P L D 1954 Lahore 745 (PLP)

MUHAMMAD MUNIR, C. J.‑This judgment will cover L. P. A. No. 29 of 1953 and L. P. A. No. 24 of 1953, which are appeals under Clause 10 of the Letters Patent from two orders passed by two different learned judges of this Court in proceedings, concerning the affairs of the Murree Brewery Company, originally taken before the learned Company Judge. The appeals have some interesting history behind them which may be stated very briefly and only for the purpose of bring ing out the points that fall for decision. The Murree Brewery Company is a joint stock company functioning in Pakistan with its registered head office at Rawalpindi It is a pre‑Partition company which was, and is, carrying on a lucrative business. It has a share capital of twenty‑four lass of rupees in the form of 240,000 fully paid- up shares of the nominal value of Rs. 10 each. The main business of the company is the manufacture of liquor and methylated spirit of both of which it has at present a monopoly in Pakistan. Properly managed, the company has great prospects and it is this appraisal, of its possibilities that has caused a strife between two influential parties for acquiring control of its affairs. One of these parties is P. D. Bhandara, who is carrying on his family business of a wine merchant in Lahore and other places. The other is Saeed Sehgal a business magnate who is a new entrant in this industry. Legal talent is equally arrayed on either side, and Saeed Sehgal has the advantage of the support of Feroze Hasan Shah, an ex‑officer of the Excise Department who knows the secrets of the trade and is the manager of the company's Brewery at Murree. The story of this strife is as follows :‑ Before the Partition, the management of the company was entirely non‑Muslim, its directors being either Europeans or wealthy Hindu businessmen of Lahore. On Partition, or shortly afterwards, the Hindu directors left Pakistan and the directorate began to function at Delhi. Bhandara, who is a Parsee of Pakistan nationality, was co‑opted as a director and began to attend the meetings of the directors at Delhi. Bhandara persuades Saeed Sehgal also to purchase some shares of the company, in fact the former transferred some of his own shares to the latter and had him co‑opted as a director. The third director was a European, Mitchell, who was subsequently succeeded by Morgan. Acting under section 138 of the Companies Act, the Central Government appointed Mr. Yaqub Ali, an advocate of this Court, who is conducting the proceedings on behalf of Saeed Sehgal, and Mr. Rahim A. Jan, a chartered accountant, as inspectors to examine the affairs of the company. The inspectors, who submitted their report on 14th November 1952, found a prima facie case of fraud against the directors of the company both before and after the Partition. They pointed out in their report that in anticipa tion of the Partition the directors converted securities of the value of rupees twenty lacs into cash which they transferred to the London Office of the Lloyds Bank and that by a resolution of 2nd December 1947 they made a present of another sum of Rs. 8,74,000 to two directors of the Punjab Distributors Ltd., who were nominees of two directors of the Murree Brewery Company. In the opinion of the inspectors, the directors were liable in damages for this fraud and their shares in the company, if they held any, were liable to forfeiture under the company's constitution. One of the directors alleged to be a party to this fraud was R. B. Ganga Saran, who had pledged a large block of shares with Grindlays Bank Ltd., Lahore, by delivering to the Bank signed transfers which the bank had filled up in its own favour some time in 1949. The inspectors thought that this transfer was a collusive and fictitious transaction, that the ownership of the shares still vested in Ganga Saran, and that the shares could be forfeited by the company under Article 31 of the Articles of Association. On the strength of the inspectors' report, the company under the instructions of Bhandara, who is Chairman of the Board of Directors, presented to the Company judge a petition under section 38 of the Companies Act for rectifica tion of the register of members by substituting in it the name of Ganga Saran for that of Grindlay's Bank in respect of the block of shares that had originally been pledged by the former with the latter. It was alleged in that petition that in conspiracy with the other directors, Ganga Saran had defrauded the company of a sum exceeding rupees twenty lacs. As an instance of the fraud practised by the directors the petition mentioned a payment of Rs. 3,18,239‑2‑6 to H. L. Harris, a nominee director, of the Punjab Distributors Limited for Mitchell, one of the directors of the Murree Brewery Company, and another payment of Rs. 5,53,635-13‑2 to Sardari Lal Aggarwal, also a director of Punjab Distributors Ltd., who was a brother of M. R. Aggarwal, another director of the Murree Brewery, Company on the pretext of paying compensation for termination of the company's contract with the Punjab Distributors Ltd. for the selling agency of the company's products. The petition proceeded to allege that for these fraudulent payments the directors of the company were liable in damages and their shares liable to forfeiture under Articles 31 and 32 of the Articles of Association. The petition then referred to the transfer in 1949 of a total of 26,4)0 shares of Ganga Saran by Grindlay's Bank in its own favour and alleged that the transfer had been effected to avoid Ganga Saran's liability to the company and to prevent the company from exercising its lien on those shares under Articles 31 and

32. In support of the averment that the transfer of the shares by Grindlay's Bank to itself was fictitious, reliance was placed on the fact that the Bank on filling up the transfer forms had not in its books credited Ganga Saran with the price of the shares, which conduct showed that the shares were still the property of Ganga Saran. The prayer in the petition was that the register of members be ordered to be rectified and the name of the real owner restored therein. Along with the petition .under section 38 the company presented another application, purporting to be under Order 39 rule 2 and section 151 of the Code of Civil Procedure, and praying that during the pendency of the petition, Grindlay's. Bank be restrained from exercising any rights as share‑holders of the Murree Brewery Company in respect of the shares registered in the bank's name which had formerly been shown in the name, of Ganga Saran. By his order dated the 13th July 1953, the learned Company judge granted against Grindlay's Bank the temporary injunction prayed for in the application. The learned judge held in that order that there were reasons for believing that the real owner of the shares of which the ostensible owner was Grindlay's Bank was Ganga Saran, and that keeping in view the relevant circumstances it appeared to be just and proper to restrain the bank from exercising its right to vote in the general meetings of the company on the strength of these shares. Being dissatisfied with this order Grindlay's Bank appealed under Clause 10 of the Letters Patent. This is appeal No. 29 of 1953. In the appeal by the bank, an application was made for a temporary injunction that during the pendency of the appeal the Murree Brewery Company. be restrained from holding any general meeting of the company. The injunction prayed for was granted by a Division Bench of this Court on 17th July 1953. In December 1953, Bhandara fell seriously ill and had to be moved to hospital. During his illness, the other two directors, namely, Morgan and Saeed Seghal, held a meeting of the board on 8th December 1953 and ‑passed a resolution to co‑opt Feroze Hasan Shah, the General Manager of the Brewery, as a director. They also altered some of the condi tions of Feroze Hasan Shah's service to his advantage and divested Bhandara of the powers which he had hitherto pos sessed of operating on the company accounts. Feroze Hasan Shah held no shares in the company at the time of his being co‑opted but subsequently he acquired 100 shares. Morgan held on 100 shares; while Saeed Sehgal owned 1800 shares. As against this, the number of shares held by the Bhandara family was 44,560 and Bhandara himself was the Chairman of the Board of Directors. Bhandara naturally felt aggrieved by the action taken by his co‑directors during his illness and after his appeal to the directors to call a meeting of the board at the hospital had failed, he, his wife Tahmina Bhandara and his daughter Bepsy Bhandara made an application to the Court under sections 76 (3) and 79 (3) of the Companies Act praying that a general meeting of the shareholders of the company be called. In this application it was alleged that no general meeting of the shareholders of the company had been held since July 1953, that Bhandara, the Chairman of the Board of Directors, was lying ill in the Ganga Ram Hospital since 4th December and was physically unfit to attend a meeting of the board, that he had suggested to Saeed Sehgal to hold a meeting of the board in the hospital but that the latter had refused, that thus no meeting of the Board of Directors was possible, that because a meeting of the board with the required quorum was not possible, no general meeting of the company could be called by the directors, that in the appeal by Grindlay's Bank a temporary injunction had been issued by the Court restraining the shareholders of the company from meeting, and that the holding of a general meeting had thus become impracticable. The application then referred to the company's petition under section 38 of the Companies Act which had been filed for the purpose of having the name of Grindlay's Bank removed from the register of members and the name of Ganga Saran restored, to the appeal by Grindlay's Bank against the temporary injunc tion, and to the temporary injunction issued by a Division Bench on the appeal of Grindlays Bank and alleged that Mr. Anwar, the Advocate who had filed the petition under section 38 and was to oppose the appeal by Grindlay's Bank, had been directed by the secretary of the company, at the instance of Saeed Sehgal and Morgan, to refrain from taking any action in the matter without further instructions. There was also a definite allegation in that application that these directors had become either indifferent to or not averse to a finding against the company in the appeal by Grindlay's Bank and that any such finding was bound adversely to affect the company's interests. The application, therefore, prayed that a general meeting of the company be ordered and that Grindlay's Bank be restrained from taking any part or voting in the said general meeting. The relief clause of the applica tion prayed for the holding of the meeting under "an indepen dent chairman who may please be appointed by this Honour able Court" to consider and decide "whether the appeal of Messrs. Grindlay's Bank Ltd. Lahore against the company, now pending in this Hon'ble Court, and all subsequent proceedings thereto be contested and properly conducted and the counsel of the company be instructed to act accordingly ". Notice was issued on this application on 6th January 1954. On 15th February a petition signed by the petitioners, namely, Bhandara and his family, by Mr. Norman Edmunds on behalf of Grindlay's Bank, and by Mr. Abdul Aziz on behalf of the company, was submitted before the Division Bench, consis ting of Rahman and Kaikaus JJ., to which the application had been referred for hearing. It was stated in the petition that parties to the proceedings had agreed to the calling of annual ordinary general meeting of the members of the company at 11 a.m. at the registered office of the company for 20th March 1954 under the chairmanship of the Chairman of the Board of Directors (Bhandara) to consider and, if thought fit, to pass the following items :‑ "(i) Receiving the auditor's balance sheet and profit and loss account for the period from 1st September 1951 to 31st December 1952. (ii) The report of the directors for the said purpose. (iii) Election or re‑election of the directors. (iv) Electing auditors for the year 1953‑54, Messrs. A. F. Ferguson & Co. being eligible to offer themselves for re appointment. (v) The Murree Brewery Company had filed a petition under section 38, Companies Act, VII of 1913, against Messrs. Grindlays Bank Ltd., Lahore, and same is now pending in the High Court of Judicature at Lahore. The bank preferred a Letters Patent Appeal against the interim order made by the High Court. Should the appeal and the other proceedings be contested ? (vi) Such other matters as the chairman may allow." The signatories to this petition also agreed that the members of the company as registered might attend personally and or execute and deposit with the chairman of the meeting not later than 72 hours before the hour appointed for the meeting, the form of proxy, provided the proxy‑holder was a member of the company, that the chairman would serve notices and send proxy forms to all shareholders and that the counsel for the petitioners would be permitted to attend and address the meeting but would not have any right of vote. On this petition the Court on 15th February 1954, recorded the following order :‑ "Parties have arrived at a settlement as embodied in the petition submitted to‑day. This petition is signed by learned counsel for the petitioner, for Grindlays Bank and for the Murree Brewery Co. In accordance with the terms con tained in this petition a meeting of the company will be called on the 20th March 1954 at 11 a.m. at the registered office of the company at Rawalpindi to discuss and decide the matters mentioned therein on the terms and conditions specified in the petition." It may be mentioned at this stage that the block of shares, the ownership of which was in dispute between the company and Grindlay's Bank, had been, under legal advice, purchased by Bhandara himself on 13th February 1954. The meeting as ordered by the Court was held on 20th March 1954 and resolution of the several matters mentioned in the joint petition were passed. As Mitchell and Morgan had resigned and there was no proposal for the election of Saeed Sehgal, the meeting elected Mrs. Bhandara and Mr. Anwar, the Advocate who was pleading the company's case in the petition under section 38, as directors. As regards the attitude to be adopted towards the petition under section 38, Khawaja Nazir Ahmad, Bhandara's own Advocate, addressed the meeting and expressed his opinion that the company had no case against Grindlay's Bank and that the company had no lien on the shares for the liability of Ganga Saran and informed the members that the chairman had himself purchased these shares at the rate of Rs. 4 per share from Grindlay's Bank and that he intended to sell them on a pro rata basis to the members of the company. Explaining further the terms on which the shares had been purchased, counsel proceeded to state that the transaction was subject to the approval of the company, that the proceedings pending in the Lahore High Court would be withdrawn without prejudice to the claims of the company against Ganga Saran and that in case the Custo dian, Evacuee Property declared the said shares to be evacuee property, the transaction would stand cancelled. After this address, the meeting resolved "that the purchase of shares (30,280) from Grindlays Bank Ltd., Lahore, at Rs. 4 per share by the chairman be and is hereby approved and his offer to sell the said shares to all members of the company on pro rata basis is accepted subject to the condition that the chairman shall retain himself all such shares as are not purchased by the respective members of the company." The meeting further resolved that "the proceedings now pending in the High Court of Judicature at Lahore against Grindlay's Bank Ltd., Lahore, be withdrawn and that the company be represented before the Custodian in connection with the reference made by the Lahore High Court and the counsel for the company in that case be instructed to try and get a declaration from the Custodian that the aforesaid shares were and are non‑evacuee property " On 29th March 1954, Saeed Sehgal made an application against the three members of the Bhandara family, Grindlay's Bank, Mr. Anwar and the Murree Brewery Company Limited under section 151 and Order 47 rule 1 of the Code of Civil Procedure. This eight page document complained of irregularities in calling and in the procedure adopted at the meeting and prayed "that the order'‑obtained by the respon dents from this Honourable High‑Court on 16th February 1954 may kindly be reviewed and set aside and the proceedings of the general meeting of the company held on 20th March 1954 may, on the grounds stated, be declared to be invalid." The application came up for hearing before the Division Bench which had passed the order for the meeting on 15th February 1954 but Rahman J., on the ground that Saeed Sehgal was distantly related to him, expressed his disincli nation to sit on that Bench. Since the application was primarily one for review, it was heard by Kaikaus, J. alone. The learned Judge wrote a lengthy judgment stating the relevant facts in detail and held that the order for the calling of the meeting was obtained by the Bhandara family by fraud and was thus void and of no effect. It is against that order that L. P. A. No. 24 of 1954 has been presented. We first proceed to determine Bhandara's appeal No. 24 of 1954. There are a large number of law points arising in that appeal but after hearing arguments extending over four days, we are of the view that the appeal can be disposed of on a very short ground. There is an apparent and irreconcilable inconsistency between Bhandara's representation in his appli cation under sections 76 (3) and 79 (3) of the Companies Act and his conduct, both antecedent and subsequent to the order of 15th February which he obtained from the Division Bench with the concurrence of the Murree Brewery Company and Grindlay's Bank. We have already stated that on 13th February 1954 Bhandara had purchased the shares from Grindlay s Bank which the Murree Brewery Company in its petition under section 38 and Bhandara himself in his appli cation under section 76 (3) and 79 (3) of the Companies Act had alleged to be the property of Ganga Saran and not that of Grindlay's Bank. The order for a general meeting of the company was obtained by Bhandara on the representation that the other two directors, namely, Morgan and Saeed Sehgal, were not giving proper instructions to the company's counsel and that they were no longer averse to a finding being recorded by the Court that the shares belonged to Grindlay's Bank and not to Ganga Saran. As against this attitude of his colleagues he represented that he himself was anxious to obtain a finding that the shares belonged to Ganga Saran and were liable to be forfeited by the company and that any contrary finding would cause a substantial loss to the company. This presentation was untrue because if it had been true, Bhandara would not have, as has been proved, been negoti ating for their purchase with Grindlay's Bank since May 1953 and have actually purchased them himself three days before the order for the calling of a general meeting was obtained. He suppressed the fact of the purchase from the judges, who in terms of the compromise directed a general meeting to be held, and obtained from them an order for the meeting only by suppression of this material fact but also by a misrepresentation that while he himself believed that the shares in question were the property of Ganga Saran, his two colleagues were scheming to have the shares declared as the property of Grindlay's Bank. At the meeting that was held in pursuance of the order of 15th February, Bhandara presented his own purchase as a fait accompli though he offered to share the purchase with the other shareholders pro rata. His counsel advised the meeting that the company had no case under section 38 of the Companies Act and that the correct course for the company to adopt was not only to withdraw that petition but also to take up before the Custo dian the position that the shares were not evacuee property. Bhandara says that he is not responsible for the averments in the application under sections 76 and 79 which was drafted by his counsel and which he signed without reading, while his counsel states that the averments in that application were inserted with a view to avoiding inconsistency with those in the petition under section 38, though Bhandara and his counsel had both come to hold the opinion that the shares had been validly transferred by Ganga Saran to Grindlay's Bank and that the company had no lien on them. We need not go into the question of which of the two is really responsible for these averments, which were admittedly untrue, and of whether one or both of them have been guilty of a moral fraud. The short question we have to decide is whether the conduct of the petitioners in the appli cation under sections 76 and 79 amounted to legal fraud, and as to that we have no doubt whatsoever that the order of 15th February was obtained on representations which in law certainly amounted to fraud. Even if Bhandara did not read the petition and signed it relying on the skill and experience of his counsel, and counsel merely attempted to be consistent with what had been alleged earlier in the section 38 petition, the actual result of the averments, whether they were made by Bhandara or by his counsel, was that the Court was led to pass an order in ignorance of the facts and in the belief that the averments in that application were true and that the calling of a meeting had become necessary in the interests of the company. The real state of affairs, however, was precisely to the contrary and was known both to Bhandara and to his counsel. It was Bhandara who was anxious to obtain a finding from the Court that the shares belonged to Grindlay's Bank and not his two colleagues, who in point or fact were opposed to Bhandara's attitude and were not willing to give up the company's lien on the shares or to agree to their being held and treated by the Court as having been validly transferred to Grindlay's Bank. We are, therefore, satisfied that the view taken by the learned judge on this part of the case was correct and that in law the order of 15th February and all subsequent proceedings that flowed from that order were void. The only question that has caused us some anxiety is whether the learned judge sitting singly had the jurisdiction to recall the order of 15th February. That order had been made by a Division Bench of which the learned Judge was only one member. He heard Saeed Sehgal's application because it purported to be one for review, which he alone could hear. He has, however, held that the application for review was barred by time. Further, the fraud which the learned judge has found established against Bhandara was not alleged in the application by Saeed Sehgal though it came to the notice of the learned judge in the inquiry started on that application. The question we have to answer, therefore, is whether, Saeed Sehgal's application not having alleged the fraud which has been found by the learned Judge, and an application for review having been dismissed, the learned judge sitting singly had the jurisdiction under section 151 of the Code of Civil Procedure to vacate an order passed by a Division Bench of which he was only one of the members. In law a judgment or order, however high or independent the tribunal delivering or making it and however exclusive its jurisdiction, is a nullity if it be proved that it was obtained by fraud. This fraud maybe proved not only in the proceedings in which it was committed but also in a suit to set aside that judgment or order, the only limitation on the Court's power to avoid such adjudication being that the fraud should have been set up under section 40, 41, 42 or 43 of the Evidence Act by the party relying on it. In appropriate cases it is the duty of the Court that has seisin of the case to recall suo motu an order procured by fraud. In the present case, even if Saeed Sehgal's application for review failed either because it was barred by time or because as an application under section 151 it did not allege the fraud found, the learned Judge had arrived at the result that the Court of which he was a member had been deceived and that neither he nor the other learned judge who sat with him would have made the order that they actually did on 15th February 1954, if deception had not been practised upon them. This fraud was discovered in the proceedings taken on the application of Saeed Sehgal and if it had come to the knowledge of both the judges, they would certainly have been competent to recall the order of 15th May. Cannot then one of them sitting singly pronounce the order to be a nullity? Since fraud vitiates all proceedings, and a lower Court in a suit properly constituted is certainly competent to set aside a judgment of a higher tribunal if it be proved that such judgment was obtained by fraud, it must a fortiori follow that a judge of this Court sitting singly has jurisdiction to pass such order provided the issue whether the judgment was obtained by fraud properly comes up before him. In the present case there is aril application by one Feroze Ali Bhatti praying that a fresh meeting be called under sections 76 and 79 of the Companies Act, and one of the points for determination in that applica tion would be whether the meeting held on 20th March in pursuance of the order of 15th February was or was not a meeting which bars the holding of a second meeting under an order of the Court. This application was before the learned judge and therefore it had become necessary for him to determine whether the meeting of 20th March was held on the authority of a valid order. He was thus properly seized of the issue and fully competent, though sitting singly, to declare that the Division Bench order of 15th February 1954, was a nullity because it was procured by fraud. Even if Saeed Sehgal's application did not specifically allege the fraud by the learned judge, that fraud being, without causing any surprise to the appellants, proved during the inquiry into that application, the learned judge acquired the jurisdiction to declare the legal result of the proof of that fraud. In any case, sitting in Division Bench, of which one of the members is the Chief Justice, who could refer Saeed Sehgal's application under section 151 and Feroze Ali Bhatti's application under sections 76 and 79 to itself, we can go into that question and since we agree with the finding of the learned judge on this part of the case, there is no insurmountable obstacle in the way of our vacating the order of 15th February. Several other reasons have been given and certain other matters discussed by the learned judge in his lengthy judgment, but we are not called upon to express our opinion on any one of those questions, whether of law or of fact, including the question whether a notice to the Custodian in respect of the shares in question or other shares held by the evacuees was necessary. We consider that on the essential point on which the decision of this appeal depends, the learned judge was right and we dismiss the appeal with costs. Coming now to appeal No. 29 of 1953, the first point that requires decision is whether a Company judge acting on a petition under section 38 is competent to issue an injunction of the kind that the learned Judge granted in this case. Under section 141 of the Code of Civil Procedure, the procedure provided in that Code in regard to suits shall be followed, as far as it can be made applicable, in all proceedings in any Court of civil jurisdiction. Proceedings taken on an applica tion under section 38 of the Companies Act are proceedings in a Court of Civil jurisdiction and therefore by reason of section 141 of the Code of Civil Procedure, they are governed by the other provisions of that Code, as far as those provisions are applicable to suits. On the question of whether, during the pendency of a petition under section 38 of the Companies Act, a receiver can be appointed under Order 40 rule 1 of the Code, we have a Division Bench judgment of this Court Ratan Lal v. Jagadhri Light Railway Co. Ltd. (A I R 1946 Lah. 193), holding that such appointment for the purpose of managing the property of the company or for the administration of the affairs of the company is without jurisdiction, the reason being that, the relief that can be asked for under section 38 being limited to the rectification of the register or members, all questions relating to the preservation or management of the company's property or for the administration of the company's affairs are foreign to that relief. We think that the same principle is applicable to applications for temporary injunctions under Order 39 rule 2 of the Code of Civil Procedure. Section 38 merely gives to they persons mentioned therein the right to apply to the Court for rectification of the register of members where the name of a person is fraudulently or without sufficient cause entered in or omitted from that register. On an application being made under that section, the Court may decide any question relating to the title of a person who is a party to the application to have his name entered in or omitted from the register, whether the question arises between members or alleged members or between members or alleged members on the one hand and the company on the other, and generally the Court may decide any other question necessary or expedient to be decided for the rectification of the register. Now the question whether during the hearing of such application, the ostensible owner of a share whose name is borne on the register of members may or may not vote at a general meeting of the company can neither be necessary nor expedient to be decided for the rectification of the register, the sole function of the Court, called upon to decide an application of that nature being whether the register should or should not, after inquiry, be rectified in the manner sought. Therefore, even if such application be governed by the procedure/prescribed for suits, the application cannot be considered as one for restraining the defendant from com mitting a breach of contract or other injury of any kind, which is the only kind of proceeding under Order 39 rule 2 in which a temporary injunction can issue to restrain the defendant from doing something. This legal position was realised by the learned judge who issued the injunction and that is why he invoked some jurisdiction other than that given by Order 39 rule 2 to justify the injunction. We consider that even if he had any such jurisdiction, he should not have exercised it in the circumstances of the present case. The second question, and one that requires still closer examination, is whether there were any sufficient reasons to restrain Grindlay's Bank from voting at the general meeting of the company. The answer to this question depends upon whether there were grounds for believing that the bank was in collusion with Ganga Saran or a party to a conspiracy the object of which was to shield Ganga Saran against a liability which might have been incurred by his misconduct in the management of the affairs of the company. The two grounds stated in the order under appeal which prima facie show that Grindlay's Bank had no interest in the shares are (1), the fact that the price of the sale of shares was not credited by the bank to Ganga Saran's account, and (2) that the London office of Grindlay's Bank communicated to the Lahore branch an authority from Ganga Saran to dispose of the shares. No one responsible for making the suggested entry was questioned on the point, and learned counsel for the bank had stated that according to banking practice such an entry is not necessary until the whole security has been realised and the debt wiped off or adjusted. As regards the cablegram in which Ganga Saran's authority to sell the shares on certain conditions was communicated to the Lahore branch of the bank by the head office in London, it must be borne in mind that the cablegram was a reply to an inquiry made by the Lahore branch itself on the strength of a proposal which the bank's counsel, Mr. Edmunds, had made to his client. Mr. Edmunds informs us that because in the application under section 38 there was an allegation that the shares were the property of Ganaga Saran, he advised his clients to obtain Ganga Saran's consent to the sale in order to pass a clear title to the intending purchaser. In support of this, Mr. Edmunds has produced before us some correspondence on the subject between Grindlay's Bank and himself. The two circumstances relied upon by the learned judge raise no more than a suspicion and we consider that in the case of a bank of Grindlay's standing, a more unequivocal admission or some other determining circumstance was necessary before restraining it from exercising its right to vote. It is not disputed before us that Ganga Saran had an account with the bank, in which he had been permitted a large overdraft, and that the shares in question were being pledged by him from 6th December 1940 to 28th February 1947 under duly executed memoranda accompanied by signed transfers which according to prevailing commercial usage could be filled up by the bank to purchase the shares for itself or to sell them to somebody else at the current market rate. Some more shares were similarly pledged by Ganga Saran from February 1947 to August 1949. It is not alleged, not even hinted, that these pledges, the bulk of which was effected before the end of 1945, were without consideration or fictitious or that Ganga Saran did not draw against such pledges. The transfer forms were duly filled up some time in 1949 and the company gave due effect to these transfers in the register of its members. There is no prima pacie proof that Grindlay's Bank was a conscious party to any fraudulent design that Ganga Saran might have adopted to avoid liability for his misconduct, and in the absence of any such proof the bank's title to the shares could not be doubted, and under Article 31 of the Articles of Association the company had lost its lien, if it ever had any, when it accepted the transfer. It may be that the directors of the company acted fraudulently or dishonestly in collusion with Ganga Saran in accepting the transfers and that their liability in damages for their fraud may be established and enforced in a properly constituted suit, but that does not in any way affect the transferee's rights, which as against the company became indefeasible on the acceptance of the transfer. The law governing such transfers is that where the owner of shares borrows money and deposits with the lender certificates of his shares and also transfers thereof signed by him but with the date and name of the transferee left blank, the lender has an implied power to fill up the blanks, and the transfers will pass the legal interest if the articles of association do not require a deed. The law in this respect is so liberal that the transferee has the right to fill up the necessary particulars even after the death of the original transferor (vide In the Matter of Bengal Silk Mills Co. Ltd. (A I R 1942 Cal. 461.) As held by the Privy Council in Manechji Pestonji Bharucha v. Wadilal Sarabhai (I L R 50 Bom. 361.) where the original consideration for the transfer subsequently fails, as for instance where the cheque which constituted the payment has been dishonored, the remedy of the person signing a blank transfer is to sue on the cheque and not for the return of the certificates and transfers. We are, therefore, of the opinion that the Bank's title to the shares in question was so obvious that a mere suspicion founded on the circumstances mentioned by the learned judge and of which no explanation was sought from the bank, should not have been considered sufficient for the issuing of a temporary injunction restraining the bank from exercising its right of vote. Under the general law, as held in Sassoon & Co. Ltd. v. Patch (45 Bom, L R 46,), even if the transfer had not been accepted by the company and Ganga Saran remained the legal owner of the shares in question, the bank as transferee of the beneficial interest in them could have controlled the exercise by the owner of the right to vote, because in such a case the legal owner becomes a trustee not only of the dividends but also of the right to vote, which is a right of property annexed to the shares. We, therefore, consider that the restraint order was wrongly issued in this case. Ultimately it is for the Custodian to decide whether the shares belong to Grindlay's Bank or to Ganga Saran, who is an evacuee. The learned Company Judge has already referred this issue to the Custodian and the result of the application under section 38 would depend upon the adjudication of this issue by the Custodian, which would be final and not liable to be called in question by any Court. We have discussed the question of the bank's title to the shares only for the purpose of considering whether there was or was not a prima facie case for a temporary injunction and our observations regarding the title to the shares will in no way be binding‑they may not even be relevant‑on the Custodian. For the reasons which we have explained above, we accept appeal No. 29 of 1953 and discharge the temporary injunction. The respondent will pay the costs of this appeal. To avoid further delay in the solution of the dispute that has arisen, C. O. No. 8 of 1953, C. M. No. 117 of 1954 and C. O. No. 1 of 1954 will now be listed before the learned Company judge on Monday, the 14th June 1954. A. H. Orders accordingly.