Judgment

RAY, C.J.I. :- These four appeals by certificate raise two questions. First, whether the provisions of Section 108 of the Companies Act, 1956 are mandatory in regard to transfer of shares. Second, can a company having been served with notice of attachment of shares register transfer of shares in contravention of the order of attachment.

2. The appellant Mannalal Khetan and the respondents Kedar Nath Khetan and Durga Prasad Khetan are members belonging to two branches of the Khetan Family. The respondent Lakshmi Devi Sugar Mills Private Ltd. is a private company. It was incorporated on 7th April 1934 under the Indian Companies Act, 1913.

3. The Khetan family held shares in the respondent company and in two other companies Maheshwari Khetan Sugar Mills Private Ltd. The shares stood in the names of (1) M/s. Ganeshnarayan Onkarmal Khetan. (2) M/s. Sagarmal Hariram Khetan, (3) Sri Mannalal Khetan and (4) Sri Radhakrishna Khetan.

4. The members of the Khetan family did partnership business at various places. Civil Suit No. 337 of 1948 was filed in the Bombay High Court for dissolution of the partnership and for taking the accounts. On 3rd July 1953 the Official Receiver of the Bombay High Court was appointed Receiver of the properties of the partnership firms.

5. There were large income-tax arrears and other tax liabilities outstanding against the firms and individual partners. For the realisation of the income-tax dues the Income-tax Department issued in 1950 a notice under Section 46 (5) (a) of the Indian Income-tax Act, 1922 requiring the respondent company to pay any amount due to the firm of Ganesh Narayan Onkarmal or its partners to that department.

6. On 16th June, 1953, a Receiver was appointed by the Collector of Bombay in execution of the tax recovery certificate issued by the Income-tax Officer S. VI Central Bombay. Subsequently under orders of the Bombay High Court the Receiver appointed by the Collector of Bombay took over papers of the dissolved firm from the Receiver appointed by the Bombay High Court. The Receiver appointed by the Collector of Bombay also took possession of shares standing in the names of M/s. Sagarmal Hariram Khetan, Sri Mannalal Khetan and Sri Radhakrishna Khetan along with blank transfer deeds signed by them.

7. The Additional Collector of Bombay issued to the Collector of Deoria two certificates under which on 8th March 1954 and 18/31st October 1955 certain shares of the respondent company belonging to the Khetans were attached under Order 21, Rule 46 of the Code of Civil Procedure.

8. On 31st July, 1957 the members of the Khetan family entered into agreement among them for exchange of blocks of shares held by them in the respondent company and other companies in settlement of their differences and disputes. These agreements provided for transfer of shares in the respondent company and in the Maheshwari Khetan Sugar Mills Private Ltd. belonging to Sagarmal Hariram and Ganesh Narayan Onkarnath groups to which the appellants belonged to the group of Kedarnath Khetan to which respondents 1 and 2 belonged. These transfers were in lieu of shares in Ishwari Khetan Sugar Mills Private Ltd. to be transferred by the group of respondents 1 and 2 to the group of the appellant. It is significant to notice that the agreements recited that the shares in the respondent company were under attachment of the Income-tax authorities and therefore, they could not be immediately transferred. The agreement was that as soon as the transfer of the shares became permissible or if the Income-tax authorities so permitted, transfers as agreed and contemplated would be effective.

9. On 8th April, 1958 and 3rd October 1959 the Board of Directors of the respondent company passed a resolution for transfer of the shares belonging to the appellant group to the group of respondents Nos. 1 and 2. These resolutions were passed on the applications made on behalf of respondents Nos. 1 and 2 and others of their group. The shares were t