A AKHILANDAM Vs. GREAT EASTERN SHIPPING COMPANY LTD

JUDGEMENT

(1.) A. Akhilandam and A. Nagalakshmi (hereinafter referred to as "the petitioners"), who were the joint holders of 200 shares have filed a petition under Section 111 of the Companies Act, 1956, seeking rectification of the register of members of the Great Eastern Shipping Company Limited (hereinafter referred to as "the respondent-company"), in respect of share certificates Nos. S21346 and S21347 held in ledger folio No. 6377 each scrip being of 100 shares.

(2.) According to the petitioners the said shares were in the possession of the Bank of Baroda, Bangalore. The said shares were not pledged--there being no pledge letter signed by the joint shareholders. The shares were also not subject to any lien since no lien was given to the bank. However, the shares scrips were accompanied by blank transfer deed signed by the joint holders but the rest of the columns of the transfer deed were left blank. The Bank of Baroda without intimating the petitioners and quite contrary to the trust reposed in them by the petitioners in the said bank, the bank was only to be in possession of the share scrips and was not empowered to alienate or otherwise transfer and notwithstanding the fulfilment by the petitioners of all obligations on their part to the bank, appears to have held out that the bank had authority to transfer the shares. The bank purported to have transferred the shares to unknown persons. It is further submitted that on coming to know of the unlawful act of the Bank of Baroda, the petitioner wrote letter dated January 7, 1994, to the respondent-company not to put through the transfer in respect of the abovementioned shares. It is further stated that a letter dated February 17, 1994, the Sharepro Services who claimed to be the registrar and transfer agents of the respondent-company, acknowledging the receipt of the petitioners letter dated January 7, 1994, required an injunction or a similar order of the court. It is further submitted that the letter proceeded to state that if a valid transfer deed complete in all respects was presented to the respondent-company, the transfer may not be held back for a long time. However, irrespective of the objections lodged by the petitioner, the respondent-company and/or their transfer agents put through the transfer. The petitioners submit that they are aggrieved by the transfer effected as there can be no transfer unless the title is validly passed on to the transferee. In this case, the Bank of Baroda which acted on the blank transfer did not have authority or title or right or claim to the shares in question, the Bank of Baroda having been satisfied with reference to obligations vis-a-vis the petitioners, the bank was in the position of a person who had no title to pass on to another and cannot confer title on the transferee. It is further submitted that the share scrip did not accompany the transfer deed on the showing of the respon dent and hence the transfer is invalid. It is further submitted that the endorsement by the bank on the reverse of the transfer deed was incomplete, and further incorrect The dispute with the Bank of Baroda being genuine and bona fide, the bank had no authority to deal with the shares in any manner under company law except through a proper order from a competent court. It is further submitted that the transfer deed is invalid because of the various deficiencies as pointed out in the petition. The petitioner has also sought for the consequential reliefs as to the rights and dividend accrued on the shares.

(3.) WHEN the matter was taken up on April 15, 1997, none was present on behalf of both the petitioners. However, the petitioners sent a telegram which reads as under :