Court-sale share purchaser has no absolute right to registration; company discretion to refuse transfer remains intact.

Section 38 of the Indian Companies Act, 1913 was read as subject to its proviso generally, so the absence of a specific issue directed for trial did not prevent the appeal from being entertained where a question of law arose in substance. On registration of shares, a purchaser at a court-sale was treated as acquiring no greater right than a private purchaser and therefore no absolute entitlement to have the transfer registered. The company's articles and the directors' discretion to refuse an undesirable transferee remained effective, and the refusal to register was not displaced by the compulsory nature of the sale.

---

---

Issues: (i) whether an appeal lay under Section 38 of the Indian Companies Act, 1913 without a specific issue having been directed for trial; (ii) whether a purchaser of shares at a court-sale was entitled as of right to have the transfer registered in his name notwithstanding the directors' refusal.

Issue (i): whether an appeal lay under Section 38 of the Indian Companies Act, 1913 without a specific issue having been directed for trial

Analysis: The proviso to Section 38 was held to apply generally to the section and not merely to its last sub-section. Although the absence of an express direction to try an issue created difficulty, the matter had in substance involved a question of law arising in the application, and the appeal was entertained in view of the existing practice and the need to avoid prejudice from procedural laxity.

Conclusion: The appeal was treated as competent.

Issue (ii): whether a purchaser of shares at a court-sale was entitled as of right to have the transfer registered in his name notwithstanding the directors' refusal

Analysis: A purchaser at a court-sale was held to acquire only the same proprietary interest as the original owner could transfer, together with no greater right to insist upon registration than a private purchaser. The intervention of the court and the compulsory character of the sale did not curtail the company's powers under its articles or enlarge the purchaser's rights. The cited procedural rule preventing dealings inconsistent with the sale did not confer an absolute right to registration, and the company's discretionary power to refuse an undesirable transferee remained intact. The refusal by the directors was also held to fall outside interference on the limited appellate grounds available under Section 100 of the Code of Civil Procedure, 1908.

Conclusion: A court-sale purchaser had no absolute right to be registered as shareholder, and the directors' refusal stood.

Final Conclusion: The appeal failed on the substantive question and the company's refusal to register the transfer was upheld.

Ratio Decidendi: A purchaser at a court-sale acquires no higher right to registration of shares than a private purchaser, and the company's discretionary power to refuse transfer remains unaffected unless the governing law expressly removes that discretion.

---