MOTILAL CHUNILAL Vs. THAKORLAL CHIMANLAL

JUDGEMENT

(1.) This suit was brought by the Liquidator of the Narmada Cotton Seed Crushing Co., Ltd., against the defendant Motilal Chunilal to recover calls upon ten shares in that Company of Rs. 100 each. The first question that arises is: Is the defendant a member of the Company ? By Section 45 of the Indian Companies Act members are (a) subscribers of the Memorandum of Association ; (b) every other person who has agreed with a Company under this Act to become a member of such Company, and whose name is entered on the register of members. The defendant s name was entered on the register of members, so this condition precedent has been complied with : see Tufnell & Ponsonby s case (1885) 29 Ch. D. 421. Did he agree to become a member ? That is a question of fact (Fry J. in Winstone s case) (1879) 12 Ch. D. 239, 246. The evidence of the defendant is to this effect. He knew Girdharlal pleader who was the agent of the Company and who asked defendant to take ten shares in it, and the defendant signed the application for them, (the application is an Exhibit herein.) Defendant said he was doubtful whether the Company s business would be profitable. Girdharlal said he need not pay for the shares unless dividend was paid. Defendant was told that if he and others like him became share-holders the Company s shares would be taken up. Defendant would not have signed the application but for the condition. He never paid anything in respect of the shares, nor was any demand made upon him, nor was he informed that the ten shares had been allotted to him. In cross- examination he said he was President of the Agricultural and Industrial Association of Broach, and hat been trying to manage industries in Broach. Girdharilal desired to increase the reputation of his Mill and to take money from the defendant if there was profit. If he had received intimation of the allotment he would have filed it.

(2.) Girdharlal is dead, so the matter must be decided on this evidence.

(3.) Although a witness in the case K. Narbheram at page 11 says that there was an allotment of shares, the resolution for which was passed on 9-4-08, and accordingly letters allotting shares were sent, still, we must adopt the finding of the Judge in the lower Court that the defendant received no notice that the shares had been allotted to him. The ordinary principles laid down in the Contract Act must apply to the case. And in our opinion when, according to the defendant s statement, Girdharlal asked him to take ten shares in the Company and he signed the application for them" the proposal came Tom the Company s agent and was accepted by the defendant. If this view is correct then there was a complete contract between the defendant and the Company s agent (see Section 2(a) and (b), Indian Contract Act, and Sections 3 and 10.) In Nicol s case (1885) 29 Ch. D. 421 it was held that the agreement was not different from agreements in relation to other matters. No particular form 3 required (see Ritso s case) (1877) 4 Ch. D. 774. And it may be expressed or implied and either written or oral: see Bloxam s case (1864) 33 Beav. 529.