JUDGMENT

Jagdish Sahil, J. - This First Appeal from Order by Messrs. Basant Company (hereinafter referred to as the appellant) has been filed under section 202 of the Indian Companies Act, 1913 (hereinafter called the Act) against the Benares Cotton and Silk Mills, Ltd., (in liquidation) (hereinbelow described as the company) and is. directed against the order of the learned District Judge, Varanasi, dated 3rd March, 1960.

It would contribute to a clear understanding of the points raised in this appeal if the following facts were given.

2. By means of the resolution dated 17th March, 1954, the Company decided to. issue some debentures and on 2nd April, 1954, they did so. On 11th April, 1954, 125 debentures were allotted to one M. K. Jhunjhunwala but before that date on 4th April, 1954 Jhunjhunwala had already sold 50 debentures to the appellant C L i--28 and on 7th April, 1954 transfer deeds in respect of the same were executed. On 17th June, 1954, on the appellant's instructions the Allahabad Bank, Ltd., (hereinafter referred to as the Bank) requested the Company to pay them interest on those fifty debentures. On 6th July, 1954, the Company refused to make the payment on the objection that the name of the appellant had not been entered in the registers of the Company. On 4th May, 1955 the Company went into liquidation and on 8th May, 1956, Jhunjhunwala filed with the Official Liquidator a claim under section 177-A of the Act inclusive of the 50 shares mentioned above. On 10th October, 1957 he sent the debenture scrips and the transfer deeds to the Official Liquidator with a request that the name of the appellant be entered on them. On 6th November, 1957, the Official Liquidator sent a reply to the appellant saying that he was unable to do anything in the matter until the orders of the Company Judge had been obtained. On 4th January, 1958 Jhunjhunwala declared before a Magistrate at Calcutta that on or about 4th April, 1954 he had transferred in favour of the appellant 50 debentures and the appellant had become the owner thereof. Thereafter, the appellant made an application purporting to be under section 123 of the Act with a prayer that in the register of debentures the name of the appellant be included in respect of 50 debentures in the place of Jhunjhunwala. That application was dismissed with costs on 3rd March, 1960 by the learned District Judge, Varanasi. and it is against that order that the present First Appeal From Order has been filed.

3. The learned District Judge decided against the appellant on the ground that " there are certain circumstances which go to show that the claim of the applicant is not genuine but is of a very suspicious character."

We have heard Mr. Rajeshwari Prasad for the appellant and Mr. Jagdish Swaroop for the Official Liquidator. Apart from reiterating that the claim of the applicant is not genuine, Mr. Jagdish Swaroop has tried to support the order of the learned District Judge, Varanasi on the ground that the application was not maintainable, the transfer of the shares (sic) had not been proved and in any case was colourable and that the Company had a right to refuse to register the name of the appellant.

4. We will first deal with the question as to whether or not the application made by the appellant in the Court of the District Judge, Varanasi, was maintainable. The application was made under section 123 of the Act which reads :-

"123. Company's register of mortgages.-(1) Every company shall keep a register of mortgages and enter therein all mortgages and charges specifically affecting property of the company and all floating charges on the undertaking or on any property of the company, giving in each case a short description of the property, mortgaged or charged, the amount of the mortgage or charge and (except in the case of securities to bearer) the name of the mortgagees or persons entitled thereto.

(2) If any director, manager or other officer of the company knowingly and wilfully aut