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2021 DIGILAW 37 (CAL)

Mittal Portfolios Pvt. Ltd. v. Subir Kumar Das

2021-01-18

DEBANGSU BASAK

body2021
JUDGMENT Debangsu Basak, J. - In a suit for declaration, perpetual and mandatory injunction, relating to 100 equity shares of the defendant no.3 under folio No.383, the plaintiff seeks interim protection. 2. Learned advocate appearing for the plaintiff submits that, the plaintiff and the defendant no.1 entered into an agreement dated October 17, 2013 relating to the shares in the suit. She draws the attention of the Court to the various clauses of the agreement. She submits that, the plaintiff performed its obligations under the agreement. The plaintiff paid the entire consideration money. In fact, the defendant no.1 part performed the obligations under the agreement. The defendant no.1 upon receipt of the consideration money, forwarded the succession certificate as was required. It is subsequent thereto, that the defendant no.1 purported to take a stand that, heirs of the deceased sister of the defendant no. 1 were not willing to have the share transferred. She submits that, as on October 15, 2016 at least, the transaction between the plaintiff and the defendant no.1 stood concluded. According to her the title to the 100 shares stood transferred upon the plaintiff depositing the consideration amount with the defendant no.1 that is on October 15, 2016. The ministerial act of executing the transfer deed and executing other documents so as to secure the title on the shares concerned, were not done. Consequently, the defendant no.1 was holding the 100 shares for and on behalf of the plaintiff as its trustee. In support of the contention that the title to the property in the shares stood transferred upon the plaintiff as on October 15, 2016 if not earlier, learned advocate appearing for the plaintiff relies upon Sections 19 and 28 of the Sale of Goods Act, 1930. She submits that, the intentions of the parties were that the shares would stand transferred to the plaintiff upon the plaintiff paying for the same. She draws the attention of the Court to the various clauses of the agreement between the parties. 3. Learned advocate appearing for the plaintiff submits that the entire consideration was paid in a staggered manner. The last of the payments was made on October 15, 2016. Therefore, as on October 15, 2016 the property in the shares stood transferred in favour of the plaintiff. 3. Learned advocate appearing for the plaintiff submits that the entire consideration was paid in a staggered manner. The last of the payments was made on October 15, 2016. Therefore, as on October 15, 2016 the property in the shares stood transferred in favour of the plaintiff. Subsequent to such date, the defendant no.1 was holding on the original share certificates as a trustee for and on behalf of the plaintiff. 4. Learned advocate appearing for the plaintiff refers to the letter of termination dated December 9, 2016. She submits that, the defendant no.1 cannot terminate the contract as, the title to the property stood transferred in favour of the plaintiff on October 15, 2016. She submits that, the plaintiff became aware of the subsequent transfer or an attempt to do so from the communication received by the plaintiff from the registered transfer agent of the defendant no.3. Upon the plaintiff learning about the particulars of the transferee of such shares, the plaintiff took appropriate steps and filed an application for impleading such purported transferee in the suit. 5. Learned advocate appearing for the defendant no.1 submits that, the suit as framed is not maintainable. He submits that, the prayers in the plaint did not seek specific performance of the so called agreement. In absence of the plaintiff seeking a prayer for specific performance of the so called agreement, according to him the plaintiff is not entitled to a declaration or perpetual injunction or mandatory injunction in respect of the subject shares. In support of such contention learned advocate appearing for the defendant no.1 relies upon ( Atma Ram versus Charanjit Singh, (2020) 3 SCC 311 ) and (Mujeeb Rehman versus Mohd. Nabi & Ors.,2017 SCConlineDel 11393). 6. Learned advocate appearing for the defendant no.1 submits that in any view of the situation, the transfer of the shares cannot be said to complete. He draws the attention of the Court to the correspondence exchanged between the parties. He submits that the plaintiff was requiring the defendant no.1 to execute the transfer deed and other documents in respect of the shares concerned. He submits that, without any deed of transfer being executed, the shares cannot be said to stand transferred in favour of the plaintiff. He submits that the plaintiff was requiring the defendant no.1 to execute the transfer deed and other documents in respect of the shares concerned. He submits that, without any deed of transfer being executed, the shares cannot be said to stand transferred in favour of the plaintiff. Coupled with the fact that the plaintiff is not seeking specific performance of the so called agreement and the fact that, the transfer deeds not being executed, the plaintiff is not entitled to any relief in the suit far less in the interim application. He draws the attention of the Court to the various correspondence exchanged between the parties. He submits that, the defendant no.1 volunteered and paid the plaintiff the principal amount received along with interest. The plaintiff did not refund the same till such time the Court by its order required the plaintiff to keep the sum deposited with the Registrar, Original Side. 7. Learned advocate appearing for the defendant No. 1 submits that, at this stage, the claim for specific performance is barred by the laws of limitation. In any event the plaintiff did not apply under Order VI Rule 17 of the Code of Civil Procedure, 1908 for amendment of the pleadings. He submits that, the plaintiff being aware of the sale to the third party deliberately did not include such third party in the suit. 8. Learned advocate appearing for the defendant no.1 submits that there is gross delay on the part of the plaintiff in approaching the Court. The plaintiff paid the money on October 15, 2016, the defendant no.1 refunded such amount in the month of April 24, 2017. The instant suit was filed in 2018. Moreover, after one year of the filing of the suit the plaintiff applied for injunction. He submits that, the interim orders passed earlier be vacated. 9. In reply, learned advocate appearing for the plaintiff submits that, the plaintiff became aware of the particulars of the transferee subsequent to the filing of the suit. It is only on the plaintiff becoming aware that the plaintiff filed the application for including such purported transferee as a party to the suit. 10. The subject matter of the suit is 100 equity shares of the defendant no.3 under folio no.383 standing in the name of Late Panch Kori Das. The defendant nos.1 and 2 are the sons of Late Panch Kori Das. 10. The subject matter of the suit is 100 equity shares of the defendant no.3 under folio no.383 standing in the name of Late Panch Kori Das. The defendant nos.1 and 2 are the sons of Late Panch Kori Das. The plaintiff and the defendant no.1 entered into an agreement on October 17, 2013 concerning the 100 shares of the defendant no.3 held by Late Panch Kori Das. The defendant no.1 represented the estate of Late Panch Kori Das in the agreement. The agreement records that, the defendant no.1 needs to transmit/transfer such shares in his name. The need for the succession certificate of Late Panch Kori Das is also emphasized. Clause 3 of the agreement requires the defendant no.1 to hand over the succession certificate to the plaintiff upon obtaining the same. Clause 4 requires the defendant no.1 to execute a special power of attorney in favour of the plaintiff for submission of documents and to apply for transmission/transfer of the shares to the company. Clause 5 requires the defendant no.1 to hand over the original share certificates with duly signed and attested transfer deed along with the self attested copies of identity and address proof. 11. Prima facie, it appears that, succession certificate was obtained by the defendant no.1 in respect of the estate of Late Panch Kori Das and forwarded to the plaintiff on September 23, 2016. Again prima facie, it appears that, the plaintiff initially paid a portion of the consideration price. The balance consideration was paid on October 15, 2016. 12. By a letter dated December 9, 2016, the defendant no. 1 informed the plaintiff that, one of the heirs of late Panch Kori Das, namely, Smt. Champa Bhar, sister of the defendant no.1 died on November 28, 2015 and that, the heirs of Late Champa Bhar are opposing the agreement dated October 17, 2013. By such communication, the defendant no. 1 terminated the agreement dated October 17, 2013. The defendant no.1 undertook to pay the amount received along with interest. It appears that, the defendant no.1 made over the amount received from the defendant no.1 together with interest to the plaintiff. Prima facie it appears that, the plaintiff did not accept the termination of the agreement. 1 terminated the agreement dated October 17, 2013. The defendant no.1 undertook to pay the amount received along with interest. It appears that, the defendant no.1 made over the amount received from the defendant no.1 together with interest to the plaintiff. Prima facie it appears that, the plaintiff did not accept the termination of the agreement. The plaintiff, however, kept the amount received from the defendant no.1 till the order of the Court required the plaintiff to deposit such sum with the Registrar, Original Side. The Court is informed that the plaintiff complied with such direction. The amount is presently lying with the Registrar, Original Side. 13. In this factual matrix, provisions of Section 19 and 28 of the Sale of Goods Act, 1930 requires consideration. Section 19 of the Act of 1930 prescribes that title to a property passes when intended to pass. Section 28 of the Act of 1930 stipulates that sale by one of the joint owners having possession of the property is valid. Section 28, however, prescribed certain limitations on the power to sell by joint owners having possession of the property. 14. In the facts of the present case, the agreement dated October 17, 2013 prescribes in Clause 8 that, the plaintiff will be entitled to the benefits of the 100 Shares of the defendant no.3 including splitting of the shares, dividends, bonus, benefits arising out of merger or de-merger or any other corporate actions from the date of the execution of the agreement while, the defendant no.1 will be entitled to such benefits prior to the execution of the agreement. Therefore, the parties prescribed a cut of date being October 17, 2013, that is the date of the agreement as the date which will govern the entitlement between the parties in respect of the 100 shares. Prima facie, I am of the view that, the parties intended that, the title to the 100 shares will stand transferred and vested with the plaintiff on and from October 17, 2013 subject to the plaintiff, paying the entire consideration thereof. Admittedly, the defendant no.1 received the entire consideration for the sale of the shares on October 15, 2016. At least, therefore, again on a prima facie view, the title to the shares stood transferred to the plaintiff on October 15, 2016. 15. Admittedly, the defendant no.1 received the entire consideration for the sale of the shares on October 15, 2016. At least, therefore, again on a prima facie view, the title to the shares stood transferred to the plaintiff on October 15, 2016. 15. The contention of the defendant no.1 that, in absence of the share transfer deed, title did not pass in the shares, requires consideration. 16. No doubt in order to complete the sale of the shares, a duly executed transfer deed is required. Such transfer deed is required to be lodged with the relevant company for such company to register the transfer of the shares. 17. In the facts and circumstances of the present case, given the nature of transactions between the parties, I am not in a position to arrive at a final finding on the materials available on record that, the plaintiff does not have any right title and interest in respect of the 100 shares of the defendant no.1 belonging to Late Panch Kori Das. 18. In Atma Ram (supra) the Supreme Court considered the relief sought for by the plaintiff on the conclusion of the trial. Considering the facts of that case, the Supreme Court arrived at the finding that, no issue was framed on the question of readiness and willingness on the part of the plaintiff in terms of Section 16(c) of the Specific Relief Act, 1963. It also returned the finding that the conduct of the plaintiff is crucial in a suit for specific performance. On facts, the Supreme Court found that the plaintiff was not entitled to a relief for specific performance. In the facts of the present case, the parties are yet to lead their evidence. 19. In Mujeeb Rehman (supra) an application under Section 115 of the Code of Civil Procedure 1908 was considered. The application was directed against the order of dismissal of the petition under Order VII Rule 11 of the Code of Civil Procedure, 1908. Presently there is no application under Order VII Rule 11 of the Code of Civil Procedure, 1908 pending. In any event, even on a prima facie, it cannot be said that the claim of the plaintiff in the suit is barred by law. 20. It is imperative that the Court protects the subject matter of the lis till the final decision of the suit. In any event, even on a prima facie, it cannot be said that the claim of the plaintiff in the suit is barred by law. 20. It is imperative that the Court protects the subject matter of the lis till the final decision of the suit. As noted herein the subject matter of the lis is 100 shares of the defendant no.3 belonging to Late Panch Kori Das. Till the issues raised by the parties are finally decided, it would be appropriate that no third party right is created in respect of the 100 shares of Late Panch Kori Das for the Court to take a decision thereon. 21. In such circumstances, the plaintiff having made out a prima facie case and the balance of convenience and inconvenience being in favour of the plaintiff and since, compensation in terms of money may not be adequate, it would be appropriate to continue the interim order granted on January 16, 2020 till the disposal of the suit. 22. Ia NO.GA/2/2019 (Old No. GA/2842/2019) is disposed of accordingly.