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Ali Jawad Ameerhasan Rizvi & Others v/s Indo French Biotech Enterprises Ltd. & Others

    WRIT PETITION NO. 434 OF 1998 WITH NOTICE OF MOTION NO.176 OF 1999 AND NOTICE OF MOTION NO. 222 OF 1999
    Decided On, 05 August 1999
    At, High Court of Judicature at Bombay
    By, THE HON'BLE CHIEF JUSTICE MR. Y.K. SABHARWAL & THE HON'BLE MR. JUSTICE S.H. KAPADIA
    Mr. A.J. Rizvi for the Petitioners. Mr. J.B. Chinai with Mr. Rajiv Wagh and Mr. B.B. Parekh for Respondents Nos. 1 and 3. Mr. S.H. Doctor with Mr. S.B. Jijina i/b M/s. Mulla & Mulla & Craigie Blunt & Caroe for Respondents Nos. 2 and 15. Mr. O.P. Soni for Respondents Nos. 4, 5 and 6. Mr.M.V. Limaye for Respondent No.7 Mr.R.V. Govilkar, Government Pleader for the State Mr.Rahul Chitnis with Mr.B.G.Saraf for Respondent No.9 Mr.Kumar Desai i/b M/s. Maneksha & Sethna for Respondent No.10 Dr.D.Y.Chandrachud, Additional Solicitor General i/b U.U.& Bergis for Respondent No. 13 Mr.S.K.Srivastav i/b. Mls. S.K.Srivastav & Co. for Intervenors.


Judgment Text
Y.K.Sabharwal, C.J.


This Petition, in public interest, was filed in February 1998 and is pending since then. Orders passed from time to time clearly show that hours and hours of Court time were spent on consideration of the grievances made by the Petitioners. The Petitioners are four in number. As many as 16 reliefs have been claimed. There are 15 Respondents, including Minerals & Metal Trading Corporation Limited, Securities Exchange Board of India, Commissioner of Police, Criminal Bureau of Investigation, Reserve Bank of India and Union of India. In substance, the Petitioners' grievance as set out in the Writ Petition is that they had invested huge amounts in 'Project Grape, Investment Scheme' of Respondent No.1 and they were forced by Respondent No.3 to accept equity shares of Respondent No.2 in lieu of surrender of their investment in Respondent No.1 Company. They say that rosy picture of high returns was shown to them by Respondent No.3 because of which they were lured and various investors have lodged complaints with the Commissioner of Police on 22nd December 1997. Complaint dated 22nd December 1997 lodged by Petitioner No.4 with the Deputy Commissioner of Police, Economic Offences Wing, Crime Branch, Crawford Market. Mumbai, has been annexed to the Petition as a sample complaint. It has been further alleged that the investors have not heard about the progress of the investigation made by the Commissioner of Police and, therefore, the Petition is being filed seeking directions against the Respondents, including the Commissioner of Police.


2.On hearing respective contentions of learned Counsel, and perusal of record, the facts which have come to light clearly demonstrate not only the misconceived nature of the Petition but further show that, with a design, material facts were suppressed from the Court. The suppression, it seems, was done with a view to take undue advantage of the liberal approach the Court may adopt when it is brought to the notice of the Court that large number of innocent investors were duped and the agencies despite complaints were not taking requisite actions. Now we will briefly notice the facts.


3.(a) There are four Petitioners. The first Petitioner is an Advocate by profession. He has been appearing in this matter as Petitioner No.1 in person and also as Counsel for Petitioners Nos.2 to 4. It seems clear that the four Petitioners were shareholders of Respondent No.1 as also investors having invested certain amounts with Respondent No.1 to earn profits. The exact investment of the Petitioners has not been stated in the Petition. However, Mr.Rizvi, who is a Advocate and Petitioner No.1 in this Petition, states that he had 1800 shares of Respondent No.1 and had also deposited Rs.80,000.00 as a deposit with Respondent No.1. He further states that Petitioner No.4 had deposited with Respondent No.1 a sum of Rs.3,35,000/-. These deposits are stated to have been made sometime in the year 1993. Mr. Rizvi however, is unable to state about the amount invested/deposited by Petitioner No.2 and 3 but submits that their investments were nominal amounts.


(b)At the time of investments with Respondent No.1, agreements were entered into between the parties i.e. the investor and Respondent No.1. Respondent No.1 has also issued in favour of the investors, including the Petitioners before us, the postdated cheques of nearly four years' later date. The said post-dated cheques covered the amount of investment plus 18% interest thereupon. Respondent No.1 had also executed conveyance deed in respect of interest in some agricultural land in favour of the investors.


(c)in the beginning of 1995, it appears that some of the investors of Respondent No.1 surrendered their investment in favour of Respondent No.1-Company and in lieu thereof they were given by Respondent No.3 the shares of Respondent No.2 Company. Respondent No. 3 was probably controlling both the Companies.


(d)As far as Petitioner No.4 is concerned, Mr. Rizvi admits today that she had deposited with Respondent No.1 a sum of Rs.3,35,000/-. This deposit was surrendered by her in favour of Respondent No.1 in the year 1995. In lieu of her surrender of deposit of Rs.3,35,000/-, total number of 50,200 shares of Respondent No.2 were given to her by Respondent No.3. Mr.Rizvi states that in his favour, Respondent No.3 gave 66,000 shares of Respondent No.2 Company for surrender of deposit of Rs.80,000/-. They had also surrendered all the documents executed by Respondent No.1 in their favour at the time of deposit. Thus those documents were returned by the Petitioners to the Company (Respondent No.1).


(e)Further, from the material shown to us, prima facie, it seems evident that the shares of Respondent No.2 were easily saleable at high premium at the point of time when they were transferred by Respondent No.3 in favour of the investors. It is further evident that Petitioner No.4 transferred 6,800 shares out of the aforesaid shareholding of 50,200, accepting the offer of Times Professional Services Ltd., for consideration of Rs. 1,02,000.00. The said amount of Rs.1,02,000.00 was paid to Petitioner No.4 by cheque No. 324008 dated 24th March 1995. This was the amount of consideration for purchase of 6,800 equity shares of Respondent No.2 from Petitioner No.4. It also seems evident that in case she had sold the entire shareholding of 50,200 shares, she would have received more than Rs.7,00,000.00 for investment of Rs.3,35,000.00 made in 1993.


(f)Petitioner No.1 states that he did not sell his shares. That may be so, but what is relevant is that Petitioner No.1 has not stated anywhere in the Petition that at the point of time when he was given 66,000 shares of Respondent No. 2 by Respondent No. 3, the same were not saleable in the same manner as Petitioner No. 4. sold part of her shareholding.


(g)The question is not about the sale or saleability of the shareholdings of Respondent No.2. The question is about the non-disclosure of all the above facts in the Petition. These facts were also not disclosed by Petitioner No.4 in her complaint made to the Police. The complaint to police was made on 22nd December 1997, whereas transaction had taken place in March, 1995. It is evident that if these material facts had not been suppressed from the Court, the position may have been entirely different. If it had been disclosed that the shares of Respondent No.2 were saleable at high price as noticed above, certainly a serious doubt would have arisen, at least prima facie, about the plea of lurement and force as alleged against Respondent No.3.


4. Different investors react differently. One may encash the investment. The other may like to wait for still better returns. Yet another may encash the investment/shares by sale of part of shareholding and hold on to other shares expecting better price. This is what was done by Petitioner No. 4. The question is not as to how the Petitioners dealt with their investments but the real question is their complete silence and non-disclosure of these facts while filing this Writ Petition.


5.The responsibility to disclose the facts in the present case is greater since it is a public interest litigation. It is further greater on Petitioner No.1, he being a member of the noble profession and having filed the Petition in dual capacity, one as a litigant and the other as Advocate representing Petitioners Nos.2 to 4. The result of this adventure by the Petitioners has been a colossal waste of time of the Court, thereby depriving the other litigants a hearing of their cases. Accepting as true the statements made in the Petition and proceeding on the basis that all material facts have been disclosed, various directions were issued to the authorities. The authorities have proceeded in the matter and enquiries, investigations and other steps in respect of the affairs of Respondents Nos.1 to 9 and 15 have been taken. If any of the Respondents have committed any offence or have otherwise violated any provisions of law, they have to face the consequences. Even the dismissal of the Writ Petition would not absolve the Respondents of the illegalities, if any, committed by them. It would also not absolve either the police authorities or other statutory bodies like SEBI to perform their obligations in accordance with the Rules, Regulations and procedures established by law. We are, however, pained to find the manner in which this public interest jurisdiction has been invoked by the Petitioners led by Petitioner No.1. Petitioner No.1 being a member of legal profession is supposed to be acquainted with the parameters of public interest jurisprudence and owes an obligation not only to the Court but also to litigating public making it clear to them as well that such Petition cannot be filed to settle personal scores. According to affidavit of Respondent No.3, Petitioner No.1 has caused immense harm to 1st Respondent Company by wrongfully misusing the forum of public interest litigation for promoting self interest as he has in the course of hearing of the Petition sent feelers demanding several millions of rupees to bail out the Respondent Company from the present litigation. Though it may be difficult to find out the correct position, but there is no difficulty in coming to the conclusion that in the manner abovestated the material facts were suppressed from this Court. It is our duty to discourage filing of such Petition. With increasing number of such Petitions, it has become necessary to ensure that the course of justice is not polluted by unscrupulous litigants for personal matters under the garb of public interest litigation. Only a person acting bonafide has a locus to approach this Court. A vexatious Petition under the colour of public interest litigation for vindicating personal grievance or for personal gains, deserves outright rejection. As already noted, innumerable days have been wasted on account of this vexatious Petition. This time, otherwise, could have been spent for the disposal of cases of the genuine litigants.


6.Faced with the aforesaid position, we dismiss the Petition, but at the same time hoping that the authorities will continue with the investigations and enquiries and if they come to the conclusion that any offence has been committed by any of the Respondents, necessary steps including filing of chargesheet will be taken as also other actions for violation of law by the erring Respondents.


7.Reverting now to the question of costs, two options are open to us. The softer option is to warn the Petitioners and the harder option is to impose exemplary costs. Considering the facts and circumstances of the case, in so far as Petitioner No.1 is concerned, we would op

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t for harder option since he, instead of advising other Petitioners against filing this type of Petition, himself also became the party when the matter was purely commercial in nature. Accordingly we impose on Petitioner No.1 costs in the sum of Rs.1,00,000.00 (Rupees One Lakh). This amount, however, would be payable to the National Association for the Blind within a period of four weeks from today. A copy of this order shall be sent to the said Association so that in case payment is not made, the said Association can execute it as an order of the Court. 8.The attachments, etc., made by the Police during the pendency of the Petition under the orders of the Court, will continue for a period of three months subject to the condition that in the meanwhile the Police authorities may seek appropriate directions from the competent Criminal Court for continuing with the said attachments etc.. if permissible in law. 9.Having considered the facts of the case we hereby vacate orders passed, freezing the accounts of the respondents. 10.This will also dispose of the Notices of Motion. 11.Issuance of certified copy of this order is expedited.
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