Full Judgment Text
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
APPEAL FROM ORDER NO.703 OF 2019
WITH
INTERIM APPLICATION NO.1 OF 2019
Prakash Pralhad Chhabria … Appellant
Versus
Vijay K. Chhabria
And Others … Respondents
ALONG WITH
APPEAL FROM ORDER NO.704 OF 2019
WITH
INTERIM APPLICATION NO.1 OF 2019
Orbit Electricals Pvt. Ltd. … Appellant
Versus
Vijay K. Chhabria
And Others … Respondents
…..
Mr. Janak Dwarkadas, Senior Advocate a/w Mr. Ashish Kamat i/b
Mr. Shailendra S. Kanetkar for the Appellant in Appeal from Order
No.703 of 2019.
Mr. Aspi Chinoy, Senior Advocate a/w Mr. Kunal Mehta i/b Mr.
Shailendra S. Kanetkar for the Appellant in Appeal from Order No.704
of 2019.
Mr. Shyam Mehta, Senior Advocate a/w Mr. Mayur Khandeparkar,
Mr. Nausher Kohli and Mr. Parag Khandhar i/b DSK Legal for
Respondent No.1.
Mr. Girish S. Godbole i/b Mr. Abhijeet Marathe for Respondent No.2.
Dr. Birendra Saraf a/w Mr. Amit Jajoo and Mr. Bhargav Kosuru i/b
Induslaw for Respondent No.3.
…..
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CORAM : S.C. GUPTE, J.
DATE : 15 OCTOBER 2019
( Oral Judgment )
. These two Appeals from Order challenge an order passed by
the Joint Civil Judge Senior Division at Pune on 10 May 2019. The
impugned order was passed on an interlocutory application of
Respondent No.1 to these appeals (original plaintiff). The plaintiff’s
suit was chiefly for a declaration that one Pralhad Chhabria Trust
(hereinafter for short called “PC Trust”), through its trustees (the
plaintiff being one of them), was the sole owner of 116922 shares of
defendant no.4-one Orbit Electricals Pvt. Ltd. (hereinafter for short
called “Orbit”). The shares represented approximately 80 per sent of
ownership of Orbit, who in turn held 30.7 per cent shares of a group
company known as Finolex Cables Ltd. and 18.8 per cent shares of
another group company known as Finolex Industries Ltd. By the
impugned order, Orbit was sought to be restrained from acting on the
votes cast by the Appellant herein (original defendant no.1) on
100300 shares of Orbit held by him till the final disposal of the suit.
2 The short facts of the case leading to the filing of the present
suit may be stated as follows :
(i) We are concerned in the present suit with
116992 shares of Orbit held by one Pralhad P.
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Chhabria (for short “Pralhad”). Pralhad’s brother,
Kishan P. Chhabria (for short “Kishan”), through
himself and his family members, held 7.3 per cent of
shares of Orbit. (Orbit, as is noted above, was the
shareholder of the family group companies, Finolex
Cables Ltd. and Finolex Industries Ltd.)
(ii) Kishan and his family members claimed that
an oral family arrangement was entered into between
the parties sometime in 2011 regarding the shares held
by Pralhad in Orbit. It was claimed that under this
family arrangement, Pralhad and Kishan were each to
hold 50 per cent shares of Orbit and to the extent he
held shares over 50 per cent, Pralhad was holding the
same in trust for Kishan. The case of oral family
arrangement was denied by Pralhad and his family
members.
(iii) On 12 March 2012, Pralhad executed a trust
deed constituting PC Trust. The trustees were
Pralhad and his daughter Aruna Katara, who is
Defendant No.2 in the present suit (hereinafter for
short called “Aruna”). The beneficiaries of the trust
were Pralhad’s son and daughter, Prakash P. Chhabria
(hereinafter for short “Prakash”) and Aruna, and
Kishen’s sons, Vijay K. Chhabria (in short called
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“Vijay”), who is the plaintiff herein, and his brother
Deepak K. Chhabria (in short called “Deepak”), who
is defendant no.3 to the suit. The trust deed inter
alia records Pralhad’s desire to settle some of his
estate immediately, whilst the rest from time to time,
in trust for PC Trust, the estate comprising of money
and equity shares and other financial instruments of
the group companies, etc.
(iv) On 15 March 2012, Pralhad transferred 10
shares out of his 116922 shares of Orbit to PC Trust.
He also transferred 4274 shares of Orbit each to
Prakash and Aruna. Pralhad continued to hold his
balance shares in Orbit.
(v) On 7 February 2013, the Board of Orbit
published a notice of its meeting to be held on 13
February 2013. One of the agenda items, namely,
item no.4, proposed consideration of a letter and
transfer deed received from Pralhad for transfer of his
entire shareholding in Orbit to PC Trust. The agenda
item recorded that Pralhad had submitted a letter
dated 5 February 2013 regarding transfer of his
shareholding of 116922 equity shares of Orbit to PC
Trust and this letter was being placed for
consideration of the Board in terms of Articles of
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Association of Orbit.
(vi) The minutes of meeting of Orbit held on 13
February 2013 recorded that the Chairman had placed
before the Board the request received for transfer of
Pralhad’s shareholding to PC Trust and that matter
was discussed at length and ultimately it was decided
to defer the decision to transfer shares.
(vii) On 14 September 2013, Pralhad transferred
3 shares of Orbit, one each to the daughters of
Prakash and Aruna and one to the son of Aruna. This
transfer was made by a duly executed transfer deed in
favour of the transferees.
(viii) On 15 July 2013 and 30 September 2014,
Articles of Association of Orbit were amended by the
general body of its shareholders inter alia by
introducing two new articles, namely, Articles 15A
and 31(d) and amending then existing Article 60.
Article 15A provided inter alia that upon the death of
Pralhad, equity shares lying in his name under
Registered Folio No.21 shall be transmitted in the
name of PC Trust and none else. Article 31(d)
provided that upon the demise of Pralhad, shares in
his name, either as the sole or the first holder thereof,
shall stand automatically transmitted to PC Trust.
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Article 60 was amended so as to provide against any
further amendment of the Memorandum and Articles
of Orbit during the life of 60 years of PC Trust and
any further extension thereof by the company as may
be permissible under the laws prevailing in the
country.
(ix) On 4 January 2014, Pralhad executed a
supplementary trust deed inter alia making it clear
that on his death, his shareholding in Orbit along
with accretions, if any, would stand bequeathed to PC
Trust and its trustees should ensure that on his
death the shareholding is transferred legally and held
by them in their capacity as trustees of PC Trust.
(This supplementary deed is a disputed document, the
original of which has not been produced till date.)
(x) On 15 October 2014, Pralhad is alleged to
have executed a will inter alia requiring his executors
to arrange for transmission of his share capital in
Orbit to PC Trust.
(xi) On 28 March 2016, Pralhad executed a gift
deed and share transfer form in favour of Prakash
transferring unto him 100300 shares of Orbit then held
by the former. The share transfer form was duly
stamped with a stamp duty of about Rs.3.50 crores.
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(xii) On 31 March 2016, the Board of Directors
of Orbit approved the transfer of 100300 shares of
Pralhad to Prakash. This Board Meeting was attended
by Deepak, who had signed the attendance register.
(xiii) On 5 may 2016, Pralhad died.
(xiv) On 16 November 2016, a company petition
was moved by Deepak and his wife Vini in NCLT,
Mumbai (Company Petition No.48 of 2015). The
petition claimed that an oral family arrangement was
arrived at between Pralhad and Kishan sometime in
September 2011, whereby it was agreed that Deepak
(i.e. son of Kishan) would remain in control of Finolex
Cables and Prakash (son of Pralhad) would remain in
control of Finolex Industries and accordingly,
shareholding of Pralhad in Orbit would be transferred
to PC Trust and distributed in the ratio of their
beneficial ownership mentioned in the trust deed.
Deepak placed reliance on (i) the trust deed of PC
trust, (ii) the supplementary trust deed, (iii) the
amendment to Articles of Orbit, (iv) Board Notice of 7
February 2013, (v) Minutes of Board Meeting of 13
February 2013 and (vi) will of Pralhad of 2014. The
petition contested the purported gift of 100300 shares
of Pralhad to his son Prakash, claiming the same to
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be invalid being contrary to the oral family
arrangement set up by the petitioner. The petition
also alleged that the Board Meeting of Orbit of 31
March 2016, in which the transfer of 100300 shares in
favour of Prakash was approved, was illegal; no such
meeting had actually been held. The petitioner,
Deepak, claimed that he had signed the attendance
register of that meeting upon a misrepresentation. No
interim relief has been granted to Deepak on the
company petition in respect of 100300 shares of
Pralhad till date.
(xv) On 18 November 2016, Kishan and Deepak
filed a special civil suit in Pune District Court (Special
Civil Suit No.1418 of 2016) seeking enforcement of
the same purported oral family arrangement, which
was the subject matter of the company petition of
Deepak.
(xvi) On 19 November 2016, the District Court
rejected the plaintiffs’ application for ad-interim reliefs
in the aforesaid special civil suit. This order has not
been challenged so far by anyone.
(xvii) From 31 March 2016, i.e. the date of
approval of his transfer by the Board of Orbit,
Prakash has been acting on the transfer and voting on
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100300 shares of Orbit transferred in his favour by the
gift deed.
3 In the backgdrop of these facts, on 24 October 2017, the present
suit was filed by Vijay as one of the trustees of PC Trust (Special
Civil Suit No.1372 of 2017). Prakash, Aruna, Deepak and Orbit,
respectively, are defendant nos.1, 2, 3 and 4 to the suit. Vijay has
alleged in his suit, presumably on the basis of the Notice and Minutes
of Board meeting of Orbit, respectively, of 7 February 2013 and 13
February 2013, that 116922 shares of Pralhad had already stood
transferred to PC Trust prior to 13 February 2013; this transfer was
complete as between Pralhad and PC Trust; and the shares held
thereafter in the name of Pralhad were in his capacity as a trustee for
the benefit of the transferee, namely, PC Trust. Eight months after
filing of the suit, on or about 11 June 2018, Deepak and Kishan filed
an application (Exhibit “88”) in Pune District Court in their suit (SCS
No.1418 of 2016) seeking an interim injunction restraining Prakash
and others from interfering with Deepak’s reappointment as Executive
Chairman of Finolex Cables in the AGM scheduled to be held on 25
September 2018. The District Court dismissed that interim application
prima facie negativing the challenge of Deepak and Kishan to
Prakash’s entitlement to 100300 shares and his right to vote thereon
so as to affect the reappointment of Deepak as Executive Chairman of
Finolex Cables. Deepak’s appeal from that order, has been pending
before this court. This Court, however, by its order dated 21
September 2018, made it clear that it was making no interim order in
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the matter. The Court observed that any voting that may take place
on the basis of 100300 shares of Orbit held by Prakash would be
subject to the orders to be passed by this Court on Deepak’s appeal.
All this while, during the pendency of the interim application of Vijay
in the present suit (SCS No.1372 of 2017), there had been no
ad-interim order in his favour.
4 In these facts, on 10 may 2019, the trial court passed its
impugned order restraining Orbit from acting on the votes cast by
Prakash on 100300 shares of Orbit till the decision in the suit. This
order has been challenged both by Prakash and Orbit in their
respective Appeals from order (Appeal from Order Nos.703 of 2019
and 704 of 2019).
5 Mr. Chinoy and Mr. Dwarkadas, learned Senior Counsel
appearing, respectively, for Orbit and Prakash, submit that there has
been overwhelming evidence on record to support their case that till
he executed a duly stamped gift deed and transfer in favour of
Prakash in respect of his 100300 shares of Orbit on 28 March 2016,
Pralhad continued to be the owner and shareholder in respect of these
shares. Learned Counsel submit that there is no credible basis for
suggesting any executed transfer by Pralhad in favour of PC Trust at
any time during his lifetime. Learned Counsel question the basis of
knowledge purportedly gathered in this behalf by Vijay, who was
neither a shareholder nor a director of Orbit at any time. Learned
Counsel submit that Vijay claimed to have gained his knowledge from
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Deepak and Kishan’s pleadings in the earlier two rounds of litigation,
namely, the company petition of Deepak pending before NCLT,
Mumbai and Special Civil Suit of Kishan and Deepak pending before
the District Court at Pune. It is submitted that neither Deepak nor
Kishan had ever claimed in either of these proceedings that there had
been an already executed transfer in favour of PC Trust by Pralhad;
their case essentially had been based on the oral family arrangement,
as noted above, of which they were in effect seeking specific
performance, though they did refer to the agenda of the board
meeting issued on 7 February 2013 and minutes of the board meeting
held on 13 February 2014, which appear to be the sole basis for
Vijay to claim an executed transfer of Pralhad’s shareholding in favour
of PC Trust. Learned Counsel refer to an affidavit of Meena D’Sa,
who was looking after the office of Orbit since as far back as from
1998. Learned Counsel submit that she had made it clear that
whenever Pralhad intended to transfer any of his shares, he did so by
instructing her to make out a document of transfer, but that, in the
present case, no such document was created at his instance, though
the agenda item of 7 February 2013 regarding transfer of shareholding
was inserted at his instance. Learned Counsel also submit that Aruna,
who was a co-trustee of PC Trust along with Vijay, had also made it
clear that no transfer deed was actually executed by Pralhad in favour
of PC Trust. Learned Counsel contend that there is no evidence
whatsoever of any such executed transfer in favour of PC Trust, save
and except a bare reference to an alleged letter and transfer in the
agenda and minutes of the board meeting of 13 February 2013, none
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of which has so far seen the light of the day. Learned Counsel submit
that no one has even claimed to have seen any such transfer deed or
letter and in any event, admittedly, no stamp duty is even stated as
paid on any such transfer. Learned Counsel submit that, on the other
hand, the transfer executed by Pralhad in favour of Prakash on 28
March 2016 was with a duly stamped gift deed and transfer form, on
which a stamp duty of Rs.3.16 crore was actually paid by Pralhad.
Learned Counsel submit that the conduct of the parties throughout the
relevant period indicates that there was in fact no executed transfer
by Pralhad in favour of PC Trust at any time. Learned Counsel
submit that documents on record, at the most, bear out a case of a
clear intention expressed by Pralhad to transmit his shareholding after
his death to PC Trust, but no executed transfer at any time during his
lifetime, save and except in respect 10 shares, which were admittedly
transferred by Pralhad to PC Trust. Learned Counsel also submit that
Prakash, ever since the transfer in his favour was completed and
recognized and given effect to by the Board of Directors of Orbit, has
duly participated in the general meetings as holder of the shares
covered by the transfer, and voted thereon throughout the relevant
period. Learned Counsel submit that on these facts, the trial court
could not have issued any temporary injunction in respect of voting
on these shares by Prakash.
6 Mr. Mehta, learned Senior Counsel appearing for Respondent
No.1 (original plaintiff-Vijay), submits that Vijay’s suit is essentially
on two grounds: firstly, it is on the ground of a completed transfer
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in favour of PC Trust and secondly, of a fabricated gift deed set up
by Prakash in respect of 100300 shares of Orbit held originally by
Pralhad. Learned Counsel places strong reliance on the agenda of
Board Meeting issued on 7 February 2013 and the minutes of that
meeting of 13 February 2013 to support his case that there was an
already executed transfer by Pralhad in favour of PC Trust. Relying
on the case of Killick Nixon Ltd., Beena Popatlal Kapadia Vs. Dhanraj
1
, learned Counsel submits that once a transfer deed is
Mills Pvt. Ltd.
duly executed, as between the transferor and the transferee, the
beneficial ownership of the shares passes on to the transferee and till
such time as the transfer is acknowledged and given effect to by the
company in its books, the transferor holds the shares in trust for the
beneficial owner thereof, namely, the transferee. Learned Counsel, also
relying on Section 118 of the Companies Act 2013 and the case of
2
, submits that
M.S. Madhusoodhanan Vs. Kerala Kaumudi (P) Ltd
Minutes of Board Meeting kept in accordance with these provisions
are evidence of the proceedings recorded therein. Learned Counsel
submits that minutes of Board Meeting of 13 February 2013 were duly
confirmed by the Board of Directors of Orbit in their subsequent
meeting of 4 May 2013. Learned Counsel submits that till date it
has been nobody’s case that these minutes were either not genuine or
did not correctly reflect what transpired at the board meeting of
13 February 2013.
1 1981 SCC OnLine Bom 301
2 (2004) 9 SCC 2014
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7 It is trite to say that in an interlocutory application, the trial
court is expected, firstly, to make an assessment of prima facie merits
of the plaintiff’s case. For such assessment, it weighs the evidence
placed before it by both contesting parties. In the present case,
practically, the only piece of evidence, which is relied upon by Vijay,
the original plaintiff, in support of his case of a completed transfer of
the shares of Pralhad in favour of PC Trust, is the agenda of the
board meeting of Orbit issued on 7 February 2013 and the minutes of
that meeting held on 13 February 2013. The relevant agenda item
proposes consideration of a letter and transfer deed received from
Pralhad for transfer of his shareholding of Orbit to PC Trust. Neither
the alleged transfer deed nor the transfer form is either on record or
set up by any party to the suit. On the other hand, there is on
record the plaintiff’s own case that Deepak had telephonic
conversation with Ms. Meena D’Sa, Company Executive of Orbit, on
8 November 2013, a date very much relevant for its comparative
proximity with the events of February 2013, which, according to
Vijay, showed that as per Ms. D’sa, Pralhad was determined to ensure
that all shares of Orbit held by him would be transferred to the
trustees of PC Trust, but this was not done “because of tax/stamp
duty implications which would amount to crores of rupees”. Vijay
relied upon the audio recording that Deepak had given to him and the
transcript of the recording, which he himself had got prepared, in this
behalf. This case of the plaintiff himself, supported by an audio
recording of the relevant phone call, makes it clear that there was
only an intent on the part of Pralhad to transfer his shareholding of
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PC Trust, and no executed transfer. Whatever may be the case why it
was not done, what we have to see is the primary fact of execution
of a transfer deed. So far as this primary fact is concerned, the
plaintiff’s own pleaded case (in clause (x) of paragraph 13 of the
plaint) suggests otherwise. As against the evidence of the agenda and
minutes of the board meeting, relied upon by Vijay, as the only piece
of evidence in support of his case of an executed trasnsfer in favour
of PC Trust, there is a wealth of material in support of the rival case
of Prakash and other defendants that Pralhad not only continued to be
the owner of the suit shares at all times till he actually executed the
gift deed in favour of Prakash, but that every act of Pralhad and
other directors of Orbit, after the alleged executed transfer in favour
of PC Trust, i.e. post 13 February 2013, is clearly inconsistent with
such transfer. In the first place, within a few months of the alleged
transfer in favour of PC Trust, Pralhad himself duly executed a
transfer form and effected transfer of at least 3 of these shares,
respectively, in favour of plaintiff nos.5, 6 and 7. Secondly, on 15
July 2013, that is to say, within six months of the so-called transfer
in favour of PC Trust, directors of Orbit and Pralhad initiated
amendment of Articles of Association of Orbit; the General Meeting of
Orbit, held on 15 July 2013, introduced automatic transmission of
shares held by Pralhad, after his lifetime, in favour of PC Trust by
introducing Article 31(b). This was followed by insertion of another
article, namely, Article 15A, which also provided for transmission of
the equity shares of Pralhad under Registered Folio No.21 upon his
death to PC Trust and none else. Consistent with these Articles,
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Article 60 of Orbit was amended to reflect irrevocability of this
arrangement during the lifetime of the trust, namely, its scheduled
tenure of 60 years. Even the other documents set up by the plaintiff,
namely, the alleged second supplementary trust deed and last will and
testament of Pralhad, respectively, of 4 January 2014 and 15 October
2014 (which are disputed by Prakash and others), make out at best a
case of bequest of Pralhad’s shares to PC Trust after his death and not
the case of an inter vivos transfer of these shares in favour of PC
Trust. These facts are consistent with the income tax returns filed
both by Pralhad and PC Trust; the trust was shown as holder of 10
shares of Orbit in these income tax returns. It is in the backdrop of
these facts that on 20 March 2015, Pralhad proceeded to execute a
gift deed, which is duly registered and stamped along with a share
transfer form, in favour of Prakash gifting/transferring 100300 shares
of Orbit to the latter. The documents bear a stamp duty of Rs.3.60
crores. The board meeting of Orbit, which followed (i.e. the meeting
of 31 March 2015), was attended by Pralhad as well as Deepak,
where the transfer of 100300 shares by Pralhad to Prakash was
approved. After such approval and effect given to the share transfer,
when Pralhad passed away, Prakash as well as Orbit clearly appear to
have acted on the transfer, the former exercising voting rights in
respect of all these shares throughout the relevant period. Neither
Kishan nor any member of his family including Vijay himself set up
any case that there was an already executed transfer by Pralhad in
favour of PC Trust at any time before the filing of the present suit.
This in the face of the fact that there were two full-fledged
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contentious proceedings between the parties, one before NCLT,
Mumbai and the other before the District Court at Pune, where
transfer of shares by Pralhad in favour of Prakash was the very
subject matter of disputes between the parties. In none of these
proceedings or pleadings filed therein, was there any claim made by
Kishan or any of his family members that Pralhad had actually
transferred his shareholding in favour of PC Trust during his lifetime.
Aruna, who is a co-trustee with Vijay of PC Trust, has in her
affidavit also affirmed that there never was any transfer executed by
Pralhad in favour of PC Trust. In the face of all these materials, and
considering that Vijay himself admittedly had no personal knowledge
about any transfer purportedly effected by Pralhad in favour of PC
Trust (he claims to have gained knowledge of this transfer from
Deepak’s pleadings, which, as we have noted above, did not contain
any suggestion of a completed transfer in favour of PC Trust), it is
but a foregone conclusion that Vijay has failed to make out any prima
facie case of a completed transfer of shares by Pralhad in favour of
PC Trust.
8 There is no quarrel with the propositions propounded by
Mr. Mehta, learned Senior Counsel for the plaintiff, that upon any
duly executed transfer of shares, as between the shareholder and his
transferee, the beneficial ownership of the shares is indeed passed on
to the transferee, and since the date of such transfer and until
the same is recorded in the books and effect is given to
it by the company, the transferor continues to be a trustee of
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the beneficial owner, namely, the transferee, and is bound to exercise
all rights in respect of the shares at the behest and on instructions of
the latter. The fact of the matter, however, is that there is no prima
facie case of any such completed transfer as between the shareholder,
namely, Pralhad, in favour of his transferee, namely, PC Trust.
9 Coming now to the gift deed executed by Pralhad in favour of
Prakash, it is, firstly, important to note that the trial court has not
come to any conclusion (no such conclusion being even suggested in
the impugned order) that the gift deed was a fabricated document or
that the signature thereon was not of Pralhad or that the deed was
vitiated on any of the grounds, which, under the law of contracts,
vitiate volition of an executing party, or make the contract of transfer
void or voidable. In fact, it is important to note that an express
application for interim relief made by Deepak in his suit, namely, SCC
Suit No.1418 of 2016, on the very basis of nullity or illegality of the
gift deed of 28 March 2016, has been, in terms, rejected by the trial
court. It was claimed by Deepak in his application (Exhibit “66”) in
that suit that the gift deed of 28 March of 2016 was null and void
and no right flew therefrom in favour of Prakash by raising various
grounds alleged in his suit. It was alleged inter alia that no gift deed
was duly executed by Pralhad on that day; that Pralhad was not in a
sound state of health around that time; that Prakash had either forged
the signature of Pralhad or in collusion with Aruna and other
directors of Orbit, procured the signature of Pralhad on the gift deed;
that undue influence was exercised over Pralhad during his ailment
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and taking advantage of his confused state of mind for execution of
the purported gift deed; that Pralhad was not mentally aware of his
actions, and his signature, if at all there was one, was obtained
fraudulently by Prakash and Aruna. In other words, not only was the
signature of Pralhad disputed, but every available plea under the law
of contracts for vitiating his free consent was raised and interim relief
was sought on that basis, besides, of course, the originally averred
case of an oral family arrangement. The trial court was not
impressed. It did not accept any such plea prima facie, and refused
to grant any interim relief. This court, though it admitted an appeal
from that order, made it clear that it was not granting any interim
relief to the appellants. In the premises, no case of interim relief
could possibly be entertained on the basis of the self-same case urged
by a third party, who avowedly does not claim any personal
knowledge of the facts but claims to have gleaned his knowledge from
the pleadings in that other suit.
10. The trial court, whist passing the impugned order, appears to
have treated the Articles of Association of Orbit, the trust deed (of PC
Trust) and will of Pralhad as containing “specific mention…….that
116922 shares of Defendant No.4 (i.e. Orbit) has (sic, have ?) been
transferred to the PC Trust”. That is a glaring error and it really goes
to the root of the matter. If at all, these documents suggest an intent
to transfer or, really speaking, transmission of shares post Pralhad’s
lifetime, and certainly not an inter vivos transfer during his lifetime.
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11 The second leg of the plaintiffs’ case, namely, the alleged
invalidity of the gift deed, also holds no water at this prima facie
stage. It cannot possibly sustain an interim injunction restraining the
lawful putative owner of the shares, Prakash, from exercising his
voting rights thereon.
12 The impugned order of the trial court, accordingly, deserves
to be quashed and set aside and the plaintiffs’ interim application
rejected.
13 The appeals are, in the premises, allowed by setting aside the
impugned order of the Joint Civil Judge, Senior Division, Pune passed
on 10 May 2019 and rejecting the plaintiffs’ application, being
Exhibit-78. It is clarified that the merits of the third Respondent’s
cases pending before NCLT, Mumbai and District Court at Pune in
Special Civil Suit No.1418 of 2016, which agitate different causes of
action, have not been considered by this court whilst passing this
order. These cases, it is needless to add, shall be decided on their
own merits.
14 In view of the disposal of the appeals, the Interim Applications
taken out therein do not survive and are also disposed of.
(S.C. GUPTE, J.)
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
APPEAL FROM ORDER NO.703 OF 2019
WITH
INTERIM APPLICATION NO.1 OF 2019
Prakash Pralhad Chhabria … Appellant
Versus
Vijay K. Chhabria
And Others … Respondents
ALONG WITH
APPEAL FROM ORDER NO.704 OF 2019
WITH
INTERIM APPLICATION NO.1 OF 2019
Orbit Electricals Pvt. Ltd. … Appellant
Versus
Vijay K. Chhabria
And Others … Respondents
…..
Mr. Janak Dwarkadas, Senior Advocate a/w Mr. Ashish Kamat i/b
Mr. Shailendra S. Kanetkar for the Appellant in Appeal from Order
No.703 of 2019.
Mr. Aspi Chinoy, Senior Advocate a/w Mr. Kunal Mehta i/b Mr.
Shailendra S. Kanetkar for the Appellant in Appeal from Order No.704
of 2019.
Mr. Shyam Mehta, Senior Advocate a/w Mr. Mayur Khandeparkar,
Mr. Nausher Kohli and Mr. Parag Khandhar i/b DSK Legal for
Respondent No.1.
Mr. Girish S. Godbole i/b Mr. Abhijeet Marathe for Respondent No.2.
Dr. Birendra Saraf a/w Mr. Amit Jajoo and Mr. Bhargav Kosuru i/b
Induslaw for Respondent No.3.
…..
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CORAM : S.C. GUPTE, J.
DATE : 15 OCTOBER 2019
( Oral Judgment )
. These two Appeals from Order challenge an order passed by
the Joint Civil Judge Senior Division at Pune on 10 May 2019. The
impugned order was passed on an interlocutory application of
Respondent No.1 to these appeals (original plaintiff). The plaintiff’s
suit was chiefly for a declaration that one Pralhad Chhabria Trust
(hereinafter for short called “PC Trust”), through its trustees (the
plaintiff being one of them), was the sole owner of 116922 shares of
defendant no.4-one Orbit Electricals Pvt. Ltd. (hereinafter for short
called “Orbit”). The shares represented approximately 80 per sent of
ownership of Orbit, who in turn held 30.7 per cent shares of a group
company known as Finolex Cables Ltd. and 18.8 per cent shares of
another group company known as Finolex Industries Ltd. By the
impugned order, Orbit was sought to be restrained from acting on the
votes cast by the Appellant herein (original defendant no.1) on
100300 shares of Orbit held by him till the final disposal of the suit.
2 The short facts of the case leading to the filing of the present
suit may be stated as follows :
(i) We are concerned in the present suit with
116992 shares of Orbit held by one Pralhad P.
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Chhabria (for short “Pralhad”). Pralhad’s brother,
Kishan P. Chhabria (for short “Kishan”), through
himself and his family members, held 7.3 per cent of
shares of Orbit. (Orbit, as is noted above, was the
shareholder of the family group companies, Finolex
Cables Ltd. and Finolex Industries Ltd.)
(ii) Kishan and his family members claimed that
an oral family arrangement was entered into between
the parties sometime in 2011 regarding the shares held
by Pralhad in Orbit. It was claimed that under this
family arrangement, Pralhad and Kishan were each to
hold 50 per cent shares of Orbit and to the extent he
held shares over 50 per cent, Pralhad was holding the
same in trust for Kishan. The case of oral family
arrangement was denied by Pralhad and his family
members.
(iii) On 12 March 2012, Pralhad executed a trust
deed constituting PC Trust. The trustees were
Pralhad and his daughter Aruna Katara, who is
Defendant No.2 in the present suit (hereinafter for
short called “Aruna”). The beneficiaries of the trust
were Pralhad’s son and daughter, Prakash P. Chhabria
(hereinafter for short “Prakash”) and Aruna, and
Kishen’s sons, Vijay K. Chhabria (in short called
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“Vijay”), who is the plaintiff herein, and his brother
Deepak K. Chhabria (in short called “Deepak”), who
is defendant no.3 to the suit. The trust deed inter
alia records Pralhad’s desire to settle some of his
estate immediately, whilst the rest from time to time,
in trust for PC Trust, the estate comprising of money
and equity shares and other financial instruments of
the group companies, etc.
(iv) On 15 March 2012, Pralhad transferred 10
shares out of his 116922 shares of Orbit to PC Trust.
He also transferred 4274 shares of Orbit each to
Prakash and Aruna. Pralhad continued to hold his
balance shares in Orbit.
(v) On 7 February 2013, the Board of Orbit
published a notice of its meeting to be held on 13
February 2013. One of the agenda items, namely,
item no.4, proposed consideration of a letter and
transfer deed received from Pralhad for transfer of his
entire shareholding in Orbit to PC Trust. The agenda
item recorded that Pralhad had submitted a letter
dated 5 February 2013 regarding transfer of his
shareholding of 116922 equity shares of Orbit to PC
Trust and this letter was being placed for
consideration of the Board in terms of Articles of
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Association of Orbit.
(vi) The minutes of meeting of Orbit held on 13
February 2013 recorded that the Chairman had placed
before the Board the request received for transfer of
Pralhad’s shareholding to PC Trust and that matter
was discussed at length and ultimately it was decided
to defer the decision to transfer shares.
(vii) On 14 September 2013, Pralhad transferred
3 shares of Orbit, one each to the daughters of
Prakash and Aruna and one to the son of Aruna. This
transfer was made by a duly executed transfer deed in
favour of the transferees.
(viii) On 15 July 2013 and 30 September 2014,
Articles of Association of Orbit were amended by the
general body of its shareholders inter alia by
introducing two new articles, namely, Articles 15A
and 31(d) and amending then existing Article 60.
Article 15A provided inter alia that upon the death of
Pralhad, equity shares lying in his name under
Registered Folio No.21 shall be transmitted in the
name of PC Trust and none else. Article 31(d)
provided that upon the demise of Pralhad, shares in
his name, either as the sole or the first holder thereof,
shall stand automatically transmitted to PC Trust.
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Article 60 was amended so as to provide against any
further amendment of the Memorandum and Articles
of Orbit during the life of 60 years of PC Trust and
any further extension thereof by the company as may
be permissible under the laws prevailing in the
country.
(ix) On 4 January 2014, Pralhad executed a
supplementary trust deed inter alia making it clear
that on his death, his shareholding in Orbit along
with accretions, if any, would stand bequeathed to PC
Trust and its trustees should ensure that on his
death the shareholding is transferred legally and held
by them in their capacity as trustees of PC Trust.
(This supplementary deed is a disputed document, the
original of which has not been produced till date.)
(x) On 15 October 2014, Pralhad is alleged to
have executed a will inter alia requiring his executors
to arrange for transmission of his share capital in
Orbit to PC Trust.
(xi) On 28 March 2016, Pralhad executed a gift
deed and share transfer form in favour of Prakash
transferring unto him 100300 shares of Orbit then held
by the former. The share transfer form was duly
stamped with a stamp duty of about Rs.3.50 crores.
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(xii) On 31 March 2016, the Board of Directors
of Orbit approved the transfer of 100300 shares of
Pralhad to Prakash. This Board Meeting was attended
by Deepak, who had signed the attendance register.
(xiii) On 5 may 2016, Pralhad died.
(xiv) On 16 November 2016, a company petition
was moved by Deepak and his wife Vini in NCLT,
Mumbai (Company Petition No.48 of 2015). The
petition claimed that an oral family arrangement was
arrived at between Pralhad and Kishan sometime in
September 2011, whereby it was agreed that Deepak
(i.e. son of Kishan) would remain in control of Finolex
Cables and Prakash (son of Pralhad) would remain in
control of Finolex Industries and accordingly,
shareholding of Pralhad in Orbit would be transferred
to PC Trust and distributed in the ratio of their
beneficial ownership mentioned in the trust deed.
Deepak placed reliance on (i) the trust deed of PC
trust, (ii) the supplementary trust deed, (iii) the
amendment to Articles of Orbit, (iv) Board Notice of 7
February 2013, (v) Minutes of Board Meeting of 13
February 2013 and (vi) will of Pralhad of 2014. The
petition contested the purported gift of 100300 shares
of Pralhad to his son Prakash, claiming the same to
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be invalid being contrary to the oral family
arrangement set up by the petitioner. The petition
also alleged that the Board Meeting of Orbit of 31
March 2016, in which the transfer of 100300 shares in
favour of Prakash was approved, was illegal; no such
meeting had actually been held. The petitioner,
Deepak, claimed that he had signed the attendance
register of that meeting upon a misrepresentation. No
interim relief has been granted to Deepak on the
company petition in respect of 100300 shares of
Pralhad till date.
(xv) On 18 November 2016, Kishan and Deepak
filed a special civil suit in Pune District Court (Special
Civil Suit No.1418 of 2016) seeking enforcement of
the same purported oral family arrangement, which
was the subject matter of the company petition of
Deepak.
(xvi) On 19 November 2016, the District Court
rejected the plaintiffs’ application for ad-interim reliefs
in the aforesaid special civil suit. This order has not
been challenged so far by anyone.
(xvii) From 31 March 2016, i.e. the date of
approval of his transfer by the Board of Orbit,
Prakash has been acting on the transfer and voting on
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100300 shares of Orbit transferred in his favour by the
gift deed.
3 In the backgdrop of these facts, on 24 October 2017, the present
suit was filed by Vijay as one of the trustees of PC Trust (Special
Civil Suit No.1372 of 2017). Prakash, Aruna, Deepak and Orbit,
respectively, are defendant nos.1, 2, 3 and 4 to the suit. Vijay has
alleged in his suit, presumably on the basis of the Notice and Minutes
of Board meeting of Orbit, respectively, of 7 February 2013 and 13
February 2013, that 116922 shares of Pralhad had already stood
transferred to PC Trust prior to 13 February 2013; this transfer was
complete as between Pralhad and PC Trust; and the shares held
thereafter in the name of Pralhad were in his capacity as a trustee for
the benefit of the transferee, namely, PC Trust. Eight months after
filing of the suit, on or about 11 June 2018, Deepak and Kishan filed
an application (Exhibit “88”) in Pune District Court in their suit (SCS
No.1418 of 2016) seeking an interim injunction restraining Prakash
and others from interfering with Deepak’s reappointment as Executive
Chairman of Finolex Cables in the AGM scheduled to be held on 25
September 2018. The District Court dismissed that interim application
prima facie negativing the challenge of Deepak and Kishan to
Prakash’s entitlement to 100300 shares and his right to vote thereon
so as to affect the reappointment of Deepak as Executive Chairman of
Finolex Cables. Deepak’s appeal from that order, has been pending
before this court. This Court, however, by its order dated 21
September 2018, made it clear that it was making no interim order in
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the matter. The Court observed that any voting that may take place
on the basis of 100300 shares of Orbit held by Prakash would be
subject to the orders to be passed by this Court on Deepak’s appeal.
All this while, during the pendency of the interim application of Vijay
in the present suit (SCS No.1372 of 2017), there had been no
ad-interim order in his favour.
4 In these facts, on 10 may 2019, the trial court passed its
impugned order restraining Orbit from acting on the votes cast by
Prakash on 100300 shares of Orbit till the decision in the suit. This
order has been challenged both by Prakash and Orbit in their
respective Appeals from order (Appeal from Order Nos.703 of 2019
and 704 of 2019).
5 Mr. Chinoy and Mr. Dwarkadas, learned Senior Counsel
appearing, respectively, for Orbit and Prakash, submit that there has
been overwhelming evidence on record to support their case that till
he executed a duly stamped gift deed and transfer in favour of
Prakash in respect of his 100300 shares of Orbit on 28 March 2016,
Pralhad continued to be the owner and shareholder in respect of these
shares. Learned Counsel submit that there is no credible basis for
suggesting any executed transfer by Pralhad in favour of PC Trust at
any time during his lifetime. Learned Counsel question the basis of
knowledge purportedly gathered in this behalf by Vijay, who was
neither a shareholder nor a director of Orbit at any time. Learned
Counsel submit that Vijay claimed to have gained his knowledge from
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Deepak and Kishan’s pleadings in the earlier two rounds of litigation,
namely, the company petition of Deepak pending before NCLT,
Mumbai and Special Civil Suit of Kishan and Deepak pending before
the District Court at Pune. It is submitted that neither Deepak nor
Kishan had ever claimed in either of these proceedings that there had
been an already executed transfer in favour of PC Trust by Pralhad;
their case essentially had been based on the oral family arrangement,
as noted above, of which they were in effect seeking specific
performance, though they did refer to the agenda of the board
meeting issued on 7 February 2013 and minutes of the board meeting
held on 13 February 2014, which appear to be the sole basis for
Vijay to claim an executed transfer of Pralhad’s shareholding in favour
of PC Trust. Learned Counsel refer to an affidavit of Meena D’Sa,
who was looking after the office of Orbit since as far back as from
1998. Learned Counsel submit that she had made it clear that
whenever Pralhad intended to transfer any of his shares, he did so by
instructing her to make out a document of transfer, but that, in the
present case, no such document was created at his instance, though
the agenda item of 7 February 2013 regarding transfer of shareholding
was inserted at his instance. Learned Counsel also submit that Aruna,
who was a co-trustee of PC Trust along with Vijay, had also made it
clear that no transfer deed was actually executed by Pralhad in favour
of PC Trust. Learned Counsel contend that there is no evidence
whatsoever of any such executed transfer in favour of PC Trust, save
and except a bare reference to an alleged letter and transfer in the
agenda and minutes of the board meeting of 13 February 2013, none
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of which has so far seen the light of the day. Learned Counsel submit
that no one has even claimed to have seen any such transfer deed or
letter and in any event, admittedly, no stamp duty is even stated as
paid on any such transfer. Learned Counsel submit that, on the other
hand, the transfer executed by Pralhad in favour of Prakash on 28
March 2016 was with a duly stamped gift deed and transfer form, on
which a stamp duty of Rs.3.16 crore was actually paid by Pralhad.
Learned Counsel submit that the conduct of the parties throughout the
relevant period indicates that there was in fact no executed transfer
by Pralhad in favour of PC Trust at any time. Learned Counsel
submit that documents on record, at the most, bear out a case of a
clear intention expressed by Pralhad to transmit his shareholding after
his death to PC Trust, but no executed transfer at any time during his
lifetime, save and except in respect 10 shares, which were admittedly
transferred by Pralhad to PC Trust. Learned Counsel also submit that
Prakash, ever since the transfer in his favour was completed and
recognized and given effect to by the Board of Directors of Orbit, has
duly participated in the general meetings as holder of the shares
covered by the transfer, and voted thereon throughout the relevant
period. Learned Counsel submit that on these facts, the trial court
could not have issued any temporary injunction in respect of voting
on these shares by Prakash.
6 Mr. Mehta, learned Senior Counsel appearing for Respondent
No.1 (original plaintiff-Vijay), submits that Vijay’s suit is essentially
on two grounds: firstly, it is on the ground of a completed transfer
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in favour of PC Trust and secondly, of a fabricated gift deed set up
by Prakash in respect of 100300 shares of Orbit held originally by
Pralhad. Learned Counsel places strong reliance on the agenda of
Board Meeting issued on 7 February 2013 and the minutes of that
meeting of 13 February 2013 to support his case that there was an
already executed transfer by Pralhad in favour of PC Trust. Relying
on the case of Killick Nixon Ltd., Beena Popatlal Kapadia Vs. Dhanraj
1
, learned Counsel submits that once a transfer deed is
Mills Pvt. Ltd.
duly executed, as between the transferor and the transferee, the
beneficial ownership of the shares passes on to the transferee and till
such time as the transfer is acknowledged and given effect to by the
company in its books, the transferor holds the shares in trust for the
beneficial owner thereof, namely, the transferee. Learned Counsel, also
relying on Section 118 of the Companies Act 2013 and the case of
2
, submits that
M.S. Madhusoodhanan Vs. Kerala Kaumudi (P) Ltd
Minutes of Board Meeting kept in accordance with these provisions
are evidence of the proceedings recorded therein. Learned Counsel
submits that minutes of Board Meeting of 13 February 2013 were duly
confirmed by the Board of Directors of Orbit in their subsequent
meeting of 4 May 2013. Learned Counsel submits that till date it
has been nobody’s case that these minutes were either not genuine or
did not correctly reflect what transpired at the board meeting of
13 February 2013.
1 1981 SCC OnLine Bom 301
2 (2004) 9 SCC 2014
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7 It is trite to say that in an interlocutory application, the trial
court is expected, firstly, to make an assessment of prima facie merits
of the plaintiff’s case. For such assessment, it weighs the evidence
placed before it by both contesting parties. In the present case,
practically, the only piece of evidence, which is relied upon by Vijay,
the original plaintiff, in support of his case of a completed transfer of
the shares of Pralhad in favour of PC Trust, is the agenda of the
board meeting of Orbit issued on 7 February 2013 and the minutes of
that meeting held on 13 February 2013. The relevant agenda item
proposes consideration of a letter and transfer deed received from
Pralhad for transfer of his shareholding of Orbit to PC Trust. Neither
the alleged transfer deed nor the transfer form is either on record or
set up by any party to the suit. On the other hand, there is on
record the plaintiff’s own case that Deepak had telephonic
conversation with Ms. Meena D’Sa, Company Executive of Orbit, on
8 November 2013, a date very much relevant for its comparative
proximity with the events of February 2013, which, according to
Vijay, showed that as per Ms. D’sa, Pralhad was determined to ensure
that all shares of Orbit held by him would be transferred to the
trustees of PC Trust, but this was not done “because of tax/stamp
duty implications which would amount to crores of rupees”. Vijay
relied upon the audio recording that Deepak had given to him and the
transcript of the recording, which he himself had got prepared, in this
behalf. This case of the plaintiff himself, supported by an audio
recording of the relevant phone call, makes it clear that there was
only an intent on the part of Pralhad to transfer his shareholding of
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PC Trust, and no executed transfer. Whatever may be the case why it
was not done, what we have to see is the primary fact of execution
of a transfer deed. So far as this primary fact is concerned, the
plaintiff’s own pleaded case (in clause (x) of paragraph 13 of the
plaint) suggests otherwise. As against the evidence of the agenda and
minutes of the board meeting, relied upon by Vijay, as the only piece
of evidence in support of his case of an executed trasnsfer in favour
of PC Trust, there is a wealth of material in support of the rival case
of Prakash and other defendants that Pralhad not only continued to be
the owner of the suit shares at all times till he actually executed the
gift deed in favour of Prakash, but that every act of Pralhad and
other directors of Orbit, after the alleged executed transfer in favour
of PC Trust, i.e. post 13 February 2013, is clearly inconsistent with
such transfer. In the first place, within a few months of the alleged
transfer in favour of PC Trust, Pralhad himself duly executed a
transfer form and effected transfer of at least 3 of these shares,
respectively, in favour of plaintiff nos.5, 6 and 7. Secondly, on 15
July 2013, that is to say, within six months of the so-called transfer
in favour of PC Trust, directors of Orbit and Pralhad initiated
amendment of Articles of Association of Orbit; the General Meeting of
Orbit, held on 15 July 2013, introduced automatic transmission of
shares held by Pralhad, after his lifetime, in favour of PC Trust by
introducing Article 31(b). This was followed by insertion of another
article, namely, Article 15A, which also provided for transmission of
the equity shares of Pralhad under Registered Folio No.21 upon his
death to PC Trust and none else. Consistent with these Articles,
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Article 60 of Orbit was amended to reflect irrevocability of this
arrangement during the lifetime of the trust, namely, its scheduled
tenure of 60 years. Even the other documents set up by the plaintiff,
namely, the alleged second supplementary trust deed and last will and
testament of Pralhad, respectively, of 4 January 2014 and 15 October
2014 (which are disputed by Prakash and others), make out at best a
case of bequest of Pralhad’s shares to PC Trust after his death and not
the case of an inter vivos transfer of these shares in favour of PC
Trust. These facts are consistent with the income tax returns filed
both by Pralhad and PC Trust; the trust was shown as holder of 10
shares of Orbit in these income tax returns. It is in the backdrop of
these facts that on 20 March 2015, Pralhad proceeded to execute a
gift deed, which is duly registered and stamped along with a share
transfer form, in favour of Prakash gifting/transferring 100300 shares
of Orbit to the latter. The documents bear a stamp duty of Rs.3.60
crores. The board meeting of Orbit, which followed (i.e. the meeting
of 31 March 2015), was attended by Pralhad as well as Deepak,
where the transfer of 100300 shares by Pralhad to Prakash was
approved. After such approval and effect given to the share transfer,
when Pralhad passed away, Prakash as well as Orbit clearly appear to
have acted on the transfer, the former exercising voting rights in
respect of all these shares throughout the relevant period. Neither
Kishan nor any member of his family including Vijay himself set up
any case that there was an already executed transfer by Pralhad in
favour of PC Trust at any time before the filing of the present suit.
This in the face of the fact that there were two full-fledged
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contentious proceedings between the parties, one before NCLT,
Mumbai and the other before the District Court at Pune, where
transfer of shares by Pralhad in favour of Prakash was the very
subject matter of disputes between the parties. In none of these
proceedings or pleadings filed therein, was there any claim made by
Kishan or any of his family members that Pralhad had actually
transferred his shareholding in favour of PC Trust during his lifetime.
Aruna, who is a co-trustee with Vijay of PC Trust, has in her
affidavit also affirmed that there never was any transfer executed by
Pralhad in favour of PC Trust. In the face of all these materials, and
considering that Vijay himself admittedly had no personal knowledge
about any transfer purportedly effected by Pralhad in favour of PC
Trust (he claims to have gained knowledge of this transfer from
Deepak’s pleadings, which, as we have noted above, did not contain
any suggestion of a completed transfer in favour of PC Trust), it is
but a foregone conclusion that Vijay has failed to make out any prima
facie case of a completed transfer of shares by Pralhad in favour of
PC Trust.
8 There is no quarrel with the propositions propounded by
Mr. Mehta, learned Senior Counsel for the plaintiff, that upon any
duly executed transfer of shares, as between the shareholder and his
transferee, the beneficial ownership of the shares is indeed passed on
to the transferee, and since the date of such transfer and until
the same is recorded in the books and effect is given to
it by the company, the transferor continues to be a trustee of
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the beneficial owner, namely, the transferee, and is bound to exercise
all rights in respect of the shares at the behest and on instructions of
the latter. The fact of the matter, however, is that there is no prima
facie case of any such completed transfer as between the shareholder,
namely, Pralhad, in favour of his transferee, namely, PC Trust.
9 Coming now to the gift deed executed by Pralhad in favour of
Prakash, it is, firstly, important to note that the trial court has not
come to any conclusion (no such conclusion being even suggested in
the impugned order) that the gift deed was a fabricated document or
that the signature thereon was not of Pralhad or that the deed was
vitiated on any of the grounds, which, under the law of contracts,
vitiate volition of an executing party, or make the contract of transfer
void or voidable. In fact, it is important to note that an express
application for interim relief made by Deepak in his suit, namely, SCC
Suit No.1418 of 2016, on the very basis of nullity or illegality of the
gift deed of 28 March 2016, has been, in terms, rejected by the trial
court. It was claimed by Deepak in his application (Exhibit “66”) in
that suit that the gift deed of 28 March of 2016 was null and void
and no right flew therefrom in favour of Prakash by raising various
grounds alleged in his suit. It was alleged inter alia that no gift deed
was duly executed by Pralhad on that day; that Pralhad was not in a
sound state of health around that time; that Prakash had either forged
the signature of Pralhad or in collusion with Aruna and other
directors of Orbit, procured the signature of Pralhad on the gift deed;
that undue influence was exercised over Pralhad during his ailment
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and taking advantage of his confused state of mind for execution of
the purported gift deed; that Pralhad was not mentally aware of his
actions, and his signature, if at all there was one, was obtained
fraudulently by Prakash and Aruna. In other words, not only was the
signature of Pralhad disputed, but every available plea under the law
of contracts for vitiating his free consent was raised and interim relief
was sought on that basis, besides, of course, the originally averred
case of an oral family arrangement. The trial court was not
impressed. It did not accept any such plea prima facie, and refused
to grant any interim relief. This court, though it admitted an appeal
from that order, made it clear that it was not granting any interim
relief to the appellants. In the premises, no case of interim relief
could possibly be entertained on the basis of the self-same case urged
by a third party, who avowedly does not claim any personal
knowledge of the facts but claims to have gleaned his knowledge from
the pleadings in that other suit.
10. The trial court, whist passing the impugned order, appears to
have treated the Articles of Association of Orbit, the trust deed (of PC
Trust) and will of Pralhad as containing “specific mention…….that
116922 shares of Defendant No.4 (i.e. Orbit) has (sic, have ?) been
transferred to the PC Trust”. That is a glaring error and it really goes
to the root of the matter. If at all, these documents suggest an intent
to transfer or, really speaking, transmission of shares post Pralhad’s
lifetime, and certainly not an inter vivos transfer during his lifetime.
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11 The second leg of the plaintiffs’ case, namely, the alleged
invalidity of the gift deed, also holds no water at this prima facie
stage. It cannot possibly sustain an interim injunction restraining the
lawful putative owner of the shares, Prakash, from exercising his
voting rights thereon.
12 The impugned order of the trial court, accordingly, deserves
to be quashed and set aside and the plaintiffs’ interim application
rejected.
13 The appeals are, in the premises, allowed by setting aside the
impugned order of the Joint Civil Judge, Senior Division, Pune passed
on 10 May 2019 and rejecting the plaintiffs’ application, being
Exhibit-78. It is clarified that the merits of the third Respondent’s
cases pending before NCLT, Mumbai and District Court at Pune in
Special Civil Suit No.1418 of 2016, which agitate different causes of
action, have not been considered by this court whilst passing this
order. These cases, it is needless to add, shall be decided on their
own merits.
14 In view of the disposal of the appeals, the Interim Applications
taken out therein do not survive and are also disposed of.
(S.C. GUPTE, J.)
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