B.C.Mitra, J. - (1.)This appeal is directed against a judgment and order dated July 31, 1970. By that order, the trial court granted the respondent's prayer for rectification of the share register of the appellant by entering therein the name of the respondent as the registered holder of certain shares mentioned in annexure ' A ' to the petition.
(2.)The respondent purchased a lot of 2,256 fully paid-up equity shares in the capital of the appellant, the value of each share being Rs. 50. Thereafter, the respondent applied for registration of the shares in his name. Upon application by the respondent for registration of the transfer of the shares, the appellant wrote to one of the transferors, enquiring about the genuineness of the transfer of the shares in favour of the respondent, and also whether full consideration for the transfer was paid. One of the transferors by his letter dated July 5, 1969, informed the appellant that he had sold the shares to the respondent on payment of full consideration, and also that he had no objection to registration of the shares in the name of the respondent. A similar letter was written by another transferor. By 3 letters dated June 2, 1969, June 18, 1969, and July 5, 1969, the appellant informed the respondent that, as the transfer of the shares seemed to be questionable, the mutation applied for could not be allowed in the facts and circumstances of the case. On his refusal to register the transfer of the shares, the respondent made an application for rectification of the share register under Section 155 of the Companies Act, 1956 (hereinafter referred to as " the Act "). On this application the trial court made the order appealed against.
(3.)The only question involved in this appeal is whether the appellant's refusal to register the transfer in favour of the respondent was lawful. For the purpose of ascertaining the extent and scope of the powers of the appellant in the matter of registration of transfer of shares, it is necessary to refer to Article 29 of the articles of association of the appellant. This Article is as follows :
" 29. (1) The board may, subject to the right to appeal conferred by Section 111, decline to register : (a) The transfer of a share, not being fully paid up share to a person whom they do not approve; or (b) Any transfer of shares, on which the company has a lien. (2) The board may also decline to recognise any instrument of transfer unless : (a) A fee of Rs. 2 is paid to the company in respect thereof ; (b) The instrument of transfer is accompanied by the certificate of shares to which it is related and such other evidence as the board may reasonably require to show the right of the transferor to make the transfer ; (c) The instrument of transfer is in respect of only one class of shares. "