legality

Querist : Anonymous (Querist) 06 September 2010 This query is : Resolved
x authorizes y to b in charge of his shares
however x decides to sell his shares to z
and also receives half the consideration price.they become busy with life and think of continuing the transaction later.
in this case-
1)does x hv the right to sell his shares?
2)is this consideration legally binding?

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B K Raghavendra Rao (Expert) 06 September 2010
x is the owner of the shares and therefore he has every right to sell his shares to anybody he likes. It is only a matter of procedure that is involved in authorisation matters. X is required to inform y that he has withdrawn his authorisation and sell the shares. Because by virtue of authorisation, y might have made transaction in respect of shares and in such a case, the transaction made by y is perfectly valid. However, if y has not made any transaction, x could even orally or in writing ask him not to deal with his shares and do business on his own.

Devajyoti Barman (Expert) 06 September 2010
The answers depend upon the authority the Y was enjoying. If he was the mere custodian of the share without any semblance of right over it then he has done the illegal thing and the sale may not be binding. But the intervening time may play spoilsport as the X after coming to know about such anomaly did not object in all these months and by remaining silent he will be deemed to have the validated such acts.

sanjay mundada (Expert) 06 September 2010
if authorization against cosideration fully paid ? then "x" deal is not legal.only mere technical entry is not title.though "y" s name not entered "Y" is owner if paid consideration fully.

R.Ranganathan (Expert) 07 September 2010
I agree with Mr. Raghavendra Rao. It depends on what type of authorisation x has given to y. X has to recall and cancel the authorisation and tell y not to deal with the shares any further.