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Judgment
D.R. Dhanuka J.
Leave under rule 147/148 of the High Court of Judicature at Bombay (O.S.) Rules, 1980, granted to the plaintiff to take out notice of motion in terms of the draft notice of motion handed in. The notice of motion is made returnable on January 30, 1996. Learned counsel for various defendants at today''s hearing waive service of motion on behalf of their respective clients.
Perused the plaint and the affidavit filed on all sides. Heard learned counsel for the parties at length.
For the reasons briefly indicated hereinafter, the application for ad interim relief as prayed for is refused.
By letter exhibit "AA" to the plaint defendant No. 10 has refused to transfer the suit shares in favour of defendant No. 9 on the ground that the signatures made on the relevant transfer deeds for and on behalf of the transferors do not tally with the specimen signatures in the record of defendant No. 10. Defendant No. 1 is, therefore, treating the delivery of the suit shares as bad delivery. It appears that defendant No. 1, is therefore, inclined to take consequential action in this behalf as permissible under the regulations framed by defendant No. 1.
It is not disputed that the transfer deeds in respect of the suit shares were signed for and on behalf of defendants Nos. 12 to 14 by one Mr. Samir Kumar Ghosh, director of defendant No. 2. Defendant No. 10 has filed an affidavit disclosing the names of the authorised signatories entitled to sign the transfer deeds in respect of shares held by defendants Nos. 12 to 14. It is the case of defendant No. 10 that defendants Nos. 12 to 14 had never notified the name of Shri Samir Kumar Ghosh as one of the authorised signatories entitled to sign on transfer deeds in respect of the suit shares. It is, therefore, for the plaintiffs and those who support the plaintiff to prove that the transfer deeds were signed by the authorised signatory for and on behalf of the registered holder of the shares. The plaintiffs have failed to prove that the statements appearing in the affidavit filed on behalf of defendant No. 10 in this behalf are incorrect.
The plaintiffs rely on three powers of attorney supposed to have been executed by the registered holders of the shares in favour of defendant No. 2-company. It is the case of defendant No. 10 that only one of the power of attorneys was registered with defendant No. 10. Assuming for argument''s sake that defendant No. 2 held the necessary powers of attorney from defendants Nos. 11, 12, 13 and 14 so as to effect the transfer of the said shares, even then it was necessary that the verified signatures of Shri Samir Kumar Ghosh be notified to defendant No. 10 as a specimen signature. This was not done. It is the case of defendant No. 2 that defendant No. 2 had in fact passed a board resolution on August 7, 1995, authorising Shri Samir Kumar Ghosh, its director, to sign the transfer deeds in respect of the shares held by defendants Nos. 12 to 14. A copy of the said alleged resolution is to be found at page 176 of the affidavit filed on behalf of defendants Nos. 11 to 14. It is the case of defendant No. 10 that the specimen signature of Shri Samir Kumar Ghosh was never notified to defendant No. 10. I did enquire from learned counsel for defendant No. 2 as to whether a copy of the above referred resolution or the verified signature of Shri Samir Kumar Ghosh was forwarded by defendant No. 2 to defendant No. 10 at any point of time. I did enquire from learned counsel for defendant No. 2 to furnish the necessary particulars in this behalf and produce the copy of the covering letter, if any, forwarding copy of the alleged resolution dated August 7, 1995. Learned counsel for defendant No. 2 was unable to answer these queries of the court for want of instructions. I have no reason to disbelieve the affidavit filed on behalf of defendant No. 10 or defendants Nos. 11 to 14 in this behalf. Defendant No. 10 is a public limited company. Defendant No. 10 could not effect transfer of shares unless the transfer deeds were signed by the registered holders of the shares or their authorised signatory whose signatures could be compared with the specimen signatures in record of defendant No. 10. Prima facie the affidavit of defendant No. 10 is convincing. I am, therefore, unable to find fault with the procedure followed by defendant No. 10. It is possible that the plaintiffs have acted bona fide but without due care and caution. It is possible that the plaintiffs have believed defendant No. 2 and defendant No. 3 and the plaintiffs are let down by the said defendants. I express no opinion on the various disputes between the parties. The procedure followed by defendant No. 10 for considering the application for transfer of shares appears to be correct and does not suffer from any legal infirmity. If so, defendant No. 1 is entitled to take necessary action in the matter, as provided by its regulations.
Learned counsel for defendant No. 2 has argued vigorously that defendant No. 10 had acted maliciously in refusing to transfer the suit shares in favour of defendant No. 9, the ultimate purchaser of the suit shares. Learned counsel for the plaintiffs submitted that the real reason for refusing to transfer the suit shares was to the effect that defendant No. 10 wanted to assist defendant No. 11 who had disputes with defendant No. 2. Learned counsel for the plaintiffs submitted that the plaintiffs and other stock brokers had acted bona fide and parted with large amounts and the plaintiffs should not suffer by reason of internal disputes between defendant No. 11 and defendant No. 2. Learned counsel for the plaintiffs submitted that defendants Nos. 9 to 14, are group companies and the plaintiffs are being put in difficulty for no fault of theirs in view of the fraudulent and collusive action of these defendants. Here also I am not convinced. It appears from a large number of documents on record, at least prima facie, that the suit shares forming part of other shares were placed with defendant No. 2 through defendant No. 11 on the condition that defendant No. 2 shall make certain payments to defendant No. 11 and defendant No. 11 shall be entitled to repurchase the suit shares, i.e., buy back the shares. It appears that there was a buy back arrangement between plaintiff No. 2 and defendant No. 11. If so, the said shares could not have been circulated or sold or disposed of on the stock exchange at all. The plaintiff and some others have thus taken the risk. Someone has misused the said shares and the blank transfer deeds. Someone has signed on the transfer deeds for and on behalf of registered holders of the shares without proper authority to execute the transfer deeds. All these aspects will require consideration. Prima facie there is no proof of fraud, collusion or malice.
It is possible that the plaintiffs have acted bona fide and have parted with large amounts. It is possible that the other parties to the suit have also parted with amounts. If the delivery of the suit shares is liable to be considered as a bad and ineffective delivery, monies already paid or received by the parties concerned may have to be refunded. Several monetary adjustments may have to be made. I express no opinion. If the court is not able to find any legal infirmity in respect of the decision of defendant No. 10 set out in letter exhibit "AA" to the plaint, or convincing proof of malice, fraud or collusion, the National Stock Exchange cannot be prohibited from taking the necessary action of closing out as prescribed in its regulations. If the Stock Exchange, Bombay, is also required to take some such action as set out in the affidavit filed on behalf of defendant No. 7, the Stock Exchange, Bombay, cannot be restrained by the court in this behalf. It is hereby clarified that the necessary action to be taken in this behalf shall be subject to the final orders of the court. No restraint order is being passed by the court. At this stage no case is made out for grant of ad interim injunction. The High Court of Calcutta was moved by defendant No. 2 and Mr. Samir Kumar Ghosh for an ad interim injunction against defendant No. 11. This court has been made aware of the proceedings before the High Court of Calcutta. It appears that the ad interim injunction applied for by defendant No. 2 and Mr. Samir Kumar Ghosh was declined by the High Court of Calcutta.
The application for ad interim relief is refused. All contentions at further hearing of the motion are kept open. Let the parties act in accordance with the regulations of the stock exchange in the meanwhile. In the absence of a prima facie case, nothing need be done by the court although some of the stock brokers have perhaps become victims of a situation for which they are not directly responsible. Perhaps the stock brokers have declined negligently. These stock brokers undoubtedly have their own money claim against the concerned parties. These are the reasons for declining ad interim relief.
The parties are authorised to act on the basis of an ordinary copy of this order duly authenticated by the associate of this court.
Issue of certified copy expedited.