MATHALONE versus BOMBAY LIFE ASSURANCE CO. LTD.

Citation: [1954] 1 S.C.R. 117 · Decided: 19-05-1953 · Supreme Court of India · Bench: MEHR CHAND MAHAJAN · Disposal: Appeal(s) allowed

Judgment (excerpt)

,. .. 
-~. 
• 
S.O.R. 
SUPREME COURT REPORTS 
MATHALONE 
v. 
BOMBAY LIFE ASSURANCE CO. ·LTD. 
PINGLE VENKAT RAMA REDDY 
v. 
SIR PADAMPAT SINGHANIA. 
SIR PADAMPAT SINGHANIA 
v . 
. PING LE VENKAT RAMA REDDY. 
[MEHR CHAND MAHAJAN, VIVIAN BosE and 
JAGANNADHA DAS JJ.] 
117 
Indian Companies Act (VII of 1913), s. 105.C-Transfer of 
shares-Transferee's name not entered on regi'ster-Offer (Jf new 
shares 1mder s. 105-0-Transferor whether bound to acqiiire the iz.ew 
shares as trustee for transferee-Ditties of tmnsferor-Validity of 
requisition by transferee-S1iit by trans! eree again.st transferor-
Jfaintainabilit11. 
A, who held a certain number of shares in a company, sold 
some of these shares to Bon the 29th July, 1944, and executed 
blauk transfer :forms in respect of the shares. B made an appli-
cation to the company for registration of his name, only on the 
11th April, 1945, and his application was rejected. Meanwhile, 
in February, 1945, the company resolved to issue new shares and 
offered to A the number of shares to which he was entitled under 
the provisions of s. 105-C of the Indian Companies Act in respect 
of the shares which stood in the register in his name. 
A did not 
apply for the new shares pertaining to the shares sold to B. 
A 
firm of solicitors sent a requisition to A on behalf of B, C, D, E 
and others who claimed to be the purchasers of the share.a sold by 
A, calling upon A to apply for the additional shares, and to hold 
them, when allotted, on behalf of B, C, D and E and others, and 
offering to indemnify A against all liabilities he may incur there-
by. 
A declined to apply but offered to sigp. the renunciation form 
in favour of the.true purchasers. As the time fixed for making 
an application for the new shares was about to expire, B filed a 
suit against A praying that A may be ordered to deliver to B the 
application form for the new shares, and to hand over the new 
share certificates when received, with transfer forms in blank duly 
signed by him, and for damages in the alternative. A receive! 
17 
1963 
May .19. 
19.13 
.At at ha lone 
v, 
Bo1nbay Life 
Assurance Co. 
Ltd, 
118 
SUPREME COURT REPORTS 
[1954] 
was appointed and he applied to the company in his own na1ne for 
allot.ment of the ne'\v shares and .for registering his name in res· 
pect thereof hut the con1pany declined to do so. 
The receiver 
filed a suit against the co1npany for a·llotment of the new shares 
to him. 
The High Court of Bombay held that, as A was a trustee 
of B in respect of the new issue, and he had failed to apply for the 
new shares, he \\'RS liable in damages to I}. On appe~l : 
Held, (i) that if A was not of his own volition, prepared to 
obtain the new shares in his name, there v;;·as no principle of la~v 
or equity hy vl'"l1ich he could he compelled to aOquire those shares 
by spending his ov;;·n money or by undertaking financial liabilities 
and pass th01n over to Bon receiving the amount spellt hy hiin 
£ro1n the purchaser 01· being other~vise fully indemnified by hin1 in 
respect of the liahilities incurred or to he incurred. 
(ii) Assuming that A was under any such obligation, as the 
requisition n1ade hy t.he solicitors to A to purchase the shares was 
made on behalf of 21- disclosed and some undisclosed persons, it was 
ineffective and inaclequate, and A was not guilty of any breach of 
duty as a trustee in not complying 'vith the r~quisition. 
, (iii) As B had no right to call upon A . to buy the new 
'shares in his own name for his (B's) benefit, a foit1'.01·i, the receiver 
'bad also no such right. 
(iv) In any event,· as the con1pany was not a party to B's 
suit, no orrler could be issued to the co1npany in that· suit to 
recognise the receiver as a shareholder in respect of shares sold to 
B· and, as long as he ,vas not on the register, the company ,vas not 
hound to entertain an application fro1n him for issne or the new 
shares in his favour. 
Hai·doon v. Belilios ([19011 A. C. llS), E. D. Sassoon ,c· Oo· 
J,td. v. Patch (45 Born. L.R. 46), Miles v. Safe Deposit Tiwst Qo. 
(66 L.E. 903) referred to. Biss v. Bis.• ([19031 2 Ch. 40), ·.Jone.• v. 
Evans ([19131 l Ch. 23) distinguished. 
' 
CIVIL APPELLATE JURISDICTION:· Civil Appeals 
Nos. 52, 53 and 54 of 1950. 
Appeals from the Judgment and Decree dated the 
7th March, 1949, of the High Court of Judicature at 
Bombay in Appeals Nos. 55 and 54 of 1948, arising 
out of Decree dated the 29th July, 1948, of the said 
High Court in its Ordin

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