SEJAL RIKEEN DALAL Vs. STOCK EXCHANGE BOMBAY

JUDGEMENT

(1.) PRADIP Harkishondas Dalal was a member of the Stock Exchange, Bombay. He died in an Air Crash at Ahmedabad on 19th October, 1988. The 1st petitioner Sejal Dalal is the daughter in law of Pradip. The 3rd petitioner is the widow of Pradip. Petitioner No. 2 is the son of Pradip and petitioner No. 4 is the daughter of Pradip. 1st petitioner Sejal is the wife of the 2nd petitioner. On 6th December, 1988 petitioners Nos. 2 to 4 as the heirs and close relatives of Pradip nominated the 1st petitioner Sejal for being made a member of the Stock Exchange, Bombay. Accordingly on 15th December, 1988 the 1st petitioner applied for membership of the Stock Exchange, Bombay supported by this nomination. Her application was seconded by two members of the Stock Exchange as per requisite rules. On 2nd March, 1989 the Stock Exchange addressed a letter to petitioner No. 1 enquiring whether late Pradip Harkisondas Dalal had made any payment in respect of the outstanding liabilities of M/s. Harkisondas Laxmidas. The letter also sought details regarding the constitution of the firm of M/s. Harakshah which was a client of M/s. Harkisondas Laxmidas and whether dues were required to be paid by M/s. Harakshah to M/s. Harkisondas Laxmidas

(2.) IT seems that M/s. Harkisondas Laxmidas was a firm of long standing. The operation of this firm, however, from the beginning of 1970 had become highly speculative. Speculative dealings were being conducted in the name of another firm M/s. Harakshah and Co. which is said to have been promoted by the firm of M/s. Harkisondas Laxmidas. Originally in the firm of M/s. Harkisondas Laxmidas there were two partners Harkisondas Laxmidas (father of Pradip) and his brother Manharkant Laxmidas. After the death of harkisondas Laxmidas in 1957 or thereabouts the son of Harkisondas, Mukul Harkisondas who is the brother of Pradip, became a partner along with Manharkant Laxmidas. In the firm of M/s. Harakshah and Co. the wives of Mukul Harkisondas, late Pradip, Manharkant Harkisondas, Chandrakant Harkisondas and the wife of late Harkisondas Laxmidas were the partners, each having an 18% share; the remaining 10% share belonged to Shantilal Kothari. The firm of M/s. Harakshah and Co. was established in the year 1972 or thereabout.

(3.) IT is the case of the respondents that although Pradip Harkisondas was not a partner in the firm of M/s Harkisondas Laxmidas, he held himself out as a partner of that firm. Manharkant Laxmidas died and on his death the firm of Harkisondas Laxmidas was dissolved in the month of October 1982. At the date of closure it was found that the firm was required to pay the claims of about 90 members of the Stock Exchange amounting to Rs. 32,34,900/ -. It seems that there are a number of arbitration references against the firm of M/s Harkisondas Laxmidas by various customers and constituents of the firm. The total claim in these arbitration references aggregated to over Rs. 1 crore in one of the references the heirs of late Pradip are also made parties on the footing that Pradip held himself out as a partner of M/s. Harkisondas Laxmidas. It is the case of the 1st respondent that the speculative business which was the bulk of the business of M/s. Harkisondas Laxmidas was conducted in the name of M/s. Harakshah and Co. ; and M/s. Harakshah and Co. owes a substantial amount to the firm of M/s. Harkisondas Laxmidas.