TaxTMI 
TaxTMI 
1963 (5) TMI 30
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....he company under its articles. A reference to some of these articles is necessary before we proceed further. Article 21 of the articles of association of the company authorised its committee to expel or suspend a member in certain events. The present is not a case involving an exercise of power under this article. Articles 22, 24 and 27 are in these terms: " Article 22: Any member who has been declared a defaulter by reason of his failure to fulfil any engagement between himself and any other member or mrmbers find who fails to fulfil such engagement within six months from the date upon which ho has been so declared defaulter shall at the expiration of such period of six calendar months automatically cease to be a member. Article 24: Upon any member ceasing to be a member under the provisions of article 22 hereof and upon any resolution being passed by the committee expelling any member under the provisions of article 21 hereof or upon any member being adjudicated insolvent the share held by such member shall ipso facto be forfeited. Article 27 : Any share so forfeited shall be deemed to be the property of the Association, and the committee shall sell, reallot and otherwis....
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....s to it. As Chitty J. put it in In re Florence Land and Public Works Co. [1885] LR. 29 Ch. D 426: What is termed ' allotment ' is generally neither more nor less than the acceptance by the company of the offer to take shares. To take the common case, the offer is to take a certain number of shares, or such a less number of shares as may be allotted. That offer is accepted by the allotment either of the total number mentioned in me offer or a less number, to be taken by the person who made the offer. This constitutes a binding contract to take that number according to the offer and acceptance. To my mind there is no magic what ever in the term allotment as used in these circumstances. It is said that the allotment is an appropriation of a specific number of shares. It is an appropriation, not of specific shares, but of a certain number of shares. The process described by Chitty J. is very familiar in company law. Under the Act, a company having a share capital is required to state in its memorandum the amount of that capital and the division thereof into shares of a fixed amount: See section 13(4). This is what is called the authorised capital of the company. Then the company ....
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.... the issue of a share to a subscriber and the purchase of a share from aft existing shareholder is the difference between the creation and the transfer of a chose in action." It is beyond doubt from the authorities to which we have earlier referred, and there are many more which could be cited to show the same position, that in company law allotment means the appropriation out of the previously unappropriated capital of a company of a certain number of shares to a person. Till such allotment the shares do not exist as such. It is on allotment in this sense that the shares come into existence. Learned counsel for the appellant has not been able to cite any case where the word "allotment" has been used to describe a transaction with regard to an existing share, that is, a share previously brought into existence by appropriation to a person out of the authorised capital. In every case the words " allotment of shares " have been used to indicate the creation of shares by appropriation out of the unappropriated share capital to a particular person? We find no reason why the word " allotment" in section 75 should have a different sense. It is said that sub-section (5) of section 75 fu....
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....he forfeiture was valid was that on such forfeiture all that happened was that the right of the particular shareholder disappeared but the shape considered as a unit of issued capital continued to exist and was kept in suspense until another shareholder was found for it : see Naresh Chandra Sanyal v. Ramoni Kanta Ray [1945] 50 LJ. Ch. 827. We have to examine the present case on this basis. If, therefore, the shares which the company forfeited have to be considered as shares already created and as continuing in existence as such in spite of the forfeiture, obviously they could not be allotted, in the sense in which that word is understood in the company law as we have earlier stated. In Morrison v. Trustees, etc., Insurance Corporation [1898] 68 LJ. Ch. 11, the articles of the company gave power to forfeit shares for non-payment of calls and further provided that " any share so forfeited shall be deemed to be the property of the company and the directors may sell, reallot or otherwise dispose of the same in such manner as they think fit" It was held that the company could reissue the forfeited shares giving credit for the money already received in respect of them. The contention ....