OFFICIAL LIQUIDATOR OF THE BELLARY ELECTRIC SUPPLY COMPANY, LTD IN LIQUIDATION Vs. KANNIRAM RAWOOTHMAL

JUDGEMENT

(1.) The relevant facts in this appeal are that the Respondent's firm purchased 110 shares in the Bellary Electric Supply Co., Ltd., at some time previous to October 14, f925 and that on that date on behalf of his firm the Respondent deposited Rs. 1,400 with the company in respect of 140 more shares. The application for the 140 shares Ex. 1, dated October 14, 1925, contains the words "I request you to allot me" 140 shares. No share certificate was admittedly issued in respect of the 140 shares nor was a letter of allotment sent. The company went into liquidation on a date subsequent to October 14, 1925, and the Respondent now calls upon the Official Liquidator to refund the Rs. 1,400 because no allotment of shares had been made to him. The Official Liquidator contends that there was such an allotment. The learned District Judge found after an elaborate examination of the facts and the documents that there was no allotment. The short point is: was there an allotment ? The Respondent filed an affidavit setting out the above facts. No counter-affidavit was filed. At the hearing two witnesses were called. The Respondent (there the Petitioner) examined one S. M. Hussain once Managing Director of the Bellary Electric Supply Company. He stated that the Members Register, Ex. II, which purported to show that on 14 October, 1925, 140 shares were allotted to the Respondent could not in fact be relied upon as the rubber stamp of the company was not placed upon the Respondent's page nor did it appear on Ex. Ill, the Members Register. The appellant examined a clerk of the company who states that although the allotment was authorised by the Managing Director and the entries made in Ex. II "the applicant was not notified of the allotment". The appellant relies on Section 40 of the Indian Companies Act "The register of members shall be prima facie evidence of any matters by this Act directed or authorised to be inserted therein "and argues that Ex. II raises a presumption of allotment which the Respondent (who did not give evidence) has not rebutted. The Respondent could of course have been cross-examined on his affidavit but the appellant did not give him notice to appear for this purpose. Any presumption under Section 40 was clearly rebutted by the evidence of the above two witnesses.

(2.) But apart from this aspect of the case there is ample authority for the proposition that the mere entry of a shareholder's name in the company's register is insufficient to establish that an allotment of shares was in fact made. An application for shares is an offer and like any other offer must not only be accepted but the acceptance must be communicated to the person making the offer. No Indian case in point has been cited but in The Universal Banking Corporation, In re (1867) L.R. 3 Ch. App. Cases 40 it was held that the principles governing the formation of a contract between a company and a member of the public are identical in principle to those regulating the contractual relations between individuals. The facts in the above case are sufficiently similar to the facts in this appeal and it was held that a shareholder to whom the fact that an allotment of shares had been made had not been communicated was not bound by any contract. The mere entry of his name on the register was held not sufficient for this purpose. We therefore agree with the decision of the learned District Judge.

(3.) The Lower Court has allowed the petitioner interest at 6 per cent, from October 14, 1925, and the appellant contends that interest should be payable only from the date of demand. We think that this contention must prevail. The law relating to the payment of interest is dealt with in Nanchappa Koundan V/s. Ittichathara Mannadiar 1930 M.W.N. 438, the effect of which is that the provisions of the Interest Act are all comprehensive and interest can only be allowed in accordance therewith. Applying that principle it is clear that this payment of Rs. 1,400 cannot be construed to be "a debt or sum certain payable at a certain time .... by virtue of a written instrument." It is payable otherwise (i. e., as money had and received) and interest is therefore only recoverable from the date of demand, that is, Petition, 27 July, 1928. We therefore vary the decree of the Lower Court to this extent and with this variation dismiss this appeal with costs here and as decreed in the Lower Court.