D L WALTON Vs. COCHIN STOCK EXCHANGE LTD

JUDGEMENT

(1.) These appeals by the various defendants in O.S. No. 175 of 1993 on the file of the Subordinate Judge's Court of Ernakulam challenge the order of injunction granted by the trial court restraining defendants 1 to 5 from starting, functioning or organising dealings or from functioning in securities in any manner from building Nos. 36/ 1602 to 36/ 1605 in Ernakulam Village, Kanayannur Taluk, Ernakulam District till the disposal of the suit. Defendant No. 1 in the suit is a company incorporated under the Companies Act and defendants 2 to 5 are its Directors. The various appeals are tiled by the Directors challenging the order of the court below. No appeal as such has been filed by the first defendant company. As noticed these appeals directed against the interim injunction granted by the trial court came up before the vacation court on 13-4-1993. The plaintiff in the suit, the Cochin Stock Exchange Limited had filed caveats before this Court and opposed the application for stay of operation of the order made by the defendants these appeals. Counsel appearing in all these appeals at that stage requested the court to hear and dispose of the Civil Miscellaneous Appeals themselves and consequently the appeals themselves were heard during the vacation by consent of parties and are being disposed of by this judgment.

(2.) The suit O.S. 175 of 1993 is filed by the Cochin Stock Exchange Limited, a company incorporated under the Indian Companies Act and recognised as a Stock Exchange within the meaning of the Securities Contracts (Regulation) Act, 1956 for a declaration that the defendants are not authorised to carry on or establish or organise or assist in organising dealings in securities in any manner within Ernakulam District and for a decree of permanent injunction restraining the defendants from estblishing or carrying on or, permitting dealings with in stocks, shares and securities from building Nos. 36/ 1602 to 36/ 1605 of the Corporation of Cochin situated within the Ernakulam District. According to the plaintiff the plaintiff company was established in the year 1976 with the main object of functioning as a Stock Exchange. The Government of India had granted recognition to the exchange and the said recognition is being renevired from time to time and at present the recognition is valid till 9-5-1994. The trading activities of the plaintiff are regulated by the Memorandum and Articles of Association of the plaintiff company. The provisions of the securities Contracts (Regulation) Act and the bye-laws of the Cochin Stock Exchange. It is the further case of the plaintiff that Sections 13 and 19 of the Act have been brought into force in Ernakulam District through a Gazette Notification dated 10-5-1979. The said Notification has been marked as Ext. A.4. It is the case of the plaintiff that in the light of this position no one other than the plaintiff is authorised to permit or organise dealings in securities in Ernakulam District. Defendants 2 to 5 who are also members of the, Cochin Stock Exchange Limited along with others had established another Public Limited Company M/s. Mayura Securities Ltd. impleaded as defendant No. 1 in the suit with a view to give membership to large number of persons to function as stock brokers and permitting dealings in securities in their business premises. It is also averred that the first -defendant company is maintaining a trading floor in its place of business. According to the plaintiff the activities carried on by the first defendant company are illegal and are against Sections 13 and 19 of the Securities Contracts (Regulation) Act, 1956. According to the plaintiff the various advertisements issued by the first defendant company clearly make out that it proposes to function as a parallel Stock Exchange which is prohibited by law in view of the existence of the plaintiff company as a recognised Stock Exchange and that therefore the first defendant company is liable to be prevented from functioning as a parallel Stock Exchange, or from establishing or carrying on or permitting dealings in Stocks, Shares and Securities in their premises situate in Ernakulam District. In effect the plaintiffs claimed relief on the footing that the plaintiff as a recognised Stock Exchange is alone entitled to carry on business in securities or permit others to carry on business in securities or shares in its premises and is entitled to prevent any other rival from carrying on the said activities in. Ernakulam Distirict. Along with the suit the plaintiff also filed I.A. 1357 of 1993 for an interim injunction restraining the defendants from carrying on their activities pending the suit.

(3.) There is some controversy before me as to whether the first defendant company was properly served in the suit or not. Defendants 2 to 5 take the stand that there was no proper service of notice on the first defendant in the trial court. But according to the learned counsel for the plaintiff since the summons taken out to the first defendant company in the address of its Registered Office was returned, the plaintiff applied for service of notice on the first defendant on its Managing Director, the second defendant by invoking Order 29, Rule 2 of the Code of Civil Procedure and that the same was allowed and notice was hence served on the second defendant on behalf of the first defendant company. Notice was accordingly served on the second defendant for and on behalf of the first defendant company and according to the learned counsel for the plaintiff the said service of notice is sufficient in the eye of law. Anyway in these appeals before me the first defendant was served with notice and the first defendant has entered appearance in the various appeals. I do not therefore consider that anything much turns on the question as to whether there was proper service of summons on the first defendant in the court below. I do not think it necessary on proper to go into the technicalities of that question in view of the fact that the first defendant has entered appearance in these appeals.