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TMI Blog1922 (1) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... owing to prohibitory orders having been received by the Companies in respect of the shares. It appears that after the sale and before notice to the Companies these shares were attached by prohibitory orders in execution of decrees against the transferor, and they were subsequently sold in execution and purchased by strangers. The competition is between the auction purchasers at the court sales and the transferee under the deed of assignment Ex. L. 3. As regards the shares held in limited companies, it is important to consider the provisions of the Civil Procedure Code as regards the attachment and sales of shares held by judgment debtors in companies governed by the Indian Companies Act. Order 21 Rule 46 enacts that in the case of a share in the capital of a corporation attachment shall be made by a written order prohibiting the person in whose name the shares may be standing from transferring the same or receiving any dividend thereon and a copy of the order being sent to the proper officer of the corporation. Rule 76 provides that where the property to be sold is a share in a corporation the Court may instead of directing the sale to be made by public auction authorise the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is still a discretion in the Directors to recognise or not purchasers in execution of decrees. So far as regards the transferee from the shareholder under Ex. L is concerned, it is clear that the document of transfer does not conform with the provisions of the Companies Act or with the Articles of Association of the Companies. The present case is governed by the Companies Act of 1882 and by the Articles of Association of the various companies. It is clear that both under the Act and the Articles of Association the instrument of transfer of the shares of the Company has to be executed both by the transferor and transferee and in the form prescribed. So far as the transferee is concerned, the form contains a statement by the transferee that he agrees to take the shares subject to the condition on which the vendor himself holds the shares. The Act also provides that the transferor shall be deemed to remain the holder of the shares until the name of the transferee is entered in the Companies registers (See Table A I schedule). Section 44 of the Companies Act of 1882 enacts that the share or other interest of any member in a company shall be movable property capable of being transferr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd receive payments from the person who entered into that equitable contract and issue documents and treat him as a share-holder, it would not have the effect of making him a real share holder. Sir George Mellish, L. ]. observed If a share-holder in a company whose shares by Act of Parliament can only be transferred by deed and by an alteration in the register, thinks tit to sell them in another way, which can only make an equitable contract at most, and the Company so far act upon it that they receive payments from the person who has entered into that equitable contract and perhaps issue documents treating him as their share-holder and calling him their share-holder, does that have the effect of making him the real share-holder ? Now it is obvious that if we were to hold that it had that effect, the consequence would be that the provisions of the Act of Parliament that shares should only be transferred by deed would be entirely eluded; and any person who examined the register whether a creditor who wished to know who the shareholders were in the Company, or a share holder who wished to know who his Company shareholders were would be entirely deceived. None of the numerous cases c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transferee who had given notice of the prior equilable title to the company so as to compel the company to register the shares in the name of the applicant observed as follows :-- If indeed all necessary conditions had been fulfilled to give the transferee as between himself and the company, a present absolute unconditional right to have the transfer registered before the company was informed of the existence of a better title, the case might be different and on the facts of the case he held that no such right was acquired by the subsequent transferee so as to give him priority. Where the law prescribes a mode of transfer any transfer otherwise than by the manner prescribed by law will not confer a valid title. So far as the Madras High Court is concerned it has set its face against what may be called the equitable construction of statutes. In Kurri Vcerareddi v. Kurri Bapireddi I.L.R. (1906) Mad. 336, it was held that the provisions of Section 54 of the Transfer of Property Act which provides for the mode of transfer of Immovable property are imperative and that courts would not be justified in disregarding them on equitable grounds. This decision was followed by another Full Be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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