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Scientific Apparatus and Chemical Works, Ltd. Through Sukhdeo Prasad Vs. B. Joti Prasad and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAllahabad
Decided On
Reported inAIR1945All47
AppellantScientific Apparatus and Chemical Works, Ltd. Through Sukhdeo Prasad
RespondentB. Joti Prasad and anr.
Excerpt:
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Judgment:
ORDER

Malik, J.

1. The plaintiff, Joti Prasad, sold certain shares that he held in the Scientific Apparatus and Chemical Works, Ltd., Agra, to E.C. Khandelwal, defendant 2, and the said sale was registered in the books of the company on 20th January 1942. After the registration of the said sale certain dividends were declared in October 1942. The dividend was paid sometime in the month of November to E. C. Khandelwal. The plaintiff in January 1943 gave a notice to the company claiming that under a private arrangement, between him and the purchaser he was entitled to a proportionate amount of the dividend. The company, having repudiated his claim to the dividend on the ground that they could only pay the dividend to the person in whose name the shares were registered, the plaintiff filed this suit against the company and against R. C. Khandelwal. The Court below held that there was an agreement between the vendor and the vendee under which it was arranged that the vendor would be entitled to the proportionate amount of the dividend. The lower Court further went on to hold that the sale was negotiated through one Nathi Lal who was working as a clerk in the defendant company and Nathi Lal was informed by the plaintiff of this agreement. On that ground the Court below held that the company had knowledge of this agreement and it was equally liable to the plaintiff and passed a joint decree against the company and against Mr. R. C. Khandelwal. R. C. Khandelwal has submitted to the decree. The company has filed this revision before me.

2. It is urged on behalf of the company that the company was bound to pay dividend to its member whose name was registered in the books of the company and the company could not take notice of any private arrangement entered into between the vendor and the vendee. It is further argued that any information given to Nathi Lal would not in law amount to an information to the company and even on that ground the company was not liable to apportion the dividend. To my mind it would lead to great complications if it is held that by reason of a private arrangement between the vendor and the vendee of certain shares a joint stock company is liable to apportion dividend between the two and it is on that account that in most articles of association of companies there is a provision that the company would recognise the claim of the person whose name is registered in its share registers. In this case also, in the articles of association of the company, there are Articles 143 and 145 which make the dividend payable to the person whose name is registered in the books of the company.

3. I, therefore, am of the opinion that the lower Court was not justified in giving a decree to the plaintiff against the company. Though R. C. Khandelwal has not filed a revision, Mr. Gopalji Mehrotra appeared before me and he has raised two points. His' first contention is that even though R. C. Khandelwal did not file a revision he is entitled to challenge the decree of the Court below. To my mind it is not open to R. C. Khandelwal, having submitted to the decree of the Court below, now to urge before me that the decree was not properly passed. Even on the merits, however, R. C. Khandelwal has no case. Mr. Gopalji Mehrotra has urged that the claim of the plaintiff was based according to his view on the law as contained in Section 36, T.P. Act, and he was not relying on a private contract. I had the plaint read out and I am satisfied on a. reading of the plaint and the other evidence which the Court below has relied on that the plaintiff was setting up a private agreement and the Court below has accepted that 'there was such a private agreement between the vendor and the vendee. The plaintiff's suit was, therefore, rightly decreed against R. C. Khandelwal.

4. Mr. Sanyal on behalf of the plaintiff has urged that if there is no decree against the company and the dividend is not apportioned between the vendor and the vendee his client, the plaintiff vendor, will not get the benefit of income-tax rebate as the Income-tax Officer will not take into account his proportionate share of the income-tax paid by the company without a certificate to that effect. To my mind this difficulty that may arise will not entitle the Court to give Mr. Sanyal's client a decrde against the company. What I suppose his client may be able to do is to summon the dividend warrant and the income-tax certificate from the vendee Khandelwal and prove from other evidence before the Income-tax Officer that he received a part of the dividend after deduction of the proportionate amount of income-tax. I allow this revision, modify the decree of the Court below and direct that the plaintiff's suit shall be dismissed against the company. The decree, however, against R. C. Khandelwal will stand. The company will get its costs in both the Courts from the plaintiff.


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