TMI Blog1974 (5) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... The issued share capital was Rs. 6,00,000 divided into 600 fully paid up ordinary shares of the face value of Rs. 1,000. The main object of the company was to purchase, take on lease or exchange or otherwise acquire land and buildings in Calcutta or elsewhere and to acquire the property situate at No. 1 and 1/1, Bishop Lefroy Road, Calcutta. The founder-director of the company, which was a family concern, was one S.F. Mazda who held 540 shares, the other shares being held as follows : F.F. Mazda (brother of S.F. Mazda) ... 10 shares D.S. Mazda (son)... ... 10 shares Mrs. D.K. Irani (daughter)... ... 20 shares Mrs. K.R. Irani (daughter)... ... 20 shares In 1956 the 10 shares held by F.F. Mazda were transferred to the founder-director, S. F. Mazda, whose total holding, therefore, became 550 shares. Thereafter, on December 21, 1955, S. F. Mazda transferred 40 shares to his son, D.S. Mazda, and 150 shares to the respondent, who is a son-in-law of S.F. Mazda, and to the brother of the respondent, who is the other son-in-law of S.F. Mazda. The respondent's case is that 150 shares were given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to him, and later caused a lawyer's notice dated May 26, 1972, to be issued and served. In answer to this demand the appellant's solicitor denied that any shares were registered in the name of the respondent or that the respondent was the registered holder of any shares in the company. On March 20, 1972, the respondent with his brother's wife and others issued a requisition for an extraordinary general meeting of the company. The validity of this requisition was challenged by the company's solicitor. Thereafter, a suit was filed in this court on June 23, 1972 (Suit No. 226 of 1972 Daddy S. Mazda v. Grover R. Irani ) for delivery and cancellation of the notice convening extraordinary general meeting of the company and for various other reliefs. This suit was filed by the first appellant and his wife. A declaration was also prayed for that the first appellant and his wife were the legal and real owners of 170 shares of the company. In this suit an interlocutory application was made for an injunction and various other reliefs. Thereafter, an application under section 155 of the Companies Act, 1956 (hereinafter referred to as "the Act"), was made and in this application the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter expressing a desire to dispose of 170 shares of the company. There is also a denial that the respondent ever requested that accrued dividends on the said shares be paid to the credit of the respondent's alleged account with the American Express Co. In paragraph 27, the respondent denies that he ever had any account with the American Express Co. and it is also denied that dividends amounting to Rs. 68,900 were ever paid to the respondent or credited to his bank account. The account itself is alleged to be a fraudulent account opened at the instance of the appellants and the entire sum of money deposited therein is alleged to have been fraudulently misappropriated by the appellants. It is amply clear from these allegations in the petition that there were serious allegations of fraud, fictitious and sham transactions, impersonation in opening bank account and operating the same, misappropriation of moneys and false transaction involving a firm of share brokers. These allegations in the petition are seriously disputed and denied by the appellants. It is, therefore, to be seen if such disputed question relating to the title to shares can and ought to be adjudicated upon in summ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holder of those shares and, therefore, the question of sending the share certificates did not arise. This was followed by further correspondence between the parties reiterating their respective positions with regard to the 170 shares and also claiming inspection of the register of members, the register of transfer, transfer deeds, minutes book and other documents. In the letter dated June 22, 1972, from the respondent's advocate to the company, it was alleged that the respondent's signature had been forged on the transfer form in respect of his shares and the respondent was confirmed in this view by reason of the appellant's refusal to give inspection of the company's records. It is not necessary for the purpose of this appeal to refer to the other correspondence that passed between the parties, some of which was acrimonious in nature. The first appellant in the affidavit-in-opposition says that on May 17, 1965, he purchased from his personal resources 170 shares in the capital of the. company standing in the name of the respondent through Abdullah Gangee and Sons, share brokers, for valuable consideration of Rs. 1,60,860. The transfer of the shares is alleged to have been r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns made by the respondent for the first time in the affidavit-in-reply, Regarding the observations in the judgment under appeal that counsel for the first appellant was given the opportunity of filing a further affidavit dealing with the affidavit-in-reply, it was submitted that towards the very close of the arguments in the court below, junior counsel appearing for the appellants was asked if the appellants intended to file a further affidavit by way of rejoinder to the affidavit-in-reply and the court was informed that the appellants did not wish to file any further affidavit as according to them no relief could be granted to the respondent in his application. In support, of the contention that counsel should have been put to his election as to whether he would call evidence and if counsel elected not to do so then the judge must decide whether or not the petitioner had established his case. Mr. Sen relied on two English decisions in Yuill v. Yuill [1945] Probate 15 and Storey v. Storey [1961] Probate 63. We do not think this question really arises in this appeal as the principal question is firstly whether serious disputed questions relating to title to the shares have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e fail to see how such an affidavit, even if it was filed by the appellants, would have enabled the court to adjudicate upon the serious allegations made by the parties against each other. The appellants' contentions with regard to the sale of the shares had been made amply clear in the affidavit-in-opposition filed on their behalf and denial and contradiction of the allegations in the affidavit-in-reply, by a further affidavit, would in no way have advanced matters so as to enable the court to adjudicate upon the serious disputes raised and the serious charges made in the pleadings. On the materials on record there can be no doubt or dispute that S. F. Mazda, the respondent's father-in-law, transferred 150 shares of the company to the respondent. These shares were registered in the respondent's name in the register of members of the company. This was followed by transfer of 20 shares by the respondent's wife to the respondent and this transfer was also registered in the respondent's name in the company's register of members Thus, in 1956, 170 shares stood registered in the respondent's name. It appears that on 29th March, 1965, one Keki Rusi Irani desired to open an account with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade in the application out of which this appeal arises. Counsel for the appellants contended that serious and complicated questions with regard to the title to the shares had been raised by the respondent in the petition and also in the affidavit-in-reply. The title to the shares, he argued, is seriously disputed. The first appellant claims to have purchased the shares through a well-known share broker and the transaction had been put through by a well-known bank of Calcutta. The shares also have been registered by the company in the name of the first appellant. Mr. Sen argued that serious charges of fraud, forgery, impersonation and falsification of records cannot be gone into in a summary proceeding under section 155 of the Act. In support of this contention he firstly relied on a passage in Buckley, 13th edition, page 260, and also several decisions, namely, British Sugar Refining Co., In re [1857] 69 ER 1168, London Hamburgh and Continental Exchange Bank, In re [1867] 2 Ch App 431, Dhelakhat Tea Co. Ltd., In re [1958] 28 Comp Cas 62 (Cal.), Jayashree Shantaram Vankudre v. Rajkamal Kalamandir Private Ltd. [1960] 30 Comp Cas 141 (Bom.), Smt. Soma Vati Devi Chand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and since the appellants chose not to avail themselves of this opportunity, the trial court was right in coming to its conclusion that the transaction of sale pushed through by a firm of share brokers, opening of a bank account, the deposit of the sale proceeds of the shares in this account and withdrawal of the money were all bogus and sham transactions and, therefore, there was no bona fide and genuine sale of the shares by the respondent to the first appellant. Mr. Mookherjee relied on a decision of the Supreme Court in Indian Chemical Products Ltd. v. State of Orissa [1966] 36 Comp. Cas. 592 (SC). In that case the Maharaja of Mayurbhanj held 7,500 shares of a company and the remaining 150 shares were held by others. On the lapse of paramountcy of the British Crown in India on August 15, 1947, the State of Mayurbhanj became integrated with the Dominion of India and the Maharaja thereafter agreed to the merger of the State with the Dominion. As a consequence of the integration of the State with the Dominion of India all public properties of the State including 7,500 shares of the company vested in the Dominion and these shares devolved upon the Dominion of India as the succee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied in drawing the inference that these documents, if produced, could go against the contention of the appellants and that the shares in fact were never transferred by the respondent to the first appellant. We are unable to accept the contention of the counsel for the respondent. It is true that the transfer deed and the letter dated April 26, 1965, have not been produced. But can it be said that because of non-production of these documents an adverse inference ought to 1 e drawn against the appellants ? We think not. The jurisdiction to draw an adverse inference under section 114( g ) of the Evidence Act can be exercised only where there is an obligation to produce a document and not otherwise. Can it be said that the appellants were under any obligation to produce the documents mentioned above ? There was no obligation in law imposed upon the appellants to produce these documents. The position would have been otherwise if the court had directed them to produce the documents. at or before the hearing of the application. No such order was made directing the appellants to produce the documents. No adverse inference can be drawn for failure to do something which a party is not bou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avail himself of this opportunity. The appellants were under no obligation to produce the transfer deed, firstly, because in a summary proceeding under section 155 of the Act there is no provision either in the statute or in the rules framed thereunder for discovery, production and inspection of documents and, secondly, because no order was made against the appellants for production of the documents. A party to a litigation may have numerous documents in his possession or control and it cannot be said that merely because he has failed to produce one or other of these documents which would be helpful to his opponent in the litigation, an adverse inference ought to be drawn against him. An adverse inference under section 114( g ) of the Evidence Act, in our view, is permissible only where a party is obliged to produce documents either under the provisions of a statute or rules or under order of the court. In our view the intensity, the depth and the sweep of the allegations are such that it is not possible for the court to come to any conclusion about the truth of the allegations except upon evidence which can be tested by cross-examination of witnesses. There can be no doubt that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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