9911796707
TMI Blog1932 (1) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... d are that the business of the bank commenced on the 26th of March, 1924. On the 31st March, 1924, the respondent applied for shares and also consented to act as a director. On the 1st May, 1925, a promissory note for Rs. 500, was executed by the respondent in favour of the bank. He was shown in the register of the shareholders and he was credited with having paid Rs. 500 towards the application money. On the 7th May, 1925, according to the despatch book, a notice of directors' meeting was sent to him and it is contended on behalf of the liquidator that that meeting was held on the 8th May. 1925 and the respondent attended the meeting which was that of the local board of directors at Etawa and acted as chairman. On the 26th May, 1925, a res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1925, and therefore, he is estopped from now urging that he is not a shareholder. It is contended further that as no prospectus were over issued the request for being allotted shares must be taken to be an acceptance by the respondent of a previous offer made to him and this is further confirmed by fact that accompanying the application for shares is the letter of consent to act as a director. It is therefore contended that even if no allotment was ever made he had consented to act as a shareholder and Motilal Chunilal v. Thakorlal [1911] 36 Bom. 557; 16 IC 696 and Halsbury's Laws of England, Volume V, page 145, paragraph 30 are cited in support. It is further contended that the onus was on the respondent to show that he was not a memb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed further that no special contract is either alleged or proved and that the onus lay on the liquidator to prove and allege the special contract. It is admitted that the onus lies on the respondent to prove that he was not a shareholder. It is contended, however, that as he never paid the share money in cash he could not be a shareholder, and that the finding to the contrary by the learned District Judge is incorrect. Rai Lachman Singh v. Liquidators of Industrial East Co., Ltd. [1914] 25 IC 672; 201 PLR 1914 is relied on this connection. It is also contended that Gaya Parshad also never paid the share money in cash and, therefore, the finding that he was a validly appointed director is not correct. As regards Abaid Hussain it is conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther allotment the respondent became a shareholder. As regards the question of the cash payment for shares as no prospectus was issued, sections 101 does not apply, and the mere fact that the promissory note and the shares allotment were almost simultaneous may be a ground for suspicion but is not absolutely proof of fraud. Further, if it is a fraud, it seems to me extremely doubtful whether the respondent could be allowed to plead his own fraud for he must have known what he was doing. I also consider that section 86 covers any defect in the appointment of the directors. So far as Gaya Parshad is concerned he took a loan on the 10th and was credited with application money on the 13th. The contention that the transaction is not a genuine t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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