Inherent powers cannot bypass statutory remedies, and membership rights arise only on entry in the register of members.

A recall application against a sanctioned company scheme was stated to be untenable where the Companies Act provided a statutory appellate remedy, because inherent powers under Rule 9 cannot replace the prescribed challenge procedure. The text also states that membership rights arise only on entry in the register of members; where the applicant's name was never entered and the alleged transfer papers were unstamped, photocopied, and unsupported by the required share certificates, there was no enforceable right to notice of the meeting. On that basis, the omission of notice did not vitiate the scheme, and unsubstantiated fraud allegations did not justify recall.

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Issues: (i) Whether the application for recall of the sanctioned scheme was maintainable in view of the statutory appellate remedy under the Companies Act. (ii) Whether the applicant, whose name was not entered in the register of members and whose alleged share transfer documents were unstamped and incomplete, was entitled to notice of the meeting and relief on the plea of fraud.

Issue (i): Whether the application for recall of the sanctioned scheme was maintainable in view of the statutory appellate remedy under the Companies Act.

Analysis: The application invoked the Court's inherent powers under Rule 9 of the Company (Court) Rules. The scheme had already been sanctioned, and at the time of filing of the application the remedy contemplated by the Companies Act was available. Inherent powers are to be exercised only where no other adequate remedy exists and not to supplant the statutory procedure for challenging a sanctioned scheme.

Conclusion: The application was not maintainable on this ground and the contention was rejected.

Issue (ii): Whether the applicant, whose name was not entered in the register of members and whose alleged share transfer documents were unstamped and incomplete, was entitled to notice of the meeting and relief on the plea of fraud.

Analysis: Membership rights under the Companies Act arise only when the name is entered in the register of members. The evidence showed that the applicant's name was never entered in the register in respect of the disputed shares, and the transfer documents relied upon were unstamped, photocopied, and unsupported by the requisite share certificates. Compliance with the statutory requirements for transfer of shares was mandatory. As the applicant was not a registered member when notices for the meeting were issued, omission to notify him did not vitiate the scheme. The allegations of fraud were not substantiated on the record.

Conclusion: The applicant had no enforceable right to notice or to have the sanctioned scheme recalled on the ground of fraud.

Final Conclusion: The objections failed in law and on facts, and the sanctioned scheme was left undisturbed.

Ratio Decidendi: A person acquires enforceable membership rights against a company only upon entry in the register of members, and where a statutory appellate remedy exists, the Court's inherent powers cannot be used to bypass it for challenging a sanctioned scheme.

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