Bhagwati Developers Pvt. Ltd vs Peerless Gen.Finance ...

The appellant, Bhagwati Developers Private Limited, hereinafter referred to as ‘Bhagwati’ was earlier known as Lodha Services Private Limited. Tuhin Kanti Ghose, hereinafter referred to as ’Tuhin’, Respondent No.2 herein, approached Bhagwati for a loan of Rs.38,83,000/- for purchasing 3530 equity shares of Respondent No.1, Peerless General Finance & Investment Company Limited, hereinafter referred to as ‘Peerless’. As requested, Bhagwati on 25th of July, 1986 advanced a sum of Rs.38,83,000/- as loan to Tuhin. Bhagwati and Tuhin later, on 19th November, 1986 entered into a formal agreement in respect of the aforesaid loan and Tuhin assured to repay the loan on or before 31st December, 1991. On 30th of October, 1987, Tuhin agreed to transfer 3530 shares of Peerless to Bhagwati by way of repayment of the aforesaid loan. In the light thereof, Tuhin handed over the original share scrips as also the transfer deeds for doing the needful by Bhagwati. Tuhin on 30th October, 1987, wrote that Bhagwati would be entitled to all the benefits i.e. dividend, bonus shares etc. in respect of all these shares. It seems that the transfer deeds were not properly filled in and executed and accordingly, Bhagwati on 28th December, 1987 wrote to Tuhin to put his signature in the fresh transfer deeds and return them to it. Bhagwati further requested Tuhin to send it shares and dividends received by him from Peerless. During these developments, Peerless declared bonus shares in the ratio of 1:1 and Tuhin being the registered shareholder, received further 3530 bonus shares. Tuhin, it appears, did not sign the fresh transfer deeds and retained the bonus shares. Bhagwati by its letter dated 6th of July, 1988 asked Tuhin to furnish fresh transfer deeds in respect of the total shares i.e.7060 shares. Peerless declared further bonus shares in the year 1991 in the ratio of 1:1 and Tuhin being the registered shareholder of 7060 shares was further allotted 7060 bonus shares. In this way Tuhin altogether got 14120 shares.

When Tuhin did not accede to the request of Bhagwati for transferring the entire shares, Bhagwati on 29th May, 1991 filed a suit in the Court of Civil Judge at Allahabad and obtained an ad interim order of injunction restraining Tuhin from claiming any right, title or interest in respect of the aforesaid 14120 shares of Peerless. During the pendency of the suit, Tuhin and Bhagwati settled their dispute out of Court and executed an agreement dated 21st November, 1994, according to which Tuhin acknowledged to have sold 3530 equity shares to Bhagwati on 30th October, 1987 which entitled it to the bonus shares declared in the years 1987 and 1991 totaling 14120 equity shares. In terms of the agreement, an application for recording the compromise was filed in the civil suit and for passing a decree in terms of the compromise. The trial court acceded to the prayer of Bhagwati and Tuhin and decreed the suit in terms of the compromise by judgment and decree dated 28th November, 1994. The trial court further directed that the compromise petition and the agreement between the parties shall also form part of the decree. According to the compromise decree, it was agreed that Tuhin shall retain as absolute owner the dividend on the entire shares up to the accounting year 1989- 90 amounting to Rs.8,64,850/- as part of consideration for the settlement. In terms of the compromise decree, Bhagwati has also paid a further sum of Rs.10 lakh by way of pay order dated 21st November, 1994.

Mr. Sunil Gupta, further submits that the contract in question is a spot delivery contract and, therefore, does not come within the mischief of Section 16 of the Regulation Act. Mr. Bhaskar P. Gupta, joins issue and submits that in view of the limited rule the appellant cannot be allowed to raise the point of spot delivery contract. In this connection, he has drawn our attention to the order dated 19th of December, 2003. We are not inclined to sustain this objection of Counsel for the respondent.

Both the contentions of the appellant having no substance, we do not find any merit in this appeal and it is dismissed accordingly but without any order as to costs.