It was averred in the plaint that upon the sale by defendant of 484 shares the plaintiff became the beneficial owner of those shares and the defendant became a trustee for him of all rights and benefits whatsoever appertaining or accruing to the said shares, that one of such rights was the right and opportunity to apply for shares forming part of the new issue, that the defendant was bound to do all lawful acts in relation to and for the purpose of securing the said benefits for the plaintiff and which the plaintiff might call upon him to do, on terms of the plaintiff indemnifying him against all the companysequences thereof, and that the plaintiff was ready and willing to do the same.
On the 8th January, 1945, the companypany, in order to companybat the move of Sir Padampat to acquire companytrol of its management, made an application under rule 94 A of the Defence of India Rules for sanction for the issue of further capital.
The other 384 shares appertained to the shares that he had sold.
In the result he ordered the companypany to companyply with the order and allot within three months 384 shares to the plaintiff after obtaining a fresh sanction for the same from the authority companycerned.
Before companycluding the learned judge said that issues 10 and 11 had number been argued before him and the companytentions raised therein seemed to have been abandoned and that even otherwise there was numbermerit in them.
55 and 54 of 1948, arising out of Decree dated the 29th July, 1948, of the said High Court in its Ordinary Original Civil Jurisdiction in Suits No.
4,59,600 by issuing 4,596 shares otherwise the sanction was to lapse.
When allotted to you, you will hold these shares on their behalf and please then hand them to the Hindustan Commercial Bank Ltd., Apollo Street, Fort, Bombay, who will pay you the sum of Rs.
Form B was a renunciation form.
I am ready and willing to sign renunciation form in favour of the true purchasers, on my being satisfied that those who are described as the purchasers of my shares are the real and true purchasers of those shares by their producing the transfer forms given by me duly executed by them along with the share certificates.
In July, 1944, a struggle companymenced between the group of Sir Padampat Singhania and the group of Shri Maneklal Prem Chand for companytrol of the management of the Bombay Life Assurance Co. Ltd. and there was a race for the acquisition of the shares of the companypany between the two groups.
If you prefer to do so, please send the form of application A duly signed by you as well as the renunciation form B as also the fractional certificate and the relevant application attached thereto unsigned in blank to our client, Mr. N. K. Bhartiya at Second Floor, Rahimtoola House, Homji Street, Fort, Bombay, so as to reach him before the 7th March, 1945, and he will then forward the application to the companypany on your behalf along with the necessary remittance.
52, 53 and 54 of 1950.
Appeals from the Judgment and Decree dated the 7th March, 1949, of the High Court of Judicature at Bombay in Appeals Nos.
On an application being made, the companypany declined to register the shares in his name and intimated to him their refusal to do so on the 8th May, 1945.
100 for every share allotted to you, which should be accompanied by blank transfer form signed by you as the transferor and the form of renunciation unsigned.
53 of 1950 and respondent in Civil Appeal No.
On the 23rd February, 1945, Messrs. J. L. Mehta and N. K. Bhartiya purporting to act on behalf of the purchasers of 484 shares wrote to Reddy asking him to forward to them the, companypanys circular letter along with forms A and B as and when received by him, after appending to them his signatures, to enable them to apply for these shares either in Mr. Reddys name or in the name of, the transferees.
The shares were sold at the rate of Rs.
25 per share had been called up.
The suit was accordingly remanded to the trial judge for assessing damages.
75 per share.
On the same day Bhagwati J. made an order under Order XL, rule 1, of the Civil Procedure Code, appointing the companyrt receiver, interim receiver of the application form and letter of renunciation and of the rights, if any, of the defendant in the 384 shares of the Bombay Life Assurance Co. Ltd. The receiver was given power to exercise all the rights of the defendant in respect of the said shares on the plaintiff giving the usual undertakings.
On the 21st February, 1945, Reddy returned to the companypany form A duly filled in, requesting, the companypany for allotment of 40 shares out of the new issue, which appertained to the 50 shares he still held in the companypany.
In respect of the balance of 384 shares offered to him and which appertained to the 484 shares sold by him he said numberhing.
300 per share.
It was also held that a proper requisition had been made by the beneficiary upon the trustee to carry out the trust and he had defaulted in companyplying with the requisition.
Out of the 427 new shares offered to him he was entitled to 40 shares in his own right which appertained to 50 unsold shares which he still held in the companypany.
On the existing shares only Rs.
Whatever else may be said about the attitude of Reddy, he was certainly entitled to know the name of person or persons who were the real purchasers of the shares sold, because he companyld only respect and companyply with the requisition made by those persons and those persons alone and by numbere else.
The Judgment of the Court was delivered by MAHAJAN J. These appeals, though they arise out of two different suits, 336 of 1945 and 786 of 1948, can be disposed of by a companymon judgment, as both these suits were instituted in effect to obtain the same relief.
366 of 1945 Reddys appeal was allowed to the extent that the plaintiff was held disentitled by the reason of lapse of the sanction to reliefs A and B granted to him by Bhagwati J. It was however held that he was a trustee of Sir Padampat in respect of the shares of the new issue and he having failed to apply for the new shares was liable to him in damages and the fact that he made an application in respect of 40 shares did number disentitle him to make another application in respect of the 384 shares.
Our clients agree to indemnify you against any and every liability which you will incur by applying for the partly paid shares.
52 and 54 and respondent in Civil Appeal No.
As regards the requisition made by you in paras.
336 of 1945 and No.
S. Pathak H. J. Umrigar and P. N. Mehta, with him for the appellant in Civil Appeals Nos.
CIVIL APPELLATE JURISDICTION Civil Appeals Nos.
The companypany therefore decided that the new shares should be offered to the existing shareholders, in the proportion of four shares to every five shares held by the shareholders.
Without prejudice to that companytention, Mr. Reddy was called upon to apply for the newly offered shares and obtain them on their behalf or to send them the application form A and the renuniciation form B and the fractional certificate to enable them to obtain the new shares offered which appertained to the 484 shares sold by him.
336 of 1945 on the 8th March, 1945, on the Original Side of the Bombay High Court, inter alia, for the following reliefs against Mr. Reddy as the sole defendant.
The relevant part of this letter reads thus We are instructed by our clients, the parties to whom you, sold these shares,Mr. J. L. Mehta, Sir Padampat Singhania, Lala Kailashpat Singhania, Mr. N. K. Bhartiya and others to call upon you to apply for the additional shares and fractional certificates number issued to which you have become entitled, and to let us know when you have done so.
This suit was filed on the 8th March, 1948, after the lapse of about three years of the companypanys rejection of the receivers application.
On the 28th February, 1945, Messrs. Craigie, Blunt Caroe, a firm of solicitors, also acting on behalf of the purchasers, wrote to Mr. Reddy a letter to a similar effect.
They will also pay you the, Proportionate sum on any fractional certificate to which you are entitled on handing over the same to the bank in blank unsigned on or before the 7th March, 1945.
He was told that he was to hold the shares offered when acquired as a trustee for them.
The companypany issued a circular letter to every shareholder giving the details of the offer made and along with it sent two forms, A and B. Form A being the application form for allotment of new shares, the shareholder had to subscribe his name to it and return it to the companypany for allotment of the shares offered accompanied with a cheque for the amount that had to be paid for obtaining the shares.
Sir Padampat, however, made numberapplication to the companypany for registration of his name in the register of shareholders till the 11th April, 1945.
Ail application was made for the appointment of a receiver of the application form and letterof renunciation and of the rights of Reddy in the new issue of shares.
786 of 1948.
54 of 1950.
53 of 1950, on the 25th July, 1944, purchased through Shri P. N. Gupta, his Bombay agent, 667 shares of the companypany, 484 out of which belonged to Mr. Reddy, the appellant in C.A. No.
Not satisfied with this reply and in view of the fact that the last date for making the application for the issue of additional shares was to expire on the 10th March, Sir Padampat instituted suit No.
On the 10th March, 1945, the receiver made a request to the companypany for the allotment to him of 384 shares of the new issue appertaining to the 484 shares standing in Reddys name in the companypany register and sold by him on the 25th July, 1944.
4 and 5 of the circular letter of 28th February, 1945, 1 fail to understand as to how I am under an obligation to companyply with it.
In case a shareholder did number want all or any of the shares offered to be allotted to him, he was allowed to renounce his right in favour of some other person.
52 and 54 and appellant in Civil Appeal No.
The renunciation form was retained by him.
54 of 1950, and respondent in the cross appeal No.
This deal was made on his behalf by a firm of share and stock brokers, Bhaidas Gulabdas.
Reddy as a shareholder of 534 shares including 484 shares sold by him on 25th July, but yet number registered in the transferees name thus became entitled to 427 new shares and one fractional certificate.
Both the suits were heard by Bhagwati J., who delivered one judgment in both of them and substantially granted the reliefs claimed in both the suits.
Against this companymon judgment in both the suits, Reddy and the companypany preferred separate appeals.
Sir Padampat, the appellant in Civil Appeal No.
This was prefaced with the remark that the offer of fresh shares by the companypany was illegal.
Civil Appeal No.
May 19.
53, C. Setalvad, Attorney General for India J. B.Dadachanji, with him for the respondent in Civil Appeals Nos.
It is alleged that these transfer forms were ultimately filled in the name of Sir Padampat Sin ghania.
It was further alleged that unless the plaintiffs rights were safeguarded by the 10th March, 1945, which was the last day for making application for the shares, he will be irretriev ably prejudiced.
100 each at a premium of Rs.
The appeal Bench of the High Court allowed the companypanys appeal and dismissed the receivers suit on the finding that the companyrt receiver was number entitled to the allotment of the new shares in his own name as such.
On the 21st February, 1945, the directors of the companypany passed a resolution increasing the capital of the companypany by issuing these 4,596 shares of Rs.
On the 7th December, 1945, the plaint was amended and an alternative relief for a decree for Rs.
The sanction was granted and the companypany was authorised within a time limit of six months to increase its capital by a sum of Rs.
The companypany was number impleaded in this suit.
52 of 1950 has been preferred against this decision.
7,29,600 by way of damages was included therein.
In suit No.
That the defendant may be ordered to send and deliver to the plaintiff the application form A annexed to the circular letter for the number of additional shares allotable to him, as also the fractional certificates and the application relating thereto unsigned and in blank upon the plaintiff paying to him such sum as this honourable companyrt may direct and or upon the plaintiff giving such indemnity as this honble companyrt may deem proper That the defendant may be ordered upon receiving the certificates of the new shares to hand over the same as also the fractional certificates to the plaintiff together with transfer forms in blank duly signed by him.
On the 29th July, Gupta executed a receipt in favour of Bhaidas Gulabdas acknowledging the receipt of these shares, while Bhaidas Gulabdas as companystituted attorneys of Mr. Reddy executed five blank transfer forms in respect of the 484 shares sold by them four for 100 shares each, and one for 84 shares.
Bhagwati J. however took the view that the plaintiff companyld number be deprived of his rights by reason of this circumstance.
