LAWS(DLH)-1975-5-23

HIS HIGHNESS MANABENDRA SHAH MAHARAJA OF TEHRI GARHWAL Vs. OFFICIAL LIQUIDATOR INDIAN ELECTRIC TOOL CORPORATION LIMITED

Decided On May 15, 1975
HIS HIGHNESS MANABENDRA SHAH Appellant
V/S
OFFICIAL LIQUIDATOR, INDIANELECTRIC TOOLS CORPORATION LIMITED Respondents

JUDGEMENT

(1.) The petitioner (the Maharaja of Tehri Garhwal) had admittedly become a shareholder and director of the Indian Electrim Tools Corporation Ltd. (in liquidation), a company registered under the Companies Act, 1956 (hereinafter called the Company)- In this petition he prays that the Official Liquidator (O.L.) may be directed not to place him on the list of contributories: he had 500 fully paid up equity shares; he has also asked for the rectification of the Register of Members of the company, which is stated to reveal that he had taken 50,000 equity shares of Rs. 10 each in respect of which he had not paid anything, and not merely 500 equity shares, as admitted by the petitioner. Not only the facts leading to this petition are somewhat interesting but one or two questions of law of some nicety also arise for consideration.

(2.) On the record, as admitted by the O.L., there is only one application for shares which was given the mark 'A' initially: "C.W. 1" has been written on it probably by the Commissioner who was appointed to examine the petitioner as a witness. According to the petitioner the said form of application for shares was signed by him in blank. Many of the columns have been filled in later in type, the form itself being a cyclostyled (typed) one. The figure 50,000 has been written in manuscript in paragraph I which speaks of an application for those shares being made after having read the statement in flue of prospectus relating to equity shares. In paragraph 3 the figure of 5 lacs has been entered. Even the manner in which the same was paid is not apparent from it because all the three modes of payment in the form. namely, cash/cheque/draft appear to have been scored out. What is particularly intriguing is even though a sum of Rs. 5 lacs was said to have been enclosed along with the form it was stated Rs. 5 per share was payable on application per share of Rs. 10 each. the balance of Rs. 5 per share being payable on allotment. The date has been filled up in handwriting to read that the application was made on the 30th day of April, 1962. According to the petitioner he had applied only for 500 equity shares, he had sent an application on 25-4-1962, for the same along with a cheque (P3) of the same date for Rs. 5,000 being the full amount of the aforesaid shares through the stock and share broker, H. P. Mehta, who has been examined in this case as Public Witness 4, 500 shares were the qualifying shares for becoming a director. The said cheque for Rs. 5,000 was sent to the company for being cashed only on 2-5-1962 and was cashed later. According to the petitioner he did not give any cheque for Rs. 5 lacs, allegedly for 50,000 equity shares. Neither did he apply for the allotment of 50,000 shares, nor did he receive any notice of such allotment. On the other hand, the company which was not financially well off had requested him lo advance a loan of Rs. 10,000 in November, 1962 out of which Rs. 3,000 alone had been returned some time on 10-11-62 details of these had been mentioned by the petitioner in his letter dated 23-3-1964 to the O.L. (copy of which is Annexure C to the petition, exhibited as Ex. P. X. and marked E by the Commissioner).

(3.) Some time in September/October, 1962, B, B. Lal Singhania (R-2),who was the promoter of the company, came to the petitioner and informed him that the company's Accountant had made some obviously false entries in the account books and also a false report against the company, the Accountant had been dismissed for doing so. it was then that the petitioner was informed for the first time that an entry in respect of 50,000 equity shares in the company's records had been made in his name, even though he had applied only for 500 shares. The petitioner was further informed that since the Registrar of Companies was asking for an explanation in this respect the petitioner may give him a reply on the terms set out in Annexure B to the petition, to the effect, that the petitioner had applied for shares worth Rs. 5 lacs, that he wanted 50,000 shares to be reserved for him. the subscription for which will be made before the public issue and that he had not enclosed any cheque with the application though he had mentioned therein that cheque was enclosed. The petitioner "refused at first but agreed to consult his own solicitors in Bombay but R-2 insisted and prevailed on him saying that the company will, in that case, be in great trouble. At the insistence of R-2 the petitioner had agreed to consult his Solicitors in Bombay, M/s. Hooseini Doctor & Co. The person, Mr. T. S. Doctor, whom he had consulted, has been examined as Public Witness . 5. The Solicitor advised the petitioner to obtain some papers and not to sign the draft letter marked 'B'.