TaxTMI 
TaxTMI 
2023 (2) TMI 1323
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....nt suit contending therein that he represents, along with other of his family members, 50% of the total paid up and subscribed share capital of the defendant no.6. He is also one of the Directors of the defendant no. 6. The defendant no. 1, who is the first cousin of the plaintiff, along with the defendant no. 2 and other family members of the defendant no. 1, owns and controls the remaining 50% of the shareholding of the defendant no. 6. It is alleged that the defendant no. 2 is the son of the first defendant, while the defendant no. 3 is the wife of the defendant no. 2. Defendant no. 4 is also related to the first defendant. Though he has no personal shareholding in the defendant no. 6, he is an employee and a Director of the defendant no. 6. It is further alleged that the defendant no. 6 was started by the plaintiff and his parents, and the defendant no. 1 later joined the said business. 3. In the plaint, it is alleged that the defendant no. 5 has been set up by the defendants nos.2 and 3 with active support and encouragement from the first defendant, and is a competitor of the defendant no. 6. The plaintiff further asserts as under: "The prime mover in this conspiracy is the....
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....ld be matters within the exclusive jurisdiction of the learned National Company Law Tribunal (NCLT) and not for this Court to adjudicate on. 5. The plaintiff has prayed for the following reliefs in the Suit: "It is therefore, most respectfully prayed that this Hon'ble Court may be pleased to pass a Decree of Perpetual Injunction against the defendants I to 5 and in favour of the plaintiff restraining the said defendants from in any way, using or misutilising the name Hi TECH and from passing off their goods and services as that of defendant no. 6 and from any business and clientele of defendant no.6 being diverted to defendant no. 5 and from the assets and personnel of the sixth defendant being used or utilised for the business of the defendant no. 5. This Hon‟ble Court may be pleased to award costs of the suit in favour of the plaintiff and against the defendants." 6. This Court by its order dated 10.01.2022, while issuing summons on the suit, passed the following interim order: "19. In the meanwhile, since the plaintiff is in business prior to that of defendant No. 5, hence it would be appropriate if the defendant No. 5 is directed not to use the name HI TE....
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....ivities including orders in hand, incomplete and / or in-progress projects and deliveries that are currently underway and contracts that have been awarded to this company, shall continue to be performed by HITECH till a point of time the HITECH perform its all existing business obligations and also until when neither of the signatories of this consent note strictly on the basis of mutual consent, ceases to perceive any utility in continuing the said business." 8. The above „Brief Note‟ records the broad understanding of the settlement between the parties. It may not in itself be binding on the parties and /or be sufficient to hold that the present suit has been rendered infructuous thereby. 9. By a subsequent settlement dated 22.04.2022, however, it is clearly recorded that "2 new Entities with Hitech Pre Fix open up". The same is signed, apart from the plaintiff and the defendant no.1, also by the defendant no.4. 10. The plaintiff also does not deny that in terms of the above settlement, and taking benefit thereof, the plaintiff opened a new entity by the name „Hi-tech Audio and Image LLP‟ on 09.05.2022. In the new entity, the plaintiff moved the retail....
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....s of their choice. For Hitech Audio Systems Private Limited Pradeep Kumar Gupta Director DIN: Add: Date: Place: Mr.Rajan Gupta representing 50% shareholder of the Hitech Audio Systems Private Limited shall issue the following NOC Letter to Mr. Pradeep Kumar Gupta in favour of the Registrar of Companies, Delhi to facilitate the opening of new company / LLP: To, The Registrar of Companies Central Registration Centre Ministry of Company Affairs Manesar, Haryana Sub: No objection Certificate to use the name of the Company for incorporating a new Company /LLP. Dear Sir/Madam, I, Rajan Gupta, Director of Hitech Audio Systems Private Limited (hereinafter referred as "Company"), on behalf of the Board of Directors of the Company, pursuant to the resolution passed at its meeting held on Friday, 22nd April, 2022 accord no objection to the use of the word 'Hitech Audio' or 'Hitech' and/or any other word from the name or the Company, in incorporation of a new Company / LLP „______ Private Limited' or „__________ LLP' or any other Company /LLP with similar /identical name, by existing promoters /directors of the Company ei....
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....aid provision is not a complete reservoir of power under which a frivolous suit may be nipped in the bud. He submits that the continuation of a suit, which has become infructuous by the disappearance of the cause of action, interest of justice would require that such suit should be disposed of as having become infructuous, and for this purpose, Section 151 of the CPC can be invoked by the Court. 14. On the other hand, the learned counsel for the plaintiff submits that for the purposes of an application under Order VII Rule 11 of the CPC, it is only the averments in the plaint that can be seen by the Court. The documents that have been filed later by the plaintiff cannot be looked into. In support, he places reliance on the judgment of the Supreme Court in Srihari Hanumandas Totala v. Hemant Vithal, Kamat & Ors. (2021) 9 SCC 99. 15. He further submits that, in any case, the above documents of settlement shall bind only the plaintiff and the defendant no.1. They cannot enure to the benefit of the defendant nos. 2,3 and 5. It is only the defendant no.1 who has been allowed to incorporate a new company/LLP with the words „Hi Tech Audio‟ or „Hi Tech‟. The defen....
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....is equitable rule are myriad. We affirm the proposition that for making the right or remedy claimed by the party just and meaningful as also legally and factually in accord with the current realities, the court can, and in many cases must, take cautious cognizance of events and developments subsequent to the institution of the proceeding provided the rules of fairness to both sides are scrupulously obeyed. 23. In the very same case, this Court quoted with approval a judgment of the Supreme Court of the United States in Patterson v. State of Alabama, wherein it was laid down thus: (US p. 607) "We have frequently held that in the exercise of our appellate jurisdiction we have power not only to correct error in the judgment under review but to make such deposition of the case as justice requires. And in determining what justice does require, the court is bound to consider any change, either in fact or in law, which has supervened since the judgment was entered." 24. Almost similar is the view taken by this Court in the case of J.M. Biswas v. N.K. Bhattacharjee wherein this Court held: (SCC p. 71, para 10) "[T]he dispute raised in the case has lost its relevance due to pass....
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....f this Court, while considering whether the provisions of Order VII Rule 11 of the CPC are exhaustive of the circumstances under which a suit may be dismissed prior to trial, observed as under: "55. From the aforegoing, it is clear that the Apex Court has also accepted that Order VII Rule 11 is not exhaustive and frivolous suits may be dismissed as nipped in the bud by relying upon Section 151 of the Code. 56. Therefore, both this Court and the Rajasthan High Court have categorically held that Order VII Rule 11 is not the complete reservoir of power under which a frivolous suit may be nipped in the bud. The view has been accepted by the Supreme Court in Machdado Brother (supra). Even otherwise, I am of the view that the Court cannot be helpless and be forced to continue a vexatious suit, which is an abuse of its process, merely because the same cannot be rejected under the Order VII Rule 11." 21. Applying the above ratio to the facts of the present case, it is evident that after the filing of the suit, the plaintiff, for and on behalf of the defendant no.6 and as a 50% Shareholder thereof, agreed to the defendant no.1, who was executing the agreements for and on behalf of hi....
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....2.04.2022") wherein the terms of the settlement as agreed between the parties were noted and signed by the Plaintiff and the Defendant No. 1 being the representatives of 100% shareholders and also by all the Directors of the Defendant No. 6 Company. Under the said Settlement dated 22.04.2022, the parties agreed that 2 (two) separate entities with the name 'Hitech' would be opened and they would be operated by the PKG Group and the RG Group separately. In terms of the Settlement dated 22.04.2022, the PKG Group executed the existing projects/orders by their existing group entity, i.e. HAVI Design India LLP (hereinafter referred as "HAVI LLP"), whereas the RG Group agreed to take the retail business of the Defendant No. 6 Company including the right to deal with the exclusive brands which are exclusively dealt with by the Defendant No. 6 Company in India. The relevant portion of the Settlement dated 22.04.2022 is reproduced hereunder: "Agreed Terms are as Below:- 1. 2 new Entities with Hitech Pre Fix open up." Copy of the said Settlement dated 22.04.2022 is attached to the present application as Document-6. 15. It is pertinent to mention that the....
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....f obligations under the Initial Settlement dated 22.01.2022, Settlement dated 22.04.2022 and MOM dated 30.07.2022. 18. It is submitted that as per law, a family settlement agreement /arrangement between family members is regarded as the most solemn document enforceable by the courts of law and as such, the written and signed family settlement arrived at hereinabove, contained a mechanism to divide the business of the Defendant No. 6 Company. In the Settlement dated 22.04.2022, there were certain terms which were listed out and it was agreed that the parties would abide by the said terms. 19. Hence, the parties herein have already reconciled and settled all issues between them, including the present issue before this Hon'ble Court, i.e. with respect to the usage of the term 'Hi-Tech'. In view of the abovestated three settlement documents signed between the parties, specifically Settlement dated 22.04.2022, the Plaintiff has already started a new entity by the name Hi Tech Audio Image LLP and has been operating the same since 09.05.2022. Now that the Plaintiff has already signed and, in furtherance, acted upon the abovestated settlement agreements, the cause of....