CHAMPARUN SUGAR CO LTD Vs. HARIDAS MUNDHRA

JUDGEMENT

(1.) The facts in this case are shortly as follows : On or about 19th day of April, 1961 the respondent No. 1 Haridas Mundhra filed a suit in this Court being Suit No. 600 of 1961 (Haridas Mundhra v. Mrs. Mary Therese Turner and Ors.) for specific performance of an agreement relating to the sale of 51 per cent ordinary shares in Turner Morrison and Co. Private Limited and for other reliefs. In the plaint of the said suit, it was alleged as follows: J.G. turner, M.F. Turner and one A.G. Turner held the entire controlling interest in Hungerford Investment Trust Limited, the third defendant in the suit. The Hungerford Investment Trust Ltd., controlled the entire share capital of M/s. Turner Morrison and Co. Private Ltd., the 4th defendant in the said suit. On the 29th November, 1955 Mundhra made an offer to purchase 49 per cent of the entire issued capital of the said M/s. Turner Morrison and Co. Private Ltd. On the 8th December, 1955 the said Hungerford Investment Trust Ltd., accepted the said offer. It was inter alia agreed between the parties that not only would Mundhra be entitled to purchase 49 per cent of the issued capital in the said company but that he shall have the option at any time within five years from the date of the acceptance of the said offer, to purchase the remaining 51 per cent of the issued capital of the 4th defendant, Turner Morrison and Co. Private Ltd., for the sum of Rs. 86,60,000. On 30th October, 1956 an agreement was entered into between the said parties and M/s. British India Corporation Ltd., the 5th defendant in the said suit, inter alia as follows: That the agreement contained in the offer dated 29th November 1955 and acceptance dated 8th December, 1955 was to be considered as a binding agreement; that the 5th defendant, the British India Corporation Ltd., would be at liberty to assign its right, title and interest to Mundhra, and the purchase and sale would be completed within 14 days of the execution of the agreement. By a deed of Revocation dated 7th September 1957 Mundhra became entitled to exercise the option and to purchase 51 per cent of the remaining shares. It is stated that Mundhra paid for and obtained a transfer of 49 per cent of the said shares. On the 7th December, 1960 and 28th December, 1960 Mundhra, through his Solicitors, exercised his option to buy the remaining 51 per cent of the said shares. As the defendants failed to act in terms of the said agreement, Mundhra Instituted the said suit for specific performance of the agreement relating to the sale of 52 per cent ordinary shares in Turner Morrison and Co. Private Ltd., and/or specific delivery of the said shares against payment of the consideration thereof. On May 22, 1963 the appellants, M/s. Champarun Sugar Co. Ltd. and Another obtained a decree in Suit No. 179 of 1960 (Champarun Sugar Co. Ltd. v. Shri Haridas Mundhra) in the Court of the Civil Judge, Kanpur, against Haridas Mundhra for a sum of Rs. 60,950.20 nP. and costs. On December 17, 1963 the decree holders filed an application for execution, by tabular statement, in which they prayed for execution of the said decree, passed by the Kanpur Court and transmitted to this Court, by attachment and sale of the option of Mundhra under the agreement dated 30th October, 1956 taken together with the Deed of Revocation dated 7th September, 1957, and of all his rights under the said agreement which is the subject matter of Suit No. 600 of 1961 then pending in this Court. Upon this application being made, an ex parte order of attachment was made by the learned Master of this Court, the relevant part whereof is set out below: "Whereas Shri Haridas Mundhra the defendant No. 1 abovenamed has failed to satisfy the decree made in the above suit No. 179 of 1960 of the Court of Second Civil Judge Kanpur and dated the 22nd day of May 1963. It is ordered that the said defendant Shri Haridas Mundhra be and he is hereby prohibited and restrained until further order of this Court from exercising the option under the agreement dated the 30th October 1956 with Hungerford Investment Trust Limited and J.G. Turner and N.f. Turner construed with Deed of Revocation dated the 7th day of September 1957 between British India Corporation Ltd., and the said defendant Shri Haridas Mundhra, to purchase 51 per cent shares of the Turner Morrison and Co. Ltd., and of all rights of the said defendant Shri Haridas Mundhra under the said agreement which is the subject matter of Suit No. 600 of 1961 (Haridas Mundhra v. Mrs. Mary Therese Turner) of this Court in respect of the said option as recorded and all persons be and they are hereby prohibited and restrained from receiving the same by purchase, gift, sale or otherwise until further order of this Court."

(2.) On January 21, 1964 an application was made by Mundhra for an order that the ex parte order of attachment dated December 17, 1963 passed by the learned Master be set aside and/or vacated and/or recalled and that the attachment be withdrawn and/or vacated and for such further or other orders as it might be necessary to pass, in order to grant relief to the petitioner. This application came up before Ray, J., and was disposed of by his judgment and order dated March 5, 1964. The learned Judge allowed both the above mentioned prayers of the petitioner. It is against this order that this appeal is directed. It may be mentioned here that on the 25th February 1964 the said suit was decreed in favour of Mundhra.

(3.) The learned Judge in deciding the said application, held that the right attached was not attachable in law and that the procedure for attachment followed was not in accordance with law. Firstly, the learned Judge held that the option having been exercised, the right to exercise the option could not be attached. Secondly according to the learned Judge, a decree having been passed, the attachment had the effect of which could not be permitted. Thirdly, according to the learned Judge, the property sought to be attached was movable property and the proper way of attaching it was by actual seizure. As there could not be a seizure of a right to purchase shares, there could be no attachment. The learned Judge came to the conclusion that the "matter in question" was not attachable and that in fact, there was no attachment in accordance with the provisions of the Code and the High Court Rules.