PUBLIC PASSENGER SERVICE Vs. M A KHADER

JUDGEMENT

(1.) THESE appeals are preferred from the order of Ramachandra Iyer, J. (as he then was) dated 30-4-1959 in Appln. Nos. 2182 and 2183 of 1958 whereby it was declared that the forfeiture of certain shares held by the respondents herein in the appellant company is invalid and liable to be set aside and it was directed that, on payment by the respondents of the call money due by them in respect or their shares, the forfeiture effected by the company should be set aside. The only point for determination in these appeals is whether the appellant company acted and complied strictly in accordance with the provisions of the Articles in forfeiting the shares of respondents herein.

(2.) IT is necessary to state the salient facts necessary for the purpose of the disposal or these appeals. The company called the New India Newtone Transport co. Ltd. , is a joint stock company concerned with the running of buses in the south Arcot Dt. The share capital of the company under its a articles in Rs. , one lakh divided in to 500 ordinary shares of Rupees 100 each and 500 preference shares of al like value. It is stated that subsequently the capital of the company was reduced, but no details are now available in regard to the same. In respect of the ordinary shares of Rs. 75 per share had been paid up and what remained due from the members was only Rs. 25 per share. M. A. Khader, the first respondent in o. S. A. No. 55 of 1959, held 13 ordinary shares in the company of the value of rs. 1300 and M. A. Jabbar, his brother first respondent in the other appeal O. S. A. No. 56 of 1959, held 162 shares of the value of Rs. 16200.

(3.) ORIGINALLY the company had four route permits with buses, but due to various reasons three routes with buses had been sold away and the company had only one route with one bus and a spare bus permit at the relevant time. The Regional transport Officer, condemned even this one bus subsequently as unfit. Therefore, in order to avoid the closing down of the company and to prevent the authorities concerned from taking drastic action against the company and forfeiting the route itself for not providing service therein, the Directors of the Company convened a meeting on 2-1-1957, and passed a resolution to the effect that the company should call the balance amount of Rs. 25 on every share of the company immediately. Accordingly call notice was issued to all the shareholders on 3-11957. The first respondent in both the appeals on receipt of the said notice filed Appln. No. 119 of 1957 on the file of the Original Side (company jurisdiction) alleging that the whole administration of the company and its affairs are under the control of A. R. Hussain Khan, the second respondent in the appeals, that there has been gross mismanagement of the company and its affairs coupled with falsification of accounts and misappropriation of the company's funds, that there was no managing directors validly appointed by the company, that the Board of directors do not meet at least once in three months, that the appointment of A. R. Hussain khan as sole managing director is illegal and void, that the Central Government has not accorded approval of the appointment of the said Hussain Khan as sole managing Director, that it is necessary to have an investigation into the affairs of the company under S. 235 (C) of Central Act I of 1956 by an Inspector appointed by the Central Government and that- (this is relevant for the purpose of these appeals)-the call notice dated 3-1-1957 is illegal and mala fide. The applicants in appln. No. 119 of 1957 therefore prayed that this court should pass an interim order under S. 403 of Central Act I of 1956 staying all further proceedings in pursuance of the notice dated 3-1-1957 issued by the Managing director calling for payment of the balance of the share capital. When this application came before Balakrishna Aiyar J. , on 8-1-1957 the learned judge passed an interim order (ex parte) directing a stay of all further proceedings including the collection of moneys in pursuance of the notice dated 3-1-1957. There is no evidence on record to show that this ex parte order dated 18-1-1957 was communicated to the company or its officers either through the court or by the party interested in the order. But it is seen from the records that only a letter was addressed by the Advocate for the first respondent herein to the managing director of the company (Hussain Khan) intimating that an ex parte order staying all further proceedings in pursuance of the call notice was passed by Balakrishna aiyar J. , on 18-1-1957. Hussain Khan received this letter only on 21-1-1957.