NATIONAL HOSING BANK Vs. MAL CHAND PERIWAL

JUDGEMENT

(1.) BY way of this application filed on behalf of the plaintiff, a judgment on admissions is being sought. The plaintiff had filed this suit for specific performance of the contract dated 19.03.1993 which is styled as a letter of subscription whereunder the defendants 1 and 2 had undertaken to buy back 2,00,000 equity shares of the face value of Rs 10/-each from the plaintiff after a period of five years, upon the plaintiff making a demand for the same. In the alternative, the plaintiff also prayed for an appropriate decree directing the defendants 1 and 2 to jointly and severally pay to the plaintiff a sum of Rs 42,69,726/- by way of compensation together with simple interest @ 15% per annum from 01.11.2000 till the date of payment or realisation. Prayers were also made for pendente lite and future interest @ 15% per annum as well as for costs of the suit.

(2.) THE plaintiff's claim is based on several documents. The first document which has been referred to by the learned counsel for the plaintiff is the letter dated 21.01.1993 which was issued by the plaintiff in favour of the defendant No.3 of which the defendants 1 and 2 are the promoter directors. By virtue of this letter, the defendant No.3 was informed that the Board of Directors of the plaintiff had considered their proposal for the plaintiff's participation in the equity of the defendant No.3 company to the extent of Rs 20 lakhs. This is followed by a document which purports to be the extract of the minutes of the 21st Meeting of the Board of Directors of the defendant No.3 held on 28.01.1993 at the registered office of the said defendant No.3. The said document is marked as 'Exhibit P-5'. The minutes disclose that the defendant No.3 accepted the offer of the plaintiff to subscribe to the said two lakh equity shares on the terms and conditions contained in the said letter dated 21.01.1993. The minutes also disclose that the defendants 1 and 2 were authorised severally to convey to the plaintiff the acceptance on behalf of the company of the said offer for financial assistance by way of direct subscription to the equity on the terms and conditions contained in the said letter dated 21.01.1993. This was followed by the letter of subscription dated 19.03.1993 (Exhibit P-6) which has been signed by both the plaintiff and the defendant No.1 as Managing Director for the defendant No.3. It is an admitted position that the specific condition with regard to the buy-back arrangement which had been agreed to by and between the parties is as under:-

(3.) BY a letter dated 06.01.1999, the plaintiff called upon the defendants 1 and 2 to buy back the shares in accordance with the undertaking given by them within a period of 30 days from the date of receipt of the letter. It was also indicated that the amount payable by them, in terms of the undertaking, worked out to Rs 37,20,274/-as on 31.12.1998. It was also indicated that the defendants would be liable to pay interest from 01.01.1998 till the date of payment @ 15% per annum. No response was received to this letter. A letter dated 16.09.1999 was issued to the defendant No.1 with a copy marked to defendant No.2. This letter was sent by registered post. The learned counsel for the defendant states that the receipt of this letter is not denied though the contents are not admitted. In the said letter, there is mention of a discussion between the defendant No.1 and the Chairman and Managing Director of the plaintiff on 12.04.1999. It is indicated that the defendants had sought time to take a decision but that they had not come for any further discussion nor had they sent any proposal. The defendants were, therefore, requested to buy back the shares held by the plaintiff in accordance with the undertaking and that the amount payable as on 31.08.1999 would be Rs 39,19,178/-. It was also indicated that the defendants would be liable to pay interest from 01.09.1999 till actual payment @ 15% per annum. No response to this letter was sent by the defendants to the plaintiff. Finally, by a legal notice dated 29.08.2000 (Exhibit P-10), the plaintiff once again called upon the defendants 1 and 2 to honour their part of the undertaking and consequently, they were called upon to buy back the shares for a sum of Rs 41,94,726/- as on 31.07.2000 calculated on the basis of the conditions stipulated in the letter of subscription dated 19.03.1993. Since the defendants did not respond to this letter nor did they make any arrangements for buying back the shares, the plaintiffs were constrained to file the present suit seeking specific performance of the contract evidenced by the letter of subscription dated 19.03.1993 and supported by the undertaking of the same date.