PANNA LAL SOOD Vs. THE JAGATJIT DISTILLING AND ALLIED INDUSTRIES LIMITED
HIGH COURT OF PUNJAB AND HARYANA
Panna Lal Sood
The Jagatjit Distilling And Allied Industries Limited
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Kartar Singh, J. -
(1.) THIS is an application for rectification or the Jagatjit Distilling and Allied Industries Company's register under Section 38 of the Companies Act by entering the name of Panna Lal petitioner as holder of 15,500 shares Nos. 130871 to 131570, 131671 to 140870 and 145271 to 150870. The material facts bearing on the question of law involved may shortly be stated as follows:
(2.) PANNA Lal, petitioner purchased 15,500 shares of the above -mentioned numbers of the Jagatjit Distilling & Allied Industries from Mr. L.P. Jaiswal Managing Director, respondent company and sent the scripts delivered to him by the transferor for being transferred in his favour to the company on 6th June 1947 along with the deed of transfer executed in his favour by Mr. Jaiswal. The petitioner also informed the company by a letter of 23rd June 1947, Ex. P. 4, that he was sending Rs. 575/4/ - by means of a draft to cover the transfer charges. According to the allegations made by the petitioner in the application as well as in his statement recorded in Court, he did not hear from the company regarding the registration of shares in his name on the basis of transfer for some time and on 20th August 1947 he in the capacity of the Manager if the Traders Bank, New Delhi invited the immediate attention of the Company to return the share scripts that had been sent for transfer. This elicited no reply and another reminder was sent on 7 -2 -1949, complaining as to why share scripts were being withheld. This time he was, however, informed that the scripts could not be sent to him as they pertained to shares which had been forfeited on account of the fact that the call money was not paid. Accordingly another communication Ex. P. 8 was sent under registered cover asking company to return the scripts immediately as the company could not withhold the scripts in spite of the forfeiture of the shares. But the respondent company reiterated in their letter dated 25th February, 1949, Ex. P. 9 that the share scripts could not be sent to the petitioner as they related to forfeited shares. The petitioner further stated in Court that he had never received any notice of any call having been made by the company in respect of the unpaid amount of the shares and that he came to know only from the report of the Registrar Joint Stock Company, Patiala, that the shares in question were transferred in his name in 1 -5 -1948 and that the same had been forfeited on 5 -5 -1948 and on this information he was driven to file this application for the rectification of the company's register as stated above. It was prayed inter alia that the resolution of 6 -8 -1947 in regard to the call money was ultra vires, illegal and inoperative because the item to consider the making of the said call did not appear on the agenda of the meeting called for 6 -8 -1947 and that the steps to enforce the call were taken at a time when the country was passing through a crisis of extreme severity and that under the circumstances the alleged forfeiture and removal of the name of the petitioner from the register of members of the respondent company was untenable and contrary to all canons of law and justice. The application was supported by affidavit and was admitted to full hearing and notice was issued to the respondent company and intimation was also given to the Registrar, Joint Stock Companies, Patiala. The petition was resisted and hotly contested by the respondent company on various grounds. Some of these which form the subject of controversy may be summarised as under:
(a) That the petition was based on allegations which cannot be tried under Section 38 of the Companies Act as under the memorandum & Articles of Association, the Directors of the Company were vested with absolute discretion to make a call and the same cannot be challenged;
(b) That the shares were forfeited for non -payment of the call money and as such the Company was entitled not to return the scripts;
(c) That the averment made in paragraph No. 5 of the petition that the petitioner had no knowledge before February 1949 was wrong and that the petitioner knew all about the call long before;
(d) That the call was made on 6th August 1947, and was to be paid on or before the 30th September 1947, and that the notices were served through post as well as through the press and the final notice was given on 12th April 1948, that if the payment of the call money was not made by the 4th May 1948 the shares would be forfeited. It was claimed that in view of these circumstances the petition was misconceived and the move of the petitioner was mala fide and was made in order to harass the Company.
(3.) ON one of the hearings arguments were heard on the preliminary objection with regard to the maintainability of the application under Section 38 but in view of the fact that reference was made to the merits of the case in the course of arguments opportunity was given to both sides to adduce evidence in the form of affidavit or otherwise and the decision on preliminary objection was also held over to be given along with the final disposal of the case. Both sides now have filed their affidavits as well as produced certain documents which have been duty exhibited on the record. Furthermore the petitioner, Panna Lal has come into the witness -box as his own witness while Mr. C.K. Khanna, Secretary of the Company was examined on behalf of the respondent. Some other witnesses were summoned by the petitioner but they were given up and full dressed arguments followed.;
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