KANJANY TRADERS (P) LTD Vs. K H ARUNA

JUDGEMENT

(1.) The appellant is the unsuccessful appellant in A.S.No.528 of 2003 on the files of the 1st Additional District Court, Thrissur. The above appeal was filed against the decree and judgment passed in O.S.No.356 of 2001 on the files of the II Additional Munsiff's Court, Thrissur. The suit was one for declaration and also for permanent injunction both mandatory and prohibitory, filed by the respondent herein.

(2.) The case of the plaintiff is that the plaintiff is a shareholder of the defendant, a registered private company which had commenced with a working capital of Rs.2,50,000/- with a share value of Rs.5,000/- each and the plaintiff had purchased a share and she is the shareholder No.42 and the certificate was also issued for the same. Subsequently, the company had enhanced the share capital and accordingly a sum of Rs.7,500/- was given as share value. However, the share certificate has not issued for the enhanced share value to her. Later, she was given a notice requesting to contribute various amounts to the share capital and ultimately on 13/12/1999 she was informed with a notice demanding Rs. 37,500/- with 12% interest on the ground that total value of share capital was enhanced to Rs.37,500/-. Later, she was informed with notice dated 28/12/1999 intimating that her share had been forfeited. According to the plaintiff, the forfeiture of share is against the clear provisions of Companies Act and the Memorandum of Association and Articles of Association and it is illegal also. The decision of the Director's Board dated 25/12/1999 forfeiting the share is illegal and liable to be set aside as she is not liable to pay the enhanced share value. Hence, the suit was filed to declare the decision of the Director's Board dated 26/12/1999 or forfeiting the plaintiff's share is null and void and not binding on the plaintiff and further to direct by an order of mandatory injunction to issue share certificate for value of Rs.7,500/- with all dividends, further to restrain the defendant to deal with plaintiff's share without written consent of the plaintiff or in the alternative grant a decree directing the defendant to pay her share amount of Rs.12,500/- with interest @ 18%.

(3.) The defendant filed defence statement admitting that plaintiff is a share holder but denied all the averments in the plaint. Since plaintiff had not responded to the share for payment of the enhanced share amount after giving legal notice her share was forfeited and now she is not the share holder of the company. The company was constrained to enhance the share capital for the business expansion so also in accordance with the directions of the Reserve Bank of India. The defendant company was empowered to do so as per the Memorandum and Articles of Association. Even though the plaintiff was contacted in person so also through letters she was not ready to pay the enhanced balance share amount. It was in the said circumstances after giving statutory notice, the company had forfeited the share and the same is permissible under Companies Act. On several occasions the share value of the company was enhanced legally. Originally it was enhanced to Rs.5 Lakhs and the shares were enhanced to 100. Thereafter the share capital was enhanced to 10 Lakhs and 200 equity shares were fixed. The plaintiff is not entitled to get back the share value with interest since the share of the plaintiff was forfeited she is not entitled for the share certificate so also the alternative relief claiming Rs.12,500/- is also not allowable.