JAWAHAR MILLS LTD Vs. SHA MULCHAND AND CO LTD

JUDGEMENT

(1.) This is an appeal from the judgment of Clark J. arising out of proceedings under Section 38, Companies Act, to rectify the register. The respondent company was the applicant and the application was granted by the learned Judge. The substantial prayer in the application was in these terms:

(2.) Jawahar Mills Ltd., the appellant, is a company registered under the Companies Act. Shah Mulehand and Co. Ltd., were the managing agents of Jawahar Mills Ltd., from the starting of the company till 30-6-1939 on which date they resigned the managing agency. On that day Shah Mulehand and Co. Ltd., held 5000 ordinary shares of RS. 10 each in Jawahar Mills Ltd., bearing Nos. 15048 to 20047 in respect of which shares Rs. 5 was paid by that date, i. e., RS. 2 along with the application and Rs. 3 on allotment. The respondent company owed to Jawahar Mills a sum of RS. 25,804-12-1 on the date of resignation of the managing ageney which sum included the allotment money of RS. 15,000 in respect of the shares.

(3.) The respondent company is a private limited company and at all material times, it consisted of only two members T. V. T. Govindarajulu Chetty and K. N. The Jawahar Mills Ltd. vs. Sha Mulchand and Co. Ltd. (in liquidation by the Official ... Page 3 of 14 Sundara Ayyar. On 20-8-1939 the appellant company made two calls in respect of the shares held in that company, one of Rs. 2 and the other of Rs. 3 per share payable on 1-10-1939 and 1-12-1939 respectively. On 12-8-1940 the directors of the appellant company found that all the shareholders did not pay the calls and passed a resolution on that date granting a further period of two months to pay the call money failing which it was intimated to the shareholders that the shares would be forfeited. The managing agents of the appellant company gave due notice of this resolution to the concerned shareholders and the respondent company which also received one of these notices from the managing agents did not comply with the demand and the directors by their resolution of 25-11-1940 forfeited the shares of the respondent company. Some doubt was raised by the auditors of the company regarding the validity of the forfeiture and the directors, therefore, cancelled the forfeiture and reentered the respondent company as a member on 31-12-1940. On 20-2-1941 the directors resolved that notice should be issued to Shah Mulchand and Co. informing them that they were in arrears of calls to the extent of Rs. 25,000 and that the said amount should be paid at the registered office of the company on or before 31-3-1941 and that on failure to pay up the said amount on or before the due date, the shares would be forfeited. This resolution though it bears the date 25-2-1941 was passed in circulation. In pursuance of this resolution, a notice bearing date 15-3-1941 but posted on the 17th was issued to the respondent company calling upon them to pay up the amount of Eg. 25,000 on or before 31-3-1941 and that in default the shares would be forfeited. The notice was delivered on 20-3-1941. The amount was not paid and on 5-9-1941, the directors of the appellant company passed a resolution forfeiting the shares. The application for rectification out of which this appeal arises was filed on 5-3-1946 and the respondent company raised the contention that the forfeiture was invalid and that the register of the company should be rectified by restoring the name of the respondent company in respect of the 5000 shares numbering 15048 to 20047.