Estoppel mean
This query is : Resolved
03 December 2012
What does estoppel mean in law?
03 December 2012
Hi
Forged transfers
A person who brings a transfer to a company for registration not only affirms it is a genuine document, but warrants that it is so. The company is simply ministerial in registering a transfer; it cannot inquire into the transaction out of which the transfer arises. Where, therefore, a company acts in good faith and registers a transfer produced by the transferee and issues fresh certificates to him but later it is found that the transfer was forged and the company is compelled to restore the shares, the transferee is liable to indemnify the company against its liability. The company may not however be able to claim a complete indemnity if it is guilty of negligence in failing to spot the forgery.
Thus, if a forged transfer is presented for registration and the company acts upon it, it may incur a serious liability, for the registration of the transfer does not defeat the title of the true owner of the shares, and has a right to require the company to restore his name. The company may, on discovering the forgery, remove the name of the transferee from the registration; it is not estopped by registration. But if the company has issued to the transferee a share certificate and a bona fide buyer has, acting upon the certificate, purchased the shares from the transferee (who had forged the transfer) the company may be liable in damages to the subsequent buyer, since a certificate under the seal of the company estoppes the company from denying the title of a person who has accepted acted on the certificate.
A forged transfer of shares is a nullity and cannot affect the title of the shareholder whose signature is forged. If the company, therefore, has registered the forged transfer and removed the true owner of the shares from the register, it can be compelled to replace him. It can then claim an indemnity from the person who sent the forged transfer for registration if it has sustained loss through acting thereon. No estoppel in favour of such person arises from a share certificate issued to him even though he knows nothing of the forgery he has not relied on the act of the company in issuing the certificate.
If there is any fraud or forgery in holding shares or very title to the shares, then such issues will be beyond the jurisdiction of company court and will have to decide by the Civil Court.
Forged transfers
A person who brings a transfer to a company for registration not only affirms it is a genuine document, but warrants that it is so. The company is simply ministerial in registering a transfer; it cannot inquire into the transaction out of which the transfer arises. Where, therefore, a company acts in good faith and registers a transfer produced by the transferee and issues fresh certificates to him but later it is found that the transfer was forged and the company is compelled to restore the shares, the transferee is liable to indemnify the company against its liability. The company may not however be able to claim a complete indemnity if it is guilty of negligence in failing to spot the forgery.
Thus, if a forged transfer is presented for registration and the company acts upon it, it may incur a serious liability, for the registration of the transfer does not defeat the title of the true owner of the shares, and has a right to require the company to restore his name. The company may, on discovering the forgery, remove the name of the transferee from the registration; it is not estopped by registration. But if the company has issued to the transferee a share certificate and a bona fide buyer has, acting upon the certificate, purchased the shares from the transferee (who had forged the transfer) the company may be liable in damages to the subsequent buyer, since a certificate under the seal of the company estoppes the company from denying the title of a person who has accepted acted on the certificate.
A forged transfer of shares is a nullity and cannot affect the title of the shareholder whose signature is forged. If the company, therefore, has registered the forged transfer and removed the true owner of the shares from the register, it can be compelled to replace him. It can then claim an indemnity from the person who sent the forged transfer for registration if it has sustained loss through acting thereon. No estoppel in favour of such person arises from a share certificate issued to him even though he knows nothing of the forgery he has not relied on the act of the company in issuing the certificate.
If there is any fraud or forgery in holding shares or very title to the shares, then such issues will be beyond the jurisdiction of company court and will have to decide by the Civil Court.
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