2010 (1) TMI 578 - HC - Companies Law

Court rules in favor of plaintiff in stock exchange case, grants relief for shares, accounts, costs

The court ruled in favor of the plaintiff in a case involving issues such as non-joinder of necessary parties, maintainability of the suit under bye-laws ... Suit filed by the plaintiff 1 for declaration, rendition of accounts and recovery of money - Held that:- We do not find any force in the submission of the defendants that the suit is bad for non-joinder of parties and the Delhi Stock Exchange is a necessary party in the present suit. It appears from the above mentioned fact that the plaintiff has filed the suit against all the relevant parties who are involved in the transaction in question - decided in favour of the plaintiff against the defendants. The plaintiff has a real legal interest to protect and the court in such a case would not ordinarily enquire into his motive. He in the facts of the present case has suffered damage or injury occasioned by reason of actions of defendants Nos. 4 and 12, which can be remedied only by way of a declaration as sought for in the instant suit which is maintainable in the eyes of law, it is not correct to allege by the defendants that the plaintiff has no personal interest in the matter. It is held that the suit is not barred under section 41 of the Specific Relief Act, 1963, thus, this issue is decided against the defendants. The suit has been filed by the plaintiff in his personal capacity as sole proprietor of Bhupender & Co. In view of this fact, we do not think that there is any legal infirmity in the filing of the instant suit. This issue also is decided in favour of the plaintiff and against the defendants. The plaintiff had not traded the stolen property of defendants Nos. 5 to 9. Defendants Nos. 5 to 9 and 11 have failed to discharge their burden in view of the reasons given above and the complaint lodged by defendant No. 9 was false and frivolous, hence this issue is decided in favour of the plaintiff and against defendants Nos. 5 to 9 and 11. As defendants Nos. 1 to 3 were the bona fide purchaser of the shares of defendants Nos. 5 to 9 and no relief can be issued against them. It is actually defendants Nos. 5 to 9 who are liable for the claims made by the plaintiff. Therefore, this issue is accordingly decided in favour of defendants Nos. 1 to 3 accordingly. The letter dated April 26, 1989, from Shri Raghvan addressed to defendant No. 8 filed by defendants Nos. 5 to 9 discloses that Hindalco had released rights and the bonus shares to the registered holders. Thus, it appears that the company has been releasing the benefits in respect of the shares to defendants Nos. 5 to 9 and they have to furnish a statement of account with regard to the receipt of dividends benefits and all other accruals in connection with the shares in dispute which had taken place till October 31, 1995 By order dated October 31, 1995, this court had directed defendants Nos. 5 to 8 to furnish a statement of account with regard to the receipt of dividends, benefits and all other accruals in connection with the shares in dispute which had taken place till October 31, 1995 and which may take place in future till the final disposal of the suit. Defendants Nos. 5 to 9 have not done the same. Defendants Nos. 5 to 9 are liable to render accounts to the plaintiff with respect to all benefits, accruals and dividends on the shares in dispute and on such rendition, a final decree for the amount found due will be passed. This issue is, hence decided in favour of the plaintiff. As per prayer, the plaintiff has not claimed any interest/pendent lite against defendants Nos. 3 to 9 and 11, therefore, the same cannot be granted and this issue is accordingly decided against the plaintiff. Issues Involved:1. Non-joinder of necessary parties.2. Maintainability of the suit under the bye-laws of the Delhi Stock Exchange.3. Bar of the suit under section 41 of the Specific Relief Act, 1963.4. Authorization of the person instituting the suit.5. Whether the shares traded by the plaintiff were stolen property.6. Liability of defendant No. 3 or any other defendant if shares were stolen.7. Liability of defendants Nos. 5 to 9 and 11 if shares were not stolen.8. Plaintiff's entitlement to a decree of rendition of accounts.9. Plaintiff's entitlement to interest.10. Relief.11. Whether defendants Nos. 1 to 3 are bona fide purchasers.Detailed Analysis:Issues Nos. 1 and 2:The court determined that the suit was not bad for non-joinder of necessary parties and that the Delhi Stock Exchange (DSE) was not a necessary party. The plaintiff had filed the suit against all relevant parties involved in the transaction. The court found no merit in the defendants' argument that the suit was unmaintainable under the bye-laws of the DSE, as neither defendants Nos. 5 to 9 nor defendants Nos. 1 to 3 were members of the stock exchange. Thus, these issues were decided in favor of the plaintiff.Issue No. 3:The court rejected the defendants' objection that the suit was barred under section 41 of the Specific Relief Act, 1963. It was held that the plaintiff had a real legal interest to protect, as he suffered damage due to the actions of defendants Nos. 4 and 12. Therefore, the suit was maintainable, and this issue was decided against the defendants.Issue No. 4:The court found no legal infirmity in the filing of the suit by Shri B.P. Watal, the sole proprietor of Bhupender & Co. The suit was instituted by a duly authorized person, and this issue was decided in favor of the plaintiff.Issues Nos. 5, 6, and 11:The court held that the shares were not stolen property of defendants Nos. 5 to 9. The defendants failed to prove that the shares were stolen, and the complaint lodged by defendant No. 9 was found to be false and frivolous. Defendants Nos. 1 to 3 were bona fide purchasers of the shares, and the liability lay with defendants Nos. 5 to 9. These issues were decided in favor of the plaintiff and defendants Nos. 1 to 3.Issue No. 7:In light of the findings on issues Nos. 5, 6, and 11, the court held that defendants Nos. 5 to 9 and 11 were liable to hand over the shares for registration. Defendant No. 11 was directed to register the shares in favor of the bona fide purchasers. This issue was decided in favor of the plaintiff.Issue No. 8:The court directed defendants Nos. 5 to 9 to render accounts to the plaintiff regarding all benefits, accruals, and dividends on the shares in dispute. A final decree for the amount found due would be passed upon such rendition. This issue was decided in favor of the plaintiff.Issue No. 9:The court noted that the plaintiff had not claimed any interest/pendent lite against defendants Nos. 3 to 9 and 11 in the prayer. Therefore, the plaintiff was not entitled to interest, and this issue was decided against the plaintiff.Issue No. 10:The court decreed the suit in favor of the plaintiff in terms of prayers (a), (bb), and (d) of the amended plaint. The suit against the other defendants was dismissed, and costs were awarded to the plaintiff.Conclusion:The plaintiff succeeded in proving that the shares were not stolen and that defendants Nos. 5 to 9 and 11 were liable for the claims made. The court granted the plaintiff relief in terms of declaration, rendition of accounts, and costs, while dismissing the suit against the other defendants.