DAVE, C.J.—This is an appeal by the Kotah Transport Limited, which is a public limited joint stock company, under sec. 155(4) of the Companies Act No. 1 of 1956, which will hereinafter be referred to as the Act, against the order of the learned Company Judge of this Court, dated the 8th August, 1960, passed on an application filed by the State of Rajasthan under sec. 155(1) of the Act.

2. It is common ground between the parties that the Government of His Highness the Maharao Raja of the erstwhile Kotah State granted a monopoly to carry passengers and goods by motor transport within the State to Messrs. Budh Singh Bapna, Sardar Ujagar Singh and Sardar Daljit Singh, who will hereinafter be referred to as the grantee, by a "Deed of Covenant" (Ex. A. 1) dated 29th September, 1945, for a period of ten years. In pursuance of the terms and conditions of the said document, the grantee floated a joint stock company with a capital of rupees ten lakhs. That company was named as Kotah Transport Limited, Kotah. It was incorporated and registered on 15th Jan., 1946 under the Indian Companies Act, 1913, as applied to the then Kotah State and the grantee assigned his rights under the grant Ex. A. 1 to this company. Clause 4 of Ex. A. 1 provided that the grantee shall allot to His Highness Government fully paid up shares to the value of one lakh of rupees free of cost. These shares shall, in all respects, including distribution of profits and sharing in the assets in the event of winding up, rank equally with any other shares issued by the grantee." According to this agreement and in consideration of the concessions and the monopoly which was granted to the company, the company allotted to the Government of Kotah State fully paid up shares of the value of rupees one lakh, free of costs. The State further purchased shares worth one lakh of rupees on cash payment. Thus, the Kotah State was holding shares of the value of two lakhs of rupees before it merged into the former United State of Rajasthan on 25th March, 1948. The former United State of Rajasthan in turn merged with the present State of Rajasthan on 7th April, 1949. The State of Rajasthan then wrote to the company to register the shares held by the erstwhile State of Kotah in its name. On 24th November, 1951, the company passed a resolution at its meeting to the effect that "the company accepts the claim and devolution of right on the present Government of Rajasthan and is prepared to transfer the shares in the name of the Finance Secretary but there is a clear case of transmission." Thus, the company agreed to transfer the shares in favour of the petitioner on payment of transmission fee of Rs. 4050/- and this resolution was communicated to the Commissioner, Kotah Division, Kotah, on 4th December, 1951 by its letter Ex. S. 6. At the same time, Shri R.C. Dhariwal, Advocate and Legal Adviser of the company, served upon the petitioner a notice Ex. A. 5 dated 26th November, 1951, saying that shares of the value of rupees one lakh were given to the Kotah State Government free of cost in consideration of the grant of monopoly, that the monopoly had come to an end on account of the promulgation of the Motor Vehicles Act, 1939, that permits were granted to other owners of motor vehicles to ply their buses on the routes on which the company was plying its motor vehicle, that there was thus a breach of contract on the part of the Government of Rajasthan and, therefore, it was requested that the State of Rajasthan should either pay the amount of rupees one lakh, if it wanted to retain the said shares or the said shares of the value of rupees one lakh should be ceased or surrendered and that if this was not done within a period of one month, legal action would be taken against the Government of Rajasthan and it would be liable to all costs incidental thereto. The State of Rajasthan asserted its rights to hold the shares. It also asserted its right of exemption from the payment of transmission fee. E

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