BANK OF HINDUSTAN LIMITED Vs. KOWTHA SURYANARAYANA RAO

JUDGEMENT

(1.) THIS is an appeal by the Bank of Hindustan Ltd. (now in liquidation) by its joint official liquidators, the official receiver of this court and Messrs. Brahmayya and Co., the first defendant in C. S. No. 525 of 1948 and application No. 1229 of 1951 on the file of this court, against the judgment and decree of RAMASWAMI FOUNDER J. declaring that the plaintiffs, Kowtha Suryanarayana Rao and the Indian Commerce and Industries Co. Ltd., represented by him as governing director, were entitled to have their names, which stood registered in the books of the appellant company, as holders and owners, cancelled, and omitted in respect of 1, 608 partly paid up shares of Rs. 90 each (only Rs. 40 out of each share having been paid up) standing registered in the name of the first plaintiff, and of 60 other similar shares standing registered in the name of the second plaintiff in the books of the company, and directing the name of the second defendant, Saraf, to be registered as the holder and owner of the above, 1, 668 shares in the books of the bank, and restraining the appellant bank and its liquidators by an injunction from making any call or taking any other proceedings against the plaintiffs in respect of the said 1, 668 shares.

(2.) THE facts are briefly as follows : THE Bank of Hindustan Ltd., the appellant bank, was a banking company incorporated under the Companies Act, 1913 with its registered office at No. 119 Armenian Street, Madras. THE first plaintiff is a landlord and merchant, carrying on business at No. 95 Broadway, Madras. Till the beginning of May, 1945, he, admittedly, held 2, 508 partly paid up shares of Rs. 100 each (reduced to Rs. 900 in this bank and the second plaintiff, of which the first plaintiff is the governing director, held another 610 shares of Rs. 90 each. THEse shares admittedly, stood registered in the books of the appellant bank in the names of the first and second plaintiffs respectively till May, 1947. THE first plaintiff was then not only a director of the appellant bank, but the managing director thereof, having been an ordinary director from 1942 of 1944.

(3.) AS per the agreement under Exhibit P. 1, the first plaintiff tendered his resignation as director, chairman and managing director of the appellant bank on 4th May, 1945, itself. The fourth defendant later on bought 500 shares out of the 3, 118 shares agreed to be purchased by the second defendant. He paid the plaintiff Rs. 1, 28, 617-8-0 on behalf of the second defendant, as agreed to under Exhibit P.1 and wrote a letter, Exhibit P. 3, on 8th May, 1945, to the second defendant at Bombay, informing him about the payment to the plaintiffs on behalf of the second defendant, and requesting his to send a cheque to him payable at Madras for Rs. 1, 07, 992-8-0, the money paid by him to the plaintiffs, less Rs. 20, 625, the value of 500 shares bought by him out of the 3, 118 shares. Exhibit P. 3 also conveyed to defendant No. 2 information of a tea party given to the Deputy Governor, Reserve Bank of India, at the appellant bank premises, and added that the bank matter was going in order. On 9th May, 1945, the first plaintiff passed a stamped receipt for Rs. 1, 03, 455, the value of 2, 508 shares of his own sold by him to the second defendant, on whose behalf the fourth defendant had paid the money. A similar receipt was granted with regard to Rs. 24, 162-8-0 due to the second plaintiff for the 600 shares sold by it to defendant No. 2.