Service by post presumption upheld, so share forfeiture valid where authorised notices were issued and shareholder participated.

Forfeiture of the appellants' shares was held valid because board resolutions authorised notices, the statutory mode of service by post was observed or properly presumed, and defects in particulars treated as directory did not vitiate forfeiture where the shareholder had knowledge or participated in corporate decisions; consequently notices were deemed validly served and received. The claim for damages failed because the factual findings upholding the procedure and the petitioners' delay and participation were not open to reversal on appeal, so no relief for alleged illegal forfeiture was granted.

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Issues: (i) Whether the forfeiture of the appellants' shares by the company complied with articles 39 to 42 of the articles of association and was therefore valid; (ii) Whether the appellants were entitled to recover damages for alleged illegal forfeiture.

Issue (i): Whether the procedure for forfeiture prescribed by articles 39 to 42 was followed and whether notices (including exhibit B-3) were validly served.

Analysis: The Court examined the board resolutions, the despatch register entries and correspondence, and accepted the company judge's finding that the notice (exhibit B-3) was posted and, in the ordinary course of business, to be presumed received. The Court applied Section 53 of the Companies Act on service by post and reviewed authorities distinguishing mandatory and directory requisites of articles governing forfeiture, holding that particulars such as time and place of payment may be directory while intimation of arrears and authority for forfeiture are mandatory. The board's resolutions fixed time and authorised notices; prior notices and adjustments of payments showed knowledge of the arrears; the first petitioner, a director, participated in relevant resolutions and communications.

Conclusion: The forfeiture complied with articles 39 to 42; the notices were validly issued and received; the forfeiture is valid.

Issue (ii): Whether the appellants are entitled to damages for the alleged illegal forfeiture.

Analysis: Having concluded the forfeiture was valid and noting the petitioners' delay and participation in board decisions, the Court found no basis for damages; the factual findings of the company judge were upheld as not being open to reversal on the appeal grounds available under Section 155 read with section 100, Civil Procedure Code.

Conclusion: The appellants are not entitled to damages; the claim for Rs. 40,000 is dismissed.

Final Conclusion: The appeal is without merit and is dismissed; the company's forfeiture of the shares stands and no relief for damages is granted to the appellants.

Ratio Decidendi: A forfeiture under company articles will be upheld where the board resolutions authorise the notices, the statutory mode of service is observed or properly presumed under Section 53, and any directory defects do not vitiate the forfeiture especially where the shareholder had knowledge or participated in the relevant corporate decisions.

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