1935 (8) TMI 18 - HC - Companies Law

Meetings and proceedings Contents and manner of service of notice and persons on whom it is to be served, Shares warrants and entries in register of members, Winding up - Liability as contributories of present and post members , Settlement of list of contributories and application of assets and Company Membership of

Summary

Issues Involved:
1. Rectification of the share register.
2. Validity of the transfer of shares.
3. Estoppel against the contributory.

Issue-wise Detailed Analysis:

1. Rectification of the Share Register:
The application by Balubhai Khimchand, contributory No. 27, sought rectification of the share register to reflect him as the owner of only 50 shares instead of 250. The application was made under Section 184 of the Companies Act of 1913, which allows the Court to rectify the register of members even during the winding-up process. The Court has the power to decide any question relating to the title of the aggrieved person and to rectify the register accordingly. The list of contributories was settled by the Court on 28th June 1935, except for the 200 shares in dispute.

2. Validity of the Transfer of Shares:
Balubhai initially claimed he was merely a nominee for the 200 shares owned by Jivanchand Dharamchand, but this ground was abandoned during the hearing. The second ground of invalidity of the transfer was based on the form of transfer executed on 13th November 1933, which was completed in the company's books on 14th April 1934. The transfer was formalized by a resolution on 13th April 1934, which was confirmed by the directors on 19th April 1934. Balubhai contended that the transfer was invalid because the resolution was not signed by all directors as required by Article 111. However, the Court found that the irregularity was cured when the resolution was ratified on 19th April. The Court also noted that there was no evidence to show that notice of the meeting was not given to all directors, and generally, the Court assumes that everything has been done regularly and in due course.

3. Estoppel Against the Contributory:
The liquidator argued that Balubhai was estopped from denying liability as he had insisted on being registered as the owner of the shares and had acted as a shareholder, including voting at a meeting regarding the winding up of the company. The Court held that Balubhai was estopped from disowning liability because he had acted like a shareholder and insisted on his name being on the register. The Court emphasized that the register must be as conclusive as possible and that secret agreements or personal equities cannot override the statutory liability to contribute to the company's debts. The contributory had failed to prove that his name was entered fraudulently or without sufficient cause under Section 38(1) of the Companies Act.

Conclusion:
The Court rejected the application for rectification of the share register, holding that Balubhai Khimchand is liable for all 250 shares as per the register. The contributory must pay the costs of the liquidator, and in the event of non-recovery, the costs will come out of the assets of the company in the liquidator's hands.

Order Accordingly.