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Showing 21 to 27 of 27 Records
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1962 (6) TMI 42
Issues Involved:
1. Confirmation of special resolution for additions and alterations to the company's objects.
2. Compliance with procedural requirements under the Companies (Court) Rules, 1959.
3. Legality and necessity of proposed sub-clause (r(i)) regarding contributions to charitable or other funds.
4. Legality and necessity of proposed sub-clause (r(ii)) regarding acquisition and dealing in shares and securities.
5. Validity of the special resolution passed without notice to a shareholder.
Detailed Analysis:
1. Confirmation of Special Resolution:
This application sought an order confirming the additions and alterations to the company's objects as proposed in the special resolution passed on December 26, 1958. The resolution aimed to insert two new sub-clauses in the company's memorandum of association:
- Sub-clause (r(i)): To contribute and/or subscribe to any charitable or other funds not directly relating to the business of the company or the welfare of its employees.
- Sub-clause (r(ii)): To subscribe for, purchase, acquire, hold, sell, dispose of, and deal in shares, stocks, debentures, or securities of any company or authority.
2. Compliance with Procedural Requirements:
The respondent raised procedural objections, arguing that the application did not comply with the old original side rules of the court, particularly rules 19 to 30. However, the court found that the Companies (Court) Rules, 1959, which came into operation on October 1, 1959, were applicable. The court was satisfied that the requirements of rules 22 and 38 of the Companies (Court) Rules, 1959, had been complied with, as evidenced by the supporting affidavit and certified copy of the special resolution.
3. Legality and Necessity of Proposed Sub-clause (r(i)):
The court examined whether the proposed sub-clause (r(i)) fell within the scope of section 17(1)(a) of the Companies Act, 1956, which allows alterations to enable the company to carry on its business more economically or efficiently. The court noted that contributions to charitable and other funds could ensure smooth working conditions and avoid the expensive and troublesome procedures of obtaining shareholder ratification for each contribution. The court referenced previous judgments, including Indian Iron & Steel Co. Ltd. and Jayantilal v. Tata Iron & Steel Co., which supported the legality of such contributions for both public and private companies. The objections to sub-clause (r(i)) were overruled, but the court imposed conditions limiting the contributions to Rs. 15,000 or 5% of the company's average net profit over the preceding three financial years, whichever is greater, and requiring detailed disclosure in the company's balance sheet and profit and loss accounts.
4. Legality and Necessity of Proposed Sub-clause (r(ii)):
The court considered the necessity of sub-clause (r(ii)) for the company to conveniently and advantageously carry on its business, particularly in acquiring new tea gardens through the purchase of controlling shares. The court referenced Palmer's Company Precedents, which indicated that clear words in the memorandum are necessary to enable a company to take shares in another company. The court found that the existing sub-clauses (i) and (r) of clause 3 did not provide specific powers for such acquisitions. The court overruled the respondent's contention that the proposed sub-clause (r(ii)) was unnecessary and confirmed its inclusion in the memorandum.
5. Validity of the Special Resolution Passed Without Notice to a Shareholder:
The respondent contended that he did not receive notice of the meeting where the special resolution was passed. However, the court noted that the notice was sent to the respondent's address under a certificate of posting, and under section 53(2)(b)(i) of the Companies Act, service is deemed effective 48 hours after posting. Additionally, section 172(3) provides that accidental omission to give notice or non-receipt of notice does not invalidate the proceedings at the meeting. Therefore, this contention was deemed unsubstantial.
Conclusion:
The court confirmed the inclusion of sub-clause (r(ii)) in the company's memorandum and approved sub-clause (r(i)) with specific conditions regarding the limit and disclosure of contributions. Each party was ordered to bear its own costs of the application.
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1962 (6) TMI 34
Issues:
1. Maintainability of appeals under section 45G of the Banking Companies Act, 1949.
2. Interpretation of section 45N of the Banking Companies Act, 1949.
3. Relationship between section 45N and section 483 of the Companies Act, 1956.
Detailed Analysis:
The judgment addressed the issue of the maintainability of appeals from an order directing the public examination of appellants under section 45G of the Banking Companies Act, 1949. The respondent, the official liquidator, contended that no appeal was competent under section 45N of the Act. Section 45N provides for appeals from orders or decisions of the High Court in a civil proceeding when the subject-matter exceeds a specified amount. The court referred to a previous case to establish that section 45N allows appeals to a superior court from a single judge's decision. However, the court interpreted that the appeal under section 45N is not to a court superior to the High Court but within the High Court itself, based on the power of the High Court to make rules under section 45U of the Act.
Furthermore, the judgment delved into the relationship between section 45N of the Banking Companies Act, 1949, and section 483 of the Companies Act, 1956. Section 483 of the Companies Act provides for appeals from orders in the winding up of a company. The court analyzed the extent of the impact of section 45N on the power conferred by section 483. It concluded that the effect of section 45N is to restrict the right of appeal granted by section 483 only in specified cases, not affecting the right of appeal in other matters.
The court emphasized that the finality conferred by sub-section (3) of section 45N is crucial, indicating that it does not pertain to matters like directing a public examination under section 45G of the Banking Companies Act, 1949. The judgment also referred to A.N. Aiyar's commentary, which highlighted that the scope of section 45N is limited to specific cases involving claims that can be valued monetarily and parties against whom the claim is made. The court concurred with this view, ruling that the appeals in question were governed by section 483 of the Companies Act, 1956, and other relevant laws and rules, and thus, the preliminary objection to the maintainability of the appeals was overruled.
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1962 (6) TMI 32
Issues:
1. Lack of filing power of attorney or written authority by liquidators as per rule 23 of the Civil Rules of Practice.
2. Proper appointment of liquidators under the Companies Act, 1956.
3. Absence of sanction for filing the suit in a creditors' voluntary winding up.
Analysis:
Issue 1: Lack of filing power of attorney or written authority
The contention raised by the defendant appellants was that the liquidators, acting on behalf of the bank in liquidation, should have produced a power of attorney or written authority as per rule 23 of the Civil Rules of Practice. However, the court clarified that the liquidators, being representatives of the bank in liquidation, are not agents of the bank but constitute the bank itself. Rule 23 applies only when someone other than the liquidators represents them, which was not the case here. Thus, this objection was deemed invalid.
Issue 2: Proper appointment of liquidators
The second objection regarding the proper appointment of the liquidators was not raised in the lower courts. The respondents were appointed as liquidators at a creditors' meeting, as stated in the plaint. The advocate for the appellants argued that there was no evidence of a general body meeting nominating the liquidators as required by the Companies Act, 1956. However, since the objection was not raised earlier and considering the provisions of section 502(2) where creditors' nominations prevail, the court did not delve further into this issue. The advocate for the respondents assured the court of the general body meeting and offered to produce records if necessary, which the court found unnecessary. Therefore, this objection was also dismissed.
Issue 3: Absence of sanction for filing the suit
The third objection raised was the absence of sanction for filing the suit in a creditors' voluntary winding up. Section 512 of the Companies Act outlines the powers and duties of the liquidator in such cases. The court clarified that for filing suits, no specific sanction is required under section 457, as the powers requiring sanction do not pertain to the institution or defense of suits. Therefore, the objection regarding the absence of sanction for filing the suit was deemed invalid.
In conclusion, as no other points were raised, the second appeal was dismissed with costs, upholding the decrees of the lower courts in favor of the respondents, the liquidators in the creditors' voluntary winding up of the Industrial Bank Ltd.
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1962 (6) TMI 21
Issues Involved
1. Contractual Obligation to Employees
2. Contractual Obligation to Associated Newspapers
3. Ultra Vires and Gratuitous Payments
4. Justification of Compensation Payments
Detailed Analysis
1. Contractual Obligation to Employees
The defendants argued that on October 17, 1960, the defendant company became contractually bound to its employees to make the payments in question. They claimed that promises were given to the employees' representatives in consideration of their continued work and facilitation of the takeover, which the employees accepted by continuing to work. The court rejected this plea, noting that the defendants had always intended any payment beyond legal entitlement to be ex gratia. The court found no evidence that any employee did anything beyond their contractual obligations based on any promise from the defendant company. Thus, the plea was dismissed.
2. Contractual Obligation to Associated Newspapers
The defendants also claimed a contractual obligation to Associated Newspapers to make the payment. The court noted that before October 6, 1960, there was no contract between the defendant company and Associated Newspapers, as all negotiations were subject to the approval of Associated Newspapers' board. The court found that clause 6 of the agreement did not incorporate the letters into the contract to create a binding obligation. The court also rejected the alternative submission that the inclusion of the formula in Mr. Cadbury's letter induced Associated Newspapers to enter into the agreement, as there was no proof of inducement, and the terms of the letters did not indicate an intention to create a contractual obligation.
3. Ultra Vires and Gratuitous Payments
The plaintiff argued that the proposed payment of compensation was gratuitous and ultra vires the defendant company. The court referred to several authorities, including Hutton v. West Cork Railway Co. and In re Lee, Behrens & Co. Ltd., to establish that a company's funds cannot be applied in making ex gratia payments as such. The court concluded that gratuitous payments are only valid if they meet the tests of being reasonably incidental to the carrying on of the company's business, bona fide, and for the benefit of the company. The court found that the proposal to pay compensation was motivated by generosity towards employees and a desire to avoid criticism, rather than the interests of the shareholders. Therefore, the payment was deemed ultra vires.
4. Justification of Compensation Payments
The defendants attempted to justify the payments by arguing that they were linked with the sale of the company's assets and were in the company's interest. They cited Kaye v. Croydon Tramways Co. to support their argument. However, the court found that the linkage alone could not justify the payments. The court noted that the onus was on the defendants to justify the payments on the principles stated in the Lee Behrens case, which they failed to do. The court concluded that the decision to distribute the funds was not taken in the interests of the company but was motivated by a desire to treat employees generously. Consequently, the proposal to pay compensation was one that a majority of shareholders could not ratify, following the precedent set in the Hutton case.
Conclusion
The court concluded that the defendants' proposals to pay compensation were ultra vires and could not be justified under the principles established in relevant case law. The payments were motivated by considerations that the law does not recognize as sufficient justification, and therefore, the majority of shareholders were not entitled to ratify the proposal.
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1962 (6) TMI 18
Issues Involved:
1. Whether the company is a proper plaintiff to assert that a charge is void due to non-registration under section 95 of the Companies Act, 1948.
2. Whether the charge constituted by the deposit of hire-purchase agreements was a charge on book-debts and therefore registrable under section 95(2)(e) of the Companies Act, 1948.
Issue-Wise Detailed Analysis:
1. Proper Plaintiff to Assert Charge Voidness:
The preliminary point addressed whether the company, in creditors' voluntary liquidation, could assert that certain hire-purchase agreements were not subject to a charge in favor of the defendants due to non-registration under section 95 of the Companies Act, 1948. The defendants argued that section 95 makes the charge void against the liquidator and creditors, not the company itself, thus the company could not sustain such an action. The court noted that the defendants did not raise this point in their pleadings, but it was a pure point of law and could be raised at trial.
The court considered the procedural rules under R.S.C., Ord. 25, rules 1, 2, and 3, which allow points of law to be raised in pleadings or at trial. It was determined that although it is not convenient to omit significant points of law from pleadings, the defendants were not precluded from raising this point. The court concluded that the company itself could not have a good cause of action arising from the non-registration of a charge, as the charge is only void against the liquidator and creditors, not the company. Additionally, section 96 imposes a statutory duty on the company to register any registrable charge, and allowing the company to assert the charge's voidness would require it to plead its own default. Thus, the proper course was for the proceedings to be brought by the liquidator, and the court permitted the amendment to join the liquidator as a co-plaintiff.
2. Charge on Book-Debts and Registrability:
The substantive issue was whether the deposit of hire-purchase agreements constituted a charge on book-debts, making it registrable under section 95(2)(e) of the Companies Act, 1948. The court examined the nature of the charge created by the deposit of agreements. The defendants argued that the agreements charged the benefits under the agreements, not specifically book-debts. The court referred to historical interpretations of "book-debts," citing Shipley v. Marshall and concluded that book-debts are debts arising in the course of business that would be entered in well-kept books, regardless of actual entry.
The court rejected the defendants' argument that no debt existed if the hirer made payments punctually, stating that the hire rent accrued day by day, creating a liability for the hirer even if the agreement was determinable. Furthermore, the hirer's minimum liability under the agreement constituted an existing debt, making it a book-debt at the date of the deposit.
The court also addressed the registrability of charges on future book-debts, concluding that such charges are registrable under section 95. The court found no basis to restrict the interpretation of "book-debts" to existing debts only and cited Eve J.'s view in In re George Inglefield, supporting the registrability of charges on future book-debts.
Conclusion:
The court declared that the charges created by the deposit of the 53 agreements were registrable under section 95 and, not having been registered, were void against the plaintiff liquidator. An order was made for the delivery up of the agreements.
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1962 (6) TMI 2
Issues: Conviction under Section 23(1A) of the Foreign Exchange Regulation Act, 1947 and Section 167(81) of the Sea Customs Act based on possession of gold bars.
Analysis:
1. The judgment involves the conviction of two appellants under the Foreign Exchange Regulation Act and the Sea Customs Act for possession of gold bars. The case revolves around the recovery of 720 gold bars from the cabin of one of the appellants, an Apprentice Engineer, and the alleged involvement of the Second Engineer in the same.
2. The prosecution presented evidence regarding the recovery of gold bars from the cabin of the Apprentice Engineer, concealed in secret compartments. However, the court noted that the mere presence of the gold bars in the cabin does not conclusively prove conscious possession by the Apprentice Engineer. Witnesses providing initial evidence failed to appear for cross-examination, leading to their statements being expunged from the record, weakening the case against the Apprentice Engineer.
3. Regarding the Second Engineer, the evidence against him included an invitation to a crew member to bring gold into the ship at an earlier port and letters found in his cabin hinting at involvement in a business to increase wealth. However, the court found these pieces of evidence insufficient to definitively link him to the gold bars found in the Apprentice Engineer's cabin.
4. The court emphasized the importance of establishing conscious possession of the gold bars by the accused individuals for a conviction under the relevant acts. The presumption under Section 178A of the Sea Customs Act shifts the burden of proof to the accused to show that the seized items are not smuggled. However, in this case, the prosecution failed to establish conscious possession by either of the appellants, leading to the setting aside of their convictions and sentences.
5. Ultimately, the court allowed the appeals of both appellants, setting aside their convictions and ordering their immediate release due to the lack of conclusive evidence proving their conscious possession of the gold bars as required by the law.
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1962 (6) TMI 1
Issues:
1. Violation of principles of natural justice in adjudication proceedings.
2. Reliance on evidence collected behind the back of the petitioner.
3. Burden of proof on the Department regarding goods brought into India without proper permit.
Analysis:
Issue 1: Violation of principles of natural justice in adjudication proceedings
The petitioner contended that the evidence of third parties, obtained behind his back, should not be used unless produced for cross-examination. The Collector dismissed this contention, stating that no extra evidence was derived beyond the petitioner's bills and vouchers. The Court disagreed, emphasizing the burden on the Department to prove goods were obtained without a permit. The Court highlighted the necessity for the petitioner to test materials relied upon, emphasizing the violation of natural justice principles in not allowing cross-examination.
Issue 2: Reliance on evidence collected behind the back of the petitioner
The Court criticized the Department for relying on evidence gathered secretly from sellers without allowing the petitioner to test its accuracy through cross-examination. It stressed that the petitioner did not request such inquiries, and the Department's approach did not adhere to natural justice principles. The Court held that the petitioner should have been given an opportunity to challenge the evidence against him.
Issue 3: Burden of proof on the Department regarding goods brought into India without proper permit
The Court highlighted that the burden of proof lies on the Department to show goods were imported without a permit. It rejected the notion that failure to prove a specific purchase automatically implies a breach of import rules. The Court likened the petitioner's position to that of an accused in a criminal trial, emphasizing the need for the Department to demonstrate the lack of necessary permits for imported goods.
The judgment in Civil Rule No. 176/62 and 182/62 highlighted the importance of upholding natural justice principles in adjudication proceedings, criticizing the Department's reliance on evidence obtained without the petitioner's opportunity for cross-examination. The burden of proof regarding imported goods without proper permits was emphasized, underscoring the necessity for fair procedures and the right to challenge evidence. Ultimately, the Court quashed the Collector's orders in both cases, citing violations of natural justice and the burden of proof requirements on the Department.
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