Vinod Krishan Khanna vs Neha Export Ltd.
2002 Latest Caselaw 1940 Del

JUDGMENT

S. Mukherjee, J.

1. The present case relates to the suit for recovery of Rs. 9,36,000/- (Rupees Nine Lacs Thirty Six Thousand Only). The brief facts of the case are as follows:

2. The Plaintiffs, Non-Resident Indians, residing at 49, Abercorn Crescent, South Harrow, Middlesex HAZ OPX, England (U.K.) The Plaintiff No. 2 Along with Plaintiff No. 1 applied for issuance of shares of Defendant No. 1.

3. The Defendant No. 1, is a Limited Company carrying on business of Exports. Defendant Nos. 2 and 3 are the Directors of Defendant No. 1. Defendant No. 4 is the Company Secretary of Defendant No. 1.

4. The Defendant No. 2 is stated to have induced the Plaintiffs, vide his telefax dated 05.06.1996, for subscribing to the NRI share for Neha Export issue. In the aid telefax, Mr. Anand Gaggar, the Defendant No. 2, made representation to the effect that 20% deduction is available on capital gains on the sale of Viniyoga Clothes shares and thereby induced the Plaintiffs to send two cheques of Rs. 3,00,000/- each for applying for 20,000 shares.

5. The Plaintiffs reposing faith on the representations of the Defendant No. 3, in good faith, applied for 20,000 shares each of Neha Exports Limited at Rs. 15/- per share in June, 1996 by issuing two cheques dated 02.06.1996 from their NRI Account with Citibank N.A. at New Delhi to the defendant No. 1. The abovementioned two cheques for Rs. 3,00,000/- each bearing No. 339646 and 339647 were encashed by the Defendant No. 1 on 12.06.1996.

6. Even after receiving the aforementioned amount, the Defendants failed to issue the aforesaid shares, in the respective names of the plaintiffs. The Defendants also failed to respond to the various reminders of the Plaintiffs. The Defendants neither issued the share certificates, nor refunded the aforesaid amount to the Plaintiffs.

7. The Plaintiffs, after waiting patiently for more than six months for the recept of the said shares, were reportedly shocked to find a article published in the front page of the Economic Times, New Delhi, dated 12.12.96 relating to Neha Exports. The heading of the article stated "No safety for Neha Export Investors" and it further mentioned that, "Delhi based Neha Exports has defaulted in meeting its safety net obligation, while SEBI and the Lead Manager are silent. The script now does not get quoted and was last traded at Rs. 9/-.

"SEBI has been a mute spectator. While some informal meetings have taken place with SEBI officials, it is yet to issue any formal communication or take any action against Neha Exports or the lead Manager".

8. The above mentioned article published in the Economic Times, according to plaintiffs, makes it clear that the defendants had concealed material facts and misrepresented to the Plaintiffs regarding the profitability on the purchase of the said shares. The Defendants are alleged to be acting malafidely and that without issuing the shares to the Plaintiff, they have illegally withheld the amount of the plaintiffs.

9. Despite the numerous requests made by the plaintiffs to the Defendants, the Defendants not only failed to deliver the share to the Plaintiffs, but also failed to refund the sum of Rs. 6,00,000/-.

10. The Plaintiffs sent a Legal Notice dated 30.7.97 by registered A/D pointing out to the Defendants, that they (Plaintiffs) were being unduly harassed by the Defendants and that the Defendants have caused wrongful \loss to the Plaintiffs and that by this malafide act of the Defendant, the Plaintiffs have been deprived of their money. It was further notified by the Plaintiffs to the Defendant, through the aforesaid Legal Notice, that the defendants had received the money on false pretext and false representation that the shares would be duly issued and also that the Defendants had caused wrongful loss to the Plaintiffs and corresponding wrongful gain to themselves.

11. The Defendant was called upon to refund the sum of Rs. 6,00,000/- Along with interest @ 24% p.a. effective from 2.6.96 till date of payment within 15 days from the date of receipt of the said Legal Notice, failing which legal action would be taken against the defendant under both civil and criminal jurisdiction.

12. Despite the receipt of the aforesaid Legal Notice, the Defendant neither replied to the said notice nor refunded the sum of Rs. 6,00,000/- with interest to the Plaintiffs.

13. It is submitted that the Defendants became liable to pay interest @ 24% on the amount due to the Plaintiffs for the period from June, 1996 to November, 1998 totalling to Rs. 3,36,000/- up to that date. As the defendants failed to pay their liability, therefore the plaintiffs felt constrained to file the present suit.

14. The defendants were given due opportunity to appear and defend the present suit filed against them by the plaintiffs, failed to do so and were proceeded exparte vide Order dated 12.9.2001. The matter was heard and the judgment was reserved on 2.8.2002. Since the defendants were proceeded exparte, all the contentions raised and the documents exhibited by the plaintiff remained unrebutted and thus stood duly proved it has been duly established that plaintiffs made payment of Rs. 6,00,000/- to the defendants. The statement of account has been duly proved as Ex. PW-1/B. It stands unrebutted that defendants neither delivered the shares nor refunded the amount to the plaintiffs. The legal notice (Ex. PW-1/D) was neither replied to nor complied with.

15. In view of the above, I pass a decree of Rs. 9,24,000/- Along with pendende lite and future interest @ 24% per annum from the date of filing till the date of realisation in favor of the plaintiff and against the defendant. The plaintiffs will also be entitled to costs of the present proceedings.

16. The suit is decreed accordingly.