1933 (11) TMI 15

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....tification of the share register in their favour. The two claims arose out of the following facts. In 1923 the Agra United Mills Co., Ltd. who owned these shares in the company now in liquidation, executed a trust deed whereby these shares, inter alia, were charged to the debenture holders. In 1927 the debenture holders brought a suit for enforcement of the debentures, and in the same year the Court appointed an interim receiver of the assets of the company. In 1928, Seth Bir Chand brought a suit against the Agra United Mills Co., Ltd. for money due to him. He was successful in this connection, and a decree was passed in his favour for the amount claimed. In execution of his decree Seth Bir Chand applied for attachment of these shares. Mess....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ed Mills had. On behalf of Seth Bir Chand two points have been taken. Firstly, it is contended that the transfer of these shares made in 1932 to the debenture holders was a transfer after the winding up order had been made against the company whose shares were transferred, that is, the Agra Spinning and Weaving Co., and that such a transfer according to section 227(2), Companies Act, is void. The second point taken was that these shares were part of a floating charge, that therefore, according to paragraph 5 of the trust deed, the charge in no way "hindered the company from selling, mortgaging or otherwise disposing of or dealing with the shares charged," and that therefore the sale to Seth Bir Chand being made before the winding up of t....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....hough it would be discretionary would not ordinarily be made without good grounds for making it. In this case the debenture holders sought to enforce the security many years before the winding up order was made, and indeed their debenture suit was actually decreed some three months before the winding up order was made, that is, the debenture holders' right had accrued before the winding up There can be no possible reason therefore in this case for the Court to refuse an order declaring the transaction good. Apart from this point, it would not be in accordance with justice for the Court to refuse an order in this case. With regard to the second point that the debenture holders only had a floating charge on the property of the Agra United ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... these shares. That registration was not carried out. If it had been, the decision today would necessitate a rectification in favour of the debenture holders, who of course would, and will, have to pay Rs. 1 per share for the transfer in their favour. Seth Bir Chand certainly had to pay the money for registration. It is no fault of the liquidator that he was not registered as a shareholder, and, as I have already said, if he had been registered, his name would now have to be expunged. It may be-I do not express an opinion on this-that he may have an action against the directors of the company for such damages as he may think he has a right to claim for failure to register his name or for return of the money paid to them for registration as ....