TaxTMI 
TaxTMI 
2016 (2) TMI 644
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....ty Four Crores Twenty Eight Lacs Twenty Seven Thousand Nine Hundred and Eighty Seven only) together with simple interest @ 15% on the sum of Rs. 24,92,00,000/- (Rupees Twenty Four Crores and Ninety Two Lacs only) from October 01, 2012 till date of payment. VLS was to transfer its shareholding in favour of the Gupta Group and the Jain Group in BMS. BMS is named BMS IT Institute Pvt. Ltd. It is a company registered under the Companies Act, 1956. The Gupta Group comprises Dinesh Kumar Gupta and his wife Madhu Gupta. The Jain Group comprises Kailash Chand Jain, Parul Jain, Ankit Jain, Santosh Kumar Jain, Subhash Chand (HUF) and Swati Jain. Navjeevan is named Navjeevan Associates Pvt. Ltd. It is a company registered under the Companies Act, 1956. NPMG is named NPMG Developers Ltd. It is a company registered under the Companies Act, 1956. Southend is named Southend Infrastructure Pvt. Ltd. It is a company registered under the Companies Act, 1956. 3. To secure the sum as per the award VLS filed the petition under Section 9 of the Arbitration and Conciliation Act, 1996 praying as under:- "(i) Direct the Respondent Nos. 2 to 10 to jointly deposit in a no lien interest bearing ac....
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....os.2 to 10 shall not sell, encumber, alienate and deal with the properties and equity shares of various companies listed by them in their respective affidavits filed on March 27, 2015. (ii) The respondent Nos.2 to 10 shall maintain status quo with respect to title and possession of the property at C-20, 1A/10, Block-C, Sector-62, Noida, U.P. (iii) The respondent Nos.2 to 10 shall not deal with the shares of respondent Nos.1, 11 & 12 and also with respect to shares of respondent Nos.2 to 10 no transfer will be registered by respondent Nos.1, 11 & 12." 6. The grievance of VLS in FAO (OS) No.295/2015, is premised on the alleged inadequacy to secure the sum awarded. The main grievance relates to directions not being passed injuncting Southend concerning property bearing B-319, Okhla Industrial Area, Phase-I which property has been encumbered by Southend in favour of one M/s.Wonder Space Properties Pvt. Ltd. 7. Grievance of the Jain Group in FAO (OS) No.503/2015, is to they being restrained from encumbering their properties disclosed by them in their respective affidavits filed on March 27, 2015. 8. Grievance of the Gupta Group in FAO (OS) No.411/2015 is to th....
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....l particulars in the pleadings and sans any material to make good the plea. A sum of Rs. 42,47,214/- (Rupees Forty Two Lacs Forty Seven Thousand Two Hundred and Fourteen only) has been advanced to one Sushma Mittal, wife of Mangal Singh Mittal, a shareholder in BMS. As per Southend the shareholding of the Gupta Group and the Jain Group between the years 2009 and 2014, has fluctuated, and it would be useful if we put it in a tabular form. It would be as under:- Annual Return as on 30/09/2009-25/09/10 Annual Return as on 26/09/2011-12 Annual Return as on 23/09/2013 Annual Return as on 24/06/2014 Dinesh Kumar Gupta - R2 210250 shares 410250 shares 263250 shares 189250 shares Madhu Gupta - R 3 12250 shares 12250 shares 12250 shares 12250 shares Subhash Chand - R 8 5000 shares 5000 shares 5000 shares 5000 shares Priyanka Gupta (Daughter of R2 & R3) 20000 shares 20000 shares 20000 shares 20000 shares Chhaya Jain(Family member of R4 & R7 10000 shares 10000 shares 10000 shares 10000 shares Reetu Jain (Family member of R4 & R7) 5000 shares 5000 shares 5000 shares 5000 shares An....
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....oncerning their individual properties and shareholding in the companies, with further direction against BMS, NPMG and Southend not to register transfer of their shares is fully justified. 13. That apart, as has been noted by the learned Single Judge the Guptas and the Jains have prima-facie violated the interim order dated April 27, 2012 passed in OMP No.383/2012. Attempt made by them evinced by filing IA No.10835/2014 seeking modification of the injunction order passed against them to get around the order by offering to submit a bank guarantee, but not abiding therewith, also justifies a restraint order against them and concerning their shares in BMS, NPMG and Southend. They have faced contempt action thrice. The same is an add-on factor to justify the first and the third interim measure granted against them. 14. Thus, challenge by the Gupta Group and Jain Group concerning the first and the third interim measure granted by the learned Single Judge is therefore repelled by us. 15. We therefore can focus with precision concerning the second interim measure directed i.e. the Gupta Group and the Jain Group to maintain status quo with respect to title and possession of the Noi....
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....dings Pvt. Ltd. and Chaurasia Holdings Pvt. Ltd. would be 51.943%. 21. Concerning flow of funds to Southend, the only averment apart from dilution of shareholding of the Gupta Group and the Jain Group in the company, would be:- "The appellant has now learnt that the NPMG in turn also gave loans to Southend. In this manner, the appellant's investment in BMS was siphoned off by the respondents and moneys given to Southend." 22. Unless, on the principles analogous to the principles of tracing, case is made out on facts concerning Southend, no relief can be granted to VLS concerning the assets of Southend. 23. That takes us to identifying the principle of tracing. 24. The said principle was applied by the House of Lords in (1992) 4 All.ER 512 Lipkin Gorman versus Karpnale. The facts were that one Cass, a partner in a solicitors' firm had withdrawn money and gambled at the defendant's casino and had lost GBP154695 out of the funds/money derived/withdrawn from the solicitors' firm. The solicitors firm claimed restitution of the said amount by relying upon law and equity. Lord Templeman in his speech observed :- "Conversion does not lie for money, taken and r....
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....ch right; therefore the absence of any consideration entitles the plaintiffs to maintain this action, and still more so where the money has got into the defendant's pocket through the medium of a fraud." Here the money of the solicitors got into the pocket of the club without any consideration." 27. Making a reference to the decision reported as 1881 (18) Chan DW 188 Bianbrigge v Browne it was observed:- "In Bainbrigge v. Browne (1881) 18 Ch.D. 188, the plaintiff children, under the influence of their father, charged by deed their reversionary interest under a settlement as security for advances made by the defendants to the father. Fry J. held, at p. 197, that undue influence: "operates against the person who is able to exercise the influence (in this case it was the father) and in my Judgment, it would operate against every volunteer who claimed under him, and also against every person who claimed under him with notice of the equity there by created or with notice of the circumstances from which the court infers the equity." On the facts the defendants who were not volunteers did not have the requisite notice and were entitled to enforce....
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....wise, if they cannot be followed and identified, because there it might be inconvenient and open a door to fraud. Miller v. Race, 1 Burr. 452: and in Golightly v. Reynolds (1772) Lofft. 88 the identity was traced through different hands and shops. Here the plaintiff sues for his identified property, which has come to the hands of the defendant iniquitously and illegally, in breach of the Act of Parliament, therefore they have no right to retain it: and consequently the plaintiff is well entitled to recover." 31. In his concurring opinion in Lipkin's case, turning to the question of title of money, Lord Goff observed that the plaintiff is entitled to succeed against a third party for money had and received and available for use by the third party, though not if third party had received the money in good faith and for valuable consideration. This was because property in money like other fungibles is lost as much as it is mixed with other money but this is not applicable when the action is founded upon the wrong by a third party. In fact it was conceded by the defendant-club that the solicitors can establish legal title to money and the title was not defeated by mixing of money wit....
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.... such as those in the present case, if a thief steals my money and pays it to a third party who gives it away to charity, that third party should have a good defence to an action for money had and received. In other words, bona fide change of position should of itself be a good defence in such cases as these. The principle is widely recognised throughout the common law world. It is recognised in the United States of America (see Restatement of Restitution, para. 142, and Palmer on Restitution, vol. III, para. 16.8); it has been judicially recognised by the Supreme Court of Canada (see Rural Municipality of Storthoaks v. Mobil Oil Canada Ltd. (1975) 55 D.L.R. (3d) 1); it has been introduced by statute in New Zealand (Judicature Act 1908, section 94B (as amended)),and in Western Australia (see Western Australia Law Reform (Property, Perpetuities and Succession) Act 1962, section 24, and Western Australia Trustee Act 1962, section 65(8)), and it has been judicially recognised by the Supreme Court of Victoria (see Bank of New South Wales v. Murphett [1983] 1 V.R. 489). In the important case of Australia and New Zealand Banking Group Ltd, v. Westpac Banking Corporation (1988) 78 A.L.R. ....