TMI Blog2020 (3) TMI 1316X X X X Extracts X X X X X X X X Extracts X X X X ..... adjudicated without trial. Even otherwise, it is the settled law that framing of issues is not a bar to an application under Order XII Rule 6 of the CPC for decreeing the suit forthwith without any new material coming before the Court and allowed on the same record on which issues were framed. Whether the suit on the pleas in the plaint and the documents aforesaid ought to have been entertained in the first place? - HELD THAT:- The legislature in its wisdom, while providing for creation of a juristic entity such as a company, incorporated provisions in the company law, of remedies available to the shareholders of a company in the event of oppression and mismanagement. The same was in consonance with the principles that the law having providing for management of affairs of a company by its Board of Directors or as laid down in the Articles of Association of a company, individual shareholders should not be permitted to interfere in the affairs and business of the company by filing civil suits against the company. Once the Legislature in its wisdom has deemed it appropriate that less than the prescribed number of shareholders or shareholders holding less than the prescribed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 945; (v) Sir Sobha Singh divided all his properties among his five children during his lifetime; (vi) Sujan Singh Park was meant to be shared as family space, in which each of his four sons and one daughter and their children receives a flat; (vii) however in 1947 several non-family members were given accommodation on rent in Sujan Singh Park; (viii) since the family members of Sir Sobha Singh held shares in defendant no.1 company, in order to extend benefit to the shareholders of the defendant no.1 company, it was decided that the flats of defendant no.1 company at Sujan Singh Park be allotted to family members and shareholders of defendant no.1 company in lieu of shares held by them in defendant no.1 company; (ix) as the family expanded, allocation of flats became an issue and which was settled by arriving at an understanding among the family members/descendants that all the properties will be allotted to the family members / descendants up to the fourth generation; (x) a Board Resolution dated 21st July, 1990 recording the aforesaid agreement was passed, which named all descendants of Sir Sobha Singh upto the fourth generation, wherein each member of the family, whether boy or g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bearing No.D-38 to the plaintiff; (xxiii) on receiving no response, the plaintiff zealously followed up and was given to understand that an AGM / Board Meeting of the defendant no.1 company was likely to take place on 28th August, 2015; (xxiv) the plaintiff got legal notice dated 18th August, 2015 issued to the defendant, seeking status of his allotment in the meeting scheduled on 28th August, 2015; (xxv) on 22nd August, 2015, plaintiff received a copy of the Board Resolution acknowledging receipt of legal notice dated 18th August, 2015 and that the plaintiff was first in the queue and to whom allotment was due and assuring the plaintiff that allotment will be considered after the issue of freehold is resolved; (xxvi) in view of the same, the plaintiff conveyed his willingness to withdraw the legal notice dated 18th August, 2015; (xxvii) however it has come to the notice of the plaintiff that allotment of flat No.D-38 was being considered to a third party, in complete defiance of the Board Resolution dated 21st July, 1990; and, (xxviii) had the plaintiff been allotted the flat in January, 2014, the plaintiff would have generated rental income to the tune of ₹ 3,45,000/- per m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egal binding; (v) the plaintiff has no vested or enforceable interest for allotment against the defendant no.1 company; (vi) lease to defendant no.2 Rahul Singh of flat no.B-15 was executed in 2012, to the knowledge of the plaintiff and was not challenged by the plaintiff and the claim for cancellation thereof stands waived and / or is barred by time; the family members of Late Sir Sobha Singh had no right to any of the flats of the defendant no.1 company; (vii) the defendant no.1, in the recent past had allotted flat no.A-12 and flat no.G-80 to non-family members; (viii) 47% of the shares of defendant no.1 are owned by Sir Sobha Singh Public Charitable Trust and not by family members; (ix) the plaintiff is not entitled to any relief in equity since he and his family members have been in illegal possession of property No.1A, Janpath owned by Sir Sobha Singh Public Charitable Trust; a civil suit for mandatory injunction has been filed by the Trust against the plaintiff‟s father namely Shivinder Singh, in 2006 and the plaintiff and his father have been repeatedly informed that no allotment will be made in their favour till they vacate the said property No.1A, Janpath; (x) flat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; (xxiii) no assurances were ever meted out to the plaintiff; and, (xxiv) in the meeting dated 22nd August, 2015 it was resolved by the Board of defendant no.1 that allotment of flats be put on hold in view of financial requirements of defendant no.1 company. 5. The defendant no.2 has filed separate written statement, additionally pleading other facts disentitling the plaintiff to the relief claimed with respect to flat no.B-15 and / or against the defendant no.2. 6. The plaintiff has filed replications to both the written statements. 7. Though the parties, vide order dated 14th September, 2017 were referred to the Mediation Cell of this Court but mediation remained unsuccessful. 8. Vide order dated 8th August, 2018, the following issues were framed in the suit: 1. Whether the suit is not properly instituted by an authorised person, as alleged? OPD-1 2. Whether the suit does not disclose any cause of action, as alleged? OPD-1 3. Whether the suit is barred by limitation, as alleged? OPD-2 4. Whether the plaintiff is entitled to a decree of declaration, as prayed? OPP 5. Whether the plaintiff is entitled to a decree of mandatory injunction, as prayed? OPP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annex‟. 15. I have enquired from the counsel for the plaintiff, that if the plaintiff bases his case on offer and acceptance, whether not acceptance had to be complete, and without the parents of the plaintiff vacating the kothi annex‟, the plaintiff cannot enforce the offer. 16. The counsel for the plaintiff contends that the condition imposed is illegal. 17. In my prima facie view, once the plaintiff bases his claim on offer and acceptance, it is not open to the plaintiff to challenge the condition contained in the offer. 18. The counsel for the plaintiff then states that he is not fully prepared to argue on the aspect of maintainability of the suit. 19. List on 27th September, 2019. 10. Thereafter on 27th September, 2019, the following order was passed: 1. This order is in pursuance to the order dated 11th July, 2019. 2. The senior counsel appearing for the plaintiff, instead of pursuing the line of argument qua which query was raised on 11th July, 2019 and as recorded in the order of that day, has contended that what the plaintiff is enforcing is a Family Settlement and on enquiry, whether a Family Settlement is applicable qua a company, p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the plaintiff, that (i) Section 430 of the Companies Act, 2013 bars the jurisdiction of the Civil Court to entertain any suit or proceeding only in respect of matters which the National Company Law Tribunal (NCLT) or the National Company Law Appellate Tribunal (NCLAT) is empowered to determine by or under the said Act or any other law in force; (ii) the bar contained under Section 430 came into operation prospectively, with effect from 1st June, 2016; however the present suit was instituted prior thereto on 9th May, 2016 thus at the time of institution of the present suit, there was no bar to the jurisdiction of this Court; (iii) the remedy even if any available to the plaintiff under the Companies Act is to, as a shareholder, complain against acts which are prejudicial or oppressive to the shareholder; (iv) however if the plaintiff was to now approach the NCLT, he would encounter the difficulty of Section 241(1) read with Section 244 of the Companies Act which only permits shareholder/s holding one-tenth of the issued share capital of the company to apply to NCLT for relief in case of oppression etc.; the plaintiff holds only five equity shares of defendant no.1 company and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legal, being in repudiation of the Resolution dated 21st July, 1990 / Family Settlement; (xviii) the defendant no.1 company and Sir Sobha Singh Public Charitable Trust are separate legal persons and the defendant no.1 company cannot impose conditions for the benefit of Sir Sobha Singh Public Charitable Trust, on the plaintiff; and, (xiv) thus on the basis of Resolution dated 21st July, 1990, the plaintiff has an enforceable right. 13. Per contra, the counsel for the defendant no.1 company has (a) drawn attention to the subsequent judgment dated 25th January, 1994 in Deepa Anant Bandekar supra reported as 1994 SCC OnLine Bom 602 and to my judgment in ICP Investments (Mauritius) Ltd. Vs. Uppal Housing Pvt. Ltd. 2019 SCC OnLine Del 10604; (b) handed over the download on 5th February, 2020 from the website of Ministry of Corporate Affairs MCA service, of the Master data with respect to Rajaram Bandekar (Sirigao) Mines Pvt. Ltd., to show that the said company is still in existence and that the judgment of 1990 in Deepa Anant Bandekar supra cited by the counsel for the plaintiff was not upheld in appeal; and, (c) handed over in the Court, a copy of a petition filed before the NCLT i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no.1 company and on which the case of the plaintiff is premised, as contended by the defendants also. The plaintiff along with the plaint has inter alia filed (i) photocopy of a two page document described as Appx B‟ and bearing the title INTER SE SENIORITY OF ALLOTMENT bearing the names of Bhagwant Singh, Khushwant Singh, Brig. Gurbux Singh, Mrs. Mohinder Jaspal Singh and Daljit Singh at the bottom but signed only by Bhagwant Singh, Khushwant Singh Brig. Gurbux Singh and not by Mrs. Mohinder Jaspal Singh and Daljit Singh; the same contains the name of the plaintiff at serial no.18 under the sub-title 2nd Round‟; the same on the first page bears a handwritten notation Decision taken on July 21.90 G.77 given to G.S. Chopra HUF on 1.11.89 Why did Geeta get hers taken? Early 90tees after . ( ...illegible) ; (ii) extract of e-mail dated 30th June, 2015 from jaiveervirk@hotmail.com to pami.singh@theshopindia.com with CC to sirsobhasingh@gmail.com addressed to the Board of Directors (purportedly of defendant no.1 company), stating that his father, a shareholder of defendant no.1 company, had requested for the transfer of his shares in defendant no.1 company to his daug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e suit sought to create a case for the plaintiff on the basis of Family Settlement but suits are to be tested within the confines of their pleading and engagement of an accomplished senior counsel to argue with all the experience at his command cannot be permitted to change the nature and character of the suit. The senior counsel for the plaintiff also admits that no whisper even of the word Family Settlement‟ exists in the plaint filed. Not only so, the counsel for the plaintiff who issued the legal notices preceding the suit and who filed the suit and who on 11th July, 2019 addressed on the aspect of maintainability, also did not argue on the basis of any Family Settlement, as evident from the order of that date reproduced above. The senior counsel arguing today, with his ingenuity has given an entirely different colour and basis to the suit. It further becomes evident from the fact that though an argument of Family Settlement is urged but none of the family members privy to the settlement have been impleaded as parties to the suit. Certainly no enforcement of the Family Settlement can be claimed without impleading the family members. 19. Though the senior counsel for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le contract having come into existence entitling the plaintiff to seek implementation thereof and the plaintiff being entitled in law to challenge the condition subject to which the offer was made on the ground of the same being legal. 21. Even though the plaintiff has not even filed a copy of the Resolution dated 21st July, 1990 of the Board of Directors on which the reliefs claimed in the suits rests and for the last four years has not taken any steps in proof thereof and filed the application seeking disclosure thereof only now and even though the plaintiff has not even pleaded acceptance of the offer but to test the maintainability of the suit at this stage, I will proceed believing that the plaintiff in trial proves all the three crucial pleas aforesaid without proving which the plaintiff cannot succeed. 22. The first plea is the right of the plaintiff to a flat in terms of the Resolution dated 21st July, 1990 of the Board of Directors of the defendant no.1 Company to the effect that flats in Sujan Singh Park owned by defendant no.1 company will be allotted to all descendants of Sir Sobha Singh upto the fourth generation and in terms thereof a list was prepared detailing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 21st July, 1990 without referring to the Memorandum of Association or Articles of Association of defendant no.1 company and without even pleading that the Resolution dated 21st July, 1990 is in terms of the Articles of Association. The flats in Sujan Singh Park, lease of land underneath which is in the name of defendant no.1 Company and which are owned by the defendant no.1 company, are in the ownership of defendant no.1 company and not in the ownership of its shareholders or directors. The plaintiff forgets that the defendant no.1 company is a distinct legal entity. It has been held in V.B. Rangaraj Vs. V.B. Gopalakrishnan (1992) 1 SCC 160, Vodafone International Holdings BV Vs. Union of India (2012) 6 SCC 613 and World Phone India Pvt. Ltd. Vs. WPI Group Inc. USA (2013) SCC OnLine Del 1098 and HTA Employees Union Vs. Hindustan Thompson Associates Ltd. MANU/DE/3005/2013 than an agreement arrived at even between the shareholders and Directors of a company with respect to management of the affairs of the company, without being incorporated in the Articles of Association of the company is not enforceable against the company. Thus, even if the shares of the defendant no.1 company a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of a company in the event of oppression and mismanagement. The same was in consonance with the principles that the law having providing for management of affairs of a company by its Board of Directors or as laid down in the Articles of Association of a company, individual shareholders should not be permitted to interfere in the affairs and business of the company by filing civil suits against the company. The words oppression‟ and mismanagement‟ are of wide amplitude as held in Jai Kumar Arya supra and Viji Joseph Vs. P. Chander 2019 SCC OnLine Mad 10424 (DB) and would include the grievances as of the plaintiff herein with respect to the management of affairs of defendant no.1 company. Civil action cannot be brought with respect thereto, exclusive jurisdiction having been conferred earlier in the Company Law Board and in appeal in the High Court and now in the NCLT and NCLAT. 27. I may in this regard mention that though in Ammonia Supplies Corporation (P) Ltd. Vs. Modern Plastic Containers Pvt. Ltd. (1998) 7 SCC 105 with respect to disputes as to rectification of Share Register, it was held that the Company Law Board could not go into adjudication of disputed is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the plaintiff that the plaintiff was privy to the Resolution dated 21st July, 1990 for it to be said that the same became a binding agreement between the plaintiff and other family members. The justification today of the suit on the basis of Family Settlement seeks to gloss over the said aspect also of the case. 32. From the 1994 judgment in Deepa Anant Bandekar supra handed over by the counsel for the defendant no.1, it transpires that in an appeal preferred against the 1990 judgment in Deepa Anant Bandekar supra relied upon by the counsel for the plaintiff, a compromise was arrived at and Rajaram Bandekar (Sirigao) Mines Pvt. Ltd., for winding up of which order was passed in 1990, was set aside in terms of the compromise, and ultimately also the company was not ordered to be wound up and exists till date. Thus reliance by the counsel for the plaintiff on the 1990 judgment in Deepa Anant Bandekar supra which was not affirmed in appeal, is not apposite. Dinesh Gupta supra was cited by the senior counsel for the plaintiff to also contend that the remedy of approaching the NCLT is not available to the plaintiff and the Civil Suit is thus not barred. However, it was not controve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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