2004 (2) TMI 380 - HC - Companies Law

Summary

Issues Involved:

1. Claim for damages by the Defendants due to fraudulent actions by the Plaintiff.
2. Determination of liability for costs incurred due to the fraudulent suit.
3. Referral to a Commissioner for the computation of damages.

Issue-wise Detailed Analysis:

1. Claim for damages by the Defendants due to fraudulent actions by the Plaintiff:

The Applicants, who are the original Defendants, sought a direction for the original Plaintiff to pay damages amounting to Rs. 18,37,579 with interest. The case revolves around 182 shares of a company that belonged to a deceased individual, whose will did not cover these shares, thereby making them subject to intestate succession. The deceased's son, Pratapsinh Morarji, did not take steps to transfer these shares during his lifetime. After his death, the Respondent (original Plaintiff) filed a Petition for Letters of Administration, using a purported official translation of the will that omitted crucial details, thus misleading the court. This led to the wrongful transmission of the shares to the Respondent's name and subsequent fraudulent claims to the company's funds. The Defendants argued that the Respondent's actions were dishonest, involving the submission of fabricated documents and obtaining an ex parte order based on these misrepresentations. The Defendants claimed damages for legal costs and financial losses incurred due to the Respondent's fraudulent actions.

2. Determination of liability for costs incurred due to the fraudulent suit:

The Defendants claimed Rs. 15,42,750 towards Counsel fees and Rs. 2,94,829 for loss of income. The Respondent did not file any affidavit to counter the Defendants' claims, leading the court to accept the Defendants' averments at face value. The Defendants relied on previous judgments to support their claim for damages due to the fraudulent suit. The court acknowledged that the Plaintiff had made a false claim and secured an order that adversely affected the Defendants. The court noted that the Plaintiff, upon realizing that their dishonesty would be exposed, withdrew the suit and the notice of motion. The court emphasized that a party obtaining an injunction fraudulently or on insufficient grounds is liable to compensate the Defendants for the injury, loss, or damage caused. The court also stated that the Plaintiff is deemed to have given an undertaking to pay damages and is liable to compensate the Applicants for the expenses, loss, damage, and prejudice suffered.

3. Referral to a Commissioner for the computation of damages:

The court concluded that the Defendants are entitled to damages for the fraudulent actions of the Plaintiff. However, the exact amount of damages needed to be determined. Therefore, the court referred the matter to a Commissioner to compute the damages. The parties were instructed to appear before the Commissioner and present material evidence for the computation of damages. The Commissioner's report would then be placed before the court for further orders.

Conclusion:

The court held that the original Plaintiff is liable to pay damages to the Defendants/Applicants and referred the matter to a Commissioner for the determination of the amount of damages. The parties were directed to produce material evidence before the Commissioner, whose report would be reviewed by the court for further orders.