KULDIP OIL INDUSTRIES LTD Vs. CH PRATAP SINGH

JUDGEMENT

(1.) This is an appeal by M/s. Kuldip Oil Industries the defendant in the suit. The plaintiff Ch. Pratap Singh filed the suit claiming a sum of Rs. 12,500/- as principal plus Rs. 114/-as interest at the rate of 6 per cent, per annum from 8-1-1946 to 16-7-1947, in all Rs. 13,641/- with pendente lite and future interest and also the cost of the suit.

(2.) The case of the plaintiff was that Kuldip Singh, one of the Directors of the defendant company approached the plaintiff early in January, 1946 for the purchase of shares of the defendant company on the distinct understanding, (a) that the plaintiff would be taken in as one of the promoter Director of the company. (b) that the prospectus of the company was very promising and it was being floated without any liability whatsoever; and (c) that it belonged primarily to members of the Ahluwalia Community, to which both the plaintiff and Kuldip Singh belonged and the directorate would invariably consist of the same; that on the basis of the above representation and assurances the plaintiff advanced Rs. 12,500/by cheque on the 8th January 1946 and left the choice of shares to the said Kuldip Singh, that a few days after the plaintiff sent a telegram to the defendant reiterating the bases of the offer of purchase of shares by him, that the said Kuldip Singh by a telegram dated 15-1-1940, informed the plaintiff that he had been accepted as Director and congratulated the plaintiff, that the defendant sent a communication to the plaintiff dated 16-3-1946, purporting to be an allotment letter demanding the balance i.e., Rs. 12,500/- only from the plaintiff, thus intending to complete the transaction of sale of 1.00 preference shares of Rs. 100/- each, 1,000/- ordinary shares of Rs. 10/- each and 1,000/-, deferred shares of Rs. 5/- each in favour of the plaintiff, that the said Kuldip Singh purporting to act on behalf of the defendant sent another communication to the plaintiff dated 25-3-1946 enclosing a form to be filled up and to be returned by the plaintiff to the defendant purporting to be a declaration of consent to act as Director in the defendant company; that in reply the plaintiff wrote to the defendant to send the plaintiff the company's Memorandum and regulation before the plaintiff finally made up his mind to become a share-holder or not, that the defendant in. reply sent printed copies of the Memorandum of Association Articles and the Managing Agency Agreement without mentioning the names of the subscribers to these documents; that the plaintiff demanded by letters dated 5-4-1946 and 18-4-1946 certain particulars before he could finally decide whether he should become a member of the defendant company: that the particulars required were: (a) the date of in corporation of the company, (b) the prospectus of the company; (c) a certified copy of the resolution co-opting the plaintiff as a director, and that the defendant did not comply with the plaintiff's request made in the above three clauses, but sent a copy of the resolution co-opting his as a director.

(3.) The plaintiff alleged that in consequence of the misrepresentation of Kuldip Singh aforesaid as representing the defendant company and because of failure of the defendant to carry out the conditions precedent on which the plaintiff agreed to purchase the shares of the defendant company and because of misrepresentation made by the defendant company through the said Kuldip Singh, the plaintiff finally served a lawyer's notice dated 25-5-1946 on the defendant company demanding refund of Rs. 12,500/-, with interest and that the defendant refused to comply with the same.