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Issues: (i) Whether the legal representative of a deceased shareholder was entitled to have her name entered in the register of members in place of the deceased in respect of shares standing in his name. (ii) Whether the court had jurisdiction under section 155 of the Companies Act, 1956, to order rectification of the register in a case of transmission of shares, and whether default or unnecessary delay was made out.
Issue (i): Whether the legal representative of a deceased shareholder was entitled to have her name entered in the register of members in place of the deceased in respect of shares standing in his name.
Analysis: Under the articles of association and the statutory regulations incorporated into them, the legal representative of a deceased shareholder was the only person who could be recognised by the company as having title to the deceased's interest in the shares. The widow had obtained letters of administration and had duly elected to be registered as holder of the shares. No lien over the shares was asserted by the company, and no further evidence beyond the grant of administration could reasonably be demanded. A rival claim based on an alleged beneficial interest under a trust could not defeat the company's duty to recognise the legal representative, since notice of trust could not be entered in the register and the rival claimant was not the legal representative.
Conclusion: The legal representative was entitled, as against the company, to be registered in place of the deceased shareholder, and the claim to rectification succeeded on merits.
Issue (ii): Whether the court had jurisdiction under section 155 of the Companies Act, 1956, to order rectification of the register in a case of transmission of shares, and whether default or unnecessary delay was made out.
Analysis: Section 155 was construed broadly so as to cover cases of transmission as well as transfer. The expression relating to the entry of the fact of a person having become a member was held to include the case of a person entitled to membership by transmission. The statutory remedy of rectification was not confined to subscribers or to cases of original omission from incorporation records. On the facts, the board had ample opportunity to deal with the application but adjourned it and took no effective step. The later circumstances before the court could be considered to do complete justice, and by the date of decision there was no justification for withholding registration. The company's conduct amounted to both default and unnecessary delay in entering the necessary facts in the register.
Conclusion: The court had jurisdiction under section 155 to order rectification in a transmission case, and default as well as unnecessary delay was established.
Final Conclusion: The appeal failed, and the order directing rectification of the share register in favour of the widow as legal representative was maintained.
Ratio Decidendi: Section 155 of the Companies Act, 1956, is wide enough to cover rectification claims arising from transmission of shares, and a legal representative who establishes title to the shares is entitled to be entered in the register unless the company shows a lawful ground to refuse or suspend registration.
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