1984 (7) TMI 8 - HC - Income Tax

Summary

Issues involved: Ownership of 900 equity shares, rectification of share register, completion of gift of shares, validity of transfer without registration.

Ownership of 900 equity shares: The plaintiff claimed ownership of 900 equity shares of a company, alleging that they were gifted to her by her husband, who held the shares in his name and in the names of others as benamidars. The plaintiff provided evidence that the shares were handed over to her along with a blank transfer form, and she received dividends on these shares. The court found that the ownership of the shares passed to the plaintiff when they were physically transferred to her, even though the transfer was not recorded in the company's books.

Rectification of share register: The plaintiff sought a decree directing the company to rectify the share register by inserting her name as the holder of the 900 shares. The court held that the plaintiff had proven her entitlement to the shares through the gift made by her husband, and therefore, ordered the company to update the share register accordingly.

Completion of gift of shares: The court emphasized that the gift of the shares was complete when they were physically handed over to the plaintiff along with the necessary transfer documents, even though the transfer was not officially recorded by the company. Citing legal precedent, the court stated that the transfer of shares became irrevocable upon delivery, regardless of registration in the company's books.

Validity of transfer without registration: The court rejected the argument that the transfer of shares must be registered with the company to be valid. It held that the completion of the gift was not dependent on registration, and the plaintiff had acquired a legal right to have the shares registered in her name. The court distinguished previous judgments that required registration, asserting that the transfer was valid and effective without it.

Separate Judgment by Dipak Kumar Sen: Justice Dipak Kumar Sen concurred with the decision, agreeing that the plaintiff had successfully proven her ownership of the 900 equity shares and was entitled to have her name inserted in the share register. The judgment was set aside, and decrees were issued in favor of the plaintiff for ownership declaration, share register rectification, and issuance of share certificates.