Calcutta High Court
Sayedabad Tea Co. Ltd. And Ors. vs Samarendra Nath Ghattak And Ors. on 29 July, 1992
Equivalent citations: [1995]83COMPCAS504(CAL)
JUDGMENT Padma Khastgir, J.
1. In the main application, inter alia, under Sections 397 and 398 of the Companies Act, 1956, the instant application had been taken out by the respondents for an order that the main application be dismissed and/or taken off the file and all interim orders passed therein be vacated.
2. The petitioner contended that the petitioners in the main application do not have the requisite share qualifications to initiate the said proceedings inasmuch as it is only in the months of June and July, 1990, upon inspection of the records of the company by one shareholder that it transpired that the stamps on the reverse of the various transfer deeds had not been cancelled. Under those circumstances the transfer deeds were invalid and it was improper on the part of the company to register those shares. At the meeting of the board of directors held on September 4, 1990, it was detected that the original transfer deeds in respect of 1,410 shares transferred in favour of respondent No. 1 and 2,518 shares transferred in favour of respondent No. 3 were not proper inasmuch as the stamps on the reverse of the said transfer deeds 32 in number had not been cancelled. Under those circumstances, such registration by the company was illegal and improper. The board of directors, under these circumstances, resolved to delete the names of respondents Nos. 1 and 3 which was erroneously registered by the company in favour of respondents Nos. 1 and 3. Such registration has been rectified by deleting the names of respondents Nos. 1 and X which decision of the directors was carried out by the secretary on September 4, 1990, and respondent No. 3 was informed of such rectification inasmuch as, according to the petitioners, respondents Nos. 1 and 3 are no longer the shareholders of the company. Under those circumstances they do not have the requisite share qualifications to proceed with the main proceedings.
3. Apart from that the petitioners further contended that the shareholders who have consented to and/or supported the petitioners in the main application have written several letters to the effect that they have put their signatures on a blank document when it was represented to them that such application was needed to resist the move of the company to transfer the registered office from Jalpaiguri to some other place. Under those circumstances, there had not been any application of mind before they could subscribe their signature consenting to the initiation of the main proceedings.
4. However, annexure B to the petition indicates that those shareholders have heard, read over and had explained to them the contents of the petition under Sections 397 and 398 and after going through the same they have given their consent to such proceedings.
5. Mr. P.C. Sen, learned lawyer, however, contended that there is no endorsement as to who explained the contents of the main petition to the signatories ; on the contrary they have given letters to the effect that their signatures had been obtained in a blank sheet of paper which have been utilised in the present proceedings.
6. In the case Duraiswami (M.C.) v. Sakthi Sugars Ltd. [1980] 50 Comp Cas 154 (Mad) it was held that "consent in writing" contemplated in Section 399(3) of the Companies Act, 1956, is a consent to the filing of a particular petition with a particular allegation for a particular relief under Sections 397 and 398 or under both. There cannot be a blanket consent like a certain member or members consenting to some other member filing a petition under Section 397 or Section 398 or under both. Before a member can be said to have consented to a particular action, the said member should have known what was the action to be taken, what was the relief to be prayed for and what was the ground to be urged in support of the relief claimed. The members giving the consent should have applied their minds to the question before them which necessarily implies that the application of mind was to the particular reliefs sought to be prayed for and the grounds on which that relief was based. A mere consent for filing an application under Section 397 or Section 398 or under both without any particulars such as the nature of the allegation or complaint to be made in the petition and the nature of the relief sought to be claimed in the petition cannot be the result of an application of the mind to the question before them and, therefore, such a consent cannot be a valid consent.
7. However, Mr. P.N. Chatterjee, the learned lawyer on behalf of the petitioners, contended that at the time when the main, petition was filed the respondents had the requisite share qualification. It is only after the initiation of the main proceedings, i.e., almost after four years, that the directors themselves had chosen to delete the names of the petitioners on the ground that the stamps on the transfer deeds had not been deleted and/or scored through. He submitted that the directors have no authority to rectify the share register without giving any notice to the petitioners and without having recourse to the provisions of Section 155 of the Companies Act, In that respect he referred to the case of Damodara Reddi (P. V.) v. Indian National Agencies Ltd., [1945] 15 Comp Cas 148 ; AIR 1946 Mad 35, where it was held that the register of the members of a company is a public document and there is no provision in the Companies Act which permits the directors of a company or any officer of a company to make any alteration to the register by removing the names of certain members on the ground that they had been improperly added to the register. The remedy of the company is to apply to the court for the rectification of the register and not to take upon itself to alter such register.
8. In the case of Calcutta Landing and Shipping Co. Ltd. v. Collector of Calcutta, , it was observed that under Section 12(1)(a) of the Stamp Act and the West Bengal Government notification either the transferor or the transferee was bound to initially cancel the adhesive stamps affixed on the share transfer deeds before presenting them along with the share scrips to the company to register the transfer. It was further submitted that the company was under an obligation to perforate the stamps. The company could have refused to register the shares on the ground that the stamps had not been cancelled. Once having done so, it was not open to the company suo motu on its own account to deregister that without taking recourse to law.
9. In the case reported in Rajahmundry Electric Supply Corporation Ltd. v. A. Nageswara Rao , it was held that the validity of a petition must be judged on the facts as they were at the time of its presentation and when a petition was valid when it was presented, it cannot cease to be maintainable by reason of events subsequent to its presentation. The withdrawal of consent by some of the members subsequent to the presentation of the application cannot affect either the right of the applicant to proceed with the application or the jurisdiction of the court to dispose of the said application on the merits.
10. Under those circumstances this court is of the view that the petitioners are not entitled to an order as prayed for. As a result the application is dismissed. Costs will be costs in the cause.