The main legal point established in the judgment is that the allotments of shares to the applicants were valid and binding on the company, considering the legal principles of assumption of regularity and the peculiar circumstances of the company.

Clark, J.

1. P.V. Damodara Reddi and D. Duraiswami Nayudu, each applied in writing for shares in the Indian National Agencies, Limited. These shares were of the face value of value of Rs. 1,000. Their applications were considered at a meeting of the directors of the company held on 12th April, 1942. The applications for shares appear to have been made in February, 1942. Each of the applicants was allotted two shares at the meeting of 12th April, 1942 and the minutes of that meeting recorded that, upon these allotments being made, the two applicants joined the meeting, that is, as directors of the company. As well as being present at the remainder of this first meeting, the applicants are said to have been present at a number of other subsequent meetings. The applicants were duly entered on the register of the members of the company.

2. Some eight months later, in about December, 1942, the directors of the company resolved to cancel the allotment of these shares to the applicants. The present applications are applications to rectify the register by reinserting the names of the applicants. The applications are numbered as Applications Nos. 2258 and 2259 respectively of 1944. I have heard these applications together.

3. It is said on behalf of the company that the resolution to remove these applicants names from the register of members was passed in consequence of a report of the auditor of the company on the balance sheet of the companys affairs as at 30th November, 1942. In that report, the auditor expresses the view that the allotment of the shares to the applicants was ultra vires and that the allotments might therefore be cancelled by the directors.

4. Before proceeding further, I may say I am disposed to regard the removal by the company of the applicants names from the register of members as wholly illegal. The register of the members of a company is a public document and I know of no provision in the Companies Act which permits the directors of a company or any officer of a company to make any alteration to the register in the circumstances alleged in the present case. If these members names had been improperly added to the register, the remedy or the company was to apply to this Court under Section 38 for the rectification of its register and not to take upon itself to alter the register,

5. As, however, the question of the validity or otherwise of the allotment of these shares is now before me on the present applications, I think it would be more proper and suitable for me to dispose of these applications on the merits rather than to allow the applications on the ground stated above and leave the company to file similar applications again, if they are so advised.

6. The company claims that these allotments vere invalid by reason of the provisions of Article 5 of the articles of association. That article provides as follows:

The shares shall be under the control of the directors who may allot or otherwise dispose of the same only among the existing members but shall not without the consent of the company in general meeting allot or otherwise dispose of them to outsiders.

7. It is said that, as the allotments were made by the directors without the consent of company in general meeting, they are accordingly void and wholly inoperative.

8. Now Section 30, Sub-section 2 of the Act provides that a person who agrees to become a member of a company and whose name is entered in its register of members shall be a member of the company. The names of both the applicants were entered in the register of members and accordingly the only question to be decided is whether they agreed to become members of the company. If they did, then the applications must succeed.

9. An agreement to become a member of a company is usually constituted by an offer in the form of an application for shares and an acceptance of that offer by allotment. Admittedly each of the applicants made a written application and the only question is whether those applicat