1. The action in this case was for the recovery of the sum of Rs. 1,000, being the amount of the first distribution of assets in the abovementioned company (in liquidation), at the rate of Rs. 200 per share, in respect of five shares in the company held by the plaintiff.
2. The facts appearing from the case, stated by the Judge, were as follows:
3. That five shares in the company were allotted to one Nagardas Parmanandas before the 30th November 1874; that no share certificates were ever issued; that the only document which Nagardas ever obtained, as evidencing his right to the five shares, was a receipt for Rs. 1,250, the first call on five shares in the company, which receipt was signed by the then secretaries and treasurer of the company. The receipt was in the following form:
Received from Nagardas Parmanandas, Esq., the sum of rupees one thousand two hundred and fifty, being the amount of first call on five shares of Amraoti Cotton Mills, as per allotment No. 132.
Bombay, 27th October 1874.
(Signed) Volkart Brothers.
4. It was further found by the Judge that, on or about the 30th November 1874, Nagardas, by a certain document (a copy of which is annexed to the case) of that date and for valuable consideration, purported to assign his right in the said shares to the plaintiff.
5. This document, signed by Nagardas, and stamped, was in the following form:
To M. Bhowanji Mulji written by Nagardas Parmanandas. To wit. I have this day sold to you five shares, namely, five shares of the Amraoti Cotton Mills Company, Limited, on receiving Rs. 750, namely, seven hundred and fifty, in cash, at the rate of Rs. 150, namely, one hundred and fifty, per 1 share. I have given in writing (this) receipt of the first call in respect of these above-mentioned shares, and if any one makes any objection in respect of these shares, I am duly to make answer to you, and if any profit or loss ensued regarding these shares, all (that) is on your head, and you are duly to pay the calls in respect of these shares, which may have to be paid hereafter.
6. It is found, further, that no notice of this assignment was given to the company; that the company went into liquidation in October 1875; that there were surplus assets distributed among the shareholders; and that Nagardas had become insolvent, and his property had passed to the Official Assignee under the Indian Insolvent Act. The date at which he filed his petition for the benefit of the Act is not stated in the case.
7. The action, it appears, was for the amount of assets alleged to be payable to the plaintiff in respect of the said five shares, of which he claimed to have become and to be the holder.
8. The Judge at the hearing passed a verdict for the defendants on the ground, chiefly, that the right of Nagardas Parmanandas to the shares in question was only a chose in action; and as no notice of the assignment had been given, the shares remained in the order and disposition of the insolvent Nagardas at the date of his insolvency, and, therefore, passed to his assignee. Such verdict was, however, upon the request of the plaintiff's attorney for the statement of a case for the opinion of the High Court, made subject to the opinion of the High Court on the following questions:
1. Whether plaintiff was the true owner of the five shares in question, within the meaning of the 23rd section of the Indian Insolvent Act?
2. Whether, supposing plaintiff was the true owner as aforesaid, the said shares were in the order and disposition of the said Nagardas Parmanandas at the time of his insolvency?
9. The words of Section 23 of the Indian Insolvent Act 11 & 12 Vic. cap. 21 on which the present question arises, are as follows: 'If any insolvent shall, at the time of filing his petition, etc., by the consent and permission of the true owner thereof, have in his possession, order, or disposition any goods or chattels whereof such insolvent is reputed owner, or whereof he has taken upon him the sale, alteration, or disposition as owner, the same shall be deemed to be the property of such insolvent so as to become vested in the Official Assignee, etc.'
10. It was argued on behalf of the plaintiff that the operation of the section of the Insolvent Act, above cited, was excluded by the fact that the bankrupt Nagardas was a trustee of the five shares for the plaintiff, and that the case was governed by Re Bankhead' s Trust 2 K. & J. 560. It was there held that the bankrupt had constituted himself a trustee of certain policies of insurance (retained, however, in his own possession) for the purpose of answering certain appropriations to his own use of trust funds in his. hands. It was held that the bankrupt, being trustee of the policies for the purpose aforesaid, was the proper person to be in possession of them, and was, in fact, himself the real owner of them within the meaning of the provision of the English Bankrupt Law as to reputed ownership by a bankrupt, of goods and chattels; and that the provision in question applied only where the bankrupt and the real owner were distinct persons. That authority does not, however, we think, apply to the present case, for the reason that we do not consider that the insolvent Nagardas, for the purposes, at least, of this case, was in any proper sense of the word a trustee of the shares in question here. The instrument of assignment of the 30th November 1874 does not purport to be a declaration of any trust. It is, no doubt, as an instrument of assignment, ineffectual to transfer the shares, having regard to Clauses 16 to 22 of the articles of association of the company (which were put in evidence at the bearing before us), though it would, we consider, have had effect given to it as an agreement to transfer, had the plaintiff brought a suit against Nagardas to have a regular transfer executed, which would be in conformity to the articles of association of the company. Though, no doubt, in a certain sense one who is under an obligation to convey property to another is, in a Court of Equity, a trustee of it for the latter, yet this principle has not, it seems, been applied in cases where the reputed ownership clause of the Bankrupt Act is in question, as may be seen from the cases of Ex parte Littledale 6 DeG. M. & G 714 and Re Sketchley 1 DeG. & J. 163. A number of authorities were cited in the argument which had more or less bearing on the questions under consideration. But we consider that the two cases we have just mentioned are more distinctly in point. From a consideration of these authorities we are of opinion that, at the time of the insolvency of Nagardas, the plaintiff was the real owner of the shares in question within the meaning of Section 23 of the Indian Insolvent Act, and that inasmuch as he had omitted to give to the company any notice of the assignment to him, and had, in fact, no transfer or assignment at all executed in his own favour which the company, under their articles, were bound to act upon or in any way to recognize, he, the plaintiff, had consented that the shares in question should be in the 'order or disposition' of the insolvent. There was nothing done, in our opinion, which would have prevented Nagardas from executing a formal transfer of the shares, in conformity with the articles of association, to another person, which transfer the company would have been bound to recognize.
11. This being so, we are of opinion that the shares, with the consequent right to receive any distribution of assets in respect of them, vested in the Official Assignee of Nagardas.
12. The questions, therefore, referred for the opinion of this Court must be answered in the affirmative, and judgment will be entered for the defendants.
13. The plaintiff must pay the defendants' costs of reserving the said questions, and stating the same for the opinion of this Court, and the costs incidental thereto.