YVES DEPOORTER Vs. WASHINGTON CAPITAL GROUP

JUDGEMENT

(1.) The plaintiff has instituted this suit against the defendants no.1 to 8 namely (i) Washington Capital Group; (ii) David Young; (iii) William Jones; (iv) Steven Smith; (v) Amit Malik Sharma; (vi) Marcus Levy; (vii) Brilliance China Automotive Holdings Ltd.; and, (viii) LXK, Inc., pleading that (a) the plaintiff, a Belgian citizen, has been availing the services of stockbrokers for trading in shares listed on various stock exchanges; (b) the defendant no.1, on its website www.washingtoncapitalgroup.com claims to be an offshore institutional brokerage company but the plaintiff is not aware of the constitution thereof; the defendants no.2 to 6 claim to be the CEO, Vice President, Director (M&A), Accounts Head and Senior Investment Advisor/Marketing Strategist (M&A) respectively of the defendant no.1 and have been dealing with the plaintiff and participating in the transaction and are responsible for the day-to-day affairs of the defendant no.1; (c) the defendant no.1 approached the plaintiff to provide its brokerage services of stock investments; one Mr. Reynolds of the defendant no.1 proposed investment in defendant no.7 listed on the Hong Kong Stock Exchange and the plaintiff lured by the representations of the defendant no.1/its Mr. Reynolds, of projections with respect to stocks of defendant no.7, agreed to try defendant no.1 by making an initial purchase of 10,000 shares of defendant no.7; however the bank account of which defendant no.1 provided details to the plaintiff, for transfer of payment was not in the name of the defendant no.1 but in the name of another; on the plaintiff raising question with respect thereto, the defendant no.1 offered to open a brokerage account in the name of the plaintiff, and one Mr. Amit Malik of the defendant no.1 vide his e-mail dated 23rd Nov., 2016 e-mailed invoice, account application form and banking instructions held with an Indonesian bank; however the banking details were not in the name of the defendant no.1 but again in the name of some other entity and the plaintiff refused to transmit monies; the defendant no.1 vide its e-mail dated 24th Nov., 2016 informed the plaintiff that the banking details provided were of the Stock Transfer Agent and the plaintiff would be remitting direct payments to the said Stock Transfer Agent; the plaintiff still remained doubtful and vide his e-mail dated 24th Nov., 2016 informed the defendant no.1 that the plaintiff would transact subject to purchase being made on account of the plaintiff held with HSBC Bank, Hong Kong; however the defendant no.1 continued to lure the plaintiff and vide e-mail dated 30th Nov., 2016 informed the plaintiff that the shares of the defendant no.7 purchased on behalf of the plaintiff were making profits and the plaintiff should immediately remit payment in order to avail such profit and again forwarded instructions of an alternative bank i.e. Bank of Communications and assured that the defendant no.1 would issue an appropriate receipt of payment; induced therefrom, the plaintiff vide his e-mail dated 1st Dec., 2016 told the defendant no.1 that he had remitted payment of HKD 97,061.00 on 30th Nov., 2016 to Jakarta Bank account for purchase of the 10,000 shares of defendant no.7; the defendant no.1 vide its e-mail dated 2 nd Dec., 2016 forwarded the receipt of payment for the said shares; the defendant no.1 vide its e-mail dated 19th April, 2017 to the plaintiff informed the plaintiff of likely major moves which required the plaintiff's oral instructions to the defendant no.1 and sought convenient time for defendant no.1 to contact the plaintiff; thereafter the defendant no.6 vide e-mail dated 9 th May, 2017 provided his contact details to the plaintiff; (d) the defendant no.6 proposed an investment in defendant no.8 and though the plaintiff resisted but under persistent inducement of defendant no.1, vide e-mail dated 14th June, 2017 forwarded payment advice confirming remittance of payment of USD 61,357.00 to defendant no.1 and defendant no.1 vide its e-mail acknowledged receipt of payment advice and promised issuance of receipt upon receiving the funds; (e) by so trapping the plaintiff, the defendant no.6 further induced the plaintiff to buy another tranche of shares of defendant no.8 and the plaintiff, under such inducement, vide e-mail dated 6th July, 2017 agreed to further transaction in shares of defendant no.8 and on 25th July, 2017 made payment of USD 39,981.99; the defendant no.1, vide its e-mail dated 3rd Aug., 2017 forwarded receipt qua payment received; (f) on 30th Aug., 2017, the defendant no.6 proposed purchase of 2,50,000 shares of defendant no.7 and the plaintiff vide his e-mail dated 31st Aug., 2017 forwarded the details of remittance of payment of USD 72,911 as demanded and the defendant no.1 vide e-mail dated 1st Sept., 2017 assured issuance of receipt upon credit of funds to the account; (g) thereafter the defendant no.1 started taking time in corresponding with the plaintiff and also inspite of assurances failed to furnish statement of portfolio of the plaintiff; ultimately when the statement of portfolio was forwarded, the same did not reflect transactions in shares of defendant no.7 and the queries of the plaintiff remained unanswered; (h) the defendant no.1 further lured the plaintiff to buy more shares of defendant no.8 and on 21 st Sept., 2017 issued a payment receipt in respect thereof; (i) till 30th Sept., 2017 the plaintiff made total investment of USD 2,21,395.05 and should have had 2,50,000 shares of defendant no.7 and 50,000 shares of defendant no.8 with corporate financing of USD 1,50,000.00; (j) the defendant no.1 vide email dated 18th Oct., 2017 suddenly informed the plaintiff of the need for liquidation of loan financed for purchase of shares on the alleged ground of conflict of interest; (k) the plaintiff, vide his e-mail dated 18th Oct., 2017 directed the defendant no.1 to sell all shares of defendant no.7 and pay off the loan and deposit the balance amount in the plaintiff's bank account; as on that date, as per statement portfolio forwarded by the defendant no.1, the plaintiff was holding 2,50,000 shares of defendant no.7 of the value of 52,50,000 HKD equal to USD 6,73,076.92 and after paying off loan of USD 1,50,000.00, the plaintiff should have been left with USD 5,23,076.92 and 50,000 shares of defendant no.8; (l) however the aforesaid instructions were not implemented inspite of repeated requests and reminders of the plaintiff; and, (m) after repeated reminders of the plaintiff, the defendant no.3 contacted the plaintiff and accepted full responsibility and assured better management of the portfolio of the plaintiff; however still the instructions of the plaintiff were not abided by.

(2.) The plaintiff has instituted the present suit, (i) for mandatory injunction directing the defendant no.1 to sell 50,000 shares of the defendant no.8 at USD 3.50 per share or handover the original share certificates of 50,000 shares of defendant no.8 and to sell 2,50,000 shares of defendant no.7 listed on Hong Kong Stock Exchange at 1114:HK or handover the original share certificates of 2,50,000 shares of defendant no.7; (ii) alternatively, for recovery of USD 7,42,994.96 (Rs.4,85,17,571); (iii) for award of damages for delays and loss of prospective profits; (iv) for permanent injunction against creation of third party rights against the shares in the account of the plaintiff maintained by the defendant no.1; and, (v) for interest and costs.

(3.) The suit came up before this Court first on 21st Feb., 2018 when summons thereof were ordered to be issued. Summons issued to defendants no.1 to 6 were returned with the report that there was no such firm or persons at the addresses given. Subsequent order dated 17th Aug., 2018 records that the defendants no.1 to 7 had been served through e-mail and since none appeared for them, they were vide the said order proceeded against ex parte and restrained from creating third party interest in the shares purchased on behalf of the plaintiff. On 12th Feb., 2019, the counsel for the plaintiff stated that he had filed an affidavit of service of defendant no.8 through fax; since none appeared for the defendant no.8, vide the said order the defendant no.8 also was proceeded against ex parte.