Sh. Anil Kumar Gupta vs Sh. O.P.

Gulati on 22 November, 2007

Delhi District Court

Sh. Anil Kumar Gupta vs Sh. O.P. Gulati on 22 November, 2007
Author: Sh. Girish Kathpalia
1

IN THE COURT OF SH. GIRISH KATHPALIA,

ADDITIONAL DISTRICT JUDGE, DELHI
SUIT NO.551/01
SH. ANIL KUMAR GUPTA,
S/O SH. N.P. GUPTA,
SOLE PROPRIETOR
M/s KRISHNA FINCAP,
11, GURU RAM DAS NAGAR,
DELHI-110092

....PLAINTIFF

versus
1.

SH. O.P. GULATI,

PROPRIETOR OF
M/s GULATI ASSOCIATES,
D-300, ANAND VIHAR,
DELHI.

2.

M/s INTIGRATED FIN-LEASE PVT. LTD.

D-300, ANAND VIHAR,
DELHI.
....DEFENDANTS

DATE OF INSTITUTION: 09/12/1999

ARGUMENTS CONCLUDED ON: 12/11/2007
DATE OF DECISION: 22/11/2007

Counsel for Plaintiff: Sh. J.S. Garkal, Advocate

Counsel for Defendants: Sh. O.P. Aggarwal, Advocate

JUDGMENT

1. This suit for recovery of Rs.4,08,367.28paise with CS/551/01 Page 1 of 26 pages pendente lite and
future interest has been brought by the plaintiff, dealing in stocks and shares as an investor.
Defendant no.1 is a member of Delhi Stock Exchange Association and proprietor of M/s Gulati
Associates, whose business including assets and liabilities has been taken over by the defendant no.2
company. Plaintiff had been doing business regularly through defendant no.1 and as per plaintiff,
they maintained a running account. Till 14/12/96 defendant no.1 used to periodically send
statement of accounts as regards plaintiff's business carried out through defendant no.1.

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Sh. Anil Kumar Gupta vs Sh. O.P. Gulati on 22 November, 2007

2. Plaintiff placed an order on the defendant no.1 for purchase of shares of M/s Fintra Capital
Services Ltd. but subsequently plaintiff came to know from letter dated 29/10/96 of Fintra Capital
addressed to Delhi Stock Exchange that 26,700 shares which were intended to be supplied to
plaintiff by defendant no.1 were stolen shares. Plaintiff conveyed this information to defendant no.1.
But since defendant no.1 started insisting the plaintiff to take delivery of the said shares, plaintiff
filed an injunction suit against CS/551/01 Page 2 of 26 pages defendant no.1 wherein the ld. Civil
Judge vide order dated 07/11/96 restrained the defendant no.1 from forcing the plaintiff to take
delivery of Fintra Capital shares.
3. As per plaintiff, the defendants had to replace the above said shares with good delivery but
instead of doing so, in view of injunction order of the ld. Civil Judge the defendant debited plaintiff's
account with the said 26,700 stolen shares and furnished statement of accounts dated 15/11/96 to
the plaintiff.
4. Vide letter dated 23/12/96, plaintiff called upon the defendant to cancel the bills pertaining to the
stolen shares and reverse the entries from statement of accounts but defendant sent a baseless reply
dated 01/01/97 alongwith statement of accounts wherein a sum of Rs.1,00,000/- was debited as
margin money. As per plaintiff, he had no other dealing with the defendant for which the margin
money could have been debited, as such plaintiff is entitled to a credit of Rs.1,00,000/- by reversing
the entry.
5. As per plaintiff, another amount of Rs.4,725/- has been debited for 300 shares vide voucher no.89
dated CS/551/01 Page 3 of 26 pages 26/10/96 but these shares also are part of the above said stolen
shares of Fintra Capital, as such plaintiff is entitled to a credit of Rs.4,725/-.
6. As per statement of accounts supplied by defendant no.1 on 01/01/97, a sum of Rs.35,675.30paise
was debit balance towards the plaintiff. After deducting the said amount of Rs.35,675.30paise out of
the due credit of Rs.1,04,725/- plaintiff is entitled to recover Rs.69,049.70paise from the defendant.
7. Besides, plaintiff is also entitled to credit of Rs.11,400/- on account of bad delivery of 300 shares
of HDFC bank rectified.
8. As per plaintiff, the total purchase value of 26,700 shares of Fintra Capital was
Rs.4,00,933.65paise at a closing rate of a share Rs.17.50paise as on 25/10/96. Defendant is also
liable to pay additional 20% on the closing rate of the share on covering date 25/10/96. Plaintiff has
valued the share at Rs.21/- as per SEBI and DSE guidelines for accounting after adding 20% to its
value as squaring up of the transaction. Thereby, total value of the bad delivery comes to CS/551/01
Page 4 of 26 pages Rs.21/- x 26,700 = Rs.5,60,700/-. Since shares worth Rs.4,00,933.65paise were
not supplied, the defendant should have given a credit of Rs.5,60,700/- minus Rs.4,00,933.65paise
= Rs.1,59,766.35paise to the plaintiff in their accounts dated 01/01/97.
9. Hence, plaintiff claims a total sum of Rs.69,049.70 + Rs.11,400 + Rs.1,59,766.35paise =
Rs.2,40,216.05paise from the defendants. In addition, plaintiff also claims presuit interest thereon
to the tune of Rs.1,68,151.23paise at a rate of 24% per annum. Hence, the suit amount of
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Sh. Anil Kumar Gupta vs Sh. O.P. Gulati on 22 November, 2007

Rs.4,08,367.28paise.
10. Plaintiff also disclosed in the plaint that defendant no.1 has filed against him a suit for recovery
of Rs.90,000/- as damages which the plaintiff is contesting.
11. Since despite repeated demands and even registered letter dated 07/01/97 defendants have not
rectified their accounts and failed to pay, plaintiff has brought the present suit.
12. Defendants filed a joint written statement, raising preliminary objections that the suit is time
barred; without CS/551/01 Page 5 of 26 pages cause of action; bad for non-joinder and mis-joinder
of necessary parties; and the dispute is liable to be referred to arbitration of Delhi Stock Exchange.
13. It was pleaded on behalf of defendants that on order of plaintiff, the defendant no.1 purchased
26,700 shares of Fintra Capital and after taking physical delivery thereof on 26/10/96, called upon
the plaintiff to make payment as per settlement cycle by 30/10/96. But the plaintiff kept avoiding to
pay. As per defendants, the Delhi Stock Exchange had declared the said shares as "pledged" shares
and not "stolen" shares and that the said shares were good for delivery. To that extent, plaintiff has
concealed truth from this court, as per the defendants.
14. It was pleaded on behalf of defendants that due to non payment of the above said shares by
plaintiff, terminal of defendant no.1 was closed by Delhi Stock Exchange which caused to the
defendant no.1 losses and he was constrained to file a damages suit against the plaintiff which is
pending before the court of Civil Judge. Present suit is a counter blast to the suit of defendant no.1.
CS/551/01 Page 6 of 26 pages
15. Defendants pleaded that the earlier injunction suit of the plaintiff already stands dismissed and
since plaintiff failed to make payment of shares purchased by defendant no.1 on his behalf,
defendant no.1 made a debit entry.
16. It was pleaded on behalf of defendants that as per terms agreed between the parties, plaintiff was
required to provide security to the defendant no.1 for carrying on sale- purchase transactions of
shares through defendant no.1. Such an amount is retained by the broker to ensure due payments
and plaintiff had deposited the said security of Rs.1,00,000/- knowing the terms fully well, out of
which a part amount has been adjusted as margin money with defendant no.1 which deals in DSE
and a part has been adjusted as margin money with another concern of defendant no.1 namely
Integrated Capital Services Ltd. which deals in NSE.
17. Defendants denied liability to credit any amount to the plaintiff. Defendants also denied liability
to pay additional 20% on the closing rate of the share as squaring up value. Defendants also denied
liability to pay any interest.
18. Plaintiff filed a detailed replication denying the CS/551/01 Page 7 of 26 pages pleadings of the
defendants and reaffirmed the plaint contents.
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Sh. Anil Kumar Gupta vs Sh. O.P. Gulati on 22 November, 2007

19. On the basis of pleadings, my ld. Predecessor framed the following issues:1. Whether the suit of the plaintiff is barred by limitation? OPD
2. Whether this suit is bad for non-joinder and misjoinder of necessary parties? OPD
3. Whether the plaintiff has no cause of action to file the present suit? OPD
4. Whether the defendant is not liable to refund the amount on account of margin money? OPD
5. Whether the matter is liable to be referred to arbitration of Delhi Stock Exchange? OPD
6. Whether the plaintiff is entitled to suit amount?
OPP
7. Whether the plaintiff is entitled to interest, if so at what rate? OPP
20. In support of his case, plaintiff examined two witnesses including himself while from the other
side defendant no.1 stepped into the box as solitary witness. I have heard the ld. Counsel for parties
and perused the record including written submissions filed by both the sides. My findings on the
issues framed are as under:CS/551/01

Page 8 of 26 pages

ISSUE NO.1:-

21. In his testimony as PW1, the plaintiff deposed that on 29/10/96 he came to know from a letter of
Fintra Capital, addressed to the DSE that the 26,700 shares supposed to be delivered to him were
lost/stolen. On 30/10/96, as per PW1 DSE stopped delivery of these shares declaring it to be bad
delivery vide letter Ex.PW1/1. On 07/11/96, the court of ld. Civil Judge restrained the defendant no.1
from compelling the plaintiff to take delivery of the stolen shares. In statement of accounts dated
15/11/96 Ex.PW1/2 the defendant no.1 debited the stolen shares in plaintiff's account. Vide letter
dated 23/12/96 Ex.P6, plaintiff requested the defendant no.1 to reverse the debit entries. As per
PW1, the defendant no.1 sent reply dated 01/01/97 Ex.P5 alongwith statement of accounts Ex.P3
reflecting a debit entry of Rs.1,00,000/- margin money and another entry dated 26/10/96 for
Rs.4,725/- on account of 300 shares of Fintra, which were a part of stolen shares. PW1 further
stated that he is entitled to a credit of Rs.11,400/- on account of bad delivery of HDFC shares about
which the defendant issued bill Ex.P1 dated CS/551/01 Page 9 of 26 pages 23/11/96. In his cross
examination, PW1 admitted that he had a running account with the defendant and used to get a
contract note against the purchase of shares by the defendant. He further stated that it is on
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Sh. Anil Kumar Gupta vs Sh. O.P. Gulati on 22 November, 2007

15/11/96 that he came to know about the wrong entries on receiving statement of accounts from the
defendants.
22. Defendant no.1 in his chief examination stated that the suit is time barred, having been filed
more than three years after the cause of action, if any arose. In his cross examination as DW1, the
defendant no.1 stated that although a statement of accounts had been sent alongwith his letter dated
01/01/97 Ex.P5, he could not say as to whether the statement filed by plaintiff as Ex.PW1/3 is the
same statement or not.
23. The suit was filed on 09/12/99.
24. It was argued on behalf of defendant that the present suit is delayed by two months since as per
plaintiff's case the cause of action arose on 29/10/96, when he came to know that the shares being
supplied to him were stolen ones. It was argued that since plaintiff has claimed an additional 20%
on CS/551/01 Page 10 of 26 pages the closing rate of shares, it being a compensation suit, ought to
have been filed within one year in view of Article 78 with effect from 29/10/96. It was argued that
even the statement of accounts Ex.PW1/3 has not been properly proved and as such cannot be
looked into.
25. Per contra, it was argued on behalf of plaintiff that the article relevant to the present suit is
Article 1, Limitation Act since the parties were maintaining a running account which is Ex.PW1/3
which shows the last entry dated 14/12/96 as regards debit of Rs.11,400/- and vide Article 1,
Limitation Act, the period of limitation of three years begins to run from 01/01/97, which is the
close of the year in which last item is entered in the accounts. That being so, the suit filed on
09/12/99 is well within time. It was further argued that Article 78, Limitation Act has no
applicability in the present case since 20% on closing rate of shares was claimed not as
compensation but in terms with SEBI and DSE guidelines.
26. So far as applicability of article 78 Limitation Act is concerned, as per the same the suit for
compensation for CS/551/01 Page 11 of 26 pages inducing a person to break a contract with plaintiff
has to be filed within one year. I do not agree with the ld. Counsel for defendant that the present suit
falls under article 78. Firstly, this is not a case for inducement to break a contract and secondly what
is being claimed is not by way of compensation. It would be incorrect to hold that the additional
20% on closing rate of shares claimed by the plaintiff is "compensation" so as to bring the present
case under article
78. As rightly argued by ld. Counsel for plaintiff, the claim of 20% on closing rate of shares is in
terms with specific SEBI and DSE guidelines, which are on record as Ex.PW2/2. Clause 1.5 at page
13 of guidelines Ex.PW2/2 specifically provides the same and as such, claim of 20% over the closing
rate of share cannot be treated to be a compensation.
27. The relevant article, in my view would be article 1 of the Limitation Act. I do not agree with ld.
Counsel for defendant that no running account was maintained between the parties. In cross
examination of PW1, ld. Counsel for defendant himself extended a suggestion to the effect that
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Sh. Anil Kumar Gupta vs Sh. O.P. Gulati on 22 November, 2007

parties were having a running account, which suggestion was CS/551/01 Page 12 of 26 pages
admitted. Even the defendant no.1 who stepped into the box as DW1 stated in his cross examination
that the parties maintained a running account. Moreover, the nature of series of transactions that
spread over a period of time between the parties also shows that the account maintained by them
was mutual, open and current account with reciprocal demands between the parties in the sense
that the plaintiff was at times in debit and at times in credit.
28. I also fail to agree with ld. Counsel for defendants that Ex.PW1/3 cannot be looked into as
statement of accounts between the parties. In his cross examination the defendant no.1 did not
specifically deny that Ex.PW1/3 is the statement of accounts sent alongwith his letter Ex.P5; he
admitted having sent statement of accounts alongwith Ex.P5 but vaguely stated that he could not say
if Ex.PW1/3 is the same statement or not. The statement of accounts was maintained by defendants
only and had there been some other statement of accounts, the same would have been brought on
record by the defendants. As such, Ex.PW1/3 has to be looked into.

29.

Ex.PW1/3

statement

of

CS/551/01

accounts

bears

last

Page 13 of 26 pages

transaction between the parties in the form of debit entry dated 14/12/96. Vide article 1 Limitation
Act, period of limitation of three years has to begin to run from 01/01/97 and accordingly the suit
filed on 09/12/99 is well within time.
30. I do not agree with the contention of ld. Counsel for defendant that the period of limitation has
to run from 29/10/96 when plaintiff came to know that the Fintra shares supplied to him were
stolen ones. Cause of action for plaintiff arose when he first came to know about wrong debit entries
made by the defendants in their statement of accounts Ex.PW1/3 which was admittedly received by
plaintiff with defendants' letter Ex.P5 on 01/01/97. Even going by the date of cause of action, the
suit brought by plaintiff is well within three years.
31. In view of above discussion, issue no.1 is decided against the defendant and I accordingly hold it
proved that suit of plaintiff is not barred by limitation. ISSUE NO.5:32. This issue appears to have been framed by my ld. Predecessor on the basis of an application
moved on behalf of CS/551/01 Page 14 of 26 pages defendants under the provisions of Order VII
Rule 11 CPC in which it was contended that the present dispute has to be referred to arbitration in
terms with the conditions mentioned in the contract note executed between the parties.
33. It was argued on behalf of defendants that even at this stage, the dispute between the parties has
to be referred to arbitration in terms with the conditions of contract note placed on record and the
suit cannot proceed further. Per contra, ld. Counsel for plaintiff argued that as reflected from
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Sh. Anil Kumar Gupta vs Sh. O.P. Gulati on 22 November, 2007

evidence on record plaintiff is neither a broker nor a sub- broker and as such he is not bound by the
rules governing members of DSE which mandate dispute resolution by way of arbitration.
34. Vide order dated 20/05/02 while dismissing the defendants' application under Order VII Rule
11 CPC my ld. Predecessor observed with the help of various provisions of SEBI rules that as per the
same, for an investor (which the plaintiff is) there is no mandate to get the disputes resolved by way
of arbitration only. An investor's grievance can be redressed by the stock authority and investor can
also take CS/551/01 Page 15 of 26 pages recourse to arbitration proceedings or civil suit as well.
35. It would further be pertinent to note that as reflected from records, immediately on service of
summons, on 02/08/2000 a counsel for defendants appeared and sought time to file written
statement, without making any plea invoking the arbitration clause. Thereafter, on 09/07/01
written statement was filed on behalf of defendants and the suit proceeded further. Even the
replication was filed on behalf of plaintiff on 10/08/01 and suit was posted for admission/denial of
documents. It is at that stage that for the first time the defendants sought to invoke the arbitration
clause and that too not by way of an application seeking reference of the dispute but by way of an
application under Order VII Rule 11 CPC for rejection of the plaint.
36. As is obvious, the reliance on the alleged arbitration clause of the contract note was made by the
defendants much subsequent to filing the written statement. Not only this, even thereafter the
defendants proceeded further with the trial of this suit, which clearly shows that they had
surrendered to the jurisdiction of civil court and gave up their right to get the CS/551/01 Page 16 of
26 pages dispute resolved by way of arbitration.
37. In view of above discussion, issue no.5 is decided against the defendants and I hold it not proved
that the matter is liable to referred to arbitration of Delhi Stock Exchange. ISSUE NO.2:38. This issue was framed on the basis of a preliminary objection in the written statement to the
effect that DSE as well as SEBI are necessary parties to this suit since claim of the plaintiff is based
on various orders of these authorities.
39. On behalf of defendant it was argued that as reflected from evidence - oral as well as
documentary on record, the shares of Fintra Capital were being purchased by the plaintiff for his
client Sh. M.C. Gupta, who was also a party in the injunction suit filed by plaintiff, but M.C. Gupta
has not been impleaded in this case. It was argued that even the Fintra Capital and their broker
namely M/s Prabhat Investment were also necessary parties to this suit but not impleaded. Per
contra, ld. Counsel for plaintiff argued that none of these persons are necessary parties in this suit.
40. As reflected from cross examination of PW1, going CS/551/01 Page 17 of 26 pages contrary to the
documentary records he tried to evade questions regarding involvement of Sh. M.C. Gupta. Contrary
to the documentary evidence PW1 even denied initially in his cross examination that he had
purchased Fintra shares for M.C. Gupta but expressed ignorance as to whether he had pleaded in
injunction suit that the shares were purchased for M.C. Gupta. On being pointed out his own letter
Ex.D1 which reflects purchase of Fintra shares by him for M.C. Gupta, PW1 vaguely stated that both
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Sh. Anil Kumar Gupta vs Sh. O.P. Gulati on 22 November, 2007

statements are correct. Ex.D1 is a letter written by plaintiff to the defendants informing bad delivery
of Fintra shares, in which he categorically stated that buyer of these shares was M.C. Gupta. Even in
the injunction suit Ex.PW1/D2 the present plaintiff joined M.C. Gupta as a co-plaintiff, specifically
pleading in para 3 of the plaint that Fintra shares had been purchased on behalf of M.C. Gupta.
However, towards later part of his cross examination, PW1 admitted that the shares were purchased
on behalf of M.C. Gupta. Besides, as reflected from order dated 16/03/06, that day parties appeared
in person and partly addressed final arguments, during which plaintiff himself categorically argued
CS/551/01 Page 18 of 26 pages that he had sold away Fintra shares to M.C. Gupta and sought
adjournment to bring documentary record of the sale to M.C. Gupta. The overall evidence on record
leaves no room to doubt that the Fintra shares were being purchased by the plaintiff for M.C. Gupta.
It also came up in the testimony of PW1 that he is neither a broker nor a sub-broker. Consequently,
M.C. Gupta being the actual investor, was a necessary party to this suit but not impleaded.
41. Then comes the role of DSE. As reflected from letter Ex.PW1/1, The Delhi Stock Exchange
Association Ltd. held on 30/10/96 that the 26,400 shares of Fintra Capital delivered to the
defendant by Prabhat Investments were found to be stolen shares and hence bad delivery. By the
said letter, DSE directed Prabhat Investments to take back those bad delivery shares and either give
fresh delivery or square up the deal. Apparently, an inquiry was conducted by DSE on the basis of
response from Prabhat Investments, as reflected from photocopies of certain documents on record
which were not formally proved. Finally, vide Ex.DW1/1 dated 01/11/96 the Delhi Stock Exchange
Association Ltd. conveyed to the CS/551/01 Page 19 of 26 pages defendants that the said Fintra
shares were infact not stolen ones but only pledged ones and accordingly the same was a good
delivery. By way of the said letter, DSE directed the defendant to accept the delivery of Fintra shares
and make payment immediately. The core issue being as to whether the Fintra shares were good
delivery or bad delivery, the authority competent to decide the same was certainly a necessary party
but was not impleaded.
42. Even the company Fintra Capital, whose managing director earlier informed theft of the Fintra
shares and subsequently admitted having pledged the shares with M/s Prakash Money and Uttam
Money was not impleaded. Similarly, even Prabhat Investment, the broker of Fintra Capital was not
impleaded.
43. In view of above discussion, issue no.2 is decided in favour of defendants and it is held that suit
is bad for non- joinder of above said necessary parties.
ISSUES NO.3,4&6:44. As reflected from evidence on record and above findings, the Fintra shares were being purchased
by the CS/551/01 Page 20 of 26 pages plaintiff on behalf of M.C. Gupta, the actual investor. At the
same time, plaintiff in his cross examination as PW1 admitted that he is not a sub-broker.
Admittedly, plaintiff is not a registered broker as well.
45. As discussed above, the evidence on record viz. letters Ex.PW1/1 dated 30/10/96 and Ex.DW1/1
dated 01/11/96, initially the Delhi Stock Exchange Association came to a conclusion that the Fintra
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Sh. Anil Kumar Gupta vs Sh. O.P. Gulati on 22 November, 2007

shares were bad delivery but subsequently it held the same to be a good delivery. The delivery was
initially declared bad on the basis of plaintiff's letter Ex.D1 in which he stated that M/s Fintra
Capital had informed M.C. Gupta that the said shares were stolen shares. On the basis of Ex.D1,
defendants issued letter Ex.P4, informing the Delhi Stock Exchange Association Ltd., about the
information that the shares were stolen. But as reflected from letter Ex.DW1/1 of Delhi Stock
Exchange Association Ltd., on inquiry it was found that the said shares were not stolen shares but
pledged shares. As per Delhi Stock Exchange Association letter Ex.DW1/1, these shares were
pledged by the company with one of their financer namely M/s Prakash CS/551/01 Page 21 of 26
pages Money and Uttam Money. As per Ex.DW1/1, the said shares were good for delivery and the
defendant was directed to accept the same immediately and make payment. Competence of the
Delhi Stock Exchange Association Ltd., to decide as to whether a delivery of shares is good or bad is
beyond challenge. Once the Fintra shares were held to be good delivery, having placed order for the
same the plaintiff was duty bound to accept the shares and make payment therefor. But as reflected
from record, what to say of making payment, plaintiff went to the extent of preferring an injunction
suit to restrain the defendant from insisting for delivery of the shares.
46. As reflected from pleadings as well as evidence, specifically Ex.DW1/P1, on account of non
payment by the plaintiff, the Delhi Stock Exchange switched off the trading terminal (Trading Work
Station) of defendants, causing them financial loss and defendant no.1 has already filed a suit for
recovery against the plaintiff.
47. PW1 admittedly did not produce his books of accounts despite directions by my ld. predecessor
in his cross examination. Rather, he deposed that he did not maintain CS/551/01 Page 22 of 26
pages separate accounts and was furnished statements of accounts by the brokers which he used to
cross check with his registers. But even those registers were not produced by PW1 despite directions
of my ld. predecessor in his cross examination. Despite directions in cross examination, PW1 did not
produce even the statement of accounts mentioned in his own letter Ex.P6 regarding the Fintra
shares.
48. Besides the shares of Fintra Capital, plaintiff has also raised a claim of Rs.11,400/- on account of
alleged bad delivery of 300 shares of HDFC Bank. PW1 deposed in his chief examination that he is
entitled to a credit of Rs.11,400/- on account of bad delivery of 300 shares of HDFC Bank vide
letters Ex.P1 and Ex.P2. But the same is not correct. Ex.P1 dated 23/11/96 and Ex.P2 dated
26/11/96 are the bills raised respectively by the defendants and the plaintiff and though both the
bills are pertaining to HDFC Bank shares, the distinctive numbers are different. There is no
evidence on record to show that 300 shares of HDFC Bank were bad delivery.
49. As regards the debit balance of margin money CS/551/01 Page 23 of 26 pages Rs.1,00,000/-,
defendants pleaded in the written statement that the same is to be retained by a broker as a security
to ensure due payments and plaintiff had deposited the security willingly. Defendant pleaded that a
part of the security had been adjusted as margin money with defendant no.1 and part amount has
been adjusted as margin money with the Integrated Capital Services Ltd., company of defendant
no.1 which deals with NSE as a broker.

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Sh. Anil Kumar Gupta vs Sh. O.P. Gulati on 22 November, 2007

50. It would be incorrect to say that margin money of Rs.1,00,000/- could not be debited in the
account as there were no transactions, as pleaded by plaintiff. It is not in dispute that margin money
is kept by the brokers to secure payments in due time pertaining to the transactions done by the
investor. As mentioned above, till date transaction pertaining to Fintra shares has not been
concluded by the plaintiff. Even subsequent to the same, as per plaintiff's own case there were
dealings between the parties pertaining to HDFC Bank shares. Margin money was debited on
16/11/96 and thereafter, there were dealings between the parties regarding Innova Finance,
Chambal Fertilizers and HDFC CS/551/01 Page 24 of 26 pages Bank as reflected from statement of
accounts Ex.PW1/3. As such plaintiff has wrongly pleaded and argued that there were no
transactions between the parties which needed to be secured by margin money.
51. Thence, since Fintra shares were declared to be good delivery by the competent authority; there
is no evidence that HDFC Bank shares were bad delivery; and there were transactions between the
parties which were to be secured by way of margin money of Rs.1,00,000/-, plaintiff had no cause of
action and is not entitled to any amount under these heads. Accordingly issues no.3,4&6 are decided
against the plaintiff and it is held that plaintiff is not entitled to recover any money from the
defendants.
ISSUE NO.7:52. In view of above findings to the effect that plaintiff is not entitled to recover any money from the
defendants, issue no.7 is decided against the plaintiff and he is held not entitled to any interest.
RELIEF:53. In view of above findings, suit of plaintiff is CS/551/01 Page 25 of 26 pages dismissed.
54. Decree sheet be accordingly drawn up and file be consigned to record room.
ANNOUNCED IN THE OPEN COURT ON 22nd November, 2007 (GIRISH KATHPALIA) ADDL.
DISTRICT & SESSIONS JUDGE DELHI CS/551/01 Page 26 of 26 pages

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