9911796707
TMI Blog1949 (4) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... efendant company. Each share is of the face value of Rs. 50 and admittedly the appellant has paid only Rs. 20 in respect of each of them. A notice was issued to him in common with other shareholders on the 15th January, 1941, calling upon him to pay the balance of the call money on or before the 31st January, 1941. Admittedly, the appellant did not pay his money. Thereupon the managing agent of the respondent company sent a notice to the appellant on the 20th March, 1941, styled as "Notice before forfeiture for non-payment of call money". Despite receipt of this notice, the appellant did not pay the call money. Thereafter, the managing agent of the respondent company informed the appellant on the 3rd February, 1943, that his shares were for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rictly and literally complied with. A very little inaccuracy is as fatal as the greatest. Here the notice is inaccurate. It is, therefore, bad and the forfeiture is invalid. I may add that, as at present advised, I think that, the time for the payment of the call could not properly be fixed by a mere verbal direction to the secretary, it ought to be fixed by a formal resolution of the directors." In the other case, their Lordships have observed as follows at pages 288 and 289: "This may seem to be somewhat technical; but in the matter of the forfeiture of shares, technicalities must be strictly observed. And it is not, as is sometimes apt to be forgotten, merely the person whose shares are being forfeited who is entitled to insist, upon t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y at any time thereafter before payment of all calls of instalments or interest and expenses due in respect thereof, be forfeited by the directors who shall record a minute to that effect. Such forfeiture shall include ail dividends declared in respect of the forfeited shares and not actually paid before the forfeiture." It is clear from these articles that the directors alone con decide about a forfeiture, that they must give notice to the shareholder concerned stating clearly the amount payable and the date by which the payments is to be made and staling also that in the event of non-payment by a particular date the share will be liable to be forfeited. It is further clear that it is only when the notice-is not complied with that a fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a graver defect in the notice. The notice does not say that upon failure of the appellant to pay the money within a month from the date of posting the notice, the shares will be liable robe forfeited. What it says is that the question of forfeiture will be considered by the board of directors. There is dearly a difference between a liability to forfeiture and the possibility of a forfeiture. As the matter was left so vague, it was, I think, not open to the respondent company to forfeit those shares on the basis of such a notice. There is also another and stronger reason why I think the forfeiture is invalid. The notice on which reliance is placed was given on the 15th of January, 1941, but the forfeiture took place on the 3rd January 1943 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the concern. Therefore, clearly the managing agent could on his sole authority, do nothing which affected the rights of a shareholder. I am, therefore, clear that the forfeiture of the appellant's shares was without proper basis and is consequently invalid. What, then, is the effect of this? Can the appellant get back all his right which the board of direction have purported to take away from him? I am referred to Article 35 of the Articles of Association which runs thus: "An entry in the minute book of the directors of the company of the forfeiture of any shares or that any shares have been sold to satisfy a lien of the company shall be sufficient evidence as against all persons entitled to such shares that such shares were properly ..... X X X X Extracts X X X X X X X X Extracts X X X X
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