[Cites 31, Cited by 0]
Delhi High Court
Sunanina Singh & Anr vs Sita Chaudhary & Ors on 20 March, 2026
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment reserved on: 16.10.2025
Judgment pronounced on: 20.03.2026
+ FAO(OS) 96/2022
SUNANINA SINGH & ANR. .....Appellants
Through: Mr. Sunil Dalal, Sr. Adv. with
Mr. B.S. Jakhar, Mr. Vikram
Singh Jakhar & Mr. Neeraj
Jakhar, Advs.
versus
SITA CHAUDHARY (SINCE DECEASED THR LRS) &
ORS. .....Respondents
Through: Mr. Akhil Sibal, Sr. Adv. along
with Mr. Anunaya Mehta,
Ms. Sarah Haque, Mr.
Adityaraj Patodia, Mr. Vidhan
Malik & Ms. Anandita Tayal,
Advs. for LRs of R-1, R-2, 5,
10 & 11.
Mr. Rajan Chaudhary and Mr.
Pratyaksh Kumar, Advs. for
R-3.
Mr. Shreesh Chada, Mr. Aman
Singh Bakhshi, Mr. Divjot
Singh Bhatia, Mr. Shaurya
Agarwal, Mr. Faiz Khan, Advs.
for R-4, 7 & 8.
+ FAO(OS) 97/2022
JMD SUPER INFRATECH PVT. LTD. .....Appellant
Through: Mr. Naman Joshi, Mr. Rahul,
Advs.
versus
Signature Not Verified
FAO(OS) 96/2022 & other connected matters Page 1 of 53
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:20.03.2026
16:02:32
SITA CHAUDHARY (SINCE DECEASED THR LRS) &
ORS. .....Respondents
Through: Mr. Akhil Sibal, Sr. Adv. along
with Mr. Anunaya Mehta, Ms.
Sarah Haque, Mr. Adityaraj
Patodia, Mr. Vidhan Malik,
Ms. Anandita Tayal, Advs. for
LRs of R-1, R-5, 10, 12 & 20.
Mr. Rajan Chaudhary and
Mr. Pratyaksh Kumar, Advs.
for R-2.
Mr. Shreesh Chada, Mr. Aman
Singh Bakhshi, Mr. Divjot
Singh Bhatia, Mr. Shaurya
Agarwal and Mr. Faiz Khan,
Advs. for R-4, 7 & 8.
+ FAO(OS) 98/2022
M/S DS ROLLING PVT LTD NOW KNOWN AS M/S
KEDAAR METALIKS PVT LTD .....Appellant
Through: Ms. Gayatri Nandwani and
Ms. Mudita Sharda, Advs.
versus
SITA CHAUDHARY (SINCE DECEASED THR LRS) &
ORS. .....Respondents
Through: Mr. Akhil Sibal, Sr. Adv. along
with Mr. Anunaya Mehta, Ms.
Sarah Haque, Mr. Adityaraj
Patodia, Mr. Vidhan Malik and
Ms. Anandita Tayal, Advs. for
LRs of R-1, R-5, 11, 12 & 13.
Mr. Rajan Chaudhary and
Mr. Pratyaksh Kumar, Advs.
for R-2.
Signature Not Verified
FAO(OS) 96/2022 & other connected matters Page 2 of 53
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:20.03.2026
16:02:32
Mr. Shreesh Chada, Mr. Aman
Singh Bakhshi, Mr. Divjot
Singh Bhatia, Mr. Shaurya
Agarwal and Mr. Faiz Khan,
Advs. for R-4, 7 & 8.
+ FAO(OS) 99/2022
INDUSTRIAL CABLES (INDIA) LTD .....Appellant
Through: Mr. Lalit Gupta, Mr. Priyansh
Jain, Ms. Shreeyam Kedia,
Ms. Dipika Prasad, Mr. Sanyam
Kumar and Mr. Soham Krishan
Luthra, Advs.
versus
SITA CHAUDHARY (SINCE DECEASED THR LRS) &
ORS. .....Respondents
Through: Mr. Akhil Sibal, Sr. Adv. along
with Mr. Anunaya Mehta, Ms.
Sarah Haque, Mr. Adityaraj
Patodia, Mr. Vidhan Malik and
Ms. Anandita Tayal, Advs. for
LRs of R-1, R-5, 11, 12 & 13.
Mr. Rajan Chaudhary and
Mr. Pratyaksh Kumar, Advs.
for R-2.
Mr. Shreesh Chada, Mr. Aman
Singh Bakhshi, Mr. Divjot
Singh Bhatia, Mr. Shaurya
Agarwal and Mr. Faiz Khan,
Advs. for R-4, 7 & 8.
+ FAO(OS) 33/2024
M/S D S ROLLING PVT LTD .....Appellant
Through: Ms. Gayatri Nandwani, Ms.
Mudita Sharda, Advs.
Signature Not Verified
FAO(OS) 96/2022 & other connected matters Page 3 of 53
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:20.03.2026
16:02:32
versus
SITA CHAUDHARY (SINCE DECEASED THR LRS) &
ANR. .....Respondents
Through: Mr. Akhil Sibal, Sr. Adv. along
with Mr. Anunaya Mehta, Ms.
Sarah Haque, Mr. Adityaraj
Patodia, Mr. Vidhan Malik and
Ms. Anandita Tayal, Advs. for
LRs of R-1, R-5, 11, 12 & 13.
Mr. Rajan Chaudhary and Mr.
Pratyaksh Kumar, Advs. for
R-2.
Mr. Shreesh Chada, Mr. Aman
Singh Bakhshi, Mr. Divjot
Singh Bhatia, Mr. Shaurya
Agarwal and Mr. Faiz Khan,
Advs. for R-4, 7 & 8.
+ FAO(OS) 49/2024
M/S KEDAAR STAINLESS INDIA PVT. LTD. .....Appellant
Through:
versus
SITA CHAUDHARY (SINCE DECEASED THR LRS) &
ORS. .....Respondents
Through: Mr. Akhil Sibal, Sr. Adv. along
with Mr. Anunaya Mehta, Ms.
Sarah Haque, Mr. Adityaraj
Patodia, Mr. Vidhan Malik and
Ms. Anandita Tayal, Advs. for
LRs of R-1, R-5, 11, 12 & 13.
Mr. Rajan Chaudhary and Mr.
Pratyaksh Kumar, Advs. for
R-2.
Mr. Shreesh Chada, Mr. Aman
Signature Not Verified
FAO(OS) 96/2022 & other connected matters Page 4 of 53
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:20.03.2026
16:02:32
Singh Bakhshi, Mr. Divjot
Singh Bhatia, Mr. Shaurya
Agarwal and Mr. Faiz Khan,
Advs. for R-4, 7 & 8.
CORAM:
HON'BLE MR. JUSTICE ANIL KSHETARPAL
HON'BLE MR. JUSTICE HARISH VAIDYANATHAN
SHANKAR
JUDGMENT
HARISH VAIDYANATHAN SHANKAR, J.
1. With the consent of the parties, all these appeals were taken up
together for hearing. Since they arise from the same suit and challenge
the Impugned Orders1 on similar grounds, we proceed to adjudicate
them by way of this consolidated judgment.
PROLOGUE:
2. These appeals, filed under Order XLIII Rule 1(r) of the Civil
Procedure Code, 19082 read with Section 10 of the Delhi High Court
Act, 1966, seek to set aside the Orders dated 29.07.2022 and
19.12.2023 passed by the learned Single Judge in various
interlocutory applications under Order XXXIX Rules 1, 2 and 4 of the
CPC in CS(OS) 589/2021 titled ―Ms. Sita Chaudhry v. Mr. Verinder
Singh & Ors.‖.
3. By the Impugned Order dated 29.07.20223, passed in I.A. No.
14829/2021 (filed by the Plaintiff - under Order XXXIX, Rules 1 & 2
CPC), I.A. No. 15075/2021 (filed by Defendant No.16 - under Order
Orders dated 29.07.2022 and 19.12.2023
CPC
First Impugned Order
XXXIX, Rule 4 CPC), I.A. No. 15080/2021 (filed by Defendant
No.13 - under Order XXXIX, Rule 4 CPC) and I.A. No. 15081/2021
(filed by Defendant No.4 - under Order XXXIX, Rule 4 CPC) filed in
CS(OS) 589/2021, matters which form the subject-matter of Appeals
FAO(OS) 96/2022, 97/2022, 98/2022 and 99/2022, the learned Single
Judge, after considering the rival contentions and materials on record,
essentially granted interim injunctions in favour of the Plaintiff
(Respondent No.1 in these Appeals) in the following terms:
―CONCLUSION
87. In view of the discussion above, my prima facie findings may
be summarized as under.
(i) Under the Will dated 26th March, 2004, the plaintiff had only a
limited beneficial interest in the estate of late Sh. Devinder
Chaudhary, which did not culminate into an absolute interest
under Section 14(1) of the Hindu Succession Act.
(ii) There is a doubt whether the Will dated 26th March, 2004 is
the last and final will of the late Sh. Devinder Singh
Chaudhary, as the defendant no. 2 has propounded a Will
dated 2008, in respect of which, probate proceedings are
pending
(iii) Therefore, the plaintiff could not have transferred the
shareholding and interest in the estate of late Sh. Devinder
Singh Chaudhary in favour of the defendants no. 4 and 9.
(iv) The transfers of shares/interest in the defendant
companies/LLPs made in favour of the defendants no. 4 and 9
by the plaintiff were on account of undue influence exercised
by the defendants no. 4 and 9 over the plaintiff Therefore,
there a doubt is created in respect of the title of the defendants
no. 4 and 9 over the shares/interest in the defendant
companies/LLPs, transferred by the plaintiff.
(v) The various defendant companies/LLPs are nothing but alter
egos of the defendants no 4 and 9 and in the nature of quasi-
partnerships. Therefore, following the ratio of Sangramsinh P.
Gaekwad (supra). this Court is entitled to restrain the aforesaid
companies/LLPs from disposing of their immovable
properties.
(vi) Various loans have been taken and unauthorized transfers
made from the defendant companies/LLPs and other family-
owned companies/LLPs in favour of the defendants no. 4 and
9. These have been used to acquire properties/assets in their
own names
(vii) Various properties of late Sh. Devinder Singh
Chaudhary/plaintiff and the defendant companies/LLPs have
been disposed of or attempted to be disposed of by the
defendants no 4 and 9 after acquiring control of these
companies/LLPs.
88. In view of the above, the plaintiff has made out a prima facie
case in her favour for grant of interim injunction. Balance of
convenience requires that the properties in the names of the
defendant companies/LLPs are preserved and the defendants no 4
and 9 are restrained from disposing of the said properties held by
the defendant companies/LLPs on the basis of the
shareholding/interest acquired by the defendants no. 4 and 9 in the
aforesaid companies/LLPs till the final adjudication of the suit.
Further, the defendants no. 4 and 9 should also be restrained from
selling or disposing of immovable properties acquired by them till
the final adjudication of the suit Irreparable harm and injury would
be caused to the plaintiff as well as other legal heirs of the plaintiff
and late Sh. Devinder Singh Chaudhary if the assets/properties
belonging to the defendant companies/LLPs are frittered away by
the defendants no. 4 and 9 during the pendency of the present suit
Ultimately if the Court decrees the suit in favour of the plaintiff
and the assets/properties of the defendant compames/LLPs have
been alienated or sold, the decree would be rendered otiose.
89. Consequently, an interim injunction is passed in favour of the
plaintiff and against the defendants in the following terms:
(i) No third party interest, including sale, transfer and
encumbrance, shall be created in respect of the properties
owned by the defendants no. 13 to 17;
(ii) The defendant no. 4 and 9 are restrained from transferring,
selling, alienating and creating third party interest in the
properties, being property/office in Building No.7,
Basantlok, Vasant Vihar, New Delhi; flat at Magnolia,
Gurgaon; accommodation on the first and second floor of
Tower B, Magnum Towers, Golf Course Extension Road,
Sector 58, Gurgaon; factory land and building at Village
Khanpur purkazi Laksar Road, Dist. Uttarakhand-247663.
(iii) The aforesaid directions shall not come in the way of the
defendant no.13 selling/transferring plots developed in
Madhuban Colony situated in Rajpura, Punjab.
90. Accordingly, the interim order dated 12th November, 2021
stands modified to the extent hereinabove. IA 14829/2021
succeeds and I.A. 15075/2021, Ι.Α. 15080/2021 and I.A.
15081/2021 are dismissed.
91. Needless to state, any observations made herein are only for the
purposes of deciding the present applications and would have no
bearing on the final adjudication of the suit.‖
4. Thereafter, the Plaintiff filed an I.A. 25626/2023 seeking an ad-
interim injunction against Defendant No. 19 and the prospective
Defendant M/s Kedar Stainless India Pvt. Ltd. from creating third-
party rights in the properties covered under the two sale deeds dated
15.05.2019 and 25.11.2021.
5. By the Impugned Order dated 19.12.20234, which is the
subject matter of FAO(OS) 33/2024 and FAO(OS) 49/2024, the
learned Single Judge, by placing reliance on the earlier order dated
29.07.2022, granted injunction in the following terms:
―11. Having considered the submissions of learned counsel for the
parties and having perused the order dated 29.07.2022, I am of the
view that the plaintiff has been able to make out a prima facie case
in her favour. The balance of convenience also lies in favour of the
plaintiff. Furthermore, grave and irreparable prejudice will be
caused to the plaintiff in case, the defendants proceed to create any
third party rights in the aforesaid two properties, which it is
deemed, were owned by the plaintiff as late as on 25.05.2019. It is,
accordingly, directed that till the next date all the parties will
maintain status quo qua the two suit properties which are subject
matter of the present applications.‖
6. At the outset, it is pertinent to note that the Impugned Orders
directly and substantially affect Defendant No. 4 and her husband,
Defendant No. 9. Consequently, all the present Appeals have been
filed either by them or by others who appear to be supporting the
cause of Defendant Nos. 4 and 9.
7. During the pendency of these Appeals, the original Plaintiff/
Respondent No. 1 passed away on 09.01.2025. Thereafter, six out of
Second Impugned Order
her seven grandchildren, along with all three of her children, who
were already parties to the Suit as well as the present Appeals,
executed a memorandum of family arrangement dated 12.02.2025 and
were substituted as her legal representatives by Order dated
22.08.2025.
8. The only remaining grandchild, Defendant No. 4, did not join
the said family settlement and continues to contest the matter
independently. Accordingly, for all practical purposes, the record now
reflects two rival factions, namely, one representing the Plaintiff's side
and the other led by Defendant No. 4. For the sake of clarity,
convenience, and consistency, these contesting sides are hereinafter
referred to as ―the Plaintiff‖ and ―Defendant No. 4‖, unless the context
requires individual Defendants to be identified by their rank in the
suit.
9. A tabular chart setting out the parties and their respective
positions is reproduced below for ease of reference:
Name of the Party Rank in Appellants
CS(OS) before this
589/2021 Court
Late. Smt. Sita Chaudhry Plaintiff -
(W/o Late Sh. Devinder Singh Chaudhry)
Verinder Singh Defendant -
(S/o Late Sh. Devinder Singh Chaudhry) No.1
Deepinder Singh Defendant -
(S/o Late Sh. Devinder Singh Chaudhry) No.2
Bhupen Phougaat Defendant -
(S/o Late Sh. Devinder Singh Chaudhry) No.3
Sunaina Singh Defendant Appellant No.
(D/o Deepinder Singh Chaudhry) No.4 1 in FAO(OS)-
96/2022, along
with Defendant
Shruti Manav Sharma Defendant -
(D/o Deepinder Singh Chaudhry) No.5
Karandeep Singh Defendant -
(S/o Deepinder Singh Chaudhry) No.6
Brahm Dev Phougaat Defendant -
(S/o Bhupen Phougaat) No.7
Kritika Phougaat Defendant -
(D/o Bhupen Phougaat) No.8
Ajay Kadyan Defendant Appellant No.
(Husband of Sunaina Singh/ Defendant No.9 2 in FAO(OS)-
Manav Sharma Defendant -
(Husband of Shruti Manav Sharma/ No.10
Defendant No. 5)
Arjun Singh Defendant -
(S/o Verinder Singh) No.11
Ankur Singh Defendant -
(S/o Verinder Singh) No.12
Industrial Cables (India) Ltd.5 Defendant Appellant in
No.13 FAO (OS) NO.
Ruchi Towers LLP Defendant -
No.14
P.E. Manning (Consultants) Pvt. Ltd. Defendant
No.15
Amba Promoters & Developers Pvt Ltd Defendant -
No.16
Rama Packing & Wires Industries LLP Defendant -
No.17
Beetal Financial and Computer Services Defendant -
Pvt. Ltd. No.18
DS Rolling Mills Pvt. Ltd. Defendant Appellant in
No.19 FAO(OS)-
98/2022 and
FAO(OS)-
JMD Super Infratech Pvt. Ltd.6 Appellant in
appeal
FAO(OS)-
M/S Kedaar Stainless India Appellant in
Pvt. Ltd. FAO(OS)-
ICL
JMD
BRIEF FACTS:
10. The facts germane to the institution of the present Appeals are
as follows:
(a) Late Smt. Sita Chaudhry was married to Late Sh. Devinder
Singh Chaudhry7. Out of the said wedlock, they had 3 sons
who have been named in the table in the preceding paragraph.
(b) The Plaintiff and the deceased had set up various
companies/LLPs, which also included Defendant Nos. 13 to 17
and the Plaintiff and the deceased were the Directors/ Partners
in the said companies/ LLPs and held majority shareholding as
well, either directly or indirectly.
(c) The deceased left for his heavenly abode on 05.12.2009, leaving
behind the Plaintiff and his other legal heirs. At the time of the
passing of the deceased, the major shareholding of the
companies/ LLPs was in the name of the Plaintiff and the
deceased. The shareholding at the time of the passing of the
deceased is as follows:
S. NAME OF ENTITY SHAREHOLDING
No
1. ICL (Defendant no.13) a. Devinder 21,50,410 25.7%
Singh
Chaudhary
b. Sita 7,51,000 9.0%
Chaudhary
c. Ruchi Tower 41,53,150 49.6%
d. Darshan 6,49,000 7.8%
Properties
Pvt. Ltd.
e. Others 6,61,900 7.9%
Total 83,65,460 100%
Deceased
2. Ruchi Towers Pvt. Ltd. a. Devinder 88,119 40.6%
(now Ruchi Towers LLP) Singh
(Defendant no.14) Chaudhry
b. Sita 46,463 21.4%
Chaudhary
c. BBI Pvt Trust 82,424 38.0%
Total 2,17,006 100%
3. P.E. Manning a. Devinder 15,000 50.0%
(Consultants) Pvt. Ltd. Singh
(Defendant no.15) Chaudhry
b. Sita 3,012 10.0%
Chaudhary
c. Satluj Pvt 12,000 40.0%
Trust
Total 30,012 100%
4. Amba Promoters & a. Devinder 5,000 50.0%
Developers Pvt. Ltd. Singh
(Defendant no.16) Chaudhry
b. Sita 1,000 10.0%
Chaudhary
c. Satluj Pvt. 4,000 40.0%
Trust
Total 10,000 100%
5. Rama Packing & Wires a. Devinder 470 5.5%
Industries Pvt. Ltd. (Now Singh
Rama Packing & Wires Chaudhry
Industries LLP) b. Sita 443 5.2%
(Defendant no.17) Chaudhary
c. ICL Sales & 3,800 44.6%
Services Pvt
Ltd
d. Deepak Oils 3,800 44.6%
Pvt
Ltd
Total 8,513 100%
6. Deepak Oils Pvt Ltd (now a. Devinder 2,000 20.0%
amalgamated with Singh
Defendant no.17) Chaudhry
b. Sita 2,000 20.0%
Chaudhary
c. RPW Pvt 6,000 20.0%
Trust
Total 10,00 60%
7. ICL Sales & Services Pvt. a. Devinder 10,000 20.0%
Ltd. (now amalgamated Singh
with Defendant no.17) Chaudhry
b. Sita 10,000 20.0%
Chaudhary
c. RPW Pvt 30,000 60.0%
Trust
Total 50,000 100%
(d) It is stated that the deceased executed a Will dated 26.03.2004,
under which the Plaintiff was appointed as the executor and also
had a limited interest.
(e) Subsequently, another Will dated 04.10.2008 is alleged to exist,
and Defendant No. 2 instituted probate/letters of administration
proceedings with respect to the said Will before the learned
Saket District Courts, District-South, Delhi. The Plaintiff filed
objections in those proceedings.
(f) After the demise of her husband, the Plaintiff, aged about 73
years and in deteriorating health, was residing alone. During
this period, Defendant No. 4, along with her husband,
Defendant No. 9, shifted to Chandigarh, where the Plaintiff was
then residing, allegedly to take care of her ailing grandmother.
(g) It is alleged that between 2018-2019, the Plaintiff executed
various instruments/gift deeds transferring substantial
shareholding and interests, both of the deceased and herself, to
Defendant Nos. 4 and 9. The transfers were as follows:
DATE CORPORATE TRANSFE TRANSF NUMBER
ENTITY ROR EREE OF
SHARES
19.12.2018 Amba Promoters Sita Sunaina 6,000
& Developers Pvt Chaudhry Singh
Ltd (Defendant
no. 16)
19.12.2018 P.E. Manning Sita Sunaina 18,012
(Consultants) Pvt. Chaudhry Singh
Ltd
(Defendant no.
15)
14.03.2019 Ruchi Towers Sita Sunaina 62% LLP
LLP (Defendant Chaudhry Singh Capital
no. 14)
14.03.2019 Rama Packing & Sita Sunaina 47% LLP
Wires Industries Chaudhry Singh Capital
LLP (Defendant
no. 17)
24.04.2019 Ruchi Towers Rajpura Ajay 38% LLP
LLP (Defendant Steel Kadyan Capital
no. 14) Tubes Pvt.
Ltd.
06.06.2019 ICL (Defendant Sita Sunaina 21,21,240
no. 13) Chaudhry Singh
(h) Upon acquiring the above shareholding and interest, Defendant
Nos. 4 and 9 allegedly sold a number of properties belonging to
the said companies/LLPs at values significantly below the
prevailing market price. It is further alleged that they also
acquired assets in their own names by utilising loans and
advances drawn from the defendant companies/LLPs under
their control, particularly after assuming management of
Defendant No. 13.
(i) The resultant shareholding/ ownership and directorship/
partnership structure of the key companies/ LLPs is summarised
below:
S.NO. NAME OF SHAREHOLDING/ DIRECTORSHIP/
BODY PARTNERSHIP PARTNERSHIP
CORPORATE CAPITAL
1. Industrial a. Sunaina Singh 1. Sita Chaudhry
Cables Ltd. 33.6% (Managing
Director)
b. Sita Chaudhry
0.01% 2. Sunaina Singh
(Wholetime
c. Devinder Singh Director)
Chaudhry
8.6% 3. Rajeev Pandey
(Director)
d. Ruchi Towers
LLP 4. Puja Shukla
44.1% (Company
Secretary)
e. Darshan Properties
LLP
6.9%
f. Others
6.8%
100%
2. Ruchi Towers a. Sunaina Singh 1. Sunaina Singh
LLP 62.0%
2. Ajay Kadyan
b. Ajay Kadyan (Designated
38.0% Partners)
100%
3. P.E. Manning a. Sunaina Singh 1. Sita Chaudhry
(Consultants) 60.0%
Pvt. Ltd. 2. Sunaina Singh
b. Rama Packing &
Wire Industries LLP 3. Ajay Kadyan
40.0% (Directors)
100%
4. Amba a. Sunaina Singh 1. Sita Chaudhry
Promoters & 60.0%
Developers 2. Anil Kumar
Pvt. Ltd. b. Rama Packing & Rampal
Wire Industries LLP (Directors)
40.0%
100%
5. Rama Packing a. Sunaina Singh 1. Sunaina Singh
Wires 47.5% (Designated
Industries Partner)
LLP b. Ruchi Towers LLP
(Defendant 52.5% 2. Rajeev Pandey
No. 17) (Body Corporate
100% Designated Partner
Nominee)
(j) In the second half of 2020, Defendant No. 1 instituted CS(OS)
382/2020 before this Court seeking, inter alia, declaration,
partition, permanent injunction, rendition of accounts, recovery
and mesne profits concerning the estate of the deceased.
(k) In June 2021, the Plaintiff shifted from Chandigarh to Delhi to
reside with her other legal heirs, and it is stated that she then
realised the nature and consequences of the various alleged
documents executed by her while under the care of Defendants
No. 4 and 9.
(l) The Plaintiff thereafter filed an application seeking withdrawal
of or to disregard the pleadings filed in CS(OS) 382/2020 on
her behalf, asserting that those pleadings had not been instituted
by her volition but were filed by Defendant No. 4 purportedly in
her name.
(m) On 21.10.2021, the Plaintiff filed CS(OS) 589/2021 before this
Court seeking declaration, permanent and mandatory injunction,
rendition of accounts, and cancellation of gift deeds relating to
the properties of the deceased and herself. By Order dated
12.11.2021, the learned Single Judge directed the parties to
maintain status quo with respect to the disposal of the suit
properties.
(n) Along with the plaint, the Plaintiff had also filed an interim
application under Order XXXIX, Rules 1 and 2 CPC, seeking
the following reliefs:
―a) Pass an order restraining Def. No.4 and No.9 from exercising
any right and authority of any kinds whatsoever based on the
share transactions including right issues in the suit in ICL (Def.
No.13), Amba Promoters & Developers Pvt Ltd (Def. No.16),
P.E. Manning (Consultants) Pvt. Ltd (Def. No.15) as
mentioned in suit and transfer of shares in Ruchi Towers LIP
(Def. No.14 and Rama Packaging & Wire Industries LLP (Def.
No.17) in any manner whatsoever.
b) Pass an order restraining Def. No.4 and Def. No.9 from
transferring, selling, alienating and creating third party interest
in the property of ICL (Def. No.13), Amba Promoters &
Developers Put Ltd (Def. No.16), P.E. Manning (Consultants)
Pvt Ltd (Def. No. 15), Ruchi Towers LLP (Def. No.14) and
Rama packaging & Wires Industries LLP (Def. No.17).
c) Pass an order restraining Def. No.4 and Def. No.9 from selling
any property located at Build. No.7, Basantlok, Vasant Vihar,
New Delhi, flat at Mangolia, Gurgaon, accommodation on first
and second floor of Tower B, Magnum Towers, Golf Course
Extension Road, Sector 58, Gurgaon, factory land and building
at Village-Khanpur purkazi Laksar Road, Dist. Uttarakhand-
247663 till the share transactions of various companies and
LLP as mentioned in the suit and the assets of the deceased and
the plaintiff are restored back to the status before the transfer /
sale at the time of death of deceased / before transfer.
d) Pass an order restraining the Defendant No.4 and 9 from
disturbing the peaceful possession of the accommodation of
the property located at first Floor, H.No. 36, Sector 5A,
Chandigarh which was given to the plaintiff by a board
resolution of ICL.
e) Pass an interim order restraining Defendant No.4 and 9 from
leaving the country without permission of this Hon'ble Court.
f) ex-parte order in terms of prayer above.
g) Pass such further order as this Hon'ble Court deem just and
proper in the facts and circumstances of the case.‖
(o) After hearing both sides, the learned Single Judge passed the
First Impugned Order dated 29.07.2022.
(p) Thereafter, the Plaintiff filed I.A. 25626/2023 seeking interim
protection regarding properties covered under two sale deeds
dated 15.05.2019 and 25.11.2021. On 19.12.2023, while
considering the said application, the learned Single Judge
passed the Second Impugned Order.
(q) Aggrieved by the above two Impugned Orders, the present
Appeals have been preferred.
SUBMISSIONS OF DEFENDANT NO. 4/ APPELLANTS:
11. At the outset, it is submitted that the learned Single Judge,
while passing the Impugned Orders, has, on his own accord,
conducted what virtually amounts to a mini-trial, and such an exercise
is contrary to the settled principles of law governing the grant of
interim injunctions.
12. It is further submitted that the learned Single Judge has
erroneously restrained the Defendant Companies/LLPs from carrying
on business dealings on the premise of an alleged fraudulent transfer
of shares and entitlements in favour of Defendant Nos. 4 and 9, and
such restraint has resulted in serious prejudice and undue losses to the
said Companies/LLPs.
13. It is submitted that the Plaintiff's pleadings fail to satisfy the
mandatory requirements of Order VI Rule 4 of the CPC as no
particulars of fraud or undue influence have been pleaded or
substantiated, yet the learned Single Judge has returned a prima facie
finding of undue influence without either pleadings or evidence to that
effect, and despite the Plaintiff not having claimed anywhere in the
Plaint that she was under undue influence; nevertheless, the First
Impugned Order wrongly proceeds on this assumption and even
observes that such alleged undue influence continued until June 2021.
14. It is also submitted that the Plaintiff did not lodge any
complaint with any authority alleging fraud or illegality nor issue any
legal notice prior to filing the suit, and the present suit has been
instituted only on 21.10.2021, after an unexplained delay of nearly 33
months from the alleged incident dated 19.12.2018.
15. It is contended that the documents on record clearly
demonstrate that the Plaintiff was in sound physical and mental health
and was actively involved in the day-to-day affairs of the Companies,
and it was of her own free will that she executed the gift deeds, signed
the share-transfer forms, handed over the share certificates to
Defendant Nos. 4 and 9, and completed all legal formalities necessary
for effectuating the transfer of shares.
16. It is further submitted that the Plaintiff gifted shares to her other
grandchildren during the same period in 2018 when the gifts were
made to Defendant Nos. 4 and 9, and she subsequently executed an
―Additional Settlement‖ dated 28.05.2019 specifying that Defendant
No. 4 was to receive 20% of the sale consideration from the other
grandchildren upon sale of the assets of Glorious Commercial LLP
and Satluj Trading LLP.
17. It is submitted that the learned Single Judge has wrongly relied
on Section 14 of the Hindu Succession Act, 19568, because the
Plaintiff herself claims to be the absolute and sole owner of the
properties under the Will dated 26.03.2004 executed by her late
husband, and once absolute ownership is asserted, reliance on Section
14 becomes misconceived.
HSA
18. It is also contended that under Section 89 of the Companies
Act, 20139, if the Plaintiff were merely a holder of beneficial interest
in the shares devolving from the deceased, she ought to have informed
the Defendant Companies/LLPs accordingly, whereas she repeatedly
represented herself to be the absolute owner based on her
understanding of the Will dated 26.03.2004, and thus she cannot now
resile and claim only a life interest.
19. It is further contended that the Plaintiff has not sought the
appropriate relief before the learned Single Judge because, when an
executant seeks to avoid a transaction, the proper relief is cancellation
and not merely declaration, and by relying on Suhrid Singh @
Sardool Singh v. Randhir Singh & Ors.10, it is further submitted that
such a suit is not maintainable without seeking cancellation and
without paying ad valorem court fees, which the Plaintiff has not
done.
20. It is also submitted that JMD (Appellant in FAO(OS) 97/2022)
is a separate and independent juristic entity which has successfully
completed more than 100 real-estate projects, and neither in the past
nor at present have JMD and Defendant No. 13 shared shareholders,
directors, or key managerial personnel, yet the Impugned Order has
been passed in complete disregard of these material facts.
21. Lastly, it is submitted that FAO(OS) No. 33/2024 and FAO(OS)
No. 49/2024 are directed against the Second Interim Order, which is
entirely dependent upon and derivative of the First Impugned Order,
and in doing so, it has further extended the restraint even to properties
Companies Act
(2010) 12 SCC 112.
that were not part of the Plaint.
SUBMISSIONS OF THE PLAINTIFF/ CONTESTING
RESPONDENTS:
22. Per Contra, the Plaintiff would rebut each and every contention
raised in support of these Appeals.
23. On behalf of the Plaintiff, it is submitted that the learned Single
Judge has rightly passed the Impugned Orders to preserve the estate of
the deceased as well as that of the Plaintiff.
24. It is submitted that Defendant No. 13 has wrongly prayed for
setting aside the Impugned Order restraining the business activities of
the Company. It is further submitted that Defendant No. 13 is not in
the real estate business in the true commercial sense and has only ever
engaged in one real estate project by selling the industrial land of the
Company, and such a singular transaction cannot be relied upon to
term the Company as one engaged in the real estate business. Even
otherwise, the Company has never purchased any land for the
purposes of development or sale, and the land now being
developed/sold is merely the land on which the earlier factory and
housing for employees were situated, along with certain agricultural
land.
25. In support of the findings of the learned Single Judge, it is
submitted that pursuant to the transfers undertaken by Defendant Nos.
4 and 9, the majority of the shares in Defendant No. 13 are now held
by Defendant No. 4, and therefore the majority decisions in the said
Company are also being taken solely by Defendant No. 4; similarly,
this is the position with respect to Defendant Nos. 14 to 17, and
therefore, the learned Single Judge has rightly injuncted these
Defendants from carrying out any further transactions.
26. With respect to the collaboration agreements between JMD
(Appellant in FAO(OS) 97/2022) and Defendant No. 13, it is
submitted that the learned Single Judge has rightly considered the
transaction and injuncted the same, since firstly, the property is being
sold for an amount lower than its actual value because the promoters
of JMD are known to Defendant Nos. 4 and 9, and secondly, the
factum of sale was not disclosed by Defendant No. 13 before the
learned Single Judge although the transaction was executed between
the service of the suit and its first listing.
27. It is also submitted that keeping in view all these facts,
circumstances and actions of Defendant Nos. 4 and 9, the learned
Single Judge has rightly injuncted Defendant Nos. 4 and 9 as well as
Defendant Nos. 13 to 17 from dealing with or transacting in the estate
of the deceased and the Plaintiff, and if the said Injunction is not
upheld, the estate would be frittered away and nothing material would
remain.
28. With respect to the applicability of Section 89 of the Companies
Act, it is submitted that the said plea is misconceived and has no
application to the present case. During the Plaintiff's lifetime, the
Plaintiff held the shares entirely and absolutely, albeit only to the
extent of enjoying the income arising from the estate and with the
caveat that she could not sell or alienate the shares; during her
lifetime, none of the other legal heirs have any rights in the shares,
and only after the Plaintiff's demise would their rights be worked out
in accordance with the 2004 Will. Therefore, during the Plaintiff's
lifetime, there is neither any other beneficial interest holder in the
shares nor any requirement to declare any such person, and
accordingly the Plaintiff was not required to make a declaration under
Section 89(1) of the Companies Act, nor were the legal heirs required
to make a declaration under Section 89(8) of the Companies Act.
29. It is contended that the argument advanced by Defendant No. 4
that the prayer sought by the Plaintiff before the learned Single Judge
was erroneous, holds no substance. It is submitted that the transfers
made by the Plaintiff in favour of Defendant Nos. 4 and 9 are void ab
initio since they were procured under coercion/undue influence and
fraudulently; and in light of the manner in which the transfers were
made, the prayer for declaration has been rightly sought. Reliance
would be placed on the judgments of the Hon'ble Supreme Court in
Kewal Krishan vs. Rajesh Kumar11, Prem Singh vs. Birbal12 and
Shanti Devi vs. Jagan Devi13, wherein it has been held that a
declaration in respect of a void document need not even be
specifically prayed and can be considered in collateral proceedings.
30. It is also submitted that in respect of the transfer of shares in
Defendant No. 13, the relevant form has been forged by Defendant
Nos. 4 and 9, and therefore, no cancellation of a document that was
never executed by the Plaintiff is required to be sought.
ANALYSIS:
31. We have heard the learned Counsel appearing for the parties
and, with their able assistance, perused the Impugned Orders, the
(2022) 18 SCC 489
(2006) 5 SCC 353
2025 SCC OnLine 1961
material placed on record, as well as the written submissions filed by
them.
32. Before proceeding further, it is apposite to note the nature of the
jurisdiction exercised by the Appellate Court while scrutinizing
discretionary orders of the Trial Court passed under Rules 1, 2 and 4
of Order XXXIX of the CPC. The Hon'ble Supreme Court in
Ramakant Ambalal Choksi v. Harish Ambalal Choksi14 examined
the scope of appellate jurisdiction in such matters after analyzing a
line of precedents on this aspect. The relevant excerpt of the said
judgment reads as under:
"Appellate jurisdiction under Order 43 CPC
19. Order 43CPC specifies the orders against which an appeal lies.
Sub-rule (r) of Rule 1 of the said order provides that an appeal
would lie against an order made under Rules 1, 2, 2-A, 4 and 10 of
Order 39 CPC, respectively.
20. The law in relation to the scope of an appeal against grant or
non-grant of interim injunction was laid down by this Court in
Wander Ltd. v. Antox India (P) Ltd., 1990 Supp SCC 727, Antox
brought an action of passing off against Wander with respect to the
mark Cal-De-Ce. The trial court declined Antox's plea for an
interim injunction, however, on appeal the High Court reversed the
findings of the trial Judge. This Court, upon due consideration of
the matter, took notice of two egregious errors said to have been
committed by the High Court:
(a) First, as regards the scope and nature of the appeals before it
and the limitations on the powers of the appellate court to
substitute its own discretion in an appeal preferred against a
discretionary order; and
(b) Secondly, the weakness in ratiocination as to the quality of
Antox's alleged user of the trade mark on which the passing off
action is founded.
21. With regard to (a), this Court held thus: (Wander Ltd. v. Antox
India (P) Ltd., 1990 Supp SCC 727, SCC p. 733, para 14)
―14. ... In such appeals, the appellate court will not
interfere with the exercise of discretion of the court of the
first instance and substitute its own discretion, except
where the discretion has been shown to have been
(2024) 11 SCC 351
exercised arbitrarily or capriciously or perversely, or
where the court had ignored the settled principles of law
regulating grant or refusal of interlocutory injunctions. ...
The appellate court will not reassess the material and seek
to reach a conclusion different from the one reached by the
court below.... If the discretion has been exercised by the
trial court reasonably and in a judicial manner the fact that
the appellate court would have taken a different view may
not justify interference with the trial court's exercise of
discretion.‖
22. This Court, while arriving at the above findings, relied on its
earlier judgment in Printers (Mysore) (P) Ltd. v. Pothan Joseph,
1960 SCC OnLine SC 62, wherein it was held thus: (Printers
(Mysore) (P) Ltd. v. Pothan Joseph, 1960 SCC OnLine SC 62,
SCC OnLine SC para 9)
―9. ... as has been observed by Viscount Simon LC in
Charles Osenton & Co. v. Johnston, 1942 AC 130 (HL),
the law as to reversal by a court of appeal of an order
made by a Judge below in the exercise of his/her
discretion is well established, and any difficulty that arises
is due only to the application of well-settled principles in
an individual case.‖
23. It is pertinent to note that in Printers (Mysore) (P)
Ltd. v. Pothan Joseph, 1960 SCC OnLine SC 62, this Court had
held that ignoring relevant facts is also a ground for interfering
with the discretion exercised by the trial court. Furthermore,
Viscount Simon LC in Charles Osenton & Co. v. Johnston, 1942
AC 130 (HL), after stating the above, went on to quote Lord
Wright's decision in Evans v. Bartlam, 1937 AC 473 (HL):
(Evans v. Bartlam, 1937 AC 473 (HL), AC p. 486)
―... It is clear that the court of appeal should not interfere
with the discretion of a judge acting within his jurisdiction
unless the Court is clearly satisfied that he was wrong. But
the court is not entitled simply to say that if the judge had
jurisdiction and had all the facts before him, the court of
appeal cannot review his order unless he is shown to have
applied a wrong principle. The court must, if necessary,
examine anew the relevant facts and circumstances in
order to exercise a discretion by way of review which may
reverse or vary the order.‖
24. In Evans case [Evans v. Bartlam, 1937 AC 473 (HL)], Lord
Wright made it clear that while adjudicating upon the discretion
exercised by the trial court, the appellate court is obliged to
consider the case put forward by the appellant in favour of its
argument that the trial court exercised its discretion arbitrarily or
incorrectly in the circumstances.
25. What flows from a plain reading of the decisions in
Evans v. Bartlam, 1937 AC 473 (HL) and Charles Osenton &
Co. v. Johnston, 1942 AC 130 (HL) is that an appellate court,
even while deciding an appeal against a discretionary order
granting an interim injunction, has to:
(a) Examine whether the discretion has been properly exercised
i.e. examine whether the discretion exercised is not arbitrary,
capricious or contrary to the principles of law; and
(b) In addition to the above, an appellate court may in a given
case have to adjudicate on facts even in such discretionary
orders.
26. The principles of law explained by this Court in Wander
Ltd. v. Antox India (P) Ltd., 1990 Supp SCC 727, have been
reiterated in a number of subsequent decisions of this Court.
However, over a period of time the test laid down by this Court as
regards the scope of interference has been made more stringent.
The emphasis is now more on perversity rather than a mere error of
fact or law in the order granting injunction pending the final
adjudication of the suit.
27. In Neon Laboratories Ltd. v. Medical Technologies Ltd.,
(2016) 2 SCC 672, this Court held that the appellate court should
not flimsily, whimsically or lightly interfere in the exercise of
discretion by a subordinate court unless such exercise is palpably
perverse. Perversity can pertain to the understanding of law or the
appreciation of pleadings or evidence. In other words, the Court
took the view that to interfere against an order granting or declining
to grant a temporary injunction, perversity has to be demonstrated
in the finding of the trial court.
28. In Mohd. Mehtab Khan v. Khushnuma Ibrahim Khan, (2013)
9 SCC 221, this Court emphasised on the principles laid down in
Wander Ltd. v. Antox India (P) Ltd., 1990 Supp SCC 727, and
observed that while the view taken by the appellate court may be an
equally possible view, the mere possibility of taking such a view
must not form the basis for setting aside the decision arrived at by
the trial court in exercise of its discretion under Order 39 CPC. The
basis for substituting the view of the trial court should be mala
fides, capriciousness, arbitrariness or perversity in the order of the
trial court. The relevant observations are extracted below: (SCC p.
230, para 20)
―20. In a situation where the learned trial court on a
consideration of the respective cases of the parties and the
documents laid before it was of the view that the
entitlement of the plaintiffs to an order of interim
mandatory injunction was in serious doubt, the appellate
court could not have interfered with the exercise of
discretion by the learned trial Judge unless such exercise
was found to be palpably incorrect or untenable. The
reasons that weighed with the learned trial Judge, as
already noticed, according to us, do not indicate that the
view taken is not a possible view. The appellate court,
therefore, should not have substituted its views in the
matter merely on the ground that in its opinion the facts of
the case call for a different conclusion. Such an exercise is
not the correct parameter for exercise of jurisdiction while
hearing an appeal against a discretionary order. While
we must not be understood to have said that the appellate
court was wrong in its conclusions what is sought to be
emphasised is that as long as the view of the trial court
was a possible view the appellate court should not have
interfered with the same following the virtually settled
principles of law in this regard as laid down by this Court
in Wander Ltd. v. Antox India (P) Ltd. [Wander
Ltd. v. Antox India (P) Ltd., 1990 Supp SCC 727]‖.
*****
Meaning of the expression "perverse"
34. Any order made in conscious violation of pleading and law is a
perverse order. In Moffett v. Gough, (1878) 1 LR Ir 331, the Court
observed that a perverse verdict may probably be defined as one
that is not only against the weight of evidence but is altogether
against the evidence. In Godfrey v. Godfrey, 106 NW 814, the
Court defined ―perverse‖ as ―turned the wrong way‖; not right;
distorted from the right; turned away or deviating from what is
right, proper, correct, etc.
35. The expression ―perverse‖ has been defined by various
dictionaries in the following manner:
(a) Oxford Advanced Learner's Dictionary of Current English,
6th Edn.
Perverse -- Showing deliberate determination to behave in a
way that most people think is wrong, unacceptable or
unreasonable.
(b) Longman Dictionary of Contemporary English --
International Edn.
Perverse -- Deliberately departing from what is normal and
reasonable.
(c) The New Oxford Dictionary of English -- 1998 Edn.
Perverse -- Law (of a verdict) against the weight of evidence
or the direction of the Judge on a point of law.
(d) New Webster's Dictionary of the English Language (Deluxe
Encyclopedic Edn.)
Perverse -- Purposely deviating from accepted or expected
behavior or opinion; wicked or wayward; stubborn; cross or
petulant.
(e) Stroud's Judicial Dictionary of Words & Phrases, 4th Edn.
Perverse -- A perverse verdict may probably be defined as one
that is not only against the weight of evidence but is altogether
against the evidence.
36. The wrong finding should stem out on a complete misreading
of evidence or it should be based only on conjectures and surmises.
Safest approach on perversity is the classic approach on the
reasonable man's inference on the facts. To him, if the conclusion
on the facts in evidence made by the court below is possible, there
is no perversity. If not, the finding is perverse. Inadequacy of
evidence or a different reading of evidence is not perversity. (See
Damodar Lal v. Sohan Devi, (2016) 3 SCC 78.)‖
(emphasis supplied)
33. The settled position of law emerging from the above-relied
authorities is that appellate scrutiny of interim injunction orders is
inherently limited because such orders are discretionary in nature.
Since the Trial Court exercises its judicial discretion while assessing a
prima facie case, balance of convenience and irreparable injury based
on the facts before it, its assessment carries primary weight. As this
determination is not governed by rigid legal rules but by judicial
discretion, the Appellate Court does not undertake a fresh
reconsideration of the entire matter.
34. Consequently, the Appellate Court cannot substitute its own
view merely because it may have arrived at a different conclusion on
the same material. Interference is justified only in exceptional
situations, specifically when the Trial Court's exercise of discretion is
arbitrary, capricious, perverse, mala fide, based on irrelevant or
extraneous considerations, or contrary to settled legal principles. In
essence, the test is not whether the Appellate Court prefers an
alternative view, but whether the Trial Court's decision falls outside
the realm of lawful, fair and reasonable discretion.
35. Although the Appellate Court may examine the record to
determine whether the discretion has been improperly exercised, it
cannot reassess or re-appreciate the evidence solely to reach a
different conclusion. Appellate intervention is now confined to cases
of perversity, not mere legal or factual error. A finding is perverse
when it involves a clear misapplication of law, a misunderstanding of
facts, or a conclusion that no reasonable judicial mind could reach, for
example, where the decision rests on an incorrect reading of evidence
or on conjecture and speculation. The guiding test is whether a
reasonable person could have reached the same conclusion based on
the material before the Trial Court; if yes, there is no perversity. The
mere existence of another possible view or alleged insufficiency of
evidence is not a ground for interference.
36. In the same judgment, Ramakant Ambalal Choksi (supra), the
Hon'ble Supreme Court has also summarised the principles governing
the grant of temporary injunction, which are reproduced hereinbelow:
"Principles governing grant of temporary injunction
32. In Anand Prasad Agarwalla v. Tarkeshwar Prasad [Anand
Prasad Agarwalla v. Tarkeshwar Prasad, (2001) 5 SCC 568], it
was held by this Court that it would not be appropriate for any
court to hold a mini-trial at the stage of grant of temporary
injunction.
33. The burden is on the plaintiff, by evidence aliunde by affidavit
or otherwise, to prove 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 precedent 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. The Court while granting or refusing to grant
injunction should exercise sound judicial discretion to find the
amount of substantial mischief or injury which is likely to be
caused to the parties, if the injunction is refused and compare it
with that which is likely to be caused to the other side if the
injunction is granted. If on weighing competing possibilities or
probabilities of likelihood of injury and if the Court considers that
pending the suit, the subject-matter should be maintained in status
quo, an injunction would be issued. Thus, the Court has to exercise
its sound judicial discretion in granting or refusing the relief of ad
interim injunction pending the suit. (See Dalpat Kumar v. Prahlad
Singh [Dalpat Kumar v. Prahlad Singh, (1992) 1 SCC 719].)‖
(emphasis supplied)
37. Thus, the grant of temporary injunction is guided by well-
established safeguards meant to protect rights during the pendency of
a suit without prejudging the final adjudication. At this stage, the court
must not conduct a mini-trial. The burden is on the party seeking
injunction to establish the existence of a prima facie case, meaning
thereby a substantial, bona fide issue that requires adjudication at trial,
though not proof of final title or entitlement.
38. Additionally, the applicant must demonstrate that refusal of
injunction would result in irreparable injury, that is, harm of a material
nature that cannot be adequately compensated by damages or rectified
later. The objective is to prevent situations such as dispossession or
violation of rights that may render the eventual relief ineffective.
39. The third mandatory requirement is that the balance of
convenience must favour the grant of injunction. The court weighs the
comparative hardship of whether refusal of the injunction would cause
greater prejudice to the applicant than its grant would cause to the
respondent. If preserving the status quo pending trial is necessary to
avoid injustice, injunction follows. Ultimately, the court must exercise
sound judicial discretion after weighing competing risks.
40. In light of the foregoing legal principles relating to the scope of
the Trial Court's jurisdiction while granting temporary injunctions and
the limited extent of appellate review over such discretionary orders,
we now turn to examine the grounds raised by Defendant No.
4/Appellants in challenge to the Impugned Orders.
41. A principal argument advanced in these Appeals is that the
Plaintiff allegedly failed to comply with the mandatory requirement of
Order VI Rule 4 of the CPC, contending that fraud and undue
influence were not pleaded with sufficient specificity, and therefore,
the learned Single Judge erred in recording findings on undue
influence despite such omission.
42. It is well settled that before granting an injunction, the Court
must be satisfied that the Plaintiff has disclosed a bona fide prima
facie right requiring protection. Allegations of fraud or undue
influence, particularly when relied upon as the foundation for
interlocutory relief, must disclose material particulars sufficient to
cross the threshold of a prima facie case. Pertinently, while Order VI
Rule 4 of the CPC does not prescribe a rigid formula, it nevertheless
mandates that such allegations be supported by clear and specific
material rather than resting merely on inference or suspicion.
43. The learned Single Judge has undertaken examination of the
pleadings, documents, and surrounding circumstances and has
recorded extensive observations with respect to the Plaintiff's age,
residence, familial relations, and the sequence of transactions by
which Defendant Nos. 4 and 9 came to be associated with the
management and shareholding of various companies and LLPs. At
this stage, it is considered apposite to reproduce the relevant portion
of the First Impugned Order wherein the learned Single Judge has
examined this aspect, which reads as follows:
―UNDUE INFLUENCE
30. Before the death of her husband, late Sh. Devinder Singh
Chaudhry, the plaintiff was living with him in Chandigarh in one
of the properties owned by the defendant no.13 company. At the
time of death of her husband, the plaintiff was about seventy-three
years of age and was suddenly left alone and vulnerable. None of
her children were staying with her at that point of time. It was at
that point of time that the defendant no. 4 along with her husband,
the defendant no. 9, moved to Chandigarh and started living with
the plaintiff. Taking advantage of the old age as well as the
physical health of the plaintiff, the defendant no.4 slowly and
steadily gained the trust and confidence of the plaintiff and started
transferring the shareholding/interest in the various defendant
companies/LLPs in her name and in the name of her husband,
thereby taking control of the said companies/LLPs.
31. Vide two gift deeds dated 9th December, 2018, 18,012 shares
of the defendants no. 15 company and 6,000 shares of the
defendant no. 16 company were transferred by the plaintiff in
favour of the defendant no. 4A perusal of the aforesaid gift deeds
shows that the plaintiff has transferred the shares in favour of the
defendant no. 4 on account of ‗natural love and affection'. It is
pertinent to note that the aforesaid gift deeds have neither been
notarized nor are they adequately stamped. Further, the place for
the witnesses to sign on the gift deeds has been left blank. The fact
that a large amount of shareholding in the defendants no. 15 and 16
companies have been transferred in this manner in favour of the
defendant no. 4, arouses suspicion as to whether the same has been
done in a transparent and lawful manner.
32. Similarly, vide supplementary agreements dated 14th March,
2019 and 24th April, 2019, the defendant no. 4 and defendant no. 9
took over as partners in the defendants no. 14 and 17 LLPs. Once
again, there is no apparent reason as to why the aforesaid
documents were executed, giving complete control of these entities
to the defendants no.4 and 9. It is pertinent to note here that the
defendant no.14 LLP owns 44.1% shares in the defendant no.13
company and 52.5% interest in the defendant no.17 LLP.
33. In respect of 21,21,240 shares in the name of the plaintiff in the
defendant no. 13 company, a delivery instructions slip is stated to
have been executed by the plaintiff in favour of the defendant no. 4
on 6th June, 2019, purporting to transfer her shareholding in the
defendant no. 13 company in favour of the defendant no. 4 as a
gift. Significantly, instead of the phone number of the plaintiff, the
phone number of the defendant no. 4 has been mentioned in the
said delivery instructions slip. Moreover, there is a mismatch
between the two signatures of the plaintiff on the said delivery
instructions slip. Admittedly, the aforesaid transfer of shares of the
defendant no.13 company in favour of the defendant no. 4 was
without any consideration.
34. On the basis of the aforesaid document, the defendant no. 4,
who had zero shareholding in the defendant no. 13 company
acquired 33.6% of the shares of the defendant no.13 company.
Further, by acquiring control of the defendant no.14 LLP, the
defendant no.4 got control of a further 44.1% shares of the
defendant no.13 company held by the defendant no.14 LLP.
Immediately after acquiring control of the defendant no. 13
company, a rights issue was taken out and by manipulating the
same, the defendant no.4 further enhanced her shareholding and
control of the defendant no. 13 company. It is an admitted position
that the defendant no. 13 company is the main company, which
holds the maximum number of properties.
35. In respect of the first suit that was filed by the defendant no. 1
herein, in which the plaintiff was arrayed as the defendant no. 1, it
was the defendant no. 4 who engaged the counsels on behalf of the
plaintiff. The various pleadings, replies, etc. on behalf of the
plaintiff were prepared on the instructions of the defendant no. 4.
The plaintiff had no say in the stand which was being taken on her
behalf in the said proceedings. This is evident from the invoice of
the law firm that was representing the plaintiff in the said suit.
Though the said invoice is in the name of the plaintiff, it was
drawn to the attention of the defendant no. 4 and was sent to her
email address. It appears that the lawyers were taking instructions
from the defendant no.4, and it was the defendant no.4 who was
clearing their bills. On a prima facie view, it appears that the
plaintiff signed the various pleadings/replies, etc. under undue
influence of the defendants no.4 and 9, without understanding the
nature and contents of the said pleadings/replies.
36. It was only when the plaintiff moved to Delhi in June, 2021
that the plaintiff realized the purport and effect of the various
documents executed by her while living with the defendants no. 4
and 9 in Chandigarh. Immediately thereafter, an application, being
I.A. No. 15902/2021, was filed on behalf of the plaintiff for
disregarding the pleadings filed on her behalf in the first suit.
37. At this stage, I would like to refer to the scope of ‗undue
influence' and the legal position with regard to the same. Section
16 of the Indian Contract Act, 1872, defines ‗undue influence'. For
ease of reference, the said section is set out below:
"16. "Undue influence" defined.--(1) A contract is said to be
induced by "undue influence" where the relations subsisting
between the parties are such that one of the parties is in a
position to dominate the will of the other and uses that
position to obtain an unfair advantage over the other.
(2) In particular and without prejudice to the generality of
the foregoing principle, a person is deemed to be in a position
to dominate the will of another--
(a) where he holds a real or apparent authority over the other,
or where he stands in a fiduciary relation to the other; or
(b) where he makes a contract with a person whose mental
capacity is temporarily or permanently affected by reason of
age, illness, or mental or bodily distress.
(3) Where a person who is in a position to dominate the will
of another, enters into a contract with him, and the
transaction appears, on the face of it or on the evidence
adduced, to be unconscionable, the burden of proving that
such contract was not induced by undue influence shall lie
upon the person in a position to dominate the will of the
other.
Nothing in this sub-section shall affect the provisions of
section 111 of the Indian Evidence Act, 1872 (1 of 1872).‖
38. The scope of the aforesaid section is explained by the
illustrations provided therein. For the purposes of the present case,
reference may be made to illustrations (a) and (b):
"Illustrations
(a) A having advanced money to his son, B, during his
minority, upon B's coming of age obtains, by misuse of
parental influence, a bond from B for a greater amount than
the sum due in respect of the advance. A employs undue
influence.
(b) A, a man enfeebled by disease or age, is induced, by B's
influence over him as his medical attendant, to agree to pay B
an unreasonable sum for his professional services. B employs
undue influence."
39. Reference may also be made to Section 111 of the Indian
Evidence Act, 1872, which is set out below:
―111. Proof of good faith in transactions where one party is
in relation of active confidence.--Where there is a question
as to the good faith of a transaction between parties, one of
whom stands to the other in a position of active confidence,
the burden of proving the good faith of the transaction is on
the party who is in a position of active confidence.
Illustration
(b) The good faith of a sale by a son just come of age to a
father is in question in a suit brought by the son. The burden
of proving the good faith of the transaction is on the father."
40. In support of his submissions in respect of undue influence, the
counsel for the plaintiff has relied on the judgment in Keshav and
Ors. v. Gian Chand and Anr., (2022) SCC OnLine SC 81.
Relevant observations are set out below:
*****
43. Applying the aforesaid principles of law to the facts of the
present case, the defendants no.4 and 9 were indeed in a position to
dominate the will of the plaintiff so as to obtain an unfair
advantage. The plaintiff was about eighty-three years of age when
the aforesaid transfers/gifts were made, lived alone with the
defendants no.4 and 9 and was totally dependent on them.
Admittedly, the transfers/gifts were made without any
consideration and the defendants no.4 and 9 were the beneficiaries
of the same. The sheer volume and magnitude of the transfers, as
provided in table II above, make them unconscionable. The
defendants no.4 and 9 have completely failed to demonstrate that
the transfers/gifts were made in good faith and were not induced by
undue influence.
44. It defies logic as to why the plaintiff would transfer all her
interest in favour of the defendant no.4 and her husband, the
defendant no.9 to the exclusion of all other legal heirs. It is
nobody's case that the plaintiff was not on good terms with the rest
of her legal heirs. Though, it has been contended on behalf of the
defendants no. 4 and 9 that the plaintiff has also transferred her
interest in favour of other legal heirs, the same appears to be
miniscule compared to the transfers made in favour of the
defendants no. 4 and 9.
45. Therefore, in my prima facie view, the various documents
executed by the plaintiff transferring/gifting her shares and interest
in the defendant companies/LLPs in favour of the defendant no. 4
and the defendant no. 9 were on account of ‗undue influence'
exercised by the defendants no. 4 and 9 upon the plaintiff. Of
course, these prima facie findings would be subject to the outcome
of the trial in the suit.
46. Senior counsel for the defendants no.4 and 9 has relied upon
the
various photographs showing the plaintiff at family events to
submit that the plaintiff was not under the influence of the
defendants no. 4 and 9. In my view, no reliance can be placed on
the said photographs to come to a conclusion that the defendants
no. 4 and 9 did not exercise undue influence over the plaintiff.
47. Senior counsels appearing on behalf of the defendants no. 4, 9
and 13 have contended that the transfers as well as the gifts were
completed/executed as far back as in 2018-2019 and proper legally
valid documents were executed in respect thereof. Further, Board
Resolutions approving the said transfers were duly passed by the
companies in presence of the plaintiff and duly signed by her. It is
further contended that the plaintiff continues to be the Managing
Director in the defendant no.13 company and has never raised any
objection with regard to the aforesaid transfer of shares or any
other transactions till date. Therefore, it is submitted that the
aforesaid challenge, at this stage, is barred on account of
acquiescence, waiver and estoppel.
48. In view of my findings above that the defendants no.4 and 9
exercised undue influence over the plaintiff and the aforesaid
documents transferring/gifting the shares, including the Board
Resolutions, were executed on account of the undue influence
exercised by them, a serious doubt is created over the bona fide
and genuineness of these documents. The undue influence
continued till June, 2021, when the plaintiff finally moved to Delhi
to live with her other legal heirs. Therefore, there was no occasion
for the plaintiff to question any of the aforesaid documents or
Board Resolutions while she continued to live with the defendants
no. 4 and 9 and be under their influence. The challenge could only
be made after the plaintiff moved to Delhi and which was duly
made by the plaintiff.
49. Therefore, I do not find any merit in the submission made on
behalf of the defendants no. 4, 9 and 13 that the plaintiff never
objected to any of the share transfers, or gifts, or the Board
Resolutions passed at an earlier point of time. Similarly, I do not
find merit in the submissions made on behalf of the defendants no.
4, 9 and 13 in respect of the contradictory stand taken by the
plaintiff in the first suit.‖
44. It may be noted that at the interlocutory stage, the recording of
detailed observations or a narration of surrounding circumstances
cannot be conflated with the establishment of a legally enforceable
prima facie right.
45. Defendant Nos. 4 and 9 claim that the transfers were made out
of natural love and affection. The Plaintiff, however, has categorically
pleaded that these transfers were not voluntary or acts of generosity
but were procured by exploiting her advanced age, physical frailty and
emotional vulnerability. She alleges that Defendant Nos. 4 and 9
fraudulently effected the transfer of her and the deceased's
shareholding in multiple corporate entities.
46. It is undisputed that during the relevant period between 2018-
2019 and even until mid-2021, the Plaintiff was residing with
Defendant Nos. 4 and 9 in Chandigarh; that she was in her seventies;
and that several transfers of shares and interests took place during this
time. It is also undisputed that these transfers were made without
monetary consideration amongst the family members. However, the
absence of consideration, by itself, is not determinative, particularly
when the transfers are sought to be justified as gifts executed by a
person who was, admittedly, managing her affairs and assets for
several years after the demise of her husband.
47. Upon examining the material placed on record, the learned
Single Judge formed a prima facie view that multiple indicia of undue
influence existed, including unstamped and unsigned gift deeds, blank
witness columns, discrepancies in signatures, insertion of the contact
number of Defendant No. 4 in place of that of the Plaintiff, transfers
executed without consideration, and a sudden and disproportionate
concentration of control in favour of Defendant Nos. 4 and 9.
48. At this juncture, the testamentary scheme under the Will dated
26.03.2004 assumes significance. Under the said Will, the Plaintiff
was appointed as Managing Director of ICL for a period of five years.
Consequently, 13,56,290 shares held by the Deceased were transferred
in the books of ICL in her name. The Plaintiff also served as
Chairman-cum-Managing Director of several group companies and
exercised complete control over their affairs, including cable
manufacturing operations, sale of plant and machinery, real estate
development, and colonisation of vast tracts of land left behind by the
Deceased.
49. Paragraph No.III clauses (2) and (3), and Paragraph No.IV of
the aforesaid Will read as under:
―2. During the period of the natural life of my wife Sita
Chaudhry the executor (Sita Chaudhry) shall hold the entire
residue of mv estate to receive the annual or of the income
thereof and thereout and in the first place the executor shall
pay or discharge all the costs and expenses incurred for the
administration of the estate including taxes and duties of all
types and subject thereto the executor shall pay. spend or
apply the net income to or for the sole benefit of Sita
Chaudhary in any manner whatsoever as desired by Sita
Chaudhry.
3. Immediately after the day of death of my wife Sita
Chaudhary the Executor shall divide the entire residue of my
estate into three equal parts:
a) One such equal part shall be dealt with in accordance with
the provisions contained in part IV of this Will and
b) The second such equal part to be held in trust in accordance
with the provisions contained in Part V of this Will
c) The third such equal part to be held in trust in accordance
with the provisions contained in Part VI of this will.
IV. One third of the residue of 1ny estate mentioned in Part III
(3) (a) of this Will shall be transferred to the following four
persons or their respective legal heirs (but excluding wife of
Deepender Singh) equally per stirpe:
1. Deepinder Singh (testator's son)
2. Sunaina (daughter of Deepinder Singh)
3. Shruti (daughter of Deepinder Singh)
4. Karandeep (son of Deepinder Singh)‖
50. A plain reading of the aforesaid Clause (2) of the Paragraph
No.III makes it evident that the Deceased expressly authorised the
Plaintiff to administer and deal with his estate during her lifetime
without any embargo, while Clause (3) envisages division of the
residual estate only upon her demise. The testamentary disposition
further provides that one-third of the residual estate would vest, after
the Plaintiff's death, in the family of Defendant No. 2, including
Defendant No. 4.
51. The Will dated 26.03.2004 was acted upon immediately. The
Plaintiff continued to manage and deal with the properties as absolute
administrator and executed multiple sale deeds during her lifetime.
Significantly, none of the legal heirs of the Deceased raised any
objection to such transactions at the relevant time. Even in CS(OS)
589/2021, the Plaintiff did not assert that she held merely a life estate.
The contrary assumption drawn by the learned Single Judge while
granting the injunction does not flow from the testamentary scheme.
In any event, the Will clearly stipulates that the residual estate would
devolve upon Defendant No. 2 and his family, including Defendant
No.4, after the Plaintiff's death.
52. The learned Single Judge has also failed to consider that the
Plaintiff herself was a shareholder in the concerned companies and
had, during her lifetime, gifted shares to her granddaughter and the
granddaughter's husband. Despite this, injunctions have been granted
even in respect of the said shares.
53. The learned Single Judge has also overlooked that the Plaintiff,
during her lifetime, transferred shares and other immovable properties
in favour of other heirs of the Deceased testator. The Court has further
overlooked the stand of the Plaintiff in CS(OS) 382/2020 filed by
Verinder Singh (Defendant No. 1), one of her sons, wherein she
admitted the execution of the Gift Deed and transfer of shares in
favour of Defendant No. 4 and her husband. She also filed an
application under Order VII Rule 11 of the CPC. She never
questioned the correctness of the transfer of shares in favour of
Defendant No. 4 and her husband. On the contrary, she asserted that
the suit was barred by limitation. Further, on 09.03.2021, while filing
the reply to the application under Order XXXIX Rules 1 and 2 of the
CPC in CS(OS) 382/2020, the Plaintiff not only claimed absolute
ownership but also defended the Gift.
54. It is important to note that on 19.12.2018, Plaintiff executed two
Gifts in favour of the Defendant No. 4 with respect to shares in P.E.
Manning (Consultants) Pvt. Ltd. and Amba Promoters and Developers
Pvt. Ltd.. On 25.12.2018, i.e., after a period of six days from the
execution of the Gift Deed, she signed form SH-4 for the transfer of
shares in favour of Defendant No. 4. Paintiff was a member of the
Board of Directors who passed the resolution transferring the shares
of both companies in favour of Defendant No. 4.
55. On 06.06.2019, Plaintiff executed Form-36 with respect to the
Gift of 21,21,240 shares of ICL in favour of Defendant No. 4.
Thereafter, Defendant Nos. 4 and 9 have been managing the affairs of
ICL, and in order to colonize the vast land, applied and were granted
licenses under Real Estate (Regulation and Development) Act, 2016,
for developing the area into a garden estate project of ICL. Thus, the
immovable property constituted the stock and trade of ICL.
56. Moreover, the Court overlooked that on 08.10.2021, a few days
before the filing of the suit, Plaintiff executed a Gift Deed of her
immovable property at N-102, Panchsheel Park, New Delhi, in favour
of Shruti Manav Sharma (Defendant No. 5). It has also come on
record that Plaintiff also executed gifts to her other grandchildren in
the year 2018, i.e., at the same time when she gave shares to
Defendant No. 4. It has also come on record that various family
members had been paid substantial sums by the Plaintiff. Thus, it is
evident that the Plaintiff, after the death of her husband, has been
primarily managing the properties, including the business, since 2009.
57. Further, there was no dispute till Defendant No. 2 filed Probate
Petition No.04/2019 and propounded the Will dated 04.10.2008,
allegedly executed by the Deceased. For a period of ten years, the
Plaintiff managed the empire primarily single-handedly. Furthermore,
the Plaintiff, while filing the suit, has not raised any dispute with
regard to the sale of the estate in Madhuban Colony in Rajpura,
Patiala, Punjab-140401, or the sale of Apartments located in the Ivory
Tower project located in Sector-70, Mohali, Punjab.
58. The above-discussed Plaintiff's conduct, as emerging from the
record, also bears upon the assessment of a prima facie case. As is
evident, in earlier proceedings, the Plaintiff had acknowledged and
defended certain transfers and asserted absolute ownership over the
assets. These circumstances, prima facie, dilute the present assertion
that the impugned transfers were involuntary or procured through
undue influence, and raise serious disputed questions of fact which
cannot be conclusively resolved at the interlocutory stage.
59. The various facts emphasised in the First Impugned Order, such
as alleged irregularities in documentation, discrepancies in signatures,
and the concentration of corporate control, undoubtedly warrant
scrutiny at trial. However, these aspects, viewed cumulatively, do not,
at this stage, establish a prima facie case of fraud or undue influence
so as to justify a sweeping restraint on the Defendants' proprietary and
managerial rights.
60. Further, the delay in questioning the transactions, the absence of
any contemporaneous criminal complaint, and the Plaintiff's
continued participation in corporate and legal affairs during the
relevant period are all factors which assume relevance while assessing
the existence of a prima facie case. The explanation that the Plaintiff
realised the implications of the transactions only at a later stage raises
factual issues which must await evidence, and cannot by themselves
tilt the balance in favour of interim relief.
61. The observation that Defendant No. 4 did not specifically
traverse each of the factual observations during oral submissions
cannot be construed as acquiescence or acceptance thereof. The
emphasis placed by Defendant No. 4 on the legal infirmity relating to
inadequacy of pleadings was a deliberate and foundational objection,
going to the very maintainability of the claim for interim relief. Such
an objection, which strikes at the threshold requirement of disclosure
of a prima facie case, could not have been brushed aside on the
premise that factual findings stood admitted or uncontested.
62. The injunction granted also extends to properties asserted to be
self-acquired by Defendant No. 4 and her husband, without a clear
prima facie nexus being demonstrated between such properties and
the proceeds of the impugned transfers. In the absence of such
linkage, a blanket injunction travels beyond the legitimate scope of
interlocutory protection.
63. Additionally, learned Single Judge also overlooked that a grant
of an injunction would stall the developments of the various projects,
which would not only adversely affect the rights of Defendant Nos. 4
and 9 but would also affect various purchasers of the apartments/plots.
Continuation of the injunction during the pendency of the suit, which
is likely to take a long time, would do more harm than preserving the
property.
64. It is established that at the interlocutory stage, the Court must
refrain from rendering conclusive findings where serious factual
disputes exist and the matter requires extensive evidence. However,
this very principle equally mandates judicial restraint in granting
sweeping injunctive relief. Preservation of the subject matter cannot
be employed as a substitute for the foundational requirement of a
prima facie case. Interim protection is intended to safeguard an
established legal right, not to insulate disputed transactions merely
because they are the subject of challenge.
65. The submissions advanced by Defendant No. 4 with respect to
transfers made in favour of other grandchildren could not have been
discarded as inconsequential at this stage. These transactions, when
viewed alongside the testamentary scheme and the admitted authority
exercised by the Plaintiff during her lifetime, bear directly on the
allegation of selective or disproportionate benefit. Whether the value
of such transfers is comparable, or whether corporate shareholding
ought to be equated with absolute ownership of assets, are matters
requiring evidence and adjudication. At the interlocutory stage, such
contested inferences could not form the sole basis for drawing a prima
facie conclusion as to lack of bona fides or genuineness of the
transactions.
66. The caveat recorded by the learned Single Judge that the
observations are prima facie and confined to interim adjudication does
not, by itself, cure the legal infirmity in the grant of injunction. Even a
prima facie restraint must be founded on the disclosure of an
enforceable right and a demonstrable risk of irreparable harm. The
apprehension of dissipation of the estate, resting on disputed
allegations of an attempted sale at an undervalue, remains a matter to
be established by evidence. In any event, the Plaintiff's interest, who
has now passed away on 09.01.2025, stands sufficiently safeguarded
by the doctrine of lis pendens under Section 52 of the Transfer of
Property Act, 1882.
67. The second major contention raised by Defendant No. 4 is that
the learned Single Judge failed to appreciate the mandate of Section
89 of the Companies Act. In this regard, it is apposite to reproduce the
relevant portion of the First Impugned Order wherein this issue has
already been examined:
―28. Senior counsels appearing on behalf of the defendants have
relied upon Section 89 of the Companies Act, 2013 to contend that
the plaintiff was not registered as a ‗beneficial owner' of the said
shares and therefore, should be assumed to be the absolute owner.
Further, no other person has filed a declaration claiming to be the
beneficial owner in respect of the said shares. To appreciate the
aforesaid submission, a reference may be made to Section 89 of the
Companies Act, 2013.
"89. Declaration in respect of beneficial interest in any
share.--
(1) Where the name of a person is entered in the register of
members of a company as the holder of shares in that company
but who does not hold the beneficial interest in such shares,
such person shall make a declaration within such time and in
such form as may be prescribed to the company specifying the
name and other particulars of the person who holds the
beneficial interest in such shares.
(2) Every person who holds or acquires a beneficial interest in
share of a company shall make a declaration to the company
specifying the nature of his interest, particulars of the person
in whose name the shares stand registered in the books of the
company and such other particulars as may be prescribed.
(3) Where any change occurs in the beneficial interest in such
shares, the person referred to in subsection (1) and the
beneficial owner specified in sub-section (2) shall, within a
period of thirty days from the date of such change, make a
declaration to the company in such form and containing such
particulars as may be prescribed.
(4) The Central Government may make rules to provide for the
manner of holding and disclosing beneficial interest and
beneficial ownership under this section.
(5) If any person fails, to make a declaration as required under
sub-section (1) or sub-section (2) or sub-section (3), without
any reasonable cause, he shall be punishable with fine which
may extend to fifty thousand rupees and where the failure is a
continuing one, with a further fine which may extend to one
thousand rupees for every day after the first during which the
failure continues.
(6) Where any declaration under this section is made to a
company, the company shall make a note of such declaration
in the register concerned and shall file, within thirty days from
the date of receipt of declaration by it, a return in the
prescribed form with the Registrar in respect of such
declaration with such fees or additional fees as may be
prescribed, within the time specified under section 403.
(7) If a company, required to file a return under sub-section
(6), fails to do so before the expiry of the time specified under
the first proviso to sub-section (1) of section 403, the company
and every officer of the company who is in default shall be
punishable with fine which shall not be less than five hundred
rupees but which may extend to one thousand rupees and
where the failure is a continuing one, with a further fine which
may extend to one thousand rupees for every day after the first
during which the failure continues.
(8) No right in relation to any share in respect of which a
declaration is required to be made under this section but not
made by the beneficial owner, shall be enforceable by him or
by any person claiming through him.
(9) Nothing in this section shall be deemed to prejudice the
obligation of a company to pay dividend to its members under
this Act and the said obligation shall, on such payment, stand
discharged."
29. Merely because the plaintiff has not made a declaration in terms
of Section 89(1) of the Companies Act, 2013, it would not imply
that the plaintiff was the absolute owner of the said shares. It was at
best a procedural lapse in respect of which consequences
prescribed in Section 89(5) would be attracted. Further, the
submission that none of the other legal heirs of late Sh. Devinder
Singh Chaudhry have filed declarations claiming to be a beneficial
owner in terms of Section 89 of the Companies Act, 2013
overlooks the fact that the legal heirs of late Sh. Devinder Singh
Chaudhry are yet to become beneficial owners of the said shares.
The right in their favour would arrive only after the plaintiff's
death and therefore, there cannot be any question of the legal heirs
claiming to be the beneficial owners to the said shares.
Consequently, the aforesaid submission on behalf of the defendants
is devoid of merits.‖
68. Section 89 of the Companies Act is a statutory provision which
mandates disclosure of beneficial interest in shares and, significantly,
attaches clear legal consequences to non-compliance. Sub-section (8)
expressly stipulates that no right in relation to any share, in respect of
which a declaration is required but not made, shall be enforceable by
the beneficial owner or any person claiming through him. At the
interlocutory stage, this statutory embargo cannot be diluted by
treating non-compliance as a mere procedural lapse, particularly when
the enforceability of rights in respect of the very same shares is the
foundation of the claim for interim relief.
69. Whether the Plaintiff was the beneficial owner or the absolute
owner of the shares is not merely a peripheral dispute but lies at the
core of the controversy. This question is further complicated by the
admitted existence of competing testamentary instruments, namely the
Will dated 26.03.2004 and the subsequent Will dated 04.10.2008,
which is the subject matter of pending probate/letters of
administration proceedings. Until the validity and effect of the
competing Wills are adjudicated, any assumption regarding beneficial
ownership would be premature and legally untenable. In such
circumstances, the Plaintiff cannot, at the interlocutory stage, assert
enforceable rights in respect of the shares while admittedly not having
complied with the statutory disclosure regime.
70. Further, the view that Section 89 merely prescribes penal
consequences overlooks the explicit bar contained in sub-section (8),
which directly impacts enforceability of rights. At the very least, this
creates a serious cloud over the Plaintiff's asserted entitlement and
militates against the existence of a clear prima facie case. Where the
statutory framework itself restricts enforceability, interim protection
predicated on such disputed rights ought not to have been granted.
71. Moreover, the disputes in the present proceedings traverse
complex corporate and proprietary arrangements, including entities
beyond the scope of Section 89. This only reinforces the conclusion
that questions of title, beneficial interest, and control are deeply
contested and incapable of summary determination at the interlocutory
stage. In the absence of a clear prima facie entitlement, reliance on
Section 89 to non-suit the Appellant could not have been rejected in
the manner done by the learned Single Judge.
72. In view of the above, we are unable to concur with the
conclusion of the learned Single Judge on this aspect. The reasoning
adopted does not adequately account for the statutory consequences
flowing from Section 89 of the Companies Act and, at the very least,
raises serious triable issues which negate the grant of injunctive relief
at the interim stage.
73. We now turn to the issue of the applicability of Section 14 of
the HSA. The learned Single Judge, after an extensive examination in
the First Impugned Order, held that under the Will dated 26.03.2004,
the Plaintiff was neither entitled to be registered as an absolute owner
of the shares in question nor entitled to create third-party interests in
respect of those shares.
74. However, as noticed hereinabove, Defendant No.2 has
propounded a subsequent Will dated 04.10.2008 and has already
instituted probate/letters of administration proceedings in respect
thereof before the learned District Judge, Saket Courts, South District,
Delhi. If the Will dated 04.10.2008 is ultimately held to be the last
valid testament of the deceased, all conclusions premised solely on the
Will of 2004 would cease to have any legal foundation. In such
circumstances, it would be impermissible, at the interlocutory stage, to
proceed on the assumption that the Plaintiff enjoys any settled or
superior right so as to warrant injunctive protection. This is
particularly so when it has not been recorded that Defendant Nos.4
and 9 have been conferred more than a one-fourth share in the estate
of the deceased. Notably, even under the Will dated 04.10.2008,
Defendant Nos.4 and 9 are entitled to a one-fourth share. The learned
Single Judge has not returned any finding that Defendant Nos.4 and 9
have been allotted a share in excess of what is provided under the said
Will.
75. Further, both parties have placed reliance on several precedents
to support their respective interpretations of Section 14 of the HSA.
However, the correct interpretation of Section 14 is itself presently in
flux. Owing to difference in opinions in past decisions, the Hon'ble
Supreme Court has referred the issue to a Larger Bench in Tej Bhan
v. Ram Kishan15. The reference order dated 09.12.2024 notes the
persistent judicial inconsistency regarding the interplay between sub-
sections (1) and (2) of Section 14 of the HSA and directs the
constitution of an appropriate Larger Bench to restate the law with
clarity and certainty. The relevant portion of the reference order reads
as under:
"22. It is important to note that except, Karmi (supra), the
decisions in Bhura, Gumpha and Sadhu Singh (supra) are all by
two Judge benches. The larger perspective in which Section 14 was
interpreted holistically commenced from Karmi and was followed
in many subsequent cases. Some of the decisions in the same line
are Gaddam Ramakrishnareddy, Jagan Singh, Shivdev Kaur,
Ranvir Dewan and Jogi Ram (supra).
23. We have noticed that while following Tulsamma, the
subsequent decisions in Thota Sesharathamma, Masilamani
Mudaliar and Shakuntala Devi (supra) have made passing
observations about the discordant note in the case of Karmi,
Bhura and Gumpha (supra) but they have not been clearly and
categorically overruled. Perhaps this is the reason why the
subsequent decisions consistently followed the idea in Karmi and
enunciated different principles in the subsequent decisions
of Gumpha, Sadhu Singh (supra) and that perspective continued
on its own strength.
24. We heard the present appeal in detail and have also taken a
view in the matter, but having realised that there are a large
number of decisions which are not only inconsistent with one
another on principle but have tried to negotiate a contrary view by
distinguishing them on facts or by simply ignoring the binding
decision, we are of the view that there must be clarity and certainty
in the interpretation of Section 14 of the Act.
25. In view of the above, we direct the Registry to place our order
along with the appeal paper book before the Hon'ble Chief Justice
of India for constituting an appropriate larger bench for reconciling
the principles laid down in various judgments of this Court and for
restating the law on the interplay between sub-section (1) and (2)
of Section 14 of the Hindu Succession Act.‖
76. In the backdrop of the pending reference before the Hon'ble
2024 SCC OnLine SC 3661
Supreme Court, at this stage of interlocutory measures, any definitive
or even prima facie conclusion on the applicability of Section 14
would be premature. Where the governing legal position itself is in a
state of flux, it would be inappropriate to rely on selective past
precedents to sustain interim protection, particularly when the
Plaintiff's entitlement is contingent upon disputed testamentary
instruments and unresolved questions of title.
77. The next contention advanced by Defendant No. 4 is that the
Plaintiff has not sought the ―correct‖ relief in the suit. It is argued that
since the Plaintiff herself challenges the alleged gift deeds and other
transfer instruments executed in favour of Defendant No. 4, the
appropriate relief ought to have been cancellation of such documents
rather than a declaration, and also consequently, the requisite court
fee has not been paid.
78. At the outset, this objection was not raised before the learned
Single Judge, however, it cannot be brushed aside at the appellate
stage when it goes to the maintainability and framing of the suit itself.
The form of relief assumes relevance even at the interlocutory stage,
as interim injunctions are intended to aid final relief and cannot be
granted in abstraction from the substantive prayers sought in the suit.
79. Where the Plaintiff herself disputes the validity of an
instruments, the failure to seek appropriate consequential relief cannot
be treated as a mere technical lapse. Such a deficiency bears directly
on the Plaintiff's ability to demonstrate a prima facie case, particularly
when the interim order has the effect of restraining parties who hold
title under facially valid instruments.
80. The grant of interim injunction cannot be justified solely on the
premise of preserving the subject matter when the Plaintiff's own
pleadings disclose uncertainty as to the exact nature of relief claimed.
Preservation of property must be balanced against the rights of parties
in possession or control under existing documents, and a blanket
invocation of status quo cannot override substantive deficiencies in
the suit.
81. Defendant No. 4 further raises collateral objections concerning
ICL (Defendant No. 13), alleging absence of shareholding,
managerial, or directorial connection with JMD. While the learned
Single Judge has traced the chain of transactions, the conclusions
drawn at the interlocutory stage traverse disputed questions of control,
influence, and corporate separateness, which ordinarily require
evidence and cannot be conclusively determined on affidavits alone.
82. The injunction, though sought to be justified as calibrated,
nonetheless operates to substantially restrict the ability of multiple
entities to deal with their properties and commercial interests. The
mere permission granted to ICL to continue limited development
activity does not neutralise the broader restraint imposed, which
effectively curtails proprietary and commercial autonomy prior to
trial.
83. In the totality of circumstances where title is disputed, the
governing law under Section 14 of the HSA is pending authoritative
clarification, the operative Will is sub-judice, and the form of relief
itself is open to serious objection, we are of the view that the balance
of convenience does not lie in continuing the interim protection. The
injunction, as granted, travels beyond preservation and risks
conferring an unwarranted advantage on the Plaintiff, thereby
warranting appellate interference.
84. The Second Impugned Order, which substantially reiterates and
proceeds on the reasoning adopted in the First Impugned Order, does
not warrant independent affirmation. The mere identity of parties,
properties, and factual backdrop cannot, by itself, justify continuation
of interim protection when the foundational findings in the First
Impugned Order are themselves open to serious doubt. An injunction
cannot be sustained on the basis of repetition of reasoning alone. In
the absence of a clearly established prima facie right or demonstrable
necessity for protection, preservation of the status quo ceases to be a
neutral measure and instead results in undue restraint on the
Appellant's lawful exercise of rights.
DECISION:
85. In light of the foregoing discussion, we are of the considered
view that the learned Single Judge has misapplied the settled
principles governing the grant of injunction. Consequently, the
Impugned Orders cannot be sustained and warrant interference by this
Court.
86. Needless to say that any findings or observations recorded
herein are confined exclusively to the scope of the present appellate
examination. They shall not be construed as an expression of final
opinion on the merits of the suit, which shall be adjudicated
independently and strictly in accordance with law.
87. The present Appeals are allowed.
88. Pending applications, if any, are disposed of in the aforesaid
terms.
ANIL KSHETARPAL, J.
HARISH VAIDYANATHAN SHANKAR, J.
MARCH 20, 2026/sh
