1995 (6) TMI 174 - Commission - Companies Law

Issues Involved:
1. Privity of contract between complainant and OP-1.
2. Cause of action against OP-2.
3. Role of OP-3 as a broker.
4. Deficiency in service by OP-4.
5. Entitlement to bonus shares and dividend.

Issue-wise Detailed Analysis:

1. Privity of Contract:
The District Forum held that there was no privity of contract between the complainant, Mr. D.N. Aggarwal, and OP-1, Mrs. Kaushalya Devi. Consequently, Mr. D.N. Aggarwal had no right to file the complaint. This decision was based on the fact that the transaction documents did not establish a direct contractual relationship between these parties.

2. Cause of Action Against OP-2:
The District Forum found that OP-2, Mrs. Veena Sarpal, did not hold any shares and therefore could not have sold any shares. As a result, there was no cause of action against her, and she was wrongly impleaded in the complaint.

3. Role of OP-3 as Broker:
It was determined that OP-3, Madhusudan Upadhaya, did not act as a broker but merely signed the agreement dated 28-6-1991 as a witness. Therefore, the complainant's case against OP-3 was deemed false.

4. Deficiency in Service by OP-4:
The District Forum concluded that there was no deficiency in service on the part of OP-4, Hindustan Levers Ltd. The company had acted within its rights in refusing to transfer the shares due to discrepancies in the signatures on the transfer deeds.

5. Entitlement to Bonus Shares and Dividend:
The main question in the appeal was whether the shares had been sold on 28-6-1991 by expressly excluding the bonus shares and dividend due to be announced shortly. The ancillary question was whether the complainants forged the transfer deeds by forging the signatures of the original holder, OP-1. Upon reviewing the material on record, it was determined that the shares were sold without reserving the seller's right to retain bonus shares and dividend. The agreement and receipt documents (Annexure C and D) did not mention any exceptions regarding bonus shares and dividend. Therefore, it was concluded that the complainants were entitled to the bonus shares and dividend.

The appeal also addressed the argument that the market rate of the shares on the relevant date was Rs. 163 per share, while the shares were sold at Rs. 143.50. The explanation provided was that the seller, OP-1, was in urgent need of money, which justified the lower sale price. This explanation was found plausible, and it was noted that no exceptions were made regarding bonus shares and dividend in the sale agreement.

Judgment:
The appeal was allowed, setting aside the order of the District Forum. Respondent No. 1 was directed to pay Rs. 23,598.50 along with 12 percent interest per annum. The complainants were also entitled to costs assessed at Rs. 500. It was further held that there was no deficiency in service by respondent No. 4, Hindustan Lever Ltd. The appeal was disposed of in these terms, and the parties were informed accordingly.

Appeal allowed.

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