1982 (6) TMI 215 - HC - Companies Law

Summary

Issues:
1. Intervention of a shareholder in a company in a suit regarding company assets.
2. Rights of a shareholder in company assets and dividends.
3. Interpretation of the nature of shareholder's interest in company assets.
4. Validity of shareholder intervention in settlement terms.

Analysis:
The judgment dealt with the issue of intervention by a shareholder, specifically Purna Investment Co. Ltd., in a suit concerning company assets. The main question was whether a shareholder has sufficient interest in the company to intervene in such matters. It was established that a shareholder's rights primarily involve participation in winding up proceedings and receiving dividends, rather than direct ownership of company assets. The court referred to various legal authorities and precedents to emphasize that a shareholder does not acquire any direct right in the assets of the company but rather has a right to participate in profits and dividends.

Furthermore, the judgment discussed the interpretation of a shareholder's interest in company assets, highlighting that a shareholder's interest is limited to participating in asset distribution during winding up and receiving dividends based on profits. The court rejected the argument that a shareholder has a direct interest in specific company properties that would allow them to intervene independently of the company itself.

Additionally, the judgment addressed the validity of shareholder intervention in settlement terms. It was argued that the terms of settlement exceeded the company's authority, making them invalid. However, the court found that the shareholder, in this case, was neither a necessary nor a proper party for intervention based on established legal principles outlined by the Supreme Court in previous cases.

In conclusion, the court dismissed the appeal by the shareholder for intervention, upholding the trial judge's decision. The judgment reaffirmed the limited nature of a shareholder's rights in company assets and clarified that such rights do not extend to direct ownership or intervention in specific company properties.