1934 (6) TMI 26 - HC - Companies Law

Winding up - Liquidator to exercise certain powers subject to sanction Liability as contributories of present & post members and Company Membership of

Summary

Issues:
- Appeal against the order of the District Judge under Section 184/38 of the Indian Companies Act for removal of name from contributory list.
- Validity of respondent's claim of being fraudulently entered into the register of members of the Bank.
- Burden of proof on the respondent to show entries were incorrect or made fraudulently.
- Evaluation of evidence regarding respondent's agreement to become a member of the company.
- Analysis of respondent's attendance at shareholder meetings and signing of share application.
- Examination of respondent's explanation for signing the application and attending meetings.
- Consideration of respondent's admission of payment to Diwan Mangal Sen and its impact on liability as a contributory.
- Review of the Official Liquidator's failure to produce actual allotment-letter or transfer deed of shares.
- Comparison with relevant case laws to determine liability as a past member.

Analysis:
The judgment involves an appeal challenging the District Judge's order under Section 184/38 of the Indian Companies Act, seeking the removal of the respondent's name from the contributory list of the Punjab Industrial Bank. The respondent claimed that his name was fraudulently entered into the register of members of the Bank without his consent. However, the Court highlighted that the burden of proof lay on the respondent to demonstrate that the entries were incorrect or made fraudulently. The respondent admitted to signing the application for shares and attending shareholder meetings, raising questions about his explanation for these actions and his awareness of becoming a shareholder.

The Court scrutinized the respondent's conduct, emphasizing his experience in the insurance business and the implausibility of his claims regarding the share application and meeting attendance. Despite the respondent's arguments, the Court found his explanations unconvincing, especially regarding the conditions of signing the application and his presence at shareholder meetings. Additionally, the respondent's admission of payment to Diwan Mangal Sen, without corroborating evidence, further weakened his case.

Furthermore, the Court noted the absence of concrete evidence to challenge the entries in the register of members, indicating the respondent's liability as a past member of the Bank. The Court referenced relevant case laws to support its decision, ultimately accepting the appeal, overturning the lower court's order, and dismissing the respondent's application for removal from the contributory list. The respondent was directed to bear the costs of the Official Liquidator in both Courts, with the concurring opinion of the second Judge.