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In Re: Dhelakhat Tea Co. Ltd. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtKolkata High Court
Decided On
Case NumberMatter No. 114 of 1957
Judge
Reported inAIR1957Cal476
ActsCompanies Act, 1956 - Section 155 and 155(3)
AppellantIn Re: Dhelakhat Tea Co. Ltd.
DispositionApplication dismissed
Excerpt:
- .....for registration of these shares. they are not asking in the present application to have their name registered in the share register. what they are now asking is to put on the share register the name of nandalal srimany who has already denounced the sale and has got back the price which he paid to mukherjee brothers for these shares. i am satisfied that the law does not permit that course because such rectification of. register today by showing the shares in the name of nandalal srimany would be inconsistent with the existing facts prevailing either on the date of the application or today. secondly, mtikherjee brothers never applied to the company to have their names registered as shareholders in respect of these shares nor even did they apply to the company for registering these.....
Judgment:
ORDER

P.B. Mukharji, J.

1. This is an application on behalf of Messrs. Mukherjee Brothers of No. 9, Royal Exchange Place, Calcutta, for an order that the Share Register of the Company Dhelakhat Tea Co. Ltd., be rectified by deleting the name of Matadis Khaitan and by substituting the name of Nandalal Srimani as the holder of 100 shares in the said company bearing Nos. 41.015-41114.

2. The application is opposed by respondents Rabindra Nath Ghosh and Chaya Ghosh and by the respondent B. M. Garg and Co. The other respondents except Dhelakhat Tea Co. Ltd. have not appeared in answer to the summons. The company submits that it will abide by any order that may be made on this application.

3. Now, these shares are disputed shares in respect of which there are many claims. On August 29, 1951, they were registered in the name of the respondent No. 1, - Rabindra Nath Ghosh. In November 1953, the respondent Rabindra Nath Ghosh and the respondent Chaya Ghosh borrowed a sum of about Rs. 4,000/- from respondent B. M. Garg and Co. Stock brokers, and, as security for due repayment of the said loan, respondent Rabindra Nath Ghosh made over to B. M. Garg and Co. the share certificates relating to those shares and also other shares together with blank transfer deeds duly signed by him. On January 19, 1954, respondent B. M. Garg and Co. in their turn borrowed a sum of Rs. 2,000/- from respondent Murlidhar Santhalia, another stock broker by pledging the said shares with respondent Murlidhar Santhalia and by making over to him the share certificates and the blank transfer deeds. It is said that on March 26, 1954 respondent Murlidhar Santhalja called upon B. M. Garg and Co. to repay the loan whereupon respondent B. M. Garg and Co., requested Murlidhar Santhalia to wait for a few months. Without any further notice by Murlidhar Santhalia it appears that Murlidhar Santhalia sold and delivered those shares to Sewduttrai Rambullay and Sons, another firm of stock brokers. On October 18, 1954, there were a number of transactions in respect of these shares. Sewduttrai Rambullav and Sons sold them to G. M. Pyna. stock brokers, who in their turn sold them to G. K. Dhar and Sons, stock brokers, who in their turn sold them to Khandel-wal and Bros, stock brokers. Thereafter on November 1, 1954, Khandelwal and Broe. sold anddelivered these shares to the Bank of Baroda Ltd. in the account of their constituent, H. N. Mukherjee. On January 25, 1954, the Bank of Baroda sold and delivered the said shares to P. Ganguly and Co., Stock brokers, who in their turn sold them again to R. K. Jaicika and Sons, stock brokers. Then on February 1, 1955, R. K. Jaidka and Sons sold and delivered the said shares to respondent Matadin Khaitan, stock brokers. On, February 5, 1955, on the application of the respondent Matadin Khaitan, these shares were registered by the company in Matadin's name.

4. The trouble started thereafter. On March, 11, 1955, Matadin Khaitan sold and delivered these shares to N. L. Roy and Co., stock brokers who on the very same day sold and delivered those shares to Bagla and Co., stock brokers, who in their turn sold and delivered the said shares, to the present applicant Mukherjee Brothers, who in their turn sold and delivered the 'shares again to the respondent Nandalal Srimany. It is said that Nandalal Srimany, after obtaining delivery of the said shares filled up his own name on the blank transfer deeds and forwarded the same for registration of the said shares in his name. The company by its letter of June 22, 1955, declined 'to register the said shares in Srimany's name. Thereupon Srimany returned the share certificates to the applicant Mukherjee Brothers and demanded payment and return of the purchase money. It is alleged in paragraph 7 of the petition that Mukherjee Brothers were compelled to refund the said money.

5. The present position, therefore, is that Mukherjee Brothers are not the registered holders in respect of these shares. When their sale to Srimany has been cancelled and they have accepted the cancellation by returning the 'purchase Drice to Srimany, they can at best rely on their cwn title as owners of the shares and apply for registration. But they have never applied to the company for registration of these shares. They are not asking in the present application to have their name registered in the Share Register. What they are now asking is to put on the share Register the name of Nandalal Srimany who has already denounced the sale and has got back the price which he paid to Mukherjee Brothers for these shares. I am satisfied that the law does not permit that course because such rectification of. register today by showing the shares in the name of Nandalal Srimany would be inconsistent with the existing facts prevailing either on the date of the application or today. Secondly, Mtikherjee Brothers never applied to the Company to have their names registered as shareholders in respect of these shares nor even did they apply to the company for registering these shares in the name of Srimany, which they are now attempting to do by the present application to the Court without any application to the company.

6. Therefore it has been Contended that; they could not be regarded as 'the person aggrieved' within the meaning of Section 155 of the Companies Act.

7. There are some more disputes in respect of these shares. It is necessary, therefore, to continue the account of the facts. On April 1955, respondents Rabindra Nath Ghosh and Chaya Ghosh filed a suit here in this Court against B. M. Garg and Co. for redemption and delivery of those shares and alternatively, for damages. That was Suit No. 1180 of 1955 in the Ordinary Original Civil Jurisdiction of this Court between Rabindra Nath Ghosh and another v. B. M. Garg. andCo. The suit was settled on certain terms ana the terms of settlement are annexed to the petition. The suit was settled on the 20th December, 1955. But before the suit was settled an order had been made by the Court in that suit on the application of the plaintiffs Rabindra Nath Ghosh and Chaya Giiosh for appointing the Official Receiver as Receiver of such shares. The Official Receiver was appointed Receiver and he wrote on May 6, 1255 to the company that he had been directed to take possession of the shares and requested the company to make a note of such appointment in the relevant records and to refer in future all matters relating to such shares to him as the Official Receiver. On May 11, 1955, the company wrote to the Official Receiver acknowledging receipt of the letter and stating that the shares had already been transferred to Mata-din Khaitan. On June 22, 1955, when the Company wrote to Srimany refusing registration, it referred in that letter to this appointment of the Official Receiver and wrote to Nandalal Srimany 'We have been advised that until the order of the High Court has been vacated or suitably varied, it would not be proper to pass and register the transfer in your favour'. The consent decree was made' on December 20, 1955. By clause 5 of the consent decree it was provided that the Official Receiver was appointed the Receiver in respect of the said shares although discharging him in respect of the other shares as such Receiver but he was to continue as such Receiver in respect of the shares which are the subject matter of the present application and he was to act subject to further orders of Court.

8. Now, no notice of this application was given to the Official Receiver. It is true that both the plaintiffs and the defendant in that suit wherein the Receiver was appointed, have been served with notice of this application and are appearing on this application, yet I think, it should have been proper for the applicant to have given notice to the Official Receiver also. I hold however that the application cannot fail on that ground because it is a purely formal defect of a kind which does not prejudice any party.

9. So far as B. M. Garg and Co., is concerned, they have challenged this transaction as unlawful and without authority and this transfer by Murlidhar Sarthalia was not bona fide. I am of the opinion that these serious questions involving disputed questions of facts should not be tried in a summary procedure in any application for rectification of the Share Register under Section 155 of the Companies Act, 1956, because they are more appropriate subjects for a trial in a suit on evidence after a full discovery of documents and inspection.

10. I am satisfied that this application cannot succeed on two main grounds. The first ground is that I am convinced that Mukheriee Brothers in the facts and circumstances of this case, cannot obtain the particular remedy they seek under Section 155 of the Company's Act 1956. They are not applying for registration of their own name. They are applying for registration of somebody else's name. That somebody else is no longer the purchaser because he has cancelled and repudiated the sale and has got back the purchase price paid for those shares so that the applicant has accepted the repudiation of the sale by virtue of which alone the purchaser Nandalal Srimany's name could have been registered. In those circumstances, I do not consider that Mukherjee Brothers can usa Section 155 of the Companies Actfor rectification of the Share Register to put on the Share Register the name of a person who, in fact, or in law cannot be called an owner of the shares. It is fundamental for the Court to see that under Section 155 of the Companies Act it does not put on the Share register some person who has not at least a prima facie title to, the shares in question. Secondly, I am satisfied that these particular shares are the subject-matter of many claims and interests, thereupon with a disputed chain of title. On these facts I do not consider that the summary procedure provided in Section 155 of the Companies Act, 1956, is at all the proper procedure.

11. It is necessary to notice the same argument put in another form to oppose this application. That argument is based on Sub-section 3 of Section 155 of the Companies Act ft is argued that on an application under this Section the Court can really decide to do one of two things, either to have the applicant's name entered or omitted from the register. The language used in Sub-section 3 is:

'On an application under this Section the Court (a) may decide any question relating to the title of any person who is a party to the application to have his name entered in or omitted from the Register, whether the question arises between members or alleged members, or between members or alleged members on the one hand and the Company on the other hand; and (b) generally, may decide any question which is necessary or expedient to decide in connection with the application for rectification.'

12. It is, therefore, said that the purpose and object of this application are very limited. On such an application under Section 155 of the Companies Act all that the Court can do is to have the name of any party to the application either entered in or omitted from ths register. The language of the Sub-section appears to indicate that the question should be one between members and/or alleged membered and/or the Company. But Srimany at the relevant time either when the application was made or today when the application is being heard was or is neither a member nor even an alleged member. I fail to see tiow Srimany in such a context of facts be forcibly put on the Share Register when he is not the holder of those shares. On behalf of the applicant it has been argued that the words 'to have his name' in Sub-section 3 (a) of Section 155 of the Com-ppnies Act mean the name of any 'party to the application' and thnt those words 'his name' do not qualify the expression 'the title of any person'. It is therefore argued that as Srimany is a party to this application his name can be put on the share register. I am not inclined to accept that contention of the applicant. I am inclined to the view that the words 'to have his name' mean the name of the person, the question relating to whosp title is being decided by this Court on this application. Srimany has now admittedly no title to the shares and therefore I think the Court should not and cannot rectify the share register today by putting his name on the share register as holder of these shares, even though Srimany is a party to this application.

13. The application, therefore, is dismissed.

14. If the applicant files a suit within a month from 'date, then the costs of this application will be costs in the cause. In default of filing such a suit within the time, the applicant will pay all costs of this application.


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