Bombay High Court
Satvik Rajiv Samani And Anr. vs Smt. Shardaben Prabhudas Samani And 9 … on 6 April, 2026
Author: R.I. Chagla
Bench: R.I. Chagla
nms-726-1526-2014-2015.doc
jsn
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
NOTICE OF MOTION NO.726 OF 2014
IN
SUIT NO.353 OF 2014
Satvik Rajiv Samani & Anr. ...Applicants /
Plaintiffs
Versus
Shardaben Prabhudas Samani & Anr. ...Defendants
WITH
NOTICE OF MOTION NO.1526 OF 2015
----------
Mr. Archit Jaykar with Ms. Hetal Jobanputra and Ms. Dhwani Parekh
i/b. Jayakar & Partners for the Applicants / Plaintiffs.
Mr. Shanay Shah with Mr. Hamza Lakhani i/b. Suraj Shukla for
Defendant Nos.1 and 2.
Mr. Aseem Naphade with Mr. S.L. Shah i/b. Shal Legal for Defendant
Nos.3 and 7.
Mr. Nausher Kohli with Mr. Aditya Raut, Mr. Shyamdhar Upadhyay
i/b. Desai Desai Carrimjee & Mulla for Defendant Nos. 4 to 6.
Mr. Divyang Shukla /b. L.J. Law for Defendant No.9.
----------
CORAM : R.I. CHAGLA J.
Reserved on : 23RD FEBRUARY 2026
Pronounced on : 6TH APRIL, 2026.
O R D E R:
–
1. These Notices of Motion were heard together in view of
similar relief having been sought therein, namely, for an Order of
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injunction restraining the Defendants from selling, transferring,
parting with possession and / or creating any third party right, title
and interest in respect of the properties mentioned in the Particulars
of Claim annexed to the Plaint at Exhibit ‘C’. The items at Sr. Nos.1 to
6 in the Plaint include the Harileela Property which is the
asset/property of Defendant No.7 – Panache Securities Private Ltd.
(referred to as “Panache”). Further, in Notice of Motion 726 of 2014,
the Plaintiffs have sought for appointment of the Court Receiver to
take possession of the said properties from whomsoever found in
possession and to order and direct the Plaintiff Nos.1 and 2 or any
one of them to be put in physical possession of the Office at New
Harileela House, Mint Road, Fort, Mumbai 400 001 (referred to as
“Harileela Property”) as agent of the Court Receiver.
2. The Plaintiff No.1 is the son of Shri Rajiv Prabhudas
Samani (“the deceased”). The deceased had purchased the Sagarkunj
Flat and was shown in the Memorandum of Association (“MoA”) and
Articles of Association (“AoA”) having 50% shareholding and the
Plaintiff No.2 (ex-wife of the deceased) held the balance 50%
shareholding in Panache.
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3. The Defendant No.1 was the mother of the deceased and
has since the filing of the Suit has herself expired. Defendant No.1A
has been brought in place of Defendant No.1 as daughter of
Defendant No.1 and is also original Defendant No.2 in the above
Suit. The Defendant No.3 had been made Director of Panache and
whose appointment as a Director has been impugned in the above
Suit. The Defendant No.4 is the purchaser of the Harileela Property
of Panache and Defendant Nos.5 and 6 are Directors of Defendant
No.4. Defendant No.7 is Panache. Defendant No.8 – Fullerton India
Pvt. Ltd. is the mortgagee of Defendant No.4 in respect of the
Harileela Property. Defendant No.9 is the daughter of the deceased/
step sister of Plaintiff No.1. Defendant No.10 is the Sagar Kunj CHS
Ltd. – Society.
4. The facts are briefly set out as under:-
i. Rajiv Samani (the deceased) purchased Flat No.48 Sagar
Kunj CHSL, 9th Floor, 78, Napeansea Road, Mumbai 400 006
(hereinafter referred as “Sagar Kunj Flat”).
ii. The marriage between Plaintiff No.2 and the deceased
took place on 26th December, 1992. They had a son named
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nms-726-1526-2014-2015.docSatvik Samani (Plaintiff No.1) on 18th December, 1993. The
Memorandum of Association and Articles of Association of
Panache were executed on 10th October, 1994 and which
shows the deceased as having 50% shareholding and Plaintiff
No.2 having balance 50% shareholding. The deceased and
Plaintiff No.2 were subscribers to the MoA.
iii. Panache was incorporated by Certificate of Incorporation
on 22nd December, 1994 and Form No.32 of Panache on the
said date showed appointment of the deceased and Plaintiff
No.2 as its Directors.
iv. The Plaintiff No.2 and the deceased began residing
separately in 1995.
v. Panache purchased the Harileela Property on 11th July,
1996.
vi. The marriage between Plaintiff No.2 and the deceased
was dissolved by a decree of mutual consent on 6th August,
1997.
vii. The Form 32 signed by the deceased shows the
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nms-726-1526-2014-2015.docappointment of Defendant No.1 as a Director in Panache from
29th September, 1999. It is the Defendants case that the
Defendant No.1 was allotted 8000 shares of Panache and
Form 2 on 3rd December, 1999 had recorded the same.
viii. The deceased married one Dipti Panchal on 12th
December, 1999.
ix. The Defendant No.9 was born to the deceased and Dipti
Panchal on 18th November, 2001.
x. The deceased and Dipti Panchal divorced on 8th October,
2007.
xi. The letter dated 14th February, 2011 of Panache signed
by the deceased showed the Defendant No.1 to be holding
1000 shares in Panache.
xii. The deceased expressed desire to Plaintiff No.2 that he
wished to devolve 90% of his assets upon Plaintiff No.1 and
10% to his Guruji Sri Sri Ravi Shankar. This is by telephonic
conversation on 1st August, 2011 and text message on 3rd
August, 2011 respectively.
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xiii. The deceased was admitted in hospital due to brain
stroke in July, 2012 and thereafter expired on 12th March,
2013. It is the Plaintiffs’ case that at the time of his death he
was residing in Sagar Kunj Flat.
xiv. The Plaintiff No.1 discovered in May / June, 2013 that
Defendant No.1 who was residing at Nashik started residing
in Sagar Kunj Flat with Defendant No.2.
xv. Defendant No.1 and/or Defendant No.2 transferred the
50% share of the deceased in Sagar Kunj Flat into the name of
Defendant No.1 on 19th May, 2013.
xvi. Defendant No.1 was admitted in Breach Candy Hospital
on 28th July, 2013.
xvii. An alleged resolution was passed at a board meeting of
Panache at the registered office of Panache on 1st August,
2013, which has been impugned by the Plaintiffs and by
which resolution Defendant No.1 and Defendant No.3 were
authorized to sign the Agreement for Sale of the Harileela
Property. It is the Plaintiffs’ case that the Defendant No.1 was
in hospital on that date and Defendant No.3 was not a
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nms-726-1526-2014-2015.docDirector as he was appointed as a Director on 15th October,
2013.
xviii. Public Notices were issued by the Advocates of
Defendant No.4 in Times of India and Navshakti on 5th
August, 2013 and 6th August, 2013 calling for objections
about the proposed sale/purchase of the Harileela property of
Panache.
xix. Defendant No.9 addressed a Notice on 28th August,
2013 to Defendant No.1 not to effect any transfer of the
rights, title and interest of any of the properties of the
deceased.
xx. Defendant No.9 addressed a Notice dated 28th August,
2013 to the Secretary of Defendant No.10 – Society not to
effect any transfer of the right, title and interest of the
deceased in the Sagar Kunj Flat.
xxi. The Plaintiff No.2 claims to have discovered in
September, 2013 that Defendant No.2 had accessed the
Harileela Property and removed valuable furniture and files
from there which belonged to Panache. She claims to have
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nms-726-1526-2014-2015.docalso discovered that Defendant No.2 was negotiating with
third parties for disposal of the Harileela Property.
xxii. A letter was addressed by Panache on 5th September,
2013 to the Secretary of New Harileela CHS Ltd. to issue NoC
for sale of the Harileela Property.
xxiii. A legal notice was sent on behalf of Plaintiff No.1 on
12th September, 2013 to the office bearers of New Harileela
CHS Ltd. (Defendant No.6 – Prateek Gupta was the Chairman)
to not entertain any claim for transfer of the Harileela
Property.
xxiv. A legal Notice was sent on behalf of Plaintiff No.1 on
12th September 2013 to Sub Registrar of Assurances, Fort,
Mumbai calling upon them not to entertain any claim for
transfer of Harileela Property.
xxv. A legal Notice was sent on behalf of Plaintiff No.1 on
12th September, 2013 to Defendant No.10 (Society) not to
entertain any claim for transfer of Sagar Kunj Flat.
xxvi. A legal Notice was sent on behalf of the Plaintiff No.1
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nms-726-1526-2014-2015.docon 17th September, 2013 to Sub Registrar of Assurances
calling upon them not to register any document for the
transfer of the Harileela Property or the Sagar Kunj Flat.
xxvii. Reply from the Sub Registrar of Assurances on 24th
September, 2013 stating that they cannot prevent any party
from proceeding with registration.
xxviii. Form 32 from Registrar of Companies issued on 15th
October, 2013 reflecting the date of appointment of
Defendant No.3 as Executive Director (authorized by Board
Resolution on 21st October, 2013 to file the Form).
xxix. The captioned Suit was filed by the Plaintiffs on 19th
October, 2013.
xxx. Deed of Apartment was executed between Panache and
Defendant No.4 on 19th October, 2013 for sale of the
Harileela Property for Rs.3 Crore.
xxxi. Deed of Apartment was registered on 21st October,
2013. It is the Plaintiffs’ case that though Defendant No.1
alleges that the Registrar had visited residence for registration
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nms-726-1526-2014-2015.docand that there is a video recording of this, Defendant No.1 has
failed to produce the video recording and there is no
endorsement of this on the document.
xxxii. The captioned Notice of Motion No. 726 of 2013 is
filed on 28th October, 2013. Reply to the Notice of Motion
filed by the Defendant No.2 on 21st November, 2013. It is
stated in the Reply that on 12th March 2013 after the demise
of the deceased, Defendant No.3 had been appointed as
Director of Panache along with Defendant No.1. It is the
Plaintiffs’ case that no agenda, minutes or resolution were
produced to show that Defendant No.3 was appointed as a
Director in Panache.
xxxiii. Office premises were mortgaged by Defendant No.4 to
the Defendant No.8 vide Deed of Mortgage on 21st November,
2013.
xxxiv. Ad-interim order passed in favour of the Plaintiffs by
this Court (Dalvi, J) on 5th December, 2013 restraining
Defendant No.1 and 2 from creating third party rights in
respect of the Suit properties.
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xxxv. Reply was filed by the Defendant No.1 to Notice of
Motion No.726 of 2014 on 18th February, 2014. The Plaintiffs
have contended that contradictory stand has been taken by
Defendant No.1 in the said Reply in so far as her having 80%
shareholding in Panache and her appointment as Director in
Panache. Further, contrary stand has been taken with regard
to appointment of Defendant No.3 on 17th July, 2013 as a
Director of Panache.
xxxvi. Chamber Summons No.887 of 2014 was filed by the
Plaintiffs on 6th September, 2014 to add Defendant Nos.3 to 8
as party Defendants and for interim reliefs by way of
exhaustive amendment of the Plaint. This, the Plaintiff has
stated was necessitated by various documents which came on
record which they allege show the fraud on the part of
Defendants.
xxxvii. The alleged Will and Testament of Defendant No.1
was executed on 25th September, 2014 whereby the entire
Sagar Kunj Flat was bequeathed to Defendant No.2.
xxxviii. Reply by the Advocates of Defendant No.4 to 6 on
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nms-726-1526-2014-2015.doc16th October, 2014 stating that the Deed of Mortgage with
Defendant No.8 and Deed of Apartment have been registered
and forms part of public record.
xxxix. Upon pleadings in Chamber Summons No.887 of 2014
having been completed, it was heard by the learned Single
Judge (Coram : Patel, J.) who passed Order dated 9th
February, 2015 allowing the Chamber Summons in terms of
prayer Clauses (a) and (b).
xl. The Plaintiffs filed captioned Notice of Motion No.1526
of 2014 for further reliefs.
xli. An Order was passed by the learned Single Judge (Coram
– Patel, J.) on 29th April, 2015 in captioned Notice of Motion
No.1526 of 2015 directing the Defendant No.1 to give two
weeks notice to the Plaintiffs’ Advocates in the event she
proposes to transfer her shares in Panache.
xlii. Reply was filed by the Defendant No.1 on 15th June,
2015 to the captioned Notice of Motion No.1526 of 2015.
xliii. Reply filed by Defendant No.5 on behalf of Defendant
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nms-726-1526-2014-2015.docNos.4 to 6 on 22nd June, 2015 to the captioned Notice of
Motion No.1526 of 2015. It is stated in the said Reply that
Defendant No.4 was a bonafide purchaser for value without
notice and title search has been carried out. The search report
dated 18th July, 2013 has been annexed to the said Affidavit.
It is mentioned in the said Affidavit that the Defendant No.4
had mortgaged the office premises to Defendant No.8. Further
it was denied that Defendant No.7 was a quasi partnership
and/or that Defendant No.5 was aware of the alleged fraud
from notice dated 12th September, 2013 in view of him being
the Chairman of the Association.
xliv. Defendant No.1 expired on 14th July, 2015.
xlv. Rejoinder of Plaintiff No.2 dated 3rd August, 2015 was
filed to the Reply filed by the Defendant No.1 to the captioned
Notice of Motion No.1526 of 2015.
xlvi. Rejoinder of Plaintiff No.2 dated 3rd August, 2015 to the
Reply filed by Defendant No.1 to captioned Notice of Motion
No.1526 of 2015.
xlvii. Chamber Summons No.396 of 2016 was filed by the
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nms-726-1526-2014-2015.docPlaintiffs on 8th February, 2016 to bring the legal heir of
Defendant No.1 on record who was Defendant No.2.
xlviii. Reply of Defendant Nos.3 and 7 dated 17th November,
2017 to the captioned Notice of Motion No.726 of 2014. It
was stated in the Affidavit in Reply that upon the Plaintiff
No.2 having been divorced from the deceased, she resigned as
Director and handed over 1000 shares to the deceased. It is
further stated that Plaintiff No.2 is not a Director or
shareholder in Panache. Further, it is stated that Defendant
No.1 was appointed as Director on 29th September, 1999 and
8000 shares were allotted to Defendant No.1 on 3rd
December, 1999. It is further stated that only Defendant No.3
and one Sunil Dudhwadkar are the current shareholders of
Panache upon the demise of Defendant No.1.
xlix. Reply of Defendant Nos.3 and 7 dated 17th November,
2017 filed to the captioned Notice of Motion No.1526 of
2015. In the said Reply Defendant No.3 has stated that the
date on which he was appointed as Director of Panache was
15th July, 2013. It is stated that while filing Form 32
regarding appointment of Defendant No.3 as a Director of
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nms-726-1526-2014-2015.docPanache, there was an error in feeding the date in the
computer system, so the date was entered as 15th October,
2013. The Sub-Registrar visited the residence of Defendant
No.1 for registration of the Deed of Apartment.
l. Additional Affidavit of Plaintiff No.1 filed on 30th
November, 2017 to the captioned Notice of Motion No.1526
of 2015 and captioned Notice of Motion No.726 of 2014.
Reference has been made in the Additional Affidavit to the
Probate Petition filed in respect of Will of Defendant No.1 in
2016 and in the Will of Defendant No.1 the properties of the
deceased were included which include the Sagar Kunj Flat.
Further, it is alleged in the Probate Petition that there was a
bequest of 8000 shares of Panache to Defendant No.2.
Further, reference is made to an Order passed by the learned
Single Judge (Coram : Dhanuka, J.) on 7th April, 2014,
wherein it is recorded that Defendant No.1 was illiterate,
studied till 4th grade in a Gujarati medium school. It
purported to bequeath the properties of the deceased (despite
the ad-interim Order of Dalvi, J.) It is also recorded that the
Defendant No.1 agreed to give the legitimate share of the
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nms-726-1526-2014-2015.docPlaintiff No.1 in the estate of the deceased to him, once the
quantum of the estate is determined.
li. Additional Affidavit of Plaintiff No.2 dated 30th
November, 2017 was filed to captioned Notice of Motion
No.1526 of 2015 and Notice of Motion No.726 of 2014.
lii. Reply was filed of Defendant Nos.1A/2 dated 14th
March, 2018 to the Additional Affidavit of Plaintiff No.1. It is
denied in the said Affidavit that the shareholding of Plaintiff
No.2 was not transferred to Defendant No.1. Further, the
transfer of shares of the Sagar Kunj Flat is lawful.
liii. Reply of Defendant No.3 and Defendant No.7 (Panache)
dated 23rd March, 2018 was filed to the Additional Affidavit
of Plaintiff No.2. In the said Reply it is denied that the
Defendant No.3 is a shareholder of Defendant No.7. That no
shares of Panache have been issued to Defendant No.3 or
Sunil Dudhwadkar. The Affidavit of one K.R. Manik,
Chartered Accountant has been annexed, wherein it is stated
that there was an error in typing of date of appointment of
Defendant No.3 as a Director of Panache. His appointment
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nms-726-1526-2014-2015.docwas on 15th July, 2013 (and not on 15th October, 2013 as
incorrectly typed). Further, it is stated that as on 31st March,
2018, the Defendant No.1 has held 8000 shares and deceased
held 2000 shares.
liv. Reply was filed by Defendant No.1A/2 on 2nd July, 2018
to the Additional Affidavit of Plaintiff No.2. It is mentioned in
the said Affidavit that there is tacit admission of Plaintiff No.2
that after her divorce she has given up all her claims to the
assets of the deceased and Panache and she did not exercise
any rights thereupon. It has been denied that the Plaintiff
No.2 did not resign as a Director or transfer her shareholding
in the name of Defendant No.1 or Defendant No.3.
lv. There was a further Affidavit filed by the Plaintiff with
leave of the Court on 17th January, 2025 as well as Replies of
the Defendant Nos.3 and 7 to the Additional Affidavits of
Plaintiff on 28th January, 2025. Reply of Defendant No.2 to
the Additional Affidavit filed by the Plaintiff on 28th January,
2025 and Reply of Defendant Nos.4 to 6 to the Additional
Affidavit filed by the Plaintiff on 5th February, 2015.
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5. Mr. Archit Jaykar, learned Counsel appearing for the
Applicants / Plaintiffs has first dealt with the preliminary objection
raised by the Defendants namely that, Section 430 of the Companies
Act, 2013 (“2013 Act”) bars the Plaintiffs from seeking reliefs before
this Court. It is the Defendants’ contention that Section 430 of the
2013 Act bars the jurisdiction of a Civil Court from deciding any issue
and / or passing any injunction in respect of a matter in which the
National Company Law Tribunal (“NCLT”) has exclusive jurisdiction.
6. Mr. Jaykar has submitted that the present Suit is filed for
declaration and injunction. Such reliefs can be granted only by a Civil
Court. He has further submitted that the Defendants have not filed
any Application under Order VII Rule 11 of the Code of Civil
Procedure, 1908 (CPC) and have therefore not taken any preliminary
objection to the maintainability of the Suit. He has submitted that
without prejudice to the above and assuming for the sake of
arguments some of the final reliefs cannot be granted, that would not
be a ground to reject interim reliefs on the basis of the Suit.
7. Mr. Jaykar has submitted that the Plaintiffs have
amended the Suit vide Chamber Summons No.887 of 2014, whereby
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they have made appropriate submissions and sought reliefs, after
they became aware (pursuant to the Affidavit in Reply filed to the
Notice of Motion No.726 of 2014) that the Harileela Property
belonging to Defendant No.7 was purportedly sold to Defendant
No.4. Further, vide the Chamber Summons No.887 of 2014 the
Plaintiffs sought to make Defendant No.3 to Defendant No.10 as
parties to the Suit and sought further reliefs only after they became
aware of the alleged and fraudulent sale of the Harileela Property. By
an Order dated 9th February, 2015 (Patel, J) this Court permitted the
Plaintiffs to amend the Suit. He has accordingly submitted that the
Suit is one that can be heard and decided only by this Court.
8. Mr. Jaykar has placed reliance upon the judgment of the
Supreme Court in Rajesh D. Darbar and Ors. v. Narasingrao Krishnaji
Kulkarni & Ors1, at paragraph 4 and the judgments of this Court in
Shaikh Mustafa Yasin v. Sharad Ganesh Tisgaonkar & Ors 2. at
paragraph 35 and Gangaram Sakharam Dhuri v. Gangubai
Raghunath Ayare & Ors3, at paragraphs 25 – 26 in support of his
submission that the present Suit can be heard and decided only by
this Court.
1 (2003) 7 Supreme Court Cases 219.
2 2017 (1) Mh.L.J. 358
3 2007 (5) Mh.L.J.136
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9. Mr. Jaykar has submitted that the bar of Section 430 of
the Companies Act does not apply in the present case. The Plaintiffs
have shown the fraudulent manner in which the shares of Plaintiff
No.2 were illegally transferred. He has submitted that the declaration
sought in respect of Plaintiff No.2’s shares (in prayer Clause (b1) (I)
of the Plaint) can only be granted by this Court. Therefore, the
rectification of the register of members is only a consequential and
subsequent step. Moreover, this Court had already passed order dated
9th February, 2015 regarding the shares of Panache and the same has
not been disputed.
10. Mr. Jaykar has submitted that Section 59 of the 2013 Act
and/or Section 11A of the Companies Act, 1956 (“the 1956 Act”)
deals with the rectification of register which is a summary power and
is to be exercised on the basis of clear, undisputed and evident facts.
He has submitted that therefore, complex issues of fraud or to grant
declaratory or injunctive relief cannot be decided by the NCLT and
could only be tried by a Civil Court. He has submitted that the Courts
have consistently held that where serious allegations of fraud and
disputed ownership exits, such questions require full adjudication by
a Civil Court, before rectification can be effected. Such matters would
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fall outside the limited jurisdiction to be adjudicated by NCLT.
11. Mr. Jaykar has submitted that the relief sought in the
Plaint cannot be said to merely seek rectification of the register of
members that would eventually be consequential and / or subsequent
step, after the Plaintiffs make out and establish the entitlement to the
shares. He has in this regard relied upon the following judgments :-
1. Shazia Rehman vs Anwar Elahi – (2023) SCC OnLine Del
4807 (Paras 15 – 26);
2. Dhirubhai vs Lataben Abuwalla – 2016 SCCOnline Bom
14089 (Paras 9 – 14);
3. Meghmala vs G. Narsimha Reddy – (2010) 8 SCC 383 (Paras
28 – 26)
4. Satori Global Limited vs Shailja Krishna – Company Appeal
(AT) No. 379 of 2018 (Paras 4,7, 10-16)
5. State of A.P. & Anr. vs T. Suryachandra Rao – (2005) 6 SCC
149 (Paras 8 – 16)
6. IFB Agro Industries Limited vs Sicgil India Limited – (2023)
4 SCC 209 (Paras 22 – 28)
7. Jai Mahal Hotels Pvt. Ltd. vs Devraj Singh – (2016) 4 SCC
469 (Paras 16 – 18)
8. Phool Chand Gupta v Mukesh Jaiswal – 2013 SCC Online
Cal 1812 (Paras 32-43)
12. Mr. Jaykar has submitted that as the facts will show, the
entire fraud played on the Plaintiffs has arisen after the demise of the
deceased on 12th March, 2013. Up to the demise of the deceased, the
Plaintiff No.2 and the deceased were 50% shareholders and the only
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Directors in Defendant No.7.
13. Mr. Jaykar has submitted that in the present case given
the nature of fraud perpetrated upon the Plaintiffs, the corporate
identity of Defendant No.7 ought to be pierced, to ascertain the
persons who are claiming to be acting for Defendant No.7.
14. Mr. Jaykar has submitted that by strange set of events,
the entire 50% shareholding of Plaintiff No.2 has disappeared and
even the Defendants cannot justify that how they are making a claim
to the shareholding of Plaintiff No.2. Not stopping there, Plaintiff
No.2 and the deceased were the only shareholders and Directors of
Defendant No.7 since incorporation and till the demise of the
deceased. Under further mysterious circumstances, Plaintiff No.2 no
longer remains as such Director.
15. Mr. Jaykar has submitted that Defendant Nos.1 and 3
somehow claim to be Directors of Defendant No.7 and pursuant to
this purported authority, they have purportedly sold the only asset of
Defendant No.7 being the Harileela Property to Defendant No.4 for a
depressed price of Rs.3 Crore. He has submitted that the Defendants
have not even been able to show that the said amount of Rs.3 Crore
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was received by Defendant No.7.
16. Mr. Jaykar has submitted that in the facts of the present
case, it is eminent for this Court to pierce the Corporate Veil, and see
the fraud played by the persons claiming to act on behalf of
Defendant No.7. The facade of the corporate entity cannot be taken
as a defence to camouflage the illegalities of the Defendant(s). He
has therefore, submitted that the present case warrants this Court to
depart from the general principle enunciated in the judgment of
Bacha F. Guzdar Vs. Commissioner of Income Tax, Bombay.4.
17. Mr. Jaykar has submitted that it has been consistently
held that the Courts are justified in lifting the Corporate Veil where
the corporate personality is employed for fraudulent, improper,
oblique purposes. He has submitted that the Courts have recognized
that the Corporate Veil may be lifted, where the Corporate structure
is used as a device to perpetrate fraud. The Courts are entitled to
look beyond the Corporate facade when it is used to circumvent the
law, emphasizing that the doctrine of separate corporate personality
is not absolute and cannot be invoked to legitimize fraud or illegality.
He has placed reliance upon the judgments of the Supreme Court in
4 (1954) 2 Supreme Court Cases 563.
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Singer India Ltd. v. Chander Mohan Chadha & Ors 5, at paragraph 15,
Estate Officer, UT, Chandigarh and Ors. v. Esys Information
Technologies PTE., Ltd.6, at paragraph 16 and State of Rajasthan and
Ors. v. Gotan Lime Stone Khanij Udyog Private Ltd. & Anr 7, at
paragraph 24 – 27.
18. Mr. Jaykar has submitted that the above principle is more
so relevant in the case of companies that are in the nature of quasi
partnership. He has submitted that in the present case, it is not
abundantly clear that Panache was in the nature of quasi partnership.
He has submitted that this is apparent from the deceased and
Plaintiff No.2 being the only shareholders of Panache; the deceased
and Plaintiff No.2 were the only Directors of Panache and other than
the asset being the Harileela Property, Panache had no other assets
and was not doing any other significant business.
19. Mr. Jaykar has submitted that in amended paragraph 1A
of the amended Plaint, the Plaintiffs have specifically averred that
Panache was a quasi partnership. This has been reiterated by the
Plaintiffs in paragraph 9A of the amended Plaint. Pertinently in
5 (2004) 7 SCC.
6 (2016) 12 SCC 582.
7 (2016) 4 SCC 469.
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paragraph 14 of the Written Statement of Defendant No.3 (claiming
to be the Director of Panache itself) and 7, they have admitted the
contents of paragraph 1A of the amended Plaint. Furthermore in
paragraph 17 of the Written Statement being the reply to paragraph
9A, they have not denied that Panache was a quasi partnership.
20. Mr. Jaykar has submitted that the fact that Panache was
admittedly a quasi partnership, this Court ought to have exercised its
powers to pierce the Corporate Veil to do justice and grant the
equitable reliefs claimed by the Plaintiffs.
21. Mr. Jaykar has submitted that there is fraud in the
transfer of 50% shareholding of Plaintiff No.2 and there are
perjurious contradictions made by the Defendants. He has submitted
that Plaintiff No.2’s name reflects in the Memorandum of Association
(MoA) as a subscriber of 1000 shares constituting 50% shareholding
in Panache. The deceased held the other 1000 shares i.e. 50%
shareholding. Panache has only one asset i.e. the Harileela Property.
He has submitted that at various times, various differing statements
have been made by the Defendants, with regard to the shareholding
of Plaintiff No.2. He has submitted that in the Reply dated 21st
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November 2013 filed to Notice of Motion No.726 of 2014, the
Defendant No.2 falsely stated that under the Divorce Decree between
Plaintiff No.2 and the deceased dated 6th August, 1997 (Divorce
Decree), the shares of Plaintiff No.2 were agreed to be transferred to
Defendant No.1 (paragraph 9). However, in the Divorce Decree
between Plaintiff No.2 and the deceased there is no reference to the
above (Plaint Page 35). The alleged shareholding pattern of Panache
as on 14th February, 2011, has been annexed to the Reply, in which,
Defendant No.1 is shown to be holding 1000 shares representing
50% of the shareholding (Reply Page 15). Further, in the reply dated
14th March, 2018 filed to Notice of Motion No.1526 of 2015,
Defendant No.2 has denied that the Plaintiff No.2 was a 50%
shareholder in Panache and that her shareholding was transferred to
Defendant No.1 without any basis and without executing any transfer
documents (Reply paragraph 25 (h)). He has submitted that this
statement is contradictory to her own earlier reply dated 21st
November, 2013, wherein she admitted that Plaintiff No.2 was a 50%
shareholder.
22. Mr. Jaykar has submitted that there are contradictions
and falsities in the contentions of Defendant No.1. In the Reply dated
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18th February, 2014 filed to Notice of Motion No.726 of 2014,
Defendant No.1 falsely stated that the deceased was a 10%
shareholder, Plaintiff No.2 was a 10% shareholder and she was an
80% shareholder (Reply Paragraph 11(b)). That 8000 shares were
allotted to her on 3rd December, 1999 (Reply paragraph 11(c)). She
has further quoted Clause 10 of the Divorce Decree to claim that the
Plaintiff No.2 handed over her 1000 shares to the deceased (Reply
paragraph 11(f)).
23. Mr. Jaykar has submitted that the above statements are
false as the Divorce Decree never had this condition. Moreover, the
said statements are contradictory to the statements of Defendant
No.2 regarding the shareholding percentage and also regarding to
whom the shares of Plaintiff No.2 were transferred under the Divorce
Decree. Defendant No.1’s contention is also contradictory to the
annexure in the Reply of Defendant No.2, that shows Defendant No.1
holding 1000 shares representing 50% of shareholding of Panache as
on 14th February, 2011.
24. Mr. Jaykar has submitted that there are contradictions
and falsities in the contentions of Defendant No.3 and Defendant
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No.7 as well. In their Reply dated 17th November, 2017 to Notice of
Motion No.726 of 2014, Defendant No.3 and Defendant No.7 have
contended that pursuant to the Divorce Decree, Plaintiff No.2 handed
over 1000 shares held by her to the deceased (Reply Paragraph 9).
This statement is also false as it also relies on the Divorce Decree.
Moreover, this statement is contradictory to the statement made by
Defendant No.1 in her reply.
25. Mr. Jaykar has submitted that an additional Reply to
Notice of Motion No.1526 of 2015 was filed on 23rd March, 2018,
wherein an Affidavit of one Mr. K. R. Manik (Chartered Accountant)
is annexed in which it is claimed that the deceased held two lakh
shares and Defendant No.1 held eight lakh shares as per the financial
statements for the year ended 31st March, 2010 (Reply Exhibit A.)
26. Mr. Jaykar has submitted that at the time of oral
arguments, an argument was made on behalf of Defendant No.3 and
7, that as the Plaintiff No.2 had not produced her share certificate on
record, she could not be considered as the owner or holding any
shares. However, this argument was contradictory to their own
pleadings as well as the pleadings of the other Defendants. He has
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submitted that it is pertinent to note that Defendant No.2, in her
Reply dated 21st November, 2013, admitted that she had access to
the deceased’s office and that certain files were found therein. She
further acknowledged that the deceased had kept share certificates of
various companies in his office, of which they had no prior
knowledge. He has submitted that, they had taken physical control of
the office during the deceased’s paralytical condition during his final
months, and Defendant No.2 had prevented Plaintiff No.2 from
meeting the deceased during his last days. In these circumstances,
there exists a strong and reasonable apprehension that Defendant
No.2 and her husband may have destroyed the share certificates
pertaining to Plaintiff No.2 and the deceased.
27. Mr. Jaykar has submitted that noticing the false
statement of Defendant No.2, the learned Single Judge (Dalvi, J.)
had passed ad-interim order on 28th November, 2013, wherein it was
stated in paragraph 3 that :- “since no transfer of shares is shown nor
the resignation of the Plaintiff No.2 is alleged or shown, she
continues as such. Her 50% share in the assets and liabilities of the
company continues”. He has submitted that this order was never
challenged by any of the Defendants and holds the field, even today.
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He has submitted that Defendants have not been able to show, with
unimpeachable documents, how the shareholding of Plaintiff No.2
was transferred and to whom it was transferred.
28. Mr. Jaykar has submitted that all that the Defendants
allege is that the shareholding was transferred pursuant to the
Divorce Decree. However, as stated above, the Divorce Decree did not
have any clause pertaining to any such transfer. At no point, did the
Plaintiff No.2 transfer her 50% shareholding. Furthermore, she never
resigned as a Director nor was she removed from her position during
the life time of the deceased.
29. Mr. Jaykar has submitted that the alleged transfer is also
in contravention of the following sections of 2013 Act viz., a) Section
56(1), that requires an instrument of transfer to be signed by the
transferor and transferee and shall be delivered to the Company; and
b) Section 56(4) that provides a period by when the company is to
handover the certificates of the securities transferred i.e. one month.
He has submitted that the aforesaid provisions have not been
followed.
30. Mr. Jaykar has submitted that the Defendants have not
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placed any document on record that Panache issued new share
certificates to the deceased and / or Defendant No.1, as the case may
be. Therefore, using the argument made by the Counsel on behalf of
Defendant No.3 and Defendant No. 7, infact, Defendant No.1 was
unable to prove that she was a shareholder in Panache as she had not
placed any share certificate on record of her shareholding in Panache.
31. Mr. Jaykar has submitted that in light of such grossly
false statements made on oath by the Defendants, this Court ought to
exercise its power to invoke suo moto contempt against the
Defendants, so that the litigants are not permitted to get away with
making such palpably false and fraudulent statements on record. He
has in this regard placed reliance upon the judgment in Suzuki
Parasrampuria Suitings Pvt. Ltd. v. The Official Liquidator of
Mahendra Petrochemicals Ltd. (In Liquidation) and Ors8, at
paragraphs 12 and 13.
32. Mr. Jaykar has submitted that there is fraud in the
removal of Plaintiff No.2 as a Director, and the appointment of
Defendant No.1 as a Director of Panache. He has submitted in this
context, various perjurious contradictions have been made by the
8 Civil Appeal No.10322 of 2018 dated 8th October, 2018.
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Defendants.
33. Mr. Jaykar has submitted that till the demise of the
deceased i.e. 12th March, 2013, the Plaintiff No.2 and the deceased
were the only two Directors of Panache. He has submitted that the
entire fraud has been perpetrated on the Plaintiffs, after the demise
of the deceased by taking advantage of the vulnerable position. He
has submitted that similar to the manner in which the shares of
Plaintiff No.2 have disappeared, her Directorship in Panache has also,
mysteriously disappeared.
34. Mr. Jaykar has submitted that there are contradictions
and falsities in the contentions of Defendant No.2. In the Reply dated
21st November, 2013, Defendant No.2 has stated that after the
Divorce Decree on 6th August, 1997 between Plaintiff No.2 and the
deceased, the Defendant No.1 was appointed as Director in place and
stead of Defendant No.2 (Reply Paragraph 9) and thereafter
Defendant No.3 was appointed as a Director on 15th October, 2013.
35. Mr. Jaykar has submitted that there are contradictions
and falsities in the contentions of Defendant No.1. In a Reply, dated
18th February, 2014 in Notice of Motion No.726 of 2014, she has
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allegedly stated that she was appointed as Director on 29th
September, 1999 (paragraph 11(c)). She has further falsely said that
after the Divorce Decree (6th August, 1997), Plaintiff No.2 tendered
her resignation as a Director. The date of appointment as a Director
as stated by Defendant No.1 i.e. 29th September, 1999 is contrary to
the date of appointment stated by Defendant No.2 i.e. 6th August,
1997.
36. Mr. Jaykar has submitted that there are contradictions
and falsities in the contentions of Defendant No.3 and Defendant
No.7 as well. In their Reply dated 17th November, 2017, they have
alleged that the Plaintiff No.2 resigned as a Director after passing the
Divorce Decree. That Defendant No.1 was made a Director on 29th
September, 1999. Further, on 4th April, 2018, Defendant No.3 and
Defendant No.7 filed their Written Statement, in which it is reiterated
that Defendant No.1 became a Director on 29th September, 1999.
However, Defendant No.3 and Defendant No.7 have also relied on a
list of Directors of Panache as on 11th October, 2014 that appears to
be from MCA website (at Exhibit ‘D’) and the Master Data issued by
MCA, (WS page 284) in which the date of appointment of Defendant
No.1 is shown to be 30th June, 2007 (WS paragraph 9 read with
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Exhibit D at Page 261 and 284). These two paragraphs and
documents are inherently contradictory.
37. Mr. Jaykar has submitted that an additional Affidavit in
Reply to Notice of Motion No.1526 of 2015 was filed on 23rd March,
2018, wherein the Affidavit of one Mr. K. R. Manik (Chartered
Accountant) is annexed in which it is reiterated that Defendant No.1
was appointed as a Director of Panache on 30th June, 2007. He has
submitted that therefore, even the removal of Plaintiff No.2 and/or
the appointment of Defendant No.1 as a Director of Panache is
shrouded in mystery. There is no evidence of any resolution being
passed by Panache to remove Plaintiff No.2 as a Director. Moreover,
no notice was given to Plaintiff No.2 of any meeting of Panache to
remove her as a Director. There is no form No.32 or DIR-11 and DIR-
12 filed regarding the purported cessation/removal of Plaintiff No.2
as a Director. The Form No.32 of Defendant No.1 does not exist on
the records of the Registrar of Companies. Defendant No.3 and
Defendant No.7 have failed to produce it inspite of being called upon
to do so several times. He has submitted that the Defendants once
again claim that the purported removal was as per the Divorce
Decree, but the Divorce Decree does not state this in any manner.
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38. Mr. Jaykar has submitted that the relevant provisions of
the 2013 Act, for Appointment, Resignation and Removal of Directors
are Sections 161-Appointment of Additional Director; Section 168 –
Resignation of Director and Section 169 – Removal of Director. He
has submitted that neither of the procedures in the said provisions
have been followed. Neither Defendant Nos.1, 3 or 7 have been able
to show how the above provisions have been followed, to claim that
Plaintiff No.2 was validly removed as a Director and/or Defendant
No.1 was appointed as an Additional Director.
39. Mr. Jaykar has submitted that the case and pleadings of
the Defendants are not only factually false, contradictory but also in
contravention of the law. Moreover, the Defendants have relied on
records that disproved their own contentions. In these circumstances,
this Court ought to exercise its powers to take suo moto contempt
action against the Defendants.
40. Mr. Jaykar has submitted that it is alleged by the
Defendants that on 1st August, 2013 there was an alleged meeting
held at the Registered Office of Panache (alleged meeting). The
alleged meeting was allegedly attended by the purported Directors of
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Panache, being Defendant No.1 and Defendant No.3. At the alleged
meeting, a resolution was allegedly passed (the alleged Resolution)
that the Sale Agreement for the Harileela Property belonging to
Panache be entered into with Defendant No.4 and that Defendant
Nos.1 and 3 were authorized to sign the documents of resignation on
behalf of Panache. Therefore, by inference, it is the case of the
Defendants that Defendant No.1 and Defendant No.3 claimed to be
Directors of Panache on the date of alleged resolution. He has
submitted that Defendant Nos.1 and 3 empowered by the alleged
resolution, executed a Deed of Apartment on behalf of Defendant
No.7 with Defendant No.4.
41. Mr. Jaykar has submitted that the documents on record
will show that the alleged meeting never took place and the alleged
resolution is completely false. He has submitted that at the outset,
the Defendants have relied on doctored and fabricated documents.
He has submitted that both versions of the alleged Resolution(s) form
part of the alleged Deed and the sign of Defendant No.3 at the
bottom are at different places.
42. Mr. Jaykar has submitted that it is the case of the
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Plaintiffs that the alleged meeting and alleged resolution has been
retrofitted by the Defendants, to suit their narrative. He has
submitted that no notice or agenda of the alleged meeting has been
placed on record. It is the case of the Defendant No.1 in a Reply to
Notice of Motion No.726 of 2014 dated 18th February, 2014 that on
the date of the alleged meeting i.e. 1st August, 2013, she was in ICU
in Breach Candy Hospital. It is her case that she was discharged on
3rd August, 2013.
43. Mr. Jaykar has submitted that in their Reply to Notice of
Motion No.726 of 2014 dated 17th November, 2017, Defendant
Nos.3 and 7 have annexed the printout from MCA website, which
shows that Defendant No.3 was allegedly appointed as a Director on
15th October, 2013; letter issued by MCA dated 17th July, 2013 on
which date Defendant No.3 was issued DIN Number and Form 32
pertaining to the alleged appointment of Defendant No.3 as a
Director which shows his alleged date of appointment as 15th
October 2013. He has submitted that to cover up the above
discrepancy, on the same date i.e. 17th November, 2017, Defendant
Nos.3 and 7 have filed another reply in Notice of Motion No.1526 of
2015 in which it is claimed that the Defendant No.3 was appointed as
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a Director of Panache on 15th July, 2013, but by mistake and error in
the feeding the date in the computers/system that date of
appointment was entered into as 15th October, 2013. The Defendants
have stated that attempts were made to rectify the error but the
Defendants were informed that the said error cannot be rectified.
However, Defendant No.3 and 7 have not placed any documents on
record to show that Defendant No.3 was appointed as a Director of
Panache on 15th July, 2013. He has submitted that other than the
bold statement, there is no corroborative record. The statement is
nothing but an after thought, and a blatant lie. Pertinently, if
Defendant No.3 was issued a DIN Number on 17th July, 2013, he
could not have been appointed as a Director on 15th July, 2013.
44. Mr. Jaykar has submitted that Defendant Nos.3 and 7
have thereafter filed an Additional Affidavit on 23rd March 2018 in
Notice of Motion No.1526 of 2015, to which they have annexed an
Affidavit of one Mr. K.R. Manik, who claims that Defendant No.3 was
appointed as a Director on 15th July, 2013, but by mistake and error
the date of appointment was entered as 15th October, 2013. Mr
Jaykar has submitted that this is again a false statement/affidavit for
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the said deponent was not the person who filled up the Form 32
of Defendant No.3. The person who has filled up the said Form
was one Ms. Neela Vyas, who was the Company Secretary.
Therefore, the Affidavit of K R Manik is irrelevant and the alleged
acceptance of the alleged mistake, is nothing but another attempt
at a cover up.
45. Mr. Jaykar has submitted that the relevant provision of
the 2013 Act, that disprove the case of the Defendants that
Defendant No.3 was appointed as a Director on 15th July, 2013 is
Section 152 (3) which states that no person can be appointed as a
Director, unless he has been allotted a DIN Number. Hence, if
Defendant No.3 was issued a DIN Number only on 17th July, 2013,
he could never have been appointed as a Director on 15th July, 2013,
as claimed. He has submitted that for all the above reasons, it is
abundantly clear that the alleged meeting and/or alleged resolution,
had never taken place or passed.
46. Mr. Jaykar has submitted that the Defendant No.3 had
no authority to sign the alleged Deed on behalf of Panache as he was
not a Director. Moreover, if the alleged meeting and the alleged
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resolutions are held to be invalid, the entire edifice of the case of the
Defendants is called into question and the case must fail. He has
submitted that there is no dispute with the proposition of law that
“fraud vitiates all”. He has placed reliance upon the judgment of the
Supreme Court in S.P. Chengalvaraya Naidu (Dead) By LRs. v.
Jagannath (Dead) by LRs & Ors9. .
47. Mr. Jaykar has submitted that there is absolutely no
details of how Defendant No.3 claims to have been appointed on
behalf of Panache as its Director. He has submitted that Defendant
No.3 claims that he was appointed as a Director on 15th July, 2013
but this claim is false and untenable. The only other date of
appointment of Defendant No.3 as a Director is 15th October, 2013.
However, this is also unbelievable and/or bad in law as there was no
notice/agenda of any meeting to be held on 15th October, 2013 to
appoint Defendant No.3 as a Director. There was no resolution
passed to appoint Defendant No.3 as a Director. Under Section 152
(2) of the 2013 Act, a Director can be appointed only at at the
General Meeting of the Company. However, there are no minutes
produced of such appointment.
9 (1994) 1 SCC 1.
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48. Mr. Jaykar has submitted that Defendant No.1 has
admitted that she was uneducated and studied only upto the 4th
standard. He has referred to the recording in the Order dated 18th
July 2014 (Dhanuka, J) at paragraphs 4 and 12 to that effect. He has
submitted that it is unclear how Defendant No.1 was able to even
understand how to appoint Defendant No.3 as an alleged Director.
49. Mr. Jaykar has submitted that in the absence of any
document to show that the appointment of Defendant No.3 as a
Director was valid in law, this Court cannot accept the mere
statement of the Defendants, that Defendant No.3 is a Director of
Panache, and has taken steps in such capacity, particularly to dispose
of the Harileela Property of Panache.
50. Mr. Jaykar has submitted that the Defendant No.3 is a
complete usurper. He has submitted that Defendant No.3 is the
employee of the husband of Defendant No.2, one Mr. Mihir Mehta
and is acting on the instructions of him who appears to be the
mastermind behind the fraud perpetrated on the Plaintiffs. He has
submitted that the Defendant No.2 has also admitted in her Written
Statement that Defendant No.3 is associated with Mr. Mihir Mehta
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(Written Statement dated 16th June, 2016 – paragraph 36). He has
submitted that in these circumstances, strict action should also be
taken against Defendant No.3 who is claiming to be a Director of
Panache, without any supporting record.
51. Mr. Jaykar has submitted that Defendant Nos.4 – 6 are
not bonafide purchasers for value without notice. He has submitted
that the Harileela Property belongs to Panache and which was
situated in New Harileela House Owners Association (Association).
The Defendant No.5 was the Chairman of the Association. He has
submitted that on 12th April, 2013 (within a month of the demise of
the deceased), the alleged valuation was carried out by Defendant
No.4 of the Harileela Property. No notice of this alleged valuation
was given to the Plaintiffs. Defendant No.1 did not place on record
any notice that she received the alleged valuation. He has submitted
that thereafter on 19th June, 2013, a legal notice was sent on behalf
of Plaintiff No.1 to Defendant No.1 for the accounts of the estate of
the deceased. A reply was sent on 8th July 2013, by Defendant No.1’s
Advocates that they were looking for the documents. Thereafter, on
18th July, 2013, Defendant Nos.4 – 6 allegedly carried out a title
search of the Harileela Property. On 5th September, 2013, Panache
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allegedly sent a letter to the Association to issue a NoC for the sale of
Harileela Property. He has submitted that the said letter is fraudulent
and untenable, because, as seen from the above, the only date when
it could be claimed that the Defendant No.3 was appointed as
Director of Panache is 15th October, 2013. On the every same day,
5th September, 2013, Defendant No.6 passed a resolution
authorizing its Directors to purchase the property of Panache for a
consideration to be mutually agreed upon.
52. Mr. Jaykar has submitted that the Defendants have not
provided any documentary evidence to show when the said
consideration was eventually agreed upon. More strangely and
without waiting for the NoC, on 5th September, 2013, the stamp duty
of Rs.15 lakh was paid by Defendant No.4 on the alleged Deed. This
shows that entering into the alleged Deed was a forgone conclusion.
More importantly on 12th September, 2013, a legal notice was sent
on behalf of Plaintiff No.1 to the Association (including Defendant
No.5, who was the Chairman) to not entertain any transfer of the
Harileela Property. Pertinently, the NoC was never issued by the other
managing committee members of the Association.
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53. Mr. Jaykar has submitted that despite all of the above,
under the alleged authority of the alleged Resolution, Panache
(through Defendant Nos.1 and 3) sold the Harileela Property to
Defendant No.4 under the alleged Deed dated 19th October, 2013 for
a sum of Rs.3 Crore. The Defendants allege that the Ready Reckoner
rate of the Harileela Property was approximately Rs.2.85 Crore and
so the sale at Rs.3 Crore was above the Ready Reckoner rate.
54. Mr. Jaykar has submitted that it is pertinent to note that
the Defendant No.4, being a Company, its Directors were Defendant
Nos. 5 and 6. Therefore, the Harileela Property of Panache (that was
forming part of the Association in which the Defendant No.5 was the
Chairman) was sold to Defendant No.4 (whose Directors were
Defendant Nos.5 and 6). Thus, the Defendant No.5 was effectively
wearing two hats – one as Chairman of the Association, the very body
from whom the NoC was required for the alleged sale of the Harileela
Property, and the other as Director/Shareholder of the alleged
purchasing entity, Defendant No.4. He has submitted that this clearly
shows that Defendant No.4 was not a bonafide purchaser for value
without notice.
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55. Mr. Jaykar has submitted that on 21st October, 2013, the
alleged Deed was registered. He has highlighted discrepancies in the
document. He has submitted that Defendant No.1 who alleged that
the Registrar visited her residence for registration of the alleged Deed
and there is video recording of this, has failed to produce the video
recording and there is no endorsement of this on the document.
56. Mr. Jaykar has submitted that knowledge of the legal notice
not to entertain any transfer of the Harileela Property, once acquired
by Defendant Nos.4 – 6, cannot be compartmentalised. In this
connection he has placed reliance upon the Reply filed by Defendant
No.6 to Chamber Summons No.887 of 2014 dated 18th November,
2014 at paragraph 12. He has submitted that the alleged artificial
segregation of the capacities of Defendant No.5 is a calculated
fraudulent attempt to evade the consequences of the prior notice and
defeat the Plaintiffs’ rights. He has submitted that Defendant No.5
was also aware that the Association had not issued the NoC. He has
submitted that Defendant No.5 was admittedly wearing two hats.
Notice to him in one capacity cannot be conveniently disowned in
another, particularly when the transaction in question required an
NoC from the very Association over which he presided.
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57. Mr. Jaykar has submitted that the alleged Valuation
Report (to justify the value of the Harileela Property) being Rs.3
Crore was placed on record by Defendant Nos.4 – 6 in their Written
Statement filed on 30th November, 2015. He has submitted that the
alleged Valuation Report is also retrofitted by the Defendants as the
alleged Valuation Report was dated 16th November, 2015 but the
alleged Deed was allegedly executed on 19th November, 2013.
Hence, it is after two years. He has also shown other discrepancies in
the Valuation Report. He has submitted that the alleged Valuation
Report does not refer to or analyze any comparable sale instances in
the same building or in the immediate vicinity so as to ascertain the
prevailing fair market value. There is no objective benchmarking
against market data. He has submitted that in the absence of
contemporaneous inspection, comparable market analysis, and a
transparent methodology, the alleged Valuation Report is a mere ipse
dixit and cannot be relied upon to justify the consideration reflected
in the alleged Deed, particularly when the Harileela Property was
sold at a rate substantially below the prevailing market rate.
58. Mr. Jaykar has submitted that the Defendant Nos.4 – 6 in
collusion with Defendant No.1 – 3 have acted together to defraud the
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Plaintiffs and claimed to have sold the Harileela Property and
usurped all the money. He has submitted that the claim of Defendant
Nos.4 – 6 that they were bonafide purchasers for value without
notice, is patently false, illegal, untenable. He has placed reliance
upon the following judgments in this context :-
1. Manjit Singh vs Darshana Devi – (2024) SCC Online SC
3431 – (Paras 11-15, 18-19)
2. Dr. Sharda vs Nagpur Municipal Corporation – (2022) SCC
OnLine Bom 1794 – (Para 44)
3. Vithal Mane vs Balasaheb Masal – (2017) 3 Mah LJ 232
(Bom) (Para 7)
4. Nitin Gandhi vs Dinyar Pheroz Dubash – 2015(2)MhLJ 850
(Para 34-37)
5. Uthandia Pillai vs. Ramayai Ammal – 1988-2-L.W 362 –
(Para 13)
59. Mr. Jaykar has submitted that there is a fraud in the
appointment of Sunil Dudhwadkar, as Director of Panache. He has
submitted that in the Written Statement of Defendant No.3 and
Defendant No.7 dated 4th April, 2018, they have claimed that one
Sunil Dudhwadkar was appointed as a Director of Panache on 14th
February, 2016. He has submitted that notably, the alleged letter of
appointment issued by Panache to Sunil Dudhwadkar dated 13th
February, 2016 was not signed by anyone on behalf of Panache, but
has been accepted by Sunil Dudhwadkar. He has submitted that there
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is no Minutes of Meeting produced or Board Resolution placed on
record to demonstrate a valid appointment of the said Sunil
Dudhwadkar as a Director of Panache. He has submitted that such
unilateral appointment is ex-facie illegal, void ab initio, and further
evidences the continued manipulation of the affairs and records of
the company. The appointment is also ex facie in violation of the
order dated 28th November, 2013 (Dalvi J.) that recorded that the
Plaintiff No.2 stated that, it is the case of the Defendants that at
present only Defendant No.1 and one Nayak, are the shareholder and
Directors of the Company. He has submitted that this Order has not
been challenged by the Defendants. Therefore, as per the said Order,
Plaintiff No.2 continued as a Director of Panache. This is in view of
the conclusion in paragraph 3 that since no transfer of shares is
shown nor the resignation of the Plaintiff No.2 is alleged or shown,
she continues as such.
60. Mr. Jaykar has submitted that the facts of the present
case justify the appointment of a Court Receiver for the Harileela
Property as well as for the other premises i.e. the Sagar Kunj Flat.
The material on record prima facie establishes grave and continuing
acts of fraud, fabrication of resolutions, manipulation of
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shareholding, back dating of statutory records and unlawful
alienation of Defendant No.7’s sole immovable assets. He has
submitted that with regard to Sagar Kunj Flat, it is presently lying
vacant and unoccupied. The Sagar Kunj Flat is neither being used nor
generating any income. He has submitted that in order to safeguard
and optimize the value of the said asset pending adjudication of the
Suit, it is in the interest of all the parties that the Court Receiver be
appointed so that it can be monetized by the Court Receiver and
proceeds deposited in this Court. He has placed reliance upon
judgments in support of his submission that the appointment of the
Court Receiver would ensure preservation of the Suit properties,
prevent further misuse or clandestine dealings, and secure income
without causing prejudice to the rights and contentions of the either
side. These judgments include :-
(2014) SCC OnLine Bom 1178 – (Paras 15-19).
2. Subroto Ghose vs. Ashok Kumar Gupta – 1996 (36) DRJ
(Paras 5, 12, 19) ;
(Para 17)
61. Mr. Jaykar has distinguished the judgment cited on
behalf of Defendants namely Shashi Prakash Khemka (Dead)
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Through LRs and Anr. v. NEPC Micon (Now NEPC India Ltd.) & Ors 10.
He has submitted that in that case the Supreme Court had neither
decided nor delved into disputed questions of fact or law, or
allegations of fraud, misrepresentation, wrongful acts by the
Company or Directors. The Supreme Court did not explicitly address
the issue of whether the Civil Courts have jurisdiction over the
disputes involving fraud, disputed question of law, or facts whilst
holding that the bar of Section 430 applies to the case at hand.
62. Mr. Jaykar has also distinguished the judgment cited by
the Defendants namely Vikram Jairath v. Middleton Hotels Pvt. Ltd11.
on the ground that in that case the aggrieved parties had already
filed a Petition before the NCLT, which was not disclosed in the
Plaint, raising issues of overlapping jurisdiction and potential forum
abuse. He has submitted that this is not the same as the facts of the
present case. Consequently, the reasons regarding suppression of
facts does not apply here, and the Civil Court may exercise
jurisdiction without concerns of duplicity of conflicts with the
statutory forum under Section 430 of the 2013 Act. He has submitted
with respect to the other observations about Section 430 of the 2013
10 (2019) 18 SCC 569.
11 (2019) 151 CLA 38.
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Act, the same is not binding in view of IFB Agro Industries Ltd. v.
Sicgil India Ltd. and Ors.12.
63. Mr. Jaykar has also distinguished the judgment cited by
the Defendants viz. Invesco Developing Markets Fund v. Zee
Entertainment Enterprises Ltd. 13. This on the ground that this case
also did not involve allegations of fraud, misrepresentation, wrongful
acts by the Company or its Directors. There were no disputed
questions of fact in that case. The moot question was interpretation
and enforcement of statutory rights under the Companies Act, not on
resolving factual disputes or claims of title/inheritance.
64. Mr. Jaykar has also distinguished the judgment in
Shankar Assana Gaddam v. Achanak Associates Realtors Pvt. Ltd 14,
relied upon by the Defendants. He has submitted that in that case the
Petitioner had initially filed a Petition before the NCLT which was
admitted, but the NCLT did not grant any interim reliefs. Since the
NCLT already considered the matter, the Civil Court could not have
entertained the same relief, as doing so would amount to res
judicata.
12 (2023) 4 SCC 209.
13 (2022) 3 Bom CR 602.
14 2021 MhLJ 159.
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65. Mr. Jaykar has distinguished the judgment in Adesh Kaur
v. Eicher Motors Ltd. & Ors15, relied upon by the Defendants, wherein
the Supreme Court held that the Appellate Tribunal erred in
relegating the Appellant to the Civil Court, emphasizing that the
NCLT possesses jurisdiction under Section 59 of the 2013 Act, to
rectify the register of members in cases of fraud and forgery, even if a
criminal complaint is pending. However, the Supreme Court qualified
this by noting that such jurisdiction applies only when the issues of
fraud are “open and shut cases of fraud” i.e. straightforward and
undisputed. He has submitted that on a demurer, if the Defendants
are placing reliance on this judgment, it ought to be noted that they
are impliedly accepting that it is an open and shut case of fraud, and
so a summary inquiry by the NCLT would be sufficient.
66. Mr. Jaykar has distinguished the judgment in Chalasani
Udaya Shankar & Ors. v. Lexus Technologies Pvt. Ltd. & Ors 16, relied
upon by the Defendants on the ground that the Court therein
observed that rectification is required when the entries ought to have
been made but were not, or were incorrectly recorded, and the role
of the NCLT is to ensure that the register accurately reflects the true
15 (2018) 7 SCC 709.
16 (2024) 10 SCC 303.
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ownership. Whilst factual verification is necessary, the process does
not involve resolving disputes on merits or adjudication, but simply
correcting the register to reflect what ought to have been done. He
has submitted that in paragraph 38 the Supreme Court has held that
contentious issues that are raised before it for adjudication do not fall
within the purview of rectification.
67. Mr. Jaykar has distinguished the judgment in Chiranjeevi
Rathnam and Ors. v. Ramesh and Anr 17. The Madras High Court had
in that case examined the provisions of the Companies Act,
particularly Section 430, which restricts Civil Courts from
adjudicating the matters that the NCLT is empowered to determine.
Unlike in that case, the existence of contested questions of fact and
documentation which arises here precludes such summary
jurisdiction, and Civil Court intervention cannot be barred merely by
68. Mr. Jaykar has also distinguished the judgment of the
Supreme Court in Shailja Krishna v. Satori Global Ltd18, relied upon
by the Defendants. He has submitted that in that case both the Gift
17 (2020) 222 Comp Cas 85.
18 2025 SCC OnLine SC 1889.
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Deed and Board Resolution under challenge were found to be in
direct violation of the Company’s Articles of Association. As these acts
were patently unauthorized and contrary to the Company’s governing
provisions, there was nothing to be adjudicated, and the error was
apparent on the face of it. Unlike in that case, the existence of
contested questions of fact in documentation here preclude such
summary jurisdiction and Civil Court intervention cannot be barred
merely by Section 430.
69. Mr. Jaykar has accordingly submitted that the Plaintiffs
are entitled to the reliefs sought in Notice of Motion No.726 of 2014
and Notice of Motion No.1526 of 2015.
70. Mr. Shanay Shah, learned Counsel for the Defendant
Nos. 1A and 2 has submitted that admittedly the Harileela Property
stands in the name of Defendant No. 7 i.e. Panache Securities Pvt.
Ltd. (“Panache”). He has submitted that in view thereof, the case
pleaded by the Plaintiffs dis-entitles them to get any relief qua the
Harileela Property. He has submitted that though the Plaintiffs have
named properties in paragraph 7 of the Plaint, which according to
them, stand in the name of the deceased i.e. late Rajiv Samani,
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however, the Harileela Property which belongs to Panache is named
in that list at Sr. No. 1. In paragraph 8 of the Plaint, the Plaintiffs
state that the deceased left the aforesaid property and other movable
and immovable properties. In the same paragraph, the Plaintiffs refer
to particulars of claim at Exh.C, which according to them, contains
the share of the Plaintiffs. In that the Plaintiff No. 2 has claimed 50%
share and Plaintiff No. 1 has claimed 90% of the remaining share in
the Harileela Property.
71. Mr. Shah has submitted that it is the Plaintiffs’ case that
the said Harileela Property is the self acquired property of the
deceased and the same was purchased in the name of Panache. He
has submitted that it is the Plaintiffs’ case that she is purportedly a
shareholder and director of Panache. Assuming without admitting
that she is still a shareholder and director, that does not ipso facto
make her the owner of Harileela Property.
72. Mr. Shah has submitted that the Plaintiff No. 2 has
contended that she has a 50% share in the assets of Panache. At the
same time, the Plaintiffs have proceeded on the basis that the
Harileela Property is a self acquired property and has sought a
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declaration from this Court that the Plaintiff No. 1 is entitled to a
50% share i.e. the share of deceased in the said Harileela property
and/or in the alternative 90% of the 50% share of the deceased.
Pertinently, the Plaintiffs have not sought any declaration that the
deceased was the owner of the Harileela Property. He has placed
reliance upon the decision of the Supreme Court in Kayalulla
Parambath Moidu Haji Vs. Namboodiyil Vinodan19 at paragraphs 10
to 13, 18 and 19 in this context.
73. Mr. Shah has submitted that according to the Plaintiffs,
Panache could not have sold the property, as it was a self acquired
property of the deceased. Further, according to the Plaintiffs, the
value of the Harileela Property was Rs. 6,00,00,000/- and the
Defendants have suppressed the real value of the property. He has
submitted that it is pertinent to note that the Plaintiffs have failed to
produce any document to show that the value of the Harileela
Property was Rs. 6,00,00,000/-.
74. Mr. Shah has submitted that the Plaintiff No. 2 has no
right, title and interest in Panache, as she was no more a shareholder
19 (2022) 20 SCC 310
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of the company and it was only the deceased and Defendant No. 1
who were the shareholders. Further, Plaintiff No. 1 only has a 1/3rd
right in the shareholding of the deceased in Panache and cannot
object to the sale of the Harileela Property which was owned by
Panache. He has submitted that the ready-reckoner value of the
Harileela Property was Rs. 2,38,61,500/- and has therefore been
rightly sold at Rs. 3,00,00,000/-.
75. Mr. Shah has submitted that the Plaintiff No. 2 and the
deceased got divorced on 6th August 1997. He has submitted that the
Plaintiff No. 2 cannot claim any right, title or interest in the estate of
the deceased after obtaining a divorce. He has placed reliance upon
the Divorce Decree dated 6th August 1997 (annexed at Exh. B to the
Plaint). He has in particular placed reliance upon Clause 6 of the
Divorce Decree, which states “The parties hereby declares that both
of them have mutually exchanged their respective ornaments,
articles, clothes and things and therefore they have no claim against
each other in that regard.”. He has submitted that it is clear that
Plaintiff No. 2 has acted on the decree dated 6th August 1997, which
is why from 6th August 1997 till 11th October 2013 (date of filing
the Plaint), not a single issue has been raised by Plaintiff No. 2 either
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in the capacity as a director or as a shareholder of Panache. He has
submitted that this assumes significance as no person who otherwise
was a director / shareholder would maintain radio silence for nearly
16 years before filing the Suit in 2014.
76. Mr. Shah has submitted that there are inconsistencies in
the Plaint with what has been urged in the oral arguments. This is
apparent from the Plaintiff No. 2 not answering when and how from
1997 till October 2013, did Plaintiff No. 2 assert, act and conduct
herself in Panache as a shareholder or director thereof. Further,
Plaintiff No. 2 did not inform this Court about how does she claim
rights as a shareholder in the assets of Panache which otherwise in
law is not permissible. He has placed reliance on the decision of the
Supreme Court in Bacha F. Guzdar (supra).
77. Mr. Shah has submitted that mutually destructive pleas
are taken by the Plaintiffs in the Plaint qua entitlement to the
Harileela Property. He has submitted that it is the pleaded case of the
Plaintiffs that by virtue of being a shareholder, Plaintiff No. 2 is
entitled to a share in the assets of Panache. He has submitted that it
is pleaded by Plaintiffs that Plaintiff No. 2 being under the bona fide
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belief that she as a shareholder was entitled to the Harileela Property
of Panache situated at Harileela House, Mint Road, Fort, Mumbai and
the same could not be dealt with without her consent, did not bother
to involve herself in the affairs of Panache. The Plaintiffs have further
stated that this Court may be pleased to declare that the Plaintiff No.
2 is entitled to 50% share in the Harileela Property.
78. Mr. Shah has submitted that on the other hand Plaintiff
No. 1 has pleaded that the Plaintiff No. 1 as a heir of the deceased is
also entitled to a share in the estate of the deceased which will
include a share in the 50% shareholding in Panache and the
consequent right and entitlement in the assets of the closely held
company.
79. Mr. Shah has placed reliance upon the judgments which
follow Bacha F. Guzdar (supra), including Great Eastern Shipping Co.
Ltd. Vs. Oil and Natural Gas Corporation Ltd. 20; Amratlal Bhanji
Laxman Vs. Kusum Prabhudas Laxman & Ors. 21 in support of his
submission that it is settled law that a company as a juristic entity is
20 2005(3) Mh.L.J.824
21 (2009)4 Bom CR 645
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distinct from its shareholders and it is the company that own its
assets and not the shareholders.
80. Mr. Shah has also placed reliance upon the judgment of
the Supreme Court in Kayalulla Parambath Moidu Haji (supra) at
paragraphs 10 to 13 and 18 in support of his submission that without
declaration of title, no relief for injunction can be granted. This in
support of his contention that though the case pleaded by the
Plaintiffs is that the deceased Rajiv Samani was the owner of
Harileela Property but have not sought any declaration in support
thereof. Hence, no injunction can be granted qua the said Property.
81. Mr. Shah has submitted that the reliefs prayed for by the
Plaintiffs are barred under Section 430 of the Companies Act, 2013
qua the Harileela Property. He has placed reliance upon the judgment
of the Supreme Court in Shashi Prakash Khemka (Supra) and in
particular paragraphs 4 to 7 thereof. He has also placed reliance
upon the judgment of the Calcutta High Court in Vikram Jairath
(Surpa); judgments of this Court in Invesco Developing Markets Fund
(Supra) and Shankar Assana Gaddam (Supra), which all have held
that where the dispute is covered under Section 430 of the 2013 Act
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as in this case qua the Harileela Property, the reliefs in the Civil Suit
are barred. He has submitted that in the present Suit, the Defendants
have sought for a rectification of the register for bringing the names
of the Plaintiffs as shareholders in Panache. He has submitted that
this relief can only be sought before the NCLT which has exclusive
jurisdiction in view of the bar under Section 430 of the Companies
Act, 2013. He has submitted that under the said provision no Civil
Court shall have jurisdiction to entertain any Suit or proceeding in
respect of any matter, which the Tribunal or the Appellate Tribunal is
empowered to determine, by or under the 2013 Act or any other law
for the time being in force. A conjoint reading of Section 241/242
with Section 430 of 2013 Act would make it clear that in respect of
such matters, which the NCLT or NCLAT is empowered to determine,
the jurisdiction of the Civil Court would be expressly barred.
82. Mr. Shah has submitted that the attempt made by the
Plaintiffs to distinguish the aforementioned judgments, ought not to
be countenanced, as it is settled law that the jurisdiction of the Civil
Court would be expressly barred under Section 241 / 242 read with
Section 430 of the 2013 Act in respect of matters which the NCLT or
NCLAT is empowered to determine. In the present case, the issue of
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rectification of the register is to be determined by the NCLT and
hence the jurisdiction of the Civil Court would be expressly barred.
83. Mr. Shah has submitted that in so far as the Sagar Kunj
Flat is concerned, the Sagar Kunj Flat stood in the joint name of the
deceased and Defendant No.1 and was not a self acquired property.
He has submitted that it is Defendant No.2’s case that the Sagar Kunj
Flat was the sole property of Defendant No.1 as the same was
purchased by Defendant No.1 after selling Flat No.407, Chandralok
Building, Napeansea Road, which was in the name of Defendant No.1
and that the name of the deceased in Sagar Kunj Flat was only added
for the sake of convenience. He has submitted that the payment
receipts evidencing payments made by Defendant No.1 towards the
purchase of Sagar Kunj Flat have been produced in the Additional
Affidavit of Defendant No.2. He has further submitted that the
deceased passed away and at the time of his death, he was residing
in the Sagar Kunj Flat.
84. Mr. Shah has submitted that Defendant No.10
transferred 50% share of the deceased in the Sagar Kunj Flat in
favour of Defendant No.1. The Plaintiffs have not challenged the
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transfer of Share Certificate in the competent Court or even before
this Court.
85. Mr. Shah has submitted that the Plaintiffs allegedly felt
that Defendant No.1 and Defendant No.2 were taking steps to
dispose of the Sagar Kunj Flat without the knowledge of the Plaintiffs
and therefore, the Plaintiffs issued legal Notice on 19th June, 2013
calling upon Defendant No.1 to give particulars of the estate of the
deceased. In the said legal notice, Plaintiff No.1 claimed that he was
entitled to 50% share in the estate of the deceased. This has been
duly responded by Defendant No.1 on 8th July, 2013 denying the
allegations and further stating that she was searching for documents
of the deceased to issue a detailed reply.
86. Mr. Shah has submitted that there is no pleading in the
Plaint for appointment of Court Receiver as has been sought for by
the Plaintiffs in oral arguments. Further, the circumstances pertaining
to such reliefs qua the Sagar Kunj Flat is absent in the Plaint.
87. Mr. Shah has submitted that Defendant No.1 has
registered a Will and Testament on 25th September, 2014
bequeathing her entire estate to Defendant No.2 including the Sagar
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Kunj Flat.
88. Mr. Shah has submitted that from the date of filing of the
Suit, no change in circumstances has also been pleaded by the
Plaintiffs to seek appointment of Court Receiver. He has referred to
paragraph 16P of the Plaint wherein it is stated that the Plaintiffs
reserve their right to adopt appropriate proceedings with regard to
transfer of share certificate in respect of the Sagar Kunj Flat. Further,
it is submitted that the Defendant No.1 be restrained from dealing
exclusively with the said property and claiming to be the exclusive
owner of the said property in any manner whatsoever. He has
submitted that it has been held by the Supreme Court in Akella
Lalitha v. Konda Hanumantha Rao & Anr22, at paragraph 16 – 18, that
if the reliefs are not found in pleadings, the same cannot be granted.
He has submitted that since the Plaintiffs have not pleaded for the
appointment of the Court Receiver qua the Sagar Kunj Flat, the reliefs
with respect to the same cannot be granted.
89. Mr. Shah has submitted that in any event, Defendant
No.1 was the real owner of the Sagar Kunj Flat and has paid sale
consideration to purchase the said flat and was further entitled to
22 2022 SCC OnLine SC 928.
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receive income and benefits thereof. He has relied upon the
averments in the Affidavit in Reply in support thereof. He has
submitted that the averments have not been controverted by the
Plaintiffs. He has submitted that atleast prima facie, it is clear that
the Defendant No.1 was the real owner of the Sagar Kunj Flat.
90. Mr. Shah has placed reliance upon the judgment of the
Supreme Court in Commissioner of Income Tax, Bombay and Ors. v.
Podar Cement Pvt. Ltd. & Ors23 at paragraph 24 – 28 and 55; Shivani
Madan v. Pr. Commissioner Of Income Tax24, at paragraphs 4, 8
and 10.
91. Mr. Shah has submitted that when an injunction is
granted and status quo has been maintained, no relief can be granted
to appoint Court Receiver, especially when it is not even pleaded. He
has submitted that this proposition has been accepted by the
Supreme Court in Hitesh Bhuralal Jain v. Rajpal Amarnath Yadav &
Ors25.
92. Mr. Shah has submitted that without prejudice to the
23 (1997) 5 SCC 482.
24 ITA No.573 of 2023 dated 8th January, 2025.
25 SLP No.51132 of 2023.
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above submission, that there are no pleadings warranting
appointment of a Court Receiver for Sagar Kunj Flat, the Plaintiffs
have failed to demonstrate any emergency, danger or loss demanding
immediate reliefs for the appointment of Court Receiver. He has
relied upon the judgment of the Supreme Court in Parmanand Patel
(Dead) by LRs & Anr. v. Sudha A. Chowgule and Ors 26. at paragraphs
23 and 24, T. Krishnaswamy Chetty v. C. Thangavelu Chetty & Ors 27,
at paragraph 17 and Sesa International Ltd. v. Avani Projects &
Infrastructure Ltd. & Ors28, at paragraphs 98 to 109, in this context.
93. Mr. Shah has accordingly submitted that the prayer for
appointment of Court Receiver qua the Sagar Kunj Flat ought not to
be allowed by this Court.
94. Mr. Shah has distinguished the judgments which have
been cited by the Plaintiffs. He has submitted that the judgment of
Calcutta High Court in Phool Chand Gutpa & Ors. v. Mukesh Jaiswal
& Ors29, relied upon by the Plaintiffs does not pertain to the
proposition on lifting of Corporate Veil for which the said judgment
had been cited. He has submitted that when there are disputed
26 (2009) 11 SCC 127.
27 1954 SCC OnLine Mad 374.
28 2017 SCC OnLine Cal 13063.
29 2023 SCC OnLine Cal 1812.
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questions of fact involved, the Civil Court’s jurisdiction is not ousted
in Company matters. The Calcutta High Court does not consider the
judgment of the Supreme Court in the case of Shashi Prakash
Khemka (Supra), wherein the Supreme Court in a similar case has
held that in view of Section 430 of the 2013 Act being widely
worded, the jurisdiction of the Civil Court is barred. Accordingly, the
judgment is not good law and runs counter to several judgments of
this Court cited by the Defendants.
95. Mr. Shah has also distinguished the judgment cited by
the Plaintiffs viz. Estate Officer, UT, Chandigarh and Ors. (Supra) in
support of their submission that the Court is required to lift the
Corporate Veil in the present case. He has submitted that the facts in
that case are entirely different from the facts of the present case. He
has submitted that the Supreme Court in the facts of that case had
directed lifting of Corporate Veil as the promoters of the Company
had failed to comply with the directions of the Court. This does not
arise here.
96. Mr. Shah has also distinguished Jai Mahal Hotels Pvt.
Ltd. v. Devraj Singh & Ors30, and State of Rajasthan and Ors. v. Gotan
30 (2016) 1 SCC 423.
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Lime Stone Khanij Udyog Private Ltd. (supra) cited by the Plaintiffs
on the ground that they are clearly distinguishable from the facts of
this case. He has submitted that the Supreme Court in Adesh Kaur
(Supra) and Chalasani Udaya Shankar & Ors. (Supra) have
considered the proposition advanced by the Plaintiff, and held that
even in matters of fraud, the jurisdiction vested in the NCLT in view
of Section 430 of 2013 Act, is not ousted.
97. Mr. Shah has also distinguished the judgment in Singer
India Ltd. (Supra) cited by the Plaintiffs in support of their
contention that the Corporate Veil requires to be lifted in the present
case. He has submitted that in that case there were FERA violations
on the part of the Assignor and the Assignee Company and therefore,
the Court ordered piercing of the Corporate Veil. Hence, the facts of
that case are clearly distinguishable from the facts of this case.
98. Mr. Shah has also distinguished the judgment in Satori
Global & Anr. v. Shailja Krishna & Ors31, cited by the Plaintiffs on the
ground that the facts are clearly distinguishable from the facts of the
present case. He has submitted that the decisions of the NCLAT
cannot bind this Court in any event. Further, the view taken by the
31 Company Appeal (AT) No.379 of 2018.
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Supreme Court in Adesh Kaur (Supra) and Chalasani Udaya Shankar
& Ors. (Supra) considers the proposition advanced by the Plaintiffs
and holds that even in matters of fraud, the jurisdiction is vested with
the NCLT in view of Section 430 of the 2013 Act.
99. Mr. Shah has also distinguished the judgments cited by
the Plaintiffs including Meghmala (Supra), on the ground that the
judgments are the general observation by the Court as to what
constitutes fraud and does not warrant any comment.
100. Mr. Shah has submitted that the judgments cited by the
Plaintiffs in support of their contentions that the reliefs can be
moulded including Rajesh D. Darbar and Ors. (Supra) is
distinguishable on facts. It has been held that reliefs may be moulded
by the Court in view of subsequent facts and events which make the
original reliefs obsolete or unserviceable. However, this power has to
be exercised with great caution. He has submitted that no case has
been made out by the Plaintiffs compelling this Court to mould the
reliefs from what was originally prayed. Further, no arguments have
been advanced to show that the reliefs originally prayed by the
Plaintiffs have become obsolete or unserviceable in the facts and
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circumstances of the present case.
101. Mr. Shah has submitted that the judgment cited by the
Plaintiff namely Haldyn Glass Ltd. v. Saumyalata Shyama Shetty &
Anr32, is not applicable to the facts of the present case as there is
already an injunction operating against the Defendants in favour of
the Plaintiffs till date for the Sagar Kunj Flat. Further, no case that
the properties are in danger of being waisted by the Defendants has
been even pleaded or made out to seek appointment of the Receiver.
102. Mr. Shah has submitted that the judgments cited by the
Defendants in Hitesh Barulal Jain (Supra) and Parmanand Patel
(Supra) distinguishes the law cited by the Plaintiffs. Further, the
judgment of T. Krishnaswamy Chetty (Supra) relied upon by the
Plaintiffs favours the Defendants.
103. Mr. Shah has submitted that the case cited by the
Plaintiff namely Suzuki Parasrampuria Suitings Pvt. Ltd. (Supra)
pertains to a Company Appeal wherein contradictory stands were
taken by the parties. He has submitted that infact as urged by these
Defendants, the Plaintiffs have taken several contradictory and
32 2014 SCC OnLine Bom 1178.
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mutually destructive pleas regarding their very basis and entitlement
to the Harileela Property. Therefore, this decision infact goes against
the Plaintiffs.
104. Mr. Shah has also distinguished the other judgments
cited by the Plaintiffs on 3rd October, 2025 on the ground that these
judgments run counter to well settled law laid down by the Supreme
Court in Shashi Prakash Khemka (Supra), wherein the Supreme
Court has held that in view of Section 430 of 2013 Act being widely
worded, the jurisdiction of the Civil Court is barred. He has also
submitted that the judgment cited by the Plaintiffs namely Satori
Global & Anr. (Supra) has been overruled by the Supreme Court in
Appeal viz. Shailja Krishna (Supra), which has been tendered by
Defendant Nos.1A and 2. The Supreme Court has held that with
respect of Company matters, the NCLT will have jurisdiction to try
and entertain cases of fraud.
105. Mr. Shah has accordingly submitted that the present
Notices of Motion require to be dismissed in view of non-
maintainability as well as no case made out for grant of the reliefs as
sought for by the Plaintiffs.
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106. Mr. Aseem Naphade, learned Counsel appearing for the
Defendant Nos.3 and 7 has submitted that there is no prima facie
proof that Plaintiff No.2 was the shareholder in Panache. He has
submitted that in any case this Court cannot rectify the register of
members owing to the bar under Section 430 of the 2013 Act.
107. Mr. Naphade has submitted that the Plaintiffs in the
present Suit have sought for a declaration that Plaintiff No.2
continues to be a shareholder of Panache holding 1000 shares i.e.
50% share in Panache since incorporation. He has submitted that
Plaintiff No.2 and the deceased were shown as holding 1000 shares
each in the MoA and AoA of Panache. However, the same does not
establish the fact that Plaintiff No.2 followed and / or complied with
the procedure for issuance of such shares.
108. Mr. Naphade has submitted that Section 13 of the 1956
Act provides for requirements with respect to Memorandum. Section
13(4) provides that in case of Companies having share capital, the
Memorandum ought to state the amount of share capital and division
of shares. Section 13(4) (c) provides that each subscriber of the
Memorandum shall write opposite to his / her name the number of
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shares he / she takes. Therefore, the MoA of Panache records Plaintiff
No.2’s name as a subscriber agreeing to subscribe to 1000 shares of
Panache. However, the same does not establish and / or indicate that
Plaintiff No.2 actually held and / or continues to hold 1000 shares in
Panache.
109. Mr. Naphade has submitted that the purpose of the
requirement under Section 13(4) (c) becomes clear from Section 36
of the 1956 Act. Section 36 provides for the effect of MoA and AoA.
Section 36 (2) provides that the money payable by any member to
the Company under the Memorandum shall be the debt due from
him to the Company. Therefore, the same does not establish payment
and actual vesting of shares but merely creates an obligation on the
subscriber to pay the amount and / or consideration against the
shares subscribed.
110. Mr. Naphade has submitted that it is settled law that the
share certificate is a prima facie proof of title of shares. Section 84 of
the 1956 Act provides that a share certificate bearing the seal of a
Company and specifying the shares is a prima facie evidence of title
of shares of a member. He has in this context placed reliance upon
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the judgment of the Supreme Court in Vasudev Ramchandra Shelat v.
Pranlal Jayanand Thakar & Ors 33, at paragraph 13. The Supreme
Court has held that share certificate is a prima facie evidence of title
of shares as it presupposes transfer of shares. Therefore, in the
absence of any share certificate and/or marketable and / or
transferable document, Plaintiff No.2 cannot seek reliefs prayed for in
the present Suit.
111. Mr. Naphade has then referred to Section 164 of the
1956 Act which provides that the register of members is prima facie
evidence of the matters authorized to be inserted therein i.e. the
entries of members of the Company and other details as mentioned
in the said register. Section 164 attaches significant evidentiary value
to the documents referred. Plaintiff No.2 has not produced the said
register which could reflect the shares held by Plaintiff No.2.
Therefore, in the absence of the necessary prima facie evidence as
provided for in the Companies Act i.e. share certificate and the
register of members, Plaintiff No.2 has failed to make out a case for
grant of relief.
112. Mr. Naphade has submitted that the Plaintiff No.2 has
33 (1974) 2 SCC 323.
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not produced any other ancillary document establishing and/or
indicating that Plaintiff No.2 is/was a shareholder in Panache. This
would include receipt of return on the allotted shares (Section 75);
receipt of dividends (Section 93); register of members (Section 150
read with Section 164); Statutory Report issued prior to Statutory
Meetings (Section 165); Notices issued prior to Annual General
Meeting (Section 166); Minutes of the Meeting showing participation
in the affairs of Panache (Sections 183, 194 and 196) and receipt of
copies of balance sheet and Auditors Report (Section 219).
113. Mr. Naphade has submitted that the Plaintiffs cannot
claim that as Panache has not denied Plaintiff No.2’s shareholding
expressly, the same establishes title in her favour. He has submitted
that it is settled law that the title cannot be created through estoppel
as held by the Supreme Court in Kamakshi Builders v. Ambedkar
Education Society34 at paragraphs 23 and 24.
114. Mr. Naphade has submitted that Plaintiff No.2 has not
produced any documents to establish title and the surrounding facts
and circumstances negate the likelihood of issuance of shares to
Plaintiff No.2. Moreover, even if it is to be assumed that the Plaintiff
34 (2007) 12 SCC 27.
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No.2 was the shareholder, the declaration that the Plaintiff No.2
continues to be a shareholder cannot be sought before this Court as
the same falls in the jurisdiction of the NCLT as Section 59 provides
for rectification of the register of members. Therefore, by virtue of
Section 430 of the 2013 Act, this Court cannot grant reliefs sought
for by the Plaintiffs.
115. Mr. Naphade has submitted that the challenge of the
Plaintiffs to the appointment of Defendant No.3 cannot be
adjudicated by this Court owing to Section 430 of the 2013 Act. He
has supported the submissions of Mr. Shanay Shah in this context.
116. Mr. Naphade has submitted that the property of a
Company does not belong to a shareholder and in this context has
also supported the arguments of Mr. Shanay Shah on behalf of
Defendant Nos.1A and 2.
117. Mr. Naphade has accordingly submitted that the present
Notices of Motion ought to be dismissed on ground of maintainability
of the Suit as well as on merits.
118. Mr. Nausher Kohli, learned Counsel appearing for the
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Defendant Nos.4 to 6 has submitted that Defendant Nos.4 to 6 are
complete outsiders to the present dispute, which is essentially a
family dispute between the family members of the deceased Rajiv
Samani. He has submitted that Defendant No.4 is a bonafide
purchaser with full and adequate consideration of the Harileela
Property. Defendant Nos.5 and 6 were the Directors of Defendant
No.4 at the relevant time.
119. Mr. Kohli has submitted that the Harileela Property
admittedly never belonged to the deceased Rajiv Samani and/or to
any individual from the Samani family at any point in time and
therefore, can never by any stretch of imagination be treated as part
of the estate of the deceased Rajiv Samani. He has submitted that the
Harileela Property admittedly always belonged to Panache which is a
duly incorporated private limited company. The deceased Rajiv
Samani was only a shareholder of Panache. It is settled law that a
shareholder has no personal right of any nature whatsoever over the
assets of a Company. He has placed reliance upon the judgments
which have also been relied upon by Mr. Shanay Shah on behalf of
Defendant Nos.1A and 2. This include Bacha F. Guzdar (Supra). He
has further relied upon Bharat Hari Singhania & Ors. v.
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Commissioner of Wealth Tax (Central ) and Ors35.
120. Mr. Kohli has drawn reference to the pleadings filed by
Defendant Nos.4 to 6 detailing their stance in the matter which have
also been relied upon by Mr. Shanay Shah. He has submitted that
with a view to counter the false, frivolous and baseless allegations of
undervaluation of the Harileela Property as alleged by the Plaintiffs,
the Defendant Nos.4 to 6 have procured a Valuation Report of
Dadbhawala Architects, Engineers and Valuers Pvt. Ltd. in respect of
the Harileela Property at the time when it was purchased. The
valuation report has been annexed at Exhibit ‘D’ to the Written
Statement dated 30th November, 2015. He has submitted that the
Valuation Report, after considering all the applicable facts and
circumstances, including that there is an ongoing dispute in relation
to the Harileela Property, has valued the premises at less than Rs.3
Crores, the consideration for which the Harileela Property was
purchased by the Defendant Nos.4 to 6.
121. Mr. Kohli has submitted that looking at it from any
parameter, the Defendant No.4 has by virtue of paying a sum of Rs.3
Crores, paid far in excess of the market value for the said premises.
35 1994 Supp (3) SCC 46.
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Thus the allegation of undervaluation needs to be only stated to be
rejected. He has submitted that the Plaintiffs have not put forth any
evidence to counter the above and/or produce any documents to
justify its baseless allegation of undervaluation of the said Property.
122. Mr. Kohli has submitted that prior to completion of the
sale, the Defendant Nos. 4 to 6 undertook the necessary due
diligence and took all necessary steps as are taken by a bonafide
purchaser intending to purchase any property. He has submitted that
Defendant No.4 undertook a title search prior to purchasing the said
Harileela Property. The said search confirmed that Panache was the
owner of the said Harileela Property. The title report dated 18th July,
2013 has been annexed at Exhibit A to both the Affidavit in Reply
and Written Statement filed by Defendant Nos.4 to 6. He has
submitted that Defendant No.4 even issued two public notices being
public notice dated 5th August, 2013 in the Times of India (English
Edition) and public notice dated 6th August, 2013 in the Navshakti
(Marathi Newspaper), both of which have wide circulation in
Mumbai. He has submitted that no objections were received from any
party to the present proceedings and/or any third party to the said
public notices.
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123. Mr. Kohli has submitted that the Defendant Nos.4 to 6
have subsequently mortgaged the said Harileela Property vide a Deed
of Mortgage dated 21st November, 2013 to one Fullerton India
Private Limited. Since then, the facility procured under the said
mortgage is being serviced by Defendant No.4.
124. Mr. Kohli has referred to injunction granted vide order
dated 28th November, 2013 passed by this Court which has been
relied upon by the Plaintiffs and which they submit continue in
respect of the said Property. He has submitted that this would be
required to be examined in the light of the fact that at the time when
the said order was passed, the Defendant Nos.4 to 6 were not parties
to the present proceedings. They were only added subsequently. The
said Order injuncts the Defendants (who were then parties to the
Suit) from creating any third party rights in respect of the said
Harileela Property. He has submitted that in any case the Harileela
Property was sold much before the passing of the said Order dated
28th November, 2013. A Deed of Apartment between Panache (as the
Vendor) and Defendant No.4 (as the purchaser) was executed on
19th October, 2013.
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125. Mr. Kohli has submitted that a perusal of the Order dated
29th April, 2015 passed in captioned Notice of Motion (L) No.924 of
2015 would show that all the parties to the present proceedings
understood that the said order dated 28th November, 2013 would
not apply as far as the present Defendants i.e. Defendant Nos. 4 to 6
are concerned. This is evident from the fact that this Order clearly
records that “The remaining reliefs in regard to the immovable
property known as Harileela House are not pressed at this stage.”. He
has submitted that Defendant Nos.4 to 6 are simply putting the above
facts on record to enable this Court to take a holistic view of the
matter rather than the one sided picture that the Plaintiff has
attempted to paint before it.
126. Mr. Kohli has submitted that the Plaintiffs have made an
allegation that the Plaintiff No.1 vide a letter dated 12th September,
2013 addressed to the New Harileela CHS Ltd. put the Defendant
Nos.4 to 6 to notice not to entertain any claim for sale of the said
Harileela Property. The Plaintiffs have stated that Defendant No.6
was the Chairman of the said Society. He has submitted that this
contention needs to be only stated to be rejected. Firstly it is settled
law that a mere letter written by any person directing another person
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to do an act cannot by itself operate as an injunction. In the present
case, the Plaintiff No.1 (who claims to have an imaginary right in the
said Property) purportedly wrote a letter to the New Harileela CHS
directing them to not entertain any claim for sale of the said
Harileela Property. He has submitted that the said letter has little
value in the facts and circumstances of the case especially
considering that firstly the Plaintiff No.1’s predecessor (through
whom he claims his imaginary rights to the said premises) had no
right, title or interest in the said Harileela Property. Also the Plaintiff
No.1 at the relevant time made no effort to approach this Court to
secure any injunction in his favour. Secondly, the fact that Defendant
No.6 was the Chairman of the New Harileela CHS at the time has no
relevance whatsoever. The letter was addressed to New Harileela
CHS of which Defendant No.6 was the then Chairman together with
the other office bearers. Further, the said Harileela Property was
purchased by Defendant No.4 which is a separate legal entity in law.
127. Mr. Kohli has submitted that in light of the settled legal
position that the shareholder has no personal right, title and interest
over the assets of a Company, the present Notices of Motion deserve
to be dismissed as against Defendant Nos.4 to 6. The said Harileela
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Property admittedly belonged to Panache which is a private limited
Company and the deceased was a mere shareholder in the same. He
has submitted that the deceased (through whom the Plaintiff No.1
claims) could never have had any right, title or interest in the said
Harileela Property, and therefore, the same can never form a part of
the estate of the deceased He has accordingly submitted that the
Notices of Motion deserve to be dismissed as against Defendant Nos.4
to 6.
128. Having considered the submissions, the Plaintiffs have
sought a declaration in the present Suit viz. Plaintiff No.2 claiming
50% share and Plaintiff No.1 claiming 90% of the remaining 50%
share or as may be decided by this Court in the Harileela Property
which has been shown at Sr.No. 1 of list of the properties stated to
have belonged to the deceased Rajiv Samani at paragraph 7 of the
Plaint. However, it is pertinent to note that the Harileela Property
admittedly stood in the name of Defendant No.7 i.e. Panache. The
Plaintiffs have not sought any declaration in the above Suit that the
deceased was the owner of the Harileela Property.
129. The Plaintiff No.2 and the deceased got divorced on 6th
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August, 1997. It is pertinent to note that the Divorce Decree dated
6th August, 1997 (annexed at Exhibit ‘B’ to Plaint) at Clause 6 reads
as, “the parties hereby declares that both of them have mutually
exchanged their respective ornaments, articles, clothes and things
and therefore they have no claim against each other in that regard.”.
There is much merit in the contention of the Defendant No.1A and 2
that the Plaintiff No.2 has acted on the Divorce Decree dated 6th
August, 1997 and that is the reason why from 6th August, 1997 till
11th October, 2013, (date of filing of the Plaint), the Plaintiff No.2
did not raise a single issue either in her capacity as a Director or as a
shareholder of Panache. Further, this assumes significance since no
person who was otherwise a Director/Shareholder would maintain
radio silence for nearly 16 years before filing the present Suit in
2014.
130. Further, the Plaint filed by the Plaintiffs is replete with
inconsistencies as it is pleaded therein that by virtue of being a
shareholder, Plaintiff No.2 is entitled to a share in the assets of
Panache including the Harileela Property.
131. The Plaintiff No.2 has claimed 50% share in Panache
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solely on reliance placed on the Memorandum of Association (MoA)
and Articles of Association (AoA) as it is reflected therein that
Plaintiff No.2 holds 1000 shares and the deceased holds balance
1000 shares in Panache. It is on this premise that the Plaintiff No.2
has sought a declaration that she continues to be a shareholder of
Panache, since incorporation. Out of the balance 50% shares stated to
have been held by the deceased in Panache, 90% is claimed to be
held by Plaintiff No.1 i.e. the son of the deceased after the demise of
the deceased. However, the Plaintiffs have not produced any other
ancillary documents issued by Panache to establish their claim to be
the owners / shareholders of Panache.
132. Section 13 of the 1956 Act provides for requirements
with respect to the MoA. Section 13(4) provides that in case of
Companies having a share capital, the MoA ought to state the
amount of share capital and division of shares. Further, Section 13(4)
(c) provides that each subscriber of the MoA shall write opposite to
his/her name the number of shares he/she takes. Accordingly, the
MoA of Panache records the Plaintiff No.2’s name as a subscriber
agreeing to subscribe 1000 shares of Panache. This does not establish
and/or indicate that Plaintiff No.2 actually held and/or continues to
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hold 1000 shares in Panache. This would be made clear from Section
36 of the 1956 Act and in particular Section 36(2) which provides
that the money payable by any member to the Company under the
MoA shall be debt due from him to the Company. Therefore, the
same does establish payment and actual vesting of shares but merely
creates an obligation on the subscriber to pay the amount and/or
consideration against the shares subscribed.
133. It is settled law that only a Share Certificate is the prima
facie proof of the title of shares. This is borne out from Section 84 of
the 1956 Act which provides that a Share Certificate bearing the seal
of a Company and specifying the shares is prima facie evidence of
title of shares of a member. The Supreme Court in Vasudev
Ramchandra Shelat (supra) held that the Share Certificate is the
prima facie evidence of title of a share as it presupposes transfer of
shares. In the absence of a share certificate and / or marketable and /
or transferrable documents in the present case, the Plaintiff No.2
cannot seek a relief viz. declaration that she is a 50% shareholder in
Panache.
134. It is also pertinent to note that Section 164 of the 1956
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Act provides that the register of members is a prima facie evidence of
the matters authorized to be inserted therein. Absent the necessary
prima facie evidence including the production of the register of
members, Plaintiff No.2 has failed to make out a case for grant of
reliefs.
135. Presuming that the Plaintiff No.2 and the deceased by
virtue of their shareholding in Panache can claim that they had
shares in the Harileela Property which belonged to Panache, this
claim would be contrary to the settled law that a Company as a
juristic entity is distinct from its shareholders and it is the Company
that owns its assets, not the shareholders. This has been held by the
Supreme Court in the landmark case of Bacha F. Guzdar (supra) and
which has been followed by this Court in Great Eastern Shipping Co.
Ltd. (supra), Amratlal Bhanji Laxman (Supra) and Bharat Hari
Singhania (supra).
136. Further, Plaintiff No.2 by seeking a declaration that she
continues to be shareholder, inspite of the register of members of
Panache showing otherwise, is in effect seeking a rectification of the
register of members. Section 59 of the 2013 Act deals with
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rectification of a register. This cannot be sought before this Court, as
the same falls within the exclusive jurisdiction of the NCLT, in view of
the bar by virtue of Section 430 of the 2013 Act on a Civil Court
granting reliefs which can only be granted by the NCLT.
137. Section 430 of the 2013 Act provides that no Civil Court
shall have jurisdiction to entertain any Suit or proceeding in respect
of any matter which the Tribunal or the Appellate Tribunal is
empowered to determine by or under this Act or any other law for
the time being in force. Further, no injunction shall be granted by any
Court or other Authority in respect of any action taken or to be taken
in pursuance of any power conferred by or under this Act or any
other law for the time being in force, by the Tribunal or the Appellate
Tribunal.
138. It has been held by the Supreme Court in Shashi Prakash
Khemka (Supra) that the effect of the aforesaid provision is that in
matters in respect of which the power has been conferred on the
NCLT, the jurisdiction of the Civil Court is completely barred. Further,
the Supreme Court has held in the said judgment that relegating the
parties to a Civil Suit would not be the appropriate remedy, especially
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considering the manner in which Section 430 of 2013 Act is widely
worded. In that case, in view of subsequent developments, the
Supreme Court adopted the appropriate course of action viz. to
relegate the Appellants to seek remedy before the NCLT under the
2013 Act. Further, in view of lapse of time, the Supreme Court
permitted the Appellants to file a fresh Petition within a maximum
period of two months from the date of the said order.
139. There would also be a bar to the Plaintiff’s challenge to
the appointment of Defendant No.3 as Director of Panache in view of
Section 430 of the 2013 Act. Section 242(2)(h) of the 2013 Act, vests
the Tribunal with the power to remove the Directors of a Company.
140. It has been the contention of the Plaintiffs that Section
430 of 2013 Act is not applicable in the present case, as the Plaintiffs
have allegedly shown the fraudulent manner in which the shares of
Plaintiff No.2 were illegally transferred as well as the fraud in the
appointment of Defendant No.3 as a Director of Panache. It is the
Plaintiffs’ contention that the issues of fraud cannot be determined by
the Tribunal / NCLT and would necessarily have to be determined by
the Civil Court. They have distinguished the Judgment relied upon by
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the Defendants viz. Adesh Kaur (Supra) where the Supreme Court
had held that the Appellate Tribunal erred in relegating the Appellant
to the Civil Court, emphasizing that the NCLT possesses jurisdiction
under Section 59 of the 2013 Act, to rectify the register of members
in case of fraud and forgery, even if the criminal complaint is
pending. This on the ground that the Supreme Court had noted that
such jurisdiction applies only when the issues of fraud are “open and
shut cases of fraud” i.e. straight forward and undisputed. The
Plaintiffs have contended on a demurrer, that if the Defendants are
placing reliance on this Judgment, it is to be noted that they are
impliedly accepting that this is an open and shut case of fraud, and so
summary enquiry by the NCLT Court would be sufficient. This
contention overlooks the fact that it is the Plaintiffs who have
contended that the present case is an open and shut case of fraud
and in view of which they have called upon this Court to prima facie
determine the issue of fraud at the interim stage. The Supreme Court
in Adesh Kaur (Supra) had considered that the jurisdiction of the
NCLT is widely worded and held that even in matters of fraud, the
jurisdiction is vested with the NCLT in view of the bar under Section
430 of the 2013 Act. This Judgment would apply in the present case,
particularly in view of the contention of the Plaintiffs that the fraud
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in the present case is apparent from the record.
141. The Plaintiffs have sought lifting of Corporate Veil in
view of the alleged entire fraud played on the Plaintiffs which
according to them has arisen after the demise of the deceased on 12 th
March, 2013. It is further contended that upto the demise of the
deceased, Plaintiff No.2 and the deceased were each 50%
shareholders and the only Directors of Panache. They have contended
that the co-operate identity of Panache ought to be pierced, to
ascertain the persons who are claiming to be acting for Panache,
which in my view, is misconceived. In the present case, the issue
whether the Plaintiff No.2 had a 50% shareholding and was a
Director of Panache are issues which are required to be determined
by the NCLT, particularly considering the bar under Section 430 of
the 2013 Act. Further, this is not a case as in the case relied upon by
the Plaintiffs viz. Estate Officer, UT, Chandigarh (Supra), where the
Supreme Court had directed lifting of Corporate Veil as the Promoters
of the company had failed to comply with the directions of the Court.
Lifting of Corporate Veil is not as a matter of course but an exception.
142. In the present case, the Plaintiffs are seeking ownership
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of the Harileela Property which admittedly belonged to Panache.
Further, the other Judgments relied upon by the Plaintiffs in support
of their contention that this Court ought to lift the Corporate Veil in
order to determine the corporate identity of Panache and to ascertain
the persons, who are claiming to be acting for Panache, are
inapplicable and clearly distinguishable on facts.
143. I find merit in the submissions of Defendant Nos. 4 to 6
that Defendant No.4 is a bonafide purchaser with full and adequate
consideration for the Harileela Property. The Defendant Nos. 4 to 6
have prima facie been able to establish that the Harileela Property
which was purchased for a sum of Rs.3 Crores is in excess of the
market value for the said property. This is borne out from the
Valuation Reports which they have relied upon and which are
annexed at Exhibit-D to their Written Statement dated 30 th
November, 2015. The Defendant Nos. 4 to 6 have also been able to
prima facie establish that they had undertaken necessary due
diligence and took all necessary steps as are taken by a bonafide
purchaser intending to purchase the Harileela Property.
144. It is pertinent to note that Defendant Nos. 4 to 6 have
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subsequently mortgaged the Harileela Property vide a Deed of
Mortgage dated 21st November, 2013 to Fullerton India Private
Limited. Since then, the facility procured under the said mortgage is
being serviced by Defendant No.4.
145. The order of injunction dated 28th November, 2013
passed by this Court which the Plaintiffs have relied upon to contend
that it operates in respect of the Harileela Property, is to be seen from
the fact that when the said order was passed Defendant Nos. 4 to 6
were not parties to the proceedings. The Harileela Property was sold
much before passing of the said Order dated 28 th November, 2013.
The Deed of Apartment between Panache (as the Vendor) and
Defendant No.4 (as a Purchaser) was executed on 19 th October, 2013
i.e. before the said order of injunction. This is also the understanding
of the parties that the said Order dated 28 th November, 2013 would
not apply to Defendant Nos. 4 to 6 as borne out from the Order dated
29th April, 2015 passed in the captioned Notice of Motion (L) No.924
of 2015 wherein it is recorded that “The remaining reliefs in respect
of the immoveable property known as Harileela House are not
pressed at this stage.”.
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146. The contention of Plaintiffs that Plaintiff No.1 had
addressed communication dated 12th Sepetember, 2013 to new
Harileela CHS putting them to notice, to not entertain any claim from
sale of the said property, is required to be seen from the perspective
that the communication had been issued to Defendant No.6 as a
Chairman of new Harileela CHS. The said Harileela Property was
purchased by Defendant No.4 and merely the fact that Defendant
No.6 was a Director of Defendant No.4 cannot in my prima facie view
come in the way of Defendant No.4, which is a separate legal entity,
purchasing the said Harileela Property. Further, it is settled law that a
mere communication addressed by any person directing another
person to do an act cannot by itself operate as an injuction. The
communication in the facts and circumstances of the case would have
no value considering the prima facie view taken above viz. that
Plaintiff No.1’s predecessor viz. the deceased Rajiv Samani had no
right, title or interest in the Harileela property as the Harileela
Property belonged to Panache. Futher, the Plaintiff No.1 who has
addressed the communication at the relevant time had made no
efforts to approach this Court to secure an injuction in his favour.
147. The contention of the Plaintiffs that in view of the
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alleged acts of fraud, fabrication of resolutions, manipulation of
shareholding, back-dating of statutory records, and unlawful
alienation of Panache’s sole immovable asset viz. Harileela Property, a
Court Receiver is required to be appointed by this Court is in my view
misconceived. Apart from these contentions, requiring to be
examined by the Tribunal in view of the bar under Section 430 of the
2013 Act, there is prima facie no merit in these contentions which
would warrant the appointment of a Court Receiver. This also applies
to the Sagar Kunj Flat. The Plaintiffs have with respect thereof
contended that in view of it lying vacant and unoccupied and not
generating income, a Court Receiver is required to be appointed so
that it can be monetised by the Court Receiver and the proceeds
deposited in this Court. In the present case, there is no pleading in
the Plaint for appointing a Court Receiver. In Paragraph 16(p) of the
Plaint, the Plaintiffs have reserved their rights to adopt appropriate
proceedings with regard to transfer of the Share Certificate and they
have submitted that the Defendant No.1 be restrained from dealing
exclusively with the said property and claiming to be the exclusive
owner of the said property, in any manner whatsoever.
148. In Akella Lalitha (supra) it has been held that if reliefs
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are not found in pleadings, the same cannot be granted. The
Plaintiffs have not pleaded for appointment of a Court Receiver qua
Sagar Kunj, and therefore the reliefs to the same cannot be granted.
Further, when an injunction is granted and status-quo has been
maintained, no relief can be granted to appoint a Court Receiver,
especially when it is not even pleaded. This proposition has been
accepted by the Supreme Court in Hitesh Barulal Jain (Supra), relied
upon by the Defendants. Thus, the Plainitffs have failed to
demonstrate any emergency, danger or loss demanding immediate
action for appointment of a Court Receiver. Further, there is already
an injunction operating against the Defendants in favour of the
Plaintiff till date for the Sagar Kunj Flat. The Judgments relied upon
by the Defendants viz. Hitesh Barulal Jain (Supra); Parmanand Patel
(Supra); T. Krishna Swamy Shetty (Supra); & Sesa International
Limited (Supra) are apposite.
149. I do not find any merit in the attempt made by the
Plaintiffs to distinguish the Judgments which have been relied upon
by the Defendants, in particular with regard to the bar under Section
430 of 2013 Act as well as on the issue of lifting of Corproate Veil.
The Judgments which have been cited by the Plaintiffs are
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distinguishable on facts. In the present case, considering the reliefs
sought for and which include rectification of the register and the
removal of Defendant No.3 as a Director, these cannot be granted by
a Civil Court in view of the bar under Section 430 of the 2013 Act
and such bar is not excluded in the present case where the Plaintiffs
have pleaded fraud and forgery and which according to them is an
open and shut case of fraud.
150. Accordingly, I do not find merit in the captioned Notices
of Motion and the relief sought for therein. The captioned Notices of
Motion having no merit are dismissed. There shall be no orders as to
costs.
[ R.I. CHAGLA J. ]
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