that, i f in any case there has been no such allocation, or i f it
appears to the C o u rt th a t by reason o f special circumstances i t would be
inequitable th at the am ount to be added to the lia b ilitie s o f the company in
respect o f the life assurance business should be an am ount equal to such
pro p ortio n as aforesaid, the am ount to be so added shall be such am ount as
the C o urt may direct.

Special Provisions relating to Accounts and Docum ents

27. The President o f the U n io n may d ire ct any documen deposited Custody and
w ith him under this A c t, or certified copies thereof, to be kept by the Registrar ^ d o cu m e n ts
o r by any other officer appointed in this behalf, and any such documents and deposited
copies shall be open to inspection, and copies thereof may be procured by president
any person, on payment o f such fees as the President o f the U nion may
direct.

28. The President o f the U n io n shall annually cause to be published, in A ccounts,

such manner as he may direct, a summary o f the accounts, balance-sheets, etc-;.t? b.e
. . . . . . . published,
abstracts, statements and other documents under this A ct, or purporting to be
under this A ct, deposited w ith him during the preceding year by every life
assurance company except reports on the affairs o f life assurance companies
subm itted to the shareholders or policy-holders thereof, and may append to
such summary any note o f the President o f the U n io n thereon, and any
correspondence in re la tio n thereto.

29. Every document deposited under this A c t w ith the President o f the Evidence of
U nio n, and certified by the R egistrar or by any person appointed in that documents,
beh a lf by the President o f the U n io n to be a document so deposited, shall be
deemed to be a document so deposited.

30. Every document p u rp o rtin g to be certified by the Registrar, or by any Evidence of

person appointed in that behalf by the President o f the U nion, to be a copy o f copies of
a document so deposited, shall be deemed to be a copy o f that document, and ocume s
shall be received in evidence as i f it were the o riginal document unless some
va ria tio n between i t and the o rig in a l document be proved.

31. The President o f the U nion may, on the application or w ith the Alteration of
consent o f a life assurance company, alter the form s contained in the
Schedules to this A c t as respects th a t company fo r the purpose o f adapting
them to the circumstances o f th a t company .
 72 Life Assurance Companies.

Companies carrying on business in the United Kingdom.

132-33. * * * *

Penalties and Procedure.

P enalty fo r 34. A n y life assurance company w hich makes default in com plying w ith
n o n-com
pliance w ith
any o f the requirem ents o f this A ct, and every director, manager, or secretary,
A ct. or other officer or agent o f the company who is know ingly a party to the default,
shall be punishable w ith fine Which may extend to one thousand rupees, or, in
the case o f a continuing default, w ith fine w hich may extend to five; hundred
rupees fo r every day during w hich the default continues ; and, i f default
continues fo r a period o f three months after notice o f default by the President
o f the U nion (w hich notice shall be published in one or more newspapers as the
President o f the U n io n may, upon the application o f one or more p o lic y
holders or shareholders, direct), the default shall be a ground on which the
C o urt may order the w inding-up o f the company in accordance w ith the
Burm a Companies A ct.

P e n a lty fo r 35. I f any account, balance-sheet, abstract, statement or other document

fa ls ify in g
statements,
required by this A c t is false in any particular to the knowledge o f any person
etc. who signs it, such person shall be punishable w ith im prisonm ent fo r a term
w hich may extend to two years, o r w ith fine, or w ith both.

Cognizance 36. N o C ou rt in fe rio r to th a t o f a M agistrate o f the first class shall try

o f offences. any offence against th is A ct.

Miscellaneous.

A p p o in t 37. ( / ) The President o f the U nion may appoint one or more inspectors
m ent of to examine into the affairs o f any life assurance company, and to report thereon
inspectors.
in such manner as he may direct
(i) in the case o f a life assurance company w hich is not registered
under the B urm a Companies A c t, upon the a p p licatio n
(a) o f shareholders being in number not less than one-fifth o f
the whole number o f persons fo r the tim e being entered
on the lis t o f shareholders kept in accordance w ith the
provisions o f section 16 ; or
(b) o f twenty o r more policy-holders owning policies o f an
aggregate value o f n o t less than twenty thousand rupees;
(ii) in any case where a life assurance company has failed to furnish
a fu rth e r statement when required to do so under the provisions
o f section 11, sub-section (2), or where the President o f the
U nion is o f opinion that any such further statement is insufficient
or unsatisfactory.

1 Deleted by Act X X X II, 1951.

 Life Assurance Companies- 73
(2) On an appointm ent being made under sub-section ( l) , the provisions
o f the Burma Companies A c t shall apply to the exam ination made by such
inspectors.

38. A n y notice or other document w hich is by this A c t required to be Service of

notices.
sent to any policy-h o lde r may be addressed and sent to the person to whom
notices respecting such po licy are usually sent, and any notice so addressed and
sent shall be deemed and taken to be notice to the holder o f such policy :

Provided that, where any person claim ing to be interested in a p olicy has
given to the company notice in w ritin g o f his interest, any notice w hich is by
this A c t required to be sent to policy-holders shall also be sent to such person
at the address specified by him in his notice.

39. ( / ) The President o f the U n io n may make rules to carry out the P o w e r to
make rules.
purposes o f this A ct.
(2) In pa rticu lar, and w ith o u t prejudice to the generality o f the foregoing
power, such rules may

(a) prescribe the qualifications to be possessed by actuaries, auditors

and inspectors under this A c t, and the manner in w hich the
accounts o f life assurance companies shall be a u d ite d ;
( b ) prescribe the tim e w ith in , and the fo rm in which, notice o f
a lteration o f the particulars specified in section 19 o f the A c t
shall be filed w ith the R egistrar ;
(c) subject to the provisions o f th is A ct, prescribe the fees payable
thereunder.

(3) A ll rules made under this A c t shall be published in the Gazette and,
on such publication, shall have effect as i f enacted in this A ct.

4Q * * * *

41. The President o f the U n ion may, by n o tifica tio n in the Gazette Pand
o w e r of
P re sid e n t
subject to such restrictions and conditions as he th in ks fit, exempt any life to exempt
assurance company fro m a ll or any o f the provisions o f this A ct. fro m
the p r o v i
sions o f the
A c t.
 74 Life Assurance Companies.

T H E F IR S T S C H E D U LE .

{See section 7.)

R evenue A ccounts of the f o r t h e y e a r e n d in g

(A ) L ife Assurance Account.

Rs. Rs.

D ivid e n d s payable on 19 fo r th e y e a r
e n d in g 19 . (T h is is Only to be stated
here by com panies n o t s u p p lin g a
P ro fit and Loss account.)
C laim s under p o lic ie s p a id and o u tsta n d
in g
Amount of life assurance fund at the B y death
begin nin g o f the year. B y m a tu r ity ...
Surrenders, in c lu d in g surrenders o f bonus
a d d itio n s.
A n n u itie s
Bonuses in cash ...
Bonuses in re d u c tio n o f prem ium s
P re m ium s Expenses o f m a n a g e m e n t:
C om m ission
A g e n ts and Canvassers allow ances ...
Salaries, etc. (other th a n to Agents and
C o n sid e ra tio n fo r a n n uities g ra n te d * Canvassers.)
(see Note 1). T ra v e llin g expenses
D ire c to rs fees ...
A u d ito rs fees
M ed ica l fees
R.\ R ents fo r offices belo n ging to a nd occu
pied by th e com pany.
Interest?, dividends and rents
Rents o f o th e r offices occupied by the
com pany.
L a w charges
Less incom e-tax thereon A d v e rtis in g
P rin tin g and s ta tio n e ry
O th e r expenses o f m anagem ent (accounts
to be specified.)
O th e r paym ents (accounts to be speci
fied.)
A m o u n t o f lif e assurance fu n d at the end
o f th e year, as p e r T h ir d Schedule.
Other receipts ( accounis to be
specified).

Rs. Rs.

N o t e 1. Com panies having a separate annuity fund w ith investments separate from those
of the life assurance fund to return the particulars of their annuity business in a
separate statement, in Form B of this Schedule.

N ote 2. Items in this a ccou n t to be net amouuts after deduction o f the amounts paid and
received in respect of reassurances o f the com pany s ri'sks.

N ote 3. If any sum has been deducted from the expenses of management account, and
taken cred it for in the balance-sheet as an asset, the sum so deducted to be
separately show n in the above account.
 Life Assurance Companies- 75

(B ) Revenue Account applicable to annuity business o f those companies

having a separate annuity fund, the investments o f w hich are kept separate
fro m those o f the life assurance fund.

Rs. Rs.

A m o u n t o f a n n u ity fu n d a t th e A n n u itie s
b e g in n in g of the ye a r.

C o n s id e ra tio n f o r a n n u itie s g ra n te d Surrenders

Rs. Expenses o f m a n a g e m e n t:

In te re s ts , d ivid e n d s and re n ts C o m m issio n

O th e r expenses ( to be specified.)
Less in c o m e -ta x th e re o n
O th e r paym ents (accounts to be specified)

O th e r rece ip ts A m o u n t o f a n n u ity fu n d at th e end o f th e

year as per balance-sheet.

Rs. Rs.

N o t e . Item s in this account to b e net amounts after deduction of the amounts paid and
received in respect of reassurances of the com pany s risks.

(C) General Revenue Account applicable to a ll classes o f business other

than life assurance and annuity transactions.

Rs. Rs.

A m o u n t o f funds at the b e g in ning o f C la im s less reassurances (accounts to be

th e year. specified).

P rem ium s (accounts t o be specified) Expenses o f m a n a g e m e n t:

Rs. Com m ission

Interests, d iv id e n d s and rents O th e r expenses ( to be specified)

Losses (accounts to be specified)

Less in c o m e -ta x thereon
Profits (accounts to be specified)
O ther receipts (to be specified)
O ther paym ents (accounts to be specified)
A m o u n t o f funds at the end o f the year as
... per balance-sheet.

Rs. Rs.

N o te 1. All the items in th e above a ccou nt to be exclusive of life assurance and annuity
transactions.
N ote 2 . - Item s in this account to be net amounts after deduction of the amounts paid and
received in respect of reassurances o f the com panys risks.
 76 Life Assurance Companies-

T H E SECO ND S C H E D U LE .
(See section 7.)
P r o f it and L oss A ccount of the fo r the y f a r e n d in g

Rs. Rs.

B alance o f la s t ye a rs account D iv id e n d s and bonuses to share-holders

payable on 19 ,
Rs. fo r the ye a r e n d in g 19 .

In te re s t and d ivid e n d s n o t
c a rrie d t o o th e r a ccounts. Expenses n o t charged to o th e r a cco u nts

Less in c o m e -ta x thereon Loss realised (accounts to be specified)

P ro fits re a liz e d (accounts to be O ther paym ents (accounts to be specified)

specified).
Balance as per T h ir d Schedule
O ther re c e ip ts (accounts to be

Rs. Rs.

T H E T H IR D S C H E D U LE .
(See section 7.)
(A ) B a l a n c e -s h e e t o f the on the 19

L IA B IL IT IE S . Rs. A S S E TS . Rs.

Assets o f lif e assurance fund as per

separate balance-sheet (if any).
Rs. Assets o f a n n u ity fu n d as per separate
balance-sheet (if any).
L ife assurance fu n d Assets of funds o th e r th a n those sh o w n in
th e above m en tio n e d balance-sheets.
O u ts ta n d in g lia b ilitie s o f life
assurance fu n d . M o rtg a g e s on p ro p e rty w ith in the U n io n
o f B urm a.
A n n u ity fu n d ( if any) as per M ortgages on p ro p e rty o u t o f th e U n io n
separate balance-sheet. o f B urm a.
Loans on p u b lic rates
O u ts ta n d in g lia b ilitie s o f a n n u ity D o. lif e in te re sts and reve rsio n s
fund. D o , stocks and shares
D o . co m p a n ys p o lic ie s w it h in th e ir
Shareholders' c a p ita l p a id up (if su rre n d e r values.
any) D o . personal se cu rity
In ve stm e n ts
P ro fit and Loss acco u nt ( if any) ... D e p o sit w it h th e authorized B ank
Funds contained in G eneral (securities to be specified).
Revenue A ccount (if any)
[Schedule I (c)]. In d ia n G overnm ent se cu ritie s o r th e
U n io n of B u rm a G overnm ent
securities.
B r it is h and C o lo n ia l G overnm ent
securities.
O th e r sums o w in g b y th e C o m pa n y ... F ore ig n G o ve rn m e nt securities
(A ccounts to be specified and stated In d ia n M u n ic ip a l and P ro v in c ia l
separately under each class of securities or the U nion o f B urm a
business.) M u n ic ip a l and P ro v in c ia l securities.
B r itis h and C o lo n ia l se c u ritie s
F o re ig n d it t o d itto
 Life Assurance Companies. 77
(A ) B a la n c e -s h e e t of the on the 19 [ contd .]

L IA B IL IT IE S . Rs. ASSETS. RS.

Bonds, debentures, stocks and o th e r

s e c u ritie s w h ereon in te re s t is gua
ra n te e d b y th e G o ve rn m e nt o f the
U n io n o f B u rm a , Or by any G overn
m e n t in In d ia o r P a kista n , o r by
th e S e cre tary o f S ta te , as successor
to th e S ecretary o f State fo r In d ia
in C o u n cil.

Bonds, deb en tu re s, sto cks and o th e r

s e c u ritie s w hereou in te re s t is gua
ranteed b y th e B r it is h o r any C o
lo n ia l G o ve rn m e nt.

Bonds, d e b entures, sto cks and o th e r

s e c u ritie s w hereon in te re st is
guaranteed by any F ore ig n
G o ve rn m e nt.

O rd in a ry stocks and shares o f any

In d ia n P residency B a n k.

D e b e n tu re s o f any K a ilw a y in the

U n io n o f B urm a.

D ebentures o f any R a ilw a y out of

the U n io n o f B u rm a .

P reference o r g u a ra n te e d shares of
any R a ilw a y in th e U n io n o f
B u rm a .

Preference o r guaranteed shares o f

any R a ilw a y o u t o f th e U n io n o f
B urm a.

O rd in a ry stocks and shares of any

R a ilw a y in th e U n io n o f B urm a.

O rd in a ry stocks and shares o f any

R a ilw a y out o f th e U n io n o f B u rm a .

House p ro p e rty in the U n io n of

B u rm a .

House p ro p e rty out of the U n io n of

B u rm a .

F re e h o ld and leasehold gro u n d rents

and re n t charges in the U n io n of
Burm a.

L ife in te re sts a n d reversions in the

U n io n o f B urm a.
78 Life Assurance Companies.

(A ) B a la N c e -s h e e t o f th e on th e 19 [ concld.j

LIABILITIES. Ks. ASSE TS. Rs.

L ife in te re s ts and reversions out o f

the U n io n o f B u rm a .

O th e r in ve stm e n ts in the U n io n o f
B u rm a (to be sp e cifie d ).

O th e r in ve stm e n ts o u t o f th e U n io n
o f B u rm a (to be specified).

A g e n ts b a la n c e s ...

O u tsta n d in g p re m iu m s *

O utstanding in te re sts, d ivid e n d s and ren ts'

In te re s t accrued b u t n o t payable *

B ills rece iva b le ...

Cash

On deposit

I n h and and on c u rre n t a cco u nt

O ther assets (to be specified)

Is. Rs.

* T hese ite m s are o r have been in c lu d e d in the co rre s p o n d in g ite m s in the F irs t Schedule.
N o t e 1. W h e n p a rt o f th e assets of th e co m p a n y are s p e c ific a lly d e p osite d under local la w
in various places o u t o f th e U n io n o f B u rm a , as s e c u rity to h o ld e rs o f life
assurance po licie s there issued, each such place and th e am ount co m p u ls o rily
lodged th e re in m ust be specified.
N o t e 2. T h e balance-sheet m u s t state h o w the values of th e s to c k exchange securities are
a rriv e d at, and on th e occasions w h e n a sta te m e n t respecting va luation under
th e F o u rth Schedule is made, a c e rtific a te m ust be appended, signed b y the
same persons as signed th e balance-sheet, to th e effect that in th e ir b e lie f the
assets set fo rth in th e balance-sheet are in the a g g re g a te f u lly o f the value
s ta te d th e re in ,le s s any in ve stm e n t reserve fu n d taken in to acco u nt.
N o t e 3. Com panies h a vin g in ve stm e n ts w it h any un ca lle d lia b ilit y sh a ll state se p a ra te ly
the f u ll a m ount thereof.
N o t e 4. P a rticu la rs m ust be give n o f a ll loans, in c lu d in g te m p o ra ry advances, except loans
on p o licie s w it h in th e ir su rre n d e r values, m ade at any tim e d u rin g th e year to
any d ire cto r o r officer o f a com pany or to a n y oth er com pany in w h ic h any o f the
said d ire cto rs o r officers m ay h o ld th e p o sitio n e ith e r o f d ire c to r o r o f officer.

(B ) B a l a n c e - s h e e t
OTHER THAN L lF E ASSU RANCE FOR W H ICH THEY HAVE SEPARATE FU N D S .
L IA B IL IT IE S .
L ife assurance fu n d
C la im s a d m itte d or in tim a te d * but n o t
paid.
O th e r sums o w in g b y the com pany *
(under th is class o f business).
T hese item s are o r have been in clu d e d in the c o rre s p o n d in g item s in the F ir
Life Assurance Companies.
of the L if e A ssu ran ce F und on the
19 , TO BE COMPLETED BY COMPANIES DOING BUSINESS
Rs. ASSETS. Rs.
M o r t gages on p ro p e r ty w it h in the
U n io n o f B u rm a .
M ortgages on p ro p e rty out o f the U n io n
o f B u rm a .
Loans on p u b lic rates
Do. lif e in te re s t and reve rsio n s
D o. stocks and shares
D o. com panys p o lic ie s w it h in th e ir
su rre n d e r values.
Do. personal se cu rity
In ve stm e n ts :
D e posit w ith th e a u tho rize d Bank
(securities to be specified).
In d ia n G o ve rn m e n t se c u ritie s o r
th e U n io n of B u rm a G overnm ent
securities.
B r itis h and C o lo n ia l G overnm ent
se cu ritie s.
F o re ig n G o ve rn m e n t securities
In d ia n M u n ic ip a l and P ro v in c ia l
s e c u ritie s o r th e U n io n o f B u rm a
M u n ic ip a l and P ro v in c ia l securities.
B r itis h and C o lo n ia l se cu ritie s
F o re ig n do. do.
Bonds, debentures, sto cks and o th e r
securities w h e re o n in te re s t is gua
ranteed b y the G o v e rn m e n t o f th e
U n io n o f B u rm a , o r b y any G o ve rn
m e n t in In d ia o r P a kista n , o r b y
th e Secretary o f S tate, as successor
to the S e cre tary o f State fo r In d ia
in C ouncil.
Bonds, debentures, stocks and o th er
securities w h e re o n in te re s t is gua
ranteed by th e B ritis h o r any C o lo
n ia l G overnm ent.
Bonds, debentures, stocks and o th e r
securities w h ereon in te re s t is gua
ranteed by a n y F o re ig n G overn
m ent.
O rd in a ry stocks and shares o f any
In d ia n Presidency Bank.
Debentures o f any R a ilw p y in the
U n io n of B urm a.
D ebentures o f any R a ilw a y out of
th e U n io n o f Burm a.
Preference o r guaranteed shares o f any
R a ilw a y in the U n io n o f B urm a.
Preference or gu a ra n te e d shares of
any R a il way, out o f th e U n io n of
Burm a.
O rd in a ry stocks and shares o f any
R a ilw a y in th e U n io n o f B u rm a .
O rd in a ry stocks and shares o f any
R a ilw a y o u t o f the U n io n o f Burm a.
c lu d u le .
80 Life Assurance Companies.

(B ) B a l a n c e -S h e e t of the L if e A ssu ran ce F und on the

19 , TO BE COMPLETED BY COMPANIES DOING BUSINESS
other than L if e A ssu r a n c e f o r w h ic h t h e y h a v e se p a r a t e F u n d s concld.

L I A B IL IT I E S . Rs. AS SE TS. Rs.

House p ro p e rty in the U n io n of

B u rm a .
House p ro p e rty out o f the U n io n o f
B urm a.
F re e h o ld and leasehold g ro u n d rents
and rent-charges in th e U n io n o f
B u rm a .
L if e in te re sts and re ve rsio n s in the
U n io n o f B u rm a .
L if e in te re sts and reversions o u t o f
th e U n io n o f B u rm a .
O th e r investm ents in the U n io n o f
B u rm a (to be specified).
O th e r investm ents o u t o f the U n io n o f
B u rm a (to be specified).
A gents balances ...
Outstanding premiums *
Do. interests, d ivid e n d s and
re n ts.*
In te re st accrued b u t n o t payable*
B ills rece iva b le ...
Cash
On deposit
I n hand and on c u rre n t account
O th e r assets (to be specified)

Rs. Rs.

* These item s are o r have been in clu d e d in the co rre sp o n ding ite m s in the F irs t Schedule.

N o t e 1. W h e n p a rt o f th e assets o f the co m p a n y are s p e c ific a lly deposited under lo ca l la w s

in various places out o f the U n io n o f B u rm a , as s e cu rity to h o lders o f life
assurance policies there issued, each such place a nd the a m ount co m p u lso rily
lodged th e re in m ust be specified.

N o t e 2. A balance-sheet in the above fo rm m ust be ren d e re d in respect of th e a n n u ity

fu n d i f the investm ents o f th a t fu n d are d is tin c t fro m those o f th e lif e assurance
fu n d .

N o t e 3. T he balance-sheet m ust state h o w th e values o f th e stock exchange se cu ritie s are

a rrive d at, and on th e occasions w h e n a sta te m e n t resp e ctin g v a lu a tio n under
the F o u rth Schedule is made, a c e rtific a te m ust be appended, signed b y the
same persons as signed the balance-sheet, to th e effect th a t in th e ir b e lie f the
assets set fo rth in th e balance-sheet are in the aggregate fu lly o f the value stated
th e re in , less any in ve stm e n t reserve fu n d taken in to account.

N o t e 4. A ce rtifica te m ust be appended hereto, sig n e d by th e same persons as sig n e d the

balance-sheet (F o rm A ), and by the a u d ito r, to the effect that no p a rt o f any such
fu n d has been a p p lie d , d ire c tly o r in d ir e c tly , fo r any purpose o th e r th a n th e
class o f businese to w h ic h i t is a p p lica b le.

N ote 5. Com panies having investm ents w ith any uncalled liability shall state separately
the full amount thereof.

N ote 6. Particulars must b e given of all loans, in cluding tem porary advances, except loans
on policies w ithin their surrender values, m ade at any tim e during the year to
any director or officer o f a com pany or to any other com pa n y in w hich any of
the said directors o r officer* m ay hold the position either of director or o f officer.
 Life Assurance Companies. 81

THE F O U R T H S C H E D U LE .
( See sections 8 and 9.)

St a t e m e n t r e s p e c t in g t h e v a l u a t io n o f t h e l ia b il it ie s u n d e r l if e p o l ic ie s

AND ANNUITIES OF THE TO BE MADE AND SIGNED BY THE A CTU ARY-

(The answers should be numbered to accord with the numbers o f the

corresponding questions .)

1- The date up to w hich the valuation is made.

2. The general principles adopted in the valuation, and the method

follo w e d in the valuation o f p a rtic u la r classes o f assurances, including a
statement o f the m ethod by w hich the net prem ium s have been arrived at,
and whether these principles were determined by the instrum ent constituting
the company or by its regulations or bye-laws, or how otherwise ; together
w ith a statement o f the manner in w hich policies on under-average lives are
dealt w ith-

3f The table or tables o f m o rta lity used in the valuation. In cases

where the tables employed are not p ublished, specimen po licy values are to
be given a t the rate o f interest employed in the valuation, in respect o f
w h ole -life assurance policies effected at the respective ages o f 20, 30, 40 and
50, and having been respectively in force fo r 5 years, 10 years and upwards
a t intervals o f five years, respectively ; w ith s im ila r specimen p o licy values in
respect o f endowment assurance policies, according to age at entry, o rig in a l
term o f po licy and du ra tion .

4. The rate o r rates o f interest assumed in the calculations.

5. The actual p ro p o rtio n o f the annual prem ium income ( if any),
reserved as a provision fo r future expenses and profits, separately specified
in respect o f assurances w ith im m ediate profits, w ith deferred profits, and
w ith o u t p ro fits. ( I f none, state how this provision is made.)

6. The consolidated revenue-account since the last valuation, o r in case

o f a company w hich has made no valuation, since the commencement o f the
business. (T his return should be made in the fo rm annexed. N o return
under this heading w ill be required where a statement under this Schedule is
deposited annually.)

7. The lia b ilitie s o f the company under life policies and annuities at
the date o f the valuation , showing the number o f policies, the am ount
assured and the am ount o f prem ium s payable annually under each class o f
p olicies, both w ith and w ith o u t p a rticip a tio n in p ro fits ; and also the net
lia b ilitie s and assets o f the company w ith the am ount o f surplus or deficiency.
(These returns to be made in the form s annexed-)

6
82 Life Assurance Companies-

8. The principles upon w hich the d is trib u tio n o f profits among the
share-holders and policy-holders is made, and whether these principles were
determined by the instrum ent co n stitu tin g the company or by its regulations
o r bye-laws, or how otherwise, and the number o f years premiums to be
paid before a bonus ( a) is allotted, and ( b ) vests.

9. The results o f the valuation , showing

(1) the to ta l am ount o f p ro fit made by the company, allocated as
fo llo w s :
(a) among policy-holders w ith im m ediate p articipation , and the
number and am ount o f the policies w hich p a rtic ip a te d ;
(b) among policy-holders w ith deferred p a rticip a tio n , and the
number and am ount o f the policies which participated ;
(c) among the shareholders ;
( d) to reserve funds or other accounts ;
( e) carried forw a rd u n a p p ro p ria te d ;
(2) specimens o f bonuses allotted to whole life assurance policies fo r
Rs. 1,000 effected at the respective ages o f 20, 30, 40 and 50,
and having been respectively in force fo r five years, 10 years and
upwards at intervals o f 5 years respectively, together w ith the
amounts apportioned under the various modes in w hich the
bonus m ig h t be received; w ith sim ila r specimen bonuses and
particulars in respect o f endowment assurance policies, according
to age at entry, o rig in a l term o f p olicy, and duration.
 Life Assurance Companies. 83
(F o r m referred to u n der H e a d in g N o . 6 in F o u r t h S c h e d u l e .)

Consolidated Revenue Account o f the for years

commencing and ending

Rs. Rs.

Am ount of lite assurance -fund at the C l.v r s under p olicies paid and
beginning of the period c islanding
Rs.

B y death ...
Piem ium s

By maturity

Consideration of annuities granted ...

Surrenders ...

Rs. Annuities ... .

Bonuses in cash
In terest, dividends and rents
Bonuses in reduction of premiums

Less incom e-tax thereon ... C om m ission .

Expenses of m anagem ent ...

------ -------
Other payments (accounts to be
specified)
O ther receipts (accos nts to be specified!
Amount of life assurance fund at
the end of the period as per T hird
Schedule.

Rs. Rs.

N o t e . If any sum has been deducted from the expenses of management accou nt and taken
credit io r in the balance-sheet as an asset, the sum so deducted to be separately show n in the
above statement.
84 Life Assurance Companies

(F orm referred to u n der H e a d in g No. 7 in F o u r t h S c h e d u l e .)

Summary and valuation o f the policies o f the as at 19

P a rticu la rs o f the
V a lu a tio n .
p o licie s fo r v a lu a tio n

T3 on
a V a lu e by th e T a b le ,
(/)
a 1
<u s3 in te re s t p e r ce i.t.
'u u

i
S '

assured

Net yearly p re
c o

Office y e a rly
Sums assured
Ch t*

Net lia b ilit y .

Office yearly

and bonuses.
H-l G.

prem ium s.
o

bonuses.
*->

mium s.
1)

m ium s.
1 03
<u
B

Sums
>>
3
&

|
ASSURANCES.

I . W ith immediate participation

in profits.
F o r w h o le te rm o f life
O th e r classes (to be specified)
E x tr a p re m iu m s paya ble ...
I I . With deferred participation
in profits.
F o r w h o le te rm o f life
O th e r classes (to be specified)
E x tra p re m iu m s p a ya b le ...
T otal Assurances w it h p r o f it s

I I I . Without participation in profits.

F o r w h o le te rm o f lif e
O th e r classes (to be specified)
E x tra p re m iu m s
T otal A ssu r a n c e s w it h o u t p r o f it s .

T o ta l assurances
D e d u ct reassurances (to be specified
a c c o rd in g to class in a separate
sta te m e n t)
N e t a m o u n t o f assurances
A d ju s tm e n ts , i f any (to be separately
sp e cifie d )
A N N U IT IE S O N L IV E S .
Im m e d ia te
O th e r classes (to be specified)
T o t a l o f t h e results

N ote 1. T he term extra premium in this A ct shall be taken to mean the charge for any
risk not provided fo r in the minimum contract prem ium . If policies are issued
in or fo r any country at rates o f premium deducted from tables other than the
European mortality tables adopted by the com pany, separate schedules sim ilar
in form to the above must be furnished.
N ote 2 . Separate returns and valuation results must be furnished in respect of classes of
policies valued by different ta b les of m ortality, or at different rates o f interest,
a lso for business at other than European rates.
N ote 3. In cases a lso where separate valuations of any portion o f the business are required
under local laws in places outside the U nion of Burma, a summary statement
must be furnished in respect of the business so valued in each such place sh ow in g
the total number of policies, the total sums assured and bonuses, the total office
y e a rly premiums and the to ta l net liability on the bases as to m orta lity and
interest adopted in each such place, w ith a statem en t as to such bases
respectively.
 Life Assurance Companies 85

(F o r m referred to under H e a d in g N o . 7 in F o u r t h S c h e d u l e .)

Valuation Balance-sheet o f as at 19

D r. Cr.

Rs. Rs.

T o net liability under life assurance By life assurance and annuity funds
and annuity transactions (as per (as per balance sheet under Third
sum mary statement provided in Schedule)
Fourth Schedule).

T o surplus, if any By deficiency, if any

------

T H E F IF T H S C H E D U L E .

(See section 10.)

St a t e m e n t of the L if e A ssu ran ce an d A n n u it y B u s in e s s of the

ON THE 19 , TO BE SIGNED BY THE ACTUARY-

{The answers should be numbered to accord with the numbers o f the

corresponding questions Statements o f reassurances corresponding to the
statements in respect o f assurances are to be given throughout) Separate
statements are to be furnished in the replies to a ll the headings under this
Schedule fo r business at other than European rates.
1. The published table or tables o f premiums fo r assurances fo r the
w hole term o f life and fo r endowment assurances w hich are in use at the
date abovementioned.
2. The to ta l am ount assured on lives fo r the whole term o f life w hich
are in existence at the date abovementioned, distinguishing the portions
assured w ith im m ediate profits, w ith deferred profits and w ith o u t profits,
stating separately the to ta l reversionary bonuses and specifying the sums
assured fo r each year o f life fro m the youngest to the oldest ages, the basis
o f divisio n as to immediate and deferred profits being stated.
3- The am ount o f prem ium s receivable annually fo r each year o f life
after deducting the abatements made by the applicatio n o f bonuses in respect
o f the respective assurances m entioned under H eading N o. 2, distinguishing
ordinary fro m extra premiums. A separate statement is to be given o f
premiums payable fo r a lim ite d number o f years, classified according to the
number o f years payments rem aining to be made.
86 Life Assurance Companies,

4 The to ta l am ount assured under endowment assurances, specifying

sums assured and office premiums separately in respect o f each year in which
such assurances w ill mature fo r payment. The reversionary bonuses must
also be separately specified, and the sums assured w ith immediate profits,
w ith deferred profits and w ith o u t profits separately returned.
5. The to ta l amount assured under classes o f assurance business, other
than assurances dealt w ith under questions 2 and 4, distinguishing the sums
assured under each class and stating separately the am ount assured w ith
im m ediate profits, w ith deferred profits, and w ith o u t profits, and the to ta l
am ount o f reversionary bonuses.
6. The am ount o f premiums receivable annually in respect o f each such
special class o f assurance m entioned under Heading N o. 5, distinguishing
ordinary fro m extra prem ium s.
7- The to ta l amount o f premiums w hich has been received fro m the
commencement upon pure endowment policies which are in force at the date
abovementioned.
8. The to ta l amount o f im m ediate annuities on lives, distinguishing the
amounts fo r each year o f life , and distinguishing male and female lives.
9. The am ount o f a ll annuities on lives other than those specified
under Heading N o. 8, distinguishing the am ount o f annuities payable under
each class, and the am ount o f premiums annually receivable.
10. The average rate o f interest yielded by the assets, whether invested
o r uninvested, constituting the life assurance fund o f the company, calculated
upon the mean fund o f each year during the period since the last investiga
tio n , w ith o u t deduction o f income-tax-
I t must be stated whether or not the mean fund upon w hich the average
rate o f interest is calculated includes reversionary investments.
11. A table o f m inim um values, i f any, allowed fo r the surrender o f
policies fo r the whole term o f life and fo r endowments and endowment
assurances, or a statement o f the method pursued in calculating such surrender
values, w ith instances o f the application o f such method to policies o f different
standing and taken out at various in terval ages fro m the youngest to the
oldest.

T H E S IX T H S C H E D U LE .

(See section 24 and 25.)

R ules for v a l u in g A n n u it ie s , L if e P o l ic ie s and L ia b il it ie s .

Rule for valuing an annuity.

A n annuity shall be valued according to the tables used by the company
w hich granted such annuity at the tim e o f granting the same, and, where such
tables cannot be ascertained or adopted to the satisfaction o f the C ourt, then
according to such rate o f interest and table o f m o rta lity as the C ourt may
direct.
 Life Assurance Companies, 87
Rule for valuing a policy-
The value o f the p o licy is to be the difference between the present value
o f the reversion in the sum assured according to the contingency upon which
i t is payable, including any bonus or a d d itio n thereto made before the com
mencement o f the w inding-up , and the present value o f the future annual
prem ium s.
In calculating such present values interest is to be assumed at such rate,
and the rate o f m o rta lity according to such tables, as the C ourt may direct.
The prem ium to be calculated is to be such prem ium as according to the
said rate o f interest and rate o f m o rta lity is sufficient to provide fo r the risk
incurred by the office in issuing the p o licy, exclusive o f any addition thereto
fo r office expenses and other charges.

Rule for valuing a liability-

The liq u id a to r, in the case o f a ll persons appearing by the books o f the
company to be e n title d to o r interested in policies granted by such company,
is to ascertain the value o f the lia b ility o f the company to each such person,
and give notice o f such value to such persons in such manner as the C ourt
may direct, and any person to whom notice is so given shall be bound by the
value so ascertained unless he gives notice o f his intention to dispute such
value in manner and w ith in a tim e to be prescribed by a rule o r order o f the
C ourt.

THE PROVIDENT INSURANCE SOCIETIES ACT.

CONTENTS.

Preliminary.
Sections.
1. * * # #
2 D efinitions.
3. A p p lic a tio n o f A ct.

General.
4- Insurable interest.
5. Provisions to be made by rules.
6. R egistration o f Provident Insurance Societies.
7. Unregistered society n o t to receive prem ium o r co n trib u tio n .
8. Am endm ent o f rules.
9. R ig h t to supply o f copies o f rules.
10. Register o f members.
11. P ublication o f authorized, subscribed and paid-up capital,
12. Office.
 88 Provident Insurance Societies.

Sections
13. Revenue-account and balance-sheet.
14- D elivery and p u b lica tio n o f revenue-account, etc.
15- Record o f insurances effected on life other than life o f person insuring.
16- Inspection of books.
17. In q u iry.
18. C ancellation o f registry-
19. L iq u id a to rs .
Appeals-
20. Appeals-
Offences and Procedure.
21- Penalty fo r non-com pliance w ith A ct-
22. Penalty fo r fa ls ify in g documents.
23. Cognizance o f offences.
Rules.
24. Rules.
Miscellaneous
l y . Saving o f existing policies.
26. Power o f President to exempt fro m provisions o f the A ct.

THE PROVIDENT INSURANCE SOCIETIES ACT.

[I n d ia A ct V , 1912-] (18th M arch, 1912.)

Preliminary.
* * * *
Definitions. 2. In this A ct, unless there is anything repugnant in the subject or
context,
(1) C o u rt means the p rin cip a l c iv il C ourt o f o rig in a l ju risd ictio n
in a d is tric t, and includes the H ig h C o u rt in the exercise o f its
ordinary o rig in a l c iv il ju ris d ic tio n :
(2) financial year means each period o f twelve months at the end
o f w hich the balance o f the accounts o f any Provident Insurance
Society is struck, or, i f no such balance is struck, then the
calendar y e a r:
(3) life assurance business means the issue of, or the undertaking
o f lia b ility under, policies o f assurance upon human life , or
the granting o f annuities upon human life :
(4) p o lic y o f assurance on human life means any instrum ent by
which the payment o f money is assured on death (except death
by accident only) or the happening o f any contingency dependent
on human life , o r any instrum ent evidencing a contract w hich is
subject to payment o f premiums fo r a term dependent on human
life :
 Provident Insurance Societies. 89
(5) policy-h old e r means the person who fo r the tim e being is the
legal holder o f the p o licy fo r securing the contract w ith the
Provident Insurance S ociety:
(6) where a Provident Insurance Society grants annuities upon human
life , p o licy includes the instrum ent evidencing the contract
to pay such an annuity, and policy-holde r includes a n n u ita n t:
(7) prescribed means prescribed by rules made under this A c t :
(8) P rovident Insurance S ociety means any person who, o r body, of
persons whether corporate or unincorporate w hich, receives
premiums or contributions fo r insuring money to be paid on the
b irth , marriage or death o f any person o r on the happening o f
such other contingency or class o f contingency as may be
prescrib ed : and
(9) R egistrar means any person who may be appointed by the
President o f the U n io n to perform the duties o f the R egistrar
under this A c t.
3. N o th in g in this A c t shall a pply to any Provident Insurance Society Application
of Act.
carrying on life assurance business, w hich undertakes to pay on any life
assurance p o licy, or series o f life assurance policies on any one life , an
annuity exceeding fifty rupees or a gross sum exceeding five hundred rupees,
or w hich receives or undertakes to receive by way o f prem ium o r co n trib u
tio n fo r life assurance on any one life any sum exceeding tw o hundred and
f if t y rupees where the said prem ium s or contribution s are payable fo r one
year or a lim ite d number o f years, o r exceeding twenty-five rupees in any
one year where the prem ium s o r contribution s are u n lim ite d in num ber and
term inable on death or the occurrence o f an uncertain event :
Provided that, in determ ining whether this A c t applies to any Provident
Insurance Society carrying on life assurance business, contracts entered in to
by the society before the 18th M arch, 1912,1 shall n o t be taken in to
consideration

General.

4. N o Provident Insurance Society shall receive any prem ium or c o n tri In su ra b le

bution fo r insuring money to be paid on the death o f any person other than interest.

the person paying such prem ium or co n trib u tio n or the w ife, husband, child,
parent, brother o r sister o f such person.
5. E very P rovident Insurance Society shall by its rules Provisions to
be made by
(a) specify the object, name and registered office o f the society ; rules.
(b) prescribe the p ro p o rtio n o f the annual income o f the society derived
fro m prem ium s o r contributions w hich may be disbursed fo r
the expenses o f management o f the so cie ty;
(c) in the case o f a society w hich by rule o r practice divides any p a rt
o f the funds thereof, provide fo r the payment o f a ll debts due

1 Date o commencement of this Act.

 90 Provident Insurance Societies

by the society existing at the time o f d ivisio n before any such

d ivisio n has taken place ; and
(d) provide fo r any other matters w hich may be prescribed.

Registration 6. ( l ) Every P rovident Insurance Society shall, before it receives any

o f Provident
Insurance prem ium or co n trib u tio n , apply to the R egistrar fo r that p a rt o f the U nion
Societies. o f Burm a in w hich the office o f the society is situate fo r registration under
this A ct, and shall deliver to him a copy o f the rules o f the society.
(2) The R egistrar shall, on being satisfied that such rules com ply w ith
the provisions o f this A c t, acknowledge the receipt o f the rules and register
the society and its rules
(J) I f the R egistrar is not satisfied that the rules or any o f them com ply
w ith the provisions o f this A ct, he shall send to the Provident Insurance
Society a notice by post stating in what respect such rule o r rules is o r are
n o t in accordance w ith the provisions o f this A c t, and calling upon such
society to deliver to h im an amended rule or rules w ith in sixty days.
(4 ) On receipt o f a notice under sub-section ( 3), the Provident Insurance
Society m ay w ith in sixty days deliver to the R egistrar an amended rule or
rules in c o n fo rm ity w ith this A ct, and the R egistrar shall thereupon acknow
ledge the receipt o f the rules and register the society and its rules as
hereinbefore provided.

Unregistered 7. N o P rovident Insurance Society shall receive any prem ium or co ntribu
society not
to receive
tio n , unless it is registered in accordance w ith the provisions o f this A ct.
premium or
contribution.
8- ( / ) N o amendment o f any rule o f a Provident Insurance Society shall
Am endm ent
o f rules. be v a lid u n til the same has been registered under this A ct, fo r w hich
purpose a copy o f the amended rule shall be sent to the R egistrar.
(2) The R egistrar shall, on being satisfied that any amendment o f a
rule is not contrary to the provisions o f this A c t, issue to the society an
acknowledgment o f the reg istratio n o f the same.

R ight to
9. Every P rovident Insurance Society shall, on demand, deliver free o f
supply of cost to any member o f the society a copy o f the rules o f the society, and to
copies of
rules.
any person other than a member a copy o f such rules on the payment o f
a sum not exceeding one rupee.

10. Every Provident Insurance Society w hich is not a company, as

Register of
members. defined in section 2 o f the Burm a Companies A c t, shall cause to be kept in
the prescribed fo rm a register o f the names and addresses o f its members.

Publication 11. Where any notice, advertisement or other official pub lica tio n o f a
o f authorized, P rovident Insurance Society contains a statement o f the am ount o f the
subscribed
and paid-up authorized capital o f the society, the p u b licatio n shall also contain a state
capital. ment o f the am ount o f the capital w hich has been subscribed and the amount
paid up.
 Provident Insurance Societies 91

12. Every P rovident Insurance Society w hich is not a company, as Office.

defined in section 2 o f the Burm a Companies A ct, shall have an office on the
outside o f w hich i t shall display and keep displayed its name in a
conspicuous positio n in legible letters, to w hich a ll com m unications and
notices may be addressed, and shall give notice to the R egistrar o f the situation
o f such office and o f any change therein.

13. Every Provident Insurance Society shall, at the expiration o f each Revenue-
financial year, prepare a revenue-account and balance-sheet in the prescribed accou nt and
balance-
fo rm and verified in the prescribed manner, and shall cause them to be audited sheet.
by an au dito r possessing the prescribed qualifications.

14. Every Provident Insurance Society shall, w ith in six months o f the D elivery and
publication
e xpiratio n o f each financial year, deliver to the Registrar the revenue-account of revenue-
and balance-sheet required by section 13, and shall publish them in the account, etc.
prescribed manner.

15. Every P rovident Insurance Society shall m aintain in the prescribed R ecord of
fo rm a record o f every insurance effected on a life other than the life o f the insurances
effected on
person insuring, and shall deliver a copy o f such record to the R egistrar, life other
together w ith the balance-sheet and revenue-account. than life
of person
insuring.

16. The books o f every Provident Insurance Society shall a t a ll reasonable Inspection
o f books.
hours be open to inspection by the R egistrar, or by any person appointed by
h im in this behalf, or by any member o f the society.

17. (I) The R egistrar may, i f he th in ks fit, o f his own m otion, and Inquiry.
shall, upon the applicatio n o f ten or more members or policy-holders o f a
P rovident Insurance Society, h old or direct an in q u iry to be held by an
actuary possessing the prescribed qualifications appointed by h im by order in
w ritin g in this behalf as to the solvency o f any Provident Insurance Society or
as to the manner in w hich the business o f any such society is conducted.
(2) A n applicatio n to the R egistrar under sub-section (1) shall be
supported by such evidence as the R egistrar may require fo r the purpose o f
showing th a t the applicants have good reason fo r applying fo r an in q u iry.
(3) The R egistrar may require the applicants under sub-section (l) to
give such security as he thinks fit fo r the costs o f the proposed in q u iry before
such an in q u iry is held.
(4) A ll expenses o f, and incidental to or p re lim in a ry to, any in q u iry
made on applicatio n as aforesaid shall be defrayed by the applicants therefor
o r out o f the funds o f the society o r by the members o r officers o f the society
in such proportions as the R egistrar may direct by order in w ritin g .
(5) A n order made under sub-section (4) shall on applicatio n be enforced
by any c iv il C ou rt having local ju ris d ic tio n in the same manner as a decree
o f such C ourt.
 92 Provident Insurance Societies.

(6) A person h olding an in q u iry under th is section shall have access to

a ll the books and documents o f the society, and shall have power to c a ll
upon the society and the officers o f the society to fu rn ish such statements
and other in fo rm a tio n in re la tio n to its business as he may direct.
(7) The result o f the in q u iry shall be communicated to the society and
to the applicants ( if any).

C a n ce lla tio n 18. W hen an in q u iry has been held under section 17, the R egistrar may,
o{ re g is try . i f he is satisfied
(a) th a t the society is insolvent, o r m ust necessarily become so, or
( b) th a t the business o f any such society is conducted fraudulen tly
or n o t in accordance w ith the rules thereof,
after giving previous notice in w ritin g in such manner as he th in ks fit
specifying b rie fly the grounds o f the proposed cancellation, cancel the registry
o f the society.

Liquidators. 19. ( ) 1 Where the registry o f a Provident Insurance Society is cancelled

in accordance w ith the provisions o f section 18, the R egistrar may appoint a
liq u id a to r to w ind up the society.
(2) A liq u id a to r appointed under sub-section ( / ) shall have power
(a) to in stitu te or defend any legal proceedings on behalf o f the
society by his name o f o ffice ;
(b) to determine the co n trib u tio n to be made by members o f the
society, respectively, to the assets o f the society ;
(c) to investigate a ll claim s against the society and to decide questions
o f p rio rity arising between claim ants ;
(d) to determine by w hat persons and in w hat proportions the costs
o f the liq u id a tio n are to be b o rn e ; and
(e) to give such directions in regard to the collection and d is trib u
tio n o f the assets o f the society as may appear to h im to be
necessary fo r w inding up the affairs o f the society.

(3) Subject to any rules o f procedure made under this A ct, a liq u id a to r
appointed under this section shall, in so fa r as such powers are necessary to
carry out the purposes o f this section, have power to summon and enforce
the attendance o f witnesses and to compel the production o f documents by
the same means and as fa r as may be in the same manner as is provided in
the case o f a c iv il C o u rt by the Code o f C iv il Procedure.
(4) Orders made under th is section shall on application be enforced as
fo llo w s :
(a) when made by a liq u id a to r, by any c iv il C ourt having local
ju ris d ic tio n in the same manner as a decree o f such C o u r t;
(b) when made by the C o urt on appeal, in the same manner as a
decree o f the Court.
 Provident Insurance Societies 93
Appeals .

20. ( I ) A n appeal shall lie to the C ourt w ith in th ir ty days Appeals.

(a) fro m an order o f the R egistrar refusing to register a P rovident
Insurance Society or any rules or amendments o f rules o f such
society ;
(b) fro m an order o f the R egistrar cancelling the registry o f a
s o c ie ty ;
(c) fro m an order made by a liq u id a to r appointed under scction 19.
(2) Save as hereinbefore expressly provided, orders made under this
A c t shall be fina l and conclusive.
Offences and Procedure.
21. A n y Provident Insurance Society w hich makes default in com plying P enalty
w ith any o f the requirements o f th is A c t. and every director, manager or secretary fo r n o n -
co tn plia nce
o r other officer o r agent o f the society, who is know ingly a party to the w ith A ct.
default, shall be punishable w ith fine w hich may extend to five hundred rupees,
or, in the case o f a continuing default, w ith fine w hich may extend to two
hundred and fifty rupees fo r every day during w hich the d e fa u lt continues.

22. I f any register, account, balance-sheet or other document required Penalty for
falsifying
by th is A c t is false in any p a rtic u la r to the knowledge o f any person who docum ents.
signs it, such person shall be punishable w ith im prisonm ent fo r a term w hich
may extend to tw o years, or w ith fine, or w ith both.

23.N o C ou rt in fe rio r to th a t o f a M agistrate o f the firs t class shall try Cognizance

o f offence*.
any offence against th is A ct.
Rules.

24. (1) The President o f the U n io n may make rules to carry o u t the Rules.
purposes o f this A c t.
(2) In particu la r, and w ith o u t prejudice to the generality o f the
foregoing power, such rules may prescribe
(a) contingencies o r class o f contingencies and thereby extend the
a pplicatio n o f th is A c t to the receipt o f premium s o r c o n tri
butions fo r insuring money to be paid on the happening o f such
contingencies or class o f contingencies;
(b) the matters in respect o f w hich a society shall make rules ;
(c) the fo rm o f any account, return or register required by this A ct,
and the manner in w hich any such account, return o r register
shall be v e rifie d ;
(d) the fees to be charged fo r matters transacted under this A c t, and
the manner in w hich the same are to be collected ;
( e ) the qua lificatio n o f auditors and actuaries under this A c t ;
(/) the manner in w hich any docum ent required to be published by
this A c t shall be published ; and
(g) the procedure to be follow ed by liq u id a to rs under this A ct.
 94 Provident Insurance Societies.

(3) The power to make rules conferred by th is A c t is subject to the

con d ition o f the rules being made after previous pu b lica tio n .
(4) A ll rules made under this A c t shall be published in the Gazette,
and on such publica tio n shall have effect as i f enacted therein.

Miscellaneous.
Saving of 25. N o p o lic y effected before the 18th M arch, 1912 l, w ith a Provident
existing Insurance Society shall be deemed to be void by reason only th a t the
p o licie s .
insurance is n o t authorized by this A ct.

P ow er of 26. The President o f the U n io n may, by n o tifica tio n in the Gazette, and
President subject to such conditions and restrictions as he th in ks fit, exempt any
to exempt
from P rovident Insurance Society or class o f Provident Insurance Societies fro m all
provisions or any o f the provisions o f th is A ct.
of the Act,

T H E P R O V ID E N T FU N D S A C T .

[I n d ia A c t X I X , 1925-] (1st A p r il, 1926.)

1. * * * *

D efinitions. 2. In this A c t, unless there is anything repugnant in the subject or

context,
(a) com pulsory deposit means a subscription to, o r deposit in , a
Provident Fund w hich, under the rules o f the Fund, is n o t,
u n til the happening o f some specified contingency, repayable
on demand otherwise than fo r the purpose o f the payment o f
prem ia in respect o f a p o lic y o f life insurance, o r the payment o f
subscriptions or prem ia in respect o f a fa m ily pension fund, and
includes any co n trib u tio n and any interest or increment which
has accrued under the rules o f the Fund on any such
subscription, deposit o r co n trib u tio n , and also any such
subscription, deposit, co n trib u tio n , interest or increm ent
rem aining to the credit o f the subscriber or depositor a fte r the
happening o f any such contingency ;
( b ) co n trib u tio n means any am ount credited in a Provident Fund,
by any a u th o rity adm inistering the Fund, by way o f ad d itio n
to a subscription to, or deposit or balance at the cre d it o f an
in d iv id u a l account in , the Fund ; and co n trib u to ry Provident
Fund means a P rovident Fund the rules o f w hich provide
fo r the cre d iting o f contribution s ;
(c) dependant means any o f the fo llo w in g relatives o f a deceased
subscriber to , or a depositor in , a Provident Fund, namely, a
w ife, husband, parent, ch ild , m inor brother, unm arried sister

1 Date of commencement of this Act.

 Provident Funds. 95
and a deceased sons w idow and ch ild , and, where no parent
o f the subscriber o r depositor is alive, a paternal gra n d -p a re n t;
(d) Governm ent P rovident Fund means a Provident Fund, other
than a R a ilw ay P rovident Fund, constituted by the a u th o rity
o f the Government fo r any class or classes o f its employees or
o f persons employed in educational in stitu tio n s or employed by
bodies existing solely fo r educational purposes ;
(e) Provident Fund means a fund in w hich subscriptions or
deposits o f any class or classes o f employees are received and
held on th e ir in d iv id u a l accounts, and includes any co ntribu
tions and any interest or increm ent accruing on such
subscriptions, deposits or contribution s under the rules o f the
Fund;
(/) railw a y adm inistration means any a u th o rity adm inistering a
railw ay or tram way under any enactment in force in the U nion
o f Burm a regulating railw ays or tramways, or under contract
w ith the Government [* * * ]x;
(g) R ailw ay Provident Fund means a Provident Fund constituted
by the a u th o rity o f a ra ilw a y adm inistration fo r any class or
classes o f its employees.

3. (J) A com pulsory deposit in any Governm ent or R a ilw a y Provident P ro te ctio n
Fund shall not in any way be capable o f being assigned or charged and shall soof rycom pul
de
n ot be lia b le to attachm ent under any decree or order o f any c iv il, revenue posits.
o r crim in a l C ourt in respect o f any debt or lia b ility incurred by the subscri
ber or depositor, and neither the O fficial Assignee nor any receiver appointed
under the Burm a Insolvency A c t shall be entitled to, or have any claim on,
any such com pulsory deposit.
(2) A n y sum standing to the credit o f any subscriber to, or depositor
in , any such Fund at the tim e o f his decease and payable under the rules o f
the Fund to any dependant o f the subscriber or depositor, or to such person
as may be authorized by law to receive payment on his behalf, shall, subject
to any deduction authorized by this A c t and, save where the dependant is the
w idow or c h ild o f the subscriber or depositor, subject also to the rights o f an
assignee under an assignment made before the 1st A p r il, 1926,2 vest in the
dependant, and shall, subject as aforesaid, be free fro m any debt or other
lia b ility incurred by the deceased or incurred by the dependant before the
death o f the subscriber or depositor.

4. ( / ) When under the rules o f any Government or R ailw ay P rovi Provisions

re g a rd in g
dent Fund the sum standing to the credit o f any subscriber o r depositor, repaym ents.
or the balance thereof a fte r the m aking o f any deduction authorized by this
A ct, has become payable, the officer whose duty i t is to make the payment

1 T he w ords o r the R a ilw a y B oard w ere om itted by the U n io n of B u rm a (A da p ta tio n

of L a w s ) O rde r, 1948.
2 D a te o f con.mence.'nent of th is A ct.
96 Provident Funds

shall pay the sum or balance, as the case may be, to the subscriber or
depositor, or, i f he is dead, shall
(a) i f the sum or balance, or any p a rt thereof, vests ina dependant
under the provisions o f section 3, pay the same to the
dependant or to such person as may be authorized by law
to receive payment on his b e h a lf; or
(b) i f the w hole sum o r balance, as the case may be, does not
exceed five thousand rupees, pay the same, or any part
thereof w hich is n o t payable under clause (a), to any person
nom inated to receive i t under the rules o f the Fund, or, i f
no person is so nom inated, to any person appearing to h im
to be otherwise entitled to receive i t ; or
(c) in the case o f any sum o r balance, or any p a rt thereof, which
is not payable to any person under clause (a) or clause ( b )
pay the same
(i) to any person nom inated to receive i t under the rules o f the
Fund, on production by such person o f probate or
letters o f a d m in istra tio n evidencing the grant to him
o f a dm inistration to the estate o f the deceased or a
succession certificate e n titlin g the holder thereof to
receive payment o f such sum, balance or part, or
( ii) where no person is so nom inated, to any person who
produces such probate, letters or c e rtific a te :

Provided that, where the w hole or any p a rt o f any sum standing to

the cre dit o f the subscriber o r depositor has been assigned to any other
person before the 1st A p r il, 1926,1 and notice in w ritin g o f the assignment
has been received by the officer fro m the assignee( the officer shall, after
m aking any deduction authorized by this A c t and any paym ent due under
clause (a) to o r on behalf o f the w idow or children o f the subscriber or
depositor

(i) i f the subscriber or depositor or, i f he is dead, the person to whom

in the absence o f any va lid assignment the sum or balance
w ould be payable under this sub-section gives his consent in
w ritin g , pay the sum or part o r the balance thereof, as the case
may be, to the assignee, or
( ii) i f such consent is not forthcom ing, w ith h o ld payment o f the sum,
p a rt o r balance, as the case may be, pending a decision o f a
competent c iv il C ourt as to the person entitled to receive it-
(2) The m aking o f any payment authorized by sub-section ( / ) shall be a
fu ll discharge to the Government or the ra ilw a y adm inistration, as the case
may be, fro m a ll lia b ility in respect o f so much o f the sum standing to the
credit o f the subscriber o r depositor as is equivalent to the am ount so paid-

1 Date of commencement of this Act.

 Provident Funds 97
5. ( 1) Subject to the provisions o f this A ct, but otherwise notw ithstanding R ights
o f nominees.
anything contained in any law fo r the tim e being in force or any disposition,
whether testamentary or otherwise, by a subscriber to, or depositor in , a
Government or R ailw ay P rovident Fund o f the sum standing to his credit in
the Fund, or o f any pa rt thereof, any nom ination, duly made in accordance
w ith the rules o f the Fund, w hich purports to confer upon any person the
rig h t to receive the whole or any p a rt o f such sum on the death o f the sub
scriber or depositor, shall be deemed to confer such rig h t absolutely u n til
such nom ination is varied by another nom ination made in lik e manner or is
expressly cancelled by the subscriber or depositor by notice given in such
manner and to such a u th o rity as is prescribed by those rules.
(2) A n y such person shall, on the death o f the subscriber or depositor,
be e ntitled to the grant o f a succession certificate e n titlin g h im to receive pay
ment o f such sum or part, and such certificate shall n o t be deemed to
be invalidated or superseded by any grant to any other person o f probate or
letters o f ad m inistration to the estate o f the deceased.

6. When the sum standing to the credit o f any subscriber or depositor in Pow er
any Government or R ailw ay Provident Fund w hich is a co n trib u to ry Provident to make
deductions.
Fund becomes payable, there may, i f the a u th o rity specified in this behalf
in the rules o f the Fund so directs, be deducted therefrom and paid to
Government or the R a ilw a y adm inistra tion , as the case may be
(a) any am ount due under a lia b ility incurred by the subscriber or
depositor to Governm ent or the R ailw ay A d m in istra tio n , but
n o t exceeding in any case the to ta l amount o f any contributions
credited to the account o f the subscriber or depositor and o f
any interest o r increm ent w hich has accrued on such contribu
tions ; or
( b ) where the subscriber or depositor has been dismissed fro m his
em ploym ent fo r any reasons specified in this behalf in the rules
o f the Fund, o r where he has resigned such em ploym ent w ith in
five years o f the commencement thereof, the whole or any part
o f the am ount o f any such contributions, interest and increment.

7. N o suit or other legal proceeding shall lie against any person in respect Protection
for acts done
o f anything w hich is in good fa ith done or intended to be done under this
in good
A ct. faith.

8. ( I ) The President o f the U n io n may, by n o tification in the Gazette, P o w e r to

direct th a t the provisions o f this A c t shall apply to any Provident Fund a p p ly the
A c t to other
established fo r the benefit o f its employees by any local a u th o rity w ith in the P rovident
meaning o f the L o cal A u th o ritie s Loans A c t, and, on the m aking o f such Funds.
declaration, this A c t shall apply accordingly as i f such Provident Fund were
a Government P rovident Fund and such local a u th o rity were the Government.
(2) The President o f the U n io n may, by notification , direct that the
provisions o f this A c t shall apply to any Provident Fund established fo r the

7
 98 Provident Funds.

benefit of the employees o f the U niversity o f Rangoon or o f any college

affiliated thereto, or o f any other p u b lic in s titu tio n .

Savings as 9. N o th in g in section 4 or section 5 shall apply to money belonging to 56 and

to estates
o f soldiers.
any estate fo r the purpose o f the a d m in istra tio n o f w hich the Regim ental Vict- c- 5'
Debts A c t, 1893, [w ould have applied if the C o nstitution o f the U n io n had not
come in to o p e ra tion .]1

T H E C O N T R IB U T O R Y P R O V ID E N T FU N D S A C T *

[B urm a A ct V I I , 1943.] (8th December, 1941.)

Whereas i t is expedient to make provision fo r safeguarding, fo r the
benefit o f the subscribers and th e ir dependants, the assets o f certain C o n tri
b utory Provident Funds established in the U nion o f Burma ; * * * *

I t is hereby enacted as fo llo w s '.

S h o rt title , 1. (1) T his A c t may be called the C o n trib u to ry Provident Funds A c t,

com m ence 1943.
m e n t and
e xte nt. (2) I t shall be deemed to have come in to force on the 8th day of
December 1941, and shall continue in force u n til the President o f the U nion,
by n o tifica tio n , declares th a t it shall cease to be operative.

D e fin itio n s . 2 . In this A c t

(1) dependant means and includes any relative or nominee o f a
deceased subscriber to the Provident Fund who, under the
rules o f the Fund, is or m ay become entitled to receive the
whole or any p o rtio n o f the sum standing to the credit o f the
subscriber;
(2) em ployer means any person who, by him self or through
Trustees, contributes to a Provident Fund m aintained fo r the
benefit o f his employees ;
(3) Provident Fund means a fund in w hich subscriptions or
deposits o f any class or classes o f employees are received and
held on th e ir in d iv id u a l accounts, and includes any co n trib u
tions and any interest or increm ent accruing on such subscrip
tions, deposits or contributions under the rules o f the Fund ;
(4) subscriber means any person who, in accordance w ith the
rules o f the P rovident Fund, subscribes to or deposits*in the
Fund and thereby is entitled to participate in the F u n d ;
(5) Trustees means the Trustees o f the Provident Fund, and
includes any person or persons acting in sim ila r capacity in
re la tio n to the Fund.
1 Substituted b y the U n io n o f B u rm a (A da p ta tio n o f Law s) O rder, 1948.
* P ublished in C h ie f S ecretarys Office N o tific a tio n N o . 54, dated 27th F e b ru a ry 1943 and
republished in Burma Gazette, 1946, P a rt I , page 135.
 Contributory Provident Funds. 99

India X IX, 3. In the case o f any Provident Fund established in the U n io n o f N o tific a tio n
1925. o f P ro vid e n t
Burm a to w hich the provisions o f the Provident Funds A c t are n o t applicable, Funds.
and w hich is such th a t the subscribers to the Fund have no claim upon the
general assets o f the employer, the President o f the U n io n may, by notification ,
declare such P rovident Fund to be a notified Provident Fund as fro m a
specified date, whether prospectively o r retrospectively, and the provisions o f
this A c t shall thereupon be deemed to apply to such Fund as fro m such date.

4. As a co nd ition to the issue o f such n o tifica tio n the President o f the U n d e rta kin g
U nion may require fro m the Trustees or fro m the employer such under b y Trustees
o r e m p lo y e r.
takings as he may th in k fit, and in p a rticular an undertaking that the Trustees
w ill pay fro m the assets o f the Fund to the subscribers or th e ir dependants,
debarred by reason o f the provisions o f this A c t fro m receiving payment fro m
the Trustees in accordance w ith the rules o f the Fund, amounts computed in a
specified manner.

5. In m aking payments in accordance w ith any undertaking given in R ig h ts o f

pursuance o f section 4 the Trustees shall reserve a p o rtio n o f the Fund co n tin u in g
em ployees,
sufficient, at the tim e o f m aking such payments as aforesaid, to make and p rio rity ,
payments s im ila rly computed to those subscribers who are s till in the em ploy,
ment o f the em ployer, or whose whereabouts are unknown or to whom
im m ediate payment is fo r any other reason im practicable ; and no subscriber
whose em ploym ent term inated on or after the eighth day o f December, 1941,
shall be entitled to any p rio rity over other subscribers by reason o f the date
on w hich his em ploym ent term inated.

6. ( / ) On the issue o f a no tifica tio n under section 3, but subject to such Release o f
undertakings as may have been given in pursuance o f section 4, the Trustees Trustees
fro m
o f a notified P rovident Fund or the employer shall, notw ithstanding anything lia b ilit y .
contained in the rules o f the Fund, be released fro m lia b ility to make
payments out o f the Fund to any subscriber, or to the dependants o f any
subscriber.
(2) Such exem ption fro m lia b ility shall continue so long as the realization
o f any o f the securities belonging to the Provident Fund w ould involve their
disposal at prices below the cost o f purchase; but nothing in this A c t shall
be deemed to p ro h ib it the Trustees fro m realizing securities at prices which
are not below the cost o f purchase, or fro m m aking payments pro rata to
subscribers or th e ir dependants in excess o f the undertakings given under
section 4-

7. The President o f the U nion may at any tim e require any m odificatio11 M o d ifica tio n
o f the undertakings given under section 4, and may rescind or cancel any o f u n d e rta k
in g s, and
notification issued under section 3. ca n c e lla tio n
o f n o tific a
tio n .
 100 Contributory Provident Funds.

F und to 8. N otw ithstanding anything contained in the rules of the Fund, a

co ntinue in Provident Fund notified under this A c t shall be deemed to continue in
existence.
existence u n til such notificatio n is rescinded or cancelled.

Bar to 9. N o suit or other proceeding shall lie against the Trustees of a

ju ris d ic tio n .
notified Provident Fund or against the employer fo r any o f the reliefs to which
a subscriber or the dependants o f a subscriber m ight have been entitled but
fo r this A ct.

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 109
PART XIII-AGENCY.
G fa C jS s O^SI ll( ^ l 0 8 c g d S e g 3 3 S G 6 p

T H E POW ERS O F A T T O R N E Y A C T .

[In d ia A ct V I I , 1882.] (1st M ay, 1882.)

1. T his A c t shall not apply to U pper Burm a unless extended thereto by Extent.
the President o f the U n io n by n o tifica tio n .

2. The donee o f a pow er-of-attorney may, if he thinks fit, execute or do Execution

under pow er-
any assurance, instrum ent or thing in and w ith his own name and signature, of-attorney.
and his own seal, where sealing is required, by the a u th o rity o f the donor o f
the power ; and every assurance, instrum ent and thing so executed and done
shall be as effectual in law as i f i t had been executed or done by the donee of
the power in the name, and w ith the signature and seal, o f the donor thereof.

3. A n y person m aking or doing any payment or act in good fa ith , in Paym ent by
pursuance o f a pow er-of-attorney, shall not be liable in respect o f the payment attorney
under pow er,
o r act by reason that, before the payment or act, the donor o f the power had without
died or become lunatic, o f unsound m ind, or bankrupt or insolvent, or had r.otice of
death, etc.,
revoked the power, i f the fact o f death, lunacy, unsoundness o f m ind, good .
bankruptcy, insolvency or revocation was not, at the time o f the payment or
act, know n to the person m aking or doing the same.
B u t this section shall not affect any rig h t against the payee o f any
person interested in any money so paid ; and that person shall have the lik e
remedy against the payee as he w ould have had against the payer, i f the
payment had not been made by him .

4. (a) A n instrum ent creating a power-of-attorney, its execution being D e p o sit o f

verified by affidavit, statutory declaration or other sufficient evidence, may, o rig in a l
in stru m e n ts
w ith the a ffidavit o r declaration, i f any, be deposited in the H ig h C ourt. creating
(b) A separate file o f instrum ents so deposited shall be kept ; and any p o w e rs -o f-
a tto rn e y .
person may search th a t file, and inspect every instrum ent so deposited ; and
a certified copy thereof shall be delivered out to h im on request.
(c) A copy o f an instrum ent so deposited may be presented at the office
and may be stamped or marked as a certified copy, and, when so stamped or
marked, shall become and be a certified copy.
(d) A certified copy o f an instrum ent so deposited shall, w ith o u t fu rth e r
p roo f, be sufficient evidence o f the contents o f the instrum ent and o f the deposit
thereof in the H ig h C ourt.
(e) The H ig h C o urt may, fro m time to tim e, make rules 1 fo r the purposes
o f this section, and prescribing, w ith the concurrence o f the President o f the
U n io n , the fees to be taken under clauses (a), (b) and (c).

' 1 F o r rules m ade u n d er clause (e), see H ig h C o u rt R u le s and O rders and Burma Gazette
1940, P a rt IV , p. 521.
 110 Powers of Attorney.

Pow er of 5. A m arried woman, whether a m inor or not, shall, by virtue o f this

a tto rn e y o f A c t, have power, as i f she were unm arried and o f f u ll age, by a non-testamentary
m a rrie d
w om an. instrum ent, to app o in t an attorney on her behalf fo r the purpose o f executing
any non-testam entary instrum ent or doing any other act w hich she m ight
herself execute or do ; and the provisions o f this A ct, relating to instruments
creating pow ers-of-attorney, shall apply thereto.

TRUSTS.

THE TRUSTS ACT.

C O N TE N TS .

C H A P T E R I.

Pr e l im in a r y .

Sections.

1. E xte n t and savings.

2. * * * *
3- Interpretation-clause.
Expressions defined in C ontract A ct.

CHAPTER II.

O f the C r e a t io n of T rusts.

4. L a w fu l purpose.
5. T ru st o f immoveable property.
T ru s t o f moveable property.
6. C reation o f trust.
7. W ho may create trusts.
8. Subject o f trust.
9- W ho may be beneficiary.
D isclaim er by beneficiary-
10. W ho may be trustee.
N o one bound to accept trust.
Acceptance o f trust.
D isclaim er o f trust.
 .
Trusts Ill
CHAPTER III.
O f the D u t ie s and L ia b il it ie s of T rustees -
Sections.
11. Trustee to execute tru st.
12- Trustee to in fo rm h im se lf o f state o f trust-property.
13. Trustee to protect title to trust-property.
14. Trustee n o t to set up title adverse to beneficiary.
15. Care required fro m trustee.
16. Conversion o f perishable property.
17. Trustee to be im p a rtia l.
18. Trustee to prevent waste.
19. Accounts and in fo rm a tio n .
20. Investm ent o f trust-m oney.
20A . Power to purchase redeemable stock at a prem ium .
21. M ortgage o f land pledged to Government under the Land Im provem ent
Loans A c t. D eposit in Government Savings Bank-
22. Sale by trustee directed to sell w ith in specified tim e.
23. L ia b ility fo r breach o f trust.
24. N o set-off allow ed to trustee.
25. N o n -lia b ility fo r predecessors default.
26. N o n -lia b ility fo r co-trustees default.
Joining in receipt fo r conform ity.
27. Several lia b ility o f co-trustees.
C o n trib u tio n as between co-trustees.
28. N o n -lia b ility o f trustee paying w ith o u t notice o f transfer by beneficiary.
29. L ia b ility o f trustee where beneficiarys interest is fo rfe ite d to
G overnm ent.
30. Indem nity o f trustees.

C H A P T E R IV .

O f th e R ig h ts and P o w e rs o f T ru s te e s .

31. R ig h t to title-deeds.
32. R ig h t to reim bursem ent o f expenses.
R ig h t to be recouped fo r erroneous overpayment-
33. R ig h t to ind em nity fro m gainer by breach o f trust.
34. R ig h t to apply to C o urt fo r opin ion in management o f trust-property.
35. R ig h t to settlement o f accounts.
36. General a u th o rity o f trustee.
37. Power to sell in lots, and either by pu b lic auction or private contract.
38. Power to sell under special conditions.
Power to buy in and re-sell.
T im e allow ed fo r selling trust-property.
39. Power to convey.
40- Power to vary investments:
112 Trusts.

Sections.
41. Power to apply property o f m inors, etc., fo r th e ir maintenance, etc.
42. Power to give receipts.
43. Power to compound, etc.
44- Power to several trustees o f whom one disclaim s o r dies.
45. Suspension o f trustees powers by decree.

CHAPTER V .

O f the D is a b il it ie s of T rustees.

46. Trustee cannot renounce after acceptance.

47. Trustee cannot delegate.
48. Co-trustees cannot act singly.
49- C o n tro l o f discretionary power-
50. Trustee may n o t charge fo r services.
51. Trustee may n o t use trust-p ro perty fo r his own pro fit.
52. Trustee fo r sale or his agent may n o t buy.
53. Trustee may not buy beneficiarys interest w ith o u t permission.
Trustee fo r purchase.
54. Co-trustees may not lend to one o f themselves.

C H A P T E R V I.

O f the R ig h t s and L ia b il it ie s of the B e n e f ic ia r y .

55. R ig h t to rents and profits.

56. R ig h t to specific execution.
R ig h t to transfer o f possession.
57. R ig h t to inspect and take copies o f instrum ent o f trust, accounts, etc.
58- R ig h t to transfer beneficial interest.
59- R ig h t to sue fo r execution o f trust-
60. R ig h t to proper trustees.
61. R ig h t to compel to any act o f duty.
62. W ro n g fu l purchase by trustee.
63. F o llo w in g trust-property
in to the hands o f th ird persons ;
in to th at in to w hich i t has been converted.
64- Saving o f rights o f certain transferees.
65. A c q u is itio n by trustee o f trust-property w ro n g u lly converted.
66. R ig h t in case o f blended property.
67. W rongful em ploym ent by partner-trustee o f trust-property fo r partner
ship purposes.
68. L ia b ility o f beneficiary jo in in g in breach o f trust.
69. R ights and lia b ilitie s o f beneficiarys transferee.
 Trusts 113
CHAPTER VII.
O f V a c a t in g the O f f ic e of T rustee.

Sections.
70. Office how vacated.
71. Discharge o f trustee.
72. P etition to be discharged fro m tru st.
73. A ppointm ent o f new trustees on death, etc.
74. A ppo in tm e nt by Court-
Rules fo r selecting new trustees.
75. V esting o f trust-property in new trustees.
Powers o f new trustees.
76. Survival o f trust.

CHAPTER V III.

O f the E x t in c t io n of T rusts.

77. T ru st how extinguished.

78. Revocation o f trust.
79- Revocation n o t to defeat w hat trustees have d u ly done.

C H APTER IX .

O f c e r t a in O b l ig a t io n s in the N ature of T rusts .

80- Where oblig atio n in nature o f trust is created.

81. W here i t does not appear that transferor intended to dispose o f
beneficial interest.
82- Transfer to one fo r consideration paid by another.
83. T rust incapable o f execution or executed w ith o u t exhausting trust-
property.
84. Transfer fo r ille g a l purpose.
85. Bequest fo r ille g a l purpose.
Bequest o f w hich revocation is prevented by coercion.
86. Transfer pursuant to rescindable contract.
87- D ebtor becoming c red itors representative.
88. Advantage gained by fiduciary.
89. Advantage gained by exercise o f undue influence.
90. Advantage gained by qualified owner.
91. Property acquired w ith notice o f existing contract.
92. Purchase by person contracting to buy property to be held on trust.
93. Advantage secretly gained by one o f several com pounding creditors.
94. Constructive trusts in cases not expressly provided fo r.
95. O b lig o rs duties, lia b ilitie s and disabilities.
96- Saving o f rig hts o f bona fide purchasers.

8
 114
T H E TRUSTS A C T .

[In d ia A ct I I , 1882.] (1st M arch, 1882.)

i (This A ct came into force in Rangoon on the 30th September, ,1904.)

C H A P T E R I.

P r e l im in a r y .

E x te n t 1. [T h is A c t extends to the whole o f the U n io n o f Burm a.]2 B u t nothing

and savings. herein contained affects the rules o f M uham madan law as to waqf, o r the
m utual relations o f the members o f an undivided fa m ily as determined by
any custom ary o r personal law, or applies to pu b lic or private religious or
charitable endowments, o r to trusts to distribute prizes taken in w ar among
the captors ; and nothing in the second C hapter o f this A c t applies to trusts
created before the 1st M arch, 1882.3
2. * * * *

In te r preta- 3. A tru st is an o b lig a tio n annexed to the ownership o f property, and

tio n -cla u se arising out o f a confidence reposed in and accepted by the owner, or declared
tru s t
and accepted by him , fo r the benefit o f another, or o f another and the o w n e r;
a u th o r o f the person w ho reposes o r declares the confidence is called the author
the tru s t o f the trust the person who accepts the confidence is called the trustee :
trustee :
bene the person fo r whose benefit the confidence is accepted is called the benefici
fic ia ry ary : the subject-m atter o f the tru st is called trust-property o r trust-
tru s t-
p ro p e rty : money : the beneficial interest or interest o f the beneficiary is his
ben eficial rig h t against the trustee as owner o f the trust-property : and the instrument,
in te re s t
in s tru m e n t i f any, by w hich the tru st is declared is called the instrum ent o f trust :
o f tr u s t ;

breach o f
a breach o f any duty imposed on a trustee, as such, by any law fo r
t r u s t ; the tim e being in force, is called a breach o f tru st :

n o tice . and in this A ct, unless there be something repugnant in the subject or
context, a person is said to have notice o f a fa c t either when he actually
knows th at fact, or when, but fo r w ilfu l abstention fro m in q u iry o r gross
negligence, he w ould have know n it , o r when in fo rm a tio n o f the fact is given
to o r obtained by his agent, under the circumstances mentioned in the C ontract
A ct, section 229 :

expressions and a ll expressions used herein and defined in the C ontract A c t shall be
defined in deemed to have the meaning respectively attributed to them by that A ct.
C ontract
Act.

1 T h is note was in se rte d by the B u rm a L a w s (A daptation) A ct, 1940 (B u rm a Act X X V I I , 1940).

a Substituted by the U n io n o f B u rm a (A d a p ta tio n o f L a w s) O rd e r, 1948.
8 The date on w h ic h th is A ct was declared to have com e in to fo rce .
 Trusts. 115

CHAPTER II.

Of th e C r e a t io n of T rusts.

4. A tru st may be created fo r any la w fu l purpose. The purpose o f a L aw ful pur

pose.
trust is la w fu l unless it is (a) forbidden by law , o r ( b ) is o f such a nature
that, i f perm itted, i t w ould defeat the provisions o f any law , or (c) is fraudu
lent, or ( d) involves or im plies in ju ry to the person or property o f another,
or ( e ) the C o u rt regards i t as im m oral or opposed to public policy.
Every trust o f w hich the purpose is un law ful is void. A nd where a
tru st is created fo r tw o purposes, o f w hich one is la w fu l and the other
unla w fu l, and the two purposes cannot be separated, the whole trust is void.
Explanation . In this section the expression law includes, where the
trust-property is immoveable and situate in a foreign country, the law o f such
country.
Illustrations.
(a) A conveys p ro p e rty to B in tru st to a p p ly the p ro fits to the n u rtu re o f fem ale fo u n d
lin g s to be tra in e d up as p ro stitu te s. T h e tru s t is void.
(b) A bequeaths p ro p e rty to B in tru s t to e m p lo y it in c a rry in g on a s m u g g lin g business,
and out o f the p ro fits th e re o f to support A's c h ild re n . T h e tru s t is vo id .
(c) A, w h ile in in s o lv e n t circu m sta n ce s, tra n sfe rs p ro p e rty to B in tru s t fo r A d u rin g his
life , and a fte r h is death to B. A is d e clared an in s o lv e n t. T h e trust fo r A is in v a lid as against
his cred ito rs.
5. N o tru s t in relation to immoveable property is va lid unless declared Trust o f im
by a non-testam entary instrum ent in w ritin g signed by the author o f the trust m oveable
property.
or the trustee and registered, or by the w ill o f the author o f the trust or o f
the trustee.
N o tru st in re la tio n to moveable property is va lid unless declared as Trust of
m ove:ible
aforesaid or unless the ownership o f the property is transferred to the trustee. property.
These rules do n o t apply where they w ould operate so as to effectuate a
fraud.
6. Subject to the provisions o f section 5, a trust is created when the Creation of
trust.
author o f the trust indicates w ith reasonable certainty by any words or acts ( a)
an intention on his p a rt to create thereby a trust, (b) the purpose o f the
trust, (c) the beneficiary, and ( d ) the trust-property, and (unless the trust is
declared by w ill or the author o f the tru st is him self to be the trustee)
transfers the trust-property to the trustee.

Illustrations.
(a) A bequeaths ce rta in p ro p e rty to B, h a vin g the fu lle s t confidence th a t he w i l l dispose
o f i t fo r the benefit o f C. T h is creates a tru s t so fa r as regards A and C.
( b) A bequeaths ce rta in p ro p e rty to B , h o p in g he w ill continue i t in the fa m ily . T h is
does not create a tru s t as th e b e n eficiary is n o t in d ica te d w ith reasonable ce rta in ty.
(c) A bequeaths ce rta in p ro p e rty to B, req u e stin g h im to d is trib u te it am ong such
members o f Cs fa m ily as B sh o u ld th in k m ost d e se rvin g . T h is does n o t create a tru s t, fo r the
beneficiaries are n o t indicated w ith reasonable c e rta in ty .
(d) A bequeaths ce rta in p ro p e rty to B , d e s irin g him to d iv id e the b u lk o f it am ong
C's c h ild re n . T h is does n o t create a tru s t, fo r the tru s t-p ro p e rty is n o t in d ic a te d w ith sufficient
ceitainty.
(e) A bequeaths a shop and stock-in-trade to B, on condition that he pays /l's debts and
a legacy (to C. This is a condition, not a trust for 4 s creditors and C.
 116 Trusts.

W h o may 7. A tru s t may be created

create trusts.
(a) by every person competent to c o n tra c t,1 and
(b) w ith the permission o f a p rin cip a l c iv il C ourt o f o rig in a l ju ris d ic
tio n , by or on behalf o f a m inor ;
b u t subject in each case to the law fo r the tim e being in force as to the
circumstances and extent in and to w hich the author o f the tru s t may dispose
o f the trust-property.
Subject of 8. The subject-m atter o f a tru s t must be property transferable to the
trust.
beneficiary.
I t m ust not be m erely beneficial interest under a subsisting trust.
W h o m aybe 9. Every person capable o f holding property may be a beneficiary.
beneficiary.
D isclaim er A proposed beneficiary m ay renounce his interest under the trust by
b y benefici disclaim er addressed to the trustee, o r by setting up, w ith notice o f the trust,
ary.
a claim inconsistent therew ith.
W h o m ay be 10. Every person capable o f holding property may be a trustee ; but,
trustee.
where the tru st involves the exercise o f discretion, he cannot execute i t unless
he is competent to contract.
N o one N o one is bound to accept a trust-
bound to
accep t trust.
Acceptance A tru st is accepted by any words or acts o f the trustee indicating w ith
o f trust.
reasonable certainty such acceptance.
D isclaim er Instead o f accepting a trust, the intended trustee may, w ith in a reason
o f trust. able period, disclaim it, and such disclaim er shall prevent the trust-property
fro m vesting in him .
A disclaim er by one o f two or more co-trustees vests the trust-property
in the other or others, and makes h im or them sole trustee or trustees fro m
the date o f the creation o f the trust.

lllustrattons.
() A bequeaths ce rta in p ro p e rty to B and C, his executors, as trustees fo r D. B and C
pro ve / l s w ill. T h is is in its e lf an acceptance o f th e tru s t, and B and C h o ld the p ro p e rty in
tru s t fo r D,
( ) A tra n sfe rs c e rta in p ro p e rty to B in tr u s t to se ll i t and to pay o u t o f the proceeds A s
debts B accepts th e tru s t and s e lls th e p ro p e rty . So fa r as regards B, a tru s t o f th e proceeds
is created f o r A's cre d ito rs.
(c) A bequeaths a la k h o f rupees to B upon c e rta in tru s ts and a ppoints h im h is executor.
B severs th e la kh fro m the general assets and a p p ropriates it to th e sp e cific purpose. T h is is an
acceptance o f the trust.

CHAPTER III.

Of the D u t ie s and L ia b il it ie s o f T r u s t e e s .
Trustee to 11. The trustee is bound to fu lfil the purpose o f the trust, and to obey
execute
trust. the directions o f the author o f the tru s t given at the tim e o f its creation,
except as m odified by the consent o f a ll the beneficiaries being competent to
contract-
i See section 11 of the Contract Act.
 Trusts . 117

Where the beneficiary is incom petent to contract, his consent may, fo r the
purposes o f this section, be given by a p rin cip a l c iv il C ourt o f o rig in a l ju ris
diction-
N o th in g in this section shall be deemed to require a trustee to obey any
direction when to do so w ould be im practicable, ille g a l or m anifestly in ju rio u s
td the beneficiaries.
Explanation . Unless a contrary in te n tio n be expressed, the purpose o f
a trust fo r the payment o f debts shall be deemed to be (a) to pay o nly the debts
o f the author o f the tru st existing and recoverable a t the date o f the in s tru
m ent o f trust, or, when such instrum ent is a w ill, at the date o f his death,
and ( b ) in the case o f debts n o t bearing interest, to make such payment
w ith o u t interest-

Illustrations.
() A, a truste e , is s im p ly a u th o rize d to s e ll c e rta in la n d b y p u b lic a u ctio n .
He ca n n o t sell
the la n d by p riv a te contract.
( ) A, a tru s te e o f ce rta in la n d fo r X , Y and Z, is authorized to se ll th e la n d to B fo r a
specified sum. X, Y and Z, b e in g com p e te n t to c o n tra ct, consent th a t A m ay s e ll the la n d to C
fo r a less sum . A m a y s e ll the la n d a c c o rd in g ly .
(e) A, a trustee fo r B and h e r c h ild re n , is d ire c te d b y the a u tho r o f the tru s t to lend, on Bs
request, tru s t-p ro p e rty to B s husband, C, on th e se c u rity o f his bond. C becomes in s o lv e n t and
B requests A to make the lo a n . A m ay refuse to m ake it.

12. A trustee is bound to acquaint him self, as soon as possible, w ith Tthe ru ste e to
nature and circumstances o f the tru st-p ro p e rty ; to obtain, where necessary, in fo rm h im
s e lf o f state
a transfer o f the tru st-p ro p e rty to h im s e lf; and (subject to the provisions o f o f tru s t-
the instrum ent o f trust) to get in trust-moneys invested on insufficient or p ro p e rty.
hazardous security.

Illustrations.
() T u e tru s t-p ro p e rty is a debt o u tstan d in g on personal se cu rity. T h e in s tru m e n t o f tru s t
gives the trustee no d iscre tio n a ry p o w e r to leave the d e b t so ou tstan d in g . T h e trustees d u ty is to
recover th e d e b t w ith o u t unnecessary delay.
( ) T h e tru s t-p ro p e rty is m on e y in the hands o f one o f tw o co-trustees. N o d iscre tio n a ry
p o w e r is g iv e n b y th e in s tru m e n t o f tru s t. T h e o th e r co-trustee m ust n o t a llo w the fo rm e r to
re ta in the m on e y fo r a lo n g e r p e rio d than th e circu m sta n ce s o f the case req u ire .

13- A trustee is bound to m aintain and defend a ll such suits, and (sub T ru ste e to
ject to the provisions o f the instrum ent o f trust) to take such other steps as, p ro te ct title
to tru s t-
regard being had to the nature and am ount or value o f the trust-property, p ro p e rty.
may be reasonably requisite fo r the preservation o f the trust-property and
the assertion o r protection o f the title thereto.

Illustration.
T h e tru s t p ro p e rty is im m o v e a b le p ro p e rty w h ic h has been g iv e n to th e a u th o r o f the tru st
b j an u n registered in s tru m e n t. S ubject to the p ro v is io n s o f the R e g istra tio n A c t, th e truste e s d u ty
is to cause the in s tru m e n t to be re g iste re d .

14- The trustee m ust n o t fo r him self or another set up o r aid any title T ru ste e n o t
to the tru st-prop erty adverse to the interest o f the beneficiary. to set up title
adverse to
b e n eficiary.
 118 Trusts.

Care reqi i- 15. A trustee is bound to deal w ith the trust-property as carefully as a
red from
trustee.
man o f ordinary prudence w ould deal w ith such property i f i t were his own ;
and, in the absence o f a contract to the contrary, a trustee so dealing is not
responsible fo r the loss, destruction or deterioration o f the trust-property.

lllust rations.

() A, liv in g in K angoon, is a trustee fo r B, liv in g in B o m b a y. A re m its trust-funds to B b y

b ills d ra w n b y a person of undoubted c re d it in fa vo u r o f th e tru s te e as such, and payable at
B om bay. T h e b ills are d ish onoured. A is not b o u nd to make good the loss.
( ) A, a trustee of leasehold p ro p e rty, d irects th e te n an t to pay the rents on a cco u nt of the
tru s t to a banker, B, th e n in c re d it. T he ren ts are a cco rd in g ly p a id to B, and A leaves th e
m oney w ith B o n ly t i l l w a n te d . Before the m oney is d ra w n o u t B becomes in so lve n t. A, h a v in g
had no reason to believe th a t B was in in s o lv e n t circu m sta n ce s, is not bound t o make good the
loss.
(c) A, a trustee o f tw o debts fo r B, releases one and com pounds the o th e r, in good fa ith , and
reasonably b e lie v in g th a t i t is fo r B's in te re st to do so. A is n o t bound to m ake good any loss
caused th e re b y to B.
Id) A, a trustee directed to sell th e tru s t-p ro p e rty b y a u ctio n , s e lls the same, b u t does n o t
a d ve rtise the sale and o th e rw ise fa ils in reasonable d ilig e n c e in in v itin g c o m p e titio n . A is bound
to make good the loss caused th e re b y to the beneficiary.
(e) A, a trustee fo r B, in exe cu tion o f his trust, sells the tru s t-p ro p e rty , b u t fro m w a n t of
due d ilig e n c e on h is p a rt fa ils to receive p a rt of the purchase-m oney. A is b o und to make good
the loss the re b y caused to B.
( f ) A, a trustee fo r B of a p o lic y o f insurance, has funds in hand fo r p a ym e n t o f the
p re m iu m s. A neglects to pay the p re m iu m s, and th e p o lic y is co n se q u e n tly fo rfe ite d . A is bound
to make good the loss to B .
(g) A bequeaths ce rta in m oneys to B and C as trustees, and authorizes them to co n tin u e
trust-m on e ys upon the personal s e c u rity o f a ce rta in fir m in w h ic h A had h im s e lf in ve ste d them .
A dies, and a change takes place in the firm . B and C m ust n o t p e rm it the m oneys to re m a in upon
the p e rsonal se cu rity o f the n e w firm .
(h) A, a trustee for B, allow s the trust to be executed solely by his co-trustee, C. C m isa pp
lies the trust-propertv. A is personally answ erable for the loss resulting to B.

Conversion 16. Where the tru st is created fo r the benefit o f several persons in
o f perishable
property. succession, and the tru st-prop erty is o f a wasting nature or a fu tu re or rever
sionary interest, the trustee is bound, unless an intention to the contrary may
be inferred fro m the instrum ent o f trust, to convert the property in to property
o f a permanent and im m ediately profitable character.

Illustrations.
() A bequeaths to B a ll his p ro p e rty in tr u s t fo r C d u rin g his life , and on h is death fo r D,
and on D s death fo r E. /1s p ro p e rty consists of th re e le a se h o ld houses, and th e re is n o th in g in
A j w i l l to show th a t he in te n d e d th e houses to be enjoyed in specie. B sh o u ld sell th e houses,
and in ve st the proceeds in accordance w ith section 20.
( ) A bequeaths to B h is three leasehold houses in Rangoon and a ll the fu rn itu re there in
trust fo r C d u rin g his life , and on his death fo r D, and on D s d eath fo r E. H ere an in te n tio n that
the houses and fu rn itu re should be enjoyed in specie appears cle a rly , and B s h o u ld n o t s e ll them .

Trustee' to 17. Where there are more beneficiaries than one, the trustee is bound to
be impartial.
be im p a rtia l, and m ust n o t execute the tru st fo r the advantage o f one at the
expense o f another.
Where the trustee has a discretionary power, nothing in this section
shall be deemed to authorize the C o u rt to control the exercise reasonably
and in good fa ith o f such discretion-
 Trusts. 119

Illustration.
A, a trustee fo r B, C and D, is e m p o w e re d to choose betw een several specified modes of
in v e s tin g the tru s t-p ro p e rty . A in good fa ith chooses one o f these modes. T h e C o u rt w i l l n o t
in te rfe re , a lth o u g h the re s u lt o f the choice m ay be to a ry th e re la tiv e rig h ts o f B, C and D.

18. Where the tru st is created fo r the benefit o f several persons in succession T ru ste e to
prevent
and one o f them is in possession o f the tru st-property, i f he comm its, or w aste.
threatens to com m it, any act w hich is destructive or perm anently injurious
thereto, the trustee is bound to take measures to prevent such act.

19. A trustee is bound (a) to keep clear and accurate accounts o f the Accounts
and inform a
trust-prop erty, and ( b ) at a ll reasonable tim es, at the request o f the beneficiary tio n .
to fu rn is h h im w ith f u ll and accurate in fo rm a tio n as to the am ount and state
o f the trust-property.

20. Where the trust-property consists o f money and cannot be applied In ve stm e n t
o f trust-
im m ediately o r a t an early date to the purposes o f the trust, the trustee is m oney.
bound (subject to any dire ctio n contained in the instrum ent o f trust) to invest
the money on the fo llo w in g securities, and on no others :
(a) in prom issory notes, debentures, stock or other securities o f the
Government o f the U nion o f Burm a or o f the C entral or any
P rovincial Governm ent in In d ia or Pakistan, or o f the U nited
K ingdom o f G reat B rita in and Ire la n d :
Provided tha t securities, both the prin cip a l whereof and the in te r
rest whereon shall have been fu lly and u n cond itionally
guaranteed by any such Government, shall be deemed, fo r the
purposes o f this clause, to be securities o f such G overnm ent;
(b) in bonds, debentures and annuities charged or secured by the
[P arliam ent o f the U nited K ingdom o f Great B rita in and
Ire la n d ]1 on the revenues o f the U n io n o f Burm a o r o f the
[Governm ent o f In d ia or P akistan]1 or any Province o f In d ia
o r P a kista n :
Provided that, a fte r the fifteenth day o f February, 1916,2 no money
shall be invested in any such annuity being a term inable annuity
unless a sinking fu nd has been established in connection w ith
such annuity ; b u t nothing in this proviso shall apply to invest
ments made before the date aforesaid;
(bb) in In d ia or Pakistan three and a h a lf per cent, stock, India or
Pakistan three per cent, stock, In d ia or Pakistan two and a h a lf
per cent, stock, o r any other capital stock issued by the Secre
ta ry o f State fo r In d ia in C ouncil under the a u th o rity o f an A c t
o f [P arliam ent o f the U nited K ingdom o f Great B rita in and
Ire la n d ]1 and charged on the revenues o f In d ia or Pakistan, or
in any sterling loans raised by the Secretary o f State on behalf

1 Substituted by the Union of Burma (Adaptation of Laws) Order, 1948.

1 T h e d a te
o f co m m encem ent o f th e In d ia n T ru s ts (Am endm ent) A ct, 1916 (In d ia A c t I, 1916),
w h ic h added th is proviso.
 120 Trusts

26 Geo. 5, o f the Governor-General in C ouncil under the provisions o f Part

C. 2. X I I I o f the Government o f In d ia A ct, 1935 ;
(c) in stock or debentures of, or shares in , railw ay or other companies
the interest whereon shall have been guaranteed by the Secretary
o f State fo r In d ia in C ouncil or by the Government o f In d ia or
Pakistan, or in debentures o f the Bombay P rovincial Co-operative
Bank, L im ite d , the interest whereon shall have been guaranteed
by the Secretary o f State fo r In d ia in C o u n c il;
(d) in debentures or other securities fo r money issued, under the
a u th o rity of any A c t o f a Legislature established in In d ia or
Pakistan or the U n io n o f Burm a, by or on behalf o f any m u n i
cipal body, p o rt tru st dr c ity im provem ent tru s t in any
Presidency-town, or in Rangoon Tow n, or by or on behalf of
the trustees o f the p o rt o f K a ra c h i;
(e ) on a first mortgage o f immoveable p roperty situate in [ * * ]* the
U n io n o f B urm a : Provided that the property is n o t a leasehold
fo r a term o f years and that the value o f the p roperty exceeds by
one-third, or, if consisting o f buildings, exceeds by one-half, the
mortgage-money ; or
(/) on any other security expressly authorized by the instrum ent o f
trust, or by any rule w hich the H ig h C ourt may from tim e
to tim e prescribe in this b e h a lf:
Provided that, where there is a person competent to contract and entitled
in possession to receive the income o f the trust-property fo r his life , o r fo r any
greater estate, no investment on any security mentioned or referred to
in clauses (d), (e) and (/) shall be made w ith o u t his consent in w ritin g .

P ow er to 20A. ( / ) A trustee may invest in any o f the securities mentioned or

purchase referred to in section 20, notw ithstanding that the same may be redeemable
redeem able
stock at a and th at the price exceeds the redem ption value :
premium.
Provided th a t a trustee may not purchase at a price exceeding its redemp
tion value any security m entioned or referred to in clauses (c) and ( d )
o f section 20 w hich is lia b le to be redeemed w ith in fifteen years o f the date
o f purchase at par or at some other fixed rate, or purchase any such security
as is mentioned o r referred to in the said clauses w hich is liable to be
redeemed at par or at some other fixed rate at a price exceeding fifteen per
centum above par or such other fixed rate.
(2) A trustee may retain u n til redem ption any redeemable stock, fu n d or
security w hich may have been purchased in accordance w ith this section.

M ortg a g e o f 21. N o th in g in section 20 shall apply to investments made before this

la n d pledged
to G overn A c t comes in to force, or shall be deemed to preclude an investment
m e n t und-er on a mortgage o f immoveable property already pledged as security fo r
th e L a n d
Im p ro v e an advance under the Land Im provem ent Loans A ct, or, in case the
m en t L oans
A ct. D eposit 1 Omitted by the Union of Burma (Adaptation o f Law s) O rder, 1948.
 Trusts- 121

trust-m oney does n o t exceed three thousand rupees, a deposit thereof in a in G overn
m ent Savings
Government Savings Bank- B ank.

22. Where a trustee directed to sell w ith in a specified tim e extends such Sale by
tru s te e
tim e, the burden o f proving, as between him self and the beneficiary, that the directe d to
la tte r is not prejudiced by the extension lies upon the trustee, unless s e ll w it h in
specified
the extension has been authorized by a p rin cip a l c iv il C ourt o f original tim e.
ju ris d ic tio n .

Illustration.
A bequeaths p ro p e rty to B, d ire c tin g h im w it h a ll co n ve nien t speed and w it h in five years
to s e ll i t , and a p p ly th e proceeds fo r th e be n efit o f C. In the exercise o f reasonable d is c re tio n ,
B postpones th e sale fo r s ix years. T he sale is n o t th e re b y rendered in v a lid , b u t C, a lle g in g th a t
he has been in ju re d b y th e postponem ent, in s titu te s a s u it a g a in s t B to o b ta in com pensation. I n
such s u it th e b u rd e n o f p ro v in g th a t C has n o t been in ju re d lies on B.

23. Where the trustee com m its a breach o f trust, he is lia b le to make L ia b ilit y fo r
good the loss which the trust-property or the beneficiary has thereby sustained, bre a ch o f
trust.
unless the beneficiary has by fraud induced the trustee to com m it the breach, or the
beneficiary, being competent to contract, has him self, w ith o u t coercion or undue
influence having been brought to bear on him , concurred in the breach, or
subsequently acquiesced therein, w ith fu ll knowledge o f the facts o f the case
and o f his rig h ts as against the trustee.

A trustee co m m itting a breach o f trust is not lia b le to pay interest except

in the fo llo w in g cases :
(a) where he has actually received interest ;
( b ) where the breach consists in unreasonable delay in paying trust-
money to the b e n e fic ia ry ;
(c) where the trustee ought to have received interest, but has not done
so;
( d ) where he may be fa irly presumed to have received interest.
He is liable, in case (a), to account fo r the interest actually received,
and, in cases (b), (c) and (d), to account fo r sim ple interest at the rate o f six
per cent, per annum, unless the C o u rt otherwise directs.
( e) Where the breach consists in fa ilu re to invest trust-m oney and to
accumulate the interest or dividends thereon, he is liable to account fo r
com pound in te re st (w ith h a lf-yea rly rests) at the same rate.
(/) Where the breach consists in the em ploym ent o f trust-property or
the proceeds thereof in trade or business, he is lia b le to account, at the
o p tio n o f the beneficiary, either fo r compound interest (w ith h alf-yearly rests)
at the same rate, o r fo r the nett pro fits made by such employment.

Illustrations.
fa) A tru ste e im p ro p e rly leaves tru s t-p ro p e rty o u ts ta n d in g , and i t is consequently lo s t ;h e is
lia b le to m ake good th e p ro p e rty lo s t, b u t he is n o t lia b le to p a y in te re s t thereon.
(b) A bequeaths a house t o B in tru st to sell i t and pay the proceeds to C. B neglects to se ll
the house fo r a g re a t le n g th o f tim e , w h e re b y the house is d e te rio ra te d and its m a rke t p rice fa lls ,
B is a n s w e ra b le to C fo r the loss.
 122 Trusts-

(c) A truste e is g u ilty o f unreasonable d e la y in in v e s tin g trust-m on e y in accordance w ith

s e c tio n 20, o r in p a yin g i t to th e b e n e fic ia ry . T h e tru s te e is lia b le to p a y in te re s t th e re o n fo r
the p e rio d o f th e delay.
id) T h e d u ty o f th e trustee is to in v e s t tru st-m o n e y in any o f th e se cu ritie s m entioned in
s e ctio n 20, clause (a), (ft), (c) o r (rf). In s te a d o f so d o in g , he re ta in s the m o n e y in h is hands.
He is lia b le , a t the o p tio n o f th e b e n e ficia ry, to be ch a rg e d e ith e r w ith the am ount o f th e p r in c i
p a l m oney and in te re s t, o r w it h the a m o u n t o f such se cu ritie s as he m ig h t have purchased w ith
th e trust-m on e y w h e n the in ve stm e n t s h o u ld have been made, and the in te rm e d ia te dividends
and in te re st thereon.
'e) T he in s tru m e n t o f tru s t d ire cts th e trustee to in v e s t tru st-m o n e y e ith e r in any such
securities o r on m ortgage o f im m o ve a b le p ro p e rty . T h e trustee does n e ith e r. H e is lia b le fo r
th e p rin c ip a l m on e y a nd in te re s t.
( /) T h e in s tru m e n t o f tru st d ire cts th e truste e to in v e s t tru st-m o n e y in a n y o f such se cu ritie s
and to a ccu m u la te th e d iv id e n d s th e re o n . T h e tru s te e disregards the d ire c tio n . H e is lia b le ,
at the o p tio n o f the b e n e fic ia ry , to be ch a rg e d e ith e r w ith th e a m ount o f th e p rin c ip a l m oney
and com pound in te re s t, o r w ith th e a m o u n t o f such se cu ritie s as he m ig h t have purchased w it h
the tru s t-m o n e y w h e n the in v e s tm e n t sh o u ld have been made, to g e th e r w it h the am ount of th e
accu m u la tio n w h ic h w o u ld have a risen fro m a p ro p e r investm ent o f th e in te rm e d ia te dividends.
(g) T ru s t p ro p e rty is in v e s te d in one o f th e se cu ritie s m e n tirn e d in section 20, clause 'a),(b)t
(ci or (rfi. T he tru ste e se lls such s e c u rity fo r some purpose n o t au tho rize d b y the te rm s o f th e
in s tru m e n t o f tr u s t. H e is lia b le , at the o p tio n o f the b e n e ficia ry, e ith e r to replace th e se cu rity
w ith the in te rm e iia te d ivid e n d s and in te re s t thereon, o r to a cco u nt fo r th e proceeds o f th e sale
w ith in te re s t thereon.
(ft) T h e tru s t-p ro p e rty consists o f la n d . T he trustee sells th e la n d to a p urchaser fo r a
c o n s id e ra tio n w ith o u t notice o f the trust. T h e tru s te e is lia b le , a t th e o p tio n o f the b e n e ficia ry,
t o purchase o th e r la n d o f equal value to be s e ttle d upon th e lik e tru s t, o r to be charged w ith the
proceeds o f th e sale w ith in te re s t.

N o s e t o ff 24. A trustee who is lia b le fo r a loss occasioned by a breach o f trust in

a llo w e d to respect o f one p o rtio n o f the trust-property cannot set-off against his lia b ility
trustee.
a gain w hich has accrued to another p o rtio n o f the trust-property through
another and d is tin c t breach o f trust*

N o n -lia b ility 25. Where a trustee succeeds another, he is not, as such, lia b le fo r the
fo r prede acts o r defaults o f his predecessor.
cessors
d e fau lt.

N o n - lia t l it y
26. Subject to the provisions o f sections 13 and 15, one trustee is not,
fo r co as such, liab le fo r a breach o f tru st com m itted by his co -tru ste e :
tru s te e s
d e fa u lt. P rovided that, in the absence o f an express declaration to the contrary
in the instrum ent o f tru st, a trustee is so lia b le
(a) where he has delivered trust-property to his co-trustee w ith o u t
seeing to its proper application ;
( b ) where he allows his co-trustee to receive trust-property and fa ils to
make due en q u iry as to the co-trustees dealings therew ith or
allows h im to retain it longer than the circumstances o f the case
reasonably require ;
(c) where he becomes aware o f a breach o f tru st com m itted or intended
by his co-trustee, and either actively conceals i t or does not
w ith in a reasonable tim e take proper steps to protect the
beneficiarys interest.

J o in in g in A co-trustee who joins in signing a receipt fo r trust-property and proves

re c e ip t fo r that he has not received the same is not answerable, by reason o f such
c o n fo rm ity
signature o n ly, fo r loss or m isapplication o f the property by his co-trustee.
 Trusts- 123

Illustration.
A bequeaths c e rta in p ro p e rty to B and C, and d ire c ts them to s e ll i t and in ve st th e proceeds
fo r th e b e n e fit o f D. B a nd C a c c o rd in g ly s e ll the p ro p e rty , and the purchase-m oney is received
b y B and re ta in e d in his hands. C pays n o a tte n tio n to th e m a tte r fo r tw o years, and then c a lls
on B to m ake the in ve stm e n t. B is u n a b le to do so, becom es in so lve n t, and the purchase-m oney
is lo st. C m ay be c o m p e lle d to m ake good the am ount.

27. W here co-trustees jo in tly com m it a breach o f trust, o r where one o f Several lia b i
l i t y o f co
them by his neglect enables the other to co m m it a breach o f trust, each is trustees.
lia b le to the beneficiary fo r the whole o f the loss occasioned by such breach.
B u t as between the trustees themselves, i f one be less g u ilty than C o n trib u tio n
as betw een
another and has had to refund the loss, the form er may compel the la tter, or co4rustees.
his legal representative to the extent o f the assets he has received, to make
good such lo s s ; and, i f a ll be equally g u ilty , any one or more o f the trustees
w ho has had to refund the loss may compel the others to contribute.
N o th in g in this section shall be deemed to authorize a trustee who has
been g u ilty o f fra u d to in stitu te a suit to compel contribution .

28. W hen any beneficiarys interest becomes vested in another person, N o n -lia b ility ,
c f truste e
and the trustee, n o t having notice o f the vesting, pays or delivers trust- p a y in g w it h
property to the person who w ould have been entitled thereto in the absence o u t notice o f
tra n sfe r by
o f such vesting, the trustee is n o t lia b le fo r the property so paid or delivered. beneficiary.

29. W hen the beneficiarys interest is fo rfe ite d or awarded by legal L ia b ilit v of
trustee
adjudication to Governm ent, the trustee is bound to hold the trust-property w h e re b enefi
to the extent o f such interest fo r the benefit o f such person in such manner c ia r y s
in te re s t is
as the Government may direct in this behalf. fo rfe ite d to
G overnm ent.

30. Subject to the provisions o f the instrum ent o f trust and of sections In d e m n ity o f
trustees.
23 and 26, trustees shall be respectively chargeable only fo r such moneys,
stocks, funds and securities as they respectively actually receive and shall not
be answerable the one fo r the other o f them, nor fo r any banker, broker or
other person in whose hands any tru st-property may be placed, nor fo r the
insufficiency o r deficiency o f any stocks, funds o r securities, nor otherwise fo r
in vo lu n ta ry losses.

C H A P T E R IV .

O f the R ig h t s and Po w ers of T rustees.

31. A trustee is entitled to have in his possession the instrum ent o f R ig h t to title -
deeds.
tru st and a ll the documents o f title ( if any) relating solely to the trust-
property.

32. Every trustee may reimburse him self or pay or discharge out o f the R ig h t to re
im bursem ent
tru st-prop erty a ll expenses p ro p e rly incurred in or about the execution o f the o f expenses.
trust, o r the re alization, preservation o r benefit o f the trust-property, or the
protection or support o f the beneficiary.
 124 Trusts,

I f he pays such expenses out o f his own pocket, he has a first charge
upon the trust-p ro p erty fo r such expenses and interest th e re o n ; but such
charge (unless the expenses have been incurred w ith the sanction o f a
p rin c ip a l c iv il C o u rt o f o rig in a l ju ris d ictio n ) shall be enforced only by p ro
h ib itin g any disposition o f the trust-property w ith o u t previous payment o f
such expenses and interest.
I f the trust-property fa il, the trustee is entitled to recover from the
beneficiary personally on whose behalf he acted, and at whose request,
expressed o r im p lied , he made the payment, the am ount o f such expenses.
R ig h t to be
recouped fo r Where a trustee has by m istake made an over-payment to the beneficiary,
erroneous he may reimburse the trust-property out o f the beneficiary s interest. I f such
over-pay
m ent.
interest fa il, the trustee is e n title d to recover fro m the beneficiary personally
the am ount o f such over-payment.

R ig h t to in 33. A person other than a trustee who has gained an advantage fro m a
de m n ity fro m
g a in e r by breach o f trust must indem nify the trustee to the extent o f the amount
breach o f actually received by such person under the breach; and where he is a
tru st.
beneficiary the trustee has a charge on his interest fo r such amount.
N o th in g in th is section shall be deemed to e n title a trustee to be
indem nified who has, in co m m ittin g the breach o f trust, been g u ilty o f fraud-

R ig h t to ap 34. A n y trustee may, w ith o u t in s titu tin g a suit, apply by p e titio n to a

p ly to C o u rt
fo r o p in io n p rin c ip a l c iv il C o u rt o f o rig in a l ju ris d ic tio n fo r its opinion , advice or d irec
in m anage tio n on any present questions respecting the management or adm inistration
m ent o f trust-
p ro p e rty. o f the trust-property other than questions o f detail, d ifficu lty or importance,
n o t proper in the opinio n o f the C ou rt fo r summary disposal.
A copy o f such p e titio n shall be served upon, and the hearing thereof
may be attended by, such o f the persons interested in the application as the
C ou rt th in ks fit.
The trustee stating in good fa ith the facts in such p e titio n and acting
upon the o p in io n , advice or dire ction given by the C ourt shall be deemed, so
fa r as regards his own re spo nsib ility, to have discharged his duty as such
trustee in the subject-m atter o f the application.
The costs o f every app licatio n under this section shall be in the discre
tio n o f the C o u rt to w hich it is made.

R ig h t to 35. W hen the duties o f a trustee, as such, are completed, he is entitled

settlem ent of to have the accounts o f his ad m in istra tion o f the trust-property examined and
accounts.
s e ttle d ; and, where nothing is due to the beneficiary under the trust, to an
acknowledgment in w ritin g to th a t effect.

G eneral 36. In a d ditio n to the powers expressly conferred by this A c t and by

a u th o rity o f the instrum ent o f tru st, and subject to the restrictions, i f any, contained in
trustee.
such instrum ent, and to the provisions o f section 17, a trustee may do a ll
acts w hich are reasonable and proper fo r the realization, protection or benefit
o f the trust-property, and fo r the protection o r support o f a beneficiary who
is not competent to contract-
 Trusts. 125

Except w ith the perm ission o f a p rin cip a l c iv il C ourt o f o rig in a l ju ris d ic
tio n , no trustee shall lease trust-property fo r a term exceeding twenty-one
years fro m the date o f executing the lease, nor w ith o u t reserving the best
yearly ren t th a t can be reasonably obtained.

37. Where the trustee is empowered to sell any trust-property, he may P ow er to sell
sell the same subject to p rio r charges or not, and either together or in lots, in lo ts, and
e ith e r by
by p u b lic auction o r private contract, and either at one tim e o r at several p u b lic
times, unless the instrum ent o f tru s t otherwise directs. au ctio n or
p riv a te
co n tra ct.
38. The trustee m aking any such sale may insert such reasonable stipula P o w e r to s e ll
tions either as to title o r evidence o f title , or otherwise, in any conditions o f u n d er special
co n d itio n s.
sale or contract fo r sale, as he th in ks f i t ; and may also buy in the property P ow er to
o r any p a rt thereof at any sale by auction, and rescind o r vary any contract b u y in and
re-sell.
fo r sale, and re-sell the p roperty so bought in, or as to w hich the contract is
so rescinded, w ith o u t being responsible to the beneficiary fo r any loss
occasioned thereby.
Where a trustee is directed to sell trust-property or to invest trust- T im e
money in the purchase o f property, he may exercise a reasonable discretion a llo w e d
fo r s e llin g
as to the tim e o f effecting the sale or purchase. tru s t-
p ro p e rty .
Illustrations.
(a) A bequeaths p ro p e rty to B, d ire c tin g h im to s e ll it w ith a ll co n ve n ie n t speed and p a y the
proceeds to C. T h is does n o t ren d e r an im m e d ia te sale im p e ra tive .
lb) A bequeaths p ro p e rty to B, d ire c tin g h im to se ll it at such tim e and in such m a n n e r as he
sh a ll th in k fit and in v e s t th e proceeds fo r the benefit o f C. T h is does n o t a u tho rize B, as between
h im and C, to postpone the sale to an in d e fin ite p e rio d .

39. F o r the purpose o f com pleting any such sale, the trustee shall have Pow er to
power to convey or otherwise dispose o f the property sold in such manner as convey.

may be necessary.

40. A trustee may, at his discretion, ca ll in any trust-property invested P o w e r to

in any security and invest the same on any o f the securities mentioned or v a ry in v e s t
ments.
referred to in section 20, and fro m tim e to tim e vary any such investments
fo r others o f the same nature :
Provided that, where there is a person competent to contract and
entitled at the tim e to receive the income o f the trust-property fo r his life or
fo r any greater estate, no such change o f investment shall be made w ith o u t
his consent in w ritin g .

41. Where any property is held by a trustee in trust fo r a m inor, such P o w e r to

trustee may, at his discretion, pay to the guardians ( if any) o f such m inor, or a p p ly
p ro p e rty of
otherwise apply fo r o r towards his maintenance or education or advancement m in o rs, etc.,
in life , or the reasonable expenses o f his religious worship, marriage or f o r th e ir
m aintenance,
funeral, the whole o r any p a rt o f the income to w hich he may be entitled in etc.
respect o f such property ; and such trustee shall accumulate a ll the residue o f
such income by way o f compound interest by investing the same and the
resulting income thereof fro m tim e to tim e in any o f the securities mentioned
 126 Trusts.

or referred to in section 20. fo r the benefit o f the person who shall u ltim a te ly
become entitled to the p roperty fro m w hich such accumulations have arisen :
Provided th a t such trustee may, at any tim e, i f he thinks fit, apply the
w hole or any p a rt o f such accumulations as i f the same were part o f the
income arising in the then current year.
Where the income o f the tru st-property is insufficient fo r the m in o rs
mainteaance or education or advancement in life , o r the reasonable expenses
o f his religious w orship, marriage or funeral, the trustee may, w ith the
perm ission o f a p rin c ip a l c iv il C o u rt o f o rig in a l ju ris d ic tio n , but not otherwise,
apply the whole or any p a rt o f such property fo r o r towards such maintenance,
education, advancement or expenses.
N o th in g in th is section shall be deemed to affect the provisions o f any
local law fo r the tim e being in force re la tin g to the persons and property o f
m inors.

P o w e r to
42. A n y trustees o r trustee may give a receipt in w ritin g fo r any money,
g iv e receipts. securities o r other moveable property payable, transferable o r deliverable to
them or him by reason, or in the exercise, o f any trust or power ; and, in the
absence o f fraud, such receipt shall discharge the person paying, transferring
o r delivering the same therefrom , and fro m seeing to the app lica tio n thereof,
or being accountable fo r any loss or m isapplication thereof.

P o w e r to 43. Tw o or more trustees acting together may, i f arid as they th in k fit,

com pound,
etc.
(a) accept any com position or any security fo r any debt or fo r any
property claim ed ;
(ib) allow any time fo r payment o f any debt ;
(c) compromise, compound, abandon, subm it to a rb itra tio n or
otherwise settle any debt, account, claim o r thing whatever
relating to the trust ; and
(d) fo r any o f those purposes, enter in to , give, execute and do such
agreements, instrum ents o f com position o r arrangement, releases
and other things as to them seem expedient, w ith o u t being
responsible fo r any loss occasioned by any act or thing so done
by them in good faith-

The powers conferred by this section on tw o or more trustees acting

together may be exercised by a sole acting trustee when by the instrum ent o f
trust, i f any, a sole trustee is authorized to execute the trusts and powers
thereof.
T h is section applies on ly i f and as fa r as a contrary in te n tio n is not
expressed in the instrum ent o f trust, i f any, and shall have effect subject to the
terms o f th a t instrum ent and to the provisions therein contained.
T his section applies only to trusts created after this A c t comes in to
force.
 Trusts. 127

44. When an a u th o rity to deal w ith the trust-property is given to P o w e r to

several
several trustees and one o f them disclaims o r dies, the a u th o rity may be trustees
exercised by the continuing trustees, unless fro m the terms o f the instrum ent of whom
o f tru st i t is apparent th a t the a u th o rity is to be exercised by a number in one disclaim s
o r dies.
excess o f the number o f the rem aining trustees.

45. Where a decree has been made in a su it fo r the execution o f a Suspension

tru s t, the trustee m ust n o t exercise any o f his powers except in conform ity of trustees
pow ers by
w ith such decree, or w ith the sanction o f the C o u rt by which the decree has decree.
been made, or, where an appeal against the decree is pending, o f the
appellate C ourt.

C H APTER V-

O f the D is a b il it ie s of T rustees.

46. A trustee who has accepted the trust cannot afterwards renounce T rustee can
n o t renounce
i t except (a) w ith the perm ission o f a p rin c ip a l c iv il C ourt o f o rig in a l a fte r accept
ju ris d ic tio n , or (b) i f the beneficiary is competent to contract, w ith his ance.
consent, o r (c) by virtue o f a special power in the instrum ent o f trust.

47. A trustee cannot delegate his office or any o f his duties either to a T ru ste e can
not delegate.
co-trustee o r to a stranger, unless (a) the instrum ent o f trust so provides, or
(b) the delegation is in the regular course o f business, o r (c) the delegation is
necessary, o r ( d) the beneficiary, being competent to contract, consents to the
delegation.
Explanation . The appointm ent o f an attorney o r proxy to do an act
merely m in is te ria l and in vo lvin g no independent discretion is not a delega
tio n w ith in the meaning o f th is section.

Must rations.
() A bequeaths ce rta in p ro p e rty to B and C on ce rta in tru sts to be executed b y them or the
s u rv iv o r o f them o r the assigns o f such s u rv iv o r. B dies. C m ay bequeath th e tru s t-
p ro p e rty to D and E upon th e tru s ts o f 4 s w ill.
( 6) A is a trustee o f c e rta in p ro p e rty w ith p o w e r to sell th e same. A m ay e m p lo y an
auctioneer to effect th e sale.
(c) A bequeaths to B fifty houses le t a t m o n th ly rents in tru s t to co lle ct the ren ts and
pay them to C B m ay e m p lo y a p ro p e r person to c o lle c t these rents.

48. When there are more trustees than one, a ll must jo in in the execu Co-trustees
cannot act
tio n o f the tru st, except where the instrum ent o f trust otherwise provides.
singly.

49. Where a discretionary power conferred on a trustee is not exercised C o n tro l of

reasonably and in good fa ith , such power may be controlled by a prin cip a l d is c re tio n a ry
p o w e r.
c iv il C ourt o f o rig in a l ju ris d ic tio n .

50. In the absence o f express directions to the contrary contained in the T rustee m ay
n o t charge
instrum ent o f tru st or o f a contract to the contrary entered in to w ith the fo r services.
beneficiary or the C ou rt at the tim e o f accepting the trust, a trustee has no
rig h t to remuneration fo r his trouble, s k ill and loss o f tim e in executing the
trust.
 128 Trusts.

Nothing in this section applies to the Official Trustee or Administrator-

General or any person holding a certificate of administration.

Trustee may 51. A trustee may not use or deal with the trust-property for his own
not use trust- profit or for any other purpose unconnected with the trust.
property for
his own
profit.

Trustee for 52. No trustee whose duty it is to sell trust-property, and no agent
sale or his employed by such trustee for the purpose of the sale, may, directly or
agent may
not buy. indirectly, buy the same or any interest therein on his own account or as
agent for a third person.

Trustee may 53 . No trustee, and no person who has recently ceased to be a trustee,
not buy may, without the permission of a principal civil Court of original jurisdiction,
beneficiarys
interest with buy or become mortgagee or lessee of the trust-property or any part th ereof;
out perm is and such permission shall not be given unless the proposed purchase,
sion.
mortgage or lease is manifestly for the advantage of the beneficiary^
Trustee for And no trustee whose duty it is to buy or to obtain a mortgage or
purchase. lease of particular property for the beneficiary may buy it, or any part thereof,
or obtain a mortgage or lease of it, or any part thereof, for himself.

54. A trustee or co-trustee whose duty it is to invest truSt-money on

Co-trustees
may not lend mortgage or personal security must not invagt it on a mortgage by, or on the
to one of personal security of, himself or one of his co-trustees.
themselves.

C H A PT ER V I.

Of the R ig h t s a n d L ia b il it ie s o f t h e B e n e f ic ia r y .

Right to 55. The beneficiary has, subject to the provisions of the instrument of
rents and trust, a right to the rents and profits of the trust-property.
profits.

Right to 56. The beneficiary is entitled to have' the intention of the author of the
specific trust specifically executed to the. extent of the beneficiarys interest ;
execution.
and, where there is only one beneficiary and he is competent to contract,
Right to or where there are several beneficiaries and they are competent to contract and
transfer of
possession.
all of one mind, he or they may require the trustee to transfer the trust-
property to him or them, or to such person as he or they may direct.
When property has been transferred or bequeathed for the benefit of a
married woman, so that she shall not have power to deprive herself of her
beneficial interest, nothing in the second clause of this section applies to such
property during her marriage.

Illustrations.
(a> Certain Government securities are given to trustees upon tru st to accumulate the
interest until A attains the age of 2 4 , and then t o transfer the gross amount to him. A on
a tta in in g m ajority may, as the person exclusively interested in the trust-property, require the
trustees to transfer it immediately to h im ..
 Trusts* 129

(ty A bequeaths Rs 10,000 to trustees upon trust to purda*e ati annuity for B, who has
ittained bis majority and is otherwise competent toicontr&ot. flitnay claim the Rs. 10,000.
(t) A transfers ceftaitt property -to B and directs hitn to sell or invest it for the benefit of C
who is competent to contract. C may elect to take the property in its original character.

57. The beneficiary has a right, as against the trustee and all persons Right to
elairaing under him with notice of the trust, to inspect and take copies of the inspect and
take copies
instrument of trust, the documents of title relating solely to the trust-property, of instru
ment of
the accounts of the trust-property and the vouchers (if any) by which they trust,
are supported, and the cases submitted and opinions taken by the trustee for accounts, etc.
his guidance in the discharge of his duty.

58. The beneficiary, if competent to contract, may transfer his interest Right to
but subject to the law for the time being in force as to the circumstances transfer
beneficial
and extent in and to which he may dispose of such interest : interest.
Provided that when property is transferred or bequeathed for the benefit
of a married woman, so that she shall not have power to deprive herself of
her beneficial interest, nothing in this section shall authorize her to transfer
such interest during her marriage.

59. When no trustees are appointed or all the trustees die, disclaim, or Right to sue
are discharged, or where for any other reason the execution of a trust by the for execution
of trust.
trustee is or becomes impracticable, the beneficiary may institute a suit for
the execution of the trust, and the trust shall, so far as may be possible, be
executed by the Court until the appointment of a trustee or new trustee.

60. The beneficiary has a right (subject to the provisions of the instru Right to
ment of trust) that the trust-property shall be properly protected and held and proper
trustees.
administered by proper persons and by a proper number of such persons.
Explanation / . The following are not proper persons within the meaning
of this section :
A person domiciled a b ro a d : an alien enem y: a person having an
interest inconsistent with that of the beneficiary: a person in insolvent
circumstances ; and, unless the personal law of the beneficiary allows otherwise,
a married woman and a minor.
Explanation I I . When the administration of the trust involves the
receipt and custody of money, the number of trustees should be two at least.

Illustrations.
() A, one of several beneficiaries, proves that B, the trustee, has improperly disposed of
part of the trust-property, or that the property is in danger from B s being in insolvent
circumstances, or that he is incapacitated from acting as trustee. A may obtain a receiver ol
the trust-property.
() A bequeaths certain jew els to B in trust for C. B dies during /ls lifetim e ; then A dies.
C is entitled to have the property conveyed to a trustee for him.
(c) A conveys certain property to four trustees in trust for B. Three of the trustees die.
B may institute a suit to have three new trustees appointed in the place of the deceased trustees.
id) A conveys certain property to three trustees in trust for B . All the trustees dis
claim. B may institute a suit to have three trustees appointed in place of the trustees
so disclaiming.

9
 130 Trusts

() A , a trustee fo r B, refuses te act, o r goes to reside pe rm a n e ntly o u t of th e U n io n of B u rm a ,

o r is d e clared an in so lve n t, o r com pounds w ith his c re d ito rs o r suffers a co-trustee to co m m it
a breach of tru s t. B m ay in s titu te a s u it to have A rem oved and a new trustee appointed in
his room .

E ig h t to 61. The beneficiary has a rig h t that his trustee shall be compelled to
com pel to
any act of p erform any p a rtic u la r act o f his duty as such, and restrained fro m com
d u ty . m ittin g any contemplated or probable breach o f trust.

Illustrations.
() A contracts w ith B to pay h im m o n th ly Rs, 100 fo r the benefit o f C. B w rite s and
signs a le tte r declaring th a t he w ill h o ld in tru s t fo r C the m oney so to be paid. A fa ils to pay the
m oney in accordance w ith his co n tra ct. C m ay com pel B on a p ro p e r indem nity to a llo w C to
sue on the co n tra ct in B's name.
( ) ^4 is trustee of ce rta in land, w ith a p o w e r to sell the same and pay the proceeds to B
and C equnlly. A is about to m ake an im p ro v id e n t sale of the la n d . B m ay sue on b e h a lf o f
h im s e lf and C fo r in ju n c tio n to re s tra in A fro m m a kin g the sale.

W ro n g fu l 62. W here a trustee has w ro n g fu lly bought trust-property, the

purchase by
trustee. beneficiary has a rig h t to have the property declared subject to the trust or
retransferred by the trustee, if it remains in his hands unsold, or, if it has
been bought fro m him by any person w ith notice o f the trust, by such
person. B u t in such case the beneficiary must repay the purchase-money
paid by the trustee, w ith interest, and such other expenses ( if any) as he has
properly incurred in the preservation o f the p ro p e rty ; and the trustee or
purchaser must (a) account fo r the nett profits o f the property, ( b ) be charged
w ith an occupation-rent, i f he has been in actual possession o f the property,
an d (c) allow the beneficiary to deduct a proportionate part o f the purchase-
m oney i f the p ro p e rty has been deteriorated by the acts or omissions o f the
trustee or purchaser.
N o thin g in this section
(a) im pairs the rights o f lessees and others who, before the in s titu tio n
o f a suit to have the property declared subject to the tru st or
retransferred, have contracted in good fa ith w ith the trustee or
purchaser ; or
( b ) entitles the beneficiary to have the property declared subject to
the tru st or retransferred where he, being competent to con
tract, has him self, w ith o u t coercion or undue influence having
been brought to bear on him , ratified the sale to the trustee w ith
fu ll knowledge o f the facts o f the case and o f his rights as
against the trustee.
F o llo w in g 63. W here trust-property comes in to the hands o f a th ird person
tru s t- inconsistently w ith the trust, the beneficiary may require him to adm it
p ro p e rty
in to th e fo rm a lly, or may in stitu te a suit fo r a declaration, that the property is
hands o f comprised in the tru st.
t h ir d p e r
sons ; in to
th a t in to Where the trustee has disposed o f trust-property and the money or
w h ic h i t has
been co n other property w hich he has received therefor can be traced in his hands,
ve rte d . or the liands o f his legal representative or legatee, the beneficiary has, in
 Trusts 131

respect thereof, rights as nearly as may be the same as his rights in respect
o f the o rig in a l trust-property.

Illustrations.
(a) A, a trustee f'>r B o f Rs. 10,000, w r o n g fu lly invests the Rs. 10,000 in th e purchase o f
ce rta in la n d . B is e n title d to the la n d .
(b) A, a trustee, w ro n g fu lly purchases la n d in his o w n name, p a rtly w ith his o w n m oney,
p a rtly w it h m oney su b je ct to a tru s t fo r B. B is e n title d to a charge on th e la n d fo r the am ount
o f the trust-m on e y so m isem ployed.

64. N o th ing in section 6 3 entitles the beneficiary to any rig h t in respect s a v in s of

o f property in the hands o f rig h ts of
certain
(a) a transferee in good fa ith fo r consideration w ith o u t having notice transferees.
o f the trust, either when the purchase-money was paid, or
when the conveyance was executed, or
(b) a transferee fo r consideration fro m such a transferee.
A judgm ent-creditor o f the trustee attaching and purchasing trust-
p roperty is n o t a transferee fo r consideration w ith in the meaning o f this
section.
N o th in g in section 6 3 applies to money, currency notes, and negotiable
instrum ents in the hands o f a bond fide holder to whom they have passed in
circu la tio n , or shall be deemed to affect the C ontract A c t, section 108, or
the lia b ility o f a person to whom a debt or charge is transferred.

65. Where a trustee w ro n g fu lly sells or otherwise transfers trust-property Acquisition

and afterwards him self becomes the owner o f the property, the property by tru ste e o f
again becomes subject to the trust, notw ithstanding any want o f notice on peurstyPro"
the pa rt o f intervening transferees in good fa ith fo r consideration. w r o n g fu lly
converted.
66. Where the trustee w ro n g fu lly mingles the trust-property w ith his Right in .
own. the beneficiary is entitled to a charge on the whole fund fo r the amount case of
due to him .

67. I f a partner, being a trustee, w ro n g fu lly employs tru st-p ro p e rty in wrongful
the business, or on the account o f the partnership, no other partner is e m p lo ym e n t
lia b le therefor in his personal capacity to the beneficiaries, unless he had truste e ""T"
notice o f the breach o f trust. - tru s t-p ro
p e rty fo r
The partners having such notice are jo in tly and severally lia b le fo r p a rtn e rsh ip
the breach o f tru st. purposes.

Illustrations.
(a) A and B are partners. A dies, h a vin g bequeathed a ll his p ro p e rty to B in tru s t fo r Z ,
and app ointe d B his sole ext c u to r. B , instead o f w in d in g up the a ffa irs o f the p a rtn e rship,
reta in s a ll the assets in the business. Z m ay com pel h im , as p a rtn e r, to account fo r so m uch o f
th e p ro fits as are d e rive d fro m <4s share o f the ca p ita l. B is also a n sw e ra b le to Z fo r the
im p ro p e r e m ploym ent o f <4s assets.
(b) A, a tra d e r, bequeaths his p ro p e rty to B in tru s t fo r C, appoints B h is sole executor,
a nd dies. B enters in to p a rtn e rsh ip w it h X and Y in the same trade, and em ploys As asse's in
the partners liip-businees. B ives an in d e m n ity to X and Y against the claim s o f C. H e re o f
and Y are jo in tly lia b le w ith B to C as h a vin g k n o w in g ly become parties to th e breach ol tru s t
c o m m itte d b y B.
 132 Trusts-

L iab ility of 68. Where one of .several beneficiaries>

beneficiary
joining i n (a) joins in committing breach of trust, or
b re ac h of (b ) knowingly obtains any advantage therefrom, without the consent
tru st.
of the other beneficiaries, or
(c) becomes aware of a breach of trust committed or intended to be
committed, and' either/actually conceals,sit. or does nqt within
a reasonable tiine take proper steps to protect the interests of
the other beneficiaries, or
d) has .deceived the,.:triiatee raiid: therehy.iinduGed hiitnitd'coinmit a
breach of trust,
the.iothbri!.be)tiefioiaiBieSjLaEet.ntitledHto ihave iall -his beneficial* interest
impounded;, as again&t^him ,apd ali who/claim under ihim; (otherwise than as
transferee for consideration,without notice of. the-breaclift until the loss caused
by the breaoh ha-S; been, compensated.
W hea iproperty h^sifoeeiutransferaedjor bequeathed for jtheibeneiit of a
.married .woman, so, that s.he shalloti-have,power to deprive herself of her
beneficial interest, nothing in this section applies to such property during (her
marriage.

R ig h ts and 69. Every person to whom a ^beneficiary transfers, his interest has the
liab ilities of rights, and is siibiect to tlie liabilities, of the beneficiary in respect o f ,such
beneficiarys
tra n s fe re e . interest at the date of the transfer-

CHAPTER V II.

O f V a c a t in g the O f f ic e of Ts u stle .

Office liow
S70: T3he ffiee ijof a trustee fi vacated by h is dearth <bt by!tiis' df&fehaige
vacated. fro m lhi_S''offici.

D ischarge 71. The trustee may be discharged from his office only as follows :
tru stee .
(a ) by the extinctioh ofithe-.trust^
(/.>) bythe, completion o f his'duties under the tru s t;
(c ): bysuch, m eans;as may be prescribed' by the instrument of trust'
(d) by appointment under this Act of a new* trustee inTiis^ place ;*-
(e) by consent, of .hinaself, and ;the. beneficiary, or, wJjers there are
more beneficiaries than one, all the beneficiaries being com
petent to contract, or
( f ) by the Court to which a petition for his discharge is presented
under this A ct.
P e titio n to 72. N otw ithstanding the provisions of section 11, every trustee may
b e d is
ch arg e d
apply by petition to a principal civil Court of original jurisdiction to be
from tru st. discharged from his' -office fand, if the Court finds that there is sufficient
reason for' sflch discharge.. it mg.y discharge him accordingly, and direct his
costs- .lor.beMpaid <*ut-*< th tr-u3tJpropeirty. But, where there is no such
 Trusts* 133

reason, the Court shall not discharge him, unless a proper person can be
found (6 lake His placfe.

73. Whenever any person appointed a trustee disclaims, or an.y trustee, Appointment
either original or substituted, dies, or is, for a continuous period, of six of new
triteteaSttW
-months1 abseat from the Union of Burma, or leaves the U n io n o fB u rm a fo r efeath, eVC.
the purpose of residing abroad,, or, as declared an insolvent, or desires to be
discharged from the trust, or refuses or becomes, in the opinion of a
principal civil Court of original jurisdiction, unfit or personally incapable to
a ct via the trust, or accepts an inconsistent trust a new trusted may be
appointed in his place by
(a) the person nominated for that pofpose by the instrument of trust
(if any), or
(b) if there be no such person, or no such person able and willing to
act, the author o f the trust if he be alive and competent to
contract, or the surviving or continuing trustees or trustee for
the time being, or legal representative of the last surviving and
continuing trustee, or (with the consent of the .Cojtrt) the
retiring trustees, if they all retire simultaneously, or (with the
like consent) the Iastretrring trtrstee;
Every such appointment shall be by writing under the hand of the person
making it.
On an appointment of a new trustee the number of trustees may be
increased.
The Official Trustee may, with his consent and by the order of the
Court, be appointed under this section in any case in which only one trustee
is to be appointed and such trustee is to be the sole trustee.
The provisions of this section relative to a trustee who is dead include
the case of a person nominated trustee in a will but dying belore the testator,
and those relative to a continuing trustee include a refusing or retiring trustee
if willing to act in the execution of the power.

74^ Whenever any such vacancy or disqualification occurs and it is Appointm ent
found impracticable to appoint a new trustee under section 73. the beneficiary by Court.

may, without instituting a suit, apply by petition to a principal civil Court

of original jurisdiction for the appointment of a trustee or a new trustee,
and the Court may appoint a trustee or a new trustee accordingly,

In appointing new trustees, the Court shall have regard (a) to the wishes R ules for
of the author of the trust as expressed in or to be inferred from the selecting
new trustees
instrument of tftrst, (b ) to the wishes of the person, if any, empowered to
appoint new trustees, (c) to the question whether the appointment will
promote or impede the execution of the trust, and, (d) where there are more
beneficiaries than one, to the interests of all such beneficiaries.
 134 Trusts.

V esting of 75. Whenever any new trustee is appointed under section 73 or section
trust-pro-
perty in new 74. all tie trust-property for the time being vested in the surviving or
trustees. continuing trustees or trustee, or in the legal representative of any trustee,
shall become vested in such new trustee either solely or jointly with the
surviving or continuing trustees or trustee, as the case may require.
Pow ers of Every new trustee so appointed and every trustee appointed by a Court
new trustees.
shall have the same powers, authorities and discretions, and shall in all
respects act, as if he had been originally nominated a trustee by the author
of the trust.

Survival of 76. On the death or discharge of one of several co-trustees, the trust
trust.
survives and the trust-property passes to the others, unless the instrument of
trust expressly declares otherwise.

CH APTER V III.
O f t h e E x t in c t io n o f T r u sts.

T rust how 77. A trust is extinguished

extinguished.
(a) when its purpose is completely fulfilled; or
( b ) when its purpose becomes unlaw ful; or
(c) when the fulfilment of its purpose becomes impossible by destruc
tion of the trust-property or otherw ise; or
(d ) when the trust, being revocable, is expressly revoked.

Revocation 78. A trust created by will may be revoked at the pleasure of the
of trust.
testator. A trust otherwise created can be revoked only
(a) where all the beneficiaries are competent to contractby their
co n sen t;
(Z>) where the trust has been declared by a non-testamentary instru
ment or by word of m outhin exercise of a power of revocation
expressly reserved to the author of the t r u s t ; or
(c) where the trust is for the payment of the debts of the author of the
trust, and has not been communicated to the creditorsa t the
pleasure of the author of the trust.

Illu stra tio n .

A conveys property to B in tru st to sell the sam e and pay out of the .proceeds the claim s
of /)s creditors. A reserves no pow er of revocation. If no com m unication hits-been-made to the
creditors, A may revoke the trust. But if the creditors are parties to the arrangem ent, the tru st
cannot be revoked w ithout th e ir consent.

R evocation 79. No trust can be revoked by the author of the trust so as to defeat
not to defeat or prejudice what the trustees may have duly done in execution of the trust.
w hat trustees
have duly
done.
 T rusts- 135

CHAPTER IX .

O f c e r t a in O b l ig a t io n s in thf N ature of T rusts .

80. A n obligation in the nature o f a tru st is created in the fo llo w in g W h e re

o b lig a tio n in
cases. n a tu re of
tr u s t is
created.

81. Where the owner o f property transfers or bequeaths it and i t cannot W h e re i t

docs n o t
be inferred consistently w ith the attendant circumstances that he intended to appear th a t
dispose o f the beneficial interest therein, the transferee or legatee must hold tra n s fe ro r
intended to
such property fo r the benefit of1the ow ner or his legal representative. dispose o f
ben eficial
Illustra tions. in te re s t.

() A conveys la n d to B w ith o u t co n sid e ra tio n and declares no tru s t o f any part. I t can
not, co n s is te n tly w ith the circum stances under w h ic h the tra n s fe r is made, be in fe rre d th a t A
in te n d e d to tra n s fe r th e b eneficial in te re s t in the la n d . B h o ld s the la n d fo r the benefit o f A.
(b\ A conveys to B tw o fields, Y and Z , and declares a tru s t o f Y, b u t says n o thing about
Z. I t cannot, co n siste n tly w it h the circum stances under w h ic h the tra n sfe r is made, be in fe rre d
that A intended to tra n s fe r th e beneficial interest in Z. B holds Z fo r the benefit o f A.
(c) A tra n sfe rs certain stock be lo n g in g to h im in to the jo in t names of h im s e lf and B. It
cannot, c o n s is te n tly w ith the circum stances u n d er w h ic h the tra n s fe r is made, be in fe rre d th a t A
in te n d e l to tra n s fe r the beneficial interest in the sto ck d u rin g his lif e . A and B h o ld the stock
fo r the benefit o f A d u rin g h is life .
Id) A m akes a g ilt o f ce rta in la n d to h is w ife B. She takes the b eneficial in te re st in the
la n d free fro m any tru s t in fa vo u r o f A, fo r it m ay be in fe rre d fro m the circu m sta n ce s th a t the g ift
was fo r Bs benefit.

82. Where property is transferred to one person fo r a consideration paid T ra n s fe r to

one fo r con
or provided by another person, and it appears that such other person did not s id e ra tio n
intend to pay or provide such consideration fo r the benefit of the transferee, p a id by
a nother.
the transferee must hold the property fo r the benefit o f the person paying or
providing the consideration.
N othing in this section shall be deemed to affect section 66 o f the Code
o f C iv il Procedure.

83. Where a trust is incapable o f being executed, or where the trust is T ru s t in ca p

a b le o f
com pletely executed w ith o u t exhausting the trust-property, the trustee, in the execution or
absence o f a direction to the contrary, must hold the trust-property, or so executed
w dthout
much thereof as is unexhausted, fo r the benefit o f the author o f the trust or exhausting
his legal representative. trust-
p ro p e rty.
Illustrations.
la) A conveys ce rta in la n d to B
upon tr i.s t, and no tr u s t is d eclared ; or
upon tru s t to be th e re a fte r d e cla re d ," and no such d e c la ra tio n is ever m ade ; or
upon tru sts th a t are too vague to be executed ; or
upon tru sts th a t becom e in ca p a ble o f ta k in g e ffe c t; or
in tru s t fo r C, and C renounces his in te re s t under th e tru s t.
In each of these cases B holds th e la n d fo r the be n efit o f A.
( ) A tran sfe rs Rs. 10,000 in th e fo u r per cents, to B , in tru s t to pay th e in te re s t a n n u a lly
a c c ru in g due to C fo r h e r life . A dies. T h e n C dies. B h o ld s th e fu n d fo r the benefit o f ^4s
legal representative.
 136 Trusts-

(c) A conveys lan d to B upon trust to sell it a n d apply one m oiety of the proceeds for
c erta in c h arita b le purposes, and the o th er fa r the, m ain ten a n ce of the w o rsh ip of a n idol. B
sells the land, but the c h aritab le purposes w holly fail, and the m aintenance of the w orship does not
e x h a u st the second m oiety of th e proceed-1. B holds th e first m oiety and the p ^ rt u napplied of
th e second m o ie ty to r th e benefit of A or his legal respresentative.
[d) A bequeaths Rs. 10,000 to B to be laid out in buy in g lan d to be conveyed for
purposes w hich e ith e r w ho lly or p a rtia lly fa il to tak e effect.. B holds for th e benefjt,,of / l 's
leg al re p resen tativ e the undisposed of in te re st in the m oney o r land if p u rch ased .
T ransfer for 84. Where the owner of property transfers it to another for an illegal
illegal pur
pose. purpose and such purpose is not carried into execution, or the transferor is
not as guilty as the transferee, or the effect of permitting the transferee to
retain the property might be to defeat the provisions of any law, the transferee
must hold the property for the benefit of the transferor.
B equest for 85. Where a testator bequeaths certain property upon trust and the
illegal pur
pose. purpose of the trust appears on the face of the will to be unlawful, or during
the testators lifetime the legatee agrees with him to apply the property for
an unlawful purpose, the legatee must hold the property for the benefit of the
testators legal representative.
Bequest of Where property is bequeathed and the revocation of the bequest is
which revo
cation is prevented by coercion, the legatee must hold the property for the benefit of
prevented by the testators legal representative.
coercion.
T ransfer 86. Where property is transferred in pursuanfce of a contract which is
pursuant to
rtscindable liable to rescission or induced by fraud or mistake, the transferee must, on
contract. receiving notice to that effect, hold the property for the benefit of the
transferor, subject to repaym ent by the latter of the consideration actually
paid.
Debtor 87. Where a debtor becomes the executor or other legal representative
becoming
cred ito rs re of his creditor, he must hold the debt for the benefit of the persons interested
presentative. therein.

A dvantage 88. Where a trustee, executor, partner, agent, director of a company,

gained by
fiduciary. legal adviser, or other person bound in a fiduciary character to protect the
interests of another person, by availing himself of his. character, gajnjS for
himself any pecuniary advantage, or where any person so bound enters into
any dealings under circumstances in which his own interests are, or nuiy be,
adverse to those of such other person and thereby gains for himself a
pecuniary advantage, he must hold for the benefit of such other person the
advantage so gained.
llluit rat ions.
(a) A, an executor, buys a t an un d erv alu e from B, a leg atee, his claim u n d e r the w ill.
B is ig n o ra n t of th e value of the bequest. A m u st h old for th e benefit of B th e difference
betw een the p ric e and value.
(b) ,-t, a tru ste e , u se s the tru st-p ro p e rty for the p u rp o se of his ow n b u sin e ss, A holds
for the benefit of his beneficiary th e profits a ris in g from such user.
(c) A, a tru ste e , re tire s from h is tru s t in c o n sid era tio n o f his successor p a y in g him a
sum of m oney. A holds such m oney fo r th e benefit of h is beneficiary.
(rf) A, a p a rtn e r, b u y s lan d in his o w n n a m e w ith funds belo n g in g to the p a rtn e rsh ip .
A holds such lan d fo r th e benefit of the p a rtn e rsh ip .
 Trusts. 137

(e) A , a p a .tn e r , em ployed on b eh alf of h im self and his co-partners in n e g o tia tin g the
term s, of a lease, c la n d estin e ly stip u lates w ith the. lesso r for p a y m e n t to liim se lf of a lakh of
ru p e e s. A holds th e lakh for th e benefit o f th e p artn ersh ip ,.
( / ) .! and /, a re p a rtn e rs. A dies. B, in ste a d of w in d in g up the affairs of the p a rt-
n e fsh ip ; retaifts a ll the assets in- th e b u sin e ss, fi iviust acc o u n t to .4s legal re p resen tativ e
for th e profits a risin g .from ^4s sh are of th e capital. ,.
(g) A, an agent, em ployed to obtain a lease fo r B, obtains the lease for liim self. A
holds th e lea se for the benefit cf B.
Ut) A, a g u a rd ia n , buys up fo r liim self incum brances on his w a rd B s e state at an
u n d erv alu e. A h o ld s for th e benefit of B the incuii-brances so bought,, a n d can o nly charge
h im w ith w llat he has actually paid.

89. Where, by the exercise of undue influence, any advantage is gained A dvantage
g a in e d by
in derogation of the interests of another, the person gaining such advantage e xercise of
without consideration, or with notice that such influence has been exercised, u ndue influ
must hold the advantage for the benefit of the person whose interests have ence.

been so prejudiced.
90. Where a tenant for life, co-owner, mortgagee or other qualified A dvantage
g ained by
owner of any property, by availing, himself of his position as such, gains an qualified
advantage in derogation of the rights of the other persons interested in the ow ner
property, or where any such ow ner,,as representing all persona interested in
such property, gains any advantage, he must hold, for the benefit o f all
persons so interested, the advantage so gained- but subject to repayment by
such persons of their due share of the expenses properly incurred, and to an
indemnity by the same persons against liabilities properly contracted in
gaining such advantage.
Illustrations.
(a) A, th e te n ant for life o f leaseholds p ro p e rty , re n e w s the le a s e in his ow n nam e a n d for his
ow n benefit, A h o ld s the ren ew ed le.ise fo r the-benefit of all th e se in te re s te d in the o ld ,lease.
(b) A v illage belongs to a H indu fam ily . A,, one o f ..its m em bers, pays n m r a u a to
G o v ern m en t and th ere b y procures his nam e to be e n te red a s the m a m d a r of th e village. A
h o ld s th e v illa g e fo r th e benefit of h im s e lf a n d the o th er m em bers.
(c) A m o rtg ag es lan d to B, w h o en te rs into possession. B allow s th e G o v e rn m en t
revenue to fall in to a rre a r w ith a v iew to th e lan d being p u t up for sa le and his b ecom ing him self
th e p u rc h a se r of it. T he la n d i i a cco rd in g ly sold to B. S ubject to th e 're p a y m e n t of th e am ount
due on th e m o rtg a g e and of his expenses pro p erly incurred as m ortgagee, B holds the lan d for the
benefit of A.

91. Where a person acquires property with notice that another person P ro p erty ac
has entered into an existing contract affecting that property, of which specific q u ired w ith
notice of
performance could be enforced, the? former must hold the property for the existing con
benefit of the latter to the extent necessary to give effect to the contract. trac t.

92. Where a person contracts to buy property to be held on trust for P u rc h a se by

person con
certain beneficiaries and buys the property accordingly, he must hofd the tra c tin g to
property for their benefit to the extent necessary to give effect to the. contract. buy p ro p e rty
to be h e ld on
trust.

93. Where creditors compound the debts due to them, and one of such A dvantage
secretly
creditors, by a secret arrangement with the debtor, gains an undue advantage g ain ed by
over his co-creditors, he must hold for the benefit of sufch creditors the one of
se v e ra l com
advantage so gained).. pou n d in g
cred ito rs,
 138 Trusts

C o n stru ctive 94. In any case not coming w ith in the scope o f any o f the preceding
tru s ts in
cases n o t sections, where there is no trust, b u t the person having possession o f property
e x p re s s ly has not the whole beneficial interest therein, he must hold the property fo r the
pro vid e d fo r.
benefit o f the persons having such interest, or the residue thereof (as the case
may be), to the extent necessary to satisfy th e ir just demands.

Illustrations.
(a) A, nn ex c u t ir , d is trib u te s the assets cf h is te s ta to r B to the legatees w ith o u t h a v in g
p a id the w h o le o f B s debts. T he legatees h o ld fo r th e benefit of B s c re d ito is , to the exte nt
necttssary to s a tis fy th e ir ju st demands, the assets so d istrib u te d .
(6; A by m istake assumes the character o f a tru ste e fo r B, and under co lo u r o f th e tru s t
receives certain m oney. B m ay com pel h im to account fo r such moneys.
(c) A makes a g ift o f a la k h of rupees to B rese rvin g to h im se lf, w ith B s assent, p o w e r to
revoke at pleasure th e g if t as t o Rs. 10,003. T h e g if t is void as to Rs. 10,000 and B h o ld s th a t
sum fo r the benefit o f A.
O b lig o rs
duties, lia b i 95. The person holding property in accordance w ith any o f the preceding
litie s and sections o f th is Chapter must, so fa r as may be, perform the same duties, and
d is a b ilitie s .
is subject, so fa r as may be, to the same lia b ilitie s and disabilities, as i f he
were a trustee o f the property fo r the person fo r whose benefit he holds i t :
Provided th a t (a) where he rig h tfu lly cultivates the property or employs
it in trade or business, he is entitled to reasonable rem uneration fo r his
trouble, s k ill and loss o f tim e in such cu ltiva tio n or em ploym ent; and (b) where
he holds the property by virtu e o f a contract w ith a person fo r whose benefit
he holds it, or w ith any one through whom such person claims, he may, w ith
out the permission o f the C ourt, buy or become lessee or mortgagee o f the
property or any part thereof.
Saving of 96. N othing contained in this Chapter shall im p a ir the rights o f
rig h ts o f
bona fide transferees in good fa ith fo r consideration, or create an obligatio n in evasion
purchasers. o f any law fo r the tim e being in force.

THE OFFICIAL TRUSTEES ACT.

CONTENTS.

P A R T I.
P r e l im in a r y .
Sections.
1. * * * *
2- In terpretatio n clause.
3 * # * *

P A R T II.
T he O f f ic e of O f f ic ia l T rustee.

4- O fficial Trustee.
5. A ppointm e nt and powers o f Deputy O fficial Trustee.
 Official Trustees- 139

Sections-
6- O fficial Trustee to be corporation sole, to have perpetual succession
and official seal, and to sue and be sued in his corporate name.

PART III.

R ig h t s , Po w ers, D u t ie s and L ia b il it ie s Of O f f ic ia l T rustee.

7. General powers and duties o f O fficial Trustee.

8. O fficial Trustee may, w ith consent, be appointed trustee o f settlement
by grantor.
9- A ppo in tm e nt o f O fficial Trustee as trustee by w ill.
10- Power o f H ig h C ourt to appoint O fficial Trustee to be trustee o f
property.
11. Power o f private trustees to appoint O fficial Trustee to be trustee o f
property.
12- Executor or adm in istrato r may pay to O fficial Trustee legacy, share,
etc., o f in fa n t or lunatic.
13- O fficial Trustee not to be required to give bond or security.
14. E n try of O fficial Trustee not to constitute notice o f a trust.
15. L ia b ility o f Government.
16- Notice o f suit not required in certain cases.

P A R T IV .

F ees.

17- Fees.
18- Disposal o f fees.

P A R T V.

A u d it .

19. A u d ito rs to be appointed to examine O fficial Trustees accounts,

etc., and to re p o rt to Government.
20. A u d ito r s power to summon witnesses and to ca ll fo r documents.
21. Costs o f audit, etc., how paid.
22. R ig h t o f beneficiary to inspection and copies o f accounts.

P A R T V I.

M is c e l l a n e o u s .

23. Transfer to Government o f accumulations in the hands o f O fficial

Trustee.
24. Mode o f proceeding by claim ant to recover money so transferred.
 140 Official Trustees'-

Sections.
25. Power of High Court to makfc orders* i n respect'bf property'vested in
Official Trustee.
26. Who may apply for order under Act.
27- Order of Court to have effect of a decree.
28. General powers of administration.
29. Transfer of trust property by Official Trustee to original trustee or
any other trustee.
30. Rules.
3 1_ * * *
32. Saving of provisions of Registration Act.

TH E O FFIC IA L TRUSTEES ACT-

[I n d ia A c t II, 1913-1 (1st April, 1914-)

P A R I l.
P r e l im in a r y

i * * * *
Interpre 2. In this Act, unless there is anything repugnant in the subject or con
tation
clause. text,
(1)(3) * * * *
(4) prescribed means prescribed by rules under this A c t;
( 5 ) (7 ) * * ' '4 *
3 * * * *

PA RT II.

T h e O f f ic e o f O f f ic ia l T r u s t e e .

Official 4. (7) The President of the Union shall appoint an Official Trustee.
Trustee. (2)- No person sh all be appointed to th office of1Official Triistd# who
is not
(a) a B arrister; or
( b ) an Advocate of the High Court.

A ppoint 5. The President of the Union may appoint a Deputy or Deputies to

ment and assist the Official Trustee ; and any Deputy so appointed shall, subject to the
pow ers of
Deputy Offi control of the President of the Uiiion! difcl the general or special orders of the
cial Trustee. Official Trustee, be competent to discharge any of the duties and exercise any
of the powers of the Official Trustee, and, when discharging such duties or
exercising such powers, shall have the same privileges and .be subj,ept te the
same liabilities as the Official Trustee.
O ihitted by ttie Uhitth 6F Burma (Adaptation of LawvYOtder, 19-I8V
 Official Trustees- 141

<J. T}ie Official, Trustee shall be a corporation sole by the name of the Official
T ru stee to be
Official Trustee of the, U nion of Burma and, as such Official Trustee, shall corp o ratio n
have, perpetual succession >and an official seal, and may sue and be sued in sole, to have
p e rp e tu a l
his corporate name. succession
and official
se a l, a n d to
su e and be
sued in his
PA RT III. corporate
nam e.

R ig h t s , Pow ers, D u t ie s and L ia b il it ie s o f O f f ic ia l T ru stee.

7. (/) Subject to, and in accordance with, the provisions of this Act G eneral
pow ers and
and the rules made thereunder, the Official Trustee may, if he thinks fit, duties of
(a) act as an ordinary trustee ; Official
T ru stee .
(&) be appointed trustee by, a Court of competent jurisdiction.
(2) Save as hereinafter expressly provided, the Official Trustee shall
have the same powers, dtitieg, and liabilities and be entitled to the same
rights and privileges and be subject to the same control and orders of the
Court as any other trustee acting in the same capacity*
(S) The Official Trustee may decline, either absolutely or except on
such conditions as he may impose, to accept any trust.
(4 ) The Official Trustee shall not accept any trust under any composition
of scheme of arrangement for the benefit of creditors, nor of any estate
known or believed by him to be insolvent.
(5) The Official Trustee shall not, save as provided by any rules madfe
under-thrs Act, accept any trust for a religious purpose or any trust which
involves the management or carrying on of any business.
(6) The Official Trustee shall not administer the estate of a deceased
person urtless he is expressly appointed sole executor of, and sole trustee under,
the wifi of such person.
(7) The Official Trustee shall always be sole trustee, and it shall not be
lawful to appoint the'Official Trustee to be trustee along with any o th e r person.

8. (/) Any person intending to create a trust, other than a trust which Official
T ru stee m ay,
the Official Trustee is prohibited from accepting under the provisions of this w ith consent,
Act, may, by the instrum ent creating the trust and with the consent of the be appointed
tru ste e of
Official Trustee, appoint him by that name or any other sufficient description se ttle m e n t
to'be the trustee of the property subject to such tr u s t: by g ra n to r.

Provided that the consent of the Official Trustee shall be recited in the
said instrument and that such instrument shall be duly, executed by the Official
Trustee.

(2) Upon such appointm ent the property subject to the trust shall vest
in such Official Trustee, and shall be held by him upon the trusts declared in
such instrument.
 142 Official Trustees .

Appointm ent 9 When the O fficial Trustee has by th a t name or any other sufficient
ofO fficial
Trustee as description been appointed trustee under any w ill, the executor o f the w ill o f
trustee by the testator or the adm inistrator o f his estate shall, after obtaining probate or
w ill.
letters o f adm inistration , n o tify in the prescribed manner the contents o f such
w ill to the O fficial Trustee ; and i f the O fficial Trustee consents to accept the
trust, then upon the execution by such executor or adm inistrator o f an in stru
ment in w ritin g transferring the property subject to the tru st to the O fficial
Trustee, such property shall vest in the O fficial Trustee, and shall be held by
him upon the trusts expressed in the said w ill :
Provided th at the consent o f the O fficial Trustee shall be recited in the
said instrum ent and th a t such instrum ent shall be duly executed by the
O fficial Trustee.

P ow er of 10. ( i ) I f any property is subject to a trust, other than a trust which

High Court the O fficial Trustee is p rohibited fro m accepting under the provisions o f this
to appoint
Official A ct, and there is no trustee w ith in the local lim its o f the ordinary or extra
Trustee to
ordinary o rig in a l c iv il ju ris d ic tio n o f the H igh C ourt w illin g or capable to act
be trustee
of property. in the trust, the H ig h C ou rt may on application make an order fo r the
appointm ent o f the O fficial Trustee by that name w ith his consent to be the
trustee o f such property.
(2) Upon such order such property shall vest in the O fficial Trustee and
shall be held by him upon the same trusts as the same was held previously
to such order, and the previous trustee or trustees ( if any) shall be exempt
fro m lia b ility as trustees o f such property save in respect o f acts done before
the date o f such order.
(J) N o th in g in this section shall be deemed to affect the Trusts A ct.

Pow er o f 11. ( / ) I f any property is subject to a trust, other than a trust w hich
private the O fficial Trustee is pro h ibite d fro m accepting under the provisions o f this
trustees to
appoint Offi A ct, and a ll the trustees or the surviving or continuing trustee or trustees
cia l Trustee and a ll persons beneficially interested in the tru st are desirous that the
to be trustee
o f property. O fficial Trustee shall be appointed in the room o f such trustee or trustees, it
shall be la w fu l fo r such trustee or trustees, by an instrum ent in w ritin g , to
a ppoint the O fficial Trustee by that name or any other sufficient description
w ith his consent to be the trustee o f such property :
Provided th a t the consent o f the O fficial Trustee shall be recited in the
said instrum ent and that such instrum ent shall be duly executed by him .
(2) Upon such appointment such property shall vest in the O fficial
Trustee and shall be held by him upon the same trusts as the same was
held previously to such appointm ent, and the previous trustee or trustees
shall be exempt fro m a ll lia b ility as trustees o f such property save in respect
o f acts done before the date o f such appointment.

Executor 12. ( / ) I f any in fa n t or lu n atic is entitled to any g ift, legacy or share

o r adm inis o f the assets o f a deceased person, i t shall be la w fu l fo r the person by whom
trator m ay
pay to such g ift is made, or executor or adm inistrator by whom such legacy or share
 Official Trustees 143

is payable or transferable, or any trustee o f such g ift, legacy or share, to Official

Trustee
transfer the same by an instrum ent in w ritin g to the O fficial Trustee by that legacy,
name or any other sufficient description w ith his consent : share, etc.,
of infant or
Provided that the consent o f the O fficial Trustee shall be recited in the lunatic.
said instrum ent and tha t such instrum ent shall be duly executed by the
O fficial Trustee.
(2) A ny money or property transferred to the O fficial Trustee under this
section shall vest in him and shall be subject to the same provisions as are
contained in this A c t as to other property vested in such O fficial Trustee.

13. ( 1) The O fficial Trustee shall not be required by any C ourt to enter Official
Trustee not
in to any bond or security on his appointm ent in any capacity under this A ct. to be requir
(2) The O fficial Trustee shall not be required to ve rify otherwise than ed to give
b on d or
by his signature any p e titio n presented by him under the provisions o f this security.
A c t, and i f the facts stated in any such pe titio n are not w ith in the O fficial
Trustee s personal knowledge, the p e titio n may be verified and subscribed by
any person competent to make the verification.

14. The entry o f the O fficial Trustee by that name in the books o f a E ntry o f
company shall not constitute notice o f a trust ; and a company shall not be Official
Trustee n ot
entitled to object to enter the name o f the O fficial Trustee on its register by to constitute
reason only th a t the O fficial Trustee is a corporation ; and, in dealing w ith n otice o f a
trust.
property, the fact tha t the person dealt w ith is the O fficial Trustee shall not
o f its e lf constitute notice o f a trust.

15. ( I ) The revenues o f the U nion o f Burma shall be liable to make L ia b ility of
G overnm ent.
good all sums required to discharge any lia b ility which the O fficial Trustee, i f
he were a private trustee, w ould be personally liable to discharge, except
when the lia b ility is one to w hich neither the O fficial Trustee nor any o f his
officers has in any way contributed or which neither he nor any o f his officers
could by the exercise o f reasonable diligence have averted, and in either o f
those cases the O fficial Trustee shall not, nor shall the revenues o f the U nion
o f Burma, be subject to any lia b ility .
(2) * * * *

16. N othing in section 80 o f the Code o f C iv il Procedure shall apply to Notice of

suit not re
any suit against the O fficial Trustee in w hich no re lie f is claimed against him quired in
personally. certain
ca ses.

P A R T IV .

F ees.

17. ( / ) There shall be charged in respect o f the duties o f the O fficial Fees.

Trustee such fees, whether by way of percentage or otherwise, as the

President o f the U nion may prescribe.
 144 Official Trustees-

(2) The fees under this section may be at different rates for different
properties or classes of properties or for different duties, and shall, so far as
may be, be arranged so as to produce an amount sufficient to discharge the
salaries and all other expenses incidental to the working of this Act (includ
ing such sum as the President of the Union may determine to be required to
insure the revenues o f the Union of Burma against loss under this Act).
D isp o sal of 18. (J) All expenses which might be retained or paid out of the trust
fe e s.
fund, if the Official Trustee were a private trustee, shall be so retained or
paid, and any fees leviable under this Act shall be retained o r paid in like
manner as and in addition to such expenses.
(2) The Official Trustee shall transfer and pay to such authority and in
such manner and at such times as the President of the Union may prescribe
all fees received by him under this Act, and the same shall be carried to the
account and credit of the Government.

PA R T V.

A u d it .

A uditors to 19. (1) The accounts of the Official Trustee shall be audited at least
be a p p o in te d
to exam ine
once annually, and at any other time if the President of the Union so direct,
Official by the prescribed person and in the prescribed manner.
T ru ste e s
accounts,
(2) The auditor shall examine such accounts, and shall forward to
etc., and to Government a statement thereof in the prescribed form, together with a
re p o rt to
G overnm ent. report thereon and a certificate signed by him showing
M a) whether the accounts have been audited in the prescribed manner,
2(aa ) whether, so far as can be ascertained by such audit, the accounts
contained a full and true account of everything which ought to
be inserted therein, and
(b) whether the books, which by any rules made under this Act are
directed to be kept by the Official Trustee, have been duly and
regularly kept, and
(c) whether the trust funds and securities have been duly kept and
invested and deposited in the manner prescribed by this Act or
any rules made thereunder ;
or (as the case may be) that such accounts are deficient, or that the
Official Trustee has failed to comply with this Act or the rules made there
under, in such respects as may be specified in such certificate.

A u d ito rs 20,. (/) Every auditor shall have the powers of a civil Court under the
p o w e r to
su m m o n w it Code of Civil Procedure
nesses and to
call for docu (a) to summon any person whose presence he may think necessary to
m en ts. attend him from time to time, and
1 S u b s titu te d by Act X X II, 1948.
2 Inserted i b i d .
 Official Trustees. 145

(b) to examine any person, on oath to be by him administered, and

(c) to issue a commission fo r the exam ination on interrogatories or
otherwise o f any person, and
( d ) to summon any person to produce any document or thing, the
production o f w hich appears to be necessary fo r the purposes o f
such audit or exam ination.

(2) A n y person who, when summoned, refuses, or w ith o u t reasonable

cause neglects to attend or to produce any document or thing, or attends and
refuses to be sworn or to be examined, shall be deemed to have comm itted
an offence w ith in the meaning of, and punishable under, section 188 o f the
Penal Code, and the auditor shall re port every case o f such refusal or neglect
to the President o f the U nion.

21. The cost o f and incidental to every such audit and exam ination Cost of
audit, etc.,
shall be determined in accordance w ith rules made by the President o f the how paid.
U n io n and shall be defrayed in the prescribed manner-

22. Every beneficiary under a trust w hich is being adm inistered by the Kight of
beneficiary
O fficial Trustee shall, subject to such conditions and restrictions as may be to inspec
prescribed, be entitled, at a ll reasonable times, to inspect the accounts o f tion and
copies of
such trust, and the report and certificate o f the auditor, and, on payment of accounls.
the prescribed fee, to be furnished w ith copies thereof or extracts therefrom ,
and nothing in the Trusts A c t shall affect the provisions o f this section.

P A R T V I.

M is c e l l a n e o u s .

23- When any moneys payable to a beneficiary under a trust have been Transfer to
Government
in the hands o f the O fficial Trustee fo r a period o f twelve years or upwards in o f accumi la-
consequence o f the O fficial Trustee having been unable to trace the person tions in the
hands of
entitled to receive the same, such moneys shall be transferred in the Official
prescribed manner to the account and credit o f the G overnm ent: Trustee.

Provided that no such moneys shall be so transferred i f any suit or

proceeding is pending in respect thereof in any Court-

24. ( 1) I f any claim is made to any moneys so transferred and such M ode of
claim is established to the satisfaction o f the prescribed a uthority, the proceeding
by claim ant
Government shall pay to the claim ant the am ount in respect o f which the to recover
claim is established. money so
transferred.
(2) I f such claim is not established to the satisfaction o f the prescribed
authority, the claim ant may, w ith o u t prejudice to his rig h t to take any other
proceedings fo r the recovery o f such moneys, apply by p e tition to the H igh
C ourt against the Government, and, after taking such evidence as i t thinks
fit, such C ourt shall make such order on the p e tition in regard to the

10
 146 Official Trustees-

payment o f such moneys as i t th in ks fit, and such order shall be binding on

a ll parties to the proceedings :
Provided th at nothing in this section affects any op tio n afforded to a
claim ant [by any other law fo r the tim e being in fo rce .]1
(3) The C ourt may fu rth e r direct by whom a ll or any part o f the costs
o f such proceedings shall be paid.
P ow er to 25. The H igh C ourt may make such orders as it th inks fit respecting any
High Court
to make
trust-property vested in the O fficial Trustee, or the interest or produce
orders in thereof.
respect of
property
vested in
Official
Trustee.
W h o may 26. A n y order under this A c t may be made on the application o f any
apply for
order under
person beneficially interested in any trust-property or o f any trustee thereof.
Act.

Order 27. A n y order made by the H ig h C ourt under this A c t shall have the
o f Court to
have effect same effect as a decree.
o f a decree.

General 28. The O fficial Trustee may, in a ddition to and not in derogation o f
pow ers of
administra any other powers o f expenditure la w fu lly exercisable by him , incur
tion. expenditure
(a) on such acts as may be necessary fo r the proper care and manage
ment o f any property belonging to any trust administered by
h im ; and
( b ) w ith the sanction o f the H ig h C ourt on such religious, charitable
and other objects and on such improvements as may be
reasonable and proper in the case o f such property.
Transfer 29. ( / ) N othing in this A c t shall be deemed to prevent the transfer by
o f trust-pro
perty by the O fficial Trustee o f any property vested in him to
Official
Trustee (a) the o rig in a l trustee ( if any) ; or
to original ( b ) any other la w fu lly appointed trustee ; or
trustee or
any other (c) any other person i f the C ourt so directs.
trustee.
(2) Upon such transfer such property shall vest in such trustee, and
shall be held by him upon the same trusts as those upon which it was held
p rio r to such transfer, and the O fficial Trustee shall be exempt from a ll
lia b ility as trustee o f such property except in respect of acts done before such
transfer :
Provided that, in the case o f any transfer under this section, the O fficial
Trustee shall be entitled to retain out of the property any fees leviable in
accordance w ith the provisions o f this A ct.

1 Substituted by the Union of Burma (Adaptation of Law s) Order, 1948.

 Official Trustees. 147

30. ( / ) The President o f the U nion shall make rules fo r carrying into Ruels.
effect the objects o f this A c t and fo r regulating the proceedings o f the
O fficial Trustee in the discharge o f his duties.
(2) In particular, and w ith o u t prejudice to the generality o f the foregoing
power, such rules may provide fo r
(a) the accounts to be kept by the O fficial Trustee and the audit and
inspection thereof ;
( b) the safe custody and deposit o f the funds and securities which
come in to the hands o f the O fficial Trustee ;
(c) the remittance o f sums o f money in the hands o f the O fficial
Trustee in cases in w hich such remittances are required ;
(d) the statements, schedules and other documents to be submitted by
the O fficial Trustee to Government or to any other authority
and the publicatio n o f such statements, schedules or other
docum ents;
(e) the realization o f the cost o f preparing any such statements,
schedules or other documents ;
(/) subject to the provisions o f this A ct, the fees to be paid thereunder
and the collection and accounting fo r any fees so fixed ;
(g) the manner in which and the person by whom the costs o f and
incidental to any audit under the provisions o f this A c t are to
be determined and defrayed ;
(h) the manner in which summonses issued under the provisions of
section 20 are to be served and the paym ent o f the expenses of
any persons summoned or examined under the provisions o f this
A c t and o f any expenditure incidental to such exam ination ;
(/) the acceptance by the O fficial Trustee of trusts fo r religious pur
poses and trusts w hich involve the management or carrying on
o f business ; and
(/') any m atter in this A c t directed to be prescribed-
(5) Rules made under the provisions of this section shall be published
in the Gazette, and shall thereupon have effect as i f enacted in this Act-
31. * * * *
32- N othing contained in this A ct shall be deemed to affect the p roSaving
v i of
sions o f the R egistration A ct. provisions o f
Registration
Act.

T H E A D M IN IS T R A T IO N OF P U B L IC FU N D S A C T- *

[B u r m a A ct I I I , 1 9 43 .] (1st M a rch , 1943.)

Whereas it is expedient to make provision fo r the adm inistration
[* * * * ] 1 o f funds belonging to certain public bodies in the U nion
of Burma and funds held in trust in the U nion o f Burma fo r public purposes ;
* * * * -

* Published in Chief Secretary s Office N otification No. 61, dated 1st M arch 1943.
1 Omitted by Act IX , 1945.
 148 Administration of Public Funds-

I t is hereby enacted as follow s :

Short title. 1. This A c t may be called the A d m in istra tio n of Public Funds A ct,
1943.

Definition. 2. Body or a u th o rity means any body or a u thority notified under

this Act-

Appointm ent 3. ( 1) N otw ithstanding anything contained in any law fo r the tim e being
o f persons in force, the President o f the U nion may, by notification, assume to him self
to administer
public funds. a ll or any o f the rights, privileges, duties, powers and functions vested in or
exercisable by any body or auth ority under any law relating thereto.
(2) On the issue o f such notification , the President o f the U nion may,
whether prospectively or retrospectively, invest any person or persons w ith a ll
or any o f the rights, privileges, duties, powers and functions which were
previously vested in or exercisable by such body or authority.

Vesting o f 4. N otw ithstanding anything to the contrary contained in any law

property.
relating to the body or a uthority, a ll moveble and immoveble property belonging
to such body or a u tho rity shall, subject to such conditions, i f any, as the
President o f the U nion may deem fit to impose, vest in the person or persons
appointed under sub-section (2) o f section 3, and shall, w ith a ll other property
which may hereafter become s im ila rly vested in such person or persons, be
held in trust and administered by such person or persons fo r the purposes of
this A ct.

Appointment 5. Subject to such rules as may be made by the President o f the U nion
o f officers
and servants.
in this behalf, any person or persons appointed under sub-section (2) of
section 3 may appoint such officers and servants as may be necessary or
proper fo r the efficient execution and discharge o f the duties, powers and func
tions imposed upon him or them, and may assign to such officers and servants
such rem uneration as he or they may th in k fit.

Pow er to 6. N otw ithstanding anything contained in any deed o f trust, scheme o f

administer
public management, rules or by-laws, or any other instrum ent, relating to the
charities. adm inistration o f a fund created fo r a public purpose, or fo r the benefit o f
the p ublic or any section thereof, the President o f the U nion may, by
notification , assume to him self a ll or any o f the rights, privileges, duties,
powers and functions relating to the adm inistration o f any such fund,
and on the issue o f such notification the provision o f sub-section (2) o f
section 3 and sections 4, 5 and 7 o f this A ct, shall become applicable to such
fund, w ith such alteration not affecting the substance thereof as may be
necessary or proper fo r giving effect to the objects of this Act-

P ow ers to 7. (1) The President of the U nion may make rules fo r carrying out
make rules.
the objects o f this A ct.
 Administration o f Public Funds. 149

(2) In particular, and without prejudice to the generality of the

foregoing power, the President o f the Union may make rules
(a) prescribing the manner in which and the conditions subject to
which the person or persons appointed under sub-section (2)
of section 3 shall have, exercise and discharge the rights,
privileges, duties, powers and functions vested in him or
them ;
( b ) prescribing the manner in which such person or persons shall
administer the moveble and immoveble property vested in
him or them ;
(c) prescribing the conditions subject to which such person or
persons shall sue or be sued ;
(d) prescribing the conditions subject to which officers and servants
may be appointed by such person or persons.

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 CHARITIES.
cq Okj)cS ^ 8 0 3 3 3 gS g Ogsj)8 sp II
T H E R E L IG IO U S SO CIETIES A C T .

[ I n d ia A ct I, 1880.] (9th January, 1880.)

Pream ble. W h e r e a s it is expedient to s im p lify the manner in w hich certain bodies

o f persons associated fo r the purpose o f m aintaining religious worship may
hold property acquired fo r such purpose, and to provide fo r the dissolution
o f such bodies and the adjustment o f th e ir affairs and fo r the decision o f
certain questions relating to such bodies ; I t is hereby enacted as follow s :

Saving. 1. N othing herein contained shall apply to any H indus, Muhammadans

or Buddhists, or to any persons whom the President o f the U nion may from
tim e to tim e, by notifica tion in the Gazette, exclude fro m the operation o f this
A ct.

A p p o in tm e n t 2. When any body o f persons associated fo r the purpose o f m aintaining

o f ne w religious worship has acquired, or hereafter shall acquire, any property,
truste e in
cases not and such property has been or hereafter shall be vested in trustees in
otherw ise trust fo r such body,
p ro v id e d fo r.
and it becomes necessary to appoint a new trustee in the place o f or in
a ddition to any such trustee or any trustee appointed in the manner hereinafter
prescribed,
and no manner o f appointing such new trustee is prescribed by any
instrum ent by w hich such property was so vested or by which the trusts on
which it is held have been declared, or such new trustee cannot fo r any reason
be appointed in the manner so prescribed,
such new trustee may be appointed in such manner as may be agreed
upon by such body, or by a m a jo rity of not less than tw o-thirds o f the members
o f such body actually present at the meeting at which the appointm ent is
made.

A p p o in tm e n t 3. Every appointm ent o f new trustees under section 2 shall be made to

under section
2 to be appear by some memorandum under the hand o f the chairman fo r the tim e
recorded in a being o f the meeting at which such appointm ent is made.
m em orandum
under the Such memorandum shall bs in the fo rm set fo rth in the Schedule hereto
hand of the annexed, or as near thereto as circumstances allow , shall be executed and
chairm an of
the meeting. attested by tw o or more credib'e witnesses in the presence o f such meeting,
and shall be deemed to be a document o f which the registration is required
by the R egistration A ct, section 17.

P ro p e rty to 4. When any new trustees have been appointed, whether in the manner
vest in n e w prescribed by any such instrument as aforesaid or in the manner hereinbefore
trustees
provided, the property subject to the trust shall fo rth w ith , notwithstanding
 Religious Societies- 155

anything contained in any such instrum ent, become vested, w ith o u t any w ith o u t con
veyance.
conveyance or other assurance, in such new trustees and the old continuing
trustees jo in tly , or, i f there are no old continuing trustees, in sucli new
trustees w h o lly, upon the same trusts, and w ith and subject to the same
powers and provisions, as it was vested in the old trustees.

5. N othing herein contained shall be deemed to invalidate any appoint Saving o f

e xisting
ment o f new trustees, or any conveyance o f any property, which may hereafter modes
be made as heretofore was by law required. o f a p p o in t
m en t and
conveyance.

6. A n y num ber not less than three-fifths o f the members o f any such P ro visio n fo r
disso lu tio n of
body as aforesaid may at a meeting convened fo r the purpose determine that societies and
such body shall be dissolved ; and thereupon it shall be dissolved fo rth w ith , adjustm ent
o f th e ir
or at the tim e then agreed upon ; and a ll necessary steps shall be taken fo r affairs.
the disposal and settlement o f the property o f such body, its claims and
lia b ilitie s , according to the rules of such body applicable thereto, i f any, and,
i f not, then as such body at such meeting may determine :
Provided that, in the event o f any dispute arising among the members of
such body, the adjustm ent o f its affairs shall be referred to the p rincipal
C o u rt o f o rig in a l c iv il ju ris d ic tio n o f the d is tric t in which the chief building
o f such body is situate ; and the C ourt shall make such order in the m atter as
it deems fit.

7. I f upon the dissolution of any such body there remains, after the U p o n a d is
satisfaction o f a ll its debts and lia b ilitie s , any property whatsoever, the same so lu tio n no
m em ber to
shall not be paid to or distributed among the members o f such body or any of re ce ive
them, but shall be given to some other body o f persons associated fo r the purpose p ro fit.

of m aintaining religious w orship or some other religious or charitable purpose

to be determined by the votes of not less than three-fifths o f the members
present at a meeting convened in this behalf, or in default thereof by such
C ourt as last aforesaid.

8. N othing in sections 6 and 7 shall be deemed to affect any provision Saving o f

contained in any instrum ent fo r the dissolution of such body, or fo r the ce rta in p ro
visio n s o f
payment or d is trib u tio n o f such property. in stru m e n ts.

9. When any question arises, either in connection w ith the matters

Q uestions
hereinbefore referred to, or otherwise, as to whether any person is a member m ay be
su b m itte d to
o f any such body as aforesaid, or as to the v a lid ity o f any appointm ent under H ig h C ourt.
this A ct, any person interested in such question may apply by pe titio n to the
H ig h C ourt fo r its opinion on such question- A copy o f such p e tition shall
be served upon, and the hearing thereof may be attended by, such other
persons interested in the question as the C ourt thinks fit-
156 Religious Societies-

A n y o p in io n given by the C ourt on an application under this section

shall be deemed to have the force o f a declaratory decree.1
The costs o f every application under this section shall be in the discre
tio n o f the C ourt.

T H E S C H E D U LE .

( See section 3.)

Mem orandum o f the appointm ent o f the new trustees o f the ( describe
the church, chapel, or other building and property ) appointed at a meeting
duly convened and held fo r th a t purpose ( in the vestry o f the said )
on the day o f 19 A -B - of
Chairm an.

Names and descriptions o f a ll the trustees on the constitution or last

appointm ent o f trustees, made the day o f

( here insert the sa m e ).

Names and descriptions o f a ll the trustees in whom the said ( chapel and
p roperty ) now become le ga lly vested,

First- O ld continuing trustees :

( here insert the sa m e).

Second. New trustees now chosen and appointed :

(here insert the sa m e).

Dated this day of 19

Signed by the said A .B . as chairm an') A .B .,

o f the said meeting, at and in the pre- 1
Chairman o f the
sence o f the said meeting, on the day and . said meeting.
year aforesaid in the presence o f J

C . D.
E . F.

1 As to the effect of a declaratory decree, see section 43 of the Specific Relief Act.
 157

T H E C H A R IT A B L E E N D O W M E N T S A C T .

[I ndia A ct V I, 1890.] (1st October, 1890.)

j. * * * *

2. In this A c t, charitable purpose includes re lie f o f the poor, D e fin itio n .

education, m edical re lie f and the advancement o f any other object o f general
p u b lic u tility , but does n o t include a purpose which relates exclusively to
religious teaching or w orship.

3. ( f ) The President o f the U nion may appoin t an officer o f the Govern A p p o in tm e n t

and in c o r
m ent by the name o f his office to be Treasurer o f C haritable Endowments. p o ra tio n of
(2) Such Treasurer shall, fo r the purposes o f taking, holding and T re a su re r o f
transferring moveable or immoveable property under the a u th o rity o f this C h a rita b le
Endow
A c t, be a corpo ra tion sole by the name o f the Treasurer o f C haritable m ents.
Endowments, and, as such Treasurer, shall have perpetual succession and a
corporate seal, and may sue and be sued in his corporate name.

4. ( / ) W here any property is held or is to be applied in tru s t fo r a O rders vest

charitable purpose, the Exesident o f the U nion, i f he thinks fit, may, on in g p ro p e rty
in T reasurer.
applica tio n made as hereinafter mentioned, and subject to the other provisions
o f this section, order, by n o tifica tion in the Gazette, that the property be
vested in the Treasurer of; C haritable Endowments on such terms as to the
a p p lica tio n of the property o r the income thereof as may be agreed on between
the President o f the U n io n and the person or persons m aking the application,
and the property shall thereupon so vest accordingly.
(2) W hen any p roperty has vested under this section in the Treasurer of
C haritable Endowments, he is e n title d to a ll documents o f title relating
thereto.
(J) The President o f the U nion shall not make an order under sub-section
( / ) fo r the vesting in the Treasurer o f C haritable Endowments o f any securities
fo r money, except the fo llo w in g , n a m e ly :
( a) prom issory notes, debentures, stock and other securities o f the
Governm ent o f In d ia or Pakistan or the Government o f the
U nion o f Burm a, or o f the U nited Kingdom o f Great B rita in
and Ire la n d ;
(b) bonds, debentures and annuities charged or secured [* * *]*
on the revenues o f the U n io n o f Burma or o f the [Governm ent
o f In d ia or Pakistan ;] 2
(c) stock or debentures of, or shares in, railw ay or other companies,
the interest whereon has been guaranteed by the Secretary o f
State fo r Ind ia in C o u n c il;

1 O m itte d by the U n io n of B u rm a (A d a p ta tio n o f L a w s) O rder, 1948.

2 Sabstituted ibtd.
 158 Charitable Endowments-

0d) debentures or other securities fo r money issued by or on behalf

o f any local a u th o rity in exercise o f powers conferred by an
A c t o f a legislature established in In d ia or Pakistan or the
U n io n o f B u rm a ;
(e) a security expressly authorized by any order which the President
o f the U nion may make in this behalf.
(4) A n order under this section vesting property in the Treasurer o f
C haritable Endowments shall n o t require or be deemed to require him to
adm inister the property, or impose or be deemed to impose upon h im the
duty o f a trustee w ith respect to the adm inistration thereof.

Schemes fo r 5. (7) On applicatio n made as hereinafter mentioned, and w ith the

a d m in is tra
tio n o f p ro concurrence o f the person or persons m aking the application, the President
p e rty vested o f the U nion, i f he thinks fit, may settle a scheme fo r the adm inistration of
in the T re a
surer. any p roperty which has been or is to be vested in the Treasurer o f C haritable
Endowments, and may in such scheme appoint, by name or office, a person or
persons, not being or including such Treasurer, to adm inister the property.
(2) On application made as hereinafter mentioned, and w ith the
concurrence o f the person or persons m aking the application, the President
o f the U nion may, i f he thinks fit, m o d ify any scheme settled under this
section or substitute another scheme in its stead.
(3) A scheme settled, m odified or substituted under this section shall,
subject to the other provisions o f this section, come in to operation on a day
to be appointed by the President o f the U nion in this behalf, and shall remain
in force so long as the property to which it relates continues to be vested in
the Treasurer o f C haritable Endowments or u n til it has been m odified or
another such scheme has been substituted in its stead-
{4) Such a scheme, when i t comes in to operation, shall supersede any
decree or direction relating to the subject-matter thereof in so fa r as such
decree or direction is in any way repugnant thereto, and its v a lid ity shall not
be questioned in any C ourt, nor shall any C ourt give, in contravention o f the
provisions o f the scheme or in any way contrary or in addition thereto, a
decree or direction regarding the adm inistration o f the property to w hich the
scheme relates-
(5) In the settlement o f such a scheme effect shall be given to the wishes
o f the author o f the trust so fa r as they can be ascertained, and, in the
o p in io n o f the President o f the U n io n , effect can reasonably be given to them-
(6) Where a scheme has been settled under this section fo r the adm inis
tra tio n o f property not already vested in the Treasurer o f C haritable
Endowments, i t shall not come into operation u n til the property has become
so vested.

M ode of 6- ( / ) The application referred to in the two last foregoing sections must
a p p ly in g fo r be made,
ve s tin g
orders and (a) i f the property is already held in trust fo r a charitable purpose,
schemes.
then by the person acting in the adm inistration o f the trust, or,
 Charitable Endowments. 159

where there are more persons than one so acting, then by those
persons o r a m a jo rity o f them ; and
( b ) i f the p roperty is to be applied in trust fo r such a purpose, then
by the person or persons proposing so to apply it.
(2) F o r the purposes o f this section the executor or a d m in istra to r o f a
deceased trustee o f property held in trust fo r a charitable purpose shall be
deemed to be a person acting in the a dm in istra tio n o f the trust-

7. # * # *

8. ( I ) Subject to the provisions o f this A ct, the Treasurer o f Charitable Bare trustee
ship of
Endowments shall not, as such Treasurer, act in the adm inistration o f any T reasurer.
trust whereof any of the property is fo r the tim e being vested in him under
this A ct.
(2) Such Treasurer shall keep a separate account o f each property fo r
the tim e being so vested in so fa r as the property consists o f securities fo r
money, and shall a pply the property or the income thereof in accordance w ith
the provisions made in that behalf in the vesting order under section 4 or in
the scheme, i f any, under section 5, or in both those documents.
(3) In the case o f any property so vested other than securities fo r money,
such Treasurer shall, subject to any special order which he may receive fro m
the a u tho rity by whose order the property became vested in him , perm it the
persons acting in the a dm inistration o f the trust to have the possession,
management and co ntro l o f the property, and the applicatio n o f the income
thereof, as if the property had been vested in them-

9. The Treasurer o f C haritable Endowments shall cause to be published Annual

p u b lica tio n
annually in the Gazette, at such tim e as the President o f the U nion may ol lis t of
direct, a lis t o f a ll properties fo r the tim e being vested in him under this Act p.cw erties
vested in
and an abstract o f a ll accounts kept by him under sub-section (2) o f the last Treasurer.
foregoing section.

10. ( / ) The tre a s u re r o f C haritable Endowments shall always be a sole L im ita tio n
o f fu n ctio n s
trustee, and shall not, as such Treasurer, take or hold any property otherwise and pow ers
than under the provisions o f this A ct, or, subject to those provisions, transfer o f Treasurer.
any property vested in him except in obedience to a decree divesting him of
the property, or in compliance w ith a d irection in that behalf issuing from
the authority by whose order the property became vested in him .
(2) Such a directio n may require the Treasurer to sell or otherwise
dispose of any property vested in him , and, w ith the sanction o f the authority
issuing the direction, to invest the proceeds o f the sale or other disposal of
the property in any such security fo r money as is mentioned in section 4,
sub-section (J), clause (a), (b), (c), ( d) or (e), or in the purchase o f immoveable
property.
 160 Charitable Endowments.

(3) When the Treasurer o f C haritable Endowments is divested, by a

d irectio n o f the President o f the U n io n under this section, o f any property,
it shall vest in the person or persons acting in the adm inistration thereof and
be held by him or them on the same trusts as those on w hich it was held by
such Treasurer.

Provision fo r
11. I f the office held by an officer o f the Government who has been
continuance appointed to be the Treasurer o f C haritable Endowments is abolished or its
o f office o f
T re a su re r in
name is changed, the President o f the U nion may appoint the same or another
ce rta in con officer o f the Government by the name o f his office to be such Treasurer, and
tingencies.
thereupon the holder o f the la tte r office shall be deemed fo r the purposes o f
this A c t to be the successor in office o f the holder o f the form er office.

12 .
13. (I) * *
P o w e r to (2 ) The President of the U nion may make rules consistent w ith this
make rules. A c t fo r
(a) prescribing the fees to be paid to the Government in respect of
any property vested under this A c t in the Treasurer o f C h a ri
table Endowments ;
( b ) regulating the cases and the mode in which schemes or any
m odification thereof are to be published before they are settled
or made under section 5 ;
(c) prescribing the form s in which accounts are to be kept by the
Treasurer o f C haritable Endowments and the mode in which
such accounts are to be audited ; and
(d) generally carrying in to effect the purposes o f this A ct.

In d e m n ity 14. N o suit shall be instituted against the Government in respect of

to G overn anything done or p u rp o rtin g to be done under this A c t, or in respect o f any
m ent and
Treasurer, alleged neglect or omission to perform any duty devolving on the Government
under this A ct, or in respect o f the exercise of, o r the fa ilu re to exercise, any
power conferred by this A c t on the Government, nor shall any suit be in s ti
tuted against the Treasurer o f C haritable Endowments except fo r divesting
him o f property on the ground o f its not being subject to a tru s t fo r a
charitable purpose, or fo r m aking him chargeable w ith or accountable fo r the
loss or m isapplication o f any property vested in him , or the income thereof,
where the loss or m isapplication has been occasioned by or through his
w ilfu l neglect or default.

Saving w ith 15. N othing in this A c t shall be construed to affect the provisions o f
Official10 O fficial Trustees A c t or section 92 o f the Code o f C iv il Procedure.
Trustee and
A tto rn e y -
General.
 161

T H E C H A R IT A B L E A N D R E L IG IO U S TRUSTS A C T .

[ I n d ia A ct X IV , 1920-] (20th M arch, 1920.)

Whereas i t is expedient to provide fa cilitie s fo r the obtaining o f in fo rm

ation regarding trusts created fo r p u b lic purposes o f a charitable or religious
nature, and to enable the trustees o f such trusts to obtain the directions o f a
C o urt on certain matters, and to make special provision fo r the payment o f
the expenditure incurred in certain suits against the trustees o f such tru s ts ;
I t is hereby enacted as fo llo w s :
* * *
(2) The President of the U nion may, by notification, direct that this A ct, E x te n t.

or any specified p art thereof, shall not extend to any specified area in the
U nion o f Burm a or to any specified tru st or class o f trusts.

2- In this A ct, unless there is anything repugnant in the subject or In te rp re ta

tio n .
context, the C o u rt means the C o u rt o f the D is tric t Judge or any other
C o u rt empowered in that behalf by the President o f the U nion and includes
tjie H igh C o urt in the exercise o f its o rdinary o riginal c iv il ju risd ictio n .

v 3. Save as hereinafter provided in this A ct, any person having an interest P o w e r to

a p p ly to the
in any express or constructive tru st created or existing fo r a public purpose o f C o u rt in re s
a charitable or religious nature may apply by p e titio n to the C ourt w ith in the pect o f trusts
o f a c h a rit
local lim its o f whose ju ris d ic tip n any substantial part o f the subject-matter of able o r r e l i
the tru st is situate to obtain an order em bodying a ll or any o f the fo llo w in g gious nature.
directions, n a m e ly:
(1) directing the trustee to furnish the p e titio n e r through the C ourt
w ith particulars as to the nature and objects o f the trust, and
o f the value, condition , management and application o f the
subject-matter o f the trust, and o f the income belonging
thereto, or as to any o f these matters, and
(2) directing that the accounts o f the trust shall be examined and
audited :
Provided that no person shall apply fo r any such direction in respect of
accounts relating to a period more than three years p rio r to the date o f the
p e titio n .

4. ( 1) The p e titio n shall show in what way the petitioner claims to be Contents and
v e rifica tio n
interested in the trust, and shall specify, as fa r as may be, the particulars and o f p e titio n .
the a u dit w hich he seeks to obtain.
(2) The p e titio n shall be in w ritin g and shall be signed and verified in
the manner prescribed by the Code o f C iv il Procedure fo r signing and verifying
plaints.

5. ( / ) I f the C o urt on receipt o f a pe titio n under section 3, after taking Procedure on

p e titio n .
such evidence and m aking such in q u iry , if any, as it may consider necessary,
is o f opinion that the tru st to which the pe titio n relates is a trust to which

11
 162 Charitable and Religious Trusts.

this A c t applies, and that the pe titione r has an interest therein, it shall fix a
date fo r the hearing o f the p e tition , and shall cause a copy thereof, together
w ith notice o f the date so fixed, to be served on the trustee and upon any other
person to whom in its opinion notice o f the p e tition should be given.
(2) On the date fixed fo r the hearing o f the p e titio n , or on any subsequent
date to w hich the hearing may be adjourned, the C ourt shall proceed to hear
the petitioner and the trustee, i f he appears, and any other person who has
appeared in consequence o f the notice, or who it considers ought to be heard,
and shall make such fu rth e r inquiries, if any, as it thinks fit. The trustee
may and, i f so required by the C ourt, shall at the tim e o f the first hearing or
w ith in such tim e as the C ourt may perm it present a w ritten statement o f his
case. I f he does present a w ritte n statement, the statement shall be signed
and verified in the manner prescribed by the Code o f C iv il Procedure fo r
signing and ve rifyin g pleadings.
(3) I f any person appears at the hearing o f the p e titio n and either denies
the existence o f the trust or denies that it is a trust to w hich this A c t applies,
and undertakes to institute w ith in three months a suit fo r a declaration to that
effect and fo r any other appropriate re lie f, the C ourt shall order a stay o f the
proceedings and, i f such suit is so instituted, shall continue the stay u n til the
suit is fin a lly decided.
(4) I f no such undertaking is given, or i f after the e xp iry o f the three
months no such suit has been instituted, the C ourt shall itself decide the
question.
(5) On com pletion o f the in q u iry provided fo r in sub-section (2), the
C ourt shall either dismiss the petition or pass thereon such other order as it
thinks f i t :
Provided that, where a suit has been instituted in accordance w ith ..the
provisions o f sub-section (3), no order shall be passed by the C ourt which
conflicts w ith the final decision therein.
(<5) Save as provided in this section, the C ourt shall not try or determine
any question o f title between the petitioner and any person claim ing title
adversely to the trust.

Failure of 6. I f a trustee w ith o u t reasonable excuse fails to com ply w ith an order
trustee to made under sub-section (5) o f section 5, such trustee shall, w ith o u t prejudice
com ply with
order under to any other penalty or lia b ility w hich he may incur under any law fo r the tim e
section 5. being in force, be deemed to have com m itted a breach o f trust affording ground
fo r a suit under the provisions o f section 92 o f the Code of C iv il Procedure ;
and any such suit may, so fa r as it is based on such failure, be instituted
w ith o u t the previous consent o f the Advocate-General.1
P o w e r of 7. (7) Save as hereinafter provided in this A ct, any trustee o f an express
trustee to or constructive trust created or existing fo r public purpose o f a charitable or
a p p ly fo r
d ire c tio n s . religious nature may apply by petition to the Court, w ith in the local lim its o f
whose ju risd ictio n any substantial part o f the subject-matter o f the trust is
situate, fo r the opinion, advice or direction o f the C ourt on any question

1 Now the A ttorney-G eneral.

 Charitable and Religious Trusts. 163

affecting the management or adm inistration o f the trust property, and the C ourt
shall give its opinion, advice or direction, as the case may be, thereon:
Provided that the C ourt shall not be bound to give such opinion , advice
or direction on any question w hich it considers to be a question n o t proper
fo r summary disposal.
(2) The C ourt, on a petitio n under sub-section ( /) , may either give its
op inio n , advice or direction thereon fo rth w ith , or fix a date fo r the hearing o f
the p etitio n, and may direct a copy thereof, together w ith notice o f -the date
so fixed, to be served on such o f the persons interested in the trust, or to be
published fo r in fo rm a tio n in such manner, as it thinks fit.
( 3 ) On any date fixed under sub-section (2) or on any subsequent date
to w hich the hearing may be adjourned, the C ourt, before givin g any opinion,
advice or direction, shall afford a reasonable o p p o rtu n ity o f being heard to all
persons appearing in connection w ith the petition.
(4) A trustee stating in good fa ith the facts o f any m atter relating to the
trust in a p e titio n under sub-section ( /) , and acting upon the opinion, advice
or d irection o f the C ourt given thereon, shall be deemed, as fa r as his own
resp on sibility is concerned, to have discharged his duty as such trustee in the
m atter in respect o f w hich the p e titio n was made.

8. The costs, charges and expenses o f and incidental to any p e titio n , and Costs o f p e ti
a ll proceedings in connection therew ith under the foregoing provisions o f this tio n under
th is Act.
A c t shall be in the discretion o f the C ourt, which may direct the whole o r any
pa rt o f any such costs, charges and expenses to be met fro m the property or
income o f the tru st in respect o f w hich the pe titio n is made, o r to be borne
and paid in such manner and by such persons as it thinks f it :
Provided tha t no such order shall be made against any person (other
than the petitio ne r) who has not received notice o f the pe titio n and had a
reasonable o p p o rtu n ity o f being heard thereon.

9. N o p e titio n under the foregoing provisions o f this A c t in relation to Savings.

any trust shall be entertained in any o f the fo llo w in g circumstances,
n a m e ly :
(a) i f a suit instituted in accordance w ith the provisions o f section 92
o f the Code o f C iv il Procedure is pending in respect o f the
tru st in question ;
( b ) if the trust property is vested in the Treasurer o f C haritable
Endowments, the A dm inistrator-G eneral, the O fficial Trustee,
o r any society registered under the Societies R egistration
A c t; or
(c) i f a scheme fo r the adm inistration o f the trust-property has been
settled or approved by.any C ourt o f competent ju ris d ic tio n ,
or by any other a u th ority acting under the provisions o f any
enactment.
 164 Charitable and Religious Trusts.

P o w e r of 10. ( / ) In any suit instituted under section 92 o f the Code o f C iv il

Courts as to Procedure, the C ourt try in g such suit may, if, on application o f the p la in tiff
co sts in c e r
ta in su its and after hearing the defendant and making such in q u iry as it thinks fit, it is
against satisfied tha t such an order is necessary in the p u b lic interest, direct the
trustees o f
char its t le defendant either to furnish security fo r any expenditure incurred or lik e ly to
and re lig io u s be incurred by the p la in tiff in in s titu tin g and m aintaining such suit, or to
tru s ts .
deposit fro m any money in his hands as trustee o f the trust to which the suit
relates such sum as such C ourt considers sufficient to meet such expenditure
in whole or in part.
(2) When any money has been deposited in accordance w ith an order
made under sub-section ( /) , the C ourt may make over to the p la in tiff the
whole or any pa rt o f such sum fo r the conduct o f the suit. Before making
over any sum to the p la in tiff, the C ourt shall take security fro m the p la in tiff
fo r the refund o f the same in the event o f such refund being subsequently
ordered by the C ourt.

P rovisions o f 11. ( / ) The provisions o f the Code o f C iv il Procedure relating to

the Code of
C iv il Proce (a) the p ro o f o f facts by affidavit,
dure io apply. ( b ) the enforcing o f the attendance o f any person and his examina
tio n on oath,
(c) the enforcing o f the production o f documents, and
(d) the issuing o f commissions,
shall a p p ly to a ll proceedings under this A c t, and the provisions relating to
the service of summonses shall apply to the service o f notices thereunder.
(2) The provisions o f the said Code relating to the execution o f decrees
shall, so fa r as they are applicable, apply to the execution o f orders under this
A c t.

B a rrin g of 12. N o appeal shall lie fro m any order passed or against any opinion,
appeals. advice or direction given under this A ct.

T H E M U SSALM AN W A K F ACT.

[I n d ia A ct X L I I , 1923.] (1st A u gu st, 1924.)

Preliminary.
E xte n t. 1- ( / ) * * * *
(2) The President o f the U nion may, by n o tifica tio n ,1 direct that this
A c t, or any specified p art thereof, shall extend to the whole or any specified
part o f the U nion o f Burm a.
D e fin itio n s. 2- In this A ct, unless there is anything repugnant in the subject or
context,
(a) benefit does not include any benefit which a m u tw a lli is entitled
to claim solely by reason o f his being such m u tw a lli ;
1 Sections 2 to 13 w ere b rought in to fo rce in c e rta in d is tric ts o f B u rm a fro m the 1st A u g u s t
1924 ; see Burma Gazette, 1924, P art I, page 600.
 Mussalman Wakf. 165

(b) C ou rt means the C ourt o f the D is tric t Judge or, w ith in the
lim its o f the ordinary o rig in al c iv il ju risd ictio n o f the H igh
C ourt, such C ourt, subordinate to the H ig h C ourt, as the
President o f the U nion may, by notification in the Gazette,
designate in this b e h a lf;
(c) m u tw a lli means any person appointed either verbally or under
any deed or instrum ent by w hich a w akf has been created or by
a C ourt o f competent ju ris d ic tio n to be the m u tw a lli o f a w akf,
and includes a n a ib -m utw alli or other person appointed by a
m u tw a lli to perform the duties of the m u tw a lli, and, save as
otherwise provided in this A c t, any person who is fo r the tim e
being adm inistering any w akf property ;
id) prescribed means prescribed by rules made under this A c t ; and
(e) w akf means the permanent dedication by a person professing
the Mussalman fa ith o f any property fo r any purpose recognized
by the Mussalman law as religious, pious or charitable, but
does not include any w akf, such as is described in section 3 of
the Mussalman W a kf V a lid a tin g A c t,1 under which any benefit
is fo r the tim e being claim able fo r him self by the person by
whom the w a kf was created or by any o f his fa m ily or
descendants.

Statements o f Particulars.

3. ( / ) Every m u tw a lli shall furnish to the C ourt w ith in the local lim
O its
b lig a tio n
o f whose ju ris d ic tio n the property o f the w akf of w hich he is the m u tw a lli is to fu rn ish
p a rtic u la rs
situated, or to any one o f two or more such Courts, a statement containing the re la tin g to
fo llo w in g particulars, namely : w akf

(a) a description o f the w akf property sufficient fo r the identification

thereof ;
Cb) the gross annual income from such property ;
(c) the gross am ount o f such income which has been collected during
the five years preceding the date on which the statement is
furnished, or o f the period which has elapsed since the creation
o f the w akf, whichever period is shorter ;
(d) the am ount o f the Government revenue and cesses, and o f a ll rents,
annually payable in respect o f the w a kf property ;
( e) an estimate o f the expenses annually incurred in the realization of
the income o f the w akf property, based on such details as are
available o f any such expenses incurred w ith in the period to
w hich the particulars under clause (c) relate ;
(/) the am ount set apart under the w a kf fo r
(i) the salary o f the m u tw a lli and allowances to individuals ;
(ii) purely religious purposes ;

1 See Pait X X II, C (Personal Law s Muhammadan).

 166 Mussalman W akf.

( iii) charitable purposes ;

(iv ) any other purposes ; and
(g) any other particulars w hich may be prescribed.
(2) Every such statement shall be accompanied by a copy o f the deed
or instrum ent creating the w a k f o r, i f no such deed or instrum ent has been
executed or a copy thereof cannot be obtained, shall contain fu ll, particulars,
as fa r as they are known to the m u tw a lli, of the o rigin, nature and objects o f
the wakf-
(3) Where
(a) a w akf is created after the 1st August, 1924,1 or
( b ) in the case o f a w akf such as is described in section 3 o f the
Mussalman W akf V a lid a tin g A c t,2 the person creating the w akf
or any member o f his fa m ily or any o f his descendants is on the
1st August, 1924,1 alive and entitled to claim any benefit
thereunder,
the statement referred to in sub-section ( / ) shall be furnished, in the case
referred to in clause (a), w ith in six months o f the date on which the w akf is
created or, i f i t has been created by a w ritten document, o f the date on which
such document is executed, o r, in the case referred to in clause (b), w ith in six
months o f the date o f the death of the person entitled to such benefit as
aforesaid, or o f the last survivor o f any such persons, as the case may be.
P u b lic a tio n 4. (/) When any statement has been furnished under section 3, the
o f p a rti
culars and C o urt shall cause notice of the furnishing thereof to be affixed in some
re q u is itio n conspicuous place in the Court-house and to be published in such other
of fu rth e r
p a rtic u la rs . manner, if any, as may be prescribed, and thereafter any person may apply
to the C ourt by a p e titio n in w ritin g , accompanied by the prescribed fee, fo r
the issue o f an order re qu irin g the m u tw a lli to fu rn ish fu rth e r particulars
or documents.
(2) On such applicatio n being made, the C ourt may, after m aking such
in q u iry, if any, as it th in ks fit, if it is o f o p in io n that any fu rth e r particulars
or documents are necessary in order that fu ll in fo rm a tio n may be obtained
regarding the o rig in , nature or objects o f the w a kf or the condition or
management o f the w akf property, cause to be served on the m u tw a lli an
order requiring h im to furnish such particulars or documents w ith in such
tim e as the C o u rt may dire ct in the order.
Statement o f Accounts and Audit.
Statement o f 5. W ith in three months after the th irty -firs t day o f M arch next fo llo w in g
accounts. the date on which the statement referred to in section 3 has been furnished,
and thereafter w ith in three months of the th irty -firs t day o f M arch in every year,
every m u tw a lli shall prepare and fu rn ish to the C ourt to w hich such
statement was furnished a fu ll and true statement o f accounts, in such fo rm
and containing such particulars as may be prescribed, of a ll moneys received
or expended by h im on behalf o f the w akf o f w hich he is the m u tw a lli during
1 D ate o f com m encem ent of this Act.
2 See P art X X II , C (Personal L a w s M uham m adan)
 Mussalman W akf. 167

the period o f twelve months ending on such th irty -firs t day o f M arch or, as the
case may be, during th a t p o rtio n of the said period during which the provisions
o f this A c t have been applicable to the w akf :
Provided th a t the C o u rt may, i f it is satisfied that there is sufficient cause
fo r so doing, extend the tim e allow ed fo r the furnishing of any statement o f
accounts under this section.

6. Every statement o f accounts shall, before it is furnished to the C ourt A u d it of

accounts.
under section 5, be audited
{a) in the case o f a w a k f the gross income o f w hich during the year
in question, after deduction o f the land-revenue and cesses, i f any,
payable to the Government, exceeds two thousand rupees, by a
person who is the holder o f a certificate granted by the President
o f the U nion under section 144 o f the Burma Companies A ct, or
is a member o f any in s titu tio n or association the members o f which
have been declared under that section to be entitled to act as
auditors o f companies throughout the U nion o f Burm a ; or
( b ) in the case o f any other w akf, by any person authorized in this
behalf by general or special order o f the said C ourt.

General Provisions
7. N otw ithstanding anything contained in the deed or instrum ent M u tw a lli
creating any w akf, every m u tw a lli may pay fro m the income o f the w akf e n title d to
pay cost of
p roperty any expenses properly incurred by h im fo r the purpose o f enabling audit, etc.,
h im to fu rn ish any particulars, documents or copies under section 3 o r section fro m w a k f
funds.
4 or in respect o f the preparation or a u d it o f the annual accounts fo r the
purposes o f this A ct.

8. Every statement o f particulars furnished under section 3 or section Verific ation.

4 and every statement o f accounts furnished under section 5, shall be w ritte n
in the language o f the C ou rt to w hich it is furnished, and shall be verified in
the manner provided in the Code o f C iv il Procedure fo r the signing and
verification o f pleadings.

9. A n y person shall, w ith the permission of the C ourt and on pay In s p e c tio n
ment o f the prescribed fee, at any tim e at w h ich the C ourt is open, be and copies.

entitled to inspect in the prescribed manner, or to obtain a copy of, any

statement o f particulars or any document furnished to the C ourt under sec
tio n 3 or section 4, or any statement o f accounts furnished to it under sec
tio n 5, or any a u d it re p o rt made on an a u d it under section 6.

Penalty.
10. A n y person who is required by or under section 3 or section 4 to P enalties.
fu rn ish a statement o f particulars or any document relating to a w akf, or who
is required by section 5 to fu rn is h a statement of accounts, shall, i f he,
w ith o u t reasonable cause the burden o f proving which shall be upon
him , fa ils to fu rn ish such statement or document, as the case may be, in due
 168 Mussalman W akf.

tim e, or furnishes a statement w hich he knows or has reason to believe to be

false, misleading or untrue in any m aterial p a rticu la r, or, in the case of a
statement of accounts, furnishes a statement which has riot been audited in
the manner required by section 6, be punishable w ith fine which may extend
to five hundred rupees, or, in the case o f a second or subsequent offence,
w ith fine which may extend t Q tw o thousand rupees.

Rules.
P o w e r to 11. ( / ) The President o f the U nion may, after previous publicatio n,
m ake rules.
by n o tifica tion in the Gazette, make rules to carry in to effect the purposes
o f this A ct.
(2) In p a rticu lar, and w ith o u t prejudice to the generality o f the
foregoing power, such rules may provide fo r a ll or any o f the fo llo w in g
matters, namely
(<j) the additio n a l particulars to be furnished by m utw allis under
clafuse ( g ) o f sub-section ( / ) o f section 3 ;
\b) the fees to be charged upon applications made to a C o u rt under
sub-section ( / ) o f section 4 ;
(c) the fo rm in w hich the statement o f accounts referred to in section
5 shall be furnished, and the particulars which shall be contained
th e re in ;
(d) the powers w hich may be exercised by auditors fo r the purpose of
any audit referred to in section 6, and the particulars to be
contained in the reports o f such auditors ;
( e) the fees respectively chargeable on account o f the allo w in g of
inspections and o f the supply o f copies under section 9 ;
(/) the safe custody o f statements, audit reports and copies o f deeds
or instrum ents furnished to Courts under this A c t ; and
(g) any other m atter w hich is to be or may be prescribed.
Savings. 12. N othin g in this A c t shall
(a) affect any other enactment fo r the tim e being in force in the U nion
o f Burma providing fo r the control or supervision o f religious
or charitable endowments ; or
( b ) apply in the case o f any w a kf the property o f which
(i) is being adm inistered by the Treasurer o f C haritable Endow
ments, the A dm inistrator-G eneral, or the O fficial Trustee ; or
(ii) is being adm inistered either by a receiver appointed by any
C o u rt o f competent ju ris d ic tio n , or under a scheme fo r the
a d m in istra tion o f the w akf which has been settled or approved
by any C o u rt o f com petent ju ris d ic tio n or by any other
a u th o rity acting under the provisions o f any enactment.
E x e m p tio n ,
13. The President o f the U nion may, by n o tification in the Gazette,
exempt fro m the operation o f this A c t o r o f any specified p rovision thereof
any w a kf or wakfs created or adm inistered fo r the benefit o f any specified
section o f the Mussalman com m unity.
 169

PART XIVASSOCIATIONS.

S JaS S s 0 U H 3 3 C 8 s 3 3 ^ ^ j0 8 S ^ 8 s p H

T H E P A R T IT IO N A C T .

[ I n d ia A ct IV , 1893.] (9th M arch, 1893.)

1. N o thin g herein contained shall be deemed to affect any local law Saving.
pro vid ing fo r the p a rtitio n o f immoveable property paying revenue to
Governm ent.

2. Whenever in any suit fo r p a rtitio n in which, i f instituted p rio r to the P o w e r to

C o u rt to
commencement o f this A c t, a decree fo r p a rtitio n m ig h t have been made, it ord e r sale
appears to the C o urt th at, by reason o f the nature o f the p ro p e rty . to w hich in ste a d of
d iv is io n in
the suit relates, or o f the num ber o f the shareholders therein or o f any other p a rtitio n
special circumstance, a d iv is io n o f the property cannot reasonably or su its.

conveniently be made, and th a t a sale o f the property and d istrib u tio n o f the
proceeds w ould be more beneficial fo r a ll the shareholders, the C o u rt may,
i f it thinks fit, on the request o f any o f such shareholders interested
in d iv id u a lly or collectively to* the extent o f one m oiety or upwards, direct a
sale o f the p roperty and a d is trib u tio n o f the proceeds.

3. ( / ) I f , in any case in w hich the C ourt is requested under the last fore Procedure
w h e n sh a re r
going section to direct a sale, any other shareholder applies fo r leave to buy at undertakes to
a valuation the share or shares o f the party or parties asking fo r a sale, the buy.
C ou rt shall order a valuation o f the share or shares in such manner as i t may
th in k fit and offer to sell the same to such shareholder at the price
so ascertained, and may give a ll neces-sary and proper directions in
that behalf.
(2) I f two o r more shareholders severally apply fo r leave to buy as
provided in sub-section ( i) , the C o urt shall order a sale o f the share or shares
to the shareholder who offers to pay the highest price above the valuation
made by the Court.
(3) I f no such shareholder is w illin g to buy such share or shares at the
price so ascertained, the applicant or applicants shall be lia b le to pay a ll
costs o f or incident to the applicatio n or applications.

4. ( / ) Where a share o f a dwelling-house belonging to an undivided P a rtitio n

s u it by trans
fa m ily has been transferred to a person who is not a member o f such fa m ily feree of
and such transferee sues fo r p a rtitio n , the C o u rt shall, i f any member o f the share in
d w e llin g -
fa m ily being a shareholder shall undertake to buy the share o f such house.
ransferee, make a valuation o f such share in such manner as it thinks fit and
 170 Partition.

direct the sale o f such share to such shareholder, and may give a ll necessary
and proper directions in that behalf.
(2) I f in any case described in sub-section ( / ) tw o or more members o f
the fa m ily being such shareholders severally undertake to buy such share, the
C ourt shall fo llo w the procedure prescribed by sub-section (2) of the
last foregoing section.

Representa 5. In any suit fo r p a rtitio n a request fo r sale may be made or

tio n of
parties under an undertaking, or application fo r leave, to buy may be given or made on
d is a b ility . behalf o f any party under d is a b ility by any person authorized to act
on behalf o f such party in such suit, but the C ourt shall not be bound to
com ply w ith any such request, undertaking or application unless it is
o f opin ion tha t the sale or purchase w ill be fo r the benefit o f the party under
such disability.

Reserved 6. ( / ) Every sale under section 2 shall be subject to a reserved bidding,

b id d in g and
b id d in g b y and the am ount o f such bidding shall be fixed by the C ourt in such manner
shareholders. as i t may th in k fit and may be varied fro m tim e to time.
(2) On any such sale any o f the shareholers shall be at lib e rty to b id at
the sale on such terms as to non-payment o f deposit or as to setting-off or
accounting fo r the purchase money or any part thereof instead o f paying the
same as to the C o urt may seem reasonable.
(3) I f two or more persons, o f whom one is a shareholder in
the property, respectively advance the same sum at any bidding at such sale,
such bidding shall be deemed to be the bidding of the shareholder.

Procedure to 7. Save as hereinbefore provided, when any property is directed to be

be fo llo w e d
in case of
sold under this A ct, the fo llo w in g procedure shall, as fa r as practicable, be
sales. adopted, n a m e ly :
(a) i f the property be sold under a decree or order o f the H ig h C ourt
the procedure o f such C ourt in its o rig in a l c iv il ju risd ictio n fo r
the sale o f property by the Registrar ;
( b ) i f the property be sold under a decree or order o f any
other C ourt, such procedure as the H igh C ourt may fro m time
to tim e by rules prescribe in this behalf, and u n til such rules
are made, the procedure prescribed in the Code o f C iv il
Procedure in respect o f sales in execution o f decrees.
O rders fo r 8. A n y order fo r sale made by the C ourt under sections 2, 3 or 4 shall
sale to be
deemed be deemed to be a decree w ith in the meaning o f section 2 o f the Code o f
decrees. C iv il Procedure.

Saving of 9. In any suit fo r p a rtitio n the C ourt may, i f it shall th in k fit, make a
p o w e r to
o rd e r p a rtly decree fo r a p a rtitio n o f p a rt o f the property to which the suit relates and a
p a rtitio n and sale o f the remainder under this A ct.
p a rtly sale.
 171

THE PARTNERSHIP ACT

CONTENTS.

C H A P T E R I.

P r e l im in a r y .
Sections

J * * * *
2. D efinitions.
3. * * * *

C HAPTER II.

T he n ature of p a r t n e r s h ip .

4 D efinitions o f p a rtn e rs h ip , p a rtn e r , f ir m and firm name .

5. Partnership not created by status.
6. Mode o f determ ining existence o f partnership.
7- Partnership at w ill-
,8. P articular partnership.

CHAPTER III.

R e l a t io n s o f p a r t n e r s t o o n e a n o t h e r .

9. General duties o f partners.

10. D u ty to in de m n ify fo r loss caused by fraud.
11. D eterm ination o f rights and duties of partners by contract between
the partners.
Agreements in restraint o f trade.
12. The conduct o f the business.
13- M utu al rights and lia b ilitie s .
14. The property o f the firm .
15. A p p lic a tio n o f the property o f the firm .
16- Personal profits earned by partners.
17. Rights and duties o f partners a fte r a change in the firm , after the
expiry o f the term o f the firm , and where additional undertakings
are carried out.
172 Partnership.

C H A P T E R IV .

R e l a t io n s of partners to t h ir d p a r t ie s .

Sections-
18. Partner to be agent o f the firm .
19. Im p lie d a u th o rity o f partner as agent o f the firm .
20. Extension and restriction o f partners im plied authority.
21. Partner s a u th o rity in an emergency.
22. Mode o f doing act to bind firm .
23. Effect o f admissions by a partner.
24. Effect o f notice to acting partner.
25. L ia b ility o f a partner fo r acts o f the firm .
26- L ia b ility o f the firm fo r w rongful acts o f a partner.
27- L ia b ility o f firm fo r m isapplication by partners.
28. H o ld in g out-
29. Rights o f transferee o f a partners interest.
30- M inors adm itted to the benefits o f partnership.

CHAPTER V.

I n c o m in g and o u t g o in g partners.

31. In tro d u c tio n o f a partner.

32. Retirem ent o f a partner-
33- E xpulsion o f a partner-
34- Insolvency o f a partner.
35- L ia b ility o f estate of deceased partner-
36- R ights o f outgoing partner to carry on competing business.
Agreements in restraint o f trade.
37- R ig h t o f outgoing partner in certain cases to share subsequent
profits.
38- Revocation o f continuing guarantee by change in firm .

C H A P T E R V I.

D is s o l u t io n of a f ir m .

39. D issolution o f a firm .

40- D issolution by agreement.
41- C om pulsory dissolution.
42. D issolution on the happening o f certain contingencies.
43- D issolution by notice o f partnership at w ill.
44. D issolution by the C ourt.
45. L ia b ility fo r acts of partners done after dissolution.
46. R ig h t o f partners to have business wound up after dissolution.
 Partnership. 173

Sections.
47. C ontinuin g a u th o rity o f partners fo r purposes o f w inding up.
48. M ode o f settlem ent o f accounts between partners.
49. Payment o f firm debts and o f separate debts.
50. Personal profits earned afte r dissolution.
51. R eturn o f prem ium on prem ature dissolution.
52. R ights where partnership contract is rescinded fo r fraud or
m isrepresentation
53. R ig h t to restrain fro m use o f firm name or firm property.
54- Agreements in re stra in t o f trade.
55. Sale o f g o o d w ill afte r dissolution.
R ights o f buyer and seller o f g o odw ill-
Agreements in restraint o f trade.

C HAPTER V II.

R e g is t r a t io n of f ir m s .

56- Power to exempt fro m application of this Chapter-

57- A p p o in tm e n t o f Registrars.
58- A p p lic a tio n fo r registration.
59. Registration.
60. Recording o f alterations in firm name and p rin c ip a l place of
business.
61. N o tin g o f closing and opening o f branches-
62. N o tin g o f changes in names and addresses o f partners.
63. Recording o f chahges in and dissolution o f a firm-
Recording o f w ith draw a l o f a m inor-
64- R ectification o f mistakes.
65. Am endm ent o f register by order o f C ourt.
66- Inspection o f register and filed documents.
67- G rant o f copies.
68. Rules o f evidence.
69. E ffect o f non-registration.
70. Penalty fo r furnish ing false particulars.
71. Power to make rules.

C H A P TE R V III-

Su p p l e m en tal.

72. Mode o f giving pu b lic notice.

73 * * * *

74. Savings.

S C H E D U L E M axim um Fees.
 174

TH E PA RTN ERSH IP ACT-

[ I n d ia A c t IX, 1932.] (1st October, 1932.) 1

CHAPTER I.

P r e l im in a r y -

1. * * * *
D efinitions. 2. In this Act, unless there is anything repugnant in the subject or
context,
(a) an act of a firm means any act or omission by all the partners,
or by any partner or agent of the firm which gives rise to a right
enforceable by or against the firm ;
(b ) business includes every trade, occupation and profession ;
(c) prescribed means prescribed by rules made under this A c t;
(d ) third party , used in relation to a firm or to a partner therein,
means any person who is not a partner in the firm ; and
(e) expressions used b*it not defined in this Act and defined in the
Contract Act shall have the meanings assigned to them in
that Act-
3. * * * *

CH A PTER II.

T h e n a t u r e o f p a r t n e r s h ip .

Definition of 4. Partnership is the relation between persons who have agreed to

p a rtn e r share the profits of a business carried on by all or any of them acting for all.
s h ip ,
p a rtn e r, Persons who have entered into partnership with one another are
firm and
firm n a m e . called individually partners and collectively a firm , and the name under
which their business is carried on is called the firm nam e.

P a rtn e rsh ip 5. The relation of partnership arises from contract and not from status ;
not c rea te d and, in particular, the members of a Hindu undivided family carrying on
by sta tu s.
a family business as such, or a Burmese Buddhist husband and wife carrying
on business as such, are not partners in such business.

M ode of
6 . In determining whether a group of persons is or is not a firm, or
d eterm ining whether a person is or is not a partner in a firm, regard shall be had to the real
existence of relation between the parties, as shown by all relevant facts taken together.
p a rtn e rsh ip .
Explanation 1.The sharing of profits or of gross returns arising from
property by persons holding a joint or common interest in that property does
not of itself make such persons partners.

1 T h is Act cam e into force on the 1st O ctober, 1932, w ith th e exception of section 69, w hich
cam e into force on th e 1st O c to b er, 1933 ; see se c tio n 1 (5) of India Act IX , 1932.
 Partnership- 175

E xplanation 2. The receipt by a person of a share of the profits of a

business, or of a payment contingent upon the earning of profits or varying
with the profits earned by a business, does not of itself make him a partner
with the persons carrying on the business.
and, in particular, the receipt of such share or payment
(a) by a lender of money to persons engaged or about to engage in
any business,
(b ) by a servant or agent as rem uneration,
(c) by the widow or child of a deceased partner as annuity, or
(d) by a previous owner or part owner of the business, as considera
tion for the sale of the goodwill or share thereof,
does not of itself make the receiver a partner with the persons carrying on
the business-

7. Where no provision is made by contract between the partners for the Partnership
duration of their partnership, or for the determ ination of their partnership, at w ill.
the partnership is partnership at will

8. A person may become a partner with another person in particular Particular

partnership.
adventures or undertakings.
CH APTER III.
R e l a t io n s o f p a r t n e r s t o o n e a n o t h e r .
9. Partners are bound to carry on the business of the firm to the greatest General
duties of
common advantage, to be just and faithful to each other, and to render true partn ers.
accounts and full inform ation of all things affecting the firm to any partner
or his legal representative.

10. Every partner shall indemnify the firm for any loss caused to it by Duty to
indemnify
his fraud in the conduct of the business of the firm. for loss
caused by
fraud.
11. (I) Subject to the provisions of this Act, the mutual rights and D eterm ina
tion of rights
duties of the partners of a firm may be determined by contract between the and duties of
partners, and such contract may be express or may be implied by a course of partners by
contract
dealing.. between the
Such contract may be varied by consent of all the partners, and such partners.
consent may be express or may be implied by a course of dealing.
(2) Notwithstanding anything contained in section 27 of the Contract Agreements
in restrain t
Act, such contracts may provide that a partner shall not carry on any business of trade.
other than that of the firm while he is a partner.

12. Subject to contract between the partners The conduct

of the
(a) every partner has a right to take part in the conduct of the business.
business;
(b ) every partner is bound to attend diligently to his duties in the
conduct of the business;
 176 Partnership-

(c) any difference arising as to ordinary matters connected w ith the

business may be decided by a m a jo rity o f the partners', and
every partner shall have the rig h t to express his o p inion before
the m atter is decided, but no change may be made in the nature
o f the business w ith o u t the consent o f a ll the partners ; and
( d) every partner has a rig h t to have access to and to inspect and
copy any o f the books o f the firm .

Mutual 13. Subject to contract between the partners

rights and
liabilities. (a) a partner is not entitled to receive rem uneration fo r taking part
in the conduct o f the business;
( b) the partners are entitled to share equally in the profits earned, and
shall contribute equally to the losses sustained by the firm ;
(c) where a partner is entitled to interest on the capital subscribed by
h im such interest shall be payable only out o f p ro fits ;
id) a partner m aking fo r the purposes o f the business any payment
or advance beyond the am ount o f capital he has agreed to sub
scribe, is entitled to interest thereon at the rate o f six per cent,
per annum ;
(e) the firm shall indem nify a partner in respect o f payments made
and lia b ilitie s incurred by h im
(i) in the ordinary and proper conduct o f the business, and
(ii) in doing such act, in an emergency, fo r the purpose o f protec
ting the firm fro m loss, as w ould be done by a person o f
ordin ary prudence, in his own case, under sim ila r circum
stances ; and
(/) a partner shall indem nify the firm fo r any loss caused to i t by his
w ilfu l neglect in the conduct o f the business o f the firm .
T he p ro p e rty 14. Subject to contract between the partners, the property o f the firm
o f the firm . includes a ll property and rights and interests in property o rig in a lly brought
in to the stock o f the firm , or acquired, by purchase o r otherwise, by o r fo r the
firm , or fo r the purposes and in the course o f the business o f the firm , and
includes also the goodw ill o f the business-
Unless the contrary in te n tio n appears, property and rig h ts and interests
in property acquired w ith money belonging to the firm are deemed to have
been acquired fo r the firm -

A pplication
15. Subject to contract between the partners, the property o f the firm
o f the pro shall be held and used by the partners exclusively fo r the purposes o f the
perty o f the
business.
firm.

Personal 16. Subject to contract between the partners,

p ro fits earned
by p a rtn e rs. (a) i f a partner derives any p ro fit fo r him self fro m any transaction o f
the firm , or from the use o f the property or business connection
o f the firm or the firm name, he shall account fo r that p ro fit
and pay i t to the f ir m ;
 Partnership. 177

(ft) if a partner carries on any business of the same nature as and

competing with that of the firm, he shall account for and pay to
the firm all profits made by him in that business.
Rights and
17. Subject to contract between the partners, duties of
(a) where a change occurs in the constitution of a firm, the mutual partners
after a
rights and duties of the partners in the reconstituted firm remain change in the
the same as they were immediately before the change, as far as firm.
may b e ;
( b ) where a firm constituted for a fixed term continues to carry on after the
expiry of the
business after the expiry of that term, the mutual rights and term of the
duties of the partners remain the same as they were before the firm, and
expiry, so far as they may be consistent with the incidents of
partnership at w ill; and
(c) where a firm constituted to carry out one or more adventures or w here addi
tional under
undertakings, carries out other adventures or undertakings, the takings are
mutual rights and duties of the partners in respect of the other carried out.
adventures or undertakings are the same as those in respect of
the original adventures or undertakings.

CH APTER IV.

R e l a t io n s o f p a r t n e r s t o t h ir d p a r t i e s .

18. Subject to the provisions of this Act, a partner is the agent of the P artn er to be
agent of the
firm for the purposes of the business of the firm. firm.

19. (J) Subject to the provisions of section 22, the act of a partner Im plied
authority of
which is done to carry on, in the usual way, business of the kind carried on partner as
by the firm, binds the firm. agent of the
firm.
The authority of a partner to bind the firm conferred by this section is
called his implied authority.
(2) In the absence of any usage or custom of trade to the contrary, the
im plied authority of a partner does not empower him to
() submit a dispute relating to the business of the firm to arbitration,
() open a banking account on behalf of the firm in his own name,
(c) compromise or relinquish any claim or portion of a claim by the
firm,
(d) withdraw a suit or proceeding filed on behalf of the firm,
(e) admit any liability in a suit or proceeding against the firm,
(/) acquire immoveable property on behalf of the firm,
(g ) transfer immoveable property belonging to the firm, or
(A) enter into partnership on behalf of the firm.

12
 178 Partnership,

E xten sion 20. The partners in a firm may, by contract between the partners, extend
and restric
tion of or restrict the implied authority of any partner.
p artn ers Notwithstanding any such restriction, any act done by a partner on behalf
implied
authority. of the firm which falls within his implied authority binds the firm, unless the
person with whom he is dealing knows of the restriction or does not know or
believe that partner to be a partner.

P artn ers 21. A partner has authority, in an emergency, to do all such acts for
authority
in an
the purpose of protecting the firm from loss as would be done by a person of
em ergency. ordinary prudence in his own case, acting under similar circumstances, and
such acts bind the firm.

Mode of 22. In order to bind a firm, an act or instrument done or executed by a

d o in g a ct to
bind firm. partner or other person on behalf of the firm shall be done or executed in
the firm name, or in any other manner expressing or implying an intention to
bind the firm.

E ffe c t of 23. An admission or representation made by a partner concerning the

a d m issio n s
by a partner.
afiairs of the firm is evidence against the firm, if it is made in the ordinary
course of business.

E ffe ct of 24. Notice to a partner who habitually acts in the business of the firm
n o tice to
acting
of any matter relating to the affairs of the firm operates as notice to the firm,
partner. except in the case of a fraud on the firm committed by or with the consent
of that partner.

L ia b ility o f 25 Every partner is liable, jointly with all the other partners and also
a p artn er for
a cts of the severally, for all acts of the firm done while he is a partner.
firm.
L ia b ility 26. Where, by the wrongful act or omission of a partner acting in the
of th e firm ordinary course of the business of a firm, or with the authority of his
fo r w rongful
acts of a partners, loss or injury is caused to any third party, or any penalty is
p artn er. incurred, the firm is liable therefor to the same extent as the partner.

L ia b ilit y of 27. Where

firm for
m isa p p lica (a) a partner acting within his apparent authority receives money or
tion by property from a third party and misapplies it, or
p artn ers.
(b) a firm in the course of its business receives money or property
from a third party, and the money or property is misapplied
by any of the partners while it is in the custody of the firm,
the firm is liable to make good the loss.

H olding out. 28. ( / ) Any one who by words spoken or written or by conduct
represents himself, or knowingly permits himself to be represented, to be a
partner in a firm, is liable as a partner in that firm to any one who has on
the faith of any such representation given credit to the firm, whether the
person representing himself or represented to be a partner does or does not
know that the representation has reached the person so giving credit-
 Partnership. 179

(2) W here after a partners death the business is continued in the old
firm name, the continued use of that name or of the deceased partners name
as a part thereof shall not of itself make his legal representative or his
estate liable for any act of the firm done after his death.

29. ( / ) A transfer by a partner of his interest in the firm, either Rights of

absolute or by mortgage, or by the creation by him of a charge on such transferee of
a partners
interest, does not entitle the transferee, during the continuance of the firm, interest.
to interfere in the conduct of the business, or to require accounts, or to
inspect the books of the firm, but entitles the transferee only to receive the
share of profits of the transferring partner, and the transferee shall accept
the account of profits agreed to by the partners.
(2) If the firm is dissolved or if the transferring partner ceases to be a
partner, the transferee is entitled as against the remaining partners to receive
the share of the assets of the firm to which the transferring partner is
entitled, and, for the purpose of ascertaining that share, to an account as
from the date of the dissolution.

30. ( / ) A person who is a minor according to the law to which he is Minors

subject may not be a partner in a firm, but, with the consent of all the admitted to
the benefits
partners for the time being, he may be admitted to the benefits of of partner
ship.
partnership.
(2) Such minor has a right to such share of the property and of the
profits of the firm as may be agreed upon, and he may have access to and
inspect and copy any of the accounts of the firm.
(5) Such minors share is liable for the acts of the firm, but the minor
is not personally liable for any such act,
(4) Such minor may not sue the partners for an account or payment of
his share of the property or profits of the firm, save when severing his
connection with the firm, and in such case the amount of his share shall be
determined by a valuation made as far as possible in accordance with the
rules contained in section 48 :
Provided that all the partners acting together or any partner entitled to
dissolve the firm upon notice to other partners may elect in such suit to
dissolve the firm, and thereupon the Court shall proceed with the suit as
one for dissolution and for settling accounts between the partners, and the
amount of the share of the minor shall be determined along with the shares
of the partners.
(5) A t any time within six months of his attaining majority, or of his
obtaining knowledge that he had been admitted to the benefits of partnership,
whichever date is later, such person may give public notice that he has
elected to become or that he has elected not to become a partner in the firm,
and such notice shall determine his position as regards the firm :
Provided that, if he fails to give such notice, he shall become a partner
in the firm 00 the expiry of the said six months.
 180 Partnership.

(6) Where any person has been adm itted as a m inor to the benefits o f
partnership in a firm , the burden o f proving the fact th a t such person had
no knowledge o f such admission u n til a p a rticu la r date after the expiry o f six
months o f h is atta in ing m a jo rity shall lie on the person asserting that fact.
(7) W here such person becomes a partner,
(a) his rights and lia b ilitie s as a m inor continue up to the date on
which he becomes a partner, but he also becomes personally
lia ble t6 th ird parties fo r a ll acts o f the firm done since he
was adm itted to the benefits o f partnership, and
( b ) his share in the property and profits o f the firm shall be the
share to which he was e n titled as a m inor.
(8) Where such person elects n o t to become a partner,
(a) his rig h ts and lia b ilitie s shall continue to be those o f a m inor
under this section up to the date on w hich he gives public
notice,
( b) his share shall not be lia b le fo r any acts o f the firm done after
the date o f the notice, and
(c) he shall be entitled to sue the partners fo r his share o f the
p roperty and profits in accordance w ith sub-section ( 4).
(9) N o thin g in sub-sections (7) and (5) shall affect the provisions o f
section 28.

CHAPTER V.

I n c o m in g a n d o u t g o in g p a r t n e r s .

In tro d u c tio n 31. ( / ) Subject to contract between the partners and to the provisions
o( a p a rtn e r.
o f section 30, no person shall be introduced as a partner in to a firm w ith o u t
the consent o f a ll the existing partners.
(2) Subject to the provisions o f section 30, a person who is introduced
as a partner in to a firm does not thereby become liable fo r any act o f the
firm done before he became a partner.

R e tire m e n t 32. ( / ) A partner may retire

o f a p a rtn e r.
(a) w ith the consent o f a ll the other partners,
( b) in accordance w ith an express agreement by the partners, o r
(c) where the partnership is at w ill, by giving notice in w ritin g to all
the other partners o f his intention to retire.

(2) A re tirin g partner may be discharged fro m any lia b ility to any th ird
party fo r acts o f the firm done before his retirem ent by an agreement
made by h im w ith such th ird party and the partners o f the reconstituted
firm , and such agreement may be im plied by a course o f dealing between such
th ird party and the reconstituted firm after he had knowledge o f the
retirem ent.
 Partnership. 181

(3) Notwithstanding the retirement of a partner from a firm, he and the

partners continue to be liable as partners to third parties for any act done
by any of them which would have been an act of the firm if done before the
retirement, until public notice is given of the retirem ent:
Provided that a retired partner is not liable to any third party who deals
with the firm without knowing that he was a partner.
(4) Notices under sub-section (5 ) may be given by the retired partner
or by any partner of the reconstituted firm.

33. (1) A partner may not be expelled from a firm by any majority of Expulsion of
the partners, save in the exercise in good faith of powers conferred by a Partner-
contract between the partners.
(2) The provisions of sub-sections (2), (5) and (4) of section 32 shall
apply to an expelled partner as if he were a retired partner.

34. ( / ) Where a partner in a firm is adjudicated an insolvent he ceases insolvency

to be a partner on the date on which the order of adjudication is made, of 3 Partner>
whether or not the firm is thereby dissolved.
(2) Where under a contract between the partners the firm is not dissolved
by the adjudication of a partner as an insolvent, the estate of a partner so
adjudicated is not liable for any act of the firm, and the firm is not liable for
any act of the insolvent, done after the date on which the order of adjudica
tion is made.

35. Where under a contract between the partners the firm is not L iability of
dissolved by the death of a partner, the estate of a deceased partner is not deceased
liable for any act of the firm done after his death. partner.

36. ( / ) An outgoing partner may carry on a business competing with Rights of

that of the firm and he may advertise such business, but, subject to contract 0lltfi0ing
J 3 partner to
to the contrary, he may not caity on

(a) use the firm name, b u sin e ss ^

(b) represent himself as carrying on the business of the firm, or
(c) solicit the custom of persons who were dealing with the firm
before he ceased to be a partner.
(2) A partner may make an agreement with his partners that on Agreements
ceasing to be a partner he will not carry on any business similar to that of int
the firm within a specified period or within specified local lim its; and,
notwithstanding anything contained in section 27 of the Contract A ct, such
agreement shall be valid if the restrictions imposed are reasonable.

37. Where any member of a firm has died or otherwise ceased to be a R ig h t o i

partner, and the surviving or continuing partners carry on the business of the ^.fner hi
firm with the property of the firm without any final settlement of accounts certain cases
as between them and the outgoing partner or his estate, then, in the absence subsequent
of a contract to the contrary, the outgoing partner or his estate is entitled at profits,
the option of himself or his representatives to such share of the profits made
 182 Partnership.

since he ceased to be a partner as may be attributable to the use of his

share of the property of the firm or to interest at the rate of six per cent,
per annum on the amount of his share in the property of the firm :
Provided that where by contract between the partners an option is given
to surviving or continuing partners to purchase the interest of a deceased or
outgoing partner, and that option is duly exercised, the estate of the deceased
partner, or the outgoing partner or his estate, as the case may be, is not
entitled to any further or other share of profits ; but if any partner assuming
to act in exercise of the option does not in all material respects comply with
the terms thereof he is liable to account under the foregoing provisions of
this section.

R evocation 38. A continuing guarantee given to a firm, or to a third party in

of continuing
g uarantee respect of the transactions of a firm, is, in the absence of agreement to the
by ch an g e contrary, revoked as to future transactions from the date of any change in
in firm.
the constitution of the firm.

C H A PT ER V I.

D is s o l u t io n of a F ir m .

D issolution 39. The dissolution of partnership between all the partners of a firm
of a firm.
is called the dissolution of the firm.

Dissolution 40. A firm may be dissolved with the consent of all the partners or in
by agree
m ent. accordance with a contract between the partners.

Com pulsory 41. A firm is dissolved

dis solution.
(a) by the adjudication of all the partners or of all the partners but
one as insolvent, or
(b) by the happening of any event which makes it unlawful for the
business of the firm to be carried on or for the partners to
carry it on in partnership :
Provided that, where more than one separate adventure or undertaking
is carried on by the firm, the illegality of one or more shall not of itself cause
the dissolution of the firm in respect of its lawful adventures and
undertakings.
Dissolution 42. Subject to contract between the partners, a firm is dissolved
on the
happening (a) if constituted for a fixed term, by the expiry of that term ;
of certain
co ntin
(b) if constituted to carry out one or more adventures or undertakings,
gencies. by the completion thereof ;
(c) by the death of a p artn er; and
(d) by the adjudication of a partner as an insolvent.

43 . ( / ) Where the partnership is at will, the firm may be dissolved by

D issolution
by n o tice of any partner giving notice in writing to all the other partners of his intention
partnership to dissolve the firm.
a t w ill.
 Partnership. 183

(2) The firm is dissolved as fro m the date mentioned in the notice as
the date o f dissolution or, i f no date is so mentioned, as fro m the date o f the
com m unication o f the notice.

44. A t the suit o f a partner, the C o u rt may dissolve a firm on any o f D isso lu tio n
the fo llo w in g grounds, namely : by the Court,

(a) tha t a partner has become o f unsound m ind, in which case the
suit may be brought as w ell by the next friend o f the partner
who has become o f unsound m ind as by any other partner ;
Cb) that a partner, other than the partner suing, has become in any
way perm anently incapable of perform ing his duties as p a rtn e r;
(c) tha t a partner, other than the partner suing, is g u ilty o f conduct
w hich is lik e ly to affect p re ju d icia lly the carrying on o f the
business, regard being had to the nature o f the business ;
(id) th at a partner, other than the partner suing, w ilfu lly or
persistently com m its breach o f agreements relating to the
management o f the affairs o f the firm or the conduct o f its
business, or otherwise so conducts him self in matters relating
to the business th at it is not reasonably practicable fo r the
other partners to carry on the business in partnership w ith h im ;
(e) th a t a partner, other than the partner suing, has in any way
transferred the whole o f his interest in the firm to a th ird
party, o r has allowed his share to be charged under the
provisions o f rule 49 o f Order X X I o f the F irs t Schedule to
the Code o f C iv il Procedure, or has allowed i t to be sold in the
recovery o f arrears o f land-revenue or o f any dues recoverable
as arrears o f land-revenue due by the partner ;
(/) th a t the business o f the firm cannot be carried on save at a
loss ; or
( g) on any other ground w hich renders i t ju st and equitable that the
firm should be dissolved.

45. (7) N otw ithstanding the dissolution o f a firm , the partners continue to L ia b ility fo r
be lia b le as such to th ird parties fo r any act done by any o f them which acts of
partners
w ould have been an act o f the firm i f done before the dissolution, u n til public done a fte r
notice is given o f the dissolution : dissolution.

Provided th at the estate o f a partner who dies, or who is adjudicated an

insolvent, or o f a partner who, n o t having been known to the person dealing
w ith the firm to be a partner, retires fro m the firm , is not lia b le under this
section fo r acts done after the date on w hich he ceases to be a partner.
(2) Notices under sub-section ( / ) may be given by any partner.

46. On the dissolution o f a firm every partner or his representative is R ig h t of

entitled , as against a ll the other partners or their representatives, to have the {^"b u si-0
property o f the firm applied in payment o f the debts and lia b ilitie s o f the n ess w ound
 184 Partnership.

up after firm, and to have the surplus distributed among the partners or their
dissolution representatives according to their rights.
C ontinuing 47. After the dissolution of a firm the authority of each partner to bind
auth ority of
p artn eis for the firm, and the other mutual rights and obligations of the partners, continue
pu rp oses of notwithstanding the dissolution, so far as may be necessary to wind up the
w in d in g up,
affairs of the firm and to complete transactions begun but unfinished at the
time of the dissolution, but not otherwise :
Provided that the firm is in no case bound by the acts of a partner who
has been adjudicated insolvent; but this proviso does not affect the liability
of any person who has after the adjudication represented himself or
knowingly permitted himself to be represented as a partner of the insolvent.

Mode of 48. In settling the accounts of a firm after dissolution, the following
settlement of
accounts rules shall, subject to agreement by the partners, be observed
between (a) Losses, including deficiencies of capital, shall be paid first out
partners.
of profits, next out of capital, and, lastly, if necessary, by the
partneTs individually in the proportions in which they were
entitled to share profits.
(b) The assets of the firm, including any sums contributed by the
partners to make up deficiencies of capital, shall be applied in
the following manner and o rd e r:
(i) in paying the debts of the firm to third parties ;
(ii) in paying to each partner rateably what is due to him from
the firm for advances as distinguished from ca p ita l;
(iii) in paying to each partner rateably what is due to him on
account of capital ; and
(iv) the residue, if any, shall be divided among the partners in the
proportions in which they were entitled to share profits.

Payment of 49. Where there are joint debts due from the firm, and also separate
firm debts
and of debts due from any partner, the property of the firm shall be applied in the
separate first instance in payment of the debts of the firm, and, if there is any surplus,
debts.
then the share of each partner shall be applied in payment of his separate
debts or paid to him. The separate property of any partner shall be applied
first in the payment of his separate debts, and the surplus (if any) in the
payment of the debts of the firm.

Personal 50. Subject to contract between the partners, the provisions of clause (a)
profits
earned after of section 16 shall apply to transactions by any surviving partner or by the
dissolution. representatives of a deceased partner, undertaken after the firm is dissolved on
account of the death of a partner and before its affairs have been completely
wound up :

Provided that where any partner or his representative has bough the
goodwill of the firm, nothing in this section shall affect his right to use the
firm name.
 Partnership. 185

51. Where a partner has paid a prem ium on entering in to partnership R eturn o f
p re m iu m on
fo r a fixed term , and the firm is dissolved before the expiration o f that term prem ature
otherwise than by the death o f a partner, he shall be entitled to repayment d isso lu tio n .
o f the prem ium , or o f such p a rt thereof as may be reasonable, regard being
had to the terms upon which he became a partner and to the length o f time
during w hich he was a partner, unless
(a) the dissolution is m ainly due to his own misconduct, or
(b) the dissolution is in pursuance o f an agreement containing no
provision fo r the return o f the prem ium or any part o f it.

52. Where a contract creating partnership is rescinded on the ground of R ig h ts w here

p a rtn e rs h ip
the fraud or m isrepresentation o f any o f the parties thereto, the party entitled c o n tra c t is
to rescind is, w ith o u t prejudice to any other rig h t, e n titled rescinded fo r
fra u d or
(a) to a lie n on, or a rig h t o f retention of, the surplus or the assets m isrepresen
ta tio n .
o f the firm rem aining after the debts o f the firm have been paid,
fo r any sum paid by him fo r the purchase o f a share in the
firm and fo r any capital contributed by h im ;
(b) to rank as a creditor o f the firm in respect o f any payment made
by him towards the debts o f the firm ; and
(c) to be indem nified by the partner or partners g u ilty o f the fraud or
m isrepresentation against a ll the debts o f the firm -
53. A fte r a firm is dissolved, every partner or his representative may, R ig h t to
re stra in fro m
in the absence o f a contract between the partners to the contrary, restrain i se o f firm
any other partner or his representative from carrying on a sim ilar business in nam e o r
firm
the firm name or fro m using any o f the property o f the firm fo r his own p roperty.
benefit, u n til the affairs o f the firm have been com pletely wound up :
Provided th a t where any partner or his representative has bought the
g o o d w ill o f the firm , nothing in this section shall affect his rig h t to use the
firm name.

54. Partners may, upon or in anticipatio n o f the dissolution o f the A greem ents
in re s tra in t
firm , make an agreement that some or a ll of them w ill not carry on a o f trade.
business s im ila r to th a t o f the firm w ith in a specified period or w ith in
specified local lim its ; and, notw ithstanding anything contained in section
27 o f the C ontract A c t, such agreement shall be valid if the restrictions
imposed are reasonable.

55. ( / ) In settling the accounts o f a firm a fte r dissolution, the goodw ill Sale o f g ood
w ill a fte r
shall, subject to contract between the partners, be included in the assets, and dissolution.
i t may be sold either separately or along w ith other property o f the firm .
(2) Where the g o od w ill of a firm is sold after dissolution, a partner R ig h ts of
bu ye r and
may carry on a business competing w ith th a t o f the buyer and he may s f lle r of
advertise such business, but, subject to agreement between him and the buyer, g o o d w ill.
he may not
() use the firm name,
() represent him self as carrying on the business o f the firm , or
 186 Partnership.

(c) s o lic it the custom o f persons who were dealing w ith the firm
before its dissolution.
Agreem ents
(3) A n y partner may, upon the sale o f the g oodw ill o f a firm , make an
in re s tra in t
o f trad e . agreement w ith the buyer th a t such partner w ill not carry on any business
sim ila r to that o f the firm w ith in a specified period or w ith in specified local
lim its , and, notw ithstan ding anything contained in section 27 o f the C ontract
A c t, such agreement shall be valid i f the restrictions imposed are reasonable.

C HAPTER V II.
R e g is t r a t io n o f F ir m s .
P o w e r to
e xem pt fro m 56. The President o f the U n io n may, by notification 1 in the Gazette,
ap p lica tio n o f direct that the provisions o f this C hapter shall not apply to the U nion of
th is C hapter.
Burm a or to any p a rt thereof specified in the notification .
A p p o in tm e n t 57. ( / ) The President o f the U nion may appoint Registrars o f firm s fo r the
o f R e g istra rs.
purposes o f th is A c t, and may define the areas w ith in which they shall
exercise th e ir powers and p erform th e ir duties.
(2) Every R egistrar shall be deemed to be a p u blic servant w ith in the
meaning o f section 21 o f the Penal Code.
A p p lic a tio n
fo r re g is tra 58- ( / ) The registration o f a firm may be effected a t any tim e by sending
tio n . by post or delivering to the R egistrar o f the area, in w hich any place of
business o f the firm is situated or proposed to be situated, a statement in the
prescribed fo rm and accompanied by the prescribed fee, stating
(a) the firm name,
( b) the place or p rin c ip a l place o f business o f the firm ,
(c) the names o f any other places where the firm carries on business,
(d) the date when each partner joined the firm ,
(e) the names in f u ll and permanent addresses o f the partners, and
(/) the d u ra tion o f the firm -
The statement shall be signed by a ll the partners, or by th e ir agents
specially authorized in this behalf.
(2) Each person signing the statement shall also v e rify i t in the manner
prescribed.
(3) A firm name shall n o t contain any o f the fo llo w in g words, n a m e ly:
Crown , Em peror , Empress , Em pire , Im p e ria l , K in g
Queen , R oyal , [ President , U n io n ] 2, or words
expressing or im plyin g the sanction, approval or partronage o f the
[* * * ] 3 Government o f the U n io n o f Burm a, o r any Govern
ment in In d ia or Pakistan, except when the President o f the

1 F o r n o tific a tio n d ire c tin g , in supersession of a ll previous n o tific a tio n s , that the pro visio n s o f
C hapter V I I sh a ll not a p p ly to any pa rt o f the U n io n of B u rm a o th er than th e towns of
Rangoon, K ya u kp yu , Bassein, M o u lm e in , M an d a la y and T avo y, see Burma Gazette , 1956, P a rt I ,
page 723.
2 In se rte d b y th e U n io n of B u rm a (A d a p ta tio n O f Laws) O rde r, 1948.
3 O m itte d ibid.
 Partnership- 187

U nion signifies his consent to the use o f such words as part

o f the firm name by order in w ritin g .
59. W hen the R egistrar is satisfied th a t the provisions o f section 58 Registration.
have been duly com plied w ith , he shall record an entry o f the statement in a
register called the register o f firm s, and shall file the statement.
60. ( / ) When an a lteration is made in the firm name or in the location R e co rd in g o f
a lte ra tio n s in
o f the p rin c ip a l place o f business o f a registered firm , a statement may be firm name
sent to the R egistrar accompanied by the prescribed fee, specifying the altera and p rin c ip a l
place of
tio n , and signed and verified in the manner required under section 58. business.
(2) W hen the R egistrar is satisfied th a t the provisions o f sub-section ( / )
have been duly com plied w ith , he shall amend the entry relating to the firm
in the register o f firm s in accordance w ith the statement, and shall file i t along
w ith the statement relating to the firm filed under section 59.

61. W hen a registered firm discontinues business at any place or begins N o tin g Of
c lo s in g and
to carry on business at any place, such place n o t being its p rin cip a l place o f opening o f
business, any partner or agent o f the firm may send in tim a tio n thereof to the branches.
R egistrar, w ho shall make a note o f such in tim a tio n in the entry relating to
the firm in the register o f firm s, and shall file the in tim a tio n along w ith the
statement re latin g to the firm filed under section 59.
62. W hen any partner in a registered firm alters his name or permanent N o tin g o f
address, an in tim a tio n o f th e a lte ra tio n may be sent by any partner or agent changes in
nam es and
o f the firm to the R egistrar, who shall deal w ith it in the manner provided in addresses of
section 61. partners.

63. ( I ) When a change occurs in the constitution o f a registered firm R e co rd in g o f

changes in
any incom ing, continuing or outgoing partner, and when a registered firm is and d is s o lu
dissolved any person who was a partner im m ediately before the dissolution, or tio n o f a
firm .
the agent o f any such partner or person specially authorized in this behalf,
may give notice to the R egistrar o f such change or dissolution, specifying the
date th e re o f; and the R egistrar shall make a record o f the notice in the entry
relating to the firm in the register o f firm s, and shall file the notice along w ith
the statement relating to the firm filed under section 59.
(2) When a m in or who has been adm itted to the benefits o f partnership R e co rd in g o f
w ith d ra w a l
in a firm attains m a jo rity and elects to become or not to become a partner, o f a m in o r.
and the firm is then a registered firm , he, or his agent specially authorized in
this behalf, may give notice to the Registrar th a t he has or has n o t become a
partner, and the Registrar shall deal w ith the notice in the manner provided in
sub-section ( /) .
64. ( / ) The R egistrar shall have power at a ll times to rectify any mistake R e c tific a tio n
o f m istakes.
in order to brin g the entry in the register o f firm s relating to any firm into
co n fo rm ity w ith the documents relating to that firm filed under this Chapter.
(2) On application made by a ll the parties who have signed any docu
m e nt relating to a firm filed under this Chapter, the Registrar may re ctify any
m istake in such document or in the record or note thereof made in the register
of firms.
 188 Partnership.

Amendment 65. A Court deciding any matter relating to a registered firm may direct
of register that the Registrar shall make any amendment in the entry in the register of
by order of
Court. firms relating to such firm which is consequential upon its decision; and the
Registrar shall amend the entry accordingly.

Inspection of 66. (1) The register of firms shall be open to inspection by any person
register on payment of such fee as may be prescribed.
and Hied
documents. (2) All statements, notices and intimations filed under this Chapter shall
be open to inspection, subject to such conditions and on payment of such fee
as may be prescribed.

Grant of 67. The Registrar shall on application furnish to any person, on payment
copies. of such fee as may be prescribed, a copy, certified under his hand, of any
entry or portion thereof in the register of firms.

Gules of 68. ( / ) Any statement, intimation or notice recorded or noted in the

evidence. register of firms shall, as against any person by whom or on whose behalf such
statement, intimation or notice was signed, be conclusive proof of any fact
therein stated.
(2) A certified copy of an entry relating to a firm in the register of firms
may be produced in proof of the fact of the registration of such firm, and of
the contents of any statement, intimation or notice recorded or noted therein.

Effect of non 69 ( ; ) No suit to enforce a right arising from a contract or conferred by

registration . this A ct shall be instituted in any Court by or on behalf of any person suing
as a partner in a firm against the firm or any person alleged to be or to have
been a partner in the firm unless the *m is registered and the person suing is
or has been shown in the register of firms as a partner in the firm.
(2) No suit to enforce a right arising from a contract shall be instituted
in any Court by or on behalf of a firm against any third party unless the firm
is registered and the persons suing are or have *been shown in the register of
firms as partners in the firm.
(5) The provisions of sub-sections ( / ) and (2) shall apply also to a claim
of set-off or other proceeding to enforce a right arising from a contract, but
shall not affect
(a) the enforcement of any right to sue for the dissolution of a firm
or for accounts of a dissolved firm, or any right or power to
realise the property of a dissolved firm, or
(b) the powers of the official assignee, receiver or Court under the
Rangoon Insolvency Act or the Burma Insolvency A ct to realize
the property of an insolvent partner.
(4) This section shall not apply
(a) to firms or to partnersi n firms which have no place of business in
the Union of Burma, or whose places of business in the Union
of Burma are situated in areas to which, by notification under
section 56, this Chapter does not apply, or
 Partnership- 189

(2>) to any suit or cla im o f set-off n o t exceeding one hundred rupees

in value w hich is n o t o f a k in d specified in the Second Schedule
to the Burm a Sm all Cause Courts A c t or to any proceeding in
execution or other proceeding incidental to or arising fro m any
such suit or cla im .

V7(M A n y person who signs any statement, amending statement, notice or P e n a lty fo r
fu rn is h in g
in tim a tio n under this C hapter containing any particular w hich he knows to be false
false or does not believe to be true, or containing particulars w hich he knows p a rtic u la rs .
to be incom plete or does n o t believe to be complete, shall be punishable w ith
im prisonm ent which may extend to three months, or w ith fine, or w ith both.

71. ( / ) The President o f the U nion may make rules prescribing the fees Pow er to
m ake rules.
w hich shall accompany documents sent to the Registrar o f firm s, or which
shall be payable fo r the inspection o f documents in the custody o f the
R egistrar o f firm s, o r fo r copies fro m the register o f firm s :
Provided tha t such fees shall not exceed the maxim um fees specified in
the Schedule.
(2) The President o f the U nion may make rules
(a) prescribing the fo rm o f statement submitted under section 58, and
o f the verification thereof ;
( b) re q u irin g statements, in tim a tio n and notices under sections 60, 61.
62 and 63 to be in prescribed fo rm , and prescribing the form
th e re o f;
(c) prescribing the fo rm o f the register o f firm s, and the mode in
w hich entries re latin g to firms are to be made therein, and the
mode in w hich such entries are to be amended or notes made
th e re in ;
(d) regulating the procedure o f the Registrar when disputes a rise ;
(e) regulating the filin g o f documents received by the R egistrar ;
(f) prescribing conditions fo r the inspection o f o rig in a l docum ents ;
(g) regulating the grant o f copies ;
(h) regulating the e lim in a tio n o f registers and docum ents;
(0 p rovidin g fo r the maintenance and fo rm o f an index to the register
o f firm s ; and
(/) generally, to carry out the purposes o f this Chapter-
( J ) A ll rules made under this section shall be subject to the condition o f
previous publicatio n.

CHAPTER V III.
Su p p l e m e n t a l .

72. A public notice under this A c t is given M ode of

g iv in g
(a) where it relates to the retirem ent or expulsion o f a partner fro m a p u b lic
registered firm , or the dissolution o f a registered firm , or to the n o tic e .

election to become o r not to become a partner in a registered

 190 Partnership .

firm by a person attaining m a jo rity who was adm itted as a

m inor to the benefits o f partnership, by notice to the R egistrar
o f firm s under section 63, and by publicatio n in the Gazette and
in at least one vernacular newspaper circulating in the d istrict
where the firm to w hich it relates has its place or p rin cip a l
place o f business, and
(b) in any other case, by p u blicatio n in the Gazette and in at least
one vernacular newspaper circulating in the d istrict where the
firm to w hich i t relates has its place or prin cip a l place o f
business.
73. * * * *

74. N othin g in this A c t o r any repeal effected th e re b y1 shall affect or be

Savings.
deemed to affect
(a) any rig h t, title , interest, obligation or lia b ility already acquired,
accrued or incurred before the 1st October, 1932, 2 or
( b) any legal proceeding or remedy in respect o f any such rig h t, title ,
interest, oblig a tio n or lia b ility , or anything done or suffered
before the said date, or
(c) anything done or suffered before the said date, or
{d) * * * *
(e) any rule o f insolvency relating to partnership, or
(/) any rule o f law not inconsistent w ith this A ct.

SCHEDULE.

M a x im u m F ees.

[See sub-section (1) o f section 71.]

D o c u m e n to r act in respect o f w h ich the fee is p a ya b le . M axim u m fee.

Statem ent under section 58 T hre e rupees.

Statem ent under se ctio n 63 O ne rupee.
In tim a tio n under se ctio n 61 One rupee.
In tim a tio n u n d e r se ctio n 62 One rupee.
N o tice under section 63 One rupee.
A p p lic a tio n under section 64 One rupee.
In sp ectio n of the re g is te r of firm s undei sub-section (1) of E ig h t annas fo r inspecting one volum e
se ctio n 66. o f the reg iste r.

In sp ectio n o f documents re la tin g to a firm under sub E ig h t annas fo r the in sp e ctio n of a ll

section ( 2 ) of section 66. documents re la tin g to one firm .

Copies fro m the register o f firm s ... F o u r annati fo r each h u n d re d w o rd s

o r p a rt thereof.

1 i.e. by th e In d ia n P a rtn e rsh ip A c t, 1932 (In d ia A c t IX , 1932).

2 Date o f com m encem ent o f th is A ct.
 191

TH E SOCIETIES REGISTRA TION ACT.

[ I n d ia A c t XXI, I860-] (21st May, I860.)

1- Any seven or m ore persons associated for any literary, scientific or S o cieties
form ed by
charitable purpose, or for any such purpose as is described in section 20 of m em oran
this Act, may, by subscribing their names to a memorandum of association and d u m of
asso ciatio n
filing the same with the Registrar of Companies, form themselves into a and re g is
society under this Act. tra tio n .

2. The memorandum of association shall contain the following things M em oran

dum of
(that is to say) association.
the name of the society :
the objects of the society :
the names, addresses, and occupations of the governors, council,
directors, committee or other governing body to whom, by the
rules of the society, the management of its affairs is entrusted.

A copy of the rules and regulations of the society, certified to be a

correct copy by not less than three of the members of the governing body,
shall be filed with the memorandum of association.

3. Upon such memorandum and certified copy being filed, the Registrar R e g istra tio n .
shall certify under his hand that the society is registered under this Act.
There shall be paid to the Registrar for every such registration a fee of fifty F e e s.
rupees, or such smaller fee as the President of the Union may, from time to
time, d ire c t; and all fees so paid shall be accounted for to Government.
4. Once in every year, on or before the fourteenth day succeeding the A nnual l is t
of m an a g in g
day on which, according to the rules of the society, the annual general meeting body to be
of the society is held, or, if the rules do not provide for an annual general filed.
meeting, in the month of January, a list shall be filed with the Registrar of
Companies of the names, addresses and occupations of the governors,council,
directors, committee or other governing body then entrusted with the
management of the affairs of the society.

5. The property, moveable and immoveable, belonging to a society P ro p e rty of

registered under this Act, if not vested in trustees, shall be deemed to be society ho w
vested.
vested, for the time being, in the governing body of such society, and in all
proceedings, civil and crim inal, may be described as the property of the
governing body of such society by their proper title.

6. Every society registered under this Act may sue or be sued in the Suits by and
name of the president, chairman, or principal secretary, or trustees, as shall be a g a in st
so cieties.
determined by the rules and regulations of the society, and, in default of
 192 Societies Registration.

such determination, in the name of such person as shall be appointed by the

governing body for the occasion :
Provided that it shall be competent for any person having a claim or
demand against the society to sue the president or chairman or principal
secretary or the trustees thereof, if on application to the governing body some
other officer or person be not nominated to be the defendant.

S uits n o t to
abate.
7. No suit or proceeding in any civil Court shall abate or
discontinue by reason of the person by or against whom such suit or
proceedings shall have been brought or continued dying or ceasing to fill the
character in the name whereof he shall have sued or been sued, but the
same suit or proceedings shall be continued in the name of or against the
successor of such person.

E nfo rce- 8 . If a judgment shall be recovered against the person or officer named
m en t of ju d g
m en t again st on behalf of the society, such judgment shall not be put in force against the
socitty. property, moveable or immoveable, or against the body of such person or
officer, but against the property of the society.
The application for execution shall set forth the judgment, the fact of
the party against. whom it shall have been recovered having sued or having
been sued, as the case may be, on behalf of the society only, and shall
require to have the judgment enforced against the property of the society.

R ecovery of 9. Whenever by any bye-law duly made in accordance with the rules
p e n a lty
a c c ru in g and regulations of the society, or, if the rules do not provide for the making
un d er bye- of bye-law s, by any bye-law made at a general meeting of the members of the
law .
society convened for the purpose (for the making of which the concurrent votes
of three-fifths of the members present at such meeting shall be necessary), any
pecuniary penalty is imposed for the breach of any rule or bye-law of the
society, such penalty, when accrued, may be recovered in any Court having
jurisdiction where the defendant shall reside, or the society shall be situate, as
the governing body thereof shall deem expedient.

M em bers 10. Any member who may be in arrear of a subscription which

liable to be
sued as according to the rules of the society he is bound to pay, oi who shall possess
stra n g ers. himself of or detain any property of the society in a manner or for a time
contrary to such rules, or shall injure or destroy any property of the society,
may be sued for such arrear or for the damage accruing from such detention,
injury or destruction of property in the manner hereinbefore provided.
Recovery But if the defendant shall be successful in any suit or other proceeding
by successful
d e fen d an t of
brought against him at the instance of the society, and shall be adjudged to
costs recover his costs, he may elect to proceed to recover the same from the
adjudged.
officer in whose name the suit shall be brought, or from the society, and in
the latter case shall have process against the property of the said society in
the manner above described.
 Societies Registration. 193

11. Any member of the society who shall steal, purloin or embezzle any M em bers
money or other property, or wilfully and maliciously destroy or injure any Suilty of
property of such society, or shall forge any deed, bond, security for money, p u n is h a b le as
receipt, or other instrument, whereby the funds of the society may be exposed stra n g e rs,
to loss, shall be subject to the same prosecution, and, if convicted, shall be
liable to be punished in like manner, as any person not a member would be
subject and liable to in respect of the like offence,

12. Whenever it shall appear to the governing body of any society regis- so c ieties en
tered under this Act, which has been established for any particular purpose jbt^ d to
or purposes, that it is advisable to alter, extend or abridge such purpose to or extend or
for other purposes within the meaning of this Act, or to amalgamate such abride their
society either wholly or partially with any other society, such governing body
may submit the proposition to the members of the society in a written or
printed report and may convene a special meeting for the consideration
thereof according to the regulations of the society ; but no such proposition
shall be carried into effect unless such report shall have been delivered or
sent by post to every member of the society ten days previous to the
special meeting convened by the governing body for the consideration thereof,
nor unless such proposition shall have been agreed to by the votes of three-
fifths of the members delivered in person or by proxy, and confirmed by the
votes of three-fifths of the members present at a second special meeting con
vened by the governing body at an interval of one month after the former
meeting.

13. Any number not less than three-fifths of the members of any society P rovision for
may determine that it shall be dissolved, and thereupon it shall be dissolved dissolution
of so c ieties
forthw ith, or at the time then agreed upon, and all necessary steps shall be taken and a d ju st
for the disposal and settlement of the property of the society, its claims and m en t of th e ir
affairs.
liabilities, according to the rules of the said society applicable thereto, if any, and,
if not, then as the governing body shall find expedient: provided that, in the
event of any dispute arising among the said governing body or the members
of the society, the adjustment of its affairs shall be referred to the principal
Court of original civil jurisdiction of the district in which the chief building
of the society is situate, and the Court shall make such order in the m atter
as it shall deem requisite :
Provided that no society shall be dissolved unless three-fifths of the A ssent
members shall have expressed a wish for such dissolution by their votes req u ired ,
delivered in person or by proxy at a general meeting convened for the
purpose :

Provided also that whenever the Government is a member of, or a con- G overnm ent
trib u to rto , or otherwise interested in, any society registered under this Act, consent,
such society shall not be dissolved without the consent of Government.

13
 194 Societies Registration.

U pon a d is 14. If upon the dissolution of any society registered under this Act there
so lu tio n no shall rem ain after the satisfaction of all its debts and liabilities any property
m em ber to
receive whatsoever, the same shall not be paid to or distributed among the members
profit. of the said society or any of them, but shall be given to some other society,
to be determined by the votes of not less than three-fifths of the members
present personally or by proxy at the time of the dissolution, or, in default
Clause not to thereof, by such Court as aforesaid : Provided, however, that this clause shall
a p p ly to not apply to any society which shall have been founded or established by the
jo in t stock
com panies. contributions of shareholders in the nature of a joint-stock company.

M em ber 15. For the purposes of this Act a member of a society shall be a person who,
defined. having been adm itted therein according to the rules and regulations thereof, shall
have paid a subscription or shall have signed the roll or list of members thereof,
and shall not have resigned in accordance with such rules and regulations; but
D isqualified
m em bers.
in all proceedings under this Act no person shall be entitled to vote or to be
counted as a member whose subscription at the time shall have been in arrear
for a period exceeding three months.

G ov ern in g
16. The governing body of the society shall be the governors, council,
body defined. directors, committee, trustees or other body to whom by the rules and regu
lations of the society the management of its affairs is entrusted.

17_jg, * * * *

Inspection of
19. Any person may inspect all documents fded with the Registrar under
docum ents. this Act on payment of a fee of one rupee for each inspection, and any person
may require a copy or extract of any document, or any part of any document,
to be certified by the Registrar on payment of two arinas for every hundred
C ertified words of such copy or e x tra c t; and such certified copy shall be prim a facie
eopics. evidence of the matters therein contained in all legal proceedings whatever.

T o w liat 20. The following societies may be registered under this A c t:

societies Act
a p p lie s.
charitable societies, societies established for the promotion of science,
literature, or the fine arts, for instruction, the diffusion of useful
knowledge, the diffusion of political education, the foundation
or maintenance of libraries or reading-rooms for general use
among the members or open to the public, or public museums
and galleries of paintings and other works of art, collections
of natural history, mechanical and philosophical inventions,
instruments, or designs.
 195

THE CO-OPERATIVE SOCIETIES ACT.

C O N T E N TS .

P r e l im in a r y .
Sections.
1. * * * *
2. D efinitions.
3. R egistration.
4. P ro h ib itio n o f the use o f the word co-operative.
g * - * * *

6. Power to exempt co-operative societies fro m provisions o f the A ct.

7. Power to exempt societies fro m conditions as to registration.
8. Burma Companies A c t not to apply.
9. The Registrar.
10. L ia b ility o f members o f societies.
11. L im ite d lia b ility to be set fo rth in name o f society^
12- C onditions of registration.
13. Power of R egistrar to decide certain questions.
14- R egistration and evidence thereof.
15. Am endm ent o f the bye-laws o f a society.
16. M em ber not to exercise rights t i l l due payment made.
17. Votes o f members.
18. Shares or interest not lia b le to attachment.
19. N o m in a tio n o f transferees.
20. Disposal o f share or interest o f a deceased member.
21. Disposal o f share or interest o f a member i f society wound up-
22. Disposal o f moneys due to a deceased member other than share or
interest.
23. Disposal o f share or interest o f expelled, resigned or insane members.
24. A p p lic a tio n o f Government Savings Banks A ct.
25. Discharge o f persons fro m lia b ility .
26. L ia b ility o f members-
27- R estrictions on transfer o f share or interest.

D u t ie s of So c ie t ie s -

28- Address o f co-operative societies.

29. Copy o f A c t, rules, etc-, to be open to inspection-
30- A u d it.
P r iv il e g e s of C o - o p e r a t iv e So c ie t ie s .

31- Co-operative societies to be bodies corporate.

32. Charge and set-off in respect o f shares o f interest o f member.
33. A d m is s ib ility o f copy o f document or entry as evidence.
 196 Co-operative Societies.

Sections.
34. Exem ption fro m com pulsory registration o f instrum ents relating to
shares and debentures o f co-operative society.
35. Power to exempt fro m stamp duty and registration fees.

Property and F unds of C o -o p e r a t iv e So c ie t ie s .

36- R estrictions on loans.

37- R estrictions on borrow ing.
38. R estrictions on other transactions w ith non-members.
39. Investm ent o f funds.
39A. C on trib utio n to a fund m aintained fo r supervision, etc., o f societies.
40. Funds not to be divided by way o f profit-
41. C o n trib utio n to charitable purpose.

I n s p e c t io n of A f f a ir s .

42. In q u iry by Registrar.

43. Inspection o f books o f indebted society.
44. Costs o f in q u iry .
44A. Supersession of M anaging Committee.

L iq u id a t io n a n d D is s o l u t io n .
45. W inding up-
46. W in din g up where members are less than ten.
47. L iq u id a tio n .
48. D issolution.
49. Jurisdiction o f c iv il Courts.
50. Rules-
M is c e l l a n e o u s .

51. Recovery o f sums due to Government.

THE CO-OPERATIVE SOCIETIES ACT.

[B urma A ct V I, 1927-] (4th June, 1927-)

P r e l im in a r y -

E xte n t. 11. This A c t extends to the whole o f the U nion o f Burma.

Definitions. 2- In this A c t, unless there is anything repugnant in the subject or
context,
(a) by-law means the registered by-laws fo r the tim e being in
fo rc e ;
( b) comm ittee means the governing body to whom the direction of
the affairs o f a society is e n tru ste d ;

1 In se ite d b y A c t X X X I X , 1948.
 Co-operative Societies- 197

(c) a society is said to be lim ite d where the lia b ility of its members
fo r the debts o f the society in the event o f its liq u id a tio n is
declared by its by-laws to be lim ite d ( a) to the amount payable on
the shares respectively held by the members or ( b) to such
am ount as the members may respectively undertake to
contribute to the assets o f the so cie ty;
( d) officer includes a chairm an, secretary, treasurer, member o f
committee, or other person empowered under the rules or
under the by-laws o f a society to give directions in regard
to the business o f such so cie ty;
(e) co-operative society means a society registered under this A c t ;
(f) Registrar means a person appointed to perform the duties o f a
Registrar o f co-operative societies under this A c t ; and
( g) ru le s means rules made under this A ct.

3. Subject to the provisions hereinafter contained, a society which R e g istra tio n .

has as its object the prom otion o f the economic interests o f its members in
accordance w ith co-operative principles, or a society established w ith the
object o f fa c ilita tin g the operations o f such a society, may be registered under
this A ct.

4. ( J ) N o person other than a co-operative society shall, w ith o u t the P ro h ib itio n

sanction o f the President o f the U nion, trade or carry on business under any of the use of
th e w o rd
name or title o f which the word co-operative or its vernacular equivalent co-opera
is p a rt ' provided th a t nothing in this sub-section shall apply to the use by tiv e .

any person or his successor in interest o f any name or title under which he
la w fu lly traded or carried on business on the 4th June, 1927.1
(2) W hoever contravenes the provisions o f sub-section (J) shall be
punishable with fine w hich may extend to fifty rupees, and in the case o f a
continuing offence with further fine o f five rupees fo r each day on which the
offence is continued after con viction therefor.

5. * * * *

6. The President o f the U nion may, by general or special order, exempt P ow er to

any co-operative society fro m any o f the provisions o f this A ct, or may exem pt co
operative
direct that such provisions shall apply to such society w ith such modifications societies
as may be specified in the order. fro m p ro v i
sions o f th e
Act.
7- N otw ithstanding anything contained in this A ct, the President o f the Pow er to
U nion may, by special order in each case and subject to such conditions, i f exem pt socie
tie s fro m
any, as he may impose, exempt any society fro m any o f the requirements of conditions as
this A c t as to registration. to re g is tra
tio n .
8. The provisions o f the Burma Companies A ct shall not applyB uto
rm a
co-operative societies. Com panies
A c t n o t to
apply-
1 D ate ot cotnm encem cnt of this A c t.
 198 Co-operative Societies-

T h e Regis 9. The President o f the U nion may appoint a person to be R egistrar o f

tra r. Co-operative Societies fo r the whole o f the U nion of Burma or any p o rtio n of
it, and may appoint persons to assist such R egistrar.

L ia b ilit y o f 10. Unless the President o f the U nion, by general or special order,
m em bers o f otherwise directs,
societies.
(a) a society shall be registered as lim ite d i f any of its members
is a society ; and
i {b) no society shall be registered as lim ite d by shares unless its
by-laws prescribe that no member, other than a co-operative
society as member, shall hold more than one-fifth o f the share
capital o f the society, or have any interest in the shares o f the
society exceeding three thousand rupees.

L im ite d 11. When a society is registered as lim ite d the word lim ite d or the
lia b ilit y to
be set f ir t h
vernacular equivalent shall be stated as the last word o f the name o f the society
in name o f wherever the name appears.
s o cie ty.

C o n d itio n s 12. Every application fo r the registration o f a society shall conform to

o f re g is tra the fo llo w in g requirements :
tion.
(a) the applicatio n shall be accompanied by a copy o f the proposed
by-laws o f the society which shall state the objects o f the
s o cie ty;
( b) where a ll the applicants are individuals they shall include at least
ten persons, who thereby undertake to become members o f the
so c ie ty ;
(c) every one of the applicants who is an in d ivid u a l shall be above
the age o f eighteen years ;
(d) where the objects o f the society include the creation o f funds to
be lent to its members and where a ll the applicants are
individua ls, a ll the applicants shall reside in the same tow n or
village or in the same group o f v illa g e s : provided that the
R egistrar may consent to registration on the ground that the
applicants are o f the same tribe, class, caste or occupatio n;
(e) the application shall be signed by every one o f the applicants who
is an in d ivid u a l and by a person d u ly authorized on behalf of
every society which is an a p p lic a n t;
(/) the application shall be presented to the Registrar, and the
applicants shall furnish to him a ll such in fo rm a tio n about the
society as he may require.

Po w e r of 13. The R egistrar shall decide a ll questions as to whether any

Registrar to application conform s to the requirem ents o f section 12 and whether the
decide
certain objects o f the society are in accordance w ith section 3-
questions.
1 Clause (6) in se ctio n 10 w a s d e le te d and clause (c) re n u m b e re d as c la u s - (b) ; and th e
w o rd three was s u b stitu te d fo r th e w o rd one b y A c t X X X , 1951.
 Co-operative Societies. 199

14. I f the R egistrar is satisfied that the application and the proposed
R e g istra tio n
by-laws are in order he shall, unless fo r reasons given to the applicants he and evidence
thereof.
sees fit to refuse, register the society w ith such by-laws, and shall issue to
the applicants a ce rtificate o f registration w hich shall be conclusive evidence
th at a ll the requirements of this A c t and the rules in respect o f registration
have been com plied w ith.

15- (J) Every amendment o f the by-laws o f a co-operative society Amendment

of the b y
(whether by way of cancellation, addition or alteration) shall be forwarded laws of a
by the society to the R egistrar who shall, if such amendment is in order, society.
register the amendment and issue to th e society a copy thereof certified to be
duly registered : provided th a t the R egistrar may, fo r reasons given to the
society, refuse to register the amendment.
(2) No amendment o f any by-laws shall be valid u n til its registration is
so certified.

16. N o person shall exercise the rights of a member o f a co-operative M em e b r not

to exercise
society unless or u n til he has made such payment to the society in respect o f r ig h ts t i l l
membership, or acquired such interest in the society, as may be prescribed due paym ent
by the rules or by the by-laws o f such society. m ads.

17. Each member o f a co-operative society shall have one vote only as Votes of
members.
a member in the affairs o f the s o c ie ty : provided that a co-operative society
w hich is a member o f any other co-operative society shall have as many votes
as may be prescribed by the by-laws o f such other society, and may, subject
to such by-laws, appoint any number of its members, not exceeding the
num ber o f such votes, to exercise its voting power.

18. Subject to the provisions o f section 32, the share or interest o f a Shares or
in te re s t n o t
member in the capital o f a co-operative society shall not be liable to lia b le to
attachm ent or sale under any decree or order o f a C ourt o f Justice in respect a tta chm e n t.
o f any debt or lia b ility incurred by such member, and neither the O fficial
Assignee under the Rangoon Insolvency A c t nor a Receiver under the Burm a
Insolvency A c t shall be entitled to or have any claim on such share or
interest.

19. I f the by-laws o f a co-operative society so provide, any member of Nom ination
o f trans
the society may nominate a person by name or designation to whom on such ferees.
members death his share or interest shall be transferred and any money due
to him fro m the society shall be paid-

20. When any member o f a co-operative society dies (a) the committee D isposal of
share o r
may transfer his share or interest to the nominee, i f any, nominated in in te re st o f a
accordance w ith section 19, or i f the existence and residence o f such deceased
m em ber.
nominee cannot be ascertained by the comm ittee or fo r any other reason such
transfer cannot be made w ith o u t unreasonable delay, the committee may
transfer such share or interest to any person who (notw ithstanding the
absence o f probate, letters o f adm inistration or succession certificate) appears
 ioo Co-operative Societies.

to the com m ittee to be entitled to possession o f such share or interest as

part o f the estate o f the deceased member : provided always that the
transferee shall be a person who is qualified to be the transferee o f such
share or interest in accordance w ith section 27; ( b) i f the nominee nominated
in accordance w ith section 19 or the person appearing to be entitled as
aforesaid is not qualified in accordance w ith section 27 to be the transferee
o f the share or interest o f the deceased member (i) in the case o f a lim ite d
society the com m ittee shall pay to the nominee, or to the person appearing
to be entitled as aforesaid, the value, as determ ined in accordance w ith the
rules, o f the share or in terest o f the deceased member, and shall transfer the
said share or interest to another person qualified in accordance w ith section
27 to be the transferee o f the said share or interest on receiving fro m such
person the value th e re o f; (ii) in the case of an u n lim ite d society the
com m ittee shall pay to the nominee or the person appearing to be entitled
as aforesaid the value, determined in accordance w ith the rules, o f the said
share or interest.
D isposal of
21. When a member o f a lim ite d co-operative society being its e lf a co
share or
in te re s t o f a operative society is ordered to be wound up under section 45 or section 46>
m em ber
and a liq u id a to r has been appointed under section 47, the value o f the share
i f society
w o u n d up. or interest o f the society ordered to be wound up shall on the application of
the liq u id a to r be paid to him , and the share or interest shall be transferred
by the comm ittee to another person or co-operative society qualified in
accordance w ith section 27 to be the transferee on receiving fro m such person
or society the value aforesaid.
D isposal o f 22. A l l moneys due fro m a co-operative society to a deceased member
moneys due other than payments in respect o f his share or interest in the society shall be
to a deceased
m em ber paid to the person nom inated in accordance w ith section 19 : provided that,
o ther th a n i f no person has been so nom inated or i f the existence or residence o f the
share or
in te re st. nominee cannot be ascertained by the com m ittee or i f fo r any other reason
payment cannot be made to h im w ith o u t unreasonable delay, the committee
may pay such moneys to any person appearing to the committee to be
entitled to possession o f the money as p a rt o f the estate o f the deceased
member.
Disposal o f 23. When a member o f a co-operative society is expelled or resigns in
share o r
interest of
accordance w ith the rules or the by-laws o f the society, or when a member
expelied, becomes insane,
resigned
o r insane (a) in the case o f a lim ite d society the committee shall transfer his
members. share or interest to another person qualified in accordance w ith
section 27 to be the transferee, on payment to the member who
is expelled or resigns or to the guardian o f the member who
becomes insane o f the value, determined in accordance w ith the
rules, o f the said share or in te re s t;

(b) in the case o f an u n lim ite d society the committee may either transfer
the said members share or interest to another person qualified
 Co-operative Societies-

under section 27 to be the transferee, on payment o f the value

thereof to the expelled or resigned member or the guardian of
the insane member, or, i f the by-laws so provide, may pay to
the said member or guardian the value, determined in accordance
w ith the rules, o f the said share or interest.

24. Subject to the provisions o f sections 20, 21. 22 and 23, i f any person A p p lic a tio n
to whom any money is due fro m a co-operative society dies or is a m inor o f G overn
m en t Savings
or becomes insane or otherwise incapable o f managing his affairs, the Banks A c t.
provisions o f the Governm ent Savings Banks A c t shall apply mutatis mutandis
to the payment o f such money and the powers conferred by that A c t upon
the secretary or any officer empowered under section 4 o f that A c t shall be
exercised by the committee o f the society.
25. When any transfer or payment is made in accordance w ith the D isch a rg e of
persons fro m
provisions o f sections 20, 21, 22, 23, or 24 the society and a ll persons shall be lia b ility .
discharged fro m a ll lia b ility to make such transfer or payment.

26. ( i ) The lia b ility o f the members of every co-operative society fo r L ia b ility o f
m em bers.
paym ent o f the debts o f the society on its dissolution shall be jo in t and
several, but subject in the case o f a lim ite d society to such lim ita tio n o f
am ount as shall be provided by the by-laws.
(2) Subject to any lim ita tio n o f lia b ility existing at the date of dissolu
tio n , persons who have ceased to be members o f a co-operative society shall,
fo r a period o f two years, retain th e ir lia b ility as members : provided that a
past member shall n o t be liable to contribute in respect o f any debts o f the
society w hich can be satisfied by contributions fro m present members, or in
respect o f any debt contracted after he ceased to be a member.
(3) The estate o f a deceased member shall be liable in lik e manner,
and subject to the same restrictions, fo r a period o f one year from the tim e of
his decease.
27. N o transfer or mortgage by a member of his share or interest in a R e strictio n s
co-operative society shall be valid unless on tra n s fe r o f
share or
(a) he has held such share or interest fo r not less than one year ; and in te re st.
(b) the transferee or mortgagee is a member o f such society or a person
whose application fo r membership has been accepted, or is
another society ; and
(c) the transferee or mortgagee is not p ro h ibited fro m holding such
share or interest by the provisions o f this A c t or the rules or
the by-laws of- the society relating to the m aximum amount o f a
members holding.

D u t ie s of So c ie t ie s .

28. Every co-operative society shall have an address, registered in Address o f

co-operative
accordance w ith the rules, to w hich all notices and communications may be societies.
sent, and shall send to the R egistrar notice o f every change thereof w ith in
th irty days o f such change.
 202 Co-operative Societies-

Copy of A ct, 29. Every co-operative society shall keep open to inspection free of
rules, etc. to
be open to
charge at a ll reasonable times at the registered address o f the society
in sp e ctio n. (a) a copy o f this A ct,
(b) a copy o f the rules governing such society,
(c) a copy o f the by-laws of such society, and
id) a register o f its members.

A u d it. 30. ( / ) Every co-operative society shall cause its accounts to be audited
once at least in every year by a person authorized in this behalf by the R egistrar
by special or general order.
(2) Every a u dit shall include an exam ination o f overdue debts, a
verification of the existence o f cash balances and securities, and a valuation o f
the assets and lia b ilitie s o f the society.
(3) The au dito r shall have a rig h t o f access to a ll books, papers, and
things in the possession or power o f the society fo r the purposes o f such
audit, and may call upon any officer, agent, servant or member o f the society
to fu rn ish such in form a tion and to render such assistance as may be reasonably
required fo r the purpose o f such audit.
(4) I f any person fa ils to fu rn ish in fo rm a tio n or render assistance as
required by sub-section (5) he shall, on conviction by a M agistrate o f the
first class, be lia ble to a fine o f rupees two hundred in respect o f such default.

P r iv il e g e s of C o -o p e r a t iv e So c ie t ie s .

C o-op e ra tive 31. The registration o f a society shall render it a body corporate by the
so cieties to
be bodies
name under which it is registered, w ith perpetual succession and a common seal,
corporate, and w ith power to hold property, to enter in to contracts, to institute and
defend suits and other legal proceedings and to do a ll things necessary fo r
the purposes o f its constitution.

Charge and 32. Every co-operative society shall have a charge upon the share or
set-off in re s
pect o f shares
interest in the capital and upon the deposits o f a member or past member,
o r in te re st o f and upon any dividend, bonus or profits payable to a member or past member
m em ber.
in respect o f any debt due fro m such member or past member to the society
and may set-off any sum credited or payable to a member or past member in
or towards payment o f any such debt.

A d m is s ib ility 33. ( / ) A copy o f any entry in any book, register or lis t regularly kept
o f copy in the course o f business in the possession o f a co-operative society shall,
o f document
o r e n try as
i f certified in such manner as may be prescribed by the rules, be admissible in
evidence. evidence o f the existence of the document or entry.
(2) In the case o f such co-operative societies as the President of the
U nion by general or special order may direct, no officer o f a society shall, in
any legal proceedings to which the society is not a p a rty, be com pelled to
produce any o f the societys books the contents o f which can be proved
under sub-section ( /) , or to appear as a witness to prove the matters,
 Co-operative Societies- 205

transactions and accounts therein recorded, unless by order o f the C ourt or

a Judge made fo r special cause.

E xe m p tio n
34. N othing i r section 17, sub-section (7), clauses ( b ) and (c), o f the fro m co m p u l
R egistratio n A c t snail apply to so ry re g is tra
tio n o f in s tru
(ia) any instrum ent relating to shares in a co-operative society, ments r e la t
notw ithstanding th at the assets o f such society consist in whole in g to shares
and deben
or in part o f immoveable property ; or tures of co
(b) any debenture issued by any such society and not creating, o p e ra tive
society.
declaring, assigning, lim itin g or extinguishing any rig h t, title or
interest to or in immoveable property, except in so fa r as it
entitles the holder to the security afforded by a registered in stru
ment whereby the society has mortgaged, conveyed or otherwise
transferred the whole or part o f its immoveable property or any
interest therein to trustees upon trust fo r the benefit o f the
holders o f such debentures ; or
(c) any endorsement upon or transfer o f any debenture issued by any
such society.

35. The President o f the U n io n may, by n o tifica tio n , in the case o f any P ow er to
exem pt fro m
co-operative society or class o f co-operative societies, re m it stam p d u ty
(a) the stam p-duty w ith w hich, under any law fo r the tim e being in and re g is tra
tio n fees.
force, instrum ents executed by or on behalf o f a co-operative
society, or by an officer or member and relating to the business
o f such society, or any class o f such instruments, are respec
tiv e ly chargeable ; and
(b) any fee payable under the law o f registration fo r the tim e being
in force.

Property and F unds of C o - o p e r a t iv e So c ie t ie s .

,36. (1) A co-operative society shall n o t make a loan to any person R e striction s
on loans.
other than a m ember : provided that, w ith the general or special sanction o f
the R egistrar, a co-operative society may make loans to another co-operative
society-
(2) The President o f the U nion may, by general or special
order, p ro h ib it or restrict the lending o f money on mortgage o f immoveable
property by any co-operative society or class o f co-operative societies.

37. A co-operative society shall receive deposits and loans from persons
R e strictio n s
who are not members only to such extent and under such conditions as may on b o rro w
in g .
be prescribed by the rules or by-laws, and shall in respect o f such deposits
or loans make such provision fo r the maintenance o f fluid resource as the
Registar may, by general or special order in this behalf, prescribe.
 204 Co-operative Societies-

R e striction s 38. ( i ) The transactions o f a co-operative society w ith persons other

on o ther
tran sa ctio n s
than members shall be subject to such other p ro h ib itio n s and restrictions,
w ith n o n i f any, as the President o f the U nion may, by rule, prescribe.
m em bers.
1 (2) In m aking any rule under sub-section ( /) , the President o f the
U nion may direct th a t a breach thereof shall be punishable w ith im prison
ment fo r a term which may extend to one year, or w ith fine which may extend
to one thousand rupees, or w ith both.
Investm ent
o f fu n ds.
39. ( / ) A co-operative society may invest or deposit its funds
(a) in the Government Savings Bank, or
( b ) in any o f the securities specified in section 20 o f the Trusts
A c t, or
(c) in the shares or on the security o f any other co-operative society, or
(d) w ith any bank or person carrying on the business o f banking,
approved fo r this purpose by the R egistrar, or
(e) in any other mode perm itted by the rules.
(2) A n y investments or deposits made before the 4th June, 19272, which
w ould have been valid i f this A c t had been in force are hereby ratified and
confirmed.
C o n trib u tio n 3 39A. Every co-operative society shall pay, out o f its annual gross
to a fu n d
m a in ta in e d profits a c o n trib u tio n at such rate and in such manner as may be prescribed
fo r s u p e rv i by rules, towards a fund to be m aintained fo r the supervision, organization
sion, etc., of
societies. and education o f co-operative societies, or fo r such other sim ila r purposes as
may be determ ined by the Registrar-

Funds n o t to 40. N o part o f the funds o f a co-operative society shall be divided by

be d ivid e d by way o f bonus or dividend or otherwise among its members :
w ay of p ro fit.
Provided tha t after at least one-fourth o f the net profits in any year
have been carried to a reserve fund, payments fro m the remainder o f such
profits and fro m any profits o f past years available fo r d is trib u tio n may be
made among the members to such extent and under such conditions as may
be prescribed by the rules or by-laws :
Provided also th a t in the case o f a co-operative society which is not
lim ite d no d is trib u tio n o f profits shall be made w ith o u t the general or special
order o f the President o f the U nion in this behalf-

C o n trib u tio 41- A n y co-operative society may, w ith the sanction o f the Registrar,
to c h a rita b le after one-fourth o f the net profits in any year has been carried to the reserve
pupose.
fund, contribute an am ount not exceeding ten per cent- o f the rem aining
net profits to any charitable purpose, as defined in section 2 o f the Charitable
Endowments A ct-

1 In s e rte d by A ct X X X , 1951.
2 Date o f com m encem ent o f th is A c t.
3 In se rte d by A c t X L lX , 1954.
 Co-operative Societies. 205

I n s p e c t io n o f A f f a ir s .

42. ( / ) The R egistrar may o f his own m otion, by him self or by a I n q u ir y by

R e g is tra r.
person duly authorized by him in w ritin g in this behalf, hold an in q u iry into
the co n stitu tion , w orking and financial condition o f a co-operative society.
(2) The R egistrar shall hold such an in q u iry as is contemplated in
sub-section ( 1)
( a) on the application o f a m a jo rity o f the committee o f the society ;
( b) on the app lica tio n o f not less than one-third o f the members o f
the society.
(5) A ll officers and members o f the society whose affairs are investigated
shall fu rn ish such in fo rm a tio n in th e ir possession in regard to the affairs o f
the society as the R egistrar or the person authorized by the R egistrar may
require.
(4) The result o f any in q u iry under this section shall be communicated
to the society whose affairs have been investigated.

43. ( / ) The Registrar shall, on the application of a creditor o f a co In sp e ctio n o f

books o f
operative society, inspect, or direct some person authorized by him by order indebted
in w ritin g in this behalf to inspect, the books o f the society : provided th a t society.

(a) the applicant satisfies the R egistrar that the debt is a sum then due
and tha t he has demanded payment thereof and has not received
satisfaction w ith in a reasonable tim e ; and
( b) 'he applicant deposits w ith the Registrar such sum as security fo r
the costs o f the proposed inspection as the Registrar may
require.
(2) The R egistrar shall communicate the results o f any such inspection
to the creditor.

44. Where an in q u iry is held under section 42, or an inspection is made Costs of
under section 43, the R egistrar may apportion the costs, or such p a rt o f the in q u iry .

costs as he may th in k rig h t, between the society, the members or creditor

demanding the in q u iry or inspection, the officers or form er officers, and
members or past members o f the society.

1 44A- ( / ) I f , in the opinion o f the R egistrar, the com mittee o f any

registered society is mismanaging the affairs o f the society, he may, by order
in w ritin g , a fte r giving the com m ittee an opp o rtu n ity to state its objections,
i f any, dissolve the com m ittee and direct th a t a ll or any o f its members shall
be disqualified fro m being elected to the com m ittee o f the society fo r a
period to be specified in the order not exceeding three years :
Provided th a t the R egistrar may fro m tim e to tim e extend the period
specified in such order fo r fu rth e r periods not exceeding one year at a tim e,
and n o t exceeding in the aggregate, two years.

Inserted by A ct X X I I I , 1948,
 206 Co-operative Societies-

Every order o f ibe R egistrar under this sub-section shall state the reasons
fo r w hich i t is made and shall be communicated by registered post to the
registered society concerned.
(2) When a committee is dissolved under sub-section U ), the society
shall elect a fresh committee '
Provided th a t so long as an order under sub-section ( i ) remains in force,
no member shall h old office except w ith the approval o f the Registrar.
(J) I f the society fa ils or refuses to elect a fresh comm ittee under sub
section (2), the R egistrar may
(a) require an officer o f the society to call a general meeting at such
tim e and place at the headquarters o f the society, and require
the society to take in to consideration such matters, as he may
direct, and
( b ) i f such officer refuses or fa ils to call such a meeting or i f there be
no quorum at a meeting so convened, call such meeting him self
by giving notice to the members in such manner as he may
consider reasonable, notw ithstanding any rules or by-laws
prescribing the period o f notice fo r calling a general meeting of
the society. A n y meeting so convened by the Registrar shall
have a ll the powers o f a general meeting convened under the
by-laws o f the society.

(4) N oth ing in this section shall be deemed to affect the powers o f the
R egistrar to order the w inding up o f a society under section 45 or to cancel
the registration o f the society under sub-section (2) o f section 48-
(5) A n appeal shall lie fro m an order of the R egistrar under sub-section
(J ) to the Government on application made by any member o f the
com m ittee w ith in three months fro m the date o f com m unication o f the order
to the registered society concerned, and the order o f the Government thereon
shall be final-
L iq u id a t io n and D is s o l u t io n .

W in d in g up. 45- ( i ) I f the R egistrar, after an in q u iry has been held under section 42
or after an inspection has been made under section 43 or on receipt o f an
a pplication made by three-fourths o f the members o f a co-operative society, is
o f o p inion th a t the society ought to be dissolved, he may order the society
to be wound up.
(2) A n y member o f a co-operative society may, w ith in two months fro m
the date o f an order made under sub-section ( /) , appeal from such order.
(J) Where no appeal is presented w ith in two months fro m the making
o f an order fo r the w inding up o f a co-operative society the order shall take
effect on the expiry o f that period.
(4) Where an appeal is presented w ith in two months, the order shall not
take effect u n til it is confirmed by the appellate a u th o rity.
(5) The a u th o rity to which appeals under this section shall lie shall be
the President o f the U nion : provided that the President o f the U nion may,
 Co-operative Societies- 207

by n otification , direct th at appeals shall lie to such other a u thority as may

be specified in the notification .

46. In the case of a co-operative society o f w hich a ll the members are W in d in g up

individuals, the R egistrar may order the society to be wound up if at any w h e n m em
bers are less
tim e it is proved to his satisfaction that the num ber o f the members has th a n ten.
been reduced to less than ten.

47. (1) Where the R egistrar has passed an order under section 45 or Liquidation.
section 46 fo r the w inding up o f a co-operative society, he may fo rth w ith
a ppoint a competent person to be liq u id a to r, and such person, notw ithstan
ding anything in section 45 relating to the tim e when the order fo r w inding
up shall take effect, shall have power to take immediate possession of all
assets belonging to the society, and of a ll books, records and other documents
pertaining to the business thereof, and to carry on the business o f the society
so fa r as may be necessary fo r the beneficial w inding up o f the same-
(2) A liq u id a to r appointed under sub-section ( 1) shall, as soon as the
order of w inding up takes effect, have power
(a) to institute and defend suits and other legal proceedings on behalf
o f the society by his name or office ;
( b ) fro m tim e to tim e to determine the debts payable and the co ntribu
tio n to be made or rem aining to be made by the members or
past members, or by the estates or nominees, heirs or legal
representatives o f deceased members, or by any officer, to the
assets o f the society. In the case o f a society w hich is not
lim ite d such contribution s shall be determined at the discretion
o f the liq u id a to r both as to the persons who shall be called
upon to pay and the amounts which they shall pay, but w ith o u t
prejudice to any rig h t o f co n trib u tio n amongst themselves ;
(c) to investigate a ll claim s against the society, and, subject to the
provisions o f this A ct, to decide questions o f p rio rity arising
between claim ants ;
(d) to determine by w hat persons and in what proportions the costs
o f the liq u id a tio n are to be b o rn e ;
(e) in the case o f a society w hich is a member o f a co-operative
society established w ith the object o f guaranteeing sums
borrowed by co-operative societies w hich are its members, to
determine, in accordance w ith the by-laws o f such guaranteeing
society, at any stage o f the proceedings the amounts which
the other members o f such guaranteeing society shall severally
contribute towards the discharge o f the debts guaranteed
by it.

(3) Subject to any rules, a liq u id a to r appointed under this section shall,
in so fa r as such powers are necessary fo r carrying out the purposes o f this
section, have power to summon and enforce the attendance o f witnesses and
to compel the production o f documents by the same means and (so fa r as
 208 Co-operative Societies.

may be) in the same manner as is provided in the case o f a c iv il C ourt

under the Code o f C iv il Procedure-
(4) Where an appeal fro m any order made by a liq u id a to r under this
section is provided fo r by the rules, it shall lie to the C ourt o f the D is tric t
Judge.
(5) Orders made under this section shall, save as provided fo r by
section 51, on application, be enforced as follow s :
(a) when made by a liq u id a to r, by any c iv il C ourt having local
ju risd ictio n in the same manner as a decree o f such Court ;
( b) when made by the C ourt o f the D is tric t Judge on appeal, in the
same manner as a decree o f such C ourt made in any suit
pending therein.

D issolution. 48. ( / ) The Registrar may cancel an order fo r the w inding up o f a

co-operative society in any case where, in his opinion, the society should
continue to exist.
(2) In any other case the Registrar shall, after considering the final
report of the liq u id a to r, i f any has been appointed, order the registration o f
the society to be cancelled, and thereupon the society shall cease to exist as
a corporate body-

J u risdiction 49. Save in so fa r as is hereinbefore expressly provided, no c iv il C ourt

o f c iv il
Courts.
shall have any ju ris d ic tio n in respect o f any m atter connected w ith the
dissolution or w inding up o f a co-operative society under this A ct.

R ules. 50. ( / ) The President o f the U nion may, fo r the whole or any p a rt o f
the U nion o f Burm a and fo r any co-operative society or class o f co-operative
societies, make rules to carry out the purposes o f this A ct.
(2) In particular, and w ith o u t prejudice to the generality o f the
foregoing power, such rules may
(a) prescribe, subject to the provisions of section 10, the maximum
number o f shares or po rtio n o f the capital o f a society which
may be held by a member ;
( b) prescribe the form s to be used and the conditions to be com plied
w ith in the m aking o f applications fo r the registration o f a
society, and the procedure in the m atter o f such applications ;
(c) prescribe the matters in respect o f which a co-operative society
may or shall make by-laws, and fo r the procedure to be follow ed
in m aking, altering and abrogating by-laws, and the conditions
to be satisfied p rio r to such making, alteration or abrogation ;
(id) prescribe the conditions to be com plied w ith by persons applying
fo r admission or adm itted as members, and provide fo r the
election and admission o f members, and the payments to be
made and the interests to be acquired before the exercise o f
the rig h t o f membership ;
(e) regulate the manner in w hich funds may be raised by means o f
shares or debentures or otherwise ;
 Co-operative Societies- 209

(/) provide fo r general and special meetings o f the members, and fo r

the procedure at such meetings, and the resolutions to be
passed at, and the powers to be exercised by, such m eetings;
(g) provide fo r the appointm ent, suspension and removal o f the
members o f the committee and other officers, and fo r the
procedure at meetings o f the committee, and fo r the powers to
be exercised and the duties to be performed by the committee
and other officers ;
(h) prescribe the accounts and books to be kept by a co-operative
society, and provide fo r the a u d it o f such accounts and the
charges, i f any, to be made fo r such audit, and fo r the
periodical publica tio n o f a balance sheet showing the assets
and lia b ilitie s o f a society ;
(0 prescribe the returns to be submitted by a co-operative society
to the R egistrar, and provide fo r the persons by whom and
the fo rm in which such returns shall be su b m itte d ;
(/) provide fo r the persons by whom and the fo rm in w hich copies o f
entries in books o f co-operative societies may be certified, and
fo r the charges to be levied fo r such copies;
( k) provide fo r the fo rm a tio n and maintenance o f a register o f
members and, where the lia b ility o f the members is lim ite d by
shares, o f a register o f shares;
(/) provide th at any dispute touching the business o f a co-operative
society between members or past members o f the society, or
persons claim ing through a member or past member, or
between a member or past member or persons so claim ing
and the comm ittee or any officer, shall be referred to the
R egistrar fo r decision or, i f he so directs, to a rb itra tio n , and
prescribe the mode o f appointing an a rb itra to r or arbitrators,
and the procedure to be follow ed in proceedings before the
R egistrar or such a rb itra to r or arbitrators, and the enforcement
o f the decisions o f the R egistrar or the awards o f arbitrators ;
(m) provide fo r the mode in w hich the value o f the share or interest
shall be ascertained fo r the purposes o f sections 20, 21 and 23,
and fo r the nom ination o f transferees under section 19;
(n) prescribe the payments to be made and the conditions to be
com plied w ith by members applying fo r loans, the periods fo r
w hich loans may be made, and the amount which may be lent
to an in d ividu a l member ;
(o) provide fo r the fo rm a tion and maintenance o f reserve funds, and
the objects to w hich such funds may be applied, and fo r the
investm ent o f any funds under the control o f the so cie ty;
(p) prescribe the extent to w hich a co-operative society may lim it the
number o f its members ;
(q) prescribe the conditions under w hich profits may be distrib u te d to
the members o f a co-operative society w ith unlim ited lia b ility ,

14
 210 Co-operative Societies.

and the m axim um rate o f dividend which may be paid by co

operative societies;
(r) subject to the provisions o f section 45, determine in w hat cases an
appeal shall lie fro m the orders o f the R egistrar, and prescribe
the procedure to be follow ed in presenting and disposing o f
such appeals ;
(s) prescribe the procedure to be follow ed by a liq u id a to r appointed
under section 47, and the cases in which an appeal shall lie
from the order o f such liq u id a to r ; and
(?) prescribe the rem uneration which shall be payable to headmen or
others employed to collect sums recoverable under section 51
in the same manner as arrears o f land-revenue.
(5) The President o f the U nion may delegate, subject to such conditions,
i f any, as he thinks fit, a ll or any o f his powers to make rules under this
section to any a u th o rity specified in the order o f delegation.
(4) The power to make rules conferred by this section is subject to the
condition o f the rules being made after previous publication.
(5) A ll rules made under this section shall be published in the Gazette.

M is c e l l a n e o u s .

Recovery of 51. ( / ) A ll sums due fro m a co-operative society, or fro m an officer or

sums due to
G overnment,
member or past member o f a society as such, to the Government, and a ll
sums awarded as costs under section 44, or payable by order o f a liq u id a to r
under section 47, shall be recovered in the same manner as arrears o f land-
revenue on a requ isition being made by the Registrar to the C ollector.
(2) Sums due fro m a co-operative society and recoverable under
sub-section ( I ) may be recovered, firs tly , fro m the property o f the society,
and secondly, in the case o f a society o f which the lia b ility o f the members is
lim ite d , fro m the members subject to the lim it o f their lia b ility , and, in the
case o f other societies, fro m the members.

THE BURMA COMPANIES ACT.

C O N TEN TS.

PART I.
P r e l im in a r y .
Sections-
1. * * * *
2. Definitions.
3. Jurisdiction o f the Courts.

P A R T II.
C o n s t it u t io n and I n c o r p o r a t io n .

4. P roh ib ition o f partnerships exceeding certain number.

 Companies 211

Memorandum o f Association.

Sections.
5. M ode of form ing incorporated company.
6. M em orandum o f company lim ite d by shares.
7. M em orandum o f company lim ite d by guarantee.
8. M em orandum o f u nlim ited company.
9. P rintin g and signature o f memorandum.
10. R estriction on alteration o f memorandum.
11. Name o f company and change o f name.
12. A lte ra tio n o f memorandum.
13. Power o f C ourt when confirm ing alteration.
14. Exercise o f discretion by Court.
15. Procedure on confirm ation o f the alteration.
16. Effect of fa ilu re to register w ith in three months.

Articles of Association.

17. R egistration o f articles.

18. A p p lic a tio n o f Table A .
19. F orm and signature o f articles.
20. A lte ra tio n o f articles by special resolution.
20A. Effect o f alteration in memorandum or articles.

General Provisions-
21. Effect of memorandum and articles.
22. R egistration o f memorandum and articles.
23. Effect o f registration-
24. Conclusiveness o f certificate o f incorporation.
25. Copies o f memorandum and articles to be given to members.
25A. A lte ra tio n o f memorandum and articles to be noted in every copy.

Associations not for Profit.

26- Power to dispense w ith L im ite d in name o f charitable and other
companies.
Companies limited by guarantee.
27. P rovision as to companies lim ite d by guarantee.

PART III.

Sh a r e C a p it a l , R e g is t r a t io n of U n l im it e d C o m pa n y as L im it e d , and U n

l im it e d L ia b il it y of D ir e c t o r s .

Distribution of Share Capital.

28. Nature o f shares.
29. Certificate o f shares or stock.
30. D e finitio n o f member.
212 Companies.

Sections.
31. Register o f members.
31 A . Index o f members o f company.
32./ A nn ua l lis t o f members and summary.
33. Trusts not to be entered on register.
34. T ransfer o f shares.
35. Transfer by legal representative.
36. Inspection o f register o f members.
37. Power to close register.
38. Power o f C ourt to re ctify register.
39. Notice to R egistrar o f rectification o f register.
40. R egister to be evidence.
41. Power o f company to keep branch register in the U nited Kingdom-
42. Regulations as to B ritis h register.
43. Issue o f share-warrants to bearer.
44. Effect o f share- w arrant.
45. R egistration o f name o f bearer o f share-warrant.
46. Position o f bearer o f share-warrant.
47. E ntries in register when share-warrant issued.
48. Surrender o f share-warrant.
49. Power o f company to arrange fo r different amounts being paid on shares.
50. Power o f company lim ite d by shares to alter its share capital.
51. Notice to R egistrar o f consolidation o f share capital, conversion o f shares
in to stock, etc.
52. Effect o f conversion o f shares in to stock.
53. Notice o f increase o f share capital or o f members.
54. Reorganization o f share capital.

Reduction of Share Capital.

54A. R estrictions on purchase by company or loans by company fo r p u r

chase o f its own shares.
55. R eduction o f share capital.
56. A p p lic a tio n to C ourt fo r confirm ing order.
57. A d d itio n to name o f company o f and reduced.
58. Objections by creditors and settlement o f lis t o f objecting creditors.
59. Power to dispense w ith consent o f creditor on security being given fo r
his debt.
60. O rder confirm ing reduction.
61. R egistration o f order and m inute o f reduction.
62. M in ute to form pa rt o f memorandum.
63. L ia b ility o f members in respect o f reduced shares.
64. Penalty on concealment o f name o f creditor.
65. Publication o f reasons fo r reduction.
66. Increase and reduction o f share capital in case of a company lim ite d by
guarantee having a share capital.
 Companies. 213

Variation o f Shareholders' Rights.

Sections.
66A. R ights o f holders o f special classes o f shares.

Registration of Unlimited Company as Limited.

67. R egistration o f u n lim ite d company as lim ite d .

68. Power o f u n lim ite d company to provide fo r reserve share capital on
registration.

Reserve Liability of Limited Company.

69. Reserve lia b ility of lim ite d company.

Unlimited Liability of Directors.

70. L im ite d company may have directors w ith unlim ited lia b ility .
71. Special resolution o f lim ite d company making lia b ility o f directors
unlim ited.

P A R T IV .

M anagement and A d m in is t r a t io n .

Office and Name-

72. Registered office o f company.

73. P ublication o f name by a lim ite d company.
74- Penalties fo r non-publication o f name.
75. P ublication o f authorized as w ell as subscribed and paid-up capital.

Meetings and Proceedings.

76. A nn ua l general meeting.

7Y. Statutory meeting o f company.
78. C alling o f extraordinary general meeting on requisition.
79. Provisions as to meetings and votes.
80. Representation o f companies at meetings o f other companies o f which
they are members.
81. E x trao rd ina ry and special resolutions.
82. R egistration and copies o f special and extraordinary resolutions.
83. M inutes o f proceedings o f general meetings and o f its directors.

Directors.

83A. D irectors obligato ry.

83B. A ppointm e nt o f directors.
84. Restrictions on appointm ent or advertisement o f director-
85. Q ualification o f director*
214 Companies.

Sections.
86. V a lid ity o f acts o f directors.
86A. In e lig ib ility o f bankrupt to act as director.
86B. Assignm ent o f office by directors.
86C. Avoidance o f provisions relie ving lia b ility o f directors.
86D. Loans o f directors.
86E. D ire cto r n o t to hold office o f profit.
86F. Sanction o f directors necessary fo r certain contracts.
86G. Rem oval o f directors.
86H. R estrictions on powers o f directors.
861. V acation o f office o f director.
87- Register o f directors, managers and managing agents.

Managing Agents.
87A . D u ra tion o f appointm ent o f managing agent.
87B. C onditions applicable to managing agents.
87C. Rem uneration o f managing agent.
87D. Loans to managing agents.
87E. Loans to or by companies under the same management.
87F. Purchase by company o f shares o f company under same managing
agent.
87G. R estriction on managing agents powers o f management.
87H . M anaging agent not to engage in business competing w ith the business
o f managed company.
871. L im it on number o f directors appointed by managing agent.

Contracts.
88. Form o f contracts.
89. B ills o f exchange and prom issory notes.
90. Execution o f deeds.
91. Power fo r company to have official seal fo r use abroad.
91 A . Disclosure o f interest by director.
9 IB - P ro h ib itio n o f voting by interested director.
91C. Disclosure to members in case o f contract appointing a manager.
9 ID - Contracts by agent o f company in which company is undisclosed
p rin cip a l.

Prospectus.
92. F ilin g o f prospectus.
93. Specific requirements as to particulars o f prospectus.
94. M eaning o f vendor in section 93.
95. A p p lic a tio n o f section 93 to the case o f property taken on lease.
96. In v a lid ity o f certain conditions as to w aiver or notice.
97. Saving in certain cases o f non-compliance w ith section 93.
98. O bligations o f companies where no prospectus is issued.
 Companies. 215

Sections-
98A- Docum ent offering shares o r debentures fo r sale to be deemed a
prospectus.
99- R estriction on alteration o f terms mentioned in prospectus or statement
in lieu o f prospectus.
100. L ia b ility fo r statements in prospectus.

Allotment-
101. R estriction as to allotm ent.
102. Effect o f irre g ula r allotm ent.
103. R estrictions on commencement o f business.
104. R eturn as to allotm ents.

Commissions and Discounts.

105. Power to pay certain commissions and p ro h ib itio n o f payment of a ll
other commissions, discounts, etc.
105A. Power to issue shares at a discount.
105B. Issue o f redeemable preference shares.
105C. Further issue o f capital.
106. Statement in balance-sheet as to commissions and discounts.

Payment of Interest out of Capital.

107. Power o f company to pay interest out o f capital in certain cases.

Certificates of Shares, etc.

108. L im ita tio n o f tim e fo r issue o f certificates.

Information as to Mortgages, Charges, etc.

109. C ertain mortgages and charges to be void i f not registered.
109A. R egistration o f charges on properties acquired subject to charge.
110. Particulars in case of series o f debentures en titlin g holders pari passu-
111. Particulars in case o f commission, etc., on debentures.
112. Register o f mortgages and charges.
113. Index to register o f mortgages and charges.
114. Certificate o f registration.
115. Endorsement o f certificate o f registration on debenture or certificate of
debenture stock.
116. D uty o f company and rig h t o f interested party as regards registration.
117. Copy o f instrum ent creating mortgage or charge to be kept at registered
office.
118. Registration o f appointm ent o f receiver.
119. F ilin g o f accounts o f receivers.
120. R ectification o f register o f mortgages.
121. R egistration o f satisfaction o f mortgages and charges.
122. Penalties.
216 Companies .

Sections-
123. Com panys register o f mortgages.
124. R ig h t to inspect copies o f instruments creating mortgages and charges
and com pany s register o f mortgages.
125. R ig h t to inspect the register o f debenture-holders and to have copies
o f trust-deed.
125A. T ran sitory provisions as respects Indian companies.

Debentures and Floating Charges.

126. Perpetual debentures.
127. Power to re-issue redeemed debentures in certain cases.
128. Specific performance o f contract to subscribe fo r debentures.
129. Payments o f certain debts out o f assets subject to floating charge in
p rio rity to claim s under the charge.

Statements, Books and Accounts.

130. Books to be kept by company and penalty fo r not keeping proper books.
131. A nnual balance-sheet.
131A. D irectors report.
132. Contents o f balance-sheet.
132A . Balance-sheet to include particulars as to subsidiary companies.
133. A u the n tica tio n o f balance-sheet.
134- Copy o f balance-sheet to be forwarded to the R egistrar.
135- R ig h t o f member o f company to copies o f the balance-sheet and the
a u d ito rs report.

Statement to be published by Banking and certain other Companies.

136. C ertain companies to publish statement in schedule.

Investigation by the Registrar.

137. Power o f Registrar to call fo r in form ation or explanation.

Inspection and Audit.

138. Investigation o f affairs o f company by inspectors.

139. A p p lic a tio n fo r inspection to be supported by evidence.
140- Inspection o f books and exam ination o f officers.
141- Results o f exam ination how dealt w ith .
141A. In s titu tio n o f prosecutions.
142. Power o f company to appoint inspectors.
143. R eport of inspectors to be evidence.
144. Q ualifications and appointm ent of auditors.
145. Powers and duties o f auditors.
146. R ights o f preference shareholders, etc., as to receipt and inspection o f
reports, etc.
 Com panies 217

Carrying on Business with less than the L egal M inim um of Members-

Sections.
147- Liability for carrying on business with fewer than seven, or, in the
case of a private company, two members.

Service and Authentication of Documents.

148. Service of documents on company.

149. Service of documents on Registrar-
150. Authentication of documents.

T ables, Forms and R u les as to Prescribed M atters.

151. Application and alteration of tables and forms, and power to make rules
as to prescribed matters.

Arbitratio n and Com prom ise.

152. Power for companies to refer m atters to arbitration-
153. Power to compromise with creditors and members.
153A- Provisions for facilitating arrangements and compromises.
153B. Power to acquire shares of shareholders dissenting from schemes or
contract approved by majority.
Conversion o f Private C om pany into Public C om pany.
154- Conversion of private company into public company.

PA RT V.
W in d in g up.

Preliminary.
155. Mode of winding up-
Contributories.
156. Liability as contributories of present and past members.
157. Liability of directors whose liability is unlimited.
158. Meaning of contributory.
159. Nature of liability of contributory.
160. Contributories in case of death of member.
161. Contributories in case of insolvency of member.
W inding up by Court.

162. Circumstances in which company may be wound up by Court.

163. Company when deemed unable to pay its debts.
164- Winding up may be referred to District Court.
165. Transfer of winding up from one District Court to another.
218 Companies.

Sections.
166- Provisions as to applications fo r w inding up.
167. Effect o f w inding up order.
168. Commencement o f w inding up by C ourt.
169. C ourt may grant injun ctio n .
170. Powers o f C ourt on hearing p e titio n .
171. Suits stayed on w inding up order.
171A. Vacancy in the office o f liq u id a to r.
172. Copy o f w inding up order to be filed w ith R egistrar.
173. Power o f C ourt to stay w inding up-
174. C o urt may have regard to wishes o f creditors or contributories.

Official Liquidators.
175. A p p o in tm e n t o f official liq u id a to r.
176. Resignations, removals, fillin g up vacancies and compensation.
ll l . O fficial liq u id a to r.
177A. Statement o f affairs to be made to the liq u id a to r.
177B. Statement by liq u id a to r.
178. Custody o f companys property.
178A. Com m ittee o f inspection in com pulsory w inding up.
179- Powers o f official liq u id a to r.
180- D iscretion o f official liq u id a to r.
181. P rovision fo r legal assistance to official liq u id a to r.
182. L iq u id a to r to keep books containing proceedings o f meetings and to
subm it account o f his receipts to C ourt.
183. Exercise and control o f liq u id a to rs powers.

Ordinary Powers of Court-

184. Settlement o f lis t o f contributorie s and application o f assets.
185. Power to require delivery o f property.
186. Power to order payment o f debts by co n trib u to ry-
187. Power o f C o u rt to make calls.
188. Power to order payment in to bank-
189. Regulation o f account w ith C ourt.
190. Order on c o n trib u to ry conclusive evidence.
191. Power to exclude creditors not proving in tim e.
192. A djustm ent o f rig hts o f contributories.
193. Power to order costs.
194. D isso lu tio n o f company.

Extraordinary Powers of Court.

195. Power to summon persons suspected o f having property o f company.
196. Power to order p ublic exam ination o f promoters, directors, etc.
197. Power to arrest absconding con tributory.
198. Saving o f other proceedings.
 Companies. 219

Enforcement of and Appeal from Orders.

Sections.
199. Power to enforce orders.
200. O rder made in any C o u rt to be enforced by other Courts.
201. Mode o f dealing w ith orders to be enforced by other Courts.
202. Appeals fro m orders.

Voluntary Winding up-

203- Circumstances in w hich company may be wound up vo lu n ta rily.
204- Commencement o f v olu nta ry w inding upi
205. E ffect o f volun tary w ind in g up on status o f company.
206. N otice o f resolution to w ind up voluntarily*
207. D eclaration o f solvency.

Members' Voluntary Winding up.

208. Provisions applicable to a members voluntary w inding up.
208A. Power o f company to app oin t and fix rem uneration o f liquidato rs.
208B. Power to f ill vacancy in office o f liq u id a to r.
208C. Power o f liq u id a to r to accept shares, etc., as consideration fo r sale of
property o f company.
208D. D u ty o f liq u id a to r to call general meeting at end o f each year.
208E. F in a l meeting and dissolution.

Creditors' Voluntary Winding up-

209. P rovisions applicable to a creditors voluntary w inding up.
209A .M eeting o f creditors.
209B. A p p o in tm e n t o f liq u id a to r.
209C. A p p ointm e n t o f comm ittee o f inspection.
209D. F ix in g o f liq u id a to rs rem uneration and cesser o f directors powers.
209E. Power to f ill vacancy in office o f liq u id a to r.
209F. A p p lic a tio n o f section 208C to a creditors voluntary w inding up.
209G. D u ty o f liq u id a to r to call meetings o f company and o f creditors at
end o f each year.
209H. F in a l meeting and dissolution.

Members' or Creditors' Voluntary Winding up.

210. Provisions applicable to every voluntary w in d in g up.
211. D is trib u tio n o f property o f company.
212. Powers and duties o f liq u id a to r in voluntary w inding up.
213. Power o f C ou rt to appoint and remove liq u id a to r in voluntary
w ind ing up.
214- N otice by liq u id a to r o f his appointm ent.
215. Arrangem ent when binding on creditors.
216. Power to apply to C o u rt to have questions determ ined or powers
exercised.
217. Cost o f voluntary w inding up-
220 Companies.

Sections.
218. Saving fo r rights o f creditors and contributories.
219. * * * *
220. Power o f C o urt to adopt proceedings o f voluntary w inding up.

Winding up subject to Supervision of Court.

221. Power to order w inding up subject to supervision.
222. Effect o f p e titio n fo r w inding up subject to supervision.
223. C o urt may have regard to wishes o f creditors and contributories.
224. Power fo r C o urt to a p po in t or remove liq u id a to rs.
225- Effect o f supervision order.
226. A ppointm e nt in certain cases o f voluntary liq u id a to rs to office o f
officia l liq u id a to r.

Supplemental Provisions.

227. Avoidance o f transfers, etc., after commencement o f w inding up.

228. Debts o f a ll descriptions to be proved.
229. A p p lic a tio n o f insolvency rules in w inding up o f insolvent
companies.
230. Preferential payments.
230A . D isclaim er o f property.
231. Fraudulent preference.
232. Avoidance o f certain attachments, executions, etc.
233. E ffect o f floa ting charge.
234- General scheme o f liq u id a tio n may be sanctioned.
235. Power o f C ou rt to assess damages against delinquent directors, etc. ,
236. Penalty fo r falsifica tion o f books.
237. Prosecution of delinquent directors.
238. Penalty fo r false evidence.
238A. Penal provisions.
239. Meetings to ascertain wishes o f creditors or contributories.
240. Documents o f company to be evidence.
241. Inspection o f documents.
242. D isposal o f documents o f company.
243. Power o f C ou rt to declare dissolution o f company void.
244. In fo rm a tio n as to pending liq u id a tio n s.
244A. Payments o f liq u id a to r in to bank.
245. C ourt or person before whom affidavit may be sworn.

Rules.

246. Power o f H ig h C o urt to make rules.

Removal of defunct Companies from Register.

247. R egistrar m ay strike defunct company off register.

 Companies- 221

P A R T V I.

R e g is t r a t io n O f f ic e and F ees.
Sections.
248. R egistratio n offices.
249. Fees.
249A. E nfo rcin g submission o f returns and documents to Registrar-

P A R T V II.

A p p l ic a t io n o f A ct to C o m p a n ie s F ormed and R e g is t e r e d u n d e r form er

C o m p a n ie s A cts.

250. A pp lica tio n o f A c t to companies form ed under form er Companies

Acts-
251. A p p lic a tio n o f A c t to companies registered b u t not form ed under
form er Companies Acts.
252- M ode o f transferring.

PAR T V III.

C o m p a n ie s A u t h o r iz e d t o R e g is t e r u n d e r t h is A ct.

253. Companies capable o f being registered.

254. D e finitio n o f joint-stock com pany.
255. Requirements fo r registration by jo in t-sto ck companies.
256. Requirements fo r registration by other than joint-stock companies.
257. A uth en tica tion o f statement o f existing companies.
258. R egistrar may require evidence as to nature o f company.
259. On registration o f banking company w ith lim ite d lia b ility , notice to
be given to customers.
260. Exem ption o f certain companies fro m paym ent o f fees.
261. A d d itio n o f L im ite d to name.
262. Certificate o f registration o f existing companies.
263- V esting o f property on registration.
264. Saving o f existing lia b ilitie s .
265. C ontinuation o f existing suits.
266- Effect o f registration under A c t.
267. Power to substitute memorandum and articles fo r deed of
settlement.
268- Power o f C ou rt to stay or restrain proceedings.
269. Suits stayed on w inding up order-

P A R T IX -

W in d in g u p o f U n r e g is t e r e d C o m p a n ie s .

270. M eaning o f unregistered company.

271. W inding up o f unregistered companies.
222 Companies.

Sections.
272. C ontributories in w inding up o f unregistered companies.
273. Power to stay or restrain proceedings.
274. Suits stayed on w inding up order.
275. D irections as to prop erty in certain cases.
276. Provisions o f th is P art cum ulative.

PART X.

C o m p a n ie s E s t a b l is h e d o u t s id e th e U n io n of B urm a.

277- Requirements as to companies established outside the U nion of

Burm a.
277A . R estriction on sale and offer fo r sale of shares'.
277B. Requirements as to prospectus.
277C. R estriction on canvassing fo r sale o f shares.
277D. R egistration o f charges.
277E. N otice o f appointm ent o f receiver.

P A R T X -A .

B a n k in g C o m p a n ie s .

277F- D e fin ition o f banking company.

277G. L im ita tio n o f activities o f banking company.
277H. Banking company n o t to em ploy managing agent.
2771. R estriction on commencement o f business by banking company.
277J. P ro h ib itio n o f charge on unpaid capital.
277K. Reserve fund.
277L. Penalties.
277M . R estrictio n on nature o f subsidiary companies.
277N. Power o f C ou rt to stay proceedings.

P A R T X I.

Su pple m e n ta l.

Legal Proceedings, Offences, etc .

278. Cognizance o f offences.

279. A p p lic a tio n o f fines-
280. Power to require lim ite d company to give security fo r costs.
281. Power o f C ourt to grant re lie f in certain cases.
282. Penalty fo r false statement.
282A. Penalty fo r w ro n gful w ith h o ld in g o f property.
282B. Penalty fo r m isapplication o f securities by employers.
283- Penalty fo r im p ro p e r use o f w ord L im ite d .
284- Saving o f pending proceedings fo r w inding up.
 Companies. 223

Sections.
285. Saving of documents.
286. Former registration offices, registers and Registrars continued.
287. Savings for Life Assurance Companies Act and Provident Insurance
Societies Act.

SCHEDULES.
T h e F ir s t Sc h e d u l e .

T h e S ec o n d Sc h e d u l e ,
T h e T h ir d S c h e d u l e .

THE BURMA COMPANIES ACT.'

[ I n d i a A ct V II, 1913 ] (1st A pril, 1914-)

PA R T I.

P r e l im in a r y
1 * * * *

2. (/) In this Act, unless there is anything repugnant in the subject or Defini
context,
(1) articles means the articles of association of a company as
originally framed or as altered by special resolution, including,
so far as they apply to the company, the regulations contained
(as the case may be) in Table B 2 in the Schedule annexed to
Act No. X IX of 1857 or in Table A 2 in the First Schedule
India VI, annexed to the Indian Companies Act, 1882, or in Table A in
1882 .
the First Schedule annexed to this A c t;
(2) company means a company formed and registered under this
Act or an existing com pany;
3 (2A) * * * *
(3) the Court means the Court having jurisdiction under this A c t;
(4) debenture includes debenture stock ;
(5) director includes any person occupying the position of a director
by whatever name c a lle d ;
(6) * * * *
1 The Indian Companies Act, 1913, was extensively am ended by the Indian Companies
(Amendment) Act, 1936 (India Act X X II, 19.-6j. The lattei Act cam e into force on the 15th
January, 1937.
T he provisions of this Act do not apply to co-operative societies, see section 8 of the Co
operative Societies Act.
3 These Tables were printed as Appendices I and II to the Indian C-jmponies Act, 1913
(India Act V II, 1913), which appendices were omitted from this Act by the Burm a Law s (Adapta
tion) Act, 1940 (Burma Act X X V II, 1940).
3 Omitted by the Union of Burma fAdaptation of Laws) Order, 1948.
 224 Companies-

I n d i a X, (7) existing com pany means a com pany formed and registered under
1866 . the Indian C om panies A ct, 1866,1 or under any A ct or Acts
I n d i a VI ,
1882 . repealed thereby, or under the Indian Com panies A ct, 1882 i ;
(8) insurance com pany means a com pany that carries on the busi
ness of insurance either solely or in com m on with any other
business or businesses ;
(9) manager m eans a person who subject to the control and direction
of the directors has the m anagem ent of the whole affairs of a
com pany, and includes a director or any other person occupying
the p osition o f a manager by w hatever name called and whether
under a contract of service or not ;
(9A ) managing agent means a person, firm or com pany entitled to
the m anagem ent of the w hole affairs of a com pany by virtue of
an agreem ent with the com pany, and under the control and
direction of the directors except to the extent, if any, otherw ise
provided for in the agreement, and includes any person, firm or
com pany occupying such position by whatever name c a lle d ;
Explanation If a person occupying the position of a managing
agent calls him self a manager he shall nevertheless be regarded
as m anaging agent and not as manager for the purposes o f this
A c t;
(10) m em orandum means the m emorandum of association o f a com
pany as originally framed or as altered in pursuance o f the
provisions o f this A c t ;
(11) officer includes any director, m anaging agent,m anager or secre
tary but, save in sections 235, 236, and 237, does not include an
a u d ito r;
(12) prescribed m eans, as respects the provisions of this A ct relating
to the w inding up o f com panies, prescribed by rules m ade by
the H igh Court, and, as respects the other provisions o f this Act,
prescribed by ths President o f the U nion.
(13) private c o m p a n y means a com pany which by its articles
(a) restricts the right to transfer the shares, if a n y ; and
(b) lim its the number of its m em bers to fifty not including per
sons who are in the em ploym ent o f the co m p a n y ; and
(c) prohibits any invitation to the public to subscribe for the
shares, if an y, or debentures o f the com pany :
Provided that where two or m ore persons hold one or more
shares in a com pany join tly they shall, for the purposes of
this definition, be treated as a single member ;
India VI, (13A ) public c o m p a n y means a com pany incorporated under this A ct
1882. or under the Indian C om panies A ct, 1882 l , or under the Indian
India X,
1866. C om panies A ct, 18661, or under any A ct repealed thereby, which
is not a private company ;
1 The Indian Companies i^ct, 18C6 , was repealed by the Indian Companies Act, 18^2. which
in turn was repealed by Ihc Indian Companies Act, 1913.
 Companies- 225

(14) prospectus means any prospectus, notice, circular, advertisement

or other invitation, offering to the public for subscription or
purchase any shares or debentures of a company, but shall not
include any trade advertisement which shows on the face of it
that a formal prospectus has been prepared and filed,
(15) the Registrar means a Registrar or assistant Registrar performing
under this Act the duty of registration of companies ;
(16) s h a re means share in the share capital of the company, and
includes stock except when a distinction between stock and
shares is expressed or implied ;
1 (17) Scheduled Bank means a bank which has been notified under
section 38 of the Union Bank of Burma Act, 1952, as a sche
duled b a n k ;
2(18) this A c t means, as respects any period before the coming into
operation of the Constitution, the Burma Companies Act as
then in force in the Union of Burma.
(2) Where the assets of a company consist in whole or in part of shares
in another company, whether held directly or through a nominee and whether
that other company is a company within the meaning of this Act or not, and
(a) the amount of the shares so held is at the time when the accounts
of the holding company are made up more than fifty per cent
of the issued share capital of that other company or such as to
entitle the company to more than fifty per cent of the voting
power in that other company, or
(b ) the company has power (not being power vested in it by virtue
only of the provisions of a debenture trust deed or by virtue of
shares issued to it for the purpose in pursuance of those provi
sions) directly or indirectly to appoint the majority of the direc
tors of that other company,
that other company shall be deemed to be a subsidiary company within the
meaning of this Act, and the expression subsidiary company in this Act
means a company in the case of which the conditions of this sub-section are
satisfied and includes a subsidiary company of such company :
Provided that where a company the ordinary business of which includes
the lending of money holds shares in another company as security only, no
account shall, for the purpose of determining under this section whether that
other company is a subsidiary company, be taken of the shares so held.

3. (/) The Court having jurisdiction under this Act shall be the High jurisdiction
C o u rt. * t*ie CU1ts.
Provided that the President of the Union may, by notification in the
Gazette and subject to such restrictions and conditions as he thinks fit,
empower any D istrict Court to exercise all or any of the jurisdiction by this
1 Substituted by Act JX, 1952.
2 Substituted by tlia Union of Burma (Adaptation of Laws) O rder, 1948.

15
 226 Companies-

Act conferred upon the Court, and in that case such District Court shall, as
regards the jurisdiction so conferred, be the Court in respect of all companies
having their registered offices in the district.
(2) For the purposes of jurisdiction to wind up companies, the expres
sion registered office means the place which has longest been the registered
office of the company during the six months immediately preceding the
presentation of the petition for winding up.
(3) Nothing in this section shall invalidate a proceeding by reason of
its being taken in a wrong Court-

PA R T II.

C o n s t i t u t io n a n d I n c o r p o r a t i o n .

Prohibition 4. ?]) No company, association or partnership consisting of more than

o( partn er
ships ten persons shall be formed for the purpose of carrying on the business of
exceeding banking unless it is registered as a company under this Act [ * * * * ]t-
certain
number. (2) No company, association or partnership consisting of more than
twenty persons shall be formed for the purpose of carrying on any other
business that has for its object the acquisition of gain by the company,
association or partnership, or by the individual members thereof, unless it is
registered as a company under this Act [ * * * *]*.
(3) This section shall not apply to a joint family carrying on joint
family trade or business, and where two or more such joint families form a
partnership, in computing the num ber of persons for the purposes of this
section, minor members of such fam ilies shall be excluded.
(4) Every member of a company, association or partnership carrying on
business in contravention of this section shall be personally liable for all
liabilities incurred in such business.
(5) Any person who is a member of a company, association or partner
ship formed in contravention of this section shall be punishable with fine not
exceeding one thousand rupees-

M em orandum of Association.
Mode of 5- Any seven or more persons (or, where the company to be formed will
form ing in
corporated be a private company, any two or more persons) associated for any lawful
company. purpose may, by subscribing their names to a memorandum of association
and otherwise complying with the requirements of this Act in respect of
registration, form an incorporated company, with or without limited liability
(that is to say), either
(i) a company having the liability of its members limited by the
memorandum to the amount, if any, unpaid on the shares
respectively held by them (in this Act termed a company
limited by sh ares); or

1 Omitted by the Union of Burma (Adaptation of Laws) Order, 1948.

 Companies- 227

(ii) a company having the liability of its members limited by the

memorandum to such amount as the members may respectively
thereby undertake to contribute to the assets of the company
in the event of its being wound up (in this Act termed a com
pany limited by guarantee); or
(iii) a company not having any lim it on the liability of its members (in
this Act termed an unlimited company).

6. In the case of a company limited by shares

Memoran
(1) the memorandum shall state dum of com
pany limited
(i) the name of the company, with Limited as the last Word in by shares.
its name ;
(ii) that the registered office of the company will be situated in the
Union of Burma ;
(iii) the objects of the company ;
(iv) that the liability of the members is limited ;
(v) the amount of share capital with which the company proposes
to be registered, and the division thereof into shares of a
fixed amount ;
(2) no subscriber of the memorandum shall take less than one share ;
(3) each subscriber shall write opposite to his name the number of
shares he takes.

7. In the case of a company limited by guarantee Memoranr

(1) the memorandum shall state dum of com
pany lim ited
(i) the name of the company, with Limited as the last word in by guarantee.
its name ;
(ii) that the registered office of the company will be situated in the
Union of Burma ;
(iii) the objects of the company ;
(iv) that the liability of the members is limited ;
(v) that each member undertakes to contribute to the assets of the
company in the event o f its being wound up while he is a
member, or within one year afterwards, for payment of the
debts and liabilities of the company contracted before he
ceases to be a member, and of the costs, charges and expenses
of winding up, and for adjustment of the rights of the con
tributories among themselves, such amount as may be
required not exceeding a specified a m o u n t;
(2) if the company has a share capital
(i) the memorandum shall also state the amount of share capital
with which the company proposes to be registered and the
division thereof into shares of a fixed am ount;
(ii) no subscriber of the memorandum shall take less than one share ;
 228 Companies.

(iii) each subscriber shall write opposite to his name the number of
shares he takes.

Memo 8. In the case of an unlimited company

randum of
unlimited (1) the memorandum shall state
company.
(i) the name of the company ;
(ii) that the registered office of the company will be situated in the
Union of B u rm a;
(iii) the objects of the company ;
(2) if the company has a share capital- -
(i) no subscriber of the memorandum shall take less than one sh a re ;
(ii) each subscriber shall write opposite to his name the number of
shares he takes.

P rin ting and 9. The memorandum shall

signature of
m em oran (a) be printed,
dum. (b ) be divided into paragraphs numbered consecutively, and
(c) be signed by each subscriber (who shall add his address and
description) in the presence of at least one witness who shall
attest the signature.

R estriction 10. A company shall not alter the conditions contained in its
on alteration memorandum except in the cases and in the mode and to the extent for which
of m em oran
dum* express provision is made in this A c t:
Provided that any provision in the memorandum relating to the
appointm ent of a manager or managing agent, and other matters of a like
nature incidental or subsidiary to the main objects of the company, shall not
be deemed to be such condition.

Name of 11. (/) A company shall not be registered by a name identical with
company and that by which a company in existence is already registered, or so nearly
change of
name. resembling that name as to be calculated to deceive, except where the
company in existence is in the course of being dissolved and signifies its
consent in such manner as the Registrar requires.
(2) If a company, through inadvertence or otherwise, is, without such
consent as aforesaid, registered by a name identical with that by which a
company in existence is previously registered, or so nearly resembling it as to
be calculated to deceive, the first-mentioned company may, with the sanction
of the Registrar, change its name.
(J) Except with the previous consent in writing of the President of the
Union no company shall be registered by a name which
(a) contains any of the following words, namely, Crown Em peror
Empire , Empress , Federal , Im perial , King
Queen , Royal , State , Reserve Bank , [ Union
 Companies. 229

President ] *, or any word which suggests or is calculated to

suggest the patronage of His Britannic Majesty [ * * * ] 2
or any connection with His Britannic M ajestys Government
[or the Government of Burma or of any Department
thereof ;] 1 or
(b) contains the word Municipal or Chartered , or any word
which suggests or is calculated to suggest connection with any
municipality or other local authority or with any society or
body incorporated by Royal Charter :
Provided that nothing in this sub-section shall apply to companies
registered before the commencement of this Act.
(4) Any company may, by special resolution and subject to the approval
of the President of the Union signified in writing, change its name.
(5) Where a company changes its name, the Registrar shall enter the
new name on the register in place of the former name, and shall issue a
certificate of incorporation altered to meet the circumstances of the case. On
the issue of such a certificate, the change of name shall be complete.
(6) The change of name shall not affect any rights or obligations of the
company, or render defective any legal proceedings by or against the
com pany; and any legal proceedings that might have been continued or
commenced against it by its former name may be continued or commenced
against it by its new name.
A lt e r a t io n of
12. (/) Subject to the provisions of this Act, a company may, by special
m em o ran
resolution, alter the provisions of its memorandum with respect to the objects d u m .
of the company, so far as may be required to enable it
(a) to carry on its business more economically or more efficiently ; or
( b ) to attain its main purpose by new or improved means ; or
(c) to enlarge or change the local area of its operations ; or
(d ) to carry on some business which under existing circumstances
may conveniently or advantageously be combined with the
business of the company ; or
(e) to restrict or abandon any of the objects specified in the
m em orandum ; or
(/) to sell or dispose of the whole or any part of the undertaking of
the company ; or
(g) to amalgamate with any other company or body of persons.
(2) The alteration shall not take effect until and except in so far as it
is confirmed by the Court on petition.
(1) Before confirming the alteration, the Court must be satisfied
(a) that sufficient notice has been given to every holder of debentures
of the company, and to any persons or class of persons whose
interests will, in the opinion of the Court, be affected by the
alteration ; and
1 Substituted by the Union of Burma (A daptation of Laws) Order, 19-18.
2 Omitted ibid.
 230 Companies-

(b) that, with respect to every creditor who in the opinion of the
Court is entitled to object, and who signifies his objection in
manner directed by the Court, either his consent to the
alteration has been obtained or his debt or claim has been
discharged or has determined, or has been secured to the
satisfaction of the Court :
Provided that the Court may, in the case of any person or class, for
special reasons, dispense with the notice required by this section.
P ow er of 13- The Court may make an order confirming the alteration either
C ourt w hen wholly or in part, and on such terms and conditions as it thinks fit, and
confirm ing
a lte ra tio n . may make such order as to costs as it thinks proper.

E x e r c is e of 14. The Court shall, in exercising its discretion under sections 12 and
d is c r e t io n b y 13, have regard to the rights and interests of the members of the company or
C o u rt.
of any class of them, as well as to the rights and interests of the creditors,
and may, if it thinks fit, adjourn the proceedings in order that an arrangement
may be made to the satisfaction of the Court for the purchase of the interests
of dissentient members ; and may give such directions and make such orders
as it may think expedient for facilitating or carrying into effect any such
arrangement '
Provided that no part of the capital of the company may be expended
in any such purchase.

P ro c e d u re on 15. (l) A certified copy of the order confirming the alteration,

c o n f ir m a t io n together with a printed copy of the memorandum as altered, shall, within
o f th e a l t e r a
t io n . three months from the date of the order, be filed by the company with the
Registrar, and he shall register the same, and shall certify the registration
under his hand, and the certificate shall be conclusive evidence that all the
requirements of this Act with respect to the alteration and the confirmation
thereof have been complied with, and thenceforth the memorandum so
altered shall be the memorandum of the company.
(2) * * * *
(J) The Court may by order at any time extend the time for the filing of
documents with the Registrar under this section for such period as the Court
thinks proper.

Effect of 16. No such alteration shall have any operation until registration
failure to thereof has been duly effected in accordance with the provisions of section
register w ith
in three 15, and if such registration is not effected within three months next after the
months. date of the order of the Court confirming the alteration, or within such
further time as may be allowed by the Court in accordance with the provisions
of section 15, such alteration and order and all proceedings connected
therewith shall, at the expiration of such period of three months or such
further time, as the case may be, become absolutely null and void :
Provided that the Court may, on sufficient cause shown, revive the order
on application made within a further period of one month.
 Companies. 231

A rticles of A ssociation.
17. ( /) There may, in the case of a company limited by shares, and R egistration
of articles.
there shall, in the case of a company limited by guarantee or unlimited, be
registered with the memorandum articles of association signed by the
subscribers to the memorandum and prescribing regulations for the company.
(2) Articles of association may adopt all or any of the regulations
contained in Table A in the First Schedule, and shall in any event be deemed
to contain regulations identical with or to the same effect as regulation 56,
regulation 66, regulation 71, regulations 78, 79, 80, 81 and 82, regulation 95,
regulation 97, regulation 105, regulation 107 and regulations 112, 113, 114,
115, and 116 contained in that Table :
Provided that regulation 78 shall not be deemed to be included in the
articles of any private company except a private company which is the
subsidiary company of a public company :
Provided further that regulation 107 shall be deemed to require that a
statement of the reasons why, of the whole amount of any item of expenditure
which may in fairness be distributed over several years, only a portion thereof
is charged against the income of the year shall be shown in the profit and
loss account, unless the company in general meeting shall determine otherwise.
(3) In the case of an unlimited company or a company limited by
guarantee, the articles, if the company has a share capital, shall state the
amount of share capital with which the company proposes to be registered.
(4) In the case of an unlimited company or a company limited by
guarantee, if the company has not a share capital, the articles shall state the
number of members with which the company proposes to be registered, for
the purpose of enabling the Registrar to determine the fees payable on
registration.
18. In the case of a company limited by shares and registered after the Application
commencement of this Act, if articles are not registered, or, if articles are of Table A..
registered, in so far as the articles do not exclude or modify the regulations in
Table A in the First Schedule, those regulations shall, so far as applicable
be the regulations of the company in the same manner and to the same
extent as if they were contained in duly registered articles.
19. Articles shall Form and
signature of
<a) be printed ; articles.
(6) be divided into paragraphs numbered consecutively; and
(c) be signed by each subscriber of the memorandum (who shall add
his addresss and description) of association in the presence of
at least one witness who must attest the signature.
20. (/) Subject to the provisions of this Act and to the conditions Alteration
contained in its memorandum, a company may by special resolution alter or of articles
by special
add to its articles ; and any alteration or addition so made shall be as valid resolution.
aS if originally contained in the articles, and be subject in like manner to
alteration by special resolution.
 232 Companies.

(2) The power of altering articles under this section shall, in the case of
any company formed and registered under Act No. X IX of 1857 1 and Act
No. V II of 1860 1 or either of them, extend to altering any provisions in
Table B annexed to Act X IX of 1857,1 and shall also, in the case of an
unlimited company formed and registered under the said Acts or either of
them, extend to altering any regulations relating to the amount of capital or
its distribution into shares, notwithstanding that those regulations are
contained in the memorandum.

Effect of 20A. Notwithstanding anything in the memorandum or articles of a com

alteration in pany, no member of the company shall be bound by an alteration made in the
memorandum
or articles. memorandum or articles after the date on which he became a member if and
so far as the alteration requires him to take or subscribe for more shares
than the number held by him at the date on which the alteration is made, or
in any way increases his liability as at that date to contribute to the share
capital of, or otherwise to pay money to, the company :
Provided that this section shall not apply in any case where the member
agrees in writing either before or after the alteration is made to be bound
thereby.

General Provisions.

Effect of 21. (/) The memorandum and articles shall, when registered, bind the
memorandum company and the members thereof to the same extent as if they respectively
and articles.
had been signed by each member and contained a covenant on the part of
each member, his heirs, and legal representatives, to observe all the provisions
of the memorandum and of the articles, subject to the provisions of this Act.
(2) All money payable by any member to the company under the
memorandum or articles shall be a debt due from him to the company.

R egistrati n 22. The memorandum and the articles (if any) shall be filed with the
of memoran Registrar and he shall retain and register them.
dum and
articles.

Effect of 23. (/) On the registration of the memorandum of a company, the

registration. Registrar shall certify under his hand that the company is incorporated, and
in the case of a limited company that the company is limited.
(2) From the date of incorporation mentioned in the certificate of incor
poration, the subscribers of the memorandum, together with such other persons
as may from time to time become members of the company, shall be a body
corporate by the name contained in the memorandum, capable forthwith of
exercising all the functions of an incorporated company, and having perpetual
succession and a common ssal, but with such liability on the part of the
members to contribute to the assets of the company in the event of its being
wound up as is mentioned in this Act.

1 India Acts X IX of-1857 and V II of 1860 were repealed by In d ia Act X of 1866.

 Companies. 233

24. (7) A certificate of incorporation given by the Registrar in respect of Conclusive

ness of c e r
any association shall be conclusive evidence that all the requirements of this tificate of in
Act in respect of registration and of matters precedent and incidental thereto corporation.
have been complied with, and that the association is a company authorized to
be registered and duly registered under this Act.
(2) A declaration by an advocate entitled to appear before the High
Court who is engaged in the formation of a company, or by a person named in
the articles as a director, manager or secretary of the company, of compliance
with all or any of the said requirements shall be filed with the Registrar, and
the Registrar may accept such a declaration as sufficient evidence of compliance.

25. (/) Every company shall send to every member, at his request and Copies of me
within fourteen days thereof, on payment of one rupee or such less sum as the morandum
and articles to
company may prescribe, a copy of the memorandum and of the articles (if any). be given to
(2) If a company m akes,default in complying with the requirements of mem bers.
this section, it shall be liable for each offence to a fine not exceeding ten rupees.

25A. (/) Where an alteration is made in the memorandum or articles of A lteration of

a company, every copy of the memorandum or articles issued after the date of memorandum
or articles to
the alteration shall be in accordance with the alteration. be noted in
(2) If, where any such alteration has been made, the company at any every copy.
time after the date of the alteration issues any copies of the memorandum or
articles which are not in accordance with the alteration, it shall be liable to a
fine not exceeding ten rupees for each copy so issued, and every officer of the
company who is knowingly and wilfully in default shall be liable to the like
penalty.

Associations not for Profit-

26. (/) Where it is proved to the satisfaction of the President of the

Power to
Union that an association capable of being formed as a limited company has dispense with
been or is about to be form ed for promoting commerce, art, science, religion, Lim ited
in name of
charity, or any other useful object, and applies or intends to apply Its profits charitable
(if any) or other income in promoting its objects, and to prohibit the payment and other
companies.
of any dividend to its members, the President of the Union may, by licence,
direct that the association be registered as a company with limited liability,
without the addition of the word Limited to its name, and the association
may be registered accordingly.
(2) A licence by the President of the Union under this section may be
granted on such conditions and subject to such regulations as the President of
the Union thinks fit, and those conditions and regulations shall be binding on
the association, and shall, if the President of the Union so directs, be inserted
in the memorandum and articles, or in one of those documents.
(3) The association shall on registration enjoy all the privileges of
limited companies, and be subject to all their obligations, except those of
using the word Limited as any part of its name, and of publishing its
name, and of sending lists of members to the Registrar.
 234 Companies.

(4) A licence under this section may at any time be revoked by the
President of the Union, and upon revocation the Registrar shall enter the
word Limited at the end of the name of the association upon the register,
and the association shall cease to enjoy the exemptions and privileges granted
by this section :
Provided that, before a licence is so revoked, the President of the Union
shall give to the association notice in writing of his intention, and shall afford
the association an opportunity of submitting a representation in opposition to
the revocation.
C om p anies lim ited b y Guarantee.
Provision
as to com 27. (/) In the case of a company lim ited by guarantee and not having a
panies share capital, and registered after the commencement of this Act, every
lim ited by
guarantee.
provision in the memorandum or articles or in any resolution of the company
purporting to give any person a right to participate in the divisible profits of
the company otherwise than as a member shall be void.
(2) For the purpose of the provisions of this Act relating to the
memorandum of a company limited by guarantee and of this section, every
provision in the memorandum or articles, or in any resolution, of any company
limited by guarantee and registered after the commencement of this Act,
purporting to divide the undertaking of the company into shares or interests,
shall be treated as a provision for a share capital, notwithstanding that the
nominal amount or number of the shares or interests is not specified thereby.

PA RT III.

S hare C a p it a l , R e g is t r a t io n o f U n l im i t e d C o m p a n y as L im it e d , and
U n l im i t e d L ia b il it y o f D i r e c t o r s .

Distribution o f Share Capital-

N ature of]
sh ares. 26. (/) The shares or other interest of any member in a company shall
be moveable property, transferable in manner provided by the articles of the
company.
(2) Each share in a company having a share capital shall be distinguished
by its appropriate number.
Certificate of 29. A certificate, under the common seal of the company, specifying any
shares or
stock. shares or stock held by any member, shall be prim a facie evidence of the title
of the member to the shares or stock therein specified.
Definition of 30. (l) The subscribers of the memorandum of a company shall be
mem ber.
deemed to have agreed to become members of the company, and on its
registration shall be entered as members in its register of members.
(2) Every other person who agrees to become a member of a company,
and whose name is entered in its register of members, shall be a member of
the company.
 Companies. 235

31. (/) Every company shall keep in one or more books a register of R egister of
members.
its members, and enter therein the following particulars :
(i) the names and addresses, and the occupations, if any, of the
members and, in the case of a company having a share capital,
a statem ent of the shares held by each member, distinguishing
each share by its number, and of the amount paid or agreed to
be considered as paid on the shares of each member ;
(ii) the date at which each person was entered in the register as a
member ;
(iii) the date at which any person ceased to be a member.
(2) If a company makes default in complying with the requirements of
this section, it shall be liable to a fine not exceeding fifty rupees for every
day during which the default continues, and every officer of the company who
knowingly and wilfully authorizes or permits the default shall be liable to the
like penalty.

31 A. (/) Every company having more than fifty members shall, unless Index of
mem bers of
the register of members is in such a form as to constitute in itself an index, company.
keep an index of the names of the members of the company, and shall within
fourteen days after the date on which any alteration is made in the register of
members make any necessary alteration in the index.
(2) The index, which may be in the form of a card index, shall in respect
of each member contain a sufficient indication to enable the account of that
member in the register to be readily found.
(J) If default is made in complying with this section, the company and
every officer of the company who is knowingly and wilfully in default shall be
liable to a fine not exceeding fifty rupees.

32. (/) Every company having a share capital shall within eighteen Annual list of
months from its incorporation and thereafter once at least In every year make members and
summary.
a list of all persons who, on the day of the first or only ordinary general
meeting in the year, are members of the company, and of all persons who
have ceased to be members since the date of the last return or (in the case of
the first return) of the incorporation of the company.
(2) The list shall state the names, addresses, and occupations of all the
past and present members therein mentioned, and the number of shares held
by each of the existing members at the date of the return, specifying shares
transferred since the date of the last return or (in the case of the first return)
of the incorporation of the company by persons who are still members and
persons who have ceased to be members, respectively, and the dates of registra
tion of the transfers, and shall contain a summary distinguishing between shares
issued for cash and shares issued as fully or partly paid up otherwise than in
cash, and specifying the following particulars :
(a) the amount of the share capital of the company, and the number
of the shares into which it is divided ;
236 Companies.

ib ) the number of shares taken from the commencement of the

company up to the date of the return ;
(c) the amount called up on each share ;
(d) the total amount of calls received ;
(e) the total amount of calls unpaid ;
(/) the total amount of the sums (if any) paid by way of commission
in respect of any shares or debentures, or allowed by way of
discount in respect of any shares or debentures, since the date
of the last return, or so much thereof as has not been written
off at the date of the re tu rn ;
(g) the total number of shares forfeited ;
(ft) the total am ount of shares or stock for which share-warrants are
outstanding at the date of the re tu rn ;
(0 the total am ount of share-warrants issued and surrendered
respectively since the date of the last re tu rn ;
( k ) the number of shares or amount of stock comprised in each share-
w a rra n t;
(/) the names and addresses of the persons who at the date of the
return are the directors of the company and of the persons (if
any) who at the said date are the managers or managing agents
of the company, and the changes in the personnel of the
directors, managers and managing agents since the last return
together with the dates on which they took place ; and
(m) the total amount of debts due from the company in respect of all
mortgages and charges which are required to be registered with
the Registrar under this Act.

(3) The above list and summary shall be contained in a separate part
of the register of members, and shall be completed within twenty-one days
after the day of the first or only ordinary general meeting in the year, and
the company shall forthwith file with the Registrar a copy signed by a
director or by the manager or the secretary of the company, together with a
certificate from such director, manager or secretary that the list and summary
state the facts as they stood on the day aforesaid.
(4) A private company shall send with the annual return required by
sub-section (/) a certificate signed by a director or other officer of the com
pany that the company lias not, since the date of the last return or, in the case
of a first return, since the date of the incorporation of the company, issued
any invitation to the public to subscribe for any shares or debentures of the
company, and where the annual return discloses the fact that the number of
members of the company exceeds fifty, also a certificate so signed that the
excess consists wholly of persons who under sub-clause (b) of clause (13) of
sub-section (/) of section 2 are not to be included in reckoning the number of
fifty.
(5) If a company makes default in complying with the requirements of
this section, it shall be liable to a fine not exceeding fifty rupees for every
 Companies. 237

da_y during which the default continues, and every officer of the company who
knowingly and wilfully authorizes or permits the default shall be liable to
the like penalty.

33- No notice of any trust, expressed, implied or constructive, shall be Trusts not to
entered on the register, or be receivable by the Registrar. be entered
on register.

34. (/) An application for the registration of the transfer of shares Tinrana sfer of
company may be made either by the transferor or the transferee, provided shares.
that where such application is made by the transferor no registration shall in
the case of partly paid shares be effected unless the company gives notice of
the application to the transferee, and, subject to the provisions of sub-section
(4), the company shall, unless objection is made by the transferee within two
weeks from the date of receipt of the notice, enter in its register of members
the name of the transferee in the same manner and subject to the same
conditions as if the application for registration was made by the transferee.
(2) For the purposes of sub-section (f) notice to the transferee shall be
deemed to have been duly given if despatched by prepaid post to the
transferee at the address given in the instrum ent of transfer and shall be
deemed to have been delivered in the ordinary course of post.
(j) It shall not be lawful for the company to register a transfer of
shares in or debentures of the company unless the proper instrum ent of
transfer duly stamped and executed by the transferor and the transferee has
been delivered to the company along with the scrip :
Provided that, where it is proved to the satisfaction of the directors of
the company that an instrum ent of transfer signed by the transferor and
transferee has been lost, the company may, if the directors think fit, on an
application in writing made by the transferee and bearing the stamp required
by an instrum ent of transfer, register the transfer on such terms as to
indemnity as the directors may think fit.
(4 ) If a company refuses to register the transfer of any shares or
debentures, the company shall, within two months from the date on which the
instrument of transfer was lodged with the company, send to the transferee
and the transferor notice of the refusal.
(5) If default is made in complying with sub-section (4 ) of this section,
the company and every director, manager, secretary or other officer of the
company who is knowingly a party to the default shall be liable to a fine not
exceeding fifty rupees for every day during which the default continues.
(6) Nothing in sub-section (5) shall prejudice any power of the company
to register as shareholder or debenture-holder any person to whom the right
to any shares in or debentures of the company has been transmitted by opera
tion of law.
(7) Nothing in this section shall prejudice any power of the company
under its articles to refuse to register the transfer of any shares.
 238 Companies.

T ransfer by 35. A transfer of the share or other interest of a deceased member of

legal repre a company made by his legal representative shall, although the legal
sentative.
representative is not himself a member, be as valid as if he had been a
member at the time of the execution of the instrum ent of transfer.
Inspection of 36. (/) The register of members, commencing from the date of the regis
register of
m em bers. tration of the company, and the index of members shall be kept at the
registered office of the company, and, except when closed under the
provisions of this Act, shall during business hours (subject to such
reasonable restrictions, as the company in general meeting may impose, so
that not less than two hours in each day be allowed for inspection) be open
to the inspection of any member gratis, and to the inspection of any other
person on payment of one rupee, or such less sum as the company may
prescribe, for each inspection. Any such member or other person may
make extracts therefrom.
(2) Any member or other person may require a copy of the register, or
of any part thereof, or of the list and summary required by this Act, or any
part thereof, on payment of six annas for every hundred words or fractional
part thereof required to be copied, and the company shall cause any copy so
required by any person to be sent to that person within a period of ten days,
exclusive of non-working days and days on which the transfer books of the
company are closed, commencing on the day next after the day on which the
requirem ent is received by the company.
(5) If any inspection required under this section is refused, or if any
copy required under this section is not sent within the proper period, the
company and every officer of the company who is in default shall be liable
in respect of each offence to a fine not exceeding twenty rupees, and to a
further fine not exceeding twenty rupees for every day during which the
refusal or default continues, and the Court may by an order compel an
immediate inspection of the register and index or direct that copies
required shall be sent to the persons requiring them.
Pow er to
close
37. A company may, on giving seven days previous notice by advertise
register. ment in some newspaper circulating in the district in which the registered
office of the company is situate, close the register of members for any time
or times not exceeding in the whole forty-five days in each year but not
exceeding thirty days at a time.
Pow er of
Court to
38. (/) If
rectify re (a) the name of any person is fraudulently or without sufficient cause
gister. entered in or omitted from the register of members of a com
pany, or
( b ) default is made or unnecessary delay takes place in entering on
the register the fact of any person having ceased to be a
member,
the person aggrieved, or any member of the company, or the company, may
apply to the Court for rectification of the register.
 Companies- 239

(2) The Court may either refuse the application, or may order rectifica
tion of the register and payment by the company of any damages sustained
by any party aggrieved, and may make such order as to costs as it in its
discretion thinks fit.
(3) On any application under this section the Court may decide any
question relating to the title of any person who is a party to the application
to have his name entered in or omitted from the register, whether the
question arises between members or alleged members, or between
members or alleged members on the one hand and the company on the
other h a n d ; and generally may decide any question necessary or
expedient to be decided for rectification of the register :
Provided that the Court may direct an issue to be tried in which any
question of law may be ra is e d ; and an appeal from the decision on such an
issue shall lie in the manner directed by the Code of Civil Procedure on the
grounds mentioned in section 100 of that Code.

39. In the case of a company required by this Act to file a list of its N otice to
R egistrar of
members with the Registrar, the Court, when making an order for rectifica rectification
tion of the register, shall, by its order, direct notice of the rectification to be of register.
filed with the Registrar within a fortnight from the date of the completion of
the order.

40. The register of members shall be prim a facie evidence of any matters Register to
by this Act directed or authorized to be inserted therein. be evidence,

41. (/) A company having a share capital may, if so authorized by its P ow er for
articles, cause to be kept in the United Kingdom a branch register of members company to
keep branch
(in this Act called a British register). register in
(2) The company shall, within one month from the date of the opening of th e United
any British register, file with the Registrar notice of the situation of the office Kingdom.

where such register is kept and, in the event of any change in the situation
of such office or of its discontinuance shall, within one month from the date
of such change or'discontinuance as the case may be, file notice of such
change or discontinuance.
(3) If a company makes default in complying with the requirements of
this section, it shall be liable to a fine not exceeding fifty rupees for every
day during which the default continues.

42. (/) A British register shall be deemed to be part of the companys R egulations
as to Brftish
register of members (in this section called the principal register). reg ister.
(2) It shall be kept in the same manner in which the principal register
is by this Act required to be kept, except that the advertisement before closing
the register shall be inserted in some newspaper circulating in the locality
wherein the British register is kept.
G?) The company shall transm it to its registered office in the Union of
Burma a copy of every entry in its British register as soon as may be after the
entry is made ; and shall cause to be kept at such office, duly entered up from
 240 Companies-

time to time, a duplicate of his British register, and the duplicate shall, for
all the purposes of this Act, be deemed to be part of the principal register.
(4) Subject to the provisions of this section with respect to the
duplicate register, the shares registered in a British register shall
be distinguished from the shares registered in the principal register, and no
transaction with respect to any shares registered in a British register shall,
during the continuance of that registration, be registered in any other register-
(5) The company may discontinue to keep any British register, and
thereupon all entries in that register shall be transferred to the principal
register.
(6) Subject to the provisions of this Act, any company may, by its
articles, make such regulations as it may think fit respecting the keeping of
a British register-

Issue of 43. (/) A company lim ited by shares, if so authorized by its articles,
share- may, with respect to any fully paid-up shares, or to stock, issue under its
w arrants to
bearer. common seal a w arrant stating that the bearer of the w arrant is entitled to
the shares or stock therein specified, and may provide, by coupons or other
wise, for the payment of the future dividends on the shares or stock included
in the warrant, in this Act termed a share-warrant.
(2) Nothing in this section shall apply to a private company.

Effect of 44. A share-warrant shall entitle the bearer thereof to the shares or
sbare- stock therein specified, and the shares or stock m iy be transferred by delivery
w arran t.
of the warrant.

R egistration 45. The bearer of a share-warrant shall, subject to the articles of the
of nam e of company, be entitled, on surrendering it for cancellation, to have his name
b earer of
share- entered as a member in the register of members ; and the company shall be
w arrant. responsible for any loss incurred by any person by reason of the company
entering in its register the name of a bearer of a share-warrant in respect of
the shares or stock therein specified without the warrant being surrendered
and cancelled-

P o sitio n of 46. The bearer of a share-warrant may, if the articles of the company so
bearer of provide, be deemed to be a member of the company within the meaning of
share-
w arrant. this Act, either to the full extent or for any purposes defined in the articles,
except that he shall not be qualified in respect of the shares or stock specified
in the warrant for being a director or manager of the company, in cases where
such a qualification is required by the articles.

E ntries in 47- (l) On the issue of a share-warrant, the company shall strike out of
re g is te r its register of members the name of the member then entered therein as
w hen share-
holding the shares or stock specified in the warrant as if he had ceased to be
 Companies. 241

a member, and shall enter in the egister the following particulars, w arrant
issued.
namely :
(i) the fact of the issue of the warrant ;
(ii) a statement of the shares or stock included in the warrant,
distinguishing each share by its number ; and
(iii) the date of the issue of the warrant.
(2) If a company makes default in complying with the requirements of
this section it shall be liable to a fine iiot exceeding fifty rupees for every
day during which the default continues, and every officer of the company
who knowingly and wilfully continues or perm its the default shall be liable to
the like penalty.

48. Until the warrant is surrendered, the above particulars shall be Surrender of
sh are-
deemed to be the particulars required by this Act to be entered in the register w arran t.
of members ; and, on the surrender, the date of the surrender shall be entered
as if it were the date at which a person ceased to be a member-

49. A company, if so authorized by its articles, may do any one or Pow er of

more of the following things, namely : company to
arrange for
(1) make arrangements on the issue of shares for a difference between different
amounts
the shareholders in the amounts and times of payment of calls being p aid
on their shares ; on shares.
(2) accept from any member who assents thereto the whole or a part
of the amount remaining unpaid on any shares held by him
although no part of that amount has been called up ;
(3) pay dividend in proportion to the amount paid up on each share
where a larger amount is paid up on some shares than on others.

50. ( /) A company limited by shares, if so authorized by its articles, Pow er of

may alter the conditions of its memorandum as follows (that is to say), it com pany
lim ited by
m ay shares to
a lte r its
(a) increase its capital by the issue of new shares of such amount as it share
c a p ita l.
thinks expedient ;
(b) consolidate and divide all or any of its share capital into shares
of larger amount than its existing shares ;
(c) convert all or any of its paid-up shares into stock and re-convert
that stock into paid-up shares of any denomination ;
(d) sub-divide its shares, or any of them, into shares of smaller amount
than is fixed by the memorandum, so, however, that in the sub
division the proportion between the amount paid and the amount,
if any, unpaid on each reduced share shall be the same as it
was in the case of the share from which the reduced share is
derived;
(e) cancel shares which, at the date of the passing of the resolution in
that behalf, have not been taken or agreed to be taken by any

16
 242 Companies-

person, and d im in ish the amount o f its share capital by the

am ount o f the shares so cancelled.
(2) The powers conferred by this section must be exercised by the
company in general meeting.
(J) A cancellation o f shares in pursuance o f this section shall not be
deemed to be a reduction o f share capital w ith in the meaning o f this A ct.
(4) The company shall file w ith the R egistrar notice o f the exercise o f any
power referred to in clause ( d) or clause (e) o f sub-section ( / ) w ith in fifteen
days fro m the exercise thereof.

N o tic e to
51. ( / ) Where a company having a share capital has consolidated and
R e g is tra r of divided its share capital in to shares o f larger amount than its existing shares,
c o n s o lid a
tio n o f share
or converted any o f its shares in to stock, or re-converted stock in to shares, it
c a p ita l, c o n shall w ith in fifteen days o f the consolidation and division, conversion or
v e rs io n of
shares in to
re-conversion, file notice w ith the R egistrar o f the same, specifying the shares
sto ck, etc. consolidated and divided, or converted, or the stock re-converted.
(2) I f a company makes default in com plying w ith the requirements of
this section, it shall be liab le to a fine not exceeding fifty rupees fo r every day
during w hich the default continues, and every officer o f the company who
know ingly and w ilfu lly authorizes or perm its the default shall be lia b le to the
lik e penalty.

E ffe c t o f con 52- Where a company having a share ca pital has converted any o f its
v e rs io n of shares in to stock, and filed notice o f the conversion w ith the Registrar, a ll
shares in to
stock. the provisions o f this A c t w hich are applicable to shares o n ly shall cease as
to so much o f the share capital as is converted in to stock ; and the register
o f members o f the company, and the lis t o f members to be filed w ith the
Registrar, shall show the am ount o f stock held by each member instead o f the
am ount o f shares and the particulars relating to shares hereinbefore required
by this A ct.

N o tic e of 53. ( / ) Where a company having a share capital, whether its shares have
increase o(
share c a p ita l
or have not been converted in to stock, has increased its share capital beyond
o r of the registered capital, and where a company not having a share capital has
mem bers.
increased the number o f its members beyond the registered number, it shall
file w ith the Registrar, in the case o f an increase o f share capital, w ith in fifteen
days after the passing of the resolution authorizing the increase, and, in the
case o f an increase o f members, w ith in fifteen days after the increase was
resolved on or took place, notice o f the increase o f capital or members, and
the Registrar shall record the increase.
(2) The notice to be given as aforesaid shall include particulars o f the
classes o f shares affected and the conditions ( if any) subject to which the
new shares are to be issued.
(3) I f a company makes a default in com plying w ith the requirements
o f this section, it shall be lia b le to a fine not exceeding fifty rupees fo r every
day during which the default continues, and every officer o f the company
 Companies- 243

who knowingly and wilfully authorizes or permits the default shall be liable
to the like penalty.

54. (/) A company limited by shares may, by special resolution R eorganiza

confirmed by an order of the Court, modify the conditions contained in its tion of sh are
capital.
memorandum so as to reorganize its share capital, whether by the consolida
tion of shares of different classes or by the division of its shares into shares
of different classes :
Provided that no preference or special privilege attached to or belonging
to any class of shares shall be interfered with except by resolution passed by
a majority in number of shareholders of that class holding three-fourths of
the share capital of that class and every resolution so passed shall bind all
shareholders of the class.
(2) Where an order is made under this section, a certified copy thereof
shall be filed with the Registrar within twenty-one days after the making of
the order, or within such further time as the Court may allow, and the
resolution shall not take effect until such a copy has been so filed.

R eduction of Share Capital.

54A- ( /) No company limited by shares shall have power to buy its own Restrictions
shares or the shares of a public company of which it is a subsidiary company on purchase
by company
unless the consequent reduction of capital is effected and sanctioned in the or loans by
manner provided by sections 55 to 66. com pany for
pu rchase of
(2) No company limited by shares, other than a private company not its own
being a subsidiary company of a public company, shall give, whether directly sh a re s.
or indirectly, and whether by means of a loan, guarantee, the provision of
security or otherwise, any financial assistance for the purpose of or in connec
tion with a purchase made or to be made by any person of any shares in
the company :
Provided that nothing in this section shall be taken to prohibit, where
the lending of money is part of the ordinary business of a company, the
lending of money by the company in the ordinary course of its business.
(5) If a company acts in contravention of this section, the company
and every officer of the company who is knowingly and wilfully in default
shall be liable to a fine not exceeding one thousand rupees.
(4) Nothing in this section shall affect the right of a company to
redeem any shares issued under section 105B.
55. (I) Subject to confirmation by the Court, a company limited by Reduction of
shares, if so authorized by its articles, may by special resolution reduce its sh are capital.
share capital in any way, and in particular (without prejudice to the generality
of the foregoing power) may
(a) extinguish or reduce the liability on any of its shares in respect of
share capital not paid up ; or
 244 Companies

( b) either w ith or w ith o u t extinguishing or reducing lia b ility on any

o f its shares, cancel any paid-up share capital which is lost or
unrepresented by available assets ; or
(c) either w ith or w ith o u t extinguishing or reducing lia b ility on any of
its shares, pay off any paid-up share capital which is in excess
o f the wants o f the company,
and may, i f and so fa r as is necessary, alter its memorandum by reducing the
am ount o f its share capital and o f its shares accordingly.
(2) A special resolution under this section is in this A c t called a
resolution fo r reducing share capital.

A p p lic a tio n 56. Where a company has passed a resolution fo r reducing share capital,
to C o u rt fo r it may apply by p e titio n to the C ourt fo r an order confirm ing the reduction.
c o n firm in g
o rd e r.

A d d itio n to 57. On and fro m the passing by a company o f a resolution fo r reducing

nam e o f com
p a n y of and share capital, or where the reduction does not involve either the d im in u tio n
re d u ce d . o f any lia b ility in respect o f unpaid share capital o r the payment to any
shareholder o f any paid-up share capital, then on and fro m the making of
the order confirm ing the reduction, the company shall add to its name, u n til
such date as the C ou rt may fix, the words and reduced as the last words
in its name, and those words shall, u n til that date, be deemed to be p a rt of
the name o f the company :
Provided that, where the reduction does not involve either the d im in u
tion o f any lia b ility in respect o f unpaid share capital or the payment to any
shareholder o f any paid-up share capital, the C ourt may, i f it thinks
expedient, dispense altogether w ith the addition o f the words and reduced-

O bjections 58. ( 1) Where the proposed reduction o f share capital involves either
b y c re d ito rs d im in u tio n o f lia b ility in respect o f unpaid share capital, or the payment to
and s e ttle
m e n t o f lis t
any shareholder o f any paid-up share capital, and in any other case i f the
o f o b je c tin g C o u rt so directs, every cre d ito r o f the company who at the date fixed by the
c red ito rs.
C ourt is entitled to any debt or claim which, i f th a t date were the commence
ment o f the w inding up o f the company, w ould be admissible in p ro o f against
the company, shall be entitled to object to the reduction.
(2) The C ourt shall settle a lis t o f creditors so entitled to object, and
fo r th at purpose shall ascertain, as fa r as possible w ithout requiring an
application fro m any creditor, the names o f those creditors and the nature
and am ount o f the ir debts or claim s, and may publish notices fixing a day
or days w ith in which creditors not entered on the lis t are to claim to be so
entered or are to be excluded fro m the rig h t o f objecting to the reduction.

P o w e r to 59. Where a creditor entered on the lis t o f creditors whose debt or claim
dispense is not discharged or determined does n o t consent to the reduction, the C ourt
w it h consent
o f c re d ito r may, i f it thinks fit, dispense w ith the consent o f that creditor, on the company
 Companies. 245

securing payment o f his debt or claim by appropriating, as the C ourt may o n se c u rity
direct, the fo llo w ing am ount (th a t is to say), b e in g given
fo r h is debt.
( i ) i f the company adm its the fu ll amount o f his debt or claim , or,
though not adm ittin g it, is w illin g to provide fo r it, then the
f u ll am ount o f the debt or claim ;
( ii) i f the company does not adm it or is not w illin g to provide fo r
the fu ll am ount o f the debt or claim , o r i f the amount is
contingent or not ascertained, then an amount fixed by the
C o u rt after the like in q u iry and adjudication as if the company
were being wound up by the C ourt.

60. The C ourt, i f satisfied, w ith respect to every creditor of the company
O rder con
who under th is A c t is entitled to object to the reduction, th a t either his firm in g re
consent to the reduction has been obtained or his debt or claim has been d uction.

discharged or has been determined or has been secured, may make an order
confirm ing the reduction on such terms and conditions as it thinks fit.

61. ( / ) The R egistrar, on production to h im o f an order o f the C ourt R e g is tra tio n

confirm ing the reduction o f the share capital o f a company, and on the filin g o f o rd e r anU
m in u te o f
w ith h im o f a certified copy o f the order and o f a m inute (approved by the re d u ctio n .
C ourt) showing, w ith respect to the share capital of the com pany as altered
by the order, the amount o f the share capital, the number o f shares into
w hich it is to be divided and the am ount o f each share, and the amount
( if any) at the date o f the registration deemed to be paid up on each share,
shall register the order and m inute.
(2) On the registration, and not before, the resolution fo r reducing share
capital as confirmed by the order so registered shall take effect-
(J) Notice o f the registration shall be published in such manner as the
C o u rt may direct.
(4) The R egistrar shall c e rtify under his hand the registration o f the
order and m inute, and his certificate shall be conclusive evidence th a t a ll the
requirements o f this A c t w ith respect to reduction o f share capital have been
com plied w ith , and th a t the share ca p ita l o f the company is such as is stated
in the m inute.

62. (7) The m inute when registered shall be deemed to be substituted M in u te to

fo r the corresponding p a rt o f the memorandum o f the company, and shall be fo rm p a rt o f
m e m o ra n
v a lid and alterable as i f it had been o rig in a lly contained therein, and shall dum .
be embodied in every copy o f the memorandum issued after its registration.
(2) I f a com pany makes default in com plying w ith the requirements of
this section, i t shall be lia b le to a fine not exceeding ten rupees fo r each copy
in respect of which default is made, and every officer o f the company who
kn o w in g ly and w ilfu lly authorizes or perm its the default shall be liable to the
lik e penalty.
 246 Companies.

L ia b ility of 63. ( / ) A member o f the company, past or present, shall not be liable
m em bers in in respect o f any share to any call or co n trib u tio n exceeding in am ount the
respect o f
reduced difference ( if any) between the am ount paid, or (as the case may be) the
shares. reduced amount, i f any, which is to be deemed to have been paid, on the
share and the am ount o f the share as fixed by the m inute :
Provided that, i f any creditor, entitled in respect o f any debt or claim to
object to the reduction o f share capital, is, by reason o f his ignorance o f the
proceedings fo r reduction, or o f th e ir nature and effect w ith respect to his
claim , not entered on the lis t o f creditors, and, after the reduction the
company is unable, w ith in the meaning o f the provisions o f this A c t w ith
respect to w inding up by the C ourt, to pay the am ount o f his debt o r claim ,
then
( i ) every person who was a member o f the company at the date of
the registration o f the order fo r reduction and m inute shall be
lia b le to contribute fo r the payment o f that debt or claim an
am ount not exceeding the amount which he w ould have been
lia b le to contribute if the company had commenced to be
wound up on the day before that registration ; and
(ii) i f the company is wound up, the C ourt, on the application o f any
such creditor and p ro of o f his ignorance as aforesaid, may, if
it thinks fit, settle accordingly a lis t o f persons so liable to
contribute, and make and enforce calls and orders on the
contributories settled on the lis t as i f they were ordinary
contributories in a w inding up.
(2) N othing in this section shall affect the rights o f the contributories
among themselves.

P e n a lty on 64. I f any officer o f the company w ilfu lly conceals the name o f any
c o ncealm ent creditor entitled to object to the reduction, or w ilfu lly misrepresents the nature
o f n a ire o f
c re d ito r. or am ount o f the debt or claim o f any creditor, or i f any officer o f the
company abets any such concealment or misrepresentation as aforesaid, every
such officer shall be punishable w ith im prisonm ent which may extend to one
year, or w ith fine, or w ith both.

P u b lic a tio n 65. In any case o f reduction o f share capital, the C ourt may require the
o f reasons company to publish as the C ourt directs the reasons fo r reduction, or such
fo r reduc
tio n . other in fo rm a tio n in regard thereto as the C ourt may th in k expedient, w ith a
view to give proper info rm atio n to the public, and, if the C ourt thinks fit, the
causes w hich led to the reduction.

In cre a se and 66. A company lim ite d by guarantee and registered after the commence
red u ctio n of ment o f this A c t may, i f i t has a share capital and is so authorized by its
share c a p ita l
in case o f a articles, increase or reduce its share capital in the same manner and subject
com pany to the same conditions in and subject to which a company lim ite d by shares
lim ite d by
guarantee may increase or reduce its share capital under the provisions o f this A ct.
h a v in g a
share ca p ita l.
 Companies- 247

Variation of Shareholders' Rights-

6 6 A. ( / ) I f in the case o f a company, the share capital o f which is R ights of

h o ld e rs o f
divided in to different classes o f shares, provision is made by the memorandum special
o r articles fo r authorizing the variation o f the rights attached to any class of classes o f
shares in the company, subject to the consent o f any specified proportion of shares.

the holders o f the issued shares o f that class or the sanction o f a resolution
passed at a separate meeting o f the holders o f those shares, and in pursuance
o f the said provision the rights attached to any such class o f shares are at any
tim e varied, the holders o f not less in the aggregate than ten per cent- o f the
issued shares o f th a t class, being persons who did not consent to or vote in
favour o f the resolution fo r the variation, may apply to the C ourt to have the
v a ria tio n cancelled, and where any such application is made the variation
shall n o t have effect unless and u n til it is confirm ed by the C ourt.
(2) A n application under this section must be made w ith in fourteen days
after the date on w hich the consent was given or the resolution was passed,
as the case may be, and may be made on behalf o f the shareholders entitled
to make the applicatio n by such one or more o f th e ir number as they may
appoint in w ritin g fo r the purpose.
(3) On any such application the C ourt, after hearing the applicant and
any other persons who apply to the C ourt to be heard and appear to the
C o u rt to be interested in the application, may, i f it is satisfied having regard
to a ll the circumstances of the case that the va ria tio n w ould u n fa irly prej udice
the shareholders o f the class represented by the applicant, disallow the
varia tio n and shall, i f n o t so satisfied, confirm the variation.
(4) The decision o f the C o u rt on any such application shall be final.
(5) The company shall w ith in fifteen days after the service on the company
o f any order made on any such application forw ard a copy o f the order to the
Registrar, and, i f default is made in com plying w ith this provision, the
company and every officer o f the company who is know ingly and w ilfu lly in
default shall be lia ble to a fine not exceeding fifty rupees.
(6) The expression variation in this section includes abrogation
and the expression varied shall be construed accordingly.

Registration of Unlimited Company as Limited-

61- ( / ) Subject to the provisions o f this section, any company registered R e g istra tio n
as u n lim ite d may register under this A c t as lim ite d , or any company already o f u n lim ite d
com pany as
registered as a lim ite d company may re-register under this A ct, but the lim ite d .
registration o f an un lim ite d company as a lim ite d company shall not affect
any debts, lia b ilitie s , obligations or contracts incurred or entered in to by, to,
w ith or on behalf of, the company before the registration, and those debts,
lia b ilitie s , obligations and contracts may be enforced in manner provided by
P art V I I I o f this A c t in the case o f a company registered in pursuance of
th a t Part.
(2) On registration in pursuance o f this section, the Registrar shall close
the form er registration o f the company, and may dispense w ith the delivery
 248 Companies.

to him of copies of any documents with copies of which he was furnished on

the occasion of the original registration of the company ; but, save as
aforesaid, the registration shall take place in the same manner and shall
have effect as if it were the first registration of the company under this Act.

Pow er of un 68. An unlimited company having a share capital may, by its resolution
lim ited com for registration as a lim ited company in pursuance of this Act, do either or
pany to
provide for both of the following things, namely :
reserve (a) increase the nominal amount of its share capital by increasing the
share capital
On re-regis nominal amount of each of its shares, but subject to the
tration. condition that no part of the am ount by which its capital is so
increased shall be capable of being called up except in the
event and for the purposes of the company being wound u p ;
( b ) provide that a specified portion of its uncalled share capital shall
not be capable of being called up except in the event and for
the purposes of the company being wound up.

Reserve L ia b ility o f L im ited C om pany.

Reserve 69. A limited company may by special resolution determine that any
liability of portion of its share capital which has not been already called up shall not be
lim ited
company. capable of being called up, except in the event and for the purposes of the
company being wound up, and thereupon that portion of its share capital shall
not be capable of being called up except in the event and for the purposes
aforesaid.
U nlim ited L iability of Directors.
Lim ited 70. (/) In a limited company the liability of the directors or of any
company director may, if so provided by the memorandum, be unlimited.
may have
directoi s (2) In a limited company in which the liability of any director is
w ith un unlimited, the directors of the company (if any) and the member who proposes
lim ited
liability. a person for election or appointment to the office of director shall add to that
proposal a statement that the liability of the person holding that office will be
unlimited, and the promoters and officers of the company, or one of them, shall,
before the person accepts the office or acts therein, give him notice in writing
that his liability will be unlimited.
(5) If any director or proposer makes default in adding such a state
ment, or if any promoter or officer of the company makes default in giving
such a notice, he shall be liable to a fine not exceeding one thousand rupees
and shall also be liable for any damage which the person so elected or
appointed may sustain from the default, but the liability of the person elected
or appointed shall not be affected by the default.
Special re 71. (/) A limited company, if so authorized by its articles, may by special
solution of resolution alter its memorandum so as to render unlimited the liability of its
lim ited com
pany making directors or of any director.
liability
of directors
unlim ited.
 Companies. 249

(2) U pon the passing of any such special resolution, the provisions
thereof shall be as v a lid as i f they had been o rig in a lly contained in the
memorandum.

P A R T IV .

M anagement and A d m in is t r a t io n .

Office and Name.

72. ( / ) A company shall as fro m the day on w hich i t begins to carry on R egistered
business, or as fro m the twenty-eighth day after the date o f its incorporation, office o f
com pany.
whichever is the earlier,* have a registered office to which a ll com munications
and notices may be addressed.
(2) Notice o f the situation of the registered office and o f any change
therein shall be given w ith in twenty-eight days after the date o f the incorpora
tio n o f the company or o f the change, as the case may be, to the Registrar
who shall record the same.
(3) The inclusion in the annual return of a company o f the statement
as to the address o f its registered office shall not be taken to satisfy the
obligation imposed by this section.
(4) I f a company carries on business w ith o u t com plying w ith the
requirements o f this section, it shall be lia ble to a fine not exceeding fifty
rupees fo r every day during w hich i t so carries on business.

73. Every lim ite d company P u b lica tio n

(a) shall p a in t or affix, and keep painted or affixed, its name on the o f name b y
a lim ite d
outside o f every office or place in w hich its business is carried com pany.
on, in a conspicuous position, in letters easily legible and in
English characters, and also, i f the registered office be situate
in a place beyond the local lim its of the ordinary o rig in a l c iv il
ju ris d ic tio n o f the H ig h C ourt, in the characters o f one o f the
vernacular languages used in that place ;
( b) shall have its name engraven in legible characters on its s e a l;
(c) shall have its name mentioned in legible Burmese 1 characters in
a ll bill-heads and letter paper and in a ll notices, advertisements
and other official publications of the company, and in a ll bills
o f exchange, hundis, prom issory notes, endorsements, cheques
and orders fo r money or goods purporting to be signed by or
on behalf o f the company, and in a ll b ills o f parcels, invoices,
receipts and letters o f credit o f the company.

74. ( / ) I f a lim ite d company does not p a in t or affix, and keep painted Penalties fo r
or affixed, its name in manner directed by this A ct, it shall be liable to a n o n -p u b lica
tio n o f name.
fine n o t exceeding fifty rupees fo r not so painting or affixing its name, and
fo r every day during w hich its name is not so kept painted or affixed, and
1 Substituted for the w ord E n g lish by the Union of Burma (Adaptation of Laws) O rder
1948.
 250 Companies.

every officer of the company, who knowingly and wilfully authorizes

or permits the default, shall be liable to the like penalty.
(2) If any officer of a limited company, or any person on its behalf,
uses or authorizes the use of any seal purporting to be a seal of the company
whereon its name is not so engraven as aforesaid, or issues or authorizes the
issue of any bill-head, letter paper, notice, advertisement or other official
publication of the company, or signs or authorizes to be signed on behalf of
the company any bill of exchange, hundi, promissory note, endorsement,
cheque or order for money or goods, or issues or authorizes to be issued any
bill of parcels, invoice, receipt or letter of credit of the company, wherein
its name is not mentioned in manner aforesaid, he shall be liable to a fine
not exceeding five hundred rupees, and shall further be personally liable to
the holder of any such bill of exchange, hundi, promissory note, cheque or
order for money or goods, for the am ount thereof, unless the same is duly
paid by the company.

Publication 75. (/) Where any notice, advertisement or other official publication of
of authorized a company contains a statement of the amount of the authorized capital of
as w ell as
subscribed the company, such notice, advertisement or other official publication shall
and paid-up also contain a statement in an equally prominent position and in equally
capital.
conspicuous characters of the amount of the capital which has been
subscribed and the amount paid up.
(2) Any company which makes default in complying with the
requirements of this section and every officer of the company who is
knowingly a party to the default shall be liable to a fine not exceeding one
thousand rupees.

Meetings and Proceedings.

Annual 76. (/) A general meeting of every company shall be held within
general eighteen months from the date of its incorporation and thereafter once at least
meeting
in every calendar year and not more than fifteen months after the holding of
the last preceding general meeting.
(2) If default is made in holding a meeting in accordance with
the provisions of this section, the company and every director or manager of
the company who is knowingly and wilfully a party to the default shall be
liable to a fine not exceeding five hundred rupees-
(i) If default is made as aforesaid, the Court may, on the application
of any member of the company, call or direct the calling of a general
meeting of the company.

Statutory 77. (/) Every company limited by shares and every company limited by
m eeting of
c ompany. guarantee and having a share capital shall, within a period of not less than
one month nor more than six. months from the date a t which the company
is entitled to commence business, hold a general meeting of the members of
the company, which shall be called the statutory meeting.
 Companies- 251

(2) The directors shall, at least twenty-one days before the day
on which the meeting is held, forward a report (in this A ct referred to as
the statutory report) certified as required by this section to every member of
the company.
(3) The statutory report shall be certified by not less than two directors
of the company, or by the chairman of the directors if authorized in this
behalf by the directors, and shall state
(a) the total number of shares allotted, distinguishing shares allotted
as fully or partly paid up otherwise than in cash, and stating
in the case of shares partly paid up the extent to which they
are so paid up, and in either case the consideration for which
they have been allotted ;
(b ) the total amount of cash received by the company in respect
of all the shares allotted, distinguished as aforesaid;
(c) an abstract of the receipts of the company and of the payments
made thereout up to a date within seven days of the date of
the report, exhibiting under distinctive headings the receipts of
the company from shares and debentures and other sources,
the payments made thereout, and particulars concerning the
balance remaining in hand, and an account or estimate of the
preliminary expenses of the company showing separately any
commission or discount paid on the issue or sale of sh a re s;
(d) the names, addresses and descriptions of the directors, auditors,
managing agents and managers, if any, and secretary of the
company and the changes, if any, which have occurred since
the date of the incorporation ;
(e) the particulars of any contract, the modification of which is to be
submitted to the meeting for its approval, together with the
particulars of the modification or proposed modification ;
(/) the extent to which underwriting contracts, if any, have been
carried o u t ;
(g) the arrears, if any, due on calls from directors, managing agents
and managers ; and
(h) the particulars of any commission or brokerage paid or to be paid
in connection with the issue or sale of shares to any director,
managing agent or manager, or a partner of the managing
agent if the managing agent is a firm, or if the managing agent
is a private company a director thereof.
(4 ) The statutory report shall, so far as it relates to the shares allotted
by the company, and to the cash received in respect of such shares and to
the receipts and payments of the company, be certified as correct by the
auditors of the company.
(5) The directors shall cause a copy of the statutory report certified as
required by this section to be delivered to the R egistrar for registration
forthwith after the sending thereof to the members of the company.
 252 Companies.

(6) The directors shall cause a list showing the names, descriptions and
addresses of the members of the company, and the number of shares held by
them respectively, to be produced at the commencement of the meeting, and
to remain open and accessible to any member of the company during the
continuance of the meeting.
(7) The members of the company present at the meeting shall be at
liberty to discuss any m atter relating to the form ation of the company
or arising out of the statutory report, whether previous notice has bsen given
or not, but no resolution of which notice has not been given in accordance
with the articles may be passed.
(S) The meeting may adjourn from time to time, and at any adjourned
meeting any resolution of which notice has been given in accordance with the
articles, either before or subsequently to the former meeting, may be passed,
and the adjourned meeting shall have the same powers as an original
meeting.
(9) If a petition is presented to the Court in manner provided by Part
V for winding up the company on the ground of default in filing the
statutory report or in holding the statutory meeting, the Court may, instead
of directing that the company be wound up, give directions for the statutory
report to be filed or a meeting to be held, or make such other order as may
be just-
(10) In the event of any default in complying with the provisions of this
section every director of the company who is guilty of or who knowingly and
wilfully authorizes or permits the default shall be liable to a fine
not exceeding five hundred rupees.
(77) This section shall not apply to a private company.

C alling of 78. (/) Notwithstanding anything in the articles, the directors of a

e x tra company which has a share capital shall, on the requisition of the holders of
ordinary
general not less than one-tenth of the issued share capital of the company
m eeting on upon which all calls or other sums then due have been paid, forthwith
requisition.
proceed to call an extraordinary general meeting of the company.
(2) The requisition must state the objects of the meeting, and must be
signed by the requisitionists and deposited at the registered office of
the company, and may consist of several documents in like form, each signed
by one or more requisitionists.
(3) If the directors do not proceed within twenty-one days from
the date of the requisition being so deposited to cause a meeting to be called,
the requisitionists, or a m ajority of them in value, may themselves call the
meeting, but in either case any meeting so called shall be held within three
months from the date of the deposit of the requisition.
(4) Any meeting called under this section by the requisitionists shall be
called in the same manner, as nearly as possible, as that in which meetings
are to be called by directors.
(5) Any reasonable expenses incurred by the requisitionists by reason
of the failure of the directors duly to convene a meeting shall be repaid to
 Companies. 253

the requisitionists by the company, and any sum so repaid shall be retained
by the company out o f any sums due or to become due fro m the company
by way o f fees or other rem uneration fo r th e ir services to such o f
the directors as were in default.

79. P rovisions as
(J) The fo llo w in g provisions shall have effect w ith respect
to m eetings
to meetings o f a company other than a private company not being a and votes.
subsidiary o f a public company and the procedure thereat, notwithstanding
any provision made in the articles of the company in this behalf :
(a) a meeting o f a company other than a meeting fo r the passing o f a
special resolution may be called by not less than fourteen days
notice in w ritin g ; but w ith the consent o f a ll the members
entitled to receive notice o f some pa rticu la r meeting that
meeting may be convened by such shorter notice and in such
manner as those members may th in k f i t ;
(b) notice o f the meeting of a company w ith a statement o f the
business to be transacted at the meeting shall be served on
every member in the manner in which notices are required to
be served by Table A and fo r the purpose o f this clause the
expression Table A means that Table as fo r the tim e being
in fo rc e ; b u t the accidental om ission to give notice to, or the
non-receipt o f notice by, any member shall not invalidate the
proceedings at any meeting ;
(c) five members present in person or by proxy, or the chairm an of
the meeting, or any member or members holding not less than
one-tenth o f the issued capital which carries voting rights, shall
be entitled to demand a p o l l : Provided that, in the case o f a
private company, i f not more than seven members are
personally present, one member, and i f more than seven
members are personally present, two members, shall be
entitled to demand a p o l l ;
( d) an instrum ent appointing a proxy, i f in the form set out in regula
tio n 67 o f Table A , shall not be questioned on the ground that
i t fails to com ply w ith any special requirements specified fo r
such instruments by the articles ; and
( e) any shareholder whose name is entered in the register o f share
holders o f the company shall enjoy the same rights and be
subject to the same lia b ilitie s as a ll other shareholders o f the
same class.

(2) The fo llo w in g provisions shall have effect in so fa r as the articles o f

the company do not make other provision in that b e h a lf:
(a) two or more members holding not less than one-tenth o f the total
share capital paid up or, i f the company has not a share capital,
not less than five per cent, in number o f the members o f the
company may call a meeting ;
 254 Companies-

(b) in the case o f a private company two members, and in the case o f
any other company five members, personally present shall be a
q u o ru m ;
(c) any member elected by the members present at a meeting may be
chairm an th e re o f;
( d) in the case o f a company o rig in a lly having a share capital, every
member shall have one vote in respect of each share or each
hundred rupees o f stock held by him , and in any other case
every member shall have one v o te ;
(e) on a p o ll votes may be given either personally or by proxy ;
(j) the instrum ent appointing a proxy shall be in w ritin g under the
hand o f the appointor or o f his attorney duly authorized in
w ritin g , or, if the appointor is a corporation, either under seal
or under the hand o f an officer or an attorney duly authorized ; and
(g) a proxy must be a member o f the company.
(3) I f fo r any reason it is im practicable to call a meeting o f a company
in any manner in w hich meetings of th a t company may be called, or to
conduct the meeting o f the company in manner prescribed by the articles or
this A c t, the C o u rt may, either o f its own m otion or on the application o f any
director o f the company or o f any member o f the company who would be
entitled to vote at the meeting, order a meeting o f the company to be called,
held and conducted in such manner as the C ourt thinks fit, and where any
such order is given may give such ancillary or consequential directions as it
thinks expedient, and any meeting called, held and conducted in accordance
w ith any such order shall fo r a ll purposes be deemed to be a meeting o f the
company du ly called, held and conducted-

Representa 80- A company w hich is a member o f another company may, by resolu

tio n o f tio n o f the directors, authorize any o f its officials or any other person to act
com panies
a t m eetings as its representative at any meeting o f that other company, and the person so
o f o th e r authorized shall be entitled to exercise the same powers on behalf o f the
com panies of
w h ic h they company which he represents as if he were an in d ivid u a l shareholder o f that
are m em bers. other company.

E x tra 81- ( / ) A resolution shall be an extraordinary resolution when it has

o rd in a ry and been passed by a m a jo rity o f not less than three-fourths o f such members
special
re s o lu tio n s .
entitled to vote as are present in person or by proxy (where proxies are
allowed) at a general meeting o f which notice specifying the intention to
propose the resolution as an extraordinary resolution has been duly given.
(2) A resolution shall be a special resolution when it has been passed by
such a m a jo rity as is required fo r the passing o f an extraordinary resolution
and at a general meeting o f which not less than twenty-one days notice
specifying the intention to propose the resolution as a special resolution has
been duly given :

Provided that, i f a ll the members entitled to attend and vote at any such
meeting so agree, a resolution may be proposed and passed as a special
 Companies. 255

resolution at a meeting of which less than twenty-one days notice has been
given.
(J) A t any meeting at which an extraordinary resolut ion or a special
resolution is submitted to be passed a declaration of the chairman on a show
of hands that the resolution is carried shall, unless a poll is demanded, be
conclusive evidence of the fact without proof of the number or proportion of
the votes recorded in favour of or against the resolution.
(4 ) A t any meeting at which an extraordinary resolution or a special
resolution is submitted to be passed a poll may be demanded.
(5) In a case where, if a poll is demanded, it may in accordance with the
articles be taken in such manner as the chairman may direct, it may, if the
chairman so directs, be taken at the meeting at which it is demanded.
(6) When a poll is demanded in accordance with this section, in comput
ing the majority on the poll, reference shall be had to the number of votes to
which each member is entitled by the articles of the company or under this
Act.
(7) For the purposes of this section notice of a meeting shall be deemed
to be duly given and the meeting to be duly held when the notice is given and
the meeting held in manner provided by the articles or under this Act.

82. (;) A copy of every special and extraordinary resolution shall, Registration
within fifteen days from the passing thereof, be printed or typewritten and a n d copits of
duly certified under the signature of an officer of the company and filed with special
extra
and
the Registrar who shall record the same. o rdinary
(2) Where articles have been registered, a copy of every special resolu resolutions.
tion for the time being in force shall be embodied in or annexed to every
copy of the articles issued after the date of the resolution.
(5) Where articles have not been registered, a copy of every special
resolution shall be forwarded in print to any member at his request, on pay
ment of one rupee or such less sum as the company may direct.
{4) If a company makes default in so filing with the Registrar a copy of
a special or extraordinary resolution, it shall be liable to a fine not exceeding
twenty rupees for every day during which the default continues.
(5) If a company makes default in embodying in or annexing to a copy
of its articles or in forwarding in print to a member when required by this
section a copy of a special resolution, it shall be liable to a fine not exceeding
ten rupees for each copy in respect of which default is made.
(6) Every officer of a company who knowingly and wilfully authorizes or
permits any default by the company in complying with the requirements of
this section shall be liable to the like penalty as is imposed by this section on
the company for that default-
83. (1) Every company shall cause minutes of all proceedings of general Minutes of
meetings and of its directors to be entered in books kept for that purpose. proceedings
of general
(2) Any such minute, if purporting to be signed by the chairman ofmeetings
the
and of its
meeting at which the proceedings were had, or by the chairman of the next directors.
succeeding meeting, shall be evidence of the proceedings.
 256 Companies-

(3) Until the contrary is proved, every general meeting of the company
or meeting of directors in respect of the proceedings whereof minutes have
been so made shall be deemed to have been duly called and held, and all
proceedings had thereat to have been duly had, and all appointments of
directors or liquidators shall be deemed to be valid.
(4) The books containing the minutes of proceedings of any general
meeting of a company held after the 15th January, 1937,1 shall be kept at the
registered office of the company and shall during business hours (subject to
such reasonable restrictions as the company may by its articles or in general
meeting impose so that not less than two hours in each day be allowed for
inspection) be open to the inspection of any member without charge.
(5) Any member shall at any time after seven days from the meeting be
entitled to be furnished within seven days after he has made a request in that
behalf to the company with a copy of any minutes referred to in sub-section
(4) at a charge not exceeding six annas for every hundred words,
(6) If any inspection required under sub-section (4 ) of this section is
refused, or if any copy required under sub-section (5) of this section is not
furnished within the time specified in sub-section (5), the company and every
officer of the company who is knowingly and wilfully in default shall be liable
in respect of each offence to a fine not exceeding twenty-five rupees, and to a
further fine of twenty-five rupees for every day during which the default
continues.
(7) In the case of any such refusal or default, the Court may by order
compel an immediate inspection of the books in respect of all proceedings of
general meetings or direct that the copies required shall be sent to the persons
requiring them.

Directors-
D irectors 83A. (/) Every company shair have at least three directors.
obligatory. (2) This section shall not apply to a private company except a private
company being a subsidiary company of a public company.

Appointment 83B. (/) In default of and subject to any regulations in the articles of a
of directors. company other than a private company_
(i) the subscribers of the memorandum shall be deemed to be the
directors of the company until the first directors shall have been
appointed;
(ii) the directors of the company shall be appointed by the members
in general meeting ; and
(iii) any casual vacancy occurring among the directors may be filled up
by the directors, but the person so appointed shall be subject
to retirement at the same time as if he had become a director
on the day on which the director in whose place he is appointed
was last appointed a director-
1 Date of comm encement of the In d ian C om panies (Amendment lAct, 1936 (India Act X XII,
1936).
 Companies- 257

(2) N otw ithstanding anything contained in the articles of a company

other than a private company, not less than tw o-thirds o f the whole number
o f directors shall be persons whose period o f office is liable to determ ination
at any tim e by retirem ent o f directors in ro tation :
Provided that nothing herein contained shall apply to a company
incorporated before the 15th January, 1937,1 where by virtue o f the articles o f
the company the number o f directors whose period o f office is liable to deter
m ination at any tim e by retirem ent o f directors in ro ta tio n fa lls below the
tw o-thirds p ro portion mentioned in this section.

84. ( / ) A person shall not be capable o f being appointed director o f a R e striction s

company by the articles, and shall not be named as a director or proposed o n a P P n t-
director o f a company in any prospectus issued by or on behalf o f the company or a d ve rtisc-
in rela tion to any intended company or in any statement in lieu o f prospectus n.eht of
filed by or on behalf o f a company, unless, before the registration o f the
articles or the publication o f the prospectus, or the filin g o f the statement in
lie u o f prospectus, as the case may be, he has by him self or by his agent
authorized in w ritin g

(i) signed and filed w ith the R egistrar a consent in w ritin g to act as
such d ire c to r; and
( ii) save in the case of companies not having a share capital, either
signed the memorandum fo r a number o f shares not less than
his qualification ( if any) or taken from the company and paid
or agreed to pay fo r his qualification shares o r signed and filed
w ith the R egistrar a contract in w ritin g to take fro m the company
and pay fo r his qualification shares ( if any) or made and filed
w ith the Registrar an affidavit to the effect th a t a num ber of
shares, not less than his qualification ( if any), are registered in
his name.

(2) On the application fo r registration o f the memorandum and articles,

i f any, o f a company the applicant shall file w ith the Registrar a lis t o f the
persons who have consented to be directors o f the company, and, i f this lis t
contains the name of any person who has not so consented, the applicant shall
be liable to a fine not exceeding five hundred rupees,
(5) T his section shall not apply to a private company or a company
w hich was a private company before becoming a public company nor to a
prospectus issued by or on behalf o f a company after the expiration o f one
year fro m the date at w hich the company is entitled to commence business-

85. ( 1) W ith o u t prejudice to the restrictions imposed by section 84, i t Qualification

shall be the duty o f every directo r who is by the articles required to hold a o director
specified share qualification, and who is not already qualified, to obtain his
qualifica tio n w ith in two months after his appointment, or such shorter tim e as
may be fixed by the articles.

1 D ate i f con m encen.ent O f tl,e In d ia n Com panies (Am endm ent) Act, 1936 (In d ia A c t X X I I , 1936).

17
 258 Companies.

(2) I f , after the expiration o f the said period or shorter tim e, any
unqualified person acts as a director o f the company, he shall be liable to a
fine not exceeding fifty rupees fo r every day between the expiration o f the
said period or shorter tim e and the last day on which it is proved that he
acted as a director.

V a lid ity o f 86. The acts o f a director shall be va lid notw ithstanding any defect that
acts o f
d ire c to rs .
may afterwards be discovered in his appointm ent or qualification : Provided
th a t nothing in this section shall be deemed to give v a lid ity to acts done by a
director after the appointm ent o f such director has been shown to be in va lid .

In e lig ib ility 86 A . ( / ) I f any person being an undischarged insolvent acts as director

o f b a n kru p t
to act as o r managing agent or manager o f any company, he shall be liable to im prison
d ire c to r. ment fo r a term not exceeding tw o years, o r to a fine not exceeding one
thousand rupees, or to both.
(2) In this section the expression company includes a company
incorporated outside the U nion o f Burm a which has an established place o f
business w ith in the U nion o f Burm a.

A ssig n m e n t 86 B. I f in the case o f any company provision is made by the articles or

o f office by
by any agreement entered in to between any person and the company fo r
directo rs.
em powering a director or manager o f the company to assign his office as such
to another person, any assignment o f office made in pursuance o f the said
provision shall, notw ithstanding anything to the contrary contained in the
said provision, be o f no effect unless and u n til it is approved by a special
resolution o f the company :

Provided that the exercise by a director o f a power to appoint an

alternate o r substitute director to act fo r him during an absence o f n o t less
than three m onths fro m the d is tric t in w hich meetings of the directors are
o rd in a rily held, i f done w ith the approval o f the boastl o f directors, shall not
be deemed to be an assignment o f office w ith in the meaning o f this section :

Provided always tha t any such alternate or substitute director shall ipso
facto vacate office i f and when the appoin tor returns to the d is tric t in which
meetings o f the directors are o rd in a rily held.

Avoidance 86 C. Save as provided in this section, any provision, whether contained

provisions
relieving
in the articles o f a company or in any contract w ith a company or otherwise,
liability o f fo r exempting any director, manager or officer o f the company, or any person
directors.
(whether an officer o f the company or not) employed by the company as
a u d ito r, fro m or indem nifying h im against any lia b ility which by virtue of
any ru le o f law w ould otherwise attach to h im in respect o f any negligence,
default, breach o f duty or breach o f tru st o f w hich he may be g u ilty in rela
tio n to the company shall be void :
 Companies- 259

Provided that
(a) in relation to any such provision w hich is in force on the 15th
January, 1937,1 this section shall have effect only on the expira
tio n o f a period o f six months fro m that date, and
( b) nothing in this section shall operate to deprive any person o f any
exem ption or rig h t to be indem nified in respect o f anything
done or om itted to be done by him w hile any such provision
was in force, and
(c) notw ithstanding anything in this section, a company may. in
pursuance o f any such provision as aforesaid, indem nify any
such director, manager, officer or auditor against any lia b ility
incurred by him in defending any proceedings, whether c iv il or
crim in a l, in w hich judgm ent is given in his favour or in which
he is acquitted, or in connection w ith any application under
section 281 o f this A c t in which re lie f is granted to him by the
C ourt.

86D. ( / ) N o company shall make any loan or guarantee any loan Loans of
made to a director o f the company or to a firm o f w hich such director is a directors-
partner or to a private company o f w hich such director is a director.
(2) In the event o f any contravention o f sub-section Q ) any director of
the company who is a party to such contravention shall be punishable w ith
fine w hich may extend to five hundred rupees, and if default is made in
repayment o f the loan or in discharging the guarantee shall be liable jo in tly
and severally fo r the am ount unpaid-
(3) T h is section shall n o t apply to a private company (except a private
company w hich is the subsidiary company o f a public company) or to a
banking company.

86E. N o director or firm o f w hich such director is a partner or private D ire c to r not
company o f w hich such director is a director shall, w ith o u t the consent o f ^
the company in general meeting, hold any office o f p ro fit under the company
except th a t o f a managing director or manager or a legal or technical adviser
or a banker :
Provided th at nothing herein contained shall a pply to a director elected
or appointed before the 15th January, 1937,1 in respect o f any office o f p ro fit
under the company held by h im at the said date.
Explanation. F o r the purposes o f th is section the office of managing
agent shall n o t be deemed to be an office o f p ro fit under the company.

86F. Except w ith the consent o f the directors, a dire cto r o f the company, s?ncton of
d ire cto rs
o r the firm o f w hich he is a partner or any partner o f such firm , or the necessary fo r
private company o f w hich he is a member or director, shall not enter in to ce rta in
co n tra cts.
any contracts fo r the sale, purchase or supply o f goods and m aterials w ith

Date o f com m encem ent of the Indian Com panies (Amendment) Act, 1936 (India Act X X II ,1936)-
 260 Companies.

the company : Provided th a t nothing herein contained shall affect any such
contract or agreement fo r such sale, purchase or supply entered in to before
the 15th January, 1937-1

Rem oval ol 8 6 G. ( / ) The company may by extraordinary resolution remove any

directors.
director, whose period o f office is lia b le to determ ination at any tim e by
retirem ent o f directors in ro ta tio n , before the expiration o f his period o f
office, and may by ordinary resolution appoint another person in his stead.
The person so appointed shall be subject to retirem ent at the same tim e as
i f he had become a director on the day on w hich the director in whose place
he is appointed was last elected director. A director so removed shall not
be reappointed a director by the board o f directors.
(2) T his section shall not apply to directors elected or appointed before
the 15th January, 1937.1

R e s trictio n s 86H . The directors o f a public company or o f a subsidiary company o f

on pow ers o f
d ire c to rs . a public company shall not, except w ith the consent o f the company
concerned in general meeting,
(a) sell or dispose o f the undertaking o f the company ;
( b ) re m it any debt due by a director.
V a c a tio n of
office of 861. (1) The office o f a director shall be vacated if
d ire c to r. (a) he fails to obtain w ith in the tim e specified in sub-section ( 1) o f
section 84, or at any tim e thereafter ceases to hold, the share
q ua lificatio n , i f any, necessary fo r his appointment, or
( b) he is found to be o f unsound m ind by a C ourt o f competent
ju ris d ic tio n , or
(c) he is adjudged an insolvent, or
(d) he fa ils to pay calls made on h im in respect o f shares held by
h im w ith in six months fro m the date o f such calls being made,
or
(e) he or any firm o f which he is a partner o r any private company
o f w hich he is a director, w ith o u t the sanction o f the company
in general meeting, accepts or holds any office o f p ro fit under
the company other than that o f a managing director or manager
or a legal or technical adviser or a banker, or
(/) he absents him sslf from three consecutive meetings o f the
directors or fro m a ll meetings o f the directors fo r a continuous
period o f three months, whichever is the longer, w ith o u t leave
o f absence fro m the board o f directors, o r
(g) he or any firm o f which he is a partner or any private company
o f w hich he is a director accepts a loan or guarantee fro m the
company in contravention o f section 86D, or
( h) he acts in contravention o f section 86F.

1 Date of c mn.encen ent of the Indian Companies (Amendment) Act, 1936 (India Act X X I I , 1936).
 Companies- 261
(2) Nothing contained in this section shall be deemed to preclude a
company from providing by its articles that the office of director shall be
vacated on grounds additional to those specified in this section.

87. ( / ) Every company shall keep at its registered office a register of its R eg ister of
d irectors,
directors, managers and managing agents containing with respect to each of m anagers
them the following particulars, that is to say : a n i m ana
ging ag en ts.
(a) in the case of an individual, his present name in full, any former
name or surname in full, his usual residential address, his
nationality and, if that nationality is not the nationality of
origin, his nationality of origin and his business occupation, if
any, and if he holds any other directorship or directorships the
particulars of such directorship or directorships ;
(b) in the case of a corporation, its corporate name and registered or
principal office, and the full name, address and nationality of
each of its directors ; and
(c) in the case of a firm, the full name, address and nationality of
each partner, and the date on which each became a partner.
(2) The company shall within the periods respectively mentioned in this
sub-section send to the Registrar a return in the prescribed form containing
the particulars specified in the said register, and a notification in the prescribed
form of any change among its directors, managers or managing agents or in
any of the particulars contained in the register.
The period within which the said return is to be sent shall be a period
of fourteen days from the appointment of the first directors of the company,
and the period within which the said notification of a change is to be sent
shall be fourteen days from the happening thereof.
(3) The register to be kept under this section shall during business hours
(subject to such reasonable restrictions as the company may by its articles or
in general meeting impose, so that not less than two hours in each day be
allowed for inspection) be open to the inspection of any member of the
company without charge and of any other person on payment of one rupee or
such less sum as the company may impose for each inspection.
(4) If any inspection required under this section is refused, or if default
is made in complying with sub-section ( / ) or sub-section (2) of this section,
the company and every officer of the company who is knowingly and wilfully
in default shall be liable to a fine of fifty rupees.
(5) In the case of any such refusal, the Court, on application made by
the person to whom inspection has been refused and upon notice to the
company, may by order direct an immediate inspection of the register.

Managing Agents.

87A . ( l ) No managing agent shall, after the 15th January, 1937, 1 be D uration of
appointment
appointed to hold office for a term of more than twenty years at a time. of m anaging
agent.
i D ate of com m encem ent of the Indian C om panies (Amendment) Act, 1936 (Ind ia Act X X I I , 1936).
 262 Companies

(2) N otw ithstanding anything to the contrary contained in the articles o f

a company or in any agreement w ith the company, a managing agent o f a
company appointed before the 15th January, 1937,1 shall not continue to hold
office after the expiry o f twenty years fro m the said date unless then reappointed
thereto or unless he has been reappointed thereto before the expiry o f the
said tw enty years.
(3) A managing agent whose office is term inated by virtue o f the provisions
o f sub-section (2) shall upon such term ination be entitled to a charge upon
the assets o f the company by way o f indem nity fo r a ll lia b ilitie s or obligations
p roperly incurred by the managing agent on behalf o f the company subject to
existing charges and encumbrances, if any.
(4) The term in atio n o f the office o f a managing agent by virtu e o f the
provisions o f sub-section (2) shall not take effect u n til a ll moneys payable to
the managing agent fo r loans made to or remuneration due up to the date o f
such term ination fro m the company are paid.
(5) N othing in th is section shall apply to a private company which is
n ot the subsidiary company o f a p ublic company.

C o n d itio n s 87B. N othw ithstanding anything to the contrary contained in the articles
a p p licable o f the company or in any agreement w ith the company
m anaging
agents. (a) a company may, by resolution passed at a general meeting of
w hich notice has been given to the managing agent in the
same manner as to members o f the company, remove a manag
ing agent i f he is convicted o f an offence in relation to the
affairs o f the company punishable under the Penal Code, and
being under the provisions of the Code o f C rim in a l Procedure
n o n -b a ila b le ; and, fo r the purposes o f this clause, where the
managing agent is a firm or company an offence com m itted by
a member o f such firm or a director o f or an officer holding a
general pow er-of-attorney fro m such company shall be deemed
to be an offence com m itted by such firm or co m p a n y:
Provided that a managing agent shall not be liable to be removed
under the provisions hereof i f the offending member, director
or officer as aforesaid is expelled or dismissed by the managing
agent w ith in th irty days fro m the date o f his conviction or if
his conviction is set aside on a p p e a l;
(b) the office o f a managing agent shall be vacated i f he is adjudged
in s o lv e n t;
(c) a transfer o f his office by a managing agent shall be void unless
approved by the company in general meeting :
Provided th at in the case o f a managing agents firm a change in
the partners thereof shall not be deemed to operate as a transfer
o f the office o f managing agent, so long as one o f the original
partners shall continue to be a partner o f the managing agents

1 Date o f com m encem ent of the Indian Companies (Amendment) Act, 1936 (iudiaA ct X X II, 1936).
 Companies. 263

firm . F o r the purpose o f this proviso o riginal partners

shall mean, in the case o f managing agents appointed before
the 15th January, 1937,1 partners who were partners at the
said date, and in the case o f managing agents appointed after
the said date, partners who were partners at the date o f the
a p p o in tm e n t;
( d) a charge or assignment o f his remuneration or any p a rt thereof
effected by a managing agent shall be void as against the
com pany;
(e) i f a company is wound up either by the C ourt or vo lu n ta rily, any
contract o f management made w ith a managing agent shall be
thereupon determined w ith o u t prejudice, however, to the rig h t
o f the managing agent to recover any moneys recoverable by
the managing agent fro m the company : Provided that where
the C o urt finds th a t the w inding up is due to the negligence or
d efault o f the managing agent him self the managing agent shall
not be entitled to receive any compensation fo r the premature
term in atio n o f his contract o f m anagem ent; and
(/) the appointm ent o f a managing agent, the removal o f a managing
agent and any va ria tio n o f a managing agents contract o f
management made after the 15th January, 1937,1 shall not be
v a lid unless approved by the company by a resolution at a
general meeting o f the company, notw ithstanding anything to
the contrary in section 8 6 E :
Provided th a t nothing herein contained shall apply to the appoint
m ent o f a com panys first managing agent made p rio r to the
issue o f the prospectus or statement in lieu of prospectus where
the terms o f the appointm ent o f such managing agent are there
set fo rth .
87C. ( / ) Where any company appoints a managing agent after the 15th K em unera-
tio n of
January, 1937,1 the rem uneration o f the managing agent shall be a sum based m anaging
on a fixed percentage o f the net annual profits o f the company, w ith provision agent.
fo r a m inim um payment in the case o f absence o f or inadequacy o f profits,
together w ith an office allowance to be defined in the agreement o f manage
ment.
(2) A n y stip u la tio n fo r rem uneration additional to or in any other form
than the rem uneration specified in sub-section (1) shall not be binding on the
company unless sanctioned by a special resolution o f the company.
(5) F o r the purposes o f this section net profits means the profits o f
the company calculated after allow in g fo r a ll the usual w orking charges,
interest on loans and advances, repairs and outgoings, depreciation, bounties
o r subsidies received fro m Government or fro m a p u blic body, profits by way
o f prem ium on shares sold, profits on sale proceeds o f forfeited shares, or
profits fro m the sale o f the whole or part o f the undertaking of the company,

1 Date o f com m encem ent of the Indian C o n v a n ie , (Amendment) Act, 1936 (India Act X X II, 1936)
 264 Companies.

but w ith o u t any deduction in respect o f income-tax or super-tax, or any

other tax or duty on income or revenue, or fo r expenditure by way o f interest
on debentures or otherwise on capital account, or on account o f any sum
w hich may be set aside in each year out o f the profits fo r reserve or any
other special fund,
(4) This section shall not apply to a private company except a private
company w hich is the subsidiary company o f a public company, or to any
company, whose prin cip a l business is the business o f insurance.

Loans to 87D. ( / ) N o company shall make to a managing agent o f the company

m a n a g in g or to any partner o f the firm , i f the managing agent is a firm , or to any
agents.
director o f the private company, i f the managing agent is a private company,
any loan out o f moneys o f the company or guarantee any loan made to a
managing agent.
(2) N oth ing contained in this section shall apply to any credit held by a
managing agent in a current account m aintained, subject to lim its previously
approved by the board o f directors, by the company w ith the managing agent
fo r the purposes o f the com panys business.
(J) In the event o f any contravention o f sub-section ( / ) any director o f
the company who is a party to the m aking o f the loan or giving o f the
guarantee shall be punishable w ith fine which may extend to five hundred
rupees, and i f default is made in repayment o f the loan or discharging the
guarantee shall be liab le jo in tly and severally fo r the amount unpaid.
04) N othing in this section shall apply to a private company except a
private company w hich is the subsidiary company o f a public company.
(5) Except w ith the consent o f three-fourths o f the directors present and
entitled to vote on the resolution, a managing agent o f the company,
or the firm o f w hich he is a partner, or any partner o f such firm ,
or, i f the managing agent is a private company, a member or director thereof,
shall not enter in to any contract fo r the sale, purchase or supply o f goods and
m aterials w ith the company : Provided that nothing herein contained shall
affect any such contract fo r such sale, purchase or supply entered in to before
the 15th January, 1937.1
L o a ns to or 87E. ( / ) N o company incorporated under th is A c t after the 15th
b y co m
panies under January, 1937,1 which is under the management o f a managing agent, shall
the same make any loan to or guarantee any loan made to any company under
m anagem ent.
management by the same managing agent, and no company shall after the
e xpiry o f six m onths from the said date, except by way o f renewal o f an
existing loan or guarantee given, make any loan to or guarantee any loan
made to any such company :
Provided th a t nothing herein contained shall apply to loans made o r
guarantees given by a company to or on behalf o f a company under its own
management o r loans made by or to a company to o r by a subsidiary

1 Date of commencement of the Indian Companies (Amendment) Act, 1936 (India A ct X X II, 1936)
 Companies- 265

company thereof or to guarantees given by a company on behalf of a

subsidiary company thereof.
(2) In the event of any contravention of the provisions of this section,
any director or officer of the company making the loan or giving the
guarantee who is knowingly and wilfully in default shall be liable to a fine
not exceeding one thousand rupees and shall be jointly and severally liable
for any loss incurred by the company in respect of such loan or guarantee.

87F. A company, other than an investment company, that is to say, a P u'chase by

company whose principal business is the acquisition and holding of shares, company of
shares of
stocks, debentures or other securities, shall not purchase shares or debentures company
of any company under management by the same managing agent, unless the under sam e
managing
purchase has been previously approved by a unanimous decision of the board agent.
of directors of the purchasing company.

87G. A managing agent shall not exercise in respect of any company of Restriction
on m anaging
which he is a managing agent a power to issue debentures or, except with the agents
authority of the directors and within the lim itj fixed by them, a power to pow ers of
management.
invest the funds of the company, and any delegation of any such power by a
company to a managing agent shall be void.

87H. A managing agent shall not on his own account engage in any Managing
business which is of the same nature as and directly competes with the agent not to
engage in
business carried on by a company under his management or by a subsidiary business
company of such company. competing
w ith the
business of
m anaged
company.
871. Notwithstanding anything contained in the articles of a company Limit on
other than a private company, the directors, if any, appointed by the managing num ber of
directors
agent shall not exceed in number one-third of the whole number of directors. appointed by
managing
Contracts- agent.

88 . (/) Contracts on behalf of a company may be made as follows (that

Form of
is to sa y ): contracts.

(i) any contract which, if made between private persons, would be by

law required to be in writing, signed by the parties to be
charged therewith, may be made on behalf of the company in
writing signed by any person acting under its authority, express
or implied, and may in the same m anner be varied or
discharged ;
(ii) any contract which, if made between private persons, would by law
be valid although made by parol only, and not reduced into
writing, may be made by parol on behalf of the company by
any person acting under its authority, express or implied, and
may in the same manner be varied or discharged-
 266 Companies.

(2) A ll contracts made according to this section shall be effectual in

law and shall bind the company and its successors and a ll other parties
thereto, th e ir heirs, or legal representatives, as the case may be.

B ills o f 89^ A b ill o f exchange, hundi or prom issory note shall be deemed to
exchange
and p ro have been made, drawn, accepted or endorsed on behalf o f a company if
m issory made, drawn, accepted or endorsed in the name o f, or by or on behalf or
notes.
on account of, the company by any person acting under its a u th o rity, express
or im plied.

E xecution of 90. A company may, by w ritin g under its common seal, empower any
deeds.
pqjson, either generally or in respect o f any specified matters, as its attorney,
to execute deeds on its behalf in any place either in or outside the U nion o f
B u rm a ; and every deed signed by such attorney, on behalf o f the company,
and under his seal, where sealing is required, shall bind the company, and
have the same effect as i f i t were under its common seal.

P o w e r fo r 91. ( / ) A company whose objects require or comprise the transaction o f

com pany to business beyond the lim its o f the U nion o f Burm a may, i f authorized by its
have o ffic ia l
seal fo r use articles, have fo r use in any te rrito ry , d is tric t or place n o t situate in the
abroad. U n ion o f B urm a an official seal which shall be a facsim ile o f the common
seal o f the company, w ith the a d d itio n on its face o f the name o f every
te rrito ry , d is tric t or place where i t is to be used.
(2) A company having such an official seal may, by w ritin g under its
common seal, authorize any person appointed fo r the purpose in any te rrito ry ,
d is tric t or place not situate in the U nion o f Burm a to affix the same to any
deed or other document to w hich the company is party in that te rrito ry ,
d is tric t or place.
(3) The a u th o rity o f any such agent shall, as between the company and
any person dealing w ith the agent, continue during the period ( if any)
m entioned in the instrum ent conferring the a u th o rity, or i f no period is there
mentioned, then u n til notice o f the revocation or determ ination o f the agents
a u th o rity has been given to the person dealing w ith him .
( 4) The person affixing any such official seal shall, by w ritin g under his
hand, on the deed or other document to which the seal is affixed, c e rtify the
date and place o f affixing the same.
(5) A deed o r other document to w hich an official seal is d u ly affixed
shall bind the company as i f i t had been sealed w ith the common seal o f the
company.

D isclosure 91A. ( / ) E very director who is d ire ctly or in d ire c tly concerned or
of in te re s t
b y d irecto r interested in any contract or arrangement entered in to by or on behalf o f the
company shall disclose the nature o f his interest at the meeting o f the
directors at w hich the contract or arrangement is determined on, i f his interest
 Companies. 267

then exists, o r in any other case at the firs t meeting o f the directors after the
a cquisition o f his interest or the m aking o f the contract or arrangem en t:
Provided th at a general notice th a t a d irector is a director or a member
o f any specified company or is a member o f any specified firm , and is to be
regarded as interested in any subsequent transaction w ith such firm or com
pany, shall as regards any such transaction be sufficient disclosure w ith in the
meaning o f th is sub-section, and after such general notice it shall not be
necessary to give any special notice re la ting to any p a rticu la r transaction
w ith such firm or company.
(2) Every director who contravenes the provisions o f sub-section ( / )
shall be lia b le to a fine not exceeding one thousand rupees-
(3) A register shall be kept by the company in which shall be entered
particulars o f a ll contracts or arrangements to which sub-section ( / ) applies,
and w hich shall be open to inspection by any member o f the company at the
registered office o f the company during business hours-
(4) Every officer o f the company who know ingly and w ilfu lly acts in
contravention o f the provisions o f sub-section (5) shall be lia b le to a fine n o t
exceeding five hundred rupees.

91B. 0 ) N o directo r shall, as a director, vote on any contract or P ro h ib itio n

o f v o tin g b y
arrangement in w hich he is either d ire c tly or in d ire ctly concerned or interes in te re ste d
ted, n or shall his presence count fo r the purpose o f fo rm in g a quorum at the d ire c to r.

tim e o f any such v o te ; and i f he does so vote, his vote shall not be co u n te d :
Provided tha t the directors or any o f them may vote on any contract of
indem nity against any loss w h ich they or any one or more of them may suffer
by reason o f becoming or being sureties or surety fo r the company.
(2) Every director who contravenes the provisions o f sub-section ( 1)
shall be lia b le to a fine not exceeding one thousand rupees.
(3) T his section shall not apply to a private com pany:
Provided th a t where a private company is a subsidiary company o f a
public company, this section shall apply to a ll contracts or arrangements
made on behalf o f the subsidiary company w ith any person other than the
holding company.

91C. ( / ) Where a company enters in to a contract fo r the appointm ent D isclo su re to

o f a manager or managing agent o f the company in w hich contract any direc m em bers in
case o f
to r o f the company is d ire ctly or in d ire ctly concerned or interested, or varies co n tra ct
any such existing contract, the company shall, w ith in twenty-one days from a p p o in tin g a
m anager.
the date o f entering in to contract or the varying o f the contract, send an
abstract o f the terms o f such contract or variation, as the case may be,
together w ith a memorandum clearly in dicating the nature of the interest of
the dire cto r in such contract, or in such variation, to every m em ber; and the
contract shall be open to the inspection o f any member at the registered
pffice o f the company.
 268 Companies.

(2) If a company makes default in complying with the requirements of

sub-section (I), it shall be liable to a fine not exceeding one thousand
ru p ees; and every officer of the company who knowingly and wilfully
authorizes or permits the default shall be liable to the like penalty.

C ontracts by 91D. ( / ) Every manager or other agent of a company, other than a

ag ent of
com pany private company not being the subsidiary company of a public company,
in w hich who enters into a contract for or on behalf of the company in which contract
com pany is
undisclosed the company is an undisclosed principal shall, at the time of entering into
p rin cip al. the contract, make a memorandum in writing of the terms of the contract,
and specify therein the person with whom it has been made.
(2) Every such manager or other agent shall forthwith deliver the memo
randum aforesaid to the company and send copies to the directors, and such
memorandum shall be filed in the office of the company and laid before the
directors at the next directors meeting.
(5) If any such manager or other agent makes default in complying with
the requirements of this section
(a) the contract shall, at the option of the company, be void as against
the company ; and
( b) such manager or other agent shall be liable to a fine not exceeding
two hundred rupees.

Prospectus.

F ilin g of 92. ( / ) Every prospectus issued by or on behalf of a company or in

p rosi ectus.
relation to any intended company shall be dated, and that date shall, unless
the contrary be proved, be taken as the date of publication of the prospectus.
(2) A copy of every such prospectus, signed by every person who is
named therein as a director or proposed director of the company, or by his
agent authorized in writing, shall be filed for registration with the Registrar
on or before the date of its publication, and no such prospectus shall be issued
until a copy thereof has been so filed for registration.
(J) The Registrar shall not register any prospectus unless it is dated, and
the copy thereof signed, in manner required by this section.
(4) Every prospectus shall state on the face of it that a copy has been
filed for registration as required by this section.
(5) If a prospectus is issued without a copy thereof being so filed, the
company, and every person who is knowingly a party to the issue of th)
prospectus, shall be liable to a fine not exceeding fifty rupees for every day
from the date of issue of the prospectus until a copy thereof is so filed.

Specific re 93. ( / ) Every prospectus issued by or on behalf of a company, or by or

quirem ents on behalf of any person who is or has been engaged or interested in the
as to parti
cu lars of
formation of the company, shall state
prospectus. (a) the contents of the memorandum, with the names, descriptions and
addresses of the signatories and the number of shares subscribed
for by them respectively; and the number of founders cr
 Companies. 269

management or deferred shares ( if any) and the nature and

extent o f the interest o f the holders in the property and profits
o f the company, and the number o f redeemable preference shares
intended to be issued w ith the date or, where no date is fixed,
the period o f notice required and the proposed method of
re d e m p tio n ; and
(b) the number o f shares ( if any) fixed by the articles as the qualifica
tio n of a director, and any provision in the articles as to the
rem uneration o f the d ire c to rs ; and
(c) the names, descriptions and addresses o f the directors or proposed
directors and o f the managers or proposed managers and
managing agents or proposed managing agents ( if any), and
any provision in the articles or in any contract as to the appoint
ment o f managers or managing agents and the remuneration
payable to them ; and
( d) the m inim um subscription on which the directors may proceed to
allotm ent, and the amount payable on application and allotm ent
on each share; and in the case o f a second or subsequent offer
o f shares the am ount offered fo r subscription on each previous
allotm ent made w ith in the tw o preceding years, and the amount
actually allotted, and the am ount ( if any) paid on the shares so
a llo tte d ; and
(e) the number and am ount o f shares and debentures which w ith in the
tw o preceding years have been issued, or agreed to be issued, as
fu lly or p a rtly paid up otherwise than in cash, and in the latter
case the extent to w hich they are so paid up, and in either case
the consideration fo r w h ich those shares or debentures have
been issued or agreed to be issued ; and
(ee) where any issue o f shares or debentures is underwritten, the names
o f the underwriters, and the opinion of the directors that the
resources o f the underwriters are sufficient to discharge the
underw riting o b lig a tio n s ; and
(/) the names and addresses o f the vendors o f any property purchased
or acquired by the company, or proposed so to be purchased or
acquired, w hich is to be paid fo r w h o lly or p a rtly out o f the
proceeds o f the issue offered fo r subscription by the prospectus,
or the purchase or acquisition o f which has not been completed
at the date of issue o f the prospectus, and the am ount payable
in cash, shares or debentures to the vendor, and, where there is
m ore than one separate vendor or the company is a sub
purchaser, the am ount so payable to each vendor : Provided that
where the vendors or any o f them are a firm , the members of
the firm shall not be treated as separate vendors; and
(ff) where any property referred to in clause (/) has w ith in the two
years preceding the issue o f the prospectus been transferred by
sale, the am ount paid by the purchaser at each such transfer so
 Companies

fa r as the in fo rm atio n is available and, where any such property

is a business, the profits accruing fro m such business during each
o f the three years im m ediately preceding the issue o f the
prospectus, or during each year o f the existence o f the business
if less than three years, so fa r as the in fo rm a tio n is available.
A balance sheet o f the business concerned made up to a date
not more than ninety days before the date o f the issue o f the
prospectus shall be appended to the prospectus ; and
(g) the am ount ( if any) paid or payable as purchase-money, in cash,
shares or debentures, fo r any such property as aforesaid,
specifying the am ount ( if any) payable fo r g o o d w ill; and
( h) the am ount ( if any) paid w ith in the two preceding years o r payable
as commission fo r subscribing or agreeing to subscribe, or
procuring or agreeing to procure, subscriptions fo r any shares in ,
or debentures of, the company, or as discount in respect o f
shares issued, showing separately the amount, i f any, so paid to
the managing agents: Provided that it shall not be necessary to
state the commission payable to sub-underw riters; and
(0 the am ount or estimated am ount o f prelim inary expenses ; and
( k) the am ount paid w ith in the two preceding years or intended to be
paid to any prom oter, and the consideration fo r any such
p a ym e nt; and
(I) the dates of, and parties to, every m aterial contract including
contracts relating to the acquisition o f property to which clause
(f) applies, and a reasonable tim e and place at w hich any
m ateria] contract or a copy thereof may be inspected : Provided
that this requirem ent shall not apply to a contract entered into
in the ordinary course o f the business carried on or intended to
be carried on by the company, or to any contract (except a
contract appointing or fixing the rem uneration of a managing
director or managing agent) entered in to more than two years
before the date o f issue o f the prospectus; and
(m) the names and addresses o f the auditors ( if any) o f the com pany;
and
() fu ll particulars o f the nature and extent o f the interest ( if any) o f
every director in the prom otion o f, or in the property proposed
to be acquired by, the company, o r, where the interest o f such
a directo r consists in being a partner in a firm , the nature and
extent o f the interest o f the firm , w ith a statement o f a ll sums
paid o r agreed to be paid to him or to the firm , in cash or
shares or otherwise, by any person either to induce him to
become, or to q u a lify him as, a director, o r otherwise fo r
services rendered by him or by the firm in connection w ith the
p rom otion 01 form a tion o f the com pany; and
(o) where the company is a company having shares o f more than one
class, the rig h t o f voting at meetings o f the company conferred
 Companies. 271

by, and the rights in respect o f capital and dividends attached to,
the several classes o f shares respectively ; and
(p) where the articles o f the company impose any restrictions upon
the members o f the company in respect o f the rig h t to attend,
speak or vote at meetings o f the company or o f the rig h t to
transfer shares, or upon the directors o f the company in respect
o f th e ir powers o f management, the nature and extent o f those
restrictions.

(IA ) Where the prospectus is issued by a company which has been carrying
on business p rio r to the issue thereof, the prospectus shall set out the fo llo w
ing reports in addition to the matters referred to in sub-section ( /) , namely :
(i) a report by the auditors o f the company w ith respect to the p ro
fits o f the company including its subsidiary companies, i f any,
so fa r as the in fo rm a tio n is available, in each o f the three financial
years im m ediately preceding the issue o f the prospectus and
w ith respect to the rates o f the dividends, i f any, paid by
the company on each class o f shares in the company fo r each
o f the said three years, giving particulars o f each such class o f
shares on w hich such dividends have been paid and the source
fro m which the dividends have been paid and particulars o f the
cases in w hich no dividends have been paid on any class o f
shares fo r any o f those years, and i f no accounts have been
made up fo r any pa rt o f a period o f three years ending on a
date three months before the issue o f the prospectus, containing
a statement o f that fa c t;
( ii) i f the proceeds o r any part o f the proceeds o f the issue o f the
shares or debentures are or is to be applied directly or in d irectly
in the purchase o f any business, a report made by an accoun
tant or accountants holding the certificate referred to in section
144, who shall be named in the prospectus, upon the profits o f
the business in respect o f each o f the three financial years
im m ediately preceding the issue o f the prospectus :

Provided tha t if , in the case o f a company which has been carrying on

business fo r less than three years, the accounts o f the company have been made
up only in respect o f two years or any shorter period, this sub-section shall
have effect as i f references to two years or such shorter period were substitu
ted fo r references to three years.
( IB ) The statement referred to in clause ( ff) of sub-section ( / ) and the
report referred to in sub-section ( 1A) w ith respect to the profit., o f a company
or business shall show clearly the trading results and a ll charges and expenses
incidental thereto, excluding incom e o r profits having no re la tio n to the trad
ing fo r the period covered and excluding also items o f p ro fit or income o f a
non-recurring nature, but including amounts appropriated fro m profits to such
purposes as payment o f taxation or reserves.
 272 Companies.

( 1C) Where any pa rt o f the sums required fo r the matters set out in
sub-section (2) o f section 101 is to be provided out o f sources other than share
capital, particulars o f the am ount to be so provided and the sources thereof.
(2) Where any such prospectus as is mentioned in this section is published
as a newspaper advertisement, i t shall not be necessary in the advertisement
to specify ths contents o f the memorandum, or the signatories thereto, and the
number o f shares subscribed fo r by them.
(3) This section shall not apply to a circular or notice in vitin g existing
members or debenture holders o f a company to subscribe either fo r shares or
fo r debentures o f the company, whether w ith o r w ith o u t the rig h t to renounce
in favour o f other persons.
(4) The requirements o f this section as to the memorandum and the
q ualification, rem uneration and interest o f directors, the names, descriptions
and addresses o f directors or proposed directors, and o f managers or proposed
managers, and the am ount or estimated amount o f pre lim in a ry expenses, shall
not apply in the case o f a prospectus issued more than one year after the date
at w hich the company is entitled to commence business :
Provided that the said requirements, except the requirem ent as to the
am ount or estimated am ount o f p re lim inary expenses, shall apply to a pros
pectus filed in pursuance o f section 154.
(5) N o thin g in this section shall lim it or dim inish any lia b ility which
any person may incur under the general law or this A c t apart fro m this
section.

M eaning o f 94. For the purposes o f section 93 every person shall be deemed to be a
vendor vendor who has entered in to any contract, absolute or conditional, fo r the sale
in s e c tio n 93
o r purchase, or fo r any option o f purchase, o f any property to be acquired by
the company, in any case where
(a) the purchase-money is not fu lly paid a t the date o f issue o f the
prospectus ; or
( b ) the purchase-money is to be paid or satisfied w h o lly or in p a rt out
o f the proceeds of the issue offered fo r subscription by the pros
pectus ; or
(c) the contract depends fo r its v a lid ity or fu lfilm e n t on the result o f
that issue.

A p p lic a tio n 95. Where any o f the property to be acquired by the company is to be
o f section 93
taken on lease, section 93 shall apply as i f the expression vendor included
to th e case
of p ro p e rty the lessor, and the expression purchase-money included the consideration
taken on
lease.
fo r the lease, and the expression sub-purchaser included a sub-lessee.

In v a lid ity of 96. ( / ) A n y condition requiring or fin d in g any applicant fo r shares o r

ce rta in
c o n ditions as
debentures to waive com pliance w ith any requirements o f section 93, or p u r
to w a iv e r or porting to affect him w ith notice o f any contract, document or m atter not
n o tic e .
specifically referred to in the prospectus, shall be void.
 Companies. 273

(2) I t shall not be la w fu l to issue any fo rm o f application fo r the shares

in or debentures o f a company unless the fo rm is issued w ith a prospectus
w hich complies w ith the requirements o f section 93 :
Provided that this sub-section shall not apply i f it is shown th a t the fo rm
o f applicatio n was issued e ither
(a) in connection w ith a bona fide in v ita tio n to a person to enter in to
an underw riting agreement w ith respect to the shares or deben
tures ; or
( b) in relation to shares or debentures which were not offered to the
public.
I f any person acts in contravention o f the provisions o f this sub-section,
he shall be lia b le to a fine not exceeding five hundred rupees.

97. ( / ) I f a prospectus is issued w hich does not com ply w ith the p ro v i Saving in
sions o f section 93, every person who is know ingly responsible fo r the issue certain cases
o f non-com
o f such prospectus shall be liab le to a fine not exceeding fifty rupees fo r every pliance with
day fro m the day o f the issue o f the prospectus u n til a copy com plying w ith section 93.
the requirements o f section 93 is filed-
(2) In the event o f non-compliance w ith or contravention o f any o f the
requirements o f section 93, a director or other person responsible fo r the pros
pectus shall not incur any lia b ility by reason o f the non-compliance or con
travention i f he proves th at
(a) as regards any m atter not disclosed, he was n o t cognisant thereof;
or
(b) the non-compliance or contravention arose fro m an honest m istake
o f fact on his p a r t ; or
(c) the non-compliance o r contravention was in respect o f matters
which in the opinion o f the C ourt were im m aterial, or was
otherwise such as ought in the opinion o f the C ourt, having
regard to a ll the circumstances o f the case, reasonably to be
excused:

Provided that, in the event o f non-compliance w ith or contravention of

the requirements contained in clause (n) o f sub-section (./) o f section 93, no
such director or other person shall incur any lia b ility in respect o f the non-
compliance or contravention unless it be proved that he had knowledge o f the
m atters not disclosed.

98. (1) A company w hich does not issue a prospectus on or w ith reference O b lig a tion s
o f com panies
to its form ation shall not a llo t any o f its shares or debentures unless before w h ere n o
the firs t allotm ent o f either shares or debentures there has been filed w ith the prospectus
is issued.
R egistrar a statement in lie u o f prospectus, signed by every person who is
named therein as a director or a proposed director o f the company or by his
agent authorized in w ritin g , in the fo rm and containing the particulars set out
in the fo rm marked I in the Second Schedule.

18
 274 Companies

(2) T his section shall not apply to a private company or to a company

which has allotted any shares or debentures before the commencement o f this
A c t, or in so fa r as it relates to the allotm ent of shares to a company lim ite d
by a guarantee and not having a share capital.

D ocum ent 98A. ( / ) Where a company allots or agrees to a llo t any shares in or
o ffe rin g debentures o f the company w ith a view to all or any o f those shares or debentures
shares or
debentures being offered fo r sale to the public, any document by which the offer fo r sale
fo r sale to be to the public is made shall fo r a ll purposes be deemed to be a prospectus
deemed a
prospectus. issued by the company, and a ll enactments and rules o f law as to the contents
o f prospectuses and to lia b ility in respect o f statements in and omissions fro m
prospectuses or otherwise relating to prospectuses shall apply and have effect
accordingly as i f the shares or debentures had been offered to the public fo r
subscription and as if persons accepting the offer in respect of any shares or
debentures were subscribers fo r those shares or debenlures, but w ith o u t pre
judice to the lia b ility , i f any, o f the persons by whom the offer is made in
respect o f mis-statements contained in the document or otherwise in respect
thereof.
(2) F or the purposes o f this A c t it shall, unless the contrary is proved,
be evidence tha t an allotm ent o f or an agreement to a llo t shares or deben
tures was made w ith a view to the shares or debentures being offered fo r sale
to the public, i f it is shown
(a) that an offer o f the shares or debentures or o f any o f them fo r
sale to the public was made w ith in six m onths after the a llo t
ment or agreement to a llo t ; or
( b) that at the date when the offer was made the whole o f the con
sideration to be received by the company in respect of the shares
o r debentures had not been so received.

(3) Section 97 shall apply to the person or persons making the offer as
though they were persons named in a prospectus as directors o f a company, and
the provisions o f section 93 shall have effect as i f it required a prospectus to
state, in addition to the matters required by that section to be stated in a
prospectus,
(a) the net am ount o f the consideration received or to be received by
the company in respect o f the shares or debentures to which the
offer relates, and
(b) the place and tim e at which the contract under which the said
shares or debentures have been or are to be allotted may be
inspected.

(4) Where a person making an offer to which this scction relates is a

company or a firm , it shall be sufficient if the document aforesaid is signed on
behalf o f the company or firm by a ll directors o f the company or not less than
h a lf o f the partners, as the case may be, and any such director or partner may
sign by his agent authorized in w riting-
 Companies. 275

99. A company shall not, at any tim e, vary the terms of a contract refer
R e s tric tio n
red to in the prospectus or statement in lie u o f prospectus, except subject to on a lte ra tio n
of term s
the approval o f the company in general meeting. m entioned in
prospectus
o r statem ent
in lie u o f
prospectus.
100. ( / ) Where a prospectus invites persons to subscribe fo r shares inL iaor
b ilit y fo r
debentures o f a company, every person who is a director o f the company at statem ents in
prospectus.
the tim e o f the issue o f the prospectus, and every person who has authorized
the naming o f him self and is named in the prospectus as a director or as
having agreed to become a director either im m ediately or after an interval of
tim e, and every prom oter o f the company, and every person who has author
ized the issue o f the prospectus, shall be liable to pay compensation to a ll
persons who subscribe fo r any shares or debentures on the fa ith o f the pros
pectus fo r a ll loss or damage they may have sustained by reason o f any
misleading or untrue statement therein, or in any report or memorandum
appearing on the face thereof, or by reference incorporated therein or issued
therew ith, unless i t is proved
(a) w ith respect to every misleading or untrue statement not p u rp o rt
ing to be made on the a u thority o f an expert or o f a public
official document or statement, that he had reasonable ground to
believe and did up to the time o f the allotm ent o f the shares or
debentures, as the case may be, believe that the statement fa irly
represented the facts or was tr u e ;
( b) w ith respect to every m isleading or untrue statement purporting to
be a statement by or contained in what purports to be a copy o f
or extract fro m a re port or valuation o f an expert, that it fa irly
represented the statement, or was a correct and fa ir copy o f or
extract fro m the report or valuation : Provided that the director,
person named as director, prom oter or person who authorized the
issue o f the prospectus shall be liable to pay compensation as
aforesaid i f it is proved that he had no reasonable ground to
believe that the person m aking the statement, report or valuation
was competent to make i t ; and
(c) w ith respect to every m isleading or untrue statement purporting to
be a statement made by an official person or contained in what
purports to be a copy o f or extract fro m a public official
document, that it was a correct and fa ir representation o f the
statement or copy o f or extract fro m the docum ent;

or unless it is proved
(i) that having consented to become a director o f the company he
w ithdrew his consent before the issue o f the prospectus, and
that it was issued w ith o u t his a u th o rity or consent; or
(ii) that the prospectus was issued w ith o u t his knowledge or consent,
and that, on becoming aware o f its issue, he fo rth w ith gave
 276 Companies-

reasonable public notice that it was issued without his knowledge

or consent; or
(iii) that, after the issue of the prospectus and before allotment
thereunder, he, on becoming aware of any misleading or untrue
statement therein, withdrew his consent thereto, and gave
reasonable public notice of the withdrawal and of the reason
therefor.
(2) Where a company existing at the commencement of this Act* has
issued shares or debentures, and for the purpose of obtaining further capital
by subscriptions for shares or debentures issues a prospectus, a director shall
not be liable in respect of any statement therein unless he has authorized the
issue of the prospectus, or has adopted or ratified it-
(3) Where the prospectus contains the name of a person as a director of
the company, or as having agreed to become a director thereof, and he has
not consented to become a director, or has withdrawn his consent before the
issue of the prospectus, and has not authorized or consented to the issue
thereof, the directors of the company, except any without who:e knowledge
or consent the prospectus was issued, and any other person who authorized
the issue thereof, shall be liable to indemnify the person named as aforesaid
against all damages, costs and expenses to which he may be made liable by
reason of his name having been inserted in the prospectus, or in defending
himself against any suit or legal proceedings brought against him in respect
thereof,
(4) Every person who, by reason of his being a director or named as a
director or as having agreed to become a director, or of his having authorized
the issue of the prospectus, becomes liable to make any payment under this
section, may recover contribution, as in cases of contract, from any other
person who, if sued separately, would have been liable to make the same
payment, unless the person who has become so liable was, and that other
person was not, guilty of fraudulent misrepresentation.
(5) For the purposes of this section
(a) the expression promoter means a promoter who was a party to
the preparation of the prospectus, or the portion thereof contain
ing the misleading or untrue statement, but does not include any
person by reason of his acting in a professional capacity for
persons engaged in procuring the formation of the com pany;
(b) the expression expert includes engineer, valuer, accountant and
any other person whose profession gives authority to a statement
made by him.

Allotment.
Restriction 101. ( i ) No allotment shall be made of any share capital of a company
as to allo t offered to the public for subscription unless the amount stated in the prospectus
ment.
as the minimum amount which in the opinion of the directors must be raised
1 i.e. on th e 1st A p .il, 1914.
 Companiest 277

by the issue o f share capital in order to provide the sums or, i f any part
thereof is to be defrayed in any other manner, the balance o f the sums
required to be provided in respect o f the matters specified in sub-section (2)
has been subscribed, and the sum o f at least five per cent, thereof has been
paid to or received in cash by the company.
(2) The matters fo r w hich provision fo r the raising o f a m inim um amount
o f share capital m ust be made by the directors are the fo llo w in g , namely :
(a) the purchase price o f any property purchased or to be purchased
which is to be defrayed in whole or in part out o f the proceeds
o f the issue ;
( b) any p relim in a ry expenses payable by the company and any
commission so payable to any person in consideration o f his
agreeing to subscribe fo r or o f his procuring or agreeing to
procure subscriptions fo r any shares in the com pany;
( c ) the repayment o f any moneys borrowed by the company in respect
o f any o f the foregoing matters ; and
(d) w orking capital.

(2/4) The am ount referred to in sub-section ( / ) as the am ount stated in

the prospectus shall be reckoned exclusively o f any am ount payable otherwise
than in cash and is in this A c t referred to as the m inim um subscription.
( 2B) A ll moneys received fro m applicants fo r shares shall be deposited
and kept in a scheduled bank u n til returned in accordance w ith the provisions
o f sub-section ( 4) or u n til the certificate to commence business is obtained
under section 103.
(2C) In the event o f any contravention o f the provisions o f sub-section
( 2B) every prom oter, director or other person know ingly responsible fo r such
contravention shall be liable to a fine not exceeding five hundred rupees.
(3) The am ount payable on application on each share shall not be less
than five per cent, o f the nom inal amount o f the share.
( 4) I f the conditions aforesaid have not been com plied w ith on the
expiration o f one hundred and eighty days after the first issue o f the prospectus,
a ll money received fro m applicants fo r shares shall be fo rth w ith repaid to them
w ith o u t interest, and, i f any such money is not so repaid w ith in one hundred
and ninety days after the issue o f the prospectus, the directors o f the company
shall be jo in tly and severally liable to repay that money w ith interest at the
rate o f seven per cent, per annum fro m the expiration o f the one hundred and
ninetieth d a y : Provided th a t a director shall not be liable i f he proves that
the loss o f the money was not due to any misconduct or negligence on his part.
(5) A n y condition requiring or binding any applicant fo r shares to waive
compliance w ith any requirem ent o f this section shall be void.
( 6) T his section, except sub-section (5) thereof, shall not apply to any
allo tm en t o f shares subsequent to the first allotm ent o f shares offered to the
p u b lic fo r subscription.
(7) In the case of the first allotm ent of share capital payable in cash of
a company which does not issue any in vitation to the public to subscribe fo r
 Companies.

its shares, no allotm e n t shall be made unless the m inim um subscription (that
is to say)
(a) the am ount ( if any) fixed by the memorandum o r articles and
named in the statement in lieu o f prospectus as the m inim um
subscription upon w hich the directors may proceed to a llo tm e n t;
or
Cb) i f no am ount is so fixed and named, the whole am ount o f the
share capital other than that issued or agreed to be issued as
fu lly or p a rtly paid up otherwise than in cash ;
has been subscribed and an am ount not less than five per cent, o f the nom inal
am ount o f each share payable in cash has been paid to and received by the
company.
(8) Sub-section (7) shall not apply to a private company or to a company
w hich has allotted any shares or debentures before the commencement o f this
A ct.

Effect of 102. ( / ) A n allotm ent made by a company to an applicant in contraven-

ir re g u la r ^ on Gf t j j e provisions o f section 101 shall be voidable at the instance o f the
applicant w ith in one m onth after the holding o f the statutory meeting of the
company and not later, or, in any case where the company is not required to
h old a statutory meeting or where the allotm ent is made after the holding of
the statutory meeting, w ith in one m onth after the date of the allotm ent and
n ot later, and shall be so voidable notw ithstanding th a t the company is in
course o f being wound up.
(2) I f any director of a company know ingly contravenes or perm its or
authorizes the contravention o f any of the provisions o f section 101 w ith
respect to allotm ent, he shall be lia b le to compensate the company and the
allottee respectively fo r any loss, damages or costs which the company or the
allottee may have sustained or incurred thereby : Provided that proceedings
to recover any such loss, damages or costs shall not be commenced after the
expiration o f tw o years fro m the date of the allotm ent.

R e s tric tio n s 103. 0 ) A company shall not commence any business or exercise any
on co m borrow ing powers unless
m encem ent
of business. (a) shares held subject to the payment o f the whole amount thereof
in cash have been allotted to an am ount not less in the whole
than the m in im u m subscription ; and
(b) every director o f the company has paid to the company on each
o f the shares taken or contracted to be taken by him , and fo r
w hich he is lia ble to pay in cash, a proportion equal to the
p ro p o rtio n payable on application and allotm ent on the shares
offered fo r public subscription or, in the case o f a company
w hich does not. issue a prospectus in v itin g the public to subscribe
fo r its shares, on the shares payable in cash ; and
 Companies. 279

(c) there has been filed w ith the Registrar a duly verified declaration
by the secretary or one o f the directors in the prescribed form
that the aforesaid conditions have been com plied w ith ; and
(d) in the case o f a company w hich does not issue a prospectus in v it
ing the public to subscribe fo r its shares, there has been filed
w ith the R egistrar a statement in lie u o f prospectus.
(2) The Registrar shall, on the filin g o f a duly verified declaration in
accordance w ith the provisions o f this section, ce rtify that the company is
entitled to commence business, and that certificate shall be conclusive evidence
tha t the company is so entitled :
Provided that, in the case o f a company w hich does not issue a prospec
tus in v itin g the public to subscribe fo r its shares, the R egistrar shall not give
such a certificate unless a statement in lie u o f prospectus has been filed w ith
him -
(J) A n y contract made by a company before the date at which it is
entitled to commence business shall be provisional only, and shall not be
binding on the com pany u n til that date, and on that date it shall become
binding.
(4) N oth in g in this section shall prevent the simultaneous offer fo r
subscription or allotm ent o f any shares and debentures or the receipt o f any
money payable on application fo r debentures.
(5) I f any company commences business or exercises borrow ing powers
in contravention o f this section, every person who is responsible fo r the
contravention shall, w ith o u t prejudice to any other lia b ility , be lia b le to a fine
not exceeding five hundred rupees fo r every day during which the
contravention continues.
(6) N othing in this section shall apply to a private company, or to a
company registered before the commencement o f this A c t which does not
issue a prospectus in v itin g the public to subscribe fo r its shares or, in so far
as its provisions relate to shares, to a company lim ite d by guarantee and not
having a share capital.
104. (1) Whenever a company having a share capital makes any a llotmReturn
ent as to
a llo tm e n ts .
o f its shares, the company shall, w ith in one m onth thereafter,
(a) file w ith the Registrar a return o f the allotm ents, stating the
number and nom inal am ount of the shares comprised in the
allotm ent, the names, addresses and descriptions o f the allottees,
and the am ount ( if any) paid or due and payable on each share ;
and
(b) in the case of shares a llotted as fu lly or p a rtly paid up otherwise
than in cash, produce fo r the inspection and exam ination o f the
Registrar a contract in w ritin g constituting the title o f the
allottee to the allotm ent, together w ith any contract of sale,
or fo r services or other consideration in respect o f which that
allotm ent was made, such contracts being duly stamped, and
file w ith the R egistrar copies verified in the prescribed manner
 280 Companies.

o f a ll such contracts, and a return stating the number and

nom inal am ount o f shares so allotted, the extent to which
they are to be treated as paid up, and the consideration fo r
w hich they have been allotted.
(2) Where such a contract as above mentioned is not reduced to w ritin g ,
the company shall, w ith in one m onth after the allotm ent, file w ith the Registrar
the prescribed particulars o f the contract stamped w ith the same stamp-duty
as w ould have been payable i f the contract had been reduced to w ritin g , and
these particulars shall be deemed to be an instrum ent w ith in the meaning o f
the B urm a Stamp A c t, and the R egistrar may, as a condition o f filin g the
particulars, require th a t the duty payable thereon be adjudicated under section
31 o f th a t A ct.
(5) I f default is made in com plying w ith the requirements o f this section,
every officer o f the company who is know ingly a party to the default shall be
lia b le to a fine not exceeding five hundred rupees fo r every day during which
the default continues :
Provided that, in case o f default in filin g w ith the Registrar w ith in one
m onth after the allotm ent any document required to be filed by this section, the
company, or any person lia b le fo r the default, may apply to the C ourt fo r
re lie f, and the C ourt, i f satisfied that the omission to file the document was
accidental or due to inadvertence o r that on other grounds it is just and equitable
to grant re lie f, may make an order extending the tim e fo r the filin g o f the
docum ent fo r such period as the C ourt may th in k proper-
( 4) N othing in this section shall apply to the issue and allotm ent by a
company o f shares w hich under the provisions o f its articles were forfeited
fo r non-paym ent o f calls-

Commissions and Discounts,

Pow er to pay 105- ( f ) I t shall be la w fu l fo r a company to pay a com m ission to any

ce rta in person in consideration o f his subscribing or agreeing to subscribe, whether
com m issions
and p ro h ib i absolutely or co nd ition a lly, fo r any shares in the company, or procuring or
tio n o f pay agreeing to procure subscriptions, whether absolute or conditional, fo r any
m e n t o f a ll
o th e r shares in the company, i f the payment o f the commission is authoiized by
com m issions, the articles and the com m ission paid or agreed to be paid does not exceed
discounts,
etc.
the am ount or rate so authorized, and if the am ount or rate per cent- o f the
commission paid or agreed to be paid is
(a) in the case o f shares offered to the public fo r subscription, disclosed
in the prospectus ; or
( b ) in the case o f shares not offered to the public fo r subscription,
disclosed in the statement in lieu o f prospectus, or in a state
ment in the prescribed fo rm signed in lik e manner as a statement
in lie u o f prospectus and filed w ith the Registrar, and where a
circu la r or notice, not being a prospectus, in v itin g subscription
fo r the shares is issued, also disclosed in that circular or notice.
 Companies. 281

(2) Save as aforesaid and save as provided in section 105A, no company

shall apply any of its shares or capital money either directly or indirectly in
payment of any commission, discount or allowance, to any person in considera
tion of his subscribing or agreeing to subscribe, whether absolutely or con
ditionally, for any shares of the company, or procuring or agreeing to
procure subscriptions, whether absolute or conditional, for any shares in the
company, whether the shares or money be so applied by being added to the
purchase-money of any property acquired by the company or to the contract
price of any work to be executed for the company, or the money be paid
out of the nominal purchase-money or contract price, or otherwise.
(5) Nothing in this section shall affect the power of any company to
pay such brokerage as it has heretofore been lawful for a company to pay,
and a vendor to, promoter of, or other person who receives payment in money
or shares from a company shall have and shall be deemed always to have had
power to apply any part of the money or shares so received in payment of any
commission, the payment of which, if made directly by the company, would
have been legal under this section.

105A- (/) Subject to the provisions of this section, it shall be lawful for Pow er to
a company to issue at a discount shares in the company of a class already issue shares
at a discount.
issued :
Provided that
(a ) the issue of the shares at a discount must be authorized by resolu
tion passed in general meeting of the company and must be
sanctioned by the Court ;
(b ) the resolution must specify the maximun rate of discount (not
exceeding ten per cent, in any case) at which shares are to be
issued ;
(c) not less than one year must at the date of issue have elapsed since
the date on which the company was entitled to commence
business ;
(d) the shares to be issued at a discount must be issued within six
months after the date on which the issue is sanctioned by the
Court or within such extended time as the Court may allow-

(2) Every prospectus relating to the issue of the shares and every balance-
sheet issued by the company subsequently to the issue of the shares must
contain particulars of the discount allowed on the issue of the shares, or of
so much of that discount as has not been written off at the date of the issue
of the document in question.
(5) If default is made in complying with sub-section (2), the company
and every officer of the company who is in default shall be liable to a fine
not exceeding fifty rupees.
 2 82 Companies.

Issue o f 105B. ( / ) Subject to the provisions o f this section, a company lim ite d
redeemable by shares may, i f so authorized by its articles, issue preference shares which
preference
shares. are, or at the option o f the company are to be, liable to be redeemed :
Provided that
(a) no such shares shall be redeemed except out o f profits o f the company
which w ould otherwise be available fo r dividend or out of the
proceeds o f a fresh issue o f shares made fo r the purposes o f the
redem ption or o u t o f sale proceeds o f any property o f the
company ;
( b) no such shares shall be redeemed unless they are fu lly paid ;
(c) where any such shares are redeemed otherwise than out o f the
proceeds o f a fresh issue, there shall, out o f profits which would
otherwise have been available fo r dividend, be transferred to a
reserve fund, to be called the capital redemption reserve fund,
a sum equal to the am ount applied in redeeming the shares,
and the provisions o f this A c t relating to the reduction o f the
share capital o f a company shall, except as provided in this
section, apply as i f the capital redem ption reserve fund were
paid-up share capital o f the company ;
( d) where any such shares are redeemed out of the proceeds o f a fresh
issue, the prem ium , if any, payable on redemption must have
been provided fo r out o f the profits of the company before the
shares are redeemed.

(2) There shall be included in every balance-sheet o f a company which

has issued redeemable preference shares a statement specifying what part o f
the issued capital o f the company consists of such shares and the date on or
before which those shares are, or are to be, liable to be redeemed or, where
no definite date is fixed fo r redemption, the period o f notice to be given fo r
redemption.
I f a company fails to com ply w ith the provisions o f this sub-section, the
company and every officer o f the company who is in default shall be liable to
a fine not exceeding one thousand rupees.
(3) Subject to the provisions o f this section, the redemption o f preference
shares thereunder may be effected on such terms and in such manner as may
be provided by the articles o f the company.
( 4) Where in pursuance o f this section a company has redeemed "o r is
about to redeem any preference shares, it shall have power to issue shares
up to the nom inal am ount o f the shares redeemed or to be redeemed as if
those shares had never been issued, and accordingly the share capital o f the
company shall not fo r the purpose o f calculating the fees payable under
section 249 be deemed to be increased by the issue o f shares in pursuance of
this sub-section :

Provided that, where new shares are issued before the redem ption o f the
old shares, the new shares shall not, so fa r as relates to stamp duty, be
 Companies. 283

deemed to have been issued in pursuance o f this sub-section unless the old
shares are redeemed w ith in one m onth after the issue o f the new shares-
(5) Where new shares have been issued in pursuance o f the last foregoing
sub-section, the capital redem ption reserve fund may, notw ithstanding
anything in this section, be applied by the company, up to an amount equal
to the nom inal am ount o f the shares so issued, in paying up unissued shares of
the company to be issued to members o f the company as fu lly paid bonus shares.

105C. Where the directors decide to increase the capital of the company F u rth e r issue
by the issue o f fu rth e r shares, such shares shall be offered to the members in o f ca p ita l.

pro p ortio n to the existing shares held by each member (irrespective o f class),
and such offer shall be made by notice specifying the number o f shares to
w hich the member is entitled, and lim itin g a tim e w ith in which the offer, if
n ot accepted, w ill be deemed to be declined ; and after the expiration o f such
tim e, or on receipt o f an in tim a tio n fro m the member to whom such notice is
given that he declines to accept the shares offered, the directors may dispose
o f the same in such manner as they th in k most beneficial to the company.

106. Where a company has paid any sums by way o f commission in Statem ent in
respect o f any shares or debentures or allowed any sums by way o f discount balance-sheet
as to com
in respect o f any debentures, the to ta l am ount so paid or allowed, or so much m issions and
thereof as has not been w ritten off, shall be stated in every balance-sheet of discounts.
the company u n til the whole amount thereof has been w ritten off.

Payment of Interest out of Capital.

107. Where any shares o f a company are issued fo r the purpose of Pow er of
raising money to defray the expenses o f the construction o f any works or com pany to
pay in te re st
buildings or the provision o f any p la nt which cannot be made profitable fo r out of
a lengthened period, the company may pay interest on so much o f th a t share c a p ita l in
ce rta in cases'
capital as is fo r the tim e being paid up fo r the period and subject to the
conditions and restrictions in this section mentioned, and may charge the
same to capital as pa rt o f the cost o f construction o f the w ork or b u ild in g or
the provision o f p la n t:
Provided that
(1) no such payment shall be made unless the same is authorized by
the articles or by special resolution ;
(2) no such payment, whether authorized by the articles or by special
resolution, shall be made w ith o u t the previous sanction o f the
President o f the U nion, w hich sanction shall be conclusive
evidence fo r the purposes o f this section that the shares o f the
company, in respect o f w hich such sanction is given, have been
issued fo r a purpose specified in this section ;
(3) before sanctioning any such payment, the President of the U nion
may, at the expense o f the company, appoint a person to inquire
and report to the President o f the U nion as to the circumstances
 284 Companies.

o f the case, and may, before making the appointment, require

the company to give security fo r the payment o f the costs o f the
in qu iry.
(4) the payment shall be made only fo r such period as may be
determined by the President o f the U nion, and such period shall
in no case extend beyond the close o f the half-year next after
the half-year during which the works or buildings have been
actually completed or the plant provided ;
(5) the rate o f interest shall in no case exceed four per cent, per
annum or such low er rate as the President o f the U nion may,
by notification in the Gazette, prescribe ;
(6) the payment o f the interest shall not operate as a reduction o f the
amount paid up on the shares in respect o f which it is paid ;
(7) the accounts o f the company shall show the share capital on
w hich, and the rate at which, interest has been pai'd out of
capital during the period to which the accounts relate ;
(8) nothing in this section shall affect any company to w hich the
R ailw ay Companies A c t or the Tramways A c t applies.

Certificates of Shares, etc-

Lim itation of 108- ( i ) Every company shall, w ith in three months after the allotm ent
tim e for issue
o f certifi o f any of its shares, debentures or debenture stock, and w ith in three months
cates. after the registration o f the transfer of any such shares, debentures or debenture
stock, complete and have ready fo r delivery the certificates o f a ll shares, the
debentures, and the certificates o f a ll debenture stock allotted or transferred,
unless the conditions o f issue o f the shares, debentures or debenture stock
otherwise provide.
(2) I f default is made in com plying w ith the requirements o f this section,
the company, and every officer o f the company who is know ingly a party to
the default, shall be liab le to a fine not exceeding fifty rupees fo r every day
during w hich the default continues.

Information as to Mortgages, Charges, etc-

C e rta in 109. ( / ) Every mortgage or charge created after the commencement of
m ortgages
and charges
this A c t by a company and being either
to be vo id i f ( a) a mortgage or charge fo r the purpose o f securing any issue of
n o t re g is te r
ed. debentures; or
( b) a mortgage or charge on uncalled share capital o f the company ; or
(c) a mortgage or charge on any immoveable property wherever
situate, or any interest th e re in ; or
Cd) a mortgage or charge on any book debts o f the company ; or
(e) a mortgage or a charge, not being a pledge on any moveable
property o f the company except stock-in-trade ; or
(/) a floating charge on the undertaking or property o f the company ;
shall, so fa r as any security on the companys property or undertaking is
thereby conferred, be void against the liq u id a to r and any creditor o f the
 Companies. 2 85

company unless the prescribed particulars o f the mortgage or charge, together

w ith the instrum ent ( if any) by which the mortgage or charge is created or
evidenced, or a copy thereof verified in the prescribed manner, are filed w ith
the R egistrar fo r registration in manner required by this A c t w ith in twenty-
one days after the date o f its creation, b u t w ith o u t prejudice to any contract
or o b lig a tio n fo r repayment o f the money thereby secured, and when a
mortgage o r charge becomes void under this section, the money secured there
by shall im m ediately become payable :
Provided that
(i) in the case o f a mortgage or charge created out o f the U nion of
Burm a, com prising solely property situate outside the U nion
o f Burm a, twenty-one days after the date on which the
instrum ent or copy could, in due course of post and if des
patched w ith due diligence, have been received in the U nion o f
Burma shall be substituted fo r twenty-one days after the date
o f the creation o f the mortgage or charge as the tim e w ith in
which the particulars and instrum ent or copy are to be filed
w ith the Registrar ; and
(ii) where the mortgage or charge is created in the U nion o f Burma
but comprises property outside the U nion o f Burm a, the in stru
ment creating or purporting to create the mortgage or charge
or a copy thereof verified in the prescribed manner may be filed
fo r registration notw ithstanding that fu rth e r proceedings may
be necessary to make the mortgage or charge valid or effectual
according to the law of the country in which the property is
situate ; and
( iii) where a negotiable instrum ent has been given to secure the pay
ment o f any book debts o f a company, the deposit o f the
instrum ent fo r the purpose o f securing an advance to the
company shall not fo r the purposes o f this section be treated
as a mortgage or charge on those book d e b ts; and
(iv) the holding o f debentures e n titlin g the holder to a charge on
immoveable property shall not be deemed to be an interest in
immoveable property.
(2) Where any mortgage or charge on any property o f a company
required to be registered under this section has been so registered, any person
acquiring such property or any part thereof, or any share or interest therein,
shall be deemed to have notice o f the said mortgage or charge as fro m the
date o f such registration.

109A. (7) Where after the 15th January, 1937,1a company registered in R e g is tra tio n
the U nion o f Burm a acquires any property which is subject to a charge o f o f charges on
p ro p e rtie s
any such kin d as would, i f i t had been created by the company after the acquired
acquisition o f the property, have been required to be registered under this subject to
charge.
1 Date o f com m encem ent o f the Jndiau Com panies (Amendment) Act, 1936 (India A ct X X IJ,
 286 Companies.

Part, the company shall cause the prescribed particulars o f the charge,
together w ith a copy (certified in the prescribed manner to be a correct copy)
of the instrum ent, i f any, by w hich the charge was created or is evidenced, to
be delivered to the Registrar fo r registration in manner required by this A ct
w ith in twenty-one days after the date on which the acquisition is completed :
Provided that, i f the property is situate and the charge was created
outside the U nion o f Burm a, twenty-one days after the date on which the
copy o f the instrum ent could, in due course o f post and i f despatched w ith
due diligence, have been received in the U nion o f Burm a shall be substituted
fo r twenty-one days after the com pletion o f the acquisition as the tim e w ith in
which the particulars and the copy o f the instrum ent are to be delivered to
the Registrar.
(2) I f default is made in com plying w ith this section, the company and
every officer of the company who is know ingly and w ilfu lly in default shall be
liable to a fine o f five hundred rupees.

P a rtic u la rs
110. Where a series o f debentures containing or giving by reference to
in case o f any other instrum ent any charge to the benefit o f which the debenture-holders
series of o f that series are entitled pari passu is created by a company, it shall be
debentures
e n titlin g sufficient fo r the purposes o f section 109 i f there are filed w ith the Registrar
lio ld e is pari w ith in twenty-one days after the execution o f the deed containing the charge or, if
passu.
there is no such deed, after the execution o f any debentures o f the series, the
fo llo w in g particulars
(a) the to ta l amount secured by the whole series ; and
( b ) the dates o f the resolution authorizing the issue o f the series and
the date o f the covering deed ( if any) by which the security is
created or defined ; and
(c) a general description o f the property charged ; and
( d ) the names o f the trustees ( if any) fo r the debenture-holders ;

together w ith the deed or a copy thereof verified in the prescribed manner
containing the charge, or i f there is no such deed, one o f the debentures o f the
series, and the Registrar shall, on payment o f the prescribed fee, enter those
particulars in the register :
Provided that, where more than one issue is made o f debentures in the
series, there shall be filed w ith the Registrar fo r entry in the register p a rticu
lars o f the date and amount of each issue, b u t an omission to do this shall
not affect the v a lid ity o f the debentures issued.

111. Where any commission, allowance or discount has been paid or

P a rticu la rs
in case of made either directly or in d irectly by the company to any person in considera
c o m m issio n , tio n o f his subscribing or agreeing to subscribe, whether absolutely or
e tc., on
debentures. conditionally, fo r any debentures o f the company, or procuring or agreeing to
procure subscriptions, whether absolute or conditional, fo r any such
debentures, the particulars required to be filed fo r registration under sections
J09 and 110 shall include particulars as to the am ount or rate per cent, o f
 Companies. 287

the commission, discount or allowance so paid or made, but an omission to do

this shall not affect the v a lid ity o f the debentures issued:
Provided that the deposit o f any debentures as security fo r any debt of
the company shall not fo r the purposes o f this provision be treated as the
issue o f the debentures at a discount.

112. ( / ) The Registrar shall keep, w ith respect to each company,R e gaiste r o f
m ortgages
register in the prescribed fo rm o f a ll mortgages and charges created by the and chargcs.
company after the commencement o f this A c t and requiring registration under
section 109, and shall, on payment o f the prescribed fee, enter in the register,
w ith respect to every such mortgage or charge, the date o f creation, the
am ount secured by it, short particulars o f the property mortgaged or charged,
and the names o f the mortgagees or persons entitled to the charge.
(2) A fte r m aking the entry required by sub-section ( /) , the Registrar shall
return the instrum ent ( if any) or the verified copy thereof, as the case may be,
filed in accordance w ith the provisions o f section 109 or section 110, to the
person filin g the same.
(J) The register kept in pursuance o f this section shall be open to
inspection by any person on payment o f the prescribed fee, not exceeding one
rupee fo r each inspection.

113- The Registrar shall keep a chronological index, in the prescribed In d e x to

re g is te r of
fo rm and w ith the prescribed particulars, o f the mortgages or charges register m ortgages
ed w ith h im under this A ct. and charges.

114. The Registrar shall give a certificate under his hand o f the C ertificate o f
re g is tra tio n .
registration o f any mortgage or charge registered in pursuance o f section 109,
stating the am ount thereby secured, and the certificate shall be conclusive
evidence that the requirements o f sections 109 to 112 as to registration have
been com plied w ith .

115. The company shall cause a copy o f every certificate o f registration, Endorsem ent
of certificate
given under section 114, to be endorsed on every debenture or certificate of o f re g istra
debenture stock which is issued by the company, and the payment of which is tio n on
debenture or
secured by the mortgage or charge so registered : ce rtifica te of
debentm e
Provided that nothing in this section shall be construed as requiring a stock.
company to cause a certificate o f registration o f any mortgage or charge so given
to be endorsed on any debenture or certificate o f debenture stock which has
been issued by the company before the mortgage or charge was created.

116. ( i ) I t shall be the duty o f the company to file w ith the Registrar fo r D u ty ct
com pr.ny and
registration the prescribed particulars o f every mortgage or charge created by r ig h t o f in
the company and o f the issues o f debentures o f a series, requiring registration terested p a rty
as regards
under section 109, but registration o f any such mortgage or charge may be reg istra tio n
effected on the application o f any person interested therein-
 288 Companies.

(2) Where the registration is effected on the application o f some person

other than the company, that person shall be entitled to recover fro m the
company the amount o f any fees properly paid by him to the Registrar on the
registration.
( i) Whenever the terms or conditions or extent or operation o f any
mortgage or charge registered under this section are modified, it shall be the
duty o f the company to send to the Registrar the particulars o f such m o d ifi
cation, and the provisions o f this section as to registration o f a mortgage or a
charge shall apply to such m odification o f the mortgage or charge as
aforesaid.

Copy of i n 117- Every company shall cause a copy o f every instrum ent creating any
strum e n t
creating mortgage or charge requiring registration under section 109 to be kept at the
m ortgage o r registered office o f the company : Provided that, in the case o f a series o f
charge to be
kept at u n iform debentures, a copy o f one such debenture shall be sufficient.
registered
office.
R e g istra tio n 118. ( / ) I f any person obtains an order fo r the appointm ent o f a
of a p p o in t
m ent of
receiver o f the property o f a company, or appoints such a receiver under any
receiver. powers contained in any instrum ent, he shall, w ith in fifteen days fro m the
date o f the order or o f the appointm ent under the powers contained in the
instrum ent, file notice o f the fact w ith the Registrar, and the Registrar shall,
on payment o f the prescribed fee, enter the fact in the register o f mortgages
and charges.
(2) I f any person makes default in com plying w ith the requirements o f
this section, he shall be liable to a fine not exceeding fifty rupees fo r every
day during w hich the default continues.

F ilin g of 119. (J) Every receiver o f the property o f a company who has been
accounts o f
receivers. appointed under the powers contained in any instrum ent, and who has taken
possession, shall once in every half-year w hile he remains in possession, and
also on ceasing to act as receiver, file w ith the Registrar an abstract in the
prescribed fo rm o f his receipts and payments during the period to which the
abstract relates, and shall also, on ceasing to act as receiver, file w ith the
R egistrar notice to that effect, and the R egistrar shall enter the notice in the
register o f mortgages and charges.
(2) Where a receiver o f the property o f a company has been appointed,
every invoice, order fo r goods, or business letter issued by or on behalf o f the
company, or the receiver o f the company, being a document on or in which
the name o f the company appears, shall contain a statement that a receiver
has been appointed.
(3) I f default is made in com plying w ith the requirements o f this
section, the company, and every director, manager, managing agent, secretary
or other officer o f the company, and every receiver, who know ingly and w il
fu lly authorizes or perm its the default, shall be liable to a fine not exceeding
tw o hundred rupees.
 Companies. 289

120. ( / ) The C ourt, on being satisfied that the omission to register a m ort- R e c tific a tio n
gage or charge w ith in the tim e required by section 109, or that the omission or f register of
mis-statement o f any p articu la r w ith respect to any such mortgage or charge, mortgages'
or the omission to give in tim a tio n to the Registrar o f the payment or satisfaction
o f a debt fo r which a charge or mortgage was created, was accidental or due
to inadvertence or to some other sufficient cause, or is not o f a nature to
prejudice the position o f creditors or share-holders o f the company, or that on
other grounds it is ju st and equitable to grant relief, may, on the application o f
the company or any person interested and on such terms and conditions as
seem to the C ourt ju st and expedient, order that the tim e fo r registration be
extended, or, as the case may be, th at the omission or mis-statement be
rectified, and may make such order as to the costs o f the application as it
thinks fit-
(2) Where the C ourt extends the tim e fo r the registration o f a mortgage
or charge, the order shall not prejudice any rights acquired in respect o f the
p roperty concerned p rio r to the tim e when the mortgage or charge is actually
registered-

121- (1) I t shall be the duty o f the company to give in tim ation to the R e g istra tio n
R egistrar o f the payment or satisfaction o f any charge or mortgage created by
the company and requiring registration under section 109 w ithin twenty-one m ortgages
days fro m the date o f the payment or satisfaction thereof. and charSes-
(2) The Registrar shall on receipt o f such in tim a tio n cause a notice to be
sent to the mortgagee calling upon him to show cause, w ith in a tim e (not
exceeding fourteen days) to be fixed by such notice, why the payment or
satisfaction o f the charge or mortgage should not be recorded.
(5) The Registrar shall, i f no cause is shown, order that a memorandum
o f satisfaction be entered on the register and shall i f required furnish the
company w ith a copy thereof.
(4) Where cause is shown, the Registrar shall record a note to that effect
in the register, and shall in fo rm the company th a t he has done so.

122. (l) I f any company makes default in filin g w ith the Registrar fo r P enalties,
registration the particulars
(a) o f any mortgage or charge created by the com pany; or
( b) o f the payment or satisfaction o f a debt in respect o f which a
mortgage or charge has been registered under section 109 or
section 109A ; or
(c) o f the issues o f debentures o f a series,

requiring registration w ith the Registrar under the foregoing provisions o f this
A c t, then, unless the registration has been effected on the application of some
other person, the company, and every officer o f the company or other person
who is know ingly a p a rty |to the default, shall on conviction be liable to a fine
n o t exceeding five hundred rupees fo r every day during which the default
continues.

19
 290 Companies.

(2) Subject as aforesaid, i f any company makes default in com plying

w ith any o f the requirements o f this A c t as to the registration w ith the Registrar
o f any mortgage o r charge created by the company, the company, and every
officer o f the company who know ingly and w ilfu lly authorizes or perm its the
default, shall, w itho ut prejudice to any other lia b ility , be liable on conviction
to a fine not exceeding one thousand rupees.
(.?) I f any person know ingly and w ilfu lly authorizes or perm its the
delivery o f any debenture or certificate of debenture stock requiring registration
w ith the Registrar under the foregoing provisions of this A c t w ithout a copy
o f the certificate o f registration being endorsed upon it, he shall, w ithout
prejudice to any other lia b ility , be liable on conviction to a fine not exceeding
one thousand rupees.

C om panys 123. ( l ) Every company shall keep a register o f mortgages and enter
r e g ift';r of therein a ll mortgages and charges specifically affecting property o f the company
m ortgages.
and a ll floating charges on the undertaking or on any property o f the company,
giving in each case a short description o f the property mortgaged or charged,
the am ount o f the mortgage or charge and (except in the case o f securities to
bearer) the names o f the mortgagees or persons entitled thereto-
(2) I f any director, manager or other officer o f the company know ingly
and w ilfu lly authorizes or perm its the omission o f any entry required to be
made in pursuance o f this section, he shall be liable to a fine n o t exceeding
five hundred rupees.

R ig h t to 124. ( / ) The copies kept at the registered office o f the company in

in s p c t pursuance o f section 117 o f instruments creating any mortgage or charge
copies o f
in s tru m e n ts requiring registration under this A ct w ith the Registrar, and the register o f
c re a tin g mortgages kept in pursuance o f section 123, shall be open at a ll reasonable
m ortgages
and charges
times to the inspection o f any cre ditor or member o f the company w ith o u t fee,
a nd co m and the register o f mortgages shall also be open to the inspection o f any other
panys re g is
ter o f
person on payment o f such fee, not exceeding one rupee fo r each inspection,
m ortgages. as the company may prescribe.
(2) I f inspection o f the said copies or register is refused, the company
shall be lia b le to a fine not exceeding fifty rupees, and a fu rth e r fine not
exceeding twenty rupees fo r every day during which the refusal continues, and
every officer o f the company who know ingly authorizes or perm its the refusal
shall incur the lik e penalty, and in addition to the above penalty, the C ourt
may by order compel an im m ediate inspection of the copies or register.

R ig h t to 125. (1) Every register o f holders of debentures o f a company shall,

in s p t t the except v/hen closed in accordance w iih the articles during such period or
regi-.t-T of
debei ture- periods (not exceeding in the whole th irty days in any year) as may be
hoiders and specified in the articles, be open to the inspection o f the registered holder of
to have
copies o f any such debentures, and of any holder o f shares in the company, b u t subject
trust-deed. a t such reasonable restrictions as the company may in general meeting impose,
so that at least two hours in each day are appointed fo r inspection, and every
 Companies. 291

such holder may require a copy of the register or any part thereof on payment
o f six annas fo r every one hundred words or fractional p a rt thereof required to
be copied.
(2) A copy o f any trust-deed fo r securing any issue o f debentures shall
be forwarded to every holder o f any such debentures at his request on payment,
in the case o f a printed trust-deed, o f the sum o f one rupee or such less sum
as m ay be prescribed by the company, or, where the trust-deed has not been
printed, on payment o f six annas fo r every one hundred words or fractional
p a rt thereof required to be copied.
(3) I f inspection is refused, or a copy is refused or not forwarded, the
company shall be lia b le to a fine not exceeding fifty rupees, and to a fu rth e r
fine n o t exceeding tw enty rupees fo r every day during which the refusal
continues, and every officer o f the company who know ingly authorizes or
perm its the refusal shall incur the lik e penalty, and the C ourt may by order
compel an im m ediate inspection o f the register.

125A- The separation o f Burm a and India shall not, as respects a T ra n s ito ry
company w hich was under the provisions o f this A c t as in force before the pro visio n s
separation o f Burm a and In d ia a company w ith in the meaning of this A ct, indfaSn etS
render valid any mortgage or charge which, by virtue o f this Part o f this A ct, com panies,
as in force im m ediately before the said date, was void against the liq u id a to r
and creditors o f the company.

Debentures and Floating Charges.

126. A condition contained in any debentures or in any deed fo r securing perpetual
any debentures, whether issued or executed before or after the passing o f this de! entures.
A c t, shall not be in v a lid by reason only that thereby the debentures are made
irredeemable or redeemable only on the happening o f a contingency, however
remote or on the expiration o f a period however long.

127. ( / ) Where either before or after the commencement o f this A c t a P o w e r to

company has redeemed any debentures previously issued, the company, unless Adeemed
the articles or the conditions o f issue expressly otherwise provide, or unless debentures
the debentures have been redeemed in pursuance of any obligation on the ^ srtam
company so to do (n ot being an obligation enforceable only by the person to
whom the redeemed debentures were issued or his assigns), shall have power,
and shall be deemed always to have had power, to keep the debentures alive
fo r the purposes o f re-issue, and where a company has purported to exercise
such a power the company shall have power, and shall be deemed always to
have had power, to re-issue the debentures either by re-issuing the same
debentures or by issuing other debentures in th e ir place, and upon such re-issue
the person entitled to the debentures shall have, and shall be deemed always
to have had, the same rights and prio ritie s as i f the debentures had not
previously been issued.
(2) Where w ith the object o f keeping debentures alive fo r the purpose of
re-issue they have, either before or after the commencement o f this A ct,
 292 Companies.

been transferred to a nominee of the company, a transfer fro m that nominee

shall be deemed to be a re-issue fo r the purposes o f this section.
(5) Where a company has, either before or after the commencement of
this A c t, deposited any o f its debentures to secure advances fro m tim e to time
on current account or otherwise, the debentures shall not be deemed
to have been redeemed by reason only o f the account o f the company having
ceased to be in debit w h ils t the debentures remained so deposited.
( 4) The re-issue o f a debenture or the issue o f another debenture in its
place under the power by this section given to, or deemed to have been
possessed by, a company, whether the re-issue or issue was made before or
after the commencement o f this A ct, shall be treated as the issue o f a new
debenture fo r the purposes o f stam p-duty, but it shall not be so treated fo r
the purposes o f any provision lim itin g the am ount or number o f debentures
to be issued :
Provided that any person lending money on the security o f a debenture
re-issued under this section which appears to be duly stamped may give the
debenture in evidence in any proceedings fo r enforcing his security w ithout
payment o f the stamp-duty or any penalty in respect thereof, unless he had
notice or, but fo r his negligence, m ight have discovered that the debenture was
n o t duly stamped, but in any such case the company shall be liable to pay the
proper stamp-duty and penalty.
(5) N othing in this section shall prejudice
(# ) * * * * *
Cb) any power to issue debentures in the place o f any debentures paid
o ff or otherwise satisfied or extinguished, reserved to a company
by its debentures or the securities fo r the same.

Specific p e r 128. A contract w ith a company to take up and pay fo r any debentures
fo rm a n ce of o f the company may be enforced by a decree fo r specific performance.
c o n tra c t to
subscribe fo r
debentures.
Paym ents of 129. ( / ) Where either a receiver is appointed on behalf o f the holders o f
certain debts
o u t o f assets
any debentures o f a company secured by a floating charge, or possession is
subject taken by or on behalf o f those debenture-holders o f any property comprised
to floating in or subject to the charge, then, i f the company is not at the tim e in course
charge in
p r io r ity to o f being wound up, the debts which in every winding up are under the
claim under
provisions o f Part V relating to preferential payments to be paid in p rio rity to
the charge-
a ll other debts, shall be paid fo rth w ith out o f any assets coming to the hands o f
the receiver or other person taking possession as aforesaid in p rio rity to any
claim fo r p rin cipa l or interest in respect o f the debentures.
(2) The periods o f time mentioned in the said provisions of Part V shall
be reckoned from the date o f the appointm ent o f the receiver or of possession
being taken as aforesaid, as the case may be.
(J) A n y payments made under this section shall be recouped, as fa r as
may be, out o f the assets o f the company available fo r payment o f general
creditors.
 Companies. 293

Statements, Books and Accounts.

130. ( / ) Every company shall cause to be kept proper books o f account Books to be
w ith respect to kept by
com pany
(a) a ll sums o f money received and expended by the company and the and p e n a lty
fo r n o t
matters in respect o f which the receipt and expenditure takes keeping
p la c e ; p ro p e r
books.
( b) a ll sales and purchases o f goods by the company ;
(c) the assets and lia b ilitie s o f the company.
(2) The books o f account shall be kept at the registered office o f the
company or at such other place as the directors th in k fit, and shall be open to
inspection by the directors during business hours.
{3) In the case o f a company managed by a managing agent the managing
agent, or where the managing agent is a firm or company, the partner or
director o f such firm or company, and in any other case the director or
directors, who have know ingly by th eir act or omission been the cause o f any
default by the company in com plying w ith the requirements o f this section,
shall in respect o f such offence be lia b le to a fine not exceeding one thousand
rupees.

131. ( / ) The directors o f every company shall at some date not later than Annual
eighteen months after the incorporation o f the company, and subsequently balance-
sheet.
once at least in every calendar year, lay before the company in general meeting
a balance-sheet and p ro fit and loss account, or in the case o f a company not
trading fo r p ro fit an income and expenditure account fo r the period, in the
case o f the firs t account since the incorporation o f the company, and in any
other case since the preceding account, made up to a date not earlier than the
date o f the meeting by more than nine months, or in the case o f a company
carrying on business or having interests outside the U nion o f Burm a by more
than twelve months :

Provided th a t the R egistrar may fo r any special reason extend the period
by a period not exceeding three months.
(2) The balance-sheet and the p ro fit and loss account, or income and
expenditure account, shall be audited by the auditor o f the company as
hereinafter provided, and the a u d ito rs report shall be attached thereto, or
there shall be inserted at the foo t thereof a reference to the report, and the
re port shall be read before the company in general meeting and shall be open
to inspection by any member o f the company.
(3) Every company other than a private company shall send a copy of
such balance-sheet and p ro fit and loss account, or income and expenditure
account, so audited, together w ith a copy o f the auditors report, to the
registered address o f every member o f the company at least fourteen days
before the meeting at w hich it is to be la id before the members o f the company,
and shall deposit a copy at the registered office o f the company fo r the
inspection of the members of the company during a period o f at least fourteen
days before th at meeting.
 294 Companies-

D ire c to rs 131A. ( / ) The directors shall make out and attach to every balance-sheet
re p o rt. a report w ith respect to the state o f the companys affairs, the amount* if any,
w hich they recommend should be paid by way o f dividend, and the amount, if
any, w hich they propose to carry to the Reserve Fund, General Reserve or
Reserve A ccount shown specifically on the balance-sheet, o r to a Reserve
Fund, General Reserve or Reserve A ccount to be shown specifically in a
subsequent balance-sheet.
(2) The re port referred to in sub-section ( / ) may be signed by the chair,
man o f the directors on behalf o f the directors if authorized in th a t behalf by
the directors.
(3) The provisions o f sub-section (3) o f section 130 shall apply to any
person being a director who is know ingly and w ilfu lly g u ilty o f a default in
com plying w ith this section.

Contents of 132. (J) The balance-sheet shall contain a summary o f the property and
balance- assets and o f the capital and lia b ilitie s o f the company, giving such particulars
sheet.
as w ill disclose the general nature o f those lia b ilitie s and assets and how the
value o f the fixed assets has been arrived at.
(2) The balance-sheet shall be in the fo rm marked F in the T h ird Schedule,
o r as near thereto as circumstances adm it.
(3) The p ro fit and loss account shall include particulars showing the total
o f the am ount paid, whether as fees, percentages or otherwise, to the managing
agent, i f any, and the directors, respectively, as rem uneration fo r th e ir services,
and, where a special resolution passed by the members o f the company so
requires, to the manager, and the total o f the am ount w ritten o ff fo r depreciation.
I f any director o f the company is by virtue o f the nom ination, whether direct or
indirect, o f the company, a director o f an> other company, any rem uneration
o r other emoluments received by him fo r his own use, whether as a director
o f, or otherwise in connection w ith the management of, th a t other company,
shall be shown in a note at the fo o t o f the account or in a statement attached
thereto.

Balance- 132A. ( 1) Where a company, in this A c t referred to as the holding

sheet to company, holds shares, either directly or through a nominee, in a subsidiary
include
p a rtic u la is company or in two or more subsidiary companies, there shall be annexed to
as to the balance-sheet o f the holding company the last audited balance-sheet,
s u b s id ia ry
com panies.
p ro fit and loss account and auditors report o f the subsidiary company or
companies,, and a statement signed by the persons by whom , in pursuance o f
section 133, the balance-sheet o f the holding company is signed, stating how
the profits and losses o f the subsidiary company, or, where there are two or
more subsidiary companies, the aggregate profits and losses o f those companies,
have been dealt w ith in or fo r the purposes o f the accounts o f the holding
company, and in p a rticu la r how and to what extent
(a) p rovision has been made fo r the losses o f a subsidiary company
either in the accounts o f that company o r o f the holding company
or o f both, and
 Companies. 295

(b) losses o f a subsidiary company have been taken in to account by

the directors o f the holding company in a rrivin g at the profits
and losses o f the company as disclosed in its accounts :
Provided th at it shall not be necessary to specify in any such statement
the actual am ount o f the profits or losses o f any subsidiary company or the
actual am ount o f any pa rt o f any such profits or losses which has been dealt
w ith in any particular manner :
Provided furth e r th at fo r the purposes o f this section an investment
company, that is to say, a company whose principal business is the acquisition
and holding o f shares, stocks, debentures or other securities, shall not be
deemed to be a holding company by reason only that part o f its assets consists
in 51 per cent, or more o f the shares o f another company.
(2) I f, in the case o f a subsidiary company, the auditors report on the
balance-sheet o f the company does not state w ith o u t qualification that the
auditors have obtained a ll the info rm a tion and explanations they have required
and th a t the balance-sheet is properly drawn up so as to e xhibit a true and
correct view o f the state o f the com panys affairs according to the best o f their
inform ation and the explanations given to them and as shown by the books of
the company, the statement, which is to be annexed as aforesaid to the
balance-sheet o f the holding company, shall contain particulars o f the manner
in which the report is qualified.
(5) F o r the purposes o f this section the profits or losses of a subsidiary
company mean the profits or losses shown in any accounts o f the subsidiary
company made up to a date w ith in the period to which the accounts o f the
holding company relate, or, if there are no such accounts o f the subsidiary
company available at the tim e when the accounts o f the holding company are
made up, the profits or losses shown in the last previous accounts o f the subsi
diary company which became available w ith in that period-
(4) I f fo r any reason the directors o f the holding company are unable to
obtain such inform a tion as is necessary fo r the preparation o f the statement
aforesaid, the directors who sign the balance-sheet shall so re p o rt in w ritin g and
their report shall be annexed to the balance-sheet in lieu of the statement.
(5) The holding company may by a resolution authorize representatives
named in the resolution to inspect the books o f account kept in accordance
w ith section 130 by any subsidiary company, and on such resolution being passed
those books o f account shall be open to inspection by those representatives at
any tim e during business hours.
(6) The rights conferred by section 138 upon members o f a company may
be exercised in respect o f any subsidiary company by members o f the holding
company as if they were members of that subsidiary company.

133. ( / ) Save as provided by sub-section (2), the balance-sheet and p A

roufit
th e n tic a
t io n o f
and loss account, or income and expenditure account, shall balance-
(i) in the case o f a banking company, be signed by the manager or sheet.

managing agent ( if any) and, where there are more than three
 296 Companies.

directors o f the company, by at least three o f those directors

and, where there are not more than three directors, by a ll the
directors ;
(ii) in the case o f any other company, be signed by two directors or,
when there are less than two directors, by the sole director and
by the manager or managing agent ( if any) of the company.
(2) When the to ta l number o f directors o f the company fo r the tim e being
in the U nion of Burma is less than the number o f directors whose signatures
are required by sub-section ( /) , then the balance-sheet and p ro fit and loss
account, or income and expenditure account, shall be signed by a ll the directors
fo r the tim e being in the U nion o f Burma or, i f there is only one director fo r
the tim e being in the U nion o f Burm a, by such director, but in such a case
there shall be subjoined to the balance-sheet and p ro fit and loss account, or
income and expenditure account, a statement signed by such directors or
director explaining the reason fo r non-compliance w ith the provisions of
sub-section (/)
(3) I f any default is made in laying before the company or in issuing a
balance-sheet and p ro fit and loss account, or income and expenditure account,
as required by section 131, or i f any balance-sheet and p ro fit and loss account,
o r income and expenditure account, is issued, circulated or published which does
not com ply w ith the requirements la id down by and under section 131, section
132, section 132A and this section, the company and every officer o f the company
who is kn ow ingly and w ilfu lly a party to the default shall be punishable w ith
fine which may extend to five hundred rupees-

Copy o f 134- (7) A fte r the balance-sheet and p ro fit and loss account have been
balance- la id before the company at the general meeting, a copy of the balance-sheet,
sheet to be
fo rw a rd e d signed by the manager or secretary o f the company, shall be filed w ith the
to the Registrar at the same tim e as the copy o f the annual lis t o f members and
R e g is tra r.
summary prepared in accordance w ith the requirements o f section 32.
(2) I f the general meeting before which a balance-sheet is la id does not
adopt the balance-sheet, a statement o f that fact and o f the reasons therefor
shall be annexed to the balance-sheet and to the copy thereof required to be
filed w ith the Registrar.
( i ) This section shall not apply to a private company.
(4) I f a company makes default in com plying w ith the requirements o f
this section, the company and every officer o f the company who know ingly and
w ilfu lly authorizes or perm its the default shall be liable to the like penalty as
is provided by section 32 fo r a default in com plying w ith the provisions of
that section.
R ig h t of
m em ber o f
135. Save as otherwise provided in this A ct, any member o f a company
co m p a n y to shall be entitled to be furnished w ith copies o f the balance-sheet and the
copies ol the
p ro fit and loss account, or the income and expenditure account, and the
balance-
sheet and a ud itors re port at a charge not exceeding six annas fo r every hundred words
the a u d ito rs or fractional pa rt thereof.
rep o rt.
 Companies * 297

Statement to be published by Banking and certain other Companies-

136. ( / ) Every company being a lim ite d banking company or an insurance C ertain com
panies to
company or a deposit, provident or benefit society shall, before it commences p u b lis h
business, and also on the first M onday in February and the first M onday in statem ent in
schedule.
A ugust in every year during which it carries on business, make a statement in
the fo rm marked G in the T h ird Schedule, or as near thereto as circumstances
w ill adm it.
(2) A copy o f the statement, together w ith a copy o f the last audited
balance-sheet la id before the members o f the company, shall be displayed and,
u n til the display o f the next fo llo w in g statement, kept displayed in a conspicuous
place in the registered office o f the company, and in every branch office or
place where the business o f the company is carried on.
(3) Every member and every creditor o f the company shall be entitled to
a copy o f the statement on payment o f a sum not exceeding eight annas.
(4) I f a company makes default in com plying w ith the requirements o f
this section, it shall be lia ble to a fine n o t exceeding fifty rupees fo r every day
during which the default continues ; and every officer o f the company who
know ingly and w ilfu lly authorizes or perm its the default shall be liable to the
lik e penalty.
(5) T his section shall not apply to a life assurance company or provident
insurance society to which the provisions o f the L ife Assurance Companies A ct
or o f the Provident Insurance Societies A ct, as the case may be, as to the
annual statements to be made by such company or society, apply w ith or w ithout
m odifications, i f the company or society complies w ith those provisions.

Investigation by the Registrar.

137. ( i ) Where the Registrar, on perusal o f any document which a P o w e r of
company is required to subm it to him under the provisions of this A ct, is of R e g is tra r to
c a ll fo r
opinion that any info rm atio n or explanation is necessary in order that such in fo rm a tio n
document may afford fu ll particulars o f the m atter to which it purports to relate, or e xp la n a
tio n .
he may, by a w ritten order, call on the company subm itting the document to
fu rn ish in w ritin g such in form a tion or explanation w ith in such time as he may
specify in his order.
(2) On the receipt o f an order under sub-section ( /) , it shall be the duty
o f a ll persons who are or have been officers o f the company to furnish such
inform atio n or explanation to the best o f their power.
C?) I f any such person refuses or neglects to furnish any such in fo rm a
tio n or explanation, he shall be lia ble to a fine not exceeding fifty rupees in
respect o f each offence, and the C ourt may on the application o f the Registrar
and upon notice to the company make an order on the company fo r
production of such documents as in its opinion may reasonably be required
by the Registrar fo r his investigation and allow the Registrar inspection
thereof on such terms and conditions as it thinks fit.
(4) On receipt o f such info rm ation or explanation the Registrar may
annex the same to the origin al document submitted to him ; and any additional
 298 Companies.

document so annexed by the Registrar shall be subject to the lik e provisions

as to inspection and the taking o f copies as the o riginal document is subject.
(5) I f such info rm atio n or explanation is n o t furnished w ith in the
specified tim e, or i f after perusal o f such inform ation or explanation the
R egistrar is o f opinion that the document in question discloses an
unsatisfactory state o f affairs, or that it does not disclose a fu ll and fa ir
statement o f the matters to which it purports to relate, the Registrar shall
re port in w ritin g the circumstances o f the case to the President o f the U nion.
(6) I f it is represented to the Registrar in m aterials placed before him
by any co ntribu to ry or creditor that the business o f a company is carried on
in fraud o f its creditors or in fra ud o f persons dealing w ith the company or
fo r a fraudulent purpose, he may after giving the company an opp o rtu n ity o f
being heard by w ritte n order call on the company fo r in fo rm a tio n or explan a-
tio n on matters specified in the order w ith in such tim e as he may specify in
the order, and the provisions o f sub-sections (2), (J) and (5) o f this section
shall apply to such order. I f upon investigation the Registrar is satisfied
hat any representation on which he has taken action under this sub-section is
friv o lo u s or vexatious, he shall disclose the identity o f the in form ant to the
company.
(7) The provisions o f this section shall apply mutatis mutandis to
documents w hich a liq u id a to r is required to file under this A ct.

Inspection and Audit.

In v e s tig a tio n 138. The President o f the U nion may appoint one or more competent
o f a ffa irs o f
com pany b y inspectors to investigate the affairs o f any company and to report thereon in
inspectors. such manner as the President o f the U nion may direct
(i) in the case o f a banking company having a share capital, on the
applicatio n o f members holding not less than one-fifth o f the
shares issued ;
(ii) in the case o f any other company having a share capital, on the
a pplication o f members holding n o t less than one-tenth o f the
shares issued ;
( iii) in the case o f a company not having a share capital, on the
application o f not less than one-fifth in number o f the persons
on the companys register o f members ;
(iv) in the case o f any company, on a report by the Registrar under
section 137, sub-section (5).

A p p lica tio n 139- A n application by members o f a company under section 138 shall
fo r inspec
tio n to be
be supported by such evidence as the President o f the U nion may require fo r
supported by the purpose o f showing th at the applicants have good reason fo r, and are not
evidence.
actuated by m alicious motives in requiring, the in v e s tig a tio n ; and the
President o f the U n io n may, before appointing an inspector, require the
applicants to give security fo r payment o f the costs o f the in q u iry.
 Companies. 299

140. ( / ) I t shall be the duty o f a ll persons who are or have been Inspection o f
books and
officers o f the company to produce to the inspectors a ll books and documents examination
in th e ir custody o r power relating to the company. o f officers.
(2) A n inspector m ay examine on oath any such person in relation to its
business, and may adm inister an oath accordingly,
(J) I f any person refuses to produce any book or document w hich
under this section i t is his duty to produce, or to answer any question relating
to the affairs o f the company, he shall be liable to a fine n o t exceeding fifty
rupees in respect o f each offence.

141. ( / ) On the conclusion o f the investigation the inspectors shall Results o f

examination
re p o rt th e ir opinion to the President o f the U nion, and a copy of the report
h o w dealt
shall be forw arded by the President o f the U nion to the Registrar and w ith.
another copy to the registered office o f the company, and a fu rth e r copy
shall, at the request o f the applicants fo r the investigation, be delivered to
them-
(2) The report shall be w ritte n or printed, as the President o f the
U n io n directs.
(3) A ll expenses of, and incidental to, the investigation shall be defrayed
by the applicants unless the President o f the U nion directs the same to be
paid by the company, w hich the President o f the U nion is hereby authorized
to d o :
Provided tha t the expenses o f and incidental to an investigation held in
pursuance o f clause (iv) o f section 138 shall be paid out o f the assets o f the
company and shall be recoverable as an arrear o f land-revenue.
(4) The R egistrar shall keep the copy of the report sent to him w ith
the records o f the company in his custody.

141A- ( / ) I f fro m any report made under section 138 i t appears to the Institution of
prosecutions.
President o f the U nion that any person has been g u ilty o f any offence in
re la tion to the company fo r w hich he is c rim in a lly liable, the President o f the
U nion shall refer the m atter to the A ttorney-G eneral 1 or the Public Prosecutor.
(2) I f the officer to whom the m atter is referred considers th a t the case
is one in w hich a prosecution ought to be instituted, he shall cause proceedings
to be instituted, and i t shall be the duty of a ll officers and agents o f the
company, past and present (other than the accused in the proceedings), to give
to him a ll assistance in connection w ith the prosecution which they are
reasonably able to give.
(3) F o r the purposes of sub-section (2), the expression agents in
re la tion to a company shall be deemed to include the bankers and legal
advisers o f the company and any persons employed by the company as
auditors, whether those persons are or are not officers o f the company-
( 4 ) A n y director, manager or other officer o f the company convicted as
the result o f a prosecution in itia te d under this section shall not w ith o u t the

1 Substituted by the Union of Burma (Adaptation o f Law s) Order, 1948.

 300 Companies.

leave o f the C ourt be a dire ctor o f or in any way, whether dire ctly or
in d ire ctly, be concerned in or take part in the management o f a company fo r
a period o f five years fro m the date of such conviction,

i o w e r of 142. ( / ) A company may by a special resolution appoint inspectors to

co m p a n y to investigate its affairs.
a p p o in t
inspectors. (2) Inspectors so appointed shall have the same powers and duties as
inspectors appointed by the President o f the U nion, except that, instead o f
reporting to the President o f the U nion, they shall report in such manner and
to such persons as the company in general meeting may direct.
(5) A ll persons who are or have been officers o f the company shall incur
the lik e penalties in case o f refusal to produce any book or document
required to be produced to inspectors so appointed, or to answer any
question, as they w ould have incurred i f the inspectors had been appointed
by the President o f the U nion.

R e p o rt of 143. A copy o f the re port o f any inspectors appointed under this A ct,
inspectors to authenticated by the seal o f the company whose affairs they have investigated,
be evidence.
shall be admissible in any legal proceeding as evidence o f the opinion o f the
inspectors in relation to any m atter contained in the report.

Q u a lific a 144. ( 1) N o person shall be appointed or act as an auditor o f any

tions and company, other than a private company not being the subsidiary company o f
a p p o in tm e n t
o f auditors.
a public company, unless he holds a certificate fro m the President o f the
U nion entitling him to act as an auditor o f companies :
Provided that a firm whereof a ll the partners practising in the U nion o f
Burm a hold such certificates may be appointed by its firm-name to be auditor
o f a company, and may act in its firm-name.
(2) The President o f the U nion may, by notification in the Gazette and
after previous publicatio n, make rules providing fo r the grant, renewal or
cancellation o f such certificates and prescribing conditions and restrictions fo r
such grant, renewal or cancellation :
Provided that nothing contained in such rules shall preclude any person
from being granted a certificate merely by reason that he does n o t practise as
a public accountant.
( 2 A ) In particular, and w ith o u t prejudice to the generality o f the
foregoing power, such rules may
(a) provide fo r the maintenance o f a register o f Accountants entitled
to apply fo r such certificates ;
( b ) prescribe the qualifications fo r enrolment on the register and the
fees therefor ;
(c) provide fo r the exam ination o f candidates fo r enrolm ent, and
prescribe the fees to be paid by examinees ;
( d) prescribe the circumstances in which the name o f any person may
be removed fro m or restored to the re g iste r;
 Companies 301

(e) provide fo r the establishment, constitution and procedure o f an

Accountancy Board, consisting o f persons representing the
interests p rin c ip a lly affected or having special knowledge o f
accountancy, to advise him on a ll matters o f adm inistration
relating to accountancy, and to assist him in m aintaining the
standards o f qualification and conduct o f persons enrolled on
the re g is te r; and
(/) provide fo r the establishment, constitution and procedure o f local
accountancy boards at such centres as the President o f the
U nion may select, to advise him and the Accountancy Board
on any m atter th a t may be referred to them.

(27?) The holder o f a certificate granted under this section shall be

entitled to be appointed and act as an auditor o f companies throughout the
U nion o f Burm a.
(5) Every company shall at each annual general meeting appoint an
a ud itor or auditors to hold office u n til the next annual general meeting.
(4) I f an appointm ent o f an auditor is not made at an annual general
meeting, the President o f the U nion may, on the application of any member
o f the company, appoint an auditor o f the company fo r the current year, and
fix the rem uneration to be paid to him by the company fo r his services.
(5) The fo llo w in g persons, th a t is to say,
(i) a director or officer o f the company, and
(ii) a partner o f such director or officer, and
( iii) in the case o f a company, other than a private company not being
the subsidiary company o f a public company any person in the
employment o f such director or officer, and
(iv) any person indebted to the company,

shall not be appointed auditors o f the company, and i f any person after being
appointed au dito r becomes indebted to the company his appointm ent shall
thereupon be term inated.
(6) A person, other than a re tirin g auditor, shall not be capable o f being
appointed auditor at an annual general meeting unless notice o f an intention to
nominate that person to the office o f auditor has been given by a member of
the company to the company not less than fourteen days before such annual
general meeting, and the company shall send a copy o f any such notice to the
re tirin g auditor, and shall give notice thereof to its members, either by
advertisement or in any other mode allowed by the articles, not less than
seven days before the annual general meeting :
Provided that, if after notice o f the intention to nominate an
au d ito r has been given to the company, an annual general meeting is
called fo r a date fourteen days or less after the notice has been
given, the requirements o f this section as to tim e in respect o f
such a notice shall be deemed to have been satisfied, and the
notice otbe sent or given by the company may, instead o f being sent or given
 302 Companies.

w ith in the tim e required by this section, be sent or given at the same tim e as
the notice o f the annual general meeting.
(7) The first auditors o f the company may be appointed by the directors
before the statutory meeting, and i f so appointed shall hold office u n til the
first annual general meeting unless previously removed by a resolution o f the
members o f the company in general meeting, in which case such members at
th at meeting may appoint auditors.
(8) The directors may fill any casual vacancy in the office o f auditor, but
w hile any such vacancy continues the surviving or continuing auditor or
auditors ( if any) may act.
(9) The rem uneration o f the auditors o f a company shall be fixed by the
company in general meeting, except that the rem uneration o f any auditors
appointed before the statutory meeting, or to f ill any casual vacancy, may be
fixed by the directors.

Pow ers and 145. ( / ) Every aud itor o f a company shall have a rig h t o f access at all
duties o f times to the books and accounts and vouchers o f the company, and shall be
auditor*.
entitled to require fro m the directors and officers o f the company such in fo r
m ation and explanation as may be necessary fo r the performance o f the duties
o f the auditors.
(2) The auditors shall make a re p o rt to the members o f the company
on the accounts examined by them, and on every balance-sheet and p ro fit and
loss account la id before the company in general meeting during th e ir tenure
o f office, and the report shall state :
(a) whether or not they have obtained all the in fo rm a tio n and expla
nations they have required ; and
( b ) whether or not in the ir opinion the balance-sheet and the profit
and loss account referred to in the re p o rt are drawn up in con
fo rm ity w ith the law ; and
(c) whether or not such balance-sheet exhibits a true and correct view
o f the state o f the com panys affairs according to the best o f
th e ir info rm a tion and the explanations given to them, and as
shown by the books o f the company ; and
( d ) whether in th e ir opinion books o f account have been kept by the
company as required by section 130.
(2 A ) Where any o f the matters referred to in clauses (a), (b), ( c) and (d) o f
sub-section (2) is answered in the negative or w ith a qualification, the report
shall state the reason fo r such answer.
(3) In the case o f a banking company, i f the company has branch banks
beyond the lim its o f the U nion o f Burm a, it shall be sufficient i f the auditor
is allowed access to such copies o f and extracts fro m the books and accounts
o f any such branch as have been transm itted to the head office o f the
company in the U nion o f Burma-
(4) The auditors o f a company shall be entitled to receive notice o f and
to attend any general meeting o f the company at which any accounts which
have been examined or reported on by them are to be la id before the
 Companies. 303

company and may make any statement or explanation they desire w ith respect
to the accounts.
(5) I f any auditors report is made w h ich does not com ply w ith the
requirements o f this section, every auditor w ho is kn o w in g ly and w ilfu lly a
party to the default shall be punishable w ith fine w hich may extend to one
hundred rupees.

146. (7) Holders o f preference shares and debentures o f a company shall R ights o f
preference
have the same rig h t to receive and inspect the balance-sheets and p ro fit and shareholders,
loss accounts o f the company and the reports o f the auditors and other reports etc., as to
rece ip t and
as is possessed by the holders o f o rd ina ry shares in the company- inspection of
(2) T his section shall not apply to a private company, nor to a com
re p o rts , etc.
pany registered before the commencement o f this A c t :
Provided th a t in the case o f any public company w hether registered
before or after the commencement o f this A c t the trustees fo r holders o f
debentures shall have the rig h t conferred by sub-section (7) on holders of
preference shares and debentures o f a company.

Carrying on Business with less than the Legal Minimum o f M em bers.

147. I f at any tim e the num ber o f members o f a company is reduced, in L ia b ility fo r
the case o f a private company, below two, or in the case o f any other com c a rry in g On
busii ess w ith
pany, below seven, and i t carries on business fo r more than six months w hile fe w e r than
the num ber is so reduced, every person who is a member o f the company seven o r, in
th e case o f a
during the tim e that it so carries on business after those six months and is p riv a te com
cognisant o f the fact that i t is carrying on business w ith fewer than two p any, tw o
m em bers.
members or seven members, as the case may be, shall be severally lia b le fo r
the payment o f the whole debts of the company contracted during th a t tim e,
and may be sued fo r the same w ith o u t jo inder in the su it o f any other
member.
Service and Authentication o f Documents.
148. A document may be served on a company by leaving i t at, or Service of
docum ents on
sending it by post to, the registered office of the company. com pany.
149. A document may be served on the R egistrar by sending i t to him by Service of
post, or delivering i t to him , or by leaving it fo r h im at his office. docum ents on
R e g istra r.
150. A document or proceeding requiring authentication by a company A u th e n tica
may be signed by a director, secretary or other authorized officer o f the tio n o f
documents.
company, and need not be under its common seal.

Tables, Forms and Rules as to Prescribed Matters.

151. (7) The form s in the T h ird Schedule or form s as near thereto as A p p lica tio n
circumstances adm it shall be used in a ll matters to which those form s refer. oand a lte ra tio n
f ta b le s and
(2) The President o f the U nion may alter any o f the Tables and form
fo rmss, and
p o w e r to
in the F irs t Schedule, so th at he does not increase the amount of fees payable make rules as
to the Registrar in the said Schedule mentioned, and may alter or add to the to pre cribed
m atters,
form s in the T h ird Schedule,
 304 Companies.

( 3 ) A n y such Table or form , when altered, shall be published in the

Gazette, and on such publication shall have effect as i f enacted in this A ct,
but no alteration made by the President o f the U nion in Table A in the F irst
Schedule shall affect any company registered before the alteration, or repeal,
as respects that company, any p o rtio n o f th a t Table.
( 4 ) In addition to the powers hereinbefore conferred by this section, the
President o f the U nion may make rules providing fo r a ll or any matters which
by th is A c t are to be prescribed by his authority.
(5) Every such rule shall be published in the Gazette, and on such
publication shall have effect as i f enacted in this A ct.

Arbitration and Com prom ise.

P ow er fo r
152. ( i ) A company may by w ritten agreement refer to a rb itra tio n , in
com panies to accordance w ith the A rb itra tio n A ct, an existing or future difference between
re fe r m atters
to a rb itra
its e lf and any other company or person.
tion. (2) Companies, parties to the a rb itra tio n , may delegate to the arbitrator
power to settle any terms or to determine any m atter capable o f being la w fu lly
settled or determined by the companies themselves, or by their directors or
other managing body.
(3 ) The provisions o f the A rb itra tio n A c t [ * * * * ] i shall apply to
a ll arbitrations between companies and persons in pursuance o f this A ct.

P o w e r to
153. (J) Where a compromise or arrangement is proposed between a
com prom ise company and its creditors or any class o f them, or between the company and
w it h cre d ito rs
and m em bers
its members or any class o f them, the C ourt may, on the application in a
summary way o f the company or o f any creditor or member of the company
or, in the case o f a company being wound up, o f the liq u id a to r, order a meeting
o f the creditors or class o f creditors or o f the members o f the company or class
o f members, as the case may be, to be called, held and conducted in such
manner as the C ourt directs.
(2) I f a m a jo rity in number representing three-fourths in value o f the
creditors or class o f creditors, or members or class o f members, as the case
may be, present either in person or by proxy at the meeting, agree to any
compromise or arrangement, the compromise or arrangement shall, if sanctioned
by the C ourt, be binding on a ll the creditors or the class o f creditors, or on
a ll the members or class o f members, as the case may be, and also on the
company, or, in the case o f a company in the course o f being wound up, on
the liq u id a to r and contributories o f the company.
(3) A n order made under sub-section (2) shall have no effect u n til a
certified copy o f the order has been filed w ith the Registrar, and a copy of
every such order shall be annexed to every copy o f the memorandum of the
company issued after the order has been made, or in the case o f a company
not having a memorandum, o f every copy so issued o f the instrum ent con
stituting or defining the constitution of the company.

1 D eleted b y Act IV , 1944,

 Companies. 305

(4) If a company makes default in complying with sub-section (J) the com
pany and every officer of the company who is knowingly and wilfully in default
shall be liable to a fine not exceeding ten rupees for each copy in respect of
which default is made.
(5) The Court may, at any time after an application has been made to it
under this section, stay the commencement or continuation of any suit or pro
ceeding against a company on such terms as it thinks fit and proper until the
application is finally disposed of.
(6) In this section the expression com pany means any company liable
to be wound up under this Act, and for the purposes of this section unsecured
creditors who may have filed suits or obtained decrees shall be deemed to be
of the same class as other unsecured creditors.
(7) An appeal shall lie from any order made by the Court exercising
original jurisdiction under this section to the authority authorized to hear
appeals from the decisions of the Court.

153A. (/) Where an application is made to the Court under section 153 Provisions
for the sanctioning of a compromise or arrangement proposed between a for fa cilita t
ing arran g e
company and any such persons as are mentioned in that section, and it is m ents and
shown to the Court that the compromise or arrangement has been proposed con promises.
for the purposes of or in connection with a scheme for the reconstruction of
any company or companies or the amalgamation of any two or more companies,
and that under the scheme the whole or any part of the undertaking or the
property of any company concerned in the scheme (in this section referred to
as a transferor company ) is to be transferred to another company (in this
section referred to as the transferee company ), the Court may, either by
the order sanctioning the compromise or arrangement or by any subsequent
order, make provision for all or any of the following matters :
(a) the transfer to the transferee company of the whole or any part of
the undertaking and of the property or liabilities of any
transferor company ;
(b) the allotting or appropriation by the transferee company of any
shares, debentures, policies, or other like interests in that com
pany which under the compromise or arrangement are to be
allotted or appropriated by that company to or for any p erso n ;
(c) the continuation by or against the transferee company of any legal
proceedings pending by or against any transferor company ;
(d ) the dissolution, without winding up, of any transferor company ;
(e) the provision to be made for any persons who, within such time
and in such manner as the Court directs, dissent from the com
promise or arrangem ent;
(f) such incidental, consequential and supplemental matters as are
necessary to secure that the reconstruction or amalgamation
shall be fully and effectively carried out.
(2) Where an order under this section provides for the transfer of
property or liabilities, that property shall, by virtue of the order, be transferred

20
 306 Companies.

to and vest in, and those lia b ilitie s shall, by virtue o f the order, be transferred
to and become the lia b ilitie s o f, the transferee company, and in the case o f
any property, i f the order so directs, freed fro m any charge which is by virtue
o f the compromise o r arrangement to cease to have effect.
(5) Where an order is made under this section, every company in rela
tio n to w hich the order is made shall cause a certified copy thereof to be
delivered to the Registrar fo r registration w ith in fourteen days after the
com pletion o f the order, and i f default is made in com plying w ith this sub
section, the company and every officer o f the company who is kn o w in g ly and
w ilfu lly in default shall be liab le to a fine not exceeding fifty rupees.
( 4 ) In this section the expression property includes property, rights
and powers o f every description, and the expression lia b ilitie s includes
duties.
(5) N otw ithstanding the provisions o f sub-section (4) o f section 153, the
expression company in this section does not include any company other
than a company w ith in the meaning of this A ct.

P o w e r to 153B. ( / ) Where a scheme or contract involving the transfer o f shares or

acquire any class o f shares in a company (in this section referred to as the
shares of
shareholders transferor company ) to another company, whether a company w ith in the
dissenting meaning o f this A c t or not (in th is section referred to as the transferee
from schem es
or contract company ), has w ith in fo u r months after the m aking o f the offer in that
approved by behalf by the transferee company been approved by the holders o f not less
m ajority.
than three-fourths in value o f the shares affected, the transferee company
may, at any tim e w ith in two months after the expiration o f the said fo u r
m onths, give notice in the prescribed manner to any dissenting shareholder
th at i t desires to acquire his shares, and where such a notice is given the
transferee company shall, unless on an application made by the dissenting
shareholder w ith in one m onth fro m the date on which the notice was given
the C ourt thinks fit to order otherwise, be entitled and bound to acquire
those shares on the terms on which under the scheme or contract the
shares o f the approving shareholders are to be transferred to the transferee
c o m p a ny:
Provided that, where any such scheme or contract has been so approved
at any tim e before the 15th January, 1937,1 the C ourt may by order, on an
application made to i t by the transferee company w ith in tw o months after the
said date, authorize notice to be given under this section at any tim e w ith in
fourteen days after the m aking o f the order, and this section shall a pply
accordingly, except that the terms on which the shares o f the dissenting
shareholder are to be acquired shall be such terms as the C ourt may by the
order direct instead o f the terms provided by the scheme or contract.
(2) Where a notice has been given by the transferee company under this
section and the C ourt has not, on an application made by the dissenting
shareholder, ordered to the contrary, the transferee company shall, on the
1 Date of com m encem ent o f the Indian Com panies (Amendm ent) A ct, 1936 (India A ct
X X I I , 1936).
 Companies. 307

expiration o f one m onth fro m the date on which the notice has been given or,
i f an application to the C o urt by the dissenting shareholder is then pending,
afte r th a t applicatio n has been disposed of, transm it a copy o f the notice to
the transferor company and pay or transfer to the transferor company the
am ount or other consideration representing the price payable by the transferee
company fo r the shares w hich by virtue o f this section that compiany is
entitled to acquire, and the transferor company shall thereupon register the
transferee company as the holder o f those shares.
(J) A ny sums received by the transferor company under this section
shall be paid in to a separate bank account, and any such sums and any other
consideration so received shall be held by that company on trust fo r the
several persons entitled to the shares in respect o f which the said sums o r
other consideration were respectively received.
(4 ) In this section the expression dissenting shareholder includes a
shareholder who has not assented to the scheme or contract and any
shareholder who has fa iled or refused to transfer his shares to the transferee
company in accordance w ith the scheme or contract.

Conversion o f Private Company into Public Company.

154. ( / ) I f a company, being a private company, alters its articles in Conversion

such manner th at they no longer include the provisions which, under the of Private
provisions o f clause (13) o f sub-section ( / ) o f section 2, are required to be put^c 7
included in the articles o f a company in order to constitute it a private com pany,
company, the company shall, as on the date o f the alteration, cease to be a
private company and shall, w ith in a period o f fourteen days after the said
date, file w ith the R egistrar a prospectus or a statement in lieu o f prospectus
in the fo rm and containing the particulars set out in the fo rm marked I I in the
Second Schedule.
(2) I f default is made in com plying w ith sub-section ( 0 o f this section,
the company and every officer o f the company who is kn ow ingly and w ilfu lly
in default shall be liab le to a fine not exceeding five hundred rupees.
(3) Where the articles o f a company include the provisions aforesaid
but default is made in com plying w ith any o f those provisions, the company
shall cease to be entitled to the privileges and exemptions conferred on
private companies under the provisions contained in this A ct, and thereupon
the provisions o f this A c t shall apply to the company as i f i t were not a private
company :
Provided that the C ourt, on being satisfied that the fa ilu re to com ply
w ith the conditions was accidental or due to inadvertence or to some other
sufficient cause, or that on other grounds i t is just and equitable to grant
re lief, may, on the application o f the company or any other person interested
and on such terms and conditions as seem to the C ourt ju st and expedient,
order th a t the company be relieved fro m such consequences as aforesaid.
 308 Companies-

PART V.

W in d in g up.

Preliminary-
M ode of 155. ( / ) The w inding up o f a company may be either
w in din g up.
(i) by the C o u rt ; or
(ii) voluntary ; or
( iii) subject to the supervision o f the C ourt.
(2) The provisions o f this A c t w ith respect to w inding up apply, unless
the contrary appears, to the w inding up o f a company in any o f these modes.

Contributories-

L ia b ility as 156. ( / ) In the event o f a company being wound up, every present and
contributo
ries of
past member shall, subject to the provisions o f this section, be liable to
present and contribute to the assests o f the company to an am ount sufficient fo r payment
past m em
o f its debts and lia b ilitie s and the costs, charges and expenses o f the winding
bers.
up, and fo r the adjustm ent o f the rights o f the contributories among
themselves, w ith the qualifications fo llo w in g (that is to say) :
(i) a past member shall not be liable to contribute i f he has ceased to
be a member fo r one year or upwards before the commencement
o f the w inding up ;
( ii) a past member shall not be liable to contribute in respect o f any
debt, or lia b ility o f the company contracted after he ceased to
be a member ;
( iii) a past member shall not be liable to contribute unless it appears
to the C o urt that the existing members are unable to satisfy the
contributions required to be made by them in pursuance of
this A c t ;
(iv ) in the case of a company lim ite d by shares, no co n trib u tio n shall
be required fro m any member exceeding the am ount ( if any)
unpaid on the shares in respect to which he is liable as a
present or past member ;
(v) in the case o f a company lim ite d by guarantee, no contribution
shall be required fro m any member exceeding the amount
undertaken to be contributed by him to the assets o f the
company in the event o f its being wound up ;
(v i) nothing in this A c t shall invalidate any provision contained in
any p o licy o f insurance or other contract whereby the lia b ility
o f in d ivid u a l members on the policy or contract is restricted,
or whereby the funds o f the company are alone made liable in
respect o f the policy or c o n tra c t;
(v ii) a sum due to any member o f a company in his character o f a
member, by way o f dividends, profits or otherwise, shall not be
deemed to be a debt o f the company payable to that member
 Companies 309

in a case o f com petition between him self and any other creditor
not a member o f the company ; but any such sum may be taken
in to account fo r the purpose o f the final adjustments o f the
rights o f the contributories among themselves.
(2) In the w inding up o f a company lim ite d by guarantee which has a
share capital, every member o f the company shall be lia b le , in addition to the
am ount undertaken to be contributed by him to the assets o f the company in
the event o f its being wound up, to contribute to the extent o f any sums unpaid
on any shares held by him .

157. In the w inding up o f a lim ite d company any director, whether past
L ia b ility o f
or present, whose lia b ility is, iu pursuance o f this A c t, unlim ited, shall, in directors
w h ose liabi
a d ditio n to his lia b ility ( if any) to contribute as an ordinary member, be liable lity is un-
to make a fu rth e r co n trib utio n as i f he were at the commencement o f the lin .ited.
w inding up a member o f an unlim ited company :
Provided that
(i) a past director shall n o t be liable to make such fu rth e r contribution
if he has ceascd to hold office fo r a year or upwards before the
commencement o f the w inding up ;
( ii) a past director shall not be lia b le to make such fu rth e r co n trib u
tio n in respect o f any debt or lia b ility o f the company contracted
after he ceased to hold office ;
( iii) subject to the articles a director shall not be liable to make
such fu rth e r contribution unless the C ourt deems it necessary to
require th at co n trib u tio n in order to satisfy the debts and
lia b ilitie s o f the company, and the costs, charges and expenses
o f the w inding up-

8. The term con trib uto ry means every person liable to contribute to Meaning of
the assets o f a company in the event o f its being wound up, and, in all contribu
tory.
proceedings fo r determ ining and in a ll proceedings p rio r to the final determ ina
tio n of the persons who are to be deemed contributories, includes any person
alleged to be a contributory-

159. ( / ) The lia b ility o f a co n trib u to ry shall create a debt payable at Nature of
liability of
the tim e specified in the calls made on him by the liq u id a to r. contributory.
(2) No claim founded on the lia b ility of a co n trib u to ry shall be cognizable
by any C ourt o f Small Causes.
160. ( / ) I f a c o n trib u to ry dies either before or after he has been placed C ontribu
on the lis t o f contributories, his legal representatives and his heirs shall be tories in case
of death of
liab le in a due course o f adm inistration to contribute to the assets o f the n.em ber.
company in discharge o f his lia b ility and shall be contributories accordingly.
(2) I f the legal representatives or heirs make default in paying any money
ordered to be paid by them, proceedings may be taken fo r adm inistering the
property o f the deceased contributory, whether moveable or immoveable, or
both and o f com pelling payment thereout o f the money due.
 310 Companies-

(3) F or the purposes o f this section the surviving co-partners o f a

co n trib u to ry who is a member o f a H in d u jo in t fa m ily governed by the
M itakshara School o f H in d u Law shall be deemed to be his legal representa
tives and heirs.

C o n trib u 161. I f a c o n trib u to ry is adjudged insolvent either before or after he

tories in case
o f in so lve n cy
has been placed on the lis t o f contributories, then
o f m em ber. (1) his assignees shall represent him fo r a ll the purposes o f the w ind
ing up, and shall be contributories accordingly, and may be
called on to ad m it to p roof against the estate of the insolvent,
o r otherwise to allow to be paid out o f his assets in due course
o f law , any money due fro m the insolvent in respect o f his
lia b ility to contribute to the assets o f the company ; and
(2) there may be proved against the estate o f the insolvent the
estimated value o f his lia b ility to future calls as w ell as calls
already made.

Winding up b y Court-

Circum-
162. A company m ay be wound up by the C ourt
stan^ts in (i) i f the company has by special resolution resolved that the company
w hich co m
pany m ay be be wound up by the C o u r t;
w oun d up by ( ii) i f default is made in filin g the statutory report or in holding the
Court.
statutory m ee ting ;
( iii) i f the company does not commence its business w ith in a year from
its incorporation, or suspends its business fo r a whole year ;
(iv) i f the number o f members is reduced, in the case o f a private
company, below two ; or, in the case of any other company,
below seven ;
(v) i f the company is unable to pay its debts ;
1 (va) i f its licence is w ithdraw n in accordance w ith the provisions o f
section 55 o f the U nion Bank o f Burma A c t, 1952 ;
(v i) i f the C o urt is o f opinion that it is just and equitable that the
com pany should be wound up.

Company 163. ( / ) A company shall be deemed to be unable to pay its debts

w hen deem
ed unable t o (i) i f a creditor, by assignment or otherwise, to whom the
pay its debts. company is indebted in a sum exceeding five hundred rupees
then due, has served on the company, by causing the same
to be delivered by registered post or otherwise at its
registered office, a demand under his hand requiring the
company to pay the sum so due and the company has fo r
three weeks thereafter neglected to pay the sum, or to
secure or compound fo r it to the reasonable satisfaction o f
the c red itor ; or

1 In stiled by Act IX , 1952.

 Companies- 311

(ii) i f execution o r other process issued on a decree or order o f

any C ou rt in favour o f a creditor o f the company is returned
unsatisfied in whole or in p a r t; or
( iii) i f i t is proved to the satisfaction o f the C o u rt that the
company is unable to pay its debts and, in determ ining
whether a company is unable to pay its debts, the C ourt
shall take in to account the contingent and prospective
lia b ilitie s of the company.
(2) The demand referred to in clause (i) o f sub-section ( / ) shall be
deemed to have been d u ly given under the hand o f the creditor i f it is signed
by an agent or legal adviser duly authorized on his behalf, or in the case o f
a firm i f i t is signed by such agent or by a legal adviser or any one member
o f the firm on behalf o f the firm .

164. Where the H igh C ourt makes an order fo r w inding up a company W in din g up
under this A c t, it may, i f it thinks fit, direct a ll subsequent proceedings to be refer-
had in a D is tric t C o u r t; and thereupon such D is tric t C ourt shall, fo r the District
purpose o f w inding up the company, be deemed to be the C ourt w ith in Court-
the meaning o f this A c t, and shall have, fo r the purposes o f such w inding up,
a ll the ju risd ictio n and powers o f the H ig h Court.

165. I f during the progress of a w inding up in a D istrict C ourt it is T ran sfer o f

made to appear to the H ig h C ourt that the same could be more conveniently ^ ' ^ geup
prosecuted in any other D is tric t C o u rt having ju risd ictio n to w ind up District
companies, the H ig h C ou rt may transfer the same to such other C ourt, and a ^\he
thereupon the w inding up shall proceed in such other D is tric t C ourt. ; "

166. A n application to the C ourt fo r the w inding up o f a company shall Provisions

be by petitio n presented, subject to the provisions o f this section, either by the tlcns for**03"
company, or by any cred itor or creditors (including any contingent or pros- w inding upl
pective creditor or creditors), co n trib u to ry or contributories, or by a ll o r any
o f those parties, together or separately, or by the Registrar :
Provided that
(a) a c o n trib u to ry shall not be entitled to present a petition fo r
w inding up a company unless
(i) either the number o f members is reduced, in the case o f a
private company, below two, or, in the case o f any other
company, below seven, or
(ii) the shares in respect o f which he is a contributory or some o f
them either were o rig in a lly allotted to him or have been held
by him , and registered in his name, fo r at least six months
during the eighteen months before the commencement o f the
winding up, or have devolved on him through the death of a
form er h o ld e r;
 312 Companie s .

(aa) the Registrar shall not be entitled to present a petition for wind
ing up a company
(i) except on the ground that from the financial condition of the
company as disclosed in its balance-sheet or from the report
of an inspector appointed under section 138 it appears that
the company is unable to pay its debts, and
(ii) unless the previous sanction of the President of the Union has
been obtained to the presentation of the petition :
Provided that no such sanction shall be given unless the com
pany has first been afforded an opportunity of being heard ;
(b) a petition for winding up a com pany on the ground of default in
filing the statutory report or in holding the statutory meeting
shall not be presented by any person except a shareholder, nor
before the expiration of fourteen days after the last day on
which the meeting ought to have been held ;
(c) the Court shall not give a hearing to a petition for winding up a
company by a contingent or prospective creditor until such
security for costs has been given as the C ourt thinks reason
able and until a prim a facie case for winding up has been
established to the satisfaction of the Court.

Effect of 167. An order for winding up a company shall operate in favour of all
w inding up the creditors and of all the contributories of the company as if made on the
order.
joint petition of a creditor and of a contributory.

C om m ence 168. A winding up of a company by the Court shall be deemed to

ment of commence at the time of the presentation of the petition for the winding up.
w inding up
by Court.

169. The Court may, at any time after the presentation of the petition
Court may
grant injunc for winding up a company under this Act, and before making an order for
tion. winding up the company, upon the application of the company or of any
creditor or contributory of the company, restrain further proceedings in any
suit or proceeding against the company, upon such terms as the Court thinks
fit.

Pow eis of 170. (/) On hearing the petition the Court may dismiss it with or with
Court on out costs, or adjourn the hearing conditionally or unconditionally, or make
hearing
petition. any interim order or any other order that it deems just, but the Court shall
not refuse to make a winding up order on the ground only that the assets of
the company have been mortgaged to an amount equal to or in excess of those
assets, or that the company has no assets.
(2) Where the petition is presented on the ground of default in filing the
statutory report or in holding the statutory meeting, the Court may order the
costs to be paid by any persons who, in the opinion of the Court, are
responsible for the default.
 Companies. 313

(3) Where the Court makes an order for the winding up of a company it
shall, except where a liquidator is appointed simultaneously, forthwith cause
intimation thereof to be sent to the official receiver.

171. When a winding up order has been made or a provisional liquidator Suits stayed
has been appointed no suit or other legal proceeding shall be proceeded with on winding
up order.
or commenced against the company except by leave of the Court, and subject
to such terms as the Court may impose.

171 A . U ) F o r the purposes of this A ct, so far as it relates to the winding Vacancy in
the office of
up of companies by the Court, the term official receiver means the official liquidator.
receiver attached to the Court, or, if there is no such official receiver, then
such person as the President of the Union may, by notification in the Gazette,
appoint for the purpose.
(2) On the making of a winding up order, the official receiver shall
become the official liquidator of the company and shall continue to act as such
until his further continuance is terminated by an order of the Court-
(5) The official receiver shall as such official liquidator forthwith take
into his custody and control all the books, documents and the assets of the
company.
(4) The official receiver shall be entitled to such remuneration as the
Court shall fix.

172- ( 1) On the making of a winding up order it shall be the duty of Copy of

winding up
the petitioner in the winding up proceedings and of the company to file with order to be
the Registrar a copy of the order within a month from the date of the making tiled with
Registrar.
of the order.
(2) On the filing of a copy of a winding up order, the Registrar shall
make a minute thereof in his books relating to the company, and shall notify
in the Gazette that such an order has been made.
(3) Such order shall be deemed to be notice of discharge to the servants
of the company, except when the business of the company is continued.

173. The Court may at any time after an order for winding up, on the Power of
application of any creditor or contributory, and on proof to the satisfaction Court to stay-
winding up.
of the Court that all proceedings in relation to the winding up ought to be
stayed, make an order staying the proceedings, either altogether or for a
limited time, on such terms and conditions as the Court thinks fit.

174. The Court may, as to all matters relating to a winding up, have Court may
have regard
regard to the wishes of the creditors or contributories as proved to it by any to wishes of
sufficient evidence. creditors or
contribu
Official Liquidators.
tories.
175. ( / ) F or the purpose of conducting the proceedings in winding up a Appointment
company and performing such duties in reference thereto as the Court may of official
liquidator.
impose, the Cnurt may appoint a person or persons other than the official
receiver to be called an official liquidator or official liquidators.
 314 Companies-

(2) The C ourt may make such an appointm ent provisionally at any tim e
after the presentation o f a p e tition and before the m aking o f an order fo r
w inding up, b u t shall before m aking any such appointm ent give notice to the
company, unless fo r reasons to be recorded it thinks fit to dispense w ith
notice.
(5) I f more persons than one are appointed to the office o f official
liq u id a to r, the C ourt shall declare whether any act by this A c t required or
authorized to be done by the official liq u id a to r is to be done by a ll o r any
one or more o f such persons.
(4) The C ourt may determine whether any, and what, security is to be
given by any official liq u id a to r on his appointment.
(5) The acts o f an official liq u id a to r shall be valid notw ithstanding any
defect that may afterwards be discovered in his appointment : Provided that
nothing in this sub-section shall be deemed to give v a lid ity to acts done by
an official liq u id a to r after his appointm ent has been shown to be invalid.
(6) A receiver shall not be appointed o f assets in the hands o f an official
liq u id a to r.
Resignations, 176. 0 ) A n y official liq u id a to r may resign or be removed by the C ourt
rem ovals, on due cause shown.
filling up
vacancies (2) A n y vacancy in the office o f an official liq u id a to r appointed by the
and com pen C o urt shall be filled up by the C ourt and u n til the vacancy is so fille d up the
sation.
official receiver shall be and act as the official liq u id a to r.
(3) There shall be paid to the official liq u id a to r such salary or remunera
tion, by way o f percentage or otherwise, as the C ourt may d ir e c t; and, if
more liqu ida to rs than one are appointed, such remuneration shall be
distributed amongst them in such proportions as the C ourt directs.

O ffic ia l 177. The official liq u id a to r shall be described by the style o f the official
liq u id a to r. liq u id a to r o f the pa rticular company in respect o f which he is appointed, and
not by his in d ivid ua l name.

Statement of 177A. ( / ) Where the C o urt has made a w inding up order or appointed
affairs to be an official liq u id a to r provisionally, there shall, unless the C ourt thinks fit to
made to the
liquidator. order otherwise and so orders, be made out and submitted to the official
liq u id a to r a statement as to the affairs o f the company verified by an affidavit
and containing the fo llo w in g particulars, namely :
(a) the assets o f the company, stating separately the cash balance in
hand and at the bank, i f any ;
(b) the debts and lia b ilitie s ;
(c) the names, residences and occupations o f the creditors, stating
separately the am ount o f secured debts and unsecured debts, and
in the case o f secured debts particulars o f the securities, their
value and the dates when they were g iv e n ;
(d) the debts due to the company and the names, residences and occu
pations o f the persons from whom they are due and the amount
lik e ly to be realised therefrom .
 Companies . 315

(2) The statement shall be submitted and verified by one or more o f the
persons who are at the relevant date the directors and by the person who is at
th a t date the secretary, manager or other chief officer o f the company, or by
such o f the persons hereinafter in the sub-section mentioned as the official
liq u id a to r, subject to the direction o f the C ourt, may require to subm it and
ve rify the statement, that is to say, persons
(a) who are o r have been directors or officers o f the company ;
(b) who have taken p a rt in the fo rm a tio n of the company at any tim e
w ith in one year before the relevant date ;
(c) who are in the em ploym ent o f the company or have been in the
em ploym ent o f the company w ith in the said year, and are in the
opinion o f the official liq u id a to r capable o f giving the inform ation
required ;
(d) who are or have been w ith in the said year officers o f or in the
em ploym ent o f a company which is, o r w ith in the said year was,
an officer o f the company to w hich the statement relates.
(J) The statement shall be subm itted w ith in twenty-one days fro m the
relevant date, o r w ith in such extended tim e as the official liq u id a to r or the
C ou rt may fo r special reasons appoint.
(4) A n y person m aking or concurring in m aking the statement and
a ffidavit required by this section shall be allowed, and shall be paid by the
official liq u id a to r or provisional liq u id a to r, as the case may be, o u t o f the
assets o f the company, such costs and expenses incurred in and about the
preparation and m aking o f the statement and affidavit as the official liq u id a to r
may consider reasonable, subject to an appeal to the C ourt.
(J) I f any person, w ith o u t reasonable excuse, know ingly and w ilfu lly
makes default in com plying w ith the requirements o f this section, he shall be
lia b le to a fine not exceeding one hundred rupees fo r every day during w hich
the default continues.
(6) A n y person stating him self in w ritin g to be a creditor or co n trib u to ry
o f the company shall be entitled by him self or by his agent at a ll reasonable
times, on payment o f the prescribed fee, to inspect the statement subm itted in
pursuance o f this section, and to a copy thereof or extract therefrom .
(7) A n y person u n tru th fu lly so stating him self to be a cre d ito r or c o n tri
butory shall be g u ilty o f an offence under section 182 o f the Penal Code and
shall, on the application o f the liq u id a to r or o f the official receiver, be
punishable accordingly.
( 8 ) In this section the expression the relevant date means, in a case
where a provisional liq u id a to r is appointed, the date o f his appointm ent, and,
in a case where no such appointm ent is made, the date o f the w inding up
order.

177B. ( / ) In a case where a w inding up order is made, the official liq u i- sta tem n etb y
dator shall, as soon as practicable after receipt o f the statement to be submitted liquldator-
under section 177A, and n o t la te r than fo u r, o r w ith the leave o f the C ourt,
six m onths fro m the date o f the order, or in a case where the C ourt orders
 316 Companies-

that no statement shall be submitted, as soon as practicable after the date of

the order, subm it a pre lim ina ry re port to the C ourt
(a) as to the am ount o f capital issued, subscribed, and paid up, any
the estimated am ount o f assets and lia b ilitie s , giving separately
under the heading o f asset,, particulars o f
(i) cash and negotiable securities ;
(ii) debts due fro m contributories ;
( iii) debts due to and securities, if any, available to the com pany;
(iv) moveable and immoveable properties belonging to the company ;
(v) unpaid calls ; and
( b ) if the company has failed, as to the causes o f the fa ilu re ; and
(c) whether in his opinion further in q u iry is desirable as to any matter
relating to the prom otion, form ation, or fa ilu re o f the company,
o r the conduct o f the business thereof.
(2) The official liq u id a to r may also, i f he thinks fit, make a further report,
or furth er reports, stating the manner in w hich the company was formed and
whether in his opinion any fraud has been committed by any person in its
prom otion or form ation, or by any director or other officer o f the company in
relation to the company since the form ation thereof, and any other m atter
w hich in his opinio n it is desirable to bring to the notice o f the C ourt.

C ustody o f 178. ( / ) The official liq u id a to r, whether appointed p ro visionally or not,

c o m p a n y s shall take in to his custody, or under his control, a ll the property, effects and
p ro p e rty .
actionable claims to which the company is or appears to be entitled.
(2) A ll the property and effects o f the company shall be deemed to be in
the custody o f the C o urt as fro m the date o f the order fo r the w inding up o f
the company.

C om m ittee of
178A . ( / ) The official liq u id a to r shall w ith in a m onth fro m the date o f
in spection in the order fo r the w inding up o f a company convene a meeting o f the creditors
c o m p u ls o ry
o f the company (as ascertained fro m the books and documents of the company)
w in d i ng u p .
fo r the purpose o f determ ining whether or not a committee o f inspection shall
be appointed to act w ith the liq u id a to r, and who are to be members o f the
committee, i f appointed.
(2) The official liq u id a to r shall w ith in a week from the date o f the credi
tors meeting convene a meeting o f the contributories to consider the decision
of the creditors and to accept the same w ith or w ith o u t m odifications.
(3) I f the contributories do not accept the decision o f the creditors in its
entirety, i t shall be the duty o f the official liq u id a to r to apply to the C ourt fo r
directions as to whether there shall be a com m ittee o f inspection and, i f so,
what shall be the com position o f the com m ittee, and who shall be members
thereof.
(4) A committee o f inspection appointed under this section shall consist
o f not more than twelve members being creditors and contributories o f the
company, or persons holding general or special powers-of-attorney from
creditors or contributories, in such proportions as may be agreed on by the
 Companies 317

meetings o f creditors and contributories, or as, in case o f difference, may be

determ ined by the C ourt.
(5) The committee o f inspection shall have the rig h t to inspect the
accounts o f the official liq u id a to r at a ll reasonable times.
(6) The com m ittee shall meet at such times as they may fro m tim e to
tim e appoint, and, fa ilin g such appointment, at least once a month, and the
liq u id a to r o r any member o f the committee may also ca ll a meeting o f the
committee as and when he thinks necessary.
(7) The committee may act by a m a jo rity o f th e ir members present at a
meeting, but shall not act unless a m a jo rity o f the committee is present.
(8) A member o f the committee may resign by notice in w ritin g signed
by him and delivered to the liq u id a to r.
(9) I f a member o f the committee becomes bankrupt, or compounds or
arranges w ith his creditors, or is absent fro m five consecutive meetings o f the
com m ittee w ith o u t the leave o f those members who together w ith him self
represent the creditors or contributories, as the case may be, his office shall
thereupon become vacant.
(10) A member o f the committee may be removed by an o rdinary resolu
tio n at a meeting o f creditors i f he represents creditors, or o f contributories if
he represents contributories, o f w hich seven days notice has been given, stating
the object o f the meeting.
(11) On a vacancy occurring in the committee the liq u id a to r shall fo rth w ith
summon a meeting o f creditors or o f contributories, as the case may require,
to f ill the vacancy, and the meeting may, by resolution, re-appoint the same
o r appoint another creditor or c o n trib u to ry to f ill the vacancy.
(12) The continuing members o f the committee, if not less than two, may
act notw ithstanding any vacancy in the committee.

179. The official liq u id a to r shall have power, w ith the sanction o f Pow
theers of
official
C ourt, to do the fo llo w in g things : liquidator.
(a) to institute or defend any suit or prosecution, or other legal procee
ding, c iv il or crim in al, in the name and on behalf o f the
company ;
(b) to carry on the business o f the company so fa r as may be necessary
fo r the beneficial w inding up o f the same ;
(c) to sell the immoveable and moveable property o f the company by
public auction or private contract, w ith power to transfer the
whole thereof to any person or company, or to sell the same in
parcels ;
(d) to do a ll acts and to execute, in the name and on behalf o f the
company, a ll deeds, receipts, and other documents* and fo r that
purpose to use, when necessary, the companys seal ;
( e) to prove, fra n k and claim in the insolvency o f any contributory fo r
any balance against his estate, and to receive dividends in the
insolvency, in respect o f that balance, as a separate debt due
from the insolvent, and rateably w ith the other separate creditors ;
 318 Companies.

(/) to draw, accept, make and indorse any b ill o f exchange, hundi or
prom issory note in the name and on behalf o f the company,
w ith the same effect w ith respect to the lia b ility o f the company
as i f the b ill, hundi. or note had been drawn, accepted, made
or indorsed by or on behalf o f the company in the course o f
its business ;
(g) to raise, on the security o f the assets o f the company, any money
requisite ;
(h) to take out, in his official name, letters o f a d m inistration to any
deceased co n trib u to ry, and to do in his official name any other
act necessary fo r obtaining payment o f any money due fro m a
c o n trib u to ry or his estate which cannot be conveniently done in
the name o f the company ; and in a ll such cases the money due
shall, fo r the purpose o f enabling the liq u id a to r to take out the
letters o f adm inistration or recover the money, be deemed to be
due to the liq u id a to r h im s e lf: Provided that nothing herein
empowered shall be deemed to affect the rights, duties and
privileges o f the A dm inistrator-G eneral ;
O') to do a ll such other things as may be necessary fo r w inding up the
affairs o f the company and d istributing its assets.

D iscretion of
official liqui
180. The C ourt may provide by any order that the official liq u id a to r
dator. may exercise any o f the above powers w ith o u t the sanction or intervention of
the C ourt, and, where an official liq u id a to r is provisionally appointed, may
lim it and restrict his powers by the order appointing him .
Provision for
legal assist 181. The official liq u id a to r may, w ith the sanction o f the C ourt, appoint
ance to official a legal practitioner entitled to appear before the C ourt to assist him in the
liquidator.
performance o f his duties : Provided that, where the official liq u id a to r is a legal
practitioner, he shall not appoint his partner unless the la tte r consents to act
w ith o u t remuneration.
Liquidator to 182. ( / ) The official liq u id a to r o f a company which is being wound up
keep books
containing by the C ourt shall keep, in manner prescribed, proper books in which he shall
proceedings cause to be made entries or minutes o f proceedings at meetings, and o f such
of meetings
and to s u b other matters as may be prescribed, and any creditor or co n trib u to ry may,
m it accou nt subject to the control o f the C ourt, personally or by his agent inspect any such
ol his receipts
to Court. books.
(2) Every official liq u id a to r shall, at such tim es as may be prescribed
b u t not less than twice in each year during his tenure o f office, present to the
C o u rt an account o f his receipts and payments as such liquidato r.
(3) The account shall be in the prescribed form , shall be made in duplicate,
and shall be verified by a declaration in the prescribed form .
(4) The C ou rt shall cause the account to be audited in such manner as it
thinks fit, and fo r the purpose o f the audit the liq u id a to r shall furnish the C ourt
w ith such vouchers and in fo rm a tio n as the C ourt may require, and the C ourt
may at any tim e require the production of and inspect any books or accounts
kept by the liq u id a to r.
 Companies. 319

(5) W hen the account has been audited, one copy thereof shall be filed
and kept by the C ourt, and the other copy shall be delivered to the Registrar
fo r filin g , and each copy shall be open to the inspection o f any creditor, or o f
any person interested.

183. ( / ) Subject to the provisions o f this A ct, the official liq u id a to r o f a E xercise and
company w hich is being wound up by the C ourt shall, in the adm inistration o f
the assets o f the company and in the d istribution thereof among its creditors, pow ers,
have regard to any directions th a t may be given by resolution o f the creditors
or contributories at any general meeting or by the committee o f inspection*
and any directions given by the creditors or contributories at any general
meeting shall in case o f conflict be deemed to override any directions given by
the com m ittee o f inspection.
(2) The official liq u id a to r may summon general meetings o f the creditors
or contributories fo r the purpose o f ascertaining their wishes, and i t shall be his
duty to summon meetings at such times as the creditors or contributories, by
resolution, may direct, or whenever requested in w ritin g to do so by one-tenth
in value o f the creditors or contributories, as the case may be.
(3) The official liq u id a to r may apply to the C ourt in manner prescribed
fo r directions in relation to any p a rticu la r m atter arising in the w inding up.
( 4 ) Subject to the provisions o f th is A c t, the official liq u id a to r shall use
his own discretion in the adm inistration o f the assets o f the company and in
the d is trib u tio n thereof among the creditors.
(5) I f any person is aggrieved by any act or decision o f the official
liq u id a to r, th a t person may apply to the C ourt, and the C ourt may confirm ,
reverse or m o d ify the act or decision com plained of, and make such order as
i t thinks just in the circumstances.

Ordinary Powers o f Court-

184. (l) As soon as may be after m aking a winding up order, the C ourt Settlement of
shall settle a lis t o f contributories, w ith power to rectify the register of mem- t r ib u ta r ie s
bers in a ll cases where rectification is required in pursuance o f this A c t, and and applica-
shall cause the assets o f the company to be collected and applied in discharge tl0n of absets-
o f its lia b ilitie s .
(2) In settling the lis t o f contributories, the C o u rt shall distinguish be
tween persons who are contributories in th e ir own rig h t and persons who are
contributories as being representatives o f or liable fo r the debts o f others.

185. The C ou rt may, at any tim e after m aking a w inding up order, P ow er to

require any con trib utory fo r the time being settled on the lis t o f contributories 0f
and any trustee, receiver, banker, agent, or officer o f the company to pay, deliver, property,
surrender or transfer fo rth w ith , or w ith in such time as the C ourt directs, to
the o fficia l liq u id a to r any money, property or documents in his hands to which
the company is prima facie entitled.
 320 Companies.

P ow er to 186. (J ) The C o u rt may, at any tim e after making a w inding up order,

order pay make an order on any c o n trib u to ry fo r the tim e being settled on the lis t of con
ment o f debts
b y contribu tributories to pay, in manner directed by the order, any money due fro m him
tory. or fro m the estate o f the person whom he represents to the company exclusive
o f any money payable by him or the estate by virtue o f any call in pursuance
o f this A ct.
(2) The C o u rt in m aking such an order may, in the case o f an unlim ited
company, allow to the co ntribu to ry by way o f set-off any money due to him or
to the estate which he represents fro m the company on any independent dealing
or contract w ith the company, b u t not any money due to him as a member o f
the company in respect o f any dividend or p ro fit ; and may, in the case o f a
lim ite d company, make to any director whose lia b ility is unlim ited or to his
estate the lik e allowance :

Provided that, in the case o f any company whether lim ite d or unlim ited,
when a ll the creditors are paid in fu ll, any money due on any account what
ever to a c o n trib u to ry fro m the company may be allowed to him by way of
set-off against any subsequent c all.

187- ( / ) The C ourt may, at any tim e after m aking a w inding up order,
P o w e r of
C o u rt to and either before or after it has ascertained the sufficiency o f the assets o f the
m ake calls. company, make calls on and order payment thereof by a ll or any o f the c o n tri
butories fo r the tim e being settled on the lis t o f the contributories to the extent
o f the ir lia b ility , fo r payment o f any money w hich the C ourt considers necessary
to satisfy the debts and lia b ilitie s o f the company, and the costs, charges and
expenses o f w inding up, and fo r the adjustment o f the rights o f the contributories
among themselves.
(2) In m aking the call the C ourt may take in to consideration the proba
b ility tha t some o f the contributories may p a rtly or w h o lly fa il to pay the call.

Pow er t o
188. The C ourt may order any contributory, purchaser o r other person
order pay from whom money is due to the company to pay the same in to the account of
ment into
bank.
the official liq u id a to r in any scheduled bank instead o f to the official liq u id a to r,
and any such order may be enforced in the same manner as i f it had directed
payment to the official liq u id a to r.

189. A ll moneys, b ills , hundis, notes and other securities paid and d e li
Regulation of
account with vered in to the bank where the liq u id a to r o f the company may have his
Court. account, in the event o f a company being wound up by the C ourt, shall be
subject in a ll respects to the orders o f the Court.

Order oil con 190. ( / ) A n order made by the C ourt on a contributory shall (subject to
tributory any rig h t o f appeal) be conclusive evidence th a t the money, i f any, thereby
conclusive
ev idtnce. appearing to be due or ordered to be paid is due.
(2) A ll other pertinent matters stated in the order shall be taken to be
tru ly stated as against a ll persons and in a ll proceedings whatsoever.
 Companies- 321

191. The C o u rt may fix a tim e or times w ith in which creditors are to Pow er to ex
prove th e ir debts o r claims, or to be excluded fro m the benefit o f any d is trib u clu de credi
tors not
tio n made before those debts are proved. proving in
time.

192. The C o urt shall adjust the rights o f the contributories among Adjustment
o f rights of
themselves, and distribu te any surplus among the persons entitled thereto. contribu
tories.

193. The C ou rt may, in the event o f the assets being insufficient to satisfy P o w e r to
order costs.
the lia b ilitie s , make an order as to the payment out o f the assets o f the costs,
charges and expenses incurred in the w inding up in such order o f p rio rity as
the C ou rt th in ks just.

194. (J )W hen the affairs o f a company have been com pletely wound up, D issolution
of com pany.
the C ou rt shall make an order that the company be dissolved fro m the date of
the order, and the company shall be dissolved accordingly.
(2) The order shall be reported w ith in fifteen days of the making thereof
by the officia l liq u id a to r to the R egistrar, who shall make in his books a
m inute o f the dissolution o f the company.
(3) I f the official liq u id a to r makes default in com plying w ith the require
ments o f this section, he shall be liab le to a fine not exceeding fifty rupees fo r
every day during which he is in default.

Extraordinary Powers o f Court-

195 ( / ) The C o urt may, afte r it has made a w inding up order, summon Pow er to
before i t any officer o f the company or person known o r suspected to have in sum m on
persons
his possession any property o f the company, or supposed to be indebted to the suspted Of
company, o r any person whom the C ourt deems capable o f giving inform ation having pro
perty of
concerning the trade, dealings, affairs or property o f the company. co n pany.
(2) The C o u rt may examine h im on oath concerning the same, either by
word o f m outh or on w ritten interrogatories, and may reduce his answers to
w ritin g and require h im to sign them .
(3) The C o urt may require h im to produce any documents in his custody
or power relating to the company ; but, where he claim s any lien on documents
produced by h im , the production shall be w ith o u t prejudice to that lien, and
the C ou rt shall have ju ris d ic tio n in the w inding up to determine a ll questions
relating to that lien,
(4) I f any person so summoned, after being tendered a reasonable sum
fo r his expenses, refuses to come before the C ourt at the tim e appointed, not
having a la w fu / im pedim ent (made known to the C ourt at the time o f its sitting,
and allowed by it), the C o u rt may cause h im to be apprehended and brought
before the C ou rt fo r exam ination.

196. ( / ) When an order has been made fo r winding up a company byP ow theer to
C ourt, and the official liq u id a to r has applied to the C ourt stating that in his order public
examination
o p in io n a fraud has been com m itted by any person in the prom otion or o f premoters,
directors, etc.

21
 322 Companies-

form ation o f the company or by any director or other officer o f the company, in
relation to the company since its fo rm ation, the C ourt may, after consideration
o f the application, direct that any person who has taken any part in the
prom otion o r form a tio n o f the company, o r has been a director, manager or
other officer o f the company, shall attend before the C ourt on a day appointed
by the C o u rt fo r th a t purpose, and be p u b lic ly examined as to the prom otion
or form a tion or the conduct o f the business o f the company, or as to his con
duct and dealings as director, manager or other officer thereof.
(2) The official liq u id a to r shall take part in the exam ination, and fo r
tha t purpose may, i f specially authorized by the C ourt in that behalf, employ
such legal assistance as may be sanctioned by the C ourt.
(3) A ny creditor or co ntribu tory may also take part in the exam ination
either personally or by any person entitled to appear before the C ourt.
( 4 ) The C ourt may p u t such questions to the person examined as the
C ourt thinks fit.
(5) The person examined shall be examined on oath, and shall answer a ll
such questions as the C ou rt may put or allow to be put to him .
(6) A person ordered to be examined under this section may at his own
cost em ploy any person entitled to appear before the C ourt, who shall be at
lib e rty to put to him such questions as the C ourt may deem just fo r the purpose
o f enabling him to explain or q u a lify any answers given by him : Provided that
i f he is, in the opinion o f the C ourt, exculpated fro m any charges made or
suggested against him , the C o urt m ay a llow him such costs as in its discretion
i t may th in k fit.
(7) Notes o f the exam ination shall be taken down in w ritin g , and shall
be read over to or by, and signed by, the person examined, and may thereafter
be used in evidence against him in c iv il proceedings, and shall be open to the
inspection o f any credito r or c o n trib u to ry at a ll reasonable times.
($) The C ourt may, i f it thinks fit, adjourn the exam ination fro m tim e to
tim e.
(9) A n exam ination under this section may, i f the C ourt so directs, and
subject to any rules in this behalf, be held before any D is tric t Judge or before
any officer o f the H ig h Court, being an official referee, master, registrar or
deputy registrar, and the powers o f the C ourt under this section as to the con
duct o f the exam ination, but not as to costs, may be exercised by the person
before whom the exam ination is held.

P ow er to 197. The C ourt, at any tim e either before or after m aking a w inding up
arrest order, on p ro o f o f probable cause fo r believing that a contributory is about to
absconding
contributory. q u it the U nion o f Burm a or otherwise to abscond, or to remove or conceal
any o f his property fo r the purpose o f evading payment o f calls or o f avoiding
exam ination respecting the affairs o f the company, may cause the contributory
to be arrested and his books and papers and moveable property to be seized,
and h im and them to be safely kept u n til such time as the C ourt may order.
 Companies. 323

198. A n y powers by this A c t conferred on the C ourt shall be in addition Saving of

other pro
to, and n o t in restriction of, any existing powers o f instituting proceedings
ceedings.
against any co n trib u to ry o r debtor o f the company, or the estate o f any con
trib u to ry or debtor, fo r the recovery o f any ca ll or other sums.

Enforcement o f and Appeal from Orders-

199. A ll orders made by a C ourt under this A c t may be enforced in the P o w e r to en
fo rce ord ers.
same manner in w hich decrees o f such C ourt made in any suit pending therein
may be enforced.

200. A n y order made by a C o u rt fo r or in the course o f the winding up O rder m ade

o f a company shall be enforced in any place in the U nion o f Burma, other in any Court
to be enforced
than th a t in w hich such C o u rt is situate, by the C ourt that w ould have had by other
ju ris d ic tio n in respect o f such company i f the registered office o f the company Courts.

had been situate at such other place, and in the same manner in a ll respects
as i f such order had been made by the C ourt that is hereby required to enforce
the same.
201. Where any order made by one C ourt is to be enforced by another M ode of deal
C ourt, a certified copy o f the order so made shall be produced to the proper ing with
orders to b e
officer o f the C o u rt required to enforce the same, and the production o f such enforced by
certified copy shall be sufficient evidence o f such order having been m a d e ; and other Courts.

thereupon the last-m entioned C ourt shall take the requisite steps in the m atter
fo r enforcing the order, in the same manner as i f it were the order o f the
C o u rt enforcing the same.
202. Re-hearings o f and appeals fro m any order or decision made or Appeals from
given in the m atter o f the w inding up o f a company by the C ourt may be ord ers.

had in the same manner and subject to the same conditions in and subject to
w hich appeals may be had from any order or decision o f the same C ourt in
cases w ith in its ordinary jurisdictio n.

Voluntary Winding up.

203. A company may be wound up v o lu n ta rily C ircu m sta n
(1) when the period ( if any) fixed fo r the duration o f the company by ces in w h ich
com pany
the articles expires, or the event ( if any) occurs on the occurrence m ay be
w ound up
o f which the articles provide that the company is to be dissolved, volu ntarily.
and the company in general meeting has passed a resolution
requiring the company to be wound up v o lu n ta rily ;
(2) if the company resolves by special resolution that the company be
wound up v o lu n ta r ily ;
(3) i f the company resolves by extraordinary resolution to the effect
th at i t cannot by reason o f its lia b ilitie s continue its business,
and th at it is advisable to w ind up ;
and the expression resolution fo r v o lu n ta rily w inding up when
used hereafter in this Part means a resolution passed under
clause (1), clause (2) or clause (3) o f this section.
 324 Companies.

C oirm ence- 204. A volun tary w inding up shall be deemed to commence at the tim e
ment of
voluntary o f the passing o f the resolution fo r v o lu n ta rily w inding up.
winding up.
E ffect of 205. W hen a company is wound up vo lu n ta rily , the company shall, from
voluntary
w inding up
the commencement o f the w inding up, cease to carry on its business, except so
on status o f fa r as may be required fo r the beneficial w inding up th e re o f'.
com pany.
Provided th at the corporate state and corporate powers o f the company
shall, notw ithstanding anything to the contrary in its articles, continue u n til it
is dissolved.

N otice o f 206. ( / ) N otice o f any special resolution or extraordinary resolution fo r

resolu tion to
w in d up w inding up a company v o lu n ta rily shall be given by the company w ith in ten
voluntarily.
days o f the passing o f the same by advertisement in the Gazette and also in
some newspaper ( if any) circulating in the d is tric t where the registered office
o f the company is situate.
(2) I f a company makes default in com plying w ith the requirements o f
this section, i t shall be liab le to a fine not exceeding fifty rupees fo r every day
during w hich the d efault continues ; and every officer o f the company who
know ingly and w ilfu lly authorizes or perm its the default shall be liable to a
lik e penalty.

D e c la ra tio n
o f s o lve n cy. 207. ( / ) Where it is proposed to w in d up a company vo lu n ta rily , the
directors o f the company o r, in the case o f a company having more than two
directors, the m a jo rity o f the directors may, at a meeting o f the directors held
before the date on which the notices o f the meeting at which the resolution
fo r the w inding up o f the company is to be proposed are sent out, make a
declaration verified by an affidavit to the effect th a t they have made a fu ll
in q u iry in to the affairs o f the company, and that, having so done, they have
form ed the o p in io n th at the company w ill be able to pay its debts in fu ll
w ith in a period, not exceeding three years, fro m the commencement o f the
w inding up.
(2) Such declaration shall be supported by a re p o rt o f the com panys
auditors on the com panys affairs, and shall have no effect fo r the purposes o f
this A c t unless i t is delivered to the R egistrar fo r registration before the date
m entioned in sub-section ( / ) o f this section.
> (J) A w inding up in the case o f which a declaration has been made and
delivered in accordance w ith this section is in this A c t referred to as a
members volu nta ry w inding u p , and a w inding up in the case o f which a
declaration has not been made and delivered as aforesaid is in this A c t
referred to as a creditors volu n tary w inding up

M em bers' Voluntary Winding up.

P ro visio n s
a p p lic a b le to
208. The provisions contained in sections 208A to 208E, both inclusive
a m em bers shall apply in re la tion to a members voluntary w inding up-
v o lu n ta ry
w in d in g up.
 Companies- 325

208A . (J) The company in general meeting shall appoint one or more Pow er of
liq u id a to rs fo r the purpose o f w in din g up the affairs and d istrib u tin g the corrprmy to
appoint and
assets o f the company, and may fix the rem uneration to be paid to h im or fix remunera
them. tion o f liqu i
dators.
(2) On the appointm ent o f a liq u id a to r a ll the powers o f the directors
shall cease, except so fa r as the company in general meeting, or the liq u id a to r,
sanctions the continuance thereof.

208B. ( / ) I f a vacancy occurs by death, resignation or otherwise in the Pow er to fill

office o f liq u id a to r appointed by the company, the company in general meet v a ca n cj in
office of
ing may, subject to any arrangement w ith its creditors, fill the vacancy. liquidator.
(2) F o r tha t purpose a general meeting may be convened by any
c o n trib u to ry or, i f there were more liq u id a to rs than one, by the continuing
liqu id ato rs.
(3) The meeting shall be held in manner provided by this A c t or by the
articles, or in such manner as may, on application by any co n trib u to ry or by
the continuing liq u id a to rs, be determined by the Court.

208C. ( / ) Where a company is proposed to be, or is in course o f being, Pow er of

wound up altogether v o lu n ta rily , and the whole or part o f its business or liquidator to
accept
property is proposed to be transferred or sold to another company, whether a shnres, etc.,
company w ith in the meaning o f this A c t or not (in this section called the as considera
tion for s:ile
transferee company ), the liq u id a to r o f the first-m entioned company (in this o f property
section called the transferor company ) may, w ith the sanction o f a special o f com pany.
resolution o f that company conferring either a general a u th o rity on the
liq u id a to r or an a u th o rity in respect o f any particular arrangement, receive,
in compensation or pa rt compensation fo r the transfer or sale, shares, policies,
o r other lik e interests in the transferee company, fo r d istrib u tio n among the
members o f the transferor company, or may enter in to any other arrangement
whereby the members o f the transferor company may, in lie u o f receiving
c is h , shares, policies, or other lik e interests or in addition thereto, participate
in the profits o f or receive any other benefit fro m the transferee company.
(2) A n y sale or arrangement in pursuance o f this section shall be binding
on the members o f the transferor company.
(3) I f any member o f the transferor company who did not vote in favour
o f the special resolution expresses his dissent therefrom in w ritin g addressed
to the liq u id a to r and le ft at the registered office o f the company w ith in seven
days after the passing o f the special resolution, he may require the liq u id a to r
c ith e r to abstain fro m carrying the resolution in to effect or to purchase his
interest at a price to be determined by agreement or by a rbitration in manner
hereafter provided.
(4) I f the liq u id a to r elects to pure hase the members interest, the purchase
money must be paid before the com pany is dissolved, and be raised by the
liq u id a to r in such manner as may be determ ined by special resolution.
(5) A special resolution shall not be in v a lid fo r the purposes o f this
section by reason that it is passed before or concurrently w ith a resolution fo r
 326 Companies.

voluntary w inding up or fo r appointing liq u id a to rs, b u t if an order is made

w ith in a year fo r w inding up the company by or subject to the supervision o f
the C ourt, the special resolution shall not be valid unless sanctioned by the
Court.
(6) The provisions o f the A rb itra tio n A ct, other than those restricting
the application o f the A c t in respect o f the subject-m atter o f the arbitration,
shall apply to a ll arbitrations in pursuance o f this section.

Duty o f liqui 208D. ( / ) In the event o f the w inding up continuing fo r more than one
dator to ca ll
general
year, the liq u id a to r shall summon a general meeting o f the company at the
m eetin g at end o f the first year fro m the commencement o f the w inding up and o f each
end o f each
year.
succeeding year, or as soon thereafter as may be convenient w ith in ninety
days o f the close o f the year, and shall lay before the meeting an account of
his acts and dealings and o f the conduct o f the winding up during the preced
ing year and a statement in the prescribed fo rm containing the prescribed
particulars w ith respect to the position o f the liq u id a tio n .
(2) I f the liq u id a to r fa ils to com ply w ith this section, he shall be liable
to a fine not exceeding one hundred rupees.

Final m eet 208E. ( / ) As soon as the affairs o f the company are fu lly wound up,
in g and the liq u id a to r shall make up an account o f the w inding up, showing how the
dissolution.
w inding up has been conducted and the property o f the company has been
disposed of, and thereupon shall call a general meeting o f the company fo r
the purpose o f laying before it the account and giving any explanation thereof.
(2) The meeting shall be called by advertisement specifying the tim e,
place and object thereof, and published one m onth at least before the meeting
in the manner specified in sub-section (l) o f section 206 fo r publication o f a
notice under that sub-section.
(3) W ith in one week after the meeting, the liq u id a to r shall send to the
Registrar a copy o f the account, and shall make a return to him o f the ho ld
ing o f the meeting and o f its date, and i f the copy is not sent or the return is
not made in accordance w ith this sub-section the liq u id a to r shall be lia b le to
a fine not exceeding fifty rupees fo r every day during which the default
continue s:
Provided that, i f a quorum is not present at the meeting, the liq u id a to r
shall, in lie u o f the said return, make a return that the meeting was duly
summoned and tha t no quorum was present thereat, and upon such a return
being made the provisions o f this sub-section as to the making o f the return
shall be deemed to have been com plied w ith .
( 4 ) The R egistrar on receiving the account and either o f the returns
mentioned in sub-section (5) shall fo rth w ith register them, and on the expira
tio n o f three months from the registration o f the return the company shall be
deemed to be dissolved :
Provided th at the C ourt may, on the application o f the liq u id a to r or o f
any other person who appears to the C ourt to be interested, make an orde
 Companies. 327

deferring the date at w hich the dissolution o f the company is to take effect
fo r such tim e as the C ourt thinks fit.
(5) I t shall be the duty o f the person on whose application an order of
the C ourt under this section is made, w ith in twenty-one days after the making
o f the order, to deliver to the Registrar a certified copy o f the order fo r
registration, and if that person fa ils so to do he shall be liable to a fine not
exceeding fifty rupees fo r every day during which the default continues.

Creditors' Voluntary Winding up.

209. The provisions contained in sections 209A to 209H, both inclusive,

Provisions
shall apply in relation to a creditors voluntary w inding up. applicable to
a cred itors
voluntary
w inding up.

209A. ( / ) The company shall cause a meeting o f the creditors o f the Meeting of
c re d ito rs .
company to be summoned fo r the day, o r the day next fo llo w in g the day, on
which there is to be held the meeting at w hich the resolution fo r voluntary
w inding up is to be proposed, and shall cause the notices o f the said meeting
o f creditors to be sent by post to the creditors simultaneously w ith the send
ing o f the notices o f the said meeting o f the company.
(2) The company shall cause notice o f the meeting o f the creditors to be
advertised in the manner specified in sub-section ( / ) o f section 206 fo r the
publicatio n o f a notice under tha t sub-section.
(3) The directors o f the company shall
(a) cause a fu ll statement o f the position o f the companys affairs
together w ith a lis t o f the creditors o f the company and the
estimated am ount o f th e ir claims to be la id before the meeting
o f creditors to be held as aforesaid; and
(b) appoint one o f th e ir number to preside at the said meeting.

( 4 ) I t shall be the duty o f the dire ctor appointed to preside at the meet
ing o f creditors to attend the meeting and preside thereat.
(5) I f the meeting o f the company at which the resolution fo r voluntary
w inding up is to be proposed is adjourned and the resolution is passed at an
adjourned meeting, any resolution passed at the meeting o f the creditors, held
in pursuance o f sub-section U ) o f this section, shall have effect as i f it had
been passed im m ediately after the passing o f the resolution fo r w inding up
the company.
(6) I f default is made
(a) by the company in com plying w ith sub-sections ( / ) and (2 );
( b ) by the directors o f the company in com plying w ith sub-section (3);
(c) by any director o f the company in com plying w ith sub-section ( 4)\
the company, directors or director, as the case may be, shall be liable to a fine
not exceeding one thousand rupees, and, in the case o f default by the company,
every officer o f the company who is in default shall be liable to the like penalty.
 328 Companies.

Appointment 209B. The creditors and the company at th e ir respective meetings

o f liquidator.
mentioned in section 209A may nominate a person to be liq u id a to r fo r the
purpose o f w inding up the affairs and d istributing the assets o f the company,
and i f the creditors and the company nom inate different persons, the person
nominated by the creditors shall be liq u id a to r, and if no person is nominated
by the creditors the person, i f any, nominated by the company shall be
liq u id a to r :
Provided that, in the case o f different persons being nominated, any
director, member or creditor o f the company may, w ith in seven days after the
date on w hich the nom ination was made by the creditors, apply to the C ourt
fo r an order either directing that the person nominated as liq u id a to r by the
company shall be liq u id a to r instead o f or jo in tly w ith the person nominated by
the creditors, or appointing some other person to be liq u id a to r instead o f the
person appointed by the creditors.

Appointm ent 209C. The creditors at the meeting to be held in pursuance o f section
o f committee 209A or at any subsequent meeting may, i f they th in k fit, appoint a committee
o f inspection.
o f inspection consisting o f not more than five persons, and i f such a committee
is appointed the company may, either at the meeting at which the resolution
fo r voluntary w inding up is passed or at any tim e subsequently in general
meeting, appoint such number o f persons as they th in k fit to act as members
o f the committee not exceeding five in number :
Provided that the creditors may, i f they th in k fit, resolve that a ll or any
o f the persons so appointed by the company ought not to be members o f the
com m ittee o f inspection, and, i f the creditors so resolve, the persons mentioned
in the resolution shall not, unless the C ourt otherwise directs, be qualified to
act as members o f the com m ittee, and on any application to the C ourt under
this provision the C ourt may, i f i t thinks fit, appoint other persons to act as
such members in place o f the persons mentioned in the resolution.

F ixin g of 209D- 0 ) The committee o f inspection, or i f there is no such committee,

liquid:it< rs the creditors, may fix the rem uneration to be paid to the liq u id a to r or
remuneration
and cessc r liquidato rs, and where the rem uneration is not so fixed, i t shall be determined
o f directors by the C ourt.
pow ers.
(2) On the appointm ent o f a liq u id a to r, a ll the powers o f the directors
shall cease, except so fa r as the com mittee o f inspection, or i f there is no such
com m ittee, the creditors, sanction the continuance thereof.

Pow er to fill 209E. I f a vacancy occurs by death, resignation or otherwise in the office
vacancy in o f a liq u id a to r, other than a liq u id a to r appointed by or by the direction o f
office of
liquidator. the C ourt, the creditors may f ill the vacancy.

Application 209F. The provisions o f section 208C shall apply in the case o f a
of section creditors voluntary w inding up as in the case o f a members voluntary
208C to a
cred itors w inding up, w ith the m odification that the powers o f the liq u id a to r under the
voluntary
w in d in g up,
 Companies. 329

said section shall not be exercised except w ith the sanction either o f the C ourt
or o f the com m ittee o f inspection.

Duty of
209G. ( l ) In the event o f the w inding up continuing fo r more than one liquidator to
year, the liq u id a to r shall summon a general meeting o f the company and a call meetings
o f com pany
meeting o f creditors at the end o f the first year from the commencement o f a n d ( f cred i-
the w inding up, and o f each succeeding year, or as soon thereafter as may be toi s at end of
convenient, and shall lay before the meetings an account o f his acts and each year.

dealings and o f the conduct o f the w inding up during the preceding year and
a statement in the prescribed fo rm containing the prescribed particulars w ith
respect to the position o f the w inding up.
(2) I f the liq u id a to r fa ils to com ply w ith this section, he shall be liable
to a fine n o t exceeding one hundred rupees.

209H. ( / ) As soon as the affairs o f the company are fu lly wound up, the F in a l m eet
in g and d is
liq u id a to r shall make up an account o f the w inding up, showing how the s o lu tio n .
w inding up has been conducted and the property o f the company has been
disposed o f, and thereupon shall ca ll a general meeting o f the company and a
meeting o f the creditors fo r the purpose o f laying the account before the
meetings and giving any explanation thereof.
(2) Each such meeting shall be called by advertisement specifying the
tim e, place and object thereof, and published one m onth at least before the
meeting in the manner specified in sub-section ( / ) o f section 206 fo r the
p ublicatio n o f a notice under that sub-section.
(3) W ith in one week after the date o f the meetings, or, i f the meetings
are n o t held on the same date, after the date o f the later meeting, the
liq u id a to r shall send to the Registrar a copy o f the account, and shall make a
return to him o f the holding o f the meetings and o f their dates, and i f the
copy is not sent or the return is not made in accordance w ith this sub-section
the liq u id a to r shall be lia ble to a fine not exceeding fifty rupees fo r every day
during w hich the default continues :
Provided that, i f a quorum (w hich fo r the purposes o f this section shall
be tw o persons) is not present at either such meeting, the liq u id a to r shall, in
lie u o f such return, make a return that the meeting was duly summoned and
that no quorum was present thereat, and upon such a return being made the
provisions o f this sub-section as to the m aking o f the return shall, in respect
o f th at meeting, be deemed to have been com plied w ith.
(4) The Registrar on receiving the account and in respect o f each such
meeting either o f the returns mentioned in sub-section ( 3 ) shall fo rth w ith
register them, and on the expiration o f three months from the registration
thereof the company shall be deemed to be dissolved :
Provided that, the C ourt may, on the application o f the liq u id a to r or o f
any other person who appears to the C ourt to be interested, make an order
deferring the date at w hich the dissolution o f the company is to take effect fo r
such tim e as the C ourt thinks fit.
 330 Companies.

(5) I t shall be the duty of the person on whose application an order of

the C ou rt under this section is made, w ith in ten days after the making o f the
order, to deliver to the R egistrar a certified copy o f the order fo r registration,
and i f that person fa ils to do so he shall be liable to a fine not exceeding fifty
rupees fo r every day during which the default continues.

M em bers' or Creditors Voluntary Winding up.

P ro v is io n s 210. The provisions contained in sections 211 to 218, both inclusive, shall
app ic a b le apply to every voluntary w inding up, whether a members or a creditors
to every
v o lu n ta ry w inding up.
w in d in g up.

D istri bution 211. Subject to the provisions o f this A c t as to preferential payments,

o f property the property o f a company shall, on its w inding up, be applied in satisfaction
of com pany.
o f its lia b ilitie s pari passu and, subject to such application, shall, unless the
articles otherwise provide, be distributed among the members according to their
rights and interests in the company.

^ o w e s and 212. ( / ) The liq u id a to r m ay

duties of
liquidator in (a) in the case o f a members voluntary w inding up, w ith the sanction
v< ljn ta ry o f an extraordinary resolution o f the company, and in the case
w inding up.
o f a creditors voluntary winding up, w ith the sanction o f either
the C ourt or the committee o f inspection, exercise any o f the
powers given by clauses ( d), (e), (/) and ( h) o f section 179 to a
liq u id a to r in a w inding up. The exercise by the liq u id a to r of
the powers given by this clause shall be subject to the control
o f the C ourt and any creditor or contributory may apply to the
C ourt w ith respect to any exercise or proposed exercise o f any
o f these pow ers;
( b ) w itho ut the sanction referred to in clause (a), exercise any o f the
other powers by this A c t given to the liq u id a to r in a winding
up by the C o u r t;
(c) exercise the power o f the C ourt under this A c t o f settling a lis t o f
contributories, and the lis t o f contributories shall be prima facie
evidence o f the lia b ility o f the persons named therein to be
c o n trib u to rie s ;
(d) exercise the power o f the C ourt o f making c a lls ;
(e) summon general meetings o f the company fo r the purpose o f
obtaining the sanction o f the company by special or extraordi
nary resolution or fo r any other purpose he may th in k fit.

(2) The liq u id a to r shall pay the debts o f the company and shall adjust
the rights o f the contributories among themselves.
- (3) When several liq uida to rs are appointed, any power given by this A c t
may be exercised by such one or more o f them as may be determined at the
tim e o f the ir appointm ent, or, in default o f such determ ination, by any number
not less than two.
 Companies. 331

213. ( l ) I f from any cause whatever there is no liq u id a to r acting, the Pow er of
Court to
C o u rt may appoint a liq u id a to r. a, point and
(2) The C ourt may, on cause shown, remove a liq u id a to r and appoint rem ove
liquidator in
another liq uid a to r. voluntary
w inding up.

214. (J) The liq u id a to r shall, w ith in twenty-one days after his appoint N otice by
liquidator of
ment, deliver to the R egistrar fo r registration a notice o f his appointm ent in his appoint
the fo rm prescribed. ment.
(2) I f the liq u id a to r fa ils to com ply w ith the requirements o f this section,
he shall be lia b le to a fine not exceeding fifty rupees fo r every day during
which the default continues.

215. ( / ) A n y arrangement entered in to between a company about to be, Arrangement

when
o r in the course o f being, wound up and its creditors shall, subject to the binding on
rig h t o f appeal under this section, be binding on the company if sanctioned by creditors.
an extraordinary resolution, and on the creditors i f acceded to by three-fourths
in number and value o f the creditors.
(2) A n y cre dito r or co n trib u to ry may, w ith in three weeks fro m the
com pletion o f the arrangement, appeal to the C ourt against it, and the C ourt
may thereupon, as it thinks just, amend, vary o r confirm the arrangement.

216. ( / ) The liq u id a to r or any c o n trib u to ry or creditor may apply to the P ow er to

C ourt to determine any question arising in the w inding up o f a company, or apply to
Court to have
to exercise, as respects the enforcing o f calls, staying o f proceedings or any questions
other m atter, a ll o r any o f the powers w hich the C ourt m ight exercise i f the delerm ined
or pow ers
company were being w ound up by the C ourt. exercised.
(2) The liq u id a to r o r any creditor or co ntributory may apply fo r an
order setting aside any attachment, distress or execution put in to force against
the estate or effects o f the company after the commencement o f the w inding up-
Such applicatio n shall be made
(a) i f the attachment, distress o r execution is levied or put in to force
by the H igh C ourt, to the H igh C ourt, and
( b ) i f the attachment, distress or execution is levied or put in to force
in any other C ourt, to the C o urt having ju ris d ic tio n to w ind up
the company.

C?) The C ourt, i f satisfied that the determ ination o f the question or the
required exercise o f power or the order applied fo r w ill be ju st and beneficial,
may accede w h o lly or p a rtia lly to the application on such terms and conditions
as it thinks fit, o r may make such other order on the application as it thinks
ju st.

217. A ll costs, charges and expenses properly incurred in the w inding Cost of
voluntary
up, including |the rem uneration o f the liq u id a to r, shall, subject to the rights o f w in din g up.
pecured creditors, if any, be payable out o f the assets o f the company in
s rio rity to a ll other claims.
 332 Companies

Saving for 218. The w inding up o f a company shall not bar the rig h t o f any creditor
rights of o r c o n trib u to ry to have it wound up by the C ourt, b u t in the case o f an
creditors and
con tribu application by a co n trib u to ry the C ourt must bs satisfied that the rights o f the
tories. contributories w ill be prejudiced by a voluntary w inding up-

219. * * * *
Po w e r of
C o u rt to 220. Where a company is being wound up v o lu n ta rily , and an order is
a dopt p ro made fo r w inding up by the C ourt, the C ourt may, i f i t thinks fit, by the same
ceedings o f
\O lu n ta ry or any subsequent order, provide fo r the adoption o f a ll or any o f the
w in d in g up. proceedings in the voluntary w inding up.

Winding up subject to Supervision o f Court.

P ow er to
01 der w ind
221. When a company has by special or extraordinary resolution resolved
in g up sub to w ind up v o lu n ta rily , the C o urt may make an order that the voluntary
ject to
supervision.
w inding up shall continue, b u t subject to such supervision o f the C ourt, and
w ith such lib e rty fo r creditors, contributories or others to apply to the C ourt,
and generally on such terms and conditions as the C ourt thinks just.

E ffect of 222. A petition fo r the continuance o f a voluntary w inding up subject to

petition for
w inding up the supervision o f the C o u rt Shall, fo r the purpose of giving ju risdiction to the
subject to C o urt over suits, be deemed to be a petition fo r w inding up by the C ourt.
supervision.

Court may 223. The C ourt may, in deciding between a winding up by the C ourt and
have regard
to wishes of a w inding up subject to supervision, in the appointment of liquidators, and in
creditors and a ll other matters relating to the w inding up subject to supervision, have regard
contribu
tories. to the wishes o f the creditors or contributories as proved to it by any sufficient
evidence.

P ow er for 224. ( / ) Where an order is made fo r a w inding up subject to supervision,

Court to ap
point o r re the C ourt may by the same or any subsequent order appoint any additional
m ove liqui liq u id a to r.
dators.
(2) A liq u id a to r appointed by the C o u rt under this section shall have the
same powers, be subject to the same obligations, and in a ll respects stand in
the same position as i f he had been appointed by the company.
(3) The C o urt may remove any liq u id a to r so appointed by the C ourt or
any liq u id a to r continued under the supervision order, and fill any vacancy
occasioned by the rem oval or by death or resignation.

Effect of 225. ( / ) Where an order is made fo r a w inding up subject to supervision,

supervision
order. the liq u id a to r may, subject to any restrictions imposed by the C ourt, exercise
a ll his powers w ith o u t the sanction or intervention o f the C ourt, in the same
manner as if the company were being wound up altogether vo lu n ta rily.
(2) Except as provided in sub-section ( /) , and save fo r the purposes o f
section 196, any order made by the C ourt fo r a w inding up subject to the
supervision o f the C ourt shall fo r a ll purposes, including the staying o f suit
 Companies- 333

and other proceedings, be deemed to be an order o f the C o u rt fo r winding up

the company by the C ourt, and shall confer fu ll a u thority on the C ourt to
make calls, or to enforce calls made by the liquidators, and to exercise a ll
other powers w hich i t m ig ht have exercised if an order had been made fo r
w inding up the company altogether by the Court.
(5) In the construction o f the provisions whereby the C ourt is empowered
to direct any act or thing to be done to or in favour o f the official liq u id a to r,
the expression official liq u id a to r shall be deemed to mean the liq u id a to r
conducting the w inding up subject to the supervision o f the C ourt.

226. Where an order has been made fo r the winding up o f a company Appointment
in certain
subject to supervision, and an order is afterwards made fo r winding up cases o f
by the C ourt, the C o urt may, by the last-mentioned order o r by any subsequent voluntary
liquidators
oirder, appoint the vo lu nta ry liquidato rs or any o f them, either provisionally to office of
o r permanently, and either w ith or w ith o u t the addition o f any other person, official liqui
dator.
to be official liq u id a to r in the w inding up by the Court.

Supplemental Provisions-

227. ( / ) In the case o f voluntary winding up every transfer o f shares, Avoidance

except transfers made to or w ith the sanction o f the liq u id a to r, and every o f transfers,
etc., after
alteration in the status o f the members o f the company, made after the com com m ence
mencement o f the w inding up, shall be void. ment of
w indingup.
(2) In the case o f a w inding up by or subject to the supervision o f the
C ourt, every disposition o f the property (including actionable claims) of the
company, and every transfer o f shares, or alteration in the status of its mem
bers, made after the commencement o f the w inding up, shall, unless the C ourt
otherwise orders, be void.

228. In every w inding up (subject in the case o f insolvent companies to Debts of all
descriptions
the application in accordance w ith the provisions o f this A ct of the law o f to be proved.
insolvency) a ll debts payable on a contingency, and a ll claims against the
company, present or future, certain or contingent, shall be admissible to proof
against the company, a ju s t estimate being made, so fa r as possible, o f the
value o f such debts or claims as may be subject to any contingency or fo r
some other reason do not bear a certain value.

229. In the w inding up o f an insolvent company the same rules shall A pp lica tion
of insolvency
prevail and be observed w ith regard to the respective rights o f secured and rules in w ind
unsecured creditors and to debts provable and to the valuation o f annuities ing up o f in
solvent co m
and future and contingent lia b ilitie s as are in force fo r the tim e being under panies.
the law., o f insolvency w ith respect to the estates o f persons adjudged
in s o lv e n t; and a ll persons who in any such case would be entitled to prove
fo r and receive dividends out o f the assets o f the company may come in under
 334 Companies.

the w inding up, and make such claims against the company as they respectively
are entitled to by virtue o f this section.

P re fe re n tia l 230. ( / ) In a w inding up there shall be paid in p rio rity to a ll other

payments. debts
(a) a ll revenue, taxes, cesses and rates, whether payable to the
Government or to a local authority, due from the company at
the date hereinafter mentioned and having become due and
payable w ith in the twelve months next before that d a te ;
( b ) a ll wages or salary o f any clerk or servant in respect o f service
rendered to the company w ith in the two months next before the
said date, not exceeding one thousand rupees fo r each clerk or
se rva n t;
(c) a ll wages o f any labourer or workm an, not exceeding five
hundred rupees fo r each, whether payable fo r tim e or piecework,
in respect o f services rendered to the company w ith in the two
months next before the said date ;
(d) compensation payable under the W orkm ens Compensation A c t in
respect o f the death or disablement o f any officer or employee
o f the company ;
(<?) a ll sums due to any employee fro m a provident fund, a pension
fund, a g ra tu ity fund o r any other fund fo r the welfare o f the
employees m aintained by the company ; and
(/) the expenses o f any investigation held in pursuance o f clause (iv )
o f section 138 o f this A ct.
(2) The foregoing debts shall
(a) rank equally among themselves and be paid in fu ll, unless the assets
are insufficient to meet them, in which case they shall abate in
equal pro po rtio n ; and
( b ) so fa r as the assets o f the company available fo r payment o f general
creditors are insufficient to meet them, have p rio rity over the
claims o f holders o f debentures under any floating charge created
by the company, and be paid accordingly out o f any property
comprised in or subject to that charge.
(5) Subject to the retention o f such sums as may be necessary fo r the
costs and expenses o f the w inding up, the foregoing debts shall be discharged
fo rth w ith so fa r as the assets are sufficient to meet them.
(4) In the event o f a la n dlord or other person distraining or having
distrained 'on any goods o r effects o f the company w ith in three months next
before the date o f a w inding up order, the debts to which p rio rity is given by
this section shall be a first charge on the goods or effects so distrained on, or
the proceeds o f the sale thereof :

Provided tha t in respect o f any money paid under any such charge the
landlord or other person shall have the same rights o f p rio rity as the person to
whom the payment is made.
 Companies 335

(5) The date hereinbefore in this section referred to is

() in the case o f a company ordered to be wound up com pulsorily

which had not previously commenced to be wound up vo lu n ta rily,
the date o f the w inding up order ; and
() in any other case, the date o f the commencement of the w inding up.

230A. ( / ) Where any part o f the property o f a company which is being D isclaim er
wound up consists o f land o f any tenure burdened w ith onerous covenants, of o f property.
shares or stock in companies, o f unprofitable contracts, or o f any other
property tha t is unsaleable, or not readily saleable, by reason o f its. binding
the possessor thereof to the performance o f any onerous act, or to the payment
o f any sum o f money, the liq u id a to r o f the company, notw ithstanding that he
had endeavoured to sell o r has taken possession of the property, or exercised
any act o f ownership in relation thereto, may, w ith the leave of the C ourt and
subject to the provisions o f this section, by w ritin g signed by him , at any time
w ith in twelve months after the commencement of the w inding up or such
extended period as may be allowed by the C ourt, disclaim the p ro p e rty:
Provided that, where any such property has not come to the knowledge
o f the liq u id a to r w ith in one m onth after the commencement o f the winding up,
the power under this section o f disclaim ing the property may be exercised at
any tim e w ith in twelve months after he has become aware thereof or such
extended period as may be allowed by the Court.
(2) The disclaim er shall operate to determine, as fro m the date o f
disclaim er, the rights, interests, and lia b ilitie s o f the company, and the
property o f the company, in or in respect o f the property disclaimed, but shall
not, except so fa r as is necessary fo r the purpose o f releasing the company and
the property o f the company from lia b ility , affect the rights or lia b ilitie s o f
any other person.
(3) The C ourt, before or on granting leave to disclaim , may require such
notices to be given to persons interested, and impose such terms as a condition
o f granting leave, and make such other order in the m atter as the C ourt
th inks just.
(4) The liq u id a to r shall not be entitled to disclaim any property under
this section in any case where an application in w ritin g has been made to him
by any persons interested in the property requiring him to decide whether he
w ill or w ill not disclaim , and the liq u id a to r has not, w ith in a period of
tw enty-eight days after the receipt o f the application or such fu rth e r period-as
may be allowed by the C ourt, given notice to the applicant that he intends to
apply to the C ourt fo r leave to disclaim , and in the case o f a contract, i f the
liq u id a to r, after such an application as aforesaid, does not w ith in the said
period or furth er period disclaim the contract, the company shall be deemed
to have adopted it. . .........
(5) The C ourt may, on the application o f any person who is, as against
the liq u id a to r, entitled to the benefit or subject to the burden o f a contract made
w ith the company, make an order rescinding the contract on such terms as to
payment by or to either party o f damages fo r the non-performance o f the
 336 Companies.

contract, or otherwise as the C o u rt thinks just, and any damages payable under
the order to any such person may be proved by him as a debt in the w inding up.
(6) The C ourt may, on an application by any person who either claims any
interest in any disclaimed property o r is under any lia b ility not discharged by
this A c t in respect of any disclaimed property, and on hearing any such persons
as i t thinks fit, make an order fo r the vesting o f the property in o r the delivery
o f the property to any persons entitled thereto, or to whom it
may seem just that the property should be delivered by way o f compensation
fo r such lia b ility as aforesaid, or a trustee fo r him , and on such terms as the
C ourt thinks just, and on any such vesting order being made the property com
prised therein shall vest accordingly in the person therein named in that behalf
w ith o u t any conveyance o r assignment fo r the purpose :
Provided that, where the property disclaimed is o f a leasehold nature, the
C o u rt shall not make a vesting order in favour o f any person claim ing under
the company whether as under-lessee or as mortgagee except upon the terms
o f m aking that person
(a) subject to the same lia b ilitie s and obligations as those to which the
company was subject under the lease in respect o f the property
at the commencement o f the w inding u p ; or
( b ) i f the C o u rt thinks fit, subject only to the same lia b ilitie s and
obligations as i f the lease had been assigned to that person at
that date ;
and in either event ( if the case so requires) as i f the lease had comprised o n ly
the property comprised in the vesting order, and any mortgagee or under
lessee declining to accept a vesting order upon such terms shall be excluded
fro m a ll interest in and security upon the property, and, if there is no person
claim ing under the company who is w illin g to accept an order upon such
terms, the C o u rt shall have power to vest the estate and interest o f the
company in the property in any person liable, either personally or in a
representative character, and either alone or jo in tly w ith the company, to
perform the lessees covenants in the lease, freed and discharged fro m a ll
estates, incumbrances and interests created therein by the company.
(7) A n y person in jured by the operation o f a disclaim er under this
section shall be deemed to be a creditor o f the company to the am ount o f the
in ju ry , and may accordingly prove the amount as a debt in the w inding up.

Fraudulent 231- ( / ) A n y transfer, delivery o f goods, payment, execution or other act

preference. relating to property which w ould, i f made or done by or against an individual,
be deemed in his insolvency a fraudulent preference, shall, if made or done by
or against a company, be deemed, in the event of its being wound up, a
fraudulen t preference o f its creditors, and be in va lid accordingly.
(2) F o r the purposes o f this section the presentation o f a p e tition fo r
w inding up in the case o f a w inding up by or subject to the supervision of
the C ourt, and a resolution fo r w inding up in the case o f a voluntary winding
up, shall be deemed to correspond w ith the act o f insolvency in the case o f
an in d ividu a l.
 Companies. 337

(.?) Any transfer or assignment by a company of all its property to

trustees for the benefit of all its creditors shall be void.

232. ( / ) Where any company is being wound up by or subject to the Avoidance

of certain
supervision of the Court, any attachment, distress or execution put in force attachments,
without leave of the Court against the estate or effects, or any sale held executions,
etc.
without leave of the Court of any of the properties, of the company after
the commencement of the winding up shall be void.
(2) Nothing in this section applies to proceedings by the Government.

233. Where a company is being wound up, a floating charge on the Effect of
undertaking or property of the company created within three months of the floating
charge.
commencement of the winding up shall, unless it is proved that the company
immediately after the creation of the charge was solvent, be invalid except to
the amount o f any cash paid to the company at the time of, or subsequently
to the creation of, and in consideration for, the charge, together with interest
on that amount at the rate of five per cent, per annum.

234. ( / ) The liquidator may, with ihe sanction of the Court when the General
company is being wound up by the Court or subject to the supervision of the scheme of
liquidation
Court, and with the sanction of an extraordinary resolution of the company in may be
the case of a voluntary winding up, do the following things or any of them : sanctioned.

(i) pay any classes of creditors in fu ll;

(ii) make any compromise or arrangement with creditors or persons claim
ing to be creditors or having or alleging themselves to have any
claim, present or future, whereby the company may be rendered
liab le;
(iii) compromise all calls and liabilities to calls, debts and liabilities
capable of resulting in debts, and all claims, present or future,
certain or contingent, subsisting or supposed to subsist, between
the company and a contributory, or alleged contributory or other
debtor or person apprehending liability to the company, and all
questions in any way relating to or affecting the assets or the
winding up of the company, on such terms as may be agreed,
and take any security for the discharge of any such call, debt,
liability or claim, and give a complete discharge in respect
thereof.
(2) The exercise by the liquidator of the powers of this section shall be
subject to the control of the Court, and any creditor or contributory may
apply to the Court with respect to any exercise or proposed exercise of any
of these powers.

235. ( l ) Where, in the course of winding up a company, it appears that Power of

any person who has taken part in the formation or promotion of the company, Court to
assess dam-
or any past or present director, manager or liquidator, or any officer of the ages against
company has misapplied or retained or become liable or accountable for any delinquent
directors,etc.
money or property of the company, or been guilty of any misfeasance or breach

22
 338 Companies-

o f truts in relation to the company, the C ourt may, on the application o f the
liq u id a to r or o f any creditor or co n tributory, made w ith in three years from
the date o f the first appointm ent o f a liq u id a to r in the winding up, or o f the
m isapplication, retainer, misfeasance or breach o f trust, as the case may be,
whichever is longer, examine in to the conduct o f the prom oter, director,
manager, liq u id a to r or officer, and compel him to repay or restore the money
or property or any part thereof respectively w ith interest at such rate as the
C ourt thinks just, or to contribute such sum to the assets o f the company by
way o f compensation in respect o f the m isapplication, retainer, misfeasance or
breach of trust as the C ou rt thinks just.
(2) This section shall apply notw ithstanding that the offence is one fo r
which the offender may be c rim in a lly responsible.

P e n a lty fo r 236. I f any director, manager, officer or contributory o f any company

fa ls ific a tio n
o f books. being wound up destroys, m utilates, alters or falsifies or fraudulently secretes
any books, papers or securities, or makes, or is p rivy to the m aking of, any
false or fraudulent entry in any register, book o f account or document belong
ing to the company w ith intent to defraud or deceive any person, he shall be
liable to im prisonm ent fo r a term which may extend to seven years, and shall
also be lia b le to fine.

Prosecution
o f delinquent
237. ( / ) I f it appears to the C ourt in the course o f a w inding up by, or
directors. subject to the supervision of, the C ourt that any past or present director,
manager or other officer, or any member, o f the company has been g u ilty o f
any offence in relation to the company fo r w hich he is c rim in a lly liable, the
C ourt may, either on the application of any person interested in the winding
up or o f its own m otion, direct the liq u id a to r either him self to prosecute the
offender or to refer the m atter to the Registrar.
(2) I f i t appears to the liq u id a to r in the course o f a voluntary winding
up that any past or present director, manager or other officer, or any member,
o f the company has been g u ilty o f any offence in relation to the company fo r
w hich he is c rim in a lly liable, he shall fo rth w ith report the m atter to the
Registrar and shall furnish to h im such inform ation and give to him such
access to and fa cilitie s fo r inspecting and taking copies o f any documents,
being inform ation or documents in the possession or under the control o f the
liq u id a to r relating to the m atter in question, as he may require.
(5) Where any report is made under sub-section (2) to the Registrar, he
may, i f he thinks fit, refer the m atter to the President o f the U nion fo r further
in q u iry, and the President o f the U nion shall thereupon investigate the m atter
and may, i f he thinks it expedient, apply to the C ourt fo r an order conferring
on any person designated by the President o f the U nion fo r the purpose w'ith
respect to the company concerned a ll such powers o f investigating the affairs
o f the company as are provided by this A c t in the case o f a winding up by
the Court.
( 4) I f on any report to the Registrar under sub-section (2) it appears to
him that the case is not one in which proceedings ought to be taken by him .
 Companies- 339

he shall in fo rm the liq u id a to r accordingly, and thereupon, subject to the

previous sanction o f the C ourt, the liq u id a to r may him self take proceedings
against the offender.
(5) I f it appears to the C ourt in the course o f a voluntary w inding up
that any past or present director, manager or other officer, or any member, o f
the company has been g u ilty as aforesaid, and that no report w ith respect to
the m atter has been made by the liq u id a to r to the Registrar, the C ourt may,
on the application o f any person interested in the winding up or o f its own
m otion, direct the liq u id a to r to make such a report, and on a report being
made accordingly the provisions o f this section shall have effect as though
the report has been made in pursuance o f the provisions o f sub-section (2).
(6) I f , where any m atter is reported or referred to the Registrar under
this section, he considers that the case is one in which a prosecution ought to
be instituted, he shall place the papers before the Attorney-G eneral or the
Public Prosecutor and i f ad/ised to do so institute proceedings, and it shall be
the duty o f the liq u id a to r and o f every officer and agent o f the company past
and present (other than the defendant in the proceedings) to give him a ll
assistance in connection w ith the prosecution which he is reasonably able to
g iv e :
Provided tha t no prosecution shall be undertaken w ith o u t first giving the
accused person an opportun ity o f making a statement in w ritin g to the
Registrar and o f being heard thereon.
F o r the purposes of this sub-section, the expression agent in relation
to a company shall be deemed to include any banker or legal adviser o f the
company and any person employed by the company as auditor, whether that
person is or is not an officer o f the company.
(7) I f any person fails or neglects to give assistance in manner required
by sub-section (6), the C ourt may, on the application o f the Registrar, direct
that person to com ply w ith the requirements o f the said sub-section, and
where any' such application is made w ith respect to a liq u id a to r, the C ourt
may, unless it appears that the fa ilu re or neglect to com ply was due to the
liq u id a to r not having in his hands sufficient assets o f the company to enable
him so to do, direct that the costs o f the application shall be borne by the
liq u id a to r personally.

238. I f any person, upon any exam ination upon oath authorized under p enait y
this A ct, or in any affidavit, deposition or solemn affirm ation, in or about the fo r false
winding up o f any company under this A ct, or otherwise in or about any evldence-
matter arising under this A ct, in te n tio n a lly gives false evidence, he shall be
liab le to im prisonm ent fo r a term which may extend to seven years, and also
be liab le to fine.

238A. ( l ) I f any person, being a past or present director, managing pena)

agent, manager or other officer o f a company which at the time o f the p ro v is i ns.
commission of the alleged offenc; is bsing wound up, whether by or under
the supervision of the C ourt or vo lun tarily, or is subsequently ordered to be
340 Companies.

wound up by the C ourt or subsequently passes a resolution fo r voluntary

w inding up

(a) does not to the best o f his knowledge and belief fu lly and tru ly
discover to the liq u id a to r a ll the property, real and personal,
o f the company, and how and to whom and fo r what considera
tion and when the company disposed o f any part thereof, except
such part as has been disposed o f in the ordinary way o f the
business o f the company ; or
(ft) does not deliver up to the liq u id a to r, or as he directs, a ll such
part o f the real and personal property of the company as is in
his custody or under his control, and w hich he is required by
law to deliver up ; or
(c ) does not deliver up to the liq u id a to r, or as he directs, a ll books
and papers in his custody or under his control belonging to the
company and which he is required by law to deliver up ; or
(d) w ith in twelve months next before the commencement o f the
winding up or at any tim e thereafter conceals any p a rt o f the
property o f the company to the value of one hundred rupees or
upwards or conceals any debt due to or fro m the company ; or
(e) w ith in twelve months next before the commencement o f the wind
ing up or at any tim e thereafter fraudulently removes any part
o f the property o f the company to the value o f one hundred
rupees or upwards ; or
(/) makes any m aterial omission in any statement relating to the
affairs o f the company ; or
(#) know ing or believing that a false debt has been proved by any
person under the w inding up, fails fo r the period o f a m onth to
in fo rm the liq u id a to r thereof ; or
(/O after the commencement o f the w inding up prevents the production
o f any book or paper affecting or relating to the property or
affairs o f the company ; or
(/) w ith in twelve months next before the commencement o f the w ind
ing up or at any tim e thereafter, conceals, destroys, m utilates
or falsifies, or is p rivy to the concealment, destruction, m u tila
tion, or falsification of, any book or paper affecting or relating
to the property or affairs o f the company ; or
(j) w ith in twelve months next before the commencement o f the wind*
ing up or at any tim e thereafter, makes or is p rivy to the making
o f any false entry in any book or paper affecting or relating to
the property or affairs o f the company ; or
(A;) w ith in twelve months next before the commencement o f the w inding
up or at any tim e thereafter, fraudulently parts w ith , alters or
makes any omission in, or is p rivy to the fraudulent parting
w ith , altering or making any omission in , any document affecting
or relating to the property or affairs of the company ; or
 Companies. 341

(/) after the commencement o f the w inding up or at any meeting of

the creditors o f the company w ith in twelve months next before
the commencement o f the winding up, attempts to account fo r
any part o f the property o f the company by fictitious losses or
expenses ; or
On) has w ith in twelve months next before the commencement o f the
winding up or at any tim e thereafter, by any false representation
or other fraud, obtained any property fo r or on behalf o f the
company on credit which the company does not subsequently
pay f o r ; or
( n) w ith in twelve months next before the commencsment o f the w in d in g
up or at any tim e thereafter, under the false pretence that the
company is carrying on its business, obtains on credit, fo r or on
behalf o f the company, any property which the company does
not subsequently pay fo r ; or
(o) w ith in twelve months next before the commencement o f the w inding
up or at any tim e thereafter, pawns, pledges or disposes o f any
property o f the company which has been obtained on credit and
has not been paid fo r, unless such pawning, pledging or disposing
is in the ordinary way o f the business o f the company ; or
ip) is g u ilty of any false representation or other fraud fo r the purpose
o f obtaining the consent o f the creditors of the company or any
o f them to an agreement w ith reference to the affairs o f the
company or to the w inding up ;

he shall be punishable, in the case o f the offences mentioned respectively in

clauses (m ), () and (o) o f this sub-section, w ith im prisonm ent fo r a term not
exceeding five years, and, in the case o f any other offence, w ith im prisonm ent
fo r a term not exceeding two years :
Provided that it shall be a good defence to a charge under any o f clauses
( b ), (c), {d), (/), (n) and (o) if the accused proves that he had no intent to
defraud, and to a charge under any o f clauses (a), (h), (i) and (/) i f he proves
that he had no intent to conceal the state o f affairs o f the company or to
defeat the law-
(2) Where any person pawns, pledges or disposes o f any property in
circumstances which am ount to an offence under clause (o) o f sub-section ( /) ,
every person who takes in pawn or pledge or otherwise receives the property
know ing it to be pawned, pledged or disposed o f in such circumstances as
aforesaid shall be punishable w ith im prisonm ent fo r a term not exceeding three
years.

239. ( / ) Where by this A c t the C ourt is authorized in relation to winding M eetings to

up to have regard to the wishes o f creditors or contributories, as proved to it aspertain
by any sufficient evidence, the C ou rt may, if it thinks fit fo r the purpose o f cred itois o r
ascertaining those wishes, direct meetings o f the creditors or contributories to contribu-
be called, held and conducted in such manner as the C ourt directs, and may torKS'
 342 Companies.

appoint a person to act as chairm an o f any such meeting and to report the
result thereof to the Court.
(2) In the case o f creditors, regard shall be had to the value o f each
cre dito rs debt-
(3) In the case o f contributories regard shall be had to the number o f
votes conferred on each con trib uto ry by the articles-

D oci ments 240. Where any company is being wound up, a ll documents o f the com
o f com pany pany and o f the liq u ida to rs shall, as between the contributories o f the company,
to be e v i
dence. be prima facie evidence o f the tru th o f a ll matters purporting to be therein
recorded-

In sp e ctio n o f 241. A fte r an order fo r a w inding up by or subject to the supervision o f

documents. the C ourt, the C ourt may make such order fo r inspection by creditors and
contributories o f the company o f its documents as the C ourt thinks just, and
any documents in the possession o f the company may be inspected by creditors
or contributories accordingly, but not fu rth e r or otherwise.

Disposal o f 242. ( 1) When a company has been wound up and is about to be dis
docum ents of solved, the documents of the company and o f the liquidators may be disposed o f
com pany.
as follow s (th a t is to s a y ):
(a) in the case o f a w inding up by or subject to the supervision o f the
C ourt, in such way as the C ourt d ire c ts ;
( b ) in the case o f a voluntary w inding up, in such way as the com
pany by extraordinary resolution directs.
(2) A fte r three years fro m the dissolution o f the company, no responsi
b ility shall rest on the company or the liquidators, or any person to whom the
custody o f the documents has been com m itted, by reason o f the same n o t being
forthcom ing to any person claim ing to be interested therein-
Pow er o f 243. ( / ) Where a company has been dissolved, the C ourt may at any
C o u rt to
declare dis tim e w ith in two years o f the date of the dissolution, on an application being
s o lu tio n o f made fo r the purpose by the liq u id a to r o f the company or by any other person
com pany
void. who appears to the C ou rt to be interested, make an order, upon such terms as
the C o u rt thinks fit, declaring the dissolution to have been void, and thereupon
such proceedings may be taken as m ight have been taken if the company had
not been dissolved.
(2) I t shall be the duty o f the person on whose application the order was
made, w ith in twenty-one days after the making o f the order, to file w ith the
Registrar a certified copy o f the order, and i f that person fa ils so to do he
shall be lia b le to a fine not exceeding fifty rupees fo r every day during which
the default continues.

In fo rm a tio n 244. ( ; ) Where a company is being wound up, i f the w inding up is not
as to pend
in g liq u id a
concluded w ith in one year after its commencement, the liq u id a to r shall, once
tio n s. in each year and at intervals o f not more than twelve months, u n til the winding
up is concluded, file in C ou rt or w ith the Registrar, as the case may be, a
 Companies- 343

statement in the prescribed form and containing the prescribed particulars

w ith respect to the proceedings in and position of the liq u id a tio n .
(2) A n y person stating him self in w ritin g to be a creditor or contributory
o f the company shall be entitled, by him self or by his agent, at a ll reasonable
times, on payment o f the prescribed fee, to inspect the statement, and to
receive a copy thereof or extract therefrom ; but any person u n tru th fu lly so
stating im self to be a creditor or con trib u to ry shall be deemed to be g u ilty
o f an offence under section 182 o f the Penal Code, and shall be punishable
accordingly on the application o f the liq u id a to r.
(3) I f a liq u id a to r fails to com ply w ith the requirements of this section,
he shall be liable to a fine not exceeding five hundred rupees fo r each day during
w hich the default continues.
( 4 ) W hen the statement is filed in C o urt a copy shall sim ultaneously be
filed w ith the Registrar and shall be kept by him along w ith the other records
o f the company.

244A. ( / ) Every liq u id a to r of a company which is being wound up by Paym ents o f

the C o urt shall, in such manner and at such times as may be prescribed, pay liq u id a to r
in to bank.
the money received by him in to a scheduled bank :
Provided that i f the C o urt is satisfied that fo r the purpose o f carrying on
the business o f the company or o f obtaining advances or fo r any other reason
it is fo r the advantage of the creditors or contributories that the liq u id a to r should
have an account w ith any other bank, the C ourt may authorize the liq u id a to r
to make his payments in to or out o f such other bank as the C ourt may select
and thereupon those payments shall be made in the prescribed manner.
(2) I f any such liq u id a to r at any tim e retains fo r more than ten days a
sum exceeding five hundred rupees, or such other amount as the C ourt may in
any pa rticular case authorize h im to retain, then, unless he explains the reten
tio n to the satisfaction o f the C ourt, he shall pay interest on the am ount so
retained in excess at the rate o f twenty per cent, per annum and shall be liable
to disallowance of a ll o r such part o f his rem uneration as the C ourt may th in k
just and to be removed fro m his office by the C ourt, and shall be liable to pay
any expenses occasioned by reason o f his default.
(3) A liq u id a to r o f a company w hich is being wound up shall open a
special banking account and pay a ll sums received by him as liq u id a to r into
such account.

245.1 ( j) A ny affidavit required to be sworn under the provisions or fo r C o u rt o r

person before
the purposes of this Part may be sworn in the U nion o f Burm a, or elsewhere, w h o m affid a
before any C ourt, Judge or person la w fu lly authorized to take and receive v it m ay be
sw o rn .
affidavits, or in any place outside the U nion o f Burm a before any Consul,
Vice-Consul or Ambassador o f H is B ritannic M ajesty or the U nion o f Burm a.
(2) A ll Courts, Judges, Justices, Commissioners, and persons acting
ju d ic ia lly in the U nion of Burm a shall take ju d ic ia l notice o f the seal or stamp

1 Substituted by the Union of Burma (Adaptation j L i.v j) O der, 1948

 344 Companies.

o r signature (as the case may be) of any such C ourt, Judge, person, Consul or
[Vice-C onsul or A m bassador]1, attached, appended or subscribed to any such
affid avit or to any other document to be used fo r the purposes o f this Part.
Rules-
Pow er o f 246. ( / ) The H ig h C ou rt may, from tim e to time, make ru le s 2 consistent
H ig h C o u rt
to make w ith this A c t and w ith the Code o f C iv il Procedure concerning the mode o f
rules. proceedings to be had fo r w inding up a company in such C ourt and in the
C ourts subordinate thereto, and fo r voluntary w inding up (both members and
creditors), fo r the holding o f meetings o f creditors and members in connection
w ith proceedings under section 153 o f this A c t, and fo r giving effect to the
provisions hereinbefore contained as to the reduction o f the capital and the
sub-divisions o f the shares o f a company, and generally fo r a ll applications to
be made to the C ourt under the provisions o f this A ct, and shall make rules
providing fo r a ll matters relating to the winding up o f companies which, by
this A c t, are to be prescribed.
(2) W ith o u t prejudice to the generality o f the foregoing power, the H ig h
C o u rt may by such rules enable or require a ll or any of the powers and duties
conferred and imposed on the C ourt by this A ct, in respect o f the matters
fo llow ing , to be exercised or perform ed by the official liq u id a to r and subject
to the control o f the C ourt, th at is to say, the powers and duties o f the C ourt
in respect o f
(a) holding and conducting meetings to ascertain the wishes o f creditors
and c o n trib u to rie s ;
(ft) settling lists of contributories and rectifying the register o f members
where required, and collecting and applying the assets;
(c) requiring delivery o f property or documents to the liq u id a to r ;
((d) m aking calls ;
(e) fixing a tim e w ith in which debts and claims must be proved '.
Provided tha t the official liq u id a to r shall not, w ith o u t the special leave of
the C ourt, rectify the register o f members, and shall n o t make any call w ith o u t
the special leave o f the Court.
' Rem oval o f defunct Companies from Register.

R e g istra r
247. ( / ) Where the Registrar has reasonable cause to believe that a com
m ay s trik e pany is not carrying on business or in operation, he shall send to the company
d e fu n ct
com pany off
by post a letter in q u irin g whether the company is carrying on business or in
reg iste r. operation.
(2) I f the Registrar does not w ith in one m onth o f sending the letter re
ceive any answer thereto, he shall w ith in fourteen days after the expiration of
the m onth send to the company by post a registered letter referring to the first
letter, and stating that no answer thereto has been received and that, if an
answer is n o t received to the second letter w ith in one m onth from the date
thereof, a notice w ill be published in the Gazette w ith a view to strikin g the
name o f the company off the register.
1 Substituted by the U nion o f B u rm a (A d a p ta tio n o f L a w s) O rder, 1948.
2 See H ig h C o u rt Rules and Orders, and Burma Gazette 1940, P art IV , page 1023.
 Companies- 345

(3) If the Registrar either receives an answer from the company to the
effect that it is not carrying on business or in operation, or does not within
one month after rending the second letter receive any answer, he may publish
in the Gazette, and send to the company by post a notice that, at the expira
tion of three months from the date of that notice, the name of the company
mentioned therein will, unless cause is shown to the contrary, be struck off the
register and the company will be dissolved.
(4 ) If, in any case where a company is being wound up, the Registrar
has reasonable cause to believe either that no liquidator is acting or that the
affairs of the company are fully wound up, and the returns required to be
made by the liquidator have not been made for a period of six consecutive
months after notice by the Registrar demanding the returns has been sent by
post to the company, or to the liquidator at his last known place of business,
the Registrar may publish in the Gazette and send to the company a like
notice as is provided in the last preceding sub-section.
(5) A t the expiration of the time mentioned in the notice the Registrar
may> unless cause to the contrary is previously shown by the company, strike
its name off the register, and shall publish notice thereof in the Gazette, and,
on the publication in the Gazette of this notice, the company shall be dissolved :
Provided that the liability (if any) of every director and member of the
company shall continue and may be enforced as if the company had not
been dissolved.
(6) If a company or any member or creditor thereof feels aggrieved by
the company having been struck off the register, the Court, on the application
of the company or member or creditor, may, if satisfied that the company was
at the time of the striking off carrying on business or in operation, or otherwise
that it is just that the company be restored to the register, order the name of
the company to be restored to the register, and thereupon the company shall
be deemed to have continued in existence as if its name had not been struck
off ; and the Court may by the order give such directions and make such
provisions as seem just for placing the company and all other persons in the
same position, as nearly as may be, as if the name of the company had not
been struck off.
(7) A letter or notice under this section may be addressed to the company
at its registered office, or, if no office has been registered, to the care of some
director, manager or other officer of the company, or, if there is no director,
manager or other officer of the company whose name and address are known
to the Registrar, may be sent to each of the persons who subscribed the
memorandum, addressed to him at the address mentioned in the memorandum-
PA RT VI.
R e g is t r a t io n O f f i c e a n d F e e s .
248. (/) For the purposes of the registration of companies under this R egistration
Act, there shall be offices at such places as the President of the Union thinks off:ces
fit, and no company shall be registered except at an office within the Union of
Burma.
 346 Companies-

(2) The President o f the U nion may appoint such Registrars and assistant
Registrars as he thinks necessary fo r the registration o f companies under this
A ct, and may make regulations w ith respect to their duties.
(J) The salaries o f the persons appointed under this section shall be fixed
by the President o f the U nion.
(4) The President o f the U nion may direct a seal or seals to be prepared
fo r the authentication o f documents required fo r or connected w ith the
registration o f companies.
(5) A n y person may inspect the documents kept by the Registrar on
payment o f such fees as may be appointed by the President o f the U nion, not
exceeding one rupee fo r each inspection ; and any person may require a
certificate o f the incorporation o f any company, or a copy or extract of any other
document or any part o f any other document, to be certified by the Registrar
on payment fo r the certificate, certified copy or extract, o f such fees as the
President o f the U nion may appoint, not exceeding three rupees fo r a certificate
o f incorporation, and not exceeding six annas fo r every hundred words or
fra ctio na l pa rt thereof required to be copied.
( 6 ) Whenever any act is by this A c t directed to be done to or by the
Registrar it shall, u n til the President of the U nion otherwise directs, be done
to or by the existing Registrar o f joint-stock companies, or in his absence to
or by such person as the President o f the U nion may fo r the tim e being
authorize ; but, in the event o f the President o f the U nion altering the constitution
o f the existing registry offices or any o f them, any such act shall be done to or
by such officer and at such place w ith reference to the local situation o f the
registered offices o f the companies to be registered as the President o f the
U nion may appoint.

Fees.
249. (J) There shall be paid to the Registrar in respect o f the several
matters mentioned in Table B in the F irs t Schedule the several fees therein
specified, o r such smaller fees as the President o f the U nion may direct.
(2) A ll fees paid to the Registrar in pursuance o f this A c t shall be accounted
fo r to the Government.

E n fo rc in g 249A. (I) I f a company, having made default in com plying w ith any
subm ission provision o f this A c t w hich requires it to file w ith , deliver or send to the
o f retu rn s
and docu R egistrar any return, account or other document, or to give notice to him o f
m ents to any m atter, fails to make good the default w ith in fourteen days after the service
R e g istra r.
o f a notice on the company requiring it to do so, the C ourt may, on an
application made to the C ourt by any member or creditor o f the company or
by the Registrar, make an order directing the company and any officer thereof
to make good the default w ith in such tim e as may be specified in the order.
(2) A n y such order may provide th a t a ll costs o f and incidental to the
application shall be borne by the company or by any officers o f the company
responsible fo r the default.
( J ) N o th in g in this section shall be taken to prejudice the operation o f
any enactment imposing penalties on a company or its officers in respect of
any such default as aforesaid.
 Companies. 347

P A R T V II.
A p p l ic a t io n of A ct to C o m p a n ie s form ed and r e g is t e r e d under fo rm er

C o m p a n ie s A cts.

250. In the application o f this A c t to existing companies, it shall apply Application

o f A ct to
in the same manner in the case o f a lim ite d company, other than a company com panies
lim ite d by guarantee, as if the company had been form ed and registered under fo rm e d under
fo rm e r
this A c t as a company lim ite d by shares ; in the case o f a company lim ited Companies
by guarantee, as i f the company had been form ed and registered under this A cts.
A c t as a company lim ite d by guarantee ; and, in the case o f a company, other
than a lim ite d company, as i f the company had been form ed and registered
under this A c t as an unlim ited company :
Provided that
(1) nothing in Table A in the F irs t Schedule shall apply to a company
In d ia X , form ed and registered under A c t X I X o f 1857 1 and A c t V I I o f
1866.
I8 6 0 1, or either o f them, or under the Indian Companies A ct,
In d ia V I ,
1882. 1866 1, or the In dian Companies A ct, 1882 1 ;
(2) reference, express or im plied, to the date o f registration shall be
construed as a reference to the date at which the company was
In d ia X , registered under A c t No. X I X o f 1857 1 and A c t N o. V I I o f
1866.
In d ia V I ,
1860 *, or either o f them, or under the Indian Companies A ct,
1882. 1866 or the India n Companies A ct, 18821, as the case may be.

251. This A c t shall apply to every company registered but not formed A p p lic a tio n
of A c t to
In d ia X , under A c t N o. X I X o f 1857 1 and A c t No. V I I of I8601, or either o f them, or c im p a n its
1866. under the India n Companies A c t, 18661, or the Indian Companies A ct, 18821, registered
In d ia V I , b u t not
in the same manner as i t is hereinafter in this A c t declared to apply to companies fo rm e d
1882.
registered but not formed under this A c t : u n d e r fo rm e r
Com panies
Acts.
Provided th at reference, express or im plied, to the date o f registration
shall be construed as a reference to the date at which the company was registered
under the said Acts or any o f them.

252. A company registered under A c t X I X o f 1857 1and A c t V I I o f 1860 *, Mode of

or either them, may cause its shares to be transferred in the manner hitherto tra n sfe rrin g .

in use, or in such other manner as the company may direct.

PA R T V III.

. C o m p a n ie s a u t h o r iz e d t o r e g is t e r under t h is A ct.

253. ( l ) W ith the exceptions and subject to the provisions mentioned and Com panies
contained in this section, capable o f
b e in g re g is
(i) any company consisting o f seven or more members, which was in te re d .
existence on the first day o f M ay, eighteen hundred and eighty-two,

1 In d ia Acts X I X o f 1857 and V I I o f 1860 w ere re p .a le d by In d ia A ct X o f 1866. In d ia A c t

X Ol 1866 was repealed b y In d ia A c t V I o f 1882, and the la tte r A c ti in its tu rn , was repealed by
In d ia A ct V I I o f 1913.
348 Companies-

including any company registered under A c t No. X I X o f 1857 1

and A c t N o. V I I o f I860 ,1 or either o f them, and
(ii) any company form ed after the date aforesaid, whether before or
after the commencement o f this A ct, in pursuance o f any A c t o f
[Parliam ent o f the U nited K ingdom o f Great B rita in and Ireland] 2
or other law in force in the Union o f Burm a or o f Letters
Patent, or being otherwise duly constituted according to law and
consisting o f seven or more members,
may at any tim e register under this A c t as an unlim ited company or as a
company lim ite d by shares, o r as a company lim ite d by guarantee ; and the
registration shall not be in va lid by reason that it has taken place w ith a view
to the company being wound up :
(2) Provided as follow s :
(a) a company having the lia b ility o f its members lim ite d by A c t o f
[P arliam ent o f the U nited K ingdom o f Great B rita in and
Ire la nd ] 2 or by any law in force in the U nion o f Burma
or by Letters Patent, and not being a joint-stock company as
hereinafter defined, shall not register in pursuance o f this section ;
(Z>) a company having the lia b ility o f its members lim ite d by A c t o f
[Parliam ent o f the U nited K ingdom o f Great B rita in and Ire la n d ]2
or by any law in force in the U nion o f Burm a or by Letters
Patent shall not register in pursuance o f this section as an
u n lim ite d company or as a company lim ite d by guarantee ;
(c) a company that is not a joint-stock company as hereinafter defined
shall not register in pursuance of this section as a company
lim ite d by shares ;
( d) a company shall not register in pursuance o f this section w ith o u t
the assent o f a m a jo rity o f such o f its members as are present
in person or by proxy (in cases where proxies are allowed by
the articles) at a general meeting summoned fo r the purpose ;
(e) where a company not having the lia b ility of its members lim ite d
by A c t o f [Parliam ent of the U nited Kingdom o f Great B rita in
and Irela nd ] 2 or by any law in force in the U nion o f Burma
o r by Letters Patent is about to register as a lim ited company,
the m a jo rity required to assent as aforesaid shall consist o f not
less than three-fourths o f the members present in person or by
proxy at the meeting ;
(/) where a company is about to register as a company lim ite d by
guarantee, the assent to its being so registered shall be
accompanied by a resolution declaring th a t each member
undertakes to contribute to the assets o f the company, in the
event o f its being wound up w hile he is a member or w ith in one

1 See fo o tn o te 1 on previous p:ige.

2 Substituted by the U n io n o f Burm a (A d a p ta tio n o f Law s) O rd e r, 1948.
 Companies. 349

year afterwards, fo r payment o f the debts and lia b ilitie s o f the

Company contracted before he ceased to be a member, and o f
the costs and expenses o f w inding up, and fo r the adjustm ent o f
the rights o f the contributories among themselves, such amount
as may be required not exceeding a specified amount.
( J ) In com puting any m a jo rity under this section when a p o ll is demanded
regard shall be had to the number o f votes to which each member is entitled
according to the articles.
ind:a v j, (4) A company registered under the Indian Companies A ct, 1882,1 shall
1882. not be registered in pursuance o f this section.

254. F o r the purposes o f this Part as fa r as relates to registration o f D e fin itio n of

jo in t-s lo c k
companies as companies lim ite d by shares, a joint-stock company means a co m p a n y.
company having a permanent paid up or nom inal share capital o f fixed am ount
divided in to shares, also o f fixed amount, or held and transferable as stock, or
divided and held p a rtly in one way and p a rtly in the other, and form ed on the
prin ciple o f having fo r its members the holders o f those shares or that stock,
and no other persons ; and such a company, when registered w ith lim ite d
lia b ility under this A ct, shall be deemed to be a company lim ite d by shares.

255. Before the registration in pursuance o f this Part o f a joint-stock Require-

m enis fo r
company, there shall be delivered to the R egistrar the fo llo w in g documents re g is tra tio n
(that is to say) : b y jo in t-
sto ck com
(1) a lis t showing the names, addresses and occupations o f a ll persons panies.
who on a day named in the lis t, not being more than six clear
days before the day o f registration, were members o f the company,
w ith the addition of the shares or stock held by them respectively,
distinguishing, in cases where the shares are numbered, each
share by its number ;
(2) a copy o f any A c t o f [Parliam ent o f the United K ingdom o f Great
B rita in and Ire la n d ],2 law, R oyal Charter, Letters Patent, deed
o f settlement, contract o f co-partnery or other instrument
constituting or regulating the company ; and
(3) if the company is intended to be registered as a lim ite d company,
a statement specifying the fo llo w in g particulars (that is to sa y):
(a) the nom inal share capital o f the company and the number o f
shares into which it is divided or the amount o f stock o f
w hich it consists;
( b) the number o f shares taken and the am ount paid on each share;
(c) the name o f the company, w ith the addition o f the word
L im ite d as the last word thereof ; and
(d) in the case o f a company intended to be registered as a company
lim ite d by guarantee, the resolution declaring the amount of
the guarantee.

1 Repealed b v I.id ia A c t V I I o f 1913.

2 S u b s titu te d b y th e U n io n o f B urm a (A d a p ta tio n o f L a w s) O rd e r, 1948.
 350 Companies.

Requirements
256i Before the registration in pursuance o f this Part o f any company
for registra
tion! b y other not being a joint-stock company, there shall be delivered to the Registrar
than joint-
stock (1) a lis t showing the names, addresses and occupations o f the
com panies. directors o f the company ; and
( 2 ) a copy o f any A c t o f [Parliam ent o f the U nited Kingdom o f Great
B rita in and Ireland], 1 law, Letters Patent, deed o f settlement,
contract o f co-partnery or other instrum ent constituting or
regulating the company ; and
(3) in the case o f a company intended to be registered as a company
lim ite d by guarantee, a copy o f the resolution declaring the
am ount o f the guarantee.

Authentica 257. The lis t Of members and directors and any other particulars relating
tion of state to the company required to be delivered to the Registrar shall be duly
m ent of
existing verified by the declaration o f any two or more directors or other prin cip a l
com panies. officers o f the company.

Registrar 258. The Registrar may require such evidence as he thinks necessary fo r the
m ay require purpose o f satisfying him self whether any company proposing to be registered
evidence as
to nature of is or is not a jo in t-sto ck company as hereinbefore defined.
com pany.
O n re g is tra 259. ( / ) Where a banking company, which w'as in existence on the first
tio n of b a n k day o f M ay eighteen hundred and eighty-tw o, proposes to register as a lim ite d
in g com pany
w ith lim ite d
company, i t shall, at least th irty days before so registering, give notice o f its
lia b ilit y , intention so to register to every person who has a banking account w ith the
n o tic e to be
company, either by delivery o f the notice to him , o r by posting it to him at, or
g iv e n to
custom ers. delivering it at, his last know n address.

(2) I f the company om its to give the notice required by this section, then
as between the company and the person fo r the tim e being interested in the
account in respect o f which the notice ought to have been given, and so fa r
as respects the account down to the tim e at which notice is given, but not
fu rth e r or otherwise, the certificate o f registration w ith lim ite d lia b ility shall
have no operation.

Exem ption 260. N o fees shall be charged in respect o f the registration in pursuance
of ccrta in o f this Part o f a company i f it is not registered as a lim ite d company, or if
com panies
from pay before its registration as a lim ite d company the lia b ility o f the shareholders
ment ot fees. was lim ite d by some A c t o f [Parliam ent o f the U nited Kingdom o f Great B rita in
and Ire la n d ]1 or law in force in the U nion o f Burm a or by Letters Patent.
261. When a company is registered in pursuance o f this Part w ith lim ited
Addition of
Lim ited lia b ility , the w ord L im ite d shall fo rm and be registered as part o f its name.
to name.
v 262. On compliance w ith the requirements o f this Part w ith respect to
Certificate of
registration registration, and on payment o f such fees, if any, as are payable under Table B in
o f existin g the F irst Schedule, the Registrar shall ce rtify under his hand that the company
com panies.
applying fo r registration is incorporated as a company under this A ct, and in

l S ibstituted b y the Union of Burma (Adaptation of Laws) O .d e r, 1948.

 Companies. 351

the case o f a lim ite d company that i t is lim ite d , and thereupon the company
shall be incorporated and shall have perpetual succession and a common seal.

263. A ll property, moveable and immoveable, including a ll interests and V e s tin g o f

p ro p e rty on
rights in, to and out o f property, moveable and immoveable, and including re g is tra tio n .
obligations and actionable claim s as may belong to or be vested in a company
at the date o f its registration in pursuance o f this Part, shall, on registration,
pass to and vest in the company as incorporated under this A c t fo r a ll the
estate and interest o f the company therein.

264. The registration o f a company in pursuance o f this Part shall not S a vin g o f
affect the rights or lia b ilitie s o f the company in respect o f any debt or obliga e xistin g
lia b ilitie s .
tio n incurred or any contract entered into, by, to, w ith, or on behalf of, the
company before registration.

265. A ll suits and other legal proceedings w hich at the time of the C o n tin u a tio n
of e x is tin g
registration o f a company in pursuance o f this Part are pending by or against
su its.
the company, or the public officer or any member thereof, may be continued
in the same manner as if the registration had not taken place ; nevertheless
execution shall not issue against the effects o f any ind ivid u a l member o f the
company on any decree or order obtained in any such suit o r proceeding;
but, in the event o f the property and effects o f the company being insufficient
to satisfy the decree or order, an order may be obtained fo r w inding up the
company.

266. When a company as registered in pursuance o f this Part E ffe ct o f

r e g is tra tio n
(i) a ll provisions contained in any A c t o f [Parliam ent o f the United u n d er Act.
K ingdom o f Great B rita in and Ire la n d ],1 law in force in the
U nion o f Burm a, deed o f settlement, contract of co-partnery,
Letters Patent, or other instrum ent constituting or regulating
the company, including, in the case o f a company registered as a
company lim ited by guarantee, the resolution declaring the
am ount o f the guarantee, shall be deemed to be conditions
and regulations o f the company, in the same manner and w ith
the same incidence as i f so much thereof as w ould, if the
company had been form ed under this A ct, have been required
to be inserted in the memorandum, were contained in a
registered memorandum, and the residue thereof were contained
in registered articles ;
( ii) a ll the provisions o f this A c t shall apply to the company and the
members, contributories and creditors thereof, in the same
manner in a ll respects as if it had been form ed under this
A ct, subject as fo llo w s (that is to say) :
(a) the regulations in Table A in the F irs t Schedule shall not apply
unless adopted by special resolution;

1 Substituted by the Union of Burma (Adaptation of Laws) Order, 1948.

352 Companies.

( b ) the provisions of this A c t relating to the numbering o f shares

shall not apply to any joint-stock company whose shares are
not num bered;
(c) subject to the provisions o f this section, the company shall not
have power to alter any provision contained in any A c t o f
[Parliam ent o f the U nited Kingdom o f Great B rita in and
Ire la n d ]1 or law in force in the U nion of Burma relating to
the co m p a n y;
( d ) subject to the provisions o f this section, the company shall not
have power, w ith o u t the sanction o f the President o f the U nion,
to alter any provision contained in any Letters Patent relating
to the com pany;
(e) the company shall not have power to alter any provision
contained in a R oyal Charter or Letters Patent w ith respect to
the objects o f the company ;
(/) in the event of the company being wound up, every person
shall be a contributory, in respect o f the debts and lia b ilitie s
o f the company contracted before registration, who is lia b le to:
pay or contribute to the payment o f any debt or lia b ility o f
the company contracted before registration, or to pay or
contribute to the payment o f any sum fo r the adjustm ent o f
the rights o f the members among themselves in respect of any
such debt or lia b ility , or to pay or contribute to the payment
of the cost and expenses o f w inding up the company, so fa r as
relates to such debts or lia b ilitie s as aforesaid; and every
con trib uto ry shall be liable to contribute to the assets o f the
company, in the course o f the w inding up, a ll sums due from
him in respect o f any such lia b ility as a fo re sa id ; and in the
event o f the death or insolvency o f any contributory, the
provisions o f this A c t w ith respect to the legal representatives
and heirs o f deceased contributories, and w ith reference to the
assignees o f insolvent contributories, shall apply ;
( iii) the provisions o f this A c t w ith respect to
( a) the registration of an unlim ited company as lim ite d ;
( b) the powers of an u nlim ited company on registration as a lim ite d
company to increase the nom inal amount o f its share capital
and to provide that a po rtion o f its share capital shall not
be capable o f being called up except in the event of winding
up;
(c) the power o f a lim ite d company to determine that a p o rtio n of
its share capital shall not be capable o f being called up
except in the event o f w inding up :
shall apply notw ithstanding any provisions contained in any A ct
o f [Parliam ent o f ihe U nited K ingdom o f Great B rita in and
Ire la n d ],1 law in force in the U nion o f Burma, R oyal Charter,
1 Substituted by the Union of B urm a (Adaptation o f Law s) Order, 1948.
 Com panies 353

deed o f settlement, contract o f co-partnery, Letters Patent or other

instrum ent constituting or regulating the company ;
(iv) nothing in this section shall authorize the company to alter any
such provisions contained in any deed o f settlement, contract o f
co-partnery, Letters Patent or other instrum ent constituting or
regulating the company, as w ould, i f the company had o rig in a lly
been form ed under this A c t, have been required to be contained
in the memorandum and are n o t authorized to be altered by
this A c t ;
(v) nothing in this A c t shall derogate fro m any la w fu l power o f
altering its constitution or regulations which may, by virtue o f
any A c t o f [P arliam ent o f the U nited Kingdom o f Great
B rita in and Ire la n d ],1 law in force in the U nion o f Burm a,
deed o f settlement, contract o f co-partnery, Letters Patent or
other instrum ent constituting or regulating the company, be
vested in the company.

267. ( ; ) Subject to the provisions o f this section, a company registered P o w e r to

in pursuance o f this P art may by special resolution alter the fo rm o f its con- memoran-
s titu tio n by substituting a memorandum and articles fo r a deed o f settlement, dum and
(2) The provisions o f th is A c t w ith respect to confirm ation by the deed* of ^
C o urt and registration o f an alteration o f the objects o f a company shall, so se ttle m e n t,
fa r as applicable, apply to an alteration under this section w ith the fo llo w in g
m odifications :

(a) there shall be substituted fo r the printed copy o f the altered

memorandum required to be filed w ith the Registrar a printed
copy o f the substituted memorandum and articles ; and
( b ) on the registration o f the alteration being certified by the Registrar,
the substituted memorandum and articles shall apply to the
company in the same manner as i f it were a company
registered under this A c t w ith th a t memorandum and those
articles, and the companys deed o f settlement shall cease to
apply to the company.

(3) A n alteration under this section may be made either w ith or w ithout
any alteration o f the objects o f the company under this A ct.
(4) In this section the expression deed o f settlem ent includes any
contract o f co-partnery or other instrum ent constituting or regulating the
company, not being an A c t o f [Parliam ent o f the U nited Kingdom o f Great
B rita in and Ire la n d ], a law in force in the U nion o f Burm a, a R oyal Charter
or Letters Patent.

268. The provisions o f this A c t w ith respect to staying and restraining P o w e r o f

suits and legal proceedings against a company at any tim e after the presenta- court to
tio n o f a petition fo r w inding up and before the m aking o f a w inding up order restrain pro-
______ _________________________________ ;_____________________________________________ ;_______________ ceedings.

1 Substituted by the Union o f Burma (Adaptation o f Laws) Order, 1948.

23
 354 Companies

shall, in the case o f a company registered in pursuance o f this Part, where

the application to stay or restrain is by a creditor, extend to suits and legal
proceedings against any c o n trib uto ry o f the company.

S uits stayed 269. Where an order has been made fo r w inding up a company registered
on w in d in g
up o rd e r. in pursuance o f this Part, no suit or other legal proceeding shall be com
menced o r proceeded w ith against the company or any co n trib u to ry o f the
company in respect o f any debt o f the company, except by leave o f the C ourt
and subject to such terms as the C o urt may impose.

P A R T IX .

W in d in g up of U n r e g is t e r e d C o m p a n ie s .

M e a n in g o f 270. F or the purposes o f this Part, the expression unregistered

u n re g is company shall n o t include a ra ilw a y company incorporated by A c t o f
tered c o m
p a n y. [Parliam ent o f the U nited K ingdom o f Great B rita in and Ire la n d ]1 or by a law
in force in the U nion o f Burm a, nor a company registered under the Indian
Companies A c t, 1866,2 or under any A c t repealed thereby, or under the India x
In d ia n Companies A ct, 1882,3 or under this A c t, but save as aforesaid, shall ^
include any partnership, association or company consisting o f more than seven 1882.
members.

W in d in g up 271. ( / ) Subject to the provisions o f this Part, any unregistered company

o f u n re g is
tered com may be wound up under this A ct, and a ll the provisions o f this A c t w ith
panies. respect to w inding up shall apply to an unregistered company, w ith the
fo llo w in g exceptions and additions :
(i) the p rin cip a l place o f business o f the company in the U nion o f
Burm a shall be deemed to be the registered office o f the
com pany;
( ii) no unregistered company shall be wound up under this A c t
v o lu n ta rily or subject to supervision;
( iii) the circumstances in w hich an unregistered company may be
wound up are as follow s (that is to s a y ):
(a) i f the company is dissolved, or has ceased to carry on
business or is carrying on business o n ly fo r the purpose o f
w inding up its affairs ;
(b) i f the company is unable to pay its debts ;
(c) i f the C o u rt is o f opinion th a t it is just and equitable that
the company should be wound up ;
(iv) an unregistered company shall, fo r the purposes o f this A c t, be
deemed to be unable to pay its debts
(a) i f a creditor, by assignment o r otherwise, to whom the
company is indebted in a sum exceeding five hundred

1 Substituted b y th e U n io n o f B u rm a (A daptation o f L a w s) O rde r, 1948.

2 In d ia A c t X o f 1866 was repealed b y In d ia A c t V I o f 1882.
3 In d ia A c t V I o f 1882 was repealed by In d ia A c t V I I o f 1913.
 Companies. 355

rupees then due, has served on the com pany, by leaving at

its prin cip a l place o f business, or by delivering to the
secretary, or some director, manager or p rin cip a l officer
o f the company, or by otherwise serving in such manner
as the C o u rt may approve or direct, a demand under his
hand re q uiring the company to pay the sum so due, and
the company has fo r three weeks after the service o f the
demand neglected to pay the sum, or to secure or
compound fo r it to the satisfaction o f the c re d ito r;
( b) i f any suit or other legal proceeding has been instituted
against any member fo r any debt o r demand due, or
claimed to be due, fro m the company or from him in his
character o f member, and notice in w ritin g o f the in stitu tio n
o f the suit or other legal proceeding having been served
on the company by leaving the same at its p rincipal place
o f business or by delivering it to the secretary, or some
director, manager or prin cip a l officer o f the company, or
by otherwise serving the same in such manner as the C ourt
may approve or direct, the company has n o t w ith in
ten days after service o f the notice paid, secured or
compuonded fo r the debt or demand, or procured the suit
or other legal proceeding to be stayed, or indem nified the
defendant to his reasonable satisfaction against the suit or
other legal proceeding, and against a ll costs, damages and
expenses to be incurred by him by reason o f the same;
(c) i f execution o r other process issued on a decree or order
obtained in any C ourt in favour o f a creditor against the
company, or any member thereof as such, or any person
authorized to be sued as nom inal defendant on behalf o f
the company, is returned unsatisfied; and
( d ) i f i t is otherwise proved to the satisfaction o f the C ourt that
the company is unable to pay its debts.

(2) N othing in this Part shall affect the operation o f any enactment
w hich provides fo r any partnership, association or company being wound up,
or being wound up as a company or as an unregistered company under any
enactment repealed by this A ct, except th a t references in any such first-
mentioned enactment to any such repealed enactment shall be read as
references to the corresponding provision ( if any) o f this A ct.
(5) Where a company incorporated outside the U n io n o f Burm a which
has been carrying on business in the U nion o f Burm a ceases to carry
on business in the U nion o f Burm a i t may be wound up as an unregistered
com pany under this Part, notw ithstanding that it has been dissolved or
otherwise ceased to exist as a company under or by virtue o f the laws of the
country under which i t was incorporated.
 356 Companies-

C o n trib u 272. ( / ) In the event o f an unregistered company being wound up, every
to rie s in person shall be deemed to be a contributory who is lia b le to pay or contribute
w in d in g
up o f to the payment o f any debt or lia b ility o f the company, or to pay
u n registered or contribute to the payment o f any sum fo r the adjustment o f the rights o f
com panies.
the members among themselves, or to pay o r contribute to the payment o f
the costs and expenses o f w inding up the company, and every contributory
shall be lia b le to contribute to the assets o f the company a ll sums due fro m
him in respect o f any such lia b ility as aforesaid.
(2) In the event o f any contributory dying or being adjudged insolvent,
the provisions o f this A c t w ith respect to the legal representatives and heirs
o f deceased contributories, and to the assignees o f insolvent contributories,
shall apply.

P o w e r to 273. The provisions o f this A c t w ith respect to staying and restraining

s ta y o r res suits and legal proceedings against a company at any tim e after the
tr a in pro
ceedings. presentation o f a p e titio n fo r w inding up and before the m aking o f a w inding
up order shall, in the case o f an unregistered company, where the application
to stay or restrain is by a creditor, extend to suits and legal proceedings
against any con trib u to ry o f the company.

S u its stayed 274. Where an order has been made fo r w inding up an unregistered
on w in d in g company, no suit or other legal proceedings shall be proceeded w ith or
up o rd e r.
commenced against any co n trib u to ry o f the company in respect o f any debt
o f the company, except by leave o f the C ourt, and subject to such terms as
the C ourt may impose.

D ire c tio n s 275. I f an unregistered company has no power to sue and be sued in a
as to p ro
p e rty in ce r
common name, or i f fo r any reason i t appears expedient, the C ourt may, by
ta in cases. the w inding up order or by any subsequent order, direct that a ll or any part
o f the property, moveable or immoveable, including a ll interests and rights in,
to and out o f property, moveable and immoveable, and including obligations
and actionable claims as may belong to the company or to trustees on
its behalf, is to vest in the official liq u id a to r by his official name, and
thereupon the property or the part thereof specified in the order shall
vest a cco rd in g ly; and the official liq u id a to r may, after giving such indem nity
( if any) as the C o u rt may direct, bring or defend in his official name any suit
or other legal proceeding relating to that property, or necessary to be brought
or defended fo r the purposes o f effectually w inding up the company and
recovering its property.

Provisions 276. The provisions o f this Part w ith respect to unregistered companies
o f th is P a rt
c u m u la tiv e . shall be in addition to, and not in restriction of, any provisions hereinbefore
in this A c t contained w ith respect to w inding up companies by the C ourt, and
the C o urt or official liq u id a to r may exercise any powers or do any act in the
case o f unregistered companies which m ight be exercised or done by it or him
in w inding up companies form ed and registered under this A c t ; but an
unregistered company shall not, except in the event o f its being wound up, be
 Companies. 357

deemed to be a company under this A ct, and then only to the extent provided
by this Part.

PART X.

C o m p a n ie s e s t a b l is h e d o u t s id e the U n io n o f B urma .

277. ( / ) Every company incorporated outside the U nion of Burma whichR equire
has a place o f business w ith in the U nion o f Burm a shall, w ith in one m onth m ents as to
com panies
fro m the establishment o f such place o f business, or w ith in six months from esta blish ed
the date o f separation,1 as the case may be, file w ith the Registrar, ou tsid e th e
U n io n o f
(a) a certified copy o f the charter, statutes or memorandum and B urm a,
articles o f the company, or other instrum ent constituting or
defining the constitution o f the company, and, i f the instrum ent
is not w ritten in the [Burmese] 2 language, a certified translation
th e re o f;
( b ) the f u ll address o f the registered or prin cip a l office o f the company;
(c) a lis t o f the directors and managers ( if any) o f the com pany;
Cd) the names and addresses o f some one or more persons resident in
the U nion o f Burm a authorized to accept on behalf of
the company service o f process and any notices required to be
served on the company ;
and, in the event o f any alteration being made in any such instrum ent or in
such address or in the directors or managers or in the names or addresses of
any such persons as aforesaid, the company shall, w ith in the prescribed time,
file w ith the Registrar a notice o f the alteration.
(2) A n y process o r notice required to be served on the company shall be
sufficiently served i f addressed to any person whose name has been so filed as
aforesaid and le ft at or sent by post to the address w hich has been so filed.
(J) Every company to w hich this section applies shall in every year file
w ith the Registrar
(i) in a case where by the law fo r the tim e being in force o f the
country in w hich the company is incorporated such company is
required to file w ith the p ublic a u th o rity an annual balance-
sheet, a copy o f that balance-sheet, and if the balance-sheet
does not contain a ll the in fo rm a tio n provided fo r in the fo rm
marked H in the T h ird Schedule, such supplementary statements
as shall furnish such info rm a tion ; or
(ii) in a case where no such provision is made by the law fo r
the tim e being in force o f the country in which the company is
incorporated, such a statement in the fo rm o f a balance-sheet
as such company w ould, i f it were a company form ed and
registered under this A c t, be required to file in accordance
w ith the provisions o f this A c t.

1 i.e. the separation of Burma and India which took pla ce on the 1st April, 1937.
a Substituted for the w ord E nglish by the Union of Burma (Adaptation of Law s) Order,
1948.
358 Companies.

C4) Every company to which this section applies and w hich uses the word
L im ite d as p a rt o f its name, shall
(a) in every prospectus in v itin g subscriptions fo r its shares or
debentures in the U nion o f Burm a state the country in which
the company is incorporated ; and
( b ) conspicuously e xhib it on every place where i t carries on business in
the U nion o f Burm a the name o f the company and the country
in w hich the company is incorporated in letters easily legible
in English characters and also, i f any place where it carries on
business is beyond the local lim its o f the ordinary o riginal c iv il
ju ris d ic tio n o f the H ig h C ourt, in the characters o f one o f the
vernacular languages used in that p la c e ; and
(c) have the name o f the company and o f the country in w hich the
company is incorporated mentioned in legible [Burm ese]1
characters in a ll bill-heads and letter paper, and in a ll notices,
advertisements and other official publications o f the company.

(5) Every company to w hich this section applies shall, i f the lia b ility of
the members o f the company is lim ite d , cause notice o f that fact to be stated
in legible characters in every prospectus in v itin g subscriptions fo r its shares,
and in a ll bill-heads and lette r paper, notices, advertisements and other
official publications o f the company in the U n io n o f Burma, and to be affixed
on every place where it carries on business.
( 6 ) I f any company to w hich this section applies fa ils to com ply w ith
any o f the requirements o f this section, the company, and every officer or
agent o f the company, shall be lia b le to a fine not exceeding five hundred
rupees or, in the case o f a continuing offence, fifty rupees fo r every
day during which the default continues.
(7) F o r the purposes o f this section
(a) the expression certified means certified in the prescribed manner
to be a true copy or a correct translation ;
(b) the expression place o f business includes a share transfer or
share registration o ffic e ;
(c) the expression director includes any person occupying the
position o f director, by whatever name called ; and
(d) the expression prospectus means any prospectus, notice, circular,
advertisement or other in v ita tio n , offering to the public fo r
subscription or purchase any shares or debentures o f the
company.
(#) There shall be paid to the Registrar fo r registering any document
required by this section to be filed w ith him a fee o f five rupees or such
smaller fee as m ay be prescribed.
2 (9 ) * * * *

1 Substituted fo r the w o r d " E n g lis h b y the U n io n o f B u rm a (A d a p ta tip n o f L a w s) O rd e r,

1948.
2 Omitted ibid.
 Companies

277A. ( / ) I t shall n o t be la w fu l fo r any person R e striction

on sale and
(a) to issue, circulate or distribute in the U nion o f Burm a any pros offer fo r sale
pectus offering fo r subscription shares in o r debentures o f a o f shares.
company incorporated or to be incorporated outside the U nion
o f Burm a, whether the company has or has not established, or
when form ed w ill or w ill not establish, a place o f business in the
U nion o f Burm a, unless
(i) before the issue, circu latio n or distrib u tio n o f the prospectus in
the U nion o f B urm a a copy thereof, certified by the chairm an
and tw o other directors o f the company as having been
approved by resolution of the managing body, has been
delivered fo r registration to the Registrar ;
( ii) the prospectus states on the face o f it that the copy has been
so de livered ;
( iii) the prospectus is dated ; and
(iv ) the prospectus otherwise complies w ith this P a r t; or
Cb) to issue to any person in the U nion o f Burm a a form o f applica
tio n fo r shares in or debentures o f such a company or intended
company as aforesaid, unless the fo rm is issued w ith a prospectus
w hich complies w ith this P a r t:
Provided that this provision shall not apply i f it is shown that the
fo rm o f application was issued in connection w ith a bona fide
in v ita tio n to a person to enter in to an underw riting agreement
w ith respect to the shares or debentures.
(2) T his section shall n o t apply to the issue to existing members or
debenture holders o f a company o f a prospectus or fo rm o f application relating
to shares in o r debentures o f the company, whether an applicant fo r shares or
debentures w ill or w ill not have the rig h t to renounce in favour o f other
persons, but, subject as aforesaid, this section shall apply to a prospectus or
fo rm o f application whether issued on or w ith reference to the fo rm ation o f a
company o r subsequently.
(3) Where any document by w hich any shares in or debentures o f a
company incorporated outside the U nion o f Burm a are offered fo r sale to the
public w ould, i f the company concerned had been a company w ith in the
meaning o f this A c t, have been deemed by virtue o f section 98A to be a
prospectus issued by the company, that document shall be deemed to be, fo r
the purposes o f this section, a prospectus issued by the company.
(4) A n offer o f shares or debentures fo r subscription or sale to any person
whose ordinary business o r pa rt o f whose ordinary business it is to buy or sell
shares or debentures, whether as p rin cip a l or agent, shall n o t be deemed an
offer to the public fo r the purposes of this section.
(J) A n y person who is know ingly responsible fo r the issue, circulation or
d istrib u tio n o f any prospectus, or fo r the issue o f a fo rm o f application fo r
shares o r debentures, in contravention o f the provisions o f this section shall be
lia ble to a fine not exceeding five thousand rupees.
 360 Companies-

(6) In this section and in section 277B, the expressions prospectus,

shares and debentures have the same meanings as when used in relation
to a company incorporated under this A ct.

277B. ( 1) In order to com ply w ith this Part a prospectus, in addition to

R e q u ire
m ents com plying w ith the provisions o f sub-clauses (ii) and ( iii) o f clause (a) o f sub
as to pros,
section U ) o f section 277A, must
pectus.
(a) contain particulars w ith respect to the fo llo w in g m a tte rs:
(i) the objects o f the company ;
( ii) the instrum ent constituting or defining the constitution o f the
c o m p a ny;
( iii) the enactments or provisions having the force o f an enactment,
by or under which the incorporation o f the company was
effected;
(iv ) an address in the U nion o f Burm a where the said instrum ent,
enactments or provisions, or copies thereof, and i f the same
are in a foreign language a translation thereof in the English
language certified in the prescribed manner, can be inspected ;
(v) the date on which and the country in which the company was
in corpo ra te d;
(vi) whether the company has established a place o f business in the
U nion o f Burm a and, i f so, the address o f its prin cip a l office
in the U nion o f Burm a :
Provided that the provisions o f sub-clauses (i), ( ii) and ( iii) o f this
clause shall not apply in the case o f a prospectus issued more
than two years after the date at which the company is entitled
to commence business;
( b ) subject to the provisions o f this section, state the matters specified
in sub-section (1 A ) o f section 93 and set out the reports specified
in tha t se ctio n :
Provided that
(i) where any prospectus is published as a newspaper advertisement,
it shall be a sufficient compliance w ith the requirem ent that the
prospectus m ust specify the objects o f the company if the
advertisement specifies the prim ary object w ith w hich the company
was form ed, and
( ii) in section 93 o f this A c t a reference to the articles o f the company
shall be deemed to be a reference to the constitution o f the
company.

(2) A n y condition requiring o r binding any applicant fo r shares or

debentures to waive compliance w ith any requirem ent o f this section, or
p urporting to affect him w ith notice o f any contract, document, or m atter n o t
specifically referred to in the prospectus, shall be void.
(5) In the event o f non-compliance w ith or contravention o f any o f the
requirements o f this section, a director or other person responsible fo r the
 Companies. 361

prospectus shall not incur any lia b ility by reason o f the non-compliance or
contravention, i f
(a) as regards any m atter not disclosed, he proves that he was not
cognizant thereof, or
( b) he proves th at the non-compliance or contravention arose fro m an
honest mistake o f fact on his part, or
(c) the non-compliance or contravention was in respect o f matters
w hich, in the opinion o f the C ourt dealing w ith the case, were
im m aterial or were otherwise such as ought, in the opinion o f
th at C ourt, having regard to a ll the circumstances o f the case,
reasonably to be excused :
Provided that in the event o f fa ilu re to include in a prospectus a state
ment w ith respect to the matters specified in clause (n) o f sub-section ( / ) o f
section 93, no director o r other person shall incur any lia b ility in respect o f
the fa ilu re unless it be proved that he had knowledge o f the matters not
disclosed.
(4) N o thin g in this section shall lim it or dim inish any lia b ility w hich any
person may incur under the general law o r this A c t, apart fro m this section.

m C . ( / ) I t shall not be la w fu l fo r any person to go fro m house to R e strictio n

on canvas
house offering shares o f a company incorporated outside the U nion o f Burma sin g
fo r subscription or purchase to the p u b lic or any member o f the public. fo r sale o f
shares.
(2) In this section the expression house shall n o t include an office
used fo r business purposes.
(3) A n y person acting in contravention o f this section shall be liable to a
fine n o t exceeding one hundred rupees.

277D. The provisions o f sections 109 to 117, both inclusive, and 120 to R e g istra tio n
o f charges.
125A, both inclusive, shall extend to charges on properties in the U nion o f
Burm a which are created and to charges on property in the U nion o f Burma
w hich is acquired after the 15th January, 1937,1 by a company incorporated
outside the U nion o f Burm a which has an established place o f business in the
U nion o f Burma.

277E. The provisions o f sections 118 and 119 shall mutatis mutandis N o tic e o f
a p p o in tm e n t
apply to the case o f a ll companies incorporated outside the U nion o f Burm a o f re c e iv e r.
b u t having an established place o f business in the U nion o f Burm a, and the
provisions o f section 130 shall apply to such companies to the extent o f
requiring them to keep at th e ir p rin cipa l place o f business in the U nion o f
B urm a the books o f account required by that section w ith respect to money
received and expended, sales and purchases made, and assets and lia b ilitie s in
re la tion to its business in the U nion o f Burma.

1 D a te o f com m encem ent o f the Indian Companies (Amendment) Act, 1936 (India Act X X II
1936).
 362 Companies

PART XA.

B a n k in g C o m p a n ie s .

D e fin itio n o f 277F. A banking company means a company which carries on as its
b a n kin g
com pany.
p rin cip a l business the accepting o f deposits o f money on current account or
otherwise, subject to w ithdraw al by cheque, d ra ft or order, notwithstanding
tha t it engages in addition in any one or more o f the fo llo w in g forms o f
business, namely :
( 1) the borrow ing, raising or taking up o f m oney; the lending or
advancing o f money either upon or w ith o u t s e c u rity ; the
draw ing, making, accepting, discounting, buying, selling,
collecting and dealing in b ills o f exchange, hundis, promissory
notes, coupons, drafts, b ills o f lading, railw ay receipts, warrants,
debentures, certificates, scrips and other instruments, and
securities whether transferable or negotiable or n o t ; the granting
and issuing o f letters o f credit, travellers cheques and
c ircu lar n o te s ; the buying, selling and dealing in b u llio n and
specie ; the buying and selling o f foreign exchange including
foreign bank notes ; the acquiring, holding, issuing on commission,
underw riting and dealing in stock, funds, shares, debentures,
debenture stock, bonds, obligations, securities and investments of
a ll kinds ; the purchasing and selling o f bonds, scrips or other
form s o f securities on behalf o f constituents o r o th e rs ; the
negotiating o f loans and advances ; the receiving o f a ll kinds of
bonds, scrips or valuables on deposit, or fo r safe custody or
otherwise ; the collecting and transm itting o f money and
securities;
(2) acting as agents fo r Governments or local authorities or fo r any
other person or persons ; the carrying on o f agency business o f
any description other than the business o f a managing agent,
inclu din g the power to act as attorneys and to give discharges
and re ceip ts;
( 3 ) contracting fo r p u b lic and private loans and negotiating and issuing
the same ;
( 4 ) the prom oting, effecting, insuring, guaranteeing, underw riting,
p articipating in managing and carrying out o f any issue, public
o r private, o f State, m unicipal or other loans, or o f shares,
stock, debentures, o r debenture stock o f any company, corpora
tio n o r association, and the lending o f money fo r the purpose o f
any such issue;
(5) carrying on and transacting every kin d o f guarantee and indem nity
business;
( 6) prom oting or financing o r assisting in prom oting or financing any
business undertaking or industry, either existing or new, and
developing or form ing the same either through the instrum ent
a lity o f syndicates or otherw ise;
 364 Companies.

business o f accepting deposits o f money on current account or otherwise,

subject to w ithdraw al by cheque, d ra ft or otherwise, along w ith some or a ll
o f the form s o f business specified in section 277F.
( 2) N o banking company, whether incorporated in or outside the U nion
o f Burm a, shall after the expiry o f tw o years fro m the said date carry on any
fo rm o f business other than those specified in section 2 7 7 F :
Provided that the President o f the U nion may, by notification in the
Gazette, specify in addition to the businesses set fo rth in clauses ( 1) to (17) o f
section 277F other form s o f business w hich it may be la w fu l under this section
fo r a banking company to engage in.

B a n k in g
277H. N o banking company shall after the expiry o f two years fro m the
co m p a n y 15th January, 1937,1 employ or be managed by a managing agent other
n o t to
e m p lo y
than a banking company fo r the management o f the company.
m anaging
agent.

R e s tric tio n
2771. N otw ithstanding anything contained in section 103, no banking
on com company incorporated under this A c t after the 15th January, 1937,1 shall
m encem ent
of business
commence business unless shares have been allotted to an am ount sufficient
b y b a n kin g to yield a sum of at least fifty thousand rupees as w orking capital, and unless
com pany. a declaration d u ly verified by an affidavit signed by the directors and the
manager that such a sum has been received by way o f paid-up capital has
been filed w ith the Registrar.

P ro h ib itio n 277J. N o banking company shall create any charge upon any unpaid
o f charge capital o f the com pany, and any such charge shall be invalid.
on unp aid
c a p ita l.
Reserve fu n d.
277K. ( / ) Every banking company shall, after the 15th January, 1937,1
m aintain a reserve fund.
( 2) Every banking company shall out o f the declared profits o f each
year, and before any dividend is declared, transfer a sum equivalent to not
less than twenty per cent, o f such profits to the reserve fund u n til the amount
o f the said fund is equal to the paid-up capital.
(3) A banking company shall invest the amount standing to the credit of
its reserve fund in [securities issued or guaranteed by the U nion Government],2
o r keep i t deposited in a special account to be opened by the company fo r
the purpose in a scheduled bank [o r in the U nion Bank o f Burm a ]:3
Provided that the provision o f the sub-section shall not apply to a
banking company incorporated before the 15th January, 1937,1 t ill after the
expiry o f two years fro m the said date.
3 (4) N othing in this section shall apply to a scheduled bank.
Penalties. 2 277L.I f default is made in com plying w ith the requirements o f
section 277G, section 277H, section 277J, section 277K or section 277M, every

1 Date o f com m en cem en t of the Indian C om panies (Amendment) Act, 1936 (India Act
X X II, 1936).
2 Substituted b y A ct IX , 1952.
3 Inserted ibid.
 Companies. 365

director or other officer of the company who is knowingly and wilfully a party
to the default shall be liable to a fine not exceeding five hundred rupees for
every day during which the default continues.

277M. A banking company shall not form or hold shares in any Restriction
on nature of
subsidiary company, except a subsidiary company of its own formed for the subsidiary
purpose of undertaking and executing trusts, undertaking the administration of com panies.
estates as executor, trustee or otherwise, and such other purposes set forth in
section 277F as are incidental to the business of accepting deposits of money
on current account or otherwise.

277N. ( /) The Court may, on the application of a banking company Pow er of

Court to stay
which is temporarily unable to meet its obligations, make an order staying the proceedings.
commencement or continuance of all actions and proceedings against the
company for a fixed period of time on such terms and conditions as it shall
think fit and proper, and may from time to time extend the period.
(2) No such application shall be m aintainable unless accompanied by a
report of the Registrar :
Provided, however, the Court may, for sufficient reasons, grant interim
relief even if the application is not accompanied by such report.
(3) The Registrar shall for the purposes of his report be entitled at the
cost of the company to investigate the financial condition of the company, and
for such purpose to have the books and documents of the company examined
by an accountant holding a certificate issued under section 144.

PA RT XI.

Su ppl e m e n t a l .

L egal proceedings, offences, etc.

278. (/) No Court inferior to that of a M agistrate of the first class shall Cognizance
of offences.
try any offence against this Act.
(2) * * * *
(3) Notwithstanding anything in the Code of Criminal Procedure, every
offence against this Act shall, for the purposes of the said Code, be deemed
to be non-cognizable.

279. The Court imposing any fine under this Act may direct that the A pplication
of fines.
whole or any part thereof be applied in or towards payment of the costs of
the proceedings, or in or towards the rewarding of the person on whose
information the fine is recovered.
280. Where a limited company is plaintiff or petitioner in any suit or Pow er to
require
other legal proceeding, any Court having jurisdiction in the matter may, if it lim ited
appears that there is reason to believe that the company will be unable to pay com pany to
give security
the costs of the defendant if successful in his defence, require sufficient security for costs.
to be given for those costs, and may stay all proceedings until the security is
given.
 366 Companies

Pow er of 281. (/) If, in any proceeding for negligence, default, breach of duty or
Court to
grant relief in breach of trust against a person to whom this section applies, it appears to the
certain cases. Court hearing the case that that person is or may be liable in respect of the
negligence, default, breach of duty or breach of trust, but that he has acted
honestly and reasonably, and that having regard to all the circumstances of the
case, including those connected with his appointment, he ought fairly to be
excused for the negligence, default, breach of duty or breach of trust, the
Court may relieve him, either wholly or partly, from his liability on such
terms as the Court may think fit.
(2) Where any person to whom this section applies has reason to
apprehend that any claim will or might be made against him in respect of any
negligence, default, breach of duty or breach of trust, he may apply to the
Court for relief, and the Court on any such application shall have the same
power to relieve him as under this section it would have had if it had been a
Court before which proceedings against that person for negligence, default,
breach of duty or breach of trust had been brought.
(3) The persons to whom this section applies are the following :
(a) directors of a company ;
( b ) managers and managing agents of a company ;
(c) officers of a company ;
(d) persons employed by a company as auditors, whether they are or
are not officers of the company.

282. Whoever in any return, report, certificate, balance-sheet or other

document, required by or for the purposes of any of the provisions of this
Act, wilfully makes a statem ent false in any m aterial particular, knowing it
to be false, shall be punishable with imprisonment of either description for a
term which may extend to three years, and shall also be liable to fine.
P en alty for 282A. Any director, managing agent, manager or other officer or
w rongful
w ithholding employee of a company who wrongfully obtains possession of any property of
of propetry. a company, or having any such property in his possession wrongfully w ith
holds it or wilfully applies it to purposes other than those expressed or directed
in the articles and authorized by this Act, shall, on the complaint of the
company or any creditor or contributory thereof, be punishable with fine not
exceeding one thousand rupees, and may be ordered by the Court trying the
offence to deliver up or refund, within a time to be fixed by the Court, any such
property improperly obtained or wrongfully withheld or wilfully misapplied,
or in default to suffer imprisonment for a period not exceeding two years.

Penalty for 282B. (I) All moneys or securities deposited with a company by its
m isapplica-
fion of secu employees in pursuance of their contracts of service with the company shall
rities by em be kept or deposited by the company in a special account to be opened by
ployers.
the company for the purpose in a scheduled bank, and no portion thereof
shall be utilized by the company except for the purposes agreed to in the
contract of service.
 Companies. 367

( 2) Where a provident fund has been constituted by a company fo r its

employees or any class o f its employees, a ll moneys contributed to such fund
(whether by the company or by the employees) or accruing by way o f interest
o r otherwise to such fund after the 15th January, 1937,1 [shall be either
deposited in a Post Office Savings Bank Account or invested ] 2 in securities
mentioned or referred to in clauses (a) to (e) o f section 20 o f the Trusts A ct,
and a ll moneys belonging to such fund at the said date [w hich are not so
deposited or invested shall be so deposited or invested] 3 in such securities by
annual instalments not exceeding ten in number and not less in am ount in
any year than one-tenth o f the whole am ount o f such moneys.
(S) N otw ithstanding anything to the contrary in the rules o f any fund to
w hich sub-section (2) applies or in any contract between a company and its
employees, no employee shall be entitled to receive, in respect o f such p o rtio n
o f the am ount to his credit in such fund as is invested in accordance w ith the
provisions o f sub-section ( 2), interest at a rate exceeding the rate o f interest
yielded by such investment.
(4) A n employee shall be entitled, on request made in this behalf to the
company, to see the bank s receipt fo r any money or security such as is
referred to in sub-section (7) and sub-section (2).
(5) A n y director, managing agent, manager or other officer o f the
company who know ingly contravenes or perm its or authorizes the contraven
tio n o f the provisions o f this section shall be liable on conviction to a fine
n ot exceeding five hundred rupees.

283. I f any person or persons trade or carry on business under any P enalty fo r
im p ro p e r
name or title o f w hich L im ite d is the last word, that person or those use o f w o rd
persons shall, unless d uly incorporated w ith lim ite d lia b ility , be liable to a L im ite d ."
fine n o t exceeding fifty rupees fo r every day upon which that name or title
has been used.

284. The provisions o f this A c t w ith respect to winding up shall not Saving o f
pending pro
a pply to any com pany o f w hich the w inding up has commenced before the ceedings lo r
commencement o f this A c t, but every such company shall be w cund up in w in d in g up.
the same manner and w ith the same incidents as if this A c t had not been
India passed, and, fo r the purposes o f the w inding up, the In d ia n Companies A ct,
V I, 1882. 1882, shall be deemed to rem ain in fu ll force.

285. Every instrum ent o f transfer or other document made before the S a vin g o f
docum ents.
commencement o f this A c t, in pursuance o f any enactment hereby repealed,
shall be o f the same force as i f this A c t had not been passed, and fo r the
purposes o f that instrum ent or document the repealed enactment shall be
deemed to rem ain in f u ll force.

1 Date o f com mencement o f the Indian Com panies (Am endm ent) Act, 1936 (India Act X X I I ,
1936).
3 Substituted by A c t X X V II, 1950.
 368 Companies.

F o rm e r 286.. ( ! ) The offices existing at the commencement o f this A c t fo r

re g is tra tio n registration o f join t-stock companies shall be continued as i f they had been
offices,
re g is te rs and established under this A ct.
R e g istra rs (2) Registers o f companies kept in any such existing offices shall
co n tin ue d .
respectively be deemed p a rt o f the registers o f companies to be kept under
this A ct.
(3) The existing Registrars, assistant Registrars and officers in those
offices shall, during the pleasure o f the President o f the U nion, hold the offices
and receive the salaries hithe rto held and received by them, but subject to any
regulations o f the President o f the U nion w ith regard to the execution of their
duties.

Savings fo r
287. N othing in this A c t shall affect the provisions o f the L ife Assurance
L ife Companies A c t or o f the Provident Insurance Societies A ct.
Assurance
Com panies
A c t and
P ro v id e n t
In s u ra n c e
Societies A c t. SCHEDULES.
T H E F IR S T S C H E D U LE .

(See sections 2, 17, 18, 79, 266.)

TA B LE A.

R e g u l a t io n s fo r M anagement of a C ompany l im it e d by Sh a r e s .

Preliminary.
1. In these regulations, unless the context otherwise requires, expressions
defined in the Burm a Companies A c t, or any statutory m odification thereof
in force at the date at which these regulations become binding on the
company, shall have the meanings so defined ; and words im porting the
singular shall include the p lu ra l, and vice versa, and words im porting the
masculine gender shall include females, and words im porting persons shall
include bodies corporate.
Business.
2. The directors shall have regard to the restrictions on the commence
m ent o f business imposed by section 103 o f the Burm a Companies A c t, if,
and so fa r as, those restrictions are binding upon the company.

Shares.
3. Subject to the provisions, i f any, in that behalf o f the memorandum
o f association o f the company, and w ith o u t prejudice to any special rights
previously conferred on the holders o f existing shares in the company, any
share in the company m ay be issued w ith such preferred, deferred or other
special rights, or such restrictions, whether in regard to dividend, voting,
return o f share capital, or otherwise, as the company may fro m tim e to time
by special resolution determine, and any preference share may w ith the
 Companies 369

sanction o f a special resolution be issued on the terms th a t it is or at the

op tio n o f the company is lia b le to be redeemed.
4- I f at any tim e the share capital is divided in to different classes o f
shares, the rights attached to any class (unless otherwise provided by the terms
o f issue o f the shares o f that class) may, subject to the provisions o f section
66A o f the Burm a Companies A ct, be varied w ith the consent in w ritin g o f
the holders o f three-fourths o f the issued shares o f that class, or w ith the
sanction o f an extraordinary resolution passed at a separate general meeting
o f the holders o f the shares o f the class. To every such separate general
meeting the provisions o f these regulations relating to general meetings shall
mutatis mutandis apply, b u t so th at the necessary quorum shall be two persons
at least holding or representing by proxy one-third o f the issued shares o f the
class.
5. N o share shall be offered to the public fo r subscription except upon
the terms that the amount payable on application shall be at least five per
cent, o f the nom inal am ount o f the share; and the directors shall, as regards
any allotm ent o f shares, d uly com ply w ith such o f the provisions o f sections
101 and 104 o f the Burm a Companies A c t as may be applicable thereto.
6 . Every person whose name is entered as a member in the register of
members shall, w ith o u t payment, be entitled to a certificate under the
common seal o f the company specifying the share or shares held by him and
the amount paid up thereon : Provided that, in respect o f a share or shares held
jo in tly by several persons the company shall n o t be bound to issue more than
one certificate, and delivery o f a certificate fo r a share to one o f several jo in t-
holders shall be sufficient delivery to all.
7. I f a share certificate is defaced, lost or destroyed, it may be renewed
on payment o f such fee, i f any, not exceeding eight annas, and on such terms,
i f any, as to evidence and indem nity as the directors th in k fit.
8 . Except to the extent allowed by section 54A o f the Burm a Companies
A c t, no p a rt o f the funds o f the company shall be employed in the purchase
o f, or in loans upon the security of, the companys shares.

Lien.
9. The company shall have a lien on every share (not being a fu lly-p a id
share) fo r a ll moneys (whether presently payable or not) called or payable at
a fixed time in respect o f that share, and the company shall also have a lien
on a ll shares (other than fu lly -p a id shares) standing registered in the name o f
a single person fo r a ll moneys presently payable by him or his estate to the
com pany; but the directors may at any tim e declare any share to be w holly
or in part exempt fro m the provisions o f this clause. The companys lien, if
any, on a share shall extend to a ll dividends payable thereon.
10. The company may sell, in such manner as the directors th in k fit, any
shares on which the company has a lien, but no sale shall be made unless
some sum in respect o f w hich the lien exists is presently payable, nor u n til the
expiration o f fourteen days after a notice in w ritin g , stating and demanding

24
370 Companies-

payment of such part of the amount in respect of which the lien exists as is
presently payable, has been given to the registered holder for the time being of
the share, or the person entitled by reason of his death or insolvency to the
share.
11. The proceeds of the sale shall be applied in payment of such part of
the amount in respect of which the lien exists as is presently payable, and the
residue shall (subject to a like lien for sums not presently payable as existed
upon the shares prior to the sale) be paid to the person entitled to the shares
at the date of the sale. The purchaser shall be registered as the holder of the
shares, and he shall not be bound to see to the application of the purchase-
money, nor shall his title to the shares be affected by any irregularity or invalidity
in the proceedings in reference to the sale.

Calls on Shares-
12. The directors may from time to time make calls upon the members in
respect of any moneys unpaid on their shares, provided that no call shall exceed
one-fourth of the nominal amount of the share, or be payable at less than one
month from the last c a ll ; and each member shall (subject to receiving at least
fourteen days notice specifying the time or times of payments) pay to the
company at the time or times so specified the amount called on his shares.
13- The joint-holders of a share shall be jointly and severally liable to
pay all calls in respect thereof.
14. If a sum called in respect of a share is not paid before or on the
day appointed for payment thereof, the person from whom the sum is due
shall pay interest upon the sum at the rate of five per cent, per annum from
the day appointed for the payment thereof to the time of the actual payment,
but the directors shall be at liberty to waive payment of that interest wholly
or in part.
15. The provisions of these regulations as to payment of interest shall
apply in the case of non-payment of any sum which, by the terms of issue of
a share, becomes payable at a fixed time, whether on account of the amount
of the share or by way of premium, as if the same had become payable by
virtue of a call duly made and notified.
16. The directors may make arrangements on the issue of shares for a
difference between the holders in the amount of calls to be paid and in the
tiines of payment.
17. The directors may, if they think fit, receive from any member
willing to advance the same all or any part of the moneys uncalled and
unpaid upon any shares held by him ; and upon all or any of the moneys so
advanced may (until the same would, but for such advance, become presently
payable) pay interest at such rate (not exceeding, without the sanction of the
company in general meeting, six per cent.) as may be agreed upon between
the member paying the sum in advance and the directors.
 Companies. 371

Transfer and Transmission o f Shares-

18. The instrum ent o f transfer o f any share in the company shall be
executed both by the transferor and transferee, and the transferor shall be
deemed to remain holder o f the share u n til the name o f the transferee is
entered in the register o f members in respect thereof.
19. Shares in the company shall be transferred in the fo llo w in g form , 05 ,
in any usual or common fo rm which the directors shall approve :
I, A B o f , in consideration o f the sum o f rupees
paid to me by C D o f (hereinafter called the said trans
feree ), do hereby transfer to the said transferee the share [or shares] num
bered in the undertaking called the Company, L im ited,
to hold unto the said transferee, his executors, adm inistrators and assigns,
subject to the several conditions on which I held the same at the tim e o f the
execution thereof, and I, the said transferee, do hereby agree to take the said
share [or shares] subject to the conditions aforesaid. As witness our hands
the day of
Witness to the signatures of, etc.

20. The directors may decline to register any transfer of shares, not being
fu lly paid shares, to a person o f whom they do not approve, and may also
decline to register any transfer o f shares on which the company has a lien.
The directors may also suspend the registration o f transfers during the fourteen
days im m ediately preceding the ordinary general meeting in each year. The
directors may decline to recognize any instrum ent o f transfer unless
(a) a fee not exceeding two rupees is paid to the company in respect
thereof ; and
(h) the instrum ent o f transfer is accompanied by the certificate o f the
shares to which it relates, and such other evidence as the
directors may reasonably require to show the rig h t o f the
transferor to make the transfer.
I f the directors refuse to register a transfer o f any shares, they shall
w ith in two months after the date on which the transfer was lodged w ith the
company send to the transferee and the transferor notice of the refusal.

21. The executors or adm inistrators o f a deceased sole holder o f a

share shall be the only persons recognized by the company as having any title
to the share. In the case o f a share registered in the names o f two or more
holders, the survivors or survivor, or the executors or adm inistrators o f the
deceased survivor, shall be the o nly persons recognized by the company as
having any title to the share.

22. A n y person becoming entitled to a share in consequence o f the death

o r insolvency o f a member shall, upon such evidence being produced as may
fro m tim e to time be required by the directors, have the rig h t either to be
registered as a member in respect o f the share or, instead o f being registered
him self, to make such transfer o f the share as the deceased or insolvent person
37 1 Companies.

could have made ; b u t the directors shall, in either case, have the same right
to decline or suspend registration as they w ould have had in the case o f a
transfer o f the share by the deceased or insolvent person before the death or
insolvency.

23. A person becoming entitled to a share by reason o f the death or

insolvency o f the holder shall be entitled to the same dividends and other
advantages to w hich he w ould be entitled if he were the registered holder o f the
share, except th at he shall not, before being registered as a member in respect
o f the share, be entitled in respect o f it to exercise any rig h t conferred by
membership in relation to meetings o f the company.

Forfeiture o f Shares.

24. I f a member fa ils to pay any ca ll or instalm ent o f a ca ll on the day

appointed fo r payment thereof, the directors may, at any tim e thereafter
during such tim e as any p a rt o f such call or instalm ent remains unpaid, serve
a notice on him requiring payment o f so much o f the ca ll or instalm ent as is
unpaid, together w ith any interest which may have accrued.
. 25. The notice shall name a fu rth e r day (not earlier than the expiration
o f fourteen days fro m the date o f the notice) on or before which the payment
required by the notice is to be made, and shall state that, in the event o f
non-paym ent at o r before the tim e appointed, the shares in respect o f which
the c a ll was made w ill be lia ble to be forfeited.
26. I f the requirements o f any such notice as aforesaid are not com plied
w ith , any share in respect o f which the notice has been given may at any
tim e thereafter, bsfore the payment required by the notice has been made, be
forfeited by a resolution o f the directors to that effect.

27- A forfeited share may be sold or otherwise disposed o f on such terms

and in such manner as the directors th in k fit; and at any tim e before a sale
o r disposition the fo rfe iture may be cancelled on such terms as the directors
th in k fit.
28. A person whose shares have been forfeited shall cease to be a
member in respect o f the forfeited shares, b u t shall, notwithstanding, remain
lia ble to pay to the company a ll moneys which, at the date o f forfeiture, were
presently payable by him to the company in respect o f the shares, but his
lia b ility shall cease i f and when the company received payment in fu ll o f the
npm inal am ount o f the shares.

29. A d uly verified declaration in w ritin g that the declarant is a director

o f the company, and that a share in the company has been duly forfeited' on
a date stated in the declaration, shall be conclusive evidence o f the facts
thereto stated as against a ll persons claim ing to be entitled to the share, and
that declaration, and the receipt o f the company fo r the consideration, i f any,
given fo r the share on the sale or disposition thereof, shall constitute a good
title to the share, and the person to whom the share is sold or disposed o f
 Companies. 373

shall be registered as the holder o f the share and shall not be bound to see
to the application o f the purchase-money ( if any), nor shall his title to the
share be affected by any irre g u la rity o r in v a lid ity in the proceedings in
reference to the fo rfe itu re , sale or disposal o f the share.

30. The provisions o f these regulations as to fo rfe itu re shall apply in the
case o f non-paym ent o f any sum which, by the terms o f issue o f a share,
becomes payable at a fixed tim e, whether on account o f the amount o f the
share or by way o f prem ium , as if the same had been payable by virtue o f a
call duly made and notified.

Conversion o f Shares into Stock.

31. The directors may, w ith the sanction o f the company previously
given in general meeting, convert any paid-up shares into stock, and may
w ith the lik e sanction re-convert any stock in to paid-up shares o f any
denom ination.

32. The holders o f stock may transfer the same, or any part thereof, in
the same manner, and subject to the same regulations, as and subject to which
the shares fro m w hich the stock arose m ight previously to conversion have
been transferred, or as near thereto as circumstances adm it ; but the directors
m ay fro m tim e to tim e fix the m inim um amount o f stock transferable, and
restrict or fo rb id the transfer o f fractions of th a t m inim um , b u t the m inim um
shall not exceed the nom inal amount o f the shares fro m which the stock arose.

33. The holders o f stock shall, according to the am ount o f the stock
held by them, have the same rights, privileges and advantages as regards
dividends, voting at meetings o f the company, and other matters, as i f they held
the shares fro m which the stock arose, but no such privilege or advantage
(except particip atio n in the dividends and profits o f the company) shall be
conferred by any such a liq u o t part o f stock as w ould not, i f existing in shares,
have conferred th at privilege or advantage.

34- Such o f the regulations o f the company (other than those relating
to share-warrants), as are applicable to paid-up shares shall apply to stock, and
the words share and shareholder therein shall include stock and
stockholder.

Share-warrants.

35- The company may issue share-warrants, and accordingly the

directors may in th e ir discretion, w ith respect to any share which is fu lly
paid up, on application in w ritin g signed by the person registered as holder o f
the share, and authenticated by such evidence ( if any) as the directors m ay
fro m tim e to tim e require as to the id e n tity o f the person signing the request*
and on receiving the certificate ( if any) o f the share, and the am ount o f the
stamp duty on the w arrant and such fee as the directors may fro m tim e to
tim e require, issue under the company s seal a w arrant, duly stamped, stating
374 Companies-

that the bearer o f the w arrant is entitled to the shares therein specified, and
may provide by coupons or otherwise fo r the payment o f dividends or other
moneys on the shares included in the warrant.
36- A share-warrant shall entitle the bearer to the shares included in it
and the shares shall be transferred by the delivery o f the share-w arrant, ad
the provisions o f the regulations o f the company w ith respect to transfer and
transmission o f shares shall not apply thereto.

37. The bearer o f a share-warrant shall, on surrender o f the w arrant to

the company fo r cancellation, and on payment o f such sum as the directors
may from tim e to tim e prescribe, be entitled to have his name entered as a
member in the register o f members in respect o f the shares included in the
w arrant.

38. The bearer o f a share-warrant may at any tim e deposit the w arrant
at the office o f the company, and so long as the w arrant remains so deposited,
the depositor shall have the same rig h t o f signing a requisition fo r calling a
meeting o f the company, and o f attending and voting and exercising the other
privileges o f a member at any meeting held after the expiration o f two clear
days fro m the tim e o f deposit, as i f his name were inserted in the register of
members as the holder o f the shares included in the deposited warrant. N o t
more than one person shall be recognised as depositor o f the share-warrant.
The company shall, on two days w ritten notice, return the deposited share-
w arrant to the depositor.
39. Subject as herein otherwise expressly provided, no person shall, as
bearer o f a share-warrant, sign a requisition fo r calling a meeting o f the com
pany, or attend, or vote or exercise any other privilege o f a member at a meeting
o f the company, or be entitled to receive any notices fro m the company ; but
the bearer o f a share-warrant shall be entitled in all other respects to the same
privileges and advantages as i f he were named in the register o f members as
the holder o f the shares included in the w arrant, and he shall be a member
o f the company.
40. The directors may fro m tim e to tim e make rules as to the terms on
w hich ( if they shall th in k fit) a new share-warrant or coupon may be issued
by way o f renewal in case o f defacement, loss or destruction.

Alteration o f Capital-

41. The directors may, w ith the sanction o f the company in general
meeting, increase the share capital by such sum, to be divided into shares
o f such amount, as the resolution shall prescribe.
42. Subject to any direction to the contrary that may be given by the
resolution sanctioning the increase o f share capital, all new shares shall, before
issue, be offered to such persons as at the date o f the offer are entitled to receive
notices fro m the company o f general meetings in proportion, as nearly as the
circumstances adm it, to the amount o f the existing shares to which they are
entitled. The offer shall be made by notice specifying the number o f shares
 Companies- 375

offered, and lim itin g a tim e w ith in w hich the offer, i f not accepted, w ill be
deemed to be declined, and after the expiration o f that tim e, or on the receipt
o f an in tim atio n from the person to whom the offer is made that he declines
to accept the shares offered, the directors may dispose o f the same in such
manner as they th in k most beneficial to the company. The directors may
likewise so dispose o f any new shares w hich (by reason of the ra tio which the
new shares bear to shares held by persons entitled to an offer o f new shares)
cannot, in the opinion o f the directors, be conveniently offered under this
article.
43. The new shares shall be subject to the same provisions w ith reference
is the payment o f calls, lien, transfer, transmission, fo rfe itu re and otherwise
at the shares in the o rig in al share capital.
44. The company may, by ordin ary resolution,
(a) consolidate and divide its share capital into shares o f larger amount
than its existing shares ;
( b ) by sub-division o f its existing shares or any o f them, divide the whole
or any part of its share capital into shares o f smaller amount
than is fixed by the memorandum o f association, subject, never
theless, to the provisions o f paragraph ( d) o f sub-section ( / ) o f
section 50 o f the Burm a Companies A c t ;
(c) cancel any shares which, at the date o f the passing o f the resolu
tion, have not been taken or agreed to be taken by any person.
44A. The company may, by special resolution, reduce its share capital
on any manner, and w ith and subject to any incident authorized and consent
required by law.

General Meetings.

45. The statutory general meeting o f the company shall be held w ithin
the period required by section 77 o f the Burm a Companies A ct.
46. A general meeting shall be held w ith in eighteen months from the
date o f its incorporation and thereafter once at least in every year at such
tim e (not being more then fifteen months after the holding of the last preced
ing general meeting) and place as may be prescribed by the company in
general meeting, or, in default, at such tim e in the m onth fo llo w in g that in
which the anniversary o f the companys incorporation occurs, and at such place
as the directors shall appoint. In default o f a general meeting being so held,
a general meeting shall be held in the m onth next follow ing, and may be c a ll
ed by any tw o members in the same manner, as nearly as possible, as that in
which meetings are to be called by the directors.

47- The above-mentioned general meetings shall be called ordinary

meetings ; a ll other general meetings shall be called extraordinary.
48. The directors may, whenever they th in k fit, call an extraordinary
general meeting, and extraordinary general meetings shall also be called on
such requisition, or in default may be called by such requisitionists, as provided
376 Companies.

by section 78 o f the Burm a Companies A ct. I f at any tim e there are not
w ith in the U nion o f Burm a sufficient directors capable o f action to fo rm a
quorum , any director or any two members o f the company may call an extra
o rdinary general meeting in the same manner, as nearly as possible, as that
in w hich meeting may be called by the directors.

Proceedings at General Meeting.

49. Subject to the provisions o f sub-section ( 2) o f section 81 o f the

B urm a Companies A c t relating to special resolutions, fourteen days notice at
the least (exclusive o f the day on which the notice is served or deemed to be
served, b u t inclusive o f the day fo r which notice is given) specifying the place,
the day and the hour o f meeting and, in case o f special business, the general
nature o f tha t business, shall be given in manner hereinafter mentioned, or in
such other manner, i f any, as may be prescribed by the company in general
meeting, to such persons as are, under the Burm a Companies A c t or the
regulations o f the company, entitled to receive such notices from the company ;
but the accidental omission to give notice to or the non-receipt o f notice by
any member shall not invalidate the proceedings at any general meeting.
50- A ll business shall be deemed special that is transacted at an extra
ordinary meeting, and a ll that is transacted at an ordinary meeting w ith the
exception o f sanctioning a dividend, the consideration o f the accounts,
balance-sheets and the ordinary report o f the directors and auditors, the
election o f directors and other officers in the place o f those re tirin g by
ro tatio n, and the fixing o f the rem uneration o f the auditors.
51- N o business shall be transacted at any general meeting unless a
quorum o f members is present at the tim e when the meeting proceeds to
business; save as herein otherwise provided, two members in the case o f a
private company and five members in the case o f any other company person
a lly present shall be a quorum .
52. I f w ith in h a lf an hour fro m the tim e appointed fo r the meeting a
quorum is not present, the meeting, i f called upon the requisition o f members,
shall be dissolved ; in any other case, it shall stand adjourned to the same
day in the next week at the same tim e and place, and, i f at the adjourned
meeting a quorum is not present w ith in h a lf an hour fro m the tim e appointed
fo r the meeting, the members present shall be a quorum .
53. The chairm an, i f any, o f the board o f directors shall preside as
chairm an at every general meeting o f the company.
54. I f there is no such chairm an, or if at any meeting he is not present
w ith in fifteen minutes after the tim e appointed fo r holding the meeting, or is
u n w illin g to act as chairm an, the members present shall choose some one o f
th e ir number to be chairman.
55- The chairm an may, w ith the consent o f any meeting at which a
quorum is present (and shall i f so directed by the meeting), adjourn the meet
ing fro m tim e to tim e and fro m place to place, b u t no business shall be
transacted at any adjourned meeting other than the business le ft unfinished
 Companies. 377

at the meeting from which the adjournm ent took place. When a meeting is
adjourned for ten days or more, notice of the adjourned meeting shall be
given as in the case of an original meeting. Save as aforesaid, it shall not be
necessary to give any notice of an adjournment or of the businees to be
transacted at an adjourned meeting.
56. A t any general meeting a resolution put to the vote of the meeting
shall be decided on a show of hands, unless a poll is (before or on the decla
ration of the show of hands) demanded by at least three members, and unless
a poll is so demanded, a declaration by the chairman that a resolution has, on
a show of hands, been carried, or carried unanimously, or by a particular
majority, or lost, and an entry to that effect in the book of the proceedings
of the company, shall be conclusive evidence of the fact, without proof of the
number or proportion of the votes recorded in favour of, or against, that
resolution.
57. If a poll is duly demanded, it shall be taken in such manner as the
chairman directs, and the result of the poll shall be deemed to be the resolu
tion of the meeting at which the poll was demanded.
58. In the case of an equality of votes, whether on a show of hands or
on a poll, the chairman of the meeting at which the show of hands takes
place, or at which the poll is demanded, shall be entitled to a second or
casting vote.
59. A poll demanded on the election of a chairman or on a question of
adjournment shall be taken forthwith. A poll demanded on any other
question shall be taken at such time as the chairman of the meeting directs.

V o te s of M em bers.

60. On a show of hands every member present in person shall have one
vote. On a poll every member shall have one vote in respect of each share
or each hundred rupees of stock held by him.
61. In the case of joint-holders, the vote of the senior who tenders a
vote, whether in person or by proxy, shall be accepted to the exclusion of the
votes of the other joint-holders ; and for this purpose seniority shall be deter
mined by the order in which the names stand in the register of members.
62. A member of unsound mind, or in respect of whom an order has
been made by any Court having jurisdiction in lunacy, may vote, whether on
a show of hands or on a poll, by his committee or other legal guardian, and
any such committee or guardian may, on a poll, vote by proxy.
63. No member shall be entitled to vote at any general meeting unless
all calls or other sums presently payable by him in respect of shares in the
company have been paid.
64. On a poll votes may be given either personally or by p roxy: Pro
vided that no company shall vote by proxy as long as a resolution of its
directors in accordance with the provisions of section 80 of the Burma Com
panies Act is in force.
378 Companies.

65. The instrum ent appointing a proxy shall be in w ritin g under the
hand of the appoin tor or o f his attorney duly authorized in w riting, or, if the
appointor is a corporation, either under the common seal, or under the hand
o f an officer or attorney so authorized. No person shall act as a proxy
unless he is a member o f the company.
66. The instrum ent appointing a proxy, and the pow er-of-attorney or
other a u th ority ( if any) under w hich it is signed, or a n o ta ria lly certified copy
o f that power or a u tho rity, shall be deposited at the registered office o f the
company not less than seventy-two hours before the tim e fo r holding the
meeting at which the person named in the instrum ent proposes to vote, and in
default the instrum ent o f proxy shall not be treated as valid.
67. A n instrum ent appointing a proxy may be in the fo llo w in g form , or
in any other fo rm which the directors shall approve :
Company, Lim ited-
I of in the district of , being a
member of the Company, L im ite d , hereby appoint
of as m y proxy to vote fo r me and on m y behalf at the ^ordinary
or extraordinary, as the case may be,) general meeting of the company to be
held on the day o f and at any adjournm ent thereof.
Signed this day o f

Directors-
68 . The num ber o f the directors and the names o f the first directors
shall be determined in w ritin g by a m a jo rity o f the subscribers of the memo
randum o f association.
69. The rem uneration o f the directors shall from tim e to tim e be deter
mined by the company in general meeting.
70. The qualification o f a director shall be the holding of at least one
share in the company, and it shall be his duty to com ply w ith the provisions
o f section 85 o f the Burm a Companies A ct.

Powers and Duties o f Directors-

71. The business of the company shall be managed by the directors, who
may pay a ll expenses incurred in getting up and registering the company, and
may exercise a ll such powers o f the company as are not, by the Burm a Com
panies A c t or any statutory m odification thereof fo r the time being in force,
or by these articles, required to be exercised by the company in general
meeting, subject nevertheless to any regulation o f these articles, to the pro
visions o f the said A c t, and to such regulations, being not inconsistent w ith
the aforesaid regulations or provisions, as may be prescribed by the company
in general m e e tin g ; b u t no regulation made by the company in general
meeting shall invalidate any p rio r act o f the directors which w ould have been
valid if that regulation had not been made.
 Companies 379

72. The directors may fro m tim e to tim e appoint one or more o f their
body to the office o f managing director or manager fo r such term, and at
such remuneration (whether by way o f salary, or commission, or participation
in profits, or p a rtly in one way and partly in another), as they may th in k fit,
and a director so appointed shall not, w hile holding that office, be subject to
retirem ent by rotatio n, or taken in to account in determ ining the rotation o f
retirem ent o f directors, but his appointment shall be subject to determ ination
ipso facto if he ceases fro m any cause to be a director, or if the company in
general meeting resolve that his tenure of the office o f managing director or
manager be determined.

73. The am ount fo r the tim e being rem aining undischarged of moneys
borrowed or raised by the directors fo r the purposes of the company (other
wise than by the issue o f share capital) shall not at any tim e exceed the issued
share capital o f the company w ith o u t the sanction o f the company in general
meeting.

74. The directors shall duly com ply w ith the provisions o f the Burma
Companies A c t or any statutory m odification thereof fo r the time being in
force, and in p articu la r w ith the provisions in regard to the registration o f the
particulars of mortgages and charges affecting the property o f the company or
created by it, and to keeping a register o f the directors, and to sending to the
Registrar an annual lis t o f members, and a summary o f particulars relating
thereto, and notice o f any consolidation or increase o f share capital, or con
version o f shares into stock, and copies o f special resolutions and a copy of
the register o f directors and notifications o f any changes therein.

75. The directors shall cause minutes to be made in books provided fo r

the purpose
(a) o f all appointments o f officers made by the directors ;
( b ) o f the names o f the directors present at each meeting o f the
directors and o f any comm ittee of the directors ;
(c) o f all resolutions and proceedings at a ll meetings o f the company
and o f the directors and o f committees o f directors ;

and every director present at any meeting o f directors or committee o f directors

shall sign his name in a book to be kept fo r that purpose.

The Seal.

76. The seal o f the company shall not be affixed to any instrum ent
except by the a u th o rity o f a resolution o f the board o f directors, and in the
presence o f at least two directors and o f the secretary or such other person as
the directors may appoint fo r the purpose ; and those two directors and
secretary or other person as aforesaid shall sign every instrum ent to which the
seal o f the company is so affixed in their presence.
 380 Companies-

Disqualifications of Directors.

77. The office o f director shall be vacated if the director

(a) fails to obtain w ith in the tim e specified in sub-section ( / ) of
section 84 o f the Burm a Companies A c t, or at any tim e there
after ceases to hold, the share qualification, i f any, necessary
fo r his a p p oin tm e n t; or
( b ) is found to be o f unsound m ind by a C ourt o f competent ju ris d ic
tio n ; or
(c) is adjudged in s o lv e n t; or
(d) fails to pay calls made on him in respect o f shares held by him
w ith in six months fro m the date o f such calls being m a d e ; or
(e) w itho ut the sanction o f the company in general meeting accepts or
holds any office o f p ro fit under the company other than that o f
a managing director or manager or a legal or technical adviser
or a banker ; or
( / ) absents him self fro m three consecutive meetings o f the directors
or fro m a ll meetings o f the directors fo r a continuous period o f
three months, whichever is longer, w ith o u t leave o f absence
fro m the board o f directors ; or
( g) accepts a loan from the company ; or
(h) is concerned or participates in the profits o f any contract w ith the
com pa ny; or
(/) is punished w ith im prisonm ent fo r a term exceeding six months ;
Provided, however, th at no director shall vacate his office by reason o f
his being a member o f any company which has entered in to contracts w ith,
o r done any w ork fo r, the company o f which he is director, but a director shall
not vote in respect o f any such contract or w ork, and if he does so vote, his
vote shall not be counted.

Rotation of Directors.

78. A t the first ordinary meeting o f the company, the whole o f the
directors shall retire fro m office, and at the ordinary meeting in every sub
sequent year one-third o f the directors fo r the tim e being or, i f their
number is not three or a m u ltip le o f three, then the number nearest to one-
th ird shall retire fro m office.

79. The directors to retire in every year shall be those who have been
longest in office since their last election, but as between persons who became
directors on the same day those to retire shall (unless they otherwise agree
among themselves) be determined by lo t.

80. A re tirin g director shall be eligible fo r re-election.

81. The company at the general meeting at which a director retires in
manner aforesaid may f ill up the vacated office by electing a person thereto.
 Companies. 381

82. I f at any meeting at w hich an election o f directors ought to take

place the places o f the vacating directors are not fille d up, the meeting shall
stand adjourned t i l l the same day in the next week at the same tim e and
place, and, i f at the adjourned meeting the places o f the vacating directors
are not filled up, the vacating directors or such o f them as have not had
th eir places fille d up shall be deemed to have been re-elected at the adjourned
meeting.

83. Subject to the provisions o f sections 83A and 83B o f the Burma
Companies A c t, the company may from tim e to tim e in general meeting
increase or reduce the number o f directors, and may also determine in what
ro ta tio n the increased or reduced number is to go out o f office.

84. A n y casual vacancy occurring on the board of directors may be

fille d up by the directors, but the person so chosen shall be subject to retire
ment at the same tim e as if he had become a director on the day on which
the director in whose place he is appointed was last elected a director.

85. The directors shall have power at any tim e, and fro m tim e to tim e, to
appoint a person as an addition al director who shall retire from office at the
next fo llo w in g ordinary general meeting, but shall be eligible fo r election by
the company at that meeting as an additional director.

86 - The company may by extraordinary resolution remove any director

before the expiration o f his period o f office, and may by an ordinary resolu
tio n appoint another person in his stead ; the person so appointed shall be
subject to retirem ent at the same tim e as i f he had become a director on the
day on which the director in whose place he is appointed was last elected a
director.

Proceedings o f Directors.

87. The directors may meet together fo r the despatch o f business,

adjourn and otherwise regulate th e ir meetings, as they th in k fit. Questions
arising at any meeting shall be decided by a m a jo rity o f votes. In case o f
an equality o f votes, the chairm an shall have a second or casting vote. A
director may, and the secretary on the requisition o f a director shall, at any
tim e, summon a meeting o f directors.

88. The quorum necessary fo r the transaction o f the business o f the

directors may be fixed by the directors, and unless so fixed shall (when the
number o f directors exceeds three) be three.

89. The continuing directors may act notw ithstanding any vacancy in
th e ir body, but, i f and so long'as th eir number is reduced below the number
fixed by or pursuant to the regulations o f the company as the necessary
quorum o f directors, the continuing directors may act fo r the purpose o f
382 Companies.

increasing the number o f directors to that number, or o f summoning a general

meeting o f the company, but fo r no other purpose.
90. The directors may elect a chairman o f th e ir meetings and determine
the period fo r which he is to hold office ; but if no such chairman is elected,
or i f at any meeting the chairman is not present w ith in five minutes after
the tim e appointed fo r holding the same, the directors present may choose
one o f th eir number to be chairm an o f the meeting.
91- The directors may delegate any o f their powers to committees
consisting o f such member or members o f their body as they th in k f i t ; any
committee so form ed shall, in the exercise o f the powers so delegated,
conform to any regulations th a t may be imposed on them by the directors.
92. A comm ittee may elect a chairman o f their m eetings; i f no such
chairm an is elected, or if at any meeting the chairman is not present w ith in
five minutes after the tim e appointed fo r holding the same, the members
present may choose one o f th eir number to be chairman o f the meeting.

93. A committee may meet and adjourn as they th in k proper.

Questions arising at any meeting shall be determined by a m a jo rity of
votes o f the members present, and, in case o f an equality o f votes, the
chairm an shall have a second or casting vote.

94. A ll acts done by any meeting o f the directors or o f a committee o f

directors, or by any person acting as a director, shall, notwithstanding that
it be afterwards discovered that there was some defect in the appointment of
any such directors or persons acting as aforesaid, or that they or any of them
were disqualified, be as valid as i f every such person had been duly appointed
and was qualified to be a d irector.

Dividends and Reserve.

95. The company in general meeting may declare dividends, b u t

no dividends shall exceed the amount recommended by the directors.

96. The directors may fro m tim e to tim e pay to the members such
inte rim dividends as appear to the directors to be justified by the profits of
the company.

97. N o dividends shall be paid otherwise than out o f profits o f the year
or any other undistributed profits.

98. Subject to the rights o f persons ( if any) entitled to shares w ith

special rights as to dividends, a ll dividends shall be declared and paid
according to the amounts paid on the shares, but i f and so long as nothing is
paid upon any o f the shares in the company, dividends may be declared and
paid according to the amounts o f the shares. N o amount paid on a share
in advance o f calls shall, w hile carrying interest, be treated fo r the purposes
o f this article as paid on the share.
 Companies. 383

99. The directors may, before recommending any dividend, set aside out
o f the profits o f the company such sums as they th in k proper as a reserve or
reserves which shall, at the discretion of the directors, be applicable fo r
meeting contingencies, or fo r equalizing dividends, or fo r any other purpose
to w hich the profits o f the company may be properly applied, and pending such
application may. at the like discretion, either be employed in the business o f
the company or be invested in such investments (other than shares o f the
company) as the directors may fro m time to tim e th in k fit-

100. I f several persons are registered as joint-holders of any share, any

one o f them may give effectual receipts fo r any dividends payable on the
share.

101. N otice o f any dividend that may have been declared shall be given
in manner hereinafter mentioned to the persons entitled to share therein.
102. No dividend shall bear interest against the company.

Accounts.
103. The directors shall cause to be kept proper books o f account w ith
respect to
(a) a ll sums o f money received and expended by the company and the
matters in respect o f which the receipts and expenditure take
place ;
( b ) a ll sales and purchases o f goods by the com pany;
(c) the assets and lia b ilitie s o f the company-

104. The books of account shall be kept at the registered office o f the
company or at such other place as the directors shall th in k fit and shall be
open to inspection by the directors during business hours.

105. The directors shall fro m tim e to tim e determine whether and to
what extent and at what times and places and under what conditions or
regulations the accounts and books o f the company or any o f them shall be
open to the inspection o f members not being directors, and no member (not
being a director) shall have any rig h t of inspecting any account or book or
document o f the company except as conferred by law or authorized by the
directors or by the company in general meeting.

106. The directors shall, as required by sections 131 and 131A o f the
Burm a Companies A c t, cause to be prepared and to be la id before the com
pany in general meeting such p ro fit and loss accounts, balance-sheets, and
reports as are referred to in those sections.
107. The p ro fit and loss account shall, in addition to the matters referred
to in sub-section (3) o f section 132 o f the Burm a Companies A c t, show
arranged under the most convenient heads, the amount o f gross income,
distinguishing the several sources fro m w hich it has been derived, and the
384 Companies-

amount o f gross expenditure, distinguishing the expenses o f the establishment,

salaries and other like matters. Every item o f expenditure fa irly chargeable
against the years income shall be brought in to account, so th a t a ju st balance
o f p ro fit and loss may be la id before the meeting, and, in cases where any
item o f expenditure w hich may in fairness be distributed over several years
has been incurred in any one year, the whole amount o f such item shall be
stated, w ith the a d ditio n o f the reasons why only a po rtio n o f such expendi
ture is charged against the income o f the year.

108. A balance-sheet shall be made out in every year and la id before the
company in general meeting made up to a date not more than six months
before such meeting. The balance-sheet shall be accompanied by a re p o rt of
the directors as to the state o f the companys affairs, and the amount which
they recommend to be paid by way o f dividend, and the amount ( if any) which
they propose to carry to a reserve fund.

109. A copy o f the balance-sheet and report shall, seven days previously
to the meeting, be sent to the persons entitled to receive notices of general
meetings in the manner in w hich notices are to be given hereunder.

110. The directors shall in a ll respects com ply w ith the provisions o f
sections 130 to 135 o f the Burm a Companies A c t or any statutory m odification
thereof fo r the tim e being in force.

Audit-

111. A u d ito rs shall be appointed and their duties regulated in accor

dance w ith sections 144 and 145 o f the Burm a Companies A c t or any
statutory m odification thereof fo r the tim e being in force.

Notices.

112. ( / ) A notice may be given by the company to any member either

personally or by sending it by post to him to his registered address o r ( if he
has no registered address in the U nion o f Burm a) to the address, i f any, w ith in
the U nion o f Burm a supplied by him to the company fo r the giving o f notices
to him .
(2) Where a notice is sent by post, service o f the notice shall be deemed
to be effected by properly addressing, prepaying and posting a letter con
taining the notice and, unless the contrary is proved, to have been effected at
the tim e at w hich the letter w ould be delivered in the ordinary course o f post.

113. I f a member has no registered address in the U nion o f Burm a, and

has not supplied to the company an address w ith in the U nion o f Burma fo r
the giving o f notices to him , a notice addressed to him and advertised in a
newspaper circulating in the neighbourhood of the registered office o f the
company shall be deemed to be duly given to him on the day on which the
advertisement appears.
 Companies. 385

114- A notice may be given by the company to the joint-holders o f a

share by giving the notice to the jo in t-h o ld e r named first in the register in
respect o f the share.

115. A notice may be given by the company to the persons entitled to a

share in consequence o f the death or insolvency of a member by sending it
through the post in a prepaid lette r addressed to them by name, or by the
title o f representatives o f the deceased or assignee o f the insolvent, or by any
lik e description, at the address ( if any) in the U nion o f Burm a supplied fo r
the purpose by the persons cla im in g " to be so entitled, o r (u n til such an
address has been so supplied) by giving the notice in any manner in which
the same m ig h t have been given i f the death or insolvency had not occurred.

116. Notice o f every general meeting shall be given in some manner

hereinbefore authorized to (a) every member o f the company (including
bearers o f share-warrants) except those members who (having no registered
address w ith in the U nion o f Burm a) have not supplied to the company an
address w ith in the U nion o f Burma fo r the giving o f notices to them, and
also to ( b ) every person entitled to a share in consequence o f the death or
insolvency o f a member who but fo r his death or insolvency w ould be entitled
to receive notice o f the meeting. N o other persons shall be entitled to
receive notices o f general meetings.

25
386 Companies-

TABLE B.

(See sections 249 and 262.)

T able of F e e s t o b e p a id to the R e g is t r a r ,

/ . B y a company having a share capital.

Rs. A. P.
1. F o r re g is tra tio n o f a com pany whose n o m in a l share ca p ita l does not exceed
Rs. 20,000, a fee o f 40 0 0
2. F o r re g istra tio n o f a com pany whose n o m in a l share ca p ita l exceeds Rs. 20,000,
the above fee o f f o r ty rupees, w ith the fo llo w in g a d d itio n a l fees regulated
according to the a m o u n t of n o m in a l ca p ita l (th a t is to sa y)
F o r every 10,000 rupees o f n o m in a l share c a p ita l, o r p a rt o f 10,000 rupees,
a fte r the firs t 20,000 rupees up to 50,000 rupees 20 0 0
F o r e ve ry 10,000 rupees o f n o m in a l share ca p ita l, or p a rt o f 10,000 rupees,
a fte r the firs t 50,030 rupees up to 10,00,000 rupees 5 0 0
F o r e ve ry 10,000 rupees o f nom inal share ca p ita l, o r p a rt o f 10,000 rupees,
a fte r the firs t 10,00,000 rupees 10 0
3. F o r re g istra tio n o f any increase o f share c a p ita l made a fte r th e firs t re g istra
tio n of th e com pany, the same fees p e r 10,000 rupees, o r p a rt o f 10,000
rupees, as w o u ld have been payable i f such increased share c a p ita l had
fo rm e d p a rt o f the o rig in a l share c a p ita l at th e tim e o f re g is tra tio n :
P ro vid e d th a t no com pany s h a ll be lia b le to pay in respect o f n o m in a l share
c a p ita l on re g is tra tio n , o r a fte rw a rd s, any g re a te r am ount o f fees than 1,000
rupees ta kin g in to account, in the case o f fees payable on an increase of
share c a p ita l a fte r re g istra tio n , the fees p a id on re g istra tio n .
4. F o r re g is tra tio n of any e xis tin g co m p a n y, except such com panies as are b y
th is A ct exem pted fro m paym ent o f fees in respect o f re g is tra tio n under
th is A ct, the same fee as is charged fo r re g is te rin g a ne w com pany.
5. F o r filin g any docum ent b y th is A ct req u ire d o r a u tho rize d to be file d , o th er
th a n the m em orandum o r the a b stra ct re q u ire d to be file d w ith the R e g is tra r
by a rece ive r or th e statem ent req u ire d to be filed w ith the R e g is tra r by the
liq u id a to r in a w in d in g up. 5 0 0
6. F o r m a kin g a record o f any fa ct by th is A c t authorized o r req u ire d to be
recorded by th e R e g is tra r, a fee of 5 0 0

/ / . By a company not having a share capital.

1. F o r re g is tra tio n o f a co m p a n y whose n u m ber o f m em beis, as stated in the
a rticle s of association, does n o t exceed 20 40 0 0
2. F or re g is tra tio n o f a com pany whose num ber o f m em bers, as stated in the
a rtic le s o f association, exceeds 20, b u t does n o t exceed 100 100 0 0
3. F o r re g is tra tio n o f a com pany whose n u m b e r o f m em bers, as stated in the
articles o f association, exceeds 100, b u t is n o t stated to be u n lim ite d , the
above fee o f Rs. 100 w ith an a d d itio n a l Rs. 5 fo r every 50 m em bers, o r less
num ber th a n 50 m em bers, a fte r the firs t 100 .
4. F o r re g is tra tio n o f a com pany in w h ic h the n u m ber o f m em bers is stated in
the a rtic le s o f a ssociation to be u n lim ite d , a fee o f ... ... 400 0 0
5. F o r re g istra tio n o f a n y increase on th e n u m b e r o f m em bers made a fte r the
re g is tra tio n o f the com pany, the same fees as w o u ld have been payable in
respect o f such increase i f such increase had been stated in th e a rtic le s of
association at the tim e o f re g is tra tio n :
Provided that no one com pany sh a ll be lia b le to pay on the w h o le a greater
fee than Rs. 400 in respect o f its num ber o f m em bers, ta k in g in to account
the fee paid on the firs t re g is tra tio n o f th e com pany.
6 . F o r re g istra tio n o f a n y e x is tin g com pany, except such com panies as are by
th is A c t exem pted fro m paym ent o f fees in respect o f re g is tra tio n u n d e r th is
A c t, the same fee as is charged fo r re g is te rin g a n e w com pany.
7. F o r filin g any docum ent by this A c t re q u ire d o r authorized to be filed, o th er
th a n the m em orandum o r th e a b stra ct req u ire d to be file d w ith th e re g is tra r
by a rece ive r or th e statem ent req u ire d to be file d w it h the re g is tra r by th e
liq u id a to r in a w in d in g up. 5 0 0
8. F o r m a k in g a reco rd o f a n y fa c t b y th is A c t a u tho rize d o r re q u ire d to be
recorded b y the re g is tra r, a fee o f ... 5 0 Q
 Companies . 387

T H E SEC O N D S C H E D U L E .

(See sections 98 and 154-)

FORM I.

T he B urm a C o m p a n ie s A ct.

S T A T E M E N T IN L IE U O F PROSPECTUS

filed by
. . L im it e d ,

pursuant to section 98 o f the Burm a Companies A ct.

Presented fo r filin g by

T h e n o m in a l share ca p ita l o f th e com pany

D iv id e d in to Shares o f R s...... .............. each.

A m o u n t (if any) o f above c a p ita l w h ic h consists of

redeem able p reference shares.

T h e date on o r b e fore w h ic h these shares are, o r are

lia b le , to be redeem ed.

Nam es, d e scrip tio n s and addresses o f d ire c to rs o r p ro

posed d irecto rs and m anagers o r proposed m anagers,
and any p ro v is io n in th e a rticles, o r in any contract, as
to appointm e n t of and rem uneration payable to directo rs
o r m anagers.

If the share c a p ita l o f the com pany is d ivid e d in to

d iffe re n t classes o f shares, the r ig h t o f v o tin g at
m eetings o f the com pany co n ferre d by, and the rig h ts
in respect o f c a p ita l and dividends attached to , the
several classes of shares re sp e ctive ly.

N u m be r and am ount o f shares and debentures agreed to 1. shares o f Rs................ f u lly paid.
be issued as fu lly o r p a r tly p a id up o th e rw ise than in 2 . shares upon w h ic h R s.................
cash. p e r share cred ite d as paid.

4. C onsideration.

Names and addresses o f vendors o f p ro p e rty purchased

o r acquired, o r proposed to be purchased o r acquired
b y the com pany.

A m ount ( in cash, shares o r debentures) payable to each

separate ve n d or.

A m o u n t (if any) paid o r payable (in cash or shares o r

debentures) fo r any such p ro p e rty sp e cifyin g am ount
( if any) paid o r payable fo r g o o d w ill.
388 Companies

A m o u n t ( if any) p a id o r payable as co m m issio n fo r sub A tr.ount p a id .

s c rib in g o r agreeing to subscribe or p ro c u rin g o r agree A m o u n t payable.
in g to p ro cu re su bscrip tio n s fo r any shares or debentures Rate p e r cent.
in the com pany ; o r rate of the com m ission.

T h e n u m ber o f shares, if any, w h ic h persons have

agreed fo r a com m ission to su b scrib e absolutely,

E stim a te d am ount o f p re lim in a ry expenses

A m o u n t p a id o r intended to be paid to any p ro m o te r

A m o u n t-R s ......................
Consideration fo r ttie paym ent C onsideration.

Dates o f and parties to every m a te ria l co n tra ct (except

c o n tra cls entered in to in the o rd in a ry course of the
business in tended to be c a rrie d on b y the com pany, or
contracts, o th e r than contracts a p p o in tin g o r fix in g the
re m u n e ra tio n o f a m a n a g in g d ire c to r o r m anaging
agent, entered in to m ore th a n tw o years b e fore the
d e liv e ry o f this statem ent).

T im e and place at w h ic h the contracts o r copies th e re o f

m ay be inspected.

Nam es and addresses o f the a u d ito rs o f th e com pany

( if any).

F u ll p a rtic u la rs of4the n ature and e xte nt of th e in te re st of

e v e ry d ire c to r in the p ro m o tio n o f o r in the p ro p e rty
proposed to be a cquired by th e com pany, o r , w here
th e in te re st o f such a d ire c to r consists in be in g a p a rt
n e r in a firm , th e n ature and extent o f the in te re s t o f
the firm , w ith a statem ent o f a ll sums p a id o r agreed
to be p a id to h im o r to the firm in cash o r shares, o r
o th e rw ise , b y any person e ith e r to induce h im to be
come, o r to q u a lify h im as, a d ire c to r, o r o th e rw ise fo r
services rendered by h im o r b y the firm in connection
w it h the p ro m o tio n o r fo rm a tio n o f th e company.

I f i t is proposed to a cq u ire a n y business, the a m o u n t, as

ce rtifie d b v th e persons by w h o m the am ounts o f the
business have been a u d ited , o f th e net p ro fits o f the
business in respect o f each o f th e three fin a n c ia l years
im m e d ia te ly pre ce d in g th e date of th is sta te m e n t:
pro vid e d th a t in th e case of a business w h ic h has been
c a rrie d on fo r less than th re e years and th e accounts
o f w h ic h have o n ly been m ade up in respect o f tw o
years o r one year the above re q u ire m e n t shall have
effect as i f references to tw o years or one ye a r, as the
case m av be, w ere substituted fo r references to three
years, and in any such case the statem ent sh a ll say
h o w lo n g the business to be acquired has been c a rrie d
on.

(S ig n a ture s o f th e persons above-nam ed as d irecto rs o r proposed

d ire c to rs o r of th e ir agents a u tho rize d in w ritin g .)

Date
 Companies , 389

FO RM II.

T he B urm a C o m p a n ie s A ct.

S T A T E M E N T IN L IE U O F PROSPECTUS

filed by
................................................................................................... L im it e d ,
pursuant to sub-section ( 1) of section 154 o f the Burm a Companies A ct.
Presented fo r filin g by

T h e n o m in a l share ca p ita l o f the com pany

D iv id e d in to ... ... Shares o f Rs.................... each.

Shares o f R s .....................each.
Shares o f R s .................... each.

A m o u n t (if any) o f above c a p ita l w h ic h consists of Shares o f Rs..................... each.

redeem able preference shares.

T he date on o r before w h ic h these shares are, o r are

lia b le , to be redeemed.

Names, d e s crip tio n s and addresses o f d irecto rs o r

proposed d irectors and managers o r proposed managers,
and any p ro v is io n in the a rticles, o r in any contract, as
to a p p ointm e n t o f and re m u n e ra tio n payable to
d ire c to rs o r m anagers.

If the share capital o f the co m p a n y is d ivided in to

d iffe re n t classes o f shares, the r ig h t o f vo tin g a t mee
tings o f the com pany conferred b y and th e rig h ts in
respect o f c a p ita l and dividends attached to se ve ra l
classes o f shares respectively.

N u m be r and am ount o f shares and debentures issued 1. Shares o f Rs................. fu lly p a id .

w ith in the tw o years p receding the date o f th is state 2. Shares upon w h ic h R s.................
m ent as f u lly or p a rtly paid up o th e rw ise than fo r cash per share cred ite d as paid.
o r agreed to be so issued at the date of th is statem ent. 3. D ebentures R s.................
4. C o n sid e ra tio n .

Names and addresses o f vendors o f p ro p e rty (1) purchased

o r acquired b y th e com pany w ith in the tw o years
pre ce d in g the date o f th is statem ent o r ( 2) agieed or
proposed to be purchased o r acquired b y the com pany.

A m o u n t (in cash, shares o r debentures) payable to each

separate vendor.

A m o u n t ( if any) paid o r payable (in cash o r shares o r T o ta l purchase price R s.................... .

debentures) fo r any such p ro p e rty s p e c ify in g am ount Cash R s.....................
(if any) p a id or p a ya ble fo r g o o d w ill. Shares Rs....................
D ebentures R s.....................
G o o d w ill Rs......................

A m o u n t (ifa n y ) p a id o r payable as com m ission fo r A m o u n t paid.

s u b scribing or a g reeing to subscribe or p ro c u rin g or A m o u n t payable.
a g reeing to procure su b scrip tio n s fo r any shares o r Rate per cent.
debentures in the co m p a n y ; o r rate o f the com m ission.

T h e n um ber o f shares, i f any, w h ic h persons have agreed

fo r a c o irm is s io n to subscribe absolutely.
390 Companies.

U nless m ore th a n tw o years have elapsed sin ce the date

on w h ic h the com pany w as e n title d to commence
business ; R s.................................................
E s tim a te d a m ount o f p re lim in a ry expenses.
A m ount p a id o r in te n d e d to be p a id to any p ro m o te r.
C o n sid e ra tio n fo r the paym ent. C o n sid e ra tio n .

Dates o f, and parties to every m a te ria l c o n tra c t (except

contracts entered in to in the o rd in a ry course o f the
business in tended to be ca rrie d on b y the co rrp a n y, or
co n tra cts, o th e r th a n contracts a p p o in tin g o r fix in g the
rem uneration o f a m an a g in g d ire c to r o r m anaging
agent, entered in to m ore th a n tw o years before the
d e liv e ry of th is statem ent).

T im e s and pla ce at w h ic h the contracts o r copies th e re o f

m ay be in sp e cted .

Nam es and addresses o f th e a u d ito rs o f the com pany. -.

F u ll p a rtic u la rs o f the nature and extent of the in te re st o f

e v e ry d ire c to r in the p ro m o tio n o f o r in th e p ro p e rty
purchased o r acquired by th e com pany w ith in the tw o
years pre ce d in g th e date o f th is statem ent o r proposed
to be a c q u ire d by the co m p a n y, o r w h e re th e in te re st
o f such a d ire c to r consists in b e in g a p a rtn e r in a firm ,
the n ature and extent o f the in te re s t o f the firm , w ith a
statem ent o f a ll sums p a id or agreed to be paid to h im
o r to the firm in cash or shares, o r o th erw ise , by any
person e ith e r to in duce h im to become, or q u a lify h im
as, a d ire c to r, o ro th e rw is e fo r services rendered b y
h im or b y the firm in co n n e ctio n w ith the p ro m o tio n
o r th e fo rm a tio n o f the com pany.

I f i t is proposed to a cquire any business, th e am ount, as

ce rtifie d by the persons by w h o m the accounts o f the
business have been audited, o f the n e t p ro fits o f the
business in respect o f each o f the three fin a n c ia l years
im m e d ia te ly p receding th e date o f th is s ta te m e n t:
p ro v id e d th a t in th e case o f a business w h ic h has been
c a rrie d on fo r less th a n three years and the accounts
o f w h ic h have o n ly been m ade up in respect o f tw o
years o r one year th e above requirem ents shall
have effect as i f references to tw o years o r one
year, as th e case m ay be, w e re su b s titu te d f o r
references to three years, and in any such case the
statem ent s h a ll say h o w lo n g the business to be
acquired has been ca rrie d on.

(S ig n a tu re s o f th e persons above-nam ed as d irecto rs o r --------------------------------------------------- ------- -

proposed d irecto rs o r of th e ir agents a u th o rize d in
w r itin g .)

Dated the day of

T H E T H IR D S C H E D U L E ;
FORM A.
CSee sections 6 and 151.)
M em orandum of A s s o c ia t io n o f a C om pany L im it e d by Shares.
1st. The name o f the company is The Eastern Steam Packet Company,
L im ite d .
2nd. The registered office o f the company w ill be situate in the U nion o f
Burm a.
 Companies. 391

3rd. The objects fo r w hich the company is established are the

conveyance o f passengers and goods in ships or boats between such places as
the company may fro m tim e to tim e determine, and the doing a ll such other
things as are incidental or conducive to the attainm ent o f the above o b je ct.
4th. The lia b ility o f the members is lim ited.
5th. The share capital o f the company is two hundred thousand rupees,
divided into one thousand shares o f tw o hundred rupees each.
We, the several persons whose names and addresses are subscribed, are
desirous o f being form ed in to a company in pursuance o f this memorandum of
association, and we respectively agree to take the number o f shares in the
capital o f the company set opposite our respective names.

N u m b e r o f shares taken
Nam es, addresses and d e scrip tio n s o f su b scrib e rs.
b y each su b scrib e r.

1. A. B. of , m erch a n t 200
2. C .D . 25
3. E .F . 30
4. G .H . ... 40
5. I . J. 1 1 15
6. K .L . 3
7. M .N . * .................................................................. 10
T o t a l sh ares t a k e n ... 325

Dated the day o f 19

Witness to the above signatures.
X . Y. of

F O R M B.
(See sections 7 and 151.)
M emorandum and A r t ic l e s of A s s o c ia t io n of a C ompany l im it e d by

G uarantee, and not h a v in g a Sh a r e C a p it a l .

Memorandum o f Association.
1st. The name o f the company is The M u tu a l Rangoon M arine
Association, Lim ite d
2nd. The registered office o f the company w ill be situate in Rangoon.
3rd. The objects fo r which the company is established are the m utual
insurance o f ships belonging to members o f the company, and the doing a ll
such other things as are incidental or conducive to the attainm ent o f the above
object.
4th. The lia b ility o f the members is lim ited.
5th. Every
member o f the company undertakes to contribute to the
assets o f the company in the event o f its being wound up while he is a member.
392 Companies.

or w ith in one year afterwards, fo r payment o f the debts and lia b ilitie s o f the
company contracted before he ceases to be a member, and the costs, charges
and expenses o f w in d in g up, and fo r the adjustment of the rights o f the
contributories among themselves, such amount as may be required not excee
ding one hundred rupees.
We, the several persons whose names and addresses are subscribed, are
desirous o f being form ed in to a company in pursuance o f this memorandum of
association.
Names, Addresses and Descriptions o f Subscribers.

1. A. B. of
" 2. C. D. of
3. E. F. ot
4. G. H. of
5. I. J. of
6. K. L. of
7. M. N. of

Dated the day of

Witness to the above signatures.,
X . Y . of

A r t ic l e s of A s s o c ia t io n to accompany p r e c e d in g M emorandum of

A s s o c ia t io n .

Number o f M em bers.
1. The company fo r the purpose o f registration is declared to consist of
five hundred members.
2. The directors hereinafter mentioned may, whenever the business or the
association requires it, register an increase o f members.

Definition o f M em bers.

3. Every person shall be deemed to have agreed to become a member of

the company who insures any ship or share in a ship in pursuance o f the
regulations hereinafter contained.

4. The first general meeting shall be held at such tim e not being less than
one m onth nor more than three months after the incorporation o f the
company, and at such place, as the directors may determine.

5. A general meeting shall be held once in every year at such time (not
being more than fifteen months after the holding o f the last preceding general
meeting) and place as may be prescribed by the company in general meeting,
or, in default, at such tim e in the m onth fo llo w in g that in w hich the anniversary
o f the companys incorporation occurs, and at such place, as the directors
shall appoint. In d efa ult o f a general meeting being so held, a general meeting
shall be held in the m onth next follow ing, and may be called by any two
members in the same manner, as nearly as possible, as that in which meetings
are to be called by the directors.
 Companies 393

6. The above-mentioned general meetings shall be called ordinary mee

tings ; a ll other general meetings shall be called extraordinary.
7- The directors may, whenever they th in k fit, and shall, on a requisi
tio n made in w ritin g by any five or more members, call an extraordinary
general meeting.
8. A n y requisition made by the members must state the object o f the
meeting proposed to be called, and must be signed by the requisitionists and
deposited at the registered office o f the company.
9. On receipt o f the requisition the directors shall fo rth w ith proceed to
call a general m e etin g; if they do not proceed to cause a meeting to be held
w ith in twenty-one days fro m the date o f the requisition being so deposited, the
requisitionists or any other five members may themselves call a meeting.

Proceedings at General Meetings-

10. Fourteen days notice at the least, specifying the place, the day and
the hour o f meeting, and in case o f special business the general nature o f the
business, shall be given to the members in manner hereinafter mentioned, or in
such other manner ( if any) as may be prescribed by the company in general
m ee ting ; but the non-receipt o f such a notice by any member shall not
invalidate the proceedings at any general meeting.
11. A ll business shall be deemed special that is transacted at an
extraordinary meeting, and a ll th at is transacted at an o rdinary meeting, w ith
the exception o f the consideration o f the accounts, balance-sheets and the
o rd ina ry re p o rt o f the directors and auditors, the election o f directors and
other officers in the place o f those re tirin g by rotation, and the fixing of
rem uneration o f the auditors.
12. N o business shall be transacted at any meeting except the declaration
o f a dividend, unless a quorum o f members is present at the commencement
o f the business. The quorum shall be ascertained as follow s (that is to s a y ):
i f the members o f the company at the tim e o f the meeting do not exceed ten in
number, the quorum shall be five, i f they exceed ten, there shall be added to
the above quorum one fo r every five additional members w ith this lim ita tio n ,
that no quorum shall in any case exceed ten.
13. I f w ith in one hour fro m the tim e appointed fo r the meeting a quorum
o f members is not present, the meeting, i f called on the requisition o f the
members, shall be dissolved ; in any other case it shall stand adjourned to the
same day in the fo llo w in g week at the same tim e and place, and if at such adjour
ned meeting a quorum o f members is not present, it shall be adjourned sine die.

14. The chairm an ( if any) o f the directors shall preside as chairman at

every general meeting o f the company.

15. I f there is no such chairm an, or i f at any meeting he is not present

at the tim e o f holding the same, the members present shall choose some one o f
th e ir number to be chairm an o f that meeting.
 Companies.

16. The chairman may, w ith the consent o f the meeting, adjourn the
meeting from tim e to tim e and fro m placc to place, but no business shall be
transacted at any adjourned meeting other than the business le ft unfinished at
the meeting fro m which the adjournm ent took place.
17. A t any general meeting, unless a p o ll is demanded by at least three
members, a declaration by the chairm an that a resolution has been carried,
and an entry to that effect in the book o f proceedings o f the company, shall
be conclusive evidence o f the fact w ith o u t p roof o f the num ber or proportion
o f the votes recorded in favour o f or against the resolution.
18. I f a p o ll is demanded in manner aforesaid, the same shall be taken in
such manner as the chairman directs, and the result o f the p o ll shall be deemed
to be the resolution o f the meeting at which the p o ll was demanded.

Votes o f M em bers.
19. Every member shall have one vote and no more.
20. I f any member is a lunatic or id io t, he may vote by his committee or
other legal guardian.
21. N o member shall be entitled to vote at any meeting unless a ll moneys
due from him to the company have been paid.
22. On a p o ll votes may be given either personally or by proxy : Provided
that no company shall vote by proxy as long as a resolution of its directors in
accordance w ith the provisions o f section 80 o f the Burm a Companies A c t is
in force. A proxy shall be appointed in w ritin g under the hand o f the
appointor, or, i f such appointor is a corporation, under its common seal.
23. ( 1) N o person shall act as a proxy unless he is a member, or unless
he is appointed to act at the meeting as proxy fo r a corporation.
(2) The instrum ent appointing him shall be deposited at the registered
office o f the company not less than fo rty-e ig h t hours before the tim e o f holding
the meeting at w hich he proposes to vote.
24- A n y instrum ent appointing a proxy shall be in the fo llo w in g fo rm :
Company, L im ited.
I, , of , being a member o f the
Company, L im ite d , hereby appoint of as
my proxy, to vote fo r me and on my behalf at the [ordinary or extraordinary,
as the case m ay be,] general meeting o f the company to be held on the
day o f and at any adjournm ent thereof.
Signed this day o f 19

Directors ,
25. The number o f the directors and the names o f the first directors shall
be determined by the subscribers o f the memorandum o f association.
26. U n til directors are appointed, the subscribers o f the memorandum o f
association shall, fo r a ll the purposes o f the Burm a Companies A ct, be deemed
to be directors.
 Companies. 305

Powers o f Directors.

27. The business o f the company shall be managed by the directors, who
may exercise a ll such powers o f the company as are not by the Burma
Companies A ct, or by any statutory m odification thereof fo r the tim e being in
force, or by these articles, required to be exercised by the company in general
m e e tin g ; but no regulation made by the company in general meeting shall
invalidate any p rio r act o f the directors which would have been valid i f that
regulation had not been made.

Elections o f Directors.

28. The directors shall be elected annually by the company in general

meeting.

Business o f Company.

(Here insert rules as to m ode in which business o f insurance is to be

conducted.)

A u d it.

29. A u d ito rs shall be appointed and th e ir duties regulated in accordance

w ith sections 144 and 145 o f the Burm a Companies A ct, or any statutory
m odification thereof fo r the tim e being in force, and fo r this purpose the said
sections shall have effect as i f the word members were substituted fo r
shareholders, and as i f first general meeting were substituted fo r
statutory meeting.

Notices.

30. A notice may be given by the company to any member either

personally or by sending i t by post to him to his registered address.

31. Where a notice is sent by post, service o f the notice shall be deemed
to be effected by properly addressing, prepaying and posting a letter containing
the notice and, unless the contrary is proved, to have been effected at the tim e
at w hich the letter w ould be delivered in the ordinary course o f post.

Names, Addresses and Descriptions o f Subscribers.

1. A. B. of
2. C. D.of
3. E. F.of
" 4. G. H.of
" 5. 1. J of
6. K. L.of
7. M .N . of

Dated the day o f 19

Witness to the above signatures.

X .Y ., of
396 Companies.

F O R M C.
(See sections 7 and 151.)

M emorandum and A r t ic l e s of A s s o c ia t io n o f a C o m p a n y l im it e d by

G u a r a n t e e , a n d h a v in g a Sh a r e C a p it a l .

Memorandum o f Association-

1st. The name o f the company is The Snowy Range H o te l Company,

L im ite d .
2nd . The registered office o f the company w ill be situate in the U nion
o f Burma.
3rd. The objects fo r w hich the company is established are the fa c ilita tin g
travelling in the Snowy Range by providing hotels and conveyances by sea and
by land fo r the accommodation o f travellers and the doing a ll such other things
as are incidental or conducive to the attainm ent o f the above object.
4th . The lia b ility o f the members is lim ited-
5th . Every member o f the company undertakes to contribute to the
assets o f the company in the event o f its being wound up w hile he is a member,
or w ith in one year afterwards, fo r payment o f the debts and lia b ilitie s o f the
company contracted before he ceases to be a member, and the costs, charges
and expenses o f w inding up the same, and fo r the adjustment o f the rights o f
the contributories amongst themselves, such am ount as may be required not
exceeding fifty rupees.
6th . The share capital o f the company shall consist o f five hundred
thousand rupees, divided in to five thousand shares of one hundred rupees each.
We, the several persons whose names and addresses are subscribed, are
desirous o f being form ed in to a company in pursuance o f this memorandum
of association, and we respectively agree to take the number o f shares in the
capital o f the company set opposite our respective names.

N u m be r o f shares taken
Nam es, addresses and d e scrip tio n s o f Subscribers.
b y each Subscriber.

1 . A. B. of 200
2 . C. D . o f . ,,, ... ... ,,, .,, 25
3. E. F. of ... ... ... - . . . ... ... 30
4. G H. o f ,,, ... .... ... ... 40
5. 1. J. of 15
" 6 . K . L . of ... ... ... ... ... ... 5
7. M . N . o f 10
T o ta l shares taken 325

Dated the day o f 19

Witness to the above signatures.

X .Y ., of
 Companies. 39?

Articles o f Association to accompany preceding Memorandum o f Association.

1. The share capital o f the company is five hundred thousand rupees,

divided in to five thousand shares o f one hundred rupees each.

2. The directors may, w ith the sanction o f the company in general

meeting, reduce the am ount o f shares in the company.

3. The directors may, w ith the sanction o f the company in general

meeting, cancel any shares belonging to the company.

4. A ll the articles o f Table A o f the Burma Companies A c t shall be

deemed to be incorporated w ith these articles and to apply to the company.

Names, Addresses and Descriptions o f Subscribers-

1. A. B. of m e rc h a n t.
2. C. D . of
3. E . F. o f
4. G. H . of
5. I . J. of
6. K. L . of
7. M. N. of

Dated the day o f 19

Witness to the above signatures.

X .Y ., o f

FO R M D.

(See sections 8 and 151.)

M emorandum and A r t ic l e s o f A s s o c ia t io n o f a n u n l im it e d C o m p a n y h a v in g

a Sh a r e C a p i t a l .

Memorandum o f Association.

1st The name o f the company is The Patent Stereotype Company.

2 n d . The registered office o f the company w ill be sutuate in the U nion
o f Burm a.
3rd. The objects fo r which the company is established are the working
o f a patent method o f founding and casting stereotype plates o f which method
P.Q., o f Rangoon, is the sole patentee.
We, the several persons whose names are subscribed, are desirous o f
being form ed in to a company in pursuance o f this memorandum of association
398 Companies.

and we respectively agree to take the number o f shares in the capital o f the
company set opposite our respective names.

N u m be r o f shares taken
Nam es, addresses and d e scrip tio n s o f S u bscribers.
b y each Subscriber,

1. A. B . of 3

2. C. D . o f .................................................................. 2
3. E . F. of ................................................................... 1
4. G. H . o f ................................................................... 2
5. I. J. of 2
6. K . L . of .................................................................. 1
7. M. N. of ................................................................... 1

T o ta l shares taken 12

Dated the day o f 19 *

Witness to the above signatures.

X .Y ., o f

Articles o f Association to accompany the preceding Memorandum o f Association.

1. The share capital o f the company is tw enty thousand rupees, divided

in to tw enty shares o f one thousand rupees each.

2. A ll the articles o f Table A o f the Burm a Companies A c t shall be

deemed to be incorporated w ith these articles and to apply to the company.

Names, Addresses and Descriptions o f Subscribers.

1. A . B . o f i m erchant.
2. C. D . of
3. E . F . of
4. G. H . of
S. I. J. of
6. K. L. of
7. M . N . of

Dated the day o f 19 .

Witness to the above signatures.

X ,Y ., o f
 Companies- 399

F O R M E.

A S REQ UIRED BY P A R T I I OF TH E A C T .

(See section 32.)

Summary o f Share C apital and Shares of the Company, L im ite d ,

made up to the day o f 19 (being the
day o f the first ordinary general meeting in 19 ).

N o m in a l share ca p ita l Rs. d ivid e d in to 1 1 shares of Rs. each.

J shares o f R s. each.
T o ta l n u m b e r o f shares 1 ta ke n up to the day o f 19 w h ich
ch "j
n u m ber m ust agree w ith th e to ta l sh o w n in the lis t as h e ld by e xistinng g Y
m em bers .......................................................................................................

N u m b e r of shares issued s u b je c t to paym ent w h o lly in cash

N u m be r o f shares issu e d as f u lly paid up o th e rw is e th a n in cash ................

N u m b e r of shares issued as p a r tly paid up to the e xte nt o f per 1

share o th e rw is e th a n in cash ... .................................................................. J

2 T he re has been c a lle d upon each of shares ......................................................Rs.

T he re has been called upon eacho f shares ..................................................... Rs.

T h e re has been c a lle d up on each of shares ......................................................Rs.

3 T o ta l am ount o f ca lls received, in c lu d in g paym ents on a p p lic a tio n and ) p

a llo tm e n t .......................................................................................... .......................... }

T o ta l a m o u n t ( if any) agreed to be considered as paid on shares w h ic h have 1

been issued as f u lly paid up o th e rw is e than in cash ... ... ................/

T o ta l a m ount ( if any) agreed to be considered as paid on shares w h ic h h a ve ) R

been issued as p a rtly paid up to th e e xte nt o f per share ................ j

T o ta l a m o u n t o f ca lls u n p aid ............................................................................... Rs

T o ta l am ount (if any) o f sums p a id by w a y o f com m ission in respect o f shares 1

o r debentures o r a llo w e d by w a y o f d isco u n t since date o f la st su m m a ry ... J s

T o ta l am ount ( if any) paid on 4 shares fo rfe ite d ... ......................................... Rs

T o ta l am ount o f shares and stock fo r w h ic h sh a re -w a rra n ts are o u tsta n d in g ... Rs

T o ta l a m ount o f sh a re -w a rra n ts issued and surrendered respectively s in c e ) n s

date of la st su m m a ry ............................................................................................J

N u m be r of shares o r am ount o f stock com prised in each sh a re -w a rra n t ... Rs.

T o ta l a m ount of debt due fro m th e com pany in resp e ct of a ll m ortgages and 1

charges w h ic h are required to be registered w ith the R e g is tra r under this i-Rs.
A ct .................................................................................................................................. J

1 W h e n there are shares of d iffe re n t k in d s o r am ounts (e.g., Preference and O rd in a ry o f Rs. 200
o r R s. 100) state the n u m b e rs and n o m in a l values se p a ra te ly.
2 W h e re various am ounts have been called o r there are shares of d iffe re n t kin d s, s ta te them
separately.
3 In clu d e w h a t has been received on fo rfe ite d as w e ll as on e x is tin g shares,
4 State the aggregate n u m b e r o f sh a re sifo rfe ite d .
400 Companies-

L is t o f Persons holding shares in the Company, L im ite d , on

the day o f 19 and o f persons who have held
shares therein at any tim e since the date o f the last return, showing their
names and addresses and an account o f the shares so held.

Nam es, Addresses

A ccount o f Shares.
a nd O ccupations.
o*
W
3
C <4-1 <U ?, o
;s
S 0J1S u o J2 > XJ
(3 ^ o CO <1-1 (Q S-a
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5o +3co 5
.
eo
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J5 O
52 ^ G o w
_ ri U y r- U D , : O u c
^ i (j cn t i; u ' 03v- rjM a)
fa
S a " S3 I =.2 : 5? <> c s
^ MW & w 5 <0 ' G u C

55 sjo o c3 OVh
g.S c
-Q +j- 4J .O
w3 <l) cn
g
c3 T3
73
2
52 tJ s
s
E
o <
fa 5?

1 State the aggregate n um ber of shares fo rfe ite d (if any).

2 T h e aggregate n u m ber of shares h e ld , and not the d is tin c tiv e num bers, m ust be stated and
th e c o lu m n m ust be added up th ro u g h o u t so as to m ake one to ta l to agree w ith th a t stated in the
sum m ary to have been taken up.
3 W h e n the shares are of d iffe re n t classes, ttn s e colum ns m ay be su b -d ivid e d so th a t th e
n u m ber o f each class h e ld o r tra n s fe rre d m ay be s h o w n separately.
4 T h s date o f re g is tra tio n o f each tra n sfe r sh o u ld be g ive n as w e ll as th e num ber o f shares
tra n s fe rre d on each date. T he p a rticu la rs should be placed opposite the name o f th e tra n s fe ro r
and not opposite th a t o f the transferee, b u t the nam e o f the transferee m ay be inserted in th e
rem arks c o lu m n im m e d ia te ly opposite the p a rtic u la rs of each tra n sfe r,
 Companies. 401

Names and addresses o f the persons who are the Directors o f the
L im ite d , on the day o f 19

Names. Addresses.

Names and addresses o f the persons who are the managers o f the
L im ite d , on the day o f 19

Names. Addresses.

N o t e . B a n k in g c o m p a n i e s m u st a d d a lis t o f a ll t h e ir p l a c e s o f b u s in e s s .

I, , do hereby ce rtify th a t the above lis t and

summary tru ly and correctly states the facts as they stood on day
of 19

(Signature)....................................

(State whether D irector, Manager or Secretary.)

26

C A P IT A L A N D L I A B IL I T I E S .
Ca p it a l
A u th o riz e d C a p ita l..,................ shares o f R s................. each
(D is tin g u is h in g between the various classes o f C a p ita l.)
Issued C a p ita l.................... shares o f K s ......................each...
(i) Shares issued as f u lly p a id up p u rsu a n t to any
co n tra ct w ith o u t paym ents being received in cash
............shares o f Rs.................. each.
(ii) Shares issued fo r paym ents in cash............shares o f
R s..........................each.
Subscribed C a p ita l...............shares o f R s..................each ...
A m o u n t called up at R s................. per share ...
Less - C a lls u p a id
(i) due fro m M an a g in g A gents
;fti) due fro m o th ers
Add F o r f e i t e d s h a r e s (a m o u n t p a id u p ).
Note. W h e re circu m sta n ce s p e rm it issued and sub
scribed c a p ita l and am o u n t called up m a y be s h o w n as
one ite m , e g..
Issued and Subscribed C a p ita l....... shares o f Rs......... each,
R s................. pa id up ...
R eserves
D e b e n t u r e s s ta t in g t h e n a tu r e o f s e c u r i t y
A n y S in k in g F u n d
A ny oth er F und C r e a t e d o u t o f N et
i n c l u d i n g a n y d e v e l o p m e n t fu n d
A n y P e n s io n o r I n s u r a n c e F u n d
P r o v is io n f o r B a d a n d D o u b t f u l D e b t s ...
FO R M F.
(See section 132.)
...................................................................................L im it e d .
Balance-Sheet as at ............................... 19
P R O P E R T Y A N D ASSE TS.
F ixed C a p ita l E x p e n d itu r e
(D is tin g u is h in g as fa r as possible betw een exp e nd itu re upon
g o o d w ill, la n d , b u ild in g s, lease-holds, ra ilw a y sidings,
p ia n t, m achinery, fu rn itu re , de ve lo pm e n t of p ro p e rty ,
patents, trade m arks and designs, in te re st paid out of
c a p ita l d u rin g co n stru ctio n , etc., and s ta tin g in e ve ry case
th e o rig in a l cost and the a d d itio ns th e re to and deductions
Companies
th e re fro m d u rin g the year, and the to ta l depreciation
w ritte n off under each head. W h e re sums have been
w ritte n off on a red u ctio n o f capital or a reva lu a tio n of
assets every balance-sheet a fte r the firs t balance-sheet
subsequent to th e re d u ctio n or re v a lu a tio n s h a ll show the
reduced figures, w ith th e date o f and the a m o u n t o f the
re d u ctio n made).
P r e l im in a r y E x p e n s e s ...
C o m m is s io n o r B r o k e r a g e
(Com m ission o r B rokerage p a id fo r u n d e rw ritin g or p la c in g
o r su b scrib in g shares o r debentures u n til w ritte n off.)
D A l l o w e d on the issue o f shares o r so m uch as
is c o u n t
has n o t been w r itte n off at the date of the balance-sheet.
St o r e s and Spar e Parts
L o o s e T o o l s ...
L i v e -st o c k a n d V e h ic l e s
S t o c k in T r a d e
(Stating m ode of valuation, .g., cost o r m a rke t value.)
P r o f it s ,
B il l s o f E x c h a n g e
B o o k D e b t s ...
 C A P IT A L AND L IA B IL IT IE S . P R O P E R T Y AND ASSE TS.
L oans
() Secured (D is tin g u is h in g betw een those considered goad and in
(i) lo a n s on m ortgages o r fixed assets respect o f w h ic h th e com pany is fu lly secured and those
(ii) lo in s on debentures considered good fo r w h ic h th e com pany ho ld s no se cu rity
(iii) loans fro m banks s ta tin g the n a tu re of s e c u rity ... o th e r th a n th e d e b to r s personal se cu rity, and d is tin g u is h
(iv) lia b ilitie s to s u b sid ia ry companies in g betw een debts considered good and debts considered
(v! o th er secured loans, s ta tin g the na ture o f se c u rity ... d o u b tfu l o r bad. Debts due by d ire cto rs o r o ther officers
(vi) in te re s t accrued on m ortgages, debentures or o th e r o f the com pany o r any ol them e ith e r se ve ra lly o r jo in tly
secured loans ... w ith any o th er persons to be separately stated.)
A dvances
( ) U nsecured (Recoverable in cash o r in k in d o r fo r value to be received, e.g.,
(i) loans fro m banks Rates, Taxes, Insurance, etc., s h o w in g separately
(ii) fixe d deposits (i) loans given to s u b sid ia ry com panies,
( iii) s h o rt term loans... Iii) loans in c lu d in g te m p o ra ry advances m ade at any
(iv) advance by d ire c to rs o r m anagers and m anaging tim e d u rin g the year to directors o r m anagers o f the
agents company.)
(v) in te re s t accru in g b u t not due and in te re st accrued I n vestm en ts
and due [S h o w in g nature o f in ve stm e n ts and mode o f v a lu a tio n ,

Companies.
(vi) lia b ilitie s to subsidiary com panies e.g.. ccst or m a rk e t va lu e and d is tin g u is h in g
(i) investm ents in G overnm ent or t r u - t se cu ritie s,
U n c l a im e d D iv id e n d s ... (ii) investm ents in shares, debentures o r bonds (sho w ing
L ia h il it ie s separately shares fu lly paid up and p a rtly paid up),
For Goods su p p lie d ... ( iii) investm ents in shares, debentures o r ' bonds of
For Expenses su b sidiary com panies,
For Acceptances (iv) im m >vable p ro p e rtie s !
F or O th e r F ina n ce Interest accru ed on In v estm en ts . .
C ash a n d o t h e r B a l a n c e s
A dvance Pa y m e n ts and O n e x p ir e d D i s c o u n t s .................. A m o u n t in hand
(F'or the p o rtio n fo r w h ich value has s till to be give n , e.g., Balances w ith Agents and Bankers (in d e ta il show ing
in the case o f the fo llo w in g classes o f co m p a n ie s: w h e th e r on deposit o r c u rre n t account, etc.)
N ew spaper, F ire Insu ra n ce , T he a tre, C lu b , B a n k in g , P ro fit and Loss
Steam ship Companies, etc.)
P r o f it and L o ss

C o n t in g e n t L ia b il it ie s
C laim s a g a in s t the co.npany n o t acknow ledged as debts
M oney fo r w h ic h the com pany is c o n tin g e n tly lia b 'e ...
(S h o w in g separately the am ount o f any guarantees given
by th e co m p a n y on b e h a lf o f d ire cto rs o r officers of
the com pany.)
A rrears o f C u m u la tiv e P reference D iv id e n d s

T he in fo rm a tio n req u ire d to be give n u n d e r any o f the item s or sub-iteu s in this F o rm , i f n o t in c lu d e d in the Balance-Sheet its e lf, sh a ll be fu rn ish e d -
in a separate Schedule o r Schedules to be attached to and to fo rm p a rt o f the Balance-Sheet. 2
404 Companies.

F O R M G.

(See section 136.)

F orm of St a t e m e n t to be p u b l is h e d by B a n k in g and I nsurance C o m p a n ie s

and D e p o s it , P r o v id e n t , or B e n e f it So c ie t ie s .
1 The share ca p ita l of th e com pany is Rs. d iv id e d in to shares o f Rs. each.
T h e n u m b e r o f shares issued is . C alls to the a m o u n t of Ks. per
sh a re h a ve been made, under w h ic h th e sum of Rs. has been received.
T he lia b ilitie s o f the com pany on the th irty - fir s t cUy o f D e c e tn b e r(o r th irtie th o f June) w ere
D ebts o w in g to su n d ry persons by the co m p a n y
U nder decree, Rs.
O n m ortgages or bonds, Rs.
O n notes, b ills o r hundis, Rs.
O n o th e r co n tra cts, Rs.
O n estim a te d lia b ilitie s , Rs.
T he assets o f the com pany on th a t day w e re
G overnm ent securities [s ta tin g th e m ], I\'s.
B ills o f exchange, hu n dis and p ro m isso ry notes, Rs.
Cash at th e Bankers, Rs.
O ther se curities, Rs.

FO RM H.
(See section 277.)
I n f o r m a t io n to b e s u p p l ie d in or in a d d it io n t o t h e in f o r m a t io n c o n t a in e d

in the B a l a n c e -S h e e t of a C ompany referred to in Part X.

Liabilities.
1. Summary of A uthorized Share C apital and Issued Share C apital.
2. Redeemable Preference Shares, stating date on or before which the
shares are or are liable to be redeemed.
3. Debentures stating the nature o f the security.
4. Redeemed debentures which the company has power to re-issue.
5. Loans (a) secured, stating the nature o f the security ; (b) unsecured.
6. Loans fro m Banks :
(a) Secured, stating nature o f security ;
( b) Unsecured.
7. P rofit and Loss Account, showing (unless disclosed in a separate
account) :
Balance as per previous Balance-Sheet.
A pp ro p ria tio n thereof.
P ro fit since last Balance-Sheet.
8- C ontingent lia b ilitie s .
9. Arrears o f Cum ulative Preference Dividends.

Assets.
1 Fixed Assets, w ith sufficient particulars to disclose their general nature,
and stating how their values are arrived at.
2. P relim inary expenses, so fa r as not w ritten off.

1 I f the cd n p in y has no c a p ita l d iv i Jed in to sh ire $ , the p o rtio n of th e statem ent re la tin g to
c a p ita l and shares m ust be o m itte d .
 Companies . 405

3. A n y expenses incurred in connection w ith any issue o f Share C apital

or Debentures, so fa r as not w ritten off.
4. I f it is shown as a separate item in or is otherwise ascertainable fro m
the books o f the company, or fro m any contract fo r the sale or
purchase o f any property to be acquired by the company, or fro m
any documents in the possession o f the company relating to the
stamp duty payable in respect o f any such contract or the conveyance
o f any such property, the am ount o f the good-w ill and o f any patents
and trade marks as so shown o r ascertained-
5. Interest paid on capital, so fa r as not w ritten off, showing the Share
C apital on which and the rate at which interest has been paid out
o f capital during the period to which the accounts relate.
6. D iscount allowed on shares issued, so fa r as not w ritten off.
7. Commission paid or allowed in respect o f any shares or debentures,
so fa r as not w ritte n off.
8. Loans outstanding to enable employees or trustees on their behalf to
purchase shares in the company.
9. Particulars showing :

(a) the am ount o f any loans which during the period to which
the accounts relate have been made either by the company
o r by any other person undsr a guarantee fro m or on a
security provided by the company to any director or officer
o f the company, including any such loans which were repaid
during the said period ;

and
(,b) the am ount o f any loans made in manner aforesaid to any
director or officer at any tim e before the period aforesaid
and outstanding at the expiration thereof ;

and
(c) the to ta l o f the amount paid to the directors as remunera
tio n fo r th eir services, inclusive o f a ll fees, percentages, or
other emoluments, paid to or receivable by them by or
fro m the company or by or fro m any subsidiary company.
N ote (1). T here sh a ll not be req u ire d to be sh o w n :

() in the case of a com pany the o rd in a ry business o f w h ic h includes the le n d in g of

m oney, lo a n s made by the company in th e o rd in a ry course of its business ;

( ) lo a n s m ade b y th e co m p a n y to any em ployee o f the com pany i f the loan does not exceed
tw e n ty thousand rupees and is ce rtifie d b y th e d irecto rs o f the com pany to have been
m ade in accordance w ith any p ra ctice adopted o r about to be adopted by th e com pany
w ith respect to loans to its em ployees.
 40 6 Companies.

N o t e (2). The foregoing shall not apply in relation to a managing director o f the com pany,
and in the case of any other director w ho holds any salaried em ploym ent or office in the com pany
there sh all not be required to be included in the said total amount any sums paid to him except
sums paid b y way of d irectors fees.
(W h e re a com pany is a h o ld in g com pany then the Balance-Sheet s h a ll disclose the p a rtic u la rs
req u ire d by section 132A.)

T H E C O M P A N IE S F O R E IG N IN T E R E S T S A C T .

[In d ia A ct X X , 1918.] (26th September, 1918.)

* * * *

Definitions. 2. ( / ) In this A c t
1 (a) the expression citizen o f the U nion has the meaning assigned
to i t in the C onstitution but shall include any person who holds
a certificate o f naturalization as a citizen of the U nion under
any law fo r the tim e being in force in the U nion and any
association incorporated in the U nion.
( b ) the expression restrictive provision means any provision in the
articles o f association o f a company which, in the opinion o f the
President o f the U nion, is designed to restrict or lim it or has the
effect o f restricting or lim itin g the share or shares or interest which
may be held, or the rights, powers or a u thority which may be
conferred upon or exercised by or on behalf o f persons other
than [citizens o f the U n io n ]1 in the company, or in respect o f the
control, management or direction o f the affairs thereof.
(2) A ll words and expressions used in this A c t and defined in the Burm a
Companies A c t shall be deemed to have the meanings respectively attributed
to them by that A ct.

A pplication
3. T his A c t shall apply to such companies as the President o f the U nion
o f Act. may, by no tifica tion in the Gazette, declare to be companies w ith restrictive
provisions, and any such notification shall specify the restrictive provisions.

A lte ra tio n s
4. So long as a n o tifica tion issued under section 3 is in force in respect
in r t s ric tiv e o f any company, notw ithstanding anything to the contrary in any other A ct,
p ro visio n s
and w in d in g (1) no alteration o f the articles o f association o f the company affecting
up. either d ire ctly or in d ire ctly any restrictive provision shall be o f
any effect u n til it has received the consent in w ritin g o f the
President o f the U nion ;
(2) a resolution fo r the voluntary w inding up o f the company shall be
o f no effect unless the President of the U nion authorizes or ratifies
it by a w ritten consent;

1 Substituted by the Union o f Burma (Adaptation of Law s I Order, 1948.

 Companies Foreign Interests . 407

(3) any C ourt w hich has ju risd iction to w ind up the company may in
its discretion refuse to make a w inding up order. In the
exercise o f its discretion the C ourt shall be guided by the con
sideration whether the w inding up is bond fide w ith a view to
the discontinuance o f the undertaking o r is w ith a view to
continuing the undertaking freed either w h o lly or in part fro m
any restrictive provision ;
(4) the President o f the U n io n in giving consent, or the C ourt in
m aking a w inding up order, as the case may be, may impose
such terms or conditions fo r giving effect to the purposes of
this A c t as he or i t thinks fit.

THE COMPANIES (WAR-TIME PROVISIONS) ACT,

1945
CO NTENTS.

P A R T I.

Preliminary.
1. S hort-title, commencement and duration.
2. Definitions.
3. C o u rt having ju ris d ic tio n under Act.
4 Registrar to give effect to a ll orders and directions o f C ourt.

PA R T II.

Relief to Companies affected b y war circumstances.

5. R estriction on execution o f decrees.
6. Power to C o u rt to afford re lie f to companies affected by war
circumstances.
7. Date o f operation, and terms and conditions o f direction under A ct.
8. Claim s against company not to be extinguished.

PART III.

Adjustment of Liabilities.
9. Company may apply fo r scheme o f arrangement.
10. Circumstances under w hich application under section 9 may be
entertained.
11. Procedure on application fo r scheme o f arrangement.
408 Companies ( War-time Provisions).

12. W hat a scheme o f arrangement may provide fo r.

13. Extension or revocation o f scheme when creditor not served w ith notice.
14. Enforcem ent o f scheme.
15. Revocation o f scheme.
16. Revocation not to affect new scheme.
17. Government to be bound by this Part.
18. Exemptions fro m stamp duty.

P A R T IV .

Reconstruction o f Records.

19. Company may reconstruct record damaged, lost or destroyed.

20- V a lid ity o f reconstructed record.
21. Decision o f dispute whether document has been damaged, lost or
destroyed.

PART V.

Transfer o f Shares.
22. Power o f company to decline to register transfer o f shares and to
refer m atter to decision o f Registrar.
23. Subsequent transfers o f shares how to be dealt w ith.

P A R T V I.

M iscellaneous

ly . False statement or omission by director, etc.

25. Fraudulently disposing o f property after approval o f scheme.
26. Costs o f proceedings under A ct.
27. Company not to be compelled to give effect to transfer o f shares or to
pay dividends.
27A. R e-registration under Burm a Companies A c t o f companies previously
registered in Burm a but subsequently registered in the U nited
Kingdom or In d ia or in any B ritis h D om inion, etc.
28. Power to President to make rules. ?
29. Power to H igh C o u rt to make-rules.
30. B ar to ju ris d ic tio n o f c iv il C ourt.
31. Saving o f rig h t o f suit.
32. Protection fo r acts done in good-faith.
33. D e finitio n of Company as respects certain sections o f this A ct.
 409

T H E C O M P A N IE S (W A R -T IM E P R O V IS IO N S ) A C T ,
1945.*

[B urma A ct X X V , 1945.] (1st August, 1946.)

W hereas it is expedient to make tem porary provision for affording relief

to com panies adversely affected by war circumstances ;
* * * *
I t is hereby enacted as follow s :

P A R T I.

Preliminary.

1. ( / ) This A c t may be called the Companies (W ar-Tim e Provisions) Short title,

comm ence-
A c t, 1945. ment and
(2) I t shall come in to force on such date as the President o f the duration.
U n io n may, by notification, appoint and different dates may be appointed fo r
different parts or sections o f the A c t . 1
(3) I t shall remain in force u n til the President o f the U nion, by
notification , declares it to be no longer in force.

2, In this A ct, unless there is anything repugnant in the subject or D e fin itio n s ,
context,
(i) authorized officer of a company means any director, managing
agent, manager o r secretary o r other person empowered under
the charter, articles o f association, regulations, bye-laws or
other instrum ent relating to the constitution o f the company,
or by a special resolution o f the company, to give directions in
regard to the business of the company, but does not include an
auditor ;
( ii) company means a company as defined in the Burma
Companies A c t ;
( iii) the C ou rt means the C ourt having ju risd ictio n under this A c t ;
(iv) prescribed means prescribed by rules made under this A c t ;
(v) Registrar means the Registrar o f Companies appointed under
the Burma Companies A c t, and includes any other person
appointed by the President o f the U nion to perform any o f the
duties o f the Registrar under this A c t ;
(vi) war circumstances means circumstances directiy or indirectly
attributable to any war in which H is B ritannic M ajesty may
be or has been engaged after the first day o f September 1939 ;

* P ub lish e d in Com m erce and S upply D epartm ent N o tific a tio n No.,12, dated the 13th O ctober,
1945, and rep u b lish e d in Burma G azette, 1946, P a rt I , page 154.
1 Parts I, I I , I l f , IV and V I o f th e A c t came in to fo rce in the w h o le o f B u rm a on 1st A ugust,
1946 See Burma Gazette, 1946, P a rt, I, page 462 ; and P art V o f the A c t came in to force in the
w h o le of B u rm a on 1st August, 1917. See Burm a G azette, 1947, P a rt I, page 367.
 410 Companies (War-Time Provisions)

(vii) Expressions used but not defined in this Act and defined in the
Burma Companies Act have the meanings assigned to them in
that Act.

Court having 3. (/) The Court having jurisdiction under this Act shall be the High
jurisdiction Court :
under Act.
Provided that the President of the Union may, by notification and subject
to such restrictions and conditions as he thinks fit, empower any District
Court to exercise all or any of the jurisdiction by this Act conferred upon the
Court, and in that case such District Court shall, as regards the jurisdiction
so conferred, be the Court in respect of all companies having their registered
offices in the district.
(2) Nothing in this section shall invalidate any proceeding by reason
of its being taken in the wrong Court.
R egistrar to
give effect to 4. The Registrar shall be bound to give effect to all orders passed and
all orders
and all directions given by the Court under this Act as if they were part of the
directions Burma Companies Act.
of Court.
PA R T II.

R e lie f to C om panies affected b y war circumstances.

R estriction
on execution 5. Part II of the Liabilities (W ar-Time Adjustment) Act, 1945, with the
of decrees. exception of section 8, shall apply to companies in the same way as it applies
to other debtors, with the following modifications :
(i) the Court shall mean the Court having jurisdiction under this
Act, and
(ii) in section 6 for the word insolvency the words winding up
shall be substituted.
Pow er to 6. The Court may, on the application of any company which finds itself
Court to
afford relief unable by reason of war circumstances to comply with any of the provisions
to companies of the Burma Companies Act or of the charter, memorandum and articles of
affected by
w ar circum association, regulations or bye-laws of the company or of any other law or
stances. instrument which is binding on the company, and after due notice of such
application to all persons interested in such manner as may be prescribed,
give directions modifying or suspending the provisions of any law, charter,
memorandum and articles of association, regulations, bye-laws or other
instrument as to the constitution of the company or as to the discharge of any
of the powers, duties or functions of the company.
D ate of 7. ( /) Any direction given in pursuance of the powers conferred by
operation
and term s section 6 may provide that such direction shall have effect from such date as
and may be specified therein, not being earlier than the eighth day of December,
conditions of
direction 1941, and any direction so given shall be in force for such period and shall be
under Act. subject to such terms and conditions as the Court may in each case provide.
(2) Any direction given in pursuance of this Part may be varied or
revoked by a subsequent direction made in like manner.
 Companies ( W ar-Time Provisions ). 411

8. N othing contained in this Part shall be deemed to authorize the C ourt

C laim s
a g a in st
to pass any order fo r the extinguishment o f any claim against a company. com pany
n o t to be
PAR T III. e xtinguished.

Adjustm ent o f Liabilities.

9- A n y company which is in financial difficulties owing to war circumstances
C om pany
may apply to the C ourt fo r the settlement o f an equitable and reasonable m ay a p p ly
fo r scheme
scheme o f arrangement w ith its creditors under this Part : of
arrangem ent.
Provided that an application shall not be made by a company under this
Part unless a special resolution w ith in the meaning o f the Burm a Companies
A c t has been passed by the company resolving that the application be made.

10. N o application fo r a scheme o f arrangement under this Part shall be C irc u m

stances
entertained unless the C ourt is satisfied that p rin cip a l object o f the company under w h ic h
is to carry on a business fo r p ro fit, and that the object of the application is to a p p lica tio n
enable the company to carry on or rccover that business ; and the Court under
section 9
shall, in considering whether it is practicable and proper to deal w ith the m ay be
affairs o f a company under this Part, have regard to the constitution and history enterta in e d .

o f the company and the means o f the members and officers thereof.

11. U ) Where a company makes an application under this Part fo r Procedure

a scheme o f arrangement and the C ourt is satisfied that on
a p p lica to in
(a) the company is unable to pay its accrued debts or w ill be unable fo r scheme o f
arrangem ent.
after payment o f its accrued debts ( if any) to meet, as they fa ll
due, any future lia b ilitie s in respect o f obligations already
incurred, or is in such a position that, if it is required to pay
the accrued debts and to meet any such future lia b ilitie s as they
fa ll due, it w ould have no reasonable prospect o f preserving or
recovering the business o f the firm , and (a) the position o f the
company is due to war circumstances, the C ourt shall cause
notice o f the application to be served on a ll the creditors o f the
company, who have debts provable in a w inding-up o f the
company by the C ourt, in such manner as may be prescribed, and
(i) i f the company and a m a jo rity in number and value o f such
creditors assent to a scheme framed fo r the purpose, shall
approve the same ;
(ii) when no scheme to which the company and a m a jo rity in number
and value o f such creditors assent can be affected, the Court
may approve any scheme which appears to it to be equitable
and reasonable.
(2) A scheme approved under sub-section ( 1) shall, subject to the follow ing
provisions o f this Part, be binding on the company and on all the creditors on
whom notice was served under sub-section ( / ) :
Provided that where any o f the said creditors has a debt which w ould be
entitled to p rio rity i f the company were wound-up, a scheme o f arrangement
 412 Companies ( W ar-Time Provisions).

shall not be approved unless the creditor assents thereto or the scheme secures
the payment o f the debt w ith the lik e degree o f p rio rity .

W hat a 12. A scheme o f arrangement approved under this Part may provide fo r
scheme o f
a rra n g e m e n t
the com position o f debts, the postponement o f payment o f debts, the
m ay p ro vid e assignment or charging o f any property o f the company in favour of the creditors,
fo r. and the management o f the companys business or the disposal o f any part o f
its property, and may, w ith the assent o f the other parties thereto, vary the
terms o f any lease, mortgage or contract to which the company is a party.

E x te n s io n or 13. Where it appears th a t a scheme o f arrangement approved under this

revo ca tio n Part is not binding on any creditor by reason o f the fact that he has not
o f scheme
w hen received due notice o f the application under sub-section ( / ) o f section 11, that
c re d ito r n o t creditor or any creditor who is bound by the scheme may apply to the C ourt
Served w ith
n o tice . to extend the scheme, w ith such variations as may be necessary, to the creditor
not bound thereby, or to revoke the scheme, and the Court may, i f it thinks fit,
extend or revoke the scheme accordingly.

E n fo rc e m e n t 14. A n y scheme o f arrangement approved under this Part may be enforced

o f scheme.
by the C ourt on the application of the company or o f any creditor bound
thereby, and any disobedience o f an order o f the C ourt made on any
such application shall be deemed to be a contempt o f C ourt and shall be
punishable accordingly-

R evocation 15. I f the company fa ils to com ply w ith an approved scheme, o r i f it
o f sch a n e.
appears to the C ourt tha t the scheme cannot fo r any sufficient reason proceed
w ith o u t undue delay or w itho ut injustice to the creditors or to the company,
or that the company is g u ilty o f any act or omission w hich w ould constitute
an offence under this A c t or has in any respect fa iled to act in complete good
fa ith towards its creditors, the C ourt may, i f it thinks fit, on the application o f
any creditor bound by the scheme or, i f the ground is injustice to the company,
on the application o f the company, revoke the scheme, but w ith o u t prejudice to
the v a lid ity o f anything done in the meantime.

R evocation 16. The revocation of' an approved scheme by the C ourt shall be w ith o u t
n o t to affect prejudice to the m aking o f a new scheme o f arrangement, and the C ourt may
n e w scheme.
give such directions as it thinks fit w ith respect to the m aking o f a new scheme-

G o vernm ent 17. This Part shall, subject to such exceptions and m odifications as may
to be bound be prescribed by the President o f the U nion by notification in this behalf,
b y th is P art.
apply in relation to debts and lia b ilitie s due to or incurred towards the
Government, property in w hich the Government has an interest, leases,
mortgages and contracts entered into w ith the Government, proceedings by the
Government, and the exercise o f remedies by the Government, in the same
manner as it applies to subjects :
Provided th at nothing in this section shall be taken as affecting the
prosecution o f any c rim in al proceeding.
 Companies ( W ar-Tim e Provisions ). 413

18. Where a scheme o f arrangement is approved under this Part, every E xe m p tio ns
fro m sta m p
deed, conveyance, assignment or other instrum ent relating solely to property d u ty.
w hich was the property o f the company on the date o f the approval o f the
scheme and which, after the execution of the instrum ent, is or remains the
property o f the company or the property o f a trustee appointed fo r the purposes
o f the scheme, shall be exempt fro m stamp duty.

P A R T IV .

Reconstruction of Records.
19. ( I ) Where any document or record pertaining to a company has been Com pany
m ay
damaged, lost or destroyed in Burm a through war circumstances, it shall be reco n stru ct
la w fu l fo r the company or an authorized officer thereof to take such measures reco rd
damagedi
as it or he may deem necessary or expedient fo r the purpose o f reconstructing lost o r
such document or record fro m such in fo rm a tio n as may be available. destroyed.
(2) F or the purpose o f reconstructing any document or record w ith in
the meaning o f sub-section ( / ) the company or authorized officer thereof shall
have power to call fo r any document or any inform ation fro m any person, and
may require th a t any such in fo rm a tio n shall be given in the fo rm of
an affidavit.
(3) I f any person refuses to produce or furnish any document or
in fo rm a tio n in his possession or to swear any affidavit in connection therewith,
when required so to do under the provisions o f sub-section (2) by any company
or authorized officer thereof he shall, notw ithstanding anything contained in
this A c t, be precluded subsequently fro m questioning in any manner the
correctness o f any document or record which has been reconstructed under the
provisions o f this Part in so fa r as it affects his interest in the company.

20. ( / ) A n y document or record which has been reconstructed in V a lid ity of

pursuance o f this Part shall be submitted to the Registrar fo r his approval. reco n stru c
ted record.
(2) On such approval being obtained the document or record so
reconstructed shall, except as otherwise provided by this A ct, be deemed to
be a correct copy o f the o rigin al document or record, and may be used fo r a ll
purposes fo r which the o rig in a l m ig ht have been used ; and any action taken
or any payment made thereunder shall be deemed to be as valid and effectual
as i f such action or payment had been taken or made under the original
document or record.

21. I f any question arises as to whether a document or record has been D e cision o f
dispute
damaged, lost or destroyed as the result of war circumstances the question w h e th e r
shall be referred to the Registrar and his decision thereon shall be final. docum ent
has been
damaged, lost
PART V. or destroyed.

Transfer o f Shares.
22. ( / ) Where on an application fo r the registration of a transfer of P ow er o f
shares in a company the company has reason to believe th a t such alleged com pany to
de clin e to
transfer is not a genuine transfer o f the rig h t to the shares, or is fraudulent or re g is te r
 414 Companies ( War-Time Provisions).

tra n s fe r of collusive or is open to suspicion on any other ground, or where the inform ation
shares and to given to the company by the parties to the transfer is insufficient to enable the
re fe r m a tte r
to d e c is io n company to effect the registration thereof, the company may decline to register
o f R e g istra r. the tra n s fe r; and in a ll cases where it so declines to register a transfer it shall
refer the m atter w ith a statement o f the facts o f the case and its own opinion
thereon to the Registrar fo r his decision :
1 Provided that where the im pedim ent to registration o f the transfer of
shares is due to omissions or mistakes which do not raise any suspicion of
fraud or collusion and which are capable o f rectification by the parties to
the transfer, i t shall be la w fu l fo r the company to return the application fo r
rectification w ithout reference to the Registrar, but the return of such application
fo r rectification shall not be delayed fo r more than three months from the date
o f the receipt o f the application w ithout the previous sanction of the Registrar.
(2) A n y order passed by the Registrar in any m atter referred to him in
pursuance o f sub-section ( / ) shall be binding on the company and on a ll
persons interested in the transfer.

Subsequent 23. Where the transfer o f a share in a company has been registered in
tra n s fe rs o f
shares h o w
pursuance o f this Part, nothing in this A c t shall apply to a subsequent transfer
to be d e a lt o f the said share effected after the date o f such registration and any application
w ith .
fo r the registration o f such subsequent transfer shall be disposed of as if this
A c t had not been passed.

P A R T V I.

Miscellaneous.
False
statem ent o r 24. I f any director, managing agent, manager, or other officer o f a
om ission by company kn ow ingly makes any false statement, or om its to state any m aterial
d ire c to r, etc.
fact, fo r the purpose o f securing the assent o f the creditors to a scheme of
arrangement under P art I I I or the exercise in favour o f the company o f any
power o f the C o urt under this A ct, he shall be liable on conviction to
im prisonm ent fo r a term which may extend to two years, or to a fine which
may extend to two thousand rupees, or to both.

F ra u d u le n tly
d isposing o f
25. I f any company, after the approval o f a scheme o f arrangement,
p ro p e rty fraudulen tly sells, removes or disposes o f any part o f its property, every
a fte r
n p rro v a l of director, managing agent, manager or other officer o f the company who
scheme. know ingly and w ilfu lly carries out, authorizes, permits or connives at such
sale, rem oval or disposal shall be liable on conviction to im prisonm ent fo r a
term which may extend to two years, or to a fine which may extend to two
thousand rupees, or to both.

1 This p r o u s o was inserted by Act X IX , 1948.

 Companies ( War-Tim e Provisions). 415

26. The costs o f any proceedings under this A c t before the C ourt or the Costs o f
proceedings
Registrar shall be in the discretion o f the C ourt or the Registrar, as the case under A ct.
may be :
1 Provided tha t neither the C ourt nor the Registrar shall make an order
fo r costs against a company except costs fo r advertisements in the newspapers
unless, in the opinion o f the C ou rt or the Registrar, as the case may be, the
company has w ith ou t due cause or justifica tion attempted to avail itself o f the
provisions o f this A ct.

27. D uring such period as may be prescribed by the President o f the C om pany
n o t to be
U nion by notificatio n in this behalf, nothing contained in the Burma Companies co m p e lle d to
A c t or in this A c t or in any other law fo r the tim e being in force shall require g iv e effect to
tra n s fe r o f
any company to give effect to any transfer o f shares therein or to make shares o r to
paym ent o f any dividend that has fallen due. pay
divid e n d s.

227A. ( / ) A n y company which was, p rio r to the 31st day of December, R e-registra-
tio n u n d e r
1941, registered under the law in Burm a and which, after the aforesaid B u rm a
date, was subsequently registered in the U nited Kingdom , or In d ia , or in any Com panies
A ct of
B ritis h D om inion or Colony or in any B ritish Protectorate or in any T e rrito ry com panies
in respect o f which a mandate on behalf o f the League o f Nations has been p re vio u sly
registered
accepted by H is B ritan nic M ajesty and is being exercised by H is B ritannic in B urm a
M ajestys Government in the U nited K ingdom , may apply to the Registrar but
subsequently
appointed under the Burm a Companies A c t fo r the re-registration of the registered in
company under the Burm a Companies A c t ; and where any such company is the U n ite d
K in g d o m , or
re-registered in accordance w ith the provisions hereof, such company shall, fo r In d ia or in
the purposes o f the Burm a Companies A ct, be deemed to have been duly n y B ritis h a
D o m in io n ,
registered fro m the date on which it was o rig in a lly registered in Burma p rio r etc.
to its registration in the U nited Kingdom or In d ia , or in any B ritish D om inion
or Colony or any B ritish Protectorate or in any T e rrito ry in respect o f which
a mandate on behalf o f the League o f N ations has been accepted by His
B rita n n ic M ajesty and is being exercised by H is B rita n n ic M ajestys
Government in the U nited K ingdom , as the case may be.
(2) The President o f the U nion may prescribe the circumstances and
conditions under which the re-registration o f a company may be effected, and
where the circumstances or conditions have been so prescribed, the
re-registration shall be made only when such conditions and circumstances
are properly conformed to.

28- Pow er to
The President o f the U nion may make rules determ ining the manner
President to
in w hich and the conditions subject to w hich the Registrar shall exercise his make ru le s.
powers under this A ct.

29. ( / ) The H ig h C ourt may make rules fo r carrying into effect Pthe
o w e r to
H ig h C o u rt
provisions o f this A ct. to m ake
ru le s.
1 S u b stitu te d b y A c t X IX , 1948.
2 Inserted by A ct X X I X , 1946.
 416 Companies {W ar.Tim e Provisions).

(2) In p articular, and w ith o u t prejudice to the generality o f the foregoing

power, such rules may provide
(a) fo r the fo rm and contents o f applications under section 6 or
section 9 ;
(b) fo r the giving o f notice to creditors and others and the form and
contents o f such notices ;
(c) fo r the manner o f p roo f o f debts and the method of valuing
securities, debts and lia b ilitie s, including future and contingent
lia b ilitie s ;
(d) fo r the fees to be paid on applications in connection w ith
proceedings on applications ; and
(e) generally fo r the procedure to be adopted in proceedings under
this A ct.
B a r to 30. Except as otherwise provided in this A ct, no c iv il C o u rt shall have
ju ris d ic tio n
ju ris d ic tio n in any m atter which the Registrar is empowered by or under this
o f c iv il
C ourts. A c t to determine or shall take cognizance o f the manner in which the Registrar
exercises any power vested in him by or under this A ct.

S-w ing of 31. Except as provided by Parts I I and I I I , nothing contained in this
r ig h t o f s u it. A c t and nothing done under or in accordance w ith this A c t shall be deemed
to preclude any person fro m in stitu ting a suit or other proceeding in any
competent C ou rt under any law fo r the tim e being in force fo r establishing
any rig h t or claim against any company to which such person may deem
him self to be presently entitled.

P rotection
32. Except as provided by this A ct, no suit or other legal proceeding
f o r acts done shall lie against any company or any person in respect of anything which is
in good
fa ith .
in good fa ith done or intended to be done under the provisions o f this A ct.
D e fin itio n o f 1 33. The definition of Company in section 2 shall, as respects sections
C om pany 2, clause (i), 3, 5 to 8, 19 to 21, 26 and 28 to 32, be deemed to include a
as respects
ce rta in society registered under the Societies Registration A ct and a Provident
sectioi.s o f Insurance Society registered under the Provident Insurance Socieies A c t ;
th is A ct.
and in the application o f section 6 to such societies, th words the
Burm a Companies A c t therein shall be construed as meaning the Societies
R egistration A c t or the Provident Insurance Societies A ct, as the case may be.

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 INDEX TO VOLUME IX.

33 C^ g 33 j^ S II
P a rt P age

33Sai cotjjcS^ou
Accidents A c t, F atal X I
A d m in istra tio n o f P ublic F unds A ct X III 147
Assurance Companies A ct, L ife X II 59
A tto rn e y Act, Powers of X III 109
B u rm a Companies Act X IV 210
C h a rita b le E ndow m ents Act X III 157
C h a rita b le and Religious T ru sts A c t, X III 161
Companies A ct, Burm a X IV 210
Companies F oreign Interests A ct X IV 406
Companies Act, L ife Assurance X II 59
Com panies (W a r-T im e P ro visio n s) A ct, 1945 X IV 407
C ontract A ct XI 3
C o n trib u to ry P ro vid e n t Funds A c t X II 98
Co-operative Societies Act X IV 195
E ndow m ents A ct, C haritable X III 157
F a ta l A ccidents A c t X 1
F o re ig n Interests A c t, Com panies X IV 406
Insurance Com panies Act X II 56
Insurance Societies A ct, Provident X II 88
L ife Assurance Companies A c t X II 59
M ussalm an W a k f Act X III 164
O fficia l Trustees A c t X III 138
P a rtitio n A ct ... ... X IV 169
P a rtn ersh ip A c t ... X IV 171
Pow ers o f A tto rn e y A ct X III 109
P ro vid e n t Funds A ct X II 94
P ro vid e n t Funds A c t, C o n trib u to ry X II 98
P ro v id e n t Insurance Societies A ct X II 88
P u b lic Funds A ct, A d m in is tra tio n o f X III 147
R e g istra tio n A c t, Societies X IV 191
R eligious Societies A ct X III 154
Societies A ct, Co-operative ... X IV 195
Societies A c t, P rovident Insurance X II 88
Societies R e g istra tio n Act X IV 191
Societies A ct, Religious X III 154
T rusts A ct X III 110
T ru s ts A c t, C h a rita b le and R eligious X III 161
Trustees A c t, O fficia l X III 138
W a k f Act, Mussalman X III 164
(W a r-T im e Provisions) A c t, Companies ... X IV 407
0?gC&3cg060l S33QJS ... .. 09 90E
G ^ e o b o S l^ 330036^ 833^ 33cSgOG3 J OOO
JjcSq[S S]$9 33c5gOG3 0? o9g
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