NAVINCHANDRA RATILAL PATEL Vs. GORDHANDAS DESAI PRIVATE LTD

JUDGEMENT

(1.) THESE two petitions have been filed under section 155 of the Companies Act, 1956, which shall hereinafter be referred to as the Act. Petition No. 9 is by one Navinchandra Ratilal Patel for rectification of the register of members of respondent No. 1 company, Gordhandas Desai Private Limited, which shall hereinafter be referred to as the company. Navinchandra has prayed that 300 shares bearing the distinctive numbers 4399 to 4698 which at present stand in the name of Gordhanbhai Ishwarbhai Patel should entered in his name and the register of members rectified accordingly. In Petition No. 10 of 1966, he petitioner is Prafulkumar Ratilal Patel. It is also a petition for rectification and Prafulkumar's prayer is that 300 shares bearing distinctive numbers 4099 to 4398, which at present stand in the name of Gordhanbhai Ishwarbhai Patel should be entered in his name and the register of members of the company rectified accordingly. As these two petitions raise common questions of fact as well as law, this judgment will govern both these petition.

(2.) IT is necessary in considering these two petitions to state a few facts. Gordhanbhai Ishwarlal Patel, who will hereafter be referred to as Gordhanbhai, was one of the promoters f the company. He was the paternal uncle of both these petitioner. The company is a private limited company. It would appear that the said Gordhanbhai was entitled to 4994 equity shares of the company in consideration of his having assigned his business to the company with all its assets and some of the liabilities. By a letter dated 21st December, 1957, he requested the company to allot these 4994 equity shares of Rs. 100 each to certain persons mentioned in that letter. Under the said letter, 300 shares were to be allotted to Navinchandra, petitioner in Petition No. 9 of 1966 and 300 shares were to be allotted to Prafulkumar, petitioner in Petition No. 10 of 1966. These allotments along with others came to be made at the meeting of the company held on 23rd December, 1957. It is not disputed that when these allotments were made, both the petitioners were minors. The birth date of Prafulkumar is stated to be 20th January, 1943, so that he has attained majority on 20th January, 1961. Navinchandra was born on 23rd February, 1946, so that he must have attained majority on 23rd february, 1964. It would appear that the company came to know, some time in 1960, that when the allotments were made, the allottees were minors. There is some controversy on this point but it is not necessary for us to go into that question in these petitions. On the 28th March, 1960, the company wrote to Gordhanbhai, pointing out that the allotment of 300 shares each in favour of the two petitioners was invalid because when the allotments were made the allottees were minors. The company, therefore, stated that in view of this circumstance it would be necessary to cancel the said allotments. At the meeting of the board of directors of the company held on April 1, 1960, the allotment of these shares was cancelled and these shares were transferred to the name of Gordhanbhai himself and the names of the two petitioners came to be deleted with effect from 1st April, 1960, and the name of Gordhanbhai was substituted in the register of members. It would appear that Gordhanbhai died on 20th December, 1962, leaving a will regarding which an application for the grant of probate appears to have been filed by respondent No. 3, Natubhai Vithalbhai Patel. We are informed that the probate proceedings are yet pending in the Bombay High Court. The present petitions were filed by the petitioners under section 155 of the Act on 1st April, 1966.

(3.) NOW the contentions of the petitioners in both these petitions are that, even though they were minors at the time the allotment of shares came to be made in their favour, they were entitled to hold these shares. It is submitted that the shares were given to the petitioners by Gordhanbhai as he wanted to benefit the petitioners who were his close relatives. It is further contended that the company was in error in cancelling the allotment and in rectifying the register in favour of Gordhanbhai and deleting the names of the petitioners without approaching the court. Respondent No. 2, Ratilal Ishwarbhai Patel, who is the father of the petitioners, has filed affidavits supporting both the petitioners.