Karnataka High Court
Kotak Mahindra Bank Ltd vs Smt R P Shanthalaxmi on 28 November, 2023
Author: V Srishananda
Bench: V Srishananda
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NC: 2023:KHC:43026
RFA No. 2525 of 2006
C/W RFA No. 469 of 2007
RFA No. 1219 of 2007
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 28TH DAY OF NOVEMBER, 2023
BEFORE
THE HON'BLE MR JUSTICE V SRISHANANDA
REGULAR FIRST APPEAL No.2525 OF 2006 (DEC)
C/W
REGULAR FIRST APPEAL No.469 OF 2007(DEC/INJ)
REGULAR FIRST APPEAL No.1219 OF 2007
IN R.F.A.No.2525/2006
BETWEEN:
CANARA BANK
A BODY CORPORATE CONSTITUTED UNDER
AND GOVERNED BY PROVISIONS OF BANKING
COMPANIES (ACQUISITION AND TRANSFER OF
UNDERTAKING) ACT, 1970 WITH ITS HEAD OFFICE
AT MANIPAL -576 119
AND BRANCH SAGAR
REPRESENTED BY ITS MANAGER
SRI H RAMDAS PAI
...APPELLANT
(BY SRI B.M.BALIGA, ADVOCATE)
Digitally AND:
signed by R
MANJUNATHA
Location: 1. SMT R P SHANTHALAXMI
HIGH COURT
OF W/O R A PUTTARAJU
KARNATAKA
C/O R.P.ANANTHAPPA AND CO.,
SORAB ROAD, SAGAR -577 401
SINCE DEAD REPRESENTED BY LEGAL
REPRESENTATIVES
R.P.MADHUSUDHAN
S/O R.A.PUTTARAJ
AGED ABOUT 61 YEARS
NOW AT VITTALA TEMPLE ROAD
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RFA No. 2525 of 2006
C/W RFA No. 469 of 2007
RFA No. 1219 of 2007
ANU LADIES NEEDS, SAGAR - 577 401
SHIVAMOGGA DISTRICT.
2. KARVY CONSULTANTS LTD
6-2-68/2, SAIFABAD
HYDERABAD -500 004
3. KARVY CONSULTANTS LTD.,
NO.145, GIRIJA TOWERS
6TH A C MAIN, 30TH CROSS,
4TH BLOCK, JAYANAGAR
BANGALORE -560 011
4. KOTAK MAHINDRA BANK
72 ST MARKS ROAD
BANGALORE-560 001
...RESPONDENTS
(BY SRI R.GOPAL, ADVOCATE FOR R1;
SRI M.S.NARAYANA, ADVOCATE FOR R2 AND R3;
SRI K.V.SATHISH AND SRI B.S.ARAVINDA BABU, ADVOCATE
FOR R4;
VIDE ORDER DATED 14.09.2023, APPEAL AS AGAINST
DECEASED R1 IS DISMISSED AS ABATED)
THIS REGULAR FIRST APPEAL IS FILED UNDER SECTION
96 OF CPC AGAINST THE JUDGMENT AND DECREE DATED
09.08.2006 PASSED IN O.S.No.31/1997 ON THE FILE OF THE
CIVIL JUDGE (SR.DN.), SAGAR, PARTLY DECREEING THE SUIT
FOR DECLARATION AND MANDATORY INJUNCTION.
IN R.F.A.No.469/2007
BETWEEN:
KOTAK MAHINDRA BANK LTD.,
NO.22 M.G.ROAD
BANGALORE - 1
REPRESENTED BY ITS COMPANY SECRETARY
SRI K B V NARAYAN
...APPELLANT
(BY SRI M/s SATHISH & ARAVIND, ADVOCATES)
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RFA No. 2525 of 2006
C/W RFA No. 469 of 2007
RFA No. 1219 of 2007
AND:
1. SMT R P SHANTHALAXMI
SINCE DECEASED
REPRESENTED BY LEGAL REPRESENTATIVE
R.P.MADHUSUDHAN
S/O R.A.PUTTARAJ
AGED ABOUT 61 YEARS
NOW AT VITTALA TEMPLE ROAD
ANU LADIES NEEDS, SAGAR - 577 401
SHIVAMOGGA DISTRICT.
2. KARVY CONSULTANTS LIMITED
C/O KARVY COMPUTERSHARE PRIVATE LIMITED
"KARVY HOUSE"
46, AVENUE 4, STREET NO.1,
BANJARA HILLS
HYDERABAD -560 004
3. KARVY CONSULTANTS LIMITED
C/O KARVY COMPUTER SHARE
PRIVATE LIMITED
51/2, T K N COMPLEX,
OPP. NATIONAL COLLEGE
VANIVILAS ROAD
BASAVANAGUDI ,
BANGALORE - 560 004
4. THE MANAGER
CANARA BANK
SAGAR - 577 401
...RESPONDENTS
(BY SRI R.GOPAL, ADVOCATE FOR R1;
SRI M.S.NARAYAN, ADVOCATE FOR R2 AND R3;
SRI B.M.BALIGA, ADVOCATE FOR R4)
THIS REGULAR FIRST APPEAL IS FILED UNDER SECTION
96 OF CIVIL PROCEDURE CODE AGAINST THE JUDGMENT AND
DECREE DATED 09.08.2006 PASSED IN O.S.No.31/1997 ON
THE FILE OF THE CIVIL JUDGE (SR.DN.), SAGAR, PARTLY
DECREEING THE SUIT FOR DECLARATION AND MANDATORY
INJUNCITON.
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RFA No. 2525 of 2006
C/W RFA No. 469 of 2007
RFA No. 1219 of 2007
IN R.F.A.No.1219/2007
BETWEEN:
1. KARVY CONSULTANTS LTD.,
6-1-68/2, SAIFABAD,
HYDERABAD-500 004
2. KARVY CONSULTANTS LTD
NO.145, GIRIJA TOWERS,
6TH A.C.MAIN, 30TH CROSS,
4TH BLOCK, JAYANAGAR,
BANGALORE-11
...APPELLANTS
(BY SRI B.M.BALIGA, ADVOCATE)
AND:
1. SMT.R P SHANTHALAXMI
W/O R.A.PUTTARAJU
C/O R.P.ANANTHAPPA AND CO.,
SORAB ROAD, SAGAR - 577 201
2. THE MANAGER
SYNDICATE BANK,
SAGAR - 577 201
3. VYSHYA BANK LTD
72, ST. MARKS ROAD,
BANGALORE - 560 025
...RESPONDENTS
(BY SRI R GOPAL, ADVOCATE FOR R1;
SRI S.KRISHNASWAMY, ADVOCATE FOR R2;
SRI K.V.SATISH AND ARVIND BABU, ADVOCATE FOR R3;
VIDE ORDER DATED 14.09.2023 APPEAL AGAINST DECEASED
R1 IS ABATED)
THIS REGULAR FIRST APPEAL IS FILED UNDER SECTION
96 OF CIVIL PROCEDURE CODE AGAINST THE JUDGMENT AND
DECREE DATED 09.08.2006 PASSED IN O.S.NO.31/1997 ON
THE FILE OF THE CIVIL JUDGE (SR.DN.) SAGAR, PARTLY
DECREEING THE SUIT FOR DECLARATION AND MANDATORY
INJUNCTION.
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RFA No. 2525 of 2006
C/W RFA No. 469 of 2007
RFA No. 1219 of 2007
THESE APPEALS COMING ON FOR ORDERS THIS DAY,
THE COURT DELIVERED THE FOLLOWING:
JUDGMENT
RFA No.2525/2006 is filed by defendant No.3, RFA
No.469/2007 is filed by defendant No.4 and RFA No.1219/2007
is filed by defendant Nos.1 and 2 respectively, challenging the
judgment and decree dated 09.08.2006 passed in O.S.
No.31/1997 on the file of the Civil Judge (Sr.Dn.), Sagar,
whereby, suit of the plaintiff is decreed as under:
"The suit of the plaintiff is hereby partly
decreed with costs.
It is declared that the rejection of plaintiff's
application for allotment of shares is illegal. It is
further declared that plaintiff is entitled for allotment
of 940 right shares of defendant No.4.
The mandatory injunction is hereby granted
directing defendants 1 to 4 to purchase 940 right
shares of defendant No.4 in the name of plaintiff and
deliver the share certificates to her by collecting
necessary fees as applicable on the date of her
application."
2. For the sake of convenience, parties are referred to as
plaintiffs and defendants as per their original ranking before the
Trial Court.
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3. Brief facts of the case which are utmost necessary for
disposal of these appeals are as under:
4. Plaintiff being the customer of erstwhile Syndicate Bank
(now Canara Bank) approached the Syndicate Bank, Sagar
Branch, for issue of pay order for buying the bonus shares
which were issued by erstwhile ING Vysya Bank (now Kotak
Mahindra Bank) in the ratio of 1:5 shares. Plaintiff said to have
possessing 25 shares of erstwhile ING Vysya Bank and plaintiff
was entitled to 125 shares as bonus shares. An option was also
there to purchase additional shares of ING Vysya Bank. In this
regard, plaintiff approached the Syndicate Bank where the
plaintiff possessed the account and also a stock investment
account. Accordingly, plaintiff filed necessary requisitions with
the Syndicate Bank and the Syndicate Bank, in turn, took out a
pay order in a sum of Rs.18,000/- for the purpose of
purchasing the additional shares and the bonus shares.
5. However, the pay order issued by Syndicate Bank was not
in order. Therefore, the consultancy agency viz., M/s Karvy
Consultants Limited which was handling the issue of bonus
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shares of ING Vysya Bank, rejected the request made by the
plaintiff for the reason 'any other lapse'.
6. Being Aggrieved by the same, plaintiff filed the suit
against M/s Karvy Consultants Limited, Hyderabad and
Bengaluru, Manager, Syndicate Bank, Sagar, and ING Vysya
Bank, Bengaluru, for passing a decree as per the plaint prayer,
as under:
(a) For a declaration that the rejection of
application for allotment of shares is illegal and
consequently that the plaintiff is entitled for 1200
shares of 4th defendant;
(b) For a mandatory injunction directing the
defendants to purchase 1200 shares of 4th
defendant in the name of the plaintiff and deliver
the share certificates to her;
7. Upon service of suit summons, defendants 1 and 2
remained absent. Defendant No.3-Syndicate Bank appeared
through counsel and filed written statement stating that suit is
not maintainable and issue of stock investment pay order was
admitted but, it was issued as per the terms and conditions
prescribed in the application form by the plaintiff and there is
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no negligence on the part of the 3rd defendant and sought for
dismissal of the suit.
8. The 3rd defendant also contended that it has given the
stock investment pay order as per the terms and conditions of
the application made by the plaintiff and 3rd defendant is not
liable for the loss said to have been caused on account of lapse
in the issue of stock investment and therefore, sought for
dismissal of the suit.
9. The 4th defendant filed separate written statement
contending that the suit is not maintainable as against 4th
defendant and the suit is also bad for mis-joinder of necessary
parties. The 4th defendant further contended that it is only the
bank which is to issue the necessary shares and if the
applications were proper, it would have definitely issued the
bonus shares and additional shares as claimed by the plaintiff
and since the application was defective application, same has
been rejected by the agents who were required to handle the
issue of bonus shares and additional shares of 4th defendant
who are defendants 1 and 2 and sought for dismissal of the
suit.
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10. Based on the rival contentions of the parties, the Trial
Court raised the following issues:
(i) Whether the plaintiff proves that the third
defendant has acted negligently while issuing
stock invest pay order in not mentioning the
date?
(ii) Whether the plaintiff proves that the
defendants 1 and 2 acted negligently and
recklessly in rejecting her application for
issuance of share certificates instead of re-
transmitting the pay order for the rectification?
(iii) Whether the suit is bad for mis-joinder of
defendant No.3?
(iv) Whether this Court has got jurisdiction to try
this suit?
(v) Whether the Court fee paid is just and proper?
(vi) Whether the plaintiff is entitled to the relief
sought for?
(vii) To what order or decree?
11. In order to prove the case of the plaintiff, son of the
plaintiff, by name Sri R.P.Madhusudhan, has been examined as
P.W.1 and relied on 10 documents exhibited and marked as
Exs.P.1 to 10, comprising of general power of attorney at
Ex.P.1, stock invest order at Ex.P.2, notice copy at Ex.P.3,
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acknowledgments at Exs.P.4 to 7, notice at Ex.P.8, reply
notices at Exs.P.9 and 10.
12. As against the evidence placed on behalf of the plaintiff,
3rd defendant has examined one D.B.Vendosa as D.W.1 and
relied on two documents exhibited and marked as Exs.D.1 and
2 comprising of stock invest pay order application and
application, respectively.
13. On conclusion of recording the evidence of the parties,
the learned Trial Judge heard the parties in detail and on
cumulative consideration of the material on record, decreed the
suit of the plaintiff as referred to supra.
14. Being aggrieved by the judgment and decree, the
defendants have filed the above appeals as referred to supra.
15. Reiterating the grounds urged in the appeal
memorandum, Sri B.M.Baliga, learned counsel for the
appellant-Syndicate Bank and Karvy Consultants Limited,
contended that the stock invest application was processed by
the Syndicate Bank in a proper manner as per the request
made by the plaintiff and there is no negligence attributable to
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the Syndicate Bank, Sagar Branch, and sought for allowing the
appeals.
16. He further contended that the responsibility of the bank
was not there in properly applying for the bonus shares and it
was handled by the plaintiff herself and for negligence that has
been attributed to the Karvy Consultants Limited and Syndicate
Bank by the learned Trial Judge in the impugned judgment has
resulted in miscarriage of justice and sought for allowing these
appeals.
17. Sri Sathish, learned counsel representing the appellant in
RFA No.469/2007 filed by ING Vysya Bank, contended that the
only responsibility that was passed on erstwhile ING Vysya
Bank was to issue bonus shares and additional shares if there is
proper receipt of application which has been processed by
Karvy Consultants Limited and sent for the Bank. But for such
responsibility, no other responsibility can be attributed to ING
Vysya Bank and decreeing the suit against ING Vysya Bank has
resulted in grave miscarriage of justice and sought for allowing
the Appeal.
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18. Per contra, Sri Gopal, learned counsel representing the
plaintiff supported the impugned judgment by contending that
the responsibility of the plaintiff ended when she has issued
necessary instructions to the bank for applying for bonus
shares and additional shares inasmuch as stock investment
account was possessed by the plaintiff with Syndicate Bank and
necessary mandate has been given by her in that regard to the
Syndicate Bank, Sagar Branch, and it is the negligence on the
part of the Bank and other agents and ING Vysya Bank in
improperly rejecting the application for bonus shares and
additional shares which has been rightly appreciated by the
learned Trial Judge and has rightly decreed the suit of the
plaintiff and sought for dismissal of the appeals.
19. In view of the rival contentions of the parties, the
following points would arise for consideration:
(i) Whether Syndicate Bank, Sagar Branch has
been negligent in preparing the pay order for
applying the bonus and additional shares on
behalf of the plaintiff?
(ii) Whether rejection of application by M/s Karvy
Consultants Limited is just and proper?
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(iii) Whether ING Vysya Bank makes out a case
that responsibility of ING Vysya Bank is only
for issue of bonus shares and additional
shares, if the application is properly filed?
(iv) Whether the impugned judgment and decree is
suffering from legal infirmity and perversity
and thus calls for interference?
(v) What Order?
20. Regarding Point Nos.1 to 4: In the case on hand, there is
no dispute that ING Vysya Bank issued a notification intending
to issue of bonus shares in the ration of 1:5. Admittedly,
plaintiff possessed 25 shares of ING Vysya Bank with her and
therefore, she wanted to 125 bonus shares and also additional
shares. In this regard, plaintiff approached her banker viz.,
Syndicate Bank, Sagar Branch, with necessary mandate.
Syndicate Bank, after receiving necessary mandate from the
plaintiff who is customer of the Syndicate Bank, issued the pay
order marked at Ex.P.2. However, the pay order did not
contain the date. Since necessary particulars are not there,
application filed by the plaintiff for issue of bonus shares and
additional shares has been rejected by the agent viz., M/s
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Karvy Consultants Limited, who was handling issue of bonus
share.
21. It is at this juncture, it is to be noticed that the role of
M/s Karvy Consultants and ING Vysya Bank in handling the
application of the plaintiff which has been accompanied by pay
order issued by 3rd defendant-Syndicate Bank. It is settled
principles of law and requires no emphasis that the application
is improper inasmuch as it is not properly filled or not
accompanied by the necessary demand draft/pay order, the
application for bonus and additional shares would not be
processed by the agency viz., Karvy Consultants Limited.
Therefore, rejection of the application for and on behalf of ING
Vysya Bank by Karvy Consultants by noting that the application
is not properly filled and application is rejected with an
endorsement 'any other lapses' is justified.
22. The whole problem arose because, Ex.P.2 did not contain
the date. It is common knowledge that if the pay order does
not contain the date, it is an invalid document. Syndicate Bank
while issuing Ex.P.2 should have taken utmost care in filling all
necessary blanks in the pay order as per the mandate of the
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plaintiff and Syndicate Bank, Sagar Branch, failed to do so;
resulting in plaintiff not able to get the bonus shares as well as
the additional shares as per her request made to the Syndicate
Bank. These aspects of the matter are found from records.
23. D.W.1 who is officer of the 3rd defendant-Syndicate Bank
in his evidence clearly admitted that if customers do not know
how to fill up the application, it is the bank officials who would
usually assist them in filling up the application. He also
admitted that for regular customers, it is the responsibility of
the bank to fill up the necessary blanks in the application filed
by the regular customers. In the teeth of such admissions on
behalf of the 3rd defendant-Syndicate Bank, that no negligence
can be attributed to the Bank cannot be countenanced in law.
24. However, since the application was not properly filled up
and application did not accompany the proper pay order
inasmuch as there was no date in Ex.P.2,, the rejection of the
application by M/s Karvy consultants and resultantly not
allotting the shares by ING Vysya Bank is just and proper.
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25. This aspect of the matter has not been properly
appreciated by the learned Trial Judge in the impugned
judgment while fastening the liability on M/s Karvy Consultants
as well as ING Vysya Bank resulting in interference by this
Court by holding that impugned judgment to that extent is
suffering from legal infirmity.
26. In view of the foregoing discussions, the point Nos.1 to 3
are answered in the affirmative and point No.4 is answered in
the partly in the affirmative.
27. Regarding Point No.5: In view of the finding of this Court
on points above, the following:
ORDER
(i) Appeal filed by ING Vysya Bank which is now
Kotak Mahindra Bank in RFA No.469/2007 and
appeal filed by M/s Karvy Consultants Limited
in RFA No.1219/2017 are allowed and
impugned judgment and decree insofar as
these appellants are concerned is hereby set-
aside.
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(ii) Appeal filed by erstwhile Syndicate Bank, now
Canara Bank in RFA No.2525/2006 is hereby
dismissed.
(iii) No order as to costs.
Sd/-
JUDGE
kcm
