l Appeal No 4803 of 1984 From the Judgment and Order dated 7884 of the Allahabad High Court in Civil Misc
Application No 10968 of 84  SA No 2182
KK Venugopal R N Karanjawala  Mrs Manik Karanjawala for the appellant
RParasaran Attorney General of India
K section Cooper Csril section Shroff  section section Shroff and section A Shroff for the respondents
Ashok Desai Anil Diwan Pinaki Mishra and Praveen Kumar for respondent No 1
Dr Y section Chitale VD Mehta V A Bobde S Swarup KJ John for respondent No 2
Soli J Sorabjee Y D Mehta S Swarup and K J John for respondents Nos
Anil Dewan R Karanjawala Mrs Manik Karanjawala and Arun Jetly for the Intervenor
Miss Bina Gupta for the Intervenor
T section Krishnamurthi and Vineet Kumar for the Intervenor
The Judgment of the Court was delivered by 862 VENKATARAMIAH J
This appeal by special leave is filed against the order dated August 7 1984 passed by the High Court of Allahabad in Civil Misc
Application No 10968 of 1984 in Special Appeal No 2 of 1982 on its file
The dispute involved in this case relates to the validity of an extraordinary general meeting of the Swadeshi Polytex Ltd hereinafter referred to as the Polytex Company  a company governed by the hereinafter referred to as the Act  held pursuant to a notice dated February 11 1984 issued under section 169 of the Act by some of its members
The controlling interest in the Swadeshi Cotton Mills Company Ltd hereinafter referred to as the Cotton Mills Company  which is also governed by the Act was acquired by Mangturam Jaipuria and his family in 1946
Sitaram Jaipuria is the adopted son of Mangturam Jaipuria
After his adoption Mangturam Jaipuria got a natural son Rajaram
In or about the year 1964 Sitaram Jaipuria became the Chairman and Managing Director of the Cotton Mills Company
In 1970 the Jaipuria family decided to promote another company and accordingly the Polytex Company was established
In 1970 Rajaram became the Managing Director of the Cotton Mills Company and Sitaram continued as its Chairman
Sitaram became the Chairman and Managing Director of the newly established Polytex Company in which the Cotton Mills Company had acquired 10 lakhs shares of Rs 10 each
From about 1975 76 on account of a very serious set back in its financial position the Cotton Mills Company could not meet the wage bill the dues of the UP Electricity Board and several other monetary claims against it
There were serious labour troubles in its factory and its work virtually became paralysed
The total liability of the Cotton Mills Company was in the order of Rs 2 34 crores in the year 1977
On October 27 1977 the Collector of Kanpur passed an order under section 128 A of the UP Land Revenue Act 1901 hereinafter referred to as the Land Revenue Act  read with section 5 of the Uttar Pradesh Government Electrical Undertakings Dues Recovery Act 1958 appointing a Receiver in respect of the Cotton Mills Company for a period of six months with various powers specified therein and in particular to seize I lakh of shares of the Polytex Company of the face value of Rs 10 lakhs held by the Cotton Mills Company and to pledge them in favour of the State Government of Uttar Pradesh against a loan for the purpose of meeting the dues payable to the employees of the Cotton Mills Company and he made a further order under section 149 of the Land Revenue Act read with section 5 of the U P Government Electrical Undertakings Dues Recovery Act 1958 863 attaching the remaining 9 lakhs shares of the Polytex Company held by the Cotton Mills Company and empowering the receiver to seize them Both the order appointing the Receiver and the order attaching 9 lakhs shares were incorporated in the same document the relevant part of which read thus ORDER Whereas electricity dues are payable by Ms Swadeshi Cotton Mills Co Ltd Kanpur to the UP State Electricity Board and recovery certificates for the amount enumerated below have been received for realisation of the dues above mentioned from the said consumer Recovery certificates dated 29976 311276 16 1276 291276 16776 17976 and 31077 1062242317 Less amount paid 190000000 Balance 872242317 Add Collection charges 106224231 TOTAL RECOVERABLE 978466548 And whereas for the expeditious recovery of the dues outstanding as above without affecting adversely the running of the mills it is just and proper that a Receiver be appointed over the mills at Kanpur belonging to Ms Swadeshi Cotton Mills Co Ltd Now therefore I KK Baksi Collector Kanpur in exercise of the power under sub section 1 of section 182 A of UP Land Revenue Act of 1901 read with section 5 of UP Government Electrical Undertakings Dues Recovery Act 1958 do hereby appoint Shri LN Batra ADM Kanpur as Receiver of the said mills belonging to Ms Swadeshi Cotton Mills Co Ltd for a period of six months with immediate effect and direct that the Receiver shall exercise the following powers 1
The Receiver shall exercise supervision over the sales of products of the said mills and the disbursement of receipts from day to day
That the receiver shall ensure that the receipts of the said mills are after the payment of labour dues and 864 other essentials for the running of the Mill appropriated towards recoverable arrears against Ms Swadeshi Cotton Mills Co Ltd as Land Revenue
That the receiver shall if necessary for the running of the said mills borrow money from State Government or other financial institutions and other appropriate arrangement in this behalf for the repayment of the amount and the recovery thereof as arrears of land revenue
That the Receiver shall seize the shares held by Ms Swadeshi Cotton Mills Co Ltd of Ms Swadeshi Polytex Ltd
Of the face value of Rs 10 lacs Ten lacs and shall be competent to pledge the same by way of security for the borrowings referred to above
That the Receiver shall be competent also to make payment to the Punjab National Bank against the guarantee dated 16121976 and relieve the State Government of its liabilities thereunder correspondingly
That in the event of Guarantee furnished by the State Government in favour of Punjab National Bank dated
161276
being invoked the Receiver shall be competent to make the payment to the State Government against the liability accruing therefrom 7
That the Receiver shall have access to all books of accounts
ledger cash books Stock books and all other documents kept or maintained by Ms Swadeshi Cotton Mills Co Ltd in course of business
That the Receiver shall be competent for the reasons to be recorded also to put a restraint against any transaction being entered into by Ms Swadeshi Cotton Mills Co Ltd involving the business and assets of the mills and which are not in the interest thereof or may be detrimental to the same in his opinion
That the Receiver shall have all powers incidental or ancillary for Carrying out of the functions and the powers referred to above
That subject to the above and to any directions that I may hereafter issue from time to timethe 865 present management of the said mills shall continue to run A the mill and business
In view of the urgency the order is being made expert with the direction however that a notice to show cause shall issue to Ms Swadeshi Cotton Mills Company Ltd for November 15 1977
And further in exercise of the power under section 149 of UP Land Revenue Act 1901 read with section 5 of UP Government Electrical Undertakings Dues Recovery Act of 1958 I hereby direct attachment and sale of shares held by Ms Swadeshi Cotton Mills Co Ltd in Ms Swadeshi Polytex of the face value of Rs 90 lacs Ninety lacs and hereby empower the Receiver to seize the same
Sd KK Baksi Dated  Kanpur Collector kanpur October 27 1977
 On the same date ie On October 27 1977 the Receiver pledged 1 lakh of shares as per the order of the Collector in favour of the Government of Uttar Pradesh against a loan of Rs 135 Lakhs
i he Receiver also took possession of 9 Lakhs shares as per the order made under section 149 of the Land Revenue Act
Subsequently the Receiver pledged on November 9 1977 1 lakh shares out of the above 9 lakhs shares in favour of the Government of Utter Pradesh against a loan of Rs 15 lakhs and on January 4 1977 15 lakhs shares against a further loan Thus out of the 10 lakhs shares of the Polytex Company of the face value of Rs 1 crore held by the Cotton Mills Company 35 Lakhs shares stood pledged in favour of the Government of Uttar Pradesh and the remaining 65 lakhs shares of the face value of Rs 65 lakhs remained with the Receiver
The events which have led to this appeal are however these In the year 1976 the Cotton Mills Company filed a petition under sections 397 and 398 of the Act against the Polytex Company alleging oppression and mismanagement of the Polytex Company by Sitaram Jaipuria and other directors of the Polytex Company in Company Petition No 20 of 1976 on the file of the Allahabad High Court
That petition was dismissed by the Company Judge of the High Court on April 19 1982
Against his decision an appeal was filed by the Cotton Mills Company in August 1982 in Special Appeal No 2 866 of 1982 before the Division Bench of the High Court
That appeal is still pending
On February 11 1981 the Cotton Mills Company and four others namely Rajaram Jaipuria Mahabir Prasad Dalmia Siyaram Sharma and KB Agarwal who together held 10 01 950 shares of the value of Rs 10 each sent a notice to the Polytex Company which was received by it on February 15 1984 under section 169 of the Act requiring the Board of Directors of the Polytex Company to call an extraordinary general meeting of the Polytex Company to consider and if thought fit to pass with or without modification the following as ordinary resolutions 1 RESOLVED that the appointment of Shri Sitaram Jaipuria as Managing Director of Swadeshi Polytex Ltd be and is hereby terminated prior to the expiry of his term in exercise of the powers conferred by Article 110 of the Articles of Association of the Company
 2 RESOLVED further that Shri Sitaram Jaipuria be and is hereby removed from the office of Director and consequently from the office of the Managing Director of the Swadeshi Polytex Ltd 3 RESOLVED further that resolution passed at the 13th Annual General Meeting of Swadeshi Polytex Ltd in respect of item 7 Special Business of the Notice dated 31st January 1983 of the said 13th Annual General Meeting for the remuneration of Shri Sitaram Jaipuria as Managing Director be and is hereby rescinded
4 RESOLVED that Shri Ashok Jaipuria be and is hereby removed from the office of Director of Swadeshi Polytex Ltd 5 RESOLVED that in the vacancy caused by the a removal of Shri Ashok Jaipuria Shri Sitaram Singhania be and is hereby appointed as a Director of Swadeshi Polytex Ltd and in respect of whose appointment special notices have been received from some members indicating their intention to appoint Shri Sitaram Singhania as a Director of the Company 867 6 RESOLVED that Shri BM Kaul be and is hereby removed from the office of Director of Swadeshi Polytex Limited
 7 RESOLVED that in the vacancy caused by the removal of Shri BM Kaul Dr Rajaram Jaipuria be and is hereby appointed as a Director of Swadeshi Polytex Ltd and in respect of whose appointment special notices have been received from some members indicating their intention to appoint Dr Rajaram Jaipuria as a Director of the Company
 8 RESOLVED that Shri PB Menon be and is here removed from the office of Director of Swadeshi Polytex Ltd 9 RESOLVED that in the vacancy caused by the removal of Shri PB Menon Shri R D Thapar be and is hereby appointed as a Director of Swadeshi Polytex Ltd and in respect of whose appointment special notices have been received from some members indicating their intention to appoint Shri DR Thapar as a Director of the Company  The requisitionists of the meeting also asked the Polytex Company to treat the said notice as a special notice under section 284 2 and 5 read with section 190 of the Act for appointment of Sitaram Singhania Rajaram Jaipuria and RD Thapar in place of Ashok Jaipuria BM Kaul who was also the Chairman of the Cotton Mills Company and PB Menon respectively as directors of the Polytex Company
They enclosed an explanatory statement as required by section 173 of the Act to the notice containing reasons for moving the aforeaid resolutions
On receipt of the notice an emergent meeting of the Directors of the Polytex Company was held on February 23 1984 to consider the above said notice issued under section 169 of the Act
the following is the material part of the minutes of the said meeting REQUISITION NOTICE The Board was informed that a notice had been received at the Registered Office of the Company on 15th February 1984 from Swadeshi Cotton Mills Co Ltd 868 SCM and four other shareholders requestioning an Extraordinary General Meeting of the Company under Section 169 of the 
The requisition notice received from SCM was read before the Board
The Board considered the motives behind the requisition and took serious note of the false and baseless allegations made in the explanatory note enclosed to the notice of requisition
The Secretary pointed out few technical defects in the requisition notice
The draft notice and the explanatory statement was placed before the meeting
The same was perused and discussed and the following resolutions were passed RESOLVED that an Extraordinary General Meeting of the Company pursuant to the requisition received by the Company on 15th February 1984 under Section 169 of the from Swadeshi Cotton Mills Co Ltd  others be held at the Registered Office of the Company on Wednesday the 28th March 1984 at 1030 AM RESOLVED further that the Secretary be and is hereby authorised to issue notice for convening the aforesaid meeting as per draft placed before the Board and initialed by the Chairman for the purposes of indentification and to take such other steps as may be required in this regard
 The Board was of the view that the financial institutions should be informed of this development and the directors who wish to make their representation to the shareholders may be requested to do so
The Secretory was directed to take necessary steps in this regard
 The Board of Directors also prepared and circulated an explanatory statement pursuant to section 173 of the Act along with the notice issued to the shareholders calling the extraordinary general meeting to be held on March 28 1984
The requisitionists of the meeting filed an application before the Division Bench in special Appeal No 2 of 1982 for appointing a Chairman of the meeting
section Jagannathan who was a member of the Board of Directors as the nominee of IFCI was appointed as the chairman of the meeting by the Division Bench on March 23 1984
The meeting was however adjour
869 ned as a shareholder had obtained an order of temporary injunction A restraining the holding of the meeting in a suit filed by him at the court of the MunsifAlipore West Bengal
When the requistionists applied to the High Court of Allahabad to fix a fresh date of the meeting the High Court declined to do so by its order dated May 22 1984 because the temporary injunction order had been issued by a court not subordinate to it
It appears that another shareholder applied for injunction in a suit filed in the Civil Judge s court at Gwalior and a third shareholder moved the City Civil Court Madras for a similar relief
Then the requisitionists filed two special Leave Petitions before this Court against the order of the Allahabad High Court passed the following order on the said petitions which were numbered as Civil Appeals Nos
2597 98 of 1984 Special league granted
The High Court of Allahabad shall make a fresh order directing the holding of the meeting of the Company and that meeting shall be held in accordance with the order of the High Court notwithstanding any order of injunction etc
issued by any other court or authority in India or to be issued hereafter
If any person has any grievance about the holding of the meeting he shall approach the High Court of Allahabad for appropriate directions
If the requisitionists or the Company wish to held the meeting early they may approach the vacation Judge of the High Court of Allahabad who has all the powers of the Company Judge to make fresh orders
The appeals are disposed of accordingly Again on July 4 1984 a further order was passed by this Court as follows Mr Sorabjee and Mr Mridul state that the extra ordinary general meeting may be called on any day to be fixed by the High Court in the second week of August 1984
They also state that the venue of the meeting shall be determined by the Chairman Shri Jagannathan appointed by the High Court
No further orders are necessary on prayer b and c in the application dated 25th June 19 i l made before the Allahabad High Court by the petitioner
 Accordingly the meeting W3S fixed to be held on August 14 1984
Since there was a motion for the adjournment of the meeting 870 this Court was again approached by the parties by an application for a further direction which was disposed of on September 4 1984
In the meanwhile the appellant No I Balkrishan Gupta had filed an application before the High Court of Allahabad in Special Appeal No 2 of 1982 questioning the right of the requisitionists issue notice under section 169 of the Act to call the extraordinary general meeting
His contention was that since a Receiver had been appointed by the Collector in respect of the shares held by the Cotton Mills Company and they had also been attached the shares held by the Cotton Mills Company could not be taken into consideration for determining the required qualification to issue the notice under section 169 of the Act requisitioning the extraordinary general meeting and that if those shares were omitted from consideration then the shares held by the other requisitionists would not be sufficient to issue the said notice
That application was dismissed by the High Court by its order dated August 7 1984
This appeal by special leave is filed against the said order of the High Court
In this appeal this Court passed the following order on September 14 1984 All the learned counsel for the parties in this petition agree that the meeting which is now adjourned to 24984 should be held on that day and the agenda of the meeting should be discussed and voted upon
We make an order accordingly
The result of the voting shall be reported to this Court by the Chairman within one week after it is ascertained The resolutions passed at the meeting shall not come into effect until further orders by this Court
The matter may be listed in the third week of October 1984
 After the report submitted by the Chairman of the meeting was received by this Court this Court passed a further order on October 12 1984 which reads as follows The report of the Chairman of the extraordinary general meeting which has been submitted to this Court in a sealed cover is opened and perused by the Court
The report states that all the resolutions other than the resolution for adjournment have been lost
The photostat copies of the report along with the enclosures may be made avail able to the parties at their expense
List the matter on 29101984 before this Bench
 After the above order was passed the Industrial Development Bank of India and the Industrial Finance Corporation of India WHO 871 were aggrieved by the result of the counting of votes given on the taking of poll at the meeting filed applications before this Court questioning the correctness of  the report of the Chairman as regards the result of the meeting They contended that the Chairman had wrongly rejected the votes cast on their behalf and if these votes had been taken into consideration the resolutions would have been duly passed
Some shareholders who were opposed of the removal of the sitting Directors also filed an application for being impleaded
All these applications were allowed on November 19 1984 and all parties agreed that the validity of the meeting and of its result reported to the court should be decided by this Court During the hearing a writ petition filed in the High Court of Bombay was also withdrawn to this Court for being heard along with these cases
At the conclusion of the hearing of the above cases the parties filed a compromise petition requesting the Court to make an order in terms thereof
On the basis of the said compromise the Court passed an order on February 1 1985 the material part of which reads thus 1
The Board of Directors of Swadeshi Polytex Ltd hereinafter referred to as SPL  shall be re constituted pending the holding of the next Annual General Meeting of SPL as under a Four nominees of Financial Institutions including one to be selected and communicated by IDBI IFCI to SPL including the representative of the UP State Industrial Development Corporation
b Four nominees of Shri Sitaram Jaipuria herein after referred to as SRJ  including SRJ
c Four nominees of Dr Rajaram Jaipuriaherein after referred to as RRJ   including RRJ
All nominations under sub clauses b and c above shall be made by February 9 1985
Nominations under sub clause a except the nominee of the U P State Industrial Corporation shall be made within ten days of the date of this order
The re constituted Board shall start functioning from February I 1 1985
The Secretary of SPL is directed to convene the re constituted Board meeting within 15 days of the order
872 2a SRJ and RRJ shall designate one nominee each out of their respective nominees directors as Executive Directors
The said Executive Directors shall jointly carry on the management of SPL and will have all the powers of the Managing Director and control of finance
If any difference of opinion arises it shall be referred to the Board of Directors
2 b All committees of the Board shall stand dissolved
SRJ shall continue as the Managing Director of the Company and he voluntarily undertakes not to exercise any powers or functions of the Managing Director till his re election at the next Annual General Meeting of SPL
SRJ will continue to be the Chairman of the Company and as such will preside over the Board meetings of SPL
He voluntarily undertakes not to have any second or casting vote
All minutes of the Board meetings shall be prepared by a nominee of the Financial Institutions and shall be signed by the Chairman 6
The next Annual General Meeting of the SPL shall be called and held on May 15 1985
Th Chairman of the said Annual General Meeting shall be appointed by this Court
All the Members of the re constituted Board appointed pursuant to clause 1 above excluding nominees mentioned in clause 1 a  including non rotational Directors i e SRJ andor Shri F R Beshania shall resign and a new Board shall be elected at the said Annual General Meeting
All shareholders of SPL including SRJ and RRJ shall be entitled to propose names of any persons for appointment as Directors of SPL at the said Annual General Meeting
Members of the re constituted Board may if they so desire seek re election at the said Annual General Meeting
All pending matters before this Court including the Transfer Case No I of 1985 and all Civil Misc
Petitions in Civil Appeal No 4803 of 1984 save and except Civil 873 Appeal No 4803 of 1984 Balkrishan Gupta  Ors
vs Swadeshi Polytex Ltd  Ors shall stand withdrawn and all questions raised in all such withdrawn proceedings are expressly left open
All allegations against the Financial Institutions the Chairman of the IDBI and the Government in Transfer Case No 1 of 1985 and Civil Misc
Petitions Nos
39900 of 1984 and 340 of 1985 shall stand withdrawn
Votes cast by the Financial Institutions at the next Annual General Meeting of SPL to be held on May 15 1985 shall not be questioned by the parties hereto an any ground
The Civil Appeal No 4803 of 1984 Balkrishan Gupta  Ors
vs Swadeshi Polytex Ltd  Ors shall be disposed of on merits
Notice of Board meeting to all members of the re constituted Board shall be sent by Registered Post Acknowledgment due
It shall be open to the Board of Directors if it so chooses to review any delegation of powers
There shall be no disciplinary action by way of victimization of any employee
SRJ shall obtain the resignation of the present members of the Board of Directors excluding the nominees of Financial Institutions
Liberty is reserved to the parties to apply to this Court
The undertakings that have to be filed in accordance with the above order shall be filed in this Court within one week from today
The next Annual General Meeting which is ordered to be held on May 15
1985 shall be held notwithstanding any order direction or injunction of any other Court in India
The parties are at liberty to apply to this Court for nominating a Chairman for the next Annual General Meeting
Judgment in Civil Appeal No 4803 of 1984 is reserved
All the other cases referred to above stand disposed of 874 in terms of this order
 The parties however requested the Court to decide the question relating to the right of the Cotton Mills Company to join as a requisitionist of a meeting under section 169 of the Act or to vote at a meeting of the company since it was likely that one or the other member might raise it as an issue at the next meeting
We shall therefore proceed to decide the said question by this judgment
The principal ground urged on behalf of the appellants is that the extraordinary general meeting had not been validly called since the Cotton Mills Company had ceased to enjoy the privileges of a member of the Polytex Company by reason of the appointment of a Receiver by the Collector of Kanpur in respect of the ten lakhs shares in the Polytex Company held by the Cotton Mills Company the attachment of the 9 lakhs shares out of the said 10 lakhs shares and also the pledge of 350000 shares out of the said 10 lakhs shares with the Government of Uttar Pradesh as security for the loans advanced by it
The total paid up equity share capital of the Polytex Company is Rs 39000000 3900000 shares of Rs 10 each and it is not disputed that if the 10 lakhs shares held by the Cotton Mills Company are omitted from consideration the remaining requisitionists would not have sufficient voting strength to issue a notice under section 169 of the Act
The appellants contend that the Cotton Mills Company could not therefore join the other requisitionists in issuing the notice under section 169 of the Act calling upon the Polytex Company to call the extraordinary general meeting and without the support of the shares held by the Cotton Mills Company the remaining requisitionists would not have been eligible to requisition the meeting
The material part of section 169 rf the Act reads Calling of extraordinary general meeting on requisition 169
1 The Board of directors of a company shall on the requisition of such member or members of the company as is specified in sub section 4 forthwith proceed duty to call an extraordinary general meeting of the company
2 The requisition shall set out the matters for the consideration of which the meeting is to be called shall be signed by the requisitionists and shall be deposited at the registered office of the company
875 3 The requisition may consist of several documents in like form each signed by one or more requisitionits
4 The number of members entitled to requisition a meeting in regard to any matter shall be a in the case of a company having a share capital
such number of them as held at the date of the deposit of the requisition not less than one tenth of such of the paid up capital of the company as at that date carries the right of voting in regard to that matter  We have already referred to the order of the Collector appointing the Receiver in respect of the shares in question attaching them and ordering that 350000 shares be pledged in favour of the Government of Uttar Pradesh
Section 150 of the Act requires every company to keep a register of members containing the names address and the occupation if any of each member and other particulars mentioned therein
Section 153 of the Act provides that no notice of any trust express implied or constructive shall be entered on the register of members
Section 153B of the Act however provides that notwithstanding anything contained in section 153 where any shares in a company are held in trust by any person he the trustee shall within such time and in such form as may be prescribed make a declaration to the public trustee appointed under section 153A of the Act in accordance with and subject to the rest of the provisions of section 153B of the Act
It is clear from the relevant provisions of the Act which are referred to hereafter that a member can participate and exercise his vote at the meetings of a company in accordance with the Act and the articles of association of the company
Section 41 of the Act defines the expression member of a company
The subscribers of the memorandum of association of a company shall be deemed to have agreed to become members of the company and on its registration shall be entered as members in its register of members
A subscriber of the memorandum is liable as the holder of shares which he has undertaken to subscribe for
Any other person who agrees to become a member of a company and whose name is entered in its register of members shall be a member of the company
In his case the two conditions namely that there is an agreement to become a member and that his name is entered in the register of 876 members of the company are cumulative
Both the conditions have to be satisfied to enable him to exercise the rights of a member
Subject to section 42 of the Act a company or a body corporate may also become a member
When once a person becomes a member he is entitled to exercise all the rights of a member until he ceases to be a member in accordance with the provisions of the Act
The voting rights of a member of a company are governed by section 87 of the Act
Section 87 of the Act says that subject to the provisions of section 89 and sub section 2 of section 92 of the Act every member of a company limited by shares and holding any equity share capital therein shall have a right to vote in respect of such capital on every resolution placed before the company and his voting right on a poll shall be in proportion to his share of the paid up equity capital of the company
Regulations 8 and 86 a of the Articles of the PolYtex Company read 8
Save as herein otherwise provided the Company shall be entitled to treat the registered holder of any share as the absolute owner thereof and accordingly shall not except as ordered by a court of competent jurisdiction or as by law required be bound to recognise any trust be nami or equitable or other claim to or interest in any such share or any fractional part of such share on the part of any other person whether or not it shall have express or other notice thereof
a On show of hands every holder of Equity shares entitled to vote and present in person or by proxy shall have one vote and upon a poll every holder of equity shares entitled to vote and present in person or by proxy shall have one vote for every Equity share held by him
 A person ceases to be a member by transferring his share to another person by transmission of his share by operation of law by forefeiture of share by death or by any other reason known to law
In the case before us therefore three points arise for consideration at this stage
They are i Whether by reason of the appointment of the Receiver under the Land Revenue Act in respect of the shares of the Polytex Company held by the Cotton Mills 877 Company the Cotton Mills Company had ceased to have the rights of a member under section 169 of the Act  ii Whether by the attachment of the shares under section 149 of the Land Revenue Act the Cotton Mills Company suffered any diminution or curtailment in its rights as a shareholder in respect of the shares so attached  iii Whether by the pledge of certain shares the Cotton Mills Company suffered any such diminution or curtailment  In the Act the expressions a member  a share holder  or holder of a share  are used as synonyms to indicate the person who is recognised by a company as its owner for its purposes
What does ownership of a share connote Ownership in it most comprehensive signification says Salmond denotes the relation between a person and any right that is vested in him
That which a man owns in this sense is a right
The right of ownership comprises benefits like claims liberties powers immunities and privileges and burdens like duties l abilities disabilities
Whatever advantages a man may have as a result of the ownership of a right may be curtailed by the disadvantages in the form of burdens attached to it
As observed by Dias an owner may be divested of his claims etc
arising from the right owned to such an extent that he may be left with no immediate practical benefit
He remains the owner nonetheless because his interest will outlast that of other persons in the thing owned
The owner possesses that right which ultimately enables him to enjoy all rights in the thing owned by attracting towards himself those rights in the thing owned which for the time being belong to others by getting rid of the corresponding burdens
An owner of a land may get rid of the interest of a mortgagee in it by redeeming the mortgage may get physical possession of land by terminating a lease and may get rid of an attachment by discharging the debt for which it is attached
A Receiver appointed by a court or authority in respect of a property holds it for the benefit of the true owner subject to the orders that may be made by such court or authority
the different kinds of rights of ownership flowing from the ownership of a right depend upon the nature of the right owned
A person who is a shareholder of a company has many rights under the Act
Some 878 of them with which we are concerned in this appeal principally are i the right to vote at all meetings Section 87 i the right to requisition an extraordinary general meeting of the company or to be a joint requisitionist Section 169 iii the right to receive notice of a general meeting Section 172 iv the right to appoint proxy and inspect proxy registers Section 176 V in the case of a body corporate which is a member the right to appoint a representative to attend a general meeting on its behalf Section 187 and vi the right to require the company to circulate his resolution Section 188
The question for consideration is when does a shareholder cease to be entitled to exercise any of these rights  Section 182 A of the Land Revenue Act which provides for the appointment of a Receiver in respect of the assets of a defaulter who is liable to pay an arrear of revenue or any other sum recoverable as an arrear of revenue reads thus 182 A Appointment of Receiver 1 Notwithstanding anything in this Act when an arrear of revenue or any other sum recoverable as an arrear of revenue is due the Collector may in addition to or instead of any of the processes hereinbefore specified by order a Appoint for such period as he may deem fit a Receiver of any movable or immovable property of the defaulter b Remove any person from the possession or ousted of the property c Commit the same to the possession custody or management of the Receiver d Confer upon the receiver all such powers as to bringing and defending suits and for the realisation management protection preservation and improvement of the property the collection of the rents and profits thereof the application and disposal of such rents and profits and the execution of documents as the defaulter himself has or such of those powers as the Collector thinks fit
2 Nothing in this Section shall authorise the Collector to remove from the possession or custody of property any person whom the defaulter has not a present right to remove
879 3 The Collector may from time to time extend the A duration of appointment of the Receiver
3 A No order under sub section 1 or sub section 3 shall be made except after giving notice to the defaulter to show cause and after considering any representations that may be received by the Collector in response to such notice Provided that an interim order under sub section 1 or sub section 3 may be made at any time before or after the issue of such notice Provided further that where an interim order is made before the issue of such notice the order shall stand vacated if no notice is issued within two weeks from the date of the interim order
4 The provisions of Rules 2 to 4 of Order XL contained in the First Schedule to the Code of Civil Procedure 1908 shall apply in relation to a Receiver appointed under this section as they apply in relation to a Receiver appointed under this section as they apply in relation to a Receiver appointed under the Code with the substitution of references to the Collector for references to the Court
 Section 149 of the Land Revenue Act which provides for the attachment and sale of movable property belonging to a defaulter reads thus 149
Attachment and sale of movable property Ihe Collector may whether the defaulter has been arrested or not attach and sell his movable property
Every attachment and sale ordered under this section shall be made according to the law in force for the time being for the attachment and sale of movable property under the decree of a Civil Court
In addition to the particulars mentioned in clauses a to c of the proviso to Section 60 of the Code of Civil Procedure 1908 Act V of 1908 articles set aside exclusively for the use of religious endowments shall be exempted from attachment and sale under this section
The costs of the attachment and sale shall be added to the arrear of revenue and shall be recoverable by the same procedure
 880 We shall first consider the effect of appointment of a Receiver in respect of the shares in question
A perusal of the provisions of section 182 A of the Land Revenue Act shows that there is no provision in it which states that on the appointment of a person as a Receiver the property in respect of which he is so appointed vests in him similar to the provision in section 17 of the Presidency Towns Insolvency Act 109 where on the making of an order of adjudication the property of the insolvent wherever situate would vest in the official assignee or in section 28 2 of the which states that on the making of an order of adjudication the whole of the property of the insolvent would vest in the court or in the Official Receiver
Sub section 4 of section 182 A of the Land Revenue Act provides that Rules 2 to 4 of Order XL of the Code of Civil Procedure 1908 shall apply in relation to a Receiver appointed under that section
A Receiver appointed under Order XL of the Code of Civil Procedure only holds the property committed to his control under the order of the court but the property does not vest in him
The privileges of a member can be exercised by only that person whose name is entered in the Register of Members
A Receiver whose name is not entered in the Register of Members cannot exercise any of those rights unless in a proceeding to which the company concerned is a party and an order is made therein
In Mahathalone vs Bombay Life Assurance Co Ltd 1 it has been laid down clearly that a Receiver appointed by 3 court in respect of certain shares which had not been duly entered in the Register of Members of the company concerned as belonging to him could not acquire certain newly issued shares which could be obtained by the members of the company
This Court observed at page 143 thus Mr Pathak argued that the plaintiff was entitled to reliefs A and B both in his suit as well as in the receiver s suit and that the receiver s suit was wrongly dismissed by the High Court
We ate unable to agree
In our opinion the High Court rightly held that the receiver appointed in the suit of Sir Padampat could not acquire the newly issued shares in his name
that privilege was conferred by section 105 only on a person whose name was on the register of members
The receiver s name admittedly was not in the register and the company was not bound to entertain that application
Mr Pathak argued that may be so but the ceiver was not making an application in his individual 1  881 right but he had been armed by the court with power to A apply in the right of the defendant Reddy
The fact how ever is that the receiver made the application in his own name
Even if Mr Pathak s contention is right the company was no party to the suit filed by Sir Padampat against Reddy and that being so no order could be issued to the company in that suit to recognize the receiver as a shareholder in place of Reddy
 Even where the holder of a share whose name is entered in the Register of Members hands over his shares with blank transfer forms duly singed the transferee would not be able to claim the rights of a member as against the company concerned until his name is entered in the Register of Members
This Court in Messrs Howrah Trading Co Ltd vs The Commissioner of Income tax Calcutta has observed at pages 453 454 thus The position of a shareholder who gets dividend when his name stands in the register of members of the company causes no difficulty whatever
But transfers of shares are common and they take place either by a fully executed document such as was contemplated by Regulation 18 of Table A of the Indian Companies Act 1913 or by what are known as blank transfers  In such blank Transfers the name of the transferor is entered and the transfer deed signed by the transferor is handed over with the share scrip to the transferee who if he so chooses complete s the tarns for 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 members can be made against the company if the transferor retains the money in his own hands and fails to pay it to him
1 1959 Supp 2 SCR 448 882 A Glance at the scheme of the Indian Companies Act1913 shows that the words member shareholder and holder of a share have been used interchangeably in that Act
Indeed the opinion of most of the writers on t e subject is also the same
Buckley on the Companies Act 12th Edition Page 803 has pointed out that the right of a transferee is only to call upon the company to register his name and no more
No rights arise till such registration takes place
 In this case this Court followed the dictum of Chitty J in re Wala Wynaad Indian Gold Mining Company1 which emphasised that the entry of the name of person in the Register of Members was an essential condition for exercising voting rights at the meeting of the company concerned
In Buckley on the Companies Acts 14th Edn Vol
I page 972 it is stated thus Company cannot enquire into beneficial ownership As between the shareholder and the company the person entitled to exercise the right of voting is the person legally entitled to the shares the member whose name is on the register
 In Kurapati Venkata Mallayya  Anr
vs Thondepu Ramaswami  Co  Anr2 this Court had occasion to consider the validity of a suit instituted by a Receiver to collect debts due to a party to a suit in his own name
The Count upheld the right of the Receiver to maintain the suit observing that a Receiver invested with full powers to administer the property which is Custodian legis or who is expressly authorised by the court to institute a suit for collection of debts was entitled to institute a suit in his own name provided he did so in his capacity as a Receiver
But in the course of the said decision this Court approved the decision of the Calcutta High Court in Jagat Tarini Dasi vs Naba Gopal Chaki  in which it had been stated On the whole we are disposed to take the view that although a Receiver is not the assignee or beneficial owner of the property entrusted to his care it is an incomplete and inaccurate statement of his relation to the property to say that he is merely its custodian Underlining by us
Thus whatever may be the other powers of a Receiver dealing with the property which is in custodian legis while in his custody he is not to be construed as either an assignee or beneficial owner of such property
1 2 1963 Supp 2 SCR 995
3 1907 
 883 In Wise vs Lansdell1 it was held that in the case of a bankrupt A whose name was still on the Register of Members of a company as between himself and the company the bankrupt so long as his name remained on the register was entitled to vote in respect of the shares though as between himself and the mortgagees he could vote only as they dictated
But the right to vote was held to be unimpaired as long as his name appeared on the Register
In a later case Morgan  Anr
vs Gray  Ors 2 after referring to the decision in Wise vs Lansdell supra Danckwerts 1
Observed It seems to me that unless there is some provision in the company s articles or in the Companies Act which empowers me to say that the bankrupt is no longer a member of the company and is therefore unable to vote expressly
I must come to the conclusion that the bankrupt still remains a member as long as he is on the register notwithstanding that by taking appropriate steps under the appropriate provisions the trustee in bankruptcy may be able to secure registration of himself as the proprietor of the shares
Unless and until that is done and as long as the bankrupt remains on the register of the company he remains a member in respect of those shares and is entitled as it seems to me to exercise the votes which are attribute able to that states notwithstanding that he has no longer any beneficial interest in the shares and that the company is entitled to pay any dividends to his trustee in bankruptcy
 The following statement in Kerr on Receivers 13th Edn at page 310 the power of the company and its directors to deal with the property comprised in the appointment both property subject to a floating charge and property subject to a fixed charge except subject to the charge are paralysed which was relied on by the appellants is not of much use to them
it only means that the authority competent to appoint a Receiver may give directions regarding the property It does not imply that the right of the company to exercise the right to vote on the basis of the shares of another company held by it at the meeting of such other company becomes automatically suspended
Under section 51 of the Code of Civil Procedure 1908 a 11921 I Ch
21953 I Ch 83 at p 87 884 Receiver may be appointed by a civil court on the application of a A decree holder in execution of a decree for purposes of realising the decree debt
This is only a mode of equitable relief granted ordinarily when other modes of realization Or the decretal amount are impracticable
A Receiver appointed under that section will be able to realise the amounts due from a garnishee and his powers are taking to the powers of a Receiver appointed under Order 40 rule 1 of the Code of Civil Procedure 1908
But he would not have any beneficial interest in the assets of the judgment debtor
He collects the debts not as his own but as an officer of the court
We do not also find any substance in the contention of the appellant based on section 137 of the Act
Section 137 of the Act provides that if any person obtains an order for the appointment of a Receiver of or of a person to manage the property of a company or if any person appoints such Receiver under any powers contained in any instrument he shall within thirty days from the date of the passing of the order or of the making of the appointment under the said powers give notice of the fact to the Registrar and the Registrar shall on payment of the prescribed fee enter the fact in the register of charges maintained under section 130 of the Act
It is not clear in this case whether any entry had been made in the register of charges of the order Or appointment of Receiver in this case
Even granting that such an entry had been made it would not have the effect of taking away the right of the Cotton Mills Company to exercise the right to vote in respect of the shares in question
We do not also find any substance in the argument based on sections 153B 187B and 187C of the Act
Section 153 of the Act states that no notice of any trust express implied or constructive shall be entered in the register of members or of debenture holders
Section 153B of the Act requires that notwithstanding anything contained in section 153 well any shares in or debentures of a company are held in trust by any person the trustee shall make a declaration to the public trustee
Section 187B of the Act provides that save as otherwise provided in section 153B but notwithstanding anything contained in any other provisions of the Act or any other law or any contract memorandum or articles where any shares in a company are held in trust by a person as trustee the rights and powers including the right to vote by proxy exercisable at any matinee of  the company or at any meeting of any class of members of the company by the trustee as a member of the company cease to be exercisable by the trustee as such member and become exercisable l l by the public trustee
Section 187C of the Act makes it incumbent 885 upon a person whose name is entered in the Register of Members of a company but who does not hold the beneficial interest in the share in question in such form as may be prescribed specifying the name and other particulars of the person who holds the beneficial interest in such share
The Companies Declaration of Beneficial Interest in Shares Rules 1975 are made in this connection
it is obvious from the foregoing that none of the provisions referred to above has any bearing on the question before us
Mere appointment of a Receiver in respect of certain shares of a company without more cannot therefore deprive the holder of the shares whose name is entered in the Register of Members of the company the right to vote at the meetings of the company or to issue a notice under section 169 of the Act
The consequence of attachment of certain shares of a company held by a shareholder for purposes of sale in a proceeding under section 149 of the Land Revenue Act is more or less the same
The effect of an order of attachment is what section 149 of the Land Revenue Act itself says
Such attachment is made according to the law in force for the time being for the attachment and sale of movable property under the decree of a civil court
Section 60 of the Code of Civil Procedure 1908 says that except those items of E property mentioned in its proviso lands
houses or other buildings goods money banknotes cheques bills of exchange hands promissory notes Government securities bonds or other securities of money debts shares in a corporation and all other saleable property movable or immovable belonging to a judgment debtor or over which or the profits of which he has a disposing power which he may exercise for his own benefit whether the same be held in the name of the judgment debtor or by another person in trust for him or on his behalf is liable for attachment and sale in execution of a decree against him
Section 64 of the Code of Civil Procedure 1908 states that where an attachment of a property is made any private transfer or delivery of the property attached or of any interest therein and any payment to the judgment debtor of any debt dividend or other monies contrary to such attachment shall be void as against all claims enforceable under the attachment
What is forbidden under section 64 of the Code of Civil Procedure is a private transfer by the judgment debtor of the property attached contrary to the attachment that is contrary to the claims of the decree holder under the decree for realisation of which the attach 886 ment is effected
A private transfer under section 64 of the Code of Civil Procedure is not absolutely void that is void as against all the world but void only as against the claims enforceable under the attachment
Until the property is actually told the judgment debtor retains title in the property attached
Under Rule 76 of Order 21 of the Code of Civil Procedure 1908 the shares in a Corporation which reattached may sold through a broker
In the alternative such shares may be sold in public auction under Rule 7 thereof
On such sale  either under Rule 76 or under Rule 77 the purchaser acquires title
Until such sale is effected all other rights of the judgment debtor remain unaffected even if the shares may have been seized by the officer of the count under Rule 43 of Order 21 of the Code of Civil Procedure 1908 for the purpose of effecting the attachment or through a Receiver or though an order in terms of Rule 46 of Order 21 of the Code of Civil Procedure may have been served on the judgment debtor or on the company concerned
On behalf of the appellants relying upon the decision in Hawks vs Mc Arthur  Ors1 it is contended that the order of the Collector attaching the hare was in the nature of a charging order which deprived the Cotton Mills Company of its rights in them
Having carefully gone through the said decision we find that it has not much relevance to the case In that case the Chairman and the Manager of a company had purchased certain shares of the company held by one of its members in two separate lots after paying consideration therefore contrary to Article 13 of the Company s Articles of Association which granted a right of pre emotion to all the other members in respect of the shares in question
Immediately after the said purchases were made another member of the company obtained a money decree against the transferor of the shares and also a charging order over the shares standing in the name of the transferor but which had been sold earlier either to the Chairman or the Manager
He claimed that since the transfer of the shares was contrary to Article 13 of the company s Articles of Association the transfer was void and hence he was entitled to enforce the charging order against those shares for realising his decretal amount
The Court negatived his claim holding that notwithstanding the complete failure to comply with the company s articles in regard to the procedure to be followed before shares could be transferred the transferees having paid to the transferor the full consideration for the shares had obtained equitable rights therein and as their rights accrued earlier than the equitable right 11951 1 A 887 of the plaintiff under the charging order their rights must prevail over his claim
It was argued before us that the order of the Collector being an order in the nature of a charging order the Receiver had obtained an equitable right in the shares in question and there being no other legal or equitable right which would prevail over it the Cotton Mills Company had lost its right to the shares The statement of facts of the above decision itself shows that it has no bearing on the case before us
it is to be noted that a charging order under the English Law is not the same as an attachment of property or appointment of a Receiver under the Land Revenue Act
We may here state that charging orders under the English Law are made under Order 50 of the English Supreme Court Practice under which the English court may for the purpose of enforcing a judgment or order of that court under which a debtor is required to pay a sum of money to a creditor make an order imposing on any such property of the debtor as may be specified in the order a charge for securing the payment of any money due or to become due under the judgment or order Such an order is referred to as the charging order 
A charging order on the property or assets of the debtor is one of the modes of enforcement of a judgment or order for the payment of money to the creditor
It is however not a direct mode of enforcement in the sense that the creditor can immediately proceed to recover the fruits of his judgment but it is rather an indirect mode of enforcement in the sense that it provides the creditor with security in whole or in part over the property of the debtor
It makes the creditor a secured creditor who having obtained his charging order must proceed as may be necessary according to the nature of the property charged to enforce his charge in order to obtain the actual proceeds of his charge to satisfy his judgment in whole or in part
Subject to the other p provisions of law a charge imposed by a charging order will have effect and will be enforceable in the same court and in the same manner as an equitable mortgage created by the debtor by writing under his hand
A short passage in Mull s Code of Civil Procedure 14th Edn Vol
II at page 1510 is instructive and it reads thus There is no provision in the Code for charging orders but on the Original Side of the High Courts which has inherited the older jurisdiction of the Court of Chancery it is the practice in cases where it is considered undesirable to grant immediate execution to make a charging order in the form made in the case of Kewny vs Attril When the a8sets require nursing the advantage of a 888 charging order is that it enables the Court on the one hand to gain time and on the other hand to protect the decree holder
It also avoids the confusion that might ensue if the Court were to allow a direct attachment while it is administering the assets of the partnership
The effect of a charging order is to constitute the decree holder a secured creditor although he undertakes to deal with the charge subject to the further orders of the Court
 An order of attachment cannot therefore have the effect of depriving the holder of the shares of his title to the shares
We are of the view that the attachment of the shares in the Polytex Company held by the Cotton Mills Company had not deprived the Cotton Mills Company of its right to vote at the meeting or to issue the notice under section 169 of the Act The fact that 350000 shares have been pledged in favour of the Government of Uttar Pradesh also would not make any difference Sections 172 to 178 A of the deal with the contract of pledge
A pawn is not exactly a mortgage
As observed by this Court in Lallan Prasad vs Rahamat Ali  Anrl the two ingredients of a pawn are 1 that it is essential to the contract of pawn that the property pledged should be actually or constructively delivered to the Pawnee and 2 a Pawnee has only a special pore party in the pledge but the general property therein remains in the pawner and woolly reverts to him on discharge of the debt
A pawn therefore is a security where by contract a deposit of goods is made as security for a debt
The right to property vests in the pledge only so far as is necessary to secure the debt 
The pawner however has a right to redeem the property pledged until the sale
 In Bank of Bihar vs State of Bihar and Ors
2 also this Court has reiterated the above legal position and held that the pawnee had a special property which was not of ordinary nature on the goods pledged and so long as his claim was not satisfied no other creditor of the pawner had any right to take away the goods or its price
Beyond this no other right was recognised in a pawnee in the above decision
Under section 176 of the if the pawner makes default in payment of the debt or performance at the stipulated time of the promise in respect of which the goods were pledged the pawnee may bring a suit against the pawnor upon 11967 2 SCR 233 at p 238 239
21971 Supp SCR 299
889 the debt or promise and retain the goods pledged as a collateral A security or he may sell the thing pledged on giving the pawnor reasonable notice of the sale
in the case of a pledge however the legal title to the goods pledged would not vest in the pawnee
The pawnee has only a special property
A pawnee has no right of foreclosure since he never had the absolute ownership at law and his equitable title cannot exceed what is specifically granted by law
In this sense a pledge differs from a mortgage
In view of the foregoing the pawnee in the instant case i e the Government of Uttar Pradesh could not be treated as the holder of the shares pledged in its favour
the Cotton Mills Company continued to be the member of the Polytex Company in respect of the said shares and could exercise its rights under section 169 of the Act
It may be stated here that the Government of Uttar Pradesh and the Collector who are parties to this appeal have not questioned the correctness of the judgment of the High Court
One other subsidiary contention urged on behalf of the appellants relates to the effect of an order made by the Central Government on April 131978 under section 18 AA 1 a of the Industries Development and Regulation Act 1951 taking over the management of Sideshow Cotton Mills along with five other industrial units belonging to the Cotton Mills Company which was the subject matter of dispute in Sideshow Cotton Mills vs Union of Indial and the order of extensions passed by the Central Government on November 261983 which is the subject matter of dispute in a case now pending before this Court
It is urged on behalf of the appellants that on the passing of the above said orders the Cotton Mills Company lost its right to exercise its voting rights in respect of the shores in question
There is no substance in this contention
What was taken over under the above said orders was the management of the six industrial units referred to therein and not all the rights of the Cotton Mills Company
The shares belong to the company and the orders referred to above cannot have any effect on them
The Department of Company Affairs Government of India rightly expressed its view in the letter written by C Khushaldas Director in the Department of Company Affairs on April 9 1979 to B M Kaul Chairman of the Cotton Mills Company that the voting rights in respect of these shares continued to vest with the Cotton Mills Company and the manner in which those voting rights were to be exercised was to be determined by the Board of Directors 1 119812 SCR533 890 of the Cotton Mills Company
Hence the passing of the orders under section 18AA 1 a of the Industries Development and Regulation Act 1951 has no effect on the voting rights of the Cotton Mills Company
It is also significant that the Directors of the Polytex Company who what that a Receiver had been appointed in respect of the shares in question that they had been attached by the Collector that a part of them had also been pledged in favour of the Government of Uttar Pradesh and that orders had been passed under section 18AA 1 a of the Industries Development and regulation Act 1951 taking over six industrial units of the Cotton Mills Company did not question the validity of the notice
The Polytex Company had in this case rightly treated the registered holder ie the Cotton Mills Company as the owner of the shares in question and to call the meeting in accordance with the notice issued under section 169 of the Act
The appellant cannot therefore be allowed to raise any dispute about the validity of the meeting on any of the grounds referred to above
In the result the appeal fails and it is dismissed with costs
The costs of all the parties to the above appeal and other connected cases shall however be borne by the Polytex Company
Subject to the above order the order passed by this Court on February 1 1985 shall remain in force
MLA Appeal dismissed


Summary:
Section 169 1 of the Companies Act provides that the Board of directors of a company shall on the requisition of such number of members of the company as is specified in sub section 4 forthwith proceed duly to call an extraordinary general meeting of the company Sub section 4a says that the number of members entitled to requisition a meeting in regard to any matter shall be in the case of a company having a share capital such number of them as held at the date of the deposit of the requisition not less than one tenth of such of the paid up capital of the company as at that date carries the right of voting in regard to that matter
The Swadeshi Cotton Mills Company Ltd for short the Cotton Mills Company had 10 lakhs shares out of 3900000 shares of Rs 10 each in the respondent Swadeshi Polytex Ltd for short the Polytex Company
On 855 27th October 1977 the Collector of Kanpur passed an order under section 182A A of the UP Land Revenue Act 1901 for short the Land Revenue Act road with section 5 of the UP Government Electrical Undertakings Dues Recovery Act 1958 appointing a Receiver in respect of the Cotton Mills Company since it could not meet the wage bill the dues of the UP Electricity Board and several other monetary claims against it from about 1975 76 on account of a serious set back in its financial position
By the said order he empowered the Receiver to seize 1 lakh of shares of the Polytex Company and to pledge them in favour of the State Government of Uttar Pradesh against a loan for the purpose of meeting the dues payable to the employees of the Cotton Mills Company
He made a further order under section 14g of the Land Revenue Act read with section 5 of the UP Government Electrical Undertakings Dues Recovery Act 1958 attaching the remaining 9 lakhs shares of the Polytex Company held by Cotton Mills Company and empowering the Receiver to seize them
Pursuant to the Orders of the Collector the Receiver seized 10 lakhs shares held by the Cotton Mills Company and pledged 3 5 lakhs shares in favour of the Government of UP and kept the remaining 65 lakhs shares with him
The Cotton Mills Company and four others share holders who together held 1001950 shares of Rs 10 each in the Polytex Company sent a notice to the Polytex Company under section 169 of the Act requiring the Board of Directors of Polytex Company to consider and pass certain resolutions regarding removal of its Managing Director and three directors and appointment of some other persons in their place
Pursuant to such requisitions the directors of the Polytex Company resolved to hold the extraordinary meeting on March 28 1984
However the meeting could not be held since some of the share holders had obtained temporary injunctions restraining the holding of the meeting
The matter ultimately came up before the Supreme Court in Special Leave Petitions when it directed the High Court to make an order for holding the meeting notwithstanding any order of injunction etc
issued by any other court or authority in India
Accordingly the meeting was filed for 14th August 1984
But in the meanwhile appellant No 1 moved an application before the High Court in an appeal already pending between the Cotton Mills Company and the Polytex company questioning the right of the requisitionists to issue notice under section 169 of the Act to call the extraordinary general meeting
The High Court dismissed the application Hence this appeal by Special Leave
The appellants contended that 1 Since a Receiver had been appoint ed by the Collector in respect of the shares held by the Cotton Mills Company and they had also been attached the shares held by the Cotton Mills Company could not be taken into consideration for determining the required qualification to issue the notice under s 169 of the Act requisitioning the extraordinary general meeting and that if those shares were omitted from consideration then the shares held by the other requisitionists would not be sufficient to issue the said notice
In other words the extraordinary general meeting had not been validly called since the Cotton Mills Company had 856 ceased to enjoy the privileges of a member of the Polytex Company by reason of the appointment of a Receiver by the Collector of Kanpur in respect of the ten lakhs shares in the POLYTEX Company held by the Cotton Mills Company the attachment of the 9 lakhs shares out of the said 10 lakhs and also the pledge of 350000 shares out of the said 10 lakhs shares with the Government of Uttar Pradesh as security for the loans advanced by it ii The order OF the Collector being an order in the nature of a charging order the Receiver had obtained an equitable right in the shares in question and there being no other legal or equitable right which would prevail over it the Cotton Mills Company had lost its right to the shares and iii By virtue of an order made by the Central Government on April 13 1978 under 8
18AA 1 a of the Industrial Development  Regulation Act 1951 taking over the management of Swadeshi Cotton Mills along with its five other industrial units the Cotton Mills Company had lost the right to exercise its voting rights in respect of the shares in question
Dismissing the appeal  HELD 1
i In the Act the expressions a member  a share
holder  or holder of a share  are used as synonyms to indicate the person who is recognised by a company as its owner for its purposes
What does ownership of a share connote  Ownership in its most comprehensive signification says Salmond denotes the relation between a person and any right that is vested in him
That which a man owns in this sense is a right 
The right of ownership comprises benefits like claims liberties powers immunities and privileges and burdens like duties liabilities disabilities
Whatever advantages a man may have as a result of the ownership of a right may be curtailed by the disadvantages in the form of burdens attached to it
As observed by Dias an owner may be divested of his claims etc
arising from the right owned to such an extent that he may be left with no immediate practical benefit
He remain the owner nonetheless because his interest will outlast that of other persons in the thing owned
The owner possesses that right which ultimately enables him to enjoy all rights in the thing owned by attracting towards himself those rights in the thing owned which for the time being belong to others by getting rid of the corresponding p73 burdens
871 D F 1
ii Section 41 of the Act defines the expression member of a company
Subject to section 42 of the Act a company or a body corporate may also become a member
When once a person becomes a member he is entitled to exercise all the rights of a member until he ceases to be a member in accordance with the provisions of the Act
A persons ceases to be a member by transferring his share to another person by transmission of his share by operation of law by forfeiture of share by death or by any other reason known to law
A person who is a shareholder of a company has many rights under the Act
Some of them are i the right to vote at all meetings Section 87
ii the right to requisition an extraordinary general meeting of the company or to be a joint requisitionists Section 169 iii the 857 right to receive notice of a general meeting Section 172
iv the right to A appoint proxy and inspect proxy register Section 176 v in the case of a body corporate which is a member the right to appoint a representative to attend a general meeting on its behalf Section 181 and vi the right to require the company to circulate his resolution Section 188
Therefore it is clear from the relevant provisions of the Act which are referred to above that a member can participate and exercise his vote at the meetings of a company in accordance with the Act and the articles of association of the company
875 G 876 A 878 A B 2
i Section 150 of the Act requires every company to keep a register of members containing the names address and the occupation IF any of each member and other particulars mentioned therein
The privileges of a member can be exercised by only that person whose name is entered in the Register of Members
A Receiver whose name is not entered in the Register of Members cannot exercise any of these rights unless in a proceeding to which the Company concerned is a party an order is made authorising him to do so
Even where the holder of a share whose name is entered in the Register of Members hands over his shares with blank transfer forms duly signed the transferee would not be able to claim the rights of a member as against the company concerned until his names is entered in the Register of Members
875 D 880 D 13 881 G Mathalone vs Bombay Life Assurance Co Ltd  and Messers Howrah Trading Co Ltd vs The Commisioner of Income tax Calcutta 1959 Supp
2 SCR 448 followed
In re Wala Wynaad Indian Gold Mining Company 18821  Kurapati Venkata Mallayya  Anr
vs Thondeput Ramaswami  Co  Anr
1963 Supp 2 SCR 995 and Jagat Tarini Dasi vs Naba Gopal Chaki Cal 305 referred to
Wise vs Landsdell and Morgan  Anr
vs Gray  Ors at p87 relied upon
2 ii A perusal of the provisions of s182A of the Land Revenue Act shows that there is no provisions in it which states that on the appointment of a Person as a receiver the property in respect of which he is so appointed vests in him similar to the provision in sl7 of the Presidency Towns Insolvency Act 1909 where on the making of an order of adjudication the property of the insolvent wherever situate would vest in the official assignee or in s282 of the which states that on the making of an order of adjudication the whole of the property of the insolvent would vest in the court or in the official Receiver
Sub section 4 of section 182A of the Land Revenue Act provides that Rules 2 to 4 of Order XL of the Code of Civil Procedure 1908 shall apply in relation to a Receiver appointed under that section
A Receiver appointed under order XL of the Code of Civil Procedure only holds the property committed to 858 his control under the order of the court but the property does not vest in him
A receiver appointed by a court or authority in respect of a property holds it for the benefit of the true owner subject to the orders that may be made by such court or authority
Under s51 of the Code of Civil Procedure 1908 a Receiver may be appointed by a civil court on the application of a decree holder in execution of a decree for purposes of realising the decree debt
This is only a mode of equitable relief granted ordinarily when other modes of realisation of the decretal amount are impracticable
A Receiver appointed under that section will be able to realise the amounts due from a garnishee and his powers are akin to the powers of a Receiver appointed under Order 40 Rule I of the Code of Civil Procedure 1908
But be would not have any beneficial interest in the assets of the judgment debtor
He collects the debts not as his own but as an officer of the court
Thus whatever may be the other powers of a Receiver dealing with the property which is custodia legis while in his custody he is not to be construed as either an assignee or beneficial owner of such property
880 A 887 H 888 A B 882 H 2
iii Section 137 of the Act provides that if any person obtains an order for the appointment of a Receiver of or of a person to manage the property of a company or if any person appoints such Receiver and any powers contained in any instrument he shall within thirty days from the date of the passing of the order of the making of the appointment under the said powers give notice of the fact to the Registrar and the Registrar shall on payment of the prescribed fee enter the fact in the register of charges maintained under s130 of the Act
It is not clear in the instant case whether any entry had been made in the register of charges of the order of appointment of Receiver
Even granting that such an entry had been made it would not have the effect of taking away the right of the Cotton Mills Company to exercise the right to vote in respect of the shares in question
884 C E 3
There is no substance in the argument based on ss153B 187B and 187C of the Act
Section 153 of the Act states that no notice of any trust express implied or constructive shall be entered in the register of members or of debenture holders
Section 153B of the Act requires that notwithstanding anything contained in s153 where any shares in or debentures of a company are held in trust by any person the trustee shall make a declaration to the public trustee
Section 187B of the Act provides that save as otherwise provided in s153B but notwithstanding anything contained in any other provisions of the Act or any other law or any contract memorandum or articles where any shares in a company are held in trust by a person as trustee the rights and powers including the right to vote by proxy exercise able at any meeting of the company or at any meeting of any class of members of the company by the trustee as a member of the company cease to be exercisable by the trustee as such member and become exercisable by the public trustee
Section 187C of the Act makes it incumbent upon a person whose name is entered in the Register of Members of a company but who does not hold the beneficial interest in the share in question in such form as may be prescribed specifying the name and other particulars of the persons who holds the beneficial interest in such share
The Companies Declaration of beneficial Interest in shares Rules 1975 are made in this connec 859 tion
It is obvious from the foregoing that none of the provisions referred A to above has any bearing on the question before this Court
Thus more appointment of a Receiver in respect of certain shares of a company without more cannot therefore deprive the holder of the shares whose name is entered in the Register of Members of the Company the right to vote at the meeting of the company or to issue a notice under s169 of the Act
1884 F H 885 A C 4
Under Rule 76 of Order 21 of the Code of Civil Procedure 1908 the shares in a Corporation which are attached may be sold through a broker
In the alternative such shares may be sold in public auction under Rule 77 thereof
On such sale either under Rule 76 or under Rule 77 the purchases acquires title
Until such sale is effected all other rights of the judgment debtor remain unaffected even if the shares may have been seized by the officer of the court under Rule 43 of Order 21 of the Code of Civil Procedure 1908 for the purpose of effecting the attachment or through a Receiver or though an order in terms of Rule 46 of Order 21 of the Code of Civil Procedure may have been served on the judgment debtor or on the company concerned
The consequence of attachment of certain shares of a company held by a shareholder for purposes of sale in a proceeding under s149 of the Land Revenue Act is more or less the same
The effect of an order of attachment is what sl49 of the Land Revenue Act itself says
Such attachment is made according to the law in force for the time being for the attachment and sale of movable property under the decree of a civil court 886 B C 885 D 5
i It is to be Doted that a charging order under the English Law is not the same as an attachment of property or appointment of a Receiver under the Land Revenue Act
Charging Orders under the English Law are made under order 50 of the English Supreme Court Practice under which the English court may for the purpose of enforcing a judgment or order of that court under which a debtor is required to pay a sum of money to a creditor make an order imposing on any such property of the debtor as may be specified in the order a charge for securing the payment of any money due or to become due under the judgment or order
Such an order is referred to as the charging order 
A charging order on the property or assets of the debtor is one of the modes of enforcement of a judgment or order for the payment of money to the creditor
It is however not a direct mode of enforcement in the sense that the creditor can immediately proceed to recover the fruits of his judgment but it is rather an Indirect mode of enforcement in the sense that it provides the creditor with security in whole or in part over the property of the debtor
It makes the creditor secured creditor who having obtained his charging order must proceed as may be necessary according to the nature of the property charged to enforce his charge in order to obtain the actual proceeds of his charge to satisfy his judgment in whole or in part
Subject to the other provisions of law a charge imposed by a charging order will have effect and will be enforceable in the same court and in the same manner as an equitable mortgage created by the debtor by writing under his hand
An order of attachment cannot therefore have the effect of depriving the holder of the shares of his title to the shares Therefore the attachment of the shares in the Polytex Company held by the Cotton 860 Mills Company had not deprived the Cotton Mills Company of its right to vote at the meeting or to issue the notice under s169 of the Act
887 B F 888 C Hawks vs Mc Arthur  Ors
l9SIl 1 All ER 22 inapplicable
ii The fact that 350000 shares have been pledged in favor of the Government of Uttar Pradesh also would not make any difference
Sections 172 to 178 A of the deal with the contract of pledge
A pawn is not exactly a mortgage
The two ingredients of a pawn are 1 that it is essential to the contract of pawn that the property pledged should be actually or constructively delivered to the pawnee and 2 a pawnee has only a special property in the pledge but the general property therein remains in the pawner and wholly reverts to him on discharge of the debt
A pawn therefore is a security where by contract a deposit of goods is made as security for a debt The right to property vests in the pledged only so far as is necessary to secure the debt
The pawner however has a right to redeem the property pledged until the sale
Under s116 of the if the pawnor makes default in payment of the debt or performance at the stipulated time of the promise in respect of which the goods were pledged the pawnee may bring a suit against the pawnor upon the debt or promise and retain the goods pledged as a collateral security or he may sell the thing pledged on giving the pawnor reasonable notice of the sale In the case of a pledge however the legal title to the goods pledged would not vest in the pawnee
the pawnee has only a special property
A pawnee has no right of foreclosure since he never had absolute ownership at law and his equitable title cannot exceed what is specifically granted by law
In this sense a pledge differs from a mortgage in view of the foregoing the pawnee in the instant case ie the Government of Uttar Pradesh could not be treated as the holder of the shares pledged Fin its favour
The Cotton Mills Company continued to be the member of the Polytex Company in respect of the said shares and could exercise its right under sl69 of the Act
888 D H 889 ACl Lallan Prasad vs Rahmat Ali  Anr  pp
238 239 Bank of Bihar vs State of Bihar  Ors 1971 Supp
SCR 299 and Swadeshi Cotton Mills vs Union of India  refereed to
There is no substance in the contention that on the passing of an order by the Central Government under s 18A 1 a of the Industries Development and Regulation Act 1951 taking over the management of the Cotton Mills Company alongwith its five other industrial units the Cotton Mills Company lost its right to exercise its voting rights 861 in respect of the shares in question
What was taken over under the above A said orders was the management of the six industrial units referred to therein and not all the rights of the Cotton Mills Company
The shares belong to the company and the orders referred to above cannot have any effect on them
Hence the passing of the orders under sl8AA 1 a of the Industries Development and Regulation Act 1951 has no effect of the voting rights of the Cotton Mills Company
889 B H 890 A