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Allahbad High Court
BISHAMBHARDAYAL,D.S.MATHUR
Maheshwari Khetan Sugar Mills (P.) Ltd. - Appellant
Versus
Ishwari Khetan Sugar Mills - Respondent
Decided On : 05/24/1963
COMPANIES ACT - RECTIFICATION OF REGISTERS OF MEMBERS - BURDEN OF PROOF - S. 155 - S. 108 - S. 64 C.P.C. - O. XXI, R. 46 C.P.C. - FORM 18 IN APPENDIX 'E' - TRANSFER OF SHARES UNDER ATTACHMENT - VOID AS AGAINST CLAIMS ENFORCEABLE UNDER ATTACHMENT - NOT WHOLLY VOID - TRANSFER OF SHARES IN DISREGARD OF PROHIBITORY ORDER UNDER O. XXI, R. 46 C.P.C. NOT ILLEGAL - S. 108 OF THE COMPANIES ACT, 1956 NOT MANDATORY - NOT EXHAUSTIVE - ALTERATIONS IN REGISTERS OF MEMBERS NOT ILLEGAL AND VOID.
Fact of the Case:
The appellants, Kedar Nath Khetan and his adopted son, Gauri Prasad Khetan; Durga Prasad Khetan and Gauri Prasad Khetan; Kedar Nath Khetan, Durga Prasad Khetan, Gauri Prasad Khetan and Smt. Saraswati Bai Khetan; and Maheswari Khetan Sugar Mills (Private) Ramkola, district Deoria, Kedar Nath Khetan, Durga Prasad Khetan and Gauri Prasad Khetan, filed special appeals against the orders of the Company Judge passed in company cases No. 16 of 1962, No. 17 of 1962, No. 18 of 1962, and No. 15 of 1982, respectively. The Company Judge had allowed the applications under S. 155 of the Companies Act, 1956, for rectification of the registers of members of Lakshmi Devi Sugar Mills (Private) Ltd. and Maheshwari Khetan Sugar Mills (Private) Ltd. by restoring the names of the original share holders as they stood before 2-7-1959.
Finding of the Court:
The Court held that the act of the two companies in giving effect to the agreement between the members of the Khetan family by making alterations in the registers of members cannot be held to be illegal or void and, in the circumstances, the burden lay upon the person making the application under S. 155 of the Companies Act, 1956, to prove facts which would justify rectification of the registers of members. The Court further held that S. 108 of the Companies Act, 1956 is not mandatory and not exhaustive, and therefore, the alterations in the registers of members were not illegal and void.
Issues: 1. Whether the transfer of shares under attachment is wholly void? 2. Whether the transfer of shares in disregard of the prohibitory order under O. XXI, R. 46 C.P.C. is illegal? 3. Whether S. 108 of the Companies Act, 1956 is mandatory and exhaustive?
Ratio Decidendi: 1. The transfer of shares under attachment is not wholly void, but is void as against all claims enforceable under the attachment. 2. The transfer of shares in disregard of the prohibitory order under O. XXI, R. 46 C.P.C. is not illegal. 3. S. 108 of the Companies Act, 1956 is not mandatory and not exhaustive.
Final Decision: The Court allowed all the four Special Appeals and set aside the orders of the Company Judge. The applications under S. 155 of the Companies Act, 1956, were dismissed with costs throughout on the parties.
MATHUR, J. : This judgment shall govern special appeals Nos. 108 to 111 of 1963 which arises out of four applications under S. 155 of the Companies Act, 1956, for rectification of registers of members. Special Appeal No. 108 of 1963 is against the order of the Company Judge passed in company case No. 16 of 1962 initiated on the application of Manna Lal Khetan against Lakshmi Devi Sugar Mill; (Private) Ltd. Chhitauni, distt. Deoria, Kedar Nath Khetan and his adopted son, Gauri Prasad Khetan, and R.N. Chavan, special Mamlatdar and Receiver appointed by the Collector, Bombay, in recovery proceedings against Kedar Nath Khetan Mitanand and Mata Din Hari Ram. Special Appeal No. 109 is against the decision in company case No. 17 of 1962 started on the application of Manna Lal Khetan, Matadin Khetan, Bhagwati Prasad Khetan, sons of Seth Hari Ram Khelan, and Smt. Mahadbiri Devi widow of Seth Hari Ram Khetan against Lakshmi Devi Sugar Mills (Private) Ltd. Chhitauiti, distt. Deoria, Durga Prasad Khetan, Gauri Prasad Khetan and Sri R.N. Chavan, special Mamlatdar.
Special Appeal No. 110 of 1963 arises out of company case No. 18 of 1962, Kamla Prasad Khetan and Jwala Prasad Khetan, sons of Seth Onkarmal Khetan v. Lakhmi Devi Sugar Mills (Private) Ltd. Kedar Nath Khetan, Durga Prasad Khetan, Gauri Prasad Khetan, Smt. Saraswati Devi and Sri R.N. Chavan. Special Appeal No. 111 relates to another Sugar Factory Maheshwari Khetan Sugar Mill (Private) Limited, Ramkula, district Deoria and arises out of company case No. 15 of 1982 started on the application under S. 155 of the Companies Act of the Ishwari Khetan Sugar Mills (Private) Ltd. Lakshmiganj, District Deoria, against Maheshwari Khetan Sugar Mills (Private) Ltd. Ramkola, district Deoria, Kedar Nath Khetan and nine others belonging to the three branches of Debi Dutt, common ancestor of the contesting parties to the four proceedings and also against Nagarmal Khetan and the Receiver appointed by the Collector of Bombay in the recovery proceedings against Kedar Nath Mitanand and Hari Ram. It may here be noted that some of the opposite parties are applicants in the other three proceedings and they are apparently pro forma opposite parties in whose interest the application has been made.
2. The Company Judge passed a common order in the first three cases relating to Lakshmi Devi Sugar Mills (Private) Ltd. and a separate order in the case relating to Maheshwari Khetan Sugar Mills (Private) Ltd. The Company Judge allowed all the applications and directed rectification of the registers of members of the two companies by restoring the names of the original share holders as they stood before 2-7-1959. In view of the fact that some of the original share holders had died or ceased to exist, it was left open to the heirs and successors to apply for further rectification in the ordinary way. The persons aggrieved in the tour cases are Kedar Nath Khetan and his adopted son, Gauri Prasad Khetan; Durga Prasad Khetan and Gauri Prasad Khetan; Kedar Nath Khetan, Durga Prasad Khetan, Gauri Prasad Khetan and Smt. Saraswati Bai Khetan; and Maheswari Khetan Sugar Mills (Private) Ramkola, district Deoria, Kedar Nath Khetan, Durga Prasad Khetan and Gauri Prasad Khetan, and they have preferred special appeals which are Nos. 108 to 111 of 1963. As common questions of law and tact arise in all the four appeals they are being disposed of by one common judgment.
3. The parties have filed detailed affidavits-giving the past history of the litigation and the disputes that had occasionally arisen among them. They have naturally tried to blame the other party for the situation in which they are now placed. For purposes of the present appeals it is not necessary to express any opinion on the past conduct of the parties and we shall, therefore merely refer to those facts which are pertinent for the decisions of the appeals leaving it open to the parties to agitate other points in a regular suit. It, however, appears that
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