Seth Mohan Lal v. Grain Chambers Ltd; 1967

Seth Mohan Lal v. Grain Chambers Ltd; 1967

FACT:
The respondent company was formed for carrying out specific business that relates with the exchange of commodities that included gur. The Articles of association of the company made it compulsory for all the members in the company to participate in the company’s business transactions. The company’s transactions were carried out based on the 1913 Companies Act which did not contain any prohibition against the entering of a director into transactions with the company. The Act was amended
in 1936 which prohibited directors from entering into transactions with the company; this did not change the Company’s mode of operation. The appellant company had entered into a transaction with the respondent and had made huge deposits in monetary terms to the account of the respondent in respect to the transaction. The Indian government had on February 15, 1950 issued an order that prohibits any person from entering into transactions on ‘future’ in gur or make or receive payments relating to any futures aer the said date. The appellant filed a petition against closing of the company following their resolution to settle all outstanding transactions before the closing day at the prevailing rate.

JUDGEMENT:
The appeal court held that the notification had voided any outstanding transaction in guts and futures. Thus, no case was made out from the closing of the company and the notification against the transactions in futures in gut was to operate in the prospective.