Court sale of shares passes by operation of law; only shares still in the judgment-debtor's name were transferred.

A regular suit for rectification of a share register and consequential reliefs was treated as maintainable where the Companies Act remedy was only summary and the dispute lay beyond execution proceedings, so section 47 CPC did not bar the suit. In a court sale of shares, title was held to pass on payment and confirmation of sale; formal delivery or endorsement under Order XXI was not an additional condition to perfect title. The suit was held to fall within the residuary limitation period. On the facts, only the 31 shares still standing in the judgment-debtor's name passed to the auction purchaser, because the earlier transfers of the remaining shares were recognised and were not displaced for want of proof of fraud or notice.

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Issues: (i) whether a regular suit for rectification of the share register and consequential reliefs was maintainable despite the availability of an application under the Companies Act and the bar under section 47 of the Code of Civil Procedure, (ii) whether non-compliance with the procedure relating to delivery and endorsement under Order XXI of the Code of Civil Procedure defeated the auction purchaser's title, (iii) whether the suit was barred by limitation, and (iv) whether the plaintiff acquired title to all 121 shares or only to the 31 shares still standing in the name of the judgment-debtor.

Issue (i): whether a regular suit for rectification of the share register and consequential reliefs was maintainable despite the availability of an application under the Companies Act and the bar under section 47 of the Code of Civil Procedure

Analysis: The reliefs claimed in the suit were held to be beyond the scope of execution proceedings in the earlier decree. The remedy under section 38 of the Companies Act was treated as a summary remedy that did not exclude the common-law right to sue. Since the controversy was complicated and the district court itself had directed the plaintiff to file a regular suit, the bar of section 47 was held inapplicable.

Conclusion: The regular suit was maintainable and was not barred by section 47 of the Code of Civil Procedure.

Issue (ii): whether non-compliance with the procedure relating to delivery and endorsement under Order XXI of the Code of Civil Procedure defeated the auction purchaser's title

Analysis: The sale was treated as a sale of movable property, and the court held that the sale became absolute on payment of the purchase money and confirmation of sale. The delivery mechanism under Rule 79 was held to be a mode of safeguarding the auction purchaser where third parties were in possession, not an additional condition for perfection of title. Rule 80 was held to be directory and applicable only where transfer by endorsement or execution of a document was required. The court sale of shares was treated as transmission by operation of law, not voluntary transfer.

Conclusion: The plaintiff's title was not defeated by the absence of a formal delivery order or by non-compliance with Rule 80.

Issue (iii): whether the suit was barred by limitation

Analysis: The court found that the specific articles relied upon by the defendants did not govern a suit for rectification of a share register and consequential reliefs. In the absence of a specific article, the residuary article applied.

Conclusion: The suit was governed by the residuary period of limitation and was not time-barred.

Issue (iv): whether the plaintiff acquired title to all 121 shares or only to the 31 shares still standing in the name of the judgment-debtor

Analysis: The evidence showed that 90 shares had already been transferred long before the court sale, that the company had recognised those transfers, and that the plaintiff had not established fraud, collusion, or notice to the transferees and company sufficient to invalidate them. The note on the share certificate was held to be only a cautionary stipulation and not a contractual restraint binding the company. As a result, only the shares remaining in the judgment-debtor's name could pass under the auction sale.

Conclusion: The plaintiff acquired title only to the 31 shares still standing in the name of defendant No. 5, and not to the remaining 90 shares.

Final Conclusion: The plaintiff succeeded only in part, obtaining relief in respect of the 31 shares that had remained in the judgment-debtor's name, while the challenge relating to the other shares failed.

Ratio Decidendi: A court sale of shares operates as transmission by law, and the auction purchaser's title is perfected without a formal transfer endorsement where the sale is confirmed and the statutory delivery mechanism has served its protective purpose; prior bona fide transfers already recognised by the company cannot be displaced absent proof of fraud or notice.

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