DES RAJ SHER SINGH Vs. RATTI RAM

JUDGEMENT

(1.) THIS is an application on behalf of thirteen petitioners under Section 155 of the Companies Act for the rectification of the register of the members of Jai Hanuman Trading Company (Private) Limited Jind Mandi. The company was registered on 30th of April 1952 with authorised share capital of Rs. 50,000/- divided into shares of Rs. 100/- each and RS. 25/- is paid on each share. 270 shares had been subscribed by 36 shareholders. It is stated in the petition that the company is making large profits and have been distributing dividends at very high rates of 25 per cent. per share and above. Out of the seven directors, it is alleged that four directors, namely, Ratti Ram, Ram Kishan Das, Hari Chand and Parma Nand have formed themselves into one group and with a view to monopolise the company and to utilise these funds in their own way they have improperly and illegally issued shares to their friends and relatives without offering them to the existing members. It is said that this allotment was irregular and illegal having been made solely with a view to injure the company and to secure a permanent majority. Out of the 18 respondents impleaded by the petitioners, the application is contested by 16 who have filed a single written statement. These respondents are 1 to 9 and 11 to 17. They include the persons to whom the new shares had been allotted. It is stated that out of the seven directors, three directors were in minority, namely, Lachhmi Narain, Jagdish Rai and Chhabil Das, who are-creating impediments in the way of a smooth and efficient working of the company. It was denied that the new shareholders were friends and relatives of the four directors alone as they were also related to some of the petitioners. The charge of an irregularity and illegality was also denied. It was stated that the company required funds to extend its business and the allotment of new shares was necessary. Applications for new shares were being received from time to time and, almost every year fresh, allotments were being made. On the pleadings of the parties the following issue was framed :

(2.) THE petitioners produced two witnesses. P. W. 1 is Rameshwar Das, the Manager of the Company. He stated that upto November, 1959, 276 shares had been allotted and On each share Rs. 25/-had been paid. In the year 1952-53 dividend at seven per cent had been declared and in the next year the dividend was Rs. 20/- per share. In the year 1954-55, dividend was paid at Rs. 25/- per share and in the year 1955-56, Rs. 30/- per share was declared as dividend and Rs. 20/per share in the next year. In the year 1956-58, only Rs. 5/- was paid per share as dividend but no dividend was declared in the year 1958-59. This company works as commission agents and brokers for persons entering into forward contracts in respect of the various commodities in the town of Jind. These forward contracts take place through the company. The company takes responsibility for payments of money due from the contracting parties. It was also stated by this witness that a sum of Rs. 26,000/- was lying to the credit of the company for distribution as profits, and Rs, 19,700/- was set apart for charities. In the beginning of November, 1959, about Rs. 95,000/- stood to the credit of the company in the Punjab National Bank in current account in addition to a sum of Rs. 45,000/- in fixed deposit. The company had also purchased postal certificates worth about Rs. 5,000/- and in November, 1959, a sum of Rs. 14,000/- was also available for distribution as profits.

(3.) IN November, 1959, 61 shares of Rs. 100/-each on which Rs. 25/- per share had been Paid, were allotted to 12 persons, 2 out of whom were old share-holders. This was on 3rd of November, 1959. The objection of the petitioners relates to the allotment of these 61 shares.