1975 (4) TMI 75 - HC - Companies Law

Share warrants and entries in register of members, Power of court to rectify register of members

Issues Involved:
1. Maintainability of the petition.
2. Barred by limitation.
3. Entitlement for registration of the petitioner's name in the register of members.
4. Ownership of 342 shares and substitution in the register of members.
5. Relief entitled to the petitioner.

Issue-wise Detailed Analysis:

Issue No. 1: Maintainability of the Petition
The court addressed the maintainability of the petition as a preliminary issue. It was determined that the application was maintainable under section 155 of the Companies Act, 1956. The court held that a person who has become the owner of shares and thus a member of the company, but whose name has not been entered in the register of members, can apply under section 155. This section provides the court with an overriding power, independent of section 111 of the Companies Act. The court clarified that the procedure under sections 108 to 111, which includes the requirement of a proper instrument of transfer, does not apply to the transmission of shares resulting from a court order. Consequently, the application was deemed maintainable.

Issue No. 2: Barred by Limitation
The court examined whether the petition was barred by limitation. The winding-up order was passed on 19th May 1972, and the petitioner made an application on 15th July 1972, within two months of the winding-up order. The court referenced Shankara v. Haridhan Singh, which held that an application for rectification of the register is not subject to the Limitation Act, specifically article 137. The court agreed with this precedent, ruling that the application was not barred by limitation and should be considered timely.

Issues Nos. 3 and 4: Entitlement for Registration and Ownership of Shares
These issues were addressed together due to their interrelated nature. The court focused on whether the petitioner was the owner of the 342 shares. The managing director did not seriously contest the execution court's auction sale proceedings. The petitioner provided certified copies of auction orders, sale confirmation, and the sale certificate, along with statements from benamidars indicating that Damodar Das Agarwal was the real owner of the shares. The court found that the petitioner had established ownership of the shares through the auction sale.

The managing director's argument, based on Order 21, rules 79 and 80 of the Civil Procedure Code, was dismissed. The court cited Philipose v. Vanchinad Rubber & Produce Co. Ltd., which held that non-compliance with these rules did not invalidate the auction purchaser's title. The court concluded that the execution proceedings vested ownership and title of the shares in the petitioner.

The managing director's claim that Damodar Das Agarwal had pledged the shares to Amrit Dal Mills was unsupported by evidence. The court found the story to be an afterthought, intended to defeat the petitioner's claim. The affidavit from Deoki Nandan Agarwal contradicted the managing director's version and did not establish any transfer of interest in the shares to Purshottam Das Agarwal.

The court also dismissed the argument that the petitioner bypassed sections 108 to 111, which could have allowed existing shareholders to purchase the shares. It was held that these sections were not applicable to the court's power under section 467 to settle the list of contributories. No shareholders expressed interest in purchasing the shares, rendering the argument moot.

The court concluded that the petitioner was the rightful owner of the 342 shares and entitled to have his name substituted in the register of members.

Issue No. 5: Relief Entitled to the Petitioner
The court ruled in favor of the petitioner, ordering the rectification of the register of members of Hanuman Mills Private Ltd., Fatehpur. The petitioner's name was to be entered as a member for the 342 shares in place of Damodar Das Agarwal and his benamidars. The petitioner was also awarded costs.

Conclusion
The petition was allowed, and the register of members was ordered to be rectified to reflect the petitioner's ownership of the 342 shares. The petitioner was entitled to costs.

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