Free transferability of listed shares requires lawful grounds for refusal; rectification and consequential dividends follow when none are shown.

Shares of a listed public company are freely transferable, and a transferee is entitled to registration and rectification of the register when the transfer is otherwise in order. Refusal is lawful only on bona fide grounds authorised by law; arbitrary, collateral, or undeclared reasons cannot sustain it. The company's reliance on section 292 of the Companies Act, 1956 was rejected because that provision concerns board powers and does not govern share transfer, and no valid ground under section 22A(3) of the Securities Contracts (Regulation) Act, 1956 was shown. The transferee was also entitled to dividends accrued from the date of purchase as a consequential benefit, and the company could not appropriate them towards alleged third-party dues.

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Issues: (i) Whether the transferee of shares of a public limited company was entitled to have the transfer registered in its name and the register of members rectified, and whether refusal could be sustained on the stated grounds; (ii) whether the transferee was entitled to dividends accrued on the shares from the date of purchase.

Issue (i): Whether the transferee of shares of a public limited company was entitled to have the transfer registered in its name and the register of members rectified, and whether refusal could be sustained on the stated grounds.

Analysis: Shares of a listed public company are freely transferable, and the transferee is entitled to rectification of the register when transfer is otherwise in order. Refusal can be justified only on bona fide grounds traceable to the governing law and cannot rest on arbitrary, collateral, or undeclared considerations. The company's reliance on alleged non-compliance with section 292 of the Companies Act, 1956 was found untenable because that provision concerns internal powers of the board and does not govern transfer of shares. The company also failed to identify any ground under section 22A(3) of the Securities Contracts (Regulation) Act, 1956 that would lawfully justify refusal. Defects initially pointed out had been rectified, and the later stand taken by the company was treated as unjustified and not bona fide.

Conclusion: The transferee was entitled to registration of the shares and rectification of the register, and the refusal to register the transfer was unlawful.

Issue (ii): Whether the transferee was entitled to dividends accrued on the shares from the date of purchase.

Analysis: Once the transfer was held to be effective from the date of purchase, the dividend flowing from those shares became an incidental and consequential benefit of the transfer. The company's attempt to appropriate the dividend towards alleged dues of a former managing director was held to be without authority of law. The claim for dividend was therefore treated as part of the relief flowing from the rectification of the register.

Conclusion: The transferee was entitled to the accrued dividends with interest from the date they became due.

Final Conclusion: The petition succeeded, the share transfer was directed to be recognised from the date of purchase, and consequential monetary relief was also granted.

Ratio Decidendi: A listed public company cannot refuse registration of a share transfer except on bona fide grounds authorised by law, and where no statutory ground is made out, the transferee is entitled to rectification of the register together with consequential benefits from the date of purchase.

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