LexBLOOM DEKOR LTD. ETC. ETC. versus SUBHASH HIMATLAL DESAI AND ORS. ETC.
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A BLOOM DEKOR LTD. ETC. ETC. v. SUBHASH HIMATLAL DESAI AND ORS. ETC. SEPTEMBER 9, 1994 (M.N. VENKATACHALIAH, CJ., P.B. SWANT AND S. MOHAN, JJ.] Companies Act, 1956 : Section$ 33, 73-Public Issue· of shareS-Allot- ment of Shares-Guidelines-Pennission to list the shares-Approval by Stock Exchang~Suits filed at various Cowts ~nterim orders passed-Jurisdiction C of the Courts-Held: Frivolous and Vexatious proceedings filed in Courts having no jurisdiction in the matter-Transfer of cases to Competent Court- Orderetl-To be tried along with pending suit-Conduct of the litigants in filing vexatious and frivolous proceedings-Disapproved and each of them ordered . to pay Rs. 10,000 to the order party. D The appellant company went for public issue of 23,65,000 equity shares (of which 4,00,000 equity shares were reserved for NRis) at Rs. 10 each for cash at par. The company complied with the necessary formalities. The issue was over subscribed. " E A group of persons entered into large scale out of the ring transac- . tions to mak~ good their speculative losses once company shares were listed and traded in the market. They Indulged in frivolous and vexatious litigation by filing various petitions in different courts with a view to defeat or delay their liability in illegal speculative transaction in shares. The ground on which the said suits and petitions came to.be filed was that the F appellant company did not obtain the necessary permission from th:! Stock Exchanges concerned. Certain interim orders came to be passed against which the present appeals have been preferred. The Transfer Petition relates to transfer of the suits pending at Morvi, Prantij and Baroda Civil Courts to the Gujarat High Court or the Ahmedabad City Civil Court. G Disposing of the matters, this Court HELD : 1. The respondends have been clearly indulging in judicial adventurism. A string of suits came to be filed one after the other. Late orders were obtained that too on applications filed without notice to the H appellant. Unfortunately, the courts below wittingly or otherwise have 322 BLOOMDEKORLID. v. S.H.DESAl[MOHAN,J.] 323 aided this judicial adventurism without even determining whether they had A jurisdiction. (330-D] 2.1. By "cause of action" it is meant every fact, which if traversed, it would be necessary for the plaintiff to prove in order to support his right to a judgment of the Court. In other words, a bundle of facts which it is necessary for the plaintiff to prove in order to succeed in the suit. (330-E] 2.2. In the instant case, if the matter is viewed as a contract no part B of cause of action has arisen within the jurisdiction of Morvi Court. The same principle will be applicable to the suit before the Civil Court (Senior Division), Baroda; more so, in the light of Explanation to Section 20 of the C Companies Act the appellant company having its registered office in Ahmedabad. Therefore, one could expect the court to examine these aspects before granting an interim order. (331-C] A.K Gupta v. Damodar Vally Corporation, AIR (1967) SC 96 relied D on. 3. The main charge in the various suits and the writ petition before the High Court was that Ahmedabad and Bombay Stock Exchanges men- tioned in the prospectus of the appellant company have not granted. permission for the shares or debentures to be dealt with in Stock Exchange E as contemplated under Section 73 of the Act. For making this statement reliance is placed on three letters written to a stock broker on 13.12.93, 9.12.93 and 24.12.93 by the Ahmedabad and Bombay Stock Exchanges respectively. Barring the statement that such information obtained from reliable sources, the source of information is not specified. The court had p not even cared to examine the aspect whether the ac~al listing under Section 73 of the Act is necessary. [331-D, E] · 4. It is not difficult to perceive that all these actions are nothing but attempts by one causes of persons to baulk the appellant company from issuing or dealing with shares or debentures; the plaintiffs or the G petitioner in the writ petition having little stake. It is not a matter of coincidence that the same Advocate had appeared in all the case at some stage or other. The statement before the High Court during the hearing of the writ petition that the civil court bad not been moved for the same relief was false and was clearly intended to mislead the court. [335-D, EJ H
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