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TMI Blog1960 (5) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... thal. After the minimum subscription of Rs. 1,00,000 had been subscribed by April 26, 1956, the company proceeded to allot shares on May 16, 1956, and obtained the commencement of business certificate on August 11, 1956. The company had at one time share capital of the value of Rs. 10,37,270 which had been subscribed, but under a compromise entered into by the company on June 15, 1957, in settlement of a dispute between the company and its sole selling agents, the capital of the nominal value of Rs. 10,05,000 was returned and written off. The capital was reduced after the sanction of this court had been obtained. Thereafter the company entered into underwriting agreements with respondents Nos. 1 to 6 and two others, Shri O.P. Chopra and S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 4,000 and Rs. 5,000 respectively. Thereafter, the respondents committed default and did not procure or subscribe for shares underwritten by them within the prescribed time. On February 28, 1958, at a meeting of the board of directors of the company a resolution was passed asking the managing agents of the company to remind respondents Nos. 1 and 2 to subscribe or get subscription to the extent agreed upon by them by March 15, 1958, failing which the company would allot shares in their names. At this meeting respondents Nos. 2, 3 and 5 were present. Respondent No. 3, Kashmiri Lal Gupta, and respondent No. 4, Sham Das Gupta, had been specially invited. At a meeting held on March 31, 1958, at which some of the respondents were present, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve allotments was submitted to the Registrar of Companies, Punjab, under section 75 of the Companies Act, 1956, together with the fee. But the Registrar of Companies wrote back to say that as the shares had been allotted without any cash consideration, no allotment of shares in a company could be made unless at least 5% of the nominal amount of the shares had been paid to and received by the company. Reference was made to section 69 of the Act. The Registrar of Companies refused to register the allotment made by the company to the six underwriters : vide annexure "F". The company feels that as a result of the said refusal of the Registrar (respondent No. 7) respondents Nos. 1 to 6 cannot be treated as shareholders and the company will thu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d upon the agreement in the expectation of the licence for the spindles being continued. On this account it was stated that the underwriting agreements have become frustrated and, therefore, the shares could not be sold. On the pleadings of the parties the following issues were framed : 1.Whether the allotment of shares was valid ? 2.Is the petition competent ? 3.Relief. The parties have led oral evidence and a number of documents have also been placed on the record. The case has been argued at considerable length by the learned counsel for the respective parties. In view of an initial obstacle in the way of the company it is not necessary to consider the several arguments addressed at the Bar. One peculiar feature of this case is, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion of ' rectification ' of the register arises. " While deciding that case I had placed reliance upon the following observations of Lord Cairns, L.J., in Ward and Henry's case: In re London, Hamburgh, and Continental Exchange Bank [1867] L.R. 2 Ch. App. 431, 441. "In the next place, the act to be done under the powers of that section is the 'rectification' of the register, a term which of itself implies that the register, either in what is, or what is not upon it, is wrong : but the register cannot be wrong unless there has been a failure on the part of the company to comply with the directions in the Act as to the kind of register to be kept: for if the Act has been complied with, the register must be right and not wrong." The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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