TMI Blog1922 (11) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... the shares for them. This seems both according to Indian law and the English authorities to be correct. 4. Under Section 28 of the Indian Companies Act, 1913, shares are moveable property transferable in the manner provided by the articles of association. By Article 32 of the articles of association, the shares are transferable by an instrument in writing in the prescribed form. Under Article 33 the transferor is deemed to remain the holder of such share until the name of the transferee is entered in the register of shareholders. 5. Thus, in spite of the sale and purchase, the defendant is still the holder of the shares. The legal title to the shares is in him although the beneficial interest has been transferred to the plaintiffs. 6. This severance of interest leads to the result enacted in Section 94 of the Indian Trusts Act, 1882, which is as follows :- In any case not coming within the scope of the preceding sections, where there Is no trust, but the person having possession of property has not the whole beneficial interest therein, he must hold the property for the benefit of the persons having such interest, or the residue thereof (as the case may be) to the exten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 15):- Of course the plaintiff must act in respect of the shares exactly as the Defendant may desire. This sentence shows that the Court found that the plaintiff held the shares as trustee for the defendant and this is made quite clear by the minutes of the decree at p. 16 of the report:- Order that the plaintiff do, in all things, relating to the said shares, act as the defendant shall reasonably direct, and as if the plaintiff were a trustee for the defendant of the shares. 11. Again in Shepherd v. Gillespie (1867) L.R. 5 Eq. 293 the plaintiff was given a decree for specific performance of an agreement by the defendant to purchase two hundred and fifty shares; the decree gave directions for transfer of the shares in the register to the defendant's name and in the meantime gave the plaintiff an indemnity for calls and embodied the following order (p. 299) :- And let the plaintiff in all things relating to the said 250 shares act at the expense of the said defendant, as the said defendant shall reasonably direct, and as if the said plaintiff were trustee of the said defendant for the same shares. 12. It seems clear, therefore, that the transferor whose name r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... practice and settled authorities that the contention must be limited to the shares in suit. because under Article 35 the directors have an unrestricted right to refuse registration. The contention is supported by a reference to Section 8 of the Indian Trusts Act which enacts that the subject-matter of a trust must be property transferable to the beneficiary. But this section refers to property such as is. defined in Section 6 of the Transfer of Property Act, 1882, like an English peerage which cannot be the subject of a legal conveyance or of an equitable assignment. The shares in suit are, notwithstanding Article 35 of the articles of association, capable of equitable assignment, and can, therefore, be the subject of a trust. 17. It is then argued that the right to vote is a right personal to the shareholder, that it is, therefore, not transferable under Section 6 of the Transfer of Property Act, 1882, and cannot be the subject of a trust under Section 8 of the Indian Trusts Act. But the right to vote has no connection with the personality of the shareholder. It is suggested that the company has a right that the shareholder shall exercise his own personal judgment on matters c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able in the beneficiary requiring him to bring about a state of things which will remove that obstacle ? Certainly not-for if he holds the shares for the benefit of the plaintiffs, he must act for their benefit. It is said that the plaintiffs' ultimate object is to secure agency and displace the present agents. Very likely it is-but as the defendant has no interest in the company, that is no concern of his. So that I can see no justification, either legal or moral, for his siding with the present agents against 'the interests of the cestui que trust. 19. Next, it is said that the control of the vote of the shareholder would render nugatory Section 33 of the Indian Companies Act and Article 94 of the articles of association under which no notice of trust is entered in the register, and the registered holder alone is entitled to vote. But the position is really quite simple. As between the company and the trustee, the trustee is the shareholder; but as between the trustee and the beneficiary, it is the beneficiary who is the shareholder. These provisions are merely administrative. The legislature has not declared trusts of shares to be invalid; on the contrary, as I have a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mnity by) the beneficiary. 24. The last contention of the defendant is that Article 104 of the company's articles of association would render the injunction as regards proxy nugatory, as the defendant would not be allowed to vote. That article is as follows :- A vote given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death of the principal or revocation of proxy or transfer of the share in respect of which the vote is given provided no intimation in writing of the death, revocation or transfer shall have been received at the office before the meeting. 25. It is said that the effect of this article is to prevent a shareholder who has executed a transfer of his shares from giving a proxy. Such a construction would lead to this absurd result, that while he can vote under Article 97 on a show of hands if present, he cannot give a proxy if absent. The article must refer to a transfer occurring in the same interval of time as the other events referred to, namely, death and revocation that is, between the date of the proxy and the date of the meeting. It means that a transfer subsequent to the proxy would not imply revocat ..... 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