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Shakuntala Rajpal and Others Vs. Mckenzie Philip (India) P. Ltd. and Others - Court Judgment

LegalCrystal Citation
Subject Company
CourtDelhi High Court
Decided On
Case NumberC.P. No. 25 of 1982 and C.A. No. 95 of 1984
Judge
Reported in[1986]60CompCas545(Delhi)
Acts Companies Act, 1956 - Sections 151 and 155
AppellantShakuntala Rajpal and Others
RespondentMckenzie Philip (India) P. Ltd. and Others
Cases ReferredHemlata Saha v. Stadmed P. Ltd.
Excerpt:
company - maintainability of petition - section 155 of code of civil procedure, 1908 - petition filed under section 155 for rectification of register of membership of respondent-company by widow and five sons and daughters of deceased who incorporated respondent-company - discretion of court under section 155 to refuse to go into question of fact in case it feels that matter to be decided in regular suit - on finding matter not necessary to be tried as separate suit - judge would not commit irregularity or illegality in deciding question of fact on basis of documentary evidence on record - petition maintainable. - section 13: [altamas kabir & cyriac joseph,jj] custody of child - welfare of child vis--vis comity of courts - the minor girl child of 3 1/2 years was brought to india by her.....d.r. khanna, j.1. this petition moved under section 155 of the companies act, 1956, for rectification of the register of membership of the respondent company, namely, the mcknezie philip (india) pvt. ltd., by the widow and five sons and daughters of late som parkash rajpal, who died on march 16, 1968, reflects an unfortunate and simple background. the same, however, has been rendered a chequered struggle for the petitioners by what may hereafter be stated as a concerted effort by the respondents to defeat their rights. 2. the respondent-company was incorporated by som parkash rajpal and his younger brother, kapil muni rajpal, in the year 1951, each holding 50 shares of the value of rs. 100 each. it was said to be the first manufacturer of transistor radios in india under the trade name.....
Judgment:

D.R. Khanna, J.

1. This petition moved under section 155 of the Companies Act, 1956, for rectification of the register of membership of the respondent company, namely, the Mcknezie Philip (India) Pvt. Ltd., by the widow and five sons and daughters of late Som Parkash Rajpal, who died on March 16, 1968, reflects an unfortunate and simple background. The same, however, has been rendered a chequered struggle for the petitioners by what may hereafter be stated as a concerted effort by the respondents to defeat their rights.

2. The respondent-company was incorporated by Som Parkash Rajpal and his younger brother, Kapil Muni Rajpal, in the year 1951, each holding 50 shares of the value of Rs. 100 each. It was said to be the first manufacturer of transistor radios in India under the trade name 'Standard', and this was in collaboration with a Japanese concern which was marketing transistor radios under the same name. At that time, three other brothers of the promoters of this company were minors and were students. However, as they finished their studies and attained majority, they were as well allotted shares in this company from time to time and made directors. The nominal share capital was rupees one lakh, and the same became fully subscribed in this process when the youngest of the brothers was allotted shares. Their mother was also allotted some shares, and the position of the shareholdings in about mid-sixties was as under :

Name No. of shares1. Shri Som Parkash Rajpal 1672. Shri Kapil Muni Rajpal(brother) 1673. Smt. Krishna Rajpal (mother) 2724. Shri Chander Muni Rajpal (brother) 1675. Shri Shanti Rajpal (brother) 1276. Shri Anand Rajpal (brother) 100------------Total 1,000

3. Although these brothers had four sisters, none of them at any stage was allotted any share. In the year 1962, Som Parkash Rajpal had become the chairman of the company, and retained this position till the date of demise on March 16, 1968. Kapil Muni Rajpal, who was the other promoter of this company along with Som Parkash Rajpal, was termed as the managing director. The petitioners have referred to this background in order to show in what manner Som Parkash Rajpal, being the eldest male member, had looked to the interest and well-being of his younger minor brothers, and gradually allotted them shares as and when they came of age. In the counter which respondents Nos. 1, 2, 6, 7 and 8 have filed, these averments made by the petitioners have been termed as unnecessary, frivolous, vexatious, scandalous and in order to prejudice, embarrass and delay the proceedings, and they were sought to be struck out as mere abuse of process of court. I do not see how these averments could at all be termed as such. In fact, this stand of these respondents itself smacks of trying to ignore what had happened, and how ungratefully they are determined to defeat the legitimate claims of the descendants of Som Parkash Rajpal.

4. The factory of the company in those days was located at 9, Ram Bagh, Kishan Ganj, Delhi, and there was stated to be export of transistor radios as well, and the sales during each of the years 1965 and 1966 crossed rupees one million mark. In the year 1967, they were of Rs. 6.71 lakhs. As such the company was able to procure allotment of a valuable plot of land measuring 5,261, sq. yds. in Mayapuri Industrial Area, Phase-II, New Delhi. The total amount spent by the company in its acquisition was rupees 1.98 lakhs. Its present value, according to the petitioners, is about Rs. 30 lakhs. In this manner, the petitioners claim that Som Parkash Rajpal not only did so much for the family, he as well made the company prosper. However, Som Parkash Rajpal died on March 16, 1968. As unfortunately happens in some of the families, instead of feeling sympathetic to the widow and children of Som Parkash Rajpal, on whom tragedy had befallen, the company and the respondents (brothers of Som Parkash Rajpal) adopted an attitude of adamant indifference and a negative approach to their interest in so far as the 167 shares in the company left behind by Som Parkash Rajpal were concerned. It was not disputed that Smt. Shakuntala Rajpal was his widow and petitioners Nos. 2 to 6 were his sons and daughters. However, repeated requests by them to transmit those shares in their favor were ignored with the result, that till this day those shares have not been transferred in their names. At one stage, the petitioners were required to obtain estate duty clearance. This they obtained. Then they were required to furnish succession certificate. This too was compiled with by the petitioners. In that succession certificate, as mutually agreed between the petitioners, they requested the company to register the shares in the name of Smt. Shakuntala Rajpal, the widow of Som Parkash Rajpal. The petitioners contended that this was as a matter of convenience and in order to expeditiously get the matters accomplished. I have nothing to doubt this version on their behalf as it is not unoften that such like requests where the relations between the heirs are cordial, are made. The company, however, insisted that the sucession certificate should be produced. The petitioners then sent a photo copy of the same, but fault was found in that also on the ground that it had not been certified by a competent authority as correct. The petitioners then complied with that as well. Still the transmission of shares was not done. In the meanwhile, the brothers of Som Parkash Rajpal started not only issuing fresh shares to themselves, but also inducted outsiders who are respondents No. 6 to 8, and may be termed as 'Aggarwal group'. In this manner, the percentage of shareholding of the petitioners as descendants of Som Parkash Rajpal was reduced to less than 5% as against 167/1000 in the year 1968 when Som Parkash Rajpal died.

5. Still another misfortune fell on the petitioners when Smt. Shakuntala Rajpal, widow of Som Parkash Rajpal, as well died on February 8, 1982, during the pendency of this petition. Objection was then raised that the other petitioners could not claim any right in the shares left behind by Som Parkash Rajpal as they had relinquished their rights in them in favor of their mother, Smt. Shakuntala Rajpal. This was in spite of the fact that they knew that these petitioners were in fact the children of Smt. Shakuntala Rajpal and her only heirs. They were made to obtain succession certificate for her estate as well which they did. Still all sorts of misplaced hypertechnical objections have been put forth in the transmission of those shares in their favor.

6. The position of shareholding as reproduced above in the year 1968 when Som Parkash Rajpal died, showed that Smt. Krishna Rajpal, mother of Som Parkash Rajpal, and respondents Nos. 2 to 5 owned 277 shares. Smt. Krishna Rajpal never during her lifetime, claimed any share in the 167 shares left behind by Som Parkash Rajpal. In fact, the respondent company or any of the brothers never took the stand that Smt. Krishna Rajpal was also entitled to 1/7th share along with six of the petitioners under the Hindu Succession Act. The petitioners contend that she being the mother of Som Parkash Rajpal never thought of claiming any interest in his estate and wanted that to go entirely to the benefit of his widow and children. It was because of this that she never during her lifetime, asserted any right, whatsoever, in that estate, and allowed that to be exclusively claimed by the petitioners. This I am inclined to accept as the entire course of conduct displayed by Smt. Krishna Rajpal and respondents Nos. 2 to 5 showed that they were treating the estate of Som Parkash Rajpal to belong to the petitioners, and never at any stage came out imputing any share to Smt. Krishna Rajpal.

7. Smt. Krishna Rajpal, however, died on August 5, 1976, still holding 272 shares in the company as per record in the Register of shares. Even thereafter, no claim was set up imputing any share to her in the estate of Som Parkash Rajpal. The counters filed in these proceedings also do not make any such assertion.

8. However, when the present petition under section 155 of the Companies Act became almost mature for decision, it has been suddenly realised that under the Hindu Succession Act, mother was as well an equal heir to the estate of Som Parkash Rajpal. This has opened an arena to delay the relief to the petitioners and drag the matter as long as possible. An application was, thereforee, moved by one of her daughters, namely, Shobha Chutani, under Order 1, rule 10 of the Code of Civil Procedure (C.A. No. 95 of 1984) for being imp leaded as a party in this petition claiming that she is as well an heir to Smt. Krishna Rajpal who in turn was an heir to the extent of 1/7th share in the estate of Som Parkash Rajpal, and, thereforee, she is entitled to her share in the 167 shares in dispute. Another suit has been filed in which share is being claimed in the other estate left behind by Som Parkash Rajpal. A challenge has also been made in separate proceedings to the sucession certificate granted in favor of the petitioners with regard to the 167 shares in dispute before the Administrative Sub-judge who had granted that certificate. In the former suit, an interim injunction has been obtained, restraining the petitioners from transferring or alienating the properties left behind by Som Parkash Rajpal, and in the latter the petitioners have been got restrained as an interim measure from using the succession certificate. It may be mentioned that of the four sisters of Som Parkash Rajpal, two are already dead, and still another has not chosen to join Shobha Chutani in the application under Order 1, rule 10 of the Code of Civil Procedure. The respondents have also been insisting that the petitioners must produce the share scrips of the 167 shares held by Som Parkash Rajpal. The petitioners, however, have been taking the stand that they possess 100 share scrips and they can be produced whenever required at the time of actual transmission and the other 67 share scrips are lying with the company. All this has been in spite of a certificate issued by the company on September 13, 1969, vide annexure 'B' attached with the petition that Som Parkash Rajpal held 167 shares of the value of Rs. 100 each. Admittedly, no other person has claimed transfer of the 67 shares, the scrips of which are not with the petitioners. They have been ready to indemnify the respondents that those scrips have not been transferred by them to any person. However, the respondents continue to ignore all this.

9. The following chart will bring out the allotment of shares of the respondent company from time to time.

---------------------------------------------------------------------Date Shares issued Total share capitalpaid-up---------------------------------------------------------------------30-10-51 100 1 30-10-51 100 1 ,00010-02-55 100 20023-12-57 170 37029-12-58 46 41624-11-59 8 424 24-11-59 8 424 09-06-60 414 83811-08-64 162 1 11-08-64 162 1 ,00018-06-68 268 1 18-06-68 268 1 ,26814-05-71 200 1,46822-12-71 110 1 22-12-71 110 1 ,57824-12-71 97 1,67527-12-74 310 1,98523-11-79 560 2,54527-11-80 802 3,347---------------------------------------------------------------------

10. The induction of the Aggarwal group in the company took place in 1980. As to when the authorised capital of the company was raised from Rs. 1 lakh to Rs. 25 lakhs, there is some confusion on record. According to the petitioners, this was after the demise of Som Parkash Rajpal when the respondents proceeded to allot additional shares to themselves and later inducted Aggarwal group. The respondents, however, have referred to the printed memorandum and articles of association in order to show that this was done on November 27, 1965, as mentioned at page 8 of the same. The existence of this date in this printed booklet is not free from controversy inasmuch as the certified copy of the memorandum and articles of association which the petitioners have obtained from the office of the Registrar of Companies (page Nos. 214 to 224 of the court file) does not show this date. They state that there was no occasion in the year 1965 to raise this capital, and the course of events also does not show that any increase in actuality in the sub-scibed capital took place then. However, a copy of the resolution of the general body of shareholders has been placed by respondents on record about this increase in 1965, and the same shows that Som Parkash Rajpal was a party to the same. All additional shares were, however, allotted after the death of Som Parkash Rajpal. This, according to the respondents, was to meet the cost of the plot and to meet the losses in business.

11. The object behind this increase in share capital and allotment of additional shares, according to the petitioners, was to correspondingly raise the shares of the respondent-shareholders in the company's aforesaid plot of land in Mayapuri Industrial Area. At the same time, the petitioners' share in the plot was sought to be substantially reduced. Thus, it has purported to come down from 167/1000 in 1968 to less than 5% in 1980. The factory of the respondent company was shifted to this plot after the death of Som Parkash Rajpal, and according to the petitioners, the respondents charged a fair amount of 'pugree' for vacating the Ram Bagh premises. There is, however, no evidence of the same on record. The respondents have denied that.

12. So far as the business of the respondent company is concerned, the same, according to the petitioners, is lying closed for considerable time. It is stated that its affairs were so badly managed after the death of Som Parkash Rajpal that losses were shown to have occurred every year.

13. The respondents on their part have contended that it was Som Parkash Rajpal who had substantially mismanaged the company, and the first year when losses started occurring, was in 1968 when he was still alive. They have also contended that it is not the function of the respondent company to effect partition inter se the petitioners or their heirs of Som Parkash Rajpal, and that their proper remedy is by way of suit. Complicated questions of fact and law are stated to be involved which cannot be gone into in summary proceedings under section 155 of the Companies Act. How much share should go to any particular petitioner, is pleaded to be a matter which can only be decided in a partition suit. Moreover, under the Hindu Succession Act, it has been asserted that Smt. Krishna Rajpal, the mother of Som Parkash Rajpal, was a well one of the heirs, and her share in the estate came to 1/7th, and, as such, she would have been entitled to 24 shares out of 167 held by Som Parkash Rajpal which have now in turn devolved upon the heirs along with her other estate. The conduct of the petitioners, it is further pointed out, has throughout been highly damaging to the company inasmuch as they have been making complaints against the company with the authorities, and have also been issuing advertisements against its interest. A number of copies in that regard have been produced, but they only tend to show what the petitioners felt apprehensive when the shares belonging to Som Parkash Rajpal were not being transmitted in their names, they thereby sought to warn any intending purchaser of the May Puri plot that they also had an interest in the same in their capacity as shareholders. The respondents also contend that Smt. Krishna Rajpal had during her lifetime transferred her 272 shares in the respondent company in favor of Shanti Rajpal. A photo copy of a hand written receipt in English dated April 7, 1972, purported to be signed by Smt. Krishna Rajpal in Hindi, transferring her 272 shares at the rate of Re. 1 per share in favor of Shanti Rajpal, respondent No. 2, has been produced, and the same is at page 324 of the court file. It is, however, not shown that this transfer was not recognised in the office of the Registrar of Companies then.

14. The petitioners have denied that any such transfer was effected. Rather they assert that they are as well entitled to share in the estate of Smt. Krishna Rajpal, and if that was taken into account, the shares attributed to Smt. Krishna Rajpal in the 167 shares of Som Parkash Rajpal would be less than what the petitioners would get in that estate of Smt. Krishna Rajpal. As an alternative, the petitioners in order to avoid all disputes, were ready to keep the matter relating to 1/7th share in the shareholding of Som Parkash Rajpal which could have gone to Smt. Krishna Rajpal in abeyance, to be decided in a separate action. With regard to the remaining shares, it is stated that there is no dispute, and, as such, they can be straightaway directed to be transferred in the petitioners' favor.

15. The reliefs which the petitioners have sought in this petition under section 155 of the Companies Act are as under :

'(a) transmission of 167 shares of late Shri Som Parkash Rajpal to the name of Smt. Shakuntala Rajpal, petitioner No. 1.

(b) Cancellation of the allotment of shares shown in the register of members in favor of respondents Nos. 2 to 5 or any of them made on June 18, 1968, May 14, 1971, December 22, 1971, December 24, 1971, December 27, 1974, November 28, 1979 and November 27, 1980, allotting 2,347 shares.

(c) Respondents to issue duplicate share scrips in lieu of 67 share scrips lost or untraceable out of the 167 shares held by late Shri Som Parkash Rajpal :

(d) Transmission of 33 shares out of 272 shares held by late Smt. Krishna Rajpal to the name of the first petitioner;

(e) Cancellation of transfer of shares by respondents Nos. 2 to 5 to respondents Nos. 6 to 8;

16. It is further prayed that :

(a) The resolution passed on June 18, 1968, May 14, 1971, December 22, 1971, December 24, 1971, December 17, 1974, November 23, 1979, and November 17, 1980, allotting shares to the respondents or any of them be also cancelled. (b) Any resolution transferring or transmitting 33 shares of late Shrimati Krishna Rajpal be declared null and void;

(c) All resolutions transferring shares of respondents Nos. 2 to 5 to respondents Nos. 6 to 8 be declared null and void;

(d) Petitioners may be awarded damages for the wrongful acts of the respondents;

(e) Such other order or orders may be passed as may be deemed just and proper; and

(f) Costs of the petition may be awarded.'

17. It may also be mentioned that earlier the petitioners applied for winding-up of the respondent company, but this was objected to by the respondents on the ground that they were not till then shown in the company or with the Registrar of Companies as owners of any shares. They were, thereforee, required to get their claim to the ownership of shares established. It was then that the present petition under section 155 of the Companies Act was moved.

18. The following issues were framed :

'1. Are petitioners not entitled to registration in their favor of 167 shares which were held by late Som Parkash Rajpal in respondent company

(Note : It has not been disputed from the side of the respondents that petitioners Nos. 2 to 6 are the only children of Som Parkash Rajpal, and that Smt. Shakuntala Rajpal was the widow of Som Parkash Rajpal).

2. Are petitioners obliged to take a succession certificate for the estate left behind by Smt. Shakuntala Rajpal

3. Is the estate duty clearance required under law for registering the shares of Smt. Shakuntala Rajpal in favor of the other petitioners

4. Is the petition not maintainable as such

5. Are petitioners Nos. 2 to 6 not proper parties

6. Had Smt. Krishna Rajpal transferred her 272 shares in favor of respondent No. 2 during her lifetime for consideration If so, to what effect

7. In case the preceding issue is not proved, are the petitioners not entitled to share in those shares as heirs of Smt. Krishna Rajpal

8. Was there any understanding or agreement by which 272 shares of Smt. Krishna Rajpal were to be distributed amongst Som Parkash Rajpal and his other brothers, so as to raise the share holding of each of the brothers to 200 If so, to what effect

9. Are 67 share scrips held by Som Parkash Rajpal lost, not traceable or are with the respondents

10. If the preceding issue is proved, are the petitioners not entitled to duplicate share scrips for those 67 share scrips

11. Have 2,545 fully paid-up shares and 802 partly paid-up shares been further allotted validly by the company for consideration If not, to what effect

12. Does the plea which has been made the subject-matter of the proceeding issue, not suffer from laches If so, to what effect

13. Relief.'

19. The respondents sought that the issue relating to the maintainability of the petition should be decided first. This, however, was rejected by this court, vide order dated August 16, 1983, after observing that prima facie any objections to the maintaibility of the petition did not have much probative force likely to prove fatal to the petition so as to continue deferring the decision on merits indefinitely, which seemed to be the object behind that plea. The respondents went in appeal against this order, but without success.

20. Issues No. 2 and 3 : The petitioner have already obtained a succession certificate with regard to the estate left behind by Smt. Shakuntala Rajpal. A notification issued by the Ministry of Finance dated January 28, 1960 (vide page 298 of the Guide to the Companies Act by A. Ramaiya, 10th edition), shows that in the case of transmission of shares by operation of law, the estate duty clearance certificate should not be insisted upon. Moreover, their status as children of Smt. Shakuntala Rajpal has not been disputed, and in the circumstances, the respondents should not have insisted upon asking for succession certificate or estate duty clearance.

21. Issue No. 1 : As noted under this issue, it has not been disputed from the side of the respondents that the petitioners were the widow and children of late Som Parkash Rajpal. They are, thereforee, his heirs and entitled to registration of the shares held by Som Parkash Rajpal in their favor. So far as the succession certificate obtained in favor of Smt. Shakuntala Rajpal, this was mutually agreed upon inter se petitioners as a matter of convenience. Such like acts when there is cordiality and confidence in the family are not uncommon in such situation. The respondents cannot take advantage of the same or nullify or obstruct the rights of the petitioners more so when Smt. Shakuntala Rajpal has as well in the meanwhile died.

22. The claim sought to be set up by Smt. Shobha Chutani in her application under Order 1, rule 10 and section 151 of the Code of Civil Procedure read with Rule 6 of the Companies (Court) Rules is being exploited as a cover up by the respondents like the proverbial catching of a straw by a drowning man and a last ditch battle against the transmission of shares in the petitioners' favor. It is noteworthy in this respect that the respondents have not in their counter or at any stage in these proceedings, taken the stand that the petitioners have not been the exclusive heirs of Som Parkash Rajpal, and that this mother was also entitled to a share. It has been after a lapse of over 16 years that Shobha Chutani has thought of raising the claim. All this course of conduct amply shows that Smt. Krishna Rajpal wanted that estate should ensure for the benefit of the widow and children of Som Parkash Rajpal, and, thereforee, should be treated to have relinquished whatever rights she possessed in the same, and this has been acquiesced into by all the other family members. Till the end of 1983, it had never struck any of the respondents that Som Parkash Rajpal's mother, Smt. Krishna Rajpal, should have as well been given a share in his estate. As already noted above, the respondents never disputed the status of the petitioners as the only heirs of Som Parkash Rajpal but rather wanted that certain legal formalities be complied with. The petitioners have been exclusively dealing with the estate, and are even said to have transferred one of the properties situated in Gurgaon. The Hindu Succession Act, no doubt, provided a share to Smt. Krishna Rajpal. However, she never asseted any share during the 8 years when she was alive after the death of Som Parkash Rajpal. Her daughters also did not come forth for about 7 years to claim any interest in these shares. Two of them are dead, and one of them has not joined Shobha Chutani. Keeping in view the entire course of events, I have little hesitation in holding that Smt. Krishna Rajpal did not and never wanted to claim any share in the estate of Som Parkash Rajpal, and she was reconciled to the entire estate going to his widow and children. It should be, thereforee, treated that she had relinquished her rights in his estate. Her eldest son had died leaving a large family, and it was natural for her to have allowed the estate to go to them.

23. It is, thereforee, held that the petitioners are entitled to the registration of 167 shares left behind by Som Parkash Rajpal in the respondent company in their favor.

24. Issue No. 5 : It has been respondents No. 2 to 6 who have been pulling the wired behind the curtain in the recalcitrant attitude displayed by the respondents company in not transmitting the shares in favor of the petitioners. They have been, thereforee, rightly imp leaded as respondents. Moreover, one of the reliefs sought in the petition pertains to the additional shares allotted to these respondents. The petitioners contend that either those allotments should be struck down or in the same proportion they should be allowed allotments of the shares.

25. Issues Nos. 6 and 7 : As noted above, the respondents have sought to rely upon a writing purported to be signed by Smt. Krishna Rajpal transferring her shares at the nominal value of Re. 1 per share in favor of respondents No. 2, Shanti Rajpal. This has been disputed by the petitioners. The best corroborative evidence in this regard would be the record of the Registrar of Companies. The same would show by contemporary evidence if this transfer was got registered in that office. That, however, has not been proved. In any case, I will restrain myself from adjudicating upon this controversy in these summary proceedings and leave the parties to have recourse to a regular suit.

26. Issue No. 8 : Similarly, I will leave the controversy whether there was an understanding and an agreement that 272 shares of Smt. Krishna Rajpal would be distributed amongst her sons in such manner as to raise the shareholding of each of the sons to 200 to be agitated by a separate suit.

27. Issues Nos. 9 and 10 : The petitioners admit that they have 100 share scrips in their possession. 67 share scrips, however, according to them are with the company. The company is denying the same. It thus appears that those share scrips are either lost or not traceable. None other has claimed those shares. The petitioners are, thereforee, entitled to duplicate share scrips in this regard.

28. Issue No. 11 : The additional shares have been allotted in the absence of the petitioners during the period when the respondents were not recognising them as shareholders. Any increase in the shareholding should have beneficial all the shareholders. The company has held a very valuable piece of land. The petitioners have contended that there were no reasons for them not to subscribe to the additional shares had the opportunity been given to them. They fully assert right to subscribe to those shares. Till 1980, the company had been a closely knit family concern. It was in the nature of a partnership, and any alteration in share structure naturally required consent and/or approval of all. So also the induction of new members. The petitioners were not allowed to have a say in all this as they were wrongfully kept excluded and were not treated as members.

29. The question, thereforee, to be considered is whether the allotment of those shares should be struck down. This, however, would not appear proper as much water has since flowed, and rights have arisen in favor of the Aggarwal group as well as a result of transfers. However, to set the matters right, the only fair way in the existing circumstances would be to direct that the petitioners should be given the choice to subscribe to share in proportion to their shareholding at all stages when additional shares were allotted. Thus in the year 1968 when 268 new shares were allotted, the petitioners should be as well allotted proportionately 167/1,000 shares of those 268 shares and as given to others holding 167 shares. Similarly in 1971, the petitioners should be allotted shares in proportion to 167 plus the other shares which they would have got in 1968 vis-a-vis the 100 shares then issued. This process should operate whenever the additional shares were allotted unless the petitioners decline to have them. The petitioners will of course pay for the additional shares the same value which the other shareholder had to pay.

30. Issue No. 12 : It was the respondents who were disputing the right of the petitioners to claim themselves as shareholders throughout. It, thereforee, does not lie with them to plead that the petitioners are guilty of laches. The petitioners, in fact, were denied their legitimate rights, and were kept in dark although they had been constantly insisting on their recognition. No question of laches, thereforee, arises.

31. Rather if any person has been guilty of laches, it has been Shobha Chutani in putting up a claim as mentioned in her application (C.A. No. 95 of 1984). The same, thereforee, deserves to be rejected on this short ground apart from merits as discussed above.

32. Issue No. 4 : It is sought to be urged from the side of the respondents that the matters involved in this petition are too disputed and complicated as to justify the grant of relief to the petitioners in these summary proceedings under section 155 of the Companies Act. Reference was made in this regard to Dhelakhai Tea and Co. Ltd., In re [1958] 28 CompCas 62 (cal) and Anil Gupta v. Delhi Cloth and General Mills Co. Ltd. . It has also been contended that any relief to the petitioners would tantamount to partitioning the estate of Som Parkash Rajpal amongst his heirs, and this can never be treated as part of the functions of the company court under section 155 of the Companies Act. In support, reliance has been placed upon the two decisions of the Calcutta High Court in New Monkhooshi Tea Co. Ltd., In re, : AIR1967Cal196 and Hemlata Saha v. Stadmed P. Ltd. : AIR1965Cal436 .

33. So far as factual controversies involved in issues Nos. 6 to 8 are concerned, they have not been adjudicated in these proceedings, and the parties have been left to agitate them by separate action as may be permissible under the law. The disputes there under naturally require evidence and appraisal thereof after the parties have occasionto cross-examine the witnesses of each other.

34. However, the main controversy in this case involving 167 shares left behind by Som Parkash Rajpal cannot by any stretch be treated as complicated or serious. The same has been a simple one, but as observed above, was rendered a chequered struggle for the petitioners by a concerted negative approach of the respondents to defeat their rights. It is not the colour and magnitude which the parties may ascribe to the disputes which render them complicated or simple. The disputes have to be looked at and assessed at their intrinsic worth. To hold it otherwise would provide a hurdle to respondents to create a semblance of disputes in all sundry cases, and thus render section 155 of the Companies Act as non-existent or ineffective. The Legislature has not without purpose introduced these provisions in section 155. They are meant to provide speedy and inexpensive remedy to the heirs and transferees of shares where the companies choose to adopt a recalcitrant attitude or sit over the fence. The company court should least hesitate to exercise powers under these provisions where the circumstances warrant so and to defeat the negative designs of companies. Some efforts or application of mind can always bring out whether there are genuine disputes or a mere frankenstein is just being raised. A Division Bench of this court in Natraj Stores (P.) Ltd. v. Shri Krishna Lal Kochar [1980] 17 DLT 528, observed that it is discretionary with the court under section 155 to refuse to go into the question of fact and feels that it is a matter to be decided in regular suit, but that does not mean that there is an automatic bar to the relief being given under section 155 simply because one of the parties chooses to raise a defense and call it a complicated one, while the judge finds that the matter is such which he could decide on the material on record without any difficulty. It was further observed that it cannot be said that the judge would be committing any irregularity or illegality if he decides question of fact on the basis of documentary evidence on record, finding it was not necessary to have the matter tried as a suit separately.

35. Reliance by the respondents on the said two Calcutta High Court decisions is entirely misplaced. In the case of New Momkhooshi Tea Co. Ltd., In re, : AIR1967Cal196 , there was a purported gift of certain shares by one of the three co-heirs. The same was not accepted by the others. The articles of the company also provided that upon the death of two joint holders out of three joint holder, the shares devolved on the surviving joint holders. Moreover, it had been noted that the company had under some mistake or misapprehension of facts registered the shares in the name of one of the co-heirs instead of all the heirs or co-owners. There was thus a dispute as to who amongst the co-heirs or co-owners the shares belonged. The question of partition did not arise there. In the other decision, Hemlata Saha v. Stadmed P. Ltd. : AIR1965Cal436 there was again a serious dispute between the co-heirs themselves. Rather para 3 of this judgment shows that the stand taken by the company was to call upon the joint holders, to agree to a division of the shares and on receipt of consent of all the joint holders, the company would have no objection to issue separate share scrips in respect of the shares. In the present case, there has been no such dilute amongst the petitioners, and the defense set up by the respondents can only be termed as smelling rats where non exits.

36. I, thereforee, decide the issue against the respondents, and hold that the petition is maintainable.

37. The result, thereforee, is that the respondents, are directed to transmit 167 shares of the late Som Parkash Rajpal in the names of petitioners Nos. 2 to 6 (petitioner No. 1 having already expired). Respondents are further directed to issue duplicate share scrips in lieu of 67 share scrips lost or untraceable out of these 167 shares. The respondents are further directed to make further allotments of shares to petitioners Nos. 2 to 6 in terms of what is directed in para 29 above under issue No. 11. The petitioners will be entitled to the costs of these proceedings. Counsel's fee Rs. 1,000. Since the defense set up by respondents Nos. 1 to 5 has been false and vexatious, I direct that respondents No. 1 will pay Rs. 1,000 as special costs to the petitioners, and each of respondents Nos. 2 to 5 shall also pay Rs. 500 as special costs to the petitioners.

38. After hearing the parties and in view of the discussion above, this petition is dismissed with costs. Counsel's fee Rs. 500.


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