Calcutta High Court
Vikash Somani vs Investor Education And Protection Fund ... on 22 August, 2024
OD-6
ORDER SHEET
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
ORIGINAL SIDE
IA No. GA/1/2024
In
CS/138/2024
VIKASH SOMANI
-VS-
INVESTOR EDUCATION AND PROTECTION FUND AUTHORITY AND ORS
BEFORE:
The Hon'ble JUSTICE KRISHNA RAO
Date : August 22, 2024.
Appearance:
Mr. Arik Banerjee, Adv.
Ms. Debjani Sengupta, Adv.
Mr. Rajib Mullick, Adv.
Ms. Ayantika Saha, Adv.
... for the plaintiff
Ms. Rashmi Bothra, Adv.
Ms. Garima Raijada, Adv.
... for the defendant no.1
Mr. U.S. Menon, Adv.
Mr. Abhirup Chakraborty, Adv.
... for the defendant no.2
Mr. Rudrajit Sarkar, Adv.
Mr. Tamoghna Saha, Adv.
Ms. Vanshika Newar, Adv.
... for the defendant no.4
The Court: Mr. Arik Banerjee, learned counsel, is appearing for the
plaintiff. Ms. Rashmi Bothra, learned counsel, is appearing for the defendant
no.1. Mr. U.S. Menon, learned counsel, is appearing for the defendant no.2.
Mr. Rudrajit Sarkar, learned counsel, is appearing for the defendant no.4.
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Initially when the plaintiff has filed this suit, the plaintiff has also
prayed for ad interim order but by an order dated 2nd May, 2024, this Court
has refused to grant ad interim order. Now, all the parties have appeared in
the matter and have filed their affidavits and after completion of pleadings,
the application for grant of interim order is taken up for hearing.
Plaintiff says that on 24th December, 1993 the plaintiff has
purchased 11600 shares of Reliance @ 300/- per share from B.C. Lamboria
and Company for a total sum of Rs.34,80,000/-. After purchase of the said
share, the plaintiff has sold 550 share to M/S. D.P. Poddar and Company for
a total sum of Rs.1,62,250/-. Though the plaintiff has sold the share but on
30th December, 1993, the plaintiff has received a telephonic call from a
person identifying himself to be calling from the office of the defendant no.6
describing himself as an employee of the defendant no.6 and requested the
plaintiff to deliver 550 share along with original transfer deed. Accordingly,
the plaintiff has delivered the said share to the said unknown person of the
defendant no.6.
On 3rd January, 1994, the plaintiff received a telephonic call from
the defendant no.6 company whereby the plaintiff was requested to deliver
550 share to the defendant no.6. On receipt of the said call, the plaintiff has
informed the defendant no.6 that he had already delivered 550 share to the
defendant no.6 to one person deputed by the defendant no.6.
On 4th January, 1994, the defendant no.6 in writing informed the
plaintiff that the defendant no.6 has not received 550 share of the Reliance
Industries Limited as per the Delivery Sheet No.31/1993. On receipt of the
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said notice, the plaintiff had immediately made a complaint to the concerned
police station for initiation of criminal action and the plaintiff has returned
the amount to the defendant no.6. As the plaintiff could not lock the said
550 share of the Reliance Industries Limited, accordingly, the plaintiff has
filed Title Suit before the City Civil Court being TS/466/1994 but ultimately,
the suit was dismissed and being aggrieved by the dismissal of the suit, the
plaintiff has preferred an appeal and the appeal was also dismissed.
The plaintiff has made out a specific case in the present suit that
in the appeal as per the direction of the Hon'ble Appellate Court, the
Reliance Industries Limited has filed an affidavit wherein it was stated that
as per the available records with KFin Technologies Private Limited, the
present Registrar and Transfer Agents of the Reliance Industries Private
Limited at all material times, the subject 550 shares in the company were
and are still in the name of M/s. Sahara India Financial Corporation and it
was further stated that the share along with executed transfer deeds were
lodged by various parties for transfer in their name sometime in the year
1994 and the request for such transfer by the lodger parties was rejected by
the Registrars and Transfer Agents of the Reliance Consultancy Services
Limited without effecting the transaction in view of the pendency of the suit.
Counsel for the plaintiff submits that in the said affidavit, the
defendant no.2 has further stated that subject 550 share have been
transferred to the Investor Education and Protection Fund along with 550
bonus shares declared in 1997, 1100 bonus shares declared in 2009 in
electronic form during the year 2019 in terms of the Investor Education and
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Protection Fund Authority. Counsel for the plaintiff submits that after
coming to know about the said facts, the plaintiff has filed the present suit.
Counsel for the plaintiff has handed over a notice published in the
newspaper The Times of India dated 25th May, 2024 wherein the defendant
no.2 has issued a publication with regard to Transfer of Equity Share of the
company to Investor Education and Protection Fund Authority. In the said
notice, it is informed that in case the company does not receive any
communication (claiming the unclaimed/unencahsed) dividend from the
concerned share-holder on or before 26th August, 2024, the company shall
with a view to complying requirements set out in the Rules, dematerialise
transfer the shares to IEPF Authority by way of corporate action as per
proceeding as stipulated in the Rule.
Learned counsel for the plaintiff submits that if at this stage
interim order is not granted restraining the defendant no.2 from transferring
the share to IEPF Authority for which the plaintiff will be badly prejudiced.
Learned counsel for the plaintiff has also relied upon the
averments made by the defendant no.4 in their affidavit in opposition
wherein it is mentioned that the defendant no.4 neither claims any right over
the said share nor has nothing to do with the present suit. He submits that
the defendant no.4 is not claiming the share which also proved that the said
share has been purchased by the plaintiff.
Counsel for the plaintiff has relied upon the judgment in the case
of Rameshwar Dayal vs. Banda reported in (1993) 1 Supreme Court
Cases 531 and submitted that to operate as res judicata the first finding
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must be on an issue which has been directly and substantially in issue in
the former suit. He submits that in the present case the issue of the present
suit and the previous suit are totally different and the party to the present
suit and the previous suit are also different.
He relied upon the judgment in the case of Escorts Farms Ltd. vs.
Commissioner, Kumanon Division, Nainital and Others reported in AIR
2004 Supreme Court 2186 and submitted that plea of res judicata is not
applicable where there is no contest on issue between parties and there is no
conscious adjudication of an issue. He submits that in the present case
though the defendant has filed the written statement before the previous suit
but subsequently, the defendant no.2 has not contested the said suit and
the learned Judge had not adjudicated the issue as per the objection raised
by the defendant no.2.
Counsel for the plaintiff has relied upon the judgment in the case
of City Municipal Council Bhalki vs. Gurappa and Another reported in
(2016) 2 Supreme Court Cases 200 and submitted that for the bar of res
judicata to operate in the subsequent original suit proceedings, the litigating
parties must be the same, and the subject-matter of the suit must also be
identical.
Learned counsel for the plaintiff has also relied upon the judgment
in the case of Nagabhushanammal vs. C. Chandikeswaralingam reported
in (2016) 4 Supreme Court Cases 434 and submitted that "Res judicata"
literally means a "thing adjudicated" or "an issue that has been definitively
settled by judicial decision".
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Learned counsel for the plaintiff has relied upon the judgment in
the case of Srihari Hanumandas Totala vs. Hemant Vithal Kamat and
Others reported in (2021) 9 Supreme Court Case 99 and submitted that to
determine whether a suit is barred by res judicata, it is necessary that the
"previous suit" is decided, the issues in the subsequent suit were directly
and substantially in issue in the former suit, the former suit was between
the same parties or parties through whom they claim, litigating under the
same title, and that these issues were adjudicated and finally decided by a
competent court.
Learned counsel for the plaintiff has relied upon the judgment in
the case of Rachit Malhotra vs. One97 Communications Limited reported
in 2018 SCC OnLine Del 12410 and submitted that the shareholder
agreement denotes an agreement whereunder all shareholders or a
shareholder of the company agree on the management of the company
merely an option available to the employees of the applicant to acquire
shares of the application would not qualify as a shareholders agreement.
Learned counsel for the plaintiff has relied upon the judgment in
the case of Prime Hitech Textiles LLP vs. Manish Kumar reported in 2022
SCC OnLine Cal 2326 and submitted that the Hon'ble Court has
categorically held that without any mercantile document it cannot be said
that the suit is coming under the provision of Commercial Suit under
Section 2 (1) (c) of the Commercial Courts Act.
Learned counsel for the plaintiff has relied upon the judgment in
the case of Dalpat Kumar and Another vs. Prahlad Singh and Others
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reported in (1992) 1 Supreme Court Case 719 and submitted that the
Hon'ble Supreme Court has framed guidelines for grant of temporary
injunction.
Per contra, Mr. U.S. Menon, learned counsel for the defendant no.2
submits that the suit filed by the plaintiff is not maintainable under law as
initially the plaintiff has filed the suit claiming declaration of the similar
shares but the learned City Civil Court has dismissed the suit. He further
submits that the suit filed by the plaintiff is barred by limitation as in the
previous suit, the defendant no.2 had filed the written statement and in the
written statement, the defendant no.2 had categorically stated that as per
the records available, the said shares are standing in the name of persons
other than the plaintiff. The plaintiff has not made registered holders as
party defendant to the said suit. The defendant no.2 in their written
statement filed before the City Civil Court has also stated that the said 550
shares have been lodged for registration of transfer along with the executed
transfer deeds by various parties and the list was also enclosed along with
the said written statement. Learned counsel for the defendant no.2 further
submits that the plaintiff had the knowledge that the shares have been
transferred and the list was enclosed along with the written statement but
the plaintiff has not taken any steps in the earlier suit which was filed before
the City Civil Court by making the said persons as party to the said suit.
Learned Counsel for the defendant no.2 has drawn the attention of
this Court to the Judgment passed by the leaned City Civil Court wherein
the learned Court has specially framed the issue whether the plaintiff is
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entitled to the declaration as prayed for but the learned Court has come to
the conclusion that the plaintiff failed to prove the case and accordingly, the
suit was dismissed.
Learned Counsel for the defendant no.2 also draws the attention of
this Court to the order passed by the Appellate Court wherein the appeal
preferred by the plaintiff was dismissed. In the said order also, the Hon'ble
Appellate Court has categorically held that it was the onus of the plaintiff to
show that the shares were sold on the basis of the instruction received by
him from the said defendant over phone and the plaintiff could have
summoned the person who alleged to have come from the defendant no.2 to
take delivery of the shares and the money receipts which the plaintiff has
relied upon is not conclusive of transaction and the Hon'ble Division Bench
also held that the plaintiff has failed to discharge the burden of proving the
transaction.
Learned counsel for the defendant no.2 further submitted that
after dismissal of the appeal, the plaintiff has preferred a review application
but, the said review application was also dismissed. It was also submitted
that being aggrieved by the order of dismissal of the appeal, the plaintiff has
preferred an SLP and the SLP was also dismissed. The Hon'ble Supreme
Court has given liberty to the plaintiff to pursue with the remedy in the
Criminal law and the plaintiff had initiated the Criminal case and as such
the suit filed by the plaintiff is barred by res judicata and is not
maintainable.
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Mr. Sarkar, learned counsel for the defendant no.4 submits that
the defendant no.4 has already sold the shares to third party and defendant
no.4 is not having any share of the plaintiff and he further submits that the
suit filed by the plaintiff before the City Civil Court has already been
dismissed which was affirmed by the Hon'ble Supreme Court and as such
the plaintiff cannot a file a separate suit for the same cause of action.
Learned counsel for the defendant no.4 further submits that the
suit filed by the plaintiff is not maintainable before this Court as the suit is
commercial in nature and the plaintiff has admitted in paragraph 1 and
paragraph 4 of the plaint that the plaintiff was a stock broker and carried on
business as stock and share broker. Accordingly, he prays for dismissal of
the application.
Heard learned counsel for the respective parties.
Perused the materials on record and the judgments relied by the
plaintiff.
Admittedly, earlier the plaintiff had earlier filed a suit being Title
Suit No.466/1994. In the said suit, the learned Court has framed the
following issues :-
1. Is the suit maintainable in its present form?
2. Is the plaintiff entitled to the declaration as prayed for?
3. Is the plaintiff entitled to the permanent injunction as
prayed for?
4. To what other relief/reliefs if any is the plaintiff entitled?
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The learned Trial Judge has dismissed the said suit holding that
"No cause of action justifying the course of action taken by the plaintiff is
found. The common sense is also contrary to the reality is especially to
establish the fact about the delivery of 550 equity shares erstwhile to an
unknown person. So the allegation to my mind, has not if so facto proved
any inducement and therefore the suit has been abortive. When indeed it
can be legitimately inferred that the version of the plaintiff is not in the ring
of truth."
The plaintiff has filed appeal, but the same was also dismissed.
The Hon'ble Appellate Court while dismissing the appeal held that "Inability
to produce any witness to prove the transaction is fatal to the case. The onus
is on the plaintiff to show that the shares were sold on the basis of the
instruction received by him from the said defendant over phone. The plaintiff
could have summoned the person who alleged to have come from the
defendant no.2 to take delivery of the shares. The money receipt is not
conclusive of the transaction. The plaintiff has failed to discharge his burden
of proving this transaction."
Now the plaintiff has taken a stand that for filing of the present
suit new cause of action arose only after receipt of affidavit filed by the
Reliance Industries Limited before the Appellate Court wherein the Reliance
Industries has taken the following plea :
"3. I state that as per the records available with KFin
Technologies Private Limited, the present Registrar and Transfer
Agents of the Respondent No.1, at all material times, the subject
550 shares in the company were and are still standing in the
name of M/s. Sahara India Financial Corporation, having their
office at Sahara India Bhawan, 1, Kapoorthala Complex, Aliganj,
Lucknow-226020. The said shares along with executed transfer
deeds were lodged by various parties for transfer in their favour
sometime in the year 1994. The request for such transfer by the
lodger parties was rejected by the then Registrars and Transfer
Agents of the Respondent No.1, namely, Reliance Consultancy
Services Limited (RCSL), without effecting transfer in view of the
pendency of the suit being Title Suit No.466 of 1994 filed by the
Plaintiff/Appellant before the Learned City Civil Court at
Calcutta and in compliance with the order of interim injunction
passed therein. Such rejection was communicated by RCSL to
the respective parties who lodged the shares with transfer deeds
under intimation to the plaintiff herein at whose instance the
restraint order was made in respect of those shares. In this
regard, copies of letters rejecting the transfer of the said shares
addressed to the respective lodger parties by RCSL with copy
marked to the plaintiff under Registered Post with A/D are
annexed hereto and collectively marked with the Letter "A".
4. I say that on or about 9th March, 2007 the
defendant/respondent No.1 had filed a Written Statement in the
aforesaid suit wherein the defendant No.1 had disclosed the
name of registered holder (Sahara India Financial Corporation)
and the parties who had lodged the shares which were returned
to them without effecting transfer. In spite of the same the
plaintiff / appellant did not choose to add or implead either the
registered holder or the lodger parties who were necessary
parties to the suit. In this regard, a list of the registered holder
and a list of lodger parties who lodged the shares and transfer
deeds for transfer are annexed hereto and collectively marked
with the Letter "B".
10. I say that in absence of knowledge of the order dated
January 14, 2013 the subject 550 shares have been transferred
to the Investor Education and Protection Fund, along with 550
bonus shares declared in 1997, 1100 bonus shares declared in
2009, in electronic form during the year 2019 in terms of The
Investor Education and Protection Fund Authority (Accounting,
Audit, Transfer and Refund) Rules, 2016 ("IEPF Rules") as
amended, which was notified by the Ministry of Corporate Affairs
pursuant to Section 124 (6) of the Companies Act, 2013 as the
respondent company was required to transfer the shares in
respect of which the dividends remains unpaid or unclaimed for
a period of seven consecutive years or more to the said Authority
(IEPF) as per the said Rules. The 2200 bonus shares declared in
the year 2017 have been kept in abeyance with the company as
it did not become due to be transferred. It is pertinent to note
that the said shares and unclaimed dividends transferred to the
said IEPF Authority could be claimed by the rightful owner from
the said Authority by making an application in prescribed form
online and forward the physical copy (print out) of the same duly
signed (as per registered specimen signature) along with the
requisite documents enumerated in the prescribed form to
address of the transfer agents of the company. Upon receipt of
above documents, the transfer agents shall send a verification
report to IEPF authority for refund of the shares/unclaimed
dividend amount through company's Nodal Officer, to the
rightful owner."
The plaintiff has also taken the stand that in the affidavit-in-
opposition the defendant no.4 has categorically stated that the defendant
no.4 neither claimed any right over the said shares nor has nothing to do
with the present suit.
Counsel for the plaintiff has filed the present suit by relying upon
the receipts wherein the plaintiff has purchased 11600 shares from B. C.
Lamboria and Company on 24th December, 1993.
The plaintiff has further relied upon the document dated 30 th
December, 1993 wherein the plaintiff has sold 550 shares to D. P. Poddar
and Company but it is the specific case of the plaintiff that D. P. Poddar has
not received the said shares and the plaintiff had initiated criminal case with
regard to the said shares and has returned the said amount. The plaintiff
has filed the previous suit before the City Civil Court praying for declaration
about the said shares. Initially, the defendant no.2 had contested the said
suit by filing the written statement. In the said written statement, the
defendant no.2 has categorically stated that as per the record available with
the defendant, the shares are standing in the name of the persons other
than the plaintiff. The defendant no.2 has enclosed two documents along
with the written statement being Exhibit-1 and Exhibit-2 wherein it shows
that the shares were recorded in the name of Sahara India Financial
Commercial along with others and also enclosed the list of lodger parties
wherein altogether 9 persons have lodged their claims. The plaintiff had the
knowledge of the said document and the statement made by the defendant
no.2 but the plaintiff has not made them as party to the said suit and the
said suit has been dismissed.
In the affidavit-in-opposition, the defendant no.4 has categorically
stated that the defendant no.4 had procured the equity share from open
market and transferred the same to another third party and booked its profit
to such transaction and the said fact is of way back 1993. The plaintiff is
claiming share of 550 shares which were also subject matter before the City
Civil Court in Title Suit No.466/1994. In the said suit, in paragraph 2, the
plaintiff has made out a case that the plaintiff has purchased 2800 equity
shares of the Reliance Industries Limited. In the said suit, the plaintiff has
mentioned the cause of action arose on 28th December, 1993 when the
plaintiff sold 550 shares, on 30th December, 1993 when the plaintiff parted
with his shares, on 3rd January, 1994, when the defendant no. 2 demanded
delivery of the said shares and the same is still subsisting.
Now the plaintiff has filed the present suit mentioning the cause of
action arose on 5th September, 2022 when the defendant no.2 has disclosed
in its affidavit that the shares of the plaintiff were transferred to IEPF and
further 21st November, 2022 when the defendant no.2 further disclosed in its
second affidavit that the shares were remain with IEPF. The cause of action
as mentioned in the present suit cannot be said to be correct as the
defendant no.2 has filed the written statement in the previous suit and
categorically taken stand that the shares are standing in the name of person
other than the plaintiff and the defendant no.2 has disclosed the name of the
person in whose name the shares were standing and the name of the lodgers
have also been enclosed by way of exhibits but the plaintiff has not taken
any steps for impleading them as a party in the said suit.
This Court at this stage has only considered with regard to the
application for grant of temporary injunction and it would not be proper for
this Court to decide whether the suit filed by the plaintiff is barred by res
judicata or the suit is of commercial in nature. Only this Court has to
consider whether the plaintiff has made out a prima facie case and whether
the balance of convenience and inconvenience is in favour of the plaintiff to
get an order of injunction.
Considering over all facts as mentioned above, this Court finds that
the plaintiff has not made out any prima facie case and the balance of
convenience and inconvenience in favour of the plaintiff.
In view of the above, this Court finds that the plaintiff is not
entitled to get an order of temporary injunction.
Accordingly, GA/1/2024 is dismissed.
(KRISHNA RAO, J.)
Sbghosh
