Entitlement to Bonus Shares - unregistered transferees on the register date not entitled; procedural delay does not create damages.
Where a purchaser applied for share transfer but was not entered on the company register on the bonus record date, the court found no legal principle obliging the company to pay the bonus to an unregistered transferee; slight administrative delay in sanctioning transfers was not held to create liability in damages. The court considered authorities on delay and rectification of the register under Section 38 but identified no authority converting procedural delay into a substantive right to bonus or a basis for damages. The petitioner's claims for the bonus and for damages were therefore rejected, and the Small Cause Court's finding that payments to registered members were proper was left undisturbed.
Issues: Whether a purchaser of shares who has applied for transfer but whose name is not yet entered on the company's register at the time of a bonus declaration is entitled to the bonus, and whether a slight delay in registering the transfer renders the company liable for damages or requires payment to the transferee.
Analysis: The petitioner purchased shares and applied for their transfer before the company declared a bonus; however the transfers were not sanctioned and the petitioner's name did not appear on the company's books on the bonus record date. The court considered authorities on delay in laying transfer applications before directors and on rectification of the register under Section 38 of the Indian Companies Act, but found no authority establishing that a slight administrative or procedural delay in according sanction to share transfers obliges a company to pay dividends to a person not entered as a member on its books, or that such delay alone creates liability in damages. The court noted that the transferors were not parties to the suit and that the Small Cause Court had found the payments to registered members proper and the delay not unreasonable.
Conclusion: The petitioner's claim for the bonus and for damages is rejected; there is no justification to disturb the Small Cause Court's decision that the bonus was properly paid to those shown as members on the company's books on the declaration date and that the delay in registration was not unreasonable.
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