Judgement

BACHAWAT, J. : The Bank of Poona Ltd., (hereinafter referred to as the Company) now amalgamated with the Sangli Bank, Ltd. was incorporated in 1945. The Company was promoted by N. G. Parulekar and Murlidhar Chaturbhuj Loya. The authorised capital of the Company was Rupees fifty lakhs divided into 50,000 ordinary shares of Rs. 100 each. By the end of April, 1946, the Company was able to find subscribers for 4,860 shares only. In view of S. 277 (I) of the Indian Companies Act, 1913, the Company was unable to carry on business unless the subscribed capital was not less than half the authorised capital. In order to comply with the requirements of S. 277 (I), the directors of the Company decided that they or their nominees would subscribe for a large number of shares. Narayandas Shriram Somani was one of the directors of the Company. Ramnath Shriram Somani is his brother. They carried on business in the name of Ramkisan Ramratan Somani. Jivanbai is the mother of Narayandas and Ramnath, Goverjabai is the wife of Narayandas, and Kamalabai is the wife of Ramnath. Narayandas decided to subscribe for 2,000 shares in the names of the three ladies. At a meeting held on May 25, 1946, t