# VASUDEV RAMCHANDRA SHELAT v. PRANLAL JAY ANAND THAKAR AND ORS

- **Citation:** [1975] 1 S.C.R. 534
- **Court:** Supreme Court of India
- **Decided:** 1974-07-17
- **Case number:** Civil Appeal No. 2515 of 1973
- **Bench:** M. H. Beg, R. S. Sar Karia
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/vasudev-ramchandra-shelat-v-pranlal-jay-anand-thakar-and-ors-6351
- **Pages:** 16

## Headnote

Tran,f.r of Prop<rly Act, 1882 (4 of 1882) "· 6, 122 and 123-Gift of sharu in
companKs by regjs/ered gift deed--Transfers TlDI effected ~fore donor's death-No
question of competing equities--WMther rights of ownership can be split into ,;ght to
t;arpw and usafruct.
Jndiim Compank' Act, 1913-S. 28-Rtf, 18 of Tablt A "title to g<t on th<
ezister" and "the full property in the shares in a company"-Distinction.
Interpretation--Harmonious interpretation.
By a registered deed, a donor gifted to the appellant shares in various limited
companies. Before her death the donor had signed several blank transfer fonns
to enable the donee to obtain transfer of the shares in the register of companies
and share certificates in his name. She bad signed at the correct places showing that she meant to sign transfer of shares but the transfer could not be effected
before the donor's death. The respondent claiming the shares filed an administration
suit. A single Judge of the High Court held that the appellant was entitled to
shares covered by the gift deed to which blank transfer .forms could be related. A
division bench of the High Court reversed the decision of the Single Judge on
the ground that the gift was incomplete for failure to comply with the formalities
prescribed by the Indian Companies Act, 1913 for transfer of shares, It further held
that there was no equity in favour of the appellant so that be may claim the right
to complete what was left imcomplete by the donor in her life-time. On appeal it
was contended in tbiB Court (1) that since the donor had signed the blank transfer
forJn' and handed them over to the dontt, the gift deed and the signed blank forms
bad to be read together and (2) that the transfer was complete with the registration
()f the gift deed and even delivery of share certificates to the donee was not necessary in view ofs. 122 of the Transfer of Property Act.
Allowing the appeal,
HELD: (I) The respondent bas not made out a case for defeating the clearly
expressed intentions of the dOnor. coupled with the authority with which the donor
was armed by reason of the signed blank transfer forms. On a correct interpretation
or the gift deed and other material the right to obtain a transfer of shares was clear ..
ly and completely obtained by the donee appellant. There was no question of comA
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peting equities because the donee appellant was shown to have obtained a complete
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legal right to obtain ~bares under the gift deed and an implied authority to take steps
to aet his name registered. [549~D] ·
The fact that the relevant provisions of the Transfer of Property Act
and the Companies Act must be interpreted harmoniously does not mean
that a provision of one Act could be nullified by
any provision of the
other Act. It means that the provision of the two Acts should be read
consistently with each other so far as it is reasonably possible to do so. This
end can be best achieved by examining the object! and the subject-matter of
each enactment and by viewing each relevant provision as a limb of an intergrated
whole meant to serve the underlying purposes. In this way their separable spheres
of operation will be clarified so as to avoid possibilities of conflict between them or
any unnecessary overflow of what really appertains to one field into another.
(539H-540B]
(2) The Transfer of Property Act is an enactment meant for defining certain
basic types of transfers and lays down the requirement both of substance and of
form for their legal recognition and
effectiveness.
Section 5 of the Act
gives a wide connotation to .. transfer of property". Section 6 of the Act lays down
that 0 propertY of any kind may be transfered" subject to certain exceptions.
Shares in a company are certainly a form of property. Section 28 of the Companies
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V. R. SHELAT v. P. J. THAKAR
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Act, 1913 says that they "shall be movable property, transferable in the manner provided by articles of the Company". A wide definition

## Text

_Characters 0–39,929 of 49,385. This is a partial read: ask again with offset=39929 for what follows._

534
VASUDEV RAMCHANDRA SHELAT
v.
PRANLAL JAY ANAND THAKAR AND ORS ..
July 17, 1974
(M. H. BEG AND R. S. SAR KARIA, JJ .)
Tran,f.r of Prop<rly Act, 1882 (4 of 1882) "· 6, 122 and 123-Gift of sharu in
companKs by regjs/ered gift deed--Transfers TlDI effected ~fore donor's death-No
question of competing equities--WMther rights of ownership can be split into ,;ght to
t;arpw and usafruct.
Jndiim Compank' Act, 1913-S. 28-Rtf, 18 of Tablt A "title to g<t on th<
ezister" and "the full property in the shares in a company"-Distinction.
Interpretation--Harmonious interpretation.
By a registered deed, a donor gifted to the appellant shares in various limited
companies. Before her death the donor had signed several blank transfer fonns
to enable the donee to obtain transfer of the shares in the register of companies
and share certificates in his name. She bad signed at the correct places showing that she meant to sign transfer of shares but the transfer could not be effected
before the donor's death. The respondent claiming the shares filed an administration
suit. A single Judge of the High Court held that the appellant was entitled to
shares covered by the gift deed to which blank transfer .forms could be related. A
division bench of the High Court reversed the decision of the Single Judge on
the ground that the gift was incomplete for failure to comply with the formalities
prescribed by the Indian Companies Act, 1913 for transfer of shares, It further held
that there was no equity in favour of the appellant so that be may claim the right
to complete what was left imcomplete by the donor in her life-time. On appeal it
was contended in tbiB Court (1) that since the donor had signed the blank transfer
forJn' and handed them over to the dontt, the gift deed and the signed blank forms
bad to be read together and (2) that the transfer was complete with the registration
()f the gift deed and even delivery of share certificates to the donee was not necessary in view ofs. 122 of the Transfer of Property Act.
Allowing the appeal,
HELD: (I) The respondent bas not made out a case for defeating the clearly
expressed intentions of the dOnor. coupled with the authority with which the donor
was armed by reason of the signed blank transfer forms. On a correct interpretation
or the gift deed and other material the right to obtain a transfer of shares was clear ..
ly and completely obtained by the donee appellant. There was no question of comA
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peting equities because the donee appellant was shown to have obtained a complete
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legal right to obtain ~bares under the gift deed and an implied authority to take steps
to aet his name registered. [549~D] ·
The fact that the relevant provisions of the Transfer of Property Act
and the Companies Act must be interpreted harmoniously does not mean
that a provision of one Act could be nullified by
any provision of the
other Act. It means that the provision of the two Acts should be read
consistently with each other so far as it is reasonably possible to do so. This
end can be best achieved by examining the object! and the subject-matter of
each enactment and by viewing each relevant provision as a limb of an intergrated
whole meant to serve the underlying purposes. In this way their separable spheres
of operation will be clarified so as to avoid possibilities of conflict between them or
any unnecessary overflow of what really appertains to one field into another.
(539H-540B]
(2) The Transfer of Property Act is an enactment meant for defining certain
basic types of transfers and lays down the requirement both of substance and of
form for their legal recognition and
effectiveness.
Section 5 of the Act
gives a wide connotation to .. transfer of property". Section 6 of the Act lays down
that 0 propertY of any kind may be transfered" subject to certain exceptions.
Shares in a company are certainly a form of property. Section 28 of the Companies
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V. R. SHELAT v. P. J. THAKAR
535
Act, 1913 says that they "shall be movable property, transferable in the manner provided by articles of the Company". A wide definition of "property" ins. 6 of the
Transfer of Property Act includes not merely shares as transferable, movable pro·
perty but would cover as a separate form of property a right to obtain shares which
may be antecedent to the accrual of rights of a shareholder upon the grant of
a sharr certificate in accordance with tho articles of association of a company.
[540B-E]
There is a distinction between ''the title to get on the register" and "the full
property in the shares in a company". The first is acquired by mere delivery, with
the requied intention of the share certificate and a blank form signed by the transfer. The second is only obtained when the transferee, in exercise of his right to
become a shareholder, gets his name on the register in place of the transferor. This
antecedent right in the person to whom the share certificate is given with a signed
blank transfer form under a transaction meant to confer right or title upon
him to become a shareholder is enforceable so long as no obstacle to it is shown
to exist in any of the articles of association of a company or a person with a
superior right or title, legal or equitable, does not appear to be there. Section 6 of
the T.P. Act justifies such a splitting up of rights constituting property in sharos
just as it is well recognised that rights of ownership of property may be split up into
a right to the ''Corpus" and another to the "usufruct" of the property and then
separately dealt with. [541C-E]
M.P. Barucha &: Anr. V. V. Sarabhai &: Co.&: Ors. 53 Indian Appeals P. 92 @
97-98, relied on.
Section 122 of the Transfer of Property Act defines a "gift". Section 123 of the
T. P. Act prescribes the mode of transfer by gift. No special mode of delivery
is specified in the se.ction. On the other hand it is indicated that the delivery "may
be made in such a way as the goods sold are delivered". [54!E-G]
In the instant case the registered document was signed both by the donor and
donee and is attested by witnesses. The donor specified and gave particulars of the
shares meant to be gifted. The donor delivered the registered gift deed together
with the share certificates to the donee. On these facts the donation of the right
to get i;ihare certificates made out in the name of the donee became irrevocable by
registration as well as by delivery. The actual transfers in the registers of the companie.$ concerned were to constitute mere enforcement of this right. They were
necessary to enable the donee to exercise the rights of the shareholder. The mere
fact that such transfers had to be recorded in accordance with the Company Law
did not detract from the completeness of what was donated. [541G-542B]
The broadly indicated requirements of regulation 18 of Table A of 1st Schedule
to the Companies Act, 1913 were also .complied with by the contents of the gift deed.
It is immaterial that the gift deed deals with a number of items so long as the rcguirements of Regulation 18 are fulfilled. The observance of a form whether found
m the Transfer of Property Act or in the Companies Act is meant to serve the needs
of the substance of the transaction which were undoubtedly shown to have been cqmplctely fu1filled here. There is nothing in Regulation 18 to mdicate that without strict
compliance· with some rigidly prescribed form, the transaction must fail to achieve
its purpose. The subservience of substance of a transaction to some rigidly prescribed form required to be meticulously observed, savours of archaic and outmoded
j urisprudence. [543G-544A]
Re Nose, Midland Bank Executer & Trustee Co. Ltd. v. Rose. 1949 Ch. D. 78,
Re Ruse, Rose v. Jnland Renvenue Commissioners, 1932 (1) Ch.D. 499, M/s. Howrah
Trading Co. Ltd. v. The Commissioner of lncoflU!tax, Calcutta, [1959] Sopp. (2) SCI!.
448 @ 453 referred to.
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2515 of 1973.
(From the Judgment and Decree dated the 11th/12th July, 1972 of
the Gujarat High Court in L.P. A. No. 40 of 1969.)
.
s. T. Desai and H. S. Parihar for the appellant.
M. c. Bhandare, P. H. Parekh and Manju Jetley · for respondent
No. 1.
SUPREME COURT REPORTS
[1975] 1 s.c.R.
The Judgment of the Court was delivered iby
BEG, J. This appeal, after certification by the Gujarat High Court
of fitness of the case for it, 'arises in the following circumstances:
Uttamram - Mayaram Thakar, a flourishing lawyer, made a will,
on 10-6-1945 and died childless on 20-8-1946- His widow, Bai Ruxmani,
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obtained, under the will, inter alia, certain shares the right and title
B
to which are disputed before us. On 6-3-1948, Bai Ruxmani executed
a registered gift deed purporting to donate the disputed shares in various limited companies, of which details were given in the gift deed,
to her brother, Vasudev Ramchandra Shela!, the appellant before us
(hereinafter refeired to as "Shelat").
On 18-4-1948, Bai Ruxmani
also expired. But, before she died, she had signed several blank transfer forms, apparently intended to be filled in by donee so as to enable
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him to obtain the transfer of the donated shares in the registers
of the various companies and share certificates in his own name. She
had put her signatures in the correct places showing that she meant
sign as the transferor of the shares. The shares could not, however,
be transferred in the registers of the various companies, in accordance
with the relevant provisions of Company law, before the lady's death.
Therefore, the respondent before us,
Pranlal Jayanand Thakar, a
D
nephew of the late Uttamram Maya.ram Thakar, disputed the claim
of the appellant Vasudev Ramchandra Shela! to these shares in an
ad.ministration suit which came up before a learned Judge of the Gujarat High Court in second appeal together with other matters. The
learned Single Judge held that Shela! was entitled to the shares covered
by the registered gift deed to which the blank transfer forms could be
related but not to others said to have been orally gifted with which
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we are not concerned here. The learned Judge having granted leave
to file a Letter's Patent Appeal, a Division Bench of the Gujarat High
Court, which considered the rival claims, reversed the decision of the
learned Single Judge even with regard to the shares covered by the
registered gift deed on the ground that the gift was incomplete for
failure to comply with the formalities prescribed by the Companies'
Act for "transfer" of shares. It held that there was no equity in
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favour of Shelat so that he may claim a right to complete what was
left incomplete by the donor in her lifetime even though there could
be no doubt that Bai Ruxmani had intended to donate the shares to
Shelat.
We think Mr. S.T. Desai, learned Counsel for the appellant Shelat,
rightly pointed out that every material finding on questions of fact,
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given in favour of the appellant, was upheld by the Division Bench.
After indicating the terms of the gift deed, the Division Bench held:
"Thus, it is undoubtedly true that the deed of gift discloses a
clear and unequivocal intention on the part of Bai Ruxmani
that Vasudev should become the owner of these shares
and he should for all future time enjoy the fruits thereof.
It is a well settled position in Jaw that unless the gift
is completed as required by law, mere intention to make
a gift cannot pass any title to the donec and does not make the
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V. R. SHELAT V. P. J. THAKAR (Beg, ],)
'537
donee the owner of the property gifted by the donor. The
registered gift deed itself cannot create any
transfer
and
so it was not competent to the donor to divest the title in
her merely by the execution of the gift deed. She was required
to execute the regular transfer deeds or
instruments
of
transfer in favour of Vasudev Shela! and hand them over to
the donee, Vasudev Shela!, together with the share certifi·
cates."
It went on to say:
"The circumstances as they clearly emerge and the facts as
found by the Courts below, go to show that the deed of gift
was executed on March 6, 1948, and, at the same time, the relevant share-certificates were handed over by the donor to the
donee; and, sometime between March 6, !948, when the gift
deed was executed, and April 18, 1948, when Bai Ruxmani died
blank transfer forms signed by Bai Ruxmani were handed over by Bai Ruxmani to vasudev Shelat, the donee."
The appellant's submissions, on facts found, may be summarised
as follows:
(!) As between the donor and the donee the transfer was complete
with the regis(ration of the gift deed; and, as there was a registered
document, even delivery of share certificates to the donee was not
necessary in view of Section 122 Transfer of Property Act.
(2) Assuming, without conceding, that the donor had to do something
more than to execute a registered document, this too was done when
the shares certificates and the signed "blank transfer" forms were
handed over to the donee by the donor. It did not matter if the name
of the donee and other particulars are wanting in these blank forms.
All necessary particulars of shares involved were expressly ment oned
in the gift deed which specifies and identifies each individual share
meant to be donated. The gift deed and the signed blank forms had
to be read together. The donor had done all that reasonably lay within her power to complete the donation.
(3) The conduct of the donor, in handing over the share certificates
to the donee and the blank transfer forms, read in the context of the
expressly laid down intentions of the donor in the gift deed,
raised the presumption of an implied authority to fill in the details
and to submit to the companies concerned the forms given by the
donor to Shelat before her death.
(4) There was no evidence whatsoever in the case to repel the irresistible inference of an implied authority given to the donee to fill in
and submit the transfer forms so as to obtain the necessary entries
in the registers of the various companies concerned.
( 5) The Division Bench had, after giving all the necessary findings
of fact in favour of the appellant, misdirected itself by resorting to the
do ctrine that there is no equity to complete an incomplete trasaction,
as there is when a bona fide purchaser for value comes before the Court.
. 538
SUPREME COURT REPORTS
[1975] 1.s.c.R.
There was no question of any equity involved here. The simple question was one of fact. Did the inference of an implied authority of the
donee to fill in the forms and take other steps necessary to get his
name entered in the registers of shareholders arise or not? Inst.ead
of considering and deciding whether such an inference arose, the Division Bench had failed to decide the real issue on the erraneous view
that equity debars it from inferring an implied authority because the
ilonee, unlike a bona fide purchaser for value, .had paid nothing for
the rights he could get from the donor.
All that could be urged on behalf of the respondent may be summed up as follows :
.
(!) The facts found make out, at best,an intention of Bai Ruxmani
to donate but not the completion of a donation required by law for
divesting . the donor of interest in the property under consideration
which consisted of shares.
(2) Although shares are goods, as defined by the Sale of Goods
Act, yet, they are 'goods' of a special kind. Their transfer is not completed merely by the execution of a registered document or by delivery
but the correct mode of transfer is determined by the character of these
"goods" Sec. 123 of the Transfer of Property Act Jays down only a
general mode of transfer by gift for goods in general bui not for the
transfer by gift. of shares which are a special type of 'goods' capable of
transfer only in accordance with a special mode prescribed by the
Companies Act of 1913, which was applicable at the relevant time.
In other words, an adoption of the prescribed form of transfer is of
the essence of a transfer for all purposes and not merely as between
the shareholder and the company concerned.
'
(3) Sections 12.2 & 123 of the Transfer of Property Act had to be
read. harmoniously with Sections 28 and 34 of the Companies Act,
1913.
(4) Since material portions of the transfer form given in regulation 19 of Table A of the first Schedule of the Companies Act of 1913
were never filled in, the doctrine of "substantial compliance" with
the required form could not come to the aid of the appellant.
·
(5) The gift deed itself does not empower the donee to take any
of those steps which remained to be taken to complete the 'transfer' so
that the doctrine of implied authority would be excluded by the ex•
press terms of the gift deed which not only do not confer any such
authority upon the donee but indicated that the donor was to take
the necessary steps herself.
'
(6) Inasmuch as acceptance of the gift "during the life-time of
the donor" is a condition precedent to the validity of the gift as a
transaction, and the appellant shelat did not apply for the transfer
of shares, so as to indicate Ws acceptance of the gift before the do no
died, the purported donation-was frustrated by reason of Sec. 122 of
of the Transfer of Property Act.
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(7) Even if we were to assume that the facts proved disclosed that
the appellant donee was armed with an implied authority to obtian
a transfer, yet that authority not having been acted upon during
the life-time of the donor, lapsed with the donor's death. The result
was that the donation, even if intended, was imperfect or infructu·
ous in the eye of law and could not be perfected or completed.
Equity does not aid a merely purported donee who has given no consideration to obtain any right. In other words, equitable consideration~
would not be irrelevant in deciding the question before us.
(8) Even apart from equity, under the law of
agency, found
in sec. 201 of our Contract Act, the Principal's death terminates the
agency, so that the doctrine of implied authority does not help the
appellant.
(9) Section 202 of the Contract Act could not apply to a case where
the subject-matter of the alleged agency is the taking of steps
to complete a transfer and not the rights which could only
accrue after the necessary steps are taken. Hence, the appellant donee
could not be said to have an interest in the "subject-matter of the
agency" which is distinct from rights which could have arisen if the
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object of the agency had been fulfilled.
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(I 0) Section 202 of the Contract Act could apply to a case where
an agent has an actual or exi>ting interest in the subject-matter of
the agency. Even if the subject-matter of the agency could be said
to be "Property", consisting of shares, there could be no 9.uestion
of applying Section 202 of the Contract Act before an "merest"
in the
shares arose. Such "interest"
could only
arise
after
a completed transfer.
(11) Section 202 of the Contract Act contemplated cases of termination of agency in ways other than death. It meant that, so long
as a Principal is alive, he could not terminate an agency so as to injure the interests of the agent in "the subject matter of the agency".
But, in the case of the death of the Principal, the relationship terminated ipso facto or automatically by death.
(12) A resort to the very concept of agency in this case pre-supposes
that some interest of the Principal or the donor in the property said
to be donated continued, or, in other words, the assumption behind
it was that the donation of shares was not complete in the eye of
law. Its completion was not possible after the death of the donor.
We think that questions to be really decided in the case before us
have tended to become needlessly clouded by references to statutory
provisions and to doctrines or concePts which really operate in separate
and distinct fields of their own. It is true that the relevant provisions
of the Transfer of Property Act and the Companies Act must be interpreted harmoniously.
But, this certainly does not mean that a pro·
vision of one Act could be nullified by any provisions of the other Act.
It means that the provisions of the two Acts should bf' read consistently with each other so far as it is reasonably possible to do so.
51!10
SUPllEMB COURT REPORTS
[197 5] 1 s.c.it.
We.think that this end can be best achieved here by examining
the objects and the subject-matter of each enactment and by viewing
each relevant provision as a limb of an integrated whole meant to serve
the underlying purposes. In this way, their separable spheres of operation will be clarified so as to avoid possibilities of conflict between them
or any unnecessary overflow of what really appertains to one field
into another.
No doubt the Transfer of Property Act is not exhaustive. It does
not deal with every kind of transfer of property which the law permits. Nor does it prescribe the mode for every legally recognised transfer. Nevertheless, it is an enactment meant for defining certain basic
types of transfer and it lays down the requirements both of substance and of form for their legal recognition and effectiveness.
Section 5 of this Act gives a wide connotation to "transfer of property". All that it requires is that the transferor must be living at the
time of the transfer recognised by the Act. Section 6 of the Act lays
down that "property of any kind may be transferred" subject to certain
exceptions. Shares in a company are certainly a form of property.
Section 28 of the Companies Act, 1913, says thatthey "shall be movable
property, transferable in the manner provided by the articles of the
company". Both sides accept as correct the view of the Division Bench
of the High Court that the shares are "goods" within the meaning of
the Sale of Goods Act. The point which, however, deserves to be noted
here is that wide defination of "property" in Section 6 of the Transfer
of Property'Act includes not merely shares as transferable, movable
property, but would cover, as a separable form of property, a right
to obtain shares which may be antecedent to the accrual of rights of
a shareholder upon the grant of a share certificate in accordance with
the a.tides of association of company.
In M.P. Barucha & Anr. v. V. Sarabhai & Co. & Ors.(1) which
was a case of handing over share certificates together with blank
signed transfer forms, the Privy Council said (at p. 97-98):
"But" further, there seems to their Lordships a good deal of
confusion arising from the prominence given to the fact that
the full property in shares in a company is only in the registered holder. That is quite true. It is ture that what Barucha
had was not the perfect right of property, which he would
have had if he had been the registered holder of the shares
which he was selling. The company is entitled to deal with
the shareholder who is on the register, and only a person who
is on the register is in the full sense of the the word owner of
the share. But the title to get on the register consists in the
possession of a certificate, together with a transfer signed by the
registered holder. This is what Barucha had. He had the certifi.
cates and blank transfers, signed by the registered holders.
It would be an upset of all Stock Exchange transactions if it were
suggested that a broker who sold shares by general description
(I) 53 Inc\ianAppealsp. 92@ p. 97-98.
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did not implement his bargain by supplying the buyer with
certificates and blank transfers. signed by the registered liolders
of the shares described. Barucha sold what he had got. He
could sell no more. He sold what in England would have been
choses in action, and he delivered choses in action. But in India,
by the terms of the Indian Contract Act, these choses in action are goods. By the definition of goods as every kind of movable property it is clear that not only registered shares, but
also this class of choses in action, are goods. Hence, equitable
considerations not applicable to goods do not apply to shares in
India."
Thus, we find that, in Barucha's case (supra), a distinction was
made between "the title to get on the register" and "the full property
in the shares in a Company." The first was held to have been acquired
by mere delivery, with the required intention, of the share certificate
and a blank form
signed by the transferor. The second is only obtained when the transferee, in exercise of his right to become a shar~
holder, gets his name on the register in place of the transferor. This
antecedent right in the person to whom the share certificate is given
with a signed blank transfer form under a transaction meant to confer
right or title upon him to become a shareholder, is enforeeable so long
as no obstacle to it is shown to exist in any of the articles of association of a company or a person with a superior right or title, legal or
equitable does not appear to be there. We think that Section 6 of the
Transfer of Property Act justifies such a splitting up
of rights
constituting "property" in shares just as it is well recognised that
rights of ownership of a property may be split up into a right to
the "corpus" and another to the "usufruct" of the property
and then separately dealt with.
Sec. 122 of the Transfer of Property Act defines a "gift". Its substantial requirements are : (I) the donor must transfer "property", which
is the subject-matter of the gift, voluntarily and without consideration;
(2) and, the donee must accept it during the life-time of the donor or
while the donor's competence to give exi;ts. Section 123 of the
Transfer of Property Act prescribes the mode of transfer by gift.
It Jays down that "the transfer may be effected either by registered
instrument signed by the donor and attested by at least two witnesses
or by delivery". No special mode of delivery is specified. On the other
hand, it is indicated that the delivery "may be made in such a way
as the goods sold are delivered".
In the case before us, the registered document was signed by the donor
as "the giver" as well as by the donee as "the accepter" of the gift,
and it is attested by six witnesses. In it, the donor specified and
gave paniculars of the shares meant to be gifted and undertook to
get the name of the donee put on to the registers of the companies
ccincerned. The donor even said that she was thenceforth a trustee
for the benefit of the donee with regard to the income she may get
due to t~e fact that her name was still entered in the registers of the
compa~1es concerned as a shareholder. The donor delivered the registered gift deed together with the share certificates to the donee. We
542
SUPREME COURT REPORTS
[1975] 1 s.c.R.
think that, on these facts, the donation of the right to get share cerA
tificates made out in the name of the donee becanie irrevocable
by registration as well as by delivery. The donation of such a right,
as a form of property, was shown to be complete so that nothing was
left to be done so far as the vesting of such a right in the donee is concerned. The actual transfers in the registers of the companies concerned were to constitute mere enforcements of this right. They were
necessary to enable the donee to exercise the rights of the
shareB
holder. The mere fact that such transfers had to be recorded in accordance with the company law did not detract from the completeness
of what was donate.d.
We think the learned Counsel for the appellant rightly contended
that, even in the absence of registration of the gift deed, the delivery
of the documents mentioned above to the donee, with the clear intention to donate, would be enough to confer upon the donee a complete
and irrevocable right, of the kind indicated above, in what is movable
property. He relied upon : Kalyanasundarain Pillai v. Keruppa
Mooppanar & Ors.(1); Venkatsubba Shrinivas Hegde
v. Subba
Rama Hegde;(2) Firm Sawan Mal Gopi Chand v. Shiv Charan Das(l).
The requirements of form or mode of transfer are really intended
to ensure that the substantial requirements of the transfer have been
satisfied. They subserve an object. In the case before us, the requirements of both Section I 22 and Section 123 of the Transfer of
Property Act were completely met so as to vest the right in the
donee to obtain the share cartificates in accordance with the
provisions of the Company law.
we think that such a right
is in itself "property" and separable from the technical legal
ownership of the shares. The subsequent or "full rights of
ownership" of shares would follow as a mattef of course by compliance
with the provisions of Company law. Jn other words, a transfer of
"property" rights in shares, recognised by the Transfer of Property
Act, may be antecedent to the actual vesting of all or the full. rights
of ownership of shares and exercise of the rights of shareholders in
accordance with the provisions of the Company law.
The Companies Act of 1913 was meant "to consolidate and
amend
the
Jaw
relating
to trading companies and other
associations". It is concerned with the acts and proceedings relating
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to the formation, running, and extinction of companies, with
rights, duties, and liabilities of those who are either members or
officers of such companies, and of those who deal with companies
c'
in other capacities. Its subject-matter is not transfer of property
in general. It deals with transfers of shares only because they
give certain rights to the legally recognised shareholders and imposes some obligations upon them with regard to the companies in
which they hold shares. A share certificate not merely entitles the
shareholder whose name is found on it to interest on the share held
but also to participate in certain proceedings relating to the company
H
(I) 54 I. A. 69.
(2) ILR 52 Born. 313.
(3) AIR 1924 Lah. 173.
•
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V. R. SHELAT v. p, J, THAKAR (Beg, /,)
543concerned. It is for this purpose that Section 34 of the Companies
Act 1913 enables the making of "an applicaton for the registration of
the 'transfer of shares in a Co ......... either by the transferor or the
transferee". A sha11e certificate is a prima facie evidence, under Sec.
29 of the Act of the title to a share. Sec. 34 of the Act does not really
prescribe the' mode of transfor but lays down the provisions for "relistration" of a transfer. In other words, it pre-supposes that a
transfer has already taken place. The manner of transfer of shares,
for the purposes of Company law, has to be provided, as indicated
by Sec. 28, by the articles of the Company, and, in the absence of such
specific provisions on the subject, regulations contained in Table 'A'
of the 1st Schedule of the Companies Act apply.
Table 'A' of the !st Scheduk to the Companies Act of 1913 gives
re,ulation 19 as follows :
"19. Shares in the company shall be transferred in the
following form, or in any usual or common form which the
directors shall approve :
I, A. B. of
, in consideration of the ;um of
rupees
paid to me by C. D. of
(hereinafter called "the said transferee"), do hereby transfer to
the said transferee the share (or shares) numbered in the undertaking called the
Company, Limited, to hold
unto the
said
transferee, his executors, administrators and assigns,
subject to the several conditions on which I held the same at the
time of the execution thereof, and I (the said transferee) do
hereby agree to take the said share (or shares) subject to
the conditions aforesaid. As witness our hands the
day of
Witness to the signatures of, etc."
Apparently, the form given here is only for sales.
In the case of a
gift the more general provisions of regulation 18 would apply. This
regulation says :
"The instrument of transfer of any share in the company
shall be executed both by the transferor and transferee, ard
the transferor shall be deemed to remain holder of the share
until the name of the transferee is entered in the register of
members in respect thereof."
We find from the gift deed that both the donor and the donee have
signed the document, under two headings respectively : "giver of the
gift" and "accepter of the gift''. Hence, we think that the broadly
indicated requirements of regulation 18 were also complied with by
the contents of the gift deed. It is immateral that the gift deed deals
with a number of items so long as the requirements of regulation 18
arc fulfilled. Mter all, the observance of a form, whether found in
the Transfer of Property Act or in the Companies Act, is meant to
serve the need of the substance of the transaction which were undoubtedly shown to have been completely fulfilled here. There is nothing in
regulation 18 or anywhere else in our Company law to indicate that.
544
SU:PREME COURT REPORTS
[1975] l S.C.R·
without strict compliance with some rigidly prescribed form the transaction must fail to achieve its purpose. The subservience of substance
of a transaction to some rigidly prescribed form required to be meti-
.culously observed savours of archaic and outmoded jurisprudence.
Buckley on the Companies Acts (XIIl-Edn. p. 813) was cited before
us for the proposition that "non registration of a transfer of shares
made by a donor does not render the gift imperfect''. Considerable
argument was advanced by both sides on the correct interpretation of
the leading English case mentioned there : Re Nose, Midland Bank
Executor & Trustee Co. Ltd. v. Rose,(1) where Jenkins J., after an
exhaustive discussion of the English case law on the subject, held that
when a testator had done everything that lay in his power to divest
himself of his rights in preference shares "completion of the legal
title by registration could only be the act of a third party which did
not affec! the efficacy of the gift of shares inter-vivas". The Court
of Appeal upheld this decision in : In Re Rose V. Inland Revenue
Commissioners.(2) It held that "the deceased was in the position of
a trustee of the legal title in the shares for the transferees", pending
the entry of the names of the donees in a company's register. and the
issue of share certificates to them. In the case before us, we find that
Bai Ruxmani had actually stated in the gift-deed that her position,
vis-a-vis the donee, who had accepted the gift, was that of a trustee
. for the benefits received by her from the gifted .shares until the completion of the legal formalities so that appropriate entries are made
in the registers of companies concerned and fresh share certificates
are issued to the donee. We, therefore, think that this case helps the
appellant.
In M/s. Howrah Trading Co. Ltd. v. The Commissioner of IncomeJax, Calcutta(3), considering a case of blank transfers, Hidayatullah J.,
speaking for this Court, said (at p. 453) :
"fn such blank transfers, the name of the transferor is entered,
and the transfer deed signed by the transferee, who, if he so
chooses, completes the transfer by entering his name and
then applying to the company to register his name in place of
the previous holder of the share. The company recognises no
person except one whose name is on the register of members,
upon whom alone calls for unpaid capital can be made and
to whom only the dividend declared by the company is legally
payable. Of course, between the transferor and the transferee,
certain equities arise even on the execution and handing over of
'a blank transfer', and among these equities is the right of the
transferee to claim the dividend declared and paid to the transferor who is ·treated as a trustee on behalf of the transferee.
These equities, however, do not touch the company, and no
claim by the transferee whose name is not in the register of
(I) [1949] Ch. D. 78.
(2) [1932) (I) Ch. D. 499.
(3) [1959) Supp. (2) SCR 448 @ 453.
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V. R. SHELAT v. P, J, THAKAR (Beg, ].)
545
members can be made against the company, if the transferor retains the money in his own hands and fails to pay to it to
him."
'J;his case also makes a distinction between an antecedent right and title
o1 the transferee under a blank transfer and the fully blossomed rights
and title of such a transferee after the due registration of a transfer .
Another case cited before us was : R. Subba Naidu v. Commissioner of Gift Tax, Madras,(1) where a distinction was made between a
transfer of the antecedent right to the shares which operated with
full force between a donor and the. donee, "notwithstanding that, vis-avis the company, the donor continued to be holder of the shares in the
absence of transfer of shares". In othe1 words, the fields of operation
of the provisions of Sections 122 and 123 of the Transfer of Property
Act and the provisions of the Companies Act, 1913 were different.
Each had different objects and legal consequences. The Companies
Act did not prevent the completion of a gift of the right to obtain the
shares which could, in common parlance or loosely speaking, be
spoken of as a gift of shares themselves even before the gift is acted
upon so that the donee obtains share certificates in his own name.
The Tranafer of Property Act could not enable the donee to exercise
the rights of a shareholder, vis-a-vis the company, until a transfer
of shares is made in accordance with the Company law.
Other cases cited on behalf of the appellant, which we will only
mention without discussion, were :
I. Colonial Bank v. Hepworth(2);
E
2. In Re. Tahiti Cotton Company ex-parte Sargent(l);
3. In Re. Letheby & Christoph~r, Limited(4);
4. In tf1e matter of Bengal Silk Mills Co. Ltd.(5);
5. T11e Bank of Hindustan Ltd. & Ors. v. Kowth~ Suryanarayana Rao & Ors .(6);
F
6. Arjun Prasad & Ors. v. Central Bank of India Ltd. (7);
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7. Benode Kishore Goswani v. Asutosh Mukhopadhya & Anr.(8).
Learned Counsel for the respondent cited the following passage
from the Palmer's Company Law (21st edition-1968, p. 334).
"A transfer is incomplete
until registered. Pending
registration, the transferee has only an equitable right to the
shares transferred to him. He does not become the legal owner
until his name is entered on the register in respect of these
shares."
(I) (1969] (Vol. 73) I.T.R. 794.
(3) [1873] (17) Equity Cases 273 @ 279.
(S} AIR 1942 Cal. 461 @ 464.
(7) AIR 1956 Pat. 32.
(2) [18871 (36) Ch. D. 36.
(4) (1904] (I) Ch. D. 815.
(6) !LR (1957] Mad. 1958 @ 1072·
(8) 16 C.W.N. 666.
546
SUPREME COURT REPORTS
[1975] l S.C.R·
This statem:nt of the Jaw in England is correct. The transferee,
under a gift of shares, cannot function as a shareholder recognisei bv
company law until his name is formally brought upon the register of a
company and he obtains a share certi:licate as already indicated above.
Indeed, there may be restrictions on transfers of shares either by gift
or by sale in the articles of association. Thus, we find in Palmer's
Company Law (at p. 336) :
"There is nothing to limit the restrictions which a company's
articles may place on the right of transfer. Tile articles may give
the directiors power to refuse to register a transfer in any specified
cases, for instance, where calls are in arrear, or where the
company has a lien on the shares--and some such provisions are usually inserted. Thus article 24 provides that
. the directors may decline to register any transfer of a share (not
being a fully paid share) to a person of whom they do not approve,
and may also decline to register any transfer of shares on
which the company has a lien. But the articles in many cases
go far beyond this. They may prohibit, for example, the
transfer of a share to any person who is not a member of a
specified class, or provide, as they often do in private companies, that before transferring to an outsider the intending
transferor must 'first offer the shares to the other members, and
give them a right of pre-emption.