TMI Blog2009 (4) TMI 1002X X X X Extracts X X X X X X X X Extracts X X X X ..... for long and the defendant No.1 has been financing the businesses of the plaintiff No. 1 from time to time; that the plaintiff No. 1 in September, 2007 was under tremendous financial pressure and in need of funds and approached the defendants No. 1 2 in first week of October, 2007 for financial assistance to the tune of ₹ 1 crore for a period of one year; that the defendant No. 1 expressed inability to advance any money himself but agreed to arrange for the same from his associates; that the defendants No. 1 2 subsequently informed the plaintiff No. 1 that the requisite loan could be arranged in two installments and subject to pledge of shares of the plaintiff No. 6 company which are listed with the Bombay Stock Exchange as security against loan; that the plaintiff No. 1 being in urgent need of monies, agreed to the said suggestion; however, the defendant No. 2 subsequently informed that the shares to be so delivered/pledged of the plaintiff No. 6 company should be of the value of four times the value of the loan to take care of the eventuality of fall in shares prices; that after negotiations, it was agreed that 15.4 lacs shares of the plaintiff No. 6 company which were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sell the shares in the open market leading the plaintiffs to institute the present suit. In the prayer paragraph in the plaint, the reliefs are claimed with respect to shares of M/s. Bhartiya Global Infomedia Ltd. (BGIL) which in the memo of parties is shown as plaintiff No. 7. Thus while averments in the body of the plaint are with respect to pledge of shares of plaintiff No. 6 namely BGIL Films Technologies Ltd., in the prayer paragraph and in some other paragraphs the shares pledged are referred to as of M/s. Bhartiya Global Infomedia Ltd. plaintiff No. 7. 6. Four sets of written statements were filed. One by the defendants No. 1, 2, 6 8, second by the defendant No. 9 and third by the defendant No. 3 and the fourth by the defendants No. 4, 5 7. The first written statement denies that there was any loan transaction between the parties. It is however stated that the plaintiffs being in urgent need of monies were wanting to sell the shares of the plaintiff No. 6 namely M/s. BGIL Films Technologies Ltd.; that the shares had no purchasers and the price of ₹ 5.5 per share for the first lot, of ₹ 5 per share for the second lot and ₹ 4 per share for the thir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellants to the respondents in any manner whatsoever. Thereafter when the matter came up before this Court the said order was continued till varied and remains in force till date. 10. The counsel for the defendant No. 3 has contended that the relief claimed by the plaintiffs in the suit was with respect to shares of the plaintiff No. 7 M/s. Bhartiya Global Infomedia Ltd. and the interim relief granted in appeal could only be in reference to the prayer in the plaint and the plaintiffs if permitted to now amend, the plaint and the application for interim relief to make the prayer with respect to the shares of plaintiff No. 6 M/s. BGIL Films Technologies Ltd. would tantamount to changing the nature and character of the suit. It is argued that the same is impermissible as held in Sumitra Sahai where amendment changing cause of action was declined and in Kesho Lal Kapur where amendment changing the subject matter of the suit was declined. Emphasis was placed of Capricorn One where the application for amendment to change the address/description of the property with respect whereto suit was filed was dismissed. 11. In my view, none of the judgments cited above are applicable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r affairs in a manner so as to in a position to repay the loan with interest only after one year and were then not in a position to repay the loan. Accordingly, not finding equities in favour of the plaintiffs to on the one hand seeking to restrain the defendants from dealing with the shares while on the other hand not clearing the amount which according to the plaintiffs also were payable to the defendants, no ex-parte relief was granted in favour of the plaintiffs. During the course of hearing on 20th October, 2008 the senior counsel for the plaintiffs had informed that the period of one year for which the loan had been taken having expired, the plaintiffs were ready and willing to refund the monies along with interest and/or to deposit the same in this Court subject to the defendants also depositing the shares in this Court. The said proposal however did not find favour with the counsel for the defendants and it was recorded that the effect thereof shall be considered at appropriate stage. Lengthy arguments spanning over seven days have been addressed to demonstrate the nature of the transaction between the parties. I however, feel the following to be relevant for the purposes o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the defendants at 1/3rd of the price or that there were other considerations between the parties with respect to the shares and which neither party is willing to bring before the court. Be that as it may, the same requires inquiry. C. Even if the price of shares now is not considered to be ₹ 16 per share, unless the price had increased manifold, it would not make sense for the defendants to contest the suit if the price had been the same as at which they claim to have acquired the shares, especially when plaintiffs are even ready to pay interest at 3% per month thereon. D. I find denial in the written statement of the defendants of the affairs of the plaintiff No. 6 company also to be not bonafide. Normally, if the defendants were purchasing the shares of the plaintiff No. 6 company in a off market transaction for the reason of there being otherwise no buyers for the shares, in spite of the same being listed on the Stock Exchange, the defendants would have made a thorough inquiry of the affairs and prospects of business of the plaintiff No. 6 company. E. The admitted documents between the parties being the document dated 8th October, 2007 is as under: To, M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h counsels have cited the SEBI Regulations to buttress the transaction pleaded by them respectively. The senior counsel for the plaintiffs has argued that disclosures made by the plaintiffs from time to time except one (in which mistakenly transaction is shown as outright sale) the transaction has been consistently disclosed as of giving of shares as security. It is further argued that though the total volume of shares so transacted was over 25% of the capital of the plaintiff No. 6, had the same been sale, the defendants would have disclosed it under the takeover code; the defendants documents showed disclosure by the defendant No. 6 alone of acquisition of 7% shares and not of the entire volume. It is argued that the defendants as per their admission were acting in concert and if the transaction had been sale, were required to make such declaration. Reliance is also placed on the valuation of the shares by Price Waterhouse Coopers (PWC). It was further the contention of the senior counsel for the plaintiffs that under the Depositories Act only the pledge of shares is to be intimated and which also is directory and not mandatory; but equitable mortgage of shares was not required t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relying upon the forged document being not entitled to the discretionary relief of injunction. The counsel for the defendant No. 9 argued that the allegations against his client were vague and his client was not connected with the entire transaction subject matter of the suit. 17. The senior counsel for the plaintiffs in rejoinder has furnished explanations for the discrepancy in shares on the basis whereof argument of forgery had been raised. 18. I do not deem it appropriate to at this stage of interlocutory relief, delve into depth with each of the submissions aforesaid. All that can be said at this stage is that the matter requires trial and the case of the plaintiffs is not found to be such which can be rubbished at this stage so as to disentitle the plaintiffs to any interim protection. I have satisfied myself as to the ingredients of irreparable injury and balance of convenience also. The shares subject matter of the suit constitute over 25% of the share capital of the plaintiff No. 6 company. If the same are permitted to be dealt with during the pendency of the suit, it would tantamount to destabilizing the control and management of the plaintiff No. 6 company. I canno ..... X X X X Extracts X X X X X X X X Extracts X X X X
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