Norman Macleod, Kt., C.J.
1. The plaintiff in his plaint alleged that he borrowed from defendant No. 1 Rs. 2,200 on December 24, 1920, and Rs. S00 on December 28, 1020, on the security of the following shares :-
Emperor Edward Mill Shares Nos. 3472 and 878.
Colaba Mill Share No. 3375.
Tata Hydro Ordinary Share No. 1740,
Crescent Mill Shares Nos. 13552 and 3185.
2. Crescent Mill Share No. 13552, though belonging to the plaintiff, stood in the name of defendant No. 1 in the Company's register. Certificates of the six shares with blank transfer forms signed by the plaintiff for the other five shares were kanded to defendant No. 1 at the time of the loan. On June 11, 1923, plaintiff redeemed the shares by payment of Rs. 2,632-13 to defendant No. 1 who after about a month returned the Emperor Edward Mill shares and the Colaba Mill share with the respective transfer forms, and stated that he could not find the other shares and transfer forma.
3. Defendant No. 2 was the brother of defendant No. 1 while defendant No, 3 was the banker of defendants Nos. 1 and 2 and had dealings with them.
4. Defendants Nos. 1 and 2 appeared to have wrongly given the shares to defendant No. 3 and plaintiff claimed to be entitled to recover them from the defendants or one of them.
5. Defendant No. 1 died after the institution of the suit and his heirs were placed on the record.
6. Defendant No. 1 (6), the widow, did not enter an appearance. The other heirs, while denying all knowledge of the suit transactions, alleged that the widow was the sole heir. Defendant No. 2 denied that he had anything to do with the suit transactions, or that he was an heir of defendant No, 1.
7. Defendant No. 3 said that he had no knowledge of the transactions between the plaintiff and defendant No. 1. He purchased the shares from defendant No. 1 bona fide and for consideration. Crescent Mill Share No. 13552 stood in the name of defendant No. 1 in the Company's register and plaintiff was estopped from claiming the other shares because of his negligence in handing them with blank transfer forma signed by him to defendant No. 1 thus enabling him to misuse them.
8. The trial Court found on the issues:-
1. That defendant No. 1(6) was the sole heir of defendant No. 1.
2. That defendant No. 2 was not liable.
3. That the plaintiff borrowed, in December 1920, Rs. 2,500 from defendant No. 1 on the security of the six shares mentioned in the plaint.
4. This plaintiff repaid the amount due to defendant No. 1 and received back the three shares mentioned in para 5 of the plaint.
5. That there was no conspiracy between defendants Nos. 1, 2, and 3, in connection with the three shares in dispute,
6. That defendant No. 3 was a bona fide purchaser for value of the suit shares without notice of the plaintiff's mortgage and passed a decree against the estate of defendant- No. 1 as represented by his widow defendant No. 1 (6) for Rs. 1,825 and costs.
9. He dismissed the suit against the other defendants but with* out costs. He considered that defendant No. 3 in allowing the shares to stand in the names of the original registered owners until the suit was instituted, thus allowing them to draw the dividends, acted with remissness, which might have induced the plaintiff to suspect fraud on his part, though such was not the case.
10. The District Judge confirmed the decree.
11. He appeared to think that the fact that defendant No. 1 was a share-broker was sufficient to justify defendant No. 3 in thinking that defendant No. 1 had a right to sell the shares, and the plaintiff was estopped from asserting his ownership against a bona fide purchaser for value. He failed to notice that defendant No. 3 never pleaded that he purchased the shares from defendant No. 1 under the belief that he was a broker empowered by the real owner to sell the shares. In his evidence he said , that Ismail sold the shares to him at his shop on December 22, 1920. He understood Ismail to be the owner of the shares when he purchased them. Two transfer forms bore the plaintiff's signature and one the signature of defendant No. 1.
12. With regard to one Crescent Mill Share No. 13552, as defendant No. 1 was the registered owner, defendant No. 3 was justified in thinking that he was the owner and he cannot be ordered to return it. With regard to the other Crescent Mill share and the Tata Hydro share he cannot rely on the defence that there is an estoppel against the real owner.
13. How far the act of the registered owner of shares, who hands over the share certificates with transfer forma signed by him in blank to another person, estops him from asserting his title against a third party who has bought the shares from that person, must depend on the particular facts of each case as it arises,
14. The authorities on the subject are referred to by Kanga J. in Faisal v. Mangaldas : (1921)23BOMLR1144 and in the judgment of the Appeal Court in Wadilal v. Manekji : AIR1923Bom372 .
15. Certain dicta of Lord Watson and Lord Herschell in Colonial Bank v. Cady and Williams (1890) 15 App. Cas. 267 have been relied upon by the respondents as an authority for the proposition that when a registered owner of shares handa over the share certificates and blank transfers to another person, whether for safe custody or for sale, and that person disposes of the shares to an honest purchaser, the owner is estopped from asserting his title to the shares, but it is admitted that those dicta were obiter and were not followed in Fox v. Martin (1895) 64 L. J. Ch. 473 which is the strongst case in favour of the appellant. A registered holder of shares instructed a broker to sell them for him for cash and signed a blank transfer which he handed to the broker with the share certificates. The broker deposited the certificates and transfers with his banker as security for an advance to himself. It was held, following France v. Clark (1884) 26 Ch.D. 257that the banker had no title to the shares as against the registered holder. Hone v. Boyle  27 L.R. Ir. 137 is an Irish case in which the contrary was held, and in Fuller v. Glyn, Mills, Curyie and Co.  2 K. B. 168 the registered owner of shares was held estopped from asserting his right to them against the defendant with whom the plaintiff's broker had deposited the shares as security for his account. But in that case' the transfer form was endorsed on the share, certificate and that fact may have influenced the Court to decide against the owners.
16. The question may be put in this form. Does a registered owner of shares, by handing over the share certificates and blank transfers signed by him to another person, make a representation to the world that such person is entitled to deal with the shares, so that any honest purchaser from that person obtains a good title to the shares In my opinion, until the decisions in France v. Clark and Fox v. Martin are directly overruled, the answer to that question must be in the negative.
17. In this case if defendant No. 3 could have said that he had purchased the two shares from defendant No. 1, acting as a broker on behalf of his client, he would have been protected by the provisions of Section 108 of the Indian Contract Act which is the section far more applicable to the case than Section 115 of the Indian Evidence Act.
18. But he bought them from defendant No. 1 who, to his know-lodge, was not the owner. It is true that defendant No, 1 was entitled to fill up the transfers in his own name and get himself registered with the Company as the holder, and, if he had done that and then transferred the shares to an honest purchaser, the plaintiff would have no right to recover the shares from such purchaser. The right which defendant No. 1 had, as between himself and the plaintiff, could not, in my opinion, be transferred to defendant No. 3, so as to bind the plaintiff, nor do I think* was defendant No. 3 justified in presuming that defendant No. 1, who was not the registered owner, had a good title to deal with the shares, The fact that he made no attempt to get the dividends from defendant No. 1 certainly tends to throw suspicion on his bona fides, even though his explanation about his not getting himself registered as owner with the Company be accepted. If he had lodged the certificates with the Company for transfer, the holder would have received notice and would have at once objected to a transfer Without his consent. A pledgee of shares, although he may get them transferred to his name, as against his pledgor, would not be entitled to sell them without notice.
19. In my opinion, therefore, there is no estoppel with regard to the Tata Hydro share and one Crescent Mill share, nor is defendant No, 3 protected by Section 108 of the Indian Contract Act, so p. that a decree should be passed against him for the return of the share certificates with properly executed transfers and in default for payment of their value.
20. The appellant will be entitled to his costs in proportion throughout.
21. I am of the same opinion. The main question arising in this case is whether the respondent (defendant No. 3) is entitled to protection under the first exception to Section 108 of the Indian Contract Act. Accordingly, the learned District Judge raised the following appropriate points for determination, viz.:-(1) whether defendant No. 3 had purchased the shares from defendant No. 1 in good faith and under circumstances which were not such as to raise a reasonable presumption that defendant No. 1 had no right to sell the same, (2) If so, whether the plaintiff is estopped from asserting his ownership against defendant No. 3. The Judge answered both the questions in the affirmative, for the reason that 'plaintiff having delivered to a share-broker the share certificates with transfer forms signed by him, except in regard to one share which already stood in defendant No. 1's name, he was estopped from asserting his ownership against defendant No. 3 who had purchased the shares bona fide for value without notice, see 23 Bom. L.R. 1144.' The judgment clearly shows that these conclusions were very largely influenced by the fact that defendant No. 1 was a share-broker by vocation. Defendant No. 3, however, never alleged that he purchased two out of the three shares from defendant No. 1 under the belief that he was a broker empowered by the registered owner to sell these shares. On the contrary, he said in his evidence : 'I understood Ismail (i.e., defendant No, 1) to be the owner of the shares when I purchased them. Two forms bore plaintiff's signature and one defendant No. 1's signature. I did not question Ismail about the two forms bearing plaintiff's signature.' With that knowledge he purchased the three shares on December 22, 1920, One of these shares stood in the name of defendant No. 1 himself, whereas plaintiff was admittedly the registered owner of the other two shares, For nearly fifteen months defendant No. 3 made no application to the Company for registration of the transfer. The Company's register continued to show the plaintiff as the owner of the two shares. And defendant No. 3 made no attempt whatever to claim the dividends. When, early in 1922, he applied to the Company to register the shares, the plaintiff objected, and instituted the suit which has given rise, to this second appeal. In my opinion, the findings of the lower Court are vitiated by the fact that they are based upon a misapprehension of defendant No. 3's case and of his evidence.
22. For these reasons, I agree with my Lord the Chief Justice that defendant No. 3 is not protected by Section 108 (Exception 1), Indian Contract Act, and that, in the circumstances of this case, the plaintiff is not estopped from asserting a right to the Tata Hydro share and the Crescent Mill share No. 3185.