IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION SUIT NO.2011 of 2001. SUIT NO.2011 of 2001. SUIT NO.2011 of 2001. Darshan Madanlal Gupta, having his office at 118, Sarang Street, 1st floor, Bombay 400 003. ..Plaintiff versus 1. M/s.T.H.Vakil a registered firm having their office at 10th floor, Office No.1002, Stock Exchange Building, Dalal Street, Bombay 400 023 2. M/s. Sanjiv Kapoor having office at C/o. Allied Associates, 1st floor, Room No.409, Trade Wing, 18/20, K. Dubhash Marg, Bombay 400 023 3. The Great Eastern Shipping Co. Ltd., C/o.Tata Consultancy Services, 912, Raheja Centre, Free Press Journal Road, Nariman Point, Bombay 400 021 4. Gujrat Ambuja Cement Ltd., C/o.EPIC Financial Consultancy Services Pvt. Ltd., 156 Mittal Court, C Wing, 15th Floor, Nariman Point, Bombay 400 021 5. Tata Power Ltd., Army & Navy Building, 148, M.G.Road, Fort, Mumbai 400 001. 6. Orkay Silk Mills Ltd., C/o. Datamatics Consultants Ltd., State Bank Building, N.G.N.Vaidya Marg, -2- Bombay 400 023. 7. Gujrat Alkalies & Chemicals Ltd., Yashkamal, Sayaji Ganj, Baroda 390 005. 8. India Glycol Ltd., C/o. M/s. M.C.S. Ltd., C-3 Community Centre, Safadar Gunj Development Area, New Delhi 110 016. ..Defendants Ms.Rekha Safari for the Plaintiff None for the Defendants CORAM : R.Y.GANOO, J. CORAM : R.Y.GANOO, J. CORAM : R.Y.GANOO, J. DATED : 23rd Oct., 2008. DATED : 23rd Oct., 2008. DATED : 23rd Oct., 2008. JUDGMENT. JUDGMENT. JUDGMENT. 1. The plaintiff claims to be the owner of the various shares in regard to which the present suit is filed. According to the plaintiff the defendant No.1 was the broker in the Stock Exchange Market at Bombay, defendant No.2 is the sub-broker and defendant Nos.3 to 9 are the various companies of which the plaintiff claims to be the share holder. The plaintiff served suit summons upon the defendants. However, nobody appeared on behalf of the defendants and none of the defendants have filed written statement. The plaintiff has tendered the evidence affidavit and documents on which the plaintiff wanted to rely upon. The said documents have been marked as exhibits. Since no -3- written statement was filed by any of the defendants, formal issues have not been framed. 2. The plaintiff has approached this Court with a positive case that certain shares more particularly set out in para 5 of the plaint were owned by the plaintiff and his family members. According to plaintiff, defendant No.1 who is the share broker induced the plaintiff to dispose of the shares and that accordingly plaintiff handed over the said shares to the defendant Nos.1 and 2 for selling them in the market. The plaintiff delivered the shares between 8.11.1990 to 20.12.1990. It is averred by the plaintiff that defendant Nos.1 and 2 had promised the plaintiff that they will first pay the price of the concerned shares within 20 days from the delivery of the same and then only they can be sent for transfer to the concerned defendant Nos.3 to 9. It is pleaded by the plaintiff that the defendant Nos.1 and 2 have not paid to the plaintiff any amount though promised and assured, and the efforts made by the plaintiff have failed. It is the case of the plaintiff that the plaintiff had filed a criminal complaint against the defendant Nos.1 and 2. The -4- plaintiff has thereafter instituted this suit to protect the interest of the plaintiff. 3. By prayer clause (a) the plaintiff has sought injunction restraining the defendants from transferring, interfering with and/or delivering the said shares of the plaintiff and his family members to any third person as mentioned in paragraph 5 of the plaint, that is to say the various shares in respect of which this suit came to be filed. For the sake of convenience the shares listed in paragraph 5 shall be referred to as the suit shares. 4. The language of prayer clause (c) is peculiar i.e. to say "the said shares of the companies- defendant Nos.3 to 9 be declared as of the plaintiff and his family and if already transferred to third party’s name, be again transferred and be delivered to them". Learned Advocate Ms.Safari appearing on behalf of the plaintiff clarified that by this prayer the plaintiff wants this Court to issue declaration that the plaintiff or his family members are the owners of the suit shares and that if the same are -5- not transferred in the names of third parties, the companies i.e. the defendant Nos.3 to 9 should re-deliver the suit shares to the plaintiff. In view of this the Court will have to approach to the present suit in the context of the prayers which are made by the plaintiff. 5. The plaintiff has produced various documents in support of his case. Out of that a letter at Exhibit C is of importance as the case of the plaintiff rests on that letter. The said letter is issued by Mr.T.H.Vakil, principal broker being letter dated 20.12.1990 on the letterhead of M/s.T.H.Vakil, Shares & Stock Brokers. By the said letter the defendant No.1 has informed the plaintiff that various shares listed in the said letter were sold through the authorised clerk Mr.Kapoor and that defendant No.1 shall pay the sale proceeds during next three weeks i.e. within three weeks from the letter dated 20.12.1999. 6. Rest of the documents may not be very much relevant as they are nominal letters coming from the various companies calling upon the plaintiff to attend to the said shares as transfer documents -6- were lodged with the said companies. 7. Learned Advocate Ms. Safari appearing on behalf of the plaintiff had taken me through the plaint, all exhibits and evidence on record and submitted that the word of the plaintiff as set out in paragraph 5 as regards the duty of the defendant Nos.1 and 2 to pay to plaintiff is duly proved and in the absence of any cross examination on part of the defendant Nos.1 and 2 the word of the plaintiff set out in the evidence affidavit as a whole has gone unchallenged and therefore the plaintiff is entitled to the decree. It was submitted by learned Advocate Ms. Safari that the document at Exhibit C is a admission on the part of the defendant No.1 that shares listed in the said letter were entrusted to the defendant No.1 for transfer. She submitted that this letter at Exhibit C should be read with her evidence affidavit filed by the plaintiff and in particular paragraph 5 where the manner in which the payment could be made to the plaintiff by defendant No.1 is set out which has gone unchallenged. Learned Advocate Ms. Safari therefore submitted that the plaintiff is entitled to an order and declaration -7- in terms of prayer clause (c) and till such time the said shares actually come in the hands of the plaintiff the injunction in terms of prayer clause (a) is required to be granted. Learned Advocate Ms. Safari submitted that the transaction with the defendant Nos.1 and 2 was a bonafide transaction and the plaintiff believed the word of defendant Nos.1 and 2 and that is how allowed the transaction to be materialised and that defendant Nos.1 and 2 have not complied with their word as regards the payment and hence the plaintiff is entitled to the decree. 8. Learned advocate for the plaintiff submitted that on account of non-payment of monies by defendant No.1 to the plaintiff the title in the shares came back to plaintiff in terms of Section 58 of Sale of Goods Act, 1930 and therefore the plaintiff is entitled to the reliefs asked in the suit. 9. Before I proceed to deal with the contentions of the plaintiff it would be necessary to note to how a typical transaction may take place in share market. This is also required to be -8- tested with reference to the period in which the transaction had taken place i.e. November 1999. In a typical transaction of sale of share a person who is interested in disposing of the share to be referred to as vendor had to hand over to his broker the original share certificate along with blank transfer forms duly signed by the person whose name appears on the Share Certificate. Thereafter the broker of the vendor is supposed to put up the said shares in the market for sale. After the deal is struck the transfer forms along with share certificates are handed over to the broker of the purchaser who is liable to pay to the broker of the vendor, the price of the said shares. The transaction between the vendor and his broker is one set of transaction. The transaction between the broker of the vendor and the broker of the purchaser is another set of transaction and the transaction between broker of purchaser and purchaser is another transaction. The purchaser’s broker recovers the monies from the purchaser and pays it to be broker of the vendor. Since broker of the vendor and the purchaser are involved, in the matter, the parties namely the vendor and the purchaser do not meet and the transaction is -9- finalised between the broker to broker. It is in these circumstances, the liability to pay the sale proceeds to the plaintiff at the price as per the deal is that of the broker of the vendor and once the shares go from the hand of the broker of the vendor along with the transfer deeds, the broker of the purchaser is free to deliver the said shares to the purchaser and that the action which is initiated by the broker of the vendor cannot be stopped and the shares once traded between the two brokers cannot be recalled and what remains to be attended to is payment by broker of vendor to vendor. 10. In the present case the broker of the plaintiff has issued letter at Exhibit C. The said letter in terms mentioned that the said shares have been sold and payment shall be made to the plaintiff within three weeks from the letter dated 20.12.1999. This will ultimately go to show that the broker of the vendor had sold the shares and what remained to be attended to between the plaintiff and the broker of the plaintiff was the payment of monies by the broker of the plaintiff to the plaintiff. Non payment of monies by defendant -10- No.1 to plaintiff will not affect further transactions. 11. It is true that the plaintiff has approached this Court with the case that the broker of the plaintiff had promised that he shall first pay the price of the concerned shares within 20 days from the delivery of the same and then only they would be sent for transfer to the concerned defendant Nos.3 to 9. However, the terms mentioned in letter at Exh."C" about payment are contrary to the case put up by the plaintiff. The plaintiff has not sent any letter to defendant No.1 thereby raising a dispute about the contents of letter at Exh."C" which speaks of time when monies would be paid. If this is the position though the case put up by the plaintiff has gone unchallenged, the same cannot be accepted as the basis for granting reliefs against the defendants. 13. The letter at Exhibit C shows that the shares have been sold in the market. This will mean that the purchasers have become owners of the shares. In such a situation, plaintiff could expect his broker to pay him monies and plaintiff -11- cannot claim ownership in respect of shares which are sold in share market through broker-broker transaction. In view of this discussion, I hold that the plaintiff would not be entitled to get the declaration in terms of prayer clause (c) of the suit. In my view, the claim of the plaintiff so far as prayer clause (c) is totally misconceived and untenable in the wake of the manner in which the share market functions between two brokers namely the broker of the vendor and the broker of the purchaser. 14. Apart from the aforesaid aspects it is required to be mentioned that the present suit is filed by the plaintiff alone i.e. Darshan Madanlal Gupta whereas the plaintiff has approached the Court with a positive averment in para 2 of the plaint that the suit shares were held by the plaintiff and his family members. It is possible that the shares are held in joint names, but in order to institute the suit for declaration in terms of prayer clause (c) all the respective share holders should have joined to file the suit. If some of them were not available they could have been impleaded as defendants. It is pertinent to -12- note that the plaintiff has produced before the Court a Xerox copy of the share transfer form duly executed by the vendors therein and it is at Exhibit G-1. The said shares are of Gujrat Alkalies & Chemicals Limited. They are 50 in number and the holders of the said share are Mohini Gupta No.1 and Darshan Gupta No.2. It is pertinent to note that these shares form part and parcel of the suit shares. If this be so, suit for return of the these shares should have been filed by Mohini Gupta as plaintiff No.1 and Darshan Gupta as plaintiff No.2. The admission on the part of the plaintiff that the shares were held by the plaintiff and his family members would go to show that the shares were held by the plaintiff and some other persons and if that is so, it was necessary for all those persons to come before the Court and apply for appropriate relief. This is one additional point which disentitles the plaintiff from getting the reliefs. . The plaint refers to shares of following companies :- (i) The Great Eastern Shipping Co. (ii) Gujrat -13- Ambuja (iii) Tata Power (iv) Orkay Silks (v) Gujarat Alkalies & Chemicals (vi) Indian Glycol (vii) Videocon International. In respect of which plaintiff has not received monies. The plaintiff has relied upon the letter at Exhibit (c) which speaks of shares of the following companies namely (i) India Glycol, (ii) Orkay Silk, (iii) Great Eastern Shipping, (iv) Gujrat Ambuja Cement, (v) Gujrat Alkalies, (vi) Larsen & Tubro, (vii) Deepak Fertilizers, (viii) Tata Power, and (ix) Videocon International Ltd. This means according to the plaintiff the plaintiff was to get monies in respect of the shares of the aforesaid companies. In the evidence affidavit names of the following companies only namely (i) India Glycol, (ii) Gujrat Ambuja Cement, (iii) Tata Power, (iv) Gujrat Alkalies and chemicals, (v) Videocon International Limited are seen. This will go to show that there is variance in the case put up by the plaintiff. This will also go to show that the plaintiff has received monies for shares of following companies viz. Orkay Silks, Great Eastern Shipping, Larsen & Toubro, Deepak Fertilizers. This will go to show that the plaintiff has not come out with all the facts concerning his transaction with defendant -14- No.1. 16. For the reasons mentioned aforesaid, I hold that the plaintiff is not entitled to the relief in terms of prayer clause (c). Once it is observed that the plaintiff is not entitled to relief in terms of prayer clause (c) the plaintiff will not be entitled to relief of injunction in terms of prayer clause (a). 17. In view of the above, the suit of the plaintiff is required to be dismissed. For the reasons mentioned aforesaid, I pass the following Decree. ORDER Plaintiff’s suit is dismissed. In the facts and circumstances of the case, there shall be no order as to costs. (R.Y.Ganoo, J.) (R.Y.Ganoo, J.) (R.Y.Ganoo, J.)