R.S.BACHAWAT, J.

(1) ON 29/11/1947, the Indian Chemical Products, Ltd., a limited company, was incorporated having its registered offices in Baripada, Mayurbhanj and in the town of Calcutta. Its authorised capital is Rs. 25 lakhs divided into 25,000.00 shares of Rs. 100.00 each. The company has seven share-holders. The Maharaja of Mayurbhanj subscribed and paid for 7,500 shares. The remaining six shareholders hold 150 shares only. All the shareholders are signatories to the memorandum of association of the company. The State of orissa claims that by reason of the constitutional changes since the declaration of independence, all the shares held by the Maharaja of Mayurbhanj have now vested in it by operation of law. The State also based its claim to the shares on a formal instrument of transfer executed by the Maharaja. On 16/03/1950, the government of orissa lodged the share scrip and the transfer deed with the company, and requested it to make the necessary changes in the share register. The government as also the Maharaja, through his agent, the Imperial Bank of India, repeatedly requested the company to register the secretary to the government of orissa,, Finance Department as the holder of the shares in place of the Maharaja. There was protracted correspondence in the matter for over three years and eventually on 16/05/1953, the board of directors of the company refused to register the transfer. On 1/12/1953, Sri S. K. Mandal, attorney for the State of orissa, requested the company to record the name of the State as the owner of the shares in the share register, but the company declined to do so. On 9/02/1955, the State of orissa filed an application under s. 38 of the Indian Companies Act, 1913 in the High court of orissa asking for rectification of the share register by inserting its name as the holder of the shares in place of the Maharaja. The company and the Maharaja were impleaded as respondents. The application was contested by the company only. On 22/11/1956, Ray, J. allowed the application. On 13/09/1957, he passed a supplemental order directing the filing of the notice of rectification with the Registrar within a fortnight. On 5/09/1960, a division bench of the High court dismissed the appeal preferred by the company. The company now appeals to this court on a certificate granted by the High court.

(2) BOTH courts concurrently held that (1) the title to the shares vested in the State of orissa by operation of law; (2) the, refusal of the board of directors to register the transfer was mala fide; (3) the State of orissa was entitled to rectification of the share register and a proper case for the exercise of the courts jurisdiction under s. 38 of the Indian Companies Act, 1913 had been made out; (4) the petition was not liable to be dismissed on the ground that the State had asked the company to register the name of the secretary to the government of orissa, as the shareholder in place of the Maharaja. The appellate court also held that under the articles of association of the company the board of directors had no power to refuse registration of a transfer where the transfer was by operation of law. The appellant challenges the correctness of these findings.

(3) THE courts below concurrently found that the 7,500 shares were held by the Maharaja in his capacity as ruler of the State of Mayurbhanj. This finding is amply supported by the documentary evidence on the record and is no longer challenged. The State of Mayurbhanj was one of the feudatory States of orissa under the suzerainty of the British Crown. As from 15/08/1947, with the declaration of independence the paramountly of the British Crown lapsed. Thereafter, steps were taken for the integration of the State with the Dominion of India. On 17/10/1948, the Maharaja of Mayurbhanj signed an agreement for the merger of the State with the Dominion. By art. 1 of this agreement, the Maharaja completely ceded to the Dominion his sovereignty over