JOSEPH P JOSEPH Vs. MARKOSE

JUDGEMENT

(1.) THE defendant in O. S. No. 562 of 1993 on the file of the Second additional Sub Court, Ernakulam is the appellant in this appeal. The said suit was one for realisation of a sum of Rs. 33,320/- with interest thereon at the rate of 18% per annum from 04. 02. 1993 till realisation and for a mandatory injunction directing the defendant to hand over 100 equity shares of Reliance capital and Finance Trust Ltd. ("reliance Company" for short) to the plaintiff.

(2.) THE case of the plaintiff can be summarised as follows:- The plaintiff namely M/s. Marcos and Co. is an authorised stock and share broker at the Cochin stock Exchange having its office at Kacheripadi, Cochin-18. The plaintiff has been a member of the Cochin Stock Exchange for the past several years and has earned high reputation and goodwill among its dealers, share brokers and investors. Transactions in the share market are highly competitive. The business of stock and share brokers in the share market is largely based on the mutual trust between the brokers and their clients as also the efficiency, goodwill and reputation of the stock and share broker. The defendant Joseph P. Joseph sold 100 equity shares of the reliance Capital through the plaintiff on 06. 02. 1992. The original share transfer deed was later returned by the buyer to the plaintiff on the ground that the Reliance Company refused to transfer the shares for the reason that the defendant's signature in the transfer deed differed from the specimen signatures lodged with the Reliance Company. Thereupon, the plaintiff sent ext. A4 letter dated 21. 12. 1992 to the defendant enclosing copies of the original share transfer deed, letter from the Reliance Company and a fresh transfer deed and requested the defendant to return the fresh transfer deed duly executed by him and attested by his Bank Manager. The plaintiff also requested the defendant to send the renounced application form for the rights issue for the aforesaid shares which he had received as the buyer had to claim the rights within the stipulated time. The defendant was requested to send the above documents without delay. The defendant did not reply to Ext. A4 letter. The plaintiff then issued Ext. A5 reminder dated 06. 01. 1993 informing the defendant that his account will be debited for the rights when the plaintiff's account is debited for the same by the Cochin Stock Exchange. The defendant did not reply to the said letter also. Thereupon, the plaintiff sent Ext. A6 final request dated 19. 01. 1993 to the defendant by registered post informing him that unless the fresh transfer deed duly executed was received by the plaintiff at least by 23. 01. 1993, the 100 equity shares would be auctioned by the Cochin stock Exchange and the plaintiff's account will be debited resulting in a consequent loss to the defendant. The defendant was further informed that the plaintiff's account was already debited with Rs. 220/- towards dividend, share transfer stamps, postage stamps etc. and the defendant was requested to pay the said amount to the plaintiff. The defendant was also informed that there would be consequential loss to the defendant when the plaintiff's account is debited for the rights also by the Stock exchange. Finally, the defendant sent Ext. A7 reply dated 22. 01. 1993 raising untenable contentions. The said reply was received by the plaintiff on 23. 01. 1993 after the shares were already auctioned by the Cochin Stock Exchange against the plaintiff at Rs. 81/- per share. The defendant has wilfully defaulted in acting upon the requests made by the plaintiff resulting in financial loss of Rs. 8,100/- to the plaintiff towards the amount debited to the plaintiff's account. Consequent on the auctioning of the shares by the Cochin stock Exchange, the plaintiff had also incurred an additional loss of Rs. 220/-towards the transfer stamps, postage stamps etc. The defendant had fraudulently and dishonestly received the dividends upon those shares even after the sale. Despite the repeated demands, the defendant wilfully refused to execute the transfer deed resulting in considerable embarrassment and loss to the plaintiff. It had also affected the goodwill and reputation of the plaintiff in all business circles particularly in regard to the transactions with the Cochin Stock Exchange. The plaintiff caused Ext. A9 lawyer notice dated 23. 02. 1993 to be sent to the defendant calling upon him to pay rs. 8,100/- towards the amount debited in the plaintiff's account and Rs. 220/-towards the share transfer stamps, postage stamps etc. and Rs. 25,000/- as damages for the loss of goodwill and reputation. The plaintiff also demanded the defendant to hand over to the plaintiff the 100 equity shares of Reliance company in lieu of the shares which a share holder was entitled to purchase the rights issue. The defendant caused Ext. A10 reply notice raising untenable contentions. Hence the suit.

(3.) THE suit was resisted by the defendant contending inter alia as follows:-This defendant retired from a private company service and he is a casual investor who is not familiar with the formalities of Stock Exchange. It is admitted that the plaintiff is a stock broker having office at Kochi during january/february, 1992. When this defendant entrusted his business with the plaintiff, the speed at which the services were rendered by the plaintiff arose suspicion in the mind of the defendant who had abruptly withdrawn all works given to the plaintiff on 21. 02. 1992. It is true that as per contract dated 06. 02. 1992, 200 equity shares of Reliance Company were sold by this defendant at the rate of Rs. 59. 50 per share. At the time of the said contract, this defendant had handed over the share certificates along with the blank share transfer deed dated 31. 01. 1992 duly signed by this defendant as directed by the plaintiff at his office. This was witnessed by Linda Fernandez, an employee of the plaintiff. It was due to the mutual trust between this defendant and the plaintiff that the blank transfer deed was executed by this defendant. The reason for rejection of one of the transfer deed forms is not known to this defendant. It is unfortunate that the Reliance Company rejected the signature in one transfer deed whereas accepted the other in spite of the fact that the signatures on both were identical. This defendant had fallen ill during December, 1992 while on a holiday tour and this defendant had to return prematurely during the weekend of January, 1993 due to the sickness. It was while he was lying sick that this defendant received the plaintiff's letters. The letter dated 21. 12. 1992 along with a photostat copy of share transfer deed dated 19. 10. 1992 was received by this defendant only later. Neither the buyer nor the plaintiff cared to inform this defendant the details such as the date, the time limit for re-lodging the documents etc. On receipt of Ext. A6 letter dated 19. 01. 1993 from the plaintiff, this defendant replied offering a fresh transfer deed in the place of the earlier one on the plaintiff agreeing to return the original transfer deed on 23. 01. 1993. This defendant renewed his offer over telephone. But the plaintiffs refused to part with the original signed transfer deed executed by this defendant. When nothing was heard of from the plaintiff, this defendant sent another registered letter to the plaintiff requesting the latter to send back the original transfer deed. Thereafter, what this defendant received was Ext. A9 lawyer notice. On receipt of the said lawyer notice, this defendant took the attested transfer deed to the plaintiff's counsel. When the plaintiff was contacted over the phone, the plaintiff did not stick to his earlier stand. All situations happened due to the wilful concealment of vital information by the plaintiff. The plaintiff did not inform this defendant about the time limit within which the transfer deed had to be forwarded. There has been no wilful and deliberate refusal on the part of this defendant in renouncing the shares since no application in that behalf had been received from the Reliance company. This defendant does not admit that the plaintiff has a goodwill and reputation. This defendant is not liable for the financial losses or damages claimed by the plaintiff by retaining the share certificates. There is no basis for the claim of Rs. 8,100/- nor Rs. 220/- nor the sum of Rs. 25,000/- claimed as damages. This defendant has no liability to hand over 100 equity shares as this defendant had not received any right offers. This suit only to be dismissed with costs.