1. This is a petition filed by Ved Prakash, Maya Prakash and Satya Prakash sons of Hira Lal and the partnership firm Messrs. Hira Lal and Sons under Ss. 397 and 398 of the Indian Companies Act against the company Messrs. Iron Traders (Private) Limited and three persons, respondents Nos. 2 to 4, described as de facto Directors of the Company though it is alleged that they had no proper authority to act as such, and two other respondents, Hira Lal the father of the first petitioner and Shiv Charan Lal both of whom are apparently regarded as their supporters by the petitioners. The petitioners claimed to hold a large number of shares in the Company and it was alleged that they were being oppressed by the persons in control of the Company and they therefore sought certain reliefs.
(2) The petition was resisted on behalf of the Company by the three respondents who are managing its affairs and who have challenged the locus stand of the petitioners to maintain the petition by denying that they are members of the Company.
(3) In the circumstances the following preliminary issues were framed:
'1. Whether the petitioners have any locus stand to file the petition.
2. If issue No. 1 is proved, should the present petition be stayed on account of the litigation already pending between the parties.'
Today was fixed for the evidence of parties and none was produced by the petitioners. The only witness examined was Shanti Sarup Khanna the Accounts Clerk of the Company, produced by the contesting respondents. He brought the register of members and deposed in accordance with the contents of the register that the names of the petitioners were removed from the list of members on the 16th January 1957 as a result of a resolution of the Directors of the Company for rectification of the register in this behalf.
The witness also stated that the petitioners had filed an application in the Court of the District Judge under S. 153 of the Companies Act for rectification of the register in which the act of the Directors was challenged. This application was dismissed by the learned District Judge by his order dated the 25th of November 1957 on the ground that the nature of the dispute between the parties was such that it could not be properly decided in summary proceedings under S. 153 and the petitioners were advised to seek their remedy by a regular suit. The witness deposed that so far no such suit had been instituted by the petitioners.
(4) In my opinion there is force in the preliminary objection of the respondents, since as the register of members of the Company stands today, the petitioners are not members, and the words of Ss. 397 and 398 clearly show that petitions under these sections can only be maintained by members of the Company.
(5) On behalf of the petitioners it was argued, and the learned counsel was prepared to cite cases on the point, that the Act of the Directors in rectifying the register on 16-1-1957 and striking out the names of the petitioners as members was illegal. This view may be correct. But in my opinion it is a view which should be asserted in proper proceedings i.e. in a regular suit after the learned District Judge has dismissed the petitioners' application for rectification under S. 153 of the Act.
(6) It was pointed out that the removal of the petitioners was mentioned in the petition, and one of the reliefs which they sought in the petition was the rectification of the share register of the Company restoring it to the stage which existed before the 16th of January, 1957.
(7) From this it would appear that in fact the petitioners, having already had their application for rectification of the register dismissed by the learned District Judge, and not having filed a suit to establish their rights as advised by him, are now seeking the same relief under the guise of an application under Ss. 397 and 398 of the Act. The learned counsel for the petitioners was unable to cite any case in which such a course had been permitted, and in my opinion he will never be able to do so, since I consider that a petition under Ss. 397 and 298 can only be maintained by a person or persons who are shown as members in the register of the Company, and if the persons who wish to file such a petition are not shown as members rightly or wrongly they must first have the register rectified before they can bring a petition. I accordingly uphold the objection embodied in first of the preliminary issues and do not consider it is necessary to go into the second. I accordingly dismiss the petition with costs to respondents Nos. 1 to 4. Counsel's fee Rs. 100/-.
(8) Petition dismissed.