- (1.) THIS first appeal by the State of Rajasthan (which will hereinafter be called the state) arises out of a suit filed by it against the defendant Bundi Electric Supply company Limited, Bundi (which will hereinafter be referred to as 'the Company")in the Court of Senior Civil Judge, Bundi. The Company also filed a cross suit against the State. The suit by the State was filed on 4-7-1958 and was registered as Civil Original Suit No. 7 of 1958 and the suit by the Company was filed on 1610-1958, and registered as No. 9 of 1958. The relevant facts giving rise to these two suits may be stated as follows :
(2.) THERE was a commercial concern owned by the former State of Bundi called the bundi Petrol Automobile Supply Agency (hereinafter referred to as "the Agency")which used to carry on business of running buses and trucks and also dealt in petrol and spare motor parts etc. It is alleged in the plaint filed by the State that the Company was registered under the Bundi Companies Act, 1936. It wanted to obtain a licence for monopoly of motor service within the territory of the former bundi State and therefore it approached the then Ruler of Bundi for the said purpose and a licence was granted to the Company by the Ruler on 31-7-1944, a copy of which has been placed on the record and marked Exhibit 7. According to the State, one of the conditions contained in the licence was that the defendant company would "take over the Bundi Petrol and Automobile Supply Agency (a commercial undertaking of the Bundi State) lock, stock and barrel and in lieu thereof pay a sum of Rs. 4,00,000 to the Bundi State". The case of the State is that the Company paid Rs. 1,00,000 in cash and agreed to issue 30,000 fully paid up ordinary shares of the face value of Bs. 10 each (total value of the shares being bupees 3,00,000) in lieu of the balance of the price money i. e. Rs. 3,00,000. The bundi State agreed to this proposal and the Company allotted 30,000 ordinary fully paid up shares. Besides the above mentioned 30,000 shares, Bundi State further acquired 11,600 ordinary fully paid up shares of Rs. 10 each of the company. With the merger of the Bundi State into the State of Rajasthan, the state became the owner of these shares by virtue of the provisions of Article 295 (2) of the Constitution of India. It is averred by the State that the Company had been declaring and paying dividends on all the aforesaid shares upto the year 1950 but thereafter it stopped doing so. For the year 1950-51 the Company paid rs. 16,407 as dividend and allotted 1640 bonus shares together with a sum of Rs. 7 in cash but it did not issue share certificates of these 1640 shaves. The State has alleged that the Company had declared dividends and other benefits on its ordinary shares for the years 1950-51 to 1955:56 but it has mala fide not paid any dividends to the State for this period. The State therefore claimed the following reliefs in its plaint: (i) The company be directed to pay a sum of Rs. 1,41,587. 50 paisa as the amount of dividend along with interest thereon at 6% per annum Rs. 27,740. 79 paisa. (ii) It may be declared that the State is entitled to receive dividends and benefits on all the shares held by it as and when the Company declares the dividends on the shares. (iii) The Company may be directed to allot and issue 2520 ordinary fully paid up shares of the value of Rs. . 10 each in lieu of bonus shares to be allotted for the year 1950-51 and also to issue share certificates for 1640 Bonus shares already allotted in 1950-51.
(3.) THE defendant company denied the State's claim, in the written statement filed by it on 10-10-1958. It admitted that the Company was desirous of obtaining monopoly rights with respect to plying of motor stage-carriages and other vehicles within the former Bundi State and had in pursuance thereof offered certain shares to the Ruler of Bundi, who accepted them subject to certain modifications contained in the order dated 6-1-1944, a copy of which has been placed on the record and marked Exhibit 5. It was also admitted that the Company was granted monopoly to ply motor buses and lorries throughout the territory of the State of bundi for a period of 30 years, commencing from 11th January, 1964 by licence exhibit 7. It was, however, denied that the purchase price of Rupees 4,00,000 was settled as the price for taking Over the Bundi Petrol and Automobile Supply agency from the Bundi Darbar. The Company pleaded that the stocks held by the agency were worth about a lakh of rupees at that time, and therefore, Rs. 1,00,000 were paid as price of the agency and the rest of the amount i. e. Rs. 3,00,000 were to be paid in lieu of grant of monopoly rights to ply buses and lorries within the territory of the former bundi State for a period of 30 years. It was stated by the Company "that these rights have been denominated as "goodwill rights" and the shares have been called as "goodwill shares" or money by the Bundi Government in their Order dated 10-1-1944 and in Clause No. 6 of the license Ex. 7. It was thus pleaded that out of Rs. 4,00,000 agreed to be paid by the Company to the former Bundi State rs. 3,00,000 were paid by issue of 30,000 shares of Rs. 10 each in consideration of the aforesaid monopoly rights granted to the Company. It was, however, admitted by the Company that the dividends declared up till year 1950 only were paid to the State and the dividends claimed by the State in its suit have not been paid. With respect to these 30,000 shares, it was further pleaded that the price of these shares was agreed to be paid and adjusted by writing off Rs. 10,000 each year during the period 30 years for which monopoly rights had been granted to the Company. The Company went on to say that the Motor Vehicles Act, 1939 was applied in the State of Rajasthan from 1st April, 1951 and with the coming into force of this Act the monopoly granted to the Company came to an end and thus the consideration for the purchase of 30,000 shares viz. the grant of monopoly rights "fell, and became illusory and inoperative as soon as the rights were infringed". The case of the Company, thus, is that the State is not entitled to any dividend on the 30,000 shares after the Company's financial year 1950-51. So far as the bonus shares of the value of Rs. 16,400, i. e. 10% of the 11,600 (sic) shares of the value of Rs. 1,16,000 is concerned, the company did not raise any dispute as to the ownership of the State of these shares. It was also pleaded by the Company that the State had at no time in general meeting of the Company raised any protest against the Company s intention of not paying the dividends on the said 30,000 shares despite the fact that the notice of each general meeting of the Company was duly sent to the Finance Secretary of the Government of Rajasthan for the last 7 years and thus the State was estopped from claiming dividends on these shares, after the cessation of the monopoly rights granted to the Company.;