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TMI Blog1951 (9) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... nd this was subsequently raised to Rs. 21,00,000 divided into 25,000 shares. Under the rules of the company, the shareholders who subscribe regularly at Re. 1 per month for 84 months should be paid a sum of Rs. 100, the difference between Rs. 84 and Rs. 100 representing the interest on the deposits of Re. 1 which they pay every month towards the share capital. This is what is generally termed as recurring deposits in Nidhis and funds where a subscriber who subscribes one rupee a month for 84 months would be entitled to receive from the company a sum of Rs. 100. The result is that the share capital so formed is liable to be repaid to the shareholders, whereas under the Indian Companies Act, such shares cannot be repaid on demand since they f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fects, as pointed out by Coutts Trotter, C.J., in The Madras Native Permanent Fund Ltd. v. Natesa Sastri that arise when these funds are turned into limited companies, because their articles are usually drawn without regard either to the provisions of the memorandum or to the general law embodied in the Companies Act. It is to rectify this defect that the company has called for a meeting and passed the resolutions altering the memorandum of association. The respondents are husband and wife and they claim to be members of the company. They oppose the application on two grounds; firstly that the extraordinary meeting has not been properly called for and no notices of the meeting as required have been served on the members, that the resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded over to her. What is required under the rules is that copies of notices should be given in the houses occupied by the respective shareholders. So long as the notice is served at the residential house of a member, that would be sufficient compliance of the rules and in this case the bill collector has stated that he handed over the notice to the second respondent personally. No doubt,, there is no acknowledgement. But, there is nothing to disregard the statement in the affidavit and the endorsement of the bill collector that such a notice had been handed over to her and left in the house in which she was residing. I therefore consider that notice of the meeting has been served on the second respondent. There is no other complaint from an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber of months in this case 84 months-and will be payable to the depositors not only the amounts which they paid but the interest added to them amounting to Rs. 100. It may be that if the depositors who contribute Re. 1 each per month for 84 months regularly receive back each Rs. 100 as they are entitled to under the memorandum of association, there will be no share capital left at all unless there are other depositors who are prepared to come and pay Rs. 1 each on the same terms, even which could not be secured to the company as its capital. The present structure of share capital cannot really be called the capital of the company. The company is now adopting a precarious system of having capital which is likely to disappear and automaticall ..... X X X X Extracts X X X X X X X X Extracts X X X X
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