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of <h1>Court dismisses application under Companies Act due to transfer in partnership name, not individual, despite maintainability under Section 38.</h1> <h3>Ganesh Das Ram Gopal Versus RG. Cotton Mills Co. Ltd.</h3> The court found that the application was maintainable under Section 38 of the Companies Act despite provisions in the Articles of Association. However, ... Company – Membership of and Transfer to Shares – Power to refuse registration and appeal against refusal Issues Involved:1. Maintainability of the application under Section 38 of the Companies Act in view of Article 42 of the Articles of Association.2. Maintainability of the application under Section 38 due to the transfer being made in the firm name of a partnership concern and not in the name of any person.3. Arbitrary or wanton refusal to register the transfer and whether the court should order registration under Section 38 of the Act.Issue-wise Detailed Analysis:Issue 1: Maintainability of the application under Section 38 of the Companies Act in view of Article 42 of the Articles of Association.The court examined whether the provisions of Article 42 of the Articles of Association rendered the application under Section 38 of the Companies Act non-maintainable. Article 42 states that 'The Directors, without assigning any reason for such refusal, may decline to register any transfer of shares whether it be in the name of a member or non-member.' The court found that Article 42 was not relevant for determining the maintainability of the application itself but might be relevant for considering the merits of the refusal to register the transfer (Issue 3). The court cited the case of Gresham Life Assurance Society; Ex parte Penney, In re [1873] 8 ch. 446, which held that directors are not bound to disclose reasons for rejecting a transferee if they have fairly considered the question. The court concluded that this case was relevant for Issue 3 but not for Issue 1. Therefore, the court found against the opposite party on Issue 1, determining that the application was maintainable under Section 38.Issue 2: Maintainability of the application under Section 38 due to the transfer being made in the firm name of a partnership concern and not in the name of any person.The court examined whether the application must fail because the transfer was made in the firm name of a partnership concern and not in the name of any individual. The court noted that Section 38 of the Companies Act refers to the entry of the names of persons in the Register of members of a company. The court reviewed various authorities, both English and Indian, to determine whether a firm could be considered a person for this purpose.The court referred to the case of Vagliano Anthracite Collieries, Ltd., In re [1910] 103 L.T. 211, where it was held that a firm is not a person in law distinct from the partners who compose the firm. The court also cited Indian cases such as Sheodoyal Khemka v. Joharmull Manmul [1924] 50 Cal. 349 and Brij Kishore Ram Sarup v. Sheo Charan Lal [1938] All. 100, which held that a partnership firm is not a person but merely a collective name for the individuals who are members of the partnership.The court considered the provisions of the Partnership Act and the Companies Act, noting that the Companies Act implies that only persons shall be recognized as members of a company. The court also reviewed the case of CIT, Madras v. M. Chidambaram Nadan [1923] AIR 1925 Mad. 1048, which held that the definition of 'person' in the General Clauses Act includes a firm. However, the court found that there was repugnancy in the Companies Act that precluded applying this definition.The court also examined the case of Land Credit Company of Ireland, In re [1873] 8 Ch. 831, generally referred to as Weikersheim's case, which suggested that shares could be registered in the name of a firm. However, the court found that this case did not establish a general proposition that shares in a company may be registered in the name of a firm.The court concluded that the Companies Act does not contemplate the registration of the name of a firm as the holder of its shares, but only individuals or other legal entities. Therefore, the court held that the application was not maintainable because the transfer was made in the firm name of a partnership concern and not in the name of any person.Issue 3: Arbitrary or wanton refusal to register the transfer and whether the court should order registration under Section 38 of the Act.Since the court found against the applicant on Issue 2, it did not proceed to consider Issue 3. The application was dismissed with costs.
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