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1984 DIGILAW 58 (PAT)

Rupak Ltd. v. Registrar Of Companies

1984-02-14

B.P.JHA, S.SARWAR ALI

body1984
Judgment B.P.Jha, J. 1. This letters patent appeal arises out of a judgment dated November 8, 1974, in Company Case No. 3 of 1971, passed by a learned single judge. 2. The short question for decision is : " Whether Rs. 2,50,000 received by Rupak Co. Ltd. (hereinafter referred to as "the company ") is the share capital or not ?" 3. The appellant, Rupak company, is registered under the Companies Act, 1956 . There were two groups of shareholders in the aforesaid company, namely, Misra group and Singh group. Misra group had genuine shares of Rs. 1,00,000. Misra group also paid Rs. 2,50,000 to the company. It is this amount which is under dispute. In this connection Money Suit No. 35 of 1954 was filed by Misra group. The company also filed counter-title Suit No. 55 of 1933. All these suits were tried together by Sri T.P. Choudhary, Additional Subordinate judge, Patna. In that case, it has been held that Rs. 2,50,000 was received by the company. No shares were issued in respect of Rs. 2,50,000. The learned Subordinate Judge held that in view of the fact that this amount was received by the company, the company should return this J amount to Misra group with interest. According to the finding of the civil court, it was clear that no share capital was issued fey the company in respect of Rs. 2,50,000. 4. In this connection, it is necessary to mention that up to November 30, 1964, the company used to show Rs. 8,60,047.10 as subscribed capital in the balance-sheet. Since 1965 the share capital of the company was reduced, to Rs. 6,10,047.10. In this circumstance, the Registrar, under the Companies Act, directed the company to take necessary steps under the provisions of Sections 100 to 103 of the Companies Act, 1956 (hereinafter referred to as " the Act"), because the subscribed capital has been reduced from Rs. 8,60,047.10 to Rs. 6/10,047.10. It is against this order that the company filed an application under Sec.155 of the "Act for rectification of the share register. The learned Company Judge rejected the petition; filed under Sec.155 of the Act on the ground that the reduction by Rs. 2,50,000 odd in the subscribed capital was the share capital. 8,60,047.10 to Rs. 6/10,047.10. It is against this order that the company filed an application under Sec.155 of the "Act for rectification of the share register. The learned Company Judge rejected the petition; filed under Sec.155 of the Act on the ground that the reduction by Rs. 2,50,000 odd in the subscribed capital was the share capital. With due respect, I may say that the learned company judge did not apply his mind to the judgment passed by the Subordinate Judge in T.S. Nos. 55 of 1953, 35 of 1954 and analogous cases. In the judgment, the learned Subordinate Judge held as follows:- -(a) That Rs. 2,50;000 was received by the company not as share capital; (b) That Rs. 2,50,000 was received by the company. It is on the basis of these findings the learned subordinate judge directed the company to return Rs. 2,50,000 plus interest to Misra group. On the basis of these facts the learned Subordinate Judge held that the company did not receivers. 2,50,000 as share capital. If it is so, then there is no need to apply for reduction of shares under Sec.100(1) of the Act. Sec.100(1) provides that the company should file an application for the purpose of reduction of the share capital and not for any other purpose. 5 Learned company judge overlooked the compromise petition which was filed in the winding up proceeding in Company Case No. 1 of 1959. In that case, a compromise petition was filed before the learned company judge. In paragraphs 3 and 7 of the compromise petition, the company was directed to pay a sum of Rs. 3,58,000 with interest. The sum of Rs. 3,58,000 included Rs. 2,50,000 plus interest. It is better to quote term (VII) : "(VII) The decree-holders in Money Suits Nos. 34 and 35 of 1954 have agreed to accept a sum of Rs. 3,58,000 with interest at 6% per annum in complete satisfaction of the decrees and to remit the balance on the following terms and conditions:- -.." 6 On the basis of the compromise petition, F.A. No. 306 of 1958 and analogous cases filed by the company were withdrawn. The winding up proceeding in Company Case No. 1 of 1959 was also withdrawn by virtue of the compromise petition. It is, therefore, clear that by virtue of the compromise petition, the amount of Rs. 2,50,000 with interest was paid to Misra group. The winding up proceeding in Company Case No. 1 of 1959 was also withdrawn by virtue of the compromise petition. It is, therefore, clear that by virtue of the compromise petition, the amount of Rs. 2,50,000 with interest was paid to Misra group. It was not treated as share capital of the company. If it is so, there was no need for the company to apply for reduction in the subscribed capital. 7. Learned counsel for the company states that it is on his own admission that the company ought to have filed an application under Sec.100(1) of the Act. The reply filed by the company in this connection was also referred to. In that reply the company agreed to follow the procedure as laid down under Section 100(1) of the Act. It is on the basis of this admission the learned Registrar says that the company is bound by the admission made in that petition. Learned counsel for the appellant contends that the admission of law is not binding on the client. In other words, the learned counsel for the appellant says that the admission of law made by a company is not binding upon the company unless it is an admission of fact. In this connection reference was made to a decision in Kalidas Bhanjibhai V/s. State of Bombay, AIR 1955 SC 62 . In the said decision it has been held that a partys opinion about the legal effect of those facts is of no consequence in construing the section. It is further held that no estoppel has arisen. Considering all these facts, I am of the opinion that the admission of law is not correct. In my opinion, the client is not bound by an admission of law. A party is bound so far as an admission of fact is concerned. Therefore, the statement made in the reply to the case of the Registrar is based upon wrong application of law by the company. 8. I am, therefore, of the opinion that no application lay under Sec.100(1) of the Act. For the reasons given above, the appellant was only entitled to file an application under Sec.155 of the Act for rectification in the share register and the same is allowed. 9. In the result, the appeal is allowed, but without costs. S.Sarwar Ali, J. 10 I agree.