TMI Blog1949 (12) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... Jamsetji A. H. Chinoy at the price of ₹ 3,000 per collective share, i.e., per 1 A and 1 B share. The plaint stated that the second plaintiffs, the firm of Chinoy and Co., claimed no interests in the contract and had been joined for greater caution and to avoid the contention that the contract had been made by the Dinshaws with them. The principal claim was for specific performance of the contract, but further relief, alternative or ancillary in nature, was also sought. ( 3. ) Subsequent to the filing of the plaint the Dinshaws transferred the shares in question in various parcels to a number of persons. These transfers were completed by 9 September 1942, and on 22 October, 1942, the transferees - some 75 in number - were made additional defendants and the plaint was amended. Of the amendments then made it will, for present purposes, suffice to say that the claim as amended sought (a) an order for specific performance against the additional defendants as well as the Dinshaws and (b) an order for the payment of ₹ 2,94,000 to the first plaintiff, being the amount of a dividend declared by the company on 24 September 1942, in respect of the said shares for the year endi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tember 1942, on these 1185A and 1195B shares. The decree directed the defendants (other than No. 77) to execute the necessary transfers and hand them over with the relevant share certificates to plaintiff 1, against payment of the price on or before 27 October 1947, and it declared plaintiff 1 entitled to take credit for the said dividend against the price. The decree, having declared that the contract was binding on the defendants other than the seventy seventh defendant made no order against him. ( 6. ) To this brief summary of the proceedings in India, there must be added a reference to an order made by the Appellate Court on 9 October 1947, which was only brought to the notice of their Lordships after the consolidated appeals had been at hearing for some time. This order was made on an application for a stay of execution pending the determination of the appeals to His Majesty in Council. A stay was not granted but, on the consent of the plaintiffs and the additional appellants, it was ordered, inter alia that the additional appellants should deposit with Messrs. Kanga and Co., the plaintiffs' attorneys, blank transfers duly executed, together with the relative share ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... current findings the contrary view was but faintly argued. There was ample and, indeed, cogent evidence to show that Shapoorji had the authority of both the Dinshaws to contract as alleged. The findings of the Indian Courts were, in the opinion of the Board clearly right and must stand. ( 10. ) Was the contract alleged by the plaintiffs in fact made ? On this question the Courts in India have, as already mentioned, differed, the lear ned trial Judge answering it in the negative and the Appellate Court taking the opposite view. The contract is pleaded in para. 4 of the plaint as follows : On 8 July 1942, the said Shapoorji Pallonji Mistry acting for and on behalf of defendants 1 and 2 and in exercise of the said authority conferred on him agreed to sell to Plaintiff 1 and Plaintiff 1 agreed to purchase 1,200 A and B collective shares of F. E. Dinshaw Ltd. as the price of ₹ 3,000 (three thousand) per collective share aggregating to ₹ 36 00,000. No time was specified for the performance of the said contract and the said shares were to be delivered against cash payment immediately or within a reasonable time. Hereto annexed and marked 'B' collectively are copies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conduct of Jamsetji and Shapoorji prior to the alleged sale, the circumstances in which the letters of 8 and 9 July 1942, saw the light of day and the events subsequent to the alleged agreement. He found Jamsetji an unsatisfactory witness and thought his conduct inconsistent with his being a genuine purchaser. He regretted that Shapoorji had not been called as a witness and appears to have come to the conclusion that he was out to secure the shares for himself. He commented pointedly that Jamsetji's testimony as to the sending of the letter of 8 July and the receipt of that of the following day was not supported by any documentary or other evidence and he saw considerable significance in the circumstances that these letters had not been revealed to anyone other than the correspondents before 27 July 1942 ; that Shapoorji had for some time kept all news of the alleged sale from the Dinshaws, local agents : and that he had informed the Dinshaws first that the purchasers were Chinoy and Co., and eventually, on 24 July 1942, that they were Jamsetji A. H. Chinoy company . The suggestion that Shapoorji might have been misled as to the proper description of the purchaser by reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the entire evidence, they are satisfied that the finding of the learned trial Judge can mean nothing less than that plaintiff 1 had actively participated in a fraudulent conspiracy with Shapoorji in order to set up a sale which had never taken place. Nothing short of such conduct could, in the circumstances, rob the letters of 8 and 9 July of their probative value in establishing the contract. This was not, indeed, disputed before the Board. On the contrary, it was contended by counsel for the Dinshaws that Shapoorji was dishonest throughout and that Jamsetji was a party to the fraud after 7 July, his letter of 8 July being described as reeking with trickery and fraud ( 14. ) Their Lordships are not unmindful of the great weight to be attached to the findings of fact of a Judge of first instance who sees and hears the witnesses and is in a position to assess their credibility from his own observation. For this reason they would be reluctant to differ from the learned Judge in this instance if his conclusion on the issue under consideration had turned on the impression made by Jamsetji in the witnessbox. That, however, was not the case. It is plain that the learned Judge bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound and the existence of the contract is established beyond all reasonable doubt. ( 15. ) The matter, however, does not end there. Their Lordships think it right to add that having regard to the pleadings and the course of the trial, the learned Judge was wrong in embracing, as he undoubtedly did, an issue of fraudulent collusion. At the beginning of the trial the position stood thus. The making of the contract was denied or not admitted by all the defendants who pleaded. The written statement of defendant 1, which was adopted in all material respects by defendant 2, alleged (para. 7) with reference to the letter a of 8 and 9 July that This defendant has reason to believe that the said letters were not written on the dates which they purport to bear . It also alleged (para 10) that if Shapoorji had authority to sell he had obtained it by making fraudulent misrepresentations as this defendant believes in collusion with plaintiff 1 . This was followed by the allegation (the first sentence of para. 11) that : This defendant further submits that plaintiff 1 was at all material times acting in collusion with the said Mistry and was aware that the said Shapoorji Pallonji Mistry wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence in rebuttal which had been reserved to the plaintiffs. ( 18. ) Their Lordships find difficulty in thinking that counsel for the defendants in India would have taken this course at the trial with regard to these issues-particularly No. 9-if any sound ground had then appeared to exist for charging Jamsetji with fabricating the letters of 8 and 9 July in collusion with Shapoorji. It was, however, urged upon their Lordships that the abandonment of these issues only withdrew the charge of collusion against Jamsetji in respect of the alleged misrepresentations by which Shapoorji was said to have obtained authority to sell, and that it remained open to the learned Judge to proceed to a finding of collusion in respect of the fabrication of the letters. In the opinion of the Board, this contention is untenable. Of the many issues framed in the case the only one raising collusion on the part of Jamsetji was No. 9 and, even when read in conjunction with Para. 11 of defendant 1's written statement, it cannot properly be regarded asdirected to less than the whole range of collusive conduct alleged by the Dinshaws. If, then, the allegation in Para. 7 of this written statement th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of construction. In the opinion of the Board, the natural meaning of the expression acquire any securities in relation to a sale of shares points to the completion of the contract, in the sense of the acquisition by the purchaser of the documents necessary to procure his registration, rather than to the contract itself. There is nothing in the context to point away from this construction. On the contrary, the words or in the performance of a contract appear to recognise the distinction on which this interpretation is based. Once this conclusion has been reached little need he said of R. 121. It was not suggested that plaintiff 1 purchased with a view to contravening the Rules and there is, therefore, no ground for saying that he did an act preparatory to contravention. Their Lordships accordingly answer this question in the negative. ( 21. ) Was plaintiff 1 entitled to relief by way of specific performance as ordered by the appellate Court? The matter raised by this question have narrowed considerably during the course of proceedings. Specific performance was sought against the additional appellants under S. 27 (b), Specific Relief Act, 1877. As it was admitted that they to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he present case the appellate Court had ample material on which to found the view it reached. Their Lordships would only add in this connection that they fully concur with Chagla A. C. J. when he says: In my opinion, on the evidence already on record it was sufficient for the Court to come to the conclusion that plaintiff 1 was ready and willing to perform his part of the contract. It was not necessary for him to work out actual figures and satisfy the Court what specific amount a bank would have advanced on the mortgage of his property and the pledge of these shares. I do not think that any jury-if the matter was left to the jury in England - would have come to the conclusion that a man, in the position in which the plaintiff was, was not read and willing to pay the purchase price of the shares which he had bought from defendants 1 and 2. For the foregoing reasons, their Lordships answer question (4) in the affirmative. ( 22. ) Should the Appellate Court have ordered the defendants, other than defendant 77 to pay plaintiff 1 the dividends declared and paid on the 1,185A and 1,195B shares by the company between 9 September 1942 and 27 October 1947? This question raises a point ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct for there the report gives some prominence to the circumstance that the dividend in question was declared in respect of a period antecedent to sale. Their Lordships cannot, however, regard that case or the decision of Morton J. (as he then was) in In re Wimbush, (1940) Ch. 92 : (109 LJ Ch. 71), as intending to curtail the principle just stated. That principle is, in the opinion of the Board, correctly expressed so far as the law of England is concerned in the passage in Palmer on Company Law, 17 Edn., 212, which reads : As between a buyer and seller of shares, the buyer is entitled to all dividends declared after the date of the contract for sale unless otherwise arranged. ( 24. ) It may be arguable that this statement of the law would be more accurately expressed as respects India if for the date of the contract there was substituted a reference to the date agreed for completion or, as the case may be, the reasonable date for completion. The point does not arise here as the first dividend in question was declared after what has been accepted as the due date for completion, and their Lordships do not, therefore, express any view upon it. But subject to such modification (if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ought. ( 27. ) This question will therefore be answered in the affirmative. To avoid difficulty and delay the parties have agreed that such interest, if payable, should be at the rate of 4? per centum per annum. ( 28. ) Ought the Appellate Court to have awarded plaintiff 1 damages for breach of the contract in respect of the 5A and 5B shares in the company which stood in the name of Sir Cowasji Jehangir, defendant 77 ? It would seem that this defendant was a trustee or nominee of the Dinshaws. As stated earlier he did not appear. He wrote to the plaintiffs, attorneys submitting himself to the order of the Court. On 8 February 1943, his holding of five collective shares was transferred to Sir Jamsetji Duggan and Lady Duggan. They have not been joined as parties to the suit. The Appellate Court made no order in respect of these shares which are excluded from the holdings of 1,185A and 1,195B shares mentioned in the decree appealed from. ( 29. ) It is clear that in the circumstances no satisfactory order for specific performance could have been made concerning defendant 77's shares. But as a transferee with notice he was not in a position to avoid all responsibility by tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided in respect of the said shares AND THIS APPELLATE COURT DOTH FURTHER ORDER that the Defendants other than the seventy seventh Defendant do execute the said transfer forms and hand over the share certificates together with the said transfer forms to the first Plaintiff on or before the twenty-seventh day of October one thousand nine hundred and forty-seven time being of the essence against payment of the sum of ₹ 35,67,857 together with interest thereon at the rate of 4? per cent. per annum from the ninth day of September one thousand nine hundred and forty-two to the twenty-seventh day of October one thousand nine hundred and forty-seven less the amount for which the first Plaintiff is entitled to take credit as hereinafter mentioned AND THIS APPELLATE COURT DOTH FURTHER ORDER that the Defendants other than the seventy-seventh Defendant do pay to the first Plaintiff the net amount of the dividends on one thousand one hundred and eighty-five A and one thousand one hundred and ninety-five B shares of F. E. Dinshaw Ltd. declared and paid between the ninth day of September one thousand nine hundred and forty-two and the twenty-seventh day of October one thousand nine hun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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