ANTONY Vs. THANDIYODE PLANTATIONS LTD.

JUDGEMENT

(1.) THE petitioner in Company Petition No. 68 of 1980 is the appellant. He is hereinafter referred to as "the petitioner". That petition was filed under Section 155 of the Companies Act for rectification of the register of members of the first respondent company, namely, Thandiyode Plantations P. Ltd., South Wynad. According to the petitioner, he and respondents Nos. 2 and 3 entered into an agreement in November, 1973, evidenced by exhibit A -1, for carrying on the business of arranging for sale of estates and dividing the profits. By exhibit A -1, they also agreed to take over the first respondent company and the understanding was that they would purchase the entire company. Another agreement was entered into between them evidenced by exhibit A -2 on January 22, 1975, for purchase of all the shares of that company. Meanwhile, all the three of them were spending amounts for the improvement of the estate, after they got possession of the estate on October 1, 1974. The petitioner made available necessary funds for purchase of the shares. However, contrary to the agreement, respondents Nos. 2 and 3 purchased the shares of the company in their own names. According to the petitioner, the registration of the shares in their names is brought about by fraud and mistake, since the petitioner is entitled to one -third right in the shares. This petition is, therefore, filed to rectify the mistake by including the petitioner's name also as a joint shareholder in the share register of the company.

(2.) RESPONDENTS Nos. 2 and 3 admit exhibits A -1 and A -2 agreements. However, according to them, the proposal to purchase shares between them and the petitioner was abandoned. According to them, they did not obtain possession of the estate on October 1, 1974, and did not make any joint effort to improve the estate. So also the petitioner did not provide funds for the purchase of shares. Since the agreements, exhibits A -1 and A -2, failed, respondents Nos. 2 and 3 purchased 50 shares each in their own names with their own funds. The second respondent became the managing director and the third respondent became the director of the first respondent company. There was no fraud or fraudulent misrepresentation. Therefore, according to them, this petition is not maintainable and the petitioner is not entitled to any reliefs.

(3.) THE learned company judge found that prima facie the arrangement between the petitioner and respondents Nos. 2 and 3 was something more than a mere proposal as attempted to be made out by respondents Nos. 2 and 3. It was further found that exhibit A -2 discloses that substantial amounts belonging to the joint funds, and in respect of which respondents Nos. 2 and 3 were bound to account to the petitioner, has been spent in connection with the Thandiyode business. Learned company judge also found that Clause 15 of exhibit A -3 indicates that an amount of Rs. 1,00,000 had been spent by the three persons together by January, 1975, for acquiring the estate of the company. It was further found that from paragraph 7 of the joint counter -affidavit of respondents Nos. 2 and 3, it can be taken as conceded that negotiations for the purchase of shares of the company as stated in exhibit A -2 agreement were actually held for the purchase of shares in the name of all the three. However, the learned judge was of the view that the petition under Section 155 of the Companies Act is not maintainable for the following reasons: