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Petitioner: SAKHAWAT HOSSAIN VS Respondent: CHITTAPANJAN COTTON MILLS, LTD. DACCA
P L D 1962 Dacca 176
P L D 1962 Dacca 176
Before B. A. Siddiky, J
SAKHAWAT HOSSAIN ‑Petitioner
Versus
CHITTAPANJAN COTTON MILLS, LTD. DACCA AND ANOTHER‑Respondents
Matter No. 10 of 1960, decided on 20th July 1961.
(a) Companies Act (VII of 1913), S. 72, read with Ss. 38 & 3 ---Act does not provide transference of registered office of company from one sovereign State to another‑Company not shifting its registered office from D in Pakistan to C in India prior to 15‑8‑1947‑Court at D in Pakistan has jurisdiction to hear appli cation under S. 38.
Section 3 of the Companies Act, 1913 provides that the Court having jurisdiction under the Act shall be the High Court having jurisdiction in the place at which the registered office of the company is situate. The Companies Act, 1913 does not provide for the transference of the registered office of a company governed by its provisions, from one country to another. All that the Act permits is the movement of the registered office of the company within the same sovereign State from Province to Province or District to District. If the removal of the registered office is from the jurisdiction of one High Court to the jurisdiction of another, within the same country, the company has to obtain permission from the High Court within whose jurisdiction the registered office was situate. Where it is found that a company having its registered office at a place in Pakistan did not shift its registered office to a place in India prior to the 15th August 1947, the High Court in Pakistan, within whose jurisdiction the original registered office was situate, has jurisdiction to try an application under section 38 of the Companies Act, 1913.
(b) Confession‑Made in Martial Law case‑Not proved in terms of Evidence Act (I of .1872), it, case under Companies Act (VII of 1913)‑Court refrained from taking into consideration such statement.
(c) Companies Act (VII of 1913), S. 72 read with S. 12 Situation or change of registered office‑Not matter of ordinary con sequence, or of discretion of Directors‑‑Notice of situation or change of registered office‑‑Cannot be made by any collateral documents.
Section 72 of the Companies Act, 1913 shows that the situation or change of address of the company is not a matter of ordinary consequence or a matter of pleasure of the Directors. This is made more clear by the provisions of section 12 of the Act. In the very beginning of the Memorandum of Association of a company tire situation of its Registered Office has to be mentioned in a separate article and once the Memo randum of Association is filed with the Registrar of Joint Stock Companies and the company is incorporated, no change can be made in the situation of its registered office without sanction of the High Court [subsection (2) of section 12] which has jurisdic tion over the company in terms of section 3 of the Act.
Subsection (3) of section 72 clearly lays down that the notice of change or situation of the registered office cannot be made by any collateral documents.
(d) Companies Act (VII of 1913), S. 38‑Whether Court has jurisdiction to decide domicile, of company while considering an application under S. 38.
Where the question was whether in an application under section 39 of the Companies Act, 1913, the Court can decide the question of domicile of company tender the general powers given to the Court under subsection (3) of section 73 of the Act.
Held, that the decision of the question of jurisdiction of the Court is a sine qua non in arriving at a decision on an application under section 38 of the Companies Act, 1913. Subsection (3) of section 38 lays down that pipe Court may generally decide any question necessary or expedient for rectification of the register. This not only gives ample power to the Court but also makes it obligatory upon it, first, to decide the question of domicile of the company, specially in a case where the question of domicile has been particularly raised in relation to the jurisdiction of the Court in deciding an application under section 38 of the Act.
(e) Company ‑ Transfer of shares ‑ Non‑availability of original Share Register‑Company to note transfer of share and rectify register after obtaining original or reconstructing a new Share Register according to labs.
Asrarul Hossain and M. A. Rab for Petitioner.
A. K. Brohi and Afzalul Huq for Respondents.
K. M. Subhan and A. H. Mirza for Proforma.
Dates of hearing : 22nd, 29th and 30th June 1961.
JUDGMENT
This is an application under section 38 of the Companies Act, 1913 by one Sakhawat Hossain of 18/3, Armanian Street, Dacca, against (1) Chittaranjan Cotton Mills Ltd., having its registered office at 74, Farashgauj Road, Dacca (hereinafter referred to as the company) and (2) Province of East Pakistan.
The petitioner's case is that, he, on 19‑11‑59, purchased 50 shares of the value of Rs. 10 each of Chittaranjan Cotton Mills Ltd. from M. A. Rahman Choudhury and Hasina Khatun, minor daughter of the said M. A. Rahman Choudhury. Of the 50 shares, 25 were held by M. .A. Rah‑an Choudhury in his own name and the rest 25 were held in the name of his minor daughter Hasina Khatun. Transfer of these shares were effected by Transfer Leeds [Exhs. 1 (a) and 2 (a)] the share scripts relating to these shares are Exhs. 1 (b) and 2(b). The 25 shares held by M. A. Rahman Choudhury under Exh. 2 (b) are numbered 277045 to 277069 and the other 25 shares held by Hasina Khatun Exh. 1 (b) are numbered 270237 to 270261.
On 21‑11‑59, the petitioner, Sakhawat Hossain, wrote to the Managing Director, Chittaranjan Cotton Mills Ltd., to correct the share register of the company by entering his name as a share‑holder of the company in place of M. A. Rahman Choudhury and Hasina Khatun. In reply to the said letter of the petitioner, the company, by its letter No. 60/Share/327, dated 74, Farashganj Road, Dacca 21‑1‑60, wrote to say,
"* * * *We regret to say that according to the existing Exchange Control Regulations and the directive issued by the State Bank of Pakistan, Dacca, it is not possible for us to accept any money here which is creditable to the account of our Registered Office in Calcutta without the State Bank's prior permission. * * * *.
There is another risk also once the relevant share certificates which you have submitted are forwarded to Calcutta for the purpose of transfer, you are not likely to get them back as the Reserve Bank of India does not usually permit transfer of share certificates from one Dominion to another."
This letter has been numbered as Exh. 14 in this proceeding.
Thereafter, on 4‑3‑60, the petitioner filed the present petition praying for a direction upon the company from this Court to rectify the Share Register of the company by inserting the petitioner's name as a share‑holder of the said company in place of the previous holders.
The company appeared and filed an affidavit‑in‑opposition sworn by one Abdul Karim, one of the Directors of the said Chittaranjan Cotton Mills Ltd. In para. 13 of the said affidavit in‑opposition the company asserted that the registered office of the company was in Calcutta and therefore this Court has no jurisdiction to make an order under section 38 of the Companies Act. Paragraph 13 of the affidavit‑in‑opposition is in the follow ing terms.
"I further add that as the register of share‑holders is at all relevant times at the registered office of the company in Calcutta and/or that the registered office of the company is in Calcutta, this Court has no jurisdiction to make an order under section 38 of the Companies Act."
On December 3rd 19,60, the Martial Law Administrator, Zone `C' by his Order No. 104, dated 1st of December 1960, pub lished in the Dacca Gazette, Extraordinary dated 3rd December 1960, authorised the Provincial Government of East Pakistan to appoint an Administrator of the Chittaranjan Cotton Mil's Ltd. for the purpose of taking over its management and administration. As a result thereof, one Mr. M: M. Khan was appointed Administrator of the Chittaranjan Cotton Mills Ltd. who is now functioning as the Board of Directors of the company. The Administrator has appeared in this proceeding and has filed an affidavit‑in‑opposition. The main contention of the Administrator in regard to the rectification of the Share Register has been, that, the original Share Registers have been removed to Calcutta by the convicted Directors of the company and the same is not available in the company's registered office at Dacca and as such it is not possible for him to rectify the Share Register as prayed for by the petitioner.
Secondly, the petitioner did not approach the Administrator after his taking over of the management of the company for such rectification.
To decide this application under section 38, it has therefore become incumbent upon the Court, first to decide the question of jurisdiction of this Court.
Section 3 of the Companies Act provides that the Court having jurisdiction under this Act shall be the High Court having jurisdiction in the place at which the registered office of the , company is situate. The company, in its affidavit‑in‑opposition dated 8th of April 1960, affirmed by one of its Directors Abdul Karim, has squarely raised the question of jurisdiction of this Court to try the present application, as it will be evident from para. 13 of the said affidavit‑in‑opposition, quoted earlier. I will, therefore, first consider the question of jurisdiction of this Court before dealing with the merits of the application.
Mr. Asrarul Hossain, the learned Advocate appearing for the petitioner, has submitted, on the basis of evidence led by his client in the present proceedings both oral and documentary, that the registered office of the company has always been, and is, in the City of Dacca within the Province of East Pakistan, and therefore this Court has jurisdiction to try this application under section 38. He has examined as many as seven witnesses and exhibited a number of documents in support of his contention that the company's registered office is within the jurisdiction of this Court.
The petitioner examined himself as witness No. 1. Accord ing to the petitioner, the registered office of the company was never shifted from Dacca to Calcutta. The signboard of the company has always been displayed mentioning its registered office at 74, Farashganj, in the City of Dacca, after the same was shifted from Simpson Road, Dacca to the former address. This witness has further stated that after his application for registration of his name as a share‑holder was refused by the company on the ground that the registered office was in Calcutta, he went over to Calcutta and there examined the papers of the Company in the office of the Registrar of Joint Stock Companies, West Bengal, from which he satisfactorily found that the registered office of the company was not shifted to Calcutta at any time prior to the appointed day.
At this juncture it will be worthwhile to note that, when by the Act of British Parliament, India was divided into two independent sovereign States, namely, India and Pakistan, some of the companies having their registered offices in the areas which would fall within the territories of India after the appointed day, i.e., the 15th of August 1947, shifted their regis tered offices to those areas which will fall within the territories comprising the new State of Pakistan. Similarly, some of the companies, who had their registered offices in the areas, which would after the appointed day fall within the territories of Pakistan, shifted their registered office to a place, which would fall within the territories of India. All these transfers were made prior to 15‑8‑47. The Companies Act does not provide for the transference of the registered office of a company governed, by the provisions of the Companies Act from ones country to another. All that the Companies Act permits is the movement of the registered office of the company within the same sovereign State from Province to Province or District to District. If the removal of the registered office is from the jurisdiction of one High Court to the jurisdiction of another, within the same country the company leas to obtain permission from the High Court within whose jurisdiction the registered office was situate. In the context of this legal provision, the; evidence led by the petitioner, both oral and documentary, has to be considered to find out as to whether the Chittaranjan Cotton Mills Ltd., which had 'its registered office situate in the town of Dacca which fell within the territory of Pakistan on the appointed day, had shifted the said office, beyond the borders of Pakistan before that day i.e., 15‑8‑47 If it is found that the company did not shift its registered office from Dacca to Calcutta which two towns fall within the jurisdiction of two different independent sovereign States, prior to the 15th of August 1947, then this Court has jurisdiction to try the present application.
It is in the evidence of the petitioner that after examining tile papers is the office of the Registrar of Joint Stock Companies, West Bengal, Calcutta, he did not come across a resolution of the company filed with the said Registrar, shifting the registered office from Dacca to any place in the Indian territory before the appointed day 'this witness further stated that lie had always, at. least twice a day while passing by the Farashganj Road to his place of business at Farashganj, seen the signboard of the company at 74, Farashganj Road on which was written " Registered Office". This the witness has seen since soon after partition until at a point of time when suddenly he found the words "Registered Office" obliterated from the signboard of the company at 74, Farashganj Road, Dacca. The oral evidence of this witness is not so very material to establish the point as to whether the company had shifted its registered office from Dacca to Calcutta prior to the appointed day.
Mr. Bazlul Huq who was an Assistant Registrar of Joint Stock Companies, Undivided Bengal in Calcutta, up to the 14th of August 1947, took over as Registrar of Joint Stock Companies, East Bengal at Chittagong, from the 15th of August 1947. He has been examined as a witness (P. W. 5) in this case and his evidence is clear on the point, that in his capacity as an Assistant Registrar in the office of the Registrar, Joint Stock Companies, Undivided Bengal at Calcutta, up to the 14th of August 1947, there was no resolution filed by the company to show that the registered office of the company which was situated from its very birth in the town of Dacca has been shifted to any part in India. It is also his evidence that in the office of the Registrar, Joint Stock Companies, Undivided Bengal, there was a sifting of records of the companies registered with him to ascertain their domicile. The records of the companies which from the date of its birth fell in the territories, within Pakistan and which had not shifted their registered offices up to the 14th of August 1947, were sorted out and handed over to the witness by Mr. M. K., Majumdar, Registrar, Joint Stock Companies, West Bengal to be brought by the witness to East Pakistan as those companies became Pakistani companies on and from 15‑8‑47. He (Bazlul Huq) had in that connection received from Mr. M. K. Majumdar, the Registrar of Undivided Bengal, who continued to be Registrar of West Bengal all papers filet' by the company (Chittaranjan Cotton Mills Ltd.) in that office from the date of its birth up to the 14th August 1947, to be brought to Pakistan as the company on tile appointed day was treated to be a company of Pakistan. The ledgers in which entries of all fillings authorities to the company were made could not be parted with by Mr. Majumdar, the Registrar of West Bengal, as the ledgers contained entries in respect of innumerable other companies which had their regis tered offices within the territories of West Bengal and continued to remain there even after the appointed day as Indian com panies. It was, therefore, arranged that Mr. Majumdar would have the ledgers copied out with the relevant entries of the companies, which became Pakistani companies, fn his office, by his men, and later on handed over to Mr. Huq. Sometime in early 1948, the copying of the ledgers were completed and Mr. Huq had to go to Calcutta to receive those ledgers from Mr. Majumdar containing the entry relating to the Pakistani companies. He had thereafter brought those ledgers to his office at Chittagong. In those ledgers entries relating to the company were made and other papers of the company left behind were handed over to Mr. Huq by Mr. Majumdar. This witness has further testified to the fact that as and from the 15th of August 1947, the Company (Chittaranjan Cotton Mills Ltd.) filed all the papers and documents in his office at Chittagong, which were required to be filed under the Companies Act. These filings were done by the company as a Pakistani company with the requisite fees required to be paid by an indigenous company having its domicile in Pakistan. This state of affairs continued right upto 1949. According to this witness, sometime in 1949, the company filed certain documents with him which are required to be filed by the foreign companies under section 277 (1) of die Companies Act. The witness, by his letter No. G/1809 dated 15th January 1949, returned the documents to the company telling them that the company having its registered office situated at Dacca in Fast Bengal could not file any documents under section 277 (1) of the Companies Act, as the said section is not applicable to the company. In reply to this letter of the witness, the company is said to have requested the witness to register the company under section 277 (1) of the Companies Act on the plea that the registered office of the company was shifted in July 1947, to 8‑B Clive Buildings, 8, Clive Street, Calcutta, India. Along with this letter, according to the witness, the company had enclosed a copy of letter No. G‑8183 dated 23‑12‑48 from the Registrar of Joint Stock Company, West Bengal, to the company [(Exh. 16 (b)] and a copy of an alleged memo. dated 7‑7‑47, [(Exh. 16 ((c))j purported to have been signed by one Mr. M. N. Bose. Exh. 16 (B), the letter of the Registrar Joint Stock Companies, West Bengal, is addressed to the company at B‑5, Clive Buildings, 8, Ntetaji Subhas Road, Calcutta. The letter is in the following terms:
"Re :‑‑Change of situation of the registered office of the, Chittaranjan Cotton Mills Limited from Dacca to Calcutta.
In reply to your letter dated the 20th December 1948, I have to confirm that an intimation of the charge of situation of the Chittaranjan Cotton Mills Ltd., from Dacca to B‑5, Clive Buildings, 8, Clive Street, together with a copy of the Directors Resolution for the change was sent to this office for filing on the 7th July 1947, as is shown by the Memo. dated the 7th July 1947, signed by the then Superintendent of this office, which was produced tome for inspection. The notice in the prescribed form has since been filed with this office."
Prom this letter it is clear that the Registrar, West Bengal had no records in his office to confirm that the registered office of the company was shifted from Dacca to Calcutta prior to the appointed day, as it will be evident, that the basis of this letter of the Registrar, West Bengal, is the alleged Memo. dated 7‑7‑4 1‑ , [(Exh. 16 (c)) under signature of M. N. Bose which was produced before him for inspection. With regard to the Memo. data: 7‑7‑47 (Exh. 16‑C) witness Bazlul Huq has clearly asserted that the Memo. is false, fabricated and concocted one. The relevant portion of his evidence relating to this Memo. is worthwhile to quote :‑
"With great courage of conviction I turned down this memo. as false, fabricated and concocted one, because, on that particular date, I was the Assistant Registrar in United Bengal in charge of receiving documents and letters filed by all the companies and I was the officer under whose signature all the letters were issued, and this M. N. Bose was only a clerk tinder me and had no authority to sign such metros. Moreover, this memo. does not bear any despatch number of the office, which was the usual practice in that office. After receiving this letter of the company, dated 3'‑1‑49, I turned down their request as the memo. was false, fabricated and concocted. My letter G/2015, dated 7‑12‑49, bears my signature." (Exh. 16 series).
Thereafter, I get from the evidence of this witness that sometime in 1952 the Government of East Bengal in the Department of Commerce, Labour and Industries issued a directive to the witness as Registrar of Joint Stock Companies, East Bengal, to transfer the name of the company from the ledger of the indigenous companies having its domicile in Pakistan to the ledger of Vie foreign companies. This happened after 7‑7‑52. Thereafter, according to this witness, in compliance with the directive of the Government of East Bengal, whose orders he was bound to carry out, struck off the name of the company from the register of the Pakistani companies and started making entries with regard to the documents filed by the company in the columns of foreign companies under section 277 (1) of tire Companies Act. This witness has firmly stated that the change that he made in striking off' the name of the company from the Register of the Pakistani companies and entering it in the Register of the Foreign companies, was done by him unwillingly, only as a subordinate, carrying out the orders of the Provincial Government which he could not disobey. To a question put to him as to what was the witnesse's stand in regard to the domicile of the company at the time when the change was ordered to be made, his answer has been:
"My attitude all through was that this company (Chittaranjan Cotton Mills Ltd.) could not be treated as a foreign company as its registered office was all through in East Pakistan before and after partition."
To a question put to him in cross‑examination by Mr. K. M. Subhan appearing for the Province of East Pakistan, the witness stated:
"According to my own and in the facts and circumstances the order was not correct."
He refers to the order of the Provincial Government directing him to transfer the name of the company from the list of the Pakistani companies to the list of the foreign companies.
16. To a question put to him by the Advocate for the Administrator representing the company, the witness replied
"Till 1952 there was no entry to show that the registered office of the company, had been shifted from Dacca to Calcutta."
To another question put to him as to whether he had satisfied himself about the entries made in the ledgers handed over to him by the Registrar of West Bengal, the witness answered
"After comparing the ledgers I satisfied myself that the entries made in these ledgers which were given to me by the Registrar of West Bengal were correctly made from the originals which were kept by the Registrar of the Joint Stock Companies, West Bengal."
At this stage, I may refer to another set of facts which are relevant for our purpose on the point as to whether the order of the Provincial Government directing the Registrar of East Bengal to transfer the name of the company from the register of the Pakistani companies to the register of foreign companies was legal or not.
We have it from the evidence of Muhammad Habibur Rahman (P. W. 2), Inspector, Bureau of Anti‑Corruption, Dacca, that the 33ureau of Anti‑Corruption en certain informations that the Chittaranjan Cotton Mills Ltd., were engaged in some illegal activities, held an enquiry Into the affairs of the company. In the course of that enquiry, it was discovered that the Managing Director of the company, one D. N. Bose, and one other Director of the said company, Nalini Mohan Ghose, and a person named 'M. Fardun of Lalbagh Road, Dacca, and one Amrita Lal Bhowmick, Accountant of the company to its Registered office U6 Dacca, were engaged in smuggling currency out of Pakistan. In that connection, Amrita Lai Bhowmick was put under arrest and a case under Martial Law Regulation No. 58 was registered against the persons named above in the Sutrapur Police‑station. After completion of the investigation by this witness, the said D. N. Bose, the Managing Director, and Nalini Mohan Ghose were tried in absentia along with Amrita Lai Bhowmick and con victed on a charge of smuggling Pakistani currency out of Pakistan. The money involved in smuggling belonged to Chittaranjan Cotton Mills Ltd. Shares standing in the names of D. N. Bose and Nalini. Mohan Ghose stood confiscated under orders of the Martial Law Court, to the Government of East Pakistan and also other assets of the said two convicts lying within Pakistan. In the course of this…
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