THE PUBLIC PASSENGER SERVICE LIMITED v. M. A. KHADER AND TWO OTHERS

the respondents did not pay the call In spite of this notice, monies, and on February 11, 1957, the board of directors passed a resolution under Art. 30 forfeiting the shares held by them. F On November 8, 1957, the respondents filed two separate appli cations under s. 155 of the Indian Companies Act, 1956 in the High Court of Madras praying that the forfeitures be set aside and the necessary rectifications be made in the share register of the Company. Ramachandra Ayyar, J. allowed the applications, and passed conditional orders for rectification of the register, and G his decision was affirmed by the appellate Court. The Courts below held that in the absence of particulars of interest and expenses, the notice dated January 20, 1957 was defective and the forfeiture is invalid. The Company now appeals to this Court by on a certificate granted by the High Court. H In all standard articles of a company, the regulations relating to calls provide for payment of interest on the unpaid call money at a certain rate from the date appointed for its payment up to the time of actual payment, see regulation 14 of Table A in the ... ~- t· I 686 S0PREME COURT REPORTS [1966] l S.C.R. In the light of Art. 29 read with similar first Schedule tc;> the Indian Companies Act, 1913, regulation 16 of Table A in tlie-first Schedule to the Indian Companies Act, 1956 and Palmer's Company Precedents, 17th Edn., Part I, p. 437 and the ,regulations relating to calls are followed by regulations relating to forfeiture like Arts. 29 lilld 30 of the appellant Com r_;:gµlations pany. relating to calls, we would have no difficulty in holding that the notice dated January 20, 1957 required payment of interest on the call money from the date appointed for the payment there- of, that is to say, January 19, 1957 up to the time of the actual payment. Unfortunately, all the regulations of the Company relating to payment of calls have not been printed in the paper book, and in the present state of the record, we express no opinion on the question whether the notice is defective in respect of the demand for interest. A B c But we agree with the High Court that the notice is defective in respect of the demand for expenses. The amount of expenses incurred by the Company by reason of the non-payment was not D disclosed. The respondents were not informed how much they should pay on account· of the expenses. The object of the notice under Art. 2.9 is to give the shareholder an opportu.nity for pay ment of the call money, interest and expenses. The notice under Art. 30 must disclose to the shareholder presumably conversant with the Articles sufficient information from which he may know with certainty the amount which he should pay in order to !lvoid the forfeiture. In the absence of particulars of the expenses, the respondents were not in a position to know the precise amount which they were required to pay on account of the expenses. A proper notice under Art. 29 is a condition precedent to forfeiture under Art. 30. Here, the notice under Art. 29 is defective, and the condition precedent is not complied with. The slight defect in the notice invalidates it and is fatal to the forfeiture. The Courts below, therefore, rightly declared that the forfeiture was invalid. E F therefrom. There Section 155(1)(a)(ii) of the Indian Companies Act allows rectification of the share register if the name of any person after having been entered in the register is, without sufficient cause, omitted omission of the name of the shareholder from the register, where the omission is due to an invalid forfeiture of his shares, and on finding that the forfeiture is invalid, the Court has ample juris- H diction under s. 155 to order rectificat'on of the register. The Hi.l!h Court said that the shareholder may approach the Court under s. 155 if he has sufficient cause. This mode of expression is no sufficient cause G r r J & ) P. P. SERVICE v. KHADER (Bachmvat, J.) 687 A was rightly criticised by counsel for the appellant. The under s. 155(1)(a)(ii) is not whether the shareholder has suflicient cause but whether his name has been omitted from the register without sufficient cause. As the forfeiture is invalid, the names of the respondents were omitted from the share register without suilicient cause, and the jurisdiction of the Court under s. 155 is attracted. Counsel for the appellant contended that the point as to the invalidity of the notice dated January 20, 1957 was not open to the respondents in the absence of any pleading on this point. In the affidavit in support of the application, the respondents pleaded that the steps prescribed before there can be a forfeiture, have not been complied with. No further particulars were given, but the contention as to the invalidity of the :iotice dated January 20, 1957 was pointedly raised in the argument in the first Court. The contention was allowed to be raised without sny objection. Had the objection been then raised, the Court might have allowed the respondents to file another affidavit. The appellant cannot now complain that the pleadings were vague. B C D F E other shareholders filed Application No. 119 of 1957 in We may now conveniently refer to certain events which happened after January 2, 1957 when the directors resolved to make the call and February 11, 1957 when the shares were for feited. On January 18, 1957, M. A. Jabbar, M. A. Khadir and Madras High Court praying for reliefs under ss. 402 and 237 of the Indian Companies Act, 1956, and obtained an interim order directing stay of collection of monies pursuant to the notice dated January 3, 1957. The stay order was communicated the directors on January 21, 1957 after the notice of the intended forfeiture dated January 20, 1957 was issued. On January restrain 30. 1957, the Court passed a modified interim order ing the forfeiture of the shares, and directed M. A. Jabbar to pay the call money into Court within one week. The call money was not paid into Court. and on February 8, 1957, the Court vacated the stay order. Application No. 119 of 1957 was even- G · tually dismissed on April 10, 1957. Counsel for the appellant contended that (1) bv reason of the aforesaid proceedings the respondents waived anct abandoned their right to challenge forfeiture: (2) the order dated Januarv 30, 1957 substituted a fresh notice of intended forfeiture Pnder Art. 29 in lieu of the orfofoal notice dated January 20. 1957 and in the ahsence of H comoliance with this o•der. ·the forfeitnre is valid. Neither of these contentions was raised in the Courts below. We find noth ing in the proceedings in Application No. 119 of 1957 688 SUPllJ!MJI CO'UIT REPORTS (1966] I S.C.R. which we can infer a waiver or abandonment by tile respondents of their right to challenge the validity of the notice dated Janu ary 20, 1957 and the subsequent forfeiture. We also fail to sec how the order of the Court dated January 30, 1957 can amount to a notice under Art. 29. TI1e onlv notice under Art. 29 is the one dated January 20. 1957, and a~ that notice is ddective, the forfeiture is invalid. A B Counsel for the appellant contended that the relief under s. 155 is discretionary, and the Court should have refused relief in the exercise of its discretion. Now, where by reason of its com plexity or otherwise the matter can more convenientlv be decided in a suit, the Court may refuse relief under s. I 55 and relegate the parties to a suit. But the point a" to the invalidity of the notice C dated January 20, 1957 could well be decided summarily, and the Courts below rightly decided to give relief in the exercise of the d:scretionary jurisdiction under s. 155. th~ notice was defective and the forfeiture was in•:alid, the Court could not arbitrarily refuse rc!ief to the respondents. !-ia;·iag, found D interests of relied upon Counsel for the appellant points out that the respondents are the trade rivals of the appellant and are anxious to cripple its affairs, and the appellate Courc recorded the finding that the respondents were acting ma/a fide and prejudicially to the appc!J:mt and their condi:ct in laking various proceedings against the appeliant is rcprehcnsihlc. Counsel equity well-known maxim of equity that "he who comes must come with cle~n hand,". and contencfcd that Court.~ below should have dismiso; ed the application' as the respondents did not come with cl~:in hands. This contention must be rejected for several reasons. The respondents are not seeking equitable relief against forfeiture. They arc asserting ~heir lc~al right the ':haccs on the gro!ind that the forfeiture is invalid, and they continue to he the legal owners of the share<. Secondly, maxim does not mean- that every improper conduct of the appli cant discntitles h!m to equitable relief. The maxim may invoked \\·here the coric.luct con1plaincd of is unfair and unjust in rc'ation to the subject-matter of the litigation and the equity sued for. The unwarranted proceedings under ss. 402 and 237 of the Indian Companies Act. 1956 and other vexatious proceed in~< started hy the respondents ha,·e no relation to the invalidity of the forfeiture and the relief of rectification and are not valid .~rounds for refusin'.! relief. In the result. the appeals arc Jismissed. There will be no order as to costs. Appeals dismissed. E ·, G H