Col. Kalyan Singh (Retired) vs M/S Wimpy International Ltd. Ors.
2012 Latest Caselaw 146 Del

*IN THE HIGH COURT OF DELHI AT NEW DELHI

+      CS(OS) 1432/2004
                          Judgment reserved on 1st November, 2011
                          Judgment decided on 9th January, 2012

       COL. KALYAN SINGH (RETIRED)              ..... Plaintiff
                       Through: Mr. M.M. Kalra and
                                Mr. Kunal Kalra, Advs.
                versus

       M/S WIMPY INTERNATIONAL
       LTD. ORS.                           ..... Defendants
                     Through: Mr. Maninder Singh, Sr.
                              Adv. with Mr. Sandeep
                              Mittal, Ms. Deepali Sharma,
                              Mr. Akhil Sachar and Mr.
                              Manav Gupta, Advs.
                              Mr. Subhash Oberoi, Adv.
                              for Defendants.
                              Applicant in I.A. No.
                              3457/2008

Coram:
HON'BLE MR. JUSTICE A.K. PATHAK

A.K. PATHAK, J.

I.A. No. 8456/2004 (u/O 39 R 1 & 2 r/w Sec. 151 CPC), I.A. No. 1121/2005 (u/O 39 R 4 r/w Sec. 151 CPC by Defendant nos. 1 &

2) and I.A. No. 2963/2005 (u/O 39 R 4 r/w Sec. 151 CPC by Defendant no. 5)

1. Plaintiff (since deceased and now being represented through

his Legal Representatives) has filed this suit for declaration and

injunction praying therein that the agreement dated 1st December,

1988 executed between the plaintiff, Captain H.S. Bajaj, Shri N.K.

Duggal and M/s Goodwill Foods (P) Ltd. as also the dissolution

deed, partnership deed, power of attorney and other documents be

declared as null and void; that the defendant nos. 1 to 3 and 5 be

restrained from selling, alienating, parting with possession or

creating any third party interest in respect of property bearing no.

245, Udyog Vihar,Dhoondahera, Gurgaon, Haryana (hereinafter

referred to as the "suit property"). It has been further prayed that

the defendant no. 4 be restrained from giving permission for

transfer/sale of the suit property to a third person through defendant

nos. 1, 2 and 3.

2. Along with the suit, I.A. No. 8456/2004 under Order 39

Rules 1 and 2 read with Section 151 of the Code of Civil Procedure

(CPC) has been filed praying therein that the defendants be

restrained from alienating, parting with possession or creating any

third party interest or causing any loss to the plaintiff in respect of

the suit property till disposal of the suit. Vide order dated 15th

December, 2004 defendants were restrained from creating any third

party interest in respect of the suit property.

3. Defendant nos. 1 and 2 have filed I.A. No. 1121/2005 for

vacation of the ad interim injunction order. Defendant no. 5 has also

filed an application under Order 39 Rule 4 CPC being I.A. No.

2963/2005 seeking vacation of the injunction order qua the

defendant no. 5 on the ground that it has no interest in the suit

property.

4. By this order I shall dispose of all the above referred

applications.

5. Case of the plaintiff, as set out in the plaint, in brief, is that

the plaintiff along with Capt. H.S. Bajaj (retd.) and Shri. N.K.

Duggal, was carrying on partnership business under the name and

style of M/s Freezo Freezing Complex in terms of partnership deed

dated 28th August 1979. Plaintiff and Capt. H.S.Bajaj being retired

Army officers had applied for allotment of an industrial plot at

Dhoondahera under the scheme of Haryana State Industrial

Development Corporation (defendant no. 4). Vide allotment letter

dated 12th December, 1979, defendant no. 4 allotted the suit

property in the name of plaintiff and Capt. H.S.Bajaj. Sale deed was

executed by defendant no. 4 in favour of the plaintiff and Capt. H.S.

Bajaj. Stamp duty of ` 66,750/- was paid by the plaintiff and

certificate in this regard was issued by the Registrar‟s Office.

Plaintiff and his partners took medium term loan facility from

defendant no. 5 in the name of the partnership firm for raising

construction on the suit property as also for purchasing and

installing plant and machinery. Suit property was mortgaged with

the defendant no.5 to secure the loan. After completion of

construction, plaintiff let out the suit property to M/s I. Ahmad &

Company. During the 1984 riots, suit property was badly damaged

as a consequence whereof, tenant fled away. Plaintiff was unable to

repay the loan due to the losses suffered by the firm.

6. Plaintiff was also working as Chief Executive of M/s Wimpy

India Ltd., M/s Wimpy Fast Foods Pvt. Ltd and M/s Wimpy Foods

Pvt. Ltd, which companies were later on sold to defendant no.2 and

one Mr. Keval Singh Sandhu. M/s Goodwill Foods (P) Ltd. was

incorporated in the year 1985, of which plaintiff became the

Executive Director. Thereafter, plaintiff entered into a partnership

business with defendant no.3 for carrying on the said business from

the suit property on the assurance of M/s Goodwill Foods (P) Ltd.

that it will clear the dues of the plaintiff firm. Accordingly,

plaintiff, Capt. H.S.Bajaj and Shri. N.K. Duggal executed a

dissolution deed along with a partnership deed as well as certain

other documents in the year 1988 including agreement dated 1st

December, 1988 executed between M/s Goodwill Foods (P) Ltd.,

plaintiff and his partners, whereby suit property along with the

super structures standing therein was transferred in favour of M/s

Goodwill Foods (P) Ltd against consideration to the effect that the

said company will clear all the liabilities of the partnership firm.

However, defendant nos.1 to 3 failed to honour its obligation as

contained in the agreement. No amount was paid to defendant no.5

to clear the dues of the plaintiff‟s firm. Later on, defendant no.3, on

behalf of M/s Goodwill Foods (P) Ltd., executed a rent agreement

dated 7th September, 1989 in favour of the plaintiff whereby it

agreed to pay rent of `1,50,000/- pm to plaintiff from the date of

initial agreement i.e. 1st December 1988. Even the rent was not

paid. In the meanwhile, M/s Goodwill Foods (P) Ltd. was merged

with Defendant no.1, of which defendant no.2 became Chairman

and Managing Director while plaintiff was one of its Directors.

Subsequently, plaintiff was illegally removed from the post of

Director General of defendant no.1. In this background, it has been

alleged that agreement dated 1st December, 1988, partnership deed,

dissolution deed and other documents were void ab initio since the

same were got executed from the plaintiff and his partners

fraudulently, inasmuch as, no sale consideration as contained in the

agreement had been paid. Plaintiff has alleged that he and Capt.

H.S. Bajaj were owners of the suit property and the defendant nos.1

to 3 had no right to deal with the same in any manner whatsoever.

7. Case of the defendant no. 1, as set out in the written

statement, is that the suit was hopelessly barred by time since

agreements and other documents as alleged in the plaint were

executed in the year 1988; whereas suit has been filed in the year

2004, that is, after about 16 years. It is alleged that the plaintiff was

not the owner of the suit property, thus, had no locus standi to file

the suit. The suit property belonged to the partnership firm M/s

Freezo Freezing Complex and since other partners of the firm had

not been impleaded, suit is bad for non-joinder of necessary parties.

Capt. H.S. Bajaj and Shri N.K. Duggal, ex-partners of M/s Freezo

Freezing Complex, were also signatories to the agreement dated 1st

December, 1988 and had not approached the court. Rent agreement

dated 7th September, 1989 was disputed on the ground that it was

forged and manufactured document. As per the defendant no.1,

assets and liabilities of M/s Freezo Freezing Complex were taken

over by defendant no. 1 pursuant to the agreement dated 1 st

December, 1988. Defendant no. 1 had cleared the dues of

defendant no. 5 in terms of the agreement. After the dues of

defendant no. 5 had been cleared by defendant no. 1, original title

deeds have been released to defendant no.1 long ago. Suit property

has even been mutated in the name of defendant no. 1 in the records

of defendant no.4. Balance sheets of the defendant no. 1 are signed

by the plaintiff as one of the Directors of the defendant no. 1,

wherein suit property has been shown as the asset of the defendant

no.1. Case of the defendant no.1 is that it had cleared the dues of

the other creditors of M/s Freezo Freezing Complex also to the

extent it was limited in the agreement dated 1st December, 1988 by

making such payments to the plaintiff and other partners through

cheques. In nutshell, case of the defendant no.1 is that it is the

lawful owner of the suit property.

8. From the facts narrated above, it is clear that the whole

dispute between the parties revolves around the suit property i.e.

No. 245, Udyog Vihar, Dhoondahera, Gurgaon, Haryana. Plaintiff

is asserting his rights as an owner of the suit property. It is his case

that the suit property had been allotted to him and Capt. H.S. Bajaj

in their personal names and not to the partnership firm i.e. M/s

Freezo Freezing Complex. As against this, case of the defendant

no. 1 is that the suit property was allotted to M/s Freezo Freezing

Complex, a partnership firm. Suit property was mortgaged with the

defendant no. 5 to secure the loan which defendant no. 5 had

extended to the said partnership firm. M/s Goodwill Foods (P)

Ltd., predecessor-in-interest of defendant no. 1 had taken over the

assets and liabilities of M/s Freezo Freezing Complex vide

agreement dated 1st December, 1988, which was duly signed by the

plaintiff, Capt. Bajaj, Shri N.K. Duggal and M/s Goodwill Foods

(P) Ltd. In terms of the agreement, dues of defendant no. 5 were

cleared by the defendant no. 1. Plaintiff and other partners were

also paid ` 6 Lacs through cheque and ` 1 Lac through demand draft

to clear their liabilities towards Bombay Mercantile Cooperative

Bank, National Small Scale Industries Development Cooperation

and M/s. Prag Ice & Oil Mills, Aligarh. Plaintiff was one of the

Directors in M/s Goodwill Foods (P) Ltd. and subsequently, in the

defendant no.1. Plaintiff had not only been corresponding with

defendant no. 5 but other authorities also on behalf of defendant

no.1. He had signed letters recognizing the defendant no.1 as the

owner of the suit property. Plaintiff and the other partners of M/s

Freezo Freezing Complex had given letters to the defendant no. 5

affirming the execution of agreement dated 1 st December, 1988 and

for release of the title deeds on clearance of the dues. Thus, in

nutshell, case of the defendant no. 1 is that plaintiff is not the owner

of the suit property. Partnership firm was the owner of the suit

property. Assets and liabilities of the said partnership firm had

been taken over by the predecessor-in-interest of defendant no.1.

After clearing the dues of defendant no.5, mortgage was redeemed

and title deeds were released in favour of the defendant no.1.

Thereafter, defendant no. 4 has re-allotted the suit property to

defendant no.1 and the same has been registered in the name of

defendant no.1 in the records of defendant no.4. Thus, defendant

no.1 is the owner of the suit property in its own right.

9. The documents placed on record by the parties, prima facie,

support the contentions of defendant no.1 that the suit property was

allotted to M/s Freezo Freezing Complex and not to the plaintiff and

Capt. H.S. Bajaj in their personal capacity. Plaintiff has failed to

make out a, prima facie, case in his favour that he is the owner of

the suit property along with Capt. H.S. Bajaj. Merely because

allotment letter has been addressed to the plaintiff and Capt. H.S.

Bajaj, as partners of M/s Freezo Freezing Complex, will not be

sufficient to indicate that the suit property was allotted in their

personal names. Allotment letter dated 12 th December, 1979 has

been addressed to Col. Kalyan Singh and Capt. H.S. Bajaj, C/o M/s

Freezo Freezing Complex. Thereafter, agreement dated 5th

December, 1979 was executed between defendant no. 4 and M/s

Freezo Freezing Complex through Col. Kalyan Singh and Capt.

H.S. Bajaj as its partners. This agreement has been signed by the

plaintiff on behalf of the partnership firm. Recital portion of the

agreement clearly indicates this fact, which is reproduced herein

under :-

"This agreement made this 5th day of December, 1979, between the Haryana State Industrial Development Corporation Limited, (hereinafter called the Corporation of the one part) and M/s Freezo Freezing Complex, E-28, Greater Kailash-1, New Delhi-110048. (hereinafter called "the allottee") of the other part.

Whereas M/s Freezo Freezing has requested the Corporation for an Industrial Plot measuring 5 acres for the purpose of setting up an Industry (as per scheme submitted by the allottee). And whereas the Corporation has agreed to the request so made on the terms and conditions hereinafter mentioned in pursuance thereof has agreed to sell to M/s Freezo Freezing the Industrial plot measuring 5 acre (hereinafter called plot No.245) shown in red colour on the demarcation plan of the industrial Estate, Dundahera Complex (Gurgaon, Haryana)"

10. Subsequently, another agreement was executed between

defendant no. 4 and M/s Freezo Freezing Complex which was

registered with the Sub Registrar, Gurgaon and a perusal thereof

makes it clear that the agreement was entered into between the

defendant no. 4 and M/s Freezo Freezing Complex through its

partners i.e. plaintiff and Capt. H.S. Bajaj. In this agreement,

rubber stamp of the partnership firm of M/s Freezo Freezing

Complex has been affixed on each page on which plaintiff has

appended his signatures as partner of the said firm. Perusal of the

agreement dated 1st December, 1988 signed by the plaintiff, Capt.

H.S. Bajaj, Shri N.K. Duggal and M/s Goodwill Foods (P) Ltd. also

shows that the suit property belonged to M/s Freezo Freezing

Complex. Relevant portion of the agreement is reproduced herein

under:-

"Now, therefore, THIS AGREEMENT WITNESSETH AS FOLLOWS:

1. The fourth party shall take over all the assets of the partnership firm comprising of :

i. Entire land measuring approx five acres 23,341 sq. Yds at plot no. 245, Udyog Vihar, Dundahera, Gurgaon.

ii. Super structures built on the said land including factory and office blocks.

iii. Plant/machinery as detailed in SCHEDULE I to this Agreement.

2. The fourth party shall not be liable for any of the liabilities of 1st, 2nd and 3rd party towards statutory or non-statutory such as sales tax authorities or persons/banks or otherwise except the liabilities of the State Bank of Saurashtra as mentioned above.

3. The 1st, 2nd and 3rd party undertake that they are left with no other right, title, interest or claim in any manner in the Unit including the goodwill of M/s Freezo Freezing Complex and the same shall belong exclusively to the 4th party. The 4th party shall enjoy and own goodwill of M/s Freezo Freezing Complex and deal with the Unit in any manner it deems fit.

4. The 1st, 2nd and 3rd parties hereby represent, declare that there exists no lien, claim, charge or demand or mortgage or encumbrance or attachments or acquisition or requisition or notice thereof whatsoever in respect of premises no. 245, Udyog Vihar, Dundahera, Gurgaon or the factory or any plant, equipment, machinery, installed thereon, except the liability of the State Bank of Saurashtra as aforesaid and that 1st, 2nd and 3rd party‟s right or hindrance whatsoever to sell and to enter into this Agreement in regard to their rights, interest and share whatsoever in the aforesaid property and business of the firm. On our aforesaid declaration, assurance and undertaking, 4th party having agreed to pay and in the event if it is found that there is defect in the title of the property and business or it is found that the property is in any manner encumbered, the 1st, 2nd and 3rd party undertake to remain liable and indemnify the 4th party any and every loss incurred by 4th party in this regard.

5. All original documents pertain to the title of property shall be handed over to the 4th party and on clearance of the liability,

State Bank of Saurashtra, Nehru Place, New Delhi, the 4th party is entitled to take the delivery of the original Tile Deeds of the property from the said bank. The sanctioned building plans and other relevant papers connected with the said property, the account books and other office records etc. of M/s Freezo Freezing Complex will be handed over to the 4th party for which a separate inventory would be prepared and signed by the parties."

11. It may be noted here that fourth party is M/s Goodwill Foods

(P) Ltd. and plaintiff, Captain H.S.Bajaj and N.K.Duggal are first,

second and third party in the agreement. In the balance sheets of

defendant no. 1, suit property has been shown as one of the asset of

defendant no.1.The balance sheets placed on record have been

signed by the plaintiff as one of the Directors of defendant no.1.

Plaintiff had also signed a letter on behalf of defendant no. 1, which

was written to M/s Tourism Finance Corporation of India in

response to a letter dated 30th July, 1990 of the said Corporation,

wherein it has been specifically stated that the industrial unit i.e.

kitchen at Dhoondahera, Gurgaon was purchased by defendant no.1

from M/s Freezo Freezing Complex partnership firm which became

sick due to its destruction in the riots followed by the assassination

of Late Mrs. Indira Gandhi in the year 1984. It has been

specifically mentioned in the letter that dues of M/s Freezo Freezing

Complex to State Bank of Saurashtra (defendant no.5) had been

cleared by defendant no.1 except the interest component in respect

whereof concession was sought, in terms of the judgment of the

Supreme Court. It is, thus, clear that plaintiff had himself admitted

that the suit property belonged to M/s Freezo Freezing Complex

and thereafter assets and liabilities including the immovable

property had been taken over by the defendant no.1. Be that as it

may, from the agreements executed between defendant no. 4 and

M/s Freezo Freezing Complex, it is clear that the plaintiff is not the

owner of the suit property nor has got any right, title and interest

therein.

12. Learned counsel for the plaintiff has vehemently contended

that the right, title and interest in an immoveable property can be

transferred in favour of the other only by means of a sale deed

under Section 54 of the Transfer of Property Act. Nobody can

claim any ownership right in a piece of land on the basis of an

agreement to sell or power of attorney or any such document, which

is neither executed nor registered as a sale deed. Reliance has been

placed on Imtiaz Ali Vs. Nasim Ahmed, AIR 1987 Delhi 36 and

Suraj Lamp & Industries Pvt. Ltd. Vs. State of Haryana &

Anr., 183 (2011), DLT 1 (SC). I do not find much force in this

contention of learned counsel for the plaintiff on two counts.

Firstly, suit has not been filed on behalf of the partnership firm or

by all the partners of M/s Freezo Freezing Complex challenging the

right, title and interest of the defendant No.1 in the suit property.

Admittedly, suit property has been duly re-allotted and/or

transferred in the name of defendant No.1 by the defendant No.4.

Such transfer has not been challenged in this suit. Plaintiff has filed

this suit claiming himself to be the owner of the suit property. As

already held above, M/s Freezo Freezing Complex was the owner of

the suit property and later on, the defendant No.1 having taken over

the assets and liabilities of M/s Freezo Freezing Complex became

the owner of the suit property along with the super structures on it.

Thus, plaintiff, acting as an individual, had no right to challenge the

ownership rights of the defendant No.1. Secondly, in Suraj Lamp‟s

case (supra), Supreme Court has observed that if the documents

relating to „SA/GPA/WILL transactions‟ has been accepted and

acted upon by DDA or other developmental authorities or by the

Municipal or revenue authorities to effect mutation, they could not

be disturbed, merely on account of the said decision. In this case,

pursuant to the agreement dated 1st December, 1988, suit property

has already been transferred in the name of defendant No.1. The

other judgment titled M/s. Malabar Fisheries Co. vs. The

Commissioner of Income Tax, Kerala, AIR 1980 Supreme

Court 176 relied upon by the counsel for the plaintiff is in the

context of different facts. In the said case, while scrutinizing the

provisions of Sections 34 (3) (b), 2 (47) and 155 (5) of the Income

Tax Act, it has been held that distribution of assets of the firm on

dissolution does not amount to transfer of assets within the meaning

of Sections 34 (3) (b), 2 (47) and 155 (5) of the Income Tax Act.

13. Before granting ad interim injunction three essential

ingredients have to be satisfied. Plaintiff is required to establish a,

prima facie case; that grave and irreparable loss and damage would

ensure to him in case interim protection was not granted and that

balance of convenience, interests of justice and equity are in his

favour. In Dalpat Kumar and Another vs Prahlad Singh And

Others AIR 1993 SC 276, (1992), Supreme Court has held that the

burden is on the plaintiff by evidence aliunde by affidavit or

otherwise that there is "a prima facie case" in his favour which

needs adjudication at the trial. The existence of the prima facie right

and infraction of the enjoyment of his property or the right is a

condition for the grant of temporary injunction. Prima facie case is

not to be confused with prima facie title which has to be

established, on evidence at the trial. Only prima facie case is a

substantial question raised, bona fide, which needs investigation

and a decision on merits. Satisfaction that there is a prima facie case

by itself is not sufficient to grant injunction. The Court further has

to satisfy that non-interference by the Court would result in

"irreparable injury" to the party seeking relief and that there is no

other remedy available to the party except one to grant injunction

and he needs protection from the consequences of apprehended

injury or dispossession. Irreparable injury, however, does not mean

that there must be no physical possibility of repairing the injury, but

means only that the injury must be a material one, namely one that

cannot be adequately compensated by way of damages. The third

condition also is that "the balance of convenience" must be in

favour of granting injunction.

14. From the discussions made hereinabove, I am of the view

that plaintiff has failed to disclose, a prima facie, case in his favour

qua the suit property. Since the plaintiff is not the owner of the suit

property it cannot be said that he shall suffer loss and injury in case

any third party interest is created by the defendants. Balance of

convenience is also not in favour of the plaintiff. Accordingly, IA

No.8456/2004 is dismissed. Interim order dated 15th December,

2004 is vacated. In view of dismissal of IA No.8456/2004, IA

Nos.1121/2005 and 2963/2005 have become infructuous and are

disposed of accordingly.

A.K. PATHAK,J.

JANUARY 09, 2012 ga