1937 (12) TMI 6

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....n November 26, 1923. Each deferred share was of the face value of Rs. 100. A further sum of Rs. 20 was paid by the applicant, on account of the share purchased by him, on the allotment of that share on March 11, 1924. A sum of Rs. 75 on account of the share remained due and the first call with respect to a portion of that amount was made on May 25, 1927. The applicant however did not pay the first call or any calls that may have been subsequently made and Rs. 75 remained due from the applicant to the Company on account of the share. By an order dated July 16,1929, this Court approved a reconstruction scheme by virtue of which every deferred share was converted into four ordinary shares of Rs. 25 each with result that the deferred share p....

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....ectus was fraudulent the agreement entered into by him for the purchase of the share was void in law and is not binding on him. In my judgment there is no force in either of the grounds relied upon by the applicant. There is nothing on the record to show that the purchase of the deferred shares by the applicant or the other shareholders of the Company was subject to the condition that newspapers published by the Company would be supplied to them free of cost. On the other hand it was provided by the prospectus of the Company that 'A subscriber subscribing one deferred share will be entitled to get free of charge either of the two weekly newspapers........and will also be entitled to the surplus dividend after deducting the annual subs....

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....ht within a reasonable time. Any contract that is induced by undue influence, misrepresentation or fraud is voidable at the option of the party who was led to enter into the contract by reason of undue influence, misrepresentation Of fraud. This proposition, though applicable to contracts relating to the purchase of shares of a Company, is subject to certain other rules of law, one of those rules is that repudiation or the. avoidance of the contract by the shareholder must be within a reasonable time and before the commencement of proceedings for the winding up of the Company. The reason for this rule is not far to seek. If a shareholder does not within a reasonable time exercise option of avoiding the contract for the purchase of shares of....