Membership under section 399 cannot be rejected at the threshold where shareholding and locus standi depend on disputed facts.

A company petition should not be dismissed at the threshold for alleged want of locus standi or failure to satisfy the shareholding requirement under section 399 of the Companies Act, 1956 where membership is itself disputed on the record. The petitioner relied on the memorandum and articles showing him as a subscriber, with section 41 treating subscribers as members on incorporation. The Board noted conflicting facts about payment for shares, missing records, and the absence of a call notice demanding call money. Because eligibility under sections 397 and 398 depended on disputed factual questions, the issue could not be decided summarily and required enquiry. The request for threshold dismissal was therefore rejected and the petition was allowed to continue.

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Issues: Whether the company petition was liable to be dismissed at the threshold for want of locus standi and non-compliance with the shareholding requirement under section 399 of the Companies Act, 1956.

Analysis: The application sought dismissal on the footing that the petitioner had not produced records to establish payment for the claimed shares or his status as a member entitled to invoke sections 397 and 398. The petitioner relied on the memorandum and articles showing him as one of the subscribers to the memorandum and on the statutory consequence under section 41 that subscribers become members on incorporation. The order also noted prior proceedings and findings indicating serious disputes of fact regarding removal of records, non-production of documents by the applicants, and the absence of any call notice demanding payment of call money. In such circumstances, the question of membership and eligibility under section 399 could not be decided as a preliminary matter without enquiry into the disputed facts.

Conclusion: The application for dismissal of the company petition at the threshold was rejected, and the petition was permitted to proceed.

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