Sh. Vinay Talwar vs M/S Vital Communications Ltd. & ...
2015 Latest Caselaw 8708 Del

*             IN THE HIGH COURT OF DELHI AT NEW DELHI

+                         CS(OS) No. 1870/2003

%                                                    23rd November, 2015

SH. VINAY TALWAR                                           ..... Plaintiff

                          Through:       Mr. Ashish Virmani, Advocate.


                          versus

M/S VITAL COMMUNICATIONS LTD. & ORS.                       ..... Defendants

                          Through:       Defendants are ex parte.

CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA

To be referred to the Reporter or not?


VALMIKI J. MEHTA, J (ORAL)

1.            The subject suit has been filed by the plaintiff for recovery of

Rs.25,00,000/- and for mandatory injunction against the defendants to return

to the plaintiff 3,38,900 shares of the plaintiff lying in the defendant

no.1/Company.


2.            The suit is coming for ex parte final arguments and counsel for

the plaintiff has been heard.




CS(OS) No. 1870/2003                                                          Page 1 of 7
 3.            The case as set out in the plaint is that the plaintiff owned

shares in the defendant no.1/Company M/s Vital Communications Ltd. The

plaintiff owned 3,38,900 shares in the company. Plaintiff was appointed as a

Managing Director of the company on 17.5.1995 for a period of five years

and was re-appointed for another five years w.e.f 17.5.2000. The plaintiff

entered into an MOU dated 16.4.1998 with the defendant no.2 when the

defendant no.2 promised to infuse funds.       Defendant no.2 introduced

defendant no.3 who initially brought in Rs.24 lacs. One Company M/s

Research Engineers, Inc. California, USA now known as M/s Net Guru Inc.

approached the defendant no.1/Company for purchase of 30% stake in the

defendant no.1/Company and a Letter of Intent (LOI) dated 14.4.2000 was

executed between M/s Research Engineers Pvt. Ltd. (in short 'REPL') a

100% subsidiary of M/s Net Guru Inc. and the defendant no.1/Company

whereby REPL transferred a sum of Rs.2.5 crores to the defendant

no.1/Company on 18.4.2000 and two nominees of REPL Sh. Gurudas Sarkar

and Sh. Amrit Dass were inducted as the Additional Directors in the

defendant no.1/Company. Plaintiff further pleads that defendant nos. 2 and

3 wrongly and surreptitiously misappropriated amounts of the defendant

no.1/Company by transferring a sum of Rs.1.75 crores to other private

companies and individuals. It is pleaded that since defendant no.2 brought
CS(OS) No. 1870/2003                                                     Page 2 of 7
 in a sum of Rs.55 lacs, actually therefore, the misappropriation would be

Rs.1.2 crores by defendant nos. 2 and 3.       Plaintiff further pleads that

defendant nos.2 and 3 illegally and unlawfully got allotted 72 lac shares of

the defendant no.1/Company to the companies controlled by them. It is

further pleaded that the funds which were misappropriated by the defendant

nos. 2 and 3 were rotated to purchase 72 lac shares of the defendant

no.1/Company. It is pleaded that though defendant no.1/Company in the

books received an amount of Rs. 9 crores towards the allotment of 72 lac

shares of Rs.10/- each at premium of Rs.2.5 per share however, defendant

no.1 actually did not receive any amount against the shares allotted. It is

further pleaded that defendant nos. 2 and 3 have unlawfully made a gain of

approximately Rs.90 crores. Plaintiff further pleads that his 3,38,900 shares

were lying in the office premises of defendant no.1/Company and that

plaintiff was however locked out from the office of the defendant

no.1/Company by illegally removing him from the post of Managing

Director and was not allowed to take back the shares from his office.

Plaintiff pleads that at the relevant time the shares of defendant no.1 were

being traded at approximately Rs.100 per share.




CS(OS) No. 1870/2003                                                      Page 3 of 7
 4.            Plaintiff further pleads that he was wrongly removed from the

post of Managing Director and Director of the defendant no.1/Company in

the Board Meeting held on 6.9.2000.          Plaintiff alleges that no Board

meetings took place of the defendant no.1/Company on 19.7.2000, 6.9.2000

and 8.9.2000 as alleged and therefore, there is wrong removal of the plaintiff

from the Board of Directors of the defendant no.1/Company and the

defendants are also liable for the loss caused to the plaintiff on account of

non-return of the shares owned by the plaintiff of the defendant

no.1/Company. Plaintiff has restricted his claim in the suit to Rs.25 lacs

although it is stated that he has suffered more losses.


5.            No doubt, ordinarily once the defendant/Company is ex parte, a

court would on filing of affidavit by way of evidence supported by the

documents decree the suit, however, it is not that in law merely because the

defendant/Company is ex parte and the plaintiff has filed affidavit by way of

evidence, the suit should necessarily be decreed. Even in the absence of

contest by the defendants, the plaintiff has to lead such evidence which will

satisfy the judicial conscience of this Court that the plaintiff has proved his

case so as to decree the suit.




CS(OS) No. 1870/2003                                                        Page 4 of 7
 6.            On reading of the plaint alongwith the affidavit by way of

evidence, it is seen that though the plaintiff originally was the Managing

Director of the defendant no.1/Company and had 3,38,900 shares,

subsequently, as many as 72 lac shares of the defendant no.1/Company were

allotted to the defendant nos.2 and 3. Self-serving averments and deposition

of the plaintiff will not result in any illegality in allotment of the 72 lac

shares of the defendant no.1/Company to the defendant nos. 2 and 3. How

the allotment of 72 lac shares of the defendant no.1/Company to defendant

nos. 2 and 3 are illegal being against the provisions of the Companies Act,

2013 is not stated or proved. A reading of the plaint shows illegality of

purchase of 72 lac shares of the defendant no.1/Company by defendant nos.

2 and 3 on the ground that no monies came in for such allotment, however,

in the same breadth plaintiff talks of 'misappropriation' by the defendant

nos. 2 and 3 of Rs. 1.75 crores and which amount is stated to have been

brought back to the defendant no.1/Company for getting the shares allotted

to the dummy companies owned by the defendant nos.2 and 3 as also to

certain individuals.     Therefore, on such self-serving averments and

deposition of the plaintiff, it cannot be held that allotment of 72 lac shares to

the defendant nos. 2 and 3 of the defendant no.1/Company is illegal. Once

the defendant nos. 2 and 3 are majority owners of the defendant
CS(OS) No. 1870/2003                                                          Page 5 of 7
 no.1/Company, on the principle of corporate democracy, they were entitled

to issue the necessary additional shares in their favour. It cannot therefore

be held that defendant nos. 2 and 3 have wrongly allotted shares to

themselves or that the defendant no.1/Company has not received the

amounts for allotment of the shares.


7.            So far as the case of the plaintiff that in the defendant

no.1/Company his original share certificates for 3,38,900 shares were lying

is concerned, once again except self-serving statements in the deposition

there is nothing in fact and reality to show that these shares were in fact

lying in the office of the defendant no.1/Company. Even assuming the shares

were lying with the defendant no.1/Company and were not returned to the

plaintiff, before loss is established for being decreed in favour of the plaintiff

and against the defendants, plaintiff had to prove the market value of his shares

and the date on which he would have allegedly sold the shares, so that the

difference can be claimed as loss, however, in the affidavit by way of evidence

there is no credible evidence in the form of documents of the stock exchange to

give the value of the shares on the date of the presumed sale for the

loss to be calculated and proved. Therefore, since the plaintiff has failed to




CS(OS) No. 1870/2003                                                           Page 6 of 7
 prove loss by leading credible evidence, the suit cannot be decreed for a

huge amount of Rs.25 lacs as prayed by the plaintiff.


8.            Also, the plaintiff is not entitled to mandatory injunction once

the plaintiff is only a minority shareholder in the defendant no.1/Company

and defendant nos. 2 and 3 are in overwhelming control owning majority

shares of the defendant no.1/Company.


9.            In view of the above, since the plaintiff has failed to prove his

case, the suit is therefore dismissed. Parties are left to bear their own costs.




NOVEMBER 23, 2015                                   VALMIKI J. MEHTA, J.

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