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TMI Blog1966 (10) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... ssary to have any transfer forms signed by the petitioner lodged with the company in connection with the transfer of shares . "No application or authority on the part of the petitioner was required for transfer of the said two shares in my favour." At the hearing of the petition, Mr. Amin for the petitioner has strongly relied upon the fact that the allotment of the shares is stated to have been cancelled. He has emphasised that shares once allotted to a member cannot be cancelled except in accordance with the provisions contained in that respect of the Companies Act. In my view, the question of cancellation of allotment does not arise in this case. The only question which arises is as to whether the company has without sufficient cause transferred the shares from the name of the petitioner to the name of the 2nd respondent. In that connection, Mr. Amin has strongly relied upon the provision in section 108 of the Act and articles 49 to 65 in the memorandum of association of the company relating to transfer and transmission of shares. The relevant articles provide as follows : "53. The company shall keep a book to be called the 'Register of Transfers' .. 54. The instrument ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alf of the transferee has been lost, the company may register the transfer .: Provided further that nothing in this section shall prejudice any power of the company to register as shareholder .the company has been transmitted by operation by law." Section 110 deals with parties who can lodge an application for transfer and the notice that the company would have to give upon an application for transfer submitted to the company. Mr. Amin has, having regard to the contents of the section 108 and the above articles relating to the transfer of shares, with some emphasis contended that everything that has been alleged on behalf of the company does not disclose any sufficient cause for transfer of the above two shares from the name of the petitioner and removal of the name of the petitioner from the register of the company in respect of these two shares. He is right in his submission that under the articles and section 108, for a transfer inter vivos and/or a private transfer, the company shall not register a transfer of shares unless a proper instrument of transfer duly stamped and executed on behalf of the transferor and transferee is submitted to the company. Admittedly, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion with section 38 of the 1913 Act corresponding to section 155 of the present Act, the court observed : "The court's jurisdiction under section 38 is, therefore, attracted. The High Court rightly ordered the rectification in the exercise of its summary powers under section 38. The jurisdiction created by section 38 is very beneficial and should be liberally exercised. We see no reason why the court should deny the applicant relief under section 38. The directors of the appellant-company on the most frivolous of objections have prevented the State of Orissa from becoming a member for the last 16 years." Ordinarily, where complicated questions of title or facts arise on a matter of an application for rectification of the register of shareholders, parties are directed to file a suit, as that is more appropriate proceeding for recording evidence and considering complicated questions of facts and law. If I was of the view that the questions raised on behalf of the respondents necessitated deep investigation of questions of facts or law, I would have directed the petitioner to file an appropriate suit for the reliefs claimed in this petition. In this connection, it is rightly point ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be provided in section 155 that in case of non-compliance of section 108 the court shall order rectification of the register of members unless, for reasons to be recorded, rectification was not necessary or proper. Similarly, non-compliance of section 108 would be declared an offence. When the law does not prescribe the consequences or does not lay down penalty for non-compliance of section 108, the provision can be considered to be directory and not mandatory." In deciding this petition, it is not necessary for me to discuss the above observations. I must, however, observe that it is my clear impression that this court has always been of the view that for transfer inter vivos of shares, a duly stamped transfer deed is an absolute necessity. It is clear to me that it was not permissible for the company in this case having regard to the facts which had come to its knowledge from the letters addressed by Gordhanbhai Patel himself to transfer the shares registered in the name of the petitioner to the name of the 2nd respondent without an application made in that connection by the petitioner himself. The facts which had come to the knowledge of the company are all mentioned in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manner for transfer of shares. The only correct attitude that the company could take was that it was not concerned with dealings in respect of those shares between Gordhanbhai on the one hand and the petitioner on the other. The company was not bound to investigate into these dealings and make findings on the footing of statements made ex parte by Gordhanbhai. It is quite clear that the company without any sufficient cause accepted all that Gordbanbhai stated as correct and proceeded to transfer the shares from the name of the petitioner to the name of the 2nd respondent in breach of the provisions in section 108 and the articles relating to transfer of shares. In this connection, it is necessary to refer to article 61, which runs as follows : "Subject to the provisions of Articles 58 and 59 any person becoming entitled to shares in consequence of the death, lunacy, bankruptcy or insolvency of any member, or the marriage of any female member or bv any lawful means other than by a transfer in accordance with these presents, may With the consent of the board of directors (which it shall not be under any obligation to give), upon producing such evidence that he sustains the char ..... X X X X Extracts X X X X X X X X Extracts X X X X
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