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Saudagar Singh and ors. Vs. Gurdip Singh Gill and ors. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtPunjab and Haryana High Court
Decided On
Case NumberLetters Patent Appeal No. 304/77 in Company Petition No. 110/77 and Civil Misc. No. 589/79
Judge
Reported in(1979)81PLR515
ActsIndian Stamps Act, 1899 - Sections 2, 11, 14, 18, 35 and 62
AppellantSaudagar Singh and ors.
RespondentGurdip Singh Gill and ors.
Appellant Advocate G.R. Majithia and; M.L. Sharma, Advs.
Respondent Advocate Bhagirath Dass and; S.K. Hirajee, Advs.
DispositionAppeal dismissed
Excerpt:
.....and he allowed the same to be used and hence the votes of kartar singh were polled in favour of gurdip singh gill group. however, the official chairman was not satisfied regarding the proxy sent by rampal singh. 93 of 1977) had been filed in which it had been stated that rampal singh, having come to know about the dispute regarding the genuineness of his proxy, sent his affidavit dated 17th june, 1977, duly attested by a notary public, wherein he affirmed the genuineness of the proxy dated 14th may, 1977. the original affidavit has been placed on the file as well as the accompanying letter and the envelope. majithia that rampal singh can be asked to send a fresh proxy executed before some independent and respectable person or authority like some responsible officer in the indian high..........groups of shareholders in this company, one is led by saudagar singh, appellant, and the other by gurdip singh gill, respondent no. 1. the authorised capital of the company is rs. 3 lakhs divided into 3,000 equity shares of rs. 100 each. the subscribed and paid up capital of the company is rs. 2,94,100. the total number of subscribed shares of the company are 2,941. kartar singh, naranjan singh and jaswant singh who had 29, 31 and 11 shares, respectively, had died. one karam din who held 22 shares had migrated to pakistan. leaving these aside, the effective voting strength comes to 2,848 and the number of members owning these shares is 46. disputes arose regarding the election of the directors of the company. a meeting was held for the election of the board of directors on september 20,.....
Judgment:

Sukhdev Singh Kang, J.

1. Dissatisfied with the judgment of the learned single judge, who rejected their objections to the proxy of Ram Pal Singh, Saudagar Singh and others have filed this appeal.

2. Sewak Bus and Transport Co. (P.) Ltd. is a private company being engaged in the business of transport having its registered office at Moga, district Faridkot. Broadly speaking, there are two groups of shareholders in this company, one is led by Saudagar Singh, appellant, and the other by Gurdip Singh Gill, respondent No. 1. The authorised capital of the company is Rs. 3 lakhs divided into 3,000 equity shares of Rs. 100 each. The subscribed and paid up capital of the company is Rs. 2,94,100. The total number of subscribed shares of the company are 2,941. Kartar Singh, Naranjan Singh and Jaswant Singh who had 29, 31 and 11 shares, respectively, had died. One Karam Din who held 22 shares had migrated to Pakistan. Leaving these aside, the effective voting strength comes to 2,848 and the number of members owning these shares is 46. Disputes arose regarding the election of the directors of the company. A meeting was held for the election of the board of directors on September 20, 1976. Both parties claimed that they had won.

3. Gurdip Singh and others filed a petition under Sections 397, 398 and 399 read with Section 402 of the Companies Act (hereinafter referred to as 'the Act'), in which they alleged that the members of their group had been elected directors in the meeting held on 20th September, 1976. Saudagar Singh and others--respondents mentioned in the petition--had taken forcible possession of the buses, the premises and the records of the company in the month of March, 1977. It was also alleged that Saudagar Singh and others were in a minority and they were not entitled to run the affairs of the company; that, on the other hand, Gurdip Singh and others were in a majority of shareholders, but they were being kept out and were being oppressed by the group of Saudagar Singh and others. It was prayed that the respondents, Saudagar Singh and others, may be removed from the illegal possession of the company and they be directed to hand over the records of the company to the petitioners. Another application (C. A. No. 37 of 1977) under Section 403 of the Act, read with Order 40, Rule 1 of the CPC, for appointment of a receiver, was filed by the petitioners in the main petition and it was prayed that a receiver may be appointed to manage the affairs of the company during the pendency of the main petition. The respondents, Saudagar Singh and others, opposed this prayer. However, Sharma J. appointed the official liquidator as a receiver, vide order dated 14th April, 1977. The respondents, Saudagar Singh and others, went up in appeal against the order of appointment of the receiver through Letters Patent Appeal No. 74 of 1977. During the pendency of the appeal, the parties entered into a compromise. On the basis of that compromise, an order was passed on 18th April, 1977, that the proceedings of the meeting held on September 20, 1976, were superseded and nobody was deemed to be elected a director.It was ordered that an official chairman be appointed who should hold a special general meeting of the company for the purpose of electing seven directors and the managing director. It was also ordered that the official receiver should take charge of the company and run the same till the election of the new directors and after such election, the official receiver was directed to hand over charge of the office and the business of the company to the newly elected directors. Both the parties were directed to give lists and addresses of the members of the company to the official chairman.

4. Still another application (C. A. No. 46 of 1977) was filed and the same was disposed of by Sharma J. on 3rd of May, 1977. An agreed order was passed that the list of shareholders as it stood on 24th August, 1976, should be used by the official chairman for the purpose of conducting the election and notices for electing the directors and the managing director be issued to the shareholders on the basis of that list. It was also ordered that the shareholders who had gone abroad be served with telegraphic notices about the date of the meeting.

5. Notices were issued to the shareholders that the special meeting of the company will be held on 2nd June, 1977, at 11 a.m. After due service, the official chairman convened a special general meeting which was attended by the shareholders. Both the groups led by Saudagar Singh and Gurdip Singh Gill attended the meeting. Two proxies had been received from Canada, one by Kartar Singh and another by Rampal Singh, two shareholders. Both the proxies were sent in favour of Gurdip Singh Gill. In fact, the official chairman had received one letter from Kartar Singh, which accompanied two proxies in favour of Gurdip Singh Gill. Rampal Singh also sent a letter along with a copy of the proxy sent to the official chairman, direct to Gurdip Singh Gill. Gurdip Singh Gill produced that proxy, the letter and the envelope before the official chairman at the time of the meeting. Saudagar Singh raised objection to these proxies. The official chairman was satisfied that the proxy sent by Kartar Singh was in order and he allowed the same to be used and hence the votes of Kartar Singh were polled in favour of Gurdip Singh Gill group. However, the official chairman was not satisfied regarding the proxy sent by Rampal Singh. Consequently he did not take any decision on the same and referred that matter for decision to the company judge. Apart from the proxy of Rampal Singh, Gurdip Singh Gill group got 1,400 votes and the group of Saudagar Singh obtained 1,403 votes. Rampal Singh, above mentioned, had 45 shares, and thus he had 45 votes. As mentioned earlier, he had sent a proxy in favour of Gurdip Singh Gill group. If these votes were counted in favour of Gurdip Singh, then they were entitled to elect seven directors and the managing director. However, it may be mentioned that before transmitting the case to this court, the official chairman recorded the statements of three witnesses. Baldev Singh and Jagdish Singh appeared on behalf of the objector, Saudagar Singh, and Gurdip Singh made his own statement. Baldev Singh, who is a labour officer of the company, stated that Rampal Singh always signed in Urdu and he never signed in English. He stated that the proxy in dispute was not signed by him. Jagdish Singh also made a statement to that effect. However, Gurdip Singh Gill produced the proceedings book of the company. It bore signatures of Rampal Singh in English.

6. Before the learned single judge, it was urged on behalf of the appellants, Saudagar Singh and others, that the signatures on the proxy were not of Rampal Singh and that the proxy was not a valid proxy as it had not been properly stamped and in the absence of proper stamp, the proxy could not be used in evidence or taken into account. The appellants did not dispute before the official chairman or the learned single judge that the signatures on the proceedings book were of Rampal Singh. However, the respondents contended that the signatures on the proxy did not tally with the admitted signatures of Rampal Singh in the proceedings book. Before the learned single judge no objection had been raised regarding the proxy of Kartar Singh. That proxy is witnessed by the priest of the Sikh Temple of Abbot Ford and Rampal Singh. It is attested by Rampal Singh and the same priest. The signatures of Rampal Singh tallies with the signatures on the proxy purported to have been sent by Rampal Singh. The latter proxy is attested by Kartar Singh. The signatures on the proxy of Rampal Singh tally with the signatures of Kartar Singh oh the proxy sent by Kartar Singh. The same is the position with the proxy sent direct to Gurdip Singh Gill by Rampal Singh. The signatures on the letter purported to have been sent by Rampal Singh along with the proxy sent to Gurdip Singh also tally with the signatures of Rampal Singh on the two proxies i.e., one sent to the official chairman and the other to Gurdip Singh Gill. On behalf of the petitioners, an application (C.A. No. 93 of 1977) had been filed in which it had been stated that Rampal Singh, having come to know about the dispute regarding the genuineness of his proxy, sent his affidavit dated 17th June, 1977, duly attested by a Notary Public, wherein he affirmed the genuineness of the proxy dated 14th May, 1977. The original affidavit has been placed on the file as well as the accompanying letter and the envelope. The signatures of Rampal Singh on this document (affidavit) are also similar to the signatures on both the proxies.

7. On behalf of the respondents, it was pointed out to the learned single judge that there was some variation in the signatures of the proxy and the signatures in the proceedings book. The learned judge also noticed a slight difference in the signatures on the two documents. However, the learned judge after thoroughly scrutinizing the same came to the conclusion that the small variation could occur with the passage of time. Rampal Singh was about 70 years of age at the time when he signed the proxy. The signatures in the proceedings book had been appended about seven years earlier. With the advancement of age and passage of time such variations were, according to the learned single judge, natural. The variation was the result of the tremors, which result from the trembling of the hands in aged people. The learned single judge considered all these facts and came to a firm conclusion that the signatures on the proxies were of Rampal Singh. The learned judge also did not find any merit in the submission that certain attending circumstances also do cast doubt on the genuineness of the proxy.

8. The learned single judge also rejected the second contention that the proxies were not properly stamped. He held that the proxies had been properly stamped within three months of their receipt in India under Section 18 of the Indian Stamp Act, 1899. If they were stamped within three months of the receipt in India, they were valid. He did not accept the argument that Section 18 of the Indian Stamp Act, 1899, was not applicable. So, the learned judge held that the proxy sent by Rampal Singh was a valid proxy and, as such, the votes of Rampal Singh, which are 45 in number, should be credited to the group of Gurdip Singh Gill.

9. Before us also, Mr. G.R. Majithia has advanced the same arguments. He has vigorously argued that the signatures on the proxy purported to have been sent by Rampal Singh are not the signatures of Rampal Singh. They, according to him, do not tally with the admitted signatures in the proceedings book. The learned counsel has tried to point out that the signatures on the proxy are at variance with the signatures on the proceedings book. He has contended that there are tremors in the signatures of Rampal Singh on the proxy. As observed by the learned single judge, the signature of Rampal Singh on the proxy, to my mind, are of the same person, who has signed the proceedings book. It has to be kept in mind that the signatures in the proceedings book were appended seven years prior to the signing of the proxy. In this long interval slight variation in the style and manner of writing is bound to occur. With the advancement of age also the signatures of a person undergo change. In old people slight trembling of hands is a common sight. We have ourselves compared the signatures on the two copies of the proxies, the letter addressed to Gurdip Singh Gill, the affidavit, the signatures on the proxy of Kartar Singh and the signatures in the proceedings book and find that they are of one and the same person. Even before us, Mr. Majithia has not challenged the genuineness of the proxy of Kartar Singh. He has not challenged the decision of the official chairman accepting the proxy of Kartar Singh. The proxy of Kartar Singh is attested by Rampal Singh. The signatures on this proxy fully tally with the signatures of Rampal Singh on the proxies purported to be the proxy sent by Rampal Singh. Similarly, the signatures of Kartar Singh on the proxy of Rampal Singh fully tally with the signatures of Kartar Singh on the proxy sent by Kartar Singh to the official chairman, regarding which there is no dispute.

10. Mr. Majithia then pointed out that there are other suspicious circumstances which suggest that the proxy of Rampal Singh is not a genuine document. He argued that in the register of members, the address of Rampal Singh is of a village in Punjab. As such, notice to him and his brother, Jagdish Singh, who is co-sharer with him in these shares, was issued at the village address. No notice was sent by the official chairman to Rampal Singh at his address in Canada. There is no force in this contention. Firstly, somebody from his house situate in his village may have sent information to him regarding the impending meeting. Secondly, Kartar Singh and Rampal Singh, it seems, executed and scribed the proxies at the same time. Both have attested the proxy of each other. These have also been attested by the same priest. Both the proxies were sent in one envelope to the official chairman, with one letter by Kartar Singh. It seems that Kartar Singh on receipt of notice from the official chairman informed Rampal Singh of the meeting to be held for the election of the directors of the company ; and on receipt of this information both of them scribed the proxies and attested them and got them attested by the priest and sent them to the official chairman. It may also be mentioned that Kartar Singh has been a director of this company when he was in India. So, it seems that he has retained his interest in the affairs of the company though he is in Canada.

11. Mr. Majithia then contended that the fact that the proxy had been sent to Gurdip Singh Gill direct, also casts a suspicion on its genuineness. I am afraid, I have not been able to appreciate this argument. As a matter of abundant caution, Rampal Singh sent one copy of the proxy to Gurdip Singh Gill also. He may be thinking that if the proxy sent direct to the official chairman is somehow misplaced, then the proxy sent to Gurdip Singh Gill would be used for the purpose of voting at the election. There is nothing unusual or suspicious about this.

12. Mr. Majithia also contended that Gurdip Singh Gill was a liar and in view of his conduct no reliance can be placed on his statement. Firstly, we have not placed any reliance on the statement of Gurdip Singh in coming to the conclusion that the signatures on the proxy are of Rampal Singh. Secondly, nothing has been brought out on the file to show that Gurdip Singh is a liar. It was argued that at first Gurdip Singh had stated that the records of the company had been taken into possession by Saudagar Singh and others, but all the same Gurdip Singh Gill produced the proceedings book before the official chairman. Mr. Gurdip Singh Gill had in a general way stated that the premises, records and business, etc., of the company were taken into possession by Saudagar Singh and others. He had not stated that he did not have any document of the company in his possession. Perhaps, he was referring to the current books which were being used from day to day for running the affairs of the company. The proceedings book in question relates to the year 1969-70. For the purpose of the petition under Sections 397, 398 and 399 read with Section 402 of the Act, this proceedings book had no relevance. The records alluded to in this application pertain to the year 1977. So, there is nothing in the conduct of Gurdip Singh to detract from his veracity. Just to repel the imaginary doubts of the respondents, we made a suggestion to Mr. Majithia that Rampal Singh can be asked to send a fresh proxy executed before some independent and respectable person or authority like some responsible officer in the Indian High Commission. After consulting his client, who was present in court during the hearing of this appeal, Mr. Majithia informed us that he would not be satisfied with this procedure as, according to him, Rampal Singh was under the influence of Gurdip Singh Gill. So taking into account all the facts and circumstances, we are of the considered view that the proxy in dispute had been signed by Rampal Singh and it is a genuine document.

13. The second submission of Mr. Majithia has also no force. Mr. Majithia, after referring to Sections 2, 11, 14, 18, 35 and 62 of the Indian Stamp Act, 1899, has argued that the proxy sent by Rampal Singh was not a valid proxy. According to him, at the time of the meeting, i.e., on 2nd June, 1977, it was not stamped and, therefore, it could not be taken notice of or acted upon and was thus to be rejected. We have carefully gone through Sections 2, 11, 14, 18, 35 and 62 of the Indian Stamp Act, 1899, with the assistance of the learned counsel and find that the case is fully covered by Section 18 of the Indian Stamp Act, 1899, which is reproduced below for facility of reference :

'18. Instruments other than bills and notes executed out of India.--(1) Every instrument chargeable with duty executed only out of India, and not being a bill of exchange or promissory note, may be stamped within three months after it has been first received in India.

(2) Where any such instrument cannot, with reference to the description of stamp prescribed therefor, be duly stamped by a private person, it may be taken within the said period of three months to the Collector who shall stamp the same, in such manner as the State Government may by rule prescribe, with a stamp of such value as the person so taking such instrument may require and pay for.'

14. According to the provisions of Section 18, every instrument chargeable with duty executed out of India and not being a bill of exchange or promissory note, may be stamped within three months after it has been first received in India. In the present case, the proxies were received in India on 23rd of May, 1977. This is the date put by the post office people on the envelope. The requisite stamps were affixed on these proxies on 19th of August, 1977, i.e., well within three months of their receipt in India. So, these proxies are validly and properly stamped. It was argued by the respondents that the provisions of Section 35 of the Indian Stamp Act and not of Section 18 of the said Act were applicable to the present case. This contention is also devoid of any force. Section 35 is not at all applicable to the facts and circumstances of the present case. When the proxies were considered and acted upon by this court, these were properly stamped. The official chairman was appointed only to conduct the proceedings of the special meeting to be held to elect the directors. That was the only task assigned to him by the learned company judge. He did not have any authority to receive the evidence under any law. So, when the proxies were produced before him they were not produced in evidence of something. There was no lis pending. When these proxies were received in evidence by the company judge, who had the authority to receive evidence, these were properly and validly stamped. The learned counsel placed reliance on the decision in Tata Iron and Steel Co. Ltd., AIR 1928 Bom 80, where it had been held that the proxies, which are unstamped and upon which the stamps have not been cancelled, must be excluded and the votes recorded on the authority of such proxies go out. This authority is not applicable to the facts of the present case as the proxy in the present case is properly stamped and it has also been properly cancelled. The scheme of the Stamp Act also suggests that, except in the case of instruments like promissory notes and bill of exchange, etc., an opportunity is provided to the concerned parties to make good the deficiency of the stamps. The learned single judge had validly allowed the petitioners to affix the requisite stamps on the proxies of Rampal Singh and Kartar Singh. So, the proxy of Rampal Singh cannot be held to be invalid on the ground that it was not properly stamped.

15. No other point was raised.

16. Consequently, we find no merit in this appeal and the same is hereby dismissed, but keeping in view the facts and circumstances of the case, there will be no order as to costs.

17. The official receiver has moved Civil Misc. No. 589 of 1979 for being relieved of the duties of an official receiver. Since we have dismissed the Letters Patent Appeal (No. 304 of 1977), the official receiver will be relieved of his duties in compliance with the judgment of the learned single judge. As such, no separate orders are required to be passed in this Civil Misc. Application (No. 589 of 1979).


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