TMI Blog1953 (2) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... in the names of the three plaintiffs. The plaintiffs also had one share jointly with Bai Harkuverbai, the wife of plaintiff No. 1, and with regard to this share the question arises because of the counterclaim to which a reference will be presently made. The first defendant company filed its written statement and also a counterclaim, and in the counterclaim they made Harkuverbai also a defendant and they claimed by the counterclaim a lien on all the shares to which reference has just been made, also a right to enforce its lien, and the counterclaim stated that the lien was being exercised by reason of a debt due by plaintiff No. 2 to the company. When the matter came for hearing before Mr. Justice Desai, the plaintiffs admitted that a sum of over Rs. 6,00,000 was due by plaintiff No. 2 to the defendants and all issues of fact which arose on the pleadings were admitted by the plaintiffs. The plaintiffs contented themselves with arguing before the learned Judge below a short and narrow point of law, and the point that they put forward was that as the debt was due solely by plaintiff No. 2 and as the shares did not belong to plaintiff No. 2 alone but were the joint shares of plaintiff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of joint contractors who have entered into a contract with the company and therefore the person who becomes member is not one of the joint contractors but all the joint contractors. We find it difficult to understand how, if more than one person agree to become members of the company, the resulting agreement creates a situation whereby there is only one member of the company and not as many members as persons who agreed to become members. It is clear that, the persons who agreed to become members of a company do not constitute a legal entity. If there are joint contractors, whatever their rights, obligations and liabilities may be inter se, they do not in the eye of the law become a legal person or a legal entity, and therefore if they are not a legal entity, they are individuals who enter into an agreement with the company in order to obtain certain rights and certain status. If the joint contractors are not a legal entity, it is difficult to understand how they can become a member of the company, thereby assuming a legal entity, which they did not possess when they entered into the contract. By his contention Mr. Desai wants to confer upon individuals, who apply to become mem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction. Reliance has been placed on a passage in Buckley at page 257. The commentary of the learned author is really not on section 30(2), but on the English section 111 corresponding to section 31 of the Indian Companies Act, and the commentary of the learned author is that for the purpose of this section joint holders are not to be treated as a single member. There is some justification in what Mr. Desai says that this commentary would have been of considerable significance and importance if it had appeared under section 26(2) of the English Act which corresponds to section 30(2), but inasmuch as it appears under a section other than the defining section, the commentary can only be held to be good with regard to the interpretation of that particular section. Reliance has also been placed on two decisions of the English cour.ts, but in our opinion neither of these two decisions is very helpful. The first is a decision reported in Cory v. Reindeer Steamship Ltd. In that case the company's articles provided that at general meetings resolutions were to be decided by a numerical majority of votes, unless a poll was demanded by three members, and that when two or more persons were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his judgment is the fact that although the shares were taken by all the trustees, the lien of the bank was held to prevail over the debt of one of the trustees and therefore it is contended that the position in that case was identical to the position here where the company is claiming a lien in respect of the debt of one of the joint shareholders. But Mr. Desai has pointed out that the articles of association in that case were different from the articles of association before us and on the articles as they were framed there no possible question could arise that the bank had a lien in respect of the debt of one of the joint shareholders. In our opinion, the real key to the construction of section 30(2) is to be found in the Indian Companies Act itself. Section 2(13) defines a "private company" and a private company means a company which among other things limits the number of its members to fifty not including persons who are in the employment of the company. Then there is a very important and significant proviso and it is to the effect that where two or more persons hold one or more shares in a company jointly they shall, for the purposes of this definition, be treated as a singl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hares registered in his name. Mr. Desai says that it would not be possible to comply with this article if joint share holders were looked upon as members. But the answer to this criticism is to be found in article 14 which expressly provides that the certificate of shares registered in the names of two or more persons shall, unless otherwise directed by them, be delivered to the person first named on the register. Then attention is drawn to article 15 which deals with calls and provides that the directors may, from time to time, make such calls as they think fit upon the members in respect of all moneys unpaid on the shares held by them, and Mr. Desai says that if all the joint shareholders were members, under this article a call could be made on each ore of them and each one would be liable to pay the call. Again, the answer to that is to be found in article 8 which provides that joint holders of a share shall be severally as well as jointly liable for the payment of all instalments and calls due in respect of such share. Then attention might be drawn to article 42 which provides for the shares of deceased persons, and it provides that in the case of a deceased member the executor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y are inserted for greater caution and in order to repel any such argument as has been advanced by Mr. Desai that in the case of a member who has been jointly enrolled as a member with others, his debts would not be liable to a lien on the part of the company. The whole of Mr. Desai's argument really resolves itself into this that in respect of one share there cannot be more than one member. No authority whatever has been adduced by Mr. Desai for this proposition. It is difficult to understand on principle why, if in respect of one share more than one person is interested, they cannot all be registered as members if they have all applied to the company and the share has been allotted to all of them. In our opinion, therefore, the learned Judge below was right when he held that in respect of the debt of plaintiff No. 2 the company was entitled to claim a lien under its articles in respect of the shares which plaintiff No. 2 held jointly with plaintiff No. 1 and/or plaintiff No. 3 and/or Harkuverbai who is defendant No. 4 to the counterclaim. The result is that the appeal fails and must be dismissed with costs in favour of respondent No. 1. Liberty to respondent No. 1's attorneys ..... X X X X Extracts X X X X X X X X Extracts X X X X
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