9911796707
TMI Blog1985 (8) TMI 314X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent No. 7 herein. The appellant's case, as will appear from its plaint and the petition of application made before the trial court which is annexed to the petition of this application, may briefly be stated. According to the appellant, respondents Nos. 1 to 6 are and/or, as was represented by them, were the owners of; 8,100 shares of Ambari Tea Co. Ltd., respondent No. 7 herein. It is alleged that the shares of the said company owned and/or held by respondents Nos. 1, 3 and 5 out of the said 8,100 shares the same were held and are still held in their names as also in the names of their respective benamidars. So far as the shares of the said company owned and/or held by respondents Nos. 2 to 6 out of the said 8,100 shares are concerned, most of them were represented to the appellant to have stood in the name of their respective benamidars; but, according to the appellant, it subsequently transpired that the same stood in their respective names. According to the appellant, respondents Nos. 1 to 6 held themselves out and/or represented to the appellant to be the owners of and in total charge and/or control of the aforesaid shares out of the controlling block of the shares o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... servation and maintenance of their control and position as directors or shareholders of respondent No. 7 and would put the appellant and its nominee or nominees in the same position of majority in the board of directors and as shareholders as the said respondents were at or about the time of the said agreement. The appellant's further case is that pursuant to the said arrangement and in terms thereof, the appellant on or about September 14, 1984, duly deposited a sum of Rs. 4,00,000 with M/s. Leslie and Khettry, Calcutta. It is further alleged by the appellant that it came to learn that respondent Nos. 1 to 6 in pursuance of the said agreement duly deposited 4,457 fully paid-up equity shares of respondent No. 7 with M/s. Leslie and Khettry as stipulated in the said agreement, but failed and neglected to deposit the balance quantity of shares as was agreed to by and between the parties. It is further stated by the appellant that it had performed and has also been ready and willing to fulfil the essential terms and conditions of the said agreement and there exists no standard for ascertaining the actual damage caused or likely to be caused by non-performance of the said agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ange the constitution of the board of directors materially so as to impair their existence and majority in the board of directors of respondent No. 7 and to induct and appoint persons other than the nominees of the appellant as directors of respondent No. 7. The respondents are also threatening to act in such a way which was likely to cause the said 8,100 shares which form the controlling block of shares in respondent No. 7 to lose their character and be reduced to minority and the entire value of the said controlling block of shares will be lost. It is further alleged that as the reliefs asked for in the suit relate to management, control and regulation of the assets and affairs of respondent No. 7, it is necessary to make it a party to the said suit, although no specific relief is claimed against it. On the basis of the above allegations, the appellant, on or about November 30, 1984, filed the above Suit No. 810 of 1984 ( East Indian Produce Ltd. v. Naresh Acharya Bhaduri ) , inter alia , for a decree for specific performance of the said agreement dated September 11, 1984, and for various directions and injunctions, both preventive and mandatory, in nature. On November 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent No. 3 on the returnable date, i.e. , December 17, 1984. On December 5, 1984, the appellant's said application appeared in the daily list of C. K. Banerjee J. as new motion. On that day, the appellant prayed for further interim protection until disposal of the application. Respondents Nos. 2, 4, 6 and 7 appeared and opposed the passing of any further interim order and also for vacating the interim order already made. After hearing the parties, C.K. Banerjee J., by an order dated December 5, 1984, directed that the ad interim order in terms of prayer ( b ) of the petition would stand vacated and the order in terms of prayer ( c ) of the petition would continue. Directions were given for filing of affidavits by the parties and the said application was adjourned till December 21, 1984. The said application is still pending. Being aggrieved by the said order dated December 5, 1984, the appellant has preferred the above appeal against the same and has moved the instant application in the appeal. In the petition of the instant application, the appellant has annexed a copy of the petition filed by it in the trial court. The appellant has further stated that the learned trial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has denied that respondent No. 6 has signed the said agreement. According to respondent No. 2, she, at the instance of respondents Nos. 1 and 3, was made to sign the said agreement. Respondents Nos. 1 and 3 did not allow her to look into the agreement before she signed the same. According to respondent No. 2, she never had any opportunity to look into the said agreement or to have any legal advice on the same at any point of time. She has denied that she signed the said agreement at Siliguri on September 11, 1984. According to her, on the said date, she was in Calcutta. Respondent No. 2 has alleged that the said agreement is hit by the provisions of section 372 of the Companies Act, 1956, and the provisions of the Securities Contracts (Regulation) Act, 1956. She has further stated that the sellers did not and do not hold the total number of 8,100 shares in the company, i.e. , respondent No. 7. It is also stated that it was and is beyond the power of respondents Nos. 1 to 6 to cause four directors of the company, i.e. , respondent No. 7, to resign or to cause 8,100 shares to be transferred in favour of the appellant. In para 9 of her affidavit filed in the trial court, she has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amananda Saha and that they would subsequently sign the said agreement. According to respondent No. 4, he, relying on such representations of respondent No. 3 who is a close relation of respondent No. 4 and upon whom respondent No. 4 reposed implicit trust and confidence, signed the said agreement. We may now refer to the affidavit filed by respondent No. 6, Shyamananda Saha, in this application and the affidavit filed by him in the application pending before the trial court, a copy of which is annexed to his affidavit filed herein. Respondent No. 6 has categorically denied that he made the representation as alleged by the appellant in the petition. According to him, all his shares in respondent No. 7 are recorded in his name and he made no representation to the contrary. He has categorically denied that he has authorised anybody to sign the said agreement on his behalf. In para 10 of his affidavit filed before the trial court, respondent No. 6 has stated that the agreement is hit by section 372(1) of the Companies Act and the provisions of the Securities Contracts (Regulation) Act, 1956, and the reasons why the said agreement is hit by the said Acts. According to respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sellers have further represented to the purchasers that the said company is the owner of the Tea Estate, namely, Ambari Tea Estate, situated at P. O. Banarhat, District Jalpaiguri (hereinafter referred to as the said 'Tea Estate') and the said company is carrying on business of plantations and of manufacturing of tea at the said Tea Estate and in its own factory therein and the said Tea Estate save and except business current debts and liabilities is free from all encumbrances, attachments, lis pendens and/or trust except encumbrance in favour of any scheduled bank; Now, this Indenture witnesseth that on the basis of the aforesaid representations, it had been agreed by and between the parties as follows: ( a )The sellers will sell and the purchasers will purchase the 'said shares' being 8,100 fully paid-up equity shares (which includes all the shareholdings of the sellers in the said company) in the capital of the said company at Rs. 1,071 per share and the said sale would be completed by the method of spot delivery contract as per the rules and regulations and bye-laws of the Calcutta Stock Exchange Association Ltd., and the sellers would also make over to the purchasers or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed share capital of the said company shall not be in excess of 20,000 fully paid-up equity shares. ( e )The sellers shall simultaneously with the date of completion of the sale and purchase of the said shares cause at least four of the existing directors of the said company who are parties to this agreement to resign from the board of directors of the said company if they be directors as on that date and to get the nominees of the purchasers to be appointed as directors of the said company. Provided that in case the sellers are unable to get all the four nominees of the purchasers to be appointed as directors of the said company on account of any restrictions by reason of any order of court then in such event the sale and purchase of the 'said shares' as also of other shares if offered by the sellers to the purchasers in terms of clause ( c ) hereof are to be completed notwithstanding such failure of the sellers. Notwithstanding anything to the contrary herein contained, in case of the failure of the sellers to get any nominee of the purchasers to be appointed as director of the said company as hereinbefore stated, then in such an event, such of the sellers as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the said shares as in the manner hereinstated, then in such an event, the sellers shall be entitled to enforce this contract specifically; ( j )Similarly, notwithstanding anything to the contrary herein contained, in case the purchasers be willing to fulfil all the terms and conditions herein contained and their part to be observed and performed and the sellers fail to complete the sale of the said shares as hereinbefore stated, then in any event, the purchasers shall also be entitled to specifically enforce this agreement for sale". Mr. S. K. Gupta, appearing with Mr. B. L. Jain and Mr. Pratap Chatterjee, has argued this case on behalf of the petitioner, the appellant, in the above appeal. Mr. S. B. Mookherjee, appearing with Mr. Anindya Mitra, has argued this case on behalf of respondents Nos. 2, 4 and 7. Mr. P. C. Sen, appearing with Mr. Jayanta Mitra, argued this case on behalf of respondent No. 6. Mr. Bimal Chatterjee has appeared in this case for respondent No. 1 but he has not advanced any argument. Various contentions were urged on behalf of the parties appearing in this application. Mr. Gupta, appearing for the appellant, has argued that the agreement dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lution passed at a meeting of the board with the consent of all the directors present at the meeting (sub-section (5) of section 378). Mr. Mookherjee has submitted that in the instant case admittedly, the investment in shares exceeds, ten per cent, of the share capital of the other body corporate, i.e. , his client, the respondent company. As it appears from the said agreement itself, admittedly, the share capital of the company, i.e. , respondent No. 7, is 20,000 fully paid-up equity shares of Rs. 100 each and the appellant proposed to purchase 8,100 shares of respondent No. 7. Therefore, Mr. Mookherjee submits, it is much more than ten per cent, of the subscribed capital of the other company, namely, respondent No. 7. Mr. Mookherjee has further submitted that the investment made by the appellants exceeds twenty per cent, of its subscribed capital. Further, according to Mr. Mookherjee, the investment made by the board of the investing company, i.e. , the appellant, in all other bodies corporate exceeds thirty per cent, of its subscribed capital. It is the further contention of Mr. Mookherjee that uptil now there is nothing on record to show that the appellant has sought for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bodies corporate exceeds 30% of the subscribed capital of the appellant company and in any event, the aggregate of the investments made by the appellant company in all other bodies corporate in the same group exceeds 20% of the subscribed capital of the appellant company. He has further submitted that the investment in excess of the limit prescribed by the section has not been denied by the appellant. Mr. Sen has further submitted that Ramesh Chandra Roy in para 35 of the affidavit-in-reply filed or to be filed in the trial court (a copy of which is annexed to the affidavit-in-reply filed in this application) has not specifically denied the allegation of excess investment as made in para 10( a ) and ( b ) of the said affidavit of respondent No. 6. It is also stated by Mr. Sen that the said purported agreement or pretended investment has not been sanctioned by a resolution of the appellant company in a general meeting and has not been approved by the Central Government. Mr. Sen has also drawn our attention to the said affidavit-in-reply and has submitted that in para 35 of the said affidavit, it has been stated that no such resolution or approval is necessary under the provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g company shall not make any investment in the shares of any other body corporate in excess of the percentages specified in sub-section (2) and the provisos thereto, unless the investment is sanctioned by a resolution of the investing company in general meeting and unless further it is approved by the Central Government......... (5)No investment shall be made by the board of directors of an investing company in pursuance of sub-section (2), unless it is sanctioned by a resolution passed at a meeting of the board with the consent of all the directors present at the meeting, except those not entitled to vote thereon, and unless further notice of the resolution to be moved at the meeting has been given to every director in the manner specified in section 286". Communication No. 48(50)-Ch-IV/61, dated February 12, 1962, provides, inter alia , that the previous approval of the company in general meeting and of the Central Government is required to be obtained before a company invests in the shares of another body corporate in excess of the limits prescribed in the section. As the Central Government will not accord ex post facto approval to any investment attracting section 37 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w that the said agreement contravenes the provisions of section 372 of the Act. We also see some substance in the argument that the requirements stipulated in section 372 of the Companies Act, 1956, are conditions precedent to such investment by an investing company in the shares of other bodies corporate. In our view, the approval of the Central Government is not an idle formality. Before according approval, the Central Government may have to examine whether the investing company has exceeded the prescribed ceiling and further whether there is any proper resolution sanctioning such investments. These are requirements to be taken into consideration before such investments are given effect to. At this stage, it is not necessary to express any final view as to whether approval of the board of directors of the investing company or of the Central Government subsequently obtained amounts to compliance with the requirement of the provisions of section 372 of the Companies Act. On behalf of the appellant company it has not been stated that its investment in shares of the said company, i.e. , respondent No. 7, has been approved by a resolution of the appellant company in a general meeti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant, to be appointed as directors. The clause further provides for what would happen in case of failure on the part of the sellers to get the nominees of the purchaser appointed as directors of the company, i.e. , respondent No. 7. Further, a shareholder can cast his vote in the general meeting in a manner as he likes provided it is not contrary to the provisions of the articles of association of the company and the Companies Act. The above clause, it appears, does not affect the retirement, removal and appointment of directors of the company, i.e. , respondent No. 7, according to the provisions of the Companies Act, 1956. Considering the above clause, we are prima facie of the view that the said agreement does not affect the provisions of sections 255, 256 and 284 of the Companies Act, 1956. Both Mr. Mukherjee and Mr. Sen have submitted that the said agreement is hit by various provisions of the Securities Contracts (Regulation) Act, 1956 (hereinafter referred to as "the Securities Act"). In this connection, our attention was drawn to the affidavits of respondents Nos. 2 and 6 filed in the trial court. In her affidavit affirmed on January 9, 1985, respondent No. 2, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent company not being quoted shares, they are not securities within the meaning of section 2( h ) of the Securities Act. Hence, on this ground also, the said agreement is not hit by section 16. Mr. Gupta has further submitted that there is no averment by any party as to whether permission of the Central Government has been obtained or not. Obtaining of permission of the Central Government is a question of fact. According to Order 6, rule 6 of the Civil Procedure Code, facts relating to compliance with condition precedent have to be pleaded and that has not been done in the instant case. In the absence of an averment that no permission of the Central Government was obtained, it is not open to the opposing respondents to allege that there is no permission of the Central Government and as such the contract is hit by section 16 of the Securities Act. It is also the submission of Mr. Gupta that in any event, the said agreement is a "spot delivery contract" as denned in section 2( i ) of the Securities Act and by the bye-laws and regulations of the Calcutta Stock Exchange Association Ltd. According to Mr. Gupta, it is an agreement for sale, but the actual sale is spot delivery. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a price therefor either on the same day as the date of the agreement, that is, September 11, 1984, or on the next day, i.e. , September 12, 1984. He lays great emphasis on the expression in the definition clause "either on the day as the date of the contract or on the next day". Referring to clause ( a ) of the said agreement, he submits "that the provisions of the said sale would be completed by the method of spot delivery contract as per the rules and regulations and bye-laws of the Calcutta Stock Exchange Association Ltd."... cannot and does not mean that actual delivery of securities and the payment of a price therefor would be made either on the same day as the date of the agreement or on the next day. Therefore, it is his argument, that the said agreement cannot by any means be a "spot delivery contract". Mr. Mookherjee further argues that the said agreement being "a contract for or relating to the purchase or sale or securities" or "a contract for the purchase or sale of a right to buy or sell, or a right to buy and sell, securities in future", is clearly hit by the provisions contained in sections 13 and 16 or in any event hit by the provisions of section 20 of the Securit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39 Comp Cas (St.) 155) has been issued and published by the Central Government. The said notification reads as follows: "In exercise of the powers conferred by sub-section (1) of section 16 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956), the Central Government being of opinion that it is necessary to prevent undesirable speculation in securities in the whole of India, hereby declares that no person, in the territory to which the said Act extends, shall, save with the permission of the Central Government, enter into any contract for the sale or purchase of securities other than such spot delivery contract or contract for cash or hand delivery or special delivery in any securities as is permissible under the said Act, and the rules, bye-laws and regulations of a recognised stock exchange". It, therefore, appears that under the above notification, bar under section 16 of the Securities Act applies to the whole of India. Definition of "spot delivery contract" under section 2( i ) of the Securities Act is as follows: " 'Spot delivery contract' means a contract which provides for the actual delivery of securities and the payment of a price therefor either on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntral Government has been obtained or applied for. There is no knowing as to whether such permission will be given by the Central Government if and when it will be applied for. Section 20(1) of the Securities Act is in the following terms: "Notwithstanding anything contained in this Act or in any other law for the time being in force, all options in securities entered into after the commencement of this Act shall be illegal". Under section 2( d ) of the Securities Act, "option in securities" means a contract for the purchase or sale of a right to buy or sell, or a right to buy and sell, securities in future, and includes a teji, a mandi, a teji mandi, a galli, a put, a call or a put and call in securities. Giving our careful consideration to the relevant provisions of the Securities Act, which, according to Mr. Mookherjee and Mr. Sen, are applicable to the instant case as stated hereinbefore, we are of the opinion that, prima facie, the said agreement does not appear to be a "spot delivery contract". On our careful reading of the said agreement, we do not find any term therein which provides for the actual delivery of securities (which includes shares within the meaning of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 952, and the bye-laws of the East India Jute and Hessian Exchange Ltd. In our opinion, the above observation was made by Ajit Kumar Sengupta J. in a different context. If, however, the said observation of His Lordship means that if an illegal contract is performed in part by a party, it is not open to it to contend subsequently that it is not legal or valid, then, with respect, we are unable to agree with the above view of His Lordship. If a contract is not legal or valid, then by acting upon it by any of the parties thereto, the same cannot be said to be valid or legal. Acting by the parties upon a contract, which is contrary to any provision of law or statute and as such is illegal, invalid and not unenforceable cannot make the same legal, valid and enforceable. The above decision is also distinguishable because in the instant case, it prima facie appears that respondents Nos. 2, 5 and 6 have not partly performed the said agreement as stated hereinafter. Mr. Mookherjee has further submitted that the said agreement is vague, uncertain and unworkable, and, therefore, it cannot be specifically enforced. Further, the appellant's application is pending before the trial court and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gth of the shareholding will get the appellant's nominee or nominees appointed as director or directors of respondent No. 7 and if they are unable to do so, then the sellers who will remain directors of the company, i.e. , respondent No. 7, at the date of completion of sale will act as the nominee or nominees of the purchaser. There is no illegality about it. Mr. Gupta has further submitted that in view of the representation contained in the said agreement, the respondents are estopped from denying that they are not the owners of the 8,100 shares. According to Mr. Gupta, respondents Nos. 1 to 6, by their declaration, act or omission intentionally caused the appellant to believe that the said respondents are the owners of the said shares. In view of their representation, the said respondents cannot now contend otherwise and are estopped from denying that the respondents are owners of the 8,100 shares under section 115 of the Evidence Act. Referring to page 2 of the said agreement to the effect that: "Whereas the sellers have approached the purchaser with an offer for sale of 8,100 fully paid-up equity shares of Ambari Tea Co. Ltd..". Mr. Gupta has submitted that the same amounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 984, respondent No. 5 stated that 113 shares were held by him, his family members, friends and relations, yet the said respondents have not said in their letters that they were the owners of shares as mentioned in their respective letters. Respondent No. 2 in her affidavit filed in the trial court (para 16) has stated that besides 136 shares, she does not hold any other share in the company, i.e. , respondent No. 7. Respondent No. 6 in his affidavit filed in the trial court (para 5) has stated that all his shares in the company are lying in his name and he had no occasion to represent and never represented to the appellant to the contrary. He has not specifically stated the number of shares held by him but as the number of shares held by respondent No. 6 is mentioned by respondent No. 2 as stated above, it can be said that he is the owner of those shares. The agreement does not contain any express representation by respondents Nos. 1 to 6 that they are the owners of the 8,100 shares. In the plaint and the petition filed in the trial court, the appellant has mentioned about various representations made by respondents Nos. 1 to 6, but all of them do not appear from any documen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interim order should be passed at this stage. It cannot also be said that the contesting respondents are estopped from denying that any of their shares are held in the names of their nominees or benamidars. Estoppel has to be pleaded. There is no such pleading either in the plaint or in the petition filed in the trial court or of this application. There is no express mention of any such representation in the same agreement. The representation relied upon by the appellant is either oral or implied. Therefore, at this stage, the appellant cannot rely on any estoppel on the part of the contesting respondents. If, however, the representation as recorded in the said agreement to the effect that 8,100 fully paid-up equity shares in the company, i.e. , respondent No. 7, offered for sale include all the shareholdings of the sellers in the company ( i.e ., respondent No. 7), means that the said respondents are the owners of 8,100 shares, then, in our view, the interest of the appellant is fully protected by the order in terms of prayer ( c ) of the petition filed in the trial court. But, in the absence of particulars of those shares as also about the shareholding of each one of respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted October 18, 19, 1984, of M/s. Leslie and Khettry, advocates-on-record of the appellant. Although this letter was received by respondent No. 6, he did not reply thereto and it has not been explained by him why he did not give a reply. If respondent No. 6 was not a party to the agreement the most natural thing would have been to deny that he was a party to the said agreement. In this connection, Mr. Gupta has referred to para 24 of the affidavit of respondent No. 6 filed in the trial court. Further, no step was taken by respondent No. 6 in respect of his 73 shares deposited with the appellant's advocates-on-record, M/s. Leslie and Khettry, against the appellant or respondent No. 2 or A. K. Pradhan, the secretary of respondent No. 7, who, according to respondent No. 6, must have made over illegally 73 shares belonging to respondent No. 6 to M/s. Leslie and Khettry. Respondent No. 6 has also not taken any steps with regard to 2,222 shares seized by the police pursuant to the order of search and seizure passed in the criminal proceedings instituted against respondents Nos. 1 to 6 by Ramesh Chandra Roy (in the criminal case it is stated "Roy Chowdhury"), secretary of the appellant, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id agreement or that it is binding on him. In para 8 of his affidavit filed in the trial court, respondent No. 6, has said that he never entered into any agreement with the petitioner ( i.e ., appellant) for sale of his shares in Ambari Tea Co. Ltd. at Siliguri or at any other place nor did he authorise anybody else to do so. He has further said that he did not sign the said agreement nor authorise respondent No. 2 or any one else to sign and execute the said agreement on his behalf. Again, in para 10, respondent No. 6 has repeated what he has stated in para 8 of the said affidavit. Regarding the said letter of M/s. Leslie and Khettry dated October 18, 19, 1984, respondent No. 6, in para 24 of his affidavit filed in the trial court, has stated that the petitioner ( i.e ., appellant) has caused the said letters to be written on its behalf knowing that the contents thereof were false only to create a ground for criminal proceedings and to insult him. He has denied the allegations contained in the said letter. An affidavit affirmed on February 28, 1985, by one Ramesh Chandra Roy, said to be the secretary of the appellant, has been filed in this application as affidavit-in-reply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1984, at Siliguri, yet he has not stated who made the endorsement. A certified copy of the deposition of Ramesh Chandra Roy, the secretary of the appellant in the criminal case started before the 7th Metropolitan Magistrate against respondents Nos. 1 to 6 upon the complaint filed by Ramesh Chandra Roy (although in the cause title of the said case the name of Ramesh Chandra Roy is stated as Ramesh Chandra Roy Chowdhury and he signed the deposition as Ramesh Chandra Roy Chowdhury) was placed before us. In the said case, in his evidence given on January 22, 1984, Ramesh Chandra Roy has stated that the said agreement dated September 11, 1984, was between respondents Nos. 1 to 6 and the appellant. But in his evidence given on October 29, 1984, he stated that respondent No. 6 was a party to the said agreement, Juthika Saha (respondent No. 2) signed the said agreement on behalf of herself as well as on behalf of Shymananda Saha (respondent No. 6). On the last occasion, Ramesh Chandra Roy stated that his evidence that all the accused persons ( i.e ., respondents Nos. 1 to 6) signed the said agreement was not correct. Due to hurry, Ramesh Chandra Roy made that misstatement and he wanted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent No. 3 deposited 1,139 shares on September 15, 1984, respondent No. 5 deposited 1,139 shares and respondent No. 6 deposited 73 shares with the appellant's advocates-on-record. M/s. Leslie and Khettry. In view of the part performance of the said agreement, respondents Nos. 1 to 6 should not be allowed to act in any way contrary thereto. Mr. Mookherjee submitted that there is a contradiction between the statement of respondent No. 1 and the statement of Ramesh Chandra Roy, the secretary of the appellant regarding deposit of 73 shares of respondent No. 6 as will appear from the letter of respondent No. 1 dated October 26, 1984, and the statement of Ramesh Chandra Roy in the affidavit-in-reply filed in the trial court. Mr. Mookherjee has further submitted that pursuant to an order of search and seizure made in the criminal case initiated wrongfully and with ulterior motive by Ramesh Chandra Roy against respondents Nos. 1 to 6, 135 shares of respondent No. 2 were seized by the police. Mr. P. C. Sen has submitted that respondent No. 6 has not in any way performed the said agreement. He has not deposited any share with M/s. Leslie and Khettry. Respondent No. 6 in his affidavi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the opposite group of directors in the board, to the appellant. In view of the above facts and circumstances, the deposit of 73 shares belonging to respondent No. 6 is a highly disputed question of fact. Regarding deposit of 73 shares, Ramesh contradicts himself as will appear from his affidavit as mentioned earlier. In spite of the specific allegation made by respondent No. 6 as stated above, A. K. Pradhan has not filed any affidavit or come forward to dispute and deny the allegations made by respondent No. 6 in his affidavit filed in the trial court. In the absence of further evidence, it is not possible to express any final view on this point. But, on the materials now before us, it can be said, prima facie, at this stage, that the appellant has not proved acting upon the said agreement by respondent No. 6. In this connection, it should be noted that respondents Nos. 2 and 4 did not deposit any share with M/s. Leslie and Khettry. It further appears that the respondents have not taken any benefit under the contract. In the above view of the matter at this stage, no prima facie conclusion can be arrived at to the effect that all the respondents have partly performed the said agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the company, i.e. , respondent No. 7, is not a party to the said agreement, no order affecting the management and affairs of the company, i.e. , respondent No. 7, should be passed. Mr. Sen has submitted that as the company, i.e. , respondent No. 7, is not a party to the said agreement, no interim order should be passed which would impinge upon the right of the company. He has referred to an unreported decision of this court dated September 19, 1979, in Matter No. 823A of 1977 ( Jiwan Kumar Lohia v. Durgadutt Lohia ) . Mr. Gupta has submitted that the company is a party to this suit and hence an interim order in terms of prayer ( b ) of the petition of the trial court can be passed. By the said prayer, an injunction has been asked against respondents Nos. 1 to 6, their servants, agents and/or nominees and it will not affect the company. It appears that there is a good deal of force in the arguments advanced by Mr. Mookherjee and Mr. Sen as stated above. The company, i.e. , respondent No. 7, admittedly, is not a party to the said agreement. The appellant in para. 27 of the plaint has stated that reliefs asked for in the plaint relate to management, control and regulat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he petition filed in the trial court and now prayed for by the appellant will have an effect upon the management and assets of the company, i.e. , respondent No. 7. Mr. Gupta has further argued that no alternative remedy is available to the appellant in the instant case. The subject-matter of the agreement is not an ordinary article of commerce and is not easily available in the market and is of special value and interest to the appellant and consists of goods which cannot be easily had or obtained. Further, having regard to the nature of the said company and the limited market for its shares, damages would not be an adequate remedy. The 8,100 fully paid-up equity shares of the said company constitute a controlling block of shares of the said company and the said agreement in essence intended to transfer the controlling interest and power of respondents Nos. 1 to 6 in the said company to the appellant and/or its nominees. Mr. Gupta has referred to para. 18 of the petition in the trial court. He has also relied upon Explanation ( ii ) to section 10 of the Specific Relief Act, 1963, and the case of Bank of India Ltd. v. Jamsetji A. H. Chinoy, AIR 1950 PC 90. Therefore, acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the company as fully stated hereinbefore, the appellant is not entitled to any further relief at this stage. The abovementioned clauses of the said agreement, prima facie, show that the said agreement in its nature is determinable. It should also be noted that admittedly the 8,100 shares being the subject-matter of the sale cannot be said to be the majority holding in the company or the controlling block of shares. The appellant has also not been able to prove prima facie that the said 8,100 shares form the majority holding of the company of which the issued share capital is admittedly 20,00,000 divided into 20,000 equity shares of Rs. 100 each. Therefore, our prima facie view is that the appellant is not entitled to any further relief at this stage. Mr. Sen has further submitted that the instant suit for specific performance of the contract is not maintainable. There is no proper pleading in the plaint. He has submitted that Form No. 47 of Appendix A to the First Schedule to the Civil Procedure Code which specifies the form of the plaint for specific performance has not been complied with. In the instant case, the appellant has not stated in the plaint that it has applied to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated December 5, 1984, should be made. According to him, the trial court should have continued the order in terms of prayer ( b ) of the petition filed in the trial court. He has referred to clauses ( c ), ( e ) and ( f ) of the said agreement. He has further submitted that granting of an order in terms of the said prayer ( b ) would not amount to disposal of the suit. Mr. Mookherjee has submitted that the ambit of prayer ( b ) of the petition filed in the trial court is very wide. The application is pending before the trial court and it should be allowed to consider whether an order in terms of prayer ( b ) shall be made or not. Mr. Mookherjee has further submitted that the assets belong to the company and the shareholders have only the right to participate in the profits. In this connection, he relies on the case of Mrs. Bacha F. Guzdar v. CIT [1955] 27 ITR 1; 25 Comp Cas 1 ; AIR 1955 SC 74. According to Mr. Mookherjee, an order in terms of prayer ( b ) would affect the constitution, management and assets of the company, i.e. , respondent No. 7, at the instance of some of its shareholders. Admittedly, the company is not a party to the said agreement. Mr. Mookherjee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holding and conducting the company meetings and recording votes cast therein and for taking decisions at such meetings is the primary responsibility of the company's shareholders and their chosen directors and not of the court. According to clause ( c ) of the said agreement, the sellers shall not till the completion of the sale of the shares in terms of the said agreement in any way transfer and/or encumber and/or dispose of any of the shares. In view of the continuance of the order in terms of prayer ( c ) of the petition filed in trial court, there should not be any apprehension on the part of the appellant regarding breach of this clause. We have already stated earlier why, according to us, the appellant at this stage is not prima facie entitled to any order which will affect the management, affairs and assets of the company. The assets belong to the company and the shareholders are entitled only to participate in the profits of the company. The affairs of the company will be managed by its board of directors. Prima facie it is a disputed question of fact whether the 8,100 shares belong to respondents Nos. 1 to 6. Further, neither do the 8,100 shares constitute a contro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e company. He has referred to section 2(45) of the Companies Act which provides that "secretary" means any individual possessing the prescribed qualifications appointed to perform the duties which may be performed by a secretary under the Companies Act and any other ministerial or administrative duties. He has submitted that sections 75, 97, 113, 118, 125, 149, 160, 161, 162, 163, 304, 322, 383A and 548 are the provisions of the Companies Act relating to the secretary's duties. He has referred to a decision of the Supreme Court in the case of Lakshmiratan Cotton Mills Co. Ltd. v. Aluminium Corporation of India Ltd., AIR 1971 SC 1482 at page 1490 (paragraph 22). According to Mr. Mookherjee, entering into a contract is not ministerial or administrative duty. Mr. S. K. Gupta has submitted that the board of directors may, by a resolution passed at a meeting, delegate to, inter alia , any other principal officer of the company the power specified in clause ( c ) of sub-section (1) of section 292 that is, power to invest funds of the company. The principal officer, according to Mr. Gupta, includes a secretary and in the instant case there is a board resolution investing upon the s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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