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TMI Blog2023 (5) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... .13117/2022 and CMP.No.7981/2022 are as follows:- (3) The petitioners in CMP.No.7981/2022 who are appellants 2 and 3 in OSA.No.101/2014 are the plaintiffs 2 and 3 in the suit in CS.No.143/2012. The 1st plaintiff who is the wife of the 2nd defendant in the suit along with the petitioners, filed the suit in CS.No.143/2012 under Section 92 of CPC for the following reliefs:- (a)Removing the defendants 2 to 8 from the Trusteeship of the 1st defendant Maha Semam Public Charitable Trust; (b)Directing the defendants 2 to 8 to render accounts relating to the Maha Semam Public Trust properties along with the original documents, title deed etc; (c)Ordering inventory of the movable and immovable properties of the 1st defendant Maha Semam Trust ; (d)Settling a scheme for a proper administration of the 1st defendant Maha Semam Trust in future ; (e) To direct payment of cost of this suit. (4) The 1st defendant in the suit is a public charitable Trust and the Deed of Trust was registered on 07.07.1999. The 1st plaintiff / wife of 2nd defendant in the suit in CS.No.143/2012 was the founder Trustee and later, she resigned from the Trusteeship and her son by name Mr.S.Ramesh was inducted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uctuous and the interest of the beneficiaries of the 1st respondent-Trust would be at stake if the 9th respondent was permitted to transfer the interest in favour of a third party. Thereafter, the 9th respondent who is also the 9th defendant in the suit, namely, M/s.SMILE Micro Finance Limited, filed CMP.No.13117/20122 in CMP.No.7981/2022, to vacate the order of status quo dated 28.04.2022 passed in CMP.No.7981/2022 in OSA.No.101/2014. (8) By a common order dated 01.09.2022, a Division Bench of this Court disposed of the petitions in CMP.Nos.13117 and 7981/2022. As against the said order, the petitioners preferred petitions in SLP.Nos.16303 and 16304/2022 before the Hon'ble Supreme Court. The learned Senior counsel appearing for the petitioners in CMP.No.7981/2022 brought to the notice of Hon'ble Supreme Court the discrepancies between the web copy of order and the certified copy of signed orders passed by the Hon'ble Division Bench of this Court. Though the Hon'ble Supreme Court was convinced with the reasons obtained from the Registry of this Court explaining the reasons for the inadvertent discrepancies in the orders, set aside the order of the Division Bench of this Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany by name M/s.DWM Investments [Cyprus] Limited [hereinafter referred to as 'M/s.DWM'] did not survive in view of the transfer of control by operation of law well before the application and that the application in OA.No.520/2013 itself is not sustainable as the application for injunction was only an attempt to over turn an event that has occurred by operation of law. Referring to the specific findings of the Hon'ble Judge regarding the maintainability of suit as well as the collusion and regarding the true object and intention behind the litigation, the learned Senior counsel pointed out that in the absence of any sustainable argument challenging the findings of the Hon'ble Judge, while dismissing the application in OA.No.520/2013, there is no prima facie case. Pointing out the irreparable injury that may be caused to the third parties and particularly, the foreign investor by granting an injunction, the learned Senior Counsel submitted that balance of convenience would be in favour of the 9th respondent to dismiss the application filed by the petitioners/appellants. (14) This Court heard the submissions made on either side and also perused the materials placed including the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e available and came to the conclusion that the application in OA.No.520/2013 and the suit itself is a collusive, one designed, invented and engineered by the family members of Dr.N.Sethuraman. Therefore, this Court having regard to the prayer in the interim application filed by the plaintiffs, has to necessarily consider the bona fides of petitioners. (19) The suit came to be filed by the wife of 2nd defendant under Section 92 of CPC by getting the leave of Court under Clause 12 of Letters Patent as well as under Section 92 of CPC. It is pertinent to mention that leave was not obtained against the 1st defendant and therefore, the Hon'ble Judge after rendering a specific finding that by furnishing a wrong address for the 1st defendant-Trust, the suit has been laid before the Original Side of this Court. Despite serious allegations having been made against defendants 2 to 8 and all of them are residing in Madurai, none of them have filed any application for revocation of leave granted under Section 92 of CPC. (20) In the plaint and in the affidavit filed in support of CMP.No.7981/2022, the petitioners have made several allegations against the 2nd defendant/2nd respondent and his s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rust from July 2010 and she has been so far paid a sum of Rs.27,20,000/- from the Trust funds. [e]By an Agreement dated 05.04.2007,the 21st defendant who is represented by the 11th defendant, the daughter of 1st plaintiff, has made a fake claim against 9 t h respondent by way of arrears for the usage of software from the year 2007 to the tune of Rs.5,51,79,000/-. [f]Under the guise of granting small business loans to fictitious members of the 1st defendant Trust, defendants 2 and 4 have siphoned of amounts to the tune of Rs.20 Crores. (22) For all the allegations against the family members in relation to the 1st respondent Trust and its administration, the plaintiffs/petitioners would only say that the exact loss to the Trust can be found out only when an audit is conducted by an independent auditor. Inadvertently a few but serious allegations are also made against 2nd and 11th respondent for making illegal attempts to transfer huge funds from the 9th respondent to 21st respondent Company in which the daughter of 2nd respondent is the Managing Director. Even with regard to the allegations regarding transfer of funds from the 1st respondent Trust to 9th respondent Company, no d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent/9th defendant is an independent financial Organization incorporated under the Companies Act, 1956. It is true that the said Company was promoted by the 2nd respondent/2nd defendant. Though the 9th respondent Company was promoted by Dr.N.Sethuraman and his family members in the year 2003, it is stated that the authorised share capital of 9th respondent Company was increased to Rs.20 Crores in the year 2009. It is not disputed that in order to infuse more capital, a foreign investor namely M/s.DWM was invited to enter into share subscription agreement. By virtue of the share subscription agreement dated 21.02.2009, the 9th respondent agreed to allot 1,15,54,639 number of equity shares in three tranches to M/s.DWM. The foreign investor M/s.DWM paid a sum of Rs.50 Crores to hold 1,15,54,639 equity shares. By virtue of the investment of Rs.50 Crores by the foreign investor, the equity shares constituting 66.64% of share capital of the Company is held by the foreign investor. Though it is the statutory requirement to notify the general public by means of a public notification in the event of change of control of a non banking finance company such as 9th respondent Company, it is stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent to his daughter's company. The petitioners sought for an interim order to enable the 9th respondent a minority shareholder to have control over the 9th respondent Company. When the plaintiffs have made several allegations against the 2nd respondent for his illegal acts, affecting the interest of a public Trust and the plaintiffs believe that the 2nd respondent is capable of manipulating things to gain illegal profits for himself at the cost of even the public Trust and 9th respondent, what would this Court reasonably infer if the 2nd defendant/2nd respondent is permitted to have control over the affairs of 9th respondent Company against the statutory mandate. How the plaintiffs can possibly protect the interest of the 1st respondent trust by keeping the 2nd defendant/2nd respondent in the helm of affairs of 9th respondent Company? (28) As pointed out by the Hon'ble Judge while dismissing OA.No.520/2013, the 2nd respondent against whom several allegations were made in the plaint has filed OA.No.901/2013 in a collateral proceedings under section 9 of Arbitration and Conciliation Act, seeking interim order of injunction restraining the 9th defendant and the private inves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner's Report, found that the plaintiffs have falsified the address of the 1st defendant Trust and held that describing the registered office of 1st defendant Trust at Chennai, is a deliberate falsehood. The Hon'ble Judge held that the plaintiffs have misled the Court by giving a wrong address within the jurisdiction of this Court and that the plaintiffs are thus guilty of coming to Court with unclean hands. The 1st document in the plaint is the original Deed of Trust dated 07.07.1999 and the address of the registered office of the Trust in Clause 3 of the Trust Deed shows ''2/47-B, Melur Road, Uthangudi, Madurai.'' It is seen that the residential addresses of 1st plaintiff, 2nd defendant and the daughter of 1st plaintiff namely 11th defendant/11th respondent are one and the same. The Hon'ble Judge found that all the meetings of the Board of Trustees were held only at Madurai Office and not at the Chennai office even once. All the Trustees have their residence only in Madurai. (33) The Advocate Commissioner has also obtained a few records containing the Minutes of the Meeting of the Board of Trustees of 1st defendant Trust. The Hon'ble Judge found that the Meetings of Board at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as occurred by operation of law. (35) The very object behind this litigation by filing a suit under Section 92 of CPC is on the basis of serious allegation that the 2nd respondent/2nd defendant, the promoter of 9th respondent Company after his induction in the 1st respondent Trust, diverted the funds of the Trust by formulating a systematic and a calculated design. It is admitted that no document is produced by the petitioners to show systematic diversion of funds of Trust in favour of 9th respondent Company. The plaintiffs now rely upon the interim report of the Advocate Commissioner pointing out that he could not collect the Books of Accounts and other details from the 1st respondent/Trust. The object of the Trust is not to carry on business and no activity with profit motive. No one could assume accumulation of huge funds by Trust. The 9th respondent is an independent Company incorporated under the Companies Act, 1956. The 2nd respondent is not in the Management of 9th respondent Company and is no more in control of 9th respondent Company after the increase of share capital with the investment of Rs.50 Crores from M/s.DWM. The Court is unable to find anything to probablise the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned Senior Counsel for the petitioners has just ignored referring to any of the findings and hence, this Court presume that he has no valid arguments at least to point out that the findings are neither warranted nor proper or at least to show that the petitioners will be in a position to prove their allegations. Except some apprehensions based on some guess work, this Court is unable to find any substance in the whole case conceived by the petitioners. Therefore, we find no prima facie case in favour of the petitioners. (41) The Hon'ble Supreme Court in Dalpat Kumar and Others V. Prahlad Singh and Others reported in 1992 [1] SCC 719, has reiterated the principle that while granting or refusing to grant injunction, the Court should exercise a sound judicial discretion to find the amount of substantial mischief which is likely to be caused to the parties, if the injunction is refused and compare it with, that it is likely to be caused to the other side if the injunction is granted. Only after weighing the competing possibilities or probabilities of likelihood of injury, an injunction can be granted to maintain status quo. It is recommended by the Hon'ble Supreme Court that the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a had conducted the annual inspection and subsequently issued the final Supervisory letter and Risk Management Plan, which the Company directors were expected to acknowledge, agree and respond by mid of May 2022. (d)The company has 11,144 very small holding women shareholders - mostly untraceable. As per MCA regulation, their shareholding and dividend must be transferred to Investor Education and Protection Fund Authority [IEPF] upon the 7th anniversary of last paid dividend. The company is bound to start the process as laid out by the MCA from 01-June 2022. A board meeting is needed to approve this exercise. (e) As per RBI regulation, the 9th respondent company maintains bank accounts with every lending bank. The Business Transfer Agreement was executed on 12.04.2022. Having sold the business, the 9th respondent is now duty bound to close inoperative accounts and transfer the money in those accounts as per the terms and conditions of the Business Transfer Agreement. This exercise also requires the approval of the Board. (f) Having sold the business, the 9th respondent has to now shift to a different address. A board meeting is needed to approve the newly selected premises. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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