LexDR. BAIS SURGICAL AND MEDICAL INSTITUTE PVT. LTD & ORS. versus DHANANJAY PANDE
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[2026] 5 S.C.R. 347 : 2026 INSC 447 Dr. Bais Surgical and Medical Institute Pvt. Ltd & Ors. v. Dhananjay Pande (Civil Appeal No. 8973 of 2010) 04 May 2026 [Pamidighantam Sri Narasimha and Alok Aradhe, JJ.] Issue for Consideration Whether, in the absence of a formal entry of the respondent no.1’s name in the register of members, he could nonetheless be regarded as a “member” of the appellant-company so as to invoke the jurisdiction of the Company Law Board u/ss.397 and 398 of the Companies Act, 1956. Headnotes† Companies Act, 1956 – ss.2(27), 41, 397, 398, 399 – “member” – High Court and the Company Law Board upheld respondent no.1 as a deemed member of the company, entitled to maintain a petition u/ss.397 and 398 – Whether the respondent no.1 could be regarded as a “member” of the appellant-company so as to maintain a petition u/ss.397 and 398, despite the absence of formal entry of his name in the register of members at the relevant point of time: Held: Yes – The requirement that an agreement to become a member be “in writing”, introduced by the Amendment Act of 1960, was intended to ensure reliable proof of consent and to prevent fraudulent inclusion of names in the register, and not to impose entry in the register as the sole or exclusive mode of acquiring membership – The equitable foundation of ss.397 and 398 must be a guiding factor to not construe the expression “member” in an unduly restrictive or technical manner confined solely to formal entry in the register, frustrating the remedial purpose underlying the legislative scheme – A conjoint reading of ss.397, 398 and 399 indicates that the expression “member” cannot be construed in isolation or confined to the technical formulation contained in s.41(2) – Rather, the broader definition embodied in s.2(27) assumes significance in determining whether a person is entitled to invoke the remedies contemplated under the Act – It would 348 [2026] 5 S.C.R. Supreme Court Reports be contrary to settled principles of interpretation to attribute to the Legislature an intention to create conflicting meanings of the same expression within the statute – The expression “member”, when employed in the context of remedies u/ss.397 and 398, must therefore be construed with reference to the wider definitional framework provided in s.2(27) and allied provisions governing the rights of members – The conclusion treating respondent no.1 as a member was founded upon a consistent and cumulative chain of factual circumstances demonstrating recognition of his proprietary interest in the appellant company – On facts, respondent no.1 was consistently treated as a stakeholder having interest in the appellant company rather than as a mere investor or creditor – High Court also relied upon the financial and operational conduct of the company, which showed that respondent no.1’s investment was accepted and utilised for the expansion of the company’s business, resulting in increased authorised share capital and profitability – Respondent no. 1 had, in substance, acquired the status of a shareholder whose interest stood recognised by the company over a considerable period – High Court was justified in affirming the finding that respondent no.1 was entitled to be treated as a member for the purposes of maintaining proceedings u/ss.397 and 398. [Paras 21, 23, 29-31] Companies Act, 1956 – ss.2(27), 41, 397, 398, 399 – “member” – Inclusive definition of “member” u/s.2(27) vis-à-vis s.41 dealing with acquisition of membership – Whether the expression “member” as appearing u/ss.397 and 398 is to be construed strictly in accordance with s.41 or it must be understood in the broader sense contemplated u/s.2(27) – Meaning and scope of the expression “member”, as occurring in ss.397, 398 and 399: Held: The statutory framework under the Act, 1956 draws a clear distinction between the inclusive definition of the term “member” contained in s.2(27) and the provisions governing acquisition of membership set out in s.41 – s.2(27) employs language of wide amplitude and, in relation to a company, embraces every category of member, subject only to the limited exclusion of a bearer of a share-warrant issued u/s.114 of the Act – Whereas, s.41 operates in a different sphere and prescribes the recognised modes by which membership may arise – It contemplates, first, deemed membership in the case of subscribers to the memorandum; secondly, persons [2026] 5
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