Larsen & Toubro Ltd. (M/s.) vs Ashok Sukhija

Hemant Gupta, J.—The challenge in the present revision petition is to the order passed by the learned executing Court on 24.5.1995, whereby the objections filed by the petitioner that the decree is not executable was dismissed.

The decreeholder filed a suit for declaration that he is engaged in sale and purchase of shares. Vide Bill No. 1765 dated 23.1.1998, he purchased 1500 shares of the defendantCompany as an absolute buyer from M/s. Neelam Bhatia and Company and another 1500 shares from Kewal Bankers and Company, Ludhiana, vide Bill No. 87 and 88. After the purchase of the aforesaid shares, the plaintiff was delivered the shares by the respective sellers. The defendant was working as a share broker at Ludhiana and defendant No. 2, in the last week of January, 1988, approached the petitioner for selling the aforesaid 3,000/ shares and offered to pay premium over and above the price at which the plaintiff has purchased the shares. The petitioner transferred the shares to defendant No. 2 on receipt of cheque for a sum of Rs. 3,00,000/ but the cheque was dishonoured. Defendant No. 1 has disappeared from his business premises and, therefore, the plaintiff sought a declaration that since the consideration has never passed, therefore, the contract of sale of shares between the plaintiff and defendant No. 2 is void ab initio. It was asserted that it is the plaintiff and not defendant No. 2, who is the sole owner of the said shares. The suit was decreed to the effect that the plaintiff is owner of the shares as detailed in head note of the plaint and defendant No. 2 has no interest in the said shares. The learned trial Court also restrained defendant No. 1 from transferring the said shares in the name of defendant No. 2 or any purchaser from defendant No. 2 except on valid documents as provided under Section 108 of the Companies Act, 1956. The operative part of the judgment reads as under :

"It is ordered that I decree the instant suit ex parte to the effect that the plaintiff is owner of the shares as detailed in the head note of the plaint which are of defendant No. 1 Company and defendant No. 2 has no interest in the said shares. Defendant No. 1 Company is further restrained from transferring the said shares in the name of the defendant No. 2 or any purchaser from defendant No. 2 except on valid documents as provided under Section 108 of the Companies Act, 1956."

In execution of the said decree, the petitioner filed objections and produced on record Exhibit OW1/3, containing the names of the registered owners of the shares in question. The said description reads as under :

Yash Trading and Finance Company 2700 shares

Mrs. Shera Jal Pavri and Mr. Jalm Rustomji Pavri 100 shares

Himmat Lal Rattan Chand Shah 100 shares

B. Shoba Rao 50 shares

G.S. Sowmy Anayaki and G.S. Sheshadri 50 shares

Total 3000 shares

It was the objection of the petitioner that neither the alleged sellers of the shares to the decreeholder nor defendant No. 2 are reflected as purchasers in the records of the Company. Therefore, the transaction of sale alleged by the plaintiff cannot be recognised by the Company in its record.

It was found that the executing Court cannot go behind the decree and it was not shown as to how the decree is unexecutable. It was found that the decree holder has been held to be owner of the disputed shares. So the matter cannot be resisted and thus dismissed the objections filed by the petitioner.

After hearing learned Counsel for the parties, I am of the opinion that the finding recorded by the learned executing Court is clearly not sustainable in law. The plaintiff is the alleged purchaser of shares from M/s. Neelam Bhati and Company and Kewal Bankers and Company. The plaintiff is not purchaser from the persons, who are recorded registered owners of the shares. In revision petition, it is sought to be argued that the said sellers are in fact, the brokers but it could not be pointed out that the petitioner has submitted any shares script on behalf of the persons named above in respect of the purchase of the shares through the brokers, named by the plaintiff. The persons, who are recorded as owners of the shares in the books of the Company, have not been impleaded as a party in the suit. Without proper parties, any decree obtained by the plaintiff cannot be executed. Neither the vendors nor the sellers of the shares are recorded as the owners of the shares in the books of the Company. Therefore, the effect of the decree is to deprive the registered owners and the third party without impleading the said owners in the suit.

In my opinion, the order passed by the learned executing Court on 24.5.1995 from parent illegality and irregularity. The decree cannot be executed which affects the rights of the persons not impleaded in the suit. Consequently, the present revision petition is allowed and the impugned order dated 24.5.1995 passed by the learned executing Court is set aside as the decree passed cannot be executed against the petitioner herein.