TMI Blog1984 (12) TMI 258X X X X Extracts X X X X X X X X Extracts X X X X ..... 12,387 shares in pursuance of an agreement between the plaintiff and defendants dated December 12, 1976. One of the terms of the agreement dated December 12, 1976, was that the first, second and third defendants were to be made directors, out of whom the first defendant was to be the full-time director of the company. Defendant No. 21 also owns 4,000 shares in the company. According to the plaintiff, these shares were transferred to defendant No. 1 in pursuance of an agreement under which defendant No. 21 had advanced a loan to the plaintiff, and it was agreed that defendant No. 2 was to be eligible only to the interest and other benefits arising out of these shares. The plaintiff has already filed a suit, C. S. No. 453 of 1983, on the original side of this court for a declaration of ownership of those shares and an injunction has been issued to defendant No. 21 restraining him from dealing in any manner with those 4,000 shares. That order has later been vacated, and an appeal filed by the plaintiff against the order vacating the injunction was later withdrawn. The plaintiff's case is that at the annual general meeting held on July 22, 1983, the first three defendants were not el ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the purpose of this revision petition. It was also alleged that some cash payments were made, and since the defendants were not transferring the shares, the plaintiff was forced to file the suit. In the suit, as many as eight substantive reliefs had been sought. The main relief is one of declaration that the plaintiff is the owner of 16,387 equity shares of M/s. Century Flour Mills Ltd., Madras. The other relief is for a direction to the defendants to deposit the share certificates in the court. The third relief is that the defendants should deposit the share transfer forms of the shares, and the company should be prohibited from entertaining any application for transfer in the name of any person other than the plaintiff. There was also a prayer for direction to the company to issue duplicate shares in lieu of 12,387 shares standing in the name of defendants Nos. 1 to 20. In his own right, defendant No. 21 had 4,000 shares. A direction was sought against defendant No. 21 for transferring those 4,000 shares. An additional relief was sought, namely, that defendants Nos. 1 to 20 should be restrained from dealing in any manner with 12,387 shares by way of sale, hypothecation, pledge, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orders also almost immediately after they were filed, and the three orders are identical in terms. It is enough to reproduce the order on LA. No. 16444 of 1984, which reads as follows: "Heard. Perused case records. Satisfied that the object of granting the interim injunction would be defeated by the delay. Hence, ad interim injunction and notice 8.10.84".Sd/ 8.10.1984. There is intrinsic evidence in this record to indicate how mechanically these orders have been made without any application of mind, because the order in I. A. No. 16446 of 1984 renders wholly ineffective the orders made on Applications Nos. 16444 and 16445 of 1984 on the same day and at the same time. Application No. 16444 of 1984 was intended for the relief of an ad interim injunction restraining defendants Nos. 1 to 20 from disposing of in any manner 12,387 shares by sale, mortgage, gift, pledge or otherwise till the disposal of the suit. This order which is at page 73 of the paper book had in effect frozen the shares. LA. No. 16445 of 1984 was made for an ad interim injunction restraining defendants Nos. 1 to 20 from exercising voting rights in respect of 12,387 shares of M/s. Century Flour Mills Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime when he made the order, he was satisfied that the object of granting the order would be defeated by the delay, and that he bona fide thought that an interim order could be made which could be reversed. In this report, however, he has further stated that he now realises that he should not have passed the ad interim order of mandatory injunction. Mr. Gandhi, who appears on behalf of the original plaintiff, has, at the outset, contended that the revision petition filed by the defendants should be dismissed, because no appeal or revision petition lies against an interim order, and he has placed reliance on a Division Bench decision of this court in Abdul Shukkoor Sahib v. Umachander, AIR 1976 Mad 350. The Division Bench has, in Abdul Shukkoor's case, AIR 1976 Mad 350, held that no appeal will lie against an ex parte ad interim injunction, but the specific remedy available in Order 39, rule 4, Civil Procedure Code, has to be availed of by the interdicted party so that a final reasoned order could be obtained in the trial court itself against which the Code has provided an obvious appeal under Order 43, rule 1( r ). That was a case in which against an ad interim temporary i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... marginal heading "Detention, preservation, inspection, etc ., of subject-matter of suit", enables the court to make three kinds of orders specified in clauses ( a ), ( b )and( c ). Order 39, rule 7(1), Civil Procedure Code, reads as follows : "7 (1) The court may, on the application of any party to a suit, and on such terms as it thinks fit, ( a )make an order for the detention, preservation or inspection of any property which is the subject-matter of such suit, or as to which any question may arise therein; ( b )for all or any of the purposes aforesaid authorise any person to enter upon or into any land or building in the possession of any other party to such suit; and ( c )for all or any of the purposes aforesaid authorise any samples to be taken, or any observation to be made or experiment to be tried, which may seem necessary or expedient for the purpose of obtaining full information or evidence". Mr. Gandhi, appearing on behalf of the plaintiff, was fair enough to concede that the ad interim mandatory injunction could not have been asked for under Order 39, rule 7, of the Civil Procedure Code at all. The learned judge has obviously not applied his mind to the corr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares issued or to have his name entered in the register of members of a public limited company has to be determined with reference to the provisions of the Companies Act. The "shares" in a company are movable property. Section 82 of the Companies Act provides that the shares or other interest of any member in a company shall be movable property, transferable in the manner provided by the articles of the company. Transfer of shares is a matter in respect of which there is an express statutory provision in section 108 of the Companies Act. Section 106(1) which provides that the transfer of a share is not to be registered except on production of the instrument of transfer, reads as follows : "A company shall not register a transfer of shares in, or debentures of, the company, unless a proper instrument of transfer duly stamped and executed by or on behalf of the transferor and by or on behalf of the transferee and specifying the name, address and occupation, if any, of the transferee, has been delivered to the company along with the certificate relating to the shares or debentures, or if no such certificate is in existence, along with the letter of allotment of the shares or deben ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PC 38). The combined effect of section 82 read with section 108 of the Companies Act is that though the shares of a company are "movable" property, in so far as the company is concerned, unless there is a valid deed of transfer in accordance with section 108 of the Companies Act, the transferee cannot claim to have his name entered in the register of members of the company. Even so far as the issue of duplicate shares of the company is concerned, the right to get a duplicate share is regulated by section 84. Under section 84(1), a certificate, under the common seal of the company, specifying any shares held by any member, is prima facie evidence of the title of the member to such shares. Sub-section (2) of section 84 reads as follows : "A certificate may be renewed or a duplicate of a certificate may be issued, if such certificate ( a )is proved to have been lost or destroyed, or ( b )having been defaced or mutilated or torn is surrendered to the company". The learned judge has not considered the effect of section 84 or section 108 of the Companies Act when he went on to make an order that duplicate shares should be issued, and the said shares should be immediately trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as follows : "When, to prevent the breach of an obligation, it is necessary to compel the performance of certain acts which the court is capable of enforcing, the court may in its discretion grant an injunction to prevent the breach complained of, and also to compel performance of the requisite acts". A mandatory injunction can, therefore, be issued in order to compel the performance of certain acts in order to prevent the breach of an obligation which the court is capable of enforcing. It is true that the obligation may flow from a contract. But then, an agreement enforceable at law has to be there between the parties on the basis of which the obligation can be ascertained. In the instant case, the agreement on which the plaintiff is relying is itself to be established. The object of an injunction is prevention ( sic ) and the maintenance of the status quo ante. Normally, this object is achieved by merely a restrictive order which forbids the carrying out of a threat of injury, or the repetition of an injurious act. In the given case, however, the acts committed by the defendant may leave an abiding injury, and it may be difficult to restore the status quo ante unless that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ily divested of the ownership of the shares in question of the value of more than Rs. 10 lakhs by one stroke of the pen of the learned judge. In the view I have taken, the order of mandatory injunction made by the trial court is set aside and Application No. 16446 of 1984 is rejected. Before parting with the case, it is necessary to observe that the trial courts must realise that injunctions, whether prohibitory or mandatory, should not be granted as a matter of course, and the trial court must exercise extreme caution and care before an order of injunction is made, and it has to decide the question relating to the grant of an ad interim injunction according to well-established principles. The trial court, even at the stage of making an ad interim order of injunction, has to apply its mind seriously to the question whether the plaintiff has made out a prima facie case for the grant of an injunction. The circumstance that an ad interim order can be vacated after the defendant appears and contests the correctness of the order of injunction is no justification for issuing an injunction as a matter of course. Accordingly, the order of the trial court made in I. A. No. 16446 of 1984 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
