- (1.) THIS appeal is from an order of P. B. Mukharji, J. , refusing to direct the Calcutta Stock Exchange Association Limited to file a return of allotment of shares under section 75 of the Indian Companies Act. 1956. The applicant is one of the shareholders of the Calcutta Stock Exchange Association Limited. The Association is a company limited by shares. The issued capital of the company consists of 277 fully paid up ordinary shares of Rs. 1,000/- each. Out of these shares, 70 shares were forfeited by the Association and later re-issued by it. The applicant alleges that it is the duty of the Association to file return of allotment in respect of the re-issue of these shares.
(2.) THE forfeiture of shares is authorised by the Articles of Association of the Calcutta Stock Exchange Association Limited. Article 21 authorised the Committee of the Association to expel or suspend any member in certain events. Articles 22, 24 and 27 are as follows :-Article 22:- "any member who has been declared a defaulter by reason of his failure to fulfill any engagement between himself and any other member or members and who fails to fulfill such engagement within six months from the date upon which he has been so declared a defaulter shall at the expiration of such period of six Calendar months automatically cease to be a member. " Article 24:- "upon any member ceasing to be a member under the provisions of article 22 hereof and upon any resolution being passed by the Committee expelling any member under the provisions of Article 21 hereof or upon any member being adjudicated insolvent the share held by such member shall ipso facto be forfeited. " Article 27:- "any share so forfeited shall be deemed to be the property of the Association, and the Committee shall sell, re-allot and otherwise dispose of the same in such manner to the best advantage for the satisfaction of all debts which may then be due and owing either to the Association or any of its members arising out of transactions or dealings in stocks and shares. " It is now well-settled that these Articles are lawful and that forfeiture of shares on grounds other than nonpayment of calls is valid and is not in contravention of the Indian Companies Act: see Calcutta Stock Exchange Association, Ltd. v. S. N. Nundy and Co. , (1) I. L. R. (1950) 1 Cal. 235; Naresh Chandra Sanyal v. Ramani Kanto Roy (2) 49 C. W. N. 502.
(3.) THE point in dispute is whether the company is bound to file a return of allotment in respect of the re-allotment and re-issue of these forfeited shares. P. B. Mukharji, J. , held that the company is not bound to file such a return and he accordingly dismissed the application. Mr. Maitra contends that the forfeiture operates as an extinguishment of the forfeited shares so that the re-issue of shares is really an issue of new shares in the share capital of the company and that as such the company is bound to file a return of allotment. I am unable to accept this contention.;