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Gujarat High Court
Judgename :S.D.Shah
Dahyabhai Ranabhai Vaghela - Appellant
Versus
Bloom Dekor Ltd. - Respondent
Civil Suit 1 of 1994
Decided On : 04/22/1994
Corporate Law – Companies Act, 1956 – Section 73 (1) – Code of Civil Procedure, 1908 – Order 11 rule 8 – Shares – Equity shares – Suit for declaration and permanent injunction – Prayed for following reliefs in the suit. to hold and declare that the public issue of the deft. No. 1-Company, for equity shares each is void as it is contrary to the provisions of Section 73 (1) of companies Act, 1956; to hold and declare that the company is liable to refund the amount of each subscribers to the companies shares with interest 15%; to pass an order of permanent injunction or in nature of permanent injunction that the trading of the shares of the deft. No. 1-Company with the deft. Nos. 3 and 4 cannot be allowed; be pleased to pass an order of permanent injunction restraining the defendants from using the money subscribed by the plaintiff and other subscribers who have subscribed for public issue of the deft. No. 1- Company – Held, In view of his candour and readiness to realise the possible implication of the way he had come to handle the cases, we think we should drop any further enquiry in the matter – At same time, in view of fact that such litigative resouecefulness in obtaining ex parte orders might in conceivable cases serious and indeed, irreparable injury to corporate business and that there is imminent need to lay down guidelines to prevent indiscriminate ex parte orders, we propose to lay down some general guidelines which will minimize, if not altogether eliminate, such harmful propensities of ex parte orders and their adverse effects on capital market – While legal remedies for protection from exploitation of gullible investors to unscrupulous promoters are appropriate and permissible, however, ex parte orders on bona fide capital venture could cause serious and irremediable mischief – It is true that the Supreme Court of india has decided not to take any serious view of the matter as of 3rd of February 1992 – It has also accepted unconditional apology of Advocate Tarun V. Shah – However, matter does not rest there – It is thereafter that the present suit is filed in Court of Civil Judge, J. D. , Chotila. It is also pertinent to note that averments contained in plaint and application for temporary injunction are closely parallel to the earlier suits preferred – He has further submitted that case of this nature, a serious view must be taken and action should also be taken against advocate as well as against the plaintiff – It may not be permissible for me in absence of any direct involvement of Advocate Tarun V. Shah in institution of this suit to hold that he was instrument in filing suit at Chotila court – Since his unconditional apology is accepted by Apex Court of country, I also would desist from taking any action except observing that his action deserves severe condemnation and denounciation – Plaintiff undoubtedly is guilty of abuse of process of court and since 1 have already imposed liability to pay cost \to defendant No. 1 on plaintiff, I do not intend to take any other action against plaintiff – Suit dismissed.
( 1 ) THE plaintiff Dayahabhai Ranabhai vaghela claiming to be resident of Anand park has filed this suit under Order 11 rule 8 of the Code of Civil Procedure for declaration and permanent injunction. He has prayed for following reliefs in the suit. (A) to hold and declare that the public issue of the deft. No. 1-Company, namely, Bloom Dekor Limited dt. 9-9- 1993 for equity shares 23,65,000/- of Rs. 10/- each is void as it is contrary to the provisions of Section 73 (1) of the companies Act, 1956; (B) to hold and declare that the company is liable to refund the amount of each subscribers to the companies shares with interest 15%; (C) to pass an order of permanent injunction or in nature of permanent injunction that the trading of the shares of the deft. No. 1-Company with the deft. Nos. 3 and 4 cannot be allowed: (D) be pleased to pass an order of permanent injunction restraining the defendants from using the money subscribed by the plaintiff and other subscribers who have subscribed for the public issue of the deft. No. 1-Company dated 9-9-1993. The suit is filed on 5th of March 1991. Along with the suit, he has tendered an application at Exh. 6 for temporary injunction under Order 39 Rules-1 and 2 of the Code of Civil Procedure and has prayed for following reliefs: (A) be pleased to pass an order of injunction directing the defendant Nos. 3 and 4, namely, the Ahmedabad Stock exchange and the Bombay Stock exchnge not to allow the trading of the shares of the Bloom Dekor Limited, i. e. defendant No. 1 herein; (B) be pleased to pass an order of injunction restraining the deft. No. 1- company as tousing of the monies (sic.) of the subscribers in the public issue of bloom Dekor Limited dated 9-9-1993.
( 2 ) THE trial Court passed ex parte order of temporary injunction, the operative portion of which reads as under:"plaintiff is successful in establishing his prima facie case. Prayers 9a and B as prayed for in plaintiffs Application of exh. 6 are hereby granted and temporary injunction in the said terms is granted against the defendants upto 15th of march 1991. It is also directed to issue urgent show-cause notice to the defendants. It is also directed that plaintiff should follow the rules of Order 39 of Civil Procedure Code strictly. Moreover, by 15th of March 1994, it is directed that plaintiffs shall produce reliable documentary evidence to establish that he is shareholder or debenture-holder of the company, thus, irreparable loss and balance of convenience are also in favour of the plaintiff and therefore temporary injunction upto 15th of March 1994, is granted. Accordingly, it is directed that immediately urgent show-cause notice should be issued to the defendants. Today dated 5-3-1994, aforesaid order is declared in open court (Civil Judge, J. D. , Chotila.)"
( 3 ) ON 15th of March 1994, defendant no. 1-Bloom Dekor Limited has appeared and has filed application at Exh. 14 objecting against extension of ex parte order of injunction and also stating in such application that six of the suits of similar nature have been preferred in the name of different persons in different courts of Gujarat and that defendant No. 1 has approached the Supreme Court and that Honourable the Supreme Court has stayed the orders of the trial Court and therefore ex parte order granted by the trial Court should not be extended.
( 4 ) DESPITE aforesaid application at Exh. 14 given by the defendant No. 1- company, the trial Court proceeded to pass order below Exh. 14 and Exh. 17 (an application given by the plaintiff for extension of temporary injunction ). By the said order, the trial Court noted that though defendant No. 1 has objected to extension of temporary injunction, it has not filed its reply to the application for temporary injunction and it has prayed for some time. It also noted that though advocate of plaintiff has shown readiness and willingness of hearing of the application at Exh. 6, he has also applied for adjournment to
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