TMI Blog1940 (7) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... m the register of members of a Company, the person aggrieved may apply to the Court for rectification of the register. The petitioner is the holder of one share only and the Company at a general meeting purported to act under Article 173 of the Articles of Association and expelled him from membership. This Article provides to that effect that if any shareholder unjustly or unlawfully has recourse to law in any matter whatever connected with the Corporation, he shall render himself liable to expulsion and on such expulsion he shall never again be admitted into the Corporation. The petitioner preferred a complaint to the District Magistrate of South Canara seeking sanction under section 196-A of the Code of Criminal Procedure to prosecute s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. On the date when this resolution was passed the petitioner was undoubtedly a member of the Company. There was no power for the Company to deal with the share or shares which were held by a person whom the company at a general meeting purported to expel from membership. The Articles provide for forfeiture of shares by members in certain contingencies but these contingencies do not include purported expulsion of a member under Article 173. Ordinarily, a company is unable to sell its own shares but when shares are forfeited it can resell or dispose of them as provided in the Articles. Subsequent to the passing of the resolution of expulsion the Company has altered its Articles by making an addition to Article 173. Notice of the meeting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n instrument of transfer, it is clearly ultra vires of section 34 of the Companies Act. The position at the time when the purported expulsion of the petitioner took place is this. He was a shareholder and learned Counsel on behalf of the Company has conceded that so long as a person remains a shareholder he must remain a member of the Company. The Company purported to expel him, according to the terms of the resolution, from the membership of the Company. There was no power by which it could obtain, seize or deprive him of his share. No doubt he was a holder of one share only, but the same principle would apply with a holder of a large number of shares of considerable value. The Articles did not enable the company to forfeit shares or s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew, the petitioner never ceased to remain a member of the Company inasmuch as he always remained a shareholder. Learned Counsel on behalf of the Company raised an objection that proceedings under section 38(1) of the Companies Act are not open to the petitioner as this section provides a remedy only when the name of any person is without sufficient cause entered in or omitted from the register of members. The name of the petitioner was included in the register of members and was struck out when his expulsion took place or when the Company purported to force him to sell his share to some other person. Same two months after the resolution expelling him, the Company wrote to the petitioner on the 23rd October, 1939, that his share had that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d he is still the holder of the share ; therefore his name must be included in the list of members. The petitioner still holds the certificate recording that he is the holder of one share in the Company and I direct that there be a rectification of the register and the Company will add to the names of members that of the petitioner. The relief which I am granting in this petition is to place the petitioner in the position in which he has always been a shareholder of the Company. The petitioner is entitled to his cost against the Company. Learned counsel for the petitioner has asked me to fix the amount of costs. He has spent Rs. 40 as out of pocket. I fix the total costs including the cut of pocket expenses at Rs. 150. - - TaxTMI - TMI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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