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Issues Involved:
1. Directors' absolute power to refuse a transfer. 2. Company's lien on shares. 3. Proper instrument of transfer not presented (unstamped transfer forms). Issue-wise Detailed Analysis: 1. Directors' Absolute Power to Refuse a Transfer: The appellant company argued that the directors had an absolute power to refuse a transfer under article 36 of the articles of association. The trial court addressed this issue under Issue 8 and found in favor of the petitioners, stating that the directors did not have such absolute power. 2. Company's Lien on Shares: The appellant company contended that it had a lien on the shares sought to be transferred, which was covered by Issues 4 to 7. The petitioners argued that there was no debt in respect of which any lien could be claimed, and alternatively, that the debt was unlawful and ultra vires the company. The trial court extensively examined this issue, considering numerous documents and evidence. The court concluded that there was no lawful debt and that any lien, if it existed, was waived. The court also found in favor of the petitioners on this issue. 3. Proper Instrument of Transfer Not Presented: The critical issue in the case was whether a proper instrument of transfer, duly stamped and executed, was presented to the company, as required by section 34(3) of the Companies Act, 1913. The appellant company argued that the transfer forms presented were not stamped, making it unlawful for the company to register the transfer. The trial court initially dismissed this defense as unmeritorious, stating that the issue of stamps was never raised before the petition was filed, and there was no refusal by the petitioners to stamp the transfer forms. However, upon appeal, it was emphasized that section 34(3) explicitly requires a duly stamped instrument of transfer to be delivered to the company. The appellate court cited the unreported case of Vinayak Balvant Gokhale v. Commonwealth Assurance Co., Ltd., where it was held that the absence of a duly stamped instrument of transfer, even if due to the company's default, precludes the court from ordering rectification of the register. The appellate court found this case indistinguishable from the present one and concluded that the petitioners did not comply with the statutory requirement of delivering a duly stamped instrument of transfer. Therefore, the company would have been breaking the law if it had registered the transfer. The appellate court allowed the appeal, discharging the order of the trial court, and ordered the respondents to pay the appellants' costs of the appeal and two-thirds of the appellants' costs of the petition, taxed on a long cause scale with two counsel. Conclusion: The appeal was allowed primarily on the ground that the petitioners failed to present a duly stamped instrument of transfer, as mandated by section 34(3) of the Companies Act, 1913. The trial court's focus on the lien issue and the directors' power to refuse the transfer did not address the statutory requirement adequately. The appellate court's decision underscores the imperative nature of compliance with statutory provisions for the transfer of shares.
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