1974 (7) TMI 78
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....he died, she had signed several blank transfer forms, apparently intended to be filled in by the donee so as to enable him to obtain the transfer of the donated shares in the registers of the various companies and share certificates in his own name. She had put her signatures in the correct places showing that she meant to sign as the transferor of the shares. The shares could not, however, be transferred in the registers of the various companies, in accordance with the relevant provisions of company law, before the lady's death. Therefore, the respondent before us, Pranlal Jayanand Thakar, a nephew of late Uttamram Mayaram Thakar, disputed the claim of the appellant, Vasudev Ramchandra Shelat, to these shares in an administration suit which came up before a learned judge of the Gujarat High Court in second appeal together with other matters. The learned single judge held that Shelat was entitled to the shares covered by the registered gift deed to which the blank transfer forms could be related but not to others said to have been orally gifted with which we are not concerned here. The learned judge having granted leave to file a Letters Patent Appeal, a Division Bench of the Gujar....
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....a registered document, even delivery of share certificates to the donee was not necessary in view of section 122, Transfer of Property Act. (2)Assuming, without conceding, that the donor had to do something more than to execute a registered document, this too was done when the share certificates and the signed "blank transfer" forms were handed over to the donee by the donor. It did not matter if the name of the donee and other particulars are wanting in these blank forms. All necessary particulars of shares involved were expressly mentioned in the gift deed which specifies and identifies each individual share meant to be donated. The gift deed and the signed blank forms had to be read together. The donor had done all that reasonably lay within her power to complete the donation. (3)The conduct of the donor, in handing over the share certificates to the donee and the blank transfer forms, read in the context of the expressly laid down intentions of the donor in the gift deed, raised the presumption of an implied authority to fill in the details and to submit to the companies concerned the forms given by the donor to Shelat before her death. (4)There was no evidence whatsoever in....
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....m given in regulation 19 of Table A of the First Schedule of the Companies Act of 1913 were never filled in, the doctrine of "substantial compliance" with the required form could not come to the aid of the applicant. (5)The gift deed itself does not empower the donee to take any of those steps which remained to be taken to complete the "transfer" so that the doctrine of implied authority would be excluded by the express terms of the gift deed which not only do not confer any such authority upon the donee but indicated that the donor was to take the necessary steps herself. (6)Inasmuch as acceptance of the gift "during the lifetime of the donor" is a condition precedent to the validity of the gift as a transaction, and the appellant, Shelat, did not apply for the transfer of shares, so as to indicate his acceptance of the gift before the donor died, the purported donation was frustrated by reason of section 122 of the Transfer of Property Act. (7)Even if we were to assume that the facts proved disclosed that the appellant donee was armed with an implied authority to obtain a transfer, yet that authority, not having been acted upon during the life time of the donor, lapsed with th....
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....at the relevant provisions of the Transfer of Property Act and the Companies Act must be interpreted harmoniously. But this certainly does not mean that a provision of one Act could be nullified by any provision of the other Act. It means that the provisions of the two Acts should be read consistently with each other so far as it is reasonably possible to do so. We think that this end can be best achieved here by examining the objects and the subject-matter of each enactment and by viewing each relevant provision as a limb of an integrated whole meant to serve the underlying purposes. In this way their separable spheres of operation will be clarified so as to avoid possibilities of conflict between them or any unnecessary overflow of what really appertains to one field into another. No doubt the Transfer of Property Act is not exhaustive. It does rot deal with every kind of transfer of property which the law permits. Nor does it prescribe the mole for every legally recognised transfer. Nevertheless, it is an enactment meant for defining certain basic types of transfer and it lays down the requirements both of substance and of form for their legal recognition and effectiveness. Sec....
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....could sell no more. He sold what in England would have been choses-in-action, and he delivered choses-in-action. But, in India, by the terms of the Indian Contract Act, these choses-in-action are goods. By the definition of goods as every kind of movable property it is clear that not only registered shares, but also this class of choses in action, are goods. Hence, equitable considerations not applicable to goods do not apply to shares in India." Thus, we find that in Barucha's case (supra) a distinction was made between "the title to get on the register" and "the full property in the shares in a company." The first was held to have been acquired by mere delivery, with the required intention, of the share certificate and a blank form signed by the transferor. The second is only obtained when the transferee, in exercise of his right to become a shareholder, gets his name on the register in place of the transferor. This antecedent right in the person to whom the share certificate is given with a signed blank transfer form under a transaction meant to confer a right or title upon him to become a shareholder, is enforceable so long as no obstacle to it is shown to exist in any of the ....
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....ts of the shareholder. The mere fact that such transfers had to be recorded in accordance with the company law did not detract from the completeness of what was donated. We think the learned counsel for the appellant rightly contended that, even in the absence of registration of the gift deed, the delivery of the documents mentioned above to the donee, with the clear intention to donate, would be enough to confer upon the donee a complete and irrevocable right, of the kind indicated above, in what is movable property. He relied upon Kalyanasundaram Pillai v. Karuppa Mooppanar AIR 1927 PC 42, Venkat Subba Srinivas Hedge v. Subba Rama Hedge AIR 1928 PC 86 and Firm Sawan Mal Gopi Chand v. Shiv Charan Das AIR 1924 Lah 173. The requirements of form or mode of transfer are really intended to ensure that the substantial requirements of the transfer have been satisfied. They sub-serve an object. In the case before us, the requirements of both section 122 and section 123 of the Transfer of Property Act were completely met so as to vest the right in the donee to obtain the share certificates in accordance with the provisions of the company law. We think that such a right is in itself "prop....
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.... I, A.B. of , in consideration of the sum of rupees paid to me by C.D. of (hereinafter called 'the said transferee'), do hereby transfer to the said transferee the share (or shares) numbered in the undertaking called the Company, Limited, to hold unto the said transferee, his executors, administrators and assigns, subject to the several conditions on which I held the same at the time of the execution thereof, and I (the said transferee) do hereby agree to take the said share (or shares) subject to the conditions aforesaid. As witness our hands the day of Witness to the signature of, etc." Apparently, the form given here is only for sales. In the case of a gift the more general provisions of regulation 18 would apply. This regulation says: "The instrument of transfer of any share in the company shall be executed both by the transferor and transferee, and the transferor shall be deemed to remain holder of the share until the name of the transferee is entered in the register of members in respect thereof. " We find from the gift deed that both the donor and the donee have signed the document, under two headings, respectively: "giver of the gift" and "acceptor of the gift". Hence, ....
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.... helps the appellant. In Howrah Trading Co. Ltd. v. Commissioner of Income-tax [1959] 36 ITR 215, 218 (SC), considering a case of blank transfers, Hidayatullah J., speaking for this court, said : "In such blank transfers, the name of the transferor is entered, and the transfer deed signed by the transferor is handed over with the share scrip to the transferee, who, if he so chooses, completes the transfer by entering his name and then applying to the company to register his name in place of the previous holder of the share. The company recognises no person except one whose name is on the register of members, upon whom alone calls for unpaid capital can be made and to whom only the dividend declared by the company is legally payable. Of course, between the transferor and the transferee, certain equities arise even on the execution and handing over of ' a blank transfer ', and among these equities is the right of the transferee to claim the dividend declared and paid to the transferor who is treated as a trustee on behalf of the transferee. These equities, however, do not touch the company, and no claim by the transferee whose name is not in the register of members can be made agai....
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.... shares." This statement of the law in England is correct. The transferee, under a gift of shares, cannot function as a shareholder recognised by company law until his name is formally brought upon the register of a company and he obtains a share certificate as already indicated above. Indeed, there may be restrictions on transfers of shares either by gift or by sale in the articles of association. Thus, we find in Palmer's Company Law (at page 336): "There is nothing to limit the restrictions which a company's articles may place on the right of transfer. The articles may give the directors power to refuse to register a transfer in any specified cases; for instance where calls are in arrear, or where the company has a lien on the shares- and some such provisions are usually inserted. Thus, article 24 provides that the directors may decline to register any transfer of a share (not being a fully paid share) to a person of whom they do not approve, and may also decline to register any transfer of shares on which the company has a lien. But the articles in many cases go far beyond this. They may prohibit, for example, the transfer of a share to a person who is not a member of a speci....
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....articles are in the form in which they are in the present case, a legal title is not acquired as against an equitable owner before registration, or at all events until the date when the person seeking to register has a present absolute and unconditional right to have the transfer registered. I am not called upon to define the meaning of a ' present absolute and unconditional right, 'bu t, as it appears to me, I am not sure that anything short of registration would do except under very special circumstances. At all events, I am of opinion that in this case, prior to the date of the injunction, the defendant, Hart, had not a ' present absolute and unconditional right' to the registration of the transfer of these shares, and that the prior equitable right of the plaintiff, Mrs. Ireland, must prevail." Thus, what was disputed there was the right to obtain registration of a transfer of shares. The husband's power to mortgage was itself circumscribed by his position as a trustee. It was also pointed out in Palmer's Company Law (at page 334): "It has never been clearly decided in what circumstances the ' present, absolute, unconditional right to have the transfer registered ', to which....
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....so relied on In re Fry : Chase National Executors & Trustee Corpn. Ltd. v. Fry [1946] Ch. 312 (Ch D), which has been referred to by Jenkins J. in the passage quoted above. In that case, apart from other distinguishing features, the flaw in the purported transfer was that it contravened the Defence (Finance Regulations) Act, 1939, which prohibited an acquisition of interest in the shares without a licence from the Treasury. Hence, the purported transfer was really illegal. No such illegality is shown to exist in the case before us. Respondent's learned counsel cited Amarendra Krishna Dutt v. Monimunjary Debi AIR 1921 Cal 148, where, after a husband had executed a document in favour of his wife, the parties had done nothing to get the transfer registered for nearly two years during which the dividend was received sometimes by the wife and sometimes retained by the husband with the permission or implied consent of the wife. The court held that the purported gilt being an intended "transfer" only could not operate as a "declaration of trust". Another ground for the decision was that "the disposition of the shares failed as being an imperfect voluntary gift". Here, the Calcutta High Co....