1954 (8) TMI 18 - HC - Companies Law

Summary

Issues:
1. Whether there was a concluded contract between the parties regarding the allotment of shares.
2. Whether the delay in accepting the offer of shares resulted in the lapse of the proposal.
3. Whether the defendants can challenge the allotment based on delay.

Analysis:

1. The judgment revolves around two suits for the recovery of amounts due for shares allotted by the plaintiff company to the defendants. The court examined whether there was a concluded contract between the parties regarding the shares. The plaintiff claimed that they had communicated the acceptance of the offer and allotment of shares to the defendants through letters. The lower court found that the letters of acceptance were duly sent to the defendants, constituting a concluded contract between the parties.

2. A contention was raised regarding the delay in accepting the offer of shares and whether it led to the lapse of the proposal. Citing the case of Ramsgate Victoria Hotel v. Montefwre, it was argued that the delay in allotment must be within a reasonable time for the offer to be valid. However, in this case, the defendants were aware of the allotment, received share certificates, and did not object until later when a demand for payment was made. The court held that the defendants' conduct indicated acceptance of the shares, and the proposal could not be deemed revoked due to the delay.

3. The judgment also addressed whether the defendants could challenge the allotment based on delay under section 101 of the Companies Act. It was noted that the statutory meeting was held, and no steps were taken by the defendants to avoid the allotment within the specified time frame. As the defendants had accepted the shares and did not object promptly, the court concluded that the allotment was valid, and the defendants could not now dispute liability. Consequently, the revision petitions were dismissed with costs.

This detailed analysis of the judgment highlights the key legal principles applied by the court in determining the validity of the contract and the impact of delay on the allotment of shares.