9911796707
TMI Blog1965 (4) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... r exceeded Rs. 7,500 under Chapter I, rule 1, clause 3( d ) of the Appellate Side Rules. The main question in the appeal is whether the District Munsiff was right in his view that the plaintiffs were subscribers to the memorandum of association of the first defendant and were among the members of its first board of directors. The first defendant was registered as a company on February 16, 1959. Its registered office was to be in the State of Madras and its primary object was to carry on transport business. It has a share capital of Rs. 1,00,000 divided into thousand shares of Rs. 100 each. The qualification of a director under the articles would be the holding of at least fifty shares of the company. The plaintiffs' case is that they and defendants Nos. 2 to 8 had agreed to take fifty shares each for becoming directors and subscribed to the memorandum or articles of association which were registered. The plaintiffs were thus appointed along with defendants Nos. 2 to 8 as directors of the company and the fact was mentioned in the articles themselves. They are entitled to hold office in that capacity for life and are neither removable nor do they retire. As directors named in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as there was objection from the Registrar to the name "Thirumurugan" it there was changed into "Arthanari Transport private Ltd." The application, with the changed name was signed only by defendants Nos. 3 and 4 and it is, therefore, not true that the plaintiffs signed the memorandum or articles of association. By about February 16, 1959, the first plaintiff did not want to be in the company with the changed name. In fact he floated another company under the name, of "Vijayalakshmi Transports Private Ltd." Meanwhile plaintiffs Nos. 2 to 4 along with the first plaintiff expressed their unwillingness to continue in the company, did not pay any money and withdrew. They gave a letter of consent withdrawing themselves which was left with the fourth defendant but he has colluded with the plaintiffs' and suppressed the same. On the strength of this withdrawal, the pontiffs were removed from directorship on March 5, 1959, and the fact was notified to the Registrar of Companies on March 9, 1959. The second defendant denied that the plaintiffs had paid Rs. 101 each and maintained that the plaintiffs never acquired the status of directors, that they had abandoned the idea of co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. We only thought of changing the name of the company and. not the directors. Even at the time of the registration we had no idea of changing the directors. The plaintiffs were the directors of the company until they gave their letters of resignation". Nevertheless the contention for the appellants is that whatever was the invention of the parties, the plaintiffs never in law became members of the 1st defendant and did not, as a matter of fact, subscribe to the memo-randam and articles of association as registered. In any case, say the appellants, the plaintiffs failed to acquire the requisite share qualification to continue as directors. It may be seen that these submissions made before us are somewhat different from those addressee to the court below. The basis for the first contention is this. At the bottom of each of the pages except the last ones in the printed memorandum of association and articles of association, the plaintiffs as well as defendants Nos. 2 to 8 had each duly signed. It is also seen that the 1st defendant's name as changed has been printed and pasted over the original name in the printed memorandum and articles of association. The last sheet in the memora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in spite of the intention of the plaintiffs and defendants Nos. 2 to 8 together to form the company and be its members and first directors. Section 12 of the Companies Act, 1956, relates to the mode of forming incorporated companies and says that two or more persons associated for any lawful purpose may form a private company by subscribing their names to a memorandum of association and otherwise complying with the requirements of the Act in respect of registration. It is Important to note that "subscribing their names to a memorandum of association" implies an agreement between the persons concerned to associate each other into a body corporate and subscribing in the context means the signing by such persons or their nominees in the memorandum in token of their agreement to so associate themselves. The signatories are thus parties to the agreement which is in the form of a declaration. A memorandum of association of a company is required by section 14 to be, where it is a private company, in the form prescribed in Table B in Schedule I. This form, after providing for the name of the company, the place of its registered office, its objects, limited liability of its members and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dum than in token of their being parties to a declaration as to the formation of the association and undertaking to accept the number of shares mentioned, they are not be regarded as subscribers to the memorandum of association, for they are not by their signatures parties to the declaration which is the vital part of the memorandum. We are aware that a certificate of incorporation given by the Register in respect of any association shall be conclusive evidence that all the requirements of the Act have been complied with in respect of registration and matters precedent to or incidental thereto. But the collusiveness engendered by section 35 does not cover the defect in this case and require that those who have not been parties to the declaration in the memorandum should nevertheless be regarded as subscribers thereto. It is also true that the. articles of association simultaneously registered with the memorandum of association by one of its clauses mention the plaintiffs as among the first directors. But, in our view, this again is not of assistance to the plaintiffs, because what governs is the memorandum of association and the fact of the plainti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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