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TMI Blog1967 (10) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Registrar in pursuance of the purported exercise of power under regulation 17(2) of the Companies Regulations framed by the Central Government. The regulations have been framed under section 609 of the said Act which empowers the Central Government to appoint Registrars, etc., and "make regulations with respect to their duties". It is appropriate to read the said regulation- "17.(1) The Registrar shall examine, or cause to be examined, every document received in his office which is required or authorised by or under the Act to be registered, recorded or filed by or with the Registrar. (2) If any such document is found to be defective or incomplete in any respect, the Registrar shall direct the company to rectify the defect or complete the document and no such document shall be registered, recorded or filed until the defect has been so rectified or the document has been completed, as the case may be." Aggrieved by this refusal by the Registrar, the appellant-company filed a petition in the Punjab High Court under article 226 of the Constitution. By order dated 3rd December, 1965, Jindra Lal J. dismissed the petition principally on the ground that there was no statutory o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lotment in this case, which was of partly paid shares, was, on the face of it, outside the competence of the guardian. Mr. Gupte's answer was that, if the Registrar had no competence to pronounce upon the validity of the contracts, the question whether or not the contracts were binding on the minors did not arise for decision in this case. Mr. Gupte also suggested that the words" by a personal covenant "did not mean that partly paid shares, even though for the benefit of a minor, could not be acquired by a guardian and these words were limited to covenants giving rise to obligations of personal nature. Various decisions were cited at the bar for and against the proposition that a minor could become a shareholder. On the view that I am taking on the second question, I would rather abstain from expressing any opinion on the point whether or not a guardian can, in given circumstances, bind the minor by a contract for purchase of shares and whether or not such minor can be placed on the register of members. That takes me to the second question. The return of allotment, as I have said earlier, was filed under section 75(1) of the said Act. Under clause ( a ) of sub-section (1) of sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in relation thereto, and pronounce on the validity of the allotment. Mr. Prakash Narain's argument was that inherent in the very power to call for information and explanation with respect to a return of allotment was the power to scrutinise the information supplied and come to a conclusion in the light thereof whether or not the return incorporated valid or proper transactions and if the Registrar had that power he had necessarily the power to reject the defective return under regulation 17. According to Mr. Prakash Narain, the legislature could not have authorised the.Registrar to call for information and explanation if the Registrar was not competent to take further steps in the matter beyond gathering information. So far as section 234 is concerned, I am of the opinion that the Registrar is competent to call for any information or explanation with respect to the matters to which various documents, including the return of allotment, which a company is required to submit to him under the Act, relate. The power to call for information under section 234 is "with respect to any matter to which such document purports to relate". The return of allotment is a document required to be f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and that provision further shows that a similar power was not, and could not have been intended to be conferred on the Registrar. It is said on behalf of the respondent that the power of the Registrar to decline to register a return is not a power to rectify the register. That may be so, but when the substance of the matter is looked at, it would appear that the Registrar by declining to register the return can compel the company to rectify its register of members by removing the names of the minors therefrom. Considerable reliance was placed by Mr. Prakash Narain on an unreported decision of Sinha J. of the Calcutta High Court in Choudhury's Estates ( Private ) Ltd. v. B. P. Roy dated July 2, 1958. In that case the question was about issue of debenture by way of mortgage in violation of law and the Registrar had declined to issue certificate under section 114 of the Indian Companies Act, 1913. Sinha J. observed: "In other words, if those provisions are not carried out, there is no valid mortgage or debenture in the eye of law. When it comes to registration under the Indian Companies Act, the provision is that a mortgage or debenture shall be registered ; that means a va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he power of the Registrar to call for information extends to all documents including the balance-sheets and if the Registrar finds that the information supplied calls for investigation, it is open to him to have recourse to section 235 of the said Act. Again, the information supplied to the Registrar may show the return is defective or incomplete within regulation 17 and he may decline to register the same. He may also apply under section 614 to the court for direction upon the company to file a proper or complete return. If the transaction incorporated in the return is illegal, the shareholders may also take up the matter in the appropriate form ; but I am not convinced that the Registrar can sit in judgment over the validity or invalidity of the transaction. No provision is made for hearing of the party affected by the impugned transaction and the Registrar may pronounce upon the transaction without even hearing such a party. It is difficult to interpret the law in a manner that concedes such a power to the Registrar. In my opinion, therefore, the learned single judge was in error in taking the view that the Registrar could, in the circumstances of this case, decline to register ..... X X X X Extracts X X X X X X X X Extracts X X X X
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