Delhi High Court
Caparo Maruti Ltd. vs M.D.Jindal on 26 July, 2019
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ Reserved on: 11th July, 2019
Pronounced on: 26th July, 2019
+ CS(OS) 756/2005
CAPARO MARUTI LTD. ..... Plaintiff
Through: Mr. Siddharth Yadav, Mr. Sagar
Chawla and Mr. Upinder Singh,
Advocates.
versus
M.D.JINDAL ..... Defendant
Through: Ms. Ranjana Roy Gawai and
Ms. Prachi Gobchha, Advocates.
Mr. Gaurav Mitra, Ms. Manmeet
Kaur, Mr. Yashvardhan Bandi and
Ms. Riya, Advocates for D-2, D-3 &
D-5.
+ CS(OS) 757/2005
M/S CAPARO MARUTI LTD. ..... Plaintiff
Through: Mr. Siddharth Yadav, Mr. Sagar
Chawla and Mr. Upinder Singh,
Advocates.
versus
SURYA KANT AGGARWAL ..... Defendant
Through: Mr. M.C. Kocchar, Advocate for D-1.
Ms. Ranjana Roy Gawai and
Ms. Prachi Gobchha, Advocates.
+ CS(OS) 761/2005
CAPARO MARUTI LTD. ..... Plaintiff
CS(OS) 756/2005 & connected matters Page 1 of 14
Through: Mr. Siddharth Yadav, Mr. Sagar
Chawla and Mr. Upinder Singh,
Advocates.
Mr. Gaurav Mitra, Ms. Manmeet
Kaur, Mr. Yashvardhan Bandi and
Ms. Riya, Advocates for D-2, D-3 &
D-5.
versus
MACHINO PLASTICS LTD. AND ORS. ..... Defendants
Through: Ms. Ranjana Roy Gawai and
Ms. Prachi Gobchha, Advocates.
Mr. M.C. Kocchar, Advocate for D-6.
+ CS(OS) 645/2007
MACHINO PLASTICS LTD. & ANR. ..... Plaintiffs
Through: Ms. Ranjana Roy Gawai and
Ms. Prachi Gobchha, Advocates.
Mr. Gaurav Mitra, Ms. Manmeet
Kaur, Mr. Yashvardhan Bandi and
Ms. Riya, Advocates for P-2.
versus
CAPARO MARUTI LTD. & ORS ..... Defendants
Through: Mr. Siddharth Yadav, Mr. Sagar
Chawla and Mr. Upinder Singh,
Advocates for D-1 to D-6 & D-8.
CORAM: JUSTICE SANJEEV NARULA
JUDGMENT
SANJEEV NARULA, J
I.A No. 2486/2018 in CS (OS) No. 645/2007
1. By way of this application, the Applicants Machino Plastics Ltd.[Plaintiff
No. 1 in the CS (OS) No. 645/2007 and Defendant No. 1 in CS (OS) No.
761/2005] and Mr. Sanjiv Jindal [Defendant No.4 in the CS (OS)
No.761/2005] under Section 151 of the Civil Procedure Code, 1908 seeks
consolidation of the following suits:
a. CS (OS) No. 756 /2005 titled as "Caparo Maruti Ltd. v. M.D Jindal"
b. CS(OS) No. 757/2005 titled as "M/S Caparo Maruti Ltd. v. Surya Kant
Aggarwal &Ors "
c. CS (OS) No. 761/2005 titled as "Caparo Maruti Ltd. v. Machine Plastics
Ltd. and Ors "
d. CS (OS) No. 645/2007 titled as "Machino Plastics Pvt. Ltd. &Ors. V.
Caparo Maruti Ltd. &Ors. "
2. It is pertinent to note that earlier this Court vide order dated 09th
November 2017 allowed the Transfer Petition, being No. TR.P.(C) 41/2017,
filed by Machino Plastics Ltd., Machino Finance Pvt. Ltd., Mr. M.D. Jindal
and Mr. Surya Kant Aggarwal, and transferred the aforementioned three
Suits [CS (OS) No. 756 /2005;CS (OS) No. 761/2005; CS (OS) No.
645/2007] from the District Court at Saket, Delhi to this Court so that all the
said three suits could be heard and tried together with the Suit (CS(OS)
No.757/2005) that was pending before this Court. While passing the said
order, the issue of consolidation of the suits was left open to be considered
in appropriate proceedings. The operative part of the said order is
reproduced hereunder:
"20. As far as the aspect of consolidation of the Suits is concerned,
the same is not in the domain of Section 24 of the CPC and it will
be open to the counsels to, before this Court, post transfer, if
entitled to, seek relief in that regard. All counsels, however agree
to recording of evidence in the Suits on commission and the said
recording to be expedited...."
Brief factual background
3. The factual background of the dispute between the parties is as follows:
i. Plaintiff No. 1 (Machino Plastics Ltd.) in CS (OS) No. 645/2007 was
incorporated as a Joint Venture between Maruti Udyog Limited, Suzuki
Motor Corporation and Murlidhar Jindal. Plaintiff No. 2 (Machino Finance
Ltd.) in the CS (OS) No. 645/2007 is a private limited Company
incorporated and registered under the provisions of the Companies Act,
1956.
ii. Caparo Maruti Limited [Defendant No. 1 in CS (OS) no. 645/2007] is a
Joint Venture between Caparo India Ltd. (U.K), Murli Dhar Jindal and
Maruti Udyog Ltd. Caparo India Limited (U.K) [Defendant No. 2 in CS
(OS) no, 645/2007] is a majority shareholder in the Defendant No.1
Company and Defendant No. 3-8 of CS (OS) 645/2007 are the Directors of
the company. The Plaintiff companies are shareholders in the Defendant No.
1 Company, jointly holding approximately 20% of the equity in the
Defendant Company.
iii. In early 2003, disputes arose between the Machino Group, represented by
the Plaintiff Companies, and the Caparo Group qua the management of the
Defendant No.1 Company (Caparo Maruti Limited). The dispute related to
certain alleged fraudulent loan transactions through which an attempt was
made by Caparo India Limited (U.K) to withdraw all of its investment in the
Defendant No. 1 Company.
iv. The Machino Plastic Ltd. filed a petition under Section 397 and 398 of
the Companies Act, 1956 being CP No. 17 of 2003 alleging oppression and
mismanagement in the Defendant No. 1 Company. On 19th August 2004,
an order was passed by the Company Law Board dismissing the C P no. 67
of 2003 with a direction that in the event the Petitioners were willing to part
with the shares of the Company, the said shares would be purchased by the
Respondents.
v. Aggrieved by the order dated 19th August 2004, the Respondent preferred
appeal before this Court. While the aforesaid appeal was still pending before
the Court, the Petitioners therein received a letter from Caparo Maruti
Limited intimating them of the purported cancellation of their shareholding
in the Company. This court vide order dated 05th December 2005 in appeal
against the order dated 19th August 2004, dismissed both the appeals and
upheld the said order, including the directions for the purchase of the
Petitioner's shares.
vi. It is alleged that despite the directions of this Court qua the Petitioner's
shares and recognition of the Petitioner's status as shareholders of the
company, Caparo Maruti Limited has illegally struck off the names of the
Petitioners from its Register of members.
vii. The parties by way of SLP (C) No. 12170/2006 challenged the order
dated 05th December 2005. Supreme Court dismissed both the appeals vide
order dated 29 March 2016 and held that further steps pursuant to the order
of dismissal will be subject to the result of such cases as may be pending
between the parties in respect of cancellation of shares. The aforementioned
suits arise out of and challenge the same actions of cancellation of shares by
the Defendant no. 1 herein and to give effect to the order of the Supreme
Court and also to carry out further steps pursuant to the order.
Submissions of the Parties
4. The learned Counsel for the Applicants submitted that the above
mentioned suits have arisen out of common sets of facts and circumstances
and that the parties in the said suits are substantially same. It was also
submitted by the Applicants that the cause of action alleged in the respective
plaints refers to the same period and that the issues arising for decision are
fundamentally common in all the above mentioned suits as is evident from
the issues framed in the respective suits. Further, it was submitted that same
set of oral and documentary evidence would be required for determining the
issues of facts and law arising for decision in the different suits pending
before different benches of this Court. The Applicants also contend that
there is also a possibility that two different benches may record findings
inconsistent with each other and conflicting decrees may come to be passed
as separate trials will be held for the abovementioned suits.
5. Learned counsel for the Applicants additionally submitted that complete
or even substantial and sufficient similarity of the issues arising for decision
in the aforementioned suits enables the suits to be consolidated for trial and
decision. It was also urged that by consolidation, the parties will be relieved
of the need of adducing the same or similar documentary and oral evidence
in the trial of the different suits and shall also be saved from multiplicity of
proceedings, delay and expenses.
6. In its reply to this Application, the Non-Applicants contended that Court
can exercise its jurisdiction to consolidate the suits only if there are common
question of law and facts or if the reliefs claimed in the suits are in respect of
or arise out of the same or series of same transaction. It was further
contended that the parties in each of the suits are different and dissimilar.
The cause of action and the prayers sought in each of the suits is different.
The suits are currently at different stages and separate and different
evidences shall be led in each suit to prove the distinct issues that have been
framed in each of them.
Analysis and Findings
7. I have given due consideration to the rival contentions of the parties.
There is no specific provision in the Code of Civil Procedure 1908, which
specifically provides for consolidation of suits. Nevertheless, the Court has
inherent power under Section 151 CPC which allows the Court to order
consolidation of suits in case the situation so demands. Essentially, an order
for consolidation of suits is to secure the ends of justice and to prevent the
abuse of process of Court. This consolidation can also save the parties from
delay and multiplicity of proceedings. Thus, while allowing the request for
consolidation, the Court has to bear in mind the following factors to arrive at
a just decision: a) If there are substantial and sufficient similarities of the
issues arising out of two or more suits; b) if, by consolidation, the parties
can be relieved of the need to adduce same or similar oral or documentary
evidence multiple times. After recording the evidence, common arguments
can be heard and the decision can be given by the Court by a common
judgment. The Court, at the final stage, by way of a common judgment can
draw two or more decrees or a common decree in respect of each suit.
8. In the present case, there is no doubt in the mind of the Court that all the
four mentioned suits arise out of the same action of cancellation of shares by
the Non-Applicants and to give effect to the order dated 29th March 2016
passed by the Hon'ble Supreme Court and to carry out further steps pursuant
to the order as mentioned. The description, in brief, of the reliefs sought in
the abovementioned suits are as follows:
i. The Suit bearing CS (OS) No. 761/2005 titled as "CaparoMaruti Ltd. v.
Machino Plastics Ltd. and Ors" filed on behalf of Caparo Group against
Machino Plastics Ltd. and others inter alia seeks a decree of permanent
injunction restraining the defendants from interfering with the management
of the Plaintiff company or the Board and shareholders meetings of the
Plaintiff company. Further, directions are also sought against Machino
Plastics Ltd and Machino Finance Ltd restraining them from exercising any
rights as shareholders of the plaintiff company.
ii. The Suit bearing CS (OS) No. 757 of 2005 titled as "M/S Caparo
Maruti ltd v. Surya Kant Aggarwal & Ors", filed by the Caparo Group inter
alia seeks a decree of permanent injunction restraining the Defendants
thereon from interfering in the management of the Company or the Board
and Shareholders meetings and also a direction that the Board meetings
convened and attended by the Defendant and the resolution passed therein
be declared illegal, null and void.
iii. The Caparo Group filed another Suit bearing No. CS (OS) NO. 756 of
2005 titled as "Caparo Maruti Ltd. v. M.D Jindal", seeking inter alia a
declaration that the Defendants therein committed breach of its fiduciary
duty towards the Plaintiff Company and the resolution passed therein shall
be declared as null and void.
iv. The suit bearing CS (OS). No. 645 of 2007 titled as "Machino Plastics
Pvt. Ltd. & Ors. V. Caparo Maruti Ltd. & Ors" was filed by Machino
Plastics Limited and Machino Finance Pvt. Limited inter alia seeks a decree
of mandatory injunction directing the Defendants therein to re-enter their
name as shareholders of the company and the resolution passed therein
cancelling their shareholding was illegal, null and void.
9. The set of parties in the abovementioned suits are as follows:-
Plaintiffs Defendants
1. M/s Caparo Maruti Ltd. 1. Mr. Surya Kant Aggarwal
2. Mr. Jawaharlal Garg
(deceased)
I. C.S. (OS) No. 757 of 2005
II. C.S. (OS) No. 761 of 2005
Plaintiffs Defendants
1. M/s Caparo Maruti Ltd. 1. Machino Plastics Ltd.
2. Machino Finance Pvt. Ltd.
3. Mr. MD Jindal (deceased)
4. Mr. Sanjiv Jindal
5. Mr. Rajeev Jindal
6. Mr. Surya Kant Jindal
III. C.S. (OS) No. 756 of 2005
Plaintiffs Defendants
1. M/s Caparo Maruti Ltd. 1. MD Jindal (deceased)
1A. Mr. Sanjiv Jindal
1B. Mr. Rajeev Jindal
IV. C.S. (OS) No. 645 of 2007
Plaintiffs Defendants
1. Machino Plastics Ltd. 1. M/s Caparo Maruti Ltd.
2. Caparo India Ltd. (U.K)
2. Machino Finance Pvt. Ltd. 3. Mr. Angad Paul
4. Mr. Amber Paul
5. Mr. R. Dayal
6. Mr. John Smith
7. Sushma Berlia
8. Mr. Sunil Pahilyani
10. On perusal of the nature of reliefs sought in the aforementioned suits, it
appears that it would be just and proper and also necessary that all the
aforenoted cases be decided and heard together. There is also no doubt that
the parties to the aforesaid suits are substantially the same. The contention of
the Non-Applicants that there are different sets of parties in all the suits
cannot singularly be a factor to deny the relief to the Applicant. The Court
has to ascertain whether the parties are substantially similar. In the present
case this is evident.
11. The Non-Applicant's contention that there are different causes of action
in each suit also is without any merit. The cause of action may have arisen
at different points of time in respect of the Joint Venture Agreement dated
7th January 1994, however, it cannot be ignored that the cause of action
refers to the same period and relates to the same transaction i.e. allotment of
shares of Machino Plastics Limited and Machino Finance Pvt. Ltd during
1984-2002 pursuant to the Joint Venture Agreement dated 7th January 1994
and the appointment of additional Directors on the board of M/s Caparo
Maruti Limited in the year 2002. I have also perused the issues framed in
each suit. The issues in each of the suits are not being reproduced here;
however, a scrutiny of the same reveals that most of them are substantially
similar and common. This necessarily would entail that the parties would
have to lead and adduce oral and documentary evidence for the purpose of
determining issues of fact and law multiple times in the different suits before
different Benches. There is bound to be duplication of recording of
evidence if there are separate trials and that would ultimately lead to writing
of separate judgments. Applicant's contention that there is a possibility of
multiple decisions leading to findings which are inconsistent with each
other, resulting in conflicting decrees or decisions also has merit in it. In
order to avoid such a situation, it would thus be expedient and in the interest
of justice that all the four mentioned suits be consolidated and heard and
tried together.
12. The other objection of the Non-Applicants that the suits have progressed
in different ways and are currently at different stages altogether is bereft of
merit. Issues have been framed in all the suits. In fact, the stages of each of
the suit as culled out by the Non-Applicant in its reply to the application
indicates that all the suits have to yet embark on trial. Therefore, the timing
is, in fact appropriate for the consolidation of the suits as evidence is yet to
be led and all the suits are ripe for trial.
13. The stage of each suit is mentioned hereunder:-
i. CS (OS) 756/2005, evidence by way of Affidavit has been filed on behalf
of the Plaintiffs i.e. Non-Applicants for one of their witnesses.
ii. CS (OS) 761/2005, the Examination-in-chief of the PW-1 of the Non-
Applicants herein have taken place. But, at present, the said witness i.e. Mr.
Gaganpreet Singh has left the Non-Applicant Company and therefore, fresh
evidence has to be filed by the Non-Applicant Company replacing the said
witness.
iii. CS (OS) 757/2005 at the stage of recording of evidence by the Non-
Applicant Company.
iv. CS (OS) 645/2007 is still in the preliminary stage and the process of
recording of evidence has not started.
14. The judgment in Bharat Nidhi Ltd. vs Shital Prasad Jain, AIR 1981
Del 251 relied on by the Non-Applicants is distinguishable on facts, as in the
said case, the Court has observed that there was no similarity in the matter in
issue in all these matters. Each case has to turn on its own facts. In the
present case, the subject matter and the relief sought are substantially
similar. The anxiety of the Non-applicant that the reliefs sought in each of
the suits is different and therefore the consolidation is not necessary is also
misconceived as after the conclusion of trial, at the stage of final decision,
the Court can pass separate decrees in each of the suits. Moreover since
issues have been framed separately, the Court would have to necessarily deal
with the same and give its decision thereon. If there are certain common
issues, the Court will obviously be saved with the burden of dealing with the
said issues all over again in multiple suits and the consolidation would, in
fact, achieve the objective of saving time and not burdening the parties to
lead and adduce evidence multiple times. It would not only curtail the delay
and save the time of the Court but also save the parties of the expenses they
would have to incur in multiple trials.
15. For the forgoing reasons, the application is allowed and the suits
[CS (OS) No. 757 of 2005; CS (OS) No. 761 of 2005; CS (OS) No. 756 of
2005; CS (OS) No. 645 of 2007] are consolidated and CS (OS) 761/2005
would be treated as the lead suit.
SANJEEV NARULA, J.
July 26, 2019
