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HIGH COURT OF CALCUTTA
U. C. Law
SRI GOPAL JALAN AND CO. - Appellant
Versus
SINGHANIA BROS. AND ANR. - Respondent
Suit 1171 Of 1948
Decided On : NOVEMBER 10, 1964
STOCK EXCHANGE ASSOCIATION - JURISDICTION - DISPUTE BETWEEN MEMBERS - DECISION OF COMMITTEE - FINALITY - SUIT TO CHALLENGE DECISION - MAINTAINABILITY - NOTICE TO STOP BUSINESS - EFFECT - RATIFICATION OF TRANSACTIONS - BIAS - NATURAL JUSTICE - JURISDICTION OF COURT.
Fact of the Case:
Plaintiff, a member of the Calcutta Stock Exchange Association, filed a suit challenging the decision of the association's committee allowing the appeal of defendant No. 1 against the decision of the sub-committee disallowing defendant No. 1's claim against the plaintiff. The plaintiff contended that the decision was illegal, invalid, and not binding on the plaintiff due to various grounds, including bias, lack of hearing, and violation of natural justice.
Finding of the Court:
The court found that the decision of the committee was final and binding on the plaintiff under the association's articles and bye-laws. The court held that the plaintiff had submitted to the jurisdiction of the association's complaints sub-committee and had not raised any objection to the filing of the case against it. The court also found that the plaintiff had ratified, adopted, and implemented the transactions in question, which were entered into by the plaintiff firm and not by Sri Gopal Jalan personally.
Issues: 1. Is the suit maintainable? 2. (a) Were the transactions mentioned in paragraphs 2, 4, 5 and 6 of the plaint entered into by Sri Gopal Jalan in his capacity and not by the firm of Sri Gopal Jalan and Co. through Sri Gopal Jalan as its senior partner? 2 (b) Is Sri Gopal Jalan and Co. bound by the transactions mentioned in the said paragraphs 2, 4, 5 and 6 of the plaint? 3. Did the plaintiff ratify, adopt and implement the transactions put through by Sri Gopal Jalan as alleged in paragraph 3 of the written statement of the defendant No. 1? 4 (a) What was the effect of the notice dated March 18, 1944 mentioned in paragraph 8 of the plaint? (b) Did the plaintiff waive the said notice dated March 18, 1944 and did not act upon the said notice? 5. Did Sri Gopal Jalan act as a senior partner of the plaintiff firm and/or was allowed to act as such by its partners as alleged in paragraphs 1 and 4 of the written statement or defendant No. 1? 6. Is the decision of the full committee of the defendant No. 2 dated April 1, 1948 illegal or invalid and not binding upon the plaintiff for the reasons alleged in paragraph 14 of the plaint or any of them? 7. Is the plaintiff entitled to raise any objection alleged in paragraph 14 of the plaint? 8. Has this Court jurisdiction to entertain and try this suit? 9. Does the plaint disclose any cause of action? 10. To what relief, if any, is the plaintiff entitled?
Ratio Decidendi: The court held that the suit was not maintainable as the decision of the committee was final and binding on the plaintiff under the association's articles and bye-laws. The court also held that the plaintiff had ratified, adopted, and implemented the transactions in question, which were entered into by the plaintiff firm and not by Sri Gopal Jalan personally. The court further held that there was no evidence to support the plaintiff's allegations of bias, lack of hearing, or violation of natural justice.
Final Decision: The suit was dismissed with costs.
( 1 ) THIS is a suit for a declaration that the decision and resolution of the defendant association and/or its Committee dated 1st April 1948 is void and of no legal effect and does not bind the plaintiff in any way and also for an injunction restraining the defendant association, their servants and agents from enforcing or giving effect to the said decision and resolution in any way. The case made out in the plaint is as follows:
( 2 ) THE plaintiff and the defendant No. 1 are members of the Calcutta Stock Exchange Association Ltd. (the defendant No. 2) to be referred to hereafter as the said association. The plaintiff's case is that on 24 November 1943 Sri Gopal Jalan a member of the plaintiff firm in his individual capacity sold 4,000 shares in Indian Iron and Steel Co. Ltd. to the defendant No. 1 at Rs. 35/12/- per share and a further 4,000 shares in the said company at Rs. 35/11/-per share. On 19th March 1944 out of the said 8,000 shares Sri Gopal Jalan bought back 6,000 shares at Rs. 38/6/- per share and the remaining 2,000 shares at Rs. 38/11/- per share. Thereafter on 18th March 1944 the plaintiff firm sent a letter to the defendant association intimating that it was stopping business from that date and giving notice that any member of the association doing business with any of the members of the plaintiff firm would do so at his own risk until further notice to the contrary, and requested the Secretary of the defendant association to put up the said letter on the notice board for the information of members. In paragraphs 4, 5 and 6 of the plaint certain other transactions in different shares with the defendant No. 1 are mentioned and it is stated that all these transactions were also entered into by Sri Gopal Jalan in his personal capacity and the plaintiff firm was in no way concerned with them. By its letter dated 18th February 1946 the defendant No. 1 filed a complaint with the Secretary of the defendant association claiming Rs. 21,885/- and Rs. 5,150/ for difference from the plaintiff in respect or the transactions mentioned hereinbefore and requested the defendant association to take steps for the immediate realisation of its dues with interest. Copies of two original bills and a cheque for Rs. 16/- as committee fee was enclosed with this letter. On 27th February 1946 the plaintiff wrote to the Secretary of the defendant association stating that there was no transaction between the defendant No. 1 and the plaintiff in their records,--these transactions were the personal private transactions of Sri Gopal Jalan with which the defendant association could not deal. On 27th May 1947 the plaintiff wrote to the Secretary of the defendant association requesting that Sagarmal Nathuni one of the members of the defendant association should not sit on the sub-committee to be constituted for decision of the dispute between the plaintiff and the defendant No. 1, as he was on bad terms with the members of the plaintiff firm. On 16th March 1948 the sub-committee of the defendant association disallowed the claim of the defendant No. 1 against the plaintiff and the next day communicated the said decision to the parties. On 23rd March 1948 the defendant No. 1 preferred an appeal against the said decision of the subcommittee dated 16th March 1948. On 1st April 1948 the committee of the defendant association allowed the appeal of the defendant No. 1 and set aside the order of the sub-committee dated 16th March 1948. This decision was also duly communicated to the parties the next day the 2nd of April 1948. The plaintiff states that the decision of the 1st April 1948 is illegal, invalid and not binding on the following grounds:-- (a) Sagarmal Nathuni should not have sat on the committee which purported to allow the appeal of the defendant No. 1 as he was a very influential person and the other members of the committee were considerably influenced by him in their decision. (b) The defendant association did not give any
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