The main legal point established in the judgment is the entitlement to specific performance of a contract for the sale of shares, compliance with the Defence of India Act, liability for payment of dividends, damages for breach of contract, and payment of interest on the purchase price.

Lord Macdermott.-

These three consolidated appeals are from a decree, dated 22nd September 1947, of the High Court at Bombay (acting in its appellate jurisdiction) which reversed a decree, dated 7th January 1947, of the same Court (acting in its original civil jurisdiction) whereby a suit (No.1086 of 1942) brought by the above named Jamsetji A.H. Chinoy and Messrs. Chinoy and Co. (respondents in the first and second appeals and appellants in the third) was dismissed.

2. This suit was instituted on 24th August 1942, against the above named Edulji F. E. Dinshaw and Bachubai F. E. Dinshaws (hereinafter referred to as "the Dinshaws" as sole defendants. The plaint alleged that the Dinshaws held between them 1,200 A and 1,200 B shares in an Indian company named F.E. Dinshaw Ltd. and had contracted on 8th July 1942, through their agent Shapoorji Pallonji Mistry (hereinafter called "Shapoorji'.) to sell these shares to the plaintiff Jamsetji A. H. Chinoy at the price of Rs. 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 9th September 1942, and on 22nd 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 Rs. 2,94,000 to the first plaintiff, being the amount of a dividend declared by the company on 24th September 1942, in respect of the said shares for the year ending 31st March 1942.

4. Of the additional defendants so joined, four appear to have been struck off the record subsequently and one, Sir Cowasji Jehangir, defendant 77, did not appear and took no part in the proceedings. The remainder may be taken as in the main identical with the appellants in the first appeal. They will be referred to as "the additional appellants." The appellants in the second appeal are the Dinshaws and, as already stated, the plaintiffs, Jamaetji A. H. Chinoy and Chinoy and Co., are the appellants in the third appeal. It was common ground that Jamsetji had no interest in Chinoy and Co., which was a firm of stock brokers carried on by three of his grand nephews in partnership. It was also common ground that the Dinahaws left India in 1941 and were resident in the United States of America and not in India at the beginning of 1942 and all material times thereafter.

5. In the Court of first instance the learned trial Judge (Tendolker J.) held that Shapoorji had authority from both the Dinshaws to enter into the contract alleged but that no such contract had been made. He therefore dismissed the suit. On appeal to the High Court in its appellate jurisdiction this decision was reversed. The Court (Chagla A.C.J. and Bhagwati J.) held that Shapoorji was duly authorised to enter into the contract and that in fact it had been made. As well as challenging Shapoorji's authority and the making of the contract, the defendants had also raised certain other defences which need not now be stated in detail, but which included contentions to the effect that the contract was invalid or unenforceable by reason of failure to obtain the permission of the Reserve Bank of India as required by the Rules made under the Defence of India Act, 1939, particularly Rules 92-A (2) (b) and 93 (2) thereof, and, further, that plaintiff 1, Jamsetji A. H. Chinoy,