BHAGWATI PRASAD Vs. SHIROMANI SUGAR MILLS LTD.

JUDGEMENT

(1.) This appeal has been filed by the defendant. The suit out of which it arises was instituted on 4th May, 1942, by the Official Liquidators of the plaintiff company, the Shiromani Sugar Mills Ltd. (in liquidation) for the recovery of a sum of money amounting to Rs. 7,817-8-0 which is made up, according to para. 9 of the plaint, as follows:- <FRM>JUDGEMENT_12_LAWS(ALL)8_19481.htm</FRM>

(2.) It was stated that the suit was within the period of limitation as the cause of action arose on 5th May, 1939, when the plaintiff company forfeited the shares under its Articles of Association. The case of the plaintiff was that the defendant was a shareholder to the extent of 50 preference shares in the plaintiff company. According to the plaintiff an application for preference shares was made by the defendant on 1st Oct., 1933, and along with that application a sum of Rs. 250 was paid by him. The defendant admits that he had applied for 50 preference shares on 1st Oct., 1933, but he contends that the sum actually paid by him was Rs. 111 and not Rs. 250 and that as 5 per cent. of the share money, Rs. 5,000, was not paid along with the share application, the allotment was not valid, having regard to the provisions of Sec. 101 of the Indian Companies Act, 1913 (VII of 1913). Sub-section (1) of Sec. 101 of the Act requires that a sum of at least 5 per cent. of the share money should be paid to or received in cash by the company before the allotment can be made.

(3.) The plaintiff's case is that, as a matter of fact, Rs. 250 were paid and we are satisfied, that the plaintiff's story on this point is true: (On this point his Lordship considered the evidence and continued:) We are satisfied that, on the materials before us, we would be justified in holding that the defendant paid a sum of Rs. 250 along with the share application, that represented 5 per cent. of the share money payable by him and that for this reason the provisions of Sec. 101 of the Act must be deemed to have been complied with.