1. This appeal is on behalf of the plaintiff, the Murshidabad Loan Office Ltd., which is a registered company having its head office at Nashipur in the district of Murshidabad and the suit out of which it arises was commenced by the appellant for recovery, from both the defendants, of a sum of Rs. 60 odd only alleged to be payable as unpaid call money in respect of certain shares. Defendant 2, Sarat Kumari Debi, is the registered holder of the shares in the books of the company while defendant 1, Satish Chandra Chakravarti is her husband. The plaintiff's case was that the wife was a mere benamidar for the husband in respect to these shares and there was a prayer in the plaint for a decree against both the husband and the wife. There was another question raised in the suit regarding the legality of a certain resolution which was passed at a general meeting of the share-holders held on 28th October 1934. It appears that the company had entered into a scheme of composition with its creditors under Section 153, Companies Act, and after the scheme was sanctioned by this Court the then Managing Director, Purna Chandra Bhoumik got a resolution adopted at a general meeting of the share-holders held on the date mentioned aforesaid, that no share money could be demanded by the directors without the consent of the general body of the share-holders. The plaintiff's case was that this resolution was illegal and ultra vires and was not binding on the directors. This question has been decided in favour of the plaintiff by both the Courts below and the propriety of this decision has not been challenged in the appeal before us.
2. The whole controversy centres round the point as to whether the plaintiff was entitled to make both the husband and the wife liable for the call money due in respect of the shares. Both Courts have held that the remedy of the plaintiff company was against the wife alone whose name was entered in the register of members kept by the company and both the Courts below have dismissed the plaintiff's suit as against the husband. It is this part of the decision that has been attacked before us in this second appeal.
3. Mr. Probodh Chandra Kar who appears in support of the appeal has contended before us that on the finding of fact arrived at by both the Courts below that the wife was a mere benamidar for the husband in respect to the shares, there should have been a decree made in favour of the plaintiff against the husband as well. In our opinion, this contention is not sound and cannot be accepted. The whole scheme of the Companies Act seems to be that the company has got to proceed on the basis of its own register of members and it is neither obliged nor competent to enquire into the rights of other persons whose names are not entered in it. Under Section 30, Companies Act, a person cannot be made a member of a company unless his name is entered in its register as a member. Section 31 lays down how a company has got to keep its register of members and what, particulars the register should contain. There is no provision under which the company can make an entry in its register to the effect that shares are held by a particular member only in a representative capacity, or that some other person has a lien or equitable interest in the same. Further when a proper instrument of transfer is executed in respect of a share and the share scrip is delivered to the company, either the transferor or the transferee can require the company to substitute the name of the transferee for that of the transferor in the register of members: vide Section 34. Finally, Section 33 expressly says that no notice of any trust express, implied or constructive should be entered on the register or be receivable by the registrar.
4. Assuming that the registered share-holder is not the real owner of the share but if he is the member in the books of the company it is he alone who would be entitled to exercise the rights of a share-holder, viz., to vote as such or to receive the dividend payable in respect of the share and it certainly follows that he alone is liable for share calls or to be put on the list of contributories in case the company is wound up. The articles of association of the plaintiff company point unmistakably to the same conclusion. Clause 5 of these articles provides that every person whose name is entered as a member in the register of members and nobody else shall, on payment of the whole value of the share, be entitled to a share certificate. Under Clause 7, the directors can make calls upon the members only in respect of moneys unpaid on their shares, and Clause 11 provides for substitution of the name of the transferee of the shares in place of the transferor in the register of members. It is a settled principle of English law that it is only the registered holder of a share who can be made liable in respect of anything unpaid on the share and it makes no difference whether he is the beneficial owner of the share or a mere trustee, and in the latter case, it is immaterial whether the company is or is not cognisant of the trust: vide Chapman and Barker's case. (1867) 3 Eq. 361. The cestui que trust eannot be made liable either as share-holder or as a contributory, Cree v. Somervail (1879) 4 A.C. 648. The same principle has been adopted by English Courts in a large number of cases and, by way of illustration, we may refer to the decisions in Sociate Generale De Paris v. Tramways Union Co. Ltd. (1884) 14 Q.B.D. 424 affirmed in appeal in The Societe Generale De Paris v. Walker (1885) 11 A.C. 20 and In re Perkins (1890) 24 Q.B.D. 613.
5. The learned advocate for the appellant contended before us that the company might not be affected by any trust so far as disputes between third parties in respect to those shares are concerned but in a dispute to which the company itself was a party the rules of equity must prevail, and in support of this contention he has relied upon the cases in Rainford v. James Keith (1905) 2 Ch. 147 and Mackereth v. Wigan Coal Co. (1916) 2 Ch. 293 We do not think that the principle laid down in those two decisions has got any application to the facts of the present case. What was held in those cases was that a company might not be bound to recognise a trust but if after receiving notice of the equitable rights of a third party in respect of any of its shares, it chooses to deal with the shares for its own benefit, as for example, by advancing money on the security of the & same, it cannot claim protection against the rights of third persons. Nothing like that has happened in the present case. The dispute in the present case is entirely between the company and its share-holder whose name appears in the register of members and it relates to the payment of the unpaid call money which is payable by the latter. If the learned advocate's contention is correct, the husband will occupy the position of a beneficial owner in this case and not only he has not given notice of his interest in the shares to the company but on the other hand has disclaimed all interest in the same.
6. If the company after receiving notice that the husband had any interest in the shares had entered into a business transaction in respect to the shares ignoring the rights of the husband, of which it received notice, the principle laid down in the above cases might possibly be attracted. In that case it would not be a question of binding the company with a trust but of affecting it as a trader with notice of the rights of third parties. The case in Dharwar Bank Ltd. v. Mahomed Hayat : AIR1931Bom269 upon which stress has been laid by the learned advocate for the appellant is, in our opinion, altogether different. In the first place there was a dispute in that case as to whether it was registered under the Companies Act and consequently Section 33 was not at all attracted to it. In the second place the question was not raised in either of the Courts below and was put forward, as one of the learned Judges puts it, at the fag-end of the arguments by the learned advocate for the appellant in reply, and moreover it was not a case where the question arose between the company and its share, holder in respect of a matter which was exclusively regulated by the articles of association. In these circumstances we think that the view taken by the Courts below is right and this appeal should stand dismissed with costs.