ALBERT DAVID LTD Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) The facts leading up to the present reference as found or admitted or as are matter of record, are shortly, as follows: M/s. Albert David Ltd., the assessee, was promoted in 1938 by one named Albert Judah Judah as a private limited company. In 1948, the assessee was converted into a public limited company. Judah and his wife owned more than 90 per cent. of the ordinary shares of the assessee till September, 1954. Judah was also the largest holder of the preference shares of the assessee and was appointed its managing director for life under its articles ratified by an agreement between him and the assessee. Judah inducted Dr. S. L. Mukherjee, a chemist, in the business of the assessee. Dr. Mukherjee was made a director of the assessee in July, 1940, when Judah made a gift of 1,000 ordinary shares of the assessee to Dr. Mukherjee.

(2.) Subsequently, by the middle of 1954, the relationship between Judah and Dr. Mukherjee became strained and disputes arose between them. Dr. Mukherjee ultimately contended that Judah had ipso facto vacated his office as director of the assessee. A number of important resolutions were passed at a meeting of the board of directors of the assessee held on the 10th September, 1954, including one by which Judah was deprived of the power of operating the assessee's bank accounts. A lien in favour of the assessee on all the shares registered in the name of Judah for a sum of over Rs. 4 lakhs alleged to be debts due by Judah to the assessee was declared. Judah and his group were forcibly ejected from the office and the factory of the assessee.

(3.) Thereupon, Judah filed a suit being Suit No. 3112 of 1954 against Dr. Mukherjee and his group claiming, inter alia, a declaration that he had a right to act as the managing director of the assessee, declaration that the issue and allotment of new shares by the assessee was invalid and various other reliefs. Subsequently, a representative suit, being Suit No. 3117 of 1954, was filed by Mrs. Judah and another shareholder against Dr. Mukherjee and his group. Certain interlocutory proceedings were heard in the said suits and in the latter suit a receiver was appointed. Against this order an appeal being Appeal No. 56 of 1956 was preferred. An injunction was also issued on an application of Judah in the first suit restraining the sale of the shares of the assessee registered in the name of Judah.