Share transfer refusal without bona fide grounds is unsustainable where certificates were lost and indemnity bonds were provided.

Refusal to register share transfers was found unsustainable where the original share certificates were alleged to be lost and the transferors had executed affidavits and indemnity bonds seeking duplicate certificates. The company relied mainly on non-enclosure of original certificates and on extraneous considerations connected with internal disputes, rather than on a bona fide legal basis. The register of members was treated as only prima facie evidence, and the company's power to refuse transfer under its articles had to be exercised for legitimate reasons. Registration of the share transfers and rectification of the register were therefore upheld.

---

---

Issues: Whether the refusal to register the transfer of shares and the resulting rejection letter were legally sustainable in the absence of original share certificates, and whether the transfer request could nevertheless be directed to be registered on the basis of the transferors' affidavits and indemnity bonds.

Analysis: The transferors had executed agreements and affidavits stating that the original share certificates were lost and had requested issuance of duplicate certificates. The respondent had submitted the transfer request, but the company refused registration mainly on the ground that original certificates were not enclosed and on extraneous considerations relating to internal disputes and conduct of the respondent. The governing framework required compliance with transfer formalities, but the record also showed that the company had not acted on the requests for duplicate certificates and had rejected the transfer without a legally sustainable basis. The register of members was only prima facie evidence, and the company's refusal power under the articles had to be exercised bona fide and for legitimate reasons.

Conclusion: The refusal to register the transfer was unsustainable, and the directions for registration of the share transfers and rectification of the register were upheld in favour of the respondent.

---