TaxTMI 
TaxTMI 
2025 (3) TMI 205
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.... the Writ Petition and directing the O.P. No.6, Serious Fraud Investigation Office, to conduct an enquiry in the right earnest and if the Opposite parties fail to show cause or show insufficient cause the Hon'ble Court may further be pleased to make the said rule absolute." I. FACTUAL MATRIX OF THE CASE: a) The case as sought to be canvassed by the Petitioners herein is that they claim to be legal heirs of one Late Kumar Harishchandra Deo, who is alleged to have 500 shares of the Company i.e. Opposite Party No. 8 M/s Bonai Industrial Company Limited (hereinafter referred to as the "Company"). The said Late Kumar Harishchandra Deo is stated to have died in the year 1970. The Petitioners i.e the alleged legal heirs allege that Opposite Parties No. 9-15 herein have fraudulently usurped the shares as well as the directorship of Late Kumar Harishchandra Deo in the Opposite Party No. 8 Company. b) The said Company was incorporated under the Indian Companies Act, 1913 on 06.10.1939. There were 9 registered shareholders in the Company wherein Late Kumar Harish Chandra Deo was holding 500 shares from out of the total of 925 shares. In course of time, new Articles of Association was....
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.... the Registrar of Companies without his consent. f) The Petitioners further state that in order to unearth the fraud committed, the petitioner and legal heirs of Late Harishchandra Deo filed various RTI applications before the ROC, Cuttack. One such RTI application was filed by one Anup Kumar Singh Deo (one of the successors of Late Harishchandra Deo) with the office of the ROC on 21.08.2013 requesting information regarding the shares of Late Harishchandra Deo. The CPIO of RoC Cuttack replied stating that the information sought is public in nature and may be accessed in the official website under Section 610 of the Companies Act 1956 on payment of fees. It also mentioned that the RTI applicant may approach the concerned company for the required information. However no such information was available on the website. g) A show cause notice was issued by the ROC Cuttack to the Company under Section 234 (1) of the Companies Act 1956 requiring the company to furnish the certified copy of register of members, board's minute book, name and addresses of the shareholders from 1965 till the date of notice, copy of resolutions regarding allotment of shares, return of allotment. h) The....
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....dated 20.12.2017 for necessary action at their end. l) The ROC, Odisha, vide letter ROC/ COMT/ 2018/3274 dated 16.01.2018 intimated to the petitioners that since matter similar to their complaint dated 12.11.2017 and referred to it by SFIO has been dealt with earlier no further investigation is warranted in the present case. From a perusal of the pleadings in the present Writ Petition, it seems that the Petitioners and others have approached authorities including the Registrar of Companies (ROC) and the said Authority which after application of mind seems to have arrived at a conclusion that no illegalities as attributed are made out against the Opposite Parties herein. It is this finding by the ROC which formed the substratum of the grievance of the Petitioners herein. At least, on a cursory reading of the Petition that is how the grievance has been packaged, however, there is more to it than it meets the eye. II. PETITIONERS' SUBMISSIONS: 2. Ld. Sr. Counsel S. K. Padhi appearing for the Petitioners contends that through the present Writ Petition, the Petitioners have only sought for a direction to Opp. Party No.6 to conduct an inquiry on the fraudulent transfer of sha....
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.... any suppression of facts by the petitioners as some of these developments have taken place after filing of the present petition, hence, the present petitioners they are not required to disclose the same. Insofar as the public interest litigations filed by third party strangers were concerned it was submitted that the petitioners had no knowledge of the same and that they could not be taken to task for the same. It is again submitted that the PILs were filed by dubious persons and the Opp. Party No. 8 Company should not be allowed to take advantage of the same to evade investigation of fraud as alleged in the present petition. It has also been submitted that civil suits filed by the other relatives of the petitioner have no bearing on the present case and hence we are not required to be mentioned. 5. The Ld. Senior Counsel for the petitioner also relies on the response of the Registrar of Company which while disposing of the impugned order states "if you find aggrieved that the shares has been transferred fraudulently you may approach the appropriate forum for redressal". It was thus submitted that neither was there any suppression of facts nor were the issues raised in the pres....
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....in the matter. Lastly, it was mentioned that in case the petitioner felt aggrieved that the shares had been transferred fraudulently they may approach the appropriate forum for a redressal. 9. Another contention raised is that the writ petition raises questions which partake purely of a private law character and on that count also the petition is not maintainable. The entire basis of the Petitioners' case is that they claim to be legal heirs/ successors-in-interest of one Late Kumar Harishchandra Deo, who is alleged to have held 500 shares and was a 54% shareholder of the Company, and he died in 1970. The Petitioners case is also that the predecessors-in-interest of the Opposite Parties No. 9-15 have fraudulently usurped the shares / directorship of the said Late Kumar Harishchandra Deo in the Opposite Party No. 8 Company. It is seen that the grievance arises out of letter dated 16.01.2018. The allegation made or the information sought for therein relates to the alleged fraud conducted with regard to the illegal share transfer of one Late Harishchandra Deo which admittedly occurred prior to the year 1970. A bare perusal of this grievance shows that the Petitioners' imaginary cla....
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....t is deemed appropriate to first understand the backdrop of the other proceedings and the nature of the challenge therein. It is even more relevant given the fact that there is a commonality of the parties involved and that the subject matter relates to a dispute with regard to the share transfer of Late Harishchandra Deo. What is also required to be seen that while invoking the Writ jurisdiction of this court whether the petitioners have indeed suppressed any material facts as has been alleged vehemently by the Ld. Counsels appearing for the opposite parties. Civil Suit No. 18 of 2015 Civil Suit by Smt. Rajshree Devi (Sister of Petitioner No. 1) 13. The prayer urged by the Plaintiffs in CS No. 18 of 2015 sought declaration that (a) Late Kumar Harishchandra Deo had right, title and interest over 500 share hold right in the Company (b) the plaintiff and the defendant Nos.15 to 38 therein (which includes both the Petitioners herein) have jointly acquired the right, title and interest in place of Late Harishchandra Deo (c )partition of the shares amongst the plaintiff and defendant Nos.15 to 38 (d) decree for permanent injunction be passed restraining the defendant Nos.2 to 1....
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....to know about the alleged usurpation of shares. The period of limitation even as per the case averred would start to begin from the date of discovery i.e. 31.12.2009 and that the suit ought to be filed within 3 years therefrom. Thus, the suit having been filed in 2015 would be barred by limitation. Therefore having rendered such findings the Ld. Trial Court proceeded to reject the Plaint of the Plaintiffs under Order 7 Rule 11 of the CPC on 23.07.2015. RFA 25 of 2015 (18.7.2022) 18. The aforesaid order dated 23.7.2015 passed in the Civil Suit was carried in appeal in RFA 25 of 2015. The Ld. Court framed 7 issues to decide the lis at hand. Out of the 7 issues, Issue No. (vi) and Issue No. (vii) were decided in favour of the defendants therein. Issue No. (vi) dealt with the question as to whether the plaint was barred by law and on that ground it ought to be rejected under Order 7 Rule 11 of CPC. This issue was dealt with in two parts. The first part being the issue of determination of the date for the computation of limitation. The Ld. Court below returned a finding that; "......Scrutiny of the above said averments made in the plaint, establish the fact that the plain....
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.... It was further held that in view of the provisions contained in Section 430 of the Companies Act, 2013 the jurisdiction of the Civil Code stands ousted and thus the rejection of plaint being barred by operation law was justified. Resultantly, the appeal under Section 100 of the CPC was dismissed by this court and the judgement and decree passed by the Trial Court as well as the First Appellate Court were confirmed. As on date, no appeal has been filed against the said Judgment dated 15.02.2023 and hence, the same has attended the finality and the Petitioners have no right in law to the shares so claimed. 22. It is a pertinent to notice at this juncture that while the suit was decreed on 23.7.2015 against the petitioners herein on and they had filed the Writ Petition sometime in the year 2020. As on that date, at time of filing of the present Writ Petition, they had no right over the shares in question which had been decided against them. Such a material fact where the petitioners themselves were parties ought to have been brought to the notice of this Court. Non-disclosure of the same raises grave doubts as to the bona fide of the present petitioners. Civil Suit by Anil Kuma....
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....de this Court's order dated 09.10.2017 with a liberty to approach such other appropriate authorities available in law for redressal of grievances. The prayer in the said writ petition was to restore the share of Late Harishchandra Deo in Opp. Party No. 8 Company who had 500 shares out of 950 shares which had been fraudulently transferred to the Opp. Parties Nos. 6 to 12 therein and to issue appropriate direction to induct the petitioner therein as a shareholder in the company as the successor in interest of Late Harishchandra Deo. The declaration that has been made by the petitioners herein is that "However the matter was before this Hon'ble Court in of W.P. (C) No. 9693 of 2017, disposed of on 09/10/2017, and at the instance of some other persons CMP No. 861 of 2016 and CMP NO. 1133 of 2016 are pending before this Hon'ble court." 26. What is interesting to note at this juncture is that all the parties who have been embroiled in litigation and has been discussed herein, are in fact the third generation of the Late Harishchandra Deo and it is the admitted case of the so called successors in interest that the change in the constitution of the board of directors of the company ....
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....n his conduct except to advise him to be careful in future and not be a party to such a litigation initiated by unscrupulous litigants. The Registry is also directed to stringently comply with the rules as indicated hereinabove while dealing with Public Interest Litigations so as to prevent valuable judicial time from being wasted and prevent certain unscrupulous elements from weaponizing petitions in courts of law. 11. We feel constrained to direct the petitioners (10 in number) to deposit cost of Rs. 5,000/- each (totaling Rs.50,000/-) before the Orissa High Court Bar Association Advocates Welfare Fund positively within four weeks from today, failing which Collector, Keonjhar shall proceed to recover the same as arrears of land revenue and ensure the deposit of the recovered amount as stated hereabove." 31. Impugning the aforesaid judgment of this Court in the above PIL, the Petitioners therein preferred SLP(C) No. 8637 of 2022 and Diary No. 12976 of 2022 before the Supreme Court which was pleased to dismiss the above Petitions with cost of Rs. 25,000/- on 9.09.2022.The relevant portion of the order passed by the Supreme Court is as follows; "Having heard sen....
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.... Association would move an application before the Collector, Keonjhar, who shall proceed to recover the same as arrears of land revenue and ensure deposit of the recovered amount as stated above. 11. In view of the above, the writ petition being W.P.(C) No. 1416 of 2021 and I.A. No. 12110 of 2022 are dismissed with costs, as determined here above." 34. It is thus clear that the conduct of Petitioners in the instant writ petition has been dubious and approached the court with unclean hands and have sought to abuse of the process of law. And as such they cannot be permitted to perpetuate an endless cycle of re-litigation on exactly the same subject matter, more so by suppressing such material information. 35. The present Writ Petition raises issues that have already been adjudicated upon multiple times by courts of competent jurisdiction, at various stages, including the Hon'ble Supreme Court. Therefore, by way of the present writ petition, the Petitioners are seeking to re-agitate and re-litigate matters which already stand finally decided. 36. In fact, this Court cannot ignore the fact the Petitioners might be in cahoots with other setup unscrupulous persons who h....
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.... Commission Report, or base any of its conclusions on the Shah Commission Report, in view of the fact that the Commission had not complied with Sections 8B and 8C of the Commissions of Inquiry Act, 1952. This contention need not be gone into as the Petitioners only case is that they came to know of the alleged illegal share transfer only upon the formation of the Commission in 2009. Thus, it seems that the reference to the formation of the commission has been done to justify the starting point and cause of action in the litigation and nothing more. 39. In the case of Prestige Lights Ltd. v. SBI (2007) 8 SCC 449 it was held that in exercising power under Article 226 of the Constitution of India the High Court is not just a court of law, but is also a court of equity and a person who invokes the High Court's jurisdiction under Article 226 of the Constitution is duty-bound to place all the facts before the Court without any reservation. If there is suppression of material facts or twisted facts have been placed before the High Court then it will be fully justified in refusing to entertain a petition filed under Article 226 of the Constitution. This Court referred to the judgmen....
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.... 493); Kishore Samrite vs. State of U.P. & Ors (2013) 2 SCC 398.; All India State Bank V. Chandrasekaran & Anr. vs. The Administrative Officer & Ors (2012) 10 SCR 603.; Amar Singh vs. Union of India & Ors (2011) 7 SCC 69. (C) WHETHER THE ISSUES RAISED IN THE PRESENT PETITION ARE BARRED BY RES JUDICATA/ CONSTRUCTIVE RES JUDICATA: 42. The Hon'ble Supreme Court recently in the case of Celir LLP Vs Sumati Prasad Bafna & Ors. 2024 SCC Online SC 3727 has exhaustively dealt with the principle of Res Judciata/ Constructive Res Judicata and has propounded the "Henderson principle" as a corollary of Constructive Res-Judicata. It is therein been recognized that the is intrinsically tied to "issue estoppel" and "cause of action estoppel". The relevant passages from the aforesaid judgement dealing with the proposition make for profitable and delightful reading. The relevant passages are extracted hereinbelow; "135. The 'Henderson Principle' is a foundational doctrine in common law that addresses the issue of multiplicity in litigation. It embodies the broader concept of procedural fairness, abuse of process and judicial efficiency by mandating that all claims and issues that coul....
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....son Principle' and underwent significant evolution, adapting to changing judicial landscapes and procedural requirements. The House of Lords in Johnson v. Gore Wood & Co, [2002] 2 A.C. 1, upon examining the 'Henderson Principle' authoritatively approved it with the following observations:- (i) Lord Bingham of Cornhill integrated the principle with the broader doctrine of abuse of process and held that the bringing of a claim or the raising of a defence in later proceedings which ought to have been raised earlier will not always be hit by this principle, but rather will apply where such point is sought to be raised as an additional or collateral attack on a previous decision and the bringing forth of such ground amounts to misusing or abusing the process of the court or as a means for unjust harassment of a party. The relevant observations read as under:- ""Henderson v. Henderson abuse of process, as now understood, although separate and distinct from cause of action estoppel and issue estoppel, has much in common with them. The underlying public interest is the same : that there should be finality in litigation and that a party should not be twice vexed in the sam....
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....o limit what he was saying to cases which had proceeded to judgment, and not, as in the present case, to an out of court settlement. Later decisions have doubted the correctness of treating the principle as an application of the doctrine of res judicata, while describing it as an extension of the doctrine or analogous to it < But these various defences [res judicata, issue or cause of action estoppel] are all designed to serve the same purpose : to bring finality to litigation and avoid the oppression of subjecting a defendant unnecessarily to successive actions. While the exact relationship between the principle expounded by Sir James Wigram V-C and the defences of res judicata and cause of action and issue estoppel may be obscure, I am inclined to regard it as primarily an ancillary and salutary principle necessary to protect the integrity of those defences and prevent them from being deliberately or inadvertently circumvented. In one respect, however, the principle goes further than the strict doctrine of res judicata or the formulation adopted by Sir James Wigram V-C, for I agree that it is capable of applying even where the first action concluded in a settlement. Here....
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....ill took up the earlier suggestion of Lord Hailsham of St Marylebone LC in Vervaeke (formerly Messina) v. Smith [1983] 1 A.C. 145, 157 that the principle in Henderson v. Henderson was "both a rule of public policy and an application of the law of res judicata". He expressed his own view of the relationship between the two at p. 31 as follows: "Henderson v. Henderson abuse of process, as now understood, although separate and distinct from cause of action estoppel and issue estoppel, has much in common with them. The underlying public interest is the same : that there should be finality in litigation and that a party should not be twice vexed in the same matter. This public interest is reinforced by the current emphasis on efficiency and economy in the conduct of litigation, in the interests of the parties and the public as a whole"." (Emphasis supplied) 139. Even in a common law action it was said by Blackburn, J.: "I incline to think that the doctrine of res judicata applies to all matters which existed at the time of giving of the judgment, and which the party had an opportunity of bringing before the Court." See : Newington v. Levy, [L.R.] 6 C.....
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....olicy, and (ii) the interest of the individual that he should be protected from multiplication of litigation. It therefore serves not only a public but also a private purpose by obstructing the reopening of matters which have once been adjudicated upon. It is thus not permissible to obtain a second judgment for the same civil relief on the same cause of action, for otherwise the spirit of contentiousness may give rise to conflicting judgments of equal authority, lead to multiplicity of actions and bring the administration of justice into disrepute. It is the cause of action which gives rise to an action, and that is why it is necessary for the courts to recognise that a cause of action which results in a judgment must lose its identity and vitality and merge in the judgment when pronounced. It cannot therefore survive the judgment, or give rise to another cause of action on the same facts. This is what is known as the general principle of res judicata. 4. But it may be that the same set of facts may give rise to two or more causes of action. If in such a case a person is allowed to choose and sue upon one cause of action at one time and to reserve the other for su....
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....ised issue estoppel," where an issue is sought to be litigated which could, and should, have been raised in a previous action but was not raised; (iv) a further extension of the aforesaid to points not raised in relation to an issue in the earlier decision, as opposed to issues not raised in relation to the decision itself. 146. As part of the broader rule against abuse of process, the Henderson principle is rooted in the idea of preventing the judicial process from being exploited in any manner that tends to undermine its integrity. This idea of preventing abuse of judicial process is not confined to specific procedure rules, but rather aligned to a broader purport of giving quietus to litigation and finality to judicial decisions. The essence of this rule is that litigation must be conducted in good faith, and parties should not engage in procedural tactics that fragment disputes, prolong litigation, or undermine the outcomes of such litigation. It is not a rigid rule but rather a flexible principle to prevent oppressive, unfair, or detrimental litigation. 149. Piecemeal litigation where issues are deliberately fragmented across separate proceedings to ....
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....resources but also subjects the opposing party to unnecessary expense and harassment. judicial processes are not merely technical mechanisms but are rooted in principles of equity and justice. 153. Both logic and principle support the approach that the judicial determination of an entire cause of action is in fact the determination of every issue which is fundamental to establishing the entire cause of action. Thus, the assertion that the determination is only on one of the issues is flawed as it is nothing but an indirect way of asserting that the whole judgment is flawed and thereby relitigating the entire cause of action once more. The effect of a judicial determination on an entire cause of action is as if the court had made declarations on each issue fundamental to the ultimate decision." 43. The Supreme Court in the case of Devilal Modi v. Sales Tax Officer, Ratlam AIR 1965 SC 1150, clarified and highlighted the need to extend rule of constructive res judicata to writ proceedings. It was held that it would not be open to the party to take one proceeding after another and urge new grounds every time, and would be inconsistent with considerations of public policy. T....
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....ad occurred at that point in time when that prior Writ Petition had been filed. That being the case, the instant case is squarely covered by the discussion here in above. The subsequent/ successive petition i.e. the present petition would be barred by the principles of constructive res judicata by applying the "Hendersen principle" as enunciated hereinabove. 46. From a conjoint reading of the aforesaid it emerges that both Petitioner No. 1 and Petitioner No. 2 have tried their luck not only by way of civil suits and appeals there from but also by filing a Writ Petition, with the self-same prayer, before this court. In all these proceedings the Petitioners have sought declaration of their legal rights which has consistently been repelled by all the courts concerned on different counts. That being stated, the common thread of the story has been kept the same even in the present Writ Petition with the only addition being that certain other persons have been introduced who are said to have filed RTI applications and that the response to those applications has been said to be unsatisfactory. It seems that the same has been done only as a desperate measure to clutch on to the last str....