1949 (12) TMI 35 - HC - Indian Laws

Summary

Issues Involved:
1. Authority of Shapoorji to enter into the contract.
2. Existence of the contract.
3. Validity of the contract under the Reserve Bank of India regulations.
4. Plaintiff's entitlement to specific performance.
5. Entitlement to dividends declared on the shares.
6. Plaintiff's liability to pay interest on the purchase price.
7. Damages for breach of contract regarding specific shares.

Issue-wise Detailed Analysis:

1. Authority of Shapoorji to Enter into the Contract:
The court affirmed that Shapoorji had the authority from both the Dinshaws to enter into the contract. The evidence presented was ample and cogent, supporting the findings of the Indian Courts.

2. Existence of the Contract:
The contract's existence was contested. The trial judge found no contract was made, while the Appellate Court held that a contract was indeed made. The appellate court's view was upheld, concluding that the letters exchanged on 8 and 9 July 1942, confirmed the contract. The trial judge's theory of conspiracy was rejected as it was based on conjectural assumptions without direct evidence.

3. Validity of the Contract under the Reserve Bank of India Regulations:
The court determined that the contract was not void due to illegality, as the agreement for sale did not contravene Rule 93 of the Defence of India Act, 1939. The term "acquire any securities" was interpreted to mean the completion of the contract, not merely the agreement to purchase. Hence, the contract did not require prior permission from the Reserve Bank of India.

4. Plaintiff's Entitlement to Specific Performance:
The court found that the plaintiff was ready and willing to perform his obligations under the contract. The appellate court's finding that plaintiff 1 was financially capable and ready to fulfill the contract was upheld. The applicability of Section 27(b) of the Specific Relief Act, 1877, was confirmed, given that the additional appellants took their transfers with notice of the contract.

5. Entitlement to Dividends Declared on the Shares:
The court held that the plaintiff was entitled to dividends declared on the shares between the date of the contract and the date for completion. The appellate court's differentiation between dividends based on the period they were declared was rejected. The principle that the buyer is entitled to all dividends declared after the date of the contract was affirmed.

6. Plaintiff's Liability to Pay Interest on the Purchase Price:
The court ruled that the plaintiff must pay interest on the purchase price from the due date for completion until it was paid. This was based on the principle of equity and fair dealing, aligning with both Indian and English law. The agreed interest rate was 4 1/2 percent per annum.

7. Damages for Breach of Contract Regarding Specific Shares:
The court concluded that the plaintiff was entitled to damages for the breach of contract concerning the 5A and 5B shares held by defendant 77. The damages were agreed to be Rs. 1,725.

Conclusion:
The appeal of the plaintiff was allowed to the extent specified, with the decree of the Appellate Court being modified accordingly. The other appeals were dismissed. The plaintiffs succeeded on the major issues, and the other appellants were ordered to pay the costs of the consolidated appeals.