Karnataka High Court
Sri Manoj Bajaria vs Sri Parthiban on 20 March, 2018
Author: P.S.Dinesh Kumar
Bench: P.S. Dinesh Kumar
1
MFA No.1602/2018
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 20TH DAY OF MARCH, 2018
BEFORE
THE HON'BLE MR. JUSTICE P.S. DINESH KUMAR
MISCELLANEOUS FIRST APPEAL NO.1602/2018 (CPC)
BETWEEN:
SRI MANOJ BAJARIA
S/O CHAMPAKLAL BAJARIA
AGED ABOUT 50 YEARS
C 401, SHANTI COMPLEX
M.G.ROAD, KANDIWALI (W)
MUMBAI ...APPELLANT
(BY SHRI.B.V.ACHARYA, SENIOR COUNSEL FOR
SHRI.H.P.RAGHU, ADVOCATE)
AND:
1. SRI PARTHIBAN
S/O MURUGAIYAN
AGED ABOUT 44 YEARS
NO.76, CAMBRIDGE ROAD
SINGAPORE-219 753
2. M/S INDIABULLS VENTURES LIMITED
COMPANY REGISTERED UNDER THE
COMPANIES' ACT 1956, INDIABULLS HOUSE
448-451, UDHYOGVIHAR, PHASE V
GURGAON-122 016, REPRESENTED BY
ITS AUTHORIZED SIGNATORY
3. RAJESH EXPORTS LIMITED
COMPANY REGISTERED UNDER THE
COMPANIES' ACT 1956, BATAVIA CHAMBERS
KUMARA KRUPA ROAD
KUMARA PARK (E), BANGALORE-560 001
2
MFA No.1602/2018
REPRESENTED BY ITS
AUTHORISED SIGNATORY ...RESPONDENTS
(BY SHRI UDAYA HOLLA, SENIOR COUNSEL FOR
SHRI C.K.NANDAKUMAR, ADVOCATE FOR C/R1)
THIS MFA IS FILED UNDER ORDER 43 RULE 1(r) OF CPC,
AGAINST THE ORDER DT.17.02.2018 PASSED ON I.A.NO.1 IN
O.S.NO.8286/2017 ON THE FILE OF THE XXX ADDITIONAL CITY
CIVIL & SESSIONS JUDGE, BENGALURU, (CCH-31), REJECTING
I.A.NO.1 FILED UNDER ORDER 39 RULES 1 & 2 OF CPC.
THIS MFA, HAVING BEEN HEARD AND RESERVED FOR
JUDGMENT ON 1.3.2018, COMING ON FOR PRONOUNCEMENT
OF JUDGMENT, THIS DAY, THIS COURT PRONOUNCED THE
FOLLOWING:-
JUDGMENT
This appeal by plaintiff is directed against order dated 17.2.2018 in O.S.No.8286/2017 on the file of XXX Additional City Civil and Sessions Judge, Bengaluru, rejecting his application, IA No.1, filed under Order 39 Rules 1 and 2 of Code of Civil Procedure.
2. Heard Shri B.V.Acharya, learned Senior Counsel for appellant and Shri Udaya Holla, learned Senior Counsel for Caveator/Respondent No.1.
3. For the sake of convenience, the parties shall be referred to as per their status before the trial Court. 3 MFA No.1602/2018
4. Briefly stated the facts of the case are, plaintiff filed instant suit for rendition of accounts and a decree of injunction against the first defendant from sale of equity shares of third defendant company held in Demat account, contending inter alia, • that he is an investment advisor;
• that the first defendant, an NRI living in Singapore was exploring possibilities of investment in Indian Stock Market;
• that plaintiff and first defendant have entered into a Memorandum of Understanding ['MoU' for short], on 19.7.2008 and in terms whereof, the first defendant agreed to invest based on plaintiff's advice; • that Plaintiff would be entitled for 25% profit and in case of loss, plaintiff would be liable to reimburse 40% of the loss;
• that in furtherance of plaintiff's advice, first defendant invested in third defendant-Company; • that the first defendant started selling shares of third defendant-Company without plaintiff's consent; 4 MFA No.1602/2018 With these pleadings, he brought the instant suit along with an interlocutory application under Order 39 Rules 1 and 2 CPC to freeze first defendant's Demat Account bearing No.IN 30223611825564.
5. First defendant resisted the suit principally on the ground that, the plaintiff is a stranger and there was no MoU between them. He also pleaded that, the instant suit is hopelessly barred by time, as it is in the nature of a suit for specific performance of the alleged MoU of the year 2008 and that the suit was grossly undervalued.
6. On consideration of the material on record, the learned trial Judge framed following points for his consideration:
"1. Whether the plaintiff has made out a prima facie case in his favour?
2. Whether the plaintiff shows that balance of convenience lies in his favour?
3. Whether the plaintiff shows that he will be put to greater hardship and irreparable injury in case an order of temporary injunction is refused?
4. What order?"5 MFA No.1602/2018
Answering Points No.1 to 3 in the negative, he rejected IA No.1. Feeling aggrieved, the appellant is before this Court.
7. Shri B.V.Acharya, learned Senior Advocate for the appellant submitted that, the instant suit has triable issues for consideration. In the trade of Stock & Shares, advice of Consultants is not alien. The first defendant has admittedly invested in third defendant- Company based on plaintiff's advice. The very fact that the plaintiff has placed on record first defendant's Demat Account number, prima facie, establishes that, the parties have indeed transacted in terms of the MoU. As the share value of third defendant-Company multiplied several folds, the first defendant, in order to deprive plaintiff of his legitimate share started off-loading the shares without informing the plaintiff. Such an act, on the part of the first defendant is in breach of agreed terms between the parties and has resulted in financial loss to the plaintiff. In order to protect plaintiff's interest, it is just and necessary to allow the interlocutory application and injunct first defendant from 6 MFA No.1602/2018 trading further, as otherwise, it would cause irreparable injury to the plaintiff.
8. Shri Udaya Holla, learned Senior Advocate for first respondent, strongly opposing I.A.No.2/2018 for temporary injunction, submitted that the plaintiff is a total stranger to the first defendant. The alleged MoU is not a genuine one. Plaintiff has not produced any material before the trial Court to establish a prima facie case. Further, in the event, plaintiff succeeds in the suit, he can be adequately compensated by way of damages. With regard to the contention that plaintiff has placed defendant's Demat account number on record, he submitted that it is not difficult to trace the Demat account of any individual. More so, first defendant is a large investor and his Demat account will be known to several stock brokers. In any event, mere knowledge of Demat account does not lead the case of plaintiff any further. In support of his contentions, he placed reliance on two judgments of the Hon'ble Supreme Court in the case of Wander Ltd. and another Vs. Antox India P.Ltd. reported in 1990 (supp) 7 MFA No.1602/2018 SCC 727 and Best Sellers Retail (India) Private Limited Vs. Aditya Birla Nuvo Limited and Others reported in (2012) 6 SCC 792.
9. I have carefully considered submissions of learned Senior Advocates for the parties and perused material papers on record.
10. While rejecting plaintiff's application, the trial Court has recorded a finding that the plaintiff has not produced even a scrap of paper to demonstrate that he had tendered any advice in pursuance of the MoU and the first defendant had acted on such advice. It has also recorded that no details of transactions were forthcoming in the pleadings. The trial Court's findings precisely read as follows:
"28. If this version of the plaintiff is to be believed, then naturally there must have been series of conversations and exchange of message between the plaintiff and the 1st defendant regarding the advice and investment in the stock market. But to corroborate the said version of the plaintiff that based on the said Memorandum of Understanding the 1st defendant has purchased the shares in the 3rd defendant company, the plaintiff has not produced even a single scrap of paper which could demonstrate that after entering into the said agreement, there was nexus between the plaintiff and the 1st defendant and there were series of 8 MFA No.1602/2018 conversations between himself and the 1st defendant and that the 1st defendant has acted upon his advice and has invested the money in purchasing the shares of the 3rd defendant. As rightly contended by the counsel for the 1st defendant even in the pleading, there is no material particulars as to what sort of advice have been given by the plaintiff to the 1st defendant and what was his role in the 1st defendant's investment in purchasing the shares belonging to the 3rd defendant.
29. No particulars as to when the 1st defendant purchased the shares of the 3rd defendant and whether he had purchased all the shares in a single shot or in a series of transactions have been furnished by the plaintiff in the pleadings. The plaintiff has not produced even a single paper to show that the 1st defendant had taken his advice in purchasing the shares of 3rd defendant. Hence, even by overlooking the preliminary objections raised by the 1st defendant that the said Memorandum of Understanding is unstamped document; Clause-9 of the said Memorandum of Understanding is contrary to the provisions of Sec.58(2) of Companies Act of 2013 and the said Memorandum of Understanding is forged document, etc., on facts, the plaintiff has thoroughly failed to establish the prima-facie case on his behalf."
(Emphasis supplied)
11. Based on the above findings, trial Court has rejected plaintiff's application under Order 39 Rules 1 & 2 CPC.
12. The MoU relied upon by the plaintiff is dated 19.07.2008. It is averred in paragraph No.22 of statement of objections filed in this Court that the suit was filed on 4.12.2017. In the plaint, the cause of action is described 9 MFA No.1602/2018 as 'in the month of May 2017'. There is a delay of about seven months from the date of knowledge in filing the suit. Admittedly, the relief sought in the application under Order 39 Rules 1 & 2 CPC is in respect of a Demat account which is operated electronically. A delay of seven months is substantial in a case of this nature, for transactions in a Demat account can be operated at the click of a computer's button. Thus, there is lack of diligence on the part of the plaintiff.
13. The parameters to be considered while granting an order of temporary injunction is fairly well-settled. As held in the case of Wander Limited supra, an appeal against exercise of discretion is an appeal on principle. Appellate court will not reassess the material and seek to reach a conclusion different from one reached by the trial Court if it was reasonably possible on the material to arrive at such conclusion. In the said judgment, the Hon'ble Supreme Court has held as follows:
"14. The appeals before the Division Bench were against the exercise of discretion by the Single Judge. In such appeals, the appellate court will not interfere 10 MFA No.1602/2018 with the exercise of discretion of the court of first instance and substitute it own discretion except where the discretion has been shown to have been exercised arbitrarily, or capriciously or perversely or where the court had ignored the settled principles of law regulating grant or refusal of interlocutory injunctions. An appeal against exercise of discretion is said to be an appeal on principle. Appellate court will not reassess the material and seek to reach a conclusion different from the one reached by the court below if the one reached by that court was reasonably possible on the material. The appellate court would normally not be justified in interfering with the exercise of discretion under appeal solely on the ground that if it had considered the matter at the trial stage it would have come to a contrary conclusion. If the discretion has been exercised by the trial court reasonably and in a judicial manner the fact that the appellate court would have taken a different view may not justify interference with the trial court's exercise of discretion. After referring to these principles Gajendragadkar, J. in Printers (Mysore) Private Ltd. v. Pothan Joseph:(SCR 721) "... These principles are well established, but as has been observed by Viscount Simon in Charles Osenton & Co. v. Jhanaton '...the law as to the reversal by a court of appeal of an order made by a judge below in the exercise of his discretion is well established, and any difficulty that arises is due only to the application of well settled principles in an individual case'."
The appellate judgment does not seem to defer to this principle."
(Emphasis supplied)
14. In the case of Best Sellers Retail (India) Pvt.Ltd. supra, it is authoritatively held that the Court will refuse temporary injunction if the injury suffered by the plaintiff 11 MFA No.1602/2018 on account of refusal of temporary injunction is not irreparable, by holding thus:
"29. Yet, the settled principle of law is that even where prima facie case is in favour of the plaintiff, the Court will refuse temporary injunction if the injury suffered by the plaintiff on account of refusal of temporary injunction was not irreparable.
30. In Dalpat Kumar v. Prahald Singh this Court held: (SCC p. 721, para 5) "5. ...Satisfaction that there is a prima facie case by itself is not sufficient to grant injunction. The Court further has to satisfy that non-interference by the Court would result in 'irreparable injury' to the party seeking relief and that there is no other remedy available to the party except one to grant injunction and he needs protection from the consequences of apprehended injury or dispossession. Irreparable injury, however, does not mean that there must be no physical possibility of repairing the injury, but means only that the injury must be a material one, namely, one that cannot be adequately compensated by way of damages."
(Emphasis supplied)
15. Indisputably, precise case of the plaintiff is that he has tendered certain advice, based upon which, first defendant has made investments and he is attempting to off-load his shares in the third defendant company without seeking plaintiff's consent. Trial Court has recorded a categorical finding that not a scrap of paper was placed for its consideration. In a transaction running to few hundred 12 MFA No.1602/2018 crores, a plea for injunction without a scrap of paper is far too fragile to be tenable.
16. In the light of my finding that the plaintiff did not produce even a scrap of paper before the trial Court to substantiate his claim coupled with the fact that suit was filed after substantial delay from the date of cause of action, it is not necessary to examine the contention with regard to payment of court fee urged on behalf of the first defendant.
17. In the conspectus of facts recorded hereinabove and the settled position of law, in my considered view, this appeal is devoid of merits. Resultantly, the appeal fails and is accordingly dismissed.
In view of dismissal of the appeal, I.As.No.2 and 3/2018 do not survive for consideration and they are disposed of accordingly.
No costs.
Sd/-
JUDGE Yn.