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TMI Blog1949 (9) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... ssociated Banking Corporation Ltd., which is now in liquidation, and he applied for and was allotted 1000 shares of the company on 18th August, 1942. He had one more share, being the signatory to the memorandum of association and that share was given to him in that capacity. The case of the appellant was that he only needed 500 shares as the qualifying shares for being a director of the company and with regard to the other 500, he had applied for them at the request of Casamalli Munjee who was the chairman of the board of directors, and as soon as he got these 500 shares, he executed the necessary blank transfer forms in respect of these 500 shares and he gave them to Casamalli Munjee in the presence of the secretary of the company Mr. M. C. Jhavari. With regard to the 501 shares, the case of the appellant was that he sold these shares in August, 1945, and he was paid in respect of the same Rs. 18,386-8-0. This amount was received on 20th August, 1945. The amount was paid to him by Casamalli Munjee. When he sold the shares he executed the necessary blank transfer forms. He then received dividends in respect of 891 shares for the year ended 30th June, 1945. He then found out from an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r is also given to rectify the register of members. But that power is limited to those cases where rectification is required in pursuance of this Act, and the only section which empowers the Court to rectify the register of members is section 38. This section provides for two cases in which the rectification of the register may be made, and those two cases are: ( a )were the name of any person is fraudulently or without sufficient cause entered in or omitted from the register of members of the company; or ( b )where default is made or unnecessary delay takes place in entering on the register the fact of any person having ceased to be a member. It is perfectly clear that if there is no rectification of the register, then the liability of a member of the company in the event of its being wound up arises under section 156. That liability is not ex-contractu but ea-lege. It is by reason of the fact that the name of a certain person appears on the register of a company that he becomes liable as a contributory. The Privy Council in Hansraj Gupta v. Asthana [1932] 2 Comp. Cas. 548 , have emphasised this position. In that case the executors were contending that the contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge that both Casamalli Munjee who was the chairman of the board of directors and Mr. Jhaveri who was the secretary knew that these shares had been sold by the appellant and that he was no longer the owner of these shares. In our opinion, it is not sufficient to impute the knowledge with regard to the change of ownership of the shares to the chairman of the board of directors or to the secretary. Something much more has to be established before it can be held that the company was in default in not making the necessary alterations in its register. Reliance is placed on a letter written by the appellant to the company on 13th September, 1945. In that letter he pointed out to the company that he had sold the 500 shares and had received payment in full and that he was no longer a shareholder of the Bank. Having written this letter, the appellant failed to follow it up by taking any further action. Not only he did not follow it up, but what is more, he received the dividends of the subsequent year ended 30th June, 1945, and these dividends he kept to himself not with the intention of appropriating them but without taking the necessary action of sending the dividends to Dr. Jivraj Mehta a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oved from the register. In this case the deed of transfer was executed in the name of the purchaser, the purchaser deposited it with the company, applied that the shares be registered in his name, and this could not be done because a third party who claimed to be interested in the shares gave notice to the company not to register the shares. It was on these special facts that Lord Romilly, M.R., in delivering the judgment of the Court expressed the opinion that the Court could determine who was the real owner of the shares, and in this particular case the Court did give relief to the registered owner of the shares although the name of the purchaser had not been entered in the register of shareholders of the company. As I said before, this is a decision which must be read in the light of its own special facts. But the real principle in fact was enunciated by the same learned Judge in a subsequent case reported in In re Anglo-Danubian Steam Navigation and Colliery Company ( Walker's case) [1868] LR 6 Eq. 30. In this case a transfer was executed and the deed was handed over to the solicitor of the company and this arose out of a compromise that was brought about in a litigation ini ..... X X X X Extracts X X X X X X X X Extracts X X X X
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