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Fazulbhoy Jaffer Vs. the Credit Bank of India Ltd. - Court Judgment

LegalCrystal Citation
SubjectCompany;Contract
CourtMumbai
Decided On
Case NumberO.C.J. Appeal No. 8 of 1914
Judge
Reported inAIR1914Bom128(2); (1914)16BOMLR730
AppellantFazulbhoy Jaffer
RespondentThe Credit Bank of India Ltd.
DispositionAppeal dismissed
Excerpt:
company-liquidation-minor share-holder-receipt of dividends even after attaining majority--liability as contributor.;the appellant purchased fifty shares of the respondent banking company in 1910. he was then a minor; but he attained majority in august 1912. from the date of his purchase to november 1913, when the affairs of the company were wound up by the court, he had regularly received dividends on his shares, in the liquidation proceedings he contended that he was not liable to be included in the list of contributories of the company, for he was, at the date of the purchase of the shares, a minor ;-;negativing the contention, that inasmuch as he had intention, ally permitted the company to believe him to be a share-holder and in that belief to pay him dividends on his shares since he..........member ' cannot keep the interest and prevent the company from having it and dealing with it as their own without being bound to bear the burthen attached to it ' : london & north western railway co. v. m'michael (1851) 20 l.j. 238.9. this view of the position of a share-holder pleading minority when registered was taken by stirling j. in re yeoland consols limited (1888) 58 l.t. 922 and the learned chamber judge has, we think, rightly adopted it in the present case. the same principle underlies section 248 of the contract act. qui sentit commodum sentire debet et onus.
Judgment:

Macleod, J.

1. This is an application by a share-holder to be struck off the list of contributories on the ground that he was an infant at the time he applied for the shares and that therefore, his contract with the Company was void. The applicant may be considered to be in the same position as a shareholder whose name has been put upon the register either without his consent or without any application on his part. As soon as he becomes aware of the fact he may refuse to accept the ownership of the shares within a reasonable time but if he allows his name to remain on the register without doing any thing he must be taken to have acquiesced. In Ebbetts' case (1870) 5 CH. App. 302 a minor made a similar application, and Giffard L.J. remarked; 'I do not rely on the transfer which he executed, but on the ground that he acquiesced for a lengthened period in being on the register.

2. Again in Re Yeoland Consols Limited (1888) 58 L.T. 922 the applicant was put upon the register when a minor without any application on his part. On an application to remove his name from the list of contributories on the winding up Stirling J. said; 'Being on the register of the Company for the shares he is prima facie entitled to them. Shares are property which may turn out to be valuable, and may on the other hand turn out to carry with them only a very serious liability. The law assumes that where property is assigned to a person the assignee accepts it, but he may refuse to accept it if he does so within a reasonable time.' The present applicant knew he was on the register for the shares. From his coming of age in July or August 1913 a till the winding-up order was made in November 1913 he must be taken to have known that his name was on the register and since he chose to allow his name to remain there without doing anything it cannot now be removed.

3. There was an appeal.

4. Kanga, for the appellant.

5. The Official Liquidator in person.

Basil Scott, Kt., C.J.

6. The appellant appeals from an order of the Chamber Judge including him in the list of contributories in the Credit Bank of India, a limited Company now being wound up by the Court. The appellant applied for fifty shares in this company which were allotted to him on the 8th of January 1910 on payment of Rs. 10 per share the nominal value being Rs. 50. If he has been rightly included among the contributories he will be liable for Rs. 40 per share. He contests his liability on the ground that he was a minor at the date of the allotment. It is not disputed that he attained majority in August 1912. He has received dividends at the rate of six per cent, per annum on the sums paid upon his shares twice in each of the years 1911, 1912, and 1913 and he has raised no objection to his name being included in the register of members until January 1914. Under these circumstances it cannot be doubted that he has intentionally permitted the Company to believe him to be a shareholder and in that belief to pay him dividends on his shares since he attained majority. He is therefore estopped now by his conduct while a person sui juris from denying as between himself and the Company's representative that he is a share-holder.

7. This is sufficient to dispose of the appeal; but we will express our opinion upon the point made in the excellent argument of Mr. Kanga. His contention was that the matter must be decided according to the law contained in the Contract Act under which a minor is not competent to contract and there fore it cannot be said that he has agreed with the Company to become a member which is one of the conditions of membership under the Companies Act of 1882, Section 45. This argument would be more convincing if the words used in Section 45 were has contracted with the Company,' for under the Contract Act it is not every agreement that is a contract. Moreover, it appears from the Statutory Article 45 in Table A of the Companies Act that a minor may be a member of a Company under that Act.

8. It has been settled law in England for many years that a registered holder of shares in a Statutory Company is a person with a vested interest in property which may be burdened with an obligation to pay calls in the future. The registered member ' cannot keep the interest and prevent the Company from having it and dealing with it as their own without being bound to bear the burthen attached to it ' : London & North Western Railway Co. v. M'Michael (1851) 20 L.J. 238.

9. This view of the position of a share-holder pleading minority when registered was taken by Stirling J. in Re Yeoland Consols Limited (1888) 58 L.T. 922 and the learned Chamber Judge has, we think, rightly adopted it in the present case. The same principle underlies Section 248 of the Contract Act. Qui sentit commodum sentire debet et onus.


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