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TMI Blog1949 (12) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... ot;Shapoorji'.) to sell these shares to the plaintiff 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 Septembe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said dividend, declared as aforesaid by the company on 24 September 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' attorney ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a answered this in the affirmative and in the face of their concurrent 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12. ) In considering the issue under discussion the learned trial Judge dwelt at some length upon the 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 co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot open to the Judge. ( 13. ) In the opinion of their Lordships, the Appellate Court was clearly right in these views. After a careful consideration 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 issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble sent by Shapoorji to the Dinshaws on 9 July 1942, and that when it and the rest of the evidence is fairly assessed the case for conspiracy falls to the ground 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) tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing issues 8, 9 and 10. There was nothing conditional about this announcement which meant and was understood by the Judge to mean that these issues were abandoned; and with them went the right to adduce 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct for the sale of shares does not, of itself and in the ordinary course of events, create an equitable interest in the purchaser, and that no question arose as to the acquisition of such an interest. The point is, therefore, solely one 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d been made for finding it at the time of repudiation. But in order to prove himself ready and willing a purchaser has not necessarily to produce the money or to vouch a concluded scheme for financing the transaction. The question is one of fact and in the 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such dividends but that is not because the period in which they were earned is crucial; what is crucial is the date or dates of declaration. It may be that the facts in Black V/s. Homersham, (1879) 4 Ex. D. 24 : (48 LJ. ex. 79), mislead the appellate Court in this respect 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ruit they have borne while the price remained unpaid, he cannot claim to retain a fair measure of the profit earned or the expense saved by reason of the price being unpaid without denying the vendors a correlative equity and ignoring the quality and character of the relief which he has sought. ( 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icates together with the relative transfer forms duly executed by them in favour of the first Plaintiff or his nominee or nominees on the first Plaintiff paying the sum of ₹ 35,67,857 with interest thereon as hereinafter mentioned less the sum for which he is entitled to take credit as hereinafter 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 th ..... 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