Tek Chand, J. - (1.) This is a Letters Patent appeal from the judgment of Grover J. dismissing regular second appeal preferred by two defendants-appellants, Jarnail Singh and Behari Lal. In this case the trial Court, whose judgment was affirmed by the learned Single Judge, had passed a decree in plaintiff's favour for a declaration that transfers of shares made in favour of Jarnali Singh and Behari Lal defendants Nos. 11 and 12 were illegal and ultra vires of the Articles of Association of the Moga Transport Company (Private) Ltd. Jarnail Singh and Behari Lal had unsuccessfully appealed to the Senior Subordinate Judge, Ferozepur, and their appeal to the High Court was also dismissed by the learned Single Judge. This is an appeal on their behalf under the Letters Patent of this Court.
(2.) On 26-5-1954, the Company had sanctioned the transfer of ten shares held by Bachittar Singh in favour of Jarnail Singh defendant No. 11, and had also sanctioned transfer of five shares held by Milkhi Ram in favour of Behari Lal defendant No. 12. These transfers besides some other transfers which are no longer the subject-matter of any dispute were challenged by the plaintiff and a relief by way of declaratory decree was prayed, which has been granted. On the parties' pleadings, the following four issues were framed, but at this stage we are concerned with the first issue in so far as it affects the case of the contesting defendants Nos. 11 and 12: 1.Whether the transfer of shares in favour of defendants 2 to 12 is illegal and ultra vires for the reasons given in Paras 5 to 7 of the plaint, if so, its effect? 2. Is the suit within time? 3. Whether the plaintiff is estopped by his conduct from suing? 4. Relief?
(3.) On the register of members of this Company, there are two sets of joint shareholders, (1) Karnail Singh and Jarnail Singh. (2) Girdhari Lal and Behari Lal. The two transfers sanctioned by the Company on 26-5-1954, were in favour of Jarnail Singh and Behari Lal respectively each in their individual capacity. The contention raised on behalf of the plaintiff and which found favour with the learned Single Judge and the two Courts below was that although Jarnail Singh and Karnail Singh as two joint holders, and similarly Behari Lal and Girdhari Lal as two joint holders, were members of the Company but a single joint holders cannot be deemed to be a shareholder and a member of the Company within the meaning of Article 8(a) of the Articles of Association of the Company. For ready reference, the relevant articles of the Articles of Association of the Company are reproduced below: "Article 2. The Company is a 'private Company' within the meaning of Section 2 (1)(13) of the Indian Companies Act, 1913, and accordingly (1) no invitation shall be issued to the public to subscribe for any share, debentures or debenture stock of the Company (2) the number of the members of the Company (exclusive of persons in the employment of the Company) shall be limited to fifty, provided that for the purposes of this provision, where two or more persons hold one or more shares, in the Company jointly they shall be treated as single member and (3) the right to transfer the shares of the Company is restricted in manner and to the extent hereinafter appearing. Article 8 (a). No shareholder will be entitled to transfer his shares except to other shareholders of this Company. Article 11. Each shareholder and director will have only one vote irrespective of the number of shares he holds. Article 12. The qualification of a director shall be holding in his own right and not jointly with any other person one or more shares of the Company.";