RAMESH CHANDRA MITTER Vs. JOGINI MOHAN CHATTERJI

JUDGEMENT

(1.) This is an appeal from an order made by Mr. Justice Chaudhuri on an application under Section 38 of the Indian Companies Act for the removal of the name of the respondent from the Register of Members of a Company known as the Bengal C., Ltd.

(2.) On the 19th June 1915 the respondent agreed to purchase six ordinary shares of the Company on the understanding, that he would be elected as one of its Special Directors. On the same date he paid Rs. 1.000 for the six shares, which were issued to him two days later. On the 27th June 1915 the appellant entered into an agreement with the Company for a first charge, to the extent of Rs. 10,000, on all uncalled share capital; he advanced Rs. 5,000, on the same day and the balance was paid on the 11th January, 1916. The mortgage instrument, which was executed by the Company in favour of the appellant on the 21st March 1916, referred specifically to thirty ordinary shares of Rs. 1,000 each, six ordinary shares, class A , of Rs. 500 each, and twenty-seven preference shares of Ra. 100. It is not disputed that the six ordinary shares specified in the schedule to the document are those that belonged to the respondent; consequently, there can be no doubt that the appellant had a specific charge on the six shares in question.

(3.) It appears that the respondent was not elected as a Special Director. He thereupon instituted a suit in the Court of Small Causes, on the 7th May 1918, for damages for breach if agreement and obtained a decree against the Company on the 7th August 1918. On the 20th December 1918 the respondent made an application under Section 38 of the Indian Companies Act, with a view to have his name removed from the Register of Members of the Company. The Company did not oppose the application, which was, however, contested by the present appellant. Mr. Justice Chaudhuri expressed a doubt, whether the appellant, a mortgages of the Company, had locus standi in these proceedings, but held that, even if he was allowed to intervene, it would be inexpedient to decide summarily the objection raised by him. In this view, Mr. Justice Chaudhuri, on the 4th March 1919, made an order in favour of the respondent, without opportunity afforded to the appellant to place his objections before the Court for adjudication. The mortgagee accordingly lodged this appeal on the 11th April 1919. Thereafter, on the 16th June 1919, the respondent made an application for liquidation of the Company and three days later obtained an order in that behalf. The appellant he now argued, first, that Section 38 is comprehensive enough to entitle a person is his position to oppose the application of the respondent for removal of his name from the Register of Members of the Company; and, secondly, that on the indisputable facts of the case, the application should have been refused on the merits. In our opinion, these contentions are well founded.