1966 (12) TMI 35 - Tri - Companies Law

Summary

Issues Involved:
1. Whether the names of the petitioners were omitted from the register of members without sufficient cause.
2. Whether the petitions are barred by limitation.

Detailed Analysis:

Issue 1: Omission of Petitioners' Names from the Register of Members
The petitions were filed under Section 155 of the Companies Act, 1956, for rectification of the register of members of Gordhandas Desai Private Limited. The petitioners, Navinchandra Ratilal Patel and Prafulkumar Ratilal Patel, sought the rectification of 300 shares each, originally allotted to them but later transferred to Gordhanbhai Ishwarlal Patel, their paternal uncle and one of the company's promoters.

Facts:
- Gordhanbhai was allotted 4994 equity shares in consideration of assigning his business to the company.
- On 21st December 1957, Gordhanbhai requested the company to allot 300 shares each to the petitioners, who were minors at the time.
- The company allotted these shares on 23rd December 1957.
- Upon discovering the petitioners' minority in 1960, the company cancelled the allotments and transferred the shares to Gordhanbhai.
- Gordhanbhai passed away on 20th December 1962.

Contentions:
- Petitioners argued they were entitled to hold the shares despite being minors at the time of allotment and that the company erred in cancelling the allotments without court intervention.
- The company contended the allotments were void due to the petitioners' minority and that the shares were reallocated to their father, Ratilal, causing no prejudice to the petitioners.

Judgment:
- The Tribunal held that the company was not justified in deleting the petitioners' names without approaching the court, especially given the minors' interest.
- The omission of the petitioners' names from the register was deemed without sufficient cause.
- The Tribunal directed the company to rectify its register of members by deleting Gordhanbhai's name and entering the petitioners' names for the respective shares.

Issue 2: Limitation
Contentions:
- The company argued the petitions were time-barred, asserting that the petitioners should have known about the omission since 1960.
- Petitioners claimed they only became aware of the omission in March 1966.

Judgment:
- The Tribunal determined that limitation would begin to run from the date the petitioners attained majority.
- For Navinchandra, this was 23rd February 1964.
- For Prafulkumar, this was 20th January 1961.
- The Tribunal applied Article 120 of the Limitation Act by analogy, which provides a six-year limitation period.
- Consequently, both petitions were deemed within the limitation period.

Final Orders:
- The company was directed to rectify its register of members:
- For Navinchandra, by deleting Gordhanbhai's name for shares numbered 4399 to 4698.
- For Prafulkumar, by deleting Gordhanbhai's name for shares numbered 4099 to 4398.
- The company was also instructed to file notices of rectification with the Registrar of Companies within 30 days.
- The order clarified that respondent No. 3 could still seek a decision on the question of title by filing a separate suit if so advised.

Costs:
- No order as to costs was made in both petitions.