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Laxmidas N. Madhvani Vs. Madhvani Private Ltd. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtMumbai High Court
Decided On
Case Number A.O. No. 461 of 1979
Judge
Reported in(1986)88BOMLR308
AppellantLaxmidas N. Madhvani
RespondentMadhvani Private Ltd.
Excerpt:
bombay court - fees act (bom. xxxvi of 1959), sections 6(iv)(j), 6(iv)(ha); schedule i, articles 1 and 7 - suits valuation act (vii of 1887) [as amended by maharashtra act iv of 1960] section 8--companies act (i of 1956), sections 69, 75--suit for declaration that-purported allotment of sharers by certain private limited company in favour of certain shareholders was void with further prayer for order to deliver up share-certificates to the company and consequential relief of injunction not to act on purported allotment- court-fees for suit whether payable under section 6(iv)(ha) or section 6(iv)(j)--consequential relief if for allotment of shares to plaintiff--effect on court-fees--allotment of shares by private limited company whether amounts to sale of shares--two or more appellants.....r.a. jahagirdar, j.1. this appeal is directed against the order dated september 24, 1979 passed by a judge of the city civil court at bombay returning the plaint in suit no. 6769 of 1978. the suit had been filed by the appellants, hereinafter referred to as the 'plaintiffs'. the first respondent in this appeal was the first defendant in the suit. it is a private limited company of which the plaintiffs are admittedly the shareholders. authorised capital of the company is rs. 5 lakhs divided into 5,000 shares of rs. 100 each. at the relevant time, however, subscribed capital of the company was only rs. 10,200 consisting of 102 shares of rs. 100 each. the plaintiffs hold 74 shares while defendants nos. 2 to 4 together hold the balance of shares.2. on september 11, 1978, the first defendant.....
Judgment:

R.A. Jahagirdar, J.

1. This appeal is directed against the order dated September 24, 1979 passed by a Judge of the City Civil Court at Bombay returning the plaint in Suit No. 6769 of 1978. The suit had been filed by the appellants, hereinafter referred to as the 'plaintiffs'. The first respondent in this appeal was the first defendant in the suit. It is a private limited company of which the plaintiffs are admittedly the shareholders. Authorised capital of the company is Rs. 5 lakhs divided into 5,000 shares of Rs. 100 each. At the relevant time, however, subscribed capital of the company was only Rs. 10,200 consisting of 102 shares of Rs. 100 each. The plaintiffs hold 74 shares while defendants Nos. 2 to 4 together hold the balance of shares.

2. On September 11, 1978, the first defendant issued further 1,020 shares and allotted all of them to defendants Nos. 2 to 4 in equal shares. The plaintiffs say that this action of the first defendant in issuing additional shares to defendants Nos. 2 to 4 is illegal and void as being contrary to Article 35 of the Articles of Association of the first defendant company. Article 35 on which the plaintiffs place reliance is as follows: -

35(1) New shares to he offered to members: When the Directors decide to increase the capital of the Company by the issue of further shares such shares shall be offered to the members in proportion to the existing shares held by each member (irrespective of class) and such offer shall be made by Notice specifying the number of shares to which the member is entitled, and limiting a time within which the offer, if not accepted, will be deemed to be declined, and after the expiration of such time, or on receipt of any intimation from the member to whom such notice is given, that he declined to accept the shares offered, the Directors may dispose of the same when and in such manner as they think most beneficial to the Company.

Basing the cause of action upon the alleged contravention of Article 35(1) of the Articles of Association, the plaintiffs filed the suit on December 20, 1973. The plaintiffs pleaded in the suit that the first defendant while issuing additional shares could not allot the same to any other party without complying in the first place with the requirements mentioned in Article 35(1). The plaintiffs have given in the plaint a brief history relating to the holdings of the different shareholders in the share capital of the company. It is, however, not necessary to notice the same except to mention that there was provision in the Articles of Association for retaining the majority holdings by the plaintiffs, if they so desired.

3. In the plaint, the plaintiffs prayed for a declaration

That the purported issue of 1,020 shares of Rs. 100/- each to the Defendants 2 to 4 on September 11, 1978 is void, illegal and of no effect whatsoever.

It was also prayed that defendants Nos. 2 to 4 be directed to deliver up and surrender share certificates, it' any, issued by the first defendant company in respect of the aforesaid 1,020' shares for cancellation by the first defendant company. An injunction restraining the defendants from acting in any manner on the basis of the issue of the said 1,020 shares was also prayed for. It should be noted that the plaintiffs did not ask for a relief of compelling the defendant company for allotting the shares to them. Their grievance was that the shares could not be allotted to some other persons without in the first place offering the same to the plaintiffs.

4. In the suit the plaintiffs took out a Notice of Motion bearing No. 114 of 1979 for interim relief of injunction restraining the defendants from holding the annual general meeting of the company which was sought to be held on December 30, 1978 and also restraining the defendants, pending the hearing and final disposal of the suit, from in any manner acting on the basis or implementing the issue of the said 1,020 shares.

5. This Notice of Motion was resisted by the defendants by contending that the City Civil Court at Bombay, whose pecuniary jurisdiction extends only upto Rs. 50,000, did not have jurisdiction to entertain the present suit because the subject-matter of the present suit was over Rs. 1 lakh. Since admittedly the share of the defendant company was valued at Rs. 100 and since the plaintiffs were challenging the allotment of 1,020 shares of the value of Rs. 100 each the defendants contended that the subject-matter of the suit was of the value of Rs. 1,02,000. The parties were heard by the learned Judge of the City Civil Court on the preliminary question of jurisdiction. The learned Judge held that looking to the value of the shares the subject-matter of the suit was capable of being valued at Rs. 1,02,000. The learned Judge thought that the plaintiffs were challenging the sale of the shares of that value and, therefore, the subject-matter of the suit was over Rs. 1 lakh. The learned Judge then proceeded to hold that the relevant provision of the Bombay Court Fees Act applicable to the suit was Section 6(iv)(ha), which is as follows: -

In suits for declaration that any sale, or contract for sale or termination of contract for sale, of any moveable or immoveable property is void--one-fourth of ad valorem fee leviable on the value of the property;

As mentioned in the said provision, the learned trial Judge held that the Court fee that would be payable by the plaintiffs was one-fourth of the ad valorem fee leviable on Rs, 1,02,000.

6. Proceeding further, the learned Judge held, rejecting the plaintiffs' contention, that Section 6(iv)(j) of the Bombay Court-fees Act, which is as follows:

In suits where declaration is sought, with or without injunction or other consequential relief and the subject-matter in dispute is not susceptible of monetary evaluation and which are not otherwise provided by this Act - ad valorem fee payable, as if the amount or value of the subject-matter was three hundred rupees;

did not apply to the facts of the present case. Since he had held that the value of the subject-matter of the suit was more than Rs. 1 lakh beyond the pecuniary jurisdiction of the City Civil Court, he ordered the plaint to be returned for presentation to the proper Court.

7. It is against this order that the present appeal has been preferred under Order 43(o) of the Code of Civil Procedure. The plaintiffs insist that Section 6(iv)(/) of the Bombay Court-fees Act, hereinafter referred to as 'clause (j)', applies and in view or the provisions contained in Section 8 of the Suits Valuation Act, as amended by Maharashtra Act IV of I960, the value of the Court fee and jurisdiction will be the same. Section 8 of the Suits Valuation Act. as applicable to Maharashtra, is as follows: -

Where in suits other than those referred to in paragraphs (v) and (vi) and Clause (d) of paragraph (xi) of Section 6 of the Bombay Court-fees Act, 1939, the Court fees are payable ad valorem under the Bombay Court-fees Act, 1959, the value as determinable for the computation of Court fees and the value for purpose of jurisdiction shall be the same.

8. In this appeal, M/s, Hooseini Doctor & Company had riled their appearance for all the appellants, who are three in number. The appeal was admitted on October 6, 1979. Sometime later M/s. Payne & Co., filed their appearance for appellant No. 2 only. At the time of final hearing, Mr. Raghavayya instructed by M/s. Hooseini Doctor & Company appeared for appellants Nos. 1 and 3. Mr. Chinoy instructed by M/s. Payne & Company appeared for appellant No. 2. I found that this was highly irregular. In one appeal though filed by several appellants, only one advocate can appear for all the appellants. Their grievance is common; their complaint is the same; the relief claimed by them is the same. They would be naturally attacking the judgment appealed from on common grounds. If they had conflicting interests they would not have, naturally, preferred a single appeal. They would have preferred two or more appeals. If different parties are affected by a judgment given by the trial Court in different manner, then naturally they would be preferring different appeals through different advocates. In the instant case, all the appellants were the plaintiffs in the trial Court. They have all been aggrieved in the same manner by the order passed by the trial Court. They, therefore, rightly preferred a common appeal. I do not see how two advocates can appear in support of a single appeal - one for some of the appellants and the other for the remaining, When such a thing happens, that is when two or more advocates appear for the different appellants in the same appeal, conflicting and contradictory arguments can be advanced. This will create an absurd situation. They in fact cannot be allowed to advance such arguments because if their interests are conflicting they cannot be the appellants in the same appeal.

9. Just as two or more co-plaintiffs joining in the same suit cannot be allowed to be represented at the same time by more than one advocate, two or more appellants in the same appeal cannot be allowed to be represented by more than one advocate. A situation similar to the present one was noticed by this Court in Venkatrao A. Pai & Sons v. Narayanlal : AIR1961Bom94 . It has been laid down in the said judgment that where more persons than one join as co-plaintiffs in one action they should all be jointly represented by one or more counsel.

Each one of the plaintiffs or each one of the defendants, as the case may be, is not entitled to appear, act and plead by his own advocate. However, where different advocates appear for different plaintiffs or different defendants whose defence is set out in one common written statement, the Court may under Order I Rule 11 of the Code of Civil Procedure direct any of these advocates to be in charge of the case for all the plaintiffs or the defendants, as the case may be.

The reason for insisting upon the same advocate appearing for all the appellants in one appeal is that in a further appeal, if any, the grievance against the order passed in this appeal must be specific. In the further appeal the appellants cannot be allowed to take conflicting grounds. When an appeal is filed, whether on behalf of one or more appellants, it pre-supposes that it is one appeal to be presented through and supported by one advocate for all the appellants. I have noticed that similar irregular practice is often followed even in criminal matters. This has been taken note of by a Division Bench of this Court in Bhaskar Pandit Kadam v. State of Maharashtra : (1984)86BOMLR467 . It has been pointed out therein that whenever there is one appeal irrespective of the number of the appellants, only one advocate can appear in support of the appeal. Two advocates cannot appear for two different appellants in the same appeal.

10. However, when one or more of the appellants who have already preferred one appeal wish to engage a different advocate or to otherwise separate their case from the remaining appellants, the correct procedure for them to follow is to make an application for separating their appeal and to file a memorandum of appeal enumerating, their specific grounds of objection to the decree appealed from. In the said memorandum of appeal they should mention as respondents those appellants from whom they have parted company and also in the application they should pray for showing himself or themselves as respondent/s in the appeal of those appellants from whom he or they have separated. On such an application being granted, the additional memorandum of appeal will be separately numbered and the hearing of both the appeals can proceed being supported by different advocates. When this procedure is followed, there is no fresh appeal; the existing appeal is only split up. Therefore, there should be no' bar of limitation. The office henceforth should not accept the Vakalatnama of any advocate who intends to file his appearance for some only of the appellants in a pending appeal. When such a Vakalatnama is presented it should be notified under objection and the procedure pointed out by this judgment and by the judgment in Bhaskar Pandit Kadam's case should be insisted upon.

11. However, considering the facts and circumstances of this case I thought it fit to hear both the advocates appearing before me, though I have treated Mr. Chinoy as the advocate in charge of the appeal. There is also provision in Rule 2 of Chapter XXXII of the Bombay High Court Appellate Side Rules, 1960 empowering the Court, on application, to allow two advocates to be heard on behalf of any one of the parties.

12. The main question to be decided is whether Clause (j) applies to the facts of this case. As the provision contained in Clause (j) itself shows, it applies only if no other provision under the Bombay Court-fees Act applies. Mr. D.S. Parikh, the learned advocate appearing for the defendants, has insisted that Section 6(iv)(ha) of the Bombay Court-fees Act, hereinafter referred to as 'clause (ha)', applies to the present case considering the pleadings and the prayers in the plaint. If this is so, Clause (j) will not obviously apply. Mr. Parikh further mentions, and he is right in saying so, that the value of any consequential relief is totally irrelevant in a suit for setting aside a sale. If the plaintiffs have prayed for a declaration that the sale of 1,020 shares of the first defendant company in favour of defendants Nos. 2 to 4 is void for reasons mentioned by them, the further consequential relief claimed by them in the suit does not take suit out of the provisions of Clause (ha). Once it is a suit for a declaration that any sale is invalid irrespective of whether any consequential relief is claimed or not, that suit must necessarily be covered by Clause (ha).

13. Reliance which has been placed by the plaintiffs on Jafferali v. S.R. Dossa & Co. (1967) 70 Bom. L.R. 359 is, according to Mr. Parikh, misplaced. In that case the plaintiffs had prayed for a declaration that a deed of assignment was void as against the plaintiffs and other creditors of defendant No. 1 firm. This Court held that the subject-matter of the suit was not the property comprised in the deed of assignment which was to be set aside, but was the relief by way of a declaration, namely a declaration that the deed of assignment ,was void as against the plaintiffs. This Court further held that the property comprised in the deed of assignment could not be the subject-matter of the suit because if the plaintiffs succeeded in the suit they did not get that property or any part of it. It did rot become available to them until they have proved their respective claims in independent litigations and perhaps not even then. Mr. Parikh, however, is justified in saying that when Jafferali's judgment was delivered relying upon an earlier judgment of this Court, Clause (ha) as mentioned above was not on the statute book. The only clause under the Court-fees Act which was applicable was Clause (/'). However, Clause (ha) has been placed on the statute book by Maharashtra Act 9 of 1970. After this it is not open to contend that a suit for a declaration that any sale is void can fall under Clause (j) for the simple reason that Clause (j) will not apply to any suit which falls under any other provision of the Court-fees Act. Since a suit for declaration that the sale of any moveable or immoveable property is invalid must necessarily fall under Clause (ha), the applicability of Clause (j) is ruled out. It would be legitimate to presume that the legislature knew the law as existing prior to its amendment and proceeded to make a change. The conclusion of this discussion is that whenever there is a suit for a declaration that a sale of moveable or immoveable property is void, irrespective of whether any consequential relief is claimed or not, it must necessarily come under Clause (ha) and not under Clause (j).

14. A suggestion was made on behalf of the plaintiffs that even then the value of the subject-matter of the suit would be less than Rs. 50,000. The argument was that under Clause (ha) the Court fee which is payable is one-fourth of the ad valorem fee leviable on the value of the property. Even if it is held that in the present case the value of the property is Rs. 1,02,000, one-fourth of this would be Rs. 25,500. Therefore it is suggested that the value of the subject-matter of the suit also should be held to be Rs. 25,500, which is clearly within the competence of the City Civil Court. The argument, in my opinion, is highly fallacious. What is provided in Clause (ha) is the amount of the Court tee that is to be paid; not the valuation of the subject-matter of the suit for the purpose of jurisdiction. Correctly understood, Clause (ha) says that for the purpose of calculating Court fee in a suit for a declaration that any sale of immoveable or moveable property is void, one must first calculate the value of the property and thereafter calculate the ad valorem fee that is payable ' on that value of the property and actual payment should be made to the extent of one-fourth of the ad valorem fee so calculated. The value of the subject-matter of the suit for the purpose of jurisdiction has to be determined totally independently. In my opinion, therefore, merely because under Clause (ha) one-fourth of ad valorem fee is payable on the value of the property it does not mean that valuation of the property for the purpose of jurisdiction should be one-fourth of the total value.

15. In some cases, undoubtedly, value of the subject-matter and value for the purpose of Court fee can be the same. In fact it is so provided under Section 8 of the Suits Valuation Act as applicable to the State of Maharashtra. The said provision has already been reproduced above. Clause (ha) is not one of those suits mentioned in Section 8. Therefore, a suit for a declaration as envisaged in Clause (ha) will have to be valued on the basis of the subject-matter for the purpose of jurisdiction.

16. It has been urged, however, on behalf of the plaintiffs that in the instant case the suit is not for a declaration that a sale is void because according to Mr. Chinoy the allotment of shares in favour of defendants Nos. 2 to 4 is not a sale at all. Most of the debate that took place before me centred on this question, namely whether allotment of shares by a company in favour of one or another person can be said to amount to sale. Mr. Chinoy has re-invited my attention to the prayer clause where the declaration is sought that, the allotment of shares by the first defendant in favour of defendants Nos. 2 to 4 is void. It has not been stated that the sale in favour of the said defendants should be held to be void. Relevant provisions of the Companies Act were relied upon and committed upon, However, it is not necessary to examine the same in any great details because the same have been noticed and interpreted in an authoritative judgment, namely Sri Gopal Jalan & Co. v. Calcutta Stock Exchange Association Ltd. : [1964]3SCR698 . In the abovementioned case, the Supreme Court considered the meaning that is ascribed to the word 'allotment' occuring in Section 75(1) of the Companies Act. That provision requires a company to rile a return of the allotment of its shares with the Registrar within a month of the making of the allotment. The shares with which the Supreme Court was concerned in that case had been forfeited by the company under its articles. The question was whether when these forfeited shares were re-issued the company was under an obligation to file a return. The Supreme Court pointed out, relying upon the law which had been accepted in England, that in Company law allotment meant the appropriation, out of the previously unappropriated capital of a company, of a certain number of shares to a person. Till such allotment the shares do- not exist as such. It is only on allotment in the sense of appropriation of the previously unappropriated capital of the company that the shares come into existence. On the facts of the case before it the Supreme Court noted that when a share is forfeited and re-issued it is not 'allotment' correctly understood. If one carefully goes through the judgment in Sri Gopal Jalan & Co.'s case, it can reasonably be inferred that the allotment of shares does not amount to sale of shares. It is only allowing a particular person to hold certain shares which are appropriated from the previously unappropriated capital of the company. The payment of price for such shares should not in law make any difference or invest the transaction with the character of sale. In Sri Gopal Jalan & Go's case the Supreme Court noted the following to be found in In re: V.G.M. Holding Ltd. (1942) 1 Ch. 235 : (1942) 1 All. E.R. 224.

It seems to me that the word 'purchase' cannot with propriety be applied to the legal transaction under which a person, by the machinery of application and allotment, becomes a shareholder in the company. He does not purchase anything when he does that.' Further it had been stated in Re: V.G.M, Holdings Lid's case as follows: -

'Putting it in a nutshell, the difference between the issue of a share to a subscriber and the purchase of a share from an existing shareholder is the difference between the creation and the transfer of a chose in action.

17. Though it is true, as Mr. Parikh pointed out, that the question whether the allotment of shares amounted to a sale directly did not fall for determination before the Supreme Court in Sri Gopal Jalan & Co.'s case (supra), one cannot obviously ignore the fact that the Supreme Court while deciding the questions before it noticed the real nature and character of the allotment of shares. It has also approvingly cited the law mentioned in Re V.G.M. Holding Ltd.'s case. It should be noted that In re V.G.M. Holding Ltd's case was followed in Governments Stock and Other Securities Investment Co. Ltd. v. Christopher (1956) 1 W.L.R. 237. In particular it was held that the offer of the shares which were unissued shares of the new company was not an offer for the purchase of the shares. I have, therefore, no hesitation in holding that Sri Gopal Jalan & Co.'s case decided that allotment of shares of a limited company does not amount to sale of shares.

18. The reliance placed by Mr. Parikh on Sudarshan Talkies v. Chief Revenue Authority (1978) 48 Comp.Case 591 (Delhi) is, in my opinion, misplaced. After going through the said judgment of the Delhi High Court I do not find that it is relevant at all to the question that is to be decided by me. The question in Sudarshan Talkies' case was basically on the stamp duty to be paid. Pursuant to Section 75(1) of the Companies Act, the company had filed a return in respect of the allotment of shares in Form No. 2, but no deed had been executed in respect of the transaction. The company, therefore, furnished in Form No. 3 the particulars required to be furnished under Section 75(2) of the contract for the allotment of shares paying a stamp duty of Rs. 5 thereon. The Registrar impounded Form No. 3 because the company had mentioned in that form that the allotment was made in part satisfaction of the purchase price of the property described therein. It was found in fact that the particulars furnished in the form were to be treated as an instrument within the meaning of the Stamp Act and the title of the allottees to the allotment of shares could be constituted by a contract, and in no other way. The form furnishing the particulars of the oral agreement had to be deemed for the purposes of the stamp duty to be the contract in writing by which the title to the allotment was constituted. The facts as well as the question that arose in Sudarshan Talkies.' case were totally different and, in my opinion, nothing that has been said therein indicates that the view of the Supreme Court in Sri Go pal Jalan & Co.'s case that the allotment of shares is not a sale is in any way, and in fact could not be, impaired by anything that could be said by any High Court.

19. On the other hand, if we notice the provisions of both the Indian Stamp Act and the Bombay Stamp Act we observe that both the Parliament and the State Legislature have treated the allotment of shares and the sale of shares differently. Article 36 in Schedule I of the Indian Stamp Act speaks of letter of allotment of shares in any company or proposed company; Article 37 of Schedule I of the Bombay Stamp Act similarly speaks of letter of allotment of shares in any company or a proposed company. In contra-distinction Article 62 of the First Schedule of the Central Act speaks of transfer of shares in an incorporated company or other body corporate. Thus there is both legislative and judicial support to the view that allotment of shares is distinct from transfer of shares; the latter alone can be said to be a sale.

20. It has been very strenuously urged by Mr. Parikh that even if it is held that the allotment of shares does not amount to sale of shares, the present suit will not fall under Clause (j). On the other hand, the effect of granting the prayer of the plaintiffs will be the prevention of granting the substantive relief or the prevention of monetary loss, which substantive relief or which monetary loss is capable of being valued in terms of money. If the prayer of the plaintiffs is granted, the necessary corollary would be, in the light, of the plaintiffs' own reliance on Article 35 of the Article of Association, the allotment of the said shares to the plaintiffs. The value of the shares is admittedly over Rs. 1 lakh and, therefore, that would be the value of the substantive relief claimed by the plaintiffs. Therefore, Article 7' of Schedule I of the Bombay Court-fees Act would be applicable and the value of the subject-matter of the suit itself will naturally be over Rs. 1 lakh. As is well known, there are two Schedules to the Bombay Court-fees Act. Schedule I concerns itself with those suits or applications or objections or even appeals where ad valorem Court fees are to be paid on the value of the subject-matter of the suit. Schedule II, on the other hand, concerns itself with those matters where fixed Court fee is to be paid. Article 7 is as follows: -

7. Any other plaint, application or petition (in- A fee on the amount of thecluding memorandum of appeal), to obtain substantive monetary gain, or loss to berelief capable of being valued in terms of monetary prevented, according to the gain or prevention of monetary loss, including cases scale prescribed under Articlewherein application or petition is either treated as a 1.plaint or is described as the mode of obtaining the relief as aforesaid.

21. In this connection, reliance has been placed by Mr. Parikh on Shamsher Singh v. Rajinder Prashad : [1974]1SCR322 . In that case a suit had been filed by a Hindu son against his father and the mortgagee decree-holder for a declaration that the mortgage executed by the father in respect of the joint family property was null and void for want of legal necessity and consideration. The Supreme Court found that though couched in a declaratory form the suit was in substance a suit either for setting aside the decree or for a declaration with a consequential relief of injunction restraining the decree-holder from executing the decree against the mortgaged property. So holding the Supreme Court ruled that the plaintiff was liable to pay ad valorem Court fee under Section 7(iv}(c) of the Court-fees Act, 1870. Indeed, the Supreme Court read in the prayer clause a further prayer by necessary implication that the decree should be set aside, though the prayer was only for a, declaration. In my opinion, the said decision is of no assistance to Mr. Parikh because the Supreme Court on the facts and nature of the suit including the nature of the relief claimed found that the limited prayer must necessarily result in the granting of the larger relief of setting aside the sale. The son had a prior interest in the property in respect of which the suit has been filed and in respect of which a declaratory relief was claimed. Granting of the relief necessarily meant that the son's interest in the property would be restored which could not have been done unless the sale itself was set aside.

22. Secondly, it should also be noted that in the present suit the granting of the declaratory relief will not result, in the automatic allotment of the shares to the plaintiffs. The plaintiffs themselves did not contend, and factually it is not so, that, 'hey have any interest in the shares which have been, according to them, illegally allotted by the first defendant to the other defendants. The only prayer of the plaintiffs is that the action of the first defendant of allotting the shares to the other defendants should be declared as illegal. For similar reasons I am of the opinion that the reliance placed by Mr. Parikh on Nagin v. Haribhai : AIR1980Bom123 is also misplaced. In that case the licensor had filed a suit against the licensee claiming a declaration that the defendant was a trespasser and for a mandatory injunction to vacate and hand over possession. The latter relief necessarily must result in the passing of the decree for possession. Therefore, the Division Bench in Nagin's case held that the legal ingenuity in drafting plaint should not be allowed to alter the real character of the plaint.

23. While I have held in the earlier part of this judgment that Jafferali's case ('supra) is no longer good in so far as it relates to the question of the Court fee payable in a suit for declaration that the sale of a particular property is void or illegal, the said judgment, however, still offers the correct guidelines on the question as to whether a particular relief is capable of being valued in terms of money. The relief claimed in that case was a declaration that a deed of assignment be set aside. The declaration itself, therefore, was held to be not susceptible to monetary evaluation. Even if the plaintiffs obtained the relief which they had claimed in the suit, it was not something which was capable of monetary evaluation because nothing specific was gained by them nor anything specific was lost by them. Where a declaration was sought that the sale was ineffective and invalid, there was no standard by which the valuation which the plaintiffs themselves had put on the subject-matter of the suit could be said to be wrong. As has been pointed out on page 362 of the report, granting the relief claimed in the suit did not automatically result in the property being available to the plaintiffs until the plaintiffs proved their respective claims in independent litigation and, perhaps, not even then.

24. Vimadalal J. in that judgment in fact followed an earlier Division Bench judgment of this Court in Chhotalal Kalidas v. Laxmidas (1957) 60 Bom. L.R. 587. Therefore, it would not be inappropriate to refer to the said judgment. In Chhotalal's case, the relief claimed by the plaintiffs was a claim for a declaration that a certain sale effected by defendant No. 1 in favour of defendant No. 2 was illegal and void and the same be set aside and also for an injunction against the two defendants restraining them from proceeding further with the completion of the sale. The plaintiffs had valued the claim for Court fee and jurisdiction at Rs. 420. It was held that the suit fell expressly within the description of a suit to obtain a declaratory decree where consequential relief was prayed under Section 7(iv)(c) of the Court-fees Act, 1870, and the plaintiffs were entitled to put their own valuation on the subject-matter of the suit. Bavdekar J., in the first instance, had held as follows (at p. 591): -

The plaintiffs' suit is for a declaration and for an injunction. If the present auction sale is set aside, the property is liable to be put to sale again. It does not mean, therefore, that the plaintiffs would necessarily retain the equity of redemption. It is difficult in circumstances like these to state what the relief of the plaintiff would be worth. If the auction sale is held hereafter and the property fetches less, all that the plaintiffs would have obtained by the present suit would be a loss. On the other hand, if the property was put up to auction again and fetches more, the plaintiffs would stand to benefit. What the plaintiffs stand to gain consequently as a result of this suit it is really impossible to say ...

This view was upheld in the Letters Patent Appeal by the Division Bench expressing its view as follows (at page 593): -

If in a case there is some standard by reference to which it may be possible to value the subject-matter of tile suit, and the Court comes to the conclusion that the valuation made by the plaintiff is wrong, it is open to the Court To revise the valuation made by the plaintiff. But in this case it cannot be said that there was a standard by reference to which the valuation made by the plaintiffs of the subject-matter of the suit can be demonstrated to be wrong. The claim made by the plaintiffs is a claim for -a declaration that a certain sale effected by defendant No, 1 in favour of defendant No. 2 was 'illegal, void, invalid, ineffective and bad in law' and for an injunction against the two defendants; and we are unable to appreciate by reference to what standard the valuation of the subject-matter by the plaintiffs of a suit, for a declaration that a particular sale is 'invalid, ineffective and bad in law' can be rectified.

25. Mr. Parikh, however, says that neither Jaiierali's judgment, nor Chhotalal's judgment is any longer relevant because of a judgment, of another Division Bench of this Court. He wanted to rely upon an unreported judgment of a Division Bench of this Court in Mrs. Marrie Misquitta v. Municipal Corporation for Greater Bombay (1971) A.O. No. 317 of 1970 with A.O. No. 356 of 1970 decided by Deshmukh and Deshpande JJ. on August 25, 1971 (Unrep.) decided by Deshmukh and Deshpande JJ. on August 25, 1971. I have personally great objection to this practice of relying upon unreported judgments suddenly in the Court room. When this practice of relying upon an unreported judgment is resorted to, an advocate invariably takes out a copy which is with him. Copies of the said judgment are not supplied in advance to the other side nor are they tendered for the use of the Court earlier-This is taking everyone by surprise. If a judgment is to be found reported in any journal, there is no surprise because lawyers are supposed to be aware of the reported judgments. It is also a matter of common knowledge that normally Judges would refer to the law reporter a judgment which in their opinion lays down a new legal proposition. This is especially so when one Bench is said to, as in the present case, differ from another Division Bench of a co-ordinate jurisdiction. Besides, the practice of suddenly taking out a copy of an unreported judgment without supplying its copies to the other side advocates and the Court in advance results in lot of inconvenience to everyone. The file containing the original judgment has to be brought from the Record Room of the High Court. One or the other side will be without a copy of the said judgment. That party who is thus taken by surprise can legitimately insist that time should be given to him to get acquainted with the facts of the judgment and to see whether it really takes a different view or whether the judgment is distinguishable from the facts of the earlier judgment from which it is supposed to differ.

26. There could be two opinions on the question whether an unreported judgment should be allowed to be cited as a precedent in a Court of law. However, I am proceeding on the basis that an unreported judgment at least of the same Court could be cited before a Bench of that Court, but in such a case it is the duty of the advocates who want to rely upon unreported judgment to prepare copies of the same well in advance and supply the same to the other side and also to tender the same to the Court. It is only when such a procedure is followed that all concerned in the Court will be able to follow properly the arguments advanced on the basis of the unreported judgment.

27. Returning to the said unreported judgment relied upon by Mr. Parikh, one must notice the facts. The Municipality had put the property of the plaintiffs to sale for recovery of arrears of tax to the extent of Rs. 23 lakhs. On January 28, 1970 the sale took place and on February 24, 1970 the plaintiff filed a suit for (a) a declaration that the purported sale was void; (b) setting aside the sale; (c) injunction restraining the Municipality from completing the sale; and (d) injunction restraining the purchasers from completing the proposed auction. The Division Bench held on these facts that though the suit was for a declaration, the substantive relief was necessarily for setting aside the sale. If this is so then the said relief was capable of being valued in terms of monetary gain or monetary loss to be prevented. Thus the suit was held to be covered by Article 7 of Schedule I of the Bombay Court-fees Act. The Division Bench undoubtedly distinguished Chhotalal's case (supra) by holding that that case was based upon Section 7(iv)(c) of the Court-fees Act, 1870, a Central Act, and Section 8 of the said Act as amended by Bombay Finance Act, 1956. Since Article 7 of the First Schedule of the Bombay Court-fees Act clearly governed, according to the Division Bench, the relief claimed in the suit before it, the Division Bench held that the suit was one to obtain substantial relief which was capable of being valued in terms of monetary loss. This was so because if the plaintiff failed in the suit he would necessarily lose the property of which he was the owner. The Division Bench of Deshmukh and Deshpande JJ. also noticed Indumatiben Chimanlal Desai v. Union of India (1968) 71 Bom. L.R. 340, which apparently ran contrary to the view which this Bench was taking, but noticed the distinction between the facts of the case before the Division Bench and the facts in Indumatiben's case.

28. In Indumatiben's case, the proceeding had not, reached the stage of sale and the suit had been filed even before the sale was effected. The suit was basically for injunction seeking to restrain the defendants from proceeding with the sale. ' The Division Bench took the view that the judgment in Indumatiben's case can have no relevance whatsoever to the situation like the one before it where the sale has been completed and the plaintiff is driven to seek relief for setting aside the said sale or declaring the said sale to be void and ineffective.

29. It would be perfectly in order at this stage to mention that the unreported judgment of the Division Bench has been considered by another Division Bench in Gulam Mohamed v. Lalchand : AIR1976Bom389 . Referring to the said judgment, Gulam Mohamed's case pointed out as follows: -

The decision is relevant on the point that the emphasis is laid in assessing the substantive relief claimed. The moment such relief or the loss to be prevented could be estimated in money value, it would appear that Section 6(iv)(/) would be having no application.

So ultimately the question is whether the present suit is one to obtain substantive relief which is capable of being valued in terms of monetary gain or prevention of monetary loss. The prayers made in the present suit have been mentioned in sufficient details earlier in this judgment. The declaratory part of the prayer is undoubtedly incapable of being valued in terms of monetary gain or prevention of monetary loss. Is the prayer for preventing something which is contrary to Article 35 of the articles of Association of the first defendant company capable of being valued in terms of monetary gain or prevention of monetary loss? The answer must be in the negative because by granting this prayer the plaintiffs themselves will not gain anything nor will they necessarily lose anything. If the allotment of shares by the first defendant in favour of the other defendants is set aside, the plaintiffs themselves will not be in a position to be entitled to the shares. Mr. Parikh, however, says that the necessary corollary of the prayer for setting aside the allotment in favour of the other defendants would be the allotment of the said shares to the plaintiffs. Therefore the ruling in Shamsher Singh's case (supra) would apply. It is not possible to endorse this view for the simple reason that the necessary corollary of granting the relief of setting aside the allotment of shares in favour of the other defendants will not be the allotment of those shares in favour of the plaintiffs. The first defendant may refuse to allot the shares to the plaintiffs in which case the plaintiffs cannot insist upon the shares being allotted to them. What they are contending is that if the allotment is to be made it should be made only in accordance with Article 35 of the Articles of Association. If the allotment is set aside, may be the first defendant may take steps to reduce the capital of the company, which is not impermissible.

30. If, however, the prayer had been to compel the first defendant to allot the shares to the plaintiffs then the plaint would have been covered by Article 7 of the First Schedule of the Bombay Court-fees Act, 1959. It would then have been legitimate to contend that the suit would not be one covered by Clause (j). On the other hand, it is not possible to accept the suggestion of Mr. Chinoy when he says that if the plaintiffs had insisted upon the shares being allotted to them they would be paying for them and, therefore, Article 7 of Schedule I would not be applicable. This view is based upon the fact that the plaintiffs 'would have paid for the shares and, therefore, it would not have resulted in either monetary gain or the prevention of monetary loss. It may be so, but the value of the subject-matter in such a suit, where the relief claimed is the allotment of shares to the plaintiffs, would necessarily be the total value of the shares. If the relief was not capable of being valued in terms of monetary gain or prevention of monetary loss, nevertheless the value of the subject-matter of the suit would be the value of the shares. In such a case Article 1 of Schedule I would be applicable as far as the payment of Court fee is concerned. Since, however, the relief asked for in the present case is not for the allotment of shares, it is not necessary to pursue this line of inquiry any further.

31. Summarising the facts and the law of the present case, I hold that:

(1) plaintiffs have filed a suit for a declaration that the purported allotment of shares by the first defendant company in favour of defendants Nos. 2 to 4 is contrary to Article 35 of the articles of Association of the first defendant company and is, therefore, void and illegal. The further prayer of the plaintiffs is for an order directing defendants Nos. 2 to 4 to deliver up and surrender the share certificates to the first defendant; there is a prayer for a further relief of injunction restraining the defendants from acting in any manner on the basis of the purported allotment of the additional shares;

(2) Jafferali's case 70 Bom. L.R. 359 is no longer good law in so far as it relates to the payment of Court fee on a plaint for a declaration that a particular sale is invalid because Clause (ha) of Section 6 of the Bombay Court-fees Act, 1959 is clearly attracted and, therefore, Clause (j) would not be applicable. In such a case the value of the subject-matter of the suit for jurisdiction would be the value of the property. The Court fee payable would be one-fourth of the Court fee calculated on the basis of the total value of the subject-matter of the suit;

(3) A suit for a declaration that the allotment of shares is invalid is, however, not a suit for a declaration that the sale is invalid because the allotment of shares does not amount to sale of shares. A suit for a declaration that the allotment of shares in favour of the defendants is invalid without the further prayer that the shares be allotted to the plaintiffs is also not a suit covered by Article 7 of Schedule I of the Bombay Court-fees Act, 1959;

(4) In a suit for a declaration that the allotment of shares in favour of the defendants is invalid and for a consequential relief that the shares be allotted to the plaintiffs, the value of the shares will be the value of the subject-matter of the suit for the purpose of jurisdiction and the suit itself will fall under -

(a) Article 1 of the Schedule I of the Bombay Court-fees Act, 1959 if the plaintiffs ask for allotment for consideration; and,

(b) Article 7 of Schedule I of the Bombay Court-fees Act, 1959 if the plaintiffs ask for allotment without consideration.

32. In the result, the order passed by the learned Judge of the City Civil Court returning the plaint for presentation to the proper Court must be held to be erroneous and is set aside. The suit has been properly valued at Rs. 300 for (he purpose of jurisdiction because the relief claimed is one taxable for the purpose of Court-fees under Section 6(iv)(j) of the Bombay Court-fees Act, 1959, Suit No. 6769 of 1978 is, therefore, restored to the file of the City Civil Court which will hear and dispose of the same in accordance with law. Interim relief granted in this appeal will continue till the Notice of Motion taken out by the plaintiffs is heard and an order is passed upon the same by the City Civil Court.

33. On the facts of this case, there will be no order as to costs in this appeal.


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