At, High Court of Lahore
By, COLDSTREAM & JAI LAL
Hargopal the appellant, a Barrister of Gujarat, applied to the Peoples Bank of Northern India, Limited, on the 3rd June, 1926 asking for an allotment of 150 shares in the Bank worth Rs. 100 each. The application was made on a printed form, but he added to the printed words the following sentence in his manuscript :-
"This purchase of the shares is subject to the condition that I will be appointed a permanent Local Director. I will pay the allotment amount after the branch is opened here."
Subsequently Har Gopal paid up 50 per cent. of the face value of the shares. He was appointed local director of the Gujarat Branch. When the time came round for directors to be elected he was successful. In the second election, however which was in May 1931, he was not recommended for election and was not elected. On the 3rd August, 1931, Har Gopal instituted a suit against the Gujarat Branch of the Bank in Wazirabad to recover dividends which the Bank had refused to pay him. His position as a shareholder was admitted by the Bank who contested the suit (according to the judgment which is on the record) on the ground that the Bank had a lien on his property. Har Gopal obtained a decree for Rs. 450 on the 18th January, 1932. Meanwhile on the 29th September, 1931 the Bank had suspended payment. On the 14th July, 1932 Har Gopal instituted the suit from which this appeal arises for a declaration that he was not a shareholder in the Bank. His case was that his application for shares was conditional on an undertaking by the Bank that he would be appointed a permanent director of the local branch, Gujarat, that the Bank had, however, allotted him shares (as he had subsequently discovered) regardless of this condition, and that therefore the allotment proceedings were void, as if they had never taken place. The Bank pleaded that the condition had been with drawn by Har Gopal before the shares were allotted and that in any case the plaintiff's conduct barred him from maintaining the suitThe Senior Subordinate Judge of Gujarat found upon the evidence that Har Gopal had purchased the shares on the understanding that the allotment would be conditional, but had accepted them subsequently as free from this condition. Following Piara Singh v. Peshawar Bank (54 P.R. 1915), he dismissed the suit holding that as Har Gopal had acted as a shareholder, had pledged his shares, and not only accepted a dividend, but enforced his right to receive it, he was not competent afterwards to rely upon the non-performance of the condition precedent
The ruling cited is strong authority in support of the lower Court's decision. It was there pointed out that even if the condition on which an application for shares was a condition precedent in may be shown by evidence of conduct that the condition was waived. The appellant's conduct is consistent only with the view th
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at he accepted his position as a shareholder and condoned this defect in the issue of the shares After hearing counsel and considering the evidence, we are satisfied that the conclusion, both on the facts and on the law, arrived at by the lower Court are correct. We therefore dismiss this appeal with costs