Basil Scott, Kt., C.J.
1. The plaintiff is the Receiver appointed in suit No. 31 of 1909 for the administration of the estate of Ambaram Motichand who died in 1900. The second defendant is the surviving executor of the will of Ambaram. The first defendant, a Bank, is the holder of certificates and transfers of twenty shares in the Textile Manufacturing Company deposited with them as security by the second defendant.
2. The undisputed facts are that after the death of his co-executor in 1905 the second defendant obtained possession of the certificates for the shares abovementioned from the Bank of Bombay in which they were lodged and got them transferred in the books of the Textile Company into his own name from the name of the deceased Ambaram. On the 22nd of September 1908 he pledged ten of the twenty shares with the defendant Bank, and on the 16th of October 1908 he pledged the other ten shares with the Bank. Upon the security of these pledges he received Rs. 16,000 which he fraudulently applied for his own use. In the case of each pledge the certificates were accompanied by a transfer deed signed by the second defendant in blank.
3. On the 1st of March 1909, the plaintiff was appointed interim Receiver of the estate of Ambaram and the defendant was restrained by injunction from dealing with the estate in any way. On the 25th of March the defendant Bank sent in to the directors of the Textile Company letter signed by the second defendant intimating that the second defendant was desirous of selling and Mr. Hegarty, one of the officials of the Bank, had offered to purchase the shares and the defendant Bank asked the directors of the Textile Company to transfer the shares accordingly. Before this, however, the directors of the Company had received notice from the Receiver not to transfer the shares and the Company accordingly declined to accede to the request of the Bank.
4. The Articles of Association of the Textile Company have been put in evidence at the desire of this Court. From them it appears that the transferor shall be deemed to remain the holder of the shares until the name of the transferee is entered in the register books of the Company and no transfer shall be registered unless the directors approve of this transferee. The directors may decline to register any transfer of shares if they do not approve of the proposed transferee and the Company is at liberty to regard and attend to any notice of any equitable right, title or interest and to give effect thereto if the directors think fit.
5. In this state of facts the case is not distinguishable from that of Moore v. North Western Bank (1891) 2 Ch. 599. Romer J. said: 'As between two persons claiming title to shares in a Company like this, which are registered in the name of a third party, priority of title prevails, unless the claimant second in point of time can show that as between himself and the Company, before the Company received notice of the claim of the first claimant, he, the second claimant, has acquired the full status of a shareholder; or at any rate that all formalities have been complied with, and that nothing more than some purely ministerial act remains to be done by the Company, which as between the Company and the second claimant the Company could not have refused to do forthwith; so that as between himself and the Company he may be said to have acquired, in the words of Lord Selborne, Societe Generale De Paris v. Walker (1885) 11 App. Cas. 20' a present, absolute, unconditional right to have the transfer registered, before the Company was informed of the existence of a better title.' For that proposition the cases of Societe Generale De Paris v. Walker (1885) 11 App. Cas. 20, and Roots v. Williamson (1888) 38 Ch. D. 485 are sufficient authorities, and I need not refer to the cases cited by the defendants in argument, which were decided previously to Societe Generate De, Paris v. Walker....
Having regard to these articles, it appears to me to be clear that a transferee of shares in the Company, even under a transfer right on every point of form, cannot say as against the Company that he becomes a shareholder immediately on the execution of the transfer, or that the Company immediately on the sending in the transfer had only to perform a ministerial act. Under these articles the directors clearly have a right to consider who the proposed transferee is, and have time given to them within which to approve of that person as transferee, and if they do not choose to approve within fourteen days of the proposed transferee as a proper person to be registered as a shareholder may decline so to register him, and the transferee will not be a shareholder, nor has he the right to compel the Company to make him a shareholder.... Before there was any approval by the board of the transfer, or, indeed, any consideration by the board of the transfer at all, the company... received notice of the plaintiff's claim. Having received that notice they properly, in my judgment, refused further to proceed with the transfer until the plaintiffs in this case obtained the direction of the Court in the action which they at once instituted. The Court had seisin of the matter before anything was done, so far as the company was concerned....
Under these circumstances, it appears to me to be clear that the North Western Bank were not so invested with the full rights of shareholders before the Steamship Company had notice of the plaintiffs' claim, and have not (again to use the words of Lord Selborne), acquired as against the company ' a present, absolute, unconditional right to have the transfer registered.' The company acted rightly in the matter in not proceeding with the consideration of the transfers sent into them after the action was commenced and the motion made to obtain the direction of the Court as to the rights of the parties.'
6. These observations mutatis mutandis are directly applicable to the case now before us. The result is that the plaintiff is entitled to the shares. We reverse the decree of the lower Court and pass a decree for the plaintiff in terms of paragraphs 1 and 2 of the prayer of the plaint.