This is an application under sections 162 and 170(1-A) of the Companies Act, 1913, praying that the respondent-Company be ordered to be wound up as respondents 2 to 4, by utilising their strength, conducted the affairs of the company in an unjust, unequitable, unfair and oppressive manner, much prejudicial to the interest of the company, as well as the shareholders as a whole.
2. The relevant facts giving rise to this application are that the petitioner, who was one of the four subscribers to the Memorandum and Articles of Association of the respondent-Company statedly made a payment of Rs. 5,000 in cash to the Company in the month of May, 1979. He is said to have paid a further sum of Rs. 1,00,000 into the account of respondent No. 1 in September, 1979, as his subscription towards the purchase of shares.
3. The petitioner, vide 'his letter dated 28th August, 1980, intimated to respondents 2 to 4 that the affairs of the Company were not being properly managed and the statutory and legal obligations were not being complied with. According to the narration in the application for winding up the respondent No. 2 replied the said letter, on behalf of the respondents 2 to 4. Assuring the petitioner that they were fully responsible for the affairs of the company. He was also informed that a general meeting of the respondent company will be held on 27th October, 1980.
4. Consequently, the petitioner went to the company's office to find respondents 3 and 4 present there. According to him no agenda was drawn up or communicated to the petitioner and no formal meeting held or business transacted. The petitioner is stated to have been questioned about his letter dated 28th August, 1980, the contents of which he allegedly reiterated. It is thereafter that the petitioner approached this Court.
5. The respondents in their written statement raised a preliminary objection about the locus standi of the petitioner. They stated that despite contributing to the Memorandum and Articles of the Association the petitioner did not subscribe any amount towards the initial capital with the result that his shares were forfeited and the remaining 1,250 shares were allotted to Mst. Khawar Saleem.
The respondents also imputed a motive to the petitioner for filing this application. They said that as a particular contract had not been sublet by the company to the petitioner he revengefully initiated the proceedings. The respondents categorically denied the payment of the sum of Rs.
1,05,000.
6. The pleadings of the parties gave rise to the sole issue :- "Whether the petitioner paid a sum of Rs. 1,05,000 towards capital of the company ? O. P. P.
The parties have led documentary as well as oral evidence. The petitioner produced 3 witnesses apart from himself. P. W. I Muhammad Yunas, an Assistant from the office of the Assistant Registrar, Joint Stock Companies, proved letter Exh. P. W. 1/1. In his cross-examination he stated that the company supplied summary of shares capital, a list of share-holders made uptro 22nd October, 1978 and Form XII giving particulars of the Directors dated 9th September, 1980, along with Form XV.
7. P. W. 2 Mujabid Nasim, Officer, Bank of Credit and Commerce International (Overseas) Limited produced an original receipt TD-001117, dated 4th June, 1979, issued in favour of the petitioner for a sum of Re. 1,00,000 as a deposit, for a period of 30 days notice (photo copy Exh. P. W. 2/1). He also produced a certificate Exh. P. W. 2/l about the same amount. According to P. W. 4 he got this amount back on 9th September, 1979. This is supported by the endorsement at the back of $. W. 2/1.
P. W. 3 Mohtashim Sarfraz, Officer, Habib Bank Limited, Gulberg Branch, produced a bank statement Exh. P. W. 3/1 which shows a deposit in the company's account, of a sum of rupees one lac. He also brought a certificate (Exh. P. W. 3/2) showing various deposits made from 13th May to 22nd December, 1979, including the sum of rupees 1 lac. The original deposit slips in respect of entries in P. W. 3/2 were also produced. Their photo copies Exh. P. W. 3/3-A to 3-L have been placed on record.
8. In his cross-examination he stated that by identifying signatures is Exh. P. W. 3/3-F he can say that this amount was deposited by Mr. Amanullat} petitioner. He further stated that the respondent Company was also introduced by Mr. Amanullah at the time of opening its account. He however, did not know as to whose money was the sum of Rs. 1,00,000.
9. Appearing as his own witness Amanullah Khan petitioner (P. W. 4) identified signatures on the reverse of Exh. P--- W, 2/t as his and deposed that he received the cash mentioned in it on 9th September, 1979. He further stated that he had subscribed a sum of Rs. 5,000 in May, 1979, and a sum of Rs. 1,00,000 on 9th September, 1979. (The latter amount is mentioned in Exh. P. W. 3/3-F, as referred to above). He stated that the additional sum of Rs. 1,00,000 was deposited as it was agreed in the meeting of Directors that in view of a newly-granted contract each one should do so. The petitioner did so at the earliest as it was so required of him by the other Directors.
10. As to the share certificates, the petitioner stated that though they were demanded yet the same were not supplied to him as they had not as yet been printed. He admitted the receipt of letter Exh.
P. W. 4/1. In his cross-examination the petitioner admitted that the cordial relations between him and respondents 3 and 4 got strained since the receipt of letter Exh. P. W. 4/1. He deposed to have shown the above-referred to share-money in his wealth statement as well as the income-tax return.
11. The respondents produced Muhammad Naseer Butt P. W. I who was handling account matters.
According to him, the petitioner, whom he knew, never made any cash contribution, towards the purchase of shares, to him or the company, from May to July, 1979, while he dealt with the accounts. He then detailed the various amounts paid by various share--holders. He further stated that Mr. A. U. Lone had given one lac rupees in cash to Amanullah Khan petitioner to deposit in Habib Bank on 9th September, 1979. Earlier, on the same day Mr. Saleem and Mr. Lone had handed over sums of Rs. 90,000 and 25,030, respectively, in cash to the witness, to deposit the same in Bank. It was, thereafter, that the witness was called by Mr. Lone and asked to hand over a sum of Rs.
1,00,000 to the petitioner to deposit the same as well as his own share of the capital. R. W. 1 then handed over the amount but took no receipt.
12. R. W. 1 admitted in his cross-examination that the petitioner and respondents 2 to 4 had agreed to jointly contribute towards share capital of the Company prior to 1979. According to him every person had to contribute a sum of Rs. 1,25,000. The handing over of Rs. 1.00,000 by him to Mr. Lone and his further giving it to the petitioner was in the presence of Mr. Saleem. The sum was in hundred rupee-notes and was counted by the witness as well as the petitioner. No receipt was asked for from Mr. Saleem or Lone as the witness expected to receive the vouchers of the same subsequently.
13. R. W. 1 admitted that no separate entry of this sum of Rs. 1,09,000 was made. He, however, admitted that usually it was his own duty to deposit the company's money in the Bank. He noted the deposit slip No. 93423 (P. W. 3/3-F), dated 9th September, 1979, and said that it is the same by which the sum of Rs. 1,00,000 was deposited by Mr. Amanuliah Khan, petitioner, on 9th September, 1979. It was not written by him but probably by Mr. Amanullah Khan.
14. Mr. Amanullah Lone in his statement as R. W. 2 stated that he was the Managing Director of the respondent Company. According to him the petitioner never contributed towards share capital of the Company. Any one who contributed was given a receipt by Mr. Butt who was the Secretary as well as Accountant at that time. He (R. W. 2) paid a sum of Rs. 25,000 in cash towards his share capital on 9th September, 1979. Mr. Saleem paid a sum of Rs. 90,000 in cash on the same date. A sum of Rs. 1,00,000 in cash was then handed over to Mr. Amanullah Khan by him to deposit in the account of Petrocon.
15. In his cross-examination he admitted that the petitioner and respondents 2 to 4 had decided that the initially a sum of Rs. 5,000 shall be paid by each.. They decided later that each one of them should complete his share of Rs. 1,25,000 towards capital. At this stage he stated that the sum of Rs.
1,00,000 had been factually handed over by Mr. Butt under his instructions though he did not ask him to get any receipt as it was being given to a friend. The money wigs, however, counted in his presence by Mr. Butt and Amanullah Khan. It was in the denomination of Rs. 100 notes. Mr. Saleem was also present.
16. Mr. Saleem who appeared as R. W. 3 agreed that each one of the four persons had to contribute a sum of Rs. 1,25,000.' He paid a sum of Rs. 90,000 on 9th September, 1979, and got a receipt for it. As for the petitioner, he did not know if he contributed any amount towards share capital. He further deposed that a sum of Rs. 1,00,000 was given to Mr. Amanullah Khan to be deposited in the Bank in company's account. In his cross-examination he stated that he, Mr. Butt and Mr. Lone were present at the time. According to him the amount was handed over by Mr. Butt.
17. The evidence detailed above shows that the constitution of the respondent Company by the petitioner and respondents 2 to 4, their contri--bution to the Memorandum and Articles of Association, the subsequent registration of the Company and the agreement that each one shall contribute a sum of Rs. 1,25,000 towards its share capital is undisputed. The only dispute between the parties is whether the petitioner had contributed a sum of Rs. 1,25,000 towards the share capital or not ?
18. The petitioner has relied on the three entries made in the account of the company in Habib Bank Limited, on 14th May, 1979, as shown in Exh. P. W. 3/1. Two of these amounts, viz. Rs: 10,000 and Rs.
5,000 we paid through cheque whereas a sum .Of Rs. 5,000 was paid in cash. The deposit slips pertaining to these are P. W. 3/3-H, P. W. 3/3-J and P. W. 3/3-K. According to P. W. 3/2 the- depositor's name is not known. ' Who issued the cheque pertaining to Exh. P. W. 3/3-J is .Also not clear. Respondents have not produced their cash books or ledger accounts. The petitioner has not produced any receipt himself'. The onus was on the petitioner. In the circumstances it is difficult for this Court to presume that a sum of Rs. 5,000 out of the sum of Rs. 10,000 (Exh. P. W. 3/3-J) should be considered to be the share of the petitioner.
19. The next is the other sum of Rs. 1,00,000. The respondents 2 to admitted that this amount was in fact deposited in the Bank by the petitioner, vide Exh. P. W. 3/3-F. The petitioner has shown his possession of an equal amount on the same day as he had earlier received the . Same sum of Rs.
1,00,000 in cash, vide Exh. P. W. 2/1. The petitioner thus shall deemed to have discharged his initial onus and it fell for the respondent to show that the said sum of Rs. 1,00,000 was in fact that of the company and had been handed over to the petitioner in order to deposit the same on its behalf.
20. The case of respondents 2 to 4 is that the Company had receive a sum of Rs. 90,000 from Mr. Muhammad Saleem and Rs. 25,000 from Mr. Lone and had given a sum of Rs. 1,00,000, out of it, to the petitioner to deposit in the Company's account. The Company has produced no receipt of it. It has not produced any other document supporting the alleged receipt of the two amounts from the two respondents. The sum of Rs. 90,000 at least is a large amount and Muhammad Saleem should have shown wherefrom he got this amount. The best evidence that they could 'produce was the Company's accounts to that effect but neither any ledger nor cash-book have been produced.
21. Even, otherwise, the statements given by the 3 R. Ws. Are contradictory of each other. According to R. W. 1 Mr. Lone had asked him to hand over one lac rupees to Mr. Amanullah Khan so that he may deposit the same along with his own share capital in the Bank. Consequently, he gave away that amount to him without taking any receipt. In his cross --examination he stated that he gave the amount to Mr. Lone who further gave it to the petitioner. Amanullah Lone R. W. 2 stated that he got the sum of Rs. 1,00,000 from Mr. Butt (R. W. 1) and handed over to the petitioner. In his cross- examination he stated `The amount in question (Rs. 1.,00,000) was handed over factually by Mr. Butt under my instructions'. Both these witnesses stated that Mr. Saleem was also present at the relevant time. Mr. Saleem as R. W. 3 stated that it was Mr. Butt who handed over the money to the petitioner.
22. The above discussion makes it quite clear that the respondent could not prove that the sum of Rs. 1,00,000 came from the Company. They did not produce the books of the Company to support their contention. C That would have been the best evidence they could produce and the omission would attract adverse inference in view of Gangadara Ayyar v. Subramania Sasirigal (1) and Maharajadhiraj Sir Ramesh war Singh v. Bajl Lal Pathak (2).
23. It was a question of a large sum of one lac of rupees and, therefore, the witnesses cannot be supposed to have forgotten who gave the amount to the petitioner. The very material contradiction in their statements would thus belie their position. In this view of the matter it stands proved on record that the petitioner did contribute a suns of Rs. 1,00,000 towards his share of the capital.
24. There is another important aspect of the matter requiring considera--tion. The petitioner stated-in para. 8 of his petition that he intimated to respondents 2 to 4 by registered letter dated 28th August, 1980, that the affairs of the respondent-Company were not being properly managed and E that statutory and legal obligations were not being complied with. He also referred in the same paragraph to the reply of respondent No. 2 sent on behalf of respondents 2 to 4 assuring the 'petitioner that they were full responsible for the affairs of the respondent-Company. In their written statements respondents 1 to 4 admitted the exchange ,of letters. They, however, added that it was explained to the petitioner that "his position as a deemed `subscriber' did not extend him any legal right in the Company and, therefore, be was not accommodated in the discussions of the meeting held on 22nd October, 1980." The respondents have not produced the alleged reply sent to the petitioner despite the fact that in their cross--examination of the- petitioner, they referred to the said letter dated 28th August, 1980 (Exh. P. W. 4/2). In fact the comments of that letter would have established the real position prevailing at that time. Admittedly, the relations of the parties got strained on the receipt of letter dated 23rd October, 1979 (Exh. P. W. 4/1) sent by the Company to the petitioner. In the circumstances 1 take it that the right of the petitioner as a shareholder and the fact that he had subscribed to the capital was not in dispute till 28th August, 1980, otherwise the petitioner had no occasion to write such a letter.
(1) AIR 1949 FC 88(2) 114 I C 592 (P C)
25. The next question arising in the case is whether any relief can be granted to the petitioner under the present application which prays for an order for the winding up of the Company. The learned counsel has not been able to refer to any legal provision or case-law in support of his plea that an omission of a nature as stated above can attract such an action. Prima facie, it is a case for rectification of the register of shareholders.1 The learned counsel then referred to section 170(1) of the Companies AM to pray that the Court is empowered to grant any relief other than the winding, up also in such an application. He particularly relies on the words 'on hearing the petition, the Court may dismiss it with or without costs, or adjourn the bearing conditionally or unconditionally, or make an interim order or any other order that it deems just . . . .' *(Underlining is provided).
There is not much case-law on the above phrase as it seems not to have been noticed and considered much by Courts. None of the learned counsel, therefore, could assist much on the point.
In Re-Lathem (deceased) (1) the Court held that the words 'or other persons' in the phrase 'trustee, guardian, committee or other person' meant a person in similar position to 'a trustee etc. And could not refer to a person beneficially interested. It was held in Hood-Barrs v. !. R. C. (2) that the specific words must apply not to different objects of a widely differing character but to something which can .Be called a class or kind of objects. In N. A. L. G. O. v. Bolton Coop. (3) Lord Simon L. C. Referred to a definition of 'workman' as any person who has entered into a works under a contract with an employer whether the contract be by way of manual labour, clerical work 'or otherwise' and said "The use of the words 'otherwise' does not bring into play, the ejusdem principle : for 'manual labour' and 'clerical work' do not belong to a single genus". The House of Lords rejected the plea that the words 'or elsewhere' in the clause 'whether second marriage shall have taken place in England or Ireland or elsewhere' did not apply to a second marriage in the United States of America but to the one contracted elsewhere within U. K. Or King's Dominions. See R. v. Russel (4).
26. The connotation of the above provision, in the light of the above) case-law, appears to be that the phrase 'or any other order' must fall within either one of the categories there created or should have any connection o nexus with any of them. In the case in hand the provision referred to above speaks of the types of reliefs that may be given in or during a proceeding. The Court can dismiss the petition, allow the relief prayed for or may give an interim relief or pass any other order that it deems fit. Thus some relief short of full relief is permissible. The petitioner here has been completely ousted. He had to establish that (i) he was a shareholder, (ii) the conducts of the company was such that it merits being wound up. He has been able) to prove the first and not the second. A relief to that extent can thus be l given to him.
(1) (1962) Ch. 616(2) (1946) 2 All E R 768
(3) (1943) A C 166(4) (1901) A C 446 In view of the above, I would grant the petitioner a relief as contemplated by section 38 of the Companies Act and direct the respondent-Company to enter the name of the petitioner as a share-holder, having subscribed a sum of Rs. 1,00,000 towards the share capital and treat him a share-holder accordingly. The respondents shall also pay the costs of the petitioners.