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1965 (4) TMI 53 - SUPREME COURTWhether the allotment of the 2,000 shares and the several loans in the names of Ramnath and Narayandas were not genuine transactions, and that the parties did not intend that the allottees would be the holders of the shares or that Narayandas and Ramnath would be liable to repay the loans? Held that:- We are satisfied that the allotment of the 2,000 shares was intended to be operative and the allottees became the owners of the shares. We are also satisfied that the loans to Ramnath and Narayandas were intended to be operative, and the company did not give any assurance to them that they would not be called upon to repay the loans. The allotment of the 2,000 shares to the nominees of Narayandas in the meeting of the directors of the company held on May 25, 1946, was not void. In view of the fact that Narayandas was not entitled to vote on the allotment and alter exclusion of his vote there was no quorum, the allotment was irregular, and the company was entitled to avoid the allotment. Instead of avoiding the allotment, the company has chosen to affirm it. The allotment is, therefore, valid and binding on the allottees. For all the reasons, we hold that the allotment is valid, and there is no failure of consideration. Appeal dismissed.
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