Statutory share transfer formalities control priority, and a court auction purchaser prevails over a non-compliant private transferee.

A transfer of shares that does not comply with the Companies Act and articles of association does not prevail against a court auction purchaser, because statutory formality is mandatory and title against third parties passes only on proper execution and registration. A private transferee under an irregular transfer acquires at most an equity to seek regularisation, not superior title. After confirmation of the court sale and service of the prohibitory order, no further act was required to complete the auction purchaser's rights as against the company and rival claimants, and the company could not validly transfer the shares elsewhere.

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Issues: (i) Whether a transfer of shares not executed in the mode prescribed by the Companies Act and the articles of association could prevail against an auction purchaser at a court sale. (ii) Whether, after confirmation of the court sale and service of the prohibitory order, any further act was required to complete the auction purchaser's title as against the company and rival claimants.

Issue (i): Whether a transfer of shares not executed in the mode prescribed by the Companies Act and the articles of association could prevail against an auction purchaser at a court sale.

Analysis: The provisions governing transfer of shares required execution in the prescribed form by both transferor and transferee, and the transferor remained the shareholder until registration. A transfer that did not comply with that statutory mode did not pass title against third parties. A private transferee under an incomplete or irregular transfer acquired, at best, an equity to compel proper transfer, but not a title superior to a court purchaser whose rights had arisen in the manner required by law.

Conclusion: The private transferee could not claim priority over the auction purchaser; the statutory mode of transfer was mandatory and non-compliance was fatal against third-party claimants.

Issue (ii): Whether, after confirmation of the court sale and service of the prohibitory order, any further act was required to complete the auction purchaser's title as against the company and rival claimants.

Analysis: Under the Civil Procedure Code, attachment and sale of shares in a corporation were completed by the prohibitory order and the consequential notice to the company. Once the sale was confirmed and the order was issued, nothing further was required from the court or the purchaser except the company's recognition or refusal. The purchaser had therefore done all that the law required, and the company could not transfer the shares to anyone else.

Conclusion: No further act was required; the court purchaser had obtained the superior right to have the transfer recognised.

Final Conclusion: The appeals succeeded to the extent that the court purchasers were held entitled to priority over the prior private transferee in accordance with the prescribed statutory mode of transfer.

Ratio Decidendi: Where a statute prescribes the exclusive mode of transfer of shares, title against third parties passes only on compliance with that mode, and a court purchaser who has completed the execution-sale formalities has priority over a transferee under a non-compliant transfer.

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