1943 (3) TMI 11 - HC - Companies Law

Court orders transfer of shares, nominal damages awarded. Plaintiff's right upheld, costs granted for register rectification.

Thenappa Chettiar Versus Indian Overseas Bank Ltd.

The Court ordered the defendant Bank to transfer 402 shares to the plaintiff and awarded nominal damages of Rs. 250. The plaintiff's right to maintain the ... Shares warrants and entries in register of members and Transfer to Shares – Power to refusal registration and appeal against refusal Issues Involved:1. Transfer of shares to the plaintiff.2. Validity of the will and succession certificate.3. Plaintiff's status as an alien enemy.4. Damages claimed by the plaintiff.Issue-wise Analysis:1. Transfer of Shares to the Plaintiff:The plaintiff, Thenappa Chettiar, sought the transfer of 402 shares held by his deceased father, Lakshmanan Chettiar, in the Indian Overseas Bank. Despite multiple requests and providing necessary documents, including a registered will and a succession certificate, the Bank delayed and raised various objections. The Bank initially required probate of the will for the transfer, but later accepted a succession certificate. However, they then demanded a letter from the plaintiff recognizing the Bank's lien for his father's debt. The Court found the Bank's objections to be 'captious and untenable,' noting that the plaintiff was an executor by implication and that the succession certificate was a valid legal representation for the transfer of shares.2. Validity of the Will and Succession Certificate:The will executed by Lakshmanan Chettiar was registered and clearly appointed the plaintiff as an executor. The Court held that the will constituted the plaintiff as an executor by implication, and probate was not compulsory for a mofussal will executed at Karaikudi. The succession certificate obtained by the plaintiff was deemed sufficient for the transfer of shares, as it included the right to negotiate or transfer securities. The Court dismissed the Bank's objections regarding the necessity of probate or letters of administration, affirming that a succession certificate is a valid legal representation under Article 42 of the Bank's articles of association.3. Plaintiff's Status as an Alien Enemy:The Bank argued that the plaintiff, residing in the Federated Malay States occupied by Japan, should be treated as an alien enemy and thus could not maintain the suit. The Court rejected this argument, stating that mere military occupation by an enemy does not make the plaintiff an alien enemy. The Federated Malay States was not a foreign country at war with the United Kingdom, and there was no proof that the plaintiff was trading with the enemy. The Court concluded that the plaintiff was entitled to maintain the suit despite his location.4. Damages Claimed by the Plaintiff:The plaintiff claimed Rs. 20,000 in damages for the Bank's failure to transfer the shares, alleging that he lost a beneficial sale agreement as a result. The Court ruled that the plaintiff could not provide evidence for special damages based on the alleged contract with a third party. However, the plaintiff was allowed to claim general damages due to a fall in the market value of the shares. The Court found no sufficient evidence of a significant fall in share prices and thus did not award substantial damages. Nevertheless, the Court recognized the plaintiff's right to nominal damages for the Bank's breach of legal obligation and awarded Rs. 250, along with decreeing the rectification of the Register of Members to reflect the plaintiff as the shareholder.Conclusion:The Court ordered the defendant Bank to transfer the 402 shares to the plaintiff and awarded nominal damages of Rs. 250. The Bank's various objections were deemed unfounded, and the plaintiff's right to maintain the suit was upheld. The plaintiff was granted costs for the claim regarding the rectification of the Register of Members but not for the inflated damages claim.