1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL JURISDICTION SUIT NO. 1239 OF 1999 Mr. V. Rai & Ors. .... Plaintiffs. V/s. GFC Securities and Finance Limited. .... Defendant. ....... Mr. Bomi Patel with Mr. S. Rege i/b. Crawford Bayley & Co. for the Plaintiff. None for the Defendant. ........ CORAM : DR. D.Y. CHANDRACHUD, J. 6TH FEBRUARY 2008. P.C. :- The Plaintiffs on the date of the suit were trustees of the Rallies India Limited Non-Management Staff Gratuity Fund constituted under a deed of trust executed in 1989. The fund was constituted for the benefit of the employees of Rallies India Limited, a company 2 incorporated under the provisions of the Indian Companies' Act, 1913. The Defendants were share brokers. In March 1997, the Plaintiffs instructed the Defendants to purchase for the fund, Indian Railway Finance Corporation Bonds, 1999 of an aggregate face value of Rs.46 lakhs. The Defendants issued a contract note dated 24th March 1997 showing the purchase price of the securities at Rs.101.75 per bond. An amount of Rs.48,45,847.95 was paid by the Plaintiffs to the Defendants for the purchase of the bonds by cheque. The cheque was received by the Defendants and duly encashed. The Defendants failed to deliver the bonds following which inquiries were made by the Plaintiffs. By a letter dated 26th June 1997, the Defendants informed the Second Plaintiff that the account of the Defendants was frozen, consequent upon the freezing of the account of Global Finance Corporation Limited, the promoter of the Defendants, by the Reserve Bank of India. By a further letter dated 8th December 1997, the Defendants, while acknowledging their liability to deliver the bonds stated that the securities would be delivered once the accounts were defrozen. Since the obligation to deliver the securities has not been complied with, the suit has been instituted. The Plaintiffs have sought a declaration that 3 they are entitled as owners and purchasers to the beneficial interest in the securities mentioned in Exhibit `A' to the plaint and a decree directing the Defendants to specifically deliver the securities to the Plaintiffs. In the alternative, a decree has been sought for the payment of an amount of Rs.48,45,847.95 together with interest. The Defendants have not entered appearance despite being served with the writ of summons. An affidavit of service has been filed. The Plaintiffs have filed an affidavit in lieu of examination in chief of their witnesses and a compilation of the original documents. In the absence of any contest by the Defendants, the claim of the Plaintiffs has remained to be controverted. The Plaintiffs have, on the basis of the evidence duly established, the payment of consideration for the purchase of the securities more particularly described in Exhibit 'A' to the plaint. The Defendants have acknowledged their liability to deliver the securities and have not disputed the receipt of consideration. Having received full payment, the Defendants have failed to effect delivery. 4 In the circumstances, the suit shall stand decreed in terms of prayer clauses (a), (b) and (c ). In the event that the Defendants are unable to effect delivery of the securities then, in that event, there shall be a decree in the principal sum of Rs.48,45,847.95 on which the Plaintiffs would be entitled to interest at the rate of 12% per annum from 24th March 1997 until 8th February 1999 and at the same rate from the date of the institution of the suit until payment or realization. The Plaintiffs would be entitled to the costs of the suit. ------