Anghaila Housing Pvt. Ltd. & Ors. vs Camaron Finance & Investment Pvt. ...
2011 Latest Caselaw 5651 Del

*       IN THE HIGH COURT OF DELHI AT NEW DELHI
%                         C.R.P.72/2010


+                           Date of Decision: 23rd November, 2011

#      ANGHAILA HOUSING
       PVT. LTD. & ORS.                                ...Petitioners
!                Through:          Mr. Virender Ganda, Sr. Advocate
                                   with Mr. K.Lal, Mr. T.N. Saxena,
                                   Mr. S.K. Giri, Mr. V.K. Singh &
                                   Mr. Vipin Saxena, Advs.

                                Versus


$      CAMARON FINANCE & INVESTMENT
       PVT. LTD. & ORS.                    ....Respondents
                        Through: Mr. Harish Malhotra, Sr.
                        Advocate with Mr. Sachin Midha,
                        Advocate

       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 This revision petition has been filed by the petitioners who are defendants in a suit for declaration and injunction filed against them by the respondents-plaintiffs(hereinafter to be referred as „the

plaintiffs‟) and they are aggrieved by an order passed by the trial Court dismissing their application under Order VII Rule 11 of the Code of Civil Procedure filed for the rejection of the plaint.

2. The facts which are relevant for the disposal of this petition may be noticed at the outset. The petitioner no. 1 Company, M/s Anghaila Housing Pvt. Ltd., which was impleaded as defendant no.1 in the suit and reference to which shall hereinafter be made as „the defendant Company‟, was floated by two persons who were its promoter Directors as well as the only subscribers to its Articles of Association and were having one share each. With the passage of time the issued and subscribed share capital of the defendant Company kept on increasing with more and more persons becoming its shareholders and 4998 more shares of the value of Rs.100/- each came to be allotted to different persons between 1972 - 2003. The defendant Company owns a valuable piece of land in Dehradun District in the State of Uttarakhand and it is that land which has given rise to various civil as well as criminal cases between groups in the Company. The plaintiffs no. 5-7, who are respondents no. 5-7 herein, claimed to have acquired all the 5000 shares of the defendant Company during the period 1995- 97 from different shareholders. Plaintiff no. 5 Sanjay Daksha(petitioner no.5) claimed to have acquired 1846 shares, plaintiff no. 6 Soifur Rehman(petitioner no.6 herein) claimed to have acquired 1350 shares and plaintiff no.7 Binod Rajhans (petitioner no.7 herein) claimed to have acquired the remaining 1804 shares. Thus, the

control and management of the defendant Company came in their hands.

3. It appears to be the case of the plaintiffs no.5-7 that when they were controlling and managing the affairs of the defendant Company defendant no.3 Ms. Mausumi Bhattacharjee(petitioner no.2 herein) clandestinely and in collusion with certain persons started claiming herself to be the majority shareholder as well as the Managing Director of the defendant Company and also to have acquired its complete control and management and in order to get the judicial seal of approval in her favour to that effect she initiated collusive proceedings before the Company Law Board by filing a petition under Sections 397 and 398 of the Companies Act,1956(being C.P.No.70/2003) against some persons who were shown to be obstructing the smooth running and management of the defendant Company‟s affairs by her by claiming to have acquired 4604 shares out of the total 5000 shares of the defendant Company. She claimed that the respondents in her petition were not the lawful shareholders of the defendant Company .

4. On coming to know about the aforesaid on-going proceedings before the Company Law Board the plaintiffs no. 5-7 sought their impleadment in C.P.No. 70/2003 by filing an impleadment-cum- intervention application on 08.03.2004 claiming that they were the only shareholders of the defendant Company having acquired all the 5000 shares from time to time from the original shareholders. They also raised an objection regarding the very maintainability of the main

petition filed by Ms. Mausumi Bhattacharjee. However, both the reliefs sought by them were rejected by the Company Law Board vide its orders dated 20.05.04 25.05.04. Vide order dated 25.05.04 the Company Law Board also disposed of the main petition of Ms. Mausumi Bhattacharjee, and it was held that the acquisition of shares of the defendant Company by the respondents therein, based on which acquisition they were claiming to be majority shareholders, was null and void. Consequently the status of Ms. Mausumi Bhattacharjee as the majority shareholder and Managing Director came to be accepted by the Company Law Board. The Company Law Board while not accepting the prayer of plaintiffs no. 5 to 7 for being impleaded in those proceedings gave them the liberty to approach the competent Court.

5. Both these orders were challenged by plaintiffs no.5-7 by filing a Company Appeal (being CO.A.(SB) No. 10/2004).

6. Though the plaintiffs no.5-7 could not get impleaded in the petition of Ms. Mausumi Bhatacharjee before the Company Law Board and their appeal against the orders of the Company Law Board was pending they continued to exercise their rights as the Directors/majority shareholders of the defendant Company and that is evident from the fact that they increased the share capital of the Company sometime in June, 2004 to Rs.15,00,000/- divided into 1,50,000 shares after making the value of each share to be Rs.10/- as against Rs.100/- per share earlier. They also claim to have allotted

one lac shares thereafter to plaintiffs no.1-3(respondents no.1-3 herein).

7. However, when their appeal against the two orders passed by the Company Law Board was still pending the plaintiffs no.5-7 in October, 2005 transferred their shareholding in the defendant Company in favour of plaintiff no.4 with an understanding with him that they shall continue to co-operate with him in the ongoing disputes regarding the control and management of the affairs of the defendant Company. The plaintiffs no.5-7 however did not get their Company Appeal decided on merits and instead withdrew the same on 25th May, 2009.

8. Then came to be filed the suit for declaration and injunction out of which this revision petition has arisen and in that suit plaintiffs no.5-7, who had earlier sought their impleadment in the proceedings before the Company Law Board, were joined by plaintiffs nos. 1-4. The following prayers were made in the suit:-

"a) Pass a decree of Declaration in favour of Plaintiff Nos. 1 to 4 declaring that Plaintiffs are the share holders of defendant no. 1 to the extent of 5000 shares issued by Defendant No. 1;

b) Pass an order setting aside and declaring that the orders dated 20.05.2004 and 25.05.2005 passed by Company Law Board in CP No. 70 of 2003 in re "Anghaila Housing Pvt. Ltd." are null and void;

b1) Pass a decree of declaration that the plaintiffs are entitled to manage the affairs of defendant No. 1 to the exclusion of all others including Defendant Nos. 2 to 4.

b2) Pass a decree of Declaration in favour of the plaintiffs declaring that the alleged shares held by the Defendants No. 2 to 4 to the extent of 4225 shares are illegal and invalid and genuine and therefore null and void.

c) Pass a decree of Declaration declaring that acts done by the Defendant Nos. 2 to 4 are illegal and invalid and without any authority and therefore are null and void.

d) Pass a decree of Permanent Injunction in favour of the Plaintiffs and against Defendant Nos. 2 to 4 thereby restraining them, their servants agents, etc. from interfering in the management and control of affairs of Defendant No. 1 Company;

f) Award costs of the proceedings to the Plaintiff and against the Defendants;

g) Pass any other order or direction as this Hon‟ble Court may deem fit and proper in the facts and circumstances of this case."

9. The petitioners-defendants after entering appearance in the suit straightaway without filing written statement filed an application under Order VII Rule of the Code of Civil Procedure for the rejection of the plaint on the grounds that the Civil Court cannot sit in appeal over the orders passed by the Company Law Board which were sought to be declared by the plaintiffs as null and void and that the suit in respect of the reliefs of declarations sought for was in any event hopelessly barred by time .

10. The learned trial Court vide its impugned order dated 07.01.2010 dismissed the application under Order VII Rule 11CPC after coming to the conclusion that since the Company Law Board itself had refused to go into the factual controversies between the parties and had left the plaintiffs no.5-7, who were seeking impleadment in the proceedings before it, to agitate their grievances

before the appropriate forum they could very well file the civil suit and regarding the objection of limitation it was observed that the plaintiffs were pursuing their remedy before the Company Law Board in C.P.No.70 of 2003 and since that decision was bona fide they were entitled to the benefit of exclusion of the period consumed by them before the Company Law Board and the Company Appeal from the period of limitation provided for the filing of the suit in view of Section 14 of the Limitation Act.

11. The defendants felt aggrieved and filed the present revision petition challenging the correctness of the order dated 07.01.2010 of the learned trial Court. Arguing for the petitioners their learned senior counsel Shri Virinder Ganda had contended that it was the admitted case of the plaintiffs no.5-7 that in March,2004 they had come to know that the defendants were claiming to be in control of the affairs of the defendant Company and that claim of theirs had cast a cloud on their(plaintiffs‟) right to manage the affairs of the defendant Company being its only shareholders and therefore if they wanted that cloud to be cleared from a Civil Court they should have approached the Civil Court within the period of three years from March,2004 but that they did not do and consequently based on the averments made in the plaint itself and accepting the same to be correct also the suit was clearly time barred having been filed in the year 2009. It was further contended that the learned trial Court was not justified in extending the benefit of Section 14 of the Limitation Act since the grant of benefit exclusion of certain period spent by them in

earlier proceedings under the Companies Act was not even prayed for by the plaintiffs and in any event that provision of law was not attracted in the facts and circumstances of this case. It was also submitted that even otherwise none of the plaintiffs had any cause of action even as per the averments in the plaint to file the present suit.

12. On behalf of the respondents-plaintiffs their learned senior counsel Sh. Harish Malhotra while supporting the impugned order of the learned trial Court contended that there is no illegality committed by the trial Court in rejecting the application under Order VII Rule 11 CPC filed by the petitioners-defendants.

13. From the foregoing narration of the factual background of this matter culled out from the plaint in the suit, which only has to be taken into consideration by the Court while dealing with an application under Order VII Rule 11 CPC and the averments made therein are assumed to be correct, it is clear that as far as plaintiffs no. 5 to 7 are concerned they had simply sought their impleadment in the proceedings before the Company Law Board claiming themselves to be the only shareholders of the defendant company. However, they were not impleaded there and the Company Law Board had ordered that they could initiate any other independent proceedings before the approach appropriate Court for the redressal of their grievances. Thereafter, as noticed already, plaintiffs no. 5 to 7 themselves claim to have transferred their entire shareholding in the defendant Company in favour of plaintiff no. 4 which shows that they were very sure that there was no defect whatsoever in their shareholding and they could

legally transfer the same to anyone. After having transferred their entire shareholding in favour of plaintiff no. 4 they were left with no cause of action to file the present suit for declaration and injunction against the petitioners-defendants. If at all at any stage it is found by plaintiff no. 4 that plaintiffs no. 5 to 7 had no genuine shareholding then it would be plaintiff no. 4 who would have a grievance and he can take action against them. In fact, a minute reading of the plaint shows that plaintiffs no. 5 to 7 are not claiming any relief for themselves and they have joined as plaintiffs in this suit only because they had some understanding with plaintiff no. 4 while transferring their shareholding to him that they would cooperate with him in the litigation regarding the control and management of the defendant Company. Therefore, as far as plaintiffs no. 5 to 7 are concerned the plaint qua them should have been rejected on the ground that it disclosed no cause of action in their favour for the filing of the suit against the petitioners herein.

14. As far as plaintiffs no. 1 to 3 are concerned, they too did not have any cause of action to file the suit as it is their own case in the plaint that they had acquired shares of the defendant Company only after the Company Law Board had rejected the application of plaintiffs no. 5 to 7 for their impleadment in C.P. No. 70 of 2003. It has not been claimed by them that the petitioners-defendants or anybody else has ever cast any doubt about the genuineness of the acquisition of one lac shares by them in August, 2004. Similarly, the plaintiff no. 4 had also no cause of action to file the suit against the petitioners-

defendants since he had become the shareholder of the defendant Company, as per the plaint itself, in October, 2005 when plaintiffs no. 5 to 7 transferred their shares in his favour. There is no averment in the entire plaint that anyone from the side of petitioners has doubted the validity of that transfer of shares in his favour.

15. As far as the challenge to the two orders passed by the Company Law Board in the present suit is concerned, the same was not pressed by the learned senior counsel for the respondents-plaintiffs in view of the fact that those very orders had been challenged in appeal before the Company Bench of this Court and subsequently that appeal was withdrawn.

16. I am, therefore, of the view that the learned trial Court should have allowed the application of the petitioners-defendants under Order VII Rule 11 CPC on the ground that the plaint disclosed no cause of action whatsoever for filing of the suit by any of the seven plaintiffs against the petitioners-defendants without going into the question whether benefit of Section 14 of the Limitation Act could be availed of by the plaintiffs or not.

17. This revision petition is accordingly allowed and the impugned order is set aside. Consequently, the plaint in the suit filed by the respondents-plaintiffs stands rejected for want of any cause of action in their favour. However, it is clarified that if plaintiffs no. 1 to 4 get any cause of action in future in their favour to initiate any legal proceedings against the petitioners herein or anyone of them because of their causing interference in the exercise of their rights as the

majority shareholders of the defendant Company, which as per their case they are, the rejection of the plaint in their present suit would not come in their way as also any of the observations made by the Company Law Board in its two orders, which were under challenge in the present litigation, since they were not parties to the petition which was filed by Mausumi Bhattacharjee before the Company Law Board.

P.K. BHASIN, J

November 23, 2011/pg