Abhishek Gupta vs Shree Salasar Polyflex Pvt. Ltd. & ...
2018 Latest Caselaw 1465 Del

*            IN THE HIGH COURT OF DELHI AT NEW DELHI

+                         CS(OS) No. 628/2017
%                                                      5th March, 2018

ABHISHEK GUPTA                                            ..... Plaintiff
                          Through:       Mr. Ashish Mohan, Mr. Mohit
                                         Kumar, Ms. Chetan Rai Wahi
                                         and   Mr.   Akshit       Mago,
                                         Advocates.

                          versus

SHREE SALASAR POLYFLEX PVT. LTD. & ORS. ..... Defendants
CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA

To be referred to the Reporter or not?         YES

VALMIKI J. MEHTA, J (ORAL)

I.A. No. 13785/2017 (for exemption)

1.

Exemption allowed, subject to all just exceptions.

I.A. stands disposed of.

CS(OS) No. 628/2017 and I.A. No. 13784/2017 (for stay)

2. This suit for declaration is filed by the plaintiff seeking

the relief that the plaintiff be declared as a lawful joint owner of

9,95,000 shares as detailed in the prayer clause as also para 1 of the

plaint. The 9,95,000 shares of which plaintiff claims declaration to be

a lawful joint owner is of the defendant no.1 company. Plaintiff is

seeking the relief of holding the plaintiff to be a lawful joint owner

with the defendant no. 2 in the suit Sh. Sanjay Gupta.

3. As per the plaint, plaintiff pleads that the plaintiff was

allotted 9,95,000 shares in the defendant no. 1 company on account of

the plaintiff being involved with the project of the defendant no. 1

company since its inception being the project of recycling of PET

plastic bottles for converting the same into polyester fiber. Plaintiff

pleads that he was the original shareholder along with the defendant

nos. 2 and 3 for 5000 shares of face value of Rs.10 each and that

thereafter the plaintiff along with defendant no. 2 as a joint holder was

issued 9,95,000 shares of the defendant no. 1 company. Plaintiff

pleads that he was granted joint ownership of 9,95,000 shares along

with the defendant no. 2 on account of the plaintiff providing

consideration of his services and expertise in setting up of the

defendant no.1‟s factory unit in Rajasthan.

4. A reading of the plaint shows that after pleading that the

plaintiff is the joint owner of the subject 9,95,000 shares with the

defendant no. 2, however, the plaintiff‟s name was not indicated in the

list of shareholders of the defendant no. 1 company maintained

through its register of shareholders. This is pleaded in para 12 of the

plaint. Plaint thereafter in para 19 of the plaint refers to a complaint

made by the plaintiff in the Police Station Malviya Nagar, New Delhi

and thereafter it transpired, as stated in para 20 of the plaint, that in the

share register of the defendant no. 1 company under the name of the

plaintiff the word „joint‟ was struck-off and was replaced with

„second‟ which was stamped afterwards. Plaintiff pleads that this

endorsement of plaintiff being the second holder of the subject shares

is a manipulation and this came to light only during the proceeding

ensuing from the criminal complaint filed by the plaintiff as stated in

para 19 of the plaint. The plaintiff pleads that the plaintiff is not the

second holder of the subject 9,95,000 shares of the defendant no. 1

company but that he is the joint owner with the defendant no.2 of

these 9,95,000 shares of the defendant no. 1 company. Accordingly, a

decree for declaration is prayed of the plaintiff being lawful joint

owner of 9,95,000 shares of the defendant no. 1 company.

5. Plaintiff has filed this suit as a suit only seeking

declaration of ownership of being a joint owner of the subject shares

with the defendant no. 2. Though, plaintiff mentions in the plaint that

in the share register of the defendant no. 1 company there is an entry

of the plaintiff being only shown as a second holder of the shares, yet

the plaintiff does not seek the relief of an injunction to be issued to the

defendant no. 1 company to rectify the register of members for

showing the plaintiff as a joint holder and not the second holder of the

subject shares. In other words there is a dichotomy in the plaint

because plaintiff cannot seek the relief of being declared as a joint

owner of the subject shares with the defendant no. 2, with the register

of members of the defendant no. 1 company remaining as it is

showing the plaintiff to be only a second holder of the shares and not

the joint holder/joint owner of the shares with the defendant no. 2.

Plaintiff therefore could not have sought the relief only for declaration

because plaintiff has to sue for the further relief of injunction for

rectification of the register of the members of the defendant no. 1

company to remove the plaintiff being shown as the second

shareholder and that the plaintiff must be shown as a joint owner/joint

holder of the subject shares with the defendant no. 2.

6. Section 34 of the Specific Relief Act, 1963 provides that

Court will not grant the relief of declaration when the plaintiff in the

suit has to seek further relief but does not seek that further relief.

Section 34 of the Specific Relief Act reads as under:-

"34. Discretion of court as to declaration of status or right.--Any person entitled to any legal character, or to any right as to any property, may institute a suit against any person denying, or interested to deny, his title to such character or right, and the court may in its discretion make therein a declaration that he is so entitled, and the plaintiff need not in such suit ask for any further relief:

Provided that no court shall make any such declaration where the plaintiff, being able to seek further relief than a mere declaration of title, omits to do so.

Explanation.--A trustee of property is a "person interested to deny" a title adverse to the title of someone who is not in existence, and whom, if in existence, he would be a trustee."

7. In the present case as already observed above plaintiff by

seeking the relief of declaration simplicitor of being a joint owner will

still not be seeking the requisite complete relief because even if this

relief as prayed by the plaintiff is granted to the plaintiff yet the

register of members of defendant no. 1 company since will show the

plaintiff to be only a second holder and not a joint owner/joint holder

with the defendant no. 2, the plaintiff will in the records of the

defendant no.1 company only be a second holder as the register of the

shareholders has to be taken by the defendant no.1 company as

reflecting the final position of the shareholders of the defendant no.1

company. In order to cure this divergence between the relief of

declaration of the plaintiff as the joint owner with the factual position

of the register of members of the defendant no.1 company yet will

continue showing the plaintiff only as a second holder, the plaintiff

necessarily had to sue and seek the relief of injunction against the

defendant no. 1 company to correct its register of members and to

remove the word second holder from the register of members. There

cannot be disconnect between the physical shares issued to the

plaintiff showing the plaintiff to be a joint owner and the records of

defendant no. 1 company showing the plaintiff only to be the second

holder. It is only for such reason that Section 34 of the Specific

Reliefs Act has been enacted to ensure that a plaintiff is bound to seek

further relief and a plaint cannot be drafted in a convenient way for

avoiding to plead the correct and complete causes of action and reliefs

as required by law. Intelligent drafting of the plaint cannot prevent the

law for coming into application, and therefore plaintiff cannot as per

the present plaint simply seek declaration though plaintiff has to claim

the necessary further relief of rectification of the register of members

of the defendant no. 1 company by removing the expression „second

holder‟ found in such register of members.

8. Order VII Rule 11 CPC provides that where plaint is

found to be barred by law then the suit plaint has to be rejected. The

bar to the present suit is by virtue of law being the legal provision of

the Proviso to Section 34 of the Specific Relief Act. Since the Proviso

to Section 34 of the Specific Relief Act says that Courts will not

entertain suit for declaration if a further relief is to be claimed but is

not claimed, then such a suit is barred by law in terms of Section 34 of

the Specific Relief Act.

9. Learned counsel for the plaintiff has firstly placed

reliance upon the judgment of the Supreme Court in the case of M/s.

Ammonia Supplies Corporation (P) Ltd. Vs. M/s Modern Plastic

Containers Pvt. Ltd. & Ors., (1998) 7 SCC 105 to argue that after

seeking the relief in this suit the plaintiff will approach the Company

Court or any other appropriate forum for seeking rectification of

register of members, however I do not find any such ratio of the

Supreme Court in the case of M/s. Ammonia Supplies Corporation

(P) Ltd. (supra) that after a civil suit is decided thereafter another

fresh proceeding will have to be filed before the Company Court etc

for seeking rectification of the register of members. I may note that

the judgment of the Supreme Court in the case of M/s. Ammonia

Supplies Corporation (P) Ltd. (supra) was an appeal from a Full

Bench Judgment of this Court in the case of Ammonia Supplies

Corporation (P) Ltd. Vs. Modern Plastics (P )Ltd.& Ors. AIR 1994

Delhi 51 and the Full Bench judgment of this Court had held that a

Company Court cannot be approached under Section 155 of the

Companies Act for rectification of the register of members if there are

seriously and heatedly disputed questions of fact which have to be

tried for rectification of register of members and in which case it is

only the civil court which should be approached by filing of a civil

suit. The judgment of the Supreme Court in M/s. Ammonia Supplies

Corporation (P) Ltd. (supra) case reiterates the principle that disputed

questions of fact will have to be decided by a civil court. Neither in

the judgment of the Full Bench of this Court in Ammonia Supplies

Corporation (P) Ltd. (supra) nor of the Supreme Court in M/s.

Ammonia Supplies Corporation (P) Ltd. (supra) holds that after the

civil suit is decided with respect to the disputed questions of fact as to

who is or is not the owner of the shares, even thereafter proceedings

will have to be initiated under the Companies Act for rectification of

the register and that rectification of register cannot be prayed/granted

in the civil suit. In fact a holistic reading of the judgment of the Full

Bench of this Court as also the Supreme Court in fact lays down that

all aspects, including rectification of register of members, will be

finally decided in the suit once seriously disputed questions of fact

arise and that remedy of rectification of register of members by

approaching the Company Court under Section 155 of the Companies

Act is not the proper remedy.

10. Learned counsel for the plaintiff then sought to place

reliance upon the judgment of the Division Bench of the Bombay

High Court in the case of Mt. Munnabai w/o Ramlal & Anr. Vs. Mt.

Sharadabai w/o Bhola Prasad, AIR 1946 Nag 235 to argue that a

consequential relief need not be claimed if consequential relief has to

be claimed in separate proceedings and for which purpose reliance is

placed upon para 10 of this judgment and which para reads as under:-

"10. The relief which the plaintiff really wants is the partition of the tenancy holding. This relief can be granted to her by a Revenue Officer under s. 93, C.P. Tenancy Act, 1820 and the jurisdiction of the civil Court to grant her this relief is barred, under S. 105(0), Tenancy Act, 1920. The

Revenue Officer however is not empowered to decide a question of title in view of the proviso to S. 93 of the Act. Under S. 169(1) (c), Land Revenue Act, 1917, a Revenue Officer is empowered to inquire summarily into the merits of the question of title and pass orders thereon in a case arising out of imperfect partition but no such power has been given where such a question is raised on an application for partition of the tenancy holding. In order that the plaintiff may get the relief of partition of the tenancy holding she has first to obtain a declaration of title in the civil court and after this has been done she has to move a Revenue Officer who will then partition the tenancy holding. Under the proviso to S. 93, Tenancy Act, she is compelled to file a suit for a declaration of title in a civil Court as a preliminary or a step to her obtaining the relief of partition of the tenancy holding by a Revenue Officer."

11. In my opinion, the plaintiff can seek no benefit from the

ratio of the judgment in the case of Mt. Munnabai (supra) wherein

the facts were pertaining to a decision to be taken by a revenue officer

under the C.P. Tenancy Act, 1920 and with respect to questions of title

to be decided by the civil court, because as already observed above

there is no requirement that in the present suit plaintiff cannot, and in

fact should, seek the relief of rectification of register of members

because rectification of register of members will have to be sought as

a further relief after the plaintiff obtains the necessary declaration in

the present suit. Reliance placed by the plaintiff upon the judgment of

Mt. Munnabai (supra) therefore does not help the plaintiff and the

cited such judgment will not apply to the facts of the present case.

12.(i) Reliance is also placed by the plaintiff upon the judgment

of the Full Bench of the Allahabad High Court in the case of Chief

Inspector of Stamps Vs. Mahanth Laxmi Narain and Others, AIR

1970 Allahabad 488 to argue that Full Bench of the Allahabad High

Court has held that provision of Order VII Rule 11 CPC should not be

applied at the time of admission of the plaint, however I do not find

anything in the observations made by the Full Bench judgment of the

Allahabad High Court that Order VII Rule 11 CPC will not apply

although the plaint is since inception found to be barred by law and

therefore the plaint should not be registered as a suit and summons

should not be issued in a suit. Obviously, the Full Bench of the

Allahabad High Court could not have held so because that would be

against the direct language of Order VII Rule 11 CPC that a plaint has

to be rejected in case the suit plaint is found to be barred by law and in

this case the suit is barred by Section 34 of the Specific Relief Act

because plaintiff had to and was bound to seek further relief of

rectification of register of members but the plaintiff deliberately to

avoid payment of court fee has filed the suit only as a suit for

declaration without claiming mandatory further relief as is required by

law.

(ii) Reliance was also placed on behalf of the plaintiff on the

aforesaid Full Bench judgment of the Allahabad High Court to argue

that the proposition of law as to what relief is or is not a consequential

relief, and in this regard there is no dispute as to the proposition of law

laid down by the Full Bench judgment of Allahabad High Court as to

when a relief would be or not be a further relief and in this regard this

Court has already arrived at a conclusion being that consequential and

further relief being injunction with respect to rectification of register

of members being a further and consequential relief which had to be

prayed but is not. I may note that Proviso to Section 34 of the Specific

Relief Act does not use the word consequential relief but it only uses

the word further relief and therefore so far as the bar of the suit on

account of the Proviso of Section 34 of the Specific Relief Act is

concerned, it has only to be seen whether the plaintiff had to seek

further relief, and as already held above the plaintiff had to seek the

further relief of injunction of rectification of the register of members.

13. Admittedly, as per the plaint the value of the shareholding

of the plaintiff is Rs.4.50 crores. Plaintiff will therefore ordinarily will

have to pay approximately 1% of the court-fees in case the plaintiff had

sought, which the law mandated him to do, the further relief of

rectification of register of members, but the plaintiff has deliberately not

sought further relief of rectification of register of members because

plaintiff wanted to only illegally pay a fixed court fees of Rs.20 on the

plaint and which can be done if only a suit for declaration is filed.

Obviously by clever drafting a plaintiff in a suit cannot avoid payment of

court fees when plaintiff is claiming relief of ownership of shares worth

Rs.4.50 crores with the fact that such relief is necessarily inextricably

interlinked to rectification of register of members by removing the word

second holder as against the name of the plaintiff as found in the register

of members of the defendant no. 1 company.

14. In view of the aforesaid discussion, the suit being barred

by law i.e Section 34 of the Specific Relief Act, and therefore this

Court by applying Order VII Rule 11 CPC holds that the suit plaint is

liable to be and is accordingly rejected.

MARCH 5, 2018                                  VALMIKI J. MEHTA, J
AK/ib