Delhi District Court
Associated Instruments Manufacturers ... vs Sh. Mahinder Singh on 21 April, 2008
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IN THE COURT OF MS. ASHA MENON, ADJ,
TIS HAZARI, DELHI.
RCA No. : 52/05
Associated Instruments Manufacturers (India) ....Appellant
Private Limited
(Now M/s AIMIL Limited)
A-8, Naimex House
Mathura Road
New Delhi
Through its Director Sh. K. B. Uppal
Vs.
1. Sh. Mahinder Singh ....Respondents
S/o Late S. Tehl Singh
R/o A-145, Gujrawalan Town
Delhi - 110033
2. Smt. Ram Prakash Kaur
W/o Sh. Mahinder Singh
R/o A-145, Gujrawalan Town
Delhi - 110033
3. Sh. K. G. Purang
S/o Sh. R. R. Purang
R/o Flat no. 5 Pocket 15
C-2A, Janakpuri
New Delhi - 110018
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4. Smt. Usha Purang
W/o Sh. K. G. Purang
R/o Flat no. 5 Pocket 15
C-2A, Janakpuri
New Delhi - 110018
RCA No. 53/05
1. Sh. K. G. Purang Appellants
S/o Sh. R. R. Purang
R/o Flat no. 5 Pocket 15
C-2A, Janakpuri
New Delhi - 110018
2. Smt. Usha Purang
W/o Sh. K. G. Purang
R/o Flat no. 5 Pocket 15
C-2A, Janakpuri
New Delhi - 110018
Vs.
1. Sh. Mahinder Singh ....Respondents
S/o Late S. Tehl Singh
R/o A-145, Gujrawalan Town
Delhi - 110033
2. Smt. Ram Prakash Kaur
W/o Sh. Mahinder Singh
R/o A-145, Gujrawalan Town
Delhi - 110033
3. Associated Instruments Manufacturers (India)
3
Private Limited
(Now M/s AIMIL Limited)
A-8, Naimex House
Mathura Road
New Delhi
Through its Director Sh. K. B. Uppal
JUDGMENT
This order will dispose of two appeals filed against the Judgment & decree of the Ld. Trial Court dated 14.05.01. RCA- 52/05 has been filed by M/s Associated Instruments Manufacturers (India) Pvt. Ltd. and the appeal no. RCA-53/05 has been filed by Sh. K. G. Purang and Smt. Usha Purang.
Before coming to the appeals the facts of the case are required to be mentioned. The suit was filed Under Section 88 and order 35 of the CPC as an interpleader suit. The suit was filed by Associated Manufacturers (India) Pvt. Ltd. against Mahinder Singh, Ram Prakash, K. G. Purang and Usha Purang. It was submitted in the plaint that Sh. Mahinder Singh had been an employee of the defendant company from 16.09.1972 till 26.06.1973 when his services were terminated by a notice of termination. It was further stated that defendant no. 1 & 2 that 4 is Sh. Mahinder Singh and Smt. Ram Prakash Kaur had applied for allotment of 50 redeemable cumulative participating preference shares of Rs. 20/- each vide their application dated 14.08.1968 and the said shares bearing distinctive nos. 7146 to 7195 (both inclusive) and share certificate no. 76 had been issued to defendants 1 & 2.
It was further stated in the plaint that on or about 28.03.1973 the plaintiff received an application from defendant no. 3 i.e. K. G. Purang including share certificate no. 76 for the said 50 preference shares purchased by defendants 1 & 2 alongwith share transfer form duly signed by defendants 1 & 2 in favour of the defendants 3 & 4 i.e. K. G. Purang and Usha Purang, with a request to register the transfer of the shares and returned the original share certificate. Vide resolution dated 29.03.1973 the shares were duly transferred and the entries made in the register recording the transfer of 50 preference shares in the names of defendants 3 & 4. It was further stated that thereafter the defendants 3 & 4 wrote a letter dated 10.05.1973 intimating that the original share certificate had 5 been lost and on 06.12.1973 subject to the execution of the indemnity bond duplicate share certificate was issued to these defendants by the plaintiff company. It was further stated that on 15.04.1973 the defendants no. 1 & 2 wrote to the plaintiff asking for dividends and the annual report of the plaintiff company and plaintiff then intimated the defendant no. 1 vide letter dated 24.04.1974 that their shares stood already transferred by defendants 1 & 2 in favour of defendants 3 & 4 and therefore there is no question of paying any dividend to the defendants 1 & 2 or giving any notice for the Annual General Meeting or sending any relevant papers to them. It is stated that on 10.07.1974 the defendant no. 1 intimated that he had not transferred the shares standing in the names of defendants nos. 3 & 4 and that the company having obtained his signatures on blank documents had misused them and had forged some transfer deed. A Legal notice was also received by the plaintiff dated 22.02.1975 calling upon the plaintiff to send dividends to the defendants 1 & 2 and also threatening to initiate criminal action against the plaintiff. 6
It was in these circumstances, that the suit was filed seeking injunction against the defendants from proceeding against the plaintiff or its Managing Director, Sh. H. C. Verma and or its Secretary Sh. R. N. Gupta or any other officer or employee of the plaintiff. The plaintiff also sought directions to the defendants to inter plead together concerning their claims in respect of the share certificate no. 76, the appointment of some person to receive the dividends for defendants in the mean time and discharge the plaintiff from all its liability to either of the defendants upon such appointment of a person.
The defendants 1 & 2 filed their written statements questioning the locus of the plaintiff to move this plaint and alleging that the share certificates were transferred on forged documents not signed by the defendants 1 & 2 and submitting that the plaintiff was liable to make payments of dividends to defendant no. 1 & 2 alone.
In the written statement filed by the defendants 3 & 4 they insisted that the defendants 1 & 2 had vide valid transfer documents, transferred the share certificate and shares in their 7 favour for lawful consideration. Thus it was claimed by these defendants that they were entitled to the dividend. Replication was filed to the various written statements and thereafter the Ld. Trial Court framed 5 issues. The plaintiff examined two witnesses and the two sides of contesting defendants examined their witnesses. After considering the evidence on the record the Ld. Trial Court concluded that the plaintiff had no locus standi to file the suit as it was not a duly incorporated company under the Companies Act. It further concluded that the defendants 1 & 2 had not signed the share transfer application and the signatures there on were forged. It was also of the view that there was some collusion between the plaintiff company and the defendant nos. 3 & 4. The suit was finally disposed of by the Ld. Trial Court declining injunction as prayed for and declaring that the transfer of shares in the name of defendant no.3 & 4 was null and void and holding the defendants 1 & 2 entitled to the dividend payable against the share certificates in question.
The plaintiff has been aggrieved by this judgment as 8 also the defendants 3 & 4 who have filed these two appeals.
M/s Associated Instruments Manufacturers (India) Pvt. Ltd. has submitted in the grounds of appeal that Ld. Trial Court has not appreciated the facts and evidence on the record and had returned erroneous findings on the issues. It is submitted that the Ld. Trial Court had not appreciated that the respondent no. 1 had himself admitted having bad relations between himself and the appellant and had continued the litigation for transfer of shares for a meager sum of Rs. 1000/- only. It has been submitted that even a complaint case had been filed out of vengeance against the company and other persons only because the services of the respondent no. 1 had been terminated by the appellant company. It is further submitted that issue no. 3 had been wrongly framed as the issue framed was whether the share were transferred in collusion with the defendants 3 & 4. It is submitted that no such pleading was filed and without the pleading no amount of evidence could have been led hence the issue as well as the finding on the issue were liable to be set aside. It has been submitted that the 9 Ld. Trial Court had erred in holding that merely because the share transfer certificate was not endorsed there was collusion. It was submitted that the Ld. Trial Court had wrongly held that no meeting took place on 29.03.1973 as another set of shares had also been transferred on that day which had not been challenged till date. It was submitted that the defendants 1 & 2 had made allegations against the plaintiff/ appellant as a result the appellant company had to contest this suit as an opponent. And in this context the Ld. Trial Court returned a finding of collusion whereas had there been collusion the respondent no. 1 and 2 should have filed a separate suit against the appellant and the respondent nos. 3 & 4 or atleast a counter claim should have been filed..
It has been submitted that the respondent no. 1 in his cross examination admitted that he could not tell the name of the person who had conspired with respondent no. 3 & 4 and there was therefore no basis for the Ld. Trial Court to hold that there was collusion between appellant and the respondent nos. 3 & 4.
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It was submitted that the Ld. Trial Court had erroneously rejected the evidence of handwriting expert Dr. H. L. Bami and had erroneously relied on the report of Sh. V. K. Sakhuja handwriting expert produced by respondent 1 & 2 and have further gravely erred in comparing the disputed signatures itself and concluding that the signatures on the transfer certificate were forged. It was submitted that in any case the respondent no. 2 had not even appeared in the witness box to affirm on oath that she had not signed a transfer form. It has been submitted that when the defendant nos. 1 & 2 had in their written statement first claimed that the blank signatures of the respondent/defendant no. 1 obtained during the course of his employment had been misused to fabricate the transfer application there had been an ample admission that the signatures were his and it was a clear afterthought that he denied his signatures on the transfer application. It is further submitted that the Ld. Trial Court gravely erred in holding that the appellant company was not duly incorporated or that the person signing the plaint was not duly authorized, since all the 11 relevant documents had been produced and proved before the Ld. Trial Court. It was further submitted that the Ld. Trial Court had gravely erred in holding that appellant company had no locus standi to file the suit since the shares in respect of which there was a dispute belonged to the appellant company.
On the basis of these averments the appellant M/s Associated Instruments Manufacturers (India) Pvt. Ltd. has prayed that the impugned judgment be set aside. In the appeal filed by Sh. K. G. Purang and Smt. Usha Purang defendants 3 & 4 before the Ld. Trial Court the very same grounds have been taken to challenge the impugned judgment and decree.
Sh. Mukesh Gupta, Ld. Counsel for M/s Associated Instruments Manufacturers (India) Pvt. Ltd. argued both appeals. Sh. R. P Pandey, has argued on behalf of respondents 1 & 2 in both appeals. Ld. Counsel for the appellant has submitted that the interpleader suit had been filed when the two sets of respondents impleaded as defendants 1 to 4 12 claimed dividends on the basis of the same set of shares. It has been submitted that the claim that have been set up by the defendants interse interest the defendants 1 & 2 being the respondents 1 & 2 made allegations against the company as a result of which the Company had to defend itself. It was further submitted that during the pendency of the Civil Suit the respondent no. 1 & 2 launched a criminal prosecution against the company and its officers including the witness to the transfer deed and vide orders of the Hon'ble High Court the criminal proceedings have been stayed subject to the outcome of the present Civil litigation. It has been submitted that in the plaint the company had specifically mentioned that it had not colluded with any of the defendants and the defendants/ respondents 1 & 2 in their written statement made a bear denial and no facts of collusion were disclosed and yet the issue regarding alleged collusion was framed and answered by the Ld. Trial Court.
Adverting to the issues the Ld. Counsel has submitted that in respect of issue no. 4, PW-1 had produced the original 13 minute book, the certified copy of incorporation and under Section 76 & 7 of the Evidence Act sufficient proof had been produced to establish that the appellant company was an incorporated company and Sh. H. C. Verma was authorized to file the suit. It was further submitted that the Company's shares were involved and the question of shares would not have arisen if the company was not an incorporated company. It was further submitted that since the question was who were entitled to the dividends on the shares of the plaintiff company, the plaintiff company had the locus standi to institute the interpleader suit. Hence it was contended that the finding of the Ld. Trial Court on these issues were erroneous and was liable to be set aside.
In respect of issue no. 2 the Ld. Counsel has submitted that there were two contradictory reports of two handwriting experts produced by two sets of defendants. It was submitted that though the Court had ample powers to make a comparison of the hand writing itself the Ld. Trial Court should have accepted the version of Dr. Bami as his credentials were 14 high. It was submitted that respondent no. 2 whose signatures were also disputed never appeared in Court. Ld. Counsel pointed out to the testimony of respondent no. 1 and submitted that the signatures of the respondent no. 1 was different on every page of his written statement and the vakalatnama and the respondent no. 1 had finally denied his signatures on the written statement. Hence it was submitted that Ld. Trial Court erred in observing that style of signatures were different in the written statement and in the transfer certificate.
It was further submitted that Sh. K. G. Purang had deposed to the time and place of payment of Rs. 1000/-. It was submitted that merely because the witness to the transfer Sh. D. K. Bhandari stated that transfer deed was signed in June 1973 in stead of March 1973 would not make the entire transactions doubtful because the witness was examined in the year 1987 and lapse of memory was quite possible. It was further submitted that there would have been no reason for the plaintiff to have erased signatures as transfer forms were easily 15 available and a fresh one could have been made use of. It was submitted that the initial burden was on the defendant / respondent no. 1 who had claimed that the company had obtained his signature on blank papers and had then misused it. It was further submitted that the Ld. Trial Court while comparing signatures in the written statement and vakalatnama which were not contemporaneous with the signatures in transfer deed had erred. It was submitted that in any case the commencement of litigation would prompt the litigant to modify his signatures to avoid comparison. Thus the Ld. Counsel submitted that there was no forgery, shares were duly transferred and the findings of the Ld. Trial Court in this regard were liable to be set aside.
Ld. Counsel for Mahinder Singh and Smt. Ram Prakash Kaur has submitted that the entire case of both the appellants was shrouded with doubt and their commonality of purpose revealed their conspiracy. It was submitted that the respondents 1 & 2 had alleged that the plaintiff and the other defendants were in conspiracy and not in collusion. 16
It was submitted that when the alleged transfer had taken place on 28.03.1973, the respondent no. 1 was in the employment of the company and yet the company did not chose to confirm the transfer from the respondent no. 1. It was further submitted that collusion was in any case established in the manner in which the Company had been fighting the case tooth and nail with the respondent 1 & 2 instead of abiding by the order of the Ld. Trial Court. It was submitted that the entire suit of the Company was false.
It was further submitted that the witness D. K. Bhandari established that the entire transaction was forged and fabricated as the documents were reportedly signed in March' 73 and the transfer was effected in April' 74 whereas the witness claimed that the documents had been signed in June' 73. He further admitted that he had signed the documents on the insistence of defendant no. 3 Sh. K. G. Purang and at that time the defendants 1 & 2 / respondents 1 & 2 were not present. It was further submitted that the entire case of the plaintiff and defendants 3 & 4 collapsed as there was no valid transfer form 17 signed by defendants 1 & 2 in favour of the defendants 3 & 4.
The Ld. Counsel pointed out that admittedly no receipt for payment was in the possession of Sh. K. G. Purang and his wife. It was submitted that duplicate share certificate was issued without adherence to procedure which called for publication of loss and lodging of an FIR. It was submitted that the entire story of loss of share certificate was far from credible. It has been pointed out in the plaint the Company claimed that the share transfer application has been submitted alongwith the share certificate on 28.03.73 and the share was transferred on 17.04.73 and returned to the defendants 3 & 4 by 10.05.73. It was claimed that the share certificate was lost while the share certificate in original was in possession of defendants / respondents 1 & 2.
Ld. Counsel submitted that even in the transfer form there were several cuttings and different inks had been used. It is the submission of the Ld. Counsel for the respondents 1 & 2 that the erasures had been carried out to prevent detection of forgery. Ld. Counsel submitted that the issues were rightly 18 answered by the Ld. Trial Court and the appeals were liable to be dismissed.
In an interpleader suit filed under Order 35 CPC the plaint is to contain a statement to the effect that the plaintiff had no interest in the subject matter in the dispute other than for charges or costs and that there was no collusion between the plaintiff and any of the defendants. As per the procedure laid down under Rule 4 of Order 35 CPC, at the first hearing the Court was to declare the plaintiff discharged from all liability or in the alternative if it was felt necessary in the interest of justice or convenience retain all the parties until final disposal of the suit. Thereafter the Court was to find out if there were admissions on which adjudication of title or possession was possible and in case this was not possible issues were to be framed and tried.
In the present case initially the Court did not record a finding, however, issues were framed as if in a regular suit. Furthermore, after filing of the suit the defendant no. 1 & 2 / respondent no. 1 & 2 initiated criminal proceedings against the 19 company and its officers as well as Managing Director. Vide orders of the Hon'ble High Court the proceedings of the Criminal case were stayed subject to the outcome of this civil litigation. Vide order dated 29.09.89 the plaintiff company was permitted to participate in the proceedings in these circumstances, by specific orders of the Ld. Trial Court. Thus mere participation of the plaintiff company in the suit and now in the present appeal would not ipso facto lead to the conclusion that there was collusion between the parties. The findings of the Ld. Trial Court particularly in respect of forgery and collusion have direct bearing on the appellants and therefore even the company is entitled to file the present appeal.
First taking issue no. 4, the Ld. Ld. Trial Court has concluded that the company was not an incorporated company as incorporation has not been duly proved. This finding has led to an incongruous situation whereby on the one hand the Ld. Trial Court has held that appellant company was not a company while at the same time holding the respondents 20 1 & 2 entitled to the dividends on the shares of the appellant company. That apart the fact remains that the plaintiff had brought on record the certified copy of incorporation as Ex. PW- 1/ A. The information filed with the Registrar of Companies taking on the quality of public documents and the certified copy of incorporation issued by the Registrar of Companies having been produced as Ex. PW-1/1 there was sufficient proof of the Company's incorporation. There was no need for summoning of a witness from the Registrar of Companies to prove the certificate of incorporation.
As regards the authorization of Sh. H. C. Verma the plaintiff brought on record the resolution as Ex. PW-1/ 2. The original minute book was produced by PW-1. That again constitute due proof of the passing of the resolution. Similarly because the witness PW-1 who produced this minute book had not attended the meeting as he could not have, being a mere accountant in the company, merely because he was not aware if notice of the meeting had been sent to the Board of Directors before the meeting was held would not render the 21 resolution non est. If there was any internal lacuna in passing the resolution or in calling the meeting the defendants are no one to question it as by the subsequent conduct of the company even in the filing of this appeal through Sh. K. B. Uppal, Director, the company has clearly ratified the action of Sh. H. C. Verma in instituting the interpleader suit. This is sufficient to meet the requirements of law and I find support in this view from the judgment of the Hon'bleDelhi High Court reported in ILR (2008) I Del 203 Peerless General Finance and Investment Co. Ltd. Vs. Punjab & Sind Bank.
Thus the issue no. 4 had to be decided in favour of the plaintiff company and the findings of the Ld. Trial Court in respect of issue no. 4 are set aside and it is held that the plaintiff company was a duly incorporated company under the Companies Act and Sh. H. C. Verma was duly authorized to file the interpleader suit.
Upon an assessment of the evidence that has come on the record I am of the considered view that the conclusions of the Ld. Trial Court on issue no. 2 are not justified. There are 22 two handwriting experts who have given reports favouring one set of defendants or the other. Ld. Trial Court was therefore well within its powers to carry out the comparison on its own. While doing so, however, the Ld. Trial Court ought to have considered the fact that in the written statement the first and initial stand of the defendant was that the plaintiff company had obtained his blank signatures and had misused the same by fabricating the transfer application. It is thereafter that there has been complete denial of his signatures on the deed of transfer brought on the record as Ex. DW-3/4/3. The Ld. Trial Court compared the signatures appearing on this document with the signatures on the written statement to observe that the signatures did not follow the same pattern. I am unable to agree with this observation. Apart from the fact that the signatures of the defendant no. 1 / respondent no. 1 and his wife are varying on each page of the written statement and the vakalatnama is the fact that the defendant no. 1/ respondent no. 1 has signed his name differently even in the applications moved before the Ld. Trial Court. This would show 23 that the defendant no. 1/ respondent no. 1 is prone to varying his signatures. Therefore his mere denial would not suffice to conclude that his signatures on the transfer documents were forged. In an application moved under Section 151 before the Ld. Trial Court filed on 23.02.84 the respondent has signed his name in full with the word ''Singh'' having a gap between S & I whereas in another application dated 17.05.83 he has written his full name with ''Singh'' written in an entirely different manner.
These two signatures bear no resemblance with the signatures appended by defendant no. 1 / respondent no. 1 in his written statement. The manner in which he has signed ''Singh'' in the written statement are similar to the second signature purported to be of respondent no. 1 / defendant no. 1 on the transfer application. This signature is yet different from another admitted signature on the letter dated 29.07.74 where the name ''Singh'' is mentioned in a different way if in comparison with documents produced by the plaintiff company relating to the issuance of the shares and various other receipts on which the defendant/ respondent no. 1 and defendant / respondent 24 no. 2 have admitted their signatures. It is clear that signatures are appended in different ways by these two defendants/ respondents.
That itself would make forgery quite impossible. However as noticed above when two hand writing experts have come to conflicting reports and the record discloses the tenancies of the respondents/ defendants 1 & 2 to keep modifying their signatures the Ld. Trial Court could not have concluded that the signatures on the transfer application were forged. Such a finding of fact has no basis on the record. These findings of the Ld. Trial Court are set aside.
That brings us to the last issue as to the existence of collusion between the plaintiff and the defendants 3 & 4. The findings of the Ld. Trial Court that there appears to be collusion between them seems justified. Admittedly, the transfer certificate was not duly notarized by the defendant / respondents 1 & 3. In ordinary course the company before registering the transfer of shares would have confirmed the transfers or would have seen the share certificates for proper 25 endorsement or the company would have declined to register the transfer of shares. In the present case without adhering to the prescribed procedure the Company appeared to have been in haste to register the transfer. Interestingly the original share certificates are with the respondents 1 & 2. Plaintiff company as also the defendant no. 3 & 4 (appellants before this Court) have set a fantastic explanation for the original share certificate being with the defendants/respondents 1 & 2. According to them the respondent no. 1 / defendant no. 1 had stolen the same from the possession of the defendant no. 3/ appellant K. G. Purang. There is nothing to show that the respondent no. 1/ defendant no. 1 could have had opportunity to pilfer the share certificate. Therefore the story is only to be disbelieved. That leads to the inference that the transfer of the shares was not complete and the defendants 1 & 2/ respondents 1 & 2 continued to remain the share holders of the plaintiff company entitled to its dividends. The plaintiff knowing fully well that the transfer documents were not complete nevertheless chose to file the interpleader suit. To that extent 26 the conclusion of the Ld. Trial Court is justified that there appears some collusion between the appellants before this Court and that the interpleader suit was not called for as under
law the plaintiff had no choice but to release dividends only to the share holders that is respondents 1 & 2 and defendants 1 &
2. The conclusion drawn by the Ld. Trial Court therefore call for no inference and the conclusions in respect of the issue no. 3 and relief are upheld.
The two appeals are thus partly accepted and the impugned judgments and decree stands modified to the extent recorded herein before. The interpleader suit stands disposed of concluding that the respondents 1 & 2 are entitled to retain the shares bearing no. 7146 to 7195 vide share certificate no. 76 and entitled to the dividends thereupon from the year 1973. The findings in respect of issue no. 1, 2 & 4 are however set aside.
Decree sheet be prepared accordingly. Trial Court records be returned with a copy of this order. The original judgment shall be placed in the file relating to RCA no. 52/05 and copy be placed in the file of RCA-53/05. Both appeal files be consigned to record room.
Announced in the open court on this 21st day of April, 2008. (ASHA MENON) ADDL. DISTRICT JUDGE, DELHI.