1963 (8) TMI 21 - HC - Companies Law

Summary

Issues:
1. Timeliness of the application for rectification of the share register.
2. Allegations of fraud or misrepresentation in obtaining the share allotment.
3. Fulfillment of conditions agreed upon before share allotment.
4. Allotment of specific shares to the petitioner.
5. Relief entitled to the petitioner.

Analysis:
The case involved a petition under sections 38, 184, and 216 of the Indian Companies Act of 1913 for rectification of the Register of Members of a company in liquidation. The petitioners alleged fraud in the share allotment process. The liquidator contended that the petitioners had no right for rectification after four years, and the winding up being voluntary, section 184 was not applicable. The issues framed by the district judge included the timeliness of the application, fraud in share allotment, fulfillment of agreed conditions, specific share allotment, and relief entitled to the petitioner.

The district judge found in favor of the petitioners on issues related to timeliness, fraud in share allotment, and fulfillment of agreed conditions. However, the judge ruled against the petitioners on the specific share allotment issue. The judge concluded that since the share allotment was conditional and the condition was not fulfilled by the company, the petitioners' names should be struck off the register of members. Consequently, the judge ordered rectification of the register of members as requested by the petitioners. The liquidator appealed this decision.

The court noted that the petitioners had ample opportunity to dispute their inclusion in the list of contributories, and failing to appeal against the settlement of the list resulted in a final order. Citing legal precedents, the court emphasized that once a winding-up order is passed, a member loses the right to seek rectification of the register. The court also highlighted the considerable delay in filing the petition after the share allotment, emphasizing the need to raise objections promptly in cases of fraud or misrepresentation.

Based on the above reasons, the court accepted the appeal by the liquidator, setting aside the district judge's order for rectification of the register of members. The petitioners' application was dismissed with costs throughout.