Calcutta High Court (Appellete Side)
Hero Motocorp Ltd vs Dilip Kishore Dutta & Ors on 8 September, 2016
Author: Harish Tandon
Bench: Harish Tandon
1 15 08.09. C.O. 3004 of 2016 AGM 2016 Hero Motocorp Ltd Versus Dilip Kishore Dutta & Ors Mr. Ratnanko Banerji, Sr. Advocate, Mr. Anirban Roy, Mr. Kuldip Mallik, Mr. Debargo Basu, Mr. V.V.V. Shastri, For the Petitioner.
Mr. Santu Chakraborty, Mr. Abu Siddique Mullick, For the Opposite Parties.
This revisional application is directed against an order No. 2 dated 1st August 2016 passed by learned Additional District & Sessions Judge, Fast Track Court N. 3, Alipore, South 24 Parganas in Title Appeal No. 44 of 2014 by which an application for stay of the execution proceeding till the disposal of the said appeal is rejected.
It is not in dispute that the plaintiffs/opposite parties filed a suit for declaration that 250 equity shares of the appellant-company was owned by his father who never transferred the same during his lifetime to anybody. A further declaration is sought that whatever transfer which has been effected is an outcome of fraud and be declared bad in law.
2The Trial Court decreed the suit in following terms :
" It is hereby declared that the purported transfer of 250 shares as per Schedule-"A" of the plaintiffs deceased father of the defendant no. 1 company are all fraudulent and have been made by the defendants in conspiracy and collusion with each other in order to cheat the plaintiff in respect of his legitimate rights of the said shares ad described in Schedule-"A" and the transfer of said shares has been done by executing forged signatures of the plaintiff's father when he was dead on the transfer forms of the said shares and therefore, all such fraudulent transfers are illegal, void ab-initio and thus, are hereby set aside.
It is hereby further declared that the plaintiff is the absolute owner in respect of the said shares as described in Schedule-"A" and entitled to all usufruct, accretions and benefits thereof since the date of fraudulent transfer.
The name of all the alleged transferee of the said shares are liable to be struck off by the defendant nos. 1 and 5 from their Register of Share Holders and in place the name of the plaintiff is to be incorporated.
It is hereby further declared that the right, title and interest of the share holder, namely, that of the deceased father of the plaintiff including the usufructs, accretions thereon never got transferred to the alleged transferees and instead continued to rest with the late father of the plaintiff till his death so as to vest in to plaintiff as executor on the death of his father in terms of the Will left behind by his father.
The defendant no. 1 is hereby mandatorily directed to remove the names of the alleged transferees from the Register of the Share Holders and in place of those transferees the name of the deceased father of the plaintiff, i.e., Sri Birendra Kisor Dutta be recorded as the registered owner thereof until his death whereupon the same devolved upon the plaintiff by way of inheritance in terms of Will of his deceased father within sixty (60) days from the day of this order.
The defendant no. 1 is further mandatorily 3 directed to issue duplicate shares of shares as per Schedule-"A" along with unsufructs, accretions and benefits arising thereof to the plaintiff within sixty (60) days from the date of this order in case the original shares under schedule-"A" are not traceable.
In the alternative, the defendant no. 1 is hereby mandatorily directed to issue to the plaintiff equivalent shares in respect of the shares under Schedule -'A' along with usufructs, accretions and benefits accruing thereon, if necessary by purchasing equivalent shares from the market and transferring the same in favour of the plaintiff or by transferring equivalent shares along with the usufructs, accretions and benefits from its own holdings and from the holdings and from the holding of its Directors."
In the said appeal an application for stay was taken out by the Company because of the mandatory direction for issuance of duplicate shares with usufructs, accretions and benefits within sixty days from the date of the judgment.
It was further ordered in alternative form that the company shall issue the equivalent shares to the plaintiffs/opposite parties with all usufructs, accretions and benefits accruing thereon, if necessary by purchasing the same from the market and transfer it in favour of the plaintiff or from the share holding of the Directors.
The companies, which are listed in the stock exchange, have certain limitations under the law. The 4 regulatory body imposed fetter in dealing with the equity shares and without realising the same, the Trial Court proceeded to pass an order in such mandatory form. The company has no role to play over the right, title and interest in respect of equity shares claimed by the petitioner but the company says that once a valid transfer is effected, it is bound to register the same under the provisions of the Company Act.
Since the declaration has been made in favour of the plaintiffs/opposite parties, it is a matter which is subjudice before the Appellate Court and so long the judgment is not upset or set aside it remains binding on the parties.
The application for stay was not taken out for keeping the judgment, in its entirety, in limbo but because of the mandatory direction passed therein if the stay is not granted, it may attract several civil consequences. The Court of Appeal below was swayed by the fact that once a party has succeeded in the Court below, he should not be deprived of the fruits of the decree as the defeated party has chosen to invoke the jurisdiction of the superior form. The Appellate Court further recorded that Delhi High Court have passed an 5 order of status quo in an execution proceeding and, therefore, in order to keep the majesty and the sanctity of the said order, the application for stay deserves dismissal.
The Appellate Court overlooked the vital fact that the execution proceeding is running in its own pace pending the dismissal of an appeal.
Order 41 Rule 5 of the Code of Civil Procedure empowers the Appellate Court to pass an order of stay of the execution proceeding subject, however, on the condition which the Court thinks fit and proper.
This Court cannot ignore the judgment of the Hon'ble Supreme Court rendered in the case of Mool Chand Yadav and Another -Versus- Raza Buland Sugar Company Limited, Rampur and Others reported in (1982) 3 Supreme Court Cases 484 wherein it is held that if the judgment delivered in an appeal invites the serious civil consequences, the Court should suspend the operation of the said order pending an appeal.
Equally this Court also cannot overlook the subsequent decision of the Supreme Court rendered in case of Atma Ram Properties (P) Limited -Versus- Federal Motors (P) Limited reported in (2005) 1 SCC 705 wherein it is held that mere filing an appeal against a judgment 6 and decree does not tantamount to stay.
The language under Order 41 Rule 5 of the Code of Civil Procedure suggest such interpretation. Applying the aforesaid principles this Court found that by the impugned judgment the Court declared the right, title and interest of the plaintiffs/opposite parties over the disputes shares. Since the mandatory orders are passed in such forms unless the Appellate Court grants a stay, it will have a serious repercussion on the company's right pending the application of the appeal. The proper course which this Court feels should have been adopted by the Appellate Court is to impose a condition in securing the amount equivalent to the aforesaid shares prevalent in the open market.
The learned advocate for the plaintiffs/opposite parties submits that the value of 250 shares of the defendant no. 1 as on this day is not below 92 lacs. Since the value varies frequently and depends upon the trading made therein, this Court feels that justice would be subserved if a sum of Rs. 1 crore is deposted by the appellant in the Court of Appeal below as condition precedent for stay of the execution proceedings pending the said appeal. The said sum shall be deposited by the 7 appellant/petitioner within a week from date.
If the said amount is deposited within the time indicated hereinabove there shall be stay of the operation of the judgment and decree so far as it relates to the mandatory direction passed upon the appellant to issue the duplicate shares or equivalent shares either from purchasing the market or from holding of the Directors shall remain stayed.
The Court of Appeal below is directed to invest the said sum in a short term fixed deposit in any Nationalized Bank and shall go on renewing the same until further order passed by the Appellate Court.
In default of the deposit of the sum within the time- indicated hereinabove, this order shall be automatically recalled and the impugned order shall revive.
The application for stay stands disposed of. The revisional application is also disposed of. However, there shall be no order as to costs.
( Harish Tandon, J.)