TMI Blog1982 (1) TMI 161X X X X Extracts X X X X X X X X Extracts X X X X ..... , disposing of or transferring or selling or alienating any of the assets of the company. There were mainly' three factors involved in this application. The petitioner, viz ., the Bengal Dooars National Tea Co. Ltd., claimed to be a shareholder of 10,002 ordinary shares of Rs. 20 each. The authorised share capital of the company was Rs. 4,50,000 divided into 22,500 shares of Rs. .20 each and the subscribed capital was Rs. 49,689. The petitioner in the original application under section 397 of the Companies Act, 1956, was holding about 49 per cent, shares and was the largest single shareholder. There were three grounds of challenge in the application. One was on the issue of further shares which was sanctioned by the company at the meeting held on 5th December, 1977. The other was about the shifting of the registered office from Jalpaiguri to Siliguri and the third was relating to certain alleged private sales and misapplication of the sale proceeds of tea. The application under sections 397 and 398 was presented to this court on the 3rd April, 1978. The petitioner also contended that the petitioner had not received the notice of the impugned meeting. The learned judge did not ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... several letters were written by the respondent to the appellant asking for copy of the annual balance sheets for several years as well as the particulars of the share registers. There were certain grievances as to whether Sri Manish Chandra Mitra was duly authorised or was competent to make those enquiries on behalf of the said respondent. On 9th November, 1977, it is stated that the notice for the impugned annual general meeting was alleged to have been sent under certificate of posting to the respondent. Between 21st November, 1977, and 20th December, 1977, it is the allegation of the appellant-company that there was the closure of the share register in compliance with section 154 of the Companies Act, 1956. On 23rd November, 1977, the said Manish Chandra Mitra was written to by the appellant-company that due to the closure of the share register it was not possible to send the complete list of the shareholders. This letter, though dated 23rd November, 1977, appears to have been posted on 19th January, 1978, and was received by the respondent on the 21st January, 1978. This would be apparent from the records placed before the learned trial judge which were appearing in the paper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gistrar of Companies, West Bengal. On 25th January, 1978, the respondent-company wrote to the Registrar of Companies, West Bengal, complaining about the illegal shifting of the registered office and non-receipt of notice convening the impugned annual general meeting. Again on 31st January, 1978, a letter was written by the respondent-company to the Registrar of Companies, inter alia , complaining about the illegal shifting of the registered office, failure to supply copies of the balance-sheets for the years ending 1972 and 1976 and non-service of the notice of impugned annual general meeting. On 4th March, 1978, the Registrar of Companies wrote to the appellant company directing them to furnish copies of the balance-sheets for 1972 and 1976 and memorandum and articles of association. It was, inter alia , stated in the letter as to whether any special resolution had been passed for shifting the registered office of the company in compliance with section 146 of the Companies Act, 1956. On 20th March, 1978, the appellant-company forwarded a memorandum and articles of association as also balance-sheets for the years 1972 and 1976. On the same day, the appellant-company wrote to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal. (1) Where at any time after the expiry of two years from the formation of a company or at any time after the expiry of one year from the allotment of shares in that company made for the first time after its formation, whichever is earlier, it is proposed to increase the subscribed capital of the company by allotment of further shares, then ( a ) such further shares shall be offered to the persons who, at the date of the offer, are holders of the equity shares of the company, in proportion, as nearly as circumstances admit, to the capital paid-up on those shares, at that date: ( b ) the offer aforesaid shall be made by notice specifying the number of shares offered and limiting a time not being less than 15 days from the date of the offer within which the offer, if not accepted, will be deemed to have been declined; ( c ) unless the articles of the company otherwise provide, the offer aforesaid shall be deemed to include a right exercisable by the person concerned to renounce the shares offered to him or any of them in favour of any other person; and the notice referred to in clause ( b ) shall contain a statement of this right; ( d ) after the expiry of the time specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ducive to the company. Sub-section (1) of section 81 enjoins that where at any time after the expiry of two years from the formation of the company or at any time after the expiry of one year from the allotment of shares in that company made for the first time after its formation, whichever was earlier, it was proposed to increase the subscribed share capital of the company by allotment of further shares, then such further shares should be offered to the persons who, at the date of the offer, were holders of the equity shares of the company, in proportion, as nearly as circumstances admitted to the capital paid-up on those shares, at that date and in such a contingency by other sub-clauses notice had to be given in a particular manner. On behalf of the appellant it was contended that when it could not be given to the existing shareholders then it could be given to any other persons under section 81(1A), which might or might not include the existing shareholders, in any manner whatsoever, provided the directors were so authorised by a special resolution of the company. In this case, therefore, it was contended on behalf of the appellant that inasmuch as the learned trial judge held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares to the existing shareholders and there was no cogent evidence that the existing shareholders would not have taken these shares, though it was true that until the writing of the letters on behalf of Manish Chandra Mitra there was no interest shown by the respondent in the affairs of the company and they did not attend any meetings of the company. The liabilities of the company were nearly Rs. 8,90,679 and raising the share capital of the company to the extent of Rs. 3 lakhs, according to the respondent, would not have been sufficient to meet the liabilities of the company. In this connection, the learned judge was unable to accept the contention that the intention of issuing further shares was the improvement of the financial position of the company, as only a nominal sum had been called up and subsequently during the pendency of the application the entire amount of fresh issue had been paid by the allottees. It was nowhere disclosed in the proceedings as to who were the allottees of the new shares and there appeared to be several illegalities. The learned judge has made those findings at pages 356-357 of the paper book, and, therefore, in the back-ground of this fact there w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from this judgment the Supreme Court did not proceed on this basis. But, reliance was placed on the observations of the Supreme Court in the case of Shanti Prasad Jain v. Kalinga Tubes Ltd. [1965] 35 Comp. Cas. 351; AIR 1965 SC 1535, paras. 24 * , 25f and 32 , of the judgment, where, it was submitted that the notice of the general meeting was not in compliance with section 173 and so the proceedings of the meeting must be held to be bad. This objection was, however, not taken in the petition and the Supreme Court, therefore, did not allow this question to be raised before the Supreme Court as it was a mixed question of law and fact. The objection was not taken in the petition but it was urged before the Orissa High Court and it was dealt with and the Supreme Court made an observation that their Lordships would have agreed with the views of Das J., if the question was permitted to be raised. We may reiterate that the Supreme Court in para. 25 of the judgment mentioned that in the facts of that case there could be no doubt that the seven persons to whom the shares were eventually allotted were respectable persons of independent means. There was nothing to show that they w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a ) of the Act. In aid of this submission, on behalf of the respondent it was emphasised that allegations had been made that the allotment of shares to the benamidars of the other group of shareholders was made but in spite of that fact, in the subsequent proceedings and in subsequent affidavits, the names of allottees had not been disclosed by the appellant. As a matter of fact, on behalf of the respondent, it was emphasised, till today the respondent was quite in the dark as to who were these allottees. Such a conduct, it was submitted, showed that the action of the company in issuing the increased shares was not in the bona fide interest of the company. It was emphasised that this fact is highlighted by the fact that the money sought to be raised would be quite insignificant and would not be of much significance in helping the so-called object of raising more funds for the company. On behalf of the appellant it was submitted that even where there was a mixed motive, such an action would not be bad. In this connection reliance was placed on the observations of the Supreme Court in the case of Nanalal Zaver v. Bombay Life Assurance Co. Ltd. [1950] 20 Comp. Cas. 179; AIR 1950 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e learned judge, as the broad object of the resolution was to transform the respondent into a minority shareholder, the observation of the Supreme Court, in our opinion, cannot have any application in this case and in that view of the matter we are unable to accept the contention, as contended, in support of the appeals. Now, we shall deal with the cross-objection filed on behalf of the respondent. This cross-objection was based on certain grounds. But, before we do that, we must observe that the non-publication of the closing of the share registers, which the learned judge has observed in his judgment, violated section 154 of the Companies Act. It was submitted on behalf of the appellant that these were not relevant factors in considering the allegations made in the petition and the notice issued under section 81 of the Companies Act and in any event the non-publication of the closure of the share register would not affect the validity of the meeting. Reliance was placed in this connection on the observations of the learned trial judge. It is quite true that the violation of section 154 of the Companies Act by non-publication of the closing of the share register would not invali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived subsequently. It is also true that the said letter was posted under certificate of posting. In our opinion, on the totality of the facts which have been discussed by the learned judge, the learned judge was entitled to come to a finding of facts on this aspect of the matter. It is to be noted that the factual finding based on a totality of facts should not be looked at piece-meal or by either non-consideration of one single factor or the other. About the effect of service of the notice under certificate of posting, reliance was placed on the observations of the court in the case of Kanak Lata Ghose v. Amal Kumar Ghose, AIR 1970 Cal 328 at page 332, in the case Achamma Thomas v. E.R. Fairman, AIR 1970 Mys 77, at pages 80-81, paras. 7 and 11, and also in the case of Ramashankar Prosad v. Sindri Iron Foundry ( P .) Ltd., AIR 1966 Cal. 512 at pages 519, 528 and 547. It is true that whether in a particular case, the presumption of the receipt of a letter under certificate of posting would be drawn or not, would depend upon the facts and circumstances of the case, in this case in view of the facts that after some time, though not after a very long time, the responde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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