The Companies Act, 1956
112. Certification of transfers.
(1) The certification by a company of any instrument of transfer of shares in, or debentures of, the company, shall be taken as a representation by the company to any person acting on the faith of the certification that there have been produced to the company such documents as on the face of them show a prima facie title to the shares or debentures in the transferor named in the instrument of transfer, but not as a representation that the transferor has any title to the shares or debentures.
(2) Where any person acts on the faith of an erroneous certification made by a company negligently, the company shall be under the same liability to him as if the certification had been made fraudulently.
(3) For the purposes of this section
(a)an instrument of transfer shall be deemed to be certificated if it bears the words “certificate lodged” or words to the like effect;
(b)the certification of an instrument of transfer shall be deemed to be made by a company, if
(i)the person issuing the certificated instrument is a person authorised to issue such instruments of transfer on the company’s behalf; and
(ii)the certification is signed by any officer or servant of the company or any other person, authorised to certificate transfers on the company’s behalf, or if a body corporate has been so authorised, by any officer or servant of that body corporate;
(c)a certification shall be deemed to be signed by any person, if it purports to be authenticated by his signature unless it is shown that the signature was placed there neither by himself nor by any person authorised to use the signature for the purpose of certificating transfers on the company’s behalf.