SURESH SHENOY Vs. COCHIN STOCK EXCHANGE LTD.

JUDGEMENT

(1.) COCHIN Stock Exchange Ltd. (the company) is the sole respondent. One of its members who is also a trader in shares is the petitioner. The prayer is to wind up the company on the ground that it is unable to pay its debts. The prayer is opposed mainly on the ground that Rs. 46,143 claimed by the petitioner is not a debt due from the company and that the petition is only a pressure tactic.

(2.) TILL August 17, 1987, trading members of the company were directly buying and selling shares in the premises of the company. With effect from August 17, 1987, a settlement procedure was adopted by which the transactions of buying and selling shares and clearance of liabilities were made through the intervention of the company. Settlement period was fixed as 14 days. Settlement is not on the basis of individual dealings. The entire purchases and sales of a member for that period will be taken into account and the balance struck. The company collects and pays on the basis of details of purchases and sales given by the trading members. The company is neither a purchaser nor a seller. Shares are handed over to the company only for transmission. It cannot purchase or sell. It is only a regulating authority to regulate the relations between share brokers. But that does not mean that the company does not have the liability to pay. When the company transacted the shares and received payments on behalf of the seller to be given to him, even if it is not the seller or purchaser, it has the liability to disburse the amount that comes into its hands even if it is as the regulating authority. At best, what could be said is that the company is the trustee so far as the amount is concerned.

(3.) IT is not disputed that the company is having assets worth more than Rs. 37 lakhs. There is no case that it has any other liability or that it is unable to discharge the liability to the petitioner. On the basis of the order in O.P. No. 7225 of 1987 produced as exhibit R -1(a), the company issued a notice to the petitioner to produce his accounts and records to settle the admitted transaction with Mr. Joy. Without complying with that notice, the present petition seems to have been filed as a pressure tactic to get the money under the threat of the company being wound up. The company is prepared to make the payment after settling the accounts of the petitioner with Mr. Joy on furnishing accounts and records. But the petitioner is taking the stand that the company will have to make the payment without any adjustment, because what is due to Mr. Joy is by way of personal dealings which is not adjustable by the company. He offers to make the payments to Mr. Joy direct. But his liability under Article 154 of the articles of association of the company to produce all his records, when called for, is not disputed. Records were called for only to settle a dispute with a member and that too as per a judgment of this court. In 'such a situation, in spite of the technicalities, if any, involved in the right of adjustment, I cannot say that the dispute raised by the company is not bona fide. It is clear that more than the desire to have the claims settled and the amounts realised, the petitioner is actuated by the motive of settling scores with the company. The question is whether the petition could be admitted and advertised in this background.