RAMPURIA COTTON MILLS LTD Vs. STATE

JUDGEMENT

(1.) This is an application under Section 107 of the Indian Companies Act 1956 for an order that the variation of the rights of the holders of the ordinary shares in a company known as Rampuria Cotton Mills Ltd. in terms of a purported resolution dated 18-5-1957 be cancelled and the Company, its Directors, servants and agents be restrained by an injunction from giving effect to the said variation or to the said resolution dated 18-5-1957.

(2.) The Company to which this application relates is a public limited company which was incorporated under the name and style of Rampuria Cotton Mills Ltd. under the provisions or the Indian Companies Act in 1941. The authorised capital of the company is Rs. 4000,000/- divided into 3,50,000 ordinary shares of Rs. 10/- each and 5,00,000 deferred shares of Re. 1/- each. The issued share capital of the Company at all material times has been 2,00,000 ordinary shares of Rs. 10/-each and Rs. 5,00,000 deferred shares of Re, 1/-each. The subscribed and paid up capital of the Company is as follows: (a) 20,300 ordinary shares of Rs. 10/- fully paid up in cash. 1,74,475 ordinary shares of Rs. 10/- each issued as fully paid up otherwise than in cash, aggregating in all 1,94,775 ordinary shares. (b) 5,00,000 deferred shares of Re. 1/- each issued as fully paid up otherwise than in cash. The present directors of the company are six in number and their names are set out in paragraph 6 of the petition, the last two being ex-officio directors appointed by the managing agents. Under the Articles of Association of the company, a firm known as the firm of Hazarimull Hiralal were constituted as the first managing agents of the company and it was provided that the said firm and their successors in business would continue to be the managing agents of the company. This firm was composed of three branches of the Rampuria family consisting of three brothers, each of whom had one-third share therein. The brothers were Baha-durmull, Hazarimal and Hiralal. The only adult member of the branch of Bhadulmull was Bhanwar-lal Rampuria. This Bhanwarlal died on 18-11-1947 leaving him surviving the petitioner Sushila Rampuria, who was his sole widow, and Kamal Singh and Surendra Kumar, two sons who were minors at the time. This Sushila Rampuria, Kamal Singh Rampuria and Surendra Kumar along with one Sampatlal Rampuria are the petitioners in this application and they claim to be holders of not less than 10 per cent of the issued ordinary shares capital of the said company. It appears that disputes and differences arose between the partners or the said firm and the parties agreed to refer the disputes to arbitration by an agreement dated 28-3-1950. The said reference was however set aside by S.R. Das Gupta, J. on 9-1-1951. But prior to that, on 3-1-1951, one Sekharchand Rampuria filed a suit in this court for dissolution of the partnership and other reliefs, being suit No. 198 of 1951. By an order dated 23-2-1953, A.K. Sarkar, J. directed that the matters in the suit be referred to the arbitration of one Shri Mangturam Jaipuria.

(3.) The order of reference, inter alia, provided that 5,00,000 deferred shares and 44,475 ordinary shares in the Rampuria Cotton Mills Ltd. of the face value of Rs. 9,43,750/- held in the name of Hazarimull Heeralal together with the managing agency held by Hazarimull Heeralal should be auctioned by the arbitrator and sold to the highest bidder. Pursuant to such provision the arbitrator on 21-6-1953 put up for auction between the parties the said shares and at the said auction the rights of the said shares were purchased by Jaichandlal Rampuria, Ratanlal Rampuria and Manakchand Rampuria and the petitioners in this application ceased to have any interest in the said shares and the said rights.