The three hundis were honoured on May 29, 1946.
Narayandas obtained from Loya and Parulekar written undertakings dated December 27, 1951 for the purchase of 800 and 500 shares respectively.
71 in the name of Ramnath was opened in the books of the Company, and Ramnath obtained the sanctioned overdraft by a cheque dated June 27, 1946 for Rs.
He also suggested that he or Ramnath did number repay any moneys out of their own pocket, and all repayments in the accounts were made out of the moneys received by him from the Company.
On that date, both accounts were closed, and a new loan account No.
executed in favour of Narayandas two letters dated December 27, 1951, whereby Parulekar agreed to buy from him 500 shares and Loya agreed to buy from him 800 shares.
Civil Appeal No.
802 of 1962 arises out of this claim.
25,000, Rs.
Jivanbai dealt with the shares on the footing that they.
At the trial, the Company did number examine either Loya or Parulekar.
1,500/ on January 2, 1951.
by the advances to Ramnath.
In respect of this loan, a separate loan account was opened in the books of the Company.
the shares, and in view of this understanding, they subsequently.
The directors of the Company at a meeting held on June 8, 1946 resolved to give an overdraft of Rs.
12,500 drawn by Narayandas in favour of the Company The meeting of May 25, 1946 was attended by three directors, Murlidhar Loya, D. R,, Nayak and Narayandas.
22,964 13 0 due from them in respect of their loan account and the promissory numbere dated January 6, 1051.
By letter dated June 28, 1954, Narayandas called upon Parulekar to fulfil his undertaking for the purchase of 500 shares.
the shares some of the shares.were transferred to third parties under transfer deeds executed by Jivanbai, and the sale proceeds were credited to the loan account of Narayandas Jivanbai received from the Company all the 1000 shares allotted to her and executed a receipt dated February 25, 1953.
20,000/ .
819, 820 of 1955.
1,00,000/ on December 27, 1951 and Rs.
12,500 and Rs.
819 of 1955 preferred.
valued at Rs.
6/184 in his name was opened, in the books Of the Company.
820 of 1955 preferred by the Company, the High Court decreed the suit.
Civil Appeal No.
In view of s. 277 1 of the Indian Companies Act, 1913, the Company was unable to carry on business unless the subscribed capital was number less than half the authorised capital.
12,500, Rs.
9, Ramnath repaid Rs.
Purshottam Trikamdas, V.J. Jhaveri and S.N. Andley for the appellants in both the appeals .
4,198 8 0 on December 29, 195.1, and as a result of the last payment, the account was closed.
9 with a debit of Rs.
1,00,000/ , a letter of pledge and trust receipt in respect of cloth, saris etc.,
The above sum of.
60,000 against his promissory numbere, and a separate loan account No.
On behalf of the appellants, Mr. Purushottam Tricamdas companytended that the allotment of the 2000 shares and the several loans in the names of Ramnath and Narayandas were number genuine transactions, and that the parties did number intend that the allottees would be the holders of the shares or that Narayandas and Ramnath would be liable to repay the loans.
It may be that Loya and Parulekar gave some understanding to Narayandas with regard to the disposal of.
1/18 was opened in his name in the books of the Company.
On April 23, 1955, the trial Court dismissed the suit, but in First Appeal No.
Narayandas swore that it was agreed between him, Parulekar and Loya that he would numberinally take the 2000 shares which would be finally sold to others and he would be out of liability and he and Ramnath would number repay the loans number take any benefit thereunder.
In his loanaccount No.
1,00,000/ from the Company.
65,743 6 6 and in his overdraft account for Rs.
All these circumstances prove that the allotment of the 2000 shares was intended to be operative and the allottees were intended to be the holders of the shares.
At a meeting held on May 25, 1946, the board of directors of the Company allotted 500 shares to Goverjabai, 500 shares to Kamalabai and 1000 shares to Jivanbai against three separate applications for shares signed by them.
There is reason to believe that the subscription of the 2000 shares was financed.,
Jivanbai is the mother of Narayandas and Ramnath Goverjabai is the wife of Narayandas, and Kamalabai is the wife of Ramnath.
78 of 1954 in the Court of the Civil Judge, Senior Division, Poona against Narayandas for the recovery of, Rs.
801 and 802 of 1962.
25,000 in respect of the shares of Goverjabai, Kamalabai and Jivanbai were paid to the Company on June 22, June 28 and June 29 respectively.
6/184 and the promissory numbere dated December 27, 1951.
On May 28, 1946, Ramnath obtained from the Company the loan of Rs.
A separate overdraft account L.A. C No.
18,500/ on December 29, 1950 and Rs.
25,000.
CIVIL APPELLATE JURISDICTION Civil Appeal Nos.
At the same time, on January 6, 1951, the Company gave a new loan of Rs.
Ramnath Shriram Somani is his brother.
On March 18, 1954, the Company instituted Special Suit No.
109,099 14 4 due from him in respect of the loan account No.
were the owners of.
39 of 1954 in the Court of the Civil Judge, Senior Division of Poona, against Ramkisan Ramratan Somani and Ramnath for the recovery of Rs.
It is to be numbericed that the plea that the allotment of the 2000 shares was number intended to be operative, was number sufficiently raised in the pleadings.
750 4 0 in the overdraft account towards interest on December 12, 1946 and Rs.
On December 28, 1948, Ramnath was indebted to the Company in his loan account for Rs.
1,00,000/ was paid on behalf of Ramnath by Narayandas, who on the same date obtained a loan of Rs.
On the same date, Narayandas executed a promissory numbere for the sum of Rs.
The Reserve Bank of India was pressing the Company to take steps in respect of the advances to Ramnath.
In spite of demands, the Company was unable to realise its dues in respect of the outstanding loans.
801 of 1962 arises out of this claim.
Narayandas pleaded in his written statement that at the time of the purchase of the shares, Loya and Parulekar gave him and Ramnath the assurance that the sum of Rs.
But these assurances, if any, were given to Narayandas by Parulekar and Loya in their individual capacity and number as directorS, of the Company.
At that meeting, the directors also sanctioned a loan of Rs.
60,000 to Ramnath.
1,00,000/ required for the purchase of the shares would be paid by the Company on interest at 41/2 per cent per annum and Loya and Parulekar would number demand and recover the amount but they would sell the shares and credit the amount of the sale proceeds towards the principal and interest in the loan account and would number allow Narayandas and Ramnath to suffer loss with regard thereto.
Narayandas decided to subscribe for 2000 shares in the names of the three ladies.
40,000 to Ramnath.
In these circumstances, Ramnath repaid to the Company Rs.
On April 24, 1954, the Company instituted Special Suit No.
In order to companyply with the requirements of s. 277 1 , the directors of the Company decided that they or their numberinees would subscribe for a large number of shares.
The balance of the application and allotment moneys amounting to Rs.
The suit was dismissed by the trial N 5SCI 11 Court on April 23, 1955, but in First Appeal No.
1,09,500/was opened in the name of Ramnath, who executed a promissory numbere.
by the Company, the High Court decreed the suit.
They carried on business in the name of Ramkisan Ramratan Somani.
Appeals from the judgment and d. decree dated August 11,1960 of the Bombay High Court in first Appeals Nos.
20,000/ to Ramkisan Ramratan Somani and Ramnath, and the borrowers executed a joint and several promissory numbere in favour of the Company for the sum of Rs.
There is no record of any assurance given on behalf of the Company to Narayandas in the minutes of the board meetings.
41,909 10 0.
15,000/ and another cheque dated June 29, 1946 for Rs.
1,50,000/ , and a separate loan account No.
H. Bhabha, lqbal Chagla and J.B. Dadachanji, for the respondent in both the appeals .
100/ each.
12,500 and Rs.
The authorised capital of the Company was Rupees fifty lakhs divided into 50,000 ordinary shares of Rs.
Narayandas Shriram Somani was one of the directors of the Company.
The Judgment of the Court was delivered by Bachawat, J. The Bank of Poona Ltd., hereinafter referred to as the Company number amalgamated with the SangIi Bank, Ltd. was incorporated in 1945.
Narayandas and his numberinees, Goverjabai, Kamalabai and,.
The Company was promoted by N.G. Parulekar and Murlidhar Chaturbhuj Loya.
By the end of April, 1946, the Company was able to find subscribers for 4,860 shares only.
The applications were accompanied by three separate hundis dated May 25, 1946 for Rs.
