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Cuddalore Construction Company Ltd., In re (In Liquidation) And T.V. Somasundaram Pillai Versus Official Liquidator

1967 (3) TMI 72 - HIGH COURT OF MADRAS

Powers of Court to rectify register of members - 289 OF 1965 AND 178 OF 1966 - Dated:- 3-3-1967 - RAMAPRASADA, RAO J. N.C. Raghavachari and N.S. Varadachari for the Applicant. JUDGMENT Company Application No. 289 of 1965 is an application for setting aside the ex parte decree dated April 22, 1960, made in Company Application No, 78 of 1960 in O. P. No. 374 of 1953 and Company Application No. 178 of 1966 is an application for rectification of the register of members of Cuddalore Construction Comp .....

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t thereon at 6 per cent. per annum from March 3, 1959. In fact, even at the stage when the list of contributories was sought to be settled, notices as required under law were attempted to be served on the applicant. At one time, the notice was returned with the endorsement no such addressee . When the official liquidator made a call for the payment of the unpaid call money after obtaining orders of court in Application No. 280 of 1958, a second notice was sought to be served on the applicant, wh .....

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ting such processes, this court, by its order dated April 22, 1960, directed the applicant to pay a sum of Rs. 910 with interest thereon at 6 per cent. per annum from March 3, 1959, till date of payment. This order is conclusive, under section 190 of the Act, of the fact that such monies is due by the applicant. On obtaining such a decree, the official liquidator was anxious to secure the amount from the applicant. He even attempted to personally contact the applicant which he did on March 9, 19 .....

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is of certain court proceedings and prayed that his name may be removed from the list of contributories. The official liquidator explained the correct position in his letter dated August 2, 1965, and granted him some more time to pay the amount. A reminder was also sent on October 12, 1965. It is at this stage that both the applications referred to above have been filed. The allegation of the applicant is that he became aware of the passing of the decree only on August 2, 1965, and that the shar .....

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decree only on August 2, 1965, cannot stand scrutiny at all for the reason that he knew about it even on March 10,1965, when he inspected the records and promised to settle the matter. Whether a contributory against whom a balance order, as is commonly known, has been passed can seek to set aside a decree which has become final in the eye of law depends upon the main question whether the application for rectification of the register prayed for by the applicant by removing his name as a member th .....

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ation of its own. The word implies that there is a prior error, mistake or defect which is apparent on the face of the record of the register, which, after rectification, is made good and corrected by removing such a mistake or error. As was pointed out in Pulbrook v. Richmond Consolidated Mining Co. [1878] 9 Ch. D. 610 : The effect of rectification is exactly the same as if the name struck off had never been put in. That is the meaning of rectification . Unless the applicant establishes a just .....

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wer to correct a register of court has to be exercised with caution. It has to be remembered that in such a summary adjudication a roving enquiry is not contemplated. The applicant is seeking in the main to rest his contention on certain proceedings in court, and particularly the judgment of this court in C.C.C.A. No. 95 of 1952. That was a case in which there were certain disputes between the applicant and a director of the South Arcot Oil and Refineries Limited. The case of the applicant was t .....

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times, ever since he started the suit in 1950, that his name was in the register of members in the Cuddalore Construction Company Limited now in liquidation. In fact, the applicant is reported to have signed certain transfer forms for transfer of the shares by the applicant in favour of the director abovenamed. The learned judges, after considering the probabilities of the case, same to the conclusion that the applicant s version that he lent money as a debt pure and simple was more reliable and .....

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ges that might reasonably and naturally now from the fact that the name of the applicant indisputably appeared in the register of members. This has not been done. The applicant cannot take advantage of his own laches and avoid a claim in legi which is undoubtedly not a claim in contractu. Once a balance order is passed by court against a contributory on the foot that his name appeared in the register of members and that his liability as a contributory has become indubitable, then a remedy to rec .....

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te the contract in unequivocal terms and without undue delay as otherwise such delay would be fatal to his application for rectification. If the name of a person appears in the register of members, he cannot at his whims and fancies ask for rescission of such a contract to take shares as it would be lost because of inaction or lack of prompt action on his part. This rests on the wholesome and salient principle that such a person has allowed the company to obtain credit on the strength of it and .....

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her side, the register remains as it was - where the fault is on both sides, the register also remains as it was. Therefore the onus is heavily on the shareholder to set right the mistake, if any, in the register without any delay. The above decision has been quoted with approval by a Division Bench of the Bombay High Court in Mahomed Akbar Abdidla Fazalbhoy v. Official Liquidator [1950] 20 Comp. Cas. 26 . A Division Bench of this court also in Lakshmi Narasa Reddi v. Official Receiver, Sree Fil .....

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late. In fact, in Bank of Hindiisihan Ltd. v. Suryanarayana Rao [1958] 28 Comp. Cas. 71 ; [1957] 2 M.L.J. 517 a Bench of this court held: A petition for rectification will lie normally after the filing of a winding up petition and before the winding up order is passed, provided that the court will normally reject the petition if the company is already in a notorious state of bankruptcy by the time the petition for rectification is filed. Where the winding up order had intervened whereby the rig .....

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