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- Dispute over the allotment of shares in a company - Interpretation of section 40 of the Indian Companies Act - Application of contract law principles in company-shareholder relations - Determination of the date from which interest on a payment should be calculated Analysis: The case revolves around a disagreement regarding the allotment of shares in the Bellary Electric Supply Co., Ltd. The respondent's firm had initially purchased 110 shares and later deposited Rs. 1,400 for an additional 140 shares. The respondent claimed that no formal allotment of the 140 shares had been made to him, seeking a refund from the Official Liquidator. The District Judge, after a detailed examination, concluded that no allotment had occurred. The appellant relied on section 40 of the Indian Companies Act, arguing that the Register of Members serves as prima facie evidence of allotment. However, the evidence presented, including witness testimonies, effectively rebutted any presumption of allotment, leading to the dismissal of the appeal. In interpreting the law, the Court highlighted that the mere entry of a shareholder's name in the company's register does not conclusively establish an allotment of shares. Drawing on contract law principles, it was emphasized that an application for shares constitutes an offer that necessitates acceptance and communication of such acceptance. Citing precedent from a similar case, it was established that without communication of the allotment to the shareholder, no binding contract exists. Therefore, the Court concurred with the District Judge's decision, emphasizing the importance of communication in share allotments. Regarding the calculation of interest on the Rs. 1,400 payment, the appellant contested the lower Court's decision to award interest from October 14, 1925. Relying on legal precedent, the Court clarified that interest can only be granted in accordance with the provisions of the Interest Act. Since the payment was not a debt specified in a written instrument, interest could only be claimed from the date of demand, which was determined to be July 27, 1928. Consequently, the Court modified the lower Court's decree on interest calculation, ultimately dismissing the appeal while upholding the costs awarded in the lower Court.
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