TMI Blog1965 (4) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... ditions of the said document, the grantee floated a joint stock company with a capital of rupees ten lakhs. That company was named as Kotah Transport Limited, Kotah. It was incorporated and registered on 15th January, 1946, under the Indian Companies Act, 1913, as applied to the then Kotah State and the grantee assigned his rights under the grant, exhibit A-1, to this company. Clause 4 of exhibit A-1 provided that: "The grantee shall allot to His Highness' Government fully paid up shares to the value of one lakh of rupees free of costs. These shares shall, in all respects, including distribution of profits and sharing in the assets in the event of winding up, rank equally with any other shares issued by the grantee." According to this agreement and in consideration of the concessions and the monopoly which was granted to the company, the company allotted to the Government of Kotah State fully paid up shares of the value of rupees one lakh, free of costs. The State further purchased shares worth one lakh of rupees on cash payment. Thus, the Kotah State was holding shares of the value of two lakhs of rupees before it merged into the Former United State of Rajasthan on 25th March, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. It was urged that the application was time-barred in view of the provisions of article 181 of the Indian Limitation Act (No. IX of 1908). It was next contended that the application under section 155 of the Act was not maintainable, because the validity or otherwise of the forfeiture of shares could not be determined in summary proceedings and complicated questions of fact and law were involved. Lastly, it was urged that the petitioner having committed the breach of contract and the monopoly having been ended before the expiry of ten years, the shares were rightly forfeited. After going through the documents placed before the court by both the parties and hearing them, the learned company judge repelled all the three contentions. It was held that article 181 of the Indian Limitation Act of 1908 was not applicable to an application under section 155 of the Act and there was no other provision of law according to which the application could be held to be time-barred. It was further held that the application under section 155 of the Act was maintainable. Lastly, it was observed that "even on the allegations of fact made on behalf of the company it was not entitled to forfeit the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 178 were substituted for the old articles by Act No. X of 1940 and the two amended articles now cover the application under the Arbitration Act of 1940 (1) to set aside an award or to get an award remitted for re-consideration and (2) for the filing of an award in the court respectively. Learned counsel proceeds to argue that the amendments of articles 158 and 178 thus made no difference to the applicability of article 181 and that the learned company judge had committed no mistake in holding that it did not cover the application under section 155 of the Act. We have considered the said arguments of both the parties. It may be pointed out that as early as in 1932, a question arose before their Lordships of the Privy Council in the case of Hansraj Gupta v. Dehra Dun-Mussorie Electric Tramway Co. Ltd. [1933] 3 Comp. Cas. 207 , 214 (PC) , whether an application filed by a liquidator under section 136 of the Companies Act could be held to be barred by limitation under article 181 of the Indian Limitation Act of 1908. Adverting to this question, it was observed by their Lordships as follows: "The application of the liquidators must therefore be treated as an 'application made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s which are specially specified." Learned counsel for the appellant has referred to Shah and Co. v. Ishar Singh Kirpal Singh and Co. AIR 1954 Cal 164 and pointed out that in that case article 181 was held applicable to an application under section 33 of the Indian Arbitration Act and that this supported his view to the effect that its applicability was not confined only to applications under the Code of Civil Procedure. It is true that in the said case it was observed by the learned judge that in view of the amendments made in articles 158 and 178 of the Indian Limitation Act, it could no longer be said that, applying the doctrine of ejusdem generis, the residuary article must be held to apply only to applications under the Code of Civil Procedure, but it is noteworthy that the learned judge was considering the applicability of the residuary article 181 to those applications only which were made under the Indian Arbitration Act and which were not specifically covered by articles 158 and 178 of the Indian Limitation Act. This was because his attention was drawn to sections 37 and 41 of the Indian Arbitration Act. Section 37 provides that all the provisions of the Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 707 and Baimanekbai v. Manekji Kavasji [1883] ILR 7 Bom. 213 relate to application for probate. It was held in those cases that article 181 of the Limitation Act is confined to applications under the Code of Civil Procedure, and does not apply to an application for probate. The main reason for those decisions was that on examination of the articles in the First Schedule in the Limitation Act it appeared that in every one of them the application was made under the Code of Civil Procedure and applying the doctrine of ejusdem generis the application which is contemplated in article 181 of the Limitation Act must be confined to the same type of applications which are contemplated in the other articles in the Schedule, that is to say, applications under the Code of Civil Procedure. Mr. Sen Gupta contended before us that although this was the position before the Limitation Act came to be amended in 1940, whereby articles 158 and 178 of the Indian Limitation Act were made applicable to certain proceedings under the Arbitration Act, after the said amendment the basis of those decisions no longer exists. In other words, his contention was that, after the said amendment, it can no lon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ations made under any law other than the Code of Civil Procedure or the Indian Arbitration Act. On the other hand, it may be pointed out that in Sha Mulchand Co. Ltd. v. Jawahar Mills Ltd. [1953] 23 Comp. Cas. 1, 15, 16 (SC) referred to above, it was observed by their Lordships of the Supreme Court as follows: "A claim for the rectification of the register simpliciter does not necessarily involve a claim for the return of the share scrips and in this case there was, in fact, no prayer for the return of shares or the scrips and, therefore, these two articles (48 49, Indian Limitation Act) can have no application. Learned advocate, however, strongly relies on article 181 of the Limitation Act. That article has, in a long series of decisions of most, if not all, of the High Courts, been held to govern only applications under the Code of Civil Procedure. It may be that there may be divergence of opinion even within the same High Court but the preponderating view undoubtedly is that the article applies only to applications under the Code." Their Lordships then quoted with approval the observations of the Judicial Committee in Hansraj Gupta v. Dehra Dun-Mussorie Electric T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, however, not been able to advance before us any new argument which might persuade us to take a view different from the one contained in the said observation. It may be added that when the legislature amended articles 158 and 178, it should be presumed that it was aware of the view which was taken about the interpretation of article 181 by a series of decisions to the effect that its applicability was confined only to applications under the Code of Civil Procedure. Yet, no amendment was made in that article. It was in the Indian Limitation Act No. 38 of 1963 that its corresponding article 137 has been amended and placed in a separate Part No. II all alone. The Limitation Act of 1963, however, cannot be applied retrospectively. Since no such change was made in the Limitation Act by the time the present application under section 155 of the Act was presented, we consider it safe to follow the meaning which was given to it by their Lordships of the Supreme Court as pointed out above. There is thus no force in this contention. Now coming to the next objection about the maintainability of the application under section 155 of the Act, it is urged by the appellant's learned counsel t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application for rectification of the register of members was correct. In our opinion, it cannot be denied that the court did possess the power to order rectification of the register of members under section 155 of the Act and the learned company judge did not exceed his jurisdiction in entertaining and deciding the application under the said section. We may now take up the last contention of the appellant's learned counsel to the effect that the decision of the learned company judge regarding the fact that the company had no authority or jurisdiction to forfeit the shares is erroneous and palpably wrong. In this connection, it is firstly urged that the learned judge failed to appreciate the scope and ambit of articles 29 and 34(A) of the articles of association of the company. Those articles are as follows: " Article 29. If any member fails to pay any call or instalment on or before the day appointed for the payment of the same, the directors may at any time thereafter, during such time as the call or instalment remains unpaid, serve a notice on such member requiring him to pay the same, together with any interest that may have accrued and all expenses that have been incurred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e contrary, we may reproduce here clause 18 which runs as follows : " Clause 18. The grantee agrees to the reservation by the grantor to themselves the rights to terminate the licence and monopoly covered by the grant subject to the following conditions : ( a )In the event of terminating the grant, at least six months' notice shall be given. ( b )On such termination the grantor shall be under an obligation to take over the assets including bona fide stock-in-trade of the grantee for consideration to be mutually agreed upon. In the event of difference of opinion the valuation of such assets shall be made by arbitrator appointed by the grantor of whom at least one shall be a judicial officer not below the rank of a district judge. To such valuation 10% thereof shall be added as compulsory acquisition. The arbitrators may be aided by two assessors one to be appointed by the grantor and another by the grantee. The award of the arbitrators shall be binding on both the parties and shall be considered to be an award under the Kotah State Arbitration Act, 1945." It is obvious from a perusal of the said clause that the grantor reserved to itself the right to terminate the licence ..... X X X X Extracts X X X X X X X X Extracts X X X X
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