2002 (11) TMI 657 - HC - Companies Law

Summary

Issues:
Suit for recovery of Rs. 9,36,000.

Analysis:
The case involved a suit for the recovery of Rs. 9,36,000 by Non-Resident Indian plaintiffs against a Limited Company and its directors and company secretary. The plaintiffs applied for shares of the company based on representations made by the directors regarding capital gains deductions and profitability. Despite sending two cheques of Rs. 3,00,000 each for the shares, the defendants failed to issue the shares or refund the amount to the plaintiffs. The plaintiffs, after waiting for more than six months, discovered through a newspaper article that the company had defaulted, leading them to believe that the defendants had concealed material facts and acted mala fidely. A legal notice was sent demanding the refund of Rs. 6,00,000 along with interest, but the defendants did not respond. The defendants were proceeded ex parte as they failed to appear in court, leading to a decree in favor of the plaintiffs for Rs. 9,24,000 along with interest at 24% per annum and costs of the proceedings.

The court found that the plaintiffs had made the payment of Rs. 6,00,000 to the defendants, as evidenced by the unrebutted statement of account. It was established that the defendants neither delivered the shares nor refunded the amount to the plaintiffs, and the legal notice sent by the plaintiffs remained unanswered and uncomplied with. Due to the defendants being proceeded ex parte, all contentions and documents presented by the plaintiffs were considered proved. Consequently, the court passed a decree in favor of the plaintiffs for Rs. 9,24,000 along with interest at 24% per annum from the date of filing till realization, in addition to costs of the proceedings.

In conclusion, the court decreed the suit for recovery of Rs. 9,36,000 in favor of the plaintiffs, holding the defendants liable for the payment of Rs. 9,24,000 along with interest and costs. The judgment highlighted the defendants' failure to deliver the shares or refund the amount to the plaintiffs despite multiple reminders and a legal notice. The court's decision was based on the unrebutted evidence presented by the plaintiffs, leading to the passing of the decree against the defendants.