Transfer of shares on delivery: blank transfers and certificates passed property immediately, despite exchange rules on cheque dishonour.

Property in unascertained shares passed when the certificates and signed blank transfers were delivered and accepted, because the shares became ascertained goods and the sale was complete under the Contract Act. The sellers therefore retained no lien or rescission right against later holders; their remedy was against the cheque or for the price. Rule C of the Bombay Stock Exchange, which required return of the shares on dishonour and dealt with resale consequences, regulated breach and damages only. It did not make delivery conditional, postpone transfer of property, or supply the express stipulation required to preserve a rescissory right.

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Issues: (i) Whether the property in the shares passed when the certificates and blank transfers were delivered and the buyer gave the cheque, and whether the sellers retained any right to rescind or assert a lien against subsequent holders; (ii) Whether Rule C of the Bombay Stock Exchange made the delivery conditional so that property did not pass until the cheque was honoured.

Issue (i): Whether the property in the shares passed when the certificates and blank transfers were delivered and the buyer gave the cheque, and whether the sellers retained any right to rescind or assert a lien against subsequent holders.

Analysis: The contract concerned unascertained shares, and once the certificates and blank transfers signed by the registered holders were handed over and accepted, the goods became ascertained and the sale was complete. Under the Contract Act, shares of this kind were treated as goods, and the seller had delivered all that he could lawfully transfer in the market transaction. Since possession had passed, there was no statutory lien, and Section 121 did not assist the seller because it required an express stipulation authorising rescission on non-payment. The sellers' remedy lay on the cheque or for the price, not against later holders to whom no contractual claim existed.

Conclusion: The property passed on delivery, no lien survived, and the sellers could not rescind the sale or claim delivery from the subsequent holders.

Issue (ii): Whether Rule C of the Bombay Stock Exchange made the delivery conditional so that property did not pass until the cheque was honoured.

Analysis: Rule C required immediate return of the shares if the cheque was dishonoured and provided a mechanism for resale if the buyer failed to comply. That rule was held to be directed to the consequences of breach and to the quantification of damages, not to the perfection of the contract or the transfer of property. It could not override the statutory rule that property passed upon delivery, nor could it operate as the express stipulation required by Section 121.

Conclusion: Rule C did not make delivery conditional and did not prevent the passing of property.

Final Conclusion: The appeal failed because the sellers' title to the shares had ceased on delivery, and the stock exchange rule did not preserve any right to recover the shares from the defendants.

Ratio Decidendi: In a sale of shares treated as goods under the Contract Act, property passes on delivery of the certificates and signed blank transfers when the goods are appropriated and accepted, and a stock exchange rule governing dishonour of the buyer's cheque does not postpone that transfer or create a rescissory right absent an express contractual stipulation.

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