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2002 DIGILAW 457 (BOM)

Lalit Kabra v. Bombay Stock Exchange & others

2002-06-05

D.G.KARNIK

body2002
JUDGMENT - KARNIK D.G., J.:---This chamber summons is taken out by the plaintiff for amendment of the plaint by adding that necessary narration of subsequent events which took place during the pendency of the suit and also for addition of one prayer Clause. 2. The amendment was strongly opposed by the learned Counsels appearing for defendant Nos. 1 and 2 and defendant No. 3 was absent though served. Learned Advocate for the plaintiff showed copy of the service and undertook to file an affidavit of service to defendant No. 3. Undertaking is accepted. Affidavit to be filed within a week. 3. It was strongly contended by learned Advocate for defendant No. 2 that under section 23 of the Stock Exchange Board of India Act, 1992 (for short S.E.B.I. Act), no suit can be filed against S.E.B.I. or officials of S.E.B.I. for anything done in good faith. It was contended that since no suit can be filed, no amendment in the suit filed against S.E.B.I. should be allowed. 4. Firstly, it may be noted that there is no absolute bar for filing of a suit. Only acts done in good faith are protected. Whether a particular act is done in good faith or not is a question of fact which requires trial and adjudication. This is not the stage of that enquiry which would be done by the Court trying the suit. It was further contended by learned Counsels for defendant No. 1 as well as defendant No. 2 that the proposed amendment is delayed; if the suit for recovery of Rs. 14,94,000/- was to be instituted today, it would be barred by the law of limitation. Plaintiff should not be allowed to make a claim which is otherwise barred by limitation. In order to consider this objection, it is necessary to state a few facts. 5. The plaintiff was a trader in shares of North Star Gems Ltd. (for short the "company"). He had purchased certain shares of the company in settlement No. 23 and in anticipation of delivery of the shares sold the shares in settlement No. 24 of the year 1996. He did not receive delivery of purchases made in settlement No. 23 and hence could not give delivery of the shares sold in settlement No. 24. Consequently, transaction of the plaintiff was closed out by the Exchange and the procedure of auction was followed. He did not receive delivery of purchases made in settlement No. 23 and hence could not give delivery of the shares sold in settlement No. 24. Consequently, transaction of the plaintiff was closed out by the Exchange and the procedure of auction was followed. There were allegations of price ragging and/or manipulation of the prices of the shares of the said company and S.E.B.I. conducted an enquiry. It was held after enquiry that there was some price ragging by third parties and therefore, some transactions were annuled. Because of all these happenings, the plaintiff was deprived of the profit of Rs. 3,10,650/- which he claimed he was entitled to by sale of the shares of the said company in settlement No. 24. He, therefore, filed a suit for recovery of the said sum on 5-7-1996. It also appears that an order was passed by the S.E.B.I. on account of which, an amount of Rs. 14,94,000/- was sought to be recovered from the plaintiff on account of the transactions by the plaintiff in the said shares of the company in settlement No. 23 and 24. The plaintiff in prayer Clause (c) of the plaint, as originally filed, has sought a declaration that the impugned directions issued by the defendant for recovery of Rs. 14,94,000/- was null and void. The plaintiff also took out a Notice of Motion No. 1779 of 1996 for interim relief. Before the interim relief could be granted, the order was executed and an amount of Rs. 14,94,000/- was debited in the account of the plaintiff. The Notice of Motion thus became infructuous and the plaintiff consequently withdrew the same on 5-8-1998 with liberty to take out a fresh Notice of Motion if necessary. In the meanwhile, the plaintiff also preferred an appeal against the order of S.E.B.I. issuing the directions of recovery of Rs. 14,94,000/- but, the appeal was dismissed by the Appellate Board on 5-5-2000. The plaintiff contends that the Appellate Board has taken a somewhat different view in another matter namely (Sanman Consultants v. S.E.B.I.)1, reported in S.E.B.I. and Corporate Reports (Vol. 30) 45. 5-A. As the amount of Rs. 14,94,000/- was debited in the account of the plaintiff after the institution of the suit, original prayer (c) has become infructuous and the plaintiff now wants to claim back the said sum of Rs. 14,94,000/-. 30) 45. 5-A. As the amount of Rs. 14,94,000/- was debited in the account of the plaintiff after the institution of the suit, original prayer (c) has become infructuous and the plaintiff now wants to claim back the said sum of Rs. 14,94,000/-. Delay if any, caused for amendment was on account of the appeal which he was pursuing before the Appellate Board which was decided only in May, 2000. 5-B. Even the events giving rise to the present claim for amendment has admittedly occurred after filing of the suit by the plaintiff. Originally plaintiff had claimed an injunction as the money has been debited, after the suit, relief of injunction and Notice of Motion became infructuous and the only remedy for the plaintiff is to claim back the money. Whether the plaintiff would ultimately succeed in realising of the money or not is not material for the purpose of considering whether amendment should be allowed. The event being a subsequent event and delay having been explained, the plaintiff is entitled to amend the plaint. 6. In the circumstances, amendment is allowed subject to payment of costs Rs. 1000/- to each of the defendant Nos. 1 and 2. 7. Chamber summons is thus made absolute in terms of prayer (a). Amendment to be carried to out within a period of four weeks. Plaintiff shall also pay Additional Court fee, if any. Summons made absolute. -----