1. This is a matter of some importance to companies and it has been dealt with very summarily in the lower Court. The action is by the plaintiff against the defendant company in respect of the non-registration of a transfer in which he was interested. Under Article 6 of the Company's Articles of Association it is stated that the company reserves to itself the right of refusing any transfer if it appears to be against the interests of the company. The plaintiff by his plaint alleges that the defendant company refused to recognise the transfer under the evil advice and guidance of the second defendant. The company justified its refusal for reasons given and also because under Article 6 of the Articles of Association it claims to have unfettered discretion. The issues as originally framed were:
(3) Are defendants entitled to refuse to recognise the transfer of shares as stated by them in their written statement?
(4) Whether the suit is not maintainable for reasons alleged by the defendants?
2. that is to say it put the burden of proof upon the defendants. The defendants sought to have the issues recast as follows:
(3) Whether the refusal of the defendants' company to recognise the plaintiff as transferee is not bona fide and valid?
(4) Whether the suit is maintainable?
3. That was dealt with by the learned District Munsif as follows:
I do not consider that there are sufficient grounds for recasting the issues already framed.
4. The burden of proof in these matters is upon the plaintiff, as has been held in a number of cases one example of which is In re Coalport China Co. (1895) 2 Ch. 404 and another is In re Gresham Life Assurance Society. Ex parte Penney (1872) 8 Cha. App. 446. The same principle has been recognised in the Madras High Court in Sree Mahant Kishore Dossjee v. The Coimbatore Spinning and Weaving Co. (1902) I.L.R. 26 Mad. 79 at 84, 85 : 12 M.L.J. 439. The issues were therefore wrongly framed and this Civil Revision Petition must therefore be allowed.
5. But it has been argued on behalf of the respondent that I should not interfere in this matter. The power of interference in revision in a matter of this sort is naturally sparingly used. But when the burden of proof as in this case, is definitely wrongly placed and where the matter is, as I have said, one of considerable importance to companies and a local precedent might possibly be caused, I think this is a matter in which I am properly asked to interfere. The matter has been dealt with though not without jurisdiction certainly with material irregularity. A bench of this High Court composed of Oldfield and Venkatasubba Rao, JJ. in Rajagopala Aiyangar v. Ramanuja Aiyangar A.I.R. (1923) Mad. 607 has taken the view that discretion may be used in that way.
6. The costs of this revision petition will abide and follow the result of the suit.