The central legal point established in the judgment is that property in shares passes on delivery, and equitable considerations applicable to goods do not apply to shares in India.

Viscount Dunedin, J.

1. In March, 1920, the second plaintiff in this case, Arajania, who is not a certified share-broker, and who describes himself as the sub-broker of the first plaintiff Bharucha, who is a certified share-broker, sold on the Bombay Stock Exchange to first defendant, bora, 129 shares of a Company called Alcock, Ashdown & Co., Ltd. for delivery on the 14th April, 1920. Neither of the two plaintiffs was the registered holder of any such shares. In order to make good the delivery the first plaintiff acquired the requisite number of shares in the market from various brokers, and took from these brokers blank transfers signed by the registered holders along with the corresponding certificates. These certificates and blank transfers were handed by the second plaintiff to the first defendant at 6 P.M. on the 14th April. At 8 v. M. a cheque for the sum due under the contract in favour of the first plaintiff was handed to the second plaintiff. This cheque was dishonoured on the next day.

2. The first defendant, having had the blank transfers and certificates thus delivered to him, made certain propositions as to the raising of money to Manilal, a partner in the firm of Wadilal & Co., the second defendants, and handed the certificates and transfers to him. The second defendant in turn handed them to the third defendant, Ghia, again ,011 certain propositions as to raising money.

3. The cheque was never honoured, and the first defendant absconded. The present action is brought by the first and second plaintiffs against all the three defendants, asking for return of the certificates and blank transfers or otherwise for damages.

4. Proof was led before the Trial Judge who held in fact (i) that plaintiff No. 2 acted as sub-broker to plaintiff No. 1, and that, accordingly, plaintiff No. 1 had a direct title to sue the other defendants; (2) that Manila!, the defendant No. 2, knew when he took the certificates and shares that the cheque of: Gora, defendant No. 1, was not likely to be honoured. He gave a decree in favour of plaintiff No. 1 against all defendants. The ratio of his judgment is to be found in the following passage:

Gora was only an ostensible owner and the plaintiffs, who were the unpaid vendors, had equity in them, and they could have stopped Gora from getting these shares transferred in his name in the books of the company, but if Gora had passed on these shares either by way of sale or by way of pledge to any third person who acted bona fide and without notice then I certainly think that such a person would have a better title to these shares than the plaintiffs. But in this case it is abundantly clear that Gora himself felt that he was not the owner.... Manilal had notice that these shares were not paid for, and Ghia, being a mere nominee of Manilal, Ghia was in no better position than Manilal himself. They took these shares with the infirmity from Gora, and therefore they cannot claim these shares in priority to the plaintiffs.

5. He had previously pointed out that in a question with the Company the owners of the shares were the old owners who had signed the blank transfers.

6. On appeal by the second and third defendants the learned Judges of the Appellate Division of the High Court reversed the judgment of the Trial Judge and dismissed the action as against them. They held on the facts that plaintiff No. 2 had acted as agent for plaintiff No. 1, and that consequently, as plaintiff No. 2 was not a certified broker, the buyer was not affected by the rules of the Stock Exchange. This is only of importance as regards a certain Rule C, with which their Lordships will afterwards deal. On the merits of the case they held that, under the Indian Contract Act, the property of the shares as sold passed on the delivery of the certificates and blank transfers to Gora; that, after that, plaintiff No. 1 had no claim against Gora except upon the cheque; that consequently he, had no claim against defendants Nos. 2 and 3,