Mr. Rakesh Bhatia and ors. Vs. Mr. Parmod Sharma and ors. - Court Judgment

Excerpt:
- labour & services disability pension: [vikramajit sen, sanjiv khanna & s.l.bhayana,jj] army act (46 of 1950), section 192 & pension regulations for the army (1961), regulation. 173 claimant was on casual leave sustained injury which contributed to invalidation for military service claim for disability pension held, to claim disability pension by military personnel it requires to be established that the injury or fatality suffered by the concerned claimant bears a causal connection with military service. secondly, if this obligation exists so far as discharge from the armed force on the opinion of a medical board the obligation and responsibility a fortiori exists so far as injuries and fatalities suffered during casual leave are concerned. thirdly, as a natural corollary it is irrelevant whether the concerned personnel was on causal or annual leave at the time or at the place when and where the incident transpired. this is so because it is the causal connection which alone is relevant. fourthly, since travel to and fro the place of posting may not appear to everyone as an incident of military service, a specific provision has been incorporated in the pension regulations to bring such travel within the entitlement for disability pension if an injury is sustained in this duration. fifthly, it cannot be said that each and every injury sustained while availing of casual leave would entitle the victim to claim disability pension. sixthly, provisions treating casual leave as on duty would be relevant for deciding questions pertaining to pay or to the right of the authorities to curtail or cancel the leave. lastly, injury or death resulting from an activity not connected with military service would not justify and sustain a claim for disability pension. this is so regardless f whether the injury or death has occurred at the place of posting or during working hours. this is because attributability to military service is a factor which is required to be established. - i have satisfied myself as to the ingredients of irreparable injury and balance of convenience also. it would not be fair to while restraining the defendants from dealing with the shares, allow the plaintiffs to enjoy the money which according to the plaintiffs also, forms the consideration for the said shares. even if the plaintiffs fail in their case and in terms of their undertaking aforesaid any amount is found due to the defendants, the same can also be realized from this amount. 1 & 9 filing an undertaking to this court in the form of an affidavit, within 15 days herefrom undertaking to without any trial make good to the defendants the loss if any suffered by the defendants owing to the interim order aforesaid, calculated on the difference between the sale price of the said share as on 11th july, 2008 and on the date of final decision of the suit and within 45 days thereof and subject to any orders by the appellate court.rajiv sahai endlaw, j.1. the applications of the plaintiffs for interim relief and for amendment of the plaint and of the application for interim relief are for consideration.2. the nine plaintiffs instituted this suit against nine defendants for the relief of permanent injunction. it is inter-alia the case in the plaint that the plaintiffs no. 6 & 7 companies namely m/s. bgil films & technologies ltd. and m/s. bhartiya global infomedia ltd. respectively are inter-alia engaged in the business of film production; that the other plaintiffs hold shares of the said companies; that the defendants no. 1, 2 & 9 are related to each other and/or are in control of the defendants no. 3 to 8 companies; that the plaintiff no. 1 and the defendant no. 1 have been friends for long and the defendant no.1 has been financing the businesses of the plaintiff no. 1 from time to time; that the plaintiff no. 1 in september, 2007 was under tremendous financial pressure and in need of funds and approached the defendants no. 1 & 2 in first week of october, 2007 for financial assistance to the tune of rs. 1 crore for a period of one year; that the defendant no. 1 expressed inability to advance any money himself but agreed to arrange for the same from his associates; that the defendants no. 1 & 2 subsequently informed the plaintiff no. 1 that the requisite loan could be arranged in two installments and subject to pledge of shares of the plaintiff no. 6 company which are listed with the bombay stock exchange as security against loan; that the plaintiff no. 1 being in urgent need of monies, agreed to the said suggestion; however, the defendant no. 2 subsequently informed that the shares to be so delivered/pledged of the plaintiff no. 6 company should be of the value of four times the value of the loan to take care of the eventuality of fall in shares prices; that after negotiations, it was agreed that 15.4 lacs shares of the plaintiff no. 6 company which were stated to be then trading at rs. 18.70 per share would be transferred to the defendants to be retained by the defendants as security against loan for a sum of rs. 1 crore.3. it is the case in the plaint that the plaintiffs against release of sum of rs. 37.50 lacs out of loan of rs. 1 crore, transferred 2,95,100 shares in demat form and 2,14,900 shares in physical form of the plaintiff no. 6 company. a writing dated 8th october, 2007 is stated to have been executed. it is further the case in the plaint that in compliance with the statutory duty, disclosure letter dated 12th october, 2007 was sent to the bombay stock exchange disclosing that certain shares had been delivered as security against loan, under regulation 13(6) of sebi (prohibition of insider trading) regulation 1992. disclosure under regulation 7(3) of the sebi (sast) regulation 1997 is also stated to have been made to the bombay stock exchange. it is further the case in the plaint that though the balance loan amount was to be released on 25th october, 2007 but the defendant no. 1 expressed inability and a sum of rs. 37.50 lacs only was released against 10,37,934 shares as security on 25th october, 2007. the balance rs. 25 lac was agreed to be released by the defendant by 15th november, 2007. it is the case in the plaint that the approximate value of the 15.4 shares was rs. 3,20,00,000/-. the defendant no. 2 is also stated to have issued a letter cum receipt dated 25th october, 2007 affirming that the shares had been transferred against loan of rs. 1 crore. the plaintiffs claim to have again sent disclosure letters to the bombay stock exchange on 25th & 29th october, 2007.4. the plaintiffs state that at about that time, the value of the shares of defendant no. 6 company on the bombay stock exchange fell from rs. 18.70 per share to rs. 16.30 per share owing to which the defendant no. 1 demanded further 25 lac shares from the plaintiffs as security for release of the balance loan amount of rs. 25 lac. the plaintiffs claim to have further transferred 74,500 shares in favour of the defendants. the defendants are stated to have defaulted in releasing remaining loan amount.5. the relationship between the parties is stated to have soured thereafter. though the plaintiffs claim to have agreed to pay interest @ 3% per month, defendants threatened to sell the shares in the open market leading the plaintiffs to institute the present suit. in the prayer paragraph in the plaint, the reliefs are claimed with respect to shares of m/s. bhartiya global infomedia ltd. (bgil) which in the memo of parties is shown as plaintiff no. 7. thus while averments in the body of the plaint are with respect to pledge of shares of plaintiff no. 6 namely bgil films & technologies ltd., in the prayer paragraph and in some other paragraphs the shares pledged are referred to as of m/s. bhartiya global infomedia ltd. plaintiff no. 7.6. four sets of written statements were filed. one by the defendants no. 1, 2, 6 & 8, second by the defendant no. 9 and third by the defendant no. 3 and the fourth by the defendants no. 4, 5 & 7. the first written statement denies that there was any loan transaction between the parties. it is however stated that the plaintiffs being in urgent need of monies were wanting to sell the shares of the plaintiff no. 6 namely m/s. bgil films & technologies ltd.; that the shares had no purchasers and the price of rs. 5.5 per share for the first lot, of rs. 5 per share for the second lot and rs. 4 per share for the third lot was agreed and the shares were so sold. it is the case of the defendants that the plaintiffs have forged the documents in an attempt to show the loan. the other written statements have supported the written statement of the defendants no. 1, 2, 6 & 8.7. the plaintiffs have filed replications to the written statements. the controversy between the parties thus is whether the transaction between the parties was a loan transaction with the shares being given only as security, in which the case plaintiffs would be entitled to injunction restraining the sale of shares by the defendants or whether the transaction was of an outright sale of shares in which case the defendants having become owners of the share would be entitled to deal with the same and the plaintiffs would not be entitled to restrain the defendants from doing so.8. i. as. no. 1106 & 1107/2008 were filed by the plaintiffs for amendment of the plaint and the application for interim relief respectively. as aforesaid though reference in the plaint was made to the shares of plaintiff no. 6 m/s. bgil films & technologies ltd. but in the prayer paragraph and in certain other paragraph relief was claimed with respect to the shares of plaintiff no. 7 m/s. bhartiya global infomedia ltd. it is the case in the amendment applications that in fact the shares subject matter of the suit transaction were of plaintiff no. 6 m/s. bgil films & technologies ltd. and amendments are claimed to that extent only.9. the defendants have opposed the applications for amendment. the counsel for the defendant no. 3 has relied upon sumitra sahai v. arya orphanage : 61 (1996) dlt 396, capricorn one v. raghbir singh 80 (1999) dlt 639 and kesho lal kapur v. vinod kumar : 81 (1999) dlt 20 in this regard. at this stage, it may be mentioned that when the suit and the application for interim relief had come up before this court first, only notice of the suit and the application for interim relief was issued and no ex-parte relief was granted in favour of the plaintiffs. the plaintiffs preferred fao(os) no. 297/2008 against the non grant of ex-parte injunction and vide order dated 11th july, 2008 in the said appeal, till the next date of hearing before this court, the defendants were restrained from dealing with or disposing of the shares given by the appellants to the respondents in any manner whatsoever. thereafter when the matter came up before this court the said order was continued till varied and remains in force till date.10. the counsel for the defendant no. 3 has contended that the relief claimed by the plaintiffs in the suit was with respect to shares of the plaintiff no. 7 m/s. bhartiya global infomedia ltd. and the interim relief granted in appeal could only be in reference to the prayer in the plaint and the plaintiffs if permitted to now amend, the plaint and the application for interim relief to make the prayer with respect to the shares of plaintiff no. 6 m/s. bgil films & technologies ltd. would tantamount to changing the nature and character of the suit. it is argued that the same is impermissible as held in sumitra sahai where amendment changing cause of action was declined and in kesho lal kapur where amendment changing the subject matter of the suit was declined. emphasis was placed of capricorn one where the application for amendment to change the address/description of the property with respect whereto suit was filed was dismissed.11. in my view, none of the judgments cited above are applicable to the facts of the case. the memo of parties shows that originally the name of m/s. bhartiya global infomedia ltd. was typed against plaintiff no. 6 and of m/s. bgil films & technologies ltd. was typed against the plaintiff no. 7. subsequently, it appears to have been changed in hand and which has resulted in the discrepancy/confusion aforesaid in the plaint. it further appears that in the copies of the plaint and memo of parties served on the defendants also the said handwritten change appearing in the memo of parties in the court file was not carried out. it is otherwise the admitted position that it is m/s. bgil films & technologies ltd. whose shares are listed on the bombay stock exchange and which shares form the subject matter of the present suit. in fact the order of the division bench in appeal aforesaid is also not with reference to the name of the company whose shares were injuncted but is with reference to the shares given by the plaintiffs to the defendants.12. the suit is still at initial stage. issues have not been framed as yet. amendments claimed are found to be necessary for adjudication of the matter in controversy. the applications for amendments are allowed and the amended plaint ordered to be taken on record. since otherwise there is no controversy between the parties as to which shares form the subject matter of the suit transaction, no amended written statement is required to be filed.13. coming now the application for interim relief, as aforesaid the inquiry at this stage is as to whether prima facie, the transaction vis--vis the shares was of a loan with the shares being only the security for the loan or of outright sale. it is not in dispute that rs. 75 lacs have changed hand between the parties, according to the plaintiffs as loan and according to the defendants as consideration for sale of shares. according to the plaintiffs the loan was for a period of one year at a interest of 3% per month.14. i had on the first day itself put to the senior counsel then appearing for the plaintiffs as to whether the plaintiffs who admitted having received loan of rs. 75 lacs repayable with interest were willing to deposit the loan amount with interest due thereon in the court. however, it was then submitted that the period of one year for which the loan had been taken was not over till then and the plaintiffs had arranged their affairs in a manner so as to in a position to repay the loan with interest only after one year and were then not in a position to repay the loan. accordingly, not finding equities in favour of the plaintiffs to on the one hand seeking to restrain the defendants from dealing with the shares while on the other hand not clearing the amount which according to the plaintiffs also were payable to the defendants, no ex-parte relief was granted in favour of the plaintiffs. during the course of hearing on 20th october, 2008 the senior counsel for the plaintiffs had informed that the period of one year for which the loan had been taken having expired, the plaintiffs were ready and willing to refund the monies along with interest and/or to deposit the same in this court subject to the defendants also depositing the shares in this court. the said proposal however did not find favour with the counsel for the defendants and it was recorded that the effect thereof shall be considered at appropriate stage. lengthy arguments spanning over seven days have been addressed to demonstrate the nature of the transaction between the parties. i however, feel the following to be relevant for the purposes of determining the nature of the transaction:a. it is not in dispute that the plaintiff no. 6 m/s. bgil films & technologies ltd. is a company listed on the bombay stock exchange. the plaintiffs have expressly pleaded the rates being quoted on the bombay stock exchange in september/october, 2007. though the defendants in their written statements have generally denied the same but have not stated as to what were the quoted rates if not as pleaded in the plaint. the defendants have on the contrary pleaded that there were no buyers for the said shares of the plaintiff no. 6 company. the defendants claim to have bought the shares at prices literally 1/3rd or even less than 1/3rd of the prices stated to be quoted on the stock exchange at the relevant time. the plaintiffs have on the contrary pleaded and filed documents to show trading the said shares at about the same time on bombay stock exchange. if the intent of the plaintiffs had been to sell the shares, it strikes one as odd as to why the plaintiffs would want off market transaction and/or as to why the shares would not be sold through the stock exchange. the said circumstance indicates the transaction to be something other than that of sale simplicitor.b. i had inquired from the counsel for the defendants during the course of hearing as to whether the plaintiff no. 6 company m/s. bgil films & technologies ltd. had any immovable or other assets. the answer was in the negative. the business of the plaintiff no. 6 is described as that of the film production and which is dependent upon the personal acumen, skill and goodwill of the persons in management of the company. i had further inquired as to what price was the defendants expecting to realise on sale of the shares. it was informed that the price expected was around rs. 16 per share. i had also inquired as to what had led to the tripling of the price of the shares from the time when the defendants procured the same to the time when they were injuncted from selling. nothing leading to such increase in price of the shares of the plaintiff no. 6 could be informed. at this stage, the only inference which can be derive from the said circumstance is that either the price of the shares at the time of the transaction was as pleaded by the plaintiffs and in which case it is inexplicable as to why the plaintiffs if desirous of selling the shares would sell to the defendants at 1/3rd of the price or that there were other considerations between the parties with respect to the shares and which neither party is willing to bring before the court. be that as it may, the same requires inquiry.c. even if the price of shares now is not considered to be rs. 16 per share, unless the price had increased manifold, it would not make sense for the defendants to contest the suit if the price had been the same as at which they claim to have acquired the shares, especially when plaintiffs are even ready to pay interest at 3% per month thereon.d. i find denial in the written statement of the defendants of the affairs of the plaintiff no. 6 company also to be not bonafide. normally, if the defendants were purchasing the shares of the plaintiff no. 6 company in a off market transaction for the reason of there being otherwise no buyers for the shares, in spite of the same being listed on the stock exchange, the defendants would have made a thorough inquiry of the affairs and prospects of business of the plaintiff no. 6 company.e. the admitted documents between the parties being the document dated 8th october, 2007 is as under:to,m/s. exxin securities & credits (p) ltd.janakpuri,new delhi.sub:- confirmation of dealdear sir,enclosed please find herewith the following delivery instructions of my company i.e. m/s. bgil films & technologies ltd. no. of shares cheque no. amount (rs.)1. arti bhatia 100000 148501 dt. 9/10/07 8,00,000.002. rakesh bhhatia 85100 148502 dt. 9/10/07 9,00,000.003. bgil & misc. 314900 148503 dt. 9/10/07 8,00,000.00500000 25,00,000.00please note that aforesaid di have been given under a deal, the documents etc. will be signed later on as soon as possible, in this connection the undersigned has receive d the above said cheques from you company through mr. vikas gupta, authorised signatory of above company. here it is understood that these above di & cheques have been exchanged as a confirmation of deal and will not be considered as consideration, in case if the said deal does not take place, both the parties will restore the original situation without any damage to either parties asap.thanking you,rakesh bhatia vikas gupta601, devika tower, 704, deepalinehru place, new delhi-19 nehru place, new delhia reading thereof also shows that there was some other understanding between the parties than sale simplicitor. the defendants have tried to explain but this is not the stage therefor. all that can be said at this stage is that the case of the plaintiffs of the transaction being a loan transaction with the shares being deposited by way of security cannot be dismissed/rejected summarily.f. on the contrary, i find it strange that had the transaction been of loan, the payments would have been received in the name of one entity only which was in need of funds, in this case plaintiffs no. 6 or 7. however, the payments in the present case are to the entities owning the shares. that is indicative of a sale transaction.g. similarly, i find the action of the plaintiffs of having delivered the entire lot of shares agreed to be delivered in spite of the entire loan amount having not been disbursed to be inconsistent with the pleading of urgent requirement of the plaintiffs of fund. a loan under such emergent conditions as the plaintiffs have pleaded is not staggered. the plaintiff would have insisted upon the entire payment, especially when they were giving security of the value of several times the amount of the loan.15. both counsels have cited the sebi regulations to buttress the transaction pleaded by them respectively. the senior counsel for the plaintiffs has argued that disclosures made by the plaintiffs from time to time except one (in which mistakenly transaction is shown as outright sale) the transaction has been consistently disclosed as of giving of shares as security. it is further argued that though the total volume of shares so transacted was over 25% of the capital of the plaintiff no. 6, had the same been sale, the defendants would have disclosed it under the takeover code; the defendants documents showed disclosure by the defendant no. 6 alone of acquisition of 7% shares and not of the entire volume. it is argued that the defendants as per their admission were acting in concert and if the transaction had been sale, were required to make such declaration. reliance is also placed on the valuation of the shares by price waterhouse coopers (pwc). it was further the contention of the senior counsel for the plaintiffs that under the depositories act only the pledge of shares is to be intimated and which also is directory and not mandatory; but equitable mortgage of shares was not required to be intimated. reliance was placed on shazadi begum saheba v. girdharilal sanghi : air 1976 andhra pradesh 273 division bench to draw a distinction between the pledge of shares and mortgage of shares.16. per contra, the counsel for the defendants no. 1, 2, 6 & 8 argued that the necessary ingredients in a transaction of a loan were lacking in the present case; the document dated 8th october, 2007 relied upon by the plaintiffs neither mentioned any time for repayment nor rate of interest. it was further contended that the defendants had become owners of the shares in accordance with law and the plaintiff no. 6 company had transferred the shares in the name of the defendants. it was further argued on the basis of documents that the provisions of the takeover code had been complied with by the defendants by giving intimation to the stock exchange. it was further contended that the plaintiff no. 6 itself had been showing the defendants as shareholder in its books and was not entitled to contend to the contrary. shares not only in demat form; also in physical form were transacted and had the transaction been of mortgage only, as alleged by the plaintiffs, shares in the physical form at least would not have been transferred in the records of the plaintiff no. 6 company and would have been merely retained by the defendants by way of security. it was next contended that the declarations which the plaintiffs claimed to have made under the insider trading regulations were required to be made only in the case of sale of shares and not in the case of pledge/mortgage thereof; hence it was argued that the statement of the plaintiffs in the said declaration that the shares were pledged, was of no avail in as much as was made in compliance of a regulation, to be made in case of transaction of sale only. the counsel for the defendants also vehemently urged that the forgery of the documents was evident from the face thereof, in as much as the document dated 25th october, 2007 mentioned more shares than had been transacted by that date. it was argued that the number of shares mentioned in the document dated 25th october, 2007 was reached only on 8th november, 2007. similarly, it was urged that the postal receipts had been manipulated and related to persons other than the addressees. several judgments were cited on the proposition of a party suppressing the material facts or relying upon the forged document being not entitled to the discretionary relief of injunction. the counsel for the defendant no. 9 argued that the allegations against his client were vague and his client was not connected with the entire transaction subject matter of the suit.17. the senior counsel for the plaintiffs in rejoinder has furnished explanations for the discrepancy in shares on the basis whereof argument of forgery had been raised.18. i do not deem it appropriate to at this stage of interlocutory relief, delve into depth with each of the submissions aforesaid. all that can be said at this stage is that the matter requires trial and the case of the plaintiffs is not found to be such which can be rubbished at this stage so as to disentitle the plaintiffs to any interim protection. i have satisfied myself as to the ingredients of irreparable injury and balance of convenience also. the shares subject matter of the suit constitute over 25% of the share capital of the plaintiff no. 6 company. if the same are permitted to be dealt with during the pendency of the suit, it would tantamount to destabilizing the control and management of the plaintiff no. 6 company. i cannot fathom any way in which the plaintiffs if ultimately succeeding in the suit, can then be compensated. i have considered whether the defendants can be directed to give some undertaking to compensate the plaintiffs if the plaintiffs ultimately succeed. i have not been able to think of any way to assess the loss which would be suffered by the plaintiffs by introducing a stranger into the management of the plaintiff no. 6 company. per contra, the claims of the defendants are monetary. the maximum loss which would be suffered by the defendants would be of the difference in the price of the shares prevailing on the date of interim order and which may be prevailing on the date when the defendants, if succeeding in their defence sell the shares. the balance of convenience can be struck by directing the plaintiffs to furnish an undertaking to this court to compensate the defendants for the same.19. according to the plaintiffs themselves, the repayment of the sum of rs. 75 lacs with interest at 3% per month has fallen due. it would not be fair to while restraining the defendants from dealing with the shares, allow the plaintiffs to enjoy the money which according to the plaintiffs also, forms the consideration for the said shares. it is thus deemed expedient to also direct the plaintiffs to deposit in this court the amount so due till the date of deposit. the said amount shall be retained in this court, to be kept in a fixed deposit for a period of one year, at a time, to be renewed from time to time, for the benefit of whosoever may be ultimately found entitled thereto. if the plaintiffs succeed in their case, this money in any case would be due to the defendants. even if the plaintiffs fail in their case and in terms of their undertaking aforesaid any amount is found due to the defendants, the same can also be realized from this amount.20. i accordingly dispose of the i.a. no. 7533/2008 for interim relief with the following directions:the order dated 11th july, 2008 of the division bench is made absolute during the pendency of the suit subject to (i) the plaintiffs within 45 days herefrom depositing in this court the sum of rs. 75 lacs with interest at 3% per month thereon from the date of payment thereof by the defendants to the plaintiffs and till the date of deposit (ii) the plaintiffs no. 1 & 9 filing an undertaking to this court in the form of an affidavit, within 15 days herefrom undertaking to without any trial make good to the defendants the loss if any suffered by the defendants owing to the interim order aforesaid, calculated on the difference between the sale price of the said share as on 11th july, 2008 and on the date of final decision of the suit and within 45 days thereof and subject to any orders by the appellate court.21. the registry is directed to keep the monies so deposited by the plaintiffs in this court in fixed deposit for one year at a time and to be renewed from time to time till otherwise directed.