SHE MULCHAND AND CO Vs. JAWAHAR MILLS LTD

JUDGEMENT

(1.) This appeal arises out of an application made by the Official Receiver representing Sha Mulchand and Company Ltd. (in liquidation) under S. 38, Companies Act, for rectification of the register of the Jawahar Mills Ltd.

(2.) Sha Mulchand and Company Ltd. (hereinafter referred to as "the Company") was incorporated in 1937 as a private limited company. At all material times it consisted of two members, T. V. T. Govindaraju Chettiar and K. N. Sundara Ayyar. The Jawahar Mills Ltd. (hereinafter called "the Mills") was also incorporated in 1937 with an authorised capital of Rs. 10,00,000 divided into one lac shares of Rs. 10 each. The Company was the managing agent of the Mills from its inception and applied for and was allotted 5000 ten-rupee shares Nos. 15048 to 20047 on which Rs. 5 per share had been paid. The Company continued to act as the managing agent of the Mills till the 30th June 1939 on which date it resigned the managing agency, Prior to the company's resignation the two members of the Company had entered into an agreement with one M. A. Palaniappa Chettiar, a partner of the incoming Managing agency firm, upon certain terms which need not be referred to in greater detail.

(3.) Within two months after the change of managing agents, the Mills made two calls, namely, one on 22-8-1939 for Rs. 2 per share payable on 1-10-1939 and the other on 1-10-1939 for Rs. 3 payable on 1-12-1939. The Company did not pay either of the calls. On 23-1-1940 Govindaraju Chettiar was adjudged insolvent on the application of Sundara Ayyar. This insolvency of Govindaraju Chettiar was eventually annulled in 1944. During this period Govindaraju Chettiar, in law, ceased to be a director of the Company, although it is alleged that he nevertheless continued to take part in the management of the Company.