LORD ATKINSON, LORD JAMES OF HEREFORD, LORD MACNAGHTEN, SIR ANDREW SCOBLE, SIR ARTHUR WILSON
body1908
DigiLaw.ai
Judgement Appeal from a decree of the High Court (January 22, 1907) reversing a decree of Scott J. (August 6, 1906). The Bank of Bombay acts as bankers for Government and was incorporated in the year 1876 under the Presidency Banks Act, 1876, and its constitution, powers, rights and, privileges, and the powers, rights, and privileges of its shareholders, are defined and described in the various provisions of that Act. At the date when that Act was passed, the Indian Companies Act, 1866, s. 81, gave to shareholders in other companies an express right to inspect the register of shareholders, but no such right was expressly or impliedly given by the Presidency Banks Act, 1876. Neither that Act nor the Companies Act of 1882 applies to the bank. The respondent acquired his one share in the bank on April 18 1906, and six weeks afterwards (namely, on June 1, 1906) he claimed as of right to be allowed to take a copy of the list of the banks shareholders with full addresses; and on June 4, 1906, he claimed as of right to be furnished with such a list. At these times it was alleged that the respondent was and continued to be engaged in other litigation with the bank, and that his brothers were engaged in litigation with one of the banks directors. The bank refused to acknowledge the respondents claim of right and requested the respondent to state for what purpose and under what authority he required and claimed to be furnished with a list of the shareholders. The respondent refused to comply with this request (beyond making allegations of irregularities, and a desire to communicate with the shareholders), and early in July, 1906, he filed his plaint, claiming (a) a declaration that he was entitled at all reasonable times to inspect the register of shareholders of the bank and to copy and take extracts there-from; (b) an order on the bank to give such inspection and to allow the respondent to take copies of and extracts from the said register ; and (c) other ancillary relief. The only evidence given was that of the respondent, who tendered himself for cross-examination.
The only evidence given was that of the respondent, who tendered himself for cross-examination. Scott J. was of opinion that there was no right of inspection by statute, and that by common law a right to inspect only existed where it was " necessary with reference to some specific dispute or question depending in which the parties applying were interested, and inspection would then only be granted to such extent as might be necessary for the particular occasion." He held that the plaintiff had disclosed nothing sufficiently definite to entitle him to claim inspection, and came to the conclusion that the plaintiff did not require inspection for the protection of any interest of his which was in jeopardy, or with reference to any particular dispute in which he was interested, but that he merely wished to cause annoyance to the bank officials. The High Court in appeal held that Scott J. had taken too narrow a view of the common law right of a corporator to inspect books of the Corporation, and that " a member of a corporation as such is entitled to the inspection of any of its documents, if he satisfies the Court that he is seeking inspection not from mere idle curiosity or for some speculative purpose, but that he had some reasonable and definite object in which he is interested, and for which the inspection is required, whether that definite object concerns or not any subject then actually in controversy or discussion." The High Court also found that the plaintiff had disclosed a reasonable and proper object for which ha desired inspection, that he was interested in the object, which itself was specific and definite, and that the object could not be attained without an inspection of the register of shareholders. It was pointed out that the claim was limited to the inspection of the said register alone, and that no suggestion had been made that an inspection of the said register would in any way harm or prejudice either the interests of the bank or the interests of the shareholders. The Court further held that the plaintiff had sufficiently intimated to the officials of the bank the object of his inspection, and that the refusal of the bank to allow inspection was improper.
The Court further held that the plaintiff had sufficiently intimated to the officials of the bank the object of his inspection, and that the refusal of the bank to allow inspection was improper. Levett, K.C., and Frank Russell, K.C., for the appellant bank, contended that its shareholders were not under the Presidency Banks Act (XI. of 1876) or the common law or otherwise entitled to in3pect the banks register of shareholders or to copy or take extracts therefrom. Reference was made to ss. 1, 4, 7, 17, 22, 37 (b), and 68 of that Act; also to the Indian Companies Acts X. of 1866, ss. 31 and 231, and VI. of 1882, ss. 55 and 256. The provisions of the last two Acts were expressly not applicable to the appellant bank. Even if the right existed as claimed it is subject to a discretionary power in the banks directors to disallow the exercise of that right if they bona fide think fit to do so; and the evidence shewed that the respondent did not require inspection for any reasonable purpose, that is, for the protection of any specific interest of his own. The decree appealed from is of too wide an application and is not limited to the actual occasion in question. Reference was made to Rex v. Merchant Tailors Co. (2 B. & Ad. 115.) and in In re Barton. (( 1861) 31 L. J. (N.S.) Q B. 62.) De Gruyther, K.C., and Kyffin, for the respondent, contended that in the circumstances and as of right he was entitled to the inspection of the register of shareholders as claimed by him. Reference was made to the Presidency Banks Act, 1876, ss. 24 and 31, to s. 11 of Act VI. of 1839, and s. 13, Act IV. of 1862; Mutter v. Eastern and Midlands Ry. Co. (( 1888) 38 Ch. P. 92.) It was contended that the Indian Companies Act gave a statutory right of inspection which was not taken away by the Presidency Banks Act. Independently of statute the common law right of inspection extended to cover a case of this kind. With regard to the directors discretion, they intimated to the respondent that they would allow inspection if satisfied that it was wanted for use in the respondents interest as shareholder.
Independently of statute the common law right of inspection extended to cover a case of this kind. With regard to the directors discretion, they intimated to the respondent that they would allow inspection if satisfied that it was wanted for use in the respondents interest as shareholder. The respondent replied that there had been gross irregularities in the management of the bank, in the election and conduct of the directors, and in other matters, and that to withhold inspection w7as to prevent communication with the shareholders with a view to concerted action. Levett, K.C., replied. The judgment of their Lordships was delivered by LORD ATKINSON. This is an appeal from a decree, dated January 22, 1907, pronounced by the High Court of Judicature at Bombay (sitting in appeal from its original civil jurisdiction), by which a decree, dated August 6, 1906, of the High Court (sitting in its ordinary original civil jurisdiction) was revered and set aside. By this latter decree the respondents acton was dismissed with costs. The respondent is a holder of one share in the appellant company, the Bank of Bombay, one of the banks incorporated in 1876 by the Indian statute of that year entitled the Presidency Banks Acts, 1876. It was suggested that the respondent purchased this share for the purpose of causing annoyance to the bank owing to the fact that some other litigation to which he was a party had been instituted against the bank and was still pending. There was no satisfactory evidence given to sustain this allegation. From the correspondence which took place between the respondent and the bank before the institution of this suit, it is, in the opinion of their Lordships, perfectly plain that the respondent claimed a right to inspect the register of the shareholders of the bank, and to be supplied with a list of such shareholders, as absolute and unqualified as is that conferred on the shareholders of joint stock companies in this country by s. 32 of the Companies Act, 1862, or in India by s. 31 of the Indian Companies Act, 1866, and s. 55 of the Indian Companies Act, 1882.
It must be taken that the appellants refused to recognize this absolute and unqualified right, or to comply with the claim based upon it, but in their letter of June 21, 1906, which conveyed this refusal, they informed the respondent that they would be pleased to furnish him with the list he asked for if he would satisfy them that he required it for use in his own interests as a shareholder. It is, therefore, clear that, before action brought, the qualified and restricted right to inspect and take extracts from the register contended for in argument on behalf of the respondent was never asserted, nor any limited demand based upon it ever made or refused. In the statement of claim the respondent, for the first time, endeavoured explicitly to base his right and title to inspect, copy, and take extracts from the register on some definite matters in which he himself was interested. He alleges therein that he had observed irregularities in the management of the bank, in the election of its board of directors, in the advancing of large sums of money to its directors, and in other matters, and that he desired an inspection of the register to enable him to communicate with the other shareholders and, if possible, obtain their assent to certain resolutions for the better management of the affairs of the bank and the removal of some of the directors, which he intended to propose at the general meeting of the shareholders to take place on August 9, 1906. But though this is the purpose for which, and the occasion on which, he claimed the right to inspect, copy, and take extracts from the register, the decree of the Court of Appeal contains no restriction whatever. It is couched in the widest terms.
But though this is the purpose for which, and the occasion on which, he claimed the right to inspect, copy, and take extracts from the register, the decree of the Court of Appeal contains no restriction whatever. It is couched in the widest terms. It ignores both the occasion and the purpose, and declares expressly that the respondent, as long as he is a share-holder of the bank, is entitled at all reasonable times to inspect the register of shareholders of the bank, and to copy and take extracts from the said register, and it then proceeds to order that the bank do give such inspection, and do allow the respondent, as long as he is a shareholder of the bank, to take copies of and extracts from the register, and then restrains the bank from preventing the respondent, as long as he is a shareholder of the bank, from having access at all reasonable times to the register for the purpose of inspection and perusal, and from preventing the respondent, as long as he is a shareholder of the Bank, from taking copies of and extracts from the register. This suit is in truth in its nature, though not in its form, somewhat of the character of an application for a writ of mandamus, and the principles regulating the issue of that prerogative writ should, their Lordships think, apply to a great extent to the granting of the relief prayed for in such a suit as this. One of these principles is this, that the writ will not be allowed to issue unless the applicant shews clearly that he has the specific legal right to enforce which he asks for the interference of the Court, that he has claimed to exercise that right and none other, and that his claim has been refused. Nothing less, therefore, than the absolute right claimed by the respondent in the correspondence above referred to could justify the decree appealed from in its present wide and unrestricted form. Now by s. 231 of the above-mentioned Indian Act of 1866 and s, 256 of the above-mentioned Act of 1882, the appellant bank is expressly exempted from the operation of each of those statutes. There is no statute conferring on the members of this corporation a right to inspect, copy, or take extracts from the register of its shareholders or any other document belonging to it.
There is no statute conferring on the members of this corporation a right to inspect, copy, or take extracts from the register of its shareholders or any other document belonging to it. The only right the respondent can have, therefore, against the bank in reference to such matters is that which at common law belongs to every member of a Corporation. Their Lordships have been referred to several authorities (Rex v. Wilts and Berk s Canal Co., (1835) 3 A. & E. 477; Reg. v Lewisham Union, [ 1897] 1 Q. B. 498.) in which the nature, extent, and measure of this right is explained and defined. The learned judges in the Bombay Court of Appeal have referred to others. The result of the authorities is summed up, in their Lordships view correctly, in Taylor on Evidence, 10th ed. 1906, vol. 2, par. 1495, in the words following " On the application of a member the Kings Bench Division will, in general, grant a rule for a limited inspection of the documents of the Corporation, if it be shewn that such inspection is requisite with reference either to an action then instituted or at least to some specific dispute or question depending in which the applicant is interested; but, even in this case, the inspection will be granted to such an extent only as may be necessary for the particular occasion. The rule was formerly sometimes laid down more broadly, and the language ascribed to the Court in one or two cases might almost lead to the inference that members of a Corporation have an absolute right, whenever they think fit, to inspect all papers belonging to the aggregate body. But any such doctrine is now exploded; and the privilege of inspection is now confined to cases where the member of the Corporation has in view some definite right or object of his own, and to those documents which would tend to illustrate such right or object." The strictness with which these limitations on the general and unqualified right of inspection are insisted on may be aptly illustrated by the case of Rex v. Merchant Tailors Co. (2 B. & Ad.
(2 B. & Ad. 115.) In that case certain members of a corporation claimed the right to inspect all the documents belonging to that body on the grounds (1.) that they had heard and believed the revenues of the corporation were misapplied through the malpractices of those who managed the corporations affairs; (2.) that the fines for admitting freemen and liverymen to the Corporation had been unnecessarily and improperly raised; (3.) that lavish expenditure had taken place (in some instances to the applicants own know-ledge) without the consent of the majority of the members of the Corporation ; (4.) that a clerk of the Corporation had, as the applicants had heard and believed, recently misappropriated funds of the company to a large amount, but that no accounts or information had been laid before the freemen or liverymen by which they could have ascertained the amount of the defalcations ; and that they (the applicants) could not ascertain, unless they were allowed to look at the documents mentioned, whether the corporate funds had been properly applied and accounted for or not. Every member of the Corporation in this case obviously had an interest in each of the matters mentioned, but none of the applicants had in any of them any special interest different from that of his fellow-members, nor had they any definite purpose or object in obtaining the inspection asked for other than (in the words of Littledale J.) to see " if by possibility the companys affairs may be better administered than they think they are at present." And the writ of mandamus was accordingly refused in this case. At the trial no witness other than the respondent was produced, and he was only tendered for cross-examination. He stated that he had heard through brokers that the bank had advanced six lakhs of rupees to three persons whom he named; that at elections the directors transferred shares to nominees who voted for them (a practice not in itself illegal); that there were now only seven directors, instead of the maximum nine; that he intended to bring in two respectable people, and that he had in the correspondence given his reasons for asking inspection.
It is clear on this evidence that the respondent had no special interest in any of the matters he complained of, or any interest other than, or different from, that of each member of the corporation, and that he had no definite right or object of his own to aid or serve in asking for inspection of the register, or right or object which the register would illustrate; but that, on the contrary, his object was similar to that of the applicants in Rex v. Merchant Tailors Co. (2B. & Ad. 115.), namely, to obtain the inspection in order to communicate with the shareholders with the view of securing their help in bringing about an improvement in the administration of the corporations affairs. Their Lordships think that on this point the case is covered by the authority of Rex v. Merchant Tailors Co. (1); that the respondent is not in law entitled to the extended right to which the decree declares him to be entitled; that the limited and qualified right contended for at the trial was never put forward, or insisted on, before action brought, or any claim based upon is ever refused ; and they are therefore of opinion that the decree appealed from is erroneous and should be reversed with costs, and the judgment and order of Scott J. restored. They will humbly advise His Majesty accordingly. The respondent must pay the costs of this appeal.