SON. LDR.GURDIAL SINGH vs UNITED LAND AND HOUSING LTD.

THIS complaint has been filed by Sqn. Ldr. Gurdial Singh and his wife Smt. Jagjit Kaur, both of Chandigarh against three respondents namely; United Land and Housing Ltd., New Delhi, Harson (India) Pvt. Ltd., New Delhi and Shri Surinder Mehta, Director (Operation) of respondent No. 1 with the allegations which are these. The respondent Company (meaning respondent No. 1) advertised public issue of shares with certain highlights, one of these being guaranteed by-back of shares by the promoters, after the expiry of the non-transferability period at Rs. 21/- per share, the original price whereof was Rs. 10/- per share. The complainants were tempted to subscribe to the public issue and paid Rs. 40,000/- for the allotment of 2000 shares to each of them. These shares of the denomination of Rs. 10/- were allotted to the complainants at par. It is stated that the share certificates have not been received. The complainants after the expiry of three years from the date of allotment of shares approached the respondent Company for buy-back facility at the rates of 21/ - per share. In response to the above, respondent No. 1 directed the complainants to contact respondent No. 2 for the purpose. The original letters said to have been received by the complainants have not been produced but its specimen issued to some other persons have been placed on record as Annexures C-2 and C-3.

IT is further alleged in the complaint that on pursuing the matter, the respondents purchased 400 shares of complainant No. 1 at Rs. 21/- per share but the residuary shares of the complainants were not purchased. Another grievance made is that the respondent did not pay any dividend to the complainants. With these allegations it was contended that the respondent Company has indulged in unfair trade practice which has caused loss to the complainants. A total compersation of Rs. 1,59,966/- has been claimed on behalf of the complainants against the respondents for providing deficient service and indulging in unfair trade practice. Notice having been issued to the respondents in the complaint, they filed a joint reply. Apart from raising some preliminary objections regarding jurisdiction etc., the main contentions on merits are these. None of the respondent companies advertised the public issue of shares. However, respondent No. 1 Company had issued the brochure for providing placement of shares amongst the directors/employees, associates and relations, in accordance with the terms and conditions incorporated in the brochure (Annexure C-1). The fact that complainant No. 1 had been allotted 2000 shares on payment of Rs. 40,000/- has not been denied. At the same time it is stated that complainant No. 1 had subscribed for these 2000 shares to become Area Manager and not under a public issue. The said complainant did not comply with the other conditions attached to his appointment as Area Manager. As regards complainant No. 2, it was admitted that she had applied for purchase of 2000 shares but she too had not complied with the terms and conditions. She had also defaulted in the payment of interest on delayed payment to the extent of Rs. 2800/-. In view of these facts, both the complainants had not been issued any share certificate. Another significant defence taken is that its was respondent No. 2 Company which was the promoter and as and when any share-holder applied to the said promoter the shares were purchased. It was obliguely admitted that the respondent Company had gone in losses, though the same is attributed to non-cooperation of the complainants. The fact that the respondent having repurchased 400 shares of complainant No. 1 at the rate of Rs. 21/- per share was also denied. On the contrary it is alleged that the said complainant had borrowed Rs. 8,000/- as against the pledge of 400 shares. With these facts it was prayed that the complaint may be dismissed.

The rejoinder was filed on behalf of the complainants which does not acquire notice of any other significant fact. The parties filed an affidavit (by complainant No. 1) and a counter-affidavit (by respondent No. 3).

BEFORE making any observation on the merits of the case we would like to say that the pleadings of both the parties are quite vague and confusing with factual and other mistakes which could and should have been avoided to save the time of this Commission in spelling out the real purport of the stand taken by both the parties. However, we proceed to deal with the merits with the case. We have no hesitation in rejecting the preliminary objections regarding territorial jurisdiction of this Commission because the claimants resided at Chandigarh and the shares were admittedly allotted to them at Chandigarh as is evident from the relevant documents. The point which requires to be considered is whether the claimants are entitled to the reliefs claimed by them in the complaint. It is not disputed on either side that 2000 shares were allotted by respondent No. 1 to each of the two complainants on their applications. The contention that no public issue of the shares was made by the said respondent may be correct (in the absence of any evidence to the contrary) but this fact would not wash off the liability of the said respondent to honour the guarantee of buy-back as mentioned in their brochure, copy Annexure C-1. It is futile for the said respondent to contend that this was to be done by the promoter because it is apparent that it was respondent No. 1 itself who was the promoter of the scheme and who had received the consideration amount of the shares which were alloted to the complainants. It is emphasazied on behalf of the respondent that the buy-back guarantee and all other facilities mentioned in the brochure were available only to those persons who were appointed as Area Manager, Assistant Manager etc. and not to all the share-holders. We do not however agree with this contention because under the heading "Guaranteed Buy-Back the promoters" the guarantee was declared for all the share-holders without any mention that the same would be restricted only to Area Manager etc. We therefore hold that all the respondents were the promoters and were bound by the guarantee declared vide their brochure. We may observe here that the respondents have made a futile attempt to escape their liability by putting forward certain pleas against the eligibility of the two complainants for the buy-back facility.

IT is the case of complainant No. 1 itself that out of 2000 shares allotted to him, 400 shares had been bought back by the respondents at the rate of Rs. 21/- per share and that only the residuary share i.e. 1600 share had remained to be bought back. This being so, complainant No. 1 is entitled to a sum of Rs. 33,600/- (Rupees thirty three thousand and six hundred only) being the buy-back value of 1600 shares at the rate of Rs. 21/- per share. Complainant No. 2 is however entitled to Rs. 42,000/- (Rupees fourty two thousand only) as buy-back value of here 2000 shares at the rate of Rs. 21/- per share. We hold accordingly. As regards interest on the above amounts, we do not propose to grant the same because the respondent Companies are said to have gone in losses and this fact has not been controverted on behalf of the complainants by any cogent evidence. The respondents are held jointly and severally liable to pay the above amounts to the complainants, which they shall pay within one month from today. In the circumstances of the case we would leave the parties to bear their own costs of these proceedings. Announced in open Court. Parties be informed. Ordered accordingly.