TMI Blog1982 (6) TMI 215X X X X Extracts X X X X X X X X Extracts X X X X ..... e learned trial judge had not given them leave to intervene in the suit. It may incidentally be mentioned that Purna Investment Co. Ltd. is a company in which Mohonlal Mittal and his group are closely associated and they have the controlling interest. Being aggrieved by the said order of the learned trial judge, this appeal has been filed before this court praying, inter alia , for leave to intervene and oppose the terms of settlement. Various questions have arisen on this aspect, but the main question is, whether a shareholder, as such, has such interest in a company which entitles him to intervene in respect of a suit pending against the company in respect of some of its assets. It is well settled that a shareholder has certain interest. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upreme Court, at p. 37 of this judgment, referred to the decision of the United States of America, namely, decision in the case of McCabe v. Atchison [1914] (235 US 151), to which, as we have mentioned hereinbefore, our attention was independently drawn. The United States' Supreme Court reiterated that injury to the complainant of a legal right justified judicial interference. Reliance was placed on these observations in aid of the proposition that if a legal right was interfered with, which it was contended that the company had in respect of the assets of the company, interference with those legal rights justified right to intervene. The Supreme Court was categorical on the nature of the shareholder's right vis-a-vis the assets of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exceeding their par value by 50, the excess being expressed in the contract to be paid "to cover the portion of the dividend accrued to date". On the 13th May, 1920, a dividend of 10 per cent. free of income-tax was declared and paid by the company for the year ending 28th February, 1920. The respondent-assessee contended that of the dividend so receivable on his shares 50 plus income-tax, altogether 71, should be treated as capital in view of the terms of the contract of purchase and should not be included in the computation of the income for the year 1920-21 for the purposes of super-tax for the following year and his contention was accepted by the Special Commissioners on appeal. It was held that the transaction was in essence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed it is ordinarily implied, and there is no doubt that that is the nature of the transaction. Now, at the end of the financial year when the chance which had just been purchased had materialised and a dividend was declared and paid, what the respondent maintains, as I understand his position, is this, that a part of the purchase price which was given for that totality should be deducted or set off against the sum which he received as dividend. Now, it seems to me that if we assent to an argument of that sort we will not only be revolutionising stock exchange practice, but I think we will be upsetting the established precedent of the Inland Revenue authorities and deciding against the general terms of the Act of Parliament. Not only that, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndently of the company as such. In this connection, the Supreme Court reiterated the observations in the decision in the case of Charanjit Lal Chaudhari [1951] 21 Comp. Cas. 33, and the observations in the case of IRC v. Forrest [1924] 8 TC 704. Our attention was also drawn to the decision in the case of Turner Morrison Co. Ltd. v. Hungerford Investment Trust Ltd. [1972] 42 Comp. Cas. 512; 85 ITR 607 ( SC ), and reliance was placed on the observations at pages 528-29. It was contended further that the terms of settlement pursuant to which the decree was passed against the company was beyond the authority of the company. Therefore, it was submitted that it was bad. The observations which were relied on in aid of this submission ..... X X X X Extracts X X X X X X X X Extracts X X X X
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