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TMI Blog2011 (6) TMI 671X X X X Extracts X X X X X X X X Extracts X X X X ..... straining the Defendants 2-4 from dispossessing the Plaintiffs from the said premises. (c) issue an order of permanent injunction restraining Defendant No.5 from taking any steps pursuant to any directions issued by the Defendants in accordance to the said Board Resolution to the said premises; (d) A declaration declaring that the Board Resolution dated 12/01/02 is null and void. (e) Issue such other orders or directions as the Hon'ble Court may deem fit, proper and appropriate and considering the facts and circumstances of the present case." 3. It appears that Late Hansraj Gupta and his four sons, namely, Shri Desh Raj Gupta-appellant no.2 herein; Shri Shiv Raj Gupta-respondent no.2; Shri Rajender Kumar Gupta- respondent no.3 and Shri Mahendra Kumar Gupta-respondent no.4, constituted Hansraj Gupta & Sons, a Hindu Undivided Family (HUF). Shri Ravi Raj Gupta-appellant no.1 herein is the son of Shri Desh Raj Gupta, the appellant no.2. 4. A perpetual lease for a property bearing no.39, Block 1, Ratendon Road, New Delhi - 110 003, (now known as 3, Amrita Shergil Marg, New Delhi - 110 003) was granted to Late Lala Hansraj Gupta vide a registered deed dated 6th May, 1936. On or abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ges, Telephone facility, while washing, repairs, sanitary installation and fitting shall be borne by the company. The company shall also maintain the lawn and gardens at its cost." 8. So far as the occupation of these premises is concerned, Late Lala Hansraj Gupta was residing therein in his lifetime under the authority of the said special resolution of the company which was the tenant. The appellant no.2-as the son of late Hansraj Gupta and the appellant no.1 as his grandson, were residing with him as part of his family. 9. The plaint avers that during the lifetime of Late Lala Hansraj Gupta, the appellant no.1 on 25th August, 1981 was appointed as the Chief Executive Officer (hereinafter 'CEO') of the respondent no.1 company. 10. On 9th October, 2000, a meeting was held of the Board of Directors of the Company. The appellant no.1 was removed from the post of the Chief Executive Officer (CEO) on 20th July, 2000. The appellant no.1 has submitted that he has assailed his removal as director of the company by way of Company Petition No.115/1986 before the Company Law Board and various orders have been passed in his favour. These proceedings are stated to be pending. 11. The compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds. 7.3 Amrita Shergill Marg:- On 15.2.1974 the company took on lease property bearing No.3, Amrita Shergill Marg from the owners Hansraj Gupta & Sons. On 21.1.1974 Board of Directors of the company resolved that Lala Hansraj Gupta use the house for his residence, Pursuant thereto, Lala Hansraj Gupta occupied the said property and resided therein until his demise on 3.7.1985. After his demise the eldest son of Lala Hansraj Gupta, viz, Shri Desh Raj Gupta and the latters son Shri Ravi Raj Gupta have occupied the property and despite demands of the company refused to vacate. They have claimed that they occupy the property in their own right. The company never permitted Shri Desh Raj Gupta or Shri Ravi Raj Gupta to occupy the property. Also with the said person's occupation, the company can derive no benefit from the tenancy, though it has continued to pay rent @ R s.495/- per month. The said rent is an unnecessary liability and burden upon the company with no corresponding benefit. In view of the above it may be appropriate for the company to surrender tenancy to the owners. The Board of directors considered the matter of tenancy of 3, Amrita Shergill Marg at length considered th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment dated 17th February, 2009 by the learned Single Judge holding that there was no violation of Section 299 of the Companies Act, 1956 and that the suit filed by the plaintiff was not maintainable being a frivolous suit which has been dragged unnecessarily. As a result, dismissal of the suit was directed. 16. We have heard learned senior counsel for the appellants and counsel for the respondents at length. 17. We may now examine the findings returned by the learned Single Judge in the impugned order dated 17th February, 2009. The primary ground of challenge of the appellants/plaintiffs is premised on their reading of Section 299 of the Companies Act, 1956. This statutory provision envisages that in the event of a director of any company having any personal interest in a contract or arrangement which has been or proposed to be entered into, he would be required to disclose the same to the other directors of the company. 18. Before us, Mr. Jhanji, learned senior counsel for the appellants has urged that the resolution dated 12th January, 2002 is also in violation of Article 100 of the Articles of Association of the company. We find that Article 100 similarly refers to disclo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leased to a company can bring or maintain a challenge to the actions/resolutions of the company with regard thereto? (iii) Whether the plaintiffs (appellants) concealed material facts in the plaint? If so, consequences thereof. (i) Whether the resolution passed by the board of directors of the company incorporated under the provisions of the Companies Act can be voided on the sole ground that the directors did not re-disclose personal interest in a contract or arrangement which was discussed in the meeting even though admittedly such disclosure in the previous meetings was on record? 21. It needs no elaboration that the spirit, intendment and purpose of the requirement mandated by Section 299 of the Companies Act, 1956 is only so as to put other directors and the company to notice of the interest held by any of the directors in the matter under consideration. 22. In this regard, our attention is drawn to the pronouncement of the High Court of Mysore reported at S.M. Ramakrishna Rao v. Bangalore Race Club Ltd. [1970] 40 Comp. Cas. 674 (Mys) wherein it was held that if the board was aware of the interest of a director in a particular transaction, it would not be necessary for suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) of Section 299 deems a general notice given to the Board by a director that he is a director or member of a specified body corporate or a member of a specified firm and is to be regarded as concerned or interested in any contract or arrangement and he may after the date of the notice be entered into with that body corporate or firm shall be deemed to be a sufficient disclosure or concerned or interested in relation to any contract or arrangement so made. 30. Looked at from any angle, it has to be held that the respondents are deemed to have sufficiently disclosed their interest in the property to the board of directors of the company for the purposes of Section 299 of the Companies Act, 1956 and the Articles of Association of the Company. 31. Interestingly, the appellants also do not contend at all that they were unaware of the interest of the other directors. For this reason, the resolution dated 12th January, 2002 cannot be voided for the sole reason that it does not contain specific reference to the interest of the directors, or because the directors did not re-disclose interest which was brought on record earlier. 32. We may note that the appellants have raised no object ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the complete silence in the plaint on this aspect. 39. It also needs no elaboration that parties to a suit are bound by the strict rules of pleadings. Issues in a suit are struck on pleadings of parties on which a suit proceeds to trial. So far as civil litigation is concerned, mere deposition in an affidavit filed long after the filing of a suit, without there being any challenge thereto in the suit is of no consequence. 40. We, therefore, also find that there is no challenge by appellant no.1 to the subsequent resolution dated 21st June, 2002 ratifying the resolution dated 12th February, 2002. It has to be held that plaintiff no.1 would therefore stand estopped from laying a challenge to the resolution dated 12th February, 2002. 41. We are in agreement with the findings of the learned Single Judge to the effect that in the instant case, the appellant no.1 as well as the other parties were all fully aware of the right, title and interest of each of them so far as the subject property was concerned. 42. In the facts of the present case, there was thus substantial compliance with the spirit, intendment and object of the statutory provision and nothing further was required to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of filing representative suits under section 91 of the Code of Civil Procedure in the case of public nuisance or under section 92 with regard to public charities. Certainly, the suit under consideration is not litigation of the kind envisaged in these provisions of the Code of Civil Procedure. Therefore, looked at from any angle, the plaintiffs have no right at all to bring or maintain the present suit. 49. It has been asserted that upon the demise of Shri Hans Raj Gupta, appellant no.2 became the Karta of the HUF which is the owner of the property. In the plaint, there is no assertion that the occupation of the premises is in such capacity. No authorisation from the members of the HUF to this effect has been pleaded or placed on record. The suit also makes no such claim to support the occupancy. 50. The suit as well as the present appeal have not been filed by the appellants in the capacity of directors/shareholders of respondent no.1-Company. The appellants have also not been authorised by the company to file a suit or the present appeal on its behalf. 51. The plaint also does not disclose as to how continued occupation of the property by the appellants would be in the interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it does not fall within the stipulated categories. However, this aspect is not being examined herein for the reason that the same was not considered before the learned Single Judge. 58. In answer to a direct question by the court as to what was the enforceable right, if any, of the plaintiffs so far as the occupation of the property was concerned, Mr. Jhanji, learned senior counsel for the appellants very fairly stated that there was none. No challenge is laid before us to the finding of the learned Single Judge that the appellant no.2 was only a shareholder in the company and had no right to challenge the same. The suit is not maintainable for this reason as well. (iii) Whether the plaintiff (appellants) concealed material facts? If so, consequences thereof. 59. The above discussion would show that the resolution dated 12th of January, 2002 was ratified in the meeting of the board held on 23rd of June, 2007. 60. The plaint does not contain even a mention of the meeting of the board of directors and the resolution passed on 21st June, 2002 ratifying the earlier minutes dated 12th January, 2002. It certainly cannot be denied that the same was a material fact for complete and ef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. 63. In Advocate General, State of Bihar (supra) the court has held that apart from the power to punish for misuse of the courts process, the court has extensive alternative powers to prevent the abuse of process by striking out or staying proceedings or by prohibiting taking of further proceedings without leave. 64. In the judgment reported at Chengalvaraya Naidu (supra), the plaintiff was guilty of concealment of a material document and it was held that more often than not the process of the court is being abused and is utilised as a convenient lever to retain illegal gains indefinitely. It was held that a person whose case is based on falsehood has no right to approach the court and deserves to be summarily thrown out at any stage of the litigation. The Supreme Court observed as follows:- "7. The High Court, in our view, fell into patent error. The short question before the High Court was whether in the facts and circumstances of this case, Jagannath obtained the preliminary decree by playing fraud on the court. The High Court, however, went haywire and made observations which are wholly perverse. We do not agree with the High Court that "there is no legal duty cast upon th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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