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Petitioner: ABDUR RAB CHOUDHURY VS Respondent: REGISTRAR OF JOINT STOCK COMPANIES
P L D 1960 Dacca 541
P L D 1960 Dacca 541
Before Akbar and Asir, JJ
ABDUR RAB CHOUDHURY‑Petitioner
versus
REGISTRAR OF JOINT STOCK COMPANIES AND 2 OTHERS Respondents
Writ Petitions No. 6, 7 and 8 of 1960, decided on 29th February 1960.
(a) Writ‑Dispute requiring investigation of facts and recording of evidence‑Not to be decided on affidavits in writ jurisdiction‑Constitution of Pakistan (1956), Art. 170.
(b) Company‑Domicile of company clings to it throughout its existence ‑Registrar not authorised to change domicile‑No specific provision in Companies Act (VII of 1913) ‑Minister of Government not competent to order an indigenous company to be registered as a foreign company.
(c) Law of Evidence Amendment Act (East Pakistan XVIII of 1956) ‑Copies of register received from Registrar Joint Stock Companies, West Bengal‑Public documents.
(d) Writ‑Registrar, Joint Stock Companies illegally changing nationality of company‑ Amenable to writ jurisdiction‑Registrar performs quasi judicial functions‑Constitution of Pakistan (1956), Art. 170.
A Registrar, Joint Stock Companies, fulfils a quasi judicial function. If a Registrar registers an indigenous company as a foreign company on the directive of a Minister of Government, he .is influenced by extraneous considerations, and his order can be interfered with by mandamus.
The duty of the Registrar is to perform his duty and if he fails to do so he becomes immediately amenable to the jurisdiction of the High Court.
Rex v. Registrar of Companies (1912) 3 K B 23, 34 and Bowman v. Secular Society, Limited 1917 A C 406 ref.
(e) Writ‑Mandamus‑Applicant to show legal right to performance of legal duty‑Shareholder of company has legal right to demand that ' Registrar, Joint Stock Companies must act in accordance with law when registering company as a foreign company‑Constitution of Pakistan (1956), Art. 170.
The shareholder of a company has a right to demand that the Registrar, Joint Stock Companies while registering the company as a foreign company, must act in accordance with law and when the Registrar acts contrary to law, a shareholder can demand that a mandamus should go to correct that error.
A shareholder has an actual and personal interest in the performance by the Registrar of a public duty, namely, to maintain the register in accordance with law. When the Registrar fails to exercise jurisdiction or exercises his jurisdiction or acts in a manner which may be said to be on the face of it illegal or grossly improper, (e.g., registers an indigenous company as a foreign company on the directive of a Minister of Government) a writ of mandamus will lie for issue of a proper direction to the Registrar or even to correct his error.
Halsbury's Laws of England, 2nd Edition, Vol. IX, 770 ; The State of Pakistan v. Mehrajuddin P L D 1959 S C (Pak.) 151, ; Palmer's Company Law (20th Edition) p. 493 and Edwards v. Halliwell 2 A E R 1064 ref.
(f) Writ‑Delay in applying‑Laches and negligence dis countenanced‑But Court should see whether applicant has "slept over his right"‑Constitution of Pakistan (1956), Art, 170.
Asrarul Hossain and Md. Nurul Huq for Petitioners in all three Petitions.
A. S. Chowdhury and Shahabuddin Ahmad for Respondent 1 in all three Petitions.
B. A. Siddiky, Advocate‑General and K. M. Subhan for Res pondent 2 in all three Petitions. H. S. Suhrawardy, H. H. Chowdhury, S.R. Pal, Nurul Amin and Ahmadur Rahman Khan for Respondent 3 in all three Petitions.
Dates of hearing : 19th, 22nd and 23rd February 1960.
JUDGMENT
AKBAR, J.‑These three Rules nisi were issued calling upon the respondents to show cause why a writ of mandamus should not issue directing them to cancel the entry of the name of the proj6rma respondent (Chittaranjan Cotton Mills Ltd.) from the register of foreign companies and restore its name to the register of indigenous companies or such other or further order or orders be passed as to this Court may seem fit and proper.
As common questions of fact and law were involved the Rules were heard together.
The facts as they appear from the petition and various affidavits are as follows : The petitioners are shareholders of Chittaranjan Cotton Mills Ltd., hereinafter referred to as the Company. Towards the end of 1929 the Company was registered as a joint stock company, and Keshavlal Industrial Syndicate (hereinafter referred to as the Managing Agents) were appointed its Managing Agents. In 1938 the registered office of the company was removed from 14/15 Patuatoli Road, Dacca to 4, Simpson Road, Dacca. On 23‑6‑47 the Board of Directors at a meeting held at 4, Simpson Road, Dacca decided to transfer the registered office of the company to 8, Clive Street, Calcutta. On 30‑6‑47 the Managing Agents by a letter informed the Registrar, Joint Stock Companies, Bengal that in accordance with the resolution of the Board of Directors the registered office of the company had been shifted from Dacca to Calcutta. On 30‑11‑47 the Board of Directors decided to hold the 16th Annual General Meeting of the company at 4, Simpson Road, Dacca. On the same date, notices were issued informing the shareholders that the said 16th Annual General Meeting will be held at 2 p.m. on 28‑12‑47 at the registered office of the company at 4, Simpson Road, Dacca. In January 1948 the Registrar, Joint Stock Companies, West Bengal sent to the Registrar, Joint Stock Companies, East Bengal (hereinafter referred to as the Registrar) copies of ledger of the companies having their registered office in territories which fell in Pakistan. The said ledger contained the name of this company also. On 10‑1‑48 the Managing Agents filed the report and the accounts of the company for the year 1946 with the Registrar at Chittagong and the said report was filed with such fees as were payable by an indigenous company. On 13‑4‑48 Government issued a press note asking the foreign companies having place of business in Pakistan to file the necessary documents under section 277 (1) of the Companies Act (herein after referred to as the Act). On 14‑6‑48 the Company filed the required documents under section 277. The Registrar, however, did not recognise this company as a foreign company. In 1949 the Managing Agents were suspended and Mr. D. N. Bose, a Director of the Company, was appointed the Managing Director. The said Managing Director then filed a representation before Mr. Hamidul Huq Choudhury, Minister‑in‑Charge of Commerce, Labour and Industries, praying for registration of this company as a foreign company. The said Minister on 2‑5‑49 passed the following order:
"Secretary will call the representatives of the company and settle this case. They should be told that under the law they can register here. If needed I may also tell them when they come."
In the meantime, the Managing Agents of the company filed a Title Suit being T. S. 88 of 1949 against the Directors in the Court of 2nd Subordinate Judge, Dacca for certain declarations and injunctions. In the said suit the Managing Agents' case was that the registered office of the company had never been shifted from Dacca to Calcutta. As the said suit was pending, the Registrar did not take any action on the directions issued by the Minister and his department. On 19‑2‑52 the parties compromised the title suit. Thereafter, the Secretary of the Commerce, Labour and Industries Department issued a directive to the Registrar to register this company as a foreign company and it was so registered and a registration certificate was issued on 3‑10‑52.
In November 1959 Mr. D. N. Bose, the Managing Director of the Company, was convicted on a charge of smuggling Pakistan currency out of this country.
Now the case of the petitioners is that after the conviction of the Managing Director it struck them that there might have been fraud regarding alleged transfer of the registered office of the company from Dacca to Calcutta and hence they started making enquiries. As a result of the enquiry, they found that the registered office had not been transferred to Calcutta before Partition and that the Registrar had illegally registered the company as a foreign company after removing its name from the category of the indigenous companies. Thereafter, their lawyers gave notice to the Registrar directing him to remove the name of the company from the register of the foreign companies and to restore its name in the register of indigenous companies. As the Registrar did not comply with their demands, they filed these applications and obtained these Rules.
The Registrar who is respondent No. 1 has 'stated in his affidavit‑in‑opposition that in 1949 he brought to the notice of Mr. Hamidul Huq Choudhury, Minister‑in‑Charge, Commerce, Labour and Industries, that the registered office of the company had not been transferred before Partition from Dacca to Calcutta. The Minister, however, accepted the contention of Mr. D. N. Bose, the Managing Director, that it was so transferred. Hence, on receipt of the direction of the Government, he (the Registrar) registered it as a foreign company. He concedes that the registration of the comp4ny under section 277 of the Companies Act was not legal and proper.
Mr. Shamsuddin Ahmad, Deputy Secretary, Commerce Labour and Industries Department, has filed an affidavit on behalf of respondent No. 2, the Government of East Pakistan.
He has stated that in 1949 Mr. Hamidul Huq Choudhury, on the representation of the Managing Director that the registered office of the company had been shifted to Calcutta before Partition, ordered that the company can register itself as a foreign company. He has, however; submitted that, as the registered office had not been shifted from Dacca to Calcutta before Partition, the Government was not legally competent to order registration of this company as a foreign company.
The petitions have really been opposed by the company, the respondent No. 3.
Dhirendra Mohan Gupta, a Director of the company, has filed an affidavit stating that pursuant to a resolution passed by the Board of Directors on 23‑6‑47 the registered office of the Company was shifted to Calcutta and the said fact was intimated to the Registrar, Joint Stock Companies, Bengal. Their con tention therefore is that the registered office was legally shifted to Calcutta before Partition. Further, according to this Director, some of the shareholders of the company, with a view to get control of the company, have filed these applications on a false allegation that the registered office of the company had not been shifted to Calcutta before Partition. He has further stated that as in 1949 the Managing Agents were suspended there were several litigations between them and the Directors of the company and with a view to harass the company the Managing Agents challenged the validity of the transfer of the registered office to Calcutta in Title Suit No. 88 of 1949. As however the said Managing Agents found they could not' substantiate their allegations, they ultimately compromised the suit. In short, according to him, the registered office of the company was shifted to Calcutta before Partition and hence on 14‑6‑48 they were entitled to file the requisite documents under section 277 (1) of the Companies Act pursuant to the Press Note dated 13‑4‑48 and to obtain the certificate of registration from the Registrar.
Mr. Asrarul Hossain, the learned counsel for the petitioners, has contended that the registered office of the company was not shifted to Calcutta before Partition. He has argued that by a resolution of the Board of Directors dated 23‑6‑47 the Managing Agents were directed to arrange for shifting of the office of the company to Calcutta ; but they did not really take any action in the matter before Partition, would appear from the following facts
(1) That the copy of the ledger received after Partition from the Registrar, Joint Stock Companies, West Bengal showed that this Company's head office had not been shifted from Pakistan to India ;
(2) that the Registrar, East Pakistan also received the original documents relating to this company along with copies of the register from the Registrar, Joint Stock Companies, West Bengal ;
(3) that on 30‑11‑47 the Managing Agents issued notice to the effect "that the 16th Annual General Meeting of the share holders will be held at 4, Simpson Road, Dacca on Sunday the 28th December 1947 at 2 p.m.";
(4) that after the said General Meeting the Managing Agents filed the Report and the Account on 10‑1‑48 with the Registrar of Joint Stock Companies, East Bengal and the said papers also showed that the registered office of the company was at 4, Simpson Road, Dacca ; and
(5) that the memo dated 7‑7‑47 alleged to have been issued by the office of the Registrar, Joint Stock Companies, Bengal informing the Company that intimation of the change of the registered office had been received by them, has not been filed in this case and hence no reliance should be placed on the letter of the Registrar, West Bengal dated 27‑12‑48 which is based on the alleged office copy of the said memo.
The learned Advocate‑General appearing for the Government and Mr. A. S. Choudhury appearing for the Registrar have supported the contentions of Mr. Asrarul Hossain.
Mr. Suhrawardy, the learned counsel for the Company, has contended that the registered office of the company had been shifted to Calcutta before Partition and by mistake the Managing Agents described 4, Simpson Road as the registered office in the notice dated 30‑11‑47 calling the 16th Annual General Meeting. He has relied on the following facts and circumstances to show that the registered office had been shifted to Calcutta before Partition:
(1) that pursuant to the resolution of the Board of Directors dated 23‑6‑47 the Managing Agents informed the Registrar, Joint Stock Companies, Bengal on 30‑6‑47 that the registered office had been shifted to 8, Clive Street, Calcutta. As they did not apply in prescribed form the Registrar asked them to do so with requisite fees
(2) that on 14‑6‑48 the Company filed requisite documents under section 277 (l) of the Act with the Registrar, Joint Stock Companies, East Bengal, and the same were accepted.
(3) that on the 20th December 1948 the Company wrote to the Registrar, West Bengal confirming the change of the registered office and the Registrar on 27‑12‑48 replied by saying that the said intimation had been received "as is shown by the Memo dated 7‑7‑47 signed by the then Superintendent of this office";
(4) that after 23‑6‑47 in all the notices and proceedings 4, Simpson Road Dacca was described as "an office at Dacca" and not as "a registered office";
(5) that since partition they were filing their Returns with the Registrar, West Bengal ; and
(6) that the records of the company were still lying with the Registrar, West Bengal.
Mr. Suhrawardy has therefore contended that, in accordance with the provisions of section 2 (a) (1) of the Companies Act, this company, even though incorporated and registered in Dacca, was an Indian Company because its registered office had been shifted to Calcutta before Partition.
The contentions set forth above show, that there is consider able dispute between the parties as to the time when the registered office was shifted to Calcutta. The petitioners' case is that it was not shifted before Partition whereas the contention of the Company is otherwise. This is a dispute which requires investi gation of facts and recording of evidence and therefore, it cannot be decided on the basis of the affidavits filed in these Writ Petitions. It is well settled that Writ Proceedings being in the nature of summary proceedings controversial, questions of fact should not be decided on the affidavits. It will however be open for the parties to agitate this question in an appropriate proceeding in a Court of Law.
The next question is: Was the Registrar entitled to register this company as a foreign company after removing its name from the register of indigenous companies ? A reference to the Companies Act shows` that there are various statutory obligations cast upon the companies by the Act to file various documents and registers with the Registrar of the Joint Stock Companies. There is however no specific provision authorising the Registrar to change the domicile of a company. There cannot be such a provision because the domicile of the company clings to it provision its existence. The Registrar, in‑paragraph, 3 (d) of his affidavit, has stated :‑---
"I received the original documents of the Chittaranjan Cotton Mills Ltd, at the time of the partition. I also received ledgers of the companies having their registered office now falling within the territory now in Pakistan from my counterpart in West Bengal and consequently the said company has its domi cile in East Pakistan after the Independence. The original ledgers were not parted with by the Registrar, Joint Stock Companies, West Bengal, Calcutta. Copies were made out by his staff and handed over to me personally in January 1948. In these copies of ledgers the name of the Chittaranjan Cotton Mills Ltd. have found entry as an indigenous company in East Pakistan."
The copy of the register received by the Registrar of East Bengal from the Registrar of West Bengal can be regarded as a public document in view of the following provisions of the Law of Evidence Amendment Act of 1956 (East Pakistan Act XVIII of 1956)
`'(4) Notwithstanding anything contained in the Evidence Act, 1872, copies of common records of the divided districts of Bengal and Assam in the custody of a public officer, the originals whereof are either in West Bengal or Assam, shall be deemed to be public document within the meaning of clause (1) of section 74 of the Evidence Act, 1872 and other provisions of the said Act shall apply accordingly,"
In the said copy this company was shown as an indigenous company. The Registrar has, therefore, rightly admitted that legally he was not justified in registering this company as a foreign company. He has further submitted that he removed the name of this company from the category of the indigenous companies under the order of the Secretary of the Department of Commerce, Labour and Industries. There is however no provision in the Companies Act which authorises the Registrar to transfer the name of a company from the category of indigenous companies to that of foreign companies. If the registered office had been shifted to Calcutta before Partition, the company should have applied to Court for necessary directions for correction of the register. We are really surprised how a Minister‑in‑charge of Commerce, Labour and Industries or his officer could pass an order for registration of this company as a foreign company particularly when the name of the company appeared in the register as an indigenous company. As the said Minister is not a party to this proceeding, we are not entitled to investigate as to the circumstances under which he passed this direction. The fact however remains that he was not competent to make this order. We may point out that neither the Registrar nor the Government has any power to change the nationality of any company. Whatever be its domicile after partition, it would cling to the company throughout its existence.
Mr. Suhrawardy' has also found it difficult to support this action of the Registrar. All that he has contended is that cancellation of the order of the Registrar will put the company to great inconvenience. Now the question is: Whether we should interfere with this order of the Registrar changing the nationality of this company ? It would be a great mistake to suppose that the High Court has no jurisdiction over the Registrar in such cases as those now under consideration. The duty of the Registrar is to perform his duty and if he fails to do so he becomes immediately amenable to the jurisdiction of this Court.
In the case of Rex v. Registrar of Companies reported in ((1912) 3 R B 23, 34), Avory, J. observed:
"I think that the moment it is admitted that the registrar must exercise some discretion in the registration of a company, the name of which is suggested to be either identical with that of another company already registered or so nearly resembling it as to be calculated to deceive, then in order to displace the decision of the Registrar and justify this Court in interfering by mandamus it would be necessary for the applicants to show one or more of three things : either that the registrar had not in fact exercised any discretion in the particular, case, or that he had exercised it upon some wrong principle of law, or that he had been influenced by extraneous considerations which he ought not to have taken into account. I think that one of these three things at least must be made out to justify this Court in interfering by mandamus."
Similarly, in Bowman v. Secular Society, Limited reported in (1917 A C 406), the Law Lords held that a Registrar fulflls a quasi‑judicial function. In this case the Registrar admits in his affidavit that in registering this company he had been influenced by extraneous considerations, namely, order of the Minister. In other words, he had considered circumstances which ought not to have influenced him. It is thus clear that the Registrar's order being illegal can be interfered with by mandamus.
Mr. Suhrawardy has challenged the petitioners' right to apply for a Writ. Mr. Suhrawardy has contended that this extra ordinary power should be exercised only when it is necessary for the protection of a legal right and should not be invoked by any person who is unable to justify before the Court that any such right of his has been violated or infringed. This proposition to an extent is undoubtedly correct. As regards the petitioner's right to obtain a Writ, the following rules have been stated in Halsbury's Laws of England, 2nd Edition, Vol. IX, at page 770:
"The legal right to enforce the performance of a duty must be in the applicant himself. The Court will, therefore, only enforce the performance of statutory duties by public bodies on the application of a person who can show that he has himself a legal right to insist on such performance."
The following observations of the Supreme Court in the case of The State of Pakistan v. Mehrajuddin reported in (P L D 1959 S C (Pak.) 151, 159), is also very pertinent:
"An applicant for a mandamus must show that he has a legal right to the performance of a legal duty by the party against whom a mandamus is sought. The prosecutor must be clothed with a clear legal and equitable right to something which is properly the subject of a writ, as a legal right by virtue of an Act of Parliament. The order is only granted to compel the performance of a duty of a public nature."
These are applications by several shareholders. It cannot be disputed that by the action of the Registrar the individual rights of the shareholders are invaded. In Palmer's Company Law (20th Edition) at page 493, the right of an individual member has been thus stated:
"The right to maintain (himself) in full membership with all the rights and privileges appertaining to that status." This right implies that the individual shareholder can insist on the strict observance of the legal rules, statutory provisions, and provisions in the memorandum and articles which cannot be waived by a bare majority of shareholders."
The shareholder has therefore a right to demand that the Registrar, while registering a company as a foreign company, must act in accordance with law. As he has acted contrary to law, a share holder can demand that a mandamus should go to correct that', error. This also finds support from the following observations of Jenkins, L. J in Edwards v. Halliwell (2 A E R 1064, 1067).
"The personal and individual rights of membership of each of them have been invaded by a purported, but invalid alteration . . . . . In those circumstances, it seems to me the rule in Foss v. Harbottle [(1843) 2 Haro 461] has no application at all, for the individual members who are suing sue . . in their own right to protect from invasion their own individual rights as members."
It can, therefore, be said that a shareholder has an actual and personal interest in the performance by the Registrar of a public duty, namely, to maintain the register in accordance with law. Now, when the Registrar fails to exercises jurisdiction or exercises his jurisdiction or acts in a manner which may be said to be on the face of it illegal or grossly improper, a Writ of mandamus will' lie for issue of a proper 'direction to the Registrar or even to correct his error. In this case it will be difficult to say that by this act of the Registrar the rights of shareholders have not been invaded or affected.
We may however observe that Sakhawat Hossain, petitioner of Writ Petition No: 8, the alleged purchaser of certain shares, has…
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