BANK OF POONA LTD Vs. NARAYANDAS SHRIMAN SOMANI

JUDGEMENT

(1.) (HIS Lordship dealt with questions not material to these reports and proceeded): It is, however, contended that we must go back to the initial transactions between the parties and if the shares themselves were not validly allotted to the defendant for one reason or the other, then the debt of Ramnath itself could not be sustained and, therefore, the havala entry could not be effective since in that event the consideration would have failed. It is this part of the argument that we must now consider. The argument is founded on section 91b of the Indian Companies Act which says:

(2.) THE proviso to sub-section (I) is not necessary for our purpose. Sub- section (2)says: "every director who contravenes the provisions of sub-section (I) shall be liable to fine not exceeding on thousand rupees. "

(3.) THE rest of the section is not material for our purpose. It is argued by Mr. Gupte, that since the defendant's presence is not to be counted for the purpose of forming a quorum at the time of the vote, there was no quorum at the meeting since there were only three directors present at the meeting and, therefore, any business transacted at this meeting could not be said to be validly transacted and, therefore, the allotment was void ab initio.