1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION SUIT NO. 2726 OF 2003 Bharati S. Shroff & Ors ..Plaintiffs versus Kapil G. Thakore & Ors. ..Defendants Ms. Soumya Srikrishna i/b Tayabji Dayabhai & Co. for Plaintiffs. Ms. Kalindi Kokal i/b Negandhi Shah and Himayutullah for Defendants. CORAM : DR. D. Y. CHANDRACHUD , J. DATED : 21ST JULY, 2009. P.C. : 1. The suit has been listed for an ex-parte decree against Defendant Nos. 1 to 3. The case of the Plaintiffs is that, sometime after the death of the husband of the 1st Plaintiff on 13.10.1994, Defendant Nos.1 to 3 requested the Plaintiffs to entrust them with the task of effecting transfer of securities held in the name of the deceased. Defendant Nos.1 to 3 are alleged to have been carrying on business of dealing in shares and securities. The Plaintiffs are stated to have delivered to Defendants No.1 to 3 scrips of several companies held by the deceased, either singly or jointly, with the 1st Plaintiff together with duly completed and executed transfer forms for transmission of securities in the names of one or more of the Plaintiffs. According to the Plaintiffs, sometime in December 1997, it came to their 2 knowledge that the 1st Defendant and his family had defrauded the estate of late Mr. Justice D.P.Madon, having gained access to share certificates for the purposes of transmission. Upon being confronted, on or about 06.01.1998, Defendants No.1 and 3 are alleged to have accepted that the original securities, which had been entrusted by the Plaintiffs to them, have been sold and disposed of by substituting the original transfer forms and by forging the signatures of the Plaintiffs to make it appear that Defendant Nos.1 to 3 were the purported transferors. Defendant No.1 is alleged to have fraudulently dealt with various other securities on the Stock Exchanges. 2. Defendant No.1 is then stated to have executed an Acknowledgment- Cum Indemnity dated 19.01.1998, admitting the liability mentioned in Clause (4) thereof. Defendant Nos.1 to 3 purported to create valid and enforcible securities jointly in favour of the Plaintiffs and all other family members, namely, Defendant Nos.4 to 11 (“ the Gupta Family”). Defendant Nos.1 to 3 undertook to create a mortgage by depositing title deeds in respect of the suit property, which is more particularly described in Exhibit A to the Plaint. The ascertained liability of Defendant Nos.1 to 3 in favour of the Plaintiffs was Rs. 74,44,400/-, as on 19.01.2008. 3 3. In pursuance of the Deed dated 19.01.1998, Defendant Nos.1 to 3 are alleged to have deposited the documents of title of the suit property, which consists of a residential flat, with Plaintiff No.4, with an intention to create a mortgage. Plaintiff No.4 is stated to have accepted the same as a security trustee on behalf of the family of the Plaintiffs and/or Defendants No.4 to 11. This is recorded in the Memorandum of Entry dated 19.01.1998. A Deed of Confirmation of Pledge was also executed on the same day. On 04.10.1999, a settlement was executed between the Plaintiffs, Defendant Nos.1 to 3 and the Gupta Family, which contemplated that the suit property would be transferred and handed over to the Plaintiffs and the Gupta Family and that the Plaintiffs would be entitled to acquire the ownership thereof against the payment of a half share in the aggregate value of the flat on the ground floor. The Agreement of 04.10.1999 was, however, not performed. On 06.10.1999, Defendant Nos.1 to 3 addressed a letter to the Co-operative Housing Society, informing the Society of the creation of a mortgage over the suit property in favour of the Plaintiffs. 4. The suit has been instituted by the Plaintiffs for enforcing the mortgage that was created by Defendants No.1 to 3 on the suit property. On the date of the institution of the suit, an amount of 4 Rs.1,72,39,191/- is stated to be due and payable to the Plaintiffs, inclusive of interest @ 24 % p.a. At the interlocutory stage, in pursuance of an order dated 16.09.2003, the Court Receiver came to be appointed as Receiver of the suit property with a direction for the sale of the premises. The original title deeds were deposited by the Plaintiffs with the Court Receiver. 5. Defendant Nos.1 to 3 are stated to be absconding. Service upon them was effected by means of substituted service. Defendant Nos.1 to 3 have not entered appearance. Defendant Nos.4 to 11 have been impleaded as parties to the suit, since they claim to have a charge on the suit property. The Plaintiffs have conceded that Defendant Nos.4 to 11 are entitled to a share in the sale-proceeds on a pari passu basis together with the Plaintiffs. 6. As noted above, Defendant Nos.1 to 3 have failed to enter appearance or to file a Written Statement. The averments contained in the plaint have, in the circumstances, not been controverted. The Plaintiffs have filed an Affidavit of evidence of the 1st Plaintiff together with a compilation of the original documents. Among the documents is a Deed of Acknowledgment dated 19.01.1998 and Memorandum of Entry of the same date, which record the creation of a mortgage by 5 deposit of the title deeds in favour of the Plaintiffs and Defendants No.4 to 11. The Court has been informed about the sale of the property, in pursuance of the interim order, which was confirmed on 18.04.2006, for an amount of Rs.45,00,000/-. The learned Counsel for the Plaintiffs stated that, upon payment of the dues of the Co- operative Society, a balance of Rs.39,78,030/- is lying with the Court Receiver. 7. The claim in the suit has been duly proved on the basis of the Affidavit of evidence of the 1st Plaintiff and the compilation of the documents, which is tendered and taken on record. In so far as Defendant Nos.4 to 11 are concerned, they have stated in the Written Statement that they substantially accept the case of the Plaintiffs. Defendant Nos.4 to 11 claim that an amount of Rs.1,66,45,359/- is due and payable by Defendants No.1 to 3 to them. The liability of Defendant Nos.1 to 3 to Defendant Nos.9 to 11 is stated to be in the amount of Rs.5,00,000/-. A Written Statement has been filed on behalf of Defendant Nos.5 to 8 (Defendant No.4 has died on 08.02.2004). The heirs and Legal Representatives of deceased Defendant No.4 are already on record. An undertaking has been furnished for the disbursement of the amount which is due and payable to Defendant Nos.9 to 11. During the course of the hearing, 6 Defendants No.5 to 8 have not contested the claim of the Plaintiffs. On the part of the Plaintiffs, it has been stated during the course of the hearing that in the event the Court passes a decree as prayed, the Plaintiffs may be permitted to withdraw the amount which is lying in balance with the Court Receiver, after deducting the costs, charges and expenses of the Receiver and that the Plaintiffs shall undertake to the Court to meet the pari passu charge of Defendant Nos.5 to 11 from out of the sale proceeds. This course of action has not been opposed by the Learned Counsel appearing on behalf of Defendant Nos.4 to 11. 8. In the circumstances, the suit shall stand decreed in terms of prayer clauses (a), (b), (c) & (e). The Court Receiver is directed to pay over to the 4th Plaintiff for and on behalf of the Plaintiffs the amount now lying in balance upon sale of the suit property, subject to the deduction of costs, charges and expenses of the Receiver within a period of 4 weeks from today. The undertaking tendered by the Plaintiffs, that the Plaintiffs shall meet the pari passu charge of Defendants No.5 to 11 from out of the monies withdrawn by the Plaintiffs is accepted. The suit shall stand decreed accordingly. (DR. D. Y. CHANDRACHUD, J.)