Law: Companies Act, (VII of 1913)

Section: 38

Companies Act (VII of 1913), S. 38-Rectification of register of members-Document purporting to transfer shares-Person dealing with situation not bound to accept same as genuine in presence of allegations to contrary-Mere production of share certificates along with transfer forms alleged to be duly signed by registered owner-Held : in circumstance, not enough for company to record transfer.   Yodh Rai v. Lakshmi Insurance Co. Ltd. A I R 1935 Lah. 123 dissented from.   ORDER   This is an application under section 38 of the Companies Act praying for the rectification of the register of members of the company, namely Messrs Valika Textile Mills Limited in respect of 500 shares, the description of which is stated in the petition.   It is the case of the petitioner that he purchased these shares in the year 1953 or1954, but in so far as the payment in this regard had been made out of black-market money he did not apply for the registration of the transfer of these shares.   However, after the promulgation of the Martial Law he made a declaration in respect of these shares and therefore he approached the company for recording the transfer. The earliest corres pondence on record shows that the petitioner applied on 10th January 1962 to the State Bank for permission under section 5 of the Foreign Exchange Regulation Act regarding the transfer of these shares. This permission was necessary because the alleged transferors were Indian nationals. On 26th February 1962 the petitioner seta the share scripts and transfer forms to the company along with his Advocate's letter asking for the registration thereof. This was not done and on the following day this was sent to the company by a registered letter. In the meantime the company had received telegrams from the registered owner of these 500 shares, telling the company not to register the transfer without their written consent. The company had received a letter from the Advocate of the registered share-holder that these shares had been handed over to the father of the petitioner merely as their agent and that he had been handed over blank forms and it was only after his death that the petitioner…