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TMI Blog1957 (2) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... y practically came to a standstill and for that reason the value of the shares went down to nil. In a meeting of the company held on 29th December, 1952, Ram Dial and Gurdial, respondents, on behalf of themselves and on behalf of respondent No. 4, agreed to sell to the petitioner all the eight shares held by them on any value that may be fixed by the Railway Administration. Blank transfer deeds signed by the three respondents were handed over to the petitioner. The General Manager, Northern Railway, Delhi, forwarded the same to the Railway Board, vide his order dated 30th December, 1952, for acceptance on behalf of the President of India. On 5th February, 1953, Ram Dial respondent wrote a letter to the Railway Administration expressing his willingness to receive 10 per cent. of the face value of the shares as their price. A meeting of the board of directors of the company was fixed for 12th February, 1953. The chairman of the company, who was also a representative of the Railway Administration, wrote to respondent No. 2 to bring with him and hand over the scrips with respect to the eight shares transferred by the respondent. Ram Dial produced share scrips of six of the shares. He d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le from that of Ram Dial and has, therefore, to be considered separately. Execution of the blank transfer deeds on their behalf and the handing over of the scrips relating to their shares are not denied. On behalf of the petitioner, it is contended that this alone was sufficient to complete a valid transfer in favour of the petitioner. It is further submitted that the price, according to the agreement between the parties, was to be fixed by the Railway Administration. The latter fixed the same at 10 per cent. of the face value of the shares and the same was accepted by Ram Dial on behalf of himself and the other respondents. The fact that the price had not been actually paid was of no consequence, for the petitioner was all along willing, and is even now prepared, to pay the same to the respondents. Ordinarily, a sale of shares becomes complete and binding on the parties when scrips with respect to those shares are handed over to the purchaser along with blank transfer deeds signed by the seller. Price may be paid at the time or agreed to be subsequently paid. The parties may also agree that the price shall be fixed by the purchaser himself and paid after such fixation. The facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Indian Sale of Goods Act regards "stock and shares" as falling within the definition of "goods" for the purposes of the Act. Under section 5 of the Act, a contract of sale is made by an offer to buy or sell goods for a price and the acceptance of such offer. A completed contract for sale does not come into existence till there is an acceptance of the offer. To the same effect are the provisions of the Contract Act. Communication of an acceptance to the person making an offer is necessary to complete a contract. Under section 4, communication of an acceptance is complete-- as against the proposer, when it is put in a course of transmission to him, so as to be out of the power of the acceptor ; as against the acceptor, when it comes to the knowledge of the proposer. According to section 5, a proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards. Section 6 provides, inter alia, that a proposal is revoked-- (1)by the communication of notice of revocation by the proposer to the other party ; (2)by the lapse of the time prescribed in such proposal for its acceptance or, if no time is so prescribed, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letters, having been made by them, the acceptance also ought to have been communicated to them. So far as they are concerned, communication of the acceptance to Ram Dial could be of no avail and was not binding as against them. For the same reason, acceptance by Ram Dial of the price at 10 per cent. of the face value of the shares, in his letter (P-8), did not amount to its acceptance by Gurdial and Vidya Vati. Since the petitioner's acceptance was not conveyed to Gurdial and Vidya Vati they had the right to revoke the proposal. The Railway Administration was to fix the price and pay the same while communicating the acceptance. This too, not having been done, the proposal could be revoked, or of itself it stood revoked after the expiry of a reasonable time. In Ramsgate Hotel Co. v. Montefiore [1866] 1 Ex. 109 an offer to buy shares made on 8th June was held to have elapsed on 23rd November, when acceptance was signified, as the interval was not regarded as reasonable. In Ramlalsao Gupta v. Malak [1939] 9 Comp. Cas. 201, an offer made on 24th December, 1934, was regarded as having lapsed by operation of section 6(2) of the Contract Act on 26th August, 1935, when it was accepted. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsideration was not truly stated in the transfer, the one mentioned therein shall be accepted as the consideration that was, or is, to be paid. I would therefore, hold that the transfer deeds are properly stamped. Stamps on the transfer deed executed by Ram Dial have been only cancelled but those on the transfer deeds executed by Gurdial and Vidya Vati do not bear any mark of cancellation at all. They are left blank and may at any time be removed and used again. Under section 12 of the Stamp Act, any instrument bearing an adhesive stamp which has not been cancelled so that it cannot be used again shall, so far as such stamp is concerned, be deemed to be unstamped. Mr. Gosain meets the objection by submitting that since it was the Government who was liable to pay the duty chargeable on the instruments, the instruments need not have been stamped at all, and the stamps which were unnecessarily placed need not have been cancelled. One of the provisos to section 3 of the Stamp Act lays down that no duty shall be chargeable in respect of any instrument executed by, or on behalf of, or in favour of, the Government in cases where, but for this exemption, the Government would be liable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce, along with the letter of allotment of the shares or debentures." The provisos which follow are not relevant for the purposes of this case. The statute is mandatory in its terms. The company could not legally give effect to the transfers and register the shares in the name of the petitioner. Under section 155 of the Indian Companies Act, rectification can only be ordered if the company without sufficient cause enters or omits to enter the name of any person in the register of its members. To order rectification in a case where there is no duly stamped transfer deed in favour of the petitioner would amount to ordering the company to act in contravention of the statute. In New Citizen Bank of India v. Asian Assurance Co. Ltd. [1945] 15 Comp. Cas. 53, it was held that before a person can claim that his name be entered on the register of the company as a shareholder he has to submit the share scrips and a properly executed and duly stamped transfer form, and that the requirements of sub-section (3) of section 34 of the Companies Act, 1913 (section 108 of the new Act) having not been complied with, the company would have been breaking the law if they had registered the transfer. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transfer deeds in favour of the petitioner. Under section 108(1) of the Companies Act, the transfer with respect to these shares could not be registered without production of the share certificates. Article 11 of the company's articles also enjoins that the instrument of transfer must be accompanied by the certificate of shares. Printed forms of the company's share certificate bear the following note : "No transfer of any of the above shares will be registered without production of this certificate." The fact that the share certificates were with Mrs. Perry as a pledgee and the petitioner's failure to produce them with the transfer deeds disentitled the petitioner to claim any registration with respect to these shares. The petitioner's prayer with respect to these shares has, therefore, to be rejected. In the result, the petition so far as it relates to the shares(Nos. 14, 43, 44 and 45) held by Gurdial and Vidya Vati and shares (Nos. 39 and 40) standing in the name of Ram Dial, is rejected. The petition is accepted with respect to the remaining two shares (Nos. 41 and 42) held by Ram Dial, and it is directed that these shares shall be registered in the name of the petition ..... X X X X Extracts X X X X X X X X Extracts X X X X
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