1957 (3) TMI 18 - HC - Companies Law

Shares re-issued after forfeiture not subject to return of allotment. Costs awarded.

Calcutta Stock Exchange Association Ltd., In re.

The court dismissed the application, ruling that the return of allotment under Section 75 of the Companies Act, 1956, does not apply to shares re-issued ... Return as to allotment Issues Involved:1. Obligation to file a return of allotment under Section 75 of the Companies Act, 1956.2. Interpretation of Section 75(5) of the Companies Act, 1956.3. The applicability of the principle expressio unius est exclusio alterius.4. The status of the applicant as a member of the Calcutta Stock Exchange Association Ltd.5. The legal implications of forfeiture and re-issue of shares.Detailed Analysis:1. Obligation to File a Return of Allotment Under Section 75 of the Companies Act, 1956:The applicant, a registered partnership firm, sought an order compelling the Calcutta Stock Exchange Association Ltd. to file a return of allotment for 70 forfeited shares that were re-issued and allotted. The application was based on Section 75 of the Companies Act, 1956, which mandates that whenever a company makes any allotment of its shares, it must file a return of the allotment with the Registrar within one month. The applicant argued that since the 70 shares were not forfeited for non-payment of calls, a return of allotment was obligatory under Section 75.2. Interpretation of Section 75(5) of the Companies Act, 1956:Section 75(5) states, 'Nothing in this section shall apply to the issue and allotment by a company of shares which under the provisions of its articles were forfeited for non-payment of calls.' The applicant contended that this exception should be narrowly construed to apply only to shares forfeited for non-payment of calls, implying that all other types of forfeiture would require a return of allotment. The court, however, interpreted this provision differently, stating that the exclusion of forfeiture for non-payment of calls implies the exclusion of all kinds of forfeiture from the operation of Section 75.3. Applicability of the Principle Expressio Unius Est Exclusio Alterius:The applicant's argument relied on the principle expressio unius est exclusio alterius, which suggests that the express mention of one thing excludes all others. The court noted that this principle has many limitations and exceptions. The court cited Lord Campbell and the learned editor of Broom's Legal Maxims to emphasize that statutory interpretation should align with the Legislature's intent, which is consonant with reason and sound discretion. The court concluded that the principle could not be applied in this case to infer that all other types of forfeiture require a return of allotment.4. Status of the Applicant as a Member of the Calcutta Stock Exchange Association Ltd.:The applicant claimed to be a member of the Calcutta Stock Exchange Association Ltd., although its membership was under dispute due to pending suits. Article 22 of the articles of association provides that a member declared a defaulter and failing to fulfill engagements within six months ceases to be a member. The applicant had obtained an injunction preventing the Association from taking steps against it until the suits were resolved. The court acknowledged that the applicant's share remained unforfeited due to the injunction, allowing the applicant to move the application as a member under Section 614 of the Companies Act.5. Legal Implications of Forfeiture and Re-issue of Shares:The court examined the nature of forfeiture and re-issue of shares, concluding that re-issue after forfeiture does not constitute an allotment as contemplated by Section 75. The court emphasized that allotment refers to the creation and division of new shares, not the re-issue of existing shares. The court cited various legal precedents and interpretations to support this view, including the observations of Harries C.J. and the jurisprudence of company law. The court also noted that the annual return filed under Section 159 of the Companies Act provides sufficient information about the company's share capital, making a return of allotment for re-issued shares unnecessary.Conclusion:The court dismissed the application, holding that the return of allotment under Section 75 of the Companies Act, 1956, does not apply to shares re-issued after forfeiture, regardless of the reason for forfeiture. The court awarded costs to the respondent.