Makhan Lal Jain and Anr. v. The Amrit Banaspati Co. Ltd. and Ors.
Makhan Lal Jain and Anr. v. The Amrit Banaspati Co. Ltd. and Ors.
AIR 1953 All 326
Facts:
The petitioners are two share-holders in the Amrit Banaspati Company Limited. They have made various allegations of mismanagement and foul play against the company, its Directors and Managing Agents. It is contended on behalf of the opposite parties that the requirements of Sub-section (3) of Section 153C have not been complied with. It is conceded by the petitioners that they do not hold one-tenth of the issued share capital of the company and, therefore, they do not fall under Clause (ii). They maintain that their case falls under the first part of Clause (i) inasmuch as they allege to have obtained the consent in writing of more than hundred share-holders.
What the petitioners did was to attach with the petition several sheets of papers which bear the signatures (together with addresses) of as many as 117 share-holders. Sometime afterwards the petitioners produced the consent in writing of 30 other shareholders. On the date of hearing, consent of 22 other share-holders was produced. In the cases of second and third sets of share-holders an endorsement was made at the top of each sheet to the effect that the share-holders were expressing their approval of the application filed by the petitioners in this Court. But no such endorsement is to be found in the case of 117 share-holders whose signatures were filed along with the petition. Looking at the sheets themselves, one cannot ascertain why the signatures were affixed. The petitioners later submitted an affidavit to the effect that consent was obtained from the 117 share-holders.
Issue:
Whether, supplemented by the affidavit, the sheets containing the signatures of 117 shareholders, contain the “consent in writing” of the said share-holders?
Law Points
“(3) No application under Sub-section (1) shall be made by any member, unless–
(a) in the case of a company having a share capital, the member complaining–
(i) has obtained the consent in writing of not less than one hundred in number of the members of the company or not less than one-tenth in number of the members, whichever is less, or
(ii) holds not less than one-tenth of the issued share capital of the company upon which all calls and other sums due have been paid; and
(b) ………………”
Held
The expression “consent in writing” obviously implies that the writing itself should indicate that the persons who have affixed their signatures have applied their minds to the question before them and have given their consent to certain action being taken. If a petitioner obtains another share-holder’s signature on a blank piece of paper and wishes to supplement it by an affidavit or an oral sworn statement of himself or his agent, the signature on the blank paper does not become consent in writing. The signature cannot amount to “consent in writing”, because the document on which the signature is to be found does not, by itself, indicate why the signature was affixed. The law requires that the consent should be in writing, i. e., in the form of a document. Therefore, the document itself should prove that the consent has been given. No evidence, either by way of affidavit or of oral sworn statement in Court, can be given to prove that such, consent was given. I am consequently of the opinion that in obtaining the signatures of 117 share-holders on blank sheets the petitioners did not secure the consent in writing of the said share-holders.
The consent of the remaining two slots of share-holders, totalling 52 in all, will not be of help to the petitioners. Their consent also does not comply with the requirements of the
said Sub-section (3). The material words in that sub-section are:
“No application under Sub-section (1) shall be made by any member, unless . . . the member complaining has obtained the consent in writing. …”
The obtaining of the consent is a condition precedent to the making of the petition. In other words, consent must have been obtained prior to the presentation of the application. The two sets of share-holders, who subsequently gave their consent, have clearly indicated in the document embodying their consent that the petition had already been filed and that they were expressing their approval thereof. Their subsequent con-sent is not a valid consent under Subsection (3).