TaxTMI 
TaxTMI 
1970 (2) TMI 70
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....pany's registered office is situate, who would have the jurisdiction. The Magistrate rejected the contention and held that as the dividend had to be paid at the registered address of the respondent, which was at Meerut, it was the Meerut court which had the jurisdiction. The Sessions Judge, on appeal, upheld the order of the Magistrate and in revision the High Court, rejecting the appellant's contention, confirmed the view taken by the Magistrate and upheld by the Sessions Judge. The High Court in taking the aforesaid view observed : "The object behind the statute is to ensure prompt payment of a dividend to o shareholder. That payment may be made to him directly or it may be made by sending a cheque or warrant to his registered address. If a shareholder complains that he has not received payment, he is entitled to proceed against the company and its directors by filing a complaint at the place where he resides, because the law demands that payment should have been made to him there." The High Court's reasoning was clearly based on the premise that payment of dividend has to be made at the place where the shareholder resides, and, therefore, it is the Magistrate within whose ....
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....05 that although under sub-section (3) no dividend shall be payable except in cash, sub-section (5) authorises a company to pay the dividend by a cheque or a warrant. Therefore, dividend can be said to have been paid either when it is paid in cash or when a cheque or a warrant is sent through the. post directed to the registered address of the shareholder entitled to payment thereof. Indeed, section 207 itself lays down that the offence thereunder is committed when dividend is either not paid or a cheque or a warrant in respect thereof has not been posted within the time prescribed therefore. Once, therefore, a dividend warrant is posted at the registered address of the shareholder, dividend is deemed to have been paid. The section casts an obligation on the company to pay the dividend, which is declared to the shareholder entitled thereto within 42 days from its declaration. The offence under the section takes place when there is failure to pay or a cheque or a warrant therefore is not posted to the registered address of the shareholder, It will be noticed that the section makes the failure to post within the prescribed period and not the non-receipt of the warrant by the share....
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....um and of the articles. It is well established that the articles of association constitute a contract between a company and its members in respect of their ordinary rights as members (see Hickman v. Kent or Romney Marsh Sheep-Breeders' Association [1915] 1 Ch. 881 (Ch. D) and Beattie v. Beattie [1938] Ch. 708). If under a contract, a promise prescribes the manner in which the promise is to be performed, the promisor can perform the promise in the manner so prescribed (see section 50 of the Contract Act). Thus, if A desires B, who owes him Rs. 100 to send him a note for that amount by post, the debt is discharged as soon as B puts into the post a letter containing the note duly addressed to A (see illustration (d) to section 50 of the Contract Act). In this connection the decision in Thairlwall v. Great Northern Railway Co. [1910] 2 KB 509 shows how the problem is dealt with by the English courts. The plaintiff there, who held certain stocks of the defendant company, filed an action to recover dividend payable on those stocks. The defence was that the dividend was paid having been sent by post to the registered address of the plaintiff. The question was looked at from the point of v....
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....y stood discharged. If follows, therefore, that once a mode of payment of dividend is agreed to, namely, by posting a cheque or a warrant, the place where such posting is to be done is the place of performance and also the place of payment, as such performance in the manner agreed to is equivalent to payment and results in the discharge of the obligation. It is clear from section 205(5) that the company could pay dividend either in cash or by posting a cheque or a warrant at the registered address of the respondent. Article 132 of the articles of association also authorises the company to pay dividend either in cash or by posting a cheque or a warrant to the shareholder at his registered address. The effect of article 132 is that when a dividend warrant is posted at the registered address of the shareholder that would be equivalent to payment. Once a warrant is so posted the company is deemed to have paid and discharged its obligation. As aforesaid, the articles of association constitute an agreement between the company and the shareholders, and the latter was entitled to the payment of dividend in the manner laid down in the articles and in that manner alone. Article 132 thu....