MR SANJAY GAMBHIR & ORS. vs. M/S BEEKMAN HELIX INDIA CONSULTING PVT. LTD. & ORS.

* IN THE HIGH COURT OF DELHI AT NEW DELHI

Judgment reserved on: 21.04.2016

% Judgment delivered on: 04.05.2016

+ CS(COMM) 379/2016 and I.A. No.4768/2016
MR SANJAY GAMBHIR & ORS ….. Plaintiffs
Through: Mr. Mohit Chaudhary & Ms. Damini
Chawla, Advocates.

Versus

M/S BEEKMAN HELIX INDIA
CONSULTING PVT LTD & ORS ….. Defendants
Through:

CORAM:
HON’BLE MR. JUSTICE VIPIN SANGHI

J U D G M E N T

VIPIN SANGHI, J.

1. The plaintiffs have filed the present suit to claim the following reliefs:
“A. Pass decree of permanent and mandatory injunction
restraining defendant No.5 through itself or through any other
defendant from selling/ transferring/ alienating/ mortgaging/
changing the nature of and/ or creating any third party
interest in respect of properties belonging to defendant No.5
company at Sector 77, Faridabad, Haryana, and/ or ;
CS(COMM) 379/2016 Page 1 of 36


B. Pass decree of permanent and mandatory injunction
restraining defendant No.5 from altering the shareholding
pattern of the company in any form and manner ; and/ or;
C. Pass decree of permanent and mandatory injunction
restraining defendant No.3 from selling/ transferring/
alienating/ mortgaging and/or creating any third party
interest in respect of the shares of defendant No.5 company
held in its name; and/ or ;
D. Pass a decree of declaration that share purchase
agreement dated 15.02.2010 , and all related transactions
between the defendants with regard to the shares of DD
Housing Limited as illegal, being void, non effective, nonest ,
and nullity and further holding that any subsequent transfer
thereof is nullity in law and cancel the same; and/or;
E. Pass a decree of declaration that passing of resolution
dated 15.02.2010 effecting change in registered office of
company from Okhla to Malviya Nagar address is illegal,
nonest, void ab-initio and nullity and cancel the same; Further
cancel resolution dated 06.10.2010 , where the address of
company is changed from Malviya Nagar to M-11 Connaught
Circus, and/ or
F. Pass a decree of declaration that issuance of 5000 Nos
of debentures on 26.02.2010 , in favour of defendant No.4 is
illegal, nonest, void ab-initio and nullity and cancel the same;
and/or
G. Pass a decree of declaration that plaintiffs are entitled to
the percentage of their shareholdings as it existed prior to
15.02.2010 , more particularly shown in Annual Return
pursuant to AGM of September 2009; and/ or
H. Pass a decree of declaration that the transfer of shares
(originally belonging to the plaintiffs) from defendant No.1 to
defendant No.3 on 28.09.2010 , is illegal, nonest, void ab-initio
and nullity in law and cancel the same; and/ or
CS(COMM) 379/2016 Page 2 of 36


I. Pass a decree of declaration that increase made in
authorized capital of the company from 6 crores to 15 crores
vide resolution dated 03.09.2010 , is illegal, nonest, void ab-
initio and nullity and further holding that any subsequent
allotment thereof is nullity in law and cancel the same; and/ or
J. Pass a decree of declaration that issuance of further
share in terms of Sec.81(1) of the Companies Act and allotment
thereof in favour of defendant No.3 being 22,67,215 number of
shares, is illegal, nonest, void ab-initio and nullity in law and
cancel the same; and/ or
K. Pass a decree of declaration declaring the alleged
undertakings dated 02.03.2010 to be bad in law and being non-
effective and cancel the same; and/or
L. Declare agreement and documents detailed out at para
no.21 all dated 16.02.2011 , being illegal, nonest, void ab-initio
and nullity in law as the same is without consideration and is
in violation of law and cancel the same; and/ or
M. Declare agreement and documents detailed out at para
no.21 all dated 16.02.2011 , being obtained by fraud, coercion
and undue-influence being non effective in the eyes of law and
being illegal, nonest, void ab-initio and nullity in law and
cancel the same; and/ or
N. Declare agreement and documents detailed out at para
no.21 all dated 16.02.2011 , are not binding documents due to
breach by the defendants, thus being non effective in the eyes of
law and being illegal, nonest, void ab-initio and nullity in law
and cancel the same; and/ or
O. Pass a decree in favour of plaintiff(s) and against
defendant No.1, 2, 3 and 5 commanding them to render true
and proper accounts of the money received from the transfer of
shares belonging to the plaintiffs and further with regards to
the accounts of the company along with the details of
transaction(s) if any entered into by and on behalf of company,
and/ or;
CS(COMM) 379/2016 Page 3 of 36


P. Pass a decree of damages, for a sum of Rs.2 crores in
favour of plaintiff(s) and against defendants, and/ or;”
(Emphasis supplied)
2. There are four plaintiffs in the suit, namely Mr. Sanjay Gambhir
(plaintiff No.1), Mr. Karan Gambhir (plaintiff No.2), Mr. Kanishraaj
Gambhir (plaintiff No.3) and M/s D.D. Township Limited (plaintiff No.4),
now known as D.D. Global Capital Pvt. Ltd. – a company incorporated
under the Companies Act, 1956.
3. The defendants in the suit are:

(i) M/s Beekman Helix India Consulting Private Limited
(defendant No.1);
(ii) Mr.Manish Parwani (defendant No.2);
(iii) M/s Rose Infracon Private Limited (defendant No.3);
(iv) M/s TMW ASPF I Cyprus Holding Company Limited
(defendant No.4);
(v) M/s D.D. Housing Limited (defendant No.5);
(vi) Director, Town & Country Planning, Haryana (defendant
No.6); and
(vii) Mr. Kabul Chawla (defendant No.7).
4. The gist of the background facts in which the present suit has been
filed, as narrated by the plaintiffs in the plaint, is as follows.
CS(COMM) 379/2016 Page 4 of 36


5. The plaintiffs No.1 to 3 are the family members and original
promoters and shareholders of defendant No.5 / M/s D.D. Housing Limited
(DDHL), which was incorporated in 2006 to undertake development of an
integrated township project spread over an area of 150 Acres of land in
Sector-77, Faridabad. The name of defendant No.5 now stands changed to
M/s BPTP Parkland Pride Limited.
6. The plaintiffs claim that they appointed defendants No.1 & 2 as the
sole and exclusive intermediary and advisor to render services for raising
funds for the integrated township project initiated by them in August 2006 .
Defendant No.1, acting through defendant No.2, started negotiating with the
plaintiffs on behalf of the foreign investors and required the plaintiffs to sign
a mandate agreement. The mandate agreement entered into between
Mr.Sanjay Gambhir (plaintiff No.1) and M/s Beekman Helix India
Consulting Private Limited (defendant No.1) has been filed on record. The
plaintiff No.1 signed the same as the Managing Director of M/s D.D.
Housing Limited (defendant No.5) on 23.08.2006 , even though defendant
No.5 was incorporated as a company only in September 2006 . This
mandate agreement obliged the promoters of DDHL to undertake several
obligations, such as execution of a “Call Option Agreement”; to pledge the
shares of the promoters of DDHL in favour of defendant No.1 by executing
a Share Pledge Agreement (SPA), and; to cooperate with defendant No.1 to
provide defendant No.1 with all information necessary for defendant No.1 to
render its services. The plaintiffs state that the mandate letter dated
23.08.2006 was executed to safeguard the material interest of the plaintiffs
CS(COMM) 379/2016 Page 5 of 36


and of the foreign investors, who proposed to make investment in DDHL in
the form of mandatory and automatically fully convertible debentures.
7. The plaintiffs state that a foreign investor TMW – defendant No.4
agreed to make investment in DDHL by subscribing to mandatory and
automatically fully convertible debentures (FCD) equivalent to
Rs.1,12,50,00,000/- with a coupon rate of 4% per annum in terms of the
Debenture Subscription Agreement (DSA) dated 16.10.2006 entered into
between TMW (defendant No.4) and DDHL (defendant No.5).

8. The plaintiffs state that they and other promoters of defendant no.5
entered into with the foreign investors the DSA and the Share Holders
Agreement (SHA) in pursuance of the aforesaid transaction on 16.10.2006 .
Under this agreement, upon conversion into equity shares, the foreign
investors were to hold 63% of the fully paid up equity capital of defendant
No.5.
9. The plaintiffs state that after the execution of the DSA and SHA dated
16.10.2006, the plaintiffs executed a Call Option Agreement, a deed of
pledge and a power of attorney in favour of the defendant. They claim that
it was represented to them that the said documents would not be acted upon
by the defendant No.1, and the same was a mere formality for the purpose of
release of the first tranche of investment in favour of the defendant No.5,
and for mental satisfaction of the foreign investors. The Call Option
Agreement as executed on 18/ 19.10.2006 in favour of the defendant No.1,
and the Share Pledge Agreement and irrevocable power of attorney
were similarly executed on 19.10.2006 by the plaintiffs and other
CS(COMM) 379/2016 Page 6 of 36


promoters of defendant No.5. The plaintiffs state that the first tranche of
investment of Rs.76,50,00,000.00 was received by defendant No.5 on
23.10.2006 from TMW, and the second tranche of Rs.36,00,00,000.00 was
received by defendant No.5 on 03.03.2007 .
10. The plaintiffs state that they entered into a further supplementary
DSA on 07.08.2008 vide which TMW invested additional funds of
Rs.11,82,00,000/- in defendant No.5 and TMW was issued additional fully
convertible debentures in terms of the DSA dated 16.10.2006. It was agreed
that upon conversion of all the debentures, the same shall constitute 74.99%
of the fully paid up equity shares of defendant No.5. The plaintiffs stated
that the date for automatic conversion of fully convertible debentures was
initially 22.08.2009, which was extended to 21.11.2009 vide a second
amendment agreement dated 20.08.2009 between defendant No.5 and
TMW. The plaintiffs state that defendants No.1 & 2 made the plaintiffs sign
amendments to the Call Option Agreement with a mala fide intent to
bring the call option price to a negligible amount of Rs.100/-. The plaintiffs
state that the defendants “ forced upon the plaintiffs to execute restated Call
Option Agreement dated 18.06.2009 in order to reduce the call option price
to Rs.100/- only ”. The plaintiffs further state that “ the defendant after the
first call option agreement dated 18/ 19.10.2006 subsequently coerced upon
the plaintiffs to sign various amendments to the call option agreements,
deeds of pledge and power of attorney ”.
11. The plaintiffs state that on 29.01.2010, defendant No.1 issued a
default notice to the plaintiffs on behalf of defendant No.4/ TMW – the
foreign investor, alleging default in payment of coupon rate of 4% per
CS(COMM) 379/2016 Page 7 of 36


annum. On 06.02.2010, a call option notice was issued by defendant No.1
stating that the call option event had taken place, namely the default in
payment of interest at the coupon rate.
12. The plaintiffs claim that defendant No.2 abused his fiduciary position
and his close relationship with the plaintiffs and their family members to get
a large number of documents signed from plaintiff No.1, which were not
given to him.
13. The plaintiffs state that defendant No.1, under instructions from
defendant No.2, acted upon the documents executed by the plaintiffs, the
result of which was that the entire shareholding of the plaintiffs/ promoters
in defendant No.5 was transferred without any valid consideration. In
furtherance of call option notice, on 15.02.2010, defendant No.1 illegally
transferred the entire shareholding of the plaintiffs to itself for a
consideration of a paltry amount of Rs.100/-. The power of attorney
issued by the plaintiffs was allegedly misused by defendants No.1 & 2. On
the same day, i.e. 15.02.2010 , a Share Purchase Agreement was entered
for Rs.100/- on behalf of the plaintiffs by the attorney. The said transactions
of the year 2010 are sought to be challenged in the present suit, as noticed
hereinabove.
14. The plaintiffs state that they are putting to challenge “ the entire
transaction in 2010 ” in the present suit on the ground of “ large scale fraud ”
led by the defendants (presumably by defendants No.1 & 2) on its
principals, i.e. the plaintiffs. The plaintiffs state that after acquiring their
100% shares in defendant No.5, the defendants got the title of the lands
CS(COMM) 379/2016 Page 8 of 36


transferred in the name of defendant No.5 in connivance with defendant
No.6, namely, the Director, Town & Country Planning, Haryana. The
plaintiffs claim that the defendants No.1 & 2 illegally got the sale deeds
registered in favour of the defendant No.5 in respect of the land on the basis
of revoked power of attorneys. The plaintiffs state that in February 2011
they “ were compelled to sign a set of documents in which a second sale deed
with respect to the land in question was made to be executed under fraud
and coercion by the defendants whereby the illegal sale deed(s) dated
22.12.2010 were reinforced ”.
15. The plaintiffs state that the defendants created liability over defendant
No.5 by issuing further debentures of Rs.22.5 Crores of defendant No.5. On
22.11.2010, an FIR No.645/2010 was registered before P.S. Faridabad
Central against plaintiff No.1 and his associates, including all the Directors
of plaintiff No.4, M/s Forging Ltd., D.D. Auto Private Ltd. and M/s Daulat
Ram Dharambir Auto Pvt. Ltd. The defendants took, inter alia , the
following steps after the alleged illegal transfer of shareholding of the
plaintiffs to defendant No.1 in the defendant No.5 company:
“(a) Change in registered office of company from Okhla to
Malviya Nagar by passing the resolution dated 15.02.2010 .
(b) Transfer of shares from defendant No.1 to defendant
No.3 for a consideration of Rs.2.23 Crores on 27.09.2010 .
(c) Increase was made in authorized capital of the
company from 6 crores to 15 crores vide resolution dated
03.09.2010 . Here it is relevant to note that shareholding of the
plaintiffs (illegally transferred) was misused to vote on such
resolution.
CS(COMM) 379/2016 Page 9 of 36


(d) Transfer of 6 number of shares from Defendant No.3 to
own proxies namely Ms. Sonia Bali, Mr. Anant Sutoo, Mr. Ajay
Kumar Takru, Mr. Deepal Prasad, Ms. Sarita Bist and Mr.
Vivek Seth.” (emphasis supplied)
16. It is claimed that these acts were “ done by the defendants No.2 & 7 as
an act to reap benefit of fraud by increasing the number of their proxies in
the shareholders list ”. The defendants state that further allotment of shares
was made in favour of defendant No.3 of 22,67,215 shares in defendant
No.5 company. The registered office of defendant No.5 company was
shifted from Malviya Nagar to M-11, Connaught Place vide resolution dated
06.10.2010.
17. The plaintiffs state under the heading “ Documentation of 2011 ” from
paragraph 20 onwards of the plaint, that defendant No.2 with active
connivance of defendants No.7 made plaintiff No.1 to sign a large
number of documents, which included a back dated letter dated
02.03.2010 ratifying the alleged illegal takeover of shares of the
plaintiffs vide a Share Purchase Agreement and all actions of defendant
No.1 taken under the Call Option Agreements/ power of attorneys and
deeds of pledge .
18. The plaintiffs state that a back letter dated 02.03.2010 was taken to
the effect that the management has handed over the original records to the
defendant No.1. The plaintiffs state that the documents were handed over
after putting signatures “ as the plaintiffs wanted to buy peace and there was
a constant threat and police pressure upon the family of plaintiff No.1 due to
illegal criminal complaints that defendant No.2, defendant No.7 and the
CS(COMM) 379/2016 Page 10 of 36


other promoters of defendant No.3 company got registered against the
plaintiff ”.
19. The plaintiffs state that “ by playing fraud on the plaintiffs and under
the garb of taking care of the entire liability of the refund to the investors,
plaintiffs were made to sign 2011 documents ”. The particulars and date of
the documents disclosed by the plaintiffs, which they had executed in 2011,
have been set out in paragraph 21 and the same reads as follows:

CS(COMM) 379/2016 Page 11 of 36

CS(COMM) 379/2016 Page 12 of 36

CS(COMM) 379/2016 Page 13 of 36

CS(COMM) 379/2016 Page 14 of 36

CS(COMM) 379/2016 Page 15 of 36

CS(COMM) 379/2016 Page 16 of 36

20. Thus, the effect of execution of the “Documentation of 2011”,
undeniably, was to settle all possible disputes and claims that the plaintiffs
may have had in respect of the earlier documents executed between the
parties and the conduct of the parties.
21. In paragraph 22(ii), the plaintiffs state that they became aware of
the illegal and mala fide intentions of defendants No.2 & 7 when they
got complaints against the plaintiffs and former promoters and
Directors before the Economic Offences Wing (EOW) of Delhi Police
and F.I.R. No.43/2011 was registered against the plaintiff No.1, Mrs.
Reena Gambhir – his wife, and the Directors of plaintiff No.4. The
plaintiffs state that in September 2011, one of the Directors of plaintiff
No.4 Mr. Tarun Kumar was arrested by the EOW in the aforestated
F.I.R. The plaintiffs state that “ it was at this juncture, that the plaintiffs
became aware of the large scale fraud played on them by the defendants
when it came to their knowledge that defendants have even failed to honor
their commitments under the ‘2011 agreements’ and making plaintiffs to
sign ‘2011 set of documents’ was an act of fraud ”.
CS(COMM) 379/2016 Page 17 of 36


22. In paragraph 24 of the plaint under the heading “ Disputes Arose
Between The Parties ”, the plaintiffs state that plaintiff No.1 sent an e-mail
dated 01.12.2011 requesting defendant No.5 to pay to them an amount of
Rs.39 Crores payable under the non-compete agreement dated 16.02.2011.
It is stated that “ However, to the utter disbelief and shock of the plaintiffs,
the defendant No.5 in order to escape from their liability of refunding the
money of the customers refused to reimburse and pay the amount due to be
paid to the plaintiff No.4 ”. In this regard, letters dated 01.12.2011 and
29.12.2011 of the defendants have been placed on record.
23. The plaintiffs state that “ In view of the above, dispute(s) arose
between the parties and on 19.12.2011, a notice invoking arbitration clause
was served for adjudication of disputes ”. The plaintiffs state that since no
arbitrator was appointed, an arbitration petition under Section 11 of the
Arbitration & Conciliation Act, 1996 was preferred “ by the plaintiffs herein
before this Hon’ble Court ”. The same was got registered as Arb. Pet.
No.113/2012. The plaintiffs state that in the said petition, they “ were
seeking appointment of arbitrator for adjudication of disputes between the
parties ”. The said arbitration petition was dismissed on 22.05.2015 holding
that no arbitrable dispute survives between the parties. Consequently, the
present suit had been filed by the plaintiffs.
24. The averment against defendant No.6 is that the said defendant acted
in connivance with defendant No.7 . On 17.11.2011 , defendant No.6 on
the basis of the “ fraudulent documentation of 2011 ” transferred the
License No.30/2010 in favour of the defendant No.5 . The plaintiffs state
CS(COMM) 379/2016 Page 18 of 36


that despite defendant No.6 being put to notice on 10.08.2012 regarding
non-fulfillment of undertaking dated 20.06.2011, no action was taken.
25. The plaintiffs allege breach of trust/ fraud/ coercion at the hands of
the defendants, including defendants No.2 & 7 in paragraph 26 of the plaint.
Under the said heading, the plaintiffs have referred to acts and events which
were taken and which transpired in 2011.
26. In paragraph 29 of the plaint, the plaintiffs have set out the cause of
action in the following terms:
“29. CAUSE OF ACTION:
It is humbly submitted that there is a continuous cause of
action in hands of Plaintiff against the defendants, lastly it
arose on 05.02.2016, when the order was passed by the office
of Defendant No. 6 relying upon the documentation of 2011,
and the status quo order dated 14.08.15 came to be vacated .
Prior to this date the cause of action arose on 22.05.2015,
when an order was passed by this Court in Sec. 11 petition,
where arbitrator was sought to be appointed at instance of
Plaintiffs, where relying upon 2011 documentation, court took
the view that there exists no arbitrable dispute between the
parties .
Prior to this date the cause of action arose on 16.02.2011 (on
which date another set of documents were being made to sign)
and on 15.02.2010 (on which date the documents impugned
were illegally misused to transfer the shares of the Plaintiffs).
All the actions of 15.02.2010 and 16.02.2011 culminated into a
Notice u/s 21 of the Arbitration Act dated 19.12.2011.
From 19.12.2011 plaintiffs were in court (i.e. in the
proceedings u/s 11 of the Arbitration Act) and remained there
CS(COMM) 379/2016 Page 19 of 36


till 22.05.2015, on which date Arbitration Petition No. 113 of
2012 came to be dismissed.
As the transaction of shares with Defendant No.3 which
connects the entire thread , was received by the Plaintiffs for
the first time on 09.03.2015 i.e. upon receiving the copy of
Charge-sheet in the FIR No. 645/2011, PS Faridabad Central.”
(Emphasis supplied)
27. In paragraph 31, the plaintiffs have pleaded on the issue of limitation
in the following manner:
“ 31. Limitation:
It is humbly submitted that suit is within limitation as the cause
of action arose in plaintiffs favor on 05.02.2016, when the
order was passed by the office of Defendant No. 6 relying upon
the documentation of 2011, and the status quo order dated
14.08.15 came to be vacated.
Prior to this date the cause of action arose on 22.05.2015,
when an order was passed by this Court in Sec. 11 petition,
where arbitrator was sought to be appointed at instance of
Plaintiffs, where relying upon 2011 documentation, court took
the view that there exists no arbitrable dispute between the
parties. Thus, the Plaintiffs have no option but to prefer the
present suit humbly seeking for the prayers sought herein after.
In terms of Sec. 14 of the Limitation Act, plaintiffs are entitled
to get exclusion of time from the date of sending of Notice u/s
21 of the Arbitration Act till the disposal of the Petition i.e. till
22.05.2015.
From 16.02.2011 (on which date another set of documents were
being made to sign) and even from 15.02.2010 (on which date
the documents impugned were illegally misused to transfer the
shares of the Plaintiffs), the Suit plaint is in limitation as these
actions culminated into a Notice u/s 21 of the Arbitration Act
dated 19.12.2011. From 19.12.2011 plaintiffs were in court
CS(COMM) 379/2016 Page 20 of 36


(i.e. in the proceedings u/s 11 of the Arbitration Act) and
remained there till 22.05.2015, on which date Arbitration
Petition No. 113 of 2012 came to be dismissed.
As the transaction of shares with Defendant No.3 which
connects the entire thread , was received by the Plaintiffs for
the first time on 09.03.2015 i.e. upon receiving the copy of
Charge-sheet in the FIR No. 645/2011, PS Faridabad Central.
Thus, the suit is within limitation.”
28. From the above narration of the pleadings as well as on a perusal of
the reliefs sought in the plaint, it would be seen that the transaction in
respect whereof the plaintiffs seek reliefs of declaration and injunction date
back to 2006 when the mandate agreement was entered into on 23.08.2006
(that too only between plaintiff No.1 Sanjay Gambhir and defendant No.1
Beekman Helix India Consulting Pvt. Ltd). As noticed hereinabove,
plaintiff No.1 had signed this agreement “ for and behalf of the DD Housing
Limited ” by showing plaintiff No.1 as the “Managing Director”, even
though on the said date of execution of this mandate letter, i.e. 23.08.2006,
DD Housing Limited – defendant No.5 had not been incorporated and
registered as a company under the Companies Act, 1956. This mandate
letter – subject matter whereof was “ in relation to the identifying potential
investors to invest into instruments issued by the Special Purpose Vehicle
(SPV) proposed” to be set up by plaintiff No.1 Sanjay Gambhir, contain an
arbitration agreement, which inter alia , provided that “ any dispute,
controversy or claim arising out of or relating to this mandate letter or any
related agreement or other document or the validity, interpretation, breach,
or termination thereof (“dispute”), including claims seeking restraints or
ascertaining rights under applicable law, shall, be resolved and finally
CS(COMM) 379/2016 Page 21 of 36


settled in accordance with the provisions of the Indian Arbitration &
Conciliation Act, 1996 as may be amended from time to time or its re-
enactment (the “Arbitration Act”) ”.
29. Being conscious of the aforesaid position, the plaintiffs herein filed
Arbitration Petition No.113/2012 sometime around 03.03.2012 under
Section 11 of the Arbitration & Conciliation Act, 1996 for appointment of
an Arbitrator under the mandate letter dated 23.08.2006, impleading only
defendant No.1 M/s Beekman Helix India Consulting Pvt. Ltd as the party
respondent. None of the other defendants to the present suit were parties to
the said Arbitration Petition. This Arbitration Petition, i.e. Arbitration
Petition No.113/2012 was dismissed by this Court on 22.05.2015. While
dismissing the petition, the Court returned, inter alia , the following findings:
(i) Mr. Sanjay Gambhir could not have signed/ accepted the
contents of the mandate letter on behalf of an entity which was
not in existence (this finding was returned in view of the fact
that the plaintiff No.1 Sanjay Gambhir sought to sign the
mandate letter for and on behalf of the DD Housing Limited–
Defendant no.5 herein, which was not even incorporated under
the Companies Act as on 23.08.2006).
(ii) The other petitioners, i.e. Mr. Karan Gambhir, Mr. Kanishraaj
Gambhir and D.D. Global Capital Pvt. Ltd. (who are impleaded
as plaintiffs No.2 to 4 in the present suit as well) are not parties
to the mandate letter dated 23.08.2006 and, thus, not party to
the Arbitration Agreement contained therein.
CS(COMM) 379/2016 Page 22 of 36


(iii) The Call Option Agreement executed in pursuance of the
mandate letter dated 23.08.2006 does not have an arbitration
clause. However, the disputes between petitioner No.1 Sanjay
Gambhir, and the respondent in the Arbitration Petition M/s
Beekman Helix India Consulting Private Limited – defendant
No.1 herein, were arbitrable in relation to the Call Option
Agreement dated 18/ 19.10.2006.
(iv) The petitioner No.1 Sanjay Gambhir having confirmed in
writing of having received full and final settlement of all the
claims, he has no outstanding claims and, as such, there are no
arbitrable dispute(s) between petitioner No.1 and the
respondent, which could be referred to arbitration.
30. Since the defendants No.2 to 7 had, in any event, not been impleaded
in the said Arbitration Petition as party respondents – as they were,
admittedly, not party to the mandate letter dated 23.08.2006, the plaintiffs
were not prevented from initiating civil proceedings against them in respect
of the cause of action claimed against them in the present suit. Similarly,
since plaintiffs No.2 to 4 were not parties to the mandate letter dated
23.08.2006, the question to be considered is, whether their filing the
Arbitration Application would save their present action from the bar of
limitation. The issue thus arises: whether the present suit filed by the
plaintiffs against the defendants to seek reliefs, as aforesaid, is not barred by
limitation, and lack of cause of action.
CS(COMM) 379/2016 Page 23 of 36


31. The purpose of setting out hereinabove the extracts from the pleadings
made by the plaintiffs in their plaint is only to show that cause of action, if
any, arose in favour of the plaintiffs in relation to the transactions and
documents executed by them, and in relation to the alleged acts/ omission
and conduct of the defendants, on the dates of such transactions/ acts/
omission and conduct.
32. The submission of Mr. Chaudhary, learned counsel for the plaintiff is
that a Deed of settlement was entered into between:
New Age Town Planning Limited (formerly DD Housing Limited) i.e.
defendant no.5 and Rose Infracon Pvt. Ltd., i.e. defendant no.3 on the one
hand, and;
DD Auto Pvt. Ltd., DD Township Pvt. Ltd., i.e. plaintiff no.4 and few others
on the other hand, on 16.02.2011,
whereunder the plaintiffs undertook to withdraw the complaint to the DTCP
and confirmed that the license issued in favour of DD Township Ltd.
(plaintiff no.4) shall be transferred in the name of New Age Town Planners
Ltd. (defendant no.5). All the parties had undertaken that they shall
withdraw any/ all other complaints/ suits/ application filed by the first party
against the second party, and vice versa, in any Court or before any authority
before the date of the said settlement.
33. Mr. Chaudhary submits that the defendants sought to resile from the
said settlement on the allegation that the plaintiffs had misrepresented while
entering into the said deed of settlement with regard to withdrawal of
CS(COMM) 379/2016 Page 24 of 36


litigation by them. He submits that in this background, even the plaintiffs
were not bound by the said deed of settlement dated 16.02.2011.
34. Mr. Chaudhary submits that in 2011 itself the arbitration agreement
contained in the mandate letter 23.08.2006 was invoked and thus the
arbitration stood commenced and limitation stopped running. He submits
that the arbitration petition preferred by the petitioners – the plaintiffs
herein, was dismissed only on 22.05.2015 and the period spent by the
plaintiffs between the date of invocation of arbitration and the passing of the
order in Arbitration Petition No.113/2012 on 22.05.2015 is liable to be
excluded for purpose of computation of limitation under Section 14 of the
Limitation Act, on the ground that the plaintiffs were pursuing the said
remedy bona fide. In support of his aforesaid plea, he has placed reliance on
Consolidated Engineering Enterprises v. Principal Secretary, Irrigation
Department & Ors. , (2008) 7 SCC 169. He further submits that after the
dismissal of Arbitration Petition No.113/2012 on 22.05.2015, further cause
of action has arisen in favour of the plaintiffs, when the appeal preferred by
the plaintiff no.4 – being Appeal No.22/2014 seeking cancellation of
transfer of license No.30/2010 and restoration of the same in favour of
plaintiff no.4, was dismissed by the Secretary to the Govt. of Haryana, Town
and Country Planning Department, Chandigarh on 05.02.2016.
35. Having perused the plaint, the documents relied upon by the plaintiffs
including the judgment passed in Arbitration Petition No.113/2012 and the
judgment of the Supreme Court in Consolidated Engineering Enterprises
(supra), I am of the view that the reliefs sought in the present suit are either
CS(COMM) 379/2016 Page 25 of 36


barred by limitation, or the plaintiffs have no cause of action in respect of
the same other reliefs prayed for in the suit.
36. In relation to the relief ‘D’ sought in the plaint, it is seen that the
Share Purchase Agreement dated 15.12.2010 and all related transactions
were entered into between the concerned parties with regard to the sale of
shares of defendant No.5 on 15.02.2010. Similarly, the resolution effecting
change in the registered office of defendant No.5 company was passed on
15.02.2010, and the resolution changing the registered office of the company
from Malviya Nagar to Connaught Place is of 06.10.2010. The cause of
action in relation to the said Share Purchase Agreement of 15.02.2010 and
all other related transactions arose on the date of the transaction itself. The
limitation for seeking the declaratory relief in relation to the Share Purchase
Agreement dated 15.02.2010, and all its related transactions being three
years, expired in February 2013. In any event, even according to the
plaintiffs, they became aware of the alleged fraud played by the defendants
and their illegal and malafide intentions in 2011 when FIR No.43/2011 was
registered against plaintiff no.1, Reena Gambhir and the directors of plaintiff
no.4. In fact, the plaint states that in September 2011, one of the directors of
plaintiff no.4 Tarun Kumar was arrested by the EOW in the aforesaid FIR.
As noticed herein above, the plaintiffs themselves admits that they became
aware of the large scale fraud played on them by the defendants when it
came to their knowledge that the defendants had failed to honour their
commitments under the 2011 agreement, and the signing of the 2011 set of
documents was an act of fraud.
CS(COMM) 379/2016 Page 26 of 36


37. The said Share Purchase Agreement and related transactions, firstly,
do not fall within the scope of the mandate letter dated 23.08.2006. The
scope of the mandate letter was only to identify the potential investor who
could invest into instruments issued by the Special Purpose Vehicle
proposed to be set up by the plaintiff no.1. As noticed above, the Special
Purpose Vehicle, namely, defendant no.5 was set up much after the
execution of the mandate letter on 23.08.2006. The purpose of the mandate
letter was to grant mandate to defendant no.1 to identify the potential
investor, and, so as to secure the interest of the potential investor and grant
comfort to the potential investor, plaintiff no.1 undertook to execute the
“Call Option Agreement”, “Share Pledge Agreement” and to cooperate with
defendant no.1 and provide defendant no.1 with all necessary information to
enable defendant no.1 to render its services. The arbitration agreement, as
noticed by the learned Single Judge in his judgment 22.05.2015, related
firstly to the disputes arising under the mandate letter, and secondly to
disputes arising under any related agreement or other documents. In
arbitration, the plaintiffs could possibly not have sought the relief in respect
of the “ Share Purchase Agreement dated 15.02.2010 and all related
transactions between the defendants with regard to the shares of DD
Housing Limited ” in the arbitration petition, as the Share Purchase
Agreements dated 15.02.2010 and all related transactions went beyond the
scope of the mandate letter. Under the mandate letter, defendant no.1 was
obliged to secure investments by defendant no.4 in the defendant no.5
company in the form of automatically fully convertible debentures having
coupon rate of 4%. Thus, with the subscription being made by defendant
no.4 to the automatically fully convertible debentures as noticed herein
CS(COMM) 379/2016 Page 27 of 36


above, the contract contained in the mandate letter stood discharged upon
performance. On account of the default in payment of interest on the
debentures to the investors, the shares of the plaintiffs stood transferred as
agreed by the plaintiffs. The dispute with regard to the transfer of the said
shares from the plaintiffs to defendant no.1 clearly fell outside the scope of
the arbitration agreement contained in the mandate letter. Thus, the
plaintiffs were obliged to avail of their remedy before a civil Court within
the period of limitation in respect of the Share Purchase Agreements dated
15.12.2010 and other related transactions and cannot take the cover of the
invocation of arbitration agreement contained in the mandate letter dated
23.08.2006. The limitation in respect to the Share Purchase Agreements
dated 15.02.2010 and other related transactions commenced when the said
Share Purchase Agreements and other related transactions were entered into,
and expired on 14.02.2013. The plea premised on Section 14 of the
Limitation Act is, therefore, not available in respect of the aforesaid relief.
38. Secondly, even if the Share Purchase Agreements dated 15.02.2010
could remotely be considered as stemming from the mandate letter dated
23.08.2006, which contains an arbitration agreement, this Court held that no
arbitrable dispute survived under the said agreements and the documents
executed under the said agreement (mandate letter). The relevant extract
from the judgment dated 22.05.2015 delivered in Arbitration Petition
No.113/2012 reads as follows:
“48. … … … But a further question/issue would arise in view
of the facts pleaded by the respondent, whether any dispute
exist as on date between the petitioner no. 1 and the respondent
to be arbitrated. The said facts are;
CS(COMM) 379/2016 Page 28 of 36


(i) on March 4, 2010 the petitioners including petitioner no. 1
handed over the entire original records of the company
including but not limited to the ROC documents, cheque books,
vouchers and bank statements, income tax files, original IDS
files to the respondent against proper receipts;
(ii) the petitioner no. 1 vide undertaking dated March 2, 2010
resigned from the Board of Directors of the Company with
effect from February 01, 2010 and undertook to indemnify the
Company, its shareholders, directors etc. against losses,
liabilities incurred, claims etc.;
(iii) vide share subscription and transfer agreement dated
September 27, 2010, the respondent sold, transferred the shares
held by it in the company to M/s Rose INfracon Pvt. Ltd;
(iv) on February 16, 2011, the petitioner No.1 acknowledged
that he did not have any right title, interest, liabilities or
options of any nature whatsoever with respect to the securities
of the Company;
(v) the petitioner No.1 irrevocably agreed and confirmed that
he shall not seek to exercise any call option/buy back/purchase
rights with respect to the securities of the Company under the
Shareholders Agreement dated October 16, 2006 or the letter
dated March 02, 2010;
(vi) the securities of the Company can be freely transferred and
the petitioner No.1 do not have and shall not raise in future any
objection/claim/hindrance with regard to the securities of the
Company or the sale/disposal/transfer of securities of the
Company to any person;
(vii) the 14,88,094 equity shares of the Company including his
20,100 shares were validly sold and transferred by the
respondent to M/s Rose Infracon Pvt. Ltd and M/s Rose
Infracon Pvt. Ltd is a legal and beneficial owner of those
shares;
CS(COMM) 379/2016 Page 29 of 36


(viii) the petitioner No.1 do not have any right, interest, title,
entitlement or option of any nature in the shares held by M/s
Rose Infracon Pvt. Ltd in the Company;
(ix) the petitioner no. 1 gave an undertaking dated February
16, 2011 inter-alia confirmed that the shares were validly
transferred to the respondent under the Share Purchase
Agreement and acknowledged the receipt and adequacy of the
consideration.
49. An Agreement dated February 16, 2011 was executed
inter alia between the respondent, Company, M/s Rose Infracon
Pvt. Ltd. and the petitioners including the petitioner No.1,
pursuant to which the documents listed in Schedule I of the
Agreement were terminated with effect from the date of the
Agreement. The petitioners including petitioner no.1 confirmed
inter alia that the transfer of the 14,88,100 shares of the
Company is valid and binding; the petitioners do not have any
right, title or interest in the said shares; and they shall not
create hindrance/objections in the sale, transfer, disposal of the
said shares.
50. A Non Compete Agreement dated February 16, 2011 was
also executed between M/s Rose Infracon Pvt. Ltd., the
Company and the petitioners including petitioner No.1, wherein
the petitioners including petitioner No.1 have acknowledged
and confirmed that the petitioners including petitioner No.1
have sold certain shareholding of the Company to the
respondent and the respondent has further sold the
shareholding to M/s Rose Infracon Pvt. Ltd.
51. From the perusal of the aforesaid facts, it is clear that
the petitioner No.1 had given up his claims with regard to the
transfer of 20,100 shares held by him. It is not only one
document but several documents were executed by the
petitioner No.1 to forego his claim and not to challenge the
transfer of the shares on any account. He has rather
acknowledged the selling of shares by the respondent to M/s
Rose Infracon Pvt. Ltd.
CS(COMM) 379/2016 Page 30 of 36


52. I agree with the learned counsel for the respondent that
the petitioner No.1 having confirmed in writing of having
received the payment in full and final satisfaction of all the
claims, he has no outstanding claims and as such there are no
arbitrable dispute(s) between the petitioner No.1 and
respondent, which can be referred to arbitration… … … ”
(emphasis supplied)
39. It is not the plaintiffs case that the aforesaid findings of the Court
have not attained finality. The same, thus, bind the plaintiffs in the present
suit as well. Therefore, in any event, no cause of action survived in favour
of the plaintiffs in relation to the Share Purchase Agreement dated
15.02.2010 and all related transactions with regard to the transfer of shares
in defendant No.5. The said relief ‘D’ is, therefore, clearly barred by
limitation, and also barred as no cause of action could arise in respect of the
said transactions mentioned therein, as the parties expressly stated that no
claims or disputes survive in relation thereto.
40. For the same reason, the reliefs sought in prayer ‘E’ are also clearly
barred by limitation. The resolutions passed by the defendant No.5 company
on 15.02.2010 and 06.10.2010 effecting change of its registered office from
Okhla to Malviya Nagar and from Malviya Nagar to Connaught Place, in
any event, do not fall within the scope of the mandate letter dated
23.08.2006, and thus, a dispute in relation thereto was never an arbitrable
dispute. The plea premised on Section 14 of the Limitation Act is, therefore,
not available to the plaintiffs in respect of the said relief.

41. Relief ‘F’ sought by the plaintiffs to seek a declaration that issuance
of 5000 debentures on 26.02.2010 in favour of defendant No.4 is also barred
by limitation. The plaintiffs are not parties to the said transaction. The said
CS(COMM) 379/2016 Page 31 of 36


transaction is a transaction between defendant No.5 company and defendant
No.4, and the said transaction does not fall within the scope of the mandate
letter dated 23.08.2006. The limitation to seek a declaration in respect of
issuance of the said 5000 debentures on 26.02.2010, in any event, expired on
the expiry of three years, i.e. on 25.02.2013. The plea premised on Section
14 of the Limitation Act is, therefore, not available to the plaintiffs in
respect of the said relief.
42. For the same reasons, as aforesaid, the declarations sought under
prayers ‘G’, ‘H’, ‘I’, ‘J’, ‘K’, ‘L’, ‘M’ & ‘N’ are also barred by limitation.
The cause of action in relation to the said reliefs arose in 2010 & 2011 and
expired in 2013 & 2014, i.e. much prior to filing of the present suit. The
acts/ omissions complained of – which are claimed to be the foundation of
each of the aforesaid reliefs, are not in respect of “ any related agreement or
other document ” to the mandate letter dated 23.08.2016. The plea premised
on Section 14 of the Limitation Act is, therefore, not available to the
plaintiffs in respect of the said relief.
43. The plaintiffs have sought reliefs ‘A’, ‘B’ and ‘C’ in relation to the
management and business of defendant No.5 company. The plaintiffs, as of
date, have absolutely no stake/ shareholding in the defendant No.5 company,
and they are rank outsiders. That being the position, no such prayer is
maintainable at the instance of the plaintiffs against defendant No.5
company. Being ranked outsiders, the plaintiffs cannot interfere with the
management of its affairs by defendant No.5. No cause of action has arisen,
or can possibly arise, in favour of the plaintiff in respect of the said reliefs.
CS(COMM) 379/2016 Page 32 of 36


44. The claim of the plaintiffs that cause of action has lastly arisen on
05.02.2016 – when the order was passed in the office of defendant no.6,
dismissing the appeal of plaintiff no.4 on the aspect of transfer of License
No.30/2010 is also equally misplaced. At the highest, the dismissal of the
appeal of plaintiff no.4 by the Additional Secretary, Govt. of Haryana,
Chandigarh on 05.02.2016 may give a cause of action to plaintiff no.4 alone
to take further proceedings in respect of the said order dated 05.02.2016 in a
Court having jurisdiction over defendant no.6. Defendant no.6 was only
dealing with the appeal in relation to the transfer of License No.30/2010
and, obviously, the scope of the proceedings before him did not, and
possibly could not, include the grievances of the plaintiffs in respect
whereof the plaintiffs have sought reliefs in the present suit. Thus, the
dismissal of the said appeal by the Govt. of Haryana on 05.02.2016 has no
bearing on the other reliefs sought in the present suit.
45. So far as defendant no.6 is concerned, it is not located within the
jurisdiction of this Court. Pertinently, the plaintiffs have not even sought
any relief in the present suit in relation to the said order.
46. So far as relief ‘O’ is concerned, qua defendants No.2, 3 & 5, the said
relief, in any event, is barred by limitation. Even in relation to defendant
No.1, the said relief is barred by limitation (even though defendant No.1 was
a party to the mandate letter dated 23.08.2006), since plaintiffs
acknowledged that there were no outstanding claims or disputes between the
parties, as taken note of by this Court in Arbitration Petition No.113/2012
decided on 22.05.2015. The transfer of shares, in respect whereof accounts
are being sought by the plaintiffs, took place in 2010 and 2011 and the relief
CS(COMM) 379/2016 Page 33 of 36


for accounts could have been sought within the three years, if at all. The
plaintiffs have no locus standi to require defendant No.5 company to render
accounts to the plaintiffs, who are not even shareholders of the said
company.
47. The relief of damages claimed under relief ‘P’ is clearly barred by
limitation. Damages are claimed by the plaintiffs on the basis of allegations
of fraud, coercion, undue influence and breach of faith, etc. As noticed in
the aforesaid narration, all such alleged actions of the respondent were
undertaken latest by 2011 and the limitation for claiming compensation/
damages, thus, expired in 2014, i.e. prior to filing of the present suit. The
plea premised on Section 14 of the Limitation Act is, therefore, not available
to the plaintiffs in respect of the said relief.
48. Reliance placed by learned counsel for the plaintiffs on Consolidated
Engineering Enterprises Vs. Principal Secretary, Irrigation Department &
Others , (2008) 7 SCC 169, to invoke Section 14 of the Limitation Act is
wholly misplaced. The parameters applicable for invocation of Section 14
of the Limitation Act were noticed by the Supreme Court in paragraph 21 of
the said decision, which reads as follows:
“ 21. Section 14 of the Limitation Act deals with exclusion of
time of proceeding bona fide in a court without jurisdiction. On
analysis of the said section, it becomes evident that the
following conditions must be satisfied before Section 14 can be
pressed into service:
(1) Both the prior and subsequent proceedings are civil
proceedings prosecuted by the same party;
CS(COMM) 379/2016 Page 34 of 36


(2) The prior proceeding had been prosecuted with due
diligence and in good faith;
(3) The failure of the prior proceeding was due to defect of
jurisdiction or other cause of like nature;
(4) The earlier proceeding and the latter proceeding must
relate to the same matter in issue and;
(5) Both the proceedings are in a court. ”
49. As noticed hereinabove, the arbitration agreement contained in the
mandate letter was only between the plaintiff No.1 and the defendant No.1.
Therefore, the arbitration agreement was binding only on plaintiff No.1 and
defendant No.1, and thus, the other plaintiffs, in any event, had no
justification not to undertake civil action within the period of limitation in
respect of the causes of action which, according to them, arose in their
favour lastly in 2011. Similarly, reliefs against defendants No.2 to 7, in
respect whereof COA had arisen upto 2011, the reliefs should have been
sought within the period of limitation. The plea premised on Section 14 of
the Limitation Act is, therefore, not available to the plaintiffs in respect of
the said relief. So far as plaintiff No.1 is concerned, the failure of the earlier
proceedings, namely the Arbitration Petition No.113/2012 was not on
account of a defect of jurisdiction or other cause of like nature. The
Arbitration Petition under Section 11 was dismissed on merits after
returning a definite finding that no cause of action survives in favour of the
petitioner/ plaintiff No.1 and against the respondent, as there was no
surviving dispute which could be arbitrable.
CS(COMM) 379/2016 Page 35 of 36


50. For all the aforesaid reasons, it is absolutely clear to me that the
present is a patently frivolous and vexatious suit filed by the plaintiffs. The
filing of such litigation before a Court places undue burden on the Court
with the result that more deserving causes suffer. The hearing in this case
consumed a good part of the morning session of the Court, and the
preparation of this judgment has also taken considerable time. In these
circumstances, while dismissing the suit as being barred by limitation and
lacking cause of action, the plaintiffs are subjected to costs of Rs.2 lakhs to
be deposited with the Delhi Legal Services Authority. The costs be
deposited within three weeks. A copy of the judgment be communicated to
the Delhi Legal Services Authority. In case the costs are not so deposited,
they shall send a report in this regard which shall be placed before the Court
by the registry.


(VIPIN SANGHI)
JUDGE
MAY 04, 2016
B.S. Rohella
/sr
CS(COMM) 379/2016 Page 36 of 36