Kumari Sehej Gupta & Anr. vs Shri M.L. Gupta And Ors
2010 Latest Caselaw 3935 Del

*                IN THE HIGH COURT OF DELHI AT NEW DELHI
                                                                                   Reserved on: 09.07.2010
                                                                                Pronounced on : 25.08.2010
+                                   CS(OS) 2170/2006

          KUMARI SEHEJ GUPTA & ANR.                                                   ..... Plaintiffs

                         Through : Sh. Rohan Basoya with Sh. Arvind Mishra, Advocates.

                                 Versus

          SHRI M.L. GUPTA AND ORS                                                     ..... Defendants

                         Through : Sh. R.S. Suri, Sr. Advocate with Sh. Sanjay Agnihotri, Ms. Sumar Suri and
                         Sh. Z.A. Siddiqui, Advocates.


          CORAM:
          HON'BLE MR. JUSTICE S. RAVINDRA BHAT


1.

        Whether the Reporters of local papers            Yes.
          may be allowed to see the judgment?

2.        To be referred to Reporter or not?               Yes.

3.        Whether the judgment should be                   Yes.
          reported in the Digest?


MR. JUSTICE S.RAVINDRA BHAT, J

%

I.A. No. 12981/2006 (Under Order 39 Rule 1 and 2)

1. The plaintiffs seek a decree of prohibitory injunction against the defendants restraining them from transferring, alienating, creating third party interest and selling the following properties (hereafter "the suit properties"):

a) M-24, Greater Kailash-II Market, New Delhi.

b) Ground Floor, Chiranjeev Tower, Nehru Place, New Delhi.

c) 215, Maker Chamber, Mumbai.

d) Shop No. 2, Rokadia Landmark Co., O.P. HSG, Society Ltd., Mumbai.

e) Nehru Apartments, Opp. C.R. Park, New Delhi.

f) A-8, Greater Kailash-I, New Delhi.

g) M-225 Greater Kailash - II, New Delhi.

2. The first plaintiff is the minor daughter of the third defendant. She sues through her mother Smt. Sumeet Gupta the second plaintiff. The latter is the divorced wife of the third defendant, and her (plaintiff‟s) natural guardian and the next friend. The application is filed

I.A. No. 12981/2006 in CS (OS) 2170/2006 Page 1 against Shri M.L Gupta, grandfather (first defendant), Usha Gupta, grandmother (second defendant), Anupam Gupta, father (third defendant), Smt. Vandana (fifth defendant).

3. The suit averments are that the defendants carry on business in the name and style of „Overseas Courier Service‟, which is acting as an agent of an international company based in Japan and is popularly known as „Overseas Courier Service‟. The said courier business is a joint family business. The first defendant, the plaintiff‟s grandfather owns the said properties, which were acquired and purchased from the funds of HUF/ joint family and family business of the said international courier services, which has a huge turnover of over ` 150 crores a year, which is being managed from India in a large scale. The first and third defendant are hereafter referred to as "the grandfather" and "the father"

4. The plaintiff contends that the properties were purchased from the family business funds and that they were always being treated as HUF properties. The properties have been assessed to income tax and wealth, and also by local authorities. The first plaintiff also avers that her father purchased the property bearing no. M - 225, Greater Kailash - 2, New Delhi through his funds and some funds arranged from the family business.

5. The second plaintiff was married to the third defendant, according to Hindu rites on 11.02.1990 in New Delhi; out of the wedlock one daughter baby Sehej Gupta (first plaintiff) was born on 08.11.1997. The second plaintiff had filed a suit for dissolution of marriage by decree of divorce on the ground of cruelty under section 13 (1) (i)(a) of the Hindu Marriage Act, 1955 under HMA No. 48/1998 and the same was decreed on11.05.2006 by the learned Additional District Judge, Delhi.

6. The plaintiffs say that Defendant nos. 1, 3, 4 and 5 are carrying on a business known as Overseas Courier Services, affiliated to an international company having its head office in Japan under the name and style "Overseas Courier Services/Overseas Courier Services Pvt. Ltd". The father is one of the directors (besides other members of the family who are on the board of directors and are managing the affairs of the company). The company is earning large profits with a huge annual turnover. The suit further states that the father is intentionally and deliberately ignoring the legal rights of the first plaintiff, and ignoring his duties as the father to make specific arrangements to secure his daughter‟s well-being. The father, it is alleged, is careless, irresponsible, and self centered, and in habit of squandering money. The suit alleges that due to such habits, the first plaintiff will be unable to secure her legitimate rights in the family property of the defendants, which are HUF properties.

7. The plaintiffs also aver that the grandfather has threatened that he would dispose of all the HUF properties and after disposing off the house bearing no. M-225 Greater Kailash -

I.A. No. 12981/2006 in CS (OS) 2170/2006 Page 2 II New Delhi, the other property at A-8, Greater Kailash - I, New Delhi and commercial properties in Delhi and in Mumbai, and further has stated that no share in any property will be given to the first plaintiff. The latter, being a co-parcener, has a vested right in the HUF property and in the property of the father and is therefore, entitled to claim her 1/9th share and to file the present application.

8. The plaintiffs submit that in the case the defendants succeed in disposing of the properties the first plaintiff will be deprived of her vested rights. In these circumstances, the plaintiffs claim entitlement to a temporary injunction restraining the defendants from alienating, transferring, creating third party interest or selling the said properties. The plaintiffs also submit that the father has sufficient means and has intentionally and deliberately neglected and refused to maintain the second plaintiff knowing well that she has no source of income and is dependent on her parents who are now retired.

9. The defendants, in their written statement, submit that the suit is devoid of any merit as the properties in respect of which relief is sought are self acquired assets of the grandfather which were never a part of any common stock or put in the common hotchpotch. Therefore, the question of treating them as part of Hindu Undivided Family assets, does not arise and no interest whatsoever can accrue to the first plaintiff in them (the properties). It is further stated that only in the event of the grandfather dying intestate would his heirs be entitled to claim a share in the properties; during his lifetime, however, no right would accrue to any of the defendants or the grandfather‟s heir, to claim any share in his properties. It is argued that and since the father himself has no right to claim any share in the self acquired properties of his father (the grandfather) the first plaintiff cannot claim through father any share in such self acquired properties.

10. The defendants have also denied the allegations that they have intentionally and deliberately neglected or refused to maintain the plaintiffs. The defendants have already paid an amount of ` 15,00,000/- towards the maintenance of the plaintiffs.

11. It is also submitted that the first defendant has, as a matter of his concern and responsibility has purchased a policy of ` 25,00,000/- from Life Insurance Corporation (Policy No. 331249015) in the name of the first defendant. The said policy was taken on 28.04.2004 and the same would get matured in the year 2024. The plaintiffs have denied this policy.

12. The defendants also contend that the grandfather is the sole proprietor of the business being run in the name and style of "Overseas Courier Service", which is the agent of a Japanese international courier company, engaged in the distribution of newspaper, I.A. No. 12981/2006 in CS (OS) 2170/2006 Page 3 magazines, books, trade samples and printed matter. The business was started on the sole initiative of the grandfather. Further, the tenure of the agreement with the Japanese counterpart is for a year, which is reviewed and renewed every year. It is urged that the Japanese principles of the company are being followed by the grandfather in the management and running of the business and the said principles do not recognize anybody else in the business - a fact mentioned in the agreement signed by the grandfather and the Japanese company.

13. The defendants deny that the father is connected with or related to the grandfather‟s proprietary concern and that he is a director in the said concern. They submit that the father is one of the directors in "Overseas Courier Service (India) Pvt. Ltd., which is an entirely separate entity from "Overseas Courier Service". It is also submitted that the said company was established in 1994 whereas the sole proprietorship concern under the name and style of "Overseas Courier Service" was established 30 years back by the grandfather. According to the defendants there is no connection between the two companies and both are different entities, independent of each other. The properties in question were purchased by the grandfather long before the establishment of Overseas Courier Service (India) Pvt. Ltd. The grandfather is the sole proprietor; substantiated by the audit reports submitted to the income tax authorities. The properties under dispute are shown in the audit report, as the properties owned and acquired by the grandfather and he is the sole owner of the said properties.

14. The ownership details of the properties, as submitted by the defendants are as under:

a) M-24, Greater Kailash-II Market, New Delhi.

It was purchased by the grandfather on 17.08.1994 from his personal funds and is a self acquired property. The house tax of the said property has been assessed in his name and an amount of ` 68,177 toward house tax was paid by him on 29.06.05 vide receipt no. 661012.

b) Ground Floor Chiranjeev Tower, Nehru Place, New Delhi. It was purchased by the grandfather from Ansal Properties & Industries (P) Ltd. on part payment basis from his self earnings. The possession of the said property was given by the builder to the said defendant on 15.4.1981. The house tax of the said property has been assessed in his name and an amount of ` 12,083 was last paid by him on 29.06.05 by receipt no. 661010.

c) 215, Maker Chamber, Mumbai.

It was purchased by the grandfather on 15.09.1986 with his personal funds and is his self-acquisition.

I.A. No. 12981/2006 in CS (OS) 2170/2006 Page 4

d) Shop no. 2, Rokadia Landmark Co., O.P. HSG, Society Ltd., Mumbai. It was purchased by the grandfather on 30.06.1995 from his personal funds and is a self acquired property.

e) Nehru Apartments, Opp. C.R. Park, New Delhi.

The property was owned by Mrs. Vandana Batra daughter of the grandfather and the same was sold and disposed off about a decade back.

f) A-8, Greater Kailash-I, New Delhi.

It was purchased by the grandfather on 1.01.1975 with his personal funds and is his self acquired property. House tax of the said property has been assessed in his name and an amount of ` 12,774 was paid by him on 29.06.05 vide receipt no. 661011.

g) M-225 Greater Kailash - II, New Delhi.

This was purchased by the grandfather on 9.08.1989 in the name of father. The property was purchased for a total consideration of ` 55,00,000 out of which an amount of ` 50,00,000 was paid by the grandfather and the same is shown as a loan in the annual income tax return filed by the grandfather before the Income Tax Department. The said amount of ` 50,00,000 is standing as a loan in the books of the said grandfather and has not been repaid by the father.

It is also submitted that all these properties except (e) and (g) are the grandfather‟s self acquired properties and are his assets in schedule C of the audited Income Tax Return for the Assessment year 2006-2007.

15. The plaintiffs argue that all the properties were purchased with the assistance of the family business and ancestral funds and were throughout treated as HUF properties; they were put into the family hotchpotch and are part of the common stock. It is submitted that there is no distinction between Overseas Courier Service (OCS) and Overseas Courier Services (I) Pvt. Ltd., as it is a joint family business. To substantiate, the plaintiffs rely on the documents submitted by the defendants, which show that on 17.06.2004, 5200 shares of OCS (I) Pvt. Ltd were transferred at a base price of ` 11,000/- per share by the defendant nos. 3, 4 and 5. The above shares, i.e. 52% majority shares of the company were transferred in favour of the grandfather without any consideration. This transaction was neither reflected in the balance sheet of the grandfather nor in the balance sheet of father.

16. The above said shares, according to the plaintiffs, were sold to the Japanese investors @ ` 11,000/- per share for a consideration of ` 5.72 crores in the year 2006, as has been reflected in the balance sheet for the said year filed by the grandfather. It is submitted that the

I.A. No. 12981/2006 in CS (OS) 2170/2006 Page 5 entire consideration was retained by the grandfather and no amount was received by defendant nos. 3, 4 & 5.

17. The plaintiffs rely further on the defendants‟ documents to say that in 2006, the father sold 400 shares @ ` 11,000 per share for a consideration of ` 44,00,000/- , the fourth defendant also sold 400 shares @ ` 11,000 per share for a sale consideration of ` 44,00,000/- and the fourth defendant sold 1600 shares @ ` 11,000 per share for a sale consideration of ` 1,76,00,000/-. No money was actually paid to the third, fourth and fifth Defendants, and the amount has been shown as an outstanding in the balance sheet of Shri M.L. Gupta as per the documents filed by the defendants.

18. The plaintiffs rely upon the certificates annexed on page 464 and 465 of the defendants‟ documents filed on 19.11.2009 in support of their application under Order XXXIX Rule 1 and 2 read with sec 151 CPC to show that these two certificates pertaining to foreign remittances totaling ` 8,36,00,000 were received by the grandfather, from Overseas Courier Services Company Ltd., Tokyo as the sale consideration for 7600 shares transferred to OCS Japan, whereas the balance sheet filed by the grandfather for the year 2006-07 only reflects a payment of Rs. 5.72 crores on the account of sale of those shares.

19. The plaintiffs also submit that the trade mark and logo "OCS" were used by OCS (I) Pvt. Ltd. since 1994 without paying any consideration. Subsequently, the said Trade Marks, etc. of Overseas Courier Service were transferred to OCS (I) Pvt. Ltd. in the year 2006- again without any consideration. No evidence is placed on record, however, in this regard. The plaintiffs rely upon the annual profit and loss statements of OCS (I) Pvt. Ltd. and submit that the latter (OCS (I) Pvt. Ltd) had been using the office, M-24, Greater Kailash-II, New Delhi, which has been shown as the property of the grandfather since 1994, without paying any rent. The plaintiffs further rely on a Share Purchase Agreement, which is on a non judicial stamp paper, dated 08.08.2006 filed by the defendants upon which the address of OCS (I) Pvt. Ltd. has been shown at GF-4, Chiranjeev tower, 43, Nehru Place, New Delhi, whereas the agreement stated the address of OCS (I) Pvt. Ltd., being M-24, Greater Kailash - II, New Delhi. OCS Pvt. Ltd. has claimed both the addresses as its office making it evident that there is no distinction between OCS and OCS (I) Pvt. Ltd. and that two different names were being used for the same entity.

20. The plaintiffs also rely upon documents showing that the father and the second plaintiff were managing the affairs of Overseas Courier services, which according to the latter was a joint family property.

I.A. No. 12981/2006 in CS (OS) 2170/2006 Page 6

21. The grandfather denies that the suit properties are joint family properties and has placed on record the sale deeds of all the properties except M-225 Greater Kailash- II, New Delhi, which shows that they were purchased by him in his personal capacity and in his own name. He has also filed the house tax receipts of the properties situated in Delhi by Municipal Corporation of Delhi, which are in his name only.

22. The grandfather relies on the trade agreement between him and M/s. Overseas Courier Service Co. Ltd., Tokyo, Japan to show that he is involved in the business of OCS as an individual and that it is not a family business. The documents placed on record show him to be the sole proprietor of the business being run in the name and style of "Overseas Courier Service", which is an agent of OCS Co. Ltd. Japan. The issue, however, whether OCS and OCS (I) Pvt. Ltd. are the same entity does not arise at this point of time. The evidence on record by the plaintiffs to prove the fact that OCS was a family business, as second plaintiff and father were working in the company, does not prima facie disclose that it was a joint family business. A member of a family working in any business owned by another member would not make it a family business.

23. The Court is conscious that in the present suit, a decree for injunction with other consequential reliefs is sought. The premise of the suit is that the various properties owned by the grandfather really belong to the entire joint family, of which he is a member. The said defendant is the first plaintiff‟s paternal grandfather; the second plaintiff is her guardian and mother. The latter was married to the father, till the marriage was dissolved. The plaintiffs apprehend that the properties, which are described as HUF assets, and in which a share is claimed, (by the first plaintiff daughter) can be dissipated, to the detriment of the first plaintiff. The defendants do not deny the previous relationship between the second plaintiff and the father; nor that the first plaintiff is, the latter‟s daughter. They however, dispute that the properties made the subject matter of the suit, are HUF assets; it is contended that all of them are individually owned by the grandfather. It is also urged that the one property owned by the father, was actually funded almost entirely by the grandfather, and that the books of the latter reveal that the amounts advanced for purchase of that property, have not been returned by the father, his (i.e. the grandfather‟s) son.

24. There is no dispute that the claim to property, of the grandfather, is by virtue of the first plaintiff‟s status, as daughter of the father; he is the grandfather‟s son. The principal question which arises is whether there is material on record to conclude, prima facie, that the acquisitions of the properties by the grandfather were through joint family funds. It is now established that there is no presumption that any property or asset belonging to a coparcener

I.A. No. 12981/2006 in CS (OS) 2170/2006 Page 7 is necessarily owned by or on behalf of the joint family, to which he belongs (Ref. Anil Kumar Roy Choudhury v. CIT, 1976 (4) SCC 776). This was stated in D.S. Lakshmaiah v. L. Balasubramanyam, 2003 (1) SCC 310, in the following words:

"18. The legal principle, therefore, is that there is no presumption of a property being joint family property only on account of existence of a joint Hindu family. The one who asserts has to prove that the property is a joint family property. If, however, the person so asserting proves that there was nucleus with which the joint family property could be acquired, there would be presumption of the property being joint and the onus would shift on the person who claims it to be self-acquired property to prove that he purchased the property with his own funds and not out of joint family nucleus that was available."

The principle was reiterated in Makhan Singh v. Kulwant Singh, (2007) 10 SCC 602. It has further been held that where a coparcener of a joint family acquires property, and it is asserted that he did so, or subsequently wished it to be treated as part of the joint family assets, there must be clear manifestation of that intention. The Supreme Court, in Lakkireddi Chinna Venkata Reddi v. Lakkireddi Lakshmama, (1964) 2 SCR 172, held as follows:

"Law relating to blending of separate property with joint family property is well- settled. Property separate or self-acquired of a member of a joint Hindu family may be impressed with the character of joint family property if it is voluntarily thrown by the owner into the common stock with the intention of abandoning his separate claim therein: but to establish such abandonment a clear intention to waive separate rights must be established. From the mere fact that other member of the family were allowed to use the property jointly with himself, or that the income of the separate property was utilised out of generosity to support persons whom the holder was not bound to support, or from the failure to maintain separate accounts, abandonment cannot be inferred, for an act of generosity or kindness will not ordinarily be regarded as an admission of a legal obligation."

25. The plaintiffs, no doubt have emphasized repeatedly that the properties standing in the name of the grandfather are actually owned by him, on behalf of the joint family of which he is the head or karta, and held for their benefit. However, this averment is contested by all the defendants. In the circumstances, the plaintiffs had to show some objective materials to establish that those properties belonged to the HUF; no evidence is, however, forthcoming. Nothing was pointed out to the Court, from the materials and pleadings, to say that the business, or any property was impressed with joint character, as the grandfather had acquired them or any of them, in his capacity as coparcener of a joint family other than his joint family. The proprietorship concern OCS, or even the source for purchase of shares held by the grandfather, and his other family members, which were later sold to the Japanese partner/ investor, were prima facie his acquisitions due to dint of his effort. There is no income tax return, or any other material suggestive that the grandfather treated these properties as that of the HUF comprising his nuclear joint family. No doubt, there is some evidence that shares

I.A. No. 12981/2006 in CS (OS) 2170/2006 Page 8 owned by the other family members were transferred; perhaps the plaintiffs are correct in showing that these transactions were not revealed in the books of various parties. Yet, those circumstances cannot lead this Court to conclude that the income earned by the grandfather, and the properties acquired by him, were impressed with a joint character, as to enable his children, and through them, his grandchildren, to claim partition.

26. The Court‟s observations, though unfavourable to the plaintiffs, however, do not conclude the matter. There is one property, M-225 Greater Kailash - II, New Delhi, purchased on 09.08.1989. It is owned by the father. The Property was purchased for a total consideration of ` 55,00,000 out of which ` 50,00,000 was paid by the grandfather; the amount is claimed as a loan to his son by the grandfather, in his annual income tax return. The amount continues to be shown as a loan in the books of the grandfather and has not been repaid by the father. Here, the Court is of the opinion that in view of the ownership of the property by the father, the fact that it was funded, wholly or substantially by the grandfather, would not detract from the fact that in law, by virtue of the Benami Transactions (Prohibition) Act, 1988, title and ownership vest with the owner (i.e the father). The grandfather does not, and cannot assert, lawfully that he is the real and true owner, as there is no question of any of the exceptions enacted in Section 4 of the Act, applying in the facts of this case. Futhermore, if such plea is taken, it would be contrary to and inconsistent with the said defendants‟ plea that there are no HUF properties. In these circumstances, it has to be concluded prima facie, of course, that the said property is owned by the father.

27. In view of the above discussion, it is held that the plaintiffs have not prima facie established that the properties, which are the subject matter of the suit, are HUF assets, and that the first plaintiff has any right, title or interest in them, as a coparcener. Having held that, however, the Court, is also conscious of the need to protect the interests of the first plaintiff, who is a minor, and the child of the father. Though the grandfather, her paternal grandfather has asserted that premia towards some insurance policies, which are substantial amounts, are being paid, for the benefit of the minor plaintiff, and that these policies would mature after about a decade, the Court is not satisfied that such provision would be adequate having regard to the facts and circumstances of the case. The Court had granted an ad-interim injunction protecting the claimed 1/9th share of the first plaintiff, in the properties. However, that order cannot be confirmed in view of the above analysis. In view of the totality of circumstances, the Court is of opinion that ends of justice in this case, would be met, if the defendants are restrained from transferring, encumbering or creating third party rights in respect of M-225 Greater Kailash - II, New Delhi till final disposal. In addition, the first defendant and father I.A. No. 12981/2006 in CS (OS) 2170/2006 Page 9 are directed to deposit a total sum of ` 20,00,000/- (Rupees twenty lakhs only) in a separate interest bearing fixed deposit, to be appropriated, if necessary, at the final stage of the suit, having regard to the findings rendered on the merits. The said fixed deposit shall be for one year, and renewed within a fortnight of its expiry, after due intimation to the Registrar of this Court. This direction shall bind the parties to the suit; the defendants shall comply with it, in two weeks, and file an affidavit compliance in this regard.

28. I.A. No. 12981/2006 is partly allowed in the above terms.

CS(OS) 2170/2006 The suit is directed to be listed on 16th September, 2010, for further directions.

                                                                        S. RAVINDRA BHAT
                                                                                  (JUDGE)

AUGUST 25, 2010




I.A. No. 12981/2006 in CS (OS) 2170/2006                                                    Page 10