TMI Blog1985 (3) TMI 215X X X X Extracts X X X X X X X X Extracts X X X X ..... osite parties Nos. 2 to 6 and for other consequential reliefs. The petitioner claims to have become a shareholder of the company in the year 1975-76 and after acquiring 460 equity shares of Rs. 100 each became a full time executive director in the year 1979 with a remuneration of Rs. 1,500 subject to an enhancement of Rs. 250 per year. Opposite party No. 2, Trailokyanath Mohanty, is the managing director of the company. According to the petitioner, the company after its incorporation took various loans from the Orissa State Financial Corporation and from the State Bank of India which were to be operated by the managing director and/or the petitioner. The company engages itself in manfacturing various agricultural equipments and in the interest of the company, the petitioner went to Japan, Philippines, Malaysia, Singapore, Hong Kong and Taiwan in December, 1980, and came back in January, 1981. After his return, the petitioner alleges that he is being treated indifferently by opposite party No. 2, instead of allowing him to implement his knowledge and ideas acquired during the visit to the foreign countries. He has further alleged that opposite party No. 3, who is the son-in-law of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 2 which became effective from March 8, 1983, by necessary entry in the share register where after the petitioner ceased to be a shareholder of the company. The petitioner disputes the fact of transfer of shares as also of the validity thereof. In these circumstances, the burden of proof that the petitioner has transferred all his shares in the company in favour of opposite party No. 2 as alleged in the counter-affidavit lay on the opposite parties and, therefore, the opposite parties were directed to lead evidence first. The opposite parties have examined three witnesses including opposite party No. 2 himself whereas the petitioner has examined himself as the sole witness on his behalf. Several documents have been exhibited on behalf of the opposite parties. Before I go into the evidence adduced by the parties, it may be mentioned that this is a composite application in which reliefs under sections 397 and 398 of the Act have been claimed. Unless the petitioner is found to be a shareholder of the company, he would have no locus standi to maintain this application and in such an event, the court need not go into the merits of the allegations made in the application. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 2. The form was thereafter kept with the petitioner and all of them, namely, opposite party No. 2, the petitioner and the accountant of the company (O. P. W. No. 3), proceeded to the office of the company, where opposite party No. 2 claims to have paid Rs. 26,000 to the petitioner in cash. On receipt of the said amount, the petitioner made over the form to the opposite party No. 2 along with the letter of resignation from the directorship of the company. The prescribed form containing the signatures of the petitioner, opposite party No. 2 and the witnesses has been marked as exhibit 3, in this case. The letter of resignation said to have been typed and signed by the petitioner has been marked as exhibit 4. The transfer of shares thus made in favour of opposite party No. 2 was approved in the meeting of the board held on March 8, 1983, the minutes of which have been marked as exhibit 5 in the resolution book. Opposite party No. 2 has proved the certified copy of the intimation in Form No. 32 to the Registrar of Companies (exhibit 8) in which the resignation of the petitioner has been intimated to the Registrar of Companies. The annual general body meeting was held on September 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exhibits 3 and 4. Section 41 of the Act defines who is a member of a company. According to the said definition, the test of membership of a company is whether the name of the person appears on the register of members of the company. Section 164 of the Act provides that the register of members of the company and the returns, etc ., thereof shall be the prima facie evidence of any matter authorised to be inserted therein by this Act and the court shall accept the same as correct until it is rebutted. Exhibit 6 is the relevant entry relating to the petitioner in the register of shareholders of the company. In the said entry, it has been mentioned that the transfer of the shares of the petitioner has been registered on March 8, 1983, and exhibit 10 which is the certified copy of the annual return of the company made up to September 30, 1983, omits to mention the name of the petitioner as a shareholder of the company. Therefore, under the' circumstances, the presumption would be that the petitioner no more continues to be a shareholder of the company until the same is rebutted by the petitioner. Section 155 of the Act provides for rectification of the register of shares if the name o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture in exhibit 4 came into existence. The learned counsel appearing for the petitioner has argued that the petitioner was required to put his signature on various forms, papers and registers during his continuance as a director of the company and in that process, his signature was obtained in a piece of paper which was later on converted into the letter of resignation. Such a story cannot be believed on the basis of the evidence of the petitioner in court where he says that on exhibit 4, the signature and the date have been given in his hand. The petitioner does not say that on March 2, 1983, he had signed any other paper of the company. But on the other hand, his definite case is that after his return from foreign tour in January 1981, he was not allowed to participate in the management of the company. Though there are no materials to believe that the contents of exhibit 4 were not typed out by the petitioner himself, but assuming that it is so, it cannot be believed that the petitioner put his signature on exhibit 4 without going through its contents. Consequently, the petitioner will be bound by the effect of the documents in exhibits 3 and 4 to which he is a party. Exhibit 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he certified copy of the relevant entry in the said register. The learned counsel for the petitioner argued that he had applied for the certified copy but the same was not granted by the concerned authority. Accepting that the stamps were obtained on March 8, 1983, the learned counsel for the opposite parties had stamps to be affixed on the document prior to its execution. He refers to section 108(1A)( b ) of the Act which provides that every instrument of transfer in the prescribed form with the date of such presentation stamped or otherwise endorsed thereon shall, after it is executed by or on behalf of the transferor and the transferee and completed in all other respects, be delivered to the company within the time specified in the said section. According to the learned counsel for the opposite parties, all that the aforesaid provision in section 108(1A)( b ) of the Act requires is that before delivery, the stamps should be affixed and it does not require the stamps to be affixed prior to execution of the document. This argument of the opposite parties appears to be acceptable in view of the language used in this section. Some arguments were also advanced as to the due complianc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cellation of adhesive stamps. It says that whoever affixed any adhesive stamp to any instrument chargeable with duty which has been executed by any person shall, when affixing such stamp, cancel the same so that it cannot be used again. In the Calcutta case, the State Government issued a notification under section 75 of the Indian Stamp Act, 1899, prescribing the mode of cancellation of share transfer stamps under which it was stated that the stamps shall be cancelled by the company by means of a punch which can perforate either the word "cancel" or an abbreviation thereof. Nothing has been brought to my notice that in this State any such rule has been issued by the State Government. The manner in which the "cross" ("X") marks have been put on the stamps in exhibit 3 renders the same unfit for use and, therefore, amounts to proper cancellation in the language of section 12 of the Indian Stamp Act. On a discussion of the evidence on record, I, therefore, come to the conclusion that the petitioner has duly transferred his shares in the company in favour of opposite party No. 2 which has taken effect in the relevant registers of the company. The petitioner was, therefore, not a pers ..... X X X X Extracts X X X X X X X X Extracts X X X X
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