9911796707
TMI Blog1934 (2) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... nd a final decree on the 9th October of the same year. On the 22nd February, 1926, the liquidation of the Madras Cloth Market Ltd. was ordered by the High Court. Up to this time no notice of the equitable mortgage had been given by the Bank to the company. Such a notice was given after the company went into liquidation. On the 7th October, 1929, Callianjee Sons became insolvents and the assets of that firm became vested in the Official Assignee of Madras. In the course of the winding-up the liquidator got in the assets of the company and collected and discharged debts; and he has paid Re. 1 per share to the contributories of the company except Ramjee Callianjee or the Bank which got the equitable mortgage over Ramjee Callianjee's shares. The P. O. Bank, as equitable mortgagees, applied to the liquidator for the 5000 shares covered by the equitable mortgage. The Official Liquidator contended, and contends here, that the Bank are not entitled to be paid the value of those shares because the company are entitled to set off these shares of Ramjee Callianjee against the Rs. 36,000 owing to the company by Ramjee Callianjee. It is admitted that the Official Liquidator has a sufficient ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount whatsoever, and that this power is not limited to an indebtedness for calls and indeed that point is not contested here by the respondents. One of the contentions put forward by the appellants here, and indeed it was put in the forefront of their case, was that the proceeding, in which the Bank's claim to the shares and the company's claim to set off against those shares Ramjee Callianjee's debt to them should be settled, was the adjustment of rights of contributories under Section 192 of the Indian Companies Act (VII of 1913) which corresponds to Section 211 of the English Companies Act of 1929 which is the same as Section 170 of the Act of 1901. It is contended that the Bank are not contributories because the transfer to them by Ramjee Callianjee of his shares was never registered and no application for registration was ever made and, if it had been, the company would have been entitled to refuse to register the transfer by reason of Article 28 of the articles of association, because Ramjee Callianjee was indebted to them to the extent of Rs. 36,000. The respondents, besides contesting the argument that this is a matter arising out of Section 192 of the Indian Companies Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hould be wound up under it. Indeed, I do not see how the rights of those members who have not paid up in full could be adjusted without the rights of those members who have paid up in full being taken into account." The proceedings before us were clearly an adjustment of the rights of the contributories but the Bank are not contributories because they are not the registered holders of these shares and up to the date of this application in the trial Courts I understand it had not applied to have the transfer of these shares to them registered. But it seems that a suggestion was made that they should apply for a rectification of the register by getting the transfer of the shares registered; it is argued by the appellants that the Bank are not entitled to have the transfer registered. That they must become the registered holders of the shares is clear beyond all question. They cannot be recognised as owners unless they are registered as such. ( In re Perkins, Ex parte Mexican Santa Barbara Mining Company and New London and Brazilian Bank v. Brocklebank. It is, therefore, important to see whether the company would be entitled to refuse to register the transfer of the shares to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that provision is a non-approval of the transfer in the sense in which the term "non-approval" is used in a subsequent article. The Company only decline to register so as not to lose the right they have against the registered owner in respect of their debt. That refusal might be put an end to at any moment by payment of the debt." In the course of the argument the Earl of Selborne, L.C, asked the question "would not the bank's nominees (transferees) be entitled to be registered on satisfying the company's claim?" and on page 370 the consent of the bank to the proposal registration of these shares in the name of the trustee in liquidation is stated by the Earl of Selborne to have been in order to get rid of the right of the company to a set-off in respect of their claim. This case certainly supports the appellants' contention. But it must be observed that there were there no articles of association giving the company a lien on shares on account of the shareholder's indebtedness to the company. The position in that case was that as between the transferee and the trustee in liquidation the former was the true owner but as between the transferee and the company the transferee could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... association a first and permanent lien and charge available in law and in equity on every share for all debts due from the shareholder to the company, could claim priority over the bankers who held the shares deposited with them as security for the balance due from the shareholder on current account even in respect of money which became due from the shareholder to the company after notice of the deposit had been given to the company. It was held that the company could not claim such priority but could only do so by reason of their lien in respect of debts due to them before notice of the deposit. There was no question in that case as to the company's right to refuse to register transfers and there was no article similar to Article 28 in the present case although Article 100 of the articles of association of the company provided that no transfer of shares could take place without the approval of the Board of Directors. The appellants there claimed in the suit (1) an account of what was due to them for principal, interest and costs on the securities and to have their securities realised by foreclosure and sale and (2) a declaration that the securities had priority over all lien (if ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
