2006 (12) TMI 246 - HC - Companies Law

Issues Involved:
1. Authorization to file the suit.
2. Entitlement to recover the suit amount along with interest.
3. Suit within the limitation period.
4. Proper valuation for court fee and jurisdiction.
5. Estoppel from filing the suit.
6. Maintainability of the suit.
7. Agreement resulting from misrepresentation and fraud.
8. Suit barred under the Securities Contracts (Regulation) Act, 1956.
9. Court's jurisdiction.
10. Cause of action against defendant No. 1.
11. Misjoinder and non-joinder of necessary parties.

Issue-wise Detailed Analysis:

Issue No. 1: Authorization to file the suit
The plaintiff is a company incorporated under the Companies Act, 1956. Rajinder Parshad Gautam, Senior Manager (Project), filed the suit on behalf of the plaintiff. Evidence presented, including resolution exhibit PW1/A and memorandum exhibit PW1/B, confirmed his authorization. The issue was decided in favor of the plaintiff.

Issue No. 2: Entitlement to recover the suit amount along with interest
The plaintiff's claim was based on an agreement with defendant No. 2 dated 26-7-1993 (exhibit PW2/J). The agreement stipulated that defendant No. 2 would buy six lakh shares over eight years. The sale was not complete, and the plaintiff should have claimed damages for breach of agreement rather than recovery of the sale price. The plaintiff was not entitled to recover the suit amount as the sale of shares was not completed. The issue was decided against the plaintiff.

Issue No. 3: Suit within the limitation period
The plaintiff's claim was based on defaults in quarterly instalments starting from December 1997. The suit was filed in July 2000, within three years of the first default. Therefore, the suit was within the limitation period. The issue was decided in favor of the plaintiff.

Issue No. 4: Proper valuation for court fee and jurisdiction
No defects were pointed out regarding the valuation for court fee and jurisdiction. The issue was decided against the defendants.

Issue No. 5: Estoppel from filing the suit
No evidence was led by the defendants regarding estoppel. The issue was decided against the defendants.

Issue No. 6: Maintainability of the suit
Given the finding on issue No. 2, the suit was deemed not maintainable. The issue was decided in favor of the defendants.

Issue No. 7: Agreement resulting from misrepresentation and fraud
No evidence was presented to support the claim of misrepresentation and fraud. The issue was decided against defendant No. 2.

Issue No. 8: Suit barred under the Securities Contracts (Regulation) Act, 1956
The agreement between the plaintiff and defendant No. 2 violated the notification dated 27-6-1969 under section 16 of the Securities Contracts (Regulation) Act, 1956. The contract was deemed illegal. The issue was decided against the plaintiff.

Issue No. 9: Court's jurisdiction
The instalments were payable at Shimla, and some payments were remitted to Shimla. Applying the doctrine "debtor must seek creditor," the court had jurisdiction. The issue was decided in favor of the plaintiff.

Issue No. 10: Cause of action against defendant No. 1
Given the findings on issue Nos. 1 and 8, the issue was decided against defendant No. 2.

Issue No. 11: Misjoinder and non-joinder of necessary parties
Defendant No. 1 was a proper party as the shares were of defendant No. 1, and its promoters had agreed to buy them back. The issue was decided against the defendants.

Relief:
The suit was dismissed with no orders as to costs based on the findings on issue Nos. 2, 6, and 8.

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