H. P. GUPTA versus HIRALAL

Citation: [1970] 3 S.C.R. 788 · Decided: 24-02-1970 · Supreme Court of India · Bench: J.M. SHELAT · Disposal: Appeal(s) allowed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

788 
H.P.GUPFA 
v. 
HIRALAL 
February 24, 1970 
A 
[J. M. SHELAT AND G. K. MITTER, JJ.] 
B 
Jndian Companies ~t (of 1956). s. 201-Jurisdiction to t? co~p/aint 
Jor failure to pay dividend-Whether at place where cumpany s registered 
.-0ffice or shareholder's registered address. 
The respondent filed. complaints before the Magistrate ~t Meerut under 
s. 207 of the Companies Act, 1956 on an allegation of failure on the part 
of appellant, the director-i0rcharge of a Company whose registered office 
C 
was at Delhi, to pay the respondent dividends on shares held by h•_m, 
although the dividends were declared by tire company for the respective 
years. The appellant contended that the Magistrate at Meerut _had no 
jurisdiction to try the complaints and that the Magistrate at pel~1 '."'~ere 
1he registered office of the Company was situated had the 
1unsd1cllon. 
The Magistrate rejected the appellant's contenllon on the ground that as 
the dividends had to be paid at the registered address of the respondent, 
·\vhich was at Meerut, the Court, at Meerut had jurisdiction. 
This view 
D 
was upheld in appeal by the Sessions Judge and in revision by the High 
·Court. 
In appeal on certificate, this Court : 
HELD : The Court at Delhi and not at Meerut was competent to try 
·the offences. 
It is clear from s. 205(5) that the company could pay dividend either 
in. cash or by posting a cheque or a warrant at the registered aJdrcss of 
E 
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 IQ the shareholder at his registered address. The effect of Art. 
132 is that when a dividend warrant is posted at the registered address of 
th.e shareholder that would be equivalent to payment. 
Onoe "' warrant 
is so posted the company is deemed to have paid and discharged .its obli· 
gation. 
The Articles of Association constitute an agreement between the 
F 
company and the shareholders, and the latter are entitled to the -payment of 
dividend in the manner ]aid do\\1n in the' Articles and in that 
manner 
alone. 
Arlicle 132 thus not only authorises the company to make the 
payn1cnt in the manner laid down ther-cin but amounts to a request by the 
shareholders to be paid in the manner so laid down. 
When. therefore, 
the company posts the dividend warrant at the registered address of a 
shareholder, that being done at the shareholder's request, the post office 
becomes the agent of the sh-areholdeT, and the Joss of z. dividend warrant 
G 
cduring transit thereafter is the risk of the shareholder. [793 Fl 
That being the position, the place where a dividend warrant would be 
posted, is the post offioe a1 such place being the agent of the shareholder, 
is the place where the obligation to pay the debt is discharged in the 
present case at Delhi where the company has its registered office. 
It fol-
lows that the offence. under s. 207 of the Act would also occur at the 
place where the failure. to discharge that obligation arises, n.amely, the 
H 
failure 
to post the dividend warrant within 42 days. The .venue of the 
offence, therefore. would be Delhi and not Moerut, and the court compe-
Aent to try the offence would be that court within whose jurisdK:tion the 
A 
B 
c 
D 
E 
F 
G 
H 
H. p, GUPTA v. HIRALAL (She/at, J.) 
789 
offence takes place, i.e., Delhi. This should be so both in law and com-
mon sense, for, if held otherwisc1 the directors of compaines can be prose~ 
cute<l at hundreds of places on an allegation by shareholders that they 
ha\'e not received the warrant. 
That cannot be the intention of the legis~ 
lature when it enacted s .. 207 and made. failure to pay or post a dividend 
warrant within 42 days from the declaration of the dividend an offence. 
[794 CJ 
lndore Malwa United Mills Ltd. v. Co1n1nissioner of lncome~tax, [1966] 
59 l.T.R. 738, fOllowed. 
Hickn1an v. Kent or Ro1n111ey Marsh Sheep Breeders' Association, (1951] 
! Ch. ~81, Beattie v. Beattie, [1938] Ch. 708, Thair/wall v. The Great 
Sorthern Railway Co., [1910] 2 K.B. 509, Nor.man v. Rickett&, 3 T.L.R. 
18.2 and Regina' v. Ja111es Milner, 175 E.R. 128, referred to. 
(RIMINAL APPELLATE 
JURISDICTION : Criminal 
Appeals 
Nos. 225 to 232 of 1966. 
Appeals from the judgment and order dated April 1, 1966 of 
the Allahabad High Court in Criminal Revision Nos. 895, 894, 
876, 877, 897, 899 and 898 of 1964. 
H. R. Gokhale, K. K. Jain, Bishamber Lal and H. K. Puri,

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