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7. Grounds raised in the application for rejection of plaint in I.A.Nos.13713 & 13714 of 2000:-

(i) The right of the first respondent to the shares in the respondent company has not been recognised in the probate granted on the Will and there is no cause of action for the suit and the plaint is liable to be rejected. According to the first respondent, the shares were allotted to the petitioner during 1995 and even assuming without admitting that the shares were held by the petitioner in trust for and on behalf of late Sri.Gunaratnam. The right to claim the shares devolved on the first respondent on the death of Sri.Gunaratnam during August 1989, and the present suit was filed during 1995 is therefore barred by limitation. The Will executed by Sri.Gunaratnam dated 06.05.1977 in respect of properties outside Srilanka is unenforceable, in view of the bar contained in Wills Ordinance in Srilanka of 1911. In terms of Section 187C of the Companies Act, 1956, a person, who holds beneficial interest in shares must inform the company within 30 days, on which, he becomes beneficial interest in the shares comprised in the trust and in terms of Section 153 of the Companies Act, the company is not bound to recognise the existence of the trust of which, it has no notice. Hence, without compliance of Section 187C of the Companies Act, by late Sri.Gunaratnam, the first respondent cannot seek any relief. Further, in terms of Section 4 of the Benami Transaction (Prohibition) Act, 1988, action to recover the property held in benami is prohibited and no suit is maintainable. It is further contended that for a valid trust in terms of Sections 5 and 6 of the Trust Act, certain conditions have to be fulfilled, which are essential and all these have not been fulfilled in the case on hand. Further, in the absence of any record to show that Sri.Gunaratnam transferred money from Srilanka through known banking channel, such transaction would be illegal in terms of Section 29 of the Foreign Exchange Act.

12. Factual and legal submissions of learned Senior counsel for the petitioner:-

The learned Senior counsel appearing for the petitioner reiterated the contention raised in the affidavit, which have to be referred to above and submitted that in terms of Article 113 of the Limitation Act, the period of limitation is three years and three year period lapsed as on 1994 and the suit filed in 2004 is hit by the law of limitation. Further, by relying upon the paragraph No.15 of the plaint, it is submitted that the writing of a letter by the first respondent will not be a cause of action and such letters cannot form basis for cause of action and as the plaint does not disclose cause of action, the same is liable to be rejected. Further, it is contended that the claim of the plaintiff itself is based on a Will executed by late Sri.Gunaratnam and in view of the bar contained in the Wills Ordinance in Sirlanka, such bequeath of asset outside Srilanka are in executable, and in view of the statutory bar, the plaintiff cannot maintain the suit in India. Further, the learned Senior counsel for the petitioner referred to Section 187C of the Companies Act and submitted that it is mandatory for the plaintiff to have filed the declaration under Section 187C (2) of the Act, since non-filing of such declaration is punishable and there is a further duty under Section 187C(4) for the company to make note of such declaration. Therefore, it is submitted that failure to make a declaration is fatal to the case of the plaintiff. The learned counsel relied on the decision of the Hon'ble Supreme Court in Mannalal Khetan vs. Kedar Nath Khetan and others, AIR 1977 SC 536 for the proposition that if punishment is contemplated in a statute then its compliance is mandatory. Further, the learned Senior counsel relied on the provisions of the Benami Transaction Act and stated that in terms of Section 4(1) of the Act such suit is not maintainable. Further, it is contended that without approval of the competent authority, the funds cannot be brought from foreign countries and if such funds were brought by late Sri.Gunaratnam for the purpose of investment in the company the same is a contravention of the provisions of the Foreign Regulation Act and any contract, which is forbidden by law is not permitted under law in terms of Section 23 of the Contract Act. Further, it is submitted that the funds brought in by the petitioner where from known channels and with proper approval and the question of the petitioner holding the shares in trust for and behalf of Sri.Gunaratnam does not arise. Further, it is contended that the Trail Court ought to have considered whether the suit is maintainable under Section 38 of the Specific Relief Act, 1963, when the plaintiff is yet to establish his right to the property, which is the subject matter of the suit in Colombo. Therefore, it is contended that the Courts below ought to have rejected the plaint, accepting the submissions made by the petitioner.

15. As rightly pointed out by the learned counsel for the first respondent, that the lis involved in the suit is as to whether the shares held by the petitioner herein are held by him in trust for and on behalf of late Sri.Gunaratnam or as to whether it is his individual holding and whether there could be a decree of permanent injunction to restrain the petitioner from dealing with those shares. Prima facie, it appears that the plaintiff has not pleaded a case of a declaration of trust or a trust deed, but his case appears to be that the petitioner, who is the son-in-law of late Sri.Gunaratnam was holding the shares on his behalf, since the monies were that of Sri.Gunaratnam and that he had been instrumental in establishing the company in India. At this stage, it is useful to refer to the decision of the Karnataka High Court in Khajamiya Miransaheb Mujahid vs. Peerapasha Miransaheb Mujahid, Volume 61 Company cases 106, which was also a case arising under Section 187C of Companies Act and the Karnataka High Court, while examining the effect of Section 187C in a civil proceedings held thus:-

Thus viewed, in a civil suit between brothers as to who the true owner is, section 187C of the Act has no role to play. The failure of the defendant to report cannot be said to be penal because he was genuinely under the impression that he was holding it as a joint owner in his own right as a gift. Therefore, if action had been taken under the provisions of section 187C of the Act for failure to report the implied trust nature as claimed by the brother, it is highly improbable that the action would have resulted in penalty on the facts of this case."