Nadarajah V. H. Don Carolis & Sons, Ltd.,

1936 Present : Akbar and Koch JJ.

NADARAJAH v. H. DON CAROLIS & SONS, LTD.

156-D. C. (Inty.) Colombo.

Joint stock company-Application to register shares-Shares sold in execution of mortgage decree-Right of Directors to register sale-Appeal- Security for costs.

Where the articles of association of a joint stock company gave a discretion to the directors to refuse to register a transfer of shares by a shareholder, who is indebted to the company,-

Held, that the directors were not entitled to refuse to register a transfer consequent on a forced sale of the shares.

Qucere, whether in appeal governed by section 110 of the Joint Stock Companies' Ordinance the appellant is bound to give security for respondents' costs ?

Where the appellant has given security in cash but has failed to give notice of security to the respondent the Supreme Court may grant relief under section 2 of Ordinance No. 42 of 1921.

APPEAL from an order of the District Judge of Colombo.

N. K. Choksy (with him D. W. Fernando), for respondent, appellant.

H. V. Perera, for petitioner, respondent.

Cur. adv. vult.

June 15, 1936. AKBAR J.-

This is an appeal under section 110 of the Joint Stock Companies 2 Ordinance, No. 4 of 1861, against the order of the District Judge made under section 32 of the same Ordinance, by which the Court allowed the application of the petitioner-respondent to have his name inserted as a shareholder in the register of the company of the respondent-appellant.

Mr. H. V. Perera, for the respondent, took the preliminary objection that this appeal was not properly constituted, because no notice had been given of the security offered for the due prosecution of the appeal as required by section 756 of the Civil Procedure Code.
We thought that this objection should not be upheld for several reasons. In the first place when we looked at the facts we found that as a matter of fact the appellant had deposited a sum of Rs. 100 in cash which had been secured by a bond. It is true that no formal notice was given as required by section 756, but the section was amended by an addition made by section 2 of Ordinance No. 42 of 1921 under which this Court is given a wide discretion to correct any mistake, omission, or defect on the part of an appellant in complying with the provisions of that section, if the Supreme Court should be of opinion that the respondent has not been materially prejudiced, and relief may be granted on such terms as it may deem just. Mr. Perera quoted a case of this Court, namely, Silva v. Goonesekera [1 31 N. L. R. 185. ]. It will be seen from that case that the omission was a gross one, because not only had the security bond not been signed, but notice of appeal had not been given when the petition was filed on November 14, 1928, and the record remained in the District Court till May, 1929.. It seems to us that this case is a fit one in which relief should be granted under the amendment I have quoted above.

Apart from this, as Mr. Choksy has pointed out, these appeals are regulated by section 110 of the Joint Stock Companies' Ordinance, and it is stated in that section that every appeal shall be brought and prosecuted in such manner and shall be subject to such regulations as now exist, or shall be hereafter made by any rule or order of this Court. These are exactly the same words as appear in the Insolvency Ordinance, 1853, section 6, and the Supreme Court in two cases, namely, the Full Court decision in the case of In re Goonewardene [2 34 N. L. R. 431.]and the latter case of Dias v. Palaniappa Chettiar [3 34 N. L. R. 195.], held that in Insolvency appeals there were no Civil Appellate Rules regulating such appeals, and that in the former case the appellant need not give security for costs of any appeal at all. For these reasons we decided to hear the appeal.

As regards the main point raised in appeal, I think it could be decide

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