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TMI Blog2010 (1) TMI 578X X X X Extracts X X X X X X X X Extracts X X X X ..... e Specific Relief Act, 1963, thus, this issue is decided against the defendants. The suit has been filed by the plaintiff in his personal capacity as sole proprietor of Bhupender & Co. In view of this fact, we do not think that there is any legal infirmity in the filing of the instant suit. This issue also is decided in favour of the plaintiff and against the defendants. The plaintiff had not traded the stolen property of defendants Nos. 5 to 9. Defendants Nos. 5 to 9 and 11 have failed to discharge their burden in view of the reasons given above and the complaint lodged by defendant No. 9 was false and frivolous, hence this issue is decided in favour of the plaintiff and against defendants Nos. 5 to 9 and 11. As defendants Nos. 1 to 3 were the bona fide purchaser of the shares of defendants Nos. 5 to 9 and no relief can be issued against them. It is actually defendants Nos. 5 to 9 who are liable for the claims made by the plaintiff. Therefore, this issue is accordingly decided in favour of defendants Nos. 1 to 3 accordingly. The letter dated April 26, 1989, from Shri Raghvan addressed to defendant No. 8 filed by defendants Nos. 5 to 9 discloses that Hindalco had relea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the passing of the decree be passed in favour of the plaintiff and against defendants Nos. 1-3. ( bb )a decree for rendition of accounts be passed in favour of the plaintiff and against defendants Nos. 5-9 and defendant No. 11 in respect of the bonus shares, rights shares, dividend on the original 1,300 shares, right shares, bonus shares, right issue of non-convertible debentures and convertible debentures, interest on the non-convertible and convertible debentures. ( bc )on rendition of accounts a decree be passed in favour of the plaintiff and against defendants Nos. 1-3, 5-9 and defendant No. 11 in respect of the value of the benefits which have so accrued and found due on such rendition of accounts. ( c )interest pendent lite and till date of payment be awarded to the plaintiff against defendants Nos. 1-3. ( d )cost of the suit be awarded to the plaintiff by the defendants. 2. The brief facts for deciding this case are that the plaintiff is a share broker conducting his business in the name and style of Bhupender Co. The plaintiff is registered with the Delhi Stock Exchange ("DSE" for short). On instructions of defendant No. 1 being M.J. Investment through its p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 8 were delivered by defendants Nos. 1 to 3 to the plaintiff in the usual course of business and the plaintiff has no reason to suspect that the said shares were stolen property. The plaintiff dealt with the said shares bona fide for valuable consideration without notice of any defect in the title of defendants Nos. 1 to 3. 8. As a result of all the above stated unforeseen events, the plaintiff wrote a letter on March 9, 1988, to defendants Nos. 1 to 3 informing them that the said shares were claimed to be stolen property and that Hindalco refused to transfer the said shares to the transferee. In reply to this letter, defendants Nos. 1 to 3 on April 28, 1988, informed the plaintiff that : "that the shares were duly sent by Shri Nirbhey Lodha, authorised representative/official of Shri N.L. Hamirwasia of Mysore Cement Co., to which the shares belongs to Shri Prakash Agiwal, chartered accountant at Daryaganj and said chartered accountant had duly handed over the shares to Shri C.P. Jain one of the partners, in his office. Prior to that Shri Nirbhey Lodha when he visited Delhi met the said Shri C.P. Jain in the office of Shri Prakash Agiwal, chartered accountant in the pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re delivered to the plaintiff along with transfer deeds duly signed and authenticated by the registered holder and witnessed by M/s. Agiwal and Associates and the plaintiff never approached the defendant regarding any objection about validity of the transfer deed and shares at any time and as such the plaintiff was now estopped from filing the present suit against the answering defendant. 13. The bank draft was also sent to defendant No. 9 by defendant No. 3 vide his letter dated December 2, 1987 and as the shares were purchased by defendant No. 2 through Shri Prakash Agiwal from M/s. Agiwal Associates who was along with partner of defendant No. 1 Shri Nirbhay Lodha. The transfer deeds were duly signed by the registered holder and were sent to the defendants through representative Shri Nirbhay Lodha, therefore, there could not have been any question of theft. 14. Defendant No. 3 in his written statement also contended that the suit is bad for non-joinder of parties. It was stated that he had received the shares from M/s. Prakash Agiwal and Associates who informed him that the said shares were given to them by Shri Nirbhay Lodha. It is contended that the liability is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommittee. Further, bye-law 282 lays down that in such cases, before commencing legal proceedings against a member, permission of the board of directors of the stock exchange is to be taken. 19. Defendant No. 1 was proceeded ex parte vide order dated July 30, 1999. Defendants Nos. 4, 10 and 12 have not contested the suit being formal parties. On the basis of pleadings of the parties, the following issues were framed on November 17, 1988 : (1) Whether the suit is bad for non-joinder of necessary parties ? OPD (2) Whether the suit is not maintainable on account of bye-laws of the Delhi Stock Exchange ? OPD (3) Whether the suit is barred under section 41 of the Specific Relief Act, 1963 ? OPD (4) Whether the suit has been instituted by duly authorised person ? OPP (5) Whether the shares traded by the plaintiff were the stolen property of defendants Nos. 5 to 9 ? If so, to what effect ? OPD (6) If the answer to issue No. 5 is in the affirmative, whether defendant No. 3 or any other defendant is liable to the plaintiff and to what extent ? OPD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperty." 24. In his cross-examination by counsel for defendants Nos. 5 to 9, he has stated as under : "The shares belonged to Mr. Hamirwasia and payment was to be made by us to Mr. Hamirwasia by way of bank draft in his name. The delivery of shares was given to us by Mr. Agiwal and we were to sell the shares as brokers and thereafter payment was to be made to Mr. Hamirwasia who were the registered shareholders." 25. Shri Prakash Agiwal has appeared as D2/W2 for defendant No. 2 wherein his examination in chief, he stated that he does not recollect having introduced defendant No. 2 to Shri Nirbhay Lodha and he further stated that he does not have any knowledge about any share transactions between Shri Nirbhay Lodha and Shri C.P. Jain (defendant No. 3). In his cross-examination by counsel for the plaintiff, he stated as under : "I do not know Mr. N.L. Hamirwasia. I do not know whether Mr. Nirbhay Lodha used to work for Mr. N.L. Hamirwasia. Mr. Nirbhay Lodha did not give share to me. I know Mr. C.P. Jain as he has done his articleship with Mr. D.C. Jain and I used to visit Mr. D.C. Jain being from his native place. I do not recollect Mr. Nirbhay Lodha having given any shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice-versa. It is also pointed out that in terms of bye-law 299, the claims raised by defendants Nos. 4 to 12 against the plaintiff cannot be referred to arbitration as being time-barred. The said bye law expressly stipulates that the Arbitration Committee shall not take cognisance of disputes that are not referred within three months from the date it arose. In the instant case, defendant No. 4 (Babulal Bagri) raised his claim vide bill dated March 8, 1988 and thereafter on July 11, 1988 (exhibit P/4) but the matter was referred to arbitration in November, 1989. 30. It is submitted by the plaintiff that the Delhi Stock Exchange is neither a necessary nor a property party in the instant proceedings as the plaintiff has no grievance against the DSE. I agree with the submission of the plaintiff as in the present suit, relief in the nature of declaration that the shares are not stolen property has been sought against defendants Nos. 5 to 8 who are the registered holders of these shares and for rendition of accounts and in the alternative for recovery of money against defendants Nos. 1 to 3 on whose instructions the shares were sold by the plaintiff on the floor of the DSE and to w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allege by the defendants that the plaintiff has no personal interest in the matter. It is held that the suit is not barred under section 41 of the Specific Relief Act, 1963, thus, this issue is decided against the defendants. Issue No. 4 34. The issue as to whether the suit has been instituted by a duly authorised person has been raised by defendants Nos. 2 and 3. 35. As regards this objection, it is submitted by the plaintiff that the present suit has been filed by Shri B.P. Watal, a member of the Delhi Stock Exchange who traded in the name and style of Bhupender Co., a proprietorship firm. The suit has been filed by the plaintiff in his personal capacity as sole proprietor of Bhupender Co. In view of this fact, I do not think that there is any legal infirmity in the filing of the instant suit. This issue also is decided in favour of the plaintiff and against the defendants. Issues Nos. 5 to 6 and 11 36. As per issue No. 5, the onus of proving that the shares were actually stolen lies on the defendants. 37. Defendant No. 8 in his evidence has deposed that the share certificates along with the transfer deeds were kept with his father defendant No. 9. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed transfer deeds of the authorised transferors. 41. It is submitted by the plaintiff that as per practice in the trade, in the case of a blank transfer the seller only fills in his name and signature. Neither the buyer's name and signature nor the date of sale is filled in the transfer form. The advantage in giving such a blank deed is that the buyer will be at liberty to sell it again without filling his name and signature to a subsequent buyer. In the latter case, he can avoid the payment for the transfer stamp and new deed to the buyer. The process of purchase and sale can be repeated any number of times with the blank deed and ultimately when it reaches the hands of one who wants to retain the shares, he can fill in his name and get it registered in the company's books. For this ultimate transfer and registration, the first seller will be treated as the transferor. The person to whom the blank transfer along with the certificate is delivered can effectually transfer his interest by handing his certificate to another, and the document may thus pass from hand to hand until it comes into the possession of a holder who thinks fit to insert his own name as transferee, and to pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hri Nirbhay Lodha for sale through Delhi broker. Shri Nirbhay Lodha was/is apparently an employee of defendant No. 9 and as such it was not difficult for defendant No. 9 to produce Shri Nirbhay Lodha as a witness in the present suit. The connection of Shri Nirbhay Lodha with the shares in question is proved from the list exhibit D2W1/1 but also from the Panchnama dated January 28, 1988 and telex dated February 5, 1988. No reasons are given by defendants Nos. 5 to 9 as to why the letter dated September 21, 1987, was written by Shri Nirbhay Lodha to the brother of defendant No. 2 at the address of defendant No. 1 firm having reference of shares pertaining to defendants Nos. 5 to 8 and their transfer when as per defendants Nos. 5 to 9, they at no point of time had any kind of dealings with defendants Nos. 1 to 3. 48. The factum of dispatch of letter by courier receipt dated September 15, 1987, by the brother of defendant No. 2 to Shri Nirbhay Lodha and with reference thereof writing letter by Shri Nirbhay Lodha on September 21, 1987, to the brother of defendant No. 2 itself shows the fact that defendants Nos. 5 to 9 had in fact sold their shares to defendants Nos. 1 to 3 through S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts have been recorded in the Panchnama dated January 28, 1988 and relied upon by defendants Nos. 5 to 9. Even after discovering the identity of the plaintiff, the same was not disclosed to the police or the Munsif Court in Karnataka in April, 1988. Having failed to prove any information, the lower court at Karnataka passed an order dated November 3, 1988 (exhibit DW5/5) directing release of share certificates to defendants Nos. 5 to 8, who had already appeared before this court on September 5, 1988, in the instant suit and had not disclosed the identity of the plaintiff nor apprised the court below about the proceedings before this court including the injunction/restrain order dated July 4, 1988, passed by this court, in fact they allowed the Munsif Court in Karnataka to allow the report of the police dated January 27, 1988 and released the same to them. 54. The plaintiff filed the present suit in June, 1988 and defendants Nos. 5 to 9 were served in the said suit in September, 1988 and the closure report before the Magistrate in Bangalore was filed on November 3, 1988. Defendants Nos. 5 to 9 having come to know about the shares should have informed the police about the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by way of affidavit vide order dated February 26, 2009. In his statement, he has stated that he had given 1,300 shares of M/s. Hindustan Aluminum Corporation Ltd., to the plaintiff for sale along with transfer deeds duly executed by the registered shareholders and attested by the witnesses. He has made a statement that the said shares were given to defendant No. 3 by one Mr. Prakash Agiwal who is the chartered accountant having office in Daryaganj, Delhi and Mr. Nirbhay Lodha who is known to Mr. Prakash Agiwal. According to him, Mr. Nirbhay Lodha was employed with Mysore Cement Ltd., and Mr. N.L. Hamirvasia was the president of Mysore Cement Ltd. Defendant No. 2 has further made a statement that Mr. Nirbhay Lodha while handing over the share certificates had annexed copy of the list of shares which were being handed over to defendant No. 3. The said list was exhibited as exhibit D2W1/1. He also made a statement that at the time of delivery of share certificates certain deeds were not delivered to defendant No. 3 therefore, the brother of defendant No. 2 Mr. Ajay Mangla who works in defendant No. 1 firm along with him and defendant No. 3 wrote a letter dated September 15, 2007, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ually defendants Nos. 5 to 9 who are liable for the claims made by the plaintiff. Therefore, this issue is accordingly decided in favour of defendants Nos. 1 to 3 accordingly. Issue No. 7 61. In view of the outcome of issues Nos. 5, 6 and 11 and the case of Mahabir Singh v. Jai Singh [1978] 48 Comp. Cas. 558 (Delhi), this issue is also held to be in favour of the plaintiff and against the defendants. Admittedly, the share certificates were released to defendants Nos. 5 to 9 and since it has been proved that the said share certificates were not stolen, the same be returned to defendant No. 11 who shall register the share certificates in the name of the bona fide purchasers/transfers. 62. Vide order dated July 4, 1988, this court restrained defendant No. 11 company from distributing any benefit in any manner in respect of 1,300 shares as mentioned in the plaint. 63. The letter dated April 26, 1989, from Shri Raghvan addressed to defendant No. 8 filed by defendants Nos. 5 to 9 discloses that Hindalco had released rights and the bonus shares to the registered holders. Thus, it appears that the company has been releasing the benefits in respect of the shares to def ..... X X X X Extracts X X X X X X X X Extracts X X X X
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