Dr. D.K. Modi vs V.K. Modi And Ors.
2013 Latest Caselaw 4087 Del

        IN THE HIGH COURT OF DELHI AT NEW DELHI

                                   CS (OS) No. 974 of 2007

        DR. D.K. MODI                                             ..... Plaintiff
                                   Through: Dr. A.M. Singhvi and Mr. Sanjay Jain,
                                   Senior Advocates with Mr. Saurabh Kripal,
                                   Ms. Jayashree Shukla, Mr. Abhinav Dasgupta
                                   and Mr. Nilesh, Advocates.

                          versus

        V.K. MODI AND ORS                           ..... Defendants
                      Through: Mr. T.K. Ganju, Senior Advocate with
                      Mr. Vijay Gupta, Ms. Geeta Goel,
                      Mr. Chetan Swrup, Mr. Amit Paliwal,
                      Advocates for D-2/MRL.
                      Mr. Ravi Kumar Aggarwal with Ms. Singdha
                      Pandey, Advocates for D-3 to 6.
                      Ms. Archana Lakhotia, Advocate for D-1.

        CORAM: JUSTICE S. MURALIDHAR

                                   ORDER

11.09.2013

IA No. 7474 of 2011 (filed by Plaintiff u/O VI R 17 CPC)

1. By this order the Court disposes of IA No. 7474 of 2011 filed by the

Plaintiff under Order VI Rule 17 of the Code of Civil Procedure 1908

('CPC'). The Court also proceeds to pass a consequential order in the

main suit itself.

2. The above suit has been filed by Dr. D.K. Modi against Mr. V.K. Modi,

son of late Mr. Rai Bahadur Gujar Mal Modi, Defendant No. 1, Modi

Rubber Limited ('MRL'), Defendant No. 2 through its Managing

Director, Mrs. Ritu Kapur, Mrs. Preetika Swarup, Mrs.Neetika Jaipuria

and Mrs. Ambika Kapur, Defendant Nos. 3 to 6 respectively for the

following reliefs:

"(a) Pass a decree of declaration in favour of the Plaintiff and against the Defendants declaring that the Defendant Nos. 1 to 2 have been left with no right, title or interest in the property bearing No. 15, Friends Colony (West), New Delhi having total area of 2800 sq. yds;

(b) Declare that the Plaintiff has exclusive right, title and interest in the suit property bearing address 15, Friends Colony (West), New Delhi having total area of 2800 sq. yds;

(c) Pass a decree of permanent injunction against the Defendant Nos. 1 and 2 restraining them from acting contrary to the terms of the MOU dated 24th January 1989 and claiming any right, title or interest in the property bearing address 15, Friends Colony (West), New Delhi having total area of 2800 sq. yds contrary to the terms of MOU dated 24th January 1989;

(d) Pass a decree of permanent injunction against the Defendant Nos. 3 to 6 restraining them from transferring any right, title or interest in property bearing address 15, Friends Colony (West), New Delhi in favour of Defendant No. 1 and 2 or any third party having total area of 2800 sq. yds."

3.The suit as originally filed states that the Memorandum of Understanding

('MOU') was executed on 24th January 1989 amongst the various members

of the Modi Family comprising of Dr. K.N. Modi, Mr. M.K. Modi, Mr.

Y.K. Modi and Dr. D.K. Modi (the Plaintiff herein) who constituted Group

A, and Mr. K.K. Modi, Mr. S.K. Modi, Mr. B.K. Modi, Mr. V.K. Modi and

Mr. U.K. Modi who constituted Group B. Dr. D.K. Modi is the son of Late

Mr. K.N. Modi who headed Group A. Dr. K.N. Modi expired on 27th May

2005.

4. Defendant No.1, Mr. V.K. Modi, is the son of Late Mr. Rai Bahadur

Seth Gujar Mal Modi. Defendant No. 2 is MRL having its registered office

at 4-7C, DDA Shopping Center, New Friends Colony, New Delhi 110 025.

Defendant Nos. 3 to 6 are the legal heirs of Late Mr. Arun Kumar Kapur,

who was the owner of the property bearing No. 15, Friends Colony (West),

New Delhi admeasuring 2800 sq. yds ('suit property'). Defendant No. 3 is

the wife, and Defendant Nos. 4 to 6 are the daughters of late Mr. Arun

Kumar Kapur.

5. Late Mr. Arun Kumar Kapur, by an agreement dated 4th February 1984,

agreed to sell the suit property to MRL for a total sale consideration of Rs.

55 lakhs, out of which a sum of Rs. 48 lakhs had been paid prior to the

execution of the said agreement to sell. It is stated in para 6 of the

unamended plaint that at the time of the execution of the agreement to sell,

the suit property was under the tenancy and possession of Dr. K.N. Modi,

father of the Plaintiff.

6. According to the Plaintiff, under a family settlement of the Modi Family,

the suit property fell to the share of Dr. K.N. Modi and the Plaintiff and

that the suit property is in their exclusive possession without any objection,

claim or hindrance from any of the Defendants.

7. It is stated that Mr. Arun Kumar Kapur executed a General Power of

Attorney ('GPA') dated 6th February 1984 in favour of Mr. Ashok Kumar,

Chartered Accountant of MRL giving him all the powers to deal with the

suit property. It is further stated that a boundary wall has also been

constructed, which physically separates the property No. 15, Friends

Colony (West), New Delhi measuring 2860 sq. yds. from the property No.

15 (1), Friends Colony (West), New Delhi which remained with Mr. Balraj

Krishna Kapur and his wife Mrs. Padma Devi Kapur (owners). It is stated

that the suit property comprising of 2800 sq. yds was conveyed by late Mr.

Arun Kumar Kapur to MRL by the aforementioned agreement to sell but

Dr. K.N. Modi and the Plaintiff remained in physical possession thereof. It

is stated that another adjoining area of approximately 60 sq. yds also came

into their occupation. As regards the excess area of 60 sq. yds, an

agreement to sell was executed by Mr. Balraj Krishna Kapur, the owner of

the other portion on 31st January 1996 in favour of Dr. D.K. Modi and the

entire consideration of Rs. 1,90,000 for the said 60 sq.yds was paid to him.

It is stated that the electricity connection in respect of the suit property is in

the name of the Plaintiff. The electricity bills and property tax are being

paid by the Plaintiff.

8. Since disputes arose between Groups A and B in relation to the

management and control of the various companies of the Modi group, it

was decided that the properties of the Modi Group should be split between

the two groups. With the active mediation of senior government officials

and the heads of the financial institutions, an MOU was drawn on 24th

January 1989 in the office of the Finance Secretary, Government of India

('GOI'). According to the Plaintiff, this led to the division of the properties,

trust and assets of the Modi Group. It is further stated that the management

and control of MRL was allotted to Group B. In terms of the MOU, three

companies of the Modi group, i.e., Modipon Limited, Modi Industries

Limited ('MIL') and Modi Spinning and Weaving Mills Co. Limited

('MSWMCL') were to be split up so that a part of the assets and operation

of each of these three companies was to be given to Group A and the

remaining assets and operations were to Group B. Clauses 3 and 4 of the

MOU which are relevant to the present suit read as under:

"3. All non Productive assets including shares, properties, guest houses etc. held by Modi Group Companies shall be valued and divided in the ratio of 40:60, i.e., KNM (Group A) 40 and KKM (Group B) 60. The shares of above companies will be transferred to respective groups after such valuation is done. Valuation will be done by M/s. S.B. Billimoria & Company, Bombay.

4. The Houses occupied by each Modi will continue with them. The Houses which are on lease, the expenses thereof will be met by the companies in which that Modi is

managing and the houses owned by the company will be transferred at price fixed by the valuer to the company in which that Modi is managing."

9. In terms of the Clause 5 of the MOU, the valuation of the properties was

to be done by M/s. S.B. Billimoria & Company and a scheme of

arrangement was to be drawn by M/s. Bansi S. Mehta & Company. The

three companies, MIL, Modipon Limited and MSWMCL were to have a

non-Modi independent chairman. The existing Chairman, Vice Chairman

and Deputy Chairman of the aforementioned companies would resign

forthwith.

10. It is stated that Dr. K.N. Modi and his sons resigned from the

Chairmanship/Managing Directorship/Directorship of the following

companies:

(i) Modi Rubber Limited

(ii) Bombay Tyres Limited

(iii) Modi Xerox Limited

(iv) Bihar Sponge Limited

(v) Modi Carpets Limited

(vi) Indian Exerographic Limited

(vii) Godfrey Phillips India Limited

11. As far as Group B was concerned, Mr. K.K. Modi and his brothers

resigned from the Chairmanship/Managing Directorship/Directorship of the

following companies:

(i) Modi Alkali & Chemicals Limited

(ii) Modi Champion Limited

(iii) Modi Cement Limited

12. According to the Plaintiff, the MOU was duly acted upon not only by

the members of both Groups A and B, but also by the financial institutions

and the Board of Directors ('BoDs') of the Modi Group of companies. It is

claimed that while Group A was handed over the management and control

of Modipon Limited (minus Indofil plus selling agency), Group B inter alia

was given the ownership, management and control of Godfrey Phillips

India Limited and Modipon Limited (minus Modipon Fibre).

13. The disputes between the parties were referred to the Chairman and

Managing Director ('CMD'), IFCI who rendered his decision on 8th

December 1995. Thereafter various suits were filed. The matter reached the

Supreme Court where one question was whether the decision by Chairman,

IFCI could be treated as an arbitration Award within the meaning of the

Arbitration Act, 1940. That question was answered in the negative.

Nevertheless the suit was permitted to be revived.

14. The genesis of the present suit is the letter dated 24th January 2007

written by MRL to Defendant No. 3 seeking execution of a sale deed in

relation to the suit property. According to the Plaintiff, the purpose of

getting the suit property registered in favour of MRL (Defendant No. 2)

was malafide and with an intent of helping Defendant Nos. 1 and 2, i.e.,

Mr. V.K. Modi and MRL to avoid the obligations under the MOU. In the

circumstances the Plaintiff seeks a declaration that the Defendants have no

title, right and interest in the suit property.

15. While directing summons to be issued to the Defendants on 25th May

2007, the Court passed the following order in IA No. 6316 of 2007:

"IA No. 6316 of 2007 Notice, returnable on 12th November 2007.

Having heard learned counsel for the Plaintiff and perused the plaint, application and documents on record, I found that the parties had entered into an memorandum of settlement dated 24th January 1989. The submission is that all parties have accepted the position as set out in the memorandum of settlement. The parties has been compelled to file the present suit as the Defendant No. 2 has issued a letter dated 24th January 2007 to the erstwhile owner of property bearing No. 15, Friends Colony, New Dehi which is stated to be in possession and occupation of the predecessor-in-interest of the Plaintiff and the Plaintiff, in terms of the memorandum of settlement dated 24th January 1989. The Plaintiff contends that this communication is in breach of clause 4 of the aforenoticed memorandum of settlement.

In this view of the matter, I am satisfied that the Plaintiff has made out a prima facie case for grant of ad interim protection. Grave and irreparable loss shall, undoubtedly, ensure to the Plaintiff if the interim protection is not granted, balance of convenience, interest of justice and equity are also in favour of the Plaintiff and against the Defendants.

Accordingly, till the next date of hearing, the Defendants shall maintain status quo of title and possession of property bearing No. 15, Friends Colony (West), New Delhi in terms of

memorandum of settlement dated 24th January 1989.

The Plaintiff shall comply with the provisions of proviso to Order 39 Rule 3 CPC within three days from today."

16. In the written statement filed on behalf of Defendant Nos. 3 to 6, a

preliminary objection has been taken. It is pointed that Defendants 4 to 6

have relinquished all their rights, title and interest in the suit property in

favour of Defendant No. 3. It is stated that no relief has been sought against

Defendant Nos. 4 to 6.

17. In the written statement filed by Defendant No. 2, it is pointed out that

that suit is for a declaration and injunction simpliciter. Since it discloses no

cause of action, the plaint is liable to be rejected. Secondly, it is pointed out

that MRL not being a party cannot be bound by the MOU. It is contended

that the Plaintiff has no right or locus standi to institute the present suit and

as such the plaint is liable to be rejected. It is pointed out that MRL is

neither a necessary nor a proper party to the suit. It is then pointed out that

the Plaintiff's claim is barred by limitation even assuming without

admitting that the MOU was validly executed. As far as the agreement to

sell dated 4th February 1984, MRL is a party to the agreement and it has

already paid an amount of Rs. 54 lakhs out of the total sale consideration of

Rs. 55 lakhs to the vendor. Accordingly, MRL is entitled to have the sale

deed executed by Defendant No. 3. It is submitted that the interim order

passed by the Court on 25th May 2007 is liable to be vacated.

18. It is stated that MRL has already sent its letter dated 27th January 2007

followed by its legal notice dated 27th April 2007 to Defendant No. 3

calling upon her to execute the requisite sale deed in favour of MRL in

terms of the agreement to sell dated 4th February 1984. Accordingly, it is

prayed that the interim order be vacated to enable Defendant No. 3 to

complete the procedure for executing the sale deed in favour of MRL. It is

pointed out that after the death of Dr. K.N. Modi on 27th May 2005, the

Plaintiff's status in the suit property is that of an unauthorized occupant and

a trespasser. It is pointed out that MRL has been declared as 'a sick

industrial company' under the provisions of Sick Industrial Companies

(Special Provisions) Act, 1985 ('SICA') by an order dated 17th May 2006

passed by the Board for Industrial and Financial Reconstruction ('BIFR')

and the process of its rehabilitation/revival is presently under way. It is

stated that the claim of the Plaintiff for the property of MRL was barred by

Section 26 SICA.

19. The Plaintiff filed the present application, IA No. 7474 of 2011 under

Order VI Rule 17 CPC. The first amendment proposed is to the title of the

suit as a "suit for declaration and permanent injunction and specific

performance of agreement to sell dated 4th February 1984". Further, the

prayer clause is sought to be amended by inserting the following prayers:

"(da) Pass a decree of specific performance directing the Defendant Nos. 3 to 6 to execute sale deed in favour of the

Plaintiff and/or any of his nominated group companies in terms of the agreement to sell dated 4th February 1984;

(db) Pass a decree of mandatory injunction against Defendant Nos. 1 and 2 to nominate the Plaintiff and/or any of his group companies in terms of Clause 4 of the MOU of 1989 as per the option of the Plaintiff, as Vendee with intimation to Defendant Nos. 3 to 6 and to also sign the conveyance deed as the confirming party."

20. The Court has heard the submissions of Dr. A.M. Singhvi and Mr.

Sanjay Jain, learned Senior counsel for the Plaintiff and Mr. T.K. Ganju,

learned Senior counsel for the Defendant No. 2 MRL respectively.

21. In the first place it is seen that the amendment application has been

filed on 5th May 2011, nearly four years after the filing of the suit. There is

no valid explanation for this delay. Secondly, it is seen that no right as such

has fructified in favour of the Plaintiff to enable him to seek reliefs as

prayed for in prayers (a) and (b) of the unamended plaint or even prayers

(da) and (db) of the amended plaint.

22. Clause 4 of the MOU is unambiguous. It envisages that the house

occupied by each Modi would continue with them as far as possession is

concerned. The transfer of the property under Clause 4 is only in favour of

the company "which that Modi is managing". The Plaintiff can be

dispossessed from the suit property only in accordance with law. However,

that is not the relief that is claimed. As regards the prayer for declaratory

relief of title to the suit property, it is incapable of being granted at this

stage. In the first place, the title to the suit property occupied by the

Plaintiff can in terms of the MOU be transferred only to a company

managed by the Plaintiff and not to the Plaintiff. Till date the position as

regards the company and/or companies which the Plaintiff will get to

manage remains unclear. In the absence of that step being completed, the

question of any consequential step of transfer of the suit property to such

company does not arise. Secondly, even thereafter the price has to be fixed

by a valuer and the company concerned must have the resources to pay the

value so determined for the suit property. That stage is yet to be reached.

Thus, no cause of action arises or is disclosed in the plaint, even as

amended, to enable the Plaintiff to seek the reliefs prayed for in the suit.

23. Mr. T.K. Ganju, learned Senior counsel for Defendant No. 2/MRL

states, on instructions, that certain other proceedings have been initiated by

MRL to recover possession of the suit property.

24. It is not in dispute that as of date the crucial part of the MOU as to the

division of the Modi group of companies between Groups A and B is yet to

be operationalised despite nearly twenty four years having elapsed.

Consequently, it is premature for the Plaintiff to assert any right, title and

interest in the suit property.

25. The Court is of the considered view that the plaint, even if the

amendments sought were to be allowed, does not disclose any cause of

action for the Plaintiff to seek the reliefs as prayed for even in the amended

plaint.

26. Dr. Singhvi expressed an apprehension that the Plaintiff may not be

later able to renew the prayer in the present suit as that would be resisted by

the Defendants on the ground that it is barred by limitation. He,

accordingly, prayed that the suit be deferred till time the MOU is worked

out. The Court is unable to accept the above submission. If in twenty-four

years the MOU is yet to be fully worked out, it is not appropriate for the

Court to simply adjourn the case further for that purpose. That would make

the wait indefinite.

27. Consequently, IA No. 7474 of 2011 under Order VI Rule 17 CPC is

dismissed.

CS (OS) No. 974 of 2007

28. Mr. Sanjay Jain, learned Senior counsel appearing for the Plaintiff,

sought an adjournment stating that he would like to examine the question

whether the plaint discloses any cause of action.

29. The Court does not consider it justified to adjourn the suit any further

since, in its considered view, the plaint itself does not disclose any cause of

action for the grant of the reliefs prayed for. On a careful reading of the

MOU, it is apparent that the Plaintiff cannot, in his individual capacity,

seek the relief of being declared as to be the owner of the suit property. In

fact what is claimed in prayer (a) is a negative declaration that Defendant

Nos. 1 and 2 have no title and interest in respect of the suit property. Be

that as it may, on a plain reading of Clause 4 of the MOU it is apparent that

right, title and interest in the suit property cannot possibly be transferred to

the Plaintiff at the present stage. The application seeking amendment to the

plaint has been rejected. Even the unamended plaint fails to disclose any

cause of action for the grant of the reliefs prayed for in the suit.

Accordingly, the Court rejects the plaint.

30. This order will not affect the right of the Plaintiff to seek appropriate

remedies as and when the MOU is ultimately worked out in accordance

with law.

S. MURALIDHAR, J SEPTEMBER 11, 2013 Rk