MAFATLAL INDUSTRIES LIMITED Vs. GUJARAT GAS COMPANY LIMITED

JUDGEMENT

(1.) This appeal is filed by the original plaintiff against the interlocutory order dated September 11, 1997 passed by the City Civil Court, Ahmedabad rejecting the Notice of Motion filed by the appellant-plaintiff in Civil Suit No. 3533 of 1997. In a Nutshell

(2.) The subject-matter of the present suit is transfer of 3,81,000 equity shares in defendant No. 1-a Public Limited Company-Gujarat Gas Company Limited (hereinafter referred to as "the Company" or as "Gujarat Gas") engaged in the supply and distribution of natural gas to domestic and industrial consumers in the State of Gujarat. The appellant-plaintiff, which is a Company engaged in manufacturing textiles and chemicals, is a shareholder in Gujarat Gas with 49,95,325 shares amounting to about 39% of the shareholding. In all 5,00,000 shares amounting to 3.87% of the total equity capital were sold by the plaintiff to defendant No. 2 a Foreign Institutional Investor (FII) in October, 1993 and the said transfer was registered by the Company in December, 1993. Defendant No. 2 (through defendant No. 8 also an FII) thereafter sold 5,89,000 shares to defendant Nos. 6 and 7 (also FIIs) between March and November, 1996 and defendant No. 2 sold 1,19,000 shares to the plaintiff in June, 1997. Claiming a right of pre-emption, the plaintiff has filed the present suit for a decree against defendant No. 2 (FII) to execute transfer forms in respect of the suit shares (i.e. 3,81,000 shares) at the price at which defendant Nos. 2 and 8 executed transfer forms in favour of defendant Nos. 6 and 7 and in the alternative the plaintiff has prayed for a decree of Rs. 5.25 crores by way of damages in lieu of specific performance against defendant No. 2. The plaintiff has taken out the present Notice of Motion for an interim injunction to restrain defendant No. 2 from alienating, encumbering, dealing with or creating any third party rights or selling 3,81,000 shares to any person and also to restrain defendant No. 1 (i.e. Gujarat Gas) from registering the transfer of 3,81,000 shares or any part thereof in favour of any person and has also prayed for appointment of a Receiver to take possession of the share certificates and transfer forms of the suit shares, pending the hearing and final disposal of the suit. The trial Court has dismissed the Notice of Motion. Hence, this appeal by the plaintiff.

(3.) Before narrating the contentions urged by the learned Counsels for the parties, it is necessary to refer to the relevant dates and events in chronological order in order to appreciate the controversy between the parties. Facts