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Form No. 9 (Civil) Title sheet for judgment in Suits (R. P. 91)
TITLE SHEET FOR JUDGMENTS IN SUITS IN THE COURT OF THE SMALL CAUSES JUDGE AT BANGALORE (SCCH. 18)
PRESENT: Miss Vanamala A. Yadav B. Com, LL.B. (Spl.) I I I ADDL. JUDGE COURT OF SMLL CAUSES BANGALORE
Dated: This the 31st day of August, 2005
S. C. No. 1732/2003
Plaintiffs:
1. Malini A. G. D/O. Gopala Shetty Noojadi
2. Gopala Shetty Noojadi S/O. Channaiah Shetty Aged 60 years
Both are R/at No. 18, 3rd Cross, Anjaneya Temple Street, Nagasandra Bangalore – 560 028. (Pleader by Sr. B. N. Seshadri)
-Vs-
Defendants:
1. PANJON LTD., No. 14, Dawa Bazar II Floor, R. N. T. Marg, INDORE – 452 001. (Exparte)
2. The Chairman SEBI, Investor Grievance & Guidance Division, Post Bag No. 19972, Nariman Point Post office, Mumbai 400 021. (Pleader by Sri. A. M)
Date of institution of the suit 22-08-2003
Nature of the suit (suit on Pronote suit for Declaration and possession Suit for Injunction, etc) Recovery of money
Date of the commencement of Recording of the evidence 24-03-2005
Date on which the Judgment was Pronounced 31-8-2005
Year/s Month/s Day/s
Total duration: 2 0 9
(Vanamala A. Yadav) I I I ADDL JUDGE, COURT OF SMALL CAISE BANGALORE.
J U D G M E N T
This suit is filed by the Plaintiffs against the defendants for recovery of a sum of Rs. 12,306/- with interestat 18% p.a. from the date of the suit till its realization wit costs and also amount spent for going Indore and returning back to Bangalore.
2. The brief facts of the case are that: As per issuance of prospectus inviting general public to apply for the purchase of shares, by the 1st defendant during the year 1993-94, the Plaintiffs have applied for 200 shares under two applications jointly i.e. 100 shares on each application. For the first application they have got allotment for 100 shares and for the second application they got the refund. They have received letter of allotment along with partly paid share certificate, wherein the defendants have asked the plaintiffs to pay the allotment money of Rs. 1,500/- Accordingly Plaintiffs have snet a DD for S. 1,720/- (Rs. 1,500/- towards the allotment money and Rs. 720/- towards the interest, as the they have not paid the allotment money in time) on 19-06-1995. The 2nd defendant has been established by Government of India to protect the interest of the investors, having power to punish the wrong doing company. In spite of payment of full amount the defendant No. 1 did not issued the share certificate. Even plaintiff No. 2 went to the 1st defendants office personally and requested for issuance of share certificate and also the dividend due. Thereby, the 1st defendant has advised him to give a letter in this regard and also assured him to send share certificate at the earliest.
3. The plaintiff No. 2 has spent Rs. 1500/- for visiting the said office (1st defendant) at Indore. Inspite of the same no share certificates are sent to the plaintiff. The 1st defendant regarding payment of interest sent a letter dt. 28-06-1995. For which the Plaintiffs have written a letter requesting the 1st defendant not to demand the small interest. But 1st defendant has not replied or it has issued the share certificate. Hence, Plaintiffs have given a complaint to the 2nd defendant on 10-05-2001 by sending a copy of letter (complaint) to the 1st defendant. In spite of that the 1st defendant has not sent any reply. Hence, Plaintiffs have issued lawyer notice on 28-02-2002, which was served upon both the defendants as refused to accept the same. On 22-11-2002 the Plaintiffs have written one more letter to the 2nd defendant. Even also the 2nd defendant gave no reply and it has not taken any action against the 1st defendant. Therefore, Plaintiffs have called upon the defendants to refund the amount of Rs. 2,720/- with interest at 18% p.a. from 1993 for Rs. 1,000/- and for Rs. 1,720/- from 19-06-1995. Plaintiffs have took the loan from the Bank and paid the interest and that defendants are also liable to pay a sum of Rs. 1,500/- and costs of legal notice at Rs. 500/-. Hence, Plaintiffs have filed this suit praying for decree. 3. On issuance of suit summons, the 1st defendant did not appear before the court. Hence, it is placed exparte. Defendant No. 2 has appeared before the court through is counsel and filed his written statement denying the material allegations and stating that, the suit of the plaintiff is not maintainable in law or on facts and hence it is liable to be dismissed in limine. This respondent is not a necessary party and on that ground itself the suit is liable to be dismissed for mis-joinder of parties. The Board is established under statute by the Central Government in the year 1992 and its function is governed by the Securities and Exchange Board of India Act, 1992. The main object of the Act is to protect the interests of investors in securities and to promote the development and to regulate the securities U/s. 11 of the Act. This defendant has no knowledge about the suit transaction in connection with applying for allotment of shares and non-issuance of share certificate in favour of plaintiff by the 1st defendant. He has admitted the issuance of letter dt. 10-05-2001 by the plaintiff and the it was suitably replied and taken up the matter with the defendant No. 1 and that he is expecting reply from it. This defendant is not held liable for non-issuance of allotted share certificates by the defendant No. 1 and that the suit against this defendant, U/s. 113 of the Companies Act 1956 is not maintainable and it also provide for limitation of time for issue of share certificates. There is proper forum for adjudication the grievance raised by the plaintiff. Thereby, this court has no jurisdiction to entertain this suit and that there is no cause of action of file this suit. Accordingly it is prayed to dismiss the suit with exemplary costs. 4. The Plaintiffs to prove their case, plaintiff No. 2 has submitted his evidence by way of affidavit as PW. 1 and relied upon documents at Ex. P. 1 to P. 9. The defendant No. 2 has not adduced any oral or documentary evidence. 5. Heard the arguments, perused the pleadings, evidence and record on hand. 6. Following are the points that arose for my consideration are: 1. Whether the Plaintiffs are entitled for the suit claim with interest as prayed for? 2. What order or decree? 8. The following are the findings on the above points:
Point No. 1: Partly affirmative Point No. 2: As per the final order for the following:
R E A S O N S 9. Point No.1 and 2: It is the specific case of the Plaintiffs that though they have applied for 200 shares jointly under 2 applications of 100 shares each, as against the prospectus issued by the defendant No. 1 inviting the general public to apply for purchase of shares, during the year 1993-94 but the defendant No. 1 has allotted 100 shares for 1st application and for 2nd application they got refund and that in spite of requests and sending DD for Rs. 1,720/- in connection with allotment money and interest, no share certificates have been issued and that efforts are made by the Plaintiffs to get the share certificates by approaching defendant No. 2 also. But no steps or actions have been taken by the defendant No. 2 and that no amount was refunded in lieu of non issuance of share certificates by the defendant No. 1 and on demanding the refundable amount of Rs. 2,720/- the defendants have failed to comply with the same. Hence, cause of action is arisen to file this suit. 10. Reiterating the plaint averment the plaintiff No. 2 has deposed by submitting his affidavit evidence as PW. 1, placing reliance on the documents i.e. Ex. P. 1 the letter issued to defendant No. 2 dt. 22-11-2002, by the plaintiff, in connection wit non-issuance of share certificates or refund of amount from defendant No. 1 to settle the matter, as against the defendant No. 1 Ex. P. 2 is the U. C. P. for having sent Ex. P. 1. Ex. P. 3 is the office copy of legal notice dt. 28-02-2002 calling upon the defendants to refund the amount in connection with allotment of shares. Ex. P. 4 is the postal cover issued to defendant No. 1 with endorsement as Refused. Ex. P. 5 is the letter dt. 10-05-2001, issued by the Plaintiffs to the defendant No. 2, Ex. P. 6 is the letter of 1st defendant regarding payment of allotment money. Ex. P. 7 is the acknowledgement issued by 2nd defendant for having received the letter of Plaintiffs. Ex. P. 8 and 9 are the letters written by Plaintiffs dt. 10-05-2001 and 16-05-2001 respectively. Ex. P. 10 to 14 are also letters issued to the defendant No. 1 about suit transaction, regarding the shares. Ex. P. 15 the telegraphic message to the defendant No. 1 about the same. These are on different dates. 11. The learned counsel for the defendant No. 2 has specifically argued that the suit itself is not maintainable at the first instances as this defendant has to undertake the functions U/s. 11 of Securities and Exchange Board of India Act 1992, as the Board has been established under statute by the Central Government in the year 1992 and that Sec. 113 of the Companies Act provides for limitation of time for issue of certificates and also it provides for punishment in case, a Company, defaults in issuing of certificates and that the Company Law Board is therefore the proper forum where the grievances of Plaintiffs have to be adjudicated and that this court has no jurisdiction to entertain this suit by virtue of Sec. 10 and 113 of Companies Act, 1956. Admittedly this defendant No. 2 has established by Central Government by virtue of SCBI Act having main object to provide for establishment of the Board to protect the interest of investors in securities and to promote the development and to regulate the securities market and in the matters connects there with and incidental thereto and it has to undertake functions prescribed U/s. 11 of the said Act. On going through the entire case of the Plaintiffs there is no grievance as against this defendant No. 2 regarding recovery of amount claimed. But main grievance is in respect of issuing of letter to this defendant and it has not taken any action against defendant No. 1. But this Small Causes Court has no jurisdiction on these matters. Therefore, in view of above discussion, it is clear that there is no any relief claimed by the plaintiffs against the defendant No. 2 in connection with the recovery of suit claim. Therefore, though this defendant is made as necessary party, the suit is not maintainable against him nor the Plaintiffs are entitled for any relief as prayed for as against the defendant No. 2 and hence suit is liable to be dismissed against this defendant. 12. In the present case, the Plaintiffs have sought for the relief in connection with a sum of money that was sent towards payment of shares applied for. But the defendant No. 1 Company has not issued the share certificates and that it did not refund the amount received from the plaintiffs, in spite of repeated requests from the Plaintiffs regarding issuance of share certificates. Apart from this, the Plaintiffs have made efforts by approaching defendant No. 2 also and even after issuance of said legal notice the defendant No. 1 company has filed to refund the amount received. Therefore, for recovery of such amount, the Plaintiffs can entertain the suit and that this court has jurisdiction to entertain this suit and in this connection, I would like to rely upon the ruling, which reads thus:
Where a sum of money was sent in full payment of the shares applied for and the company allotted the lessor number and did not refnd the balance money and the applicant having moved the local consumer forum and having had a rejection on the ground that he was not a consumer, it was held by the Rajasthan High Court that neither it had jurisdiction against the consumer forum decision nor it had jurisdiction to entertain the case under S. 10 of the Companies Act. A company court had no jurisdiction in this particular matter. The only jurisdiction in such cases is that of the appropriate Civil Court Poonam Chand Kothari V. Rajasthan Tubes Mfg. Co. Ltd. (1996) 87 Com Cases 842 (Raj). 13. Whatever evidence put forth by the plaintiffs reiterating the plaint averments with documentary evidence went unchallenged by the defendant No. 1, who is supposed to be the contesting party in this suit. He has been placed exparte. Therefore, there is no reason to disbelieve the case made out by the plaintiff, in connection with the suit for recovery of amount. It is admitted by the defendant No. 1 under its letter at Ex. P. 6, because as its contents reveals that the Plaintiffs letter dt. 19-06-1995 along with DD for Rs. 1,720/- towards the payment of allotment of shares has been received. In the legal notice at Ex. P. 3, Plaintiffs have specifically clamied Rs. 1,000/- towards said application in September 1993 and Rs. 1,500/- towards 100 shares allotment money and Rs. 220/- towards interest charge and in all Rs. 2,720/-. In spite of efforts made by the Plaintiffs, the defendant No. 1 has not made refund of amount received under said transaction. Therefore, the Plaintiffs are entitled for refund of said amount of Rs. 2,720/-. In the notice the Plaintiffs have claimed interest at 18% p.a. from 1992 to 2002. After receipt of Ex. P. 6 the Plaintiffs have made correspondence wit the defendant No. 1 in connection with allotment of shares. Even they have written letter to taken action against defendant No. 1 before the defendant No. 2, under Ex. P. 5 dt. 10-05-2001 and there is acknowledgment for having received the letter of Plaintiffs by defendant No. 2 under Ex. P. 7. The defendant has no response as against the efforts made by the plaintiff. The conduct of this defendant No. 1, in not contesting the suit claim, gives right to draw the adverse inference against it, and the fact of non-appearance itself amounting to admission against the suit claim of the Plaintiffs. 14. It is notable point that the Plaintiffs have not produced the materials to show about the rate of interest agreed upon, in case of non issuance of share certificates or return of amount received by the defendant No. 1. But there is specified condition under Certificate ex. P. 6 about the interest at 15% p.a. imposed on the Plaintiffs requesting to pay the allotment money on or before 28-02-1994 and if they fails to pay, the defendant No. 1, is entitled to receive such payment with interest at 15% p.a. Hence, it is just and reasonable to award the interest at 15 p.a. on Rs. 2,720/- from the date of Ex. P. 6 i.e. 24-06-1995, on which the defendant No. 1 has made it clear about the imposing of interest. 15. Therefore, in view of above discussion, the Plaintiffs are entitled for recovery of the suit claim of Rs. 2,720/- with interest at 15% p.a. from 24-06-1995 till its realization, against the defendant No. 1only. Hence, by answering point No. 1 in the partly affirmative, I proceed to pass the following order:
ORDER
Suit of the Plaintiffs is hereby partly decreed, with costs. Defendant No. 1 is directed to pay a sum of Rs. 2,720/- with interest at 15% p.a. from 24-06-1995 till its realization to the plaintiff. Suit against the defendant No. 2 is hereby dismissed. Draw up a decree accordingly.
(Dictated to the Stenographer transcribed by her, corrected and then pronounced in the open court this the 31st day of August, 2005)
(Vanamala A. Yadav) I I I ADDL. JUDGE, COURT OF SMALL CAUSES, BANGALORE
APPENDIX OF EVIDENCE
List of witness examined for the plaintiff
OW. 1: Gopala Shetty
List of witnesses examined for the Defendant: -None-
List of documents exhibited for the plaintiff:
Ex. P. 1 : Copy of letter Ex. P. 2 : U. C. P. Ex. P. 3 : Copy of legal notice Ex. P. 4 : Postal cover Ex. P. 5 : Letter written to defendant No. 2 Ex. P. 6 : Reply letter 1st defendant Ex. P. 7 : Ack. Ex. P. 8&9 : Letters written by plaintiff Ex. P. 9 : Ack.
List of documents exhibited for the Defendant:
-Nil-
(Vanamala A. Yadav)] I I I ADDL JUDGE, COURT OF SMALL CAUSES BANGALORE.
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