TaxTMI 
TaxTMI 
2022 (7) TMI 1612
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....1 (of the defendant no.13 u/O-XXXIX R-4 of CPC), I.A. 15081/2021(of the defendant no.4 u/O-XXXIX R-4 of CPC) 1. By way of the present judgment, I shall dispose of the application filed on behalf of the plaintiff under Order XXXIX Rules 1 and 2 of the Code of Civil Procedure, 1908 (CPC) and the applications filed on behalf of the defendants no. 4, 13 and 16 respectively under Order XXXIX Rule 4 of the CPC seeking vacation of the ex parte ad interim injunction granted vide order dated 12th November, 2021 passed by this Court. PROCEEDINGS IN THE SUIT 2. The present suit has been filed for declaration, permanent and mandatory injunction, rendition of account and cancellation in respect of the shares and interest owned by late Sh. Devinder Singh Chaudhry and the plaintiff in the various defendant companies/Limited Liability Partnerships (LLPs). 3. This Court, vide an ex parte ad interim order dated 12th November, 2021 had directed that status quo be maintained qua disposing of properties as described in Schedule A to the plaint, on the basis of shares earlier held by the plaintiff and her husband, late Sh. Devinder Singh Chaudhry, that were transferred to the defendants no. ....
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....holding pattern in the defendants no. 13 to 17 at the time of death of late Sh. Devinder Singh Chaudhry was as follows: Table I S. NO. NAME OF ENTITY SHAREHOLDING 1. Industrial Cable Ltd. (Defendant no.13) a. Devinder Singh Chaudhry 21,50,410 25.7% b. Sita Chaudhry 7,51,000 9.0% c. Ruchi Towers 41,53,150 49.6% d. Darshan Properties Pvt. Ltd. 6,49,000 7.8% e. Others 6,61,900 7.9% Total 83,65,460 100% 2. Ruchi Towers Pvt. Ltd. (now Ruchi Towers LLP) (Defendant no.14) a. Devinder Singh Chaudhry 88,119 40.6% b. Sita Chaudhry 46,463 21.4% c. BBI Pvt Trust 82,424 38.0% Total 2,17,006 100% 3. P.E. Manning (Consultants) Pvt. Ltd. (Defendant no.15) HIGH a. Devinder Singh Chaudhry 15,000 50.0% b. Sita Chaudhry 3,012 10.0% c. Satluj Pvt Trust 12,000 40.0% Total 30,012 100% 4. Amba Promoters & Developers Pvt. Ltd. (Defendant no.16) a. Devinder Singh Chaudhry 5,000 50.0% b. Sita Chaudhry 1,000 10.0% c. Satluj Pvt. Trust 4,000 40.0% ....
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....g (Consultants) Pvt. Ltd (Defendant no. 15) Sita Chaudhry Sunaina Singh 18,012 14.03.2019 Ruchi Towers LLP (Defendant no. 14) Sita Chaudhry Sunaina Singh 62% LLP Capital 14.03.2019 Rama Packing & Wires Industries LLP (Defendant no. 17) Sita Chaudhry Sunaina Singh 47% LLP Capital 24.04.2019 Ruchi Towers LLP (Defendant no. 14) Rajpura Steel Tubes Pvt. Ltd. Ajay Kadyan 38% LLP Capital 06.06.2019 Industrial Cables (India) Ltd (Defendant no. 13) Sita Chaudhry RT Sunaina Singh 21,21,240 (x) Based on the aforesaid transfers, the defendants no. 4 and 9 took over the management of the various companies/LLPs and appointed themselves and their close aides as the directors/partners. The current shareholding/ownership and directorship/partnership of the various companies/LLPs are given in the table below: Table III S. NO. NAME OF BODY CORPORATE SHAREHOLDING/ PARTNERSHIP CAPITAL DIRECTORSHIP/ PARTNERSHIP 1. Industrial Cables Ltd. a. Sunaina Singh 33.6% b. Sita Chaudhry 0.01% c. Devinder Singh Chaudhry 8.6% d. Ruchi Towers LLP 44.1% e. Darshan Properties LLP ....
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.... PROPERTIES VALUE (APPROXIMATELY) 1. 35 acres of land at Town No. 1, Rajpura Township, Rajpura, Patiala, Punjab held by Industrial Cables (India) Ltd. (Defendant No. 13) Rs. 125 crores 2. 15.74 acres of land at Industrial Area, Rajpura, Patiala, Punjab held by Industrial Cables (India) Ltd. (Defendant No. 13) Rs. 60 crores 3. 5.99 acres of land, Industrial Area, Rajpura, Punjab held by Industrial Cables (India) Ltd. (Defendant No. 13) Rs. 30 crores 4. 44 acres of land bearing Khewat Khata No. 95/95 and Khatoni No. 143 at Rajpura, Patiala, Punjab held by Industrial Cables (India) Ltd. (Defendant No. 13) Rs. 30 crores 5. ICL Colony (known as Madhuban Colony) developed under PUDA license No.LDC2003/99 dated 24/04/2003 in Rajpura, Punjab on 22 acres of land bearing Khewat Khata No. 12/26 in Khasra No. 29(7-10), 30(6-5), 31(6-13) 32(6-13), 33(5- 6), 34/2(4-14-16), 35/2(5-13-1), 36/2(4-10- 1), 37/2(3-5-1), 38/2(8-5-10), 39/2(7-0-1), 40/2(4-11-10), 72/41(1-14), 73/41(2-7), 74/42(3-10), 75/42(2-15), 76/43(4-4), 77/43(2-1), 44(4-11), 45(0-5), 46(0-5), 47(4-17) & 48(3-9) held by Industrial Cables (India) Ltd. (Defendant No. 13) Rs. 50 c....
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....ama Packing & Wires Industries LLP Def. No.4 3,50,00,000 02.03.2016 Chandigarh Theatre Def. No.9 1,00,00,000 02.03.2016 P.E. Manning (Consultants) Pvt. Ltd. Def. No.9 3,00,00,000 04.02.2017 ICL Industries Def. No.4 2,78,00,000 20.03.2019 Amba Promoters & Developers Pvt. Ltd. Def. No.9 6,25,00,000 12.03.2020 Amba Promoters & Developers Pvt. Ltd. Def. No.9 5,00,00,000 06.07.2019 ICL Machinery Pvt. Ltd. Def. No.9 6,29,03,340 06.07.2019 ICL Steel Def. No.9 5,19,46,000 14.08.2020 Chinar Industrial Investment & Finance Ltd. Def. No.4 5,00,00,000 (xvii) The defendants no.4 and 9 have also purchased various properties from the sale proceeds of various assets held by the defendant companies/LLPs, which include: a. A luxury apartment in Magnolia, Gurgaon; b. An accommodation on the first and second floor of Tower B, Magnum Towers, Golf Course Extension Road, Sector 58, Gurgaon; c. Office in Building No.7, Basantlok, Vasant Vihar, New Delhi; and, d. Factory in Village Khanpur, Purkazi Laskar Road, District Haridwar- 247663, Uttarakhand. PLEADING....
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....rte injunction order against the defendants. (vii) The plaintiff has transferred her shares/interest in the defendants no.13, 15 and 16 companies/LLPs in favour of the defendant no.4 and 9 out of her own free will and without any undue influence or coercion. Not only did the plaintiff execute the gift deeds, she also signed the transfer forms in respect of the shares, handed over the relevant share certificates to the defendant no.4 and 9 and thereafter, complied with various legal formalities so as to complete the transfer of shares in favour of the defendant no.4 and 9. (viii) All sale transactions carried out by the defendant companies in respect of the properties owned by the said companies are well documented and accounted for and there is no irregularity in the same. The plaintiff continues to be a director in the various companies and was well aware of all the above transactions being carried out by the aforesaid companies. (ix) The plaintiff has no locus to question the loans taken by the defendants no.4 and 9 from the various companies/LLPs. Eight out of fifteen transactions mentioned in paragraph 20 of the plaint pertain to companies/LLPs that h....
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....additional director in the defendant no.13 company only from 2016 and there has been no material change in the functioning of the company after the said date. (v) The primary contentions in the plaint are in respect of fraud alleged to have been committed by the defendants no.4 and 9 and under the garb of the same, the plaintiff has sought reliefs against the defendant no.13 company, which is a separate legal entity. (vi) A residential project under the name of 'Garden Estate' and a commercial project under the name of 'ICL Spectrum' in Rajpura, Punjab is being currently executed. Sale of real estate is a part of the business operations of the defendant no.13 company and the interim order passed by this Court restraining the same has resulted in adversely affecting the business of the company. (vii) Since the death of late Sh. Devinder Singh Chaudhry, the plaintiff has been the Chairman and Managing Director of the defendant no.13 company and various Minutes of the Board Meetings have been signed by her. (viii) After the death of Sh. Devinder Singh Chaudhry, upon the request of the plaintiff to transfer his shares in favour of the....
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....e plaintiff moved to Delhi in June, 2021 that she obtained detailed information and knowledge about the frauds committed by the defendants no.4 and 9 and filed the present suit. (iv) The gifts made by the plaintiff in respect of family members other than the defendant no. 4 are miniscule in comparison with the shares and assets illegally usurped by the defendants no.4 and 9. The sheer magnitude of the assets usurped by the defendants no.4 and 9 shows that the plaintiff was under undue influence and control of the defendant no. 4. (v) The defendant no. 13 has entered into a fraudulent collaboration agreement with one JMD Realcon Pvt. Ltd. in respect of 94 acres of prime land in Rajpura, Punjab for the ICL Garden Estate project in terms of which the said JMD Realcon Pvt. Ltd. has been granted a share in the project in excess of 50% upon payment of a mere sum of Rs. 1,00,00,000/-. This mechanism has been devised by the defendants no. 4 and 9 to illegally divert the assets of the defendant no. 13 company. (vi) The plaintiff has not raised any dispute with regard to the sale of Madhuban Colony in Rajpura, Punjab property as well as the Ivory Towers project loc....
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....te after making the aforesaid payments in the manner hereinafter directed. III. 1. I have entered into an agreement to sell my flat in the building known as Silver Arch Apartment Ferozesha Road New Delhi to Shri Satbachan Singh Lall and already received the agreed price from him and made a Will in his favour on the 29th day of January 2004 in respect of the said flat. In the event of legal title not getting transferred to Shri Satbachan Singh Lall through a sale deed during my life time, the said flat shall be treated as bequeathed to Shri Satbachan Singh Lall by me through this Will also. 2. During the period of the natural life of my wife Sita Chaudhry the executor (Sita Chaudhry) shall hold the entire residue of my estate to receive the annual or other income thereof and thereout and in the first place the executor shall pay or discharge all the costs and expenses incurred for the administration of the estate including taxes and duties of all types and subject thereto the executor shall pay, spend or apply the net income to or for the sole benefit of Sita Chaudhry in any manner whatsoever as desired by Sita Chaudhry. 3. Immediately after the day of dea....
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....any part of the estate. 17. At this stage, it may be relevant to point out that the defendant no. 1 has also propounded a Will dated 4" October, 2008 of late Sh. Devinder Chaudhry in terms of which each of the three branches of the three sons of the plaintiff and late Sh. Devinder Chaudhry are beneficiaries. The probate case, being P.C. No. 4/2019, has been filed by the defendant no.2 before the District Court in Saket and the same is pending. If, ultimately, the said Will is held to be the last and genuine Will of late Sh. Devinder Chaudhry, the transfers made in favour of the plaintiff in terms of the Will dated 26th March, 2004 would be a nullity. SECTION 14 OF THE HINDU SUCCESSION ACT 18. Next, senior counsels appearing on behalf of the defendants no.4 and 9 submitted that even if there was a limited interest created in favour of the plaintiff, the same got converted into full ownership by virtue of Section 14(1) of the Hindu Succession Act, 1956. On the other hand, counsel for the plaintiff submits that the present case would not be covered under Section 14(1) of the Hindu Succession Act, 1956 and would in fact fall under Section 14(2) of the Hindu Succession Act, 195....
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....C 99, were quoted in Jupudy Pardha Sarathy (supra): "30. In the light of the above decisions of this Court the following principles appear to be clear: '(1) that the provisions of Section 14 of the 1956 Act must be liberally construed in order to advance the object of the Act which is to enlarge the limited interest possessed by a Hindu widow which was in consonance with the changing temper of the times; (2) it is manifestly clear that sub-section (2) of Section 14 does not refer to any transfer which merely recognises a pre-existing right without creating or conferring a new title on the widow. This was clearly held by this Court in Badri Pershad case. (3) that the Act of 1956 has made revolutionary and far-reaching changes in the Hindu society and every attempt should be made to carry out the spirit of the Act which has undoubtedly supplied a long felt need and tried to do away with the invidious distinction between a Hindu male and female in matters of intestate succession; (4) that sub-section (2) of Section 14 is merely a proviso to sub- section (1) of Section 14 and has to be interpreted as a proviso and not in a manner so as t....
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....n on par with man; extinguished pre-existing limitation of woman's estate, or widow's estate known to Sastric law removed all the fetters to blossom the same into full ownership. The discrimination suffered by Hindu female under Sastric law was exterminated by legislative fiat. The social change thus envisaged must be endeavoured to be given full vigour, thrust and efficacy. Section 14(1) enlarges the restricted estate into full ownership when the Hindu female has pre-existing right to maintenance etc. Sub. sec. (2) operates when the grant was made for the first time under the document with no pre-existing right. Sub-section (2), therefore, must be read as an exception or a proviso to Sub-section (1). Both the Sub-sections read with the explanation to be pragmatically considered as a constituent integral scheme. The Court would sit in the armed chair of the testator, or its maker summon to its aid the attending circumstances to execute the instrument; the relationship of the parties and to see whether the Hindu female acquired the property with vestige of pre-existing right and the will, gift deed, order, decree or an award of the civil court or in any of the forms known to....
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....ed of the property on the date of the Act under semblance of a right, whether it be a limited or a pre-existing right to maintenance in lieu of which she was put in possession of the property. Tulasamma [(1977) 3 SCC 99 : (1977) 3 SCR 261] ratio cannot be applied ignoring the requirement of the female Hindu having to be in possession of the property either directly or constructively as on the date of the Act, though she may acquire a right to it even after the Act. The same is the position in Raghubar Singh v. Gulab Singh [(1998) 6 SCC 314 : AIR 1998 SC 2401] wherein the testamentary succession was before the Act. The widow had obtained possession under a will. A suit was filed challenging the will. The suit was compromised. The compromise sought to restrict the right of the widow. This Court held that since the widow was in possession of the property on the date of the Act under the will as of right and since the compromise decree created no new or independent right in her, Section 14(2) of the Act had no application and Section 14(1) governed the case, her right to maintenance being a pre-existing right. In Karmi v. Amru [(1972) 4 SCC 86 : AIR 1971 SC 745] the owner of the proper....
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.... restriction is placed on her right, the restriction will have play in view of Section 14(2) of the Act. XXX XXX XXX 13. An owner of property has normally the right to deal with that property including the right to devise or bequeath the property. He could thus dispose it of by a testament. Section 30 of the Act, not only does not curtail or affect this right, it actually reaffirms that right. Thus, a Hindu male could testamentarily dispose of his property. When he does that, a succession under the Act stands excluded and the property passes to the testamentary heirs. Hence, when a male Hindu executes a will bequeathing the properties, the legatees take it subject to the terms of the will unless of course, any stipulation therein is found invalid. Therefore, there is nothing in the Act which affects the right of a male Hindu to dispose of his property by providing only a life estate or limited estate for his widow. The Act does not stand in the way of his separate properties being dealt with by him as he deems fit. His will hence could not be challenged as being hit by the Act. 14. When he thus validly disposes of his p....
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....wo cases to the facts of the case on hand, we are of the considered opinion that the case of Plaintiff 2, Mrs Pritam does not fall under Section 14(1) of the Act but it squarely falls under Section 14(2) of the Act. In other words, in our view, in the facts of this case, the law laid down in Sadhu Singh case would apply. 42. A fortiori, Plaintiff 2, late Mrs Pritam received only "life interest" in the suit house by the will dated 24-6-1986 from her late husband and such "life interest" was neither enlarged nor ripened into an absolute interest in the suit house and remained "life interest" i.e. "restricted estate" till her death under Section 14(2) of the Act. This we say for the following factual reasons arising in the case. 42.1 First, the testator, Mr Dewan being the exclusive owner of the suit house was free to dispose of his property the way he liked because it was his self-earned property. 42.2. Second, the testator gave the suit house in absolute ownership to his son and the daughter and conferred on them absolute ownership. At the same time, he gave only "life interest" to his wife i.e. a right to live in the suit house which belonged to son and d....
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....te" under Section 14(2) of the Act. It was held that such disposition made by the husband in favour of his wife was permissible in law in the light of Section 14(2) read with Section 30 of the Act. In our view, the facts of the case on hand are similar to the facts of Sadhu Singh case and, therefore, this case is fully covered by the law laid down in Sadhu Singh case." (iii) Jogi Ram v. Suresh Kumar and Ors., (2022) 4 SCC 274 "34. In our view the relevant aspect of the aforesaid conclusion is Conclusion (4) in para 62 which opines where sub-section (2) of Section 14 of the said Act would apply, and this does inter alia apply to a will which may create independent and new title in favour of females for the first time and is not a recognition of a pre-existing right. In such cases of a restricted estate in favour of a female is legally permissible and Section 14(1) of the said Act will not operate in that sphere. 35. We may add here that the objective of Section 14(1) is to create an absolute interest in case of a limited interest of the wife where such limited estate owes its origin to law as it stood then. The objective cannot be that a Hindu male who owned sel....
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....t is clear from a reading of the Will dated 26" March, 2004 that the testator only intended to create a beneficial life interest in favour of the plaintiff. There was no legal bar on the testator from doing so as the testator was free to deal with his self-acquired properties in any manner he wished to. It may be relevant to note here that the testator had provided in his Will that the income from his various properties, after meeting expenses, including taxes and duties, shall be for the sole benefit of his wife, the plaintiff. Clearly, the testator had provided for the maintenance of his wife by providing that all the income generated from the estate would go to her during her lifetime. Therefore, following the dicta of Jogi Ram (supra), I am of the prima facie view that the case of the plaintiff is not covered under Section 14(1), but under Section 14(2) of the Hindu Succession Act, 1956 and consequently, the plaintiff did not have an absolute interest in the estate of late Sh. Devinder Singh Chaudhary. 26. It has been argued on behalf of the defendants that it was the own understanding of the plaintiff that she had absolute interest in the estate of late Sh. Devinder Chaudhr....
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.... Where any change occurs in the beneficial interest in such shares, the person referred to in subsection (1) and the beneficial owner specified in sub-section (2) shall, within a period of thirty days from the date of such change, make a declaration to the company in such form and containing such particulars as may be prescribed. (4) The Central Government may make rules to provide for the manner of holding and disclosing beneficial interest and beneficial ownership under this section. (5) If any person fails, to make a declaration as required under sub-section (1) or sub-section (2) or sub-section (3), without any reasonable cause, he shall be punishable with fine which may extend to fifty thousand rupees and where the failure is a continuing one, with a further fine which may extend to one thousand rupees for every day after the first during which the failure continues. (6) Where any declaration under this section is made to a company, the company shall make a note of such declaration in the register concerned and shall file, within thirty days from the date of receipt of declaration by it, a return in the prescribed form with the Registrar in respect o....
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....g with her at that point of time. It was at that point of time that the defendant no. 4 along with her husband, the defendant no. 9, moved to Chandigarh and started living with the plaintiff. Taking advantage of the old age as well as the physical health of the plaintiff, the defendant no.4 slowly and steadily gained the trust and confidence of the plaintiff and started transferring the shareholding/interest in the various defendant companies/LLPs in her name and in the name of her husband, thereby taking control of the said companies/LLPs. 31. Vide two gift deeds dated 9th December, 2018, 18,012 shares of the defendants no. 15 company and 6,000 shares of the defendant no. 16 company were transferred by the plaintiff in favour of the defendant no. 4. A perusal of the aforesaid gift deeds shows that the plaintiff has transferred the shares in favour of the defendant no. 4 on account of 'natural love and affection'. It is pertinent to note that the aforesaid gift deeds have neither been notarized nor are they adequately stamped. Further, the place for the witnesses to sign on the gift deeds has been left blank. The fact that a large amount of shareholding in the defendants....
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....various pleadings, replies, etc. on behalf of the plaintiff were prepared on the instructions of the defendant no. 4. The plaintiff had no say in the stand which was being taken on her behalf in the said proceedings. This is evident from the invoice of the law firm that was representing the plaintiff in the said suit. Though the said invoice is in the name of the plaintiff, it was drawn to the attention of the defendant no. 4 and was sent to her email address. It appears that the lawyers were taking instructions from the defendant no.4, and it was the defendant no.4 who was clearing their bills. On a prima facie view, it appears that the plaintiff signed the various pleadings/replies, etc. under undue influence of the defendants no.4 and 9, without understanding the nature and contents of the said pleadings/replies. 36. It was only when the plaintiff moved to Delhi in June, 2021 that the plaintiff realized the purport and effect of the various documents executed by her while living with the defendants no. 4 and 9 in Chandigarh. Immediately thereafter, an application, being I.A. No. 15902/2021, was filed on behalf of the plaintiff for disregarding the pleadings filed on her behal....
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....arty is in relation of active confidence .- Where there is a question as to the good faith of a transaction between parties, one of whom stands to the other in a position of active confidence, the burden of proving the good faith of the transaction is on the party who is in a position of active confidence. Illustration (b) The good faith of a sale by a son just come of age to a father is in question in a suit brought by the son. The burden of proving the good faith of the transaction is on the father." 40. In support of his submissions in respect of undue influence, the counsel for the plaintiff has relied on the judgment in Keshav and Ors. v. Gian Chand and Anr., (2022) SCC OnLine SC 81. Relevant observations are set out below: "9. When a person obtains any benefit from another, the court would call upon the person who wishes to maintain the right to gift to discharge the burden of proving that he exerted no influence for the purpose of obtaining the document. Corollary to this principle finds recognition in sub-section (3) to Section 16 of the Indian Contract Act, 1872 which relates to pardanashin ladies. The courts can apply this principle to old, i....
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....he will of the donor, and (2) has the donee used that position to obtain an unfair advantage over the donor? * * * 7. The three stages for consideration of a case of undue influence were expounded in Raghunath Prasad Sahu v. Sarju Prasad Sahu [Raghunath Prasad Sahu v. Sarju Prasad Sahu, 1923 SCC OnLine PC 62 : (1923-24) 51 IA 101 : AIR 1924 PC 60] in the following words: (SCC OnLine PC) 'In the first place the relations between the parties to each other must be such that one is in a position to dominate the will of the other. Once that position is substantiated the second stage has been reached viz. the issue whether the contract has been induced by undue influence. Upon the determination of this issue a third point emerges, which is that of the onus probandi. If the transaction appears to be unconscionable, then the burden of proving that the contract was not induced by undue influence is to lie upon the person who was in a position to dominate the will of the other. Error is almost sure to arise if the order of these propositions be changed. The unconscionableness of the bargain is not the first thing to be considered. The....
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....s as well as the gifts were completed/executed as far back as in 2018-2019 and proper legally valid documents were executed in respect thereof. Further, Board Resolutions approving the said transfers were duly passed by the companies in presence of the plaintiff and duly signed by her. It is further contended that the plaintiff continues to be the Managing Director in the defendant no.13 company and has never raised any objection with regard to the aforesaid transfer of shares or any other transactions till date. Therefore, it is submitted that the aforesaid challenge, at this stage, is barred on account of acquiescence, waiver and estoppel. IT 48. In view of my findings above that the defendants no.4 and 9 exercised undue influence over the plaintiff and the aforesaid documents transferring/gifting the shares, including the Board Resolutions, were executed on account of the undue influence exercised by them, a serious doubt is created over the bona fide and genuineness of these documents. The undue influence continued till June, 2021, when the plaintiff finally moved to Delhi to live with her other legal heirs. Therefore, there was no occasion for the plaintiff to question any ....
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....con Pvt. Ltd. has been granted land rights in the project in excess of 50% upon payment of only Rs.1,00,00,000/- to the company, in the following terms: (i) 40.1% of Commercial area and 40.2% of Residential area on 35 acres of land at Town No.1, Rajpura Township, Rajpura, Patiala, Punjab. (ii) 70% of 44 acres of land located in Shamboo, Rajpura, Punjab, (iii) 55% of 17.39 acres of land located at ICL Road in Rajpura, Punjab. 54. Three separate Sale Deeds have been executed between defendant no.13 in favour of JMD Realcon Pvt. Ltd, the details which are as under: (i) Sale Deed for 33 acres of land in Garden Estate was executed on 22nd October, 2021; (ii) Sale Deed for 44 acres of land in Mehtabgarh was executed on 25th October, 2021; and, (iii) Sale Deed for 17.39 acres of factory land was executed on 1st November, 2021. 55. It has not been disputed that JMD Realcon Pvt. Ltd. has a paid-up share capital of only Rs. 1,00,000/-. Further, nothing is on record to demonstrate the capability, financial or otherwise, of JMD Realcon Pvt. Ltd. to deal with the project. In the notice to the AGM of the defendant no. 13, which wa....
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....he defendant no.15 to the defendant no. 9 towards purchase of 20 acres of Agricultural Land at Laksar. The said Board Resolution further records that the defendant no. 9 would not be liable to pay any interest on the aforesaid advanced amount. (v) Bank statements showing amounts of Rs.6,29,03,340/- transferred from ICL Machinery Pvt. Ltd (defendant no.17 in the first suit) to the defendants no.9 and Rs. 5,19,46,000/- transferred from M/s ICL Steels (Haryana) LLP (defendant no.18 in the first suit) to the defendant no.9. 57. All the aforesaid Board Resolutions sanctioning the loans/advances have been signed by the plaintiff. Nowhere have the defendants no.4 and 9 denied that loans of such nature were ever taken or that they have not been repaid. The defendants no.4 and 9 have only challenged the locus of the plaintiff to challenge the same. It has further been stated that some of the entities from which loans were taken are not even parties to the suit. 58. Clearly, the said resolutions are evidence of the undue influence exercised by the defendants no. 4 and 9 over the plaintiff. The aforesaid loans were given and the resolutions approving the said loans were passed ....
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....the shareholders. 62. On the other hand, the counsel for the plaintiff has relied upon the judgment in Sangramsinh P. Gaekwad And Ors. v. Shantidevi P. Gaekwad (Dead) Through LRs., (2005) 11 SCC 314 in support of his contention that the various defendant companies, including the defendant no. 13 company, were basically family-owned companies and in the nature of quasi- partnerships. Therefore, the Court has the power to lift the corporate veil to determine the real character of the said companies. The relevant observations in Sangramsinh P. Gaekwad (supra) are reproduced below: "Quasi-partnership - family company - corporate veil 225. A company incorporated under the Companies Act is a body corporate. However, in certain situations, its corporate veil can be lifted. (See Kapila Hingorani v. State of Bihar [(2003) 6 SCC 1 : 2004 SCC (L&S) 586].) 226. The Court, however, has made a clear distinction between a family company, a private company and a public limited company. The true character of the company, the business realities of the situation should not be confined to a narrow legalistic view. (See Needle Industries [(1981) 3 SCC 333].) 227. ....
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..... At all points of time, the companies were closely held and did not have any substantial shareholding outside the family. Except for the defendant no.13 company, none of the companies/LLPs had any running business. Therefore, I find merit in the submission of the plaintiff that the various defendant companies/LLPs, other than the defendant no. 13 company, have always been asset holding companies/LLPs. Even in respect of the defendant no.13 company, almost 83% is held by the defendant no.4, as is evident from the Form No.BEN-1 dated 10th September, 2019 filed on behalf of the defendant no.4 and the outside shareholding is only 6.8%. The defendant companies/LLPs are mere alter egos of the defendants 4 and 9, in the nature of quasi-partnerships. The defendants no.4 and 9 have been treating these companies/LLPs as their personal fiefdoms, as is evident from the various instances of properties/assets being disposed of. Loans have been doled out and monies siphoned off in an arbitrary manner and without any commercial logic, solely on account of the fact that the defendants no.4 and 9 control these companies/LLPs. 65. Therefore, in my prima facie view, the principles laid down in San....
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....efore, I find merit in the submission of the plaintiff that the plaintiff cannot be expected to note exact details of the documents executed by her, especially, when she did not have copies of the same. Similarly, the plaintiff cannot be expected to remember the exact date when the transfers were made, or the date when the documents executed for the said transfers, or the dates on which the said transfers were approved by the Board of Directors. 69. As regards the concealment in respect of transfers and gifts made in favour of other grandchildren of the plaintiff, I have already observed above that the same are miniscule as compared to the transfers/gifts made in favour of the defendants no.4 and 9. Further, as per the plaintiff, the said gifts were made by her as per her free will and not under undue influence. 70. Next, it was submitted on behalf of the defendants no. 4, 9 and 13 that the present suit was mentioned in a deceptive manner when the matter got listed and ad interim order dated 12th November, 2021 was obtained behind back of the said defendants. Further, it was not disclosed to the Court that in the first suit, no interim orders have been passed till date in fav....
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....he suit was served by the counsel for the plaintiff on the counsel for the defendants on 11th November, 2021. Yet, the present suit was not listed by the Registry on 12th November, 2021. The first suit that was listed on 12th November, 2021 was adjourned for 25th November, 2021 at the request of the counsel for the defendant no.13. In view of the fact that the present suit was not listed on 12th November, 2021, the matter was mentioned by the counsel for the plaintiff for urgent listing before the acting Judge In-Charge (Original Side). The said mentioning was allowed, and the present suit got listed on the same date i.e., 12th November, 2021. 72. Counsels for the defendants were not present when the present suit was listed and after hearing the counsel for the plaintiff, this Court was pleased to pass an ex-parte ad interim injunction order. It appears that the counsel for the plaintiff pointed out the fact of the first suit being pending to the Court and this is how, while issuing summons in the present suit, the next date of hearing given was 25th November, 2021, which was the date to which the first suit was adjourned. 73. In view of the facts narrated above, I am of the ....
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....unction must disclose the pendency of the earlier litigation between the parties. It was further observed that not disclosing the plaint filed in the earlier suit and the fact that the plaintiff had not obtained injunction in the previous suit amounts to playing fraud on the Court. As I have already observed above, the plaintiff had duly disclosed the filing of the earlier suit, even though the said suit was filed on behalf of the defendants no.1, wherein the plaintiff was arrayed a party. Further, as is evident from the documents filed on behalf of the plaintiff, the intention of the plaintiff was that the present suit be listed with the first suit and therefore, the plaintiff was justified in not filing the pleadings filed on her behalf in the first suit. Therefore, the observations of the Division Bench would not be applicable in the facts and circumstances of the present case. It may also be relevant to point out here that in Satish Khosla (supra), the earlier suit had been filed by the same plaintiff, which is not the position in the present case. 76. In view of my observations hereinabove, there has been no deliberate/intentional concealment on behalf of the plaintiff that....
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....s raised the court has to adjudicate on the facts and circumstances of each case. If it truly is rectification, all matters raised in that connection should be decided by the court under Section 155 [Ed .: Corresponding to Section 111 of the present Act, before its amendment by Act 31 of 1988.] and if it finds adjudication of any matter not falling under it, it may direct a party to get his right adjudicated by a civil court. Unless jurisdiction is expressly or implicitly barred under a statute, for violation or redress of any such right the civil court would have jurisdiction." 17. Thus, there is a thin line in appreciating the scope of jurisdiction of the Company Court/Company Law Board. The jurisdiction is exclusive if the matter truly relates to rectification but if the issue is alien to rectification, such matter may not be within the exclusive jurisdiction of the Company Court/Company Law Board. 18. In Standard Chartered Bank [(2006) 6 SCC 94], scope of Section 111(7) was considered. It was observed that jurisdiction being summary in nature, a seriously disputed question of title could be left to be decided by the civil court. It was observed: (SCC p. 115, p....
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....the aforesaid decision in Sangramsinh P. Gaekwad case [Sangramsinh P. Gaekwad v. Shantadevi P. Gaekwad, (2005) 11 SCC 314], we are of the opinion that the basis of the petition is the claim by way of inheritance of 1/4th shareholding so as to constitute 10% of the holding, which right cannot be decided in proceedings under Sections 241/242 of the Act. Thus, filing of the petition under Sections 241 and 242 seeking waiver is a misconceived exercise, firstly, Respondent 1 has to firmly establish his right of inheritance before a civil court to the extent of the shares he is claiming; more so, in view of the nomination made as per the provisions contained in Section 71 of the Companies Act, 2013. xxxx xxxx xxxx 31. We refrain to decide the question finally in these proceedings concerning the effect of nomination, as it being a civil dispute, cannot be decided in these proceedings and the decision may jeopardise parties' rights and interest in the civil suit. With regard to the dispute as to right, title, and interest in the securities, the finding of the civil court is going to be final and conclusive and binding on parties. The decision of such....
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....e. The Supreme Court in Ammonia Supplies Corporation (PT) Limited v. Modern Plastic Containers (P) Ltd., (1998) 7 SCC 105, the scope of jurisdiction of the Company Court to deal with an issue of rectification in the Register of Members maintained by the Company was considered. Following Public Passenger Service Limited v. M.A. Khadar, AIR 1966 SC 489, it was held that jurisdiction under Companies Act, was summary in nature. If for reasons of complexity or otherwise, the matter could be more conveniently decided in a suit. In Standard Chartered Bank v. Andhra Bank Financial Services Limited, (2006) 6 SCC 94, it was observed that jurisdiction of Tribunal being summary in nature, a seriously disputed question of title could be left to be decided by the civil court as same being more appropriate remedy for investigation and adjudication of such seriously disputed question of title. In Luxmi Tea Company Limited v. Pradip Kumar Sarkar, 1989 Supp (2) SCC 656, it was observed that a company did not have any discretion in rectifying its register except to require the procedure being followed. 37. Seriously disputed question of title, the Supreme Court has held, cannot be decided by....
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.... the shared to the defendants no.4 and 9. The plaintiff has further contended that she was forced to transfer her shares in favour of the defendants no. 4 and 9 on account of undue influence exercised on her by the said defendants. Besides, there are also allegations of her signatures being forged by the aforesaid defendants. A bare perusal of the prayers made in the suit would also demonstrate that the main reliefs have been claimed against the defendants no.4 and 9 and not against the defendant no.13. The challenge in the suit is in respect of the transfers made in favour of the defendants no.4 and 9. In my view, these are complex issues of fact and law, and which can only be decided by a Civil Court and not by the NCLT. 83. Now, I proceed to deal with the judgments cited on behalf of the defendants no.4, 9 and 13. In Jaiveer Singh Virk (supra), the Court was dealing with a case where reliefs in the plaint were based on the resolutions passed by the company. In other words, the plaintiff was seeking to enforce the resolutions passed by the company. It was not a case of inheritance or a case involving disputed title to the shares and therefore, the said case would not be applic....
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....nature of quasi-partnerships. Therefore, following the ratio of Sangramsinh P. Gaekwad (supra), this Court is entitled to restrain the aforesaid companies/LLPs from disposing of their immovable properties. (vi) Various loans have been taken and unauthorized transfers made from the defendant companies/LLPs and other family-owned companies/LLPs in favour of the defendants no. 4 and 9. These have been used to acquire properties/assets in their own names. (vii) Various properties of late Sh. Devinder Singh Chaudhary/plaintiff and the defendant companies/LLPs have been disposed of or attempted to be disposed of by the defendants no. 4 and 9 after acquiring control of these companies/LLPs. 88. In view of the above, the plaintiff has made out a prima facie case in her favour for grant of interim injunction. Balance of convenience requires that the properties in the names of the defendant companies/LLPs are preserved and the defendants no. 4 and 9 are restrained from disposing of the said properties held by the defendant companies/LLPs on the basis of the shareholding/interest acquired by the defendants no. 4 and 9 in the aforesaid companies/LLPs till the final adjudic....