1944 (9) TMI 13 - HC - Companies Law

Shareholders' Rights: Dividend Disputes & Legal Standing

Scientific Apparatus & Chemical Works Ltd. Versus B. Joti Prasad

The High Court held that a joint stock company is not obligated to apportion dividends based on a private agreement between a vendor and a vendee. ... Dividend not to be paid except to registered shareholder Issues:1. Whether a joint stock company is liable to apportion dividend between a vendor and a vendee based on a private arrangement.2. Whether a vendee who has submitted to a decree can challenge the decree of the Court below.3. Whether the plaintiff is entitled to a decree against the company for the apportionment of dividend.Analysis:1. The main issue in this case was whether a joint stock company is obligated to apportion dividends between a vendor and a vendee based on a private arrangement. The plaintiff sold shares to the defendant, and after dividends were declared, the plaintiff claimed a proportionate amount based on a private agreement. The lower Court held in favor of the plaintiff, stating that the company had knowledge of the agreement and was liable. However, the High Court disagreed, emphasizing that companies typically pay dividends to the person registered in their books, as per the articles of association. The Court ruled that the company was not obligated to apportion the dividend between the vendor and the vendee based on a private agreement.2. Another issue raised was whether the vendee, who had submitted to the decree of the Court below, could challenge the decree. The High Court held that the vendee could not challenge the decree after submission. The Court examined the plaintiff's claim based on the Transfer of Property Act and a private agreement, ultimately upholding the decree against the vendee, who had no grounds for appeal.3. The plaintiff argued that without a decree against the company for the apportionment of dividends, he would face difficulties in claiming income-tax rebate. However, the High Court ruled that this issue did not warrant a decree against the company. Instead, the plaintiff could obtain necessary documents from the vendee to prove his entitlement to the income-tax rebate. The Court modified the decree, dismissing the plaintiff's suit against the company but upholding it against the vendee. The company was awarded costs in both Courts.In conclusion, the High Court held that the company was not liable to apportion dividends based on a private agreement, the vendee could not challenge the decree after submission, and the plaintiff's claim for a decree against the company was dismissed.