Case: Vasudev Ramchandra Shelat Vs. Pranlal Jayanand Thakar And Ors

clearly decided in what circumstances the present, absolute, unconditional right to have the transfer registered to which Lord Selborne refers arises. It is thought that in many instances the test is that indicated by Jenkins J. in Re. Rose :I was referred on that to the well known case of Milroy v. Lord and also to the recent case of Re. Fry, Chase National Executors and Trustees Corpn. v Fry. Those cases, as I understand them, turn on the fact that the deceased donor had not done all in his power, according to the nature of the property given, to vest the legal interest in the property in the donee. In such circumstances it is, of course, well settled that there is no equity to complete the imperfect gift. If any act remained to be done by the donor to complete the gift at the date of the donors death the Court will not compel his personal representatives to do that act and the gift remains incomplete and fails.In Milroy v. Lord the imperfection was due to the fact that the wrong form of transfer was used for the purpose of transferring certain bank shares. The documents was not the appropriate document to pass any interest in the property at all. In Re. Fry the flaw in the transaction, which was a transfer or transfers of shares in a certain company, was failure to obtain the consent of the Treasury which in the circumstances surrounding the transfers in question was necessary under the Defence (Finance Regulations) Act, 1939, and, as appears from the headnote, what was held was that the donors executors ought not to execute confirmatory transfers. In this case, as I understand it, the testator had done everything in his power to divest himself of the shares in question to Mr. Hook. He had executed a transfer. It is not suggested that the transfer was not in accordance with the companys regulations. He had handed that transfer together with the certificates to Mr. Hook. There was nothing else the testator could do....Therefore, it seems to me that the present case is not in pari materia with the two cases to which I have been referred. The real position, in my judgment, is that the question here is one of construction of the will. The testator says if such preference shares have not been transferred to him previously to my death. The position was that, so far as the testator was concerned, they had been so transferred."23. Respondents learned Counsel also relied on Re. Fry. Chase National Executors and Trustees Corpn. Ltd. v Fry, (1946) 2 All ER 106, which has been referred to by Jenkins J. in the passage quoted above. In that case, apart from other distinguishing features, the flaw in the purported transfer was that it contravened the Defence (Finance Regulation) Act, 1939, which prohibited an acquisition of interest in the shares without a licence from the Treasury. Hence, the purported transfer was really illegal. No such illegality is shown to exist in the case before us.24. Respondents learned Counsel cited ILR 48 Cal 986 = )AIR 1921 Cal 148 ) (supra), where, after a husband had executed a document in favour of his wife, the parties had done nothing to get the transfer registered for nearly 2 years during which the dividend was received sometimes by the wife and sometimes retained by the husband with the permission or implied consent of the wife. The Court held that the purported gift being an intended "transfer" only could not operate as a "declaration of trust". Another ground for the decision was that " the disposition of the shares failed as being an imperfect voluntary gift". Here the Calcutta High Court purported to follow Milroy v. Lord, (1862) 4 DE and J 264 and, Richards v. Delbridge, (1874) 18 Eq 11. No such facts are present in the case before us. Moreover, we seriously doubt the correctness of this decision of the Calcutta High Court. It seems to confict with the law declared in the cases cited by the appellant which we approve.25. Another case relied upon by the respondent was ILR (1957) Mad 1058 = (AIR 1957 Mad 702 ) (supra), where the Court refused to direct rectification of a register of members because the articles of association vested an absolute discretion in the company to recognise or refuse to recognise a transfer. The Companys consent to a transfer had been refused because the company did not accept the correctness of the form of transfer deeds. In other words, this was a case in which the provisions of articles of association stood in the way of rectification of the register. Such is not the case before us.26. The result is that we do not think that the respondent has made out a case for defeating the clearly expressed intentions of the donor coupled with the authority with which the donee was armed by reason of the signed blank transfer forms. We think that the implied authority was given with regard to a subject-matter in which Shelat had acquired an interest. On a correct interpretation of the gift deed and the other facts mentioned above, we are of opinion that the right to obtain a transfer of shares was clearly and completely obtained by the donee appellant. There was no question here of competing equities because the donee appellant was shown to have obtained a complete legal right to obtain shares under the gift deed and an implied authority to take steps to get his name registered. This right could only be defeated by showing some obstacle which prevented it from arising or which could defeat its exercise. No such obstacle having been shown to us to exist, the rights of the donee appellant would prevail as against any legal rights which could have accrued to others if the donee had not already acquired the legal right which, as held by us above, had become vested in him.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]We think Mr. S. T. Desai, learned Counsel for the appellant Shelat, rightly pointed out that every material finding on questions of fact, given in favour of the appellant, was upheld by the Division Bench.After indicating the terms of the gift deed, the Division Bench heldit 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 aposition in law that unless the gift is completed as required by law, mere intention to make a gift cannot pass any title to the donee and does not make the 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 Shelat and hand them over to the donee, Vasudev Shelat, together with thewent on to saycircumstances 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 relevantwere handed over by the donor to the donee; and, sometime between March 6, 1948, 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.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 provision of one Act could be nullified by any provision of the other Act. It means that the provisions of the two Acts should be read consistently with each other so far as it is reasonably possible to do so. We think that this end can be best achieved here by examining the object and theof 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.6. 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 substances 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 ofthe Companies Act, 1913, says that they "shall be movable property, transferable in the manner provided by the article 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 the wide definition of "property" in Section 6 of the Transfer of Property Act includes not merely shares as transferable, movable property but would cover, as a seperable form of property, a right to obtain shares which may be antecedent to the accrual of rights of aupon the grant of a share certificate in accordance with the articles of association of a company.Thus, we find that, in Baruchas case, 53 Ind App 92=(AIR 1926 PC 38) (supra), a distinction was made between "the title to get on the register", and "the full property in the shares in a Co". The first was held to have been acquired by mere delivery, with the required intention, of the shares 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 share 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 a right or title upon him to become a share holder, 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. We think that S. 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.In the case before us, the registered document was signed by the donor as "the giver" as well as by the donee, as the "the acceptor" of the gift and it is attested by six witnesses. In it the donor specified and gave particulars of the shares meant to be gifted and undertook to get the name of the donee put on to the registers of the companies concerned. 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 the fact that her name was still entered in the registers of the companies concerned as a shareholder. The donor delivered the registered gift deed together with the share certificates to the donee. We think that, on these facts, the donation of the right to get share certificates made out in the name of the donee became 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 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.11.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 : Kalyanasundaram Pillai v. Karuppa Mooppanar, 54 Ind App 89 = (AIR 1927 PC 42) : Venkatasubba Shrinivas Hedge v. Subba Rama ILR 52 Bom 313 = (AIR 1928 PC 86  ); Firm Sawam Mal Gopi Chand v. Shiv Charan, AIR 1924 Lah 173.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 122 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 certificates 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 matter of course by compliance with the provisions of Company law.In other words, a transfer of "property" right 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.We find from the gift deed that both the donor and the donee have signed the documents 5, 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 immaterial that the gift deed deals with a number of items so long as the requirements of Regulation 18 are fulfilled. After all, the observance of a form, whether found in the Transfer of Property Act or in the Companies Act, is meant to serve the needs of the substances 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, without strict compliance with some rigidly prescribed form, the transaction must fail to achieve its purpose. The subservience of substances of a transaction to some rigidly prescribed form required to be meticulously observed savours of archaic and outmodedstatement of the law in England is correct. The transferee, under a gift of shares, cannot function as a shareholder recognised by company law until his name is formally brought upon the register of a company and he obtains a share certificate 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 Palmers Company Law (at p. 336)is nothing to limit the restrictions which a companys articles may place on the right of transfer. The articles may give the directors 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 preemption. Such provisions, though permanent, do not contravene the rule againstthe type of cases contemplated above, where there are special restrictions on the transfer of shares imposed by the articles of association, the difficulty or defects is inherent in the character of such shares. In such cases, the donee or purchaser cannot get more than what the transferor possesses. Therefore, in such cases, it is possible to hold that even the right and title to obtain shares, which we have viewed as separable from the legal right and title to function as a shareholder, is incomplete because of a defect in the nature of shares held due to some special restrictions on their transferability under the articles of association of the company concerned. But, such is not shown to be the case at all with any of the shares which formed theof the gift in favour of Shelat. Hence, in our opinion, cases which deal with inchoate rights to shares do not assist the respondent because at least a gift of the right to obtain the transfer of shares in the books of the companies concerned was shown to be complete on the terms of the gift deed of Bai Ruxmani coupled with the handing over of the share certificates and the subsequent signing of the blank transfer forms. It was not a case of a bare expression of an intention to donate. The donor had done everything which she could reasonably be expected to do to divest herself of her rights in the sharesthat case, apart from other distinguishing features, the flaw in the purported transfer was that it contravened the Defence (Finance Regulation) Act, 1939, which prohibited an acquisition of interest in the shares without a licence from the Treasury. Hence, the purported transfer was really illegal. No such illegality is shown to exist in the case beforeCourt held that the purported gift being an intended "transfer" only could not operate as a "declaration of trust". Another ground for the decision was that " the disposition of the shares failed as being an imperfect voluntary gift". Here the Calcutta High Court purported to follow Milroyv. Lord, (1862) 4 DE and J 264 and, Richards v. Delbridge, (1874) 18 EqNo such facts are present in the case before us. Moreover, we seriously doubt the correctness of this decision of the Calcutta High Court. It seems to confict with the law declared in the cases cited by the appellant which weCompanys consent to a transfer had been refused because the company did not accept the correctness of the form of transfer deeds. In other words, this was a case in which the provisions of articles of association stood in the way of rectification of the register. Such is not the case before us.26. The result is that we do not think that the respondent has made out a case for defeating the clearly expressed intentions of the donor coupled with the authority with which the donee was armed by reason of the signed blank transfer forms. We think that the implied authority was given with regard to ain which Shelat had acquired an interest. On a correct interpretation of the gift deed and the other facts mentioned above, we are of opinion that the right to obtain a transfer of shares was clearly and completely obtained by the donee appellant. There was no question here of competing equities because the donee appellant was shown to have obtained a complete legal right to obtain shares under the gift deed and an implied authority to take steps to get his name registered. This right could only be defeated by showing some obstacle which prevented it from arising or which could defeat its exercise. No such obstacle having been shown to us to exist, the rights of the donee appellant would prevail as against any legal rights which could have accrued to others if the donee had not already acquired the legal right which, as held by us above, had become vested in him.