Capital Land Builders (Pvt.) Ltd. ... vs M/S. Shaheed Memorial Society & ...
2009 Latest Caselaw 3026 Del

* IN THE HIGH COURT OF DELHI AT NEW DELHI


% I.A. Nos. 11235/06, 11671/06, 7514/07 & 8816/07

                               IN

                C.S. (OS) No. 1906 of 2006


+                                Date of Decision: 6th August , 2009


#     Capital Land Builders (Pvt.) Ltd.& Ors.       ....Plaintiffs
!               Through: Mr.Rajeev Sawhney, Sr. Advocate with
                         Mr.Vineet Jhanji, Advocate

                   versus

^     M/s Shaheed Memorial Society & Ors.       ....Defendants
                Through: Mr. Sandeep Sethi, Sr. Advocate with
                         Mr. Nitin Soni and Ms. Anuradha
                         Chaudhary, Advocates for defendant
                         nos. 1 to 6

      CORAM:
*     HON'BLE MR. JUSTICE P.K.BHASIN

1. Whether Reporters of local papers may be allowed to see
   the judgment?(No)
2. To be referred to the Reporter or not?(No)
3. Whether the judgment should be reported in the digest?(No)

                                 ORDER

P.K.BHASIN, J:

In this suit for permanent injunction, mandatory injunction

and damages an ex-parte injunction order was passed by this

Court on 06-10-2006 on the application of the plaintiffs(being IA

No. 11235/06) under Order XXXIX Rules 1 & 2 read with Section

I.A. Nos. 11235/06, 11671/06, 7514/07

151 of the Code of Civil Procedure,1908(„CPC‟ in short)

restraining the defendants from representing themselves as

shareholders/ representatives of M/s. Capital Land Builders

(Pvt.) Ltd., plaintiff no. 1 in this suit. During the pendency of that

application the plaintiffs filed another application under Order

XXXIX Rules 1&2 CPC(being IA No. 7514/07) praying for stay of

operation of certain Sale Deeds which had allegedly been

executed by some defendants in violation of the ex-parte

injunction order which had been passed by this Court(for which

act some of the defendants have already been held guilty by this

Court). By this common order those two applications as well

another application(being IA. No.11671/06) also filed by the

plaintiffs for some clarification in the order dated 6th

October,2006 and one application under Order XXXIX Rule 4

CPC(being IA No. 8816/07) filed by defendants 2-6 and 8 are

being disposed of.

2. Some relevant facts culled out from the pleadings and the

documents of the parties available on record may first be

noticed. One Company by the name of M/s Capital Land

Builders(Pvt.)Ltd.(hereinafter referred to as „the Company‟)

came to be floated in the year 1959. One of the objects of the

Company was to acquire, purchase or take on lease lands and to

I.A. Nos. 11235/06, 11671/06, 7514/07

develop the same into sites for residential, industrial and other

purposes and to sell or lease out such sites. At the time of

incorporation of the Company only two persons had signed its

Memorandum of Association and Articles of Association as the

original subscribers. One of them was defendant no.8 Smt. Satya

Chaudhary, who was the wife of Ch. Brahm Prakash, the first

Chief Minister of Delhi and was once Union Minister for

Agriculture also. Smt. Satya Chowdhary held ten shares of

Rs.100/- each. The other subscriber holding five shares was one

Mr. Kishor Lal Sachdeva. Plaintiff no.3 Smt. Promila Kishor is the

wife of that Kishor Lal Sachdeva, plaintiff no.4 Om Parkash

Sachdeva is his brother and plaintiff no.2 Ankur Sachdeva is the

son of Om Parkash Sachdeva.

3. Ch. Brahm Parkash acquired 500 shares of the Company

out of its total share capital of 560 shares in the year 1962 in

respect of which he was issued share certificate no.3 having

distinctive numbers 61-560. Then in the year 1963 he formed a

Society by the name of "Shaheed Memorial Society", defendant

no.1 herein(hereinafter to be referred to as „the Society‟) and he

became its President. In the same year Ch. Brahm Prakash

transferred his 500 shares of the Company in favour of the said

Society of which he continued to be the President till his death.

I.A. Nos. 11235/06, 11671/06, 7514/07

Ch. Brahm Parkash‟s Society thus became the major shareholder

in the Company.

4. Plaintiffs no. 2 to 4 claim that defendant no. 1 Shaheed

Memorial Society had initially acquired 500 shares of the

Company, out of the total share capital of 560 shares, by way of

transfer from its own President late Ch. Brahm Parkash and then

in 1983 the Society was allotted 150 additional shares by the

Company but it is also their claim in this suit that all those shares

were transferred by the Society in the names of different persons

during the period from 1968 to 1989 and it was left with no share

of the Company at the end of the year 1989 and consequently the

name of the Society was removed from the Register of

Shareholders of the Company and the plaintiffs‟ case appears to

be that thereafter the affairs of the Company were being

managed by the family members of Kishor Lal Sachdeva(who as

per the case of the private defendants had long back resigned

from the Company) and their friends(who shall hereinafter be

referred to as the „Kishor group‟ on whose behalf plaintiffs 2-4

appear to be fighting).

5. Plaintiffs no. 3 and 4 both claim to have bought 20 shares

each of the Company from the Society in the year 1974. This fact

I.A. Nos. 11235/06, 11671/06, 7514/07

has been pleaded in para no.2.1 of the plaint wherein the Society

has been shown as the „seller‟ and different persons named in

that para as the „buyers‟ of the Society‟s shares in the Company.

6. It appears that after the death of Ch. Brahm Parkash his sons

got together and formed a separate Group alongwith their

friends(hereinafter to be referred to as the „Chaudhary Group‟

for whom defendants 2-8 are fighting this battle) and they started

taking interest in the affairs of the Society as well as the Company

which their father was looking after during his lifetime. They

started representing to the Registrar of Companies that the

Society was still the shareholder of the Company and being the

major shareholder its office bearers were the persons who only

could manage the affairs of the Company. The plaintiffs claim

that they had, on the other hand, also represented to the

Registrar of Companies that the Society being not the

shareholder of the Company could not lodge any complaint

regarding the affairs of the Company and so the same should not

be entertained and at its instance the Company should not be

called upon to answer any querries and further that illegal

Returns filed by the Society should be removed from the

Company‟s records maintained in the office of the Registrar of

Companies. Both the Groups also appear to have constituted

I.A. Nos. 11235/06, 11671/06, 7514/07

separate Board of Directors of the Company. In that way fierce

battle for the control of the Company started between the

Chaudhary Group and Kishor Group.

7. During that battle there have been complaints and counter

complaints lodged with the police by the two Groups. Persons

belonging to Chaudhary Group started selling properties of the

Company in the name of the Company claiming themselves as

the persons authorized by the Company to sell the properties on

the basis of Society‟s original 500 shares in the Company.

Similarly the members of Kishor Group Lal also started selling

the properties of the Company in the name of the Company

claiming that they were authorized by the Company to sell its

properties. It appears that both the Groups have been issuing

share certificates to different persons purporting to be of the

Company. The Board of Directors of Chaudhary Group has been

disowning the claim of the persons of the Kishor Group of their

being the shareholders/Directors of the Company and vice

versa. Both the Groups also started filing separate Returns with

the Registrar of Companies who in turn does not appear to have

initiated any action despite having continued to receive Returns

from both the Groups giving contradictory and conflicting

information regarding the shareholders, Directors etc. of the

I.A. Nos. 11235/06, 11671/06, 7514/07

Company. If someone from Chaudhary Group asked someone

from the Kishor Group as to how and why he/she was

representing the Company the answer got was „Who are you to

ask such a question?‟ and if somebody from the Kishor Group

asked similar question from some member of the Chaudhary

Group same reply was given i.e. „Who are you?‟. But none of the

Groups claims to have acquired any property in the name of the

Company after the death of Ch. Brahm Parkash.

8. The Society also initiated proceedings before the Company

Law Board by filing a petition under Section 111(4) of the

Companies Act,1956. In that petition it was claimed by the

Society through Shri Siddharth Chaudhary, defendant no.7

herein, as its Secretary that the Society had never transferred its

shares of the Company to anyone. The prayer made in that

petition was for rectification of the Register of Members of the

Company by including therein the name of the Society as the

Company‟s shareholder.

9. The plaintiffs 2-4 claim that without waiting for the final

outcome of its petition before the Company Law Board which the

Company was contesting seriously the defendant no.1 Society

started claiming itself as the shareholder of the Company and

I.A. Nos. 11235/06, 11671/06, 7514/07

defendants 3-6 as the Directors of the Company being the office

bearers of the Society by representing to everyone that the

Society still was the major shareholder of the Company holding

original 500 shares. They constituted their own Board of Directors

of the Company and defendants 3-6 were shown to have been

appointed as its Directors on 10/03/06 and the Registrar of

Companies was also informed of that development. Defendant

no.4 Ajay Yadav thereafter claiming himself to be a Director of

the Company wrote a letter dated 26/05/06 addressed to

defendant no.2 Ajay Chaudhary as the President of the Society

acknowledging that Society continued to be the shareholder of

the Company. In view of that admission of the status of the Society

the Company Petition before the Company Law Board came to be

withdrawn on 29/05/06 by the counsel for the Society.

10. However, Shri Siddharth Chaudhary who had earlier filed

that petition moved a fresh application before the Company Law

Board for revival of its petition which was withdrawn on 29/05/06

and I was told during the course of arguments that application of

Siddhartha Chaudhary was allowed and his original petition

which was dismissed as withdrawn on 29/05/06 was revived.

11. When the dispute whether the Society had transferred its

I.A. Nos. 11235/06, 11671/06, 7514/07

entire shareholding in the Company to different persons or not

was still being adjudicated by the Company Law Board the

plaintiffs no.2-4 claiming themselves to be the Directors of the

Company filed the present suit and they also impleaded the

Company as plaintiff no.1. Registrar of Companies, Asstt.

Registrar of Companies and Registrar of Societies were also

impleaded in the suit as defendants no. 9,10 and 11 respectively.

12. The prayers made in the plaint are re-produced below:-

"(a) Issue a Permanent Injunction restraining the Defendants 1-8, their agents and employees from representing and/or holding themselves out to be shareholders of the Plaintiff Company; and

(b) Issue a Permanent Injunction restraining the Defendants 1-8, their agents and employees from representing and/or holding themselves out to be Directors, Agents or Authorised Representatives of the Plaintiff Company and restrain the said Defendants from in any manner acting for and on behalf of or in the name of the Plaintiff Company or from using the letterheads of the Plaintiff Company; and

(c) Issue a Mandatory Injunction directing the Defendant No. 1-8, their agents, employees and associates to forthwith handover all letterheads and other documents or instruments, stamps and seals created by them bearing the name of the Plaintiff Company or which may otherwise be in their possession and control and direct the destruction of the same; and

(d) Issue a Mandatory Injunction directing the Defendants No. 9 & 10 to forthwith remove from the records maintained with the said Defendant No. 9 in relation to the Plaintiff Company all Forms including Form 32 Annexure P17), Form 18(Annexure-P18), Form 2 (Annexure-P19) and Form 5(Annexure-P20) and all such other unauthorized forms filed; and

(e) Issue a Mandatory Injunction directing the Defendant No. 9 & 10 and their successors in office to immediately

I.A. Nos. 11235/06, 11671/06, 7514/07

institute and initiate appropriate proceedings against the Defendants No. 1-8 and against all those who have filed the unauthorized Form 32(Annexure-P17), Form 18(Annexure-P18), Form 2 (Annexure-19) and Form 5(Annexure-P20) and in particular proceedings under the provisions of the Companies Act with respect to the falsification of the Plaintiff Company‟s records with the Defendant No. 9 by the filing of the various falsified forms as aforesaid or otherwise; and

(f) Issue a Mandatory Injunction directing the Defendants No. 1-8 to disclose (i) all transactions entered into by them in the name of the Plaintiff Company and or on its behalf, and (ii) details of all Bank Accounts opened by them in the name of the Company; and

(g) Issue an order of Permanent Prohibitory Injunction restraining the Defendants 1-8, their servants, agents or assigns from appropriating and/or using any funds or dealing with any assets of the Company including funds wrongfully obtained by them in the name of the Company; and

(h) Award Damages to the Plaintiff Company against the Defendants No. 1-8 and hold the said Defendants jointly and severally liable to pay the same; and

(i) Award costs of the Suit to the Plaintiffs;

(j) Grant all such other reliefs which the Hon‟ble Court deems fit and proper in the facts and circumstances of the case be allowed in favour of the Plaintiffs and against the Defendants."

13. Alongwith the plaint an application under Order XXXIX

Rules 1 and 2 CPC for the following ad-interim directions to all

the defendants was also moved:-

"(a) Pass an order restraining the Defendants No. 1-8, their agents and employees from representing and/or holding themselves o0ut to be Shareholders of the Plaintiff Company during the pendency of the present Suit; and

(b) Pass an order restraining the Defendnats No. 1-8, their agents and employees from representing and/or holding themselves out to be Directors, Agents or Authorised Representatives of the Plaintiff Company and restrain the said Defendants from in any manner acting for and on

I.A. Nos. 11235/06, 11671/06, 7514/07

behalf of or in the name of the Plaintiff Company or from using the letterheads, bank accounts of the Plaintiff Company during the pendency of the present Suit; and

(c) Pass an order restraining the Defendants 1-8, their servants, gents or assigns from appropriating and/or using any funds or dealing with any assets of the Company including funds wrongfully obtained by them in the name of the Company during the pendency of the present Suit; and

(d) Pass an order directing the Defendant No. 9 to accept the Statutory Forms, Filings and Returns only from the Plaintiff Company under the signatures of any one of the Plaintiffs 2,3 & 4; and

(e) Pass an order directing the Defendant No. 9 to preserve the entire record relating to the Plaintiff Company and to produce the same in Court; and

(f) Permit the Plaintiff to advertise and notify the public at large that the Defendants are not authorized to act for and on behalf of the Company in terms of prayers A & B above

(g) Pass ex-parte ad interim orders in terms of the prayers (a) to (e) above; and

(h) Grant all such other reliefs which the Hon‟ble Court deems fit and proper in the facts and circumstances of the case be allowed in favour of the Plaintiffs and against the Defendants."

14. The stand of the defendants 1-8 in this case is that Society

never transferred its shares to anyone as was being claimed by

the plaintiffs. In one complaint to the police lodged by the

Chaudhary Group it was claimed that Kishor Lal Sachdeva,

husband of plaintiff no.3 and one of the two original promoters of

the Company, in fact, used to be the domestic-cum-office help of

late Ch. Brahm Parkash and during that employment had won

his trust and became his trusted man for which he was rewarded

by Ch. Brahm Parkash by making him as one of the two

I.A. Nos. 11235/06, 11671/06, 7514/07

subscribers to the Memorandum of Association of the Company

but later on that trust was breached and Ch. Brahm Parkash was

back-stabbed and rendered penniless. It was complained that

Kishor Lal Sachdeva taking undue advantage of the old age of

late Ch. Brahm Parkash and ill health and the trust reposed in him

by Ch. Brahm Parkash had after resigning from the Company

formed a Group to take over the entire assets of the Company

and to fulfill that evil design colluded with the former Secretary

of the Society Raghunath Singh and had been preparing false

documents after Raghunath Singh had resigned as the Secretary

of the Society showing transfer of shares of the Society to

different persons.

15. Having noticed the facts giving rise to this suit the question

which now arises for this Court to decide is whether the plaintiffs

have been able to make out a case for grant of the ad-interim

directions sought by them against the defendants. From the fore-

going narration, it is evident that this is not a case where some

shareholders or Directors of a Company are fighting against

some shareholders or Directors alleging mismanagement of the

affairs of the Company or oppression. This is a fight between

individuals, plaintiffs no.2-4 on the one side and defendants 2-8

on the other side. As noticed already, both the Groups have

I.A. Nos. 11235/06, 11671/06, 7514/07

been using the name of the Company to the exclusion of each

other. It is being represented in the present suit by one Ankur

Sachdeva, plaintiff no.2, who claims to be holding a power of

attorney of the Company executed on behalf of the Company by

himself and is witnessed by plaintiffs no. 3 and 4 whose claim of

being the shareholders is under serious dispute. These

individuals are fighting to get a declaration that they are the

persons who only can represent the Company but they have not

got that declaration so far. They are yet to establish as to when

and how they entered into the Company. So, in my view, in these

circumstances impleadment of the Company in the present suit

by plaintiffs no. 2-4 as one of the plaintiffs was not justified.

16. As far as plaintiffs no.2 to 4 are concerned, as noticed

already, they claim to be the Shareholders/Directors of the

Company and are claiming in this suit that the Society had sold its

entire shareholding in the Company by the end of the year

1989 to different persons and so its name had been struck off

from the Register of Members of the Company. That allegation

is being refuted by the Society in the present suit. However,

that controversy is already pending decision before the

Company Law Board, which is the authority competent to order

rectification of the Members Register of a Company, and plaintiffs

I.A. Nos. 11235/06, 11671/06, 7514/07

no.2-4 are contesting the Company Petition filed by the Society

and so they had no good reason to start an independent fight on

the same issue by filing the present suit. In the proceedings

before the Company Law Board also they are claiming that the

Society had transferred all its shares to different persons and

here also same plea is being put forth. The only difference is that

in the proceedings before the Company Law Boar they are the

respondents while in the present suit they are the plaintiffs. In my

view, the plaintiffs 2-4 should have waited for the decision of the

Company Law Board before rushing to the Civil Court. It is

evident that if it is decided that the Society had not sold its shares

of the Company to anyone, as is being claimed by the plaintiffs 2-

4, the empire built by them on the foundation of the original

share certificate no.3 for 500 shares in the name of the Society

would fall to the ground since that very certificate has been used

as an entry pass by these plaintiffs and their associates for

entering into the management of the Company.

17. In any event, plaintiffs 3 and 4 claim to have purchased

twenty shares each of the Company from the Society in the year

1974. However, to establish, even prima facie, their claim of

having purchased these shares from the Society they have not

placed on record any document which could show that the

I.A. Nos. 11235/06, 11671/06, 7514/07

Society‟s Governing Body had at any time taken the decision to

sell its forty shares to them. They have also not placed on record

any resolution of the Company having agreed to accept the

transfer of shares from one shareholder to someone who was

neither the family member of the transferor nor an existing

shareholder of the Company, which is the requirement for a valid

transfer of shares of the Company under its Articles of

Association. So, the plaintiffs no.3 and 4 have failed to show any

right, even prima facie, to claim various ad-interim reliefs against

the defendants.

18. It was, however, seriously contended by Shri Rajeev

Sawhney, learned senior counsel for the plaintiffs, that the entire

controversy could have been easily set at rest by defendants 1-8

by simply producing before this Court the original share

certificate no. 3 in respect of 500 shares of the Company in the

name of the Society. However, these defendants despite

claiming to be in possession of that certificate in original have

avoided to produce the same and so an adverse inference should

be drawn against them that they do not have in their possession

that share certificate and so it should be accepted, as is being

claimed by the plaintiffs, that that share certificate no more exists

because of all the shares having been transferred by the Society

I.A. Nos. 11235/06, 11671/06, 7514/07

itself to different persons from 1968 to 1989. On the other hand,

Shri Sandeep Sethi, learned senior counsel for defendants 1-6

and 8 argued that since the plaintiffs have come to the Court

claiming that the Society had sold its shares to different persons it

was its responsibility and burden to show to this Court that there

was any such sale transaction between the Society and different

persons and that too after passing of necessary resolutions by the

governing body of the Society and also by producing on record

resolutions, if any, passed by the Company approving of those

transfers but no such documents have been produced by the

plaintiffs which negatives their entire claim in the suit. It was also

contended that before the Company Law Board it had been

submitted on behalf of the Company that its old records had

been destroyed in a fire way back in the year 1975 while in the

present case it was being claimed that necessary documents

were in possession of the Company which shows that whatever

documents have been placed on record by the plaintiffs cannot

be said to be genuine documents.

19. I am in full agreement with the submission of Mr. Sandeep

Sethi that it was for the plaintiffs to have established, at least

prima facie, that the Society had sold all its shares of the

Company to different persons and that those transfers had been

I.A. Nos. 11235/06, 11671/06, 7514/07

recorded in the relevant records of the Company in accordance

with law after due compliance of the relevant provisions of the

Companies Act dealing with the transfer of shares of a Company

and recording of the transfers in the Company‟s records. Since

it is the case of the plaintiffs themselves that the Society was the

major shareholder at one time of the Company after having

acquired 500 shares out of total share capital of 560 shares, non-

production of the original share certificate in respect of those 500

shares will not, in my view, give any strength to the case of the

plaintiffs entitling them to grant of any of the interim directions

sought for by them in their injunction application.

20. I am also of the view that even if it is accepted that plaintiffs

no. 3 and 4 had purchased 20 shares each of the Company from

the Society as is being claimed by them, they would still not be

entitled to get any injunction order or any other direction against

any of the defendants. The Society is continuing to claim that it is

the major shareholder of the Company and even if 40 shares

allegedly purchased by the plaintiffs 3 and 4 are excluded from

the shareholding of the Society it would still be a shareholder of

the Company to the extent of 610 shares since as per the plaintiffs

own case the Society initially had 500 shares and 150 additional

shares were also allotted to it in the year 1983. No other person

I.A. Nos. 11235/06, 11671/06, 7514/07

has come forward to refute the claim of the Society that it had not

sold its shares to anybody. If actually there were genuine

purchasers of the Society‟s shares they would have come forward

to put forth their claim of being shareholders of the Company.

This fight regarding the Society‟s shareholding is going on for

over a decade and it cannot be accepted that the persons who

had actually purchased the Society‟s shares, as claimed by the

plaintiffs, would not come to join the fight which is going on in

their absence in respect of their shares.

21. As far as plaintiff no.2 Ankur Sachdeva is concerned, he

does not even claim to have purchased any share from the

Society. So, he has also not been able to make out a prima facie

case for grant of any ad-interim relief to him.

22. I am, therefore, of the view that no case has been made out

for giving any directions to the defendants as have been sought

for by the plaintiffs in IA No. 11235/06. As far as IA No. 7514/07 is

concerned the same has already been rendered infructuous

since this Court has already held while disposing of various

contempt applications moved by the plaintiffs that those sale

deeds having been executed in contravention of the ex-parte

injunction order passed in this suit on 06-10-2006 were non est.

I.A. Nos. 11235/06, 11671/06, 7514/07

Since it has been held that plaintiffs have failed to establish a

prima-facie case for grant of any of the ad interim directions to

the defendants, prohibitory as well as mandatory, their

application filed for clarification of order dated 06-10-2006(being

IA No. 11671/06) has to be dismissed now and it is ordered

accordingly. IA No. 8816/07 which was filed by some of the

defendants for vacation of the ex-parte injunction order dated 06-

10-2006 stands allowed.

23. Although the right of the plaintiffs to get any interim relief

has been negatived and the ex-parte injunction order is being

vacated but considering the facts and circumstances of the case

to the effect that members of the Kishor Group as well as the

Chowdhary Group are bent upon squandering away the valuable

assets of the Company without waiting for the final adjudication of

their respective claims this Court feels that at least during the

pendency of this suit neither the plaintiffs nor defendants 1-8

should be permitted to dispose of the assets standing in the name

of M/s. Capital Land Builders Pvt. Ltd. in any manner. They

would, therefore, stand restrained from disposing of any

property of the said Company during the pendency of the suit.

AUGUST 06, 2009/sh                                P.K. BHASIN,J

I.A. Nos. 11235/06, 11671/06, 7514/07