1938 (12) TMI 13 - HC - Companies Law

Summary

Issues Involved:
1. Inclusion of the objector's name in the list of contributories.
2. Application for rectification of the Company's register of members.
3. Legality of the transfer of shares to the objector.
4. Objector's knowledge and consent regarding the transfer of shares.
5. Objector's standing by and not taking timely action.

Detailed Analysis of the Judgment:

1. Inclusion of the Objector's Name in the List of Contributories:
The objector, Mr. D. Balarama Reddi, contested his inclusion in the list of contributories, arguing that the shares were not legally transferred to him. He claimed he applied for an allotment of 4,000 shares but was instead recorded as a transferee without his consent. The court found that the objector had agreed to have 4,000 shares transferred to him instead of being allotted, and thus, his inclusion in the list of contributories was justified.

2. Application for Rectification of the Company's Register of Members:
The objector sought to have his name removed from the Company's register of members, asserting that the shares were not legally transferred to him. The court noted that the objector's name appeared in the register as the holder of 4,000 shares, with Rs. 8,000 paid and Rs. 32,000 remaining as liability. The court dismissed the application for rectification, concluding that the objector had consented to the transfer of shares and stood by without taking action for a long period.

3. Legality of the Transfer of Shares to the Objector:
The objector argued that the shares were not legally transferred to him. The court examined the evidence, including the application form signed by the objector and the acknowledgment of Rs. 8,000 by the company. The court found that the objector had agreed to the transfer of shares instead of an allotment and that the transfer was effected with his knowledge and consent. The court also noted that the objector did not take any action to rectify the situation for nearly four years.

4. Objector's Knowledge and Consent Regarding the Transfer of Shares:
The court considered the objector's knowledge and consent regarding the transfer of shares. It was established that the objector was aware of the transfer and had agreed to it. The court noted that the objector did not make any complaints or take any action to rectify the situation for a significant period. The court also found that the objector had inspected the share register and was aware that his name was included as a member of the company.

5. Objector's Standing By and Not Taking Timely Action:
The court emphasized that the objector stood by for a long time, knowing that his name was on the register of shareholders, and took no steps to have it rectified. The court cited several English cases to support the principle that a person who knows their name is included in the register and stands by without taking action loses the right to have their name removed. The court concluded that the objector's inaction and delay in taking steps to rectify the register indicated his consent to the transfer of shares.

Conclusion:
The court ruled in favor of the Official Liquidator's application, including Mr. D. Balarama Reddi in the list of contributories in respect of 4,000 shares. The objector's application for rectification of the register was dismissed. The court found that the objector had consented to the transfer of shares and had stood by without taking timely action to rectify the situation. There was no order for costs.