RELIANCE CAPITAL AND FINANCE Vs. BHAWARLAL AGRAWALL

JUDGEMENT

(1.) This is an appeal under Section 96(2) of the Code of Civil Procedure, by the appellants/defendants No. 1 the Reliance Capital & Finance Trust Ltd. and other two defendants i.e. defendant 2 and 3, who are the Secretary of defendant No. 1, the Reliance Capital & Finance Trust Ltd. and the Registrar and Transfer Agent of defendant No.1 respectively, against the ex-parte judgment and decree dated 1.6.98 passed in Title Suit No. 203 of 1994 by the Civil Judge (Sr. Div.) No. 1, Kamrup, Guwahati decreeing the suit in favour of the plaintiff, for realisation of Rs. 1,28,000/- from the defendants No. 1,2 and 3, jointly and severally with cost of the suit.

(2.) Material facts giving rise to this appeal are, The defendant No. 1 being the company, registered under the Companies Act, 1956 and deals with the allotment of share, equity shares & debentures through its agent had floated shares in the market. The plaintiff being a broker dealing in shares & debentures in the stock market had applied for 1000 Rights Shares from the defendants vide Form No. 0115029 dated 4.1.93 by paying the value of shares amounting to Rs. 10,000/- through cheque which the defendants had acknowledged.

(3.) The terms and conditions as laid down in the prospectus of the company, for public issue of shares, stipulates that within 10 weeks from the date of closure of the subscription list, the defendants are required to dispose of the application and in the instant case subscription was closed on 4.1.1993, meaning thereby, that the defendants are either to issue allotment advice or to issue refund order within the prescribed period of 10 weeks. Since there was no communication, the plaintiff issued a letter on 5.4.93, conveying non-receipt of any communication from the defendants which was followed by two communications, on 13.7.93 and 1.8.93 respectively. There was no communication from the defendant in regard to allotment advice or refund order. However, in the month of September, 1993, the plaintiff received a Dividend. Warrant for Rs. 61.64 from defendants, wherein it had been specifically mentioned that the plaintiff had been allotted 1000 rights Shares in response to his application dated 4.1.93, which was followed by a letter dated 15.10.93, requesting the defendants to sent the Share Certificates including the call money required to be deposited in respect of the said shares. Thereafter, the defendants sent a demand note asking a sum of Rs. 30,000/- towards full payments of the shares along with interest of Rs. 17.26 per day with effect from 4.1.93. In reply to the said demand note along with the interest as asked for by the defendants, the plaintiff issued a communication on 16.11.93, stating that since he had not received the Share certificates till date due to laches on the part of the defendants, he is not liable to pay the interest as demanded and requested for confirmation to enable him to remit the allotment/call money. In response, the defendants vide its letter dated 21.12.93 conveyed the intimation that the plaintiff had been allotted 1000 equity shares and accordingly 10 Share Certificates, 100 shares each bearing certificate No. 714195 to 714204, and Distinctive Nos. 43289401 to 43290301 were prepared, however, in the process of forwarding the same, the said certificates have been lost/misplaced and the duplicate certificates are being prepared with a request to return the original lost certificates, in case the same came to his hands in future and with a further request not to sell/transfer or deal with the same. Thereafter, the plaintiff sent his confirmation vide letter dated 24.1.94 along with allotment money of Rs. 30,000/- as full payment for 1000 shares allotted to him which the defendants have acknowledged. The defendants however, did not make endeavour to send the Share Certificates allotted to the plaintiff and as a consequence the plaintiff issued another communication on 2.3.94, but he was not favoured with any reply till 19.4.94, on which date the plaintiff issued another notice, contending, to take up the matter before the Consumer Dispute Redressal Forum, if the Certificates are not received within 30.4.94. On receipt of the said notice, the defendants sent 9 certificates in respect of 900 shares out of 1000 shares allotted to him and 100 shares has not been sent to him. However, on 11.6.94 the plaintiff received another letter from the defendants contending that certificates No. 714200 covered by Distinctive No. 43289901 to 43290000 for hundred shares, were transferred in favour of defendant No. 4 in view of transfer deed reportedly signed by the plaintiff which he never did and the said signature was said to be witnessed by the defendant No. 5 and the defendants have to despatch the certificates to the new transferee which is a fraud played on the plaintiff by the defendants and in fact the plaintiff has not received the 100 shares nor signed by him in the transfer deed which can be said that the defendants have done it for wrongful gain. The defendants company have therefore communicated that in order to stop the despatching the said 100 shares to the transferee, an order of the court is required, in order to enable the defendants to stop despatching the same. In the said communication the defendants have enclosed a photocopy of the purported transfer deed which contains the back side of the alleged transfer deed and not the front page, in which the plaintiff was said to have signed. The loss that has been sustained by the plaintiff is Rs.1,28,700/-, which is due to the negligence on the part of the defendants company in sending the original Share Certificates in appropriate time and if he had received the original Share Certificates when the price of the shares gone upto Rs. 248/- per share, he could have earned a profit of Rs. 1,28,700 and the said calculation has been made on the basis of the current market price and the highest price reached on the shares in the stock market and hence the suit against the defendants and prayed for decree which is quoted hereunder : i) a decree declaring and holding that the plaintiff is the bonafide registered owner of the 100 shares under Share Certificate No.714200 issued by defendant No. 1; ii) Declaring and holding that the transfer of the certificate No. 714200 already effected has been obtained fraudulently and thus null and void; iii) a permanent injunction restraining the defendant Nos. 1 and 2 from transferring the share certificate Number 714200 to any other name except to the name of the plaintiff; iv) Declaring and holding that the defendant No. 1 is bound to return the said share certificate to the plaintiff; v) Declaring and holding that the transfer of the share in question to the name of the defendant No. 4 was obtained fraudulently and therefore, the defendant No. 4 is not entitled to receive the same; vi) a decree for compensation of Rs. 1,28,700/- to be paid by the company to the plaintiff vii) Decree the cost of the suit; viii) Any other reliefer reliefs that the plaintiff is entitled to;