JUDGMENT
S.B. Sinha, ACJ.
1. This appeal Is directed against a Judgment and order dated 13.5.99 whereby and whereunder an interim order granted by the said court was directed to continue with certain clarification. The said order was passed in a suit filed by the 1st respondent herein, inter alia. praying for the following reliefs:-
“a) Declaration that any settlement, arrangement and/or agreement arrived at by and between the defendants Nos.2 and 3 for acquisition of the entire shareholding of the defendant No. 3 of and in the defendant No. 3 of and in the defendant No. 1 by the defendant No. 2 and/or his associates, is Illegal, null and void;
b) Decree for delivery up of any settlement, arangement and/or agreement referred to in prayer(a) hereinabove and the same be cancelled and adjudged void:
c) Perpetual injunction restraining the defendants and each one of them from giving any effect or further effect to any settlement, arrangement and/or agreement made by and between the defendants or any one of them for acquisition of the entire shareholding of the defendant-No. 3 or any part thereof of and in the company, viz. the defendant No. 1 by the defendant No. 2 or his associates or any other person in any manner whatsoever.
d) Perpetual injunction restraining the defendant No. 3 from receiving any payment as consideration for transfer of its entire shareholding in the company from the defendant No. 2 or any of the defendants in any manner whatsoever.
2. The fact of the matter is as follows:-
One Dinesh Dalmia(Dalmla) filed a suit in the Madras High Court against the appellant-tenant (CDC) and DSQ Software Limited (DSQ), a company controlled by Dalmia contending that he was entitled to buy and CDC was obliged to sell 38 lakh equity shares held by CDC In DSQ. The said suit was compromised on 24th October, 1998 on the following terms:
“a) CDC agreed to sell the shares held by it in DSQ to Dalmia for Rs. 60 crores approximately;
b) Dalmia was requitred to deposit earnest money of Rs. 5 crores with an agreed escrow agent;
c) Dalmia was to pay the balance and and complete the transaction on or before 12.00 noon on November 30. 1998;
d) The share certificates of the shares were to be split into smaller marketable lots by DSQ and delivered to the escrow agent;
e) Dalmia was to obtain all statutory and other permissions for sale of shares;
f) In the event of Dalmia’s failure to complete the transaction by the due date, the earnest money deposited by him, was to be forfeited to the credit of CDC.
3. Pursuant to the terms of the said consent order. Dalmia deposited a sum of Rs. 5 crores with the escrow agent. In the meantime two suits were filed, one by Mr Sampath contending to be a shareholder of DSQ against CDC, Dalmia. DSQ; and the escrow agent being O. S. No. 8053 of 1998 before XIV Assistant City Civil Judge, Chennal. In the said suit it was contended that:
(a) The Plaintiff had, purchased shares in DSQ; relying upon the representation contained in the prospectus of DSQ that CDC was to be a major investor in DSQ.
(b)The compromise between CDC on one hand and DSQ and the respondent No. 3 on the other was in violation of the listing agreement between the Stock Exchanges and DSQ.
4. In the said suit an application for injunction was prayed for and ex-parte ad-interim Injunction was granted whereby CDC and escrow agent were restrained from executing any transfer deeds or transferring or receiving any consideration for the shares held by CDC in DSQ either in favour of Dalmia or his nominee or any third party.
5. Another suit has been filed for the reliefs set out hereinbefore :-
However, Dalmia having not been able to comply with the terms and conditions of the said consent order dated 24th October, 1998, the forfeiture clause came into operation. On 30.11.1998 CDC filed a proceeding before the Madras High Court impugning the ex parte order of injunction passed by City Civil Court and the operation thereof was stayed.
6. The learned interlocutory Judge of this court passed an interim order of staus quo as regard shareholding of CDC and DSQ. An application for vacating ex parte interim order was filed on 8th December, 1998. Two appeals were filed before a division bench of this court against the said orders which were marked as APOT No. 941 of 1998 and APOT No. 942 of 1998. In its order dated 17th December,
1998 a division bench of this court, inter alia, held that neither this Court has any territorial jurisdiction to entertain this suit nor the plaintiff has any locus standi to file the same. In the meantime another application was filed by Dalmia before the Madras High Court praying that a reasonable time be fixed for payment of consideration on the ground that he was prevented from performing his obligation due to Interim order passed in the aforesaid two suits.
7. The said application was dismissed by Chistian, J. by an order dated 9th February, 1999 and infer alia holding that the suits filed before City Civil Court, Channal and this court, appeared to have been filed at his Instance. Against the said order an appeal was preferred which was also dismissed. In the meantime the repondent No. 1 filed an application for leave to appeal before the Supreme Court of India against the order of the division bench dated 17th December. 1998 and by an order dated 8.3.99 the special leave petition was dismissed as withdrawn in the following term:-
“Heard learned counsel for the parties. Mr. Chidambaram. learned senior counsel appearing for the third respondent stated that the petitioners may be and can be permitted to take up contentions before the learned single Judge of the Calcutta High Court relating to sections 13 and 16 of the Security Contracts (Regulation) Act. 1956. The third respondent will reply to such contentions if found necessary in accordance with law.
8. The Division Bench at page 10 of its Order has stated
“It appears to us prima facie that apart from the fact that this Court does not have the Jurisdiction to entertain that suit, the plaintiff does not have the locus standi to raise any of the issues it has nor is it entitled to the reliefs claimed.”
This finding in our opinion is again a prima facie and the parties are not prevented from taking up rival contentions as regards to Jurisdiction and locus standi. In view of the above statement and the Order made by us, learned counsel for the petitioners applies for withdrawal of the SLP. The SLP is didmlssed as withdrawn.”
9. On or about 7th April, 1999 the first respondent made a second application in the pending suit in Calcutta on similar grounds whereupon by order dated 7th April, 1999, an ex parte interim order was granted stating :
“The Special Leave Petition was disposed of by the Hon’ble Supreme Court on the aforesaid basis. Now the plaintiff has filed a fresh application. It appears that the grievance of the plaintiff is that the purported settlement between the defendant Nos. 2 and 3 with regard to the transfer of shares is violative of the provisions of sections 13 and 16 of the Securities Contracts (Regulation) Act.
Having regard to the aforesaid submissions I pass the following order:
There will be an ad-interim order of status quo with regard to the transfer of the subject shares until further orders.
It also appears that the other application is still pending before this court. Accordingly, the said application as well as this application shall appear as ‘New Motion’ on 12th April, 1999.”
10. The said interim order was directed to continue until further
orders by an order dated 9.4.99. The matter was again mentioned before the learned trial Judge on 13.5.99. On the said date the following order was passed :
“The interim order passed earlier will continue and the same ia clarified to the extent only that there will be no dematerialisatlon of any of the shares.”
11. Mr. S.K. Kapoor , the learned counsel appearing on behalf of the appellant, inter alia, submitted that keeping in view the orders passed by the Division Bench of this Court as also the Madras High Court, the plaintiff-respondent cannot be said to have any prima facie case. According to the learned counsel the application filed by the first respondent herein was barred under the principles of resjudicata. Reliance in this connection has been placed on Satyadhyan Ghosal and Ors v. Smt. Deorajin Debi . and Arjun Singh v Mohindra Kumar and othere .
12. Mr. Kapoor would urge that a fresh application for interin order was not maintainable keeping in view the observation of the Supreme Court inasmuch as the special leave petition was dismissed as withdrawn and only the contentions of the learned counsel for the defendant were noted there and neither the said contention was accepted by the Supreme Court nor upheld and in any event, the Supreme Court having not pronounced its Judgment as regards the correctness or otherwise of the findings of the Division Bench of this Court that the plaintiff neither has any locus standi to maintain a suit nor this Court has any territorial jurisdiction to entertain this suit, the said findings are binding in the interlocutory stage. It was further submitted that in any event, in view of the decision of the Madras High Court, to the effect Dalmia is in collusion with the pallntiff and these applications have been filed with a view to aid or abet the decision of Dalmia despite the fact that he has failed to perform his obligation in terms of the consent order, the plaintiff by reason of his conduct has disentitled himself from obtaining any equitable relief.
13. Mr. Sen, the learned counsel appearing on behalf of the plaintiff-respondent, and Mr. Banerjee, the learned counsel appearing on behalf of the respondent No. 3, on the other hand, submitted that a shareholder has an independent right to file a suit questioning invalidity of a transaction if the same has been entered into in contravention of a mandatory provision of statute. The learned counsel contends that as a promise was made in contravention of the provision of sections 13 and 16 of the Securities Contract (Regulation) Act. the suit was maintainable. The learned counsel submits that as the contract was illegal and the defendant was a party to the said illegality, the court would not pass any order in his aid and in support of the said proposition has relied upon a passage from Anson’s Law of Contract, 27th Edition, at page 381.
14. The judgment of the Division Bench of this court dated 17.12.1998 was binding upon the learned single Judge. It may be true that the Division Bench on the earlier occasion had not entered into the question as regards the applicability of the provision of section 13 of the Securities Contracts (Regulation) Act but that does not mean that only because the counsel for the appellant accepted before the Supreme Court that such a question may be raised in the suit, the same by itself cannot be said to have done away with the findings of the-division bench.
15. Before passing an order of injunction in the same suit the maintainability whereof was in question, the learned trial Judge was under an obligation to examine the same in great details. The learned trial Judge has not done so. In fact, no reason has at all been assigned in support of his orders which are in the teeth of the direction issued by the Supreme Court in Shiv Kumar Chadha v. Municipal Corporation of Delhi and Morgan Stanley Mutual Fund v. Karlick Das .
16. Furthermore, it is a well settled principles of law that grant of injuction is an equitable relief. Such an equity can only be claimed by a person who approaches the Court with clean hands. Prima facie, a finding has been arrived at by the Madras High Court that Dalmia, Sampath and the plaintiff are acting in collusion and in conspiracy with each other. Such a finding merits serious consideration before coming to the conclusion that the plaintiff is entitled to obtain an equitable relief from this Court. In any event, keeping in view the stand taken before us by Mr. Kapoor. we are of the opinion, that hardly any case remains for going to trial. Mr. Kapoor has stated before us that the compromise petition having fallen through, the question of passing of any decree as prayed for by the paintiff in terms of prayer(a) of the plaint does not arise and consequently even prayer(b) could also be allowed. Mr. Kapoor had stated that his client shall nut sell his shares in favour of the defendant. It was submitted by the learned counsel that in the aforementioned situation it would be inequitable to restrain the appellant from selling his shares to any other person. in our opinion, the submission of Mr. Kapoor has substance. A share holder is entitled to sell his share to any person he likes. He may also sell his shares at any time he likes. Such exercise volition on the part of the share-holder cannot be a subject matter of a restraint order unless there exists very strong and cogent reasons therefor. Keeping in view the facts and circumstances of this case we are of the opinion, that there did not exist any such reason.
17. It is now well settled principles of law that the principles of res judicata apply in different stages of the same suit. When the Division Bench allowed the appeal from the order of the learned Interlocutory judge had arrived at some prima facie findings. Those findings being prima facie in nature, might not be binding on the trial court while hearing the suit. But such findings are binding upon the learned trial court at the interlocutry stage.
In Y. B. Patil & Ors. v. Y. L. Patil reported in AIR 1977 SC 392 It has been held by the Apex Court that the principles of res-judicate applies in different stages of the same proceedings. Reference in this connection may be made to Satyadhyan Ghosal & Ors. v. Smt. Deorajin Debi and Arjun Singh v. Mohindra Kumar and others .
18. A Court can pass an order of injunction provided it has territorial Jurisdiction to entertain the suit. There exists a prima facie finding that this court does not have any such territorial jurisdiction. There also exists a finding that the plaintiff has no locus standi to maintain this suit. If the suit was not maintainable evidently the learned trial Judge could not have passed an order of injunction. Such an order, prima facie, must be held to have been passed non corarn judice.
19. In view of our findings aforementioned it is not necessary for us to go into the question as to whether by reason of the compromise entered into by and between Dalmia and the appellant herein, any illegality has been committed so as to attract the provision of section 23 of the Indian Contract Act. Even assumig that the said contract was Illegal having been entered into in contravention of the provision of section 13 and 16 of the Act. the same having admittedly fallen through, it is not necessary for this court to set aside the same. The Court must not go into such an academic question as the purpose of the plaintiff for which the suit has been filed has been fulfilled. In that view on the matter invocation of the doctrines of “ex dolo malo non oritur act to or ex turpi causes” are only of academic interest.
20. It has been submitted by Mr. Sen that the appellant has taken benefit of the said compromise. Mr. Banerjee supported the stand of Mr. Sen. However, keeping in view the conduct of the parties viz. the respondent Nos. 1 and 3 herein, we are prima facie of the opinion, that both are sailing in the same boat. We are therefore, of the view that it is not necessary for us to go into the larger question raised by Mr. Sen as to whether the said compromise decree is a nullity being opposed to the public policy or not.
For the reasons aforementioned this appeal is allowed. The impugned Judgment and order is set aside. In the facts and circumstances of this case there will be no order as to costs.
M.H.S. Ansari. J.
21. I agree.
22. Appeal allowed