Holding

The Supreme Court held that the suits and interim orders were frivolous, vexatious, and filed in courts lacking jurisdiction; they must be transferred to the appropriate court in Ahmedabad and the respondents ordered to pay costs.

Summary

Bloom Dekor Ltd., a public company, issued a public share offering that was oversubscribed. A group of investors, seeking to avoid losses from speculative out‑of‑the‑ring transactions, filed a series of suits and applications in various courts (Morvi, Prantij, Baroda, Ahmedabad) alleging that the company had not obtained the required permission from the Ahmedabad and Bombay Stock Exchanges under Section 73 of the Companies Act, 1956. The lower courts granted ex parte interim injunctions without notice, despite the company having received approvals from the exchanges. The Supreme Court held that the suits were frivolous and vexatious, the courts lacked jurisdiction because no cause of action arose within their territorial limits, and the principles for granting ex parte injunctions were not satisfied. Consequently, all pending suits were ordered transferred to the senior civil judge in Ahmedabad, the respondents were each ordered to pay Rs. 10,000 to the appellant as costs, and the appeals were disposed of.

Issues considered

The lower courts had jurisdiction to entertain the suits and grant interim injunctions concerning alleged non‑compliance with Section 73 of the Companies Act, 1956.
Whether a cause of action arose within the territorial jurisdiction of the Morvi, Prantij and Baroda courts.
Whether the ex parte interim injunctions granted were justified under the principles laid down in Morgan Stanley Mutual Fund v. Karthik Das.
Whether the proceedings constituted frivolous and vexatious litigation (judicial adventurism).
The appropriate forum for trial of the suits and the transfer of cases to a competent court.

Legislation cited

Code of Civil Procedure, 1908s. Order I Rule 8
Companies Act, 1956s. 20, s. 33, s. 60, s. 73

Subjects

Companies ActSection 73public issue of sharesstock exchange permissionjurisdictioncause of actioninterim injunctionex parte injunctionfrivolous litigationjudicial adventurismtransfer of suitscosts

Judgment

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] B

2.2. In the instant case, if the matter is viewed as a contract no part
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
324 SUPREME COURT REPORTS (1994) SUPP. 3 S.C.R.

A United Commercial Bank v. Bank of India, [1981) 2 SCC 766 and Shiv
Kumar Chadha v. Municipal Corporation of Delhi, [1993) 3 SCC 161,
referred to.

5. The action of the respondents calculated to harm the interests of
the appellant company must be viewed with serious concern and must be
B totally disapproved, and as a token of the disapproval it is directed that
each of the contesting Respondents shall pay Rs. 10,000 to the appellant.
[335-G, 336-A]
6. All the suits mentioned in T.P. (C) No. 26 to 30 of 1994 will stand
transferred to the file of seniormost Civil Judge at City Civil _Court,
C Ahmedabad and be tried along with Ahmedabad suit, C.S. No. 6630 of
1993. [335-G]

7. The courts below are directed to examine the case on all the
relevant aspects stated above. [335-F]
D CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1751 of
1994 etc.

From the Judgment and Order dated 9.1.94 of the Court of Senior
Civil Judge, Baroda in S.P.C. Suit No.25 of 1984.
E

Yashanlc Adhyaru, Ms. Biraj Tiwari, J atin H. Jhaveri and Harish J.
Jhaveri for the Respondents.
F The Judgment of the Court was delivered by

MOHAN, J. Leave granted.

All these matters can be dealt with under a common judgment since
G the issue involved is one and the same.
The appellant-company was incorporated as a public limited com-
pany on 23rd March, 1992 in the name of 'Bloom Decoratives Limited'.
Subsequently, its name was changed as 'Bloom Dekor Limited'. The
registered office was formerly located at 1/F. Dhanlaxmi Chambers, Ash-
H ram Road, Ahmedabad. It was shifted to No. SA, National Highway, Oran,
BLOOMDEKORLID. v. S.H.DESAl[MOHAN,J.) 325

District Sabarkantha, North Gujarat with effect from 10.11.93. However, it A
continues to have its corporate office in Ahmedabad.

The company received industrial licence on 21.6.93 from the Govern-
ment of India for the manufacture of decorative industrial laminates. The
company went for public issue of 23,65,000 equity shares of which 4 lacs
equity shares have been reserved for the NRis of Rs. 10 each for cash at B
par aggregating to Rs. 236.50 lacs. The company made applications to the
Ahmedabad Stock Exchange and the Bombay Stock Exchange for permis-
sion to deal in and for an official quotation of the equity shares being
offered in terms of its prospectus dated 10.8.93. The company has filed a
copy of its prospectus under Section 60 of the Companies Act, 1956 (for C
short the Act) with Registrar of Companies, Gujarat for registration. The
issue opened on 9.9.93. It was over subscribed. Therefore, it was closed on
14.9.93 being the earliest closing date. The latest closing date announced
in the prospectus was 20.9.93.

Hereafter strange happenings take place. A group of persons, Viren D
Thakkar and his associate seem to have entered into large scale out of the
ring transactions in the sale purchase of company shares. On that account,
they would be required to make good their speculative losses once the
company shares are listed and traded in the market. To delay this the first
suit C.S. No. 90of1993, was filed at Morvi. This place was chosen because E
Viren Thakkar's sisters' husband (brother-in-law) Ramniklal Thakkar
resides there. The same Ramniklal Thakkar appears to be familiar with the
court proceedings. In the said suit C.S. No 90 of 1993 the plaintiff Bharat
Kharajbhai Chandrana through his Advocate Mr. Tarun V. Shah of
Ahmedabad obtained late in the evening an ex parte order dated 20.11.93
restraining the company from making allotment of the shares of the public F
issue or to take any further proceedings in relation thereto including issue
and despatch of share certificates.

The appellant moved the High Court. This order of 30.11.93 was
stayed on 8.12.93.
G
Viren Thakkar's wife's brother Ramesh Thakkar filed a Civil Suit No.
6630 of 1993 before the City Civil Court at Ahmedabad. He also obtained
therein an ex parte ad interim order in terms similar to the ad interim order
of Morvi Court dated 30.11.93. The same advocate Mr. Tarun V. Shah
appeared for the plaintiff. The said order was served upon the appellant H
326 SUPREME COURT REPORTS (1994) SUPP. 3 S.C.R.

A company after 6.30 P.M. ~9.12.93. Thereupon the company filed an
Appeal A.D .. No. 527of1993 before the Gujarat High Court. This was filed
on 10.12.93, 11th and 12th December, 1993 were holidays. Hence, the
appeal was circulated on 13.12.93 for orders. On that very date the same
advocate Mr. Tarun V. Shah, filed Special Civil Application No. 13891 of
B 1993 on behalf of Grahak Suraksha Samiti before Gujarat High Court. Inter
alia, an injunction restraining the Ahmedabad and Bombay Stock Exchan-
ges from granting any permission for trading/dealing the equity shares of
the company in other stock exchanges in any manner and to restrain the
company and its Directors from issuing transferring or dealing in any
manner the equity shares of the company, was sought.
c
On 14.12.93. A.D. No. 527 of 1993 was admitted and the ex parte ad
interim order was stayed.

On the same day, other Associates Arvind B. Sheth and Kirtibhai
Ghadiya filed Civil Suit No. 6683 of 1993 before the City Civil Court at
D Ahmedabad at about 7.45 P.M. on 14.12.93. An ex parte ad interim order
came to be passed. The same advocate Mr. Tarun V. Shah, appeared. A
notice of the said order was made returnable on 20th December, 1993.

On 15.12.93, the High Court took up Special Civil Application No.
13891 of 1993. Notice was ordered to the respondent returnable on 20th
E December, 1993. The application for interim relief was directed to be
posted on 18.12.93.

After midnight of 17/18-12-93 Rashmin Ghadiya, who is stated to be
a relative of the said Viren Thakkar filed a plaint through the Advocate,
Mr. Tarun V. Shah before.the Civil Judge (J.D.) at Prantij for a declaration
F that the company's issue was void since the requisite permission of stock
exchange under Section 73 of the Act was not obtained. An application for
interim injunction restraining the company, the stock exchanges at Ah-
medabad, Jaipur, Bombay, Rajkot Shareholders Association and Rajkot
Share Dealers Association from issuing transferring selling or dealing in
G any manner equity shares of the company and restraining the company
from utilising the funds of the public issue in any manner till the disposal
of the suit.

On this day (18.12,93) the Morvi Court dismissed the application for
interim relief for default. However, Mr. Tarun V. Shah applied for restora-
H tion on the ground that he was delayed in reaching the court on account
BLOOM DEKOR LID. v. S.H. DESAI [MOHAN, J.) 327

of the farmers' agitation. That application stood adjourned to 20th January, A
1994.

On 20th December, 1994 it appeares that the learned Judge of the
High Court who was dealing with Special Civil Application No. 13891 of
1993 specifically asked Mr. Tarun V. Shah whether any suit had been filed.
The answer was given in' the negative. This was countered by the appellant's B
advocate that three suits had been filed one at Morvi and two in Ahmeda-
bad. Thereupon Tarun V. Shah had stated that he had nothing to do with
those suits nor was he concerned ~ any manner.

It requires to be mentioned that Mr. Tarun V. Shah appeared in the C
City Civil Court in Civil Suit No. 6683 of 1993 during the second sitting
when the question of extension of ad interim ex parte order came up for
consideration.

Notwithstanding all the above, another suit Special Civil Suit No.25
of 1994 came to be filed before learned Civil Judge (Senior Division) D
Baroda on 2.1.94. An ex parte order was obtained. ·

The Ahmedabad City Civil Court adjourned the hearing of the
application for interim relief inC.S. No. 6683 of 1993 to 12.1.94 till the date
the ex parte order came to be extended notwithstanding the opposition of E
the appellant. company. On 12.1.94 the application could not be taken up
for hearing for want of time and the matter was adjourned to 19.1.94.

On 13.1.94 the company filed its counter to the application for
interim relief in Baroda suit No. 25 of 1993. Here again, Mr. Tarun V.
Shah appeared before the Baroda Court and sought time for publication F
of notice under Order I Rule 8 of C.P.C. On this scare, the Court was
disinclined to adjourn the matter. Therefore, time was sought for a
rejoinder whereupon the court adjourned the matter to 17.1.94. ·

The ground· on which the various suits and the writ petition came to
be filed was that the appellant company did not obtain the necessary G
permission from the Ahmedabad and Bombay Stock Exchanges to deal in
· shares or debentures as contemplated under Section 73 of the Act. In
support of this averment reliance was placed on certain letters addressed
by the Stock Exchanges of Ahmedabad and Bombay to share broker that
the shares of the company had not been listed on the exchange for dealing. H
328 SUPREME COURT REPORTS [1994) SUPP. 3 S.C.R.

A It was also alleged that the Registrar to the issue had not made allotments
in accordance with SEBI guidelines. There were irreguarities both in the
matter of applications for shares and making allotments. Further, there was
violation of Section 33 of the Act. It is under -these circumstances question-
ing the property and the correctness of these interim orders civil appeal
arising out of SLP (C) No. 878 of 1994 against the judgment dated 9.1.94
B by the City Civil Judge (Senior Division) Baroda in Special Civil Suit No.
25of1984 and Civil Appeal arising out of SLP (C) No. 874of1994 passed
by the City Civil Judge, Ahmedabad in C.S. No. 6683 of 1993 have come
to be preferred.

C T.P. No. 26 to 30of1994 have been filed for transferring Special Civil
Suit No. 90 of 1993. Civil Suit N<;>s. 6630 and 6683 of 1993, Civil Suit No.
85 of 1993 and Special Civil Suit No. 25 of 1994 to the High Court of
Gujarat at Ahmedabad or in the alternative for an order for transferring
the said suits pending at Morvi, Prantij and Baroda to the City Civil Court
at Ahmedabad. ·
D
Learned Counsel for the appellant vehemently argues that all the
suits and the writ petition are frivolous and vexatious in nature. They have
been resorted to by a caucus of individuals with a view to defeat or delay
their liability in illegal speculative transactions in the shares of the com-
pany. They are determined to see the company shares are not dealt in
E Ahmedabad and Bombay exchanges or no quotations for them are avail-
able with a view to see that the prices of company shares go down in the
transaction at the stock exchanges.

What is surprising in this case is suits were filed before courts which
have no jurisdiction whatever, namely, Morvi and Varodara,·though in the
F name of different persons all backed up by Ramlal Thakkar. No part of
cause of action has arisen within the jurisdiction of either of these courts~
Then again, the courts are approached at the last minute. Yet an order of
ad interim injunction came to be passed without even notice to the appel-
lant. The principles governing the grant of ad interim injunction in matters
G of this kind have been completely ignored. As a matter of fact, this Court
in Morgan Stanely Mutual Fund v. Ka,rtick Das, IT (1994) 3 SC 654 has
clearly indicated such principles. Tested on those principles, the impugned
orders are unsupportable.

The main grievance of the respondent was t~at the requisite permis-
H sion to deal in debentures and shares had not been obtained from Ah-
BWOM DEKOR LID. v. S.H. DESAI [MOHAN, J.) 329

medabad and Bombay Stock Exchanges. Firstly, the statements of the A
respondent are clearly false in Civil Suit No. 6683 of 1993. The Ahmedabad
Stock Exchange filed a statement that it had approved the list of this
appellant for dealing in the exchange on 22.11.93. The Company Secretary
of Ahmedabad Stock Exchange by his letter dated 24.11.93 informed the
company that basis of allotment of the public issue of equity shares of the
company was approved by the Ahmedabad Stock Exchange. It also con-
B
veyed to the appellant its no objection of the Stock Exchange for utilisation
of the issue funds. Again, on 7.1.94 the Ahmedabad Stock Exchange
approved the appellant's application seeking permission for the listing of
the equity shares and to deal in the exchange and granted the necessary
permission' under Section 73 of the Act with effect from 22.11.93. The C
Ahmedabad Exchange by its circular dated 7.1.94 notified the new enlist-
ment for information of the members of the Stock Exchange.

Likewise, Bombay Stock Exchange by its letter dated 23.11.93 in-
formed the appellant company that the Exchange was pleased to approve D
the Company's listing application seeking permission for equity shares of
the company to be dealt in on the exchange and that in order to facilitate
commencing of normal and regular trading in the Company's equity shares
on the exchange the company should complete without any further delay
the formalities mentioned in the enclosure to their earlier letter dated
27.9.1993. An affidavit Exh. 48 dated 8.1.1994 has been filed in the said E
Civil Suit No. 6683 of 1993 of JJ. Bhat, Joint General Manager of the
Bombay Stock Exchange stating inter alia that the stock exchange took a
decision to approve the listing application seeking permission for the equity
shares of the company to be dealt with on the stock exchange and that the
stock exchange accordingly wrote a letter dated 23.11.1993 to the company
F
informing the letter of the said decision, that earlier the stock exchange
had written a letter dated 27.9.1993 to the company enclosing therewith the
list of formalities to be completed by appellant.

Even as a question of law in order to comply with the requirements
of Section 73 of the Act the annual listing is not required. G

By resorting to successive suits and obtaining the impugned interim
orders the respondents have caused immense damage to the appellant and
thereby prevented the appellant company the recovery of further call
money which comes to about Rs. 63 Lacs. Therefore, this clear case in H
330 SUPREME COURT REPORTS (1994] SUPP. 3 S.C.R.

A which this Court should award heavy costs to the appellant.
,..
'
In meeting these submissions the learned counsel for the respon-
,dents submits where the respondents had genuine grievance about the
non-compliance with the provisions of the Act certainly they are entitled
to approach the court. Their case is section 73 of the Act has been violated.
B The court while granting interim orders was satisfied that there was a prima
facie case. The fact the same advocate appeared is of little consequence.
It cannot be said that the Morvi and Baroda Courts did not have jurisdic-
tion since the applicants for the shares were residing in those respective
places. In any event, these are interim orders. This Court normally does
C not interfere under Article 136 of the Constitution of India with the interim
orders since the final adjudication can be had from the courts below.

· From the above narration it is clear that the respondents have been
clearly indulging in judicial adventurism. A 'String of suits comes to be filed
one after the other. Late orders are obtained that too on applications filed
~ D without notice to the appellant. Unfortunately, the courts below wittingly
or otherwise have aided this judicial adventurism without even determin-
. ing whether they had jurisdiction. Take for instance the suit in Morvi court.
How does the said court get jurisdiction? What is the cause of action?

E 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. (Cooke v. Gill, (1873) 8 C.P. 107). In other
words, a bundle of facts which it is necessary for the plaintiff to prove in
order to succeed in the suit. This court had occasion to refer to the case
in Cooke (Supra) in A.K Gupta v. Damodar Valley Corporation AIR 1967
F SC 96. At page 98 it is stated thus :

"The expression "cause of action" in the present context does not
mean "every fact which it is material to be proved to entitle the
plaintiff to succeed" as was said in Cooke v. Gill, (1878) 8 CP 107
(116), in a different context, for if it were so, no material fact could
G ever be amended or added and, of course, no one would want to
change or add an immaterial allegation by amendment. That ex-
pression for the present purpose only means, a new claim made
on a new basis constituted by new facts. Such a view was taken in
Robinson v. Unicos Property Corporation Ltd., [1962) 2 All ER 24,
H and it seems to us to be the only possible view to take. Any other
BLOOMDEKORLID. v.S.H.DESAl(MOHAN,J.] 331

view would make the rule futile. The words "new case" have A
understood to mean "new set of ideas"; Doman v. /. W. Ellis and
Co. Ltd., (1962-1) ALL ER 303. This also seems to us to be a
reasonable view to take. No amendment will be allowed to intro-
duce a new set of ideas to the prejudice of any right acquired by
any party by lapse of time."
B
If the mater is viewed as a contract on part 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 the appellant company
having its registered office in Ahmedabad. Therefore, we could expect the C
court to examine these aspects before granting an interim order. So much
for cause of action.

The gravamen of charge by tb,e plaintiffs in various suits and the writ
petition before the High Court was that Ahmedabad and Bombay Stock
Exchanges mentioned in the prospectus of the appellant company have not D
granted permission for the shares or debentures to be dealt with in Stock
Exchange as contemplated under Section 73 of the Act. For making this
statement reliance is placed on three letters written to a stock broker dated
13.12.93, 9.12.93 and 24.12.93 by the Ahmedabad and Bombay Stock Ex-
changes respectively. Barring the statement that such information obtained E
from reliable sources, the source of information is not specified. Leave
alone that, the court had not even cared to examine the aspect whether the
actual listing under Section 73 of the Act is necessary.

A factual examination reveals that on 24.11.93 the Ahmedabad Stock
Exchange wrote the following letter to the appellant : F
"We refer the basis of allotment of your company, approved by
our Stock Exchange.

As desired,we wish to convey the No Objection of the Stock
Exchange for utilization of issue funds." G
The counter affidavit of the Exchange Director (M.L. Soneji) of the
Ahmedabad Stock Exchange inter alia states :

"Since defendant No. 3 has already approved the listing Ap-
plication for defendant No. 5 seeking permission for its equity H
332 SUPREME COURT REPORTS [1994] SUPP. 3 S.C.R.

A shares to be dealt with on stock Exchange, Ahmedabad on
22.11.93. The prayer for ad interim injunction to that extent cannot
be and may not be granted. Defendant No. 3 has also received by
FAX a letter No. List/HVD/5238/93 dated 23.11.93 addressed by
the Stock Exchange, Bombay to defendant No. 5 informing the
letter that the Stock Exchange, Bombay was pleased to approve
B the Listing Application.of defendant No. 5 seeking permission for
its equity shares to be dealt with on the said Exchange."

Again, in paragraph 4 it is stated thus :

c "On 22.11.93, the Government Board of the defendant No. 3
resolved to approve the Listing Application of defendant No. 5
seeking permission for its equity shares to be dealt with on the
Stock Exchange, Ahmedabad. It is the practice of defendant No.
3 that after the grant of such permission under Section 73 of the
Companies Act 1956, members of the Stock Exchange are in-
D formed by a notice for allowing them to deal in the said equity
shares in the market with effect from a, date specified in such
notice. Such notice is given after a company complies within a - \
reasonable time with the general listing requirements. As per the
FAX massage received by defendant No. 3, defendant No. 4 has
also approved the listing application of defendant No. 5 seeking
permission for their equity shares to be dealt in the Bombay Stock
Exchange. On 24.11.1993, defendant No. 3 wrote to defendant No.
5 and informed them that the basis of allotment was approved by
the Ahmedabad Stock Exchange and conveyed no objection of the .
Ahmedabad Stock Exchange for utilisation of issue funds."
F
This is beside the following letter dated 7.1.94:

"The Director.
Bloom Dekor Limited,
G 1/F, Dhanlaxmi Chambers,
Ashram Road,
Ahmedabad - 380009.

Sub : Listing of Equity shares of your Company on our Stock
Exchange.
BLOOM DEKOR LID. v. S.H. DESAI [MOHAN, J.] 333

Dear Sir, A
We are in receipt of your letter dated 31.12.93 along with the
enclosures and wish to inform you that the stock exchange is

... pleased to approve your application seeking permission for the
above referred equity shares to be dealt in on the exchange and
to grant such permission under section 73 of the Companies Act, B
1956 with effect from 22.11.93 and that members of our stock
exchange have been allowed to deal in equity shares of your
company with effect from 10.1.1994 in the market unit of trading
of 100 shares.

Kindly acknowledge the receipt.
c
Thank you.

- .Yours faithfully,
For, The Stock Exchange,

sd/-
(K.K. Mishra)
D

Company Srcretary"

Similarly, Jagdish Jayashankar Bhatt, Joint General Manager of the E
Stock Exchange, Bombay states :

"I say that as per the practice followed by Defendant No. 4, the
stock exchange has already grap.ted permission under section 73
of the Companies Act, 1956 to the Equity Shares of Defendant
No. 5 to be dealt with on the Stock Exchange, Bombay. The actual F
trading in the said shares has yet not commenced. As per the
practice adopted by the Stock Exchange, a notice permitting the
actual trading in the said shares is given thereafter and members
are intimated accordingly. I say that in reply to a letter dated
2.12.1993 that the shares of Defendant No. 5 were not yet listed G
on the Exchange for dealings."

Therefore, an analysis of facts on this aspect was warranted.

This Court had occasion to lay down the principles governing the
grant of injunction in such matters in Morgan Stanely Mutual Fund (supra). H
334 . SUPREME COURT REPORTS [1994] SUPP. 3S.C.R.

A At para 44 it is stated thus :
"As aprinciple, ex parte injunction could be granted only under
exceptional circumstances. The facts witch should weigh with the
court in the grant of ex parte, injunction arc :

B "(a) where irreparable or serious mischief will ensue to the
plaintiff;

(b) whether the refusal of ex parte injunction would involve
greater injustice than the grant of it would involve; ·

C (c) the court will also consider the time at which the plaintiff
first had notice of the act complained so that the making of
improper order against a party in his absence is prevented ;

( d) the court will consider whether the plaintiff had acquiesced
for some time and in such circumstances it will not grant ex parte
D injunction :

(e) the court would expect a party applying for ex parte injunc-
tion to show utmost good faith in making the application.

(t) even if granted, the ex parte injunction would be for a
E limited period of time.

(g) General principles like prima facie case, balance of con-
venience and irreparable loss would also be considered by the
court."
F In this connection reference was made to United Commercial Bank
v. Bank of India, [1981] 2 766 and Shiv Chadha v. Municipal Corporation
of Delhi, [1993] 3 SCR 161. ,

As to venue restrictions, the observations of this Court Morgan
G Stanley Mutual Fund (supra) at page 669 are apposite. Paragraph 50 reads
thus:

"As far as India is concerned, the residence of the company is
where the registered office is located. Normally, cases should be
filed only where the regist~red office of the company is situate.
H Courts outside the place where the registered office is located, if
BWOMDEKORLID. v. S.H.DESAI[MOHAN,J.] 335

approached, must have regard to the following : A

Invariably, suits are filed seeking to injunct either the allotment
of shares or the meetings of the Board of Directors or again the
meeting of general body. The court is approached at the last
minute. Could injunction be granted even without notice to the B
respondent which will cause immense hardship and administrative
inconvenience. It may be sometimes difficult even to undo the
damage by such an interim order. Therefore the court must ensure
that the plaintiff comes to court well in time so that notice may be
served on the defendant and he may have his say before any interim
order is passed. The reasons set out in the preceding paragraphs C
of our judgment in relation to the fact which should weigh with
the Court in the grant of ex parte injunction and the rulings of this
Court must be borne in mind."

- It is not difficult to perceive that all these actions are nothing but D
attempts by one caucus of persons to baulk the appellant company from
issuing or dealing with shares or debentures; the plaintiffs or the petitioner
in the writ petition having little shake. It is also evident from the orders
of this Court dated 28.1.94 and 31.1.94 and the cross-examination of Mr.
Kirit T. Gadhia by this Court. It is not a matter of coincidence that the
same advocate had appeared in all the cases at some stage or other. The E
statement before the High Court during the hearing of the writ petition
that the Civil Court had not been moved for the same relief was false and
was clearly intended to mislead the court. In the circumstances, we main-
tain the order dated 19.1.94 which is to the following effect :
F
We direct the courts below to examine the case on all the relevant
aspects stated above.

The action of the respondents calculated to harm the interests of the
appellant company must be viewed with serious concern and must be
totally disapproved. G

All the said suits mentioned in T.P. (C) Nos. 26 to 30 of 1994 will
stand transferred to the file of seniormost Civil Judge at City Civil Court,
Ahmedabad and he tried along with Ahmedabad suit, C.S. No. 6630 of
1993. The transfer petitions are ordered accordingly. H
336 SUPREME COURT REPORTS (1994) SUPP. 3 S.C.R.

A As a token of our disapproval we direct the payment of Rs. 10,000
by each of the contesting respondents, Subhash Himatlal Desai (Respon-
dent No. 1 in civil appeal No. 175i./94 arising out of SLP (C) 878of1994,
Arvind B. Sheth and Kirit TulsJu"bhai Gadhia (Respondent Nos. 1 and 2 in
civil appeal No. 1750/94 arising out of SLP (C} No .. 874of1994 respectively
B to the appellant, Bloom Dekor Limited.

The civil appeals are disposed of accordingly.

G.N. Appeals disposed of.