1949 (2) TMI 6 - HC - Companies Law

Summary

Issues:
1. Refund of share money to intending shareholders.
2. Application for restoration of the company.
3. Claims by Sharada Agencies for expenses incurred.

Refund of Share Money to Intending Shareholders:
The company, incorporated in 1945, never commenced business and received a total sum of Rs. 78,750 from intending shareholders. Due to difficulties in starting operations, a resolution was passed in 1947 to refund the share money to applicants. However, the Central Bank of India did not agree to honor the cheques for the refund. Subsequently, the company's name was struck off the register, and a voluntary winding-up resolution was passed in 1947. The Liquidator was appointed in 1948, and no claims were filed against the company. The court directed the filing of a list of creditors and contributories.

Application for Restoration of the Company:
An application was initially made under the Trustees Act for distribution of money held by the Central Bank of India among shareholders. The court treated this as an application for restoration under section 247 of the Indian Companies Act. The company was restored in April 1948, followed by a winding-up order in May 1948, appointing an Official Liquidator. The Liquidator invited claims against the company, with no claims being filed. The court gave directions for filing the list of creditors and contributories.

Claims by Sharada Agencies for Expenses Incurred:
Sharada Agencies, a partnership firm, claimed expenses of Rs. 7,913-5-3 incurred for pre-incorporation and post-incorporation activities related to the company. The court held that pre-incorporation expenses were not payable by the company. Regarding post-incorporation expenses, the court referred to the Indian Companies Act, stating that contracts made before a company is entitled to commence business are provisional and not binding until that date. The court cited precedents to support the disallowance of such claims, emphasizing that expenses incurred before the company's entitlement to commence business are not payable. The claim by Sharada Agencies for expenses was dismissed, and the list was settled by deleting their claim.