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Issues Involved:
1. Whether the transaction in question was a pledge or a mortgage. 2. The legal implications of blank transfers and the rights of the transferee. 3. The validity of the order dated 7-8-1953 passed by Imam J. 4. The applicability of Section 227(2) of the Companies Act and the power of the Court to recall or vacate ex parte orders. Detailed Analysis: 1. Nature of the Transaction: Pledge or Mortgage The principal question was whether the transaction was a pledge or a mortgage. The appellants contended that the transaction was a mere pledge, and the Central Bank had no legal title as a mortgagee. They argued that the execution of blank transfers and the deposit of share certificates did not create a legal mortgage but amounted to an equitable mortgage at best. The Court, however, concluded that the transaction was a mortgage. The Court cited several legal authorities and precedents, including Halsbury's Laws of England and Palmer's Company Law, to establish that a mortgage conveys the whole legal interest in the chattels, whereas a pledge conveys only a special property. The Court held that by depositing the share certificates and executing blank transfer deeds, the petitioners had mortgaged the shares to the Bank, which held the legal title. 2. Legal Implications of Blank Transfers The appellants argued that blank transfers were ineffective to pass title unless specifically authorized by the pledger or mortgagor. The Court rejected this argument, stating that the intention behind signing blank transfers was to allow the mortgagee to fill in the blanks and perfect the security. The Court referred to several cases, including *France v. Clark* and *The Colonial Bank v. Frederick Whinney*, to support the view that the transferee can fill in the blanks and get themselves registered without needing special or express authority. The Court emphasized that the Bank had the right to perfect their title by filling up the blank transfers and applying for registration. 3. Validity of the Order Dated 7-8-1953 The appellants sought to set aside the order dated 7-8-1953, arguing that it was made without notice to the registered holders and based on the incorrect assumption that the transfers had taken place before the order of winding up. The Court found that the order was correct and justified. It held that the transaction was a mortgage, and the Bank had a valid legal title to the shares. The Court noted that Section 227(2) of the Companies Act gave the Court complete discretion to do whatever it thought just, and since the order was correct, it would be improper to recall or vacate it merely because it was passed ex parte. 4. Applicability of Section 227(2) of the Companies Act The appellants argued that the order should be recalled 'ex debito justitiae' because it was made without notice to the registered holders. The Court discussed the applicability of Section 227(2) of the Companies Act, which gives the Court discretion to sanction transfers of shares. The Court cited the decision in *Bir Chand v. John Bros* to support the view that the section does not render transfers without previous sanction void but allows the Court to validate such transactions. The Court concluded that the transaction in favor of the Bank was a good transaction, and there was no ground to vacate or recall the order of Imam J. Conclusion: The appeal was dismissed, and the Court upheld the order of Imam J. dated 7-8-1953. The Court found that the transaction was a mortgage, and the Bank had a valid legal title to the shares. The appellants were ordered to pay costs assessed at Rs. 200/- to the respondent Bank.
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