RANCHHODDAS SHAMJI KHIRIANI Vs. RAM BALKIRSHNA PHATAK

JUDGEMENT

(1.) The two appeals, being S. A. 0. 207-D of 1963 and S. A. 0. 209-D/ of 1963, arise out of two suits, being suits Nos. 80 and 81 of 1962, respectively. The said suits were consolidated and proceedings ordered to be recorded in suit No. 80 of 1962. The transactions in suits Nos. 80 and 81 were the purchase of twenty and twenty-six shares, respectively, by the appellants in Brihan Maharashtra Sugar Syndicate Limited from the defendents respondents. Both the suits were for a declaration that the defendants held the shares, the property rights annexed there to and the dividends accruing in respect there of in trust for and for the benefit of the plaintiffs. It was also prayed in the suits that the defendants be restrained from exercising any property rights annexed to the said shares including right to vote,and they be directed to pay all future dividends realised by them on the said shares. The dividends recovered by the defendants were also claimed in the suits. The real controversial issue between the parties is issue No. 3. "Whether the suit is within limitation ?" The trial Court dismissed the suits on the ground that they were barred by time. When the matter went up in appeal before the Additional District Judge, Delhi, he concurred with the trial Court to the extent that the plaintiffs were not entitled to the benefit of section 10 of the limitation Act, as the property in shares did not vest in the defendants in trust for any specific purposes. He, however, held that the trial Court was not justified in dismissing the suits in toto . He said "as the suit was instituted on 18-1-1963 it would be within limitation so far as the dividends declared on the. meeting of the company held on 14-3-1957 or afterwards are concerned. The article applicable is article 120 of the Limitation Act. The suit for the dividends for the prior period would be barred by time because the last of these was payable on 25-9-1956. Therefore, the suit must be held barred by time only in respect of the prayer for a declaration that the defendants are trustees in respect of these shares for the plaintiffs and for dividends declared at meeting prior to that held on 14-3-1957. For the rest, the suit is within time......'' The suits were, therefore, remanded for further trial.

(2.) At the time of the sale of the shares, the defendants delivered, the share-certificates together with blank transfer-deeds, duly signed, to the plaintiffs. Simultaneously with the handing over of the share certificates, the defendants signed and delivered a letter dated 12-10-1954 (exhibit P. 7) to the plaintiffs, in which it was, inter alia, stated- "We also undertake to sign all such documents as may be required to complete your title to these shares and to enable you to exercise your rights as a shareholder. We also undertake to execute such Power of Attorney as you may desire in respect of these shares. We hereby authorise you to exercise on our behalf all our rights as holders of the said shares. In case the company hereafter decides to issue further capital and offers the new shares to the existing shareholders, before the sharea hereby sold by as to you are transferred to your name in the books of the company, we here by undertake to hand over to you all the papers such as application for new shares etc. in connection with such issue which we may receive and also to execute all such documents and papers as you may require to enable you to apply for and obtain allotment of such new shares. We also undertake to deliver to you duly endorsed all dividend warrants in respect of "these shares, which we may hereafter receive, till these shares are transferred to your name in the company's records."

(3.) These transfers were, however, not registered by the company in their books and the plaintiffs' appeal to the Central Government under section III of the Companies Act, 1956, also faild. After the sale by defendants, a number of divident warrants were received by them and they withdraw the dividents due thereon. It is in these circumstances that the above two suits were filed.