Decided on February 15,1994

Calico Dyeing And Printing Mills Limited Respondents

Cited Judgements :-



- (1.)Special leave granted.
(2.)This appeal arises out of Company Petition No. 39 of 1985 which s dismissed by a learned Single Judge of the Bombay High court by his order dated 27/02/1987 and an appeal filed against the said order was also dismissed by a division bench. The order of the division bench is impugned in this appeal.
(3.)The appellants are the son, widow and married daughter of one late Shri Prabhudas V. Mehta who was holding 100 equity shares of the respondent -- Calico Dyeing and Printing Mills Ltd. ('company' for short) of the face value of Rs. 100. 00 each. Shri Prabhudas V. Mehta died on 26/08/1974 without leaving any will. The appellants are the only legal heirs and representatives of Shri Prabhudas Mehta and they filed a company petition for rectification of the register of members of the Company by deleting the name of Shri Prabhudas V. Mehta and substituting in its place the names of the appellants in respect of those 100 shares in the Company bearing Distinctive Nos. 9101 to 9200. Prior to his death the deceased Shri Prabhudas V. Mehta was holding these shares and was working as an employee of the Company. It appears that there were certain disputes between Shri Prabhudas V. Mehta and the Directors of the Company who made efforts to purchase the said shares. The negotiations in this regard could not be completed in view of the sudden death of Shri Prabhudas V. Mehta. It is also alleged that the appellants entered into negotiations for sale of shares which were carried on for several years. Extensive correspondence ensued between the appellants and the Company. However, as no positive reply was forthcoming for the transmission of shares, the appellants sent a letter to the Company on 28/05/1977 for transmission of shares and for the notice of the annual general meeting stating that they were entitled to the same even in the absence of their names being taken on the register of members by virtue of Articles of Association and the provisions of the Companies Act. On 27/06/1977 a reminder was sent to the Company. On 9/07/1977 a reply was given by the Company stating inter alia that the appellants were not entitled to exercise any voting right in any of the meetings of the Company. On 21/09/1977 the then existing Articles of Association were replaced by a new set of Articles of Association wherein new articles were introduced conferring power on the Company to reject any application for transfer or transmission without assigning any reason in that behalf. According to the appellants this was done mainly with an intention of defeating the appellants' rights as shareholders-cum-beneficiaries of the said shares. In the month of March 1984 the Company closed down its operations and by arriving at a settlement with the workers retrenched all the workmen obtaining voluntary resignations from them. It is alleged by the appellants that this was done with the motive of making huge profits by the Directors and their related shareholders by disposing of the plants, machinery etc. On or about 23/06/1984 the Company requested the appellants to approach the Company for transmission of shares after obtaining the succession certificate in respect of the estate of the deceased Shri Prabhudas V. Mehta. On 21/08/1984 the appellants received the heirship certificate in which 100 shares were mentioned as one of the assets standing in the name of Shri Prabhudas V. Mehta in the Company. On 31/08/1984 the appellants sent a letter to the Company intimating that heirship certificate-cum-letter of administration has been received by them and therefore the Company should give to them the details about the formalities to be complied with for the purpose of effecting the transmission of the said shares in their favour. On 16/09/1984 since there was no response from the Company a reminder was sent. On 19/09/1984 the Company requested theappellants to send certified true copy of the heirship certificate to do the needful. On 21/09/1984 the appellants addressed a letter to the Company requesting to furnish the details of the procedure so as to comply with the prerequisites of transmission of shares. On 21/11/1984 the appellants forwarded a true copy of the heirship certificate and requested the company to do the needful. A reminder also was sent on 29/12/1984. Since there was no reply from the Company, Company Petition No. 39 of 1985 was filed in the High court of Bombay praying for rectification of the register of members. The Company filed an affidavit opposing the grant of the relief prayed for, stating that the Directors of the Company have decided to refuse to register the appellants as members of the Company in exercise of the powers conferred under the Articles of Association of the Company. The appellants filed a rejoinder. On 17/04/1985 the Company filed an additional affidavit purporting to enclose therewith a resolution of the Company dated 9/04/1985 by which the Board of Directors declined to register the shares of the appellants as the owners thereof and to admit them as members. On 17/04/1985 the learned Single Judge of the High court dismissed the petition on the ground that alternative remedy was available under Section III of the Companies Act. Questioning the same the appellants preferred an appeal which was admitted. Pending the disposal of the appeal, the appellants took out notice of motion and the interim order was passed directing the Company not to dispose of its assets and that the Company should give notice of each and every general meeting to the appellants. The division bench ultimately allowed the appeal and the matter was remanded back to the learned Single Judge to decide the same afresh. Further affidavits were filed. The company petition again after remand came up for hearing before the learned Single Judge and the same was again dismissed on the ground that the appellants should file either an appeal under Section I II of the Companies Act or file a separate suit to agitate the issues involved in view of the diverse disputes raised between the appellants and the Company. Being aggrieved by the said order the appellants again filed an Appeal No. 516 of 1987. Pending the said appeal various applications were made for diverse interim reliefs. In respect of some of the reliefs that were refused the appellants filed a Special Leave Petition (Civil) No. 13605 of 1988 in this court but before the same came up for hearing, the division bench of the High court completed the hearing of the main appeal and dismissed the appeal on 22/12/1989. Questioning the same the present appeal is filed.

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