DAMIEN SUBSIDIES AND KURIES LTD. Vs. JOSE PULICKEN

JUDGEMENT

(1.) THIS appeal has been preferred by a public limited company aggrieved by the order of the Company Law Board1 directing the company to transfer the share in favour of the respondent -petitioner and to issue duplicate certificate after registering the transfer.

(2.) THE respondent herein filed a petition under Section 111 of the Companies Act, 1956, seeking a direction to the company to enter his name in the register of members. The petitioner stated that hie has purchased one share held in the name of one Chacko Pulikken from his legal heirs on November 10, 1997, and sent the instrument of transfer along with the share certificate together with the deed of sale dated November 10, 1997, to the company for registration of transfer since the same was the subject -matter of a trust authored by late Pulikken Ouseph Chacko. Company refused to register the transfer in the name of the petitioner.

(3.) THE respondent took the stand that late Pulikkan had through a will bequeathed the impugned share to his sons, Jose Pulikken and George Pulikken and the legal heirs of the deceased had desired to transfer the said share to Jose Pulikken, one of the sons of Chacko. Further, it is also pointed out that as per the trust deed, one of the sons of the deceased Pulikken was to be the trustee in the event of death of the latter. Under such circumstances, he had submitted an application for registration of transfer of share in his name. The respondent stated that the Company Law Board has rightly directed transfer of the share in his favour. Section 153 of the Companies Act states that no notice of any trust, express, implied or constructive shall be entered on the register of members or of debenture holders. The object of section is : (1) to relieve the company from any obligation to take notice of equitable interests in its shares, that is to say, to take notice of rights of third parties in respect of the shares registered in the names of any members ; and (2) to preclude any person claiming an equitable interest in shares from treating the company as a trustee in respect thereof. Further, the beneficiary who is not entered as a shareholder of shares has no connection with or rights in the company in which any shares are held in trust for him. Lord Coleridge, C.J., in Perkins, In re [1889 -1890] 24 QBD 613 (CA), stated as follows (page 616): It seems to me extremely important not to throw any doubt on the principle that companies have nothing whatever to do with the relations between trustees and their cestuis que trust in respect of the shares of the company. If a trustee is on the company's register as a holder of shares, the relations which he may have with some other person in respect of the shares are matters with which the company has nothing whatever to do ; they can look only to the man whose name is on the register. Lord Esher M. R., in the same has put it as follows (page 618): the law has given the company the right to say, 'We do not care whether you are a cestui que trust or not; if you are, we have a right to take no notice of you'.