9911796707
TMI Blog1966 (11) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent No, 2 has taken possession of the company's assets and books and is exercising the powers of the board. On or about January 15, 1964, respondents Nos. 3 and 4 sold and transferred to the petitioner 74 fully paid up equity shares which were jointly held by respondents Nos. 3 and 4 in the capital of the company. On the same date the said respondents made over to the petitioner the original share certificates relating to the said 74 shares along with the transfer deeds executed in favour of the petitioner. By a letter dated January 15, 1964, respondents Nos. 3 and 4 informed respondent No. 2 about the transfer of the said shares to the petitioner. By a letter dated January 22, 1964, the petitioner's solicitor forwarded to respondent No. 2 share scrips for the said 74 shares along with the relevant transfer deeds executed in favour of the petitioner. Respondent No. 2 was called upon to register the petitioner's name as the holder of the said shares. By a letter dated February 3, 1964, respondent No. 2 declined to register the said shares in the petitioner's name on the ground that he did not get possession of the head office of the company and advised the petitioner to take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statements made in this affidavit and having regard to the contentions raised by Mr. B.K. Ghose, learned counsel for the added respondent No. 5, I directed the special officer to be examined on the question of the service of the said notice on respondent No. 5. Accordingly the special officer gave evidence and was cross-examined by Mr. B.K. Ghose. In his evidence the special officer stated that the notices were brought on December 21, 1963, and they were dated December 18, 1963. He also stated that on December 21, 1963, he asked Bidyut Basu to type two notices but did not ask Bidyut Basu to have it dated on December 18, 1963. The special officer admitted that there was omission to send the notice to Probhas Kumar Basu in the first instance. But he stated that this omission was pointed out to him by Bidyut Basu whom he asked to type two notices, one for Probhas Kumar Basu and the other for Sm. Snehalata Basu. He signed the notices and asked Bidyut Basu to post the same under certificate of posting. He has further stated that he had to take the help of Bidyut Basu as the only member of his staff at that time, one N. N. Sarkar, was in the Jambad colliery under his orders. Suggestions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rticle 32 provides that if the company, within 28 days from the receipt of the notice from the transferor, finds a member who is willing to purchase the shares, the transferor shall be bound to transfer the shares to such member upon payment of the price fixed by him or the fair value as the case may be. Article 35 provides that if the company fails within 28 days after being served with the notice of the intention to transfer, to find out a purchaser for the shares, the transferor will be at liberty within three calender months thereafter to sell the shares comprised in the notice to any person and at any price. The determination of the issues in this application has to be made keeping in view the provisions in the said articles and the rights and obligations of the members of the company created thereunder. Mr. Ellis Meyer appearing in support of this application contended that there was no provision in the articles of the company for a notice from the company to the members of the proposed transfer of shares. He argued that respondent No. 2 was not required under the articles of the company to inform the members by a notice in writing that a member of the company proposed to tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the company, in the case of shares jointly held by several persons, a notice may be given to the joint-holder named first in the register, in respect of the shares. It was, therefore, argued that Sm, Durga Rani Basu's name appeared first as a joint-holder of a lot of shares and therefore the notice admittedly was sent to Sm. Durga Rani Basu. It is nobody's case, Mr. Meyer argued, that the notice was not received by Sm. Durga Rani Basu as a joint-holder of the shares of the company. Therefore, it was argued, that although respondent No. 5 may contend that the notice sent by respondent No. 2 under certificate of posting was not received by him, as a joint-holder of the shares, admittedly a notice has been received by Sm. Durga Rani Basu and that is a valid notice to respondent No. 5 regarding the sale of the shares. It was submitted that there was no substance in the complaint of respondent No. 5 that no opportunity was given to him to purchase the shares which have been sold to the petitioner. Mr. T.P. Das appearing in Matter No. 53 of 1964 which was heard along with the present application supported the petitioner and submitted that there was no substance in the grievance made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imited was fixed at Rs. 78,000 whereas the receipt dated January 15, 1964, showed that the consideration from the purchasers was Rs. 75,000 only for the 12 shares of North Burrakar Coal Company Limited together with 74 shares of New Standard Coal Company Limited. It was next argued by Mr. Ghose that admittedly, on the evidence of the special officer, the first notice was not sent to respondent No. 5. With regard to the second notice, Mr. Ghose argued, respondent No. 2 only approved the notice which was prepared by respondents Nos. 3 and 4 and put his signature thereto and the letters were posted also by respondent No. 4. Mr. Ghose also commented upon the conduct of respondent No. 2 in entrusting respondent No. 4 with the posting of the letter instead of doing it himself through his own clerk, servant or chaprashi. In support of this contention Mr. Ghose relied upon a Bench decision of this court in Rameshwar Prasad v. Sindri Iron Foundry (Private) Limited [1966] 70 C.W.N. 520 in which it was held that if a notice of a board meeting was duly issued, it could not be believed that such notices would fail to reach the parties to whom the notices were addressed. But in this case, howev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irst-named person in the share register of the company. Respondent No. 5, therefore, cannot be heard to urge that he had no knowledge of the proposal for sale of the shares by respondents Nos. 3 and 4. There is, however, a broader question involved in this application. That question is, can an outsider-purchaser of the shares of a company be denied the right to have his name entered in the share register, because the company or the special officer, as in this case, is in default or is negligent in the matter of sending the notices to the shareholders, assuming, however, that the articles required notices to be given to the members and further assuming that there has in fact been negligence or default on the part of the company in giving notices to the other shareholders ? In my opinion, where there has been a bona fide purchase of shares by an outsider for consideration and where there has been compliance with the "requirement of the articles of association of the company, the rights of the purchaser of shares to have his name entered in the share register of the company cannot be denied to him. If a member of a company is prejudiced by reason of any default or omission in the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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