1987 (11) TMI 324 - HC - Companies Law

Summary

Issues:
- Review of order directing issuance of duplicate shares
- Contempt application against company for refusal to obey court order

Analysis:
The judgment revolves around an execution case where 2,375 shares of the judgment-debtor were attached, but the debtor claimed they were lost. A receiver was appointed to take charge of the shares and obtain duplicate shares. The company, however, contended that most shares were sold to a third party before 1977, and the sale was not recognized by the company despite full payment received by the debtor. The company argued that the legal ownership remained with the debtor, but equitable title vested in the buyer, entitling the buyer to benefits and obligations of the shares. The court found that the shares were not lost as claimed by the debtor but were sold, leading to a review of the order directing issuance of duplicate shares.

The company filed a review application seeking to dismiss the contempt petition and challenging the direction to issue duplicate shares. The court acknowledged that the debtor's ownership was only technical, while the buyer held the beneficial ownership. As the sale was not rescinded, the buyer was entitled to all benefits and obligations of the shares. The court concluded that the receiver should not be directed to obtain duplicate shares, as there was a clear error in the initial order due to the debtor's false claim of lost shares.

Consequently, the review application was accepted, and the order directing the issuance of duplicate shares was reviewed. The court dismissed the Code of Civil Procedure application with costs, noting that the remaining shares of the judgment-debtor were unaffected by the review. The judgment clarified the legal and equitable ownership of the shares, highlighting the need to rectify errors based on factual and legal positions in such cases.