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Issues:
1. Whether the company was entitled to confiscate the shares of the first petitioner. 2. Whether the company was entitled to confiscate the shares of the second petitioner. Analysis: The petition involved a dispute under section 38 of the Indian Companies Act, 1913, regarding the forfeiture of shares belonging to two petitioners by the respondent company. The first petitioner claimed ownership of 41 shares, while the second petitioner had acquired 100 shares. The company alleged that the first petitioner only owned 24 shares and the second petitioner had outstanding dues. The company forfeited the shares based on alleged non-payment of amounts due, as per the articles of association. The petitioners sought an order to reinstate their names in the register of members and remove the names of other shareholders to whom their shares were transferred. Regarding the first petitioner, the company claimed he owed a specific amount, leading to the lawful forfeiture of his shares as per the articles of association. The second petitioner, who was a former employee of the company, had outstanding dues, resulting in the forfeiture of his shares after due process. Both petitioners were served notices to pay the outstanding amounts before the shares were forfeited. The company presented evidence supporting their claims, including resolutions passed at board meetings and confirmation by shareholders. On the petitioners' side, they denied the company's claims and presented their version of events. They argued that a detailed investigation was necessary to resolve the disputes, especially concerning the handling of funds by the second petitioner during his employment. The court noted the conflicting accounts and the need for a thorough scrutiny of the allegations made by both parties. The court emphasized that section 38 of the Indian Companies Act, 1913, provided a summary remedy for non-controversial matters, not for disputes requiring detailed investigations. Citing precedents, the court highlighted that in cases of complexity, the appropriate forum for adjudication is a civil court. The court referred to English cases and Indian precedents to support the dismissal of the petition under section 38, advising the petitioners to pursue their claims through a regular suit for a comprehensive resolution. In conclusion, the court dismissed the petition, emphasizing that the dispute required a detailed investigation beyond the scope of section 38 proceedings. The court highlighted the discretionary nature of rectification of the register and the need for a civil court for resolving complex disputes. The petitioners were advised to seek redress through a regular suit for a more suitable resolution, and no costs were awarded in this matter.
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