BABU LAL vs. M/S. VIJAY SOLVEX LTD .

Full Judgment Text

1 REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 7174 OF 2014 (Arising out of SLP(C) No.9914 of 2012) BABU LAL & ORS. … APPELLANTS VERSUS M/S VIJAY SOLVEX LTD. & ORS. … RESPONDENTS WITH C.A. NO.7175 OF 2014 (@ SLP(C)No.10363/2012) C.A. NOs.7195-7201 OF 2014 (@ SLP(C)Nos.18158-18164/2012) C.A. NO.7177 OF 2014 (@ SLP(C)No.18420/2012) J U D G M E N T SUDHANSU JYOTI MUKHOPADHAYA, J. Leave granted. JUDGMENT In these appeals the appellants have challenged the 2. th common judgment and order dated 14 March, 2012 passed by the High Court of Judicature for Rajasthan, Bench at Jaipur in S.B. Civil Misc. Appeal No. 2218 of 2011 etc. By the impugned judgment, the High Court modified the interim order th dated 10 February, 2011 passed by the Additional District Judge No.3 Jaipur Metropolitan Magistrate, Jaipur (hereinafter referred to as, “the Lower Court”) in Civil Misc. Case No.36/2010, whereby the Lower Court partly allowed Page 1 2 the application of the appellants-original plaintiffs seeking temporary injunction under Order XXXIX Rule 1,2 of CPC. The High Court set aside the temporary injunction granted in favour of plaintiffs/appellants by the Lower Court and

of the	order

run by the parties. 3. The present appeals arise from the following sequence of facts. Plaintiffs/appellants-Babulal and others filed a suit for declaration, mandatory injunction, rendition of accounts and permanent injunction against the defendants/non- applicants. The Lower Court noticed that the properties which the plaintiffs presented in the Schedules “Ka” to “Cha” are basically immovable properties, companies and partnership firms regarding which both the parties have claimed ownership. Taking into consideration that the dispute between JUDGMENT the parties has arisen after the year 2007 and the cases are pending before the Company Law Board and if a restraint is not imposed upon the transfer of the aforesaid properties it will lead to multiplicity of litigation and the parties will entangle in litigation, the Lower Court observed that plaintiffs/appellants have made out partially a prima facie case and held that the issue of balance of convenience and irreparable loss are in favour of the plaintiffs/appellants. Resultantly, the application of the plaintiffs-appellants for Page 2 3 temporary injunction against the non-applicants and the counter temporary injunction application filed on behalf of the non-applicants were partly allowed and it was ordered that till the decision of the original suit:-

s and no	n-applic

sell/transfer the immovable properties as mentioned in Schedule “Ka” to “Cha” and nor shall they create any substantial charge on the said properties. 2. The Companies/Partnership firms controlled and run by the parties of which the details have been given in Schedule “Ka” to “Cha” regarding them the audited accounts of income and expenditure half yearly/annually whichever is got done in the normal sequence shall be presented before this Court. Apart from this the other prayers which have been made by both the parties are rejected. JUDGMENT The non-applicants preferred different miscellaneous 4. appeals against the aforesaid interim order of injunction before the High Court. The non-applicants-respondents herein made the following submissions: The suit of the plaintiffs in the present form (a) is not maintainable in the eyes of law, inasmuch as it has been filed by Sh. Babulal along with Saurabh Agrotech Pvt. Ltd., which is a company incorporated Page 3 4 under the Companies Act, two partnership firms registered under the Partnership Act jointly and the HUF of Babulal, seeking partition of the properties mentioned in the Schedules annexed to the plaint and

the se	t of com

(b) Plaintiff-Babulal though seeking partition of the joint family properties has not impleaded his own sons and other coparceners as parties to the suit and has not included the properties owned and managed by the plaintiffs in the schedules annexed to the plaint. Therefore, it was argued that the suit itself is bad for non-joinder of necessary parties and of causes of action and the suit is not tenable in the eye of law. The Lower Court failed to consider the (c) contentions raised by the concerned defendants and JUDGMENT also the documents produced by them. On the other hand, learned counsel for the plaintiffs- 5. appellants made the following submissions: (a) The Lower Court has passed the impugned order which is just and proper after considering the prima facie case, irreparable injuries likely to be caused to the plaintiffs and the balance of convenience. Page 4 5 th (b) On 20 December, 2007, a family settlement has taken place between Niranjan Lal Data Group which belong to the defendants and Babu Lal Data Group which belong to the plaintiffs and that the said

igned by	Mr. Vija

Data Group. The said settlement was also partly acted upon by the defendant-Niranjan Lal and other coparceners and therefore, they cannot be permitted to back out from the said settlement. Learned counsel also placed reliance upon decisions of this Court in Reliance Natural Resources Ltd. v. Reliance Industries Ltd. (2010) 7 SCC 1 and in the case of Sangram Singh P. Gaekwad and others v. Shantadevi P. Gaekwad (D) Through LRs. & Ors. (2005) 11 SCC 314 and submitted that though a company incorporated under the Companies Act is a JUDGMENT body corporate, in certain situations, its corporate veil can be lifted and that the suit for partition could be filed against companies also. It was further contended on behalf of the plaintiffs- appellants that the family settlement need not be signed by coparceners and that if a mere memorandum of family arrangement was prepared with regard to the arrangement which had already taken place; such a document did not require registration. The family settlement made by the parties bona Page 5 6 fide by making fair and equitable division of the properties amongst various members of the family must be respected. th 6. The High Court by impugned judgment and order dated 14 March, 2012 observed as follows:


”	6………	It is also signi	ficant		to note that the
plaintiffs have impleaded the				companies, partnership
firms and proprietary concerns and HUFs as the party
defendants, and the said companies and firms have
also been shown as the properties or the assets of
the HUF in the schedule 'Gha' annexed to the plaint.
This court fails to understand as to how the
companies which are incorporated under the Companies
Act having perpetual seal and separate entity could
be the assets of the HUF as alleged by the
plaintiffs and as to how the companies could be
divided by metes and bounds by way of partition as
prayed for in the suit. The plaintiffs in the suit<br>have also prayed for mandatory injunction seeking
direction against the de			fendant-companies alongwith
other defendants to act			upon the family settlement,
alleged to have taken p			lace on 20.12.2007 between
the Niranjan Lal Data Gro			up and Babu Lal Data Group,
and have also sought the			direction against the said
companies to execute the			documents and handover the
possession of the properties of the said companies
and firms etc. This court also fails to understand
as to how the alleged family settlement between the
NLD Group and BLD Group would be binding to the
defendant companies and firms, apart from the issue
JUDGMENT<br>as to whether the alleged document dated 20.12.2007
could be called a family settlement. Under the
circumstances this court finds much substance in the
submission made by the learned counsel for the
appellants that the suit filed by the plaintiffs is
not only bad for mis-joinder of parties and of
causes of action, but also for non-joinder of
necessary parties and that the suit in the present
form would not be maintainable in the eye of law.

7.		So far as merits of the case are concerned,
according to the respondents-plaintiffs, all the
properties mentioned in the Schedules 'Ka' to 'Chha'
annexed to the plaint, were purchased from the
nucleus of the joint family properties, and as per
the family settlement dated 20.12.07, the said
properties were required to be divided amongst the
family members of the plaintiff No. 1 and the

Page 6 7

defendant Nos.1 to 9. In this regard, it is
pertinent to note that the entire suit of the
plaintiffs is based on the so-called family
settlement which had allegedly taken place between
the NLD group and BLD group on 20.12.07. From the
bare perusal of the said document it transpires that
it is the minutes of the meeting of Data Group
Family dated 20.12.07, which was signed by Mr. Vijay
Data for NLD Group and			Mr. B		abu Lal Data for BLD
Group. Apart from the fact				that there is not a
whisper in the said document that the corpus of the
companies mentioned in the said document was
provided by the HUF or that the other properties
mentioned in the said document were the HUF
properties, the said document has also not been
signed by the other coparceners of the alleged HUF
except by Mr. Vijay Data and Mr. Babu Lal Data. Such
a document by no stretch of imagination could be
said to be a family settlement. However, even if it
is believed to be a family settlement, and even if
it is held that the same was not required to be<br>signed by all the coparceners, then also there is
nothing on the record<br>memorandum prepared aft			to suggest that it was a<br>er the family arrangement
which had already been ma			de earlier, not required to
be registered. ………….
“	9.	In this regard it	is pertinent to note that
though the concerned defendants had raised
contentious issues as regards the maintainability of
the suit, mis-joinder of parties and of causes of
action, suppression of material facts by the
plaintiffs etc., the lower court has not considered
JUDGMENT<br>the same and has held that the plaintiffs had
established the prima facie case in their favour. In
the opinion of this court such a finding of the
lower court in the impugned order is not only
erroneous but also perverse. When the suit on the
face of it suffered from the mis-joinder of parties
and of causes of action and was not prima facie
tenable in the eye of law, the lower court has
committed serious error of law and facts in holding
that the plaintiffs had established a prima facie
case. If the plaintiffs were not entitled to the
final reliefs in the suit, they could not be granted
temporary injunction as prayed for during the
pendency of the suit.”

7. We have heard learned counsel for the parties and have perused the record. In the present case, the parties have Page 7 8 raised similar pleas which were taken before the High Court. However, we are of the opinion that while dealing with a matter relating to vacation of order of temporary injunction, it was not open for the High Court to give a

issue re	lating t

8. In view of the finding aforesaid, we are inclined to th interfere with the judgment and order dated 14 March, 2012 passed by the High Court of Judicature for Rajasthan, Bench at Jaipur in S.B. Civil Misc. Appeal No.2218 of 2011 etc. We, accordingly, set aside the impugned judgment and remit back the matter to the High Court for its fresh disposal after hearing the parties. 9. The appeals stand disposed of with aforesaid observations. ……………………………………………………………………………J. (SUDHANSU JYOTI MUKHOPADHAYA) JUDGMENT …………………………………………………………………………J. (S.A.BOBDE) NEW DELHI, August 4, 2014. Page 8