TMI Blog2021 (3) TMI 307X X X X Extracts X X X X X X X X Extracts X X X X ..... ravel beyond the pleadings and necessary material facts must be stated in support of the case set-up. There can be no departure from them in evidence - the Appellant has not narrated any material facts in relation to the family settlement. In absence of pleadings, evidence cannot be permitted to be adduced. We cannot see any accidental slip or omission on the part of the Appellant in drafting the suit, deserving laxity. The suit has been drafted with serious thought and is intentionally vague on the plea of family settlement. Therefore, having regard to the frame-work of the suit, even if we were to give liberal construction to the pleadings, law does not permit the Appellant to supplement the deficiency and omission in the pleadings, by producing evidence, for which trial is being requested - there are no reason to upturn the finding of learned Single Judge on this score. Whether the Board Resolution constituted a Family Settlement/Arrangement and appellant as a shareholder can seek its enforcement against Respondent no.1 in a Civil Suit? - HELD THAT:- We are conscious of the fact that under the Companies Act, 1956 there was no provision like Section 430 providing for ouster ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us. Whether Respondent No. 1 made any admission in its written statement filed in the suit, and whether the Learned Single Judge was correct in exercising jurisdiction under order XII Rule 12 CP? - HELD THAT:- The jurisprudence relating to the exercise of power under Order XXII Rule 6 of CPC is now well established. Under the said provision the Court may, on its own, deliver judgment based on admissions either in the pleadings or otherwise. The said provision is to be interpreted widely having regard to its objective and the Court is thus not precluded to examine the question of maintainability of a suit at a stage after the issues have been framed. Indisputably, this aspect had not been examined at any anterior stage, and therefore we cannot find any error in the approach of the learned Single Judge in delving into this question and exercising jurisdiction under Order 12 Rule 6 of CPC. The Appellant had contended that the learned Single Judge erroneously held that the Appellant herein had failed to even establish that he was an independent shareholder in the Respondent No.1 and proceeded to rule adversely on this basis. To our minds, there is little doubt regarding the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leased in the name of Respondent No. 1. 2.2 The Appellant herein claims that it was decided that both male and female descendants of Late Sir Sobha Singh, up to the fourth generation, will receive a flat each in Sujan Singh Park. To this effect, a seniority-wise list of 23 great grand-children was made, to whom an allotment would be made by Respondent No. 1 whenever a flat fell vacant. It is also claimed by the Appellant, and denied by Respondent No. 1, that the same was recorded by way of a family settlement, as well as a Board Resolution dated 21st July 1990 of Respondent No. 1. Such documents were not produced before the Court. Nevertheless, this practice was being followed, and 17 grandchildren were allotted flats by way of seniority. The Appellant (being a 4th generation descendant) stood at number 18 in the list. 2.3 Despite being next in line, the Appellant claims he was overlooked and the next vacant flat was allotted in 2014 to one Rahul Singh [hereinafter referred to as, Respondent No. 2 ] who was below the Appellant in the list. Thereafter, when another flat became vacant, Respondent No. 1, instead of allotting the flat to the Appellant, resolved to sell it. 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case]. 3.2 The Defendant/Respondent No. 1 raised doubts as to whether the Plaintiff/Appellant has a legally enforceable right in approaching the civil courts for remedy. In this regard, it was observed that an action by a shareholder against a Company falls squarely within the powers of the NCLT, and in light of Section 430 of the Companies Act 2013, the civil courts are barred from exercising jurisdiction in relation thereto. Noting that the Plaintiff/Appellant s father as well as other (minority) shareholders had already approached the NCLT, on the same facts as in the present case, pleading their own oppression and the mismanagement in the hands of Respondent No. 1, it was held that the Plaintiff/Appellant is barred from making the argument that he is not qualified by shares to approach the NCLT. 3.3 In the four years since the institution of the suit, the Board Resolution dated 21st July 1990, which reduced in writing the purported family settlement of the parties, was not produced before the Court by either party. In fact, no evidence to this effect had been placed on record, despite Respondent No. 1 vehemently denying the existence of such a resolution. Even if the Bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... guments advanced by the Plaintiff under Contract Law were found to be without merit. The Plaintiff/Appellant sought to plead the implementation of partial-acceptance of offer made to him by the Respondent No. 1 by e-mail. It was held that the plea that an offer was accepted in part (and right given to the acceptor, to challenge the other part of the offer) is wholly against the tenets of Section 7 of the Indian Contract Act, 1972. APPELLANT S GROUNDS OF CHALLENGE: 4. Mr. Rajshekar Rao, learned counsel for the Appellant argued that the impugned judgment is unsustainable in law as well as on the facts of the present case in as much as it proceeds on the basis of various factual errors which are contrary to the record and appear to have permeated the judgement and influenced its final outcome. Mr. Rao s submissions are summarised as follows: 4.1 Ignoring various triable issues raised and framed in the suit, the impugned judgment erroneously dismisses Appellant s suit under Order XII Rule 6 of the CPC. The impugned judgment has been passed on the presumption of absence of pleading of family settlement in the plaint, and that the counsel for Appellant had tried to set-up a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lder, can in no manner be scuttled, owing to the fact that his father had pursued a remedy before the NCLT. It was emphasised that the Appellant was not a party to the said proceedings. Furthermore, the controversy pending therein do not pertain to the reliefs sought by the Appellant in the present instance, as it only pertains to oppression and mismanagement by majority shareholders. The Learned Single Judge further failed to take into consideration that the suit of the Appellant was filed on 09.05.2016, and whereas the petition for O M was filed by Appellant s father in his independent right on 20.05.2017. The NCLT doesn t wield jurisdiction to grant relief as was sought in the suit i.e. the allotment of flats in terms of family settlement. Therefore, the dislodgment of the Appellant s suit on account of pendency of proceedings before learned NCLT is completely unjustified and per-se illegal. 4.5 The observations of the learned Single Judge to the effect that foundation for lifting of corporate veil was not laid in the plaint is incorrect. Clearly, the Appellant had pleaded necessity of lifting of corporate veil especially since his case hinged unto the existence of family arr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under: 8. That as the family members of Sir Shobha Singh had held the shares in the Company, therefore, in order to extend benefit to the shareholders of the Defendant Company, it was decided that the property viz. flats of the Defendant. Company at Sujjan Singh Park were to be allotted, to the family members and shareholders of the Defendant Company in lieu of shares held by them in Defendant Company. 9. That as the family expanded, allocation of flats became an issue, and in order to resolve this and in order to settle the family disputes, an understanding was arrived at amongst the family members/ descendants of Sir Shobha Singh to all the properties will be allotted to the members/descendants up to the fourth generation. A Board Resolution dated 21.07.1990 recording the aforesaid agreement was passed by the Board of Directors of the Defendant Company, which named all descendants of Shobha Singh up to the fourth generation, wherein each member of the family, either boy or girl, were entitled to a flat. Accordingly, a family tree was built in order to decide the entitlement. Whenever a flat fell vacant, the topmost on the waiting list was allotted flat. As such there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppearing in the list as prepared pursuant to the resolution dated 21.07.1990 in the Apartment at Sujan Singh Park, New Delhi. (d) Pass a decree for permanent injunction/ restraining Defendant No. 2, its agent, servants, nominee, assignee, licencee permanently from creating any third party right, leasing, renting, sub-letting, alienating flat No. D38, D-Block Apartments, Sujan Singh Park, New Delhi. (e) to (h) XX XX XX (emphasis supplied) 7. The afore-noted prayers lay out the gamut of the suit, which when read with the entire pleadings, demonstrate that the case of the Appellant for seeking declaration or alternatively, mandatory injunction, and the other reliefs is entirely founded on the Board Resolution dated 21.07.1990 of the Respondent No. 1. The suit was thus, in essence, an action for seeking enforcement of the right, if any, under the purported Board Resolution and nothing more. The Appellant has attempted to give the suit a different shade, by contending that an understanding was arrived at amongst the family members/descendants of Sir Shobha Singh which formed the basis of the suit. The paragraphs of the plaint which are relied upon by the Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be no departure from them in evidence. In our opinion, the Appellant has not narrated any material facts in relation to the family settlement. In absence of pleadings, evidence cannot be permitted to be adduced. We cannot see any accidental slip or omission on the part of the Appellant in drafting the suit, deserving laxity. The suit has been drafted with serious thought and is intentionally vague on the plea of family settlement. Therefore, having regard to the frame-work of the suit, even if we were to give liberal construction to the pleadings, law does not permit the Appellant to supplement the deficiency and omission in the pleadings, by producing evidence, for which trial is being requested. We find no reason to upturn the finding of learned Single Judge on this score. B. WHETHER THE BOARD RESOLUTION CONSTITUTED A FAMILY SETTLEMENT/ ARRANGEMENT AND APPELLANT AS A SHAREHOLDER CAN SEEK ITS ENFORCEMENT AGAINST RESPONDENT NO.1 IN A CIVIL SUIT? 9. The next question that falls for consideration is viz. the maintainability of the suit, as framed for enforcing the right of a shareholder under the Board Resolution dated 21st July 1990. On this aspect, firstly we will br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nderstanding borne out of the actions of Respondents, it would not result in any enforceable right in favour of the Appellant. We, therefore, have no hesitation to say that the suit, as framed, is not premised on the plea of family settlement and remains as one seeking some perceived right stated to be flowing from the tenor of a purported Board Resolution. 12. The next question is- what is the nature of Appellant s right and whether such a right is enforceable under law? The Appellant asserts that he is a shareholder of Respondent No. 1, which is a corporate entity, incorporated in the year 1945 under the erstwhile Companies Act, 1913. This perceived right as a shareholder is asserted on the basis of a Board Resolution. Let s first understand the purport of a Board Resolution under company law. The management of the company, which comprises of the board of directors selected by the shareholders, takes decisions by passing resolutions, which are formalized as Board Resolutions . A Board Resolution serves as a formal and accurate record of the important decisions taken by the Board of Directors of a Company. The learned Single Judge is correct in observing that the Company can, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to approach the said forum. We therefore, do not find any error in the reasoning of the learned Single Judge on this count, as well. 14. We also do not find merit in the submission of the Appellant that the Board Resolution was in line with the Article/ Memorandum of Company. This contention is advanced merely on the basis of the pleadings without placing any material on record and thus the observations made by the learned Single cannot be faulted with. C. WHETHER RELIANCE PLACED ON DEEPA ANANT-1990 CASE BY THE APPELLANT WAS CORRECT? 15. Appellant has argued that the learned Single Judge has misconstrued the proposition for which Deepa Anant-1990 case was relied upon and has instead erroneously relied upon the Deepa Anant-1994 case to reject and discard the Appellant s reliance. According to Appellant, Deepa Anant1990 case was cited to support the proposition that family arrangement can be binding on a company. Since we have already held that there is no family settlement on record, the proposition advanced by the Appellant is misconceived. We have also perused the aforenoted two decisions of the Bombay High Court. The Deepa Anant-1990 case, in para 1 notes the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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