1941 (7) TMI 20 - HC - Companies Law

Court grants rectification of register of members, upholds share transfer validity

The court allowed the petition for rectification of the register of members, granting the petitioner the right to have his name registered as the holder ... Shares warrants and entries in register of members Issues Involved:1. Rectification of the register of members2. Validity of transfer of shares executed in blank after the death of the original transferor3. Compliance with the Articles of Association of the company4. Authority to fill in the blanks in the transfer instrument posthumouslyDetailed Analysis:1. Rectification of the Register of Members:The petitioner, Mahomed Solaiman Ariff alias S. Monawar Nawab Ariff, sought rectification of the register of members of the respondent company. He claimed to be the current holder of six shares initially registered in the name of his grandmother, Mt. Fatma Begum, by virtue of a duly executed instrument of transfer. Despite presenting this instrument and the share script for registration on 4th March 1941, the directors refused to register the transfer without providing any reason.2. Validity of Transfer of Shares Executed in Blank After the Death of the Original Transferor:The shares were originally issued to Mt. Fatma Begum on 22nd March 1897 and transferred in blank to Mr. A.S.A. Suhrawardy on 5th December 1922. Suhrawardy subsequently transferred the shares in blank to the petitioner on 10th December 1940. The directors questioned the authenticity of the transfer, suggesting the instrument was filled after Fatma Begum's death in 1935. However, the court found no evidence to dispute the genuineness of the signature or the payment made for the shares. The court referenced multiple cases, including In re Tahiti Cotton Company and Colonial Bank v. Cady, to support the proposition that a transfer in blank remains valid even if the transferor dies before the transferee's name is filled in.3. Compliance with the Articles of Association of the Company:The Articles of Association relevant to the transfer of shares were discussed:- Article 37: Requires the instrument of transfer to be signed by both the transferor and transferee.- Article 38: Specifies the form of the transfer instrument, which was adhered to in this case.- Article 39: Allows managing agents to decline registration under certain conditions, none of which applied here.- Article 40: Mandates the instrument of transfer to be accompanied by the share certificate and other evidence of the transferor's title, which was complied with.4. Authority to Fill in the Blanks in the Transfer Instrument Posthumously:The court examined whether the petitioner had the authority to complete the transfer instrument after the original transferor's death. It cited several authorities, including Palmer's Company Law and section 202 of the Indian Contract Act, which supports the principle that an agent with an interest in the property retains authority despite the principal's death. The court concluded that the petitioner, having paid valuable consideration for the shares, had the right to fill in the necessary details, including his name and the date of transfer, even posthumously. This was further supported by the case Carter v. White, which established that such rights are based on contract and do not terminate with the death of the transferor.Conclusion:The court ruled that if the petitioner inserts the date of the transfer from Suhrawardy to himself (10th December 1940), the instrument would be complete, and he would be entitled to have his name registered as the holder of the shares. Consequently, the petition for rectification of the register was allowed, subject to this condition, with costs awarded to the petitioner.