ALOTE ESTATE Vs. R B SETH HIRALAL KALYANMAL

JUDGEMENT

(1.) This is an appeal by special leave from a judgment of the Division Bench of the Madhya Pradesh High Court reversing the order of the Company Judge in an application made by respondent No. 1 for an inquiry into that allegation that the consideration for 18,000 shares of the Vikram Sugar Mills Ltd. (now under liquidation) valued at Rs. 18 lakhs was not fully paid up by the shareholders, namely, the present appellants.

(2.) The facts may be succinctly stated. Appellant No. 1, the Alote Estate, was a firm consisting of two partners at the material time. It came into existence in 1944 when Vikram Sugar Mills Ltd. hereinafter called the "company", was proposed to be floated. The two partners of the firm were His Highness Col. Sir Vikramsingh Rao Pawar. Ruler of the State of Dewas (senior) and R. K. N. Gajapati Raju of Vaizagapatnam who died sometime in 1946 with the result that the firm was dissolved. In 1947 the ruler of Dewas (senior) was taken in adoption by Her Highness the Senior Dowager Maharanisaheba of Kolhapur. He assumed the name and title of His Highness Maj. Gen. Sir Shahaji Chhatrapati Maharaja of Kolhapur. After the constitution of the firm called the Alote Estate, the company was incorporated in February, 1944. The firm held extensive agricultural land which was suitable for cultivation of sugarcane. It had transferred 6,000 acres out of its holding to the company in lieu of 18,000 fully paid shares of Rs. 100/- each which were registered in the name of the firm.

(3.) Respondent No. I was originally a director of the company. He made a proposal for advancing debenture loan of Rs. 20 lakhs to the company which proposal was accepted by the Board of Directors as also at an extraordinary general meeting of the company on September 16, 1946. He was appointed Managing Agent of the company. On the same date at the meeting the shareholders of the company passed a resolution that out of 6,000 acres of land acquired by the company from the Alote Estate 2,000 acres selected by respondent No. 1 or his representative be returned and retransferred to the Estate. In consideration of such transfer 9,000 shares were to be surrendered by the Estate. Effect was given to this resolution and in the list of shareholders the number of shares held by the firm was shown as 9,000 instead of 18,000 subject to confirmation by the Court. A resolution was passed on October 27, 1947 for reduction of the capital from 60 Lakhs to Rs. 35 lakhs. The Court was also moved for giving permission for reduction of the capital. On January 23, 1950, Prabhakar Parashuramji Pandit - a shareholder - filed before the High Court a petition under Sections 166 and 162 of the Companies Act 1913 for winding up the company. On April 2, 1951 two joint liquidators were appointed.