1930 (4) TMI 7

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....ven shares in the Co-operative Company Ltd. Lala Nemidas is the banking and managing proprietor of the plaintiff firm. Dr. Brijbehari Lal is the managing director of the defendant company. The financial year of the defendant company begins with 1st April and ends with 31st March of the following year. On or about 13th April, 1925, Lala Nemidas intimated to the defendant company that he was desirous of selling his seven shares. He constituted the defendant company as his agent for selling the same. The company could have refused to take up this business and could well have asked the plaintiff to sell the shares without the mediation of the Co-operative Company, Ltd., or its managing director. The Company, however, agreed to act for the pl....

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....tained by the managing director as the fruit of the sale, whether the purchase was made in his name or in the name of his minor sons, the benefit must go to the owner of the shares. The suit, however, is not directed against Dr. Brijbehari Lal and no decree has been passed against him. On the 22nd April, 1925, the defendant sent to the plaintiff a cheque for Rs. 2,800 as the price of the seven shares sold. The dividend of the shares had not been declared by that time. The dividend was declared on the 20th July, 1925. It may be noticed here that although the transaction was between business people, the entire contract between the parties was not reduced to writing. The terms of the negotiations which ultimately matured into the contract h....

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....e shareholders. The plaintiff had already sold his shares and was no longer a share-holder. Behind his back, a resolution was passed that the purchaser and not Babu Nemidas was entitled to the dividends in controversy. This resolution of the shareholders could not over-ride the contract between the parties. Lastly, it was urged that the shares were sold unconditionally on the 13th April, 1925, without any reservation in favour of Lala Nemidas as regard the right to the dividends. This document dated the 13th April, 1925, was not a formal instrument and did not contain the terms of the entire contract. There was nothing to preclude the plaintiff from showing that some additional supplementary agreement had been arrived at contemporaneousl....

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....change, the price of shares is subject to constant fluctuation. In this rise and fall, one of the determining factors in fixing the price of the shares is that dividend is taken into account and treated as an integral part of the shares sold. There can, however, be no legal bar to a contract to sell the shares only to the exclusion of the dividends which had already become payable. We have no doubt that ordinarily and in the absence of a contract to the contrary, a purchaser of shares is entitled to all the dividends, which may have been declared after the date of the purchase. The general rule, however, may be modified by a special stipulation. In Black v. Homersham [1878] 4 Ex. D. 24; 48 LJ Ex. 79; 39 LT 671; 27 WR 171, the fact were that....