TROJAN & CO. LTD. versus RM. N. N. NAGAPPA CHETTIAR

Citation: [1953] 1 S.C.R. 789 · Decided: 20-03-1953 · Supreme Court of India · Bench: MEHR CHAND MAHAJAN · Disposal: Case Partly allowed

Cited by 3 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

S.C.R. 
SUPREME COURT REPORTS 
789 
determining substantial questions of law involved in 
1958 
the appeal, it nevertheless observed that even on the Atl t-w t , 
f 
. 
ier on 
es °' 
:octs the conclus10ns of the Board were perfectly 
00. Ltd. 
justified and there was no substance in the appeal on 
v. 
merits as well. 
The appellants were not heard at all 
suti Mill 
on merits and it was hardly legitimate for the Labour M•zdoor Union 
Appellate Tribunal sito motu to consider the merits of 
•nd Others. 
the appeal and arrive at a finding in regard to the 
Bhagwati J. 
same. If at all the Labour Appellate Tribunal had 
any jurisdiction in regard to the merits it was incum-
•. 
beut upon it to have heard the appellants in regard 
to the merits before arriving at a conclusion in regard 
to the same. 
The resuH is that this appeal fails and must be dis-
missed with costs. 
Appeal dismissed . 
• 
Agent for the appellant : S. S. Shukla .. 
'rROJAN & CO. LTD. 
v. 
RM. N. N. NAGAPPA CHETTIAR. 
[MEHR CHAND MAHA.TAN and DAS JJ.] 
Contract-Damages-Sale of shares-Sale induced by fra11d-
Jleas11re of damages-Di(ference between price paid and market 
price on date of sale-Fluctuations of market and sudden closure of 
Stock Exchange, effect of-Interest on damaues-Practice-Gonflict 
between pleadings and proof-Decree on alternative claim not set itp 
in plaint-Legality. 
Where a person is induced to l)Urchase shares at a certain 
price by fraud the measure of damages which he is entitled to re· 
cover from the seller is the difference between the price which he 
paid for the shares and the real price of the shares on the date on 
which the shares were purchased. 
Ordinarily the m"rket rate of 
the shares on the elate when the fraud was practised would re-
present their real price in tbe absence of any other circumstance. 
If, however, the market was vitiated or was in a state of !lux or 
1953 
1953 
Trojan tf; Co. 
Ltd. 
V, 
Rm.N.N. 
Nagrtppa 
Chettiar. 
790 
SUPREME COURT REl'ORTS 
[1953] 
p•nic in consequence of the very fact tha.t wa~ fraudulently con-
cealed, then the real value of the share~ has to be determined on 
a consideration of a variety of circumstances, disclosed by the 
evidence led by the parties. 
A firm of sharebrokers sold 3,000 shares to the plaintiff who 
was a constituent of the firm, on the 5th AJ(ril, 1937, at Rs. 77 and 
Rs. 77-4as. per sb'"e without disclosing to the plaintiff the fact 
that the shares were owned by one of the partners of the firm and 
also the fact that they had received telephonic information on that 
day from a member of the Stock Exchange that there was going 
to be a sharp decline in the price of the shares. On the 6th April 
the Stock Exchange Association passed a resolution for closing the 
Exchange on the 8th and 9th April. 
The plaintiff had to sell 
2,000 shares through the defendants on the 20th April at Rs. 47 to 
Rs. 42 per share, and 1,000 shares on the 22nd April at Rs. 42-
Sas. 
The High Court awarded f.he difference between the price 
paid by the plaintiff and the prices fetched on resale as damages. 
On appeal, 
· 
Held, that the prices received at the resale on the 20th and 
22nd April coul
0d not represent the true value of the shares on the 
5th April. 
The real question for determination was what the 
market value would have been on the 5th April of these shares if 
all the buyers and sellers knew that the Stock Exchange was to 
be closed on the 8th and 9th April. 
Held also that the plaintiff was entitled to get interest on 
the amount awarded as damages from the 5th April till the date 
of suit on the principle that where money is obtained or retain-
ed by fraud a court of equity will order it to be returned with 
· interest. 
Johnson v. Rex {[1904] A.O. 817) referred to. 
It is well settled that the decision of a case cannot be based 
on grounds outside the pleadings of the parties and that it is the 
case pleaded that has to be found. 
Where the plaintiff based his 
claim for a certain sum of money on the ground that the defer:d-
ants had sold certain shares belonging to him '>vithout his instruc-
tions, but he was not able to prove that the sale was not authorised 
by him: Held, reversing the deci,,ion of the High Court, that ohe 
plaintiff could not be given a decree for the SU)Il claimed on the 
ground of failure of consideration, as he had not set up any such 
alternative claim in the plaint or even at a later stage when he 
sought to amend the plaint. 
OrvIL AP

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