Full Judgment Text
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
14.
+ CS (OS) 665/2015
DR. JANG BAHADUR SINGH ..... Plaintiff
Through: Mr. Sanjeev Sindhwani, Senior
Advocate with Mr. Naresh Nath, Advocate.
versus
JASMOHAN SINGH & ORS. ..... Defendants
Through: Mr. Ashwani K. Mata, Senior Advocate
with Mr. N.P.S. Chawla, Advocate for Defendant
No.1.
Mr. Amit Sibal, Senior Advocate with Mr. Gaurav
Varma and Mr. Vinay Tripathi, Advocates for
Defendant Nos. 2 and 3.
Ms. Rekha Palli, Senior Advocate with Mr. Sujoy
Datta and Ms. Shruti Munjal, Advocates for
Defendant No.4.
CORAM: JUSTICE S. MURALIDHAR
O R D E R
% 31.08.2016
IA No. 7969/2015 (under Order VII Rule 11 CPC) & IA No. 10155/2016
(under Order VI Rule 17 CPC) & CS (OS) No. 665 of 2015
1. IA No. 7969 of 2015 is an application filed by Defendants 1 to 4 seeking
rejection of the plaint. IA No. 10155 of 2016 is an application filed by the
Plaintiff seeking amendment of the plaint.
2. The background to both these applications is that the above suit was filed
CS (OS) No. 665 of 2015 Page 1 of 16
by the Plaintiff Dr. Jang Bahadur Singh for a decree against Mr. Jagmohan
Singh (Defendant No. 1), Ms. Gurleen Kaur (Defendant No. 2), Mr.
Gurmohan Singh (Defendant No. 3), Ms. Jasleen Kaur (Defendant No. 4),
Mrs. Pamela Manmohan Singh (Defendant No. 5), Mr. Gurmit Singh
(Defendant No. 6) and Mr. Jagmit Singh (Defendant No. 7) for:
(i) a declaration that the Plaintiff continues to be the absolute owner of the
th
2,40,002 shares of Frick India Limited („FIL‟) purchased by him on 25
August, 1982;
nd
(ii) a declaration that the term „transfer‟ in the agreement dated 22
December, 2011 means transfer in against payment of fair market value and
not transfer in recognition of a past Benami transaction;
(iii) a decree restraining Defendant No. 1 and the other Defendants as well
as FIL from affecting, causing directly or indirectly any transfer of the
1,20,001 shares in the books of FIL so as to in any way diminish the
plaintiff's ownership of the said shares;
(iv) to restrain the Defendants from making a prayer to any court outside
India in respect of the shares of FIL.
th
3. Summons were first issued in the suit on 12 March, 2015. On that day,
an interim order was passed in IA No. 5143/2015 restraining the Defendants
th th
from enforcing orders dated 6 October, 2014 and 5 March, 2015 passed
against the Plaintiff by the Superior Court, Massachusetts in the USA. The
Court in the above order noted that the Defendants in this suit had filed a
CS (OS) No. 665 of 2015 Page 2 of 16
th
suit on 17 November 2011 in the Probate and Family Court, Massachusetts
in the USA claiming benami ownership of shares of FIL. It noted that an
nd
agreement was signed between the parties on 22 December, 2011 which
contemplated transfer of 20% of Plaintiff‟s shares in FIL to the Defendants.
A suit had also been filed by the Defendants against the Plaintiff for
declaration and injunction in the Superior Court in Massachusetts in the
th rd
USA on 28 March, 2012. Prior thereto, the Plaintiff had filed on 3 March,
2012 a petition before the Company Law Board in India.
4. While in the Defendants‟ motion for a summary judgment was declined
on 15th October, 2012, the second cross-motion before the Superior Court of
th
Massachusetts in the USA resulted in a summary judgment dated 6
October, 2014 directing the Plaintiff to execute a standard share form in
accordance with para 3 of the said judgment. The Superior Court held that
the Plaintiff had “failed to demonstrate a relationship between the
allegations of improper management at Frick, and the issue of whether the
transfer [of] funds and shares pursuant to the terms of the Agreement is legal
under Indian law.” The Court also noted that the Plaintiff had filed an appeal
th
against the judgment dated 6 October, 2014 which had been dismissed on
th
5 March, 2015. The Plaintiff‟s petition seeking stay of the said judgment
th
was rejected on 5 March 2015. The Superior Court then appointed an
escrow agent and the Plaintiff was directed to execute the security transfer
th
form by 12 March, 2015.
5. Upon service of summons in this suit, the Defendants had filed IA No.
st
7969 of 2016 in which notice was directed to be issued on 21 April, 2015.
CS (OS) No. 665 of 2015 Page 3 of 16
Meanwhile, the Defendants also filed an appeal being FAO (OS) No. 124 of
th
2015 in the Division Bench (DB) of this Court against the order dated 12
March, 2015.
th
6. On 17 March 2015, the DB passed the following order:
“ FAQ(OS) 124/2015 & CM 4944/2015 & 4946/2015
We have heard the learned counsel for the parties at
length. Mr. Manish Kumar Saryal, who appears for
respondent no.l states that the impugned order may be set
aside and that he has instructions to withdraw IA. No.
5143/2015 in CS(OS) No. 665/2015 which is pending
before the learned single Judge at this stage.
In view of the statement made by the learned counsel for
respondent no. 1, the impugned order dated 12.03.2015 is
set aside and the application being IA. No. 5143/2015
stands dismissed as withdrawn as stated above.
The appeal stands disposed of.
Insofar as the second prayer made in the appeal with
regard to the survival of the suit as such, the appellant
shall have liberty to make the same before the learned
single Judge.
Dasti under the signature of the Court Master.”
7. The Plaintiff in fact did sign the share transfer form in terms of the order
of the Appellate Court in Massachusetts, USA. However, the Plaintiff filed
an application being CM NO. 8013 of 2015 before the DB seeking recall of
th
the order dated 17 March, 2015. The submission made on behalf of the
Plaintiff before the DB was that the counsel who made a statement on behalf
th
of the Plaintiff before the Court on 17 March, 2015 mistook the
CS (OS) No. 665 of 2015 Page 4 of 16
instructions given by the Plaintiff. It was suggested that the Plaintiff never
meant to instruct the counsel to withdraw the application IA. No. 5143/2015.
The DB, however, declined to accept the said explanation and dismissed the
th th
application on 10 May, 2016 thus reaffirming the order dated 17 March,
2015.
st
8. When the matter was subsequently heard in this Court on 1 August,
2016, the following order was passed:
“ IA No.7969/2015 (of D-1 to 4 u/O 7 R-11 CPC)
1. The plaintiff has instituted the present suit (i) for
declaration that the plaintiff is and continues to be the
owner of 2,40,002 shares of Frick India Ltd. purchased
by him on 25th August, 1982; (ii) for declaration that the
nd
term 'transfer' in agreement dated 22 December, 2011
between the plaintiff on the one hand and the defendants
No.1 to 4 on the other hand means "transfer against
payment of fair market value and not transfer in
recognition of a past benami ownership"; (iii) for
injunction restraining the defendants and Frick India Ltd.
(not a defendant to the suit) from affecting transfer of
1,20,001 shares out of 2,40,002 shares aforesaid in the
books of Frick India Ltd. from the name of the plaintiff
to the names of the defendants No. l to 4; and, (iv) for
injunction restraining the defendants from making a
prayer to a court of law outside India in respect of the
said shares.
2. The senior counsels for the defendants No.l to 4 have
argued that though the application was filed on the
ground of the suit as per the averments in the plaint being
not maintainable, the suit in fact has become infructuous.
It is stated that 1,20,001 shares out of 2,40,002 shares of
Frick India Ltd. earlier held in the name of the plaintiff
have since been transferred in the name of the defendants
CS (OS) No. 665 of 2015 Page 5 of 16
No.l to 4 and thus none of the reliefs claimed in the suit
survive.
3. The senior counsel for the plaintiff is unable to
controvert that in view of the transfer having been
affected the reliefs (iii) & (iv) aforesaid claimed in the
suit do not survive. It is however his contention that the
reliefs (i) & (ii) aforesaid, of declaration survive.
4. I am however unable to agree.
5. The reliefs of declaration are combined with the
consequential relief of injunction and once the
consequential relief of injunction as claimed no longer
survives, the plaintiff ought to have, if entitled, applied
for amendment of the plaint to claim the consequential
relief to which the plaintiff may in the changed
circumstance be entitled to.
6. The senior counsel for the plaintiff has not pressed the
argument further and states that time be given to amend
the plaint.
7. It is not as if the need for amendment has arisen today
only. The suit became infructuous much earlier and the
plaintiff had sufficient time, if desired, to apply for
amendment.
8. Though reasons are sought to be given for not applying
for amendment of the plaint earlier but again, there is no
merit therein. The judgment of the Foreign Appellate
th
Court is of 13 May, 2016 and there was ample time
available to the plaintiff to take appropriate steps, if any
available. In fact the statement today, that application for
amendment of the plaint will be filed within two days or
within one week, itself shows that the plaintiff has been
lacking in pursuing his claim.
CS (OS) No. 665 of 2015 Page 6 of 16
9. The proceedings in the Court cannot be at the whim
and fancy of litigants. If litigants such as these, who are
litigating for high stakes, with a battery of legal advisors
spanning over several jurisdictions, are found to be not
diligent, they have to face the consequences.
10. As of today the suit is infructuous and liable to be
dismissed as such and there is no ground to grant the
adjournment sought. The plaintiff, if is entitled to any
relief in the changed circumstance, can always sue
therefor.
11. The senior counsel for the plaintiff, on instructions,
offers to bear the actual costs borne by the defendants of
today's hearing.
12. It is deemed appropriate to accept the said offer of the
plaintiff and to adjourn the proceeding subject to the
plaintiff paying conditional costs of Rs.7.80 lakhs
disclosed by counsels for defendants of today's hearing to
the counsels for the defendants.
st
13. List on 31 August, 2016.”
9. Mr. Sanjeev Sindhwani, learned Senior counsel appearing for the
st
Plaintiff, first informed the Court that the costs in terms of the order dated 1
August, 2016 have been paid. Mr. Sindhwani submitted that this Court
should permit the Plaintiff to amend the plaint by incorporating the
amendments and reliefs as set out in paras 10 and 11 of the application IA
No. 10155 of 2016 which read thus:
“10. That thus the plaintiff seeks leave of Hon'ble Court
to amend plaint in the following manner:
(i) The plaintiff may be permitted to incorporate para No.
113A immediately after existing para 113 to the
CS (OS) No. 665 of 2015 Page 7 of 16
following effect:-
"113A. That during pendency of present suit, on
16.06.2016 the defendant Nos. 1 to 4 have made a
statement before the Hon'ble National Company Law
Tribunal that a board resolution dated 14.06.2016 has
been passed and transfer of shares has been effected in
the board meeting which was held on the same day. In
view of said statement, the Hon'ble NCLT directed the
defendants to supply relevant documents to plaintiff
within 15 days.
The defendant Nos. 1 to 4 have thereafter on 01.07.2016
provided to plaintiff a copy of the Transfer Register
pertaining to Frick India Limited reflecting the purported
transfer of 50% shares (1,20,001 shares) belonging to
plaintiff in favour of defendant Nos. 1 to 4. The plaintiff
has also been provided with copy of Form No. MGT-10
regarding changes in shareholding position of the
company showing the purported reduction of 50%
shareholding of plaintiff and other declarations pertaining
to acquisition of said shares by defendant Nos. 1 to 4,
admitting the acquisition with non-monetary
consideration.
The plaintiff submits that purported transfer of shares is
illegal and invalid as same is based on the said order
passed by the US Court, which has no jurisdiction in the
matter and also for the reason that the order is not
conclusive and binding for the reasons as stated above.
Neither the said order passed by the US Court nor the
purported transfer of shares carried on the basis thereof
shall affect in any manner the ownership of plaintiff of
his shares in the company.
The purported transfer is per se unlawful and invalid also
for the reason of having been carried out pendente lite,
CS (OS) No. 665 of 2015 Page 8 of 16
during the pendency of the present suit, where the
jurisdiction of the US Court as well as the validity and
enforceability of the orders passed by the said court are
under challenge and are subject matter of adjudication.
The alleged transfer of shares is null and void having no
sanctity in the eyes of law and is liable to be declared as
such by the Hon'ble Court. The defendants are liable to
be directed by the Hon'ble Court to reverse the entries
made in the Transfer Register pursuant to the
resolution/meeting dated 14.06.2016 purportedly
diminishing the shareholding of the plaintiff. Further,
defendants are also liable to be restrained from selling the
said shares or dealing with them in any manner
whatsoever".
(ii) The para relating to cause of action may be permitted
to be amended by incorporating para 116A in the
following manner;-
"116A. The cause of action further arose in favour of
plaintiff on 16.06.2016 when it was informed by
defendant Nos. 1 to 4 before the Hon'ble NCLT that the
transfer of shares has already been effected in the board
meeting held on 14.06.2016. The cause of action also
arose on 01.07.2016 when the plaintiff was provided with
the photocopy of the Transfer Register of the company
and other documents reflecting the purported transfer".
(iii) The para relating to valuation and court fee may be
allowed to be amended by incorporating para 119A in the
following manner:
“119A. The value of the suit for purpose of court fee and
jurisdiction for the relief of declaration is Rs.200/- since
the purported transfer of shares is for nonmonetary
consideration. The value of the suit for the relief of
mandatory injunction is Rs.200/-.The appropriate court
fee on the said reliefs has been separately paid.
CS (OS) No. 665 of 2015 Page 9 of 16
(iv) The prayer clause may be allowed to be amended by
incorporating the following reliefs;
"(iii)- pass a decree of declaration declaring the transfer
of 1,20,001 shares of Frick India Limited from the
shareholding of the plaintiff to defendant Nos. 1 to 4 on
14.06.2016 for non-monetary consideration, as null and
void having no effect whatsoever;
(iv). pass a decree of mandatory injunction directing the
defendants to reverse/correct the entries carried out in the
Transfer Register of defendant No. 8 on 14.06.2016 and
other records purportedly transferring 1,20,001 shares
belonging to plaintiff in favour of defendant Nos. 1 to 4
and restoring the shareholding position as existed prior
thereto"
The original prayer (iii) may be allowed to be amended
and be read as under:
(v) Pass a decree of permanent injunction restraining the
defendants from selling the said 1,20,001 shares or
dealing with the same in any manner whatsoever and/or
from affecting or causing any transfer of the said shares.
The original prayer (iv) shall thus be numbered as prayer
No. (vi)
11. That in view of the aforesaid, it is also necessary for
the plaintiff to implead the company Frick India Limited
as defendant in the suit (as defendant No. 8) for due
implementation and enforcement of direction relating to
reversal/correction of the entries carried out for transfer
of shares in its Transfer Register and other records. As
such, Frick India Limited, which is thus a necessary and
proper party, may kindly be allowed to be impleaded as
defendant in the suit and the memo of parties may be
permitted to be amended accordingly.”
CS (OS) No. 665 of 2015 Page 10 of 16
10. Mr. Ashwani K. Matta, learned Senior counsel appearing for Defendant
No. 1, Mr. Amit Sibal, learned Senior counsel appearing for Defendant Nos.
2 and 3 and Ms. Rekha Palli, learned Senior counsel appearing for
Defendant No. 4 pointed out that the fact that the suit had been rendered
infructuous did not change even with the additional pleas and prayers that
the Plaintiff was seeking to incorporate. They urged that the suit was itself
an abuse of the process of law as the Plaintiff was trying to re-agitate the
issues that were already examined in the proceedings between the parties in
the Superior Court as well as the Appellate Courts in Massachusetts and in
which a judgment was rendered against the Plaintiff upon contest. It is
pointed out that with the order of the Appellate Court, Massachusetts in
USA not having been appealed against by the Plaintiff before the Supreme
Court of USA, it had attained finality.
11. It is pointed out by Senior counsel for the Defendants that the said orders
of the Court of the first instance and the Appellate Court have not been
challenged by the Plaintiff in the suit and even by way of the present
application for amendment. It is pointed out that on the principle of comity
of jurisdictions, this Court should not entertain any such plea. There was no
cause of action for the Plaintiff to file this suit and in any event the suit was
barred by law. Reliance is placed on the decisions in Rajesh Kumar
Aggarwal v. K. K. Modi (2006) 4 SCC 385 , Guru Nanak Vidya Bhandar
Trust v. Union of India 2006 (88) DRJ 567 and S.K. Sikka v. Hindustan
Papers Corporation Ltd. 2006 (87) DRJ 478.
12. Mr. Sanjeev Sindhwani, on the other hand, refers to Section 13 CPC
CS (OS) No. 665 of 2015 Page 11 of 16
which deals with the foreign judgments. He points out that there are
averments in paras 7 to 10 of the plaint which give the reasons why the
judgment of the foreign court is without jurisdiction and, therefore, not
binding on the parties. Mr. Sindhwani further urged that if the
aforementioned decree of the Superior Court of Massachusetts in the USA
had been sought to be executed in the Indian Courts by the Defendants, then
under Section 44A read with Section 47 of the CPC the Plaintiff would have
an opportunity to object to the execution of the such decree on the grounds
set out in Section 13 CPC. According to Mr. Sindhwani, notwithstanding
that there is no specific prayer even in terms of the amended plaint seeking a
declaration as to the invalidity of the decree passed by the US Court, this
Court in the interests of justice and equity may not only permit the present
amendment but also permit the Plaintiff to now further amend the plaint to
incorporate such reliefs.
13. The Court is of the view that the amendment as sought by the Plaintiff
st
cannot be allowed for several reasons. As noted in the order dated 1
August, 2016, with the transfer of the 1,20,001 shares of FIL in favour of the
Defendants having already taken place, prayers (iii) and (iv) do not survive.
Yet, they are sought to be retained even post-amendment, if allowed. The
Court had also pointed out that the Plaintiff's plea that prayers (i) and (ii)
survive is untenable since there cannot be a bare declaration without a
consequential injunction. To this the answer is that in the amendments
sought the Plaintiff seeks reversal of the entries in the share register of FIL.
14. The above submission overlooks the fact that the change in the share
CS (OS) No. 665 of 2015 Page 12 of 16
register was as a result of the orders of the Superior and Appellate Court in
USA which attained finality. As pointed out by Mr. Matta, the parties have
acted upon the agreement which was affirmed by the Courts in
Massachusetts, USA on two occasions. The Plaintiff having chosen not to
appeal the said judgments to the Supreme Court of Massachusetts, and not
seeking a declaration as to their invalidity in these proceedings cannot be
permitted to re-agitate those very issues before this Court. Therefore, the
question of entertaining the consequential prayer for reversal of the entries
in the share register of FIL does not arise.
15. The averments in the plaint assailing the above judgments of the courts
in the USA cannot erase the fact that there is no prayer, even in the proposed
amended plaint, for declaration of their invalidity. Section 13 CPC furnishes
the grounds for seeking such invalidation. However, there has to be a
specific prayer to that effect. Such relief has also to be valued separately.
The Plaintiff having himself participated in the proceedings in the USA
courts cannot fall back on equity to persuade the Court to permit him to
challenge the said judgments in these proceedings without even so much as
a prayer to that effect.
16. There may be good reasons for the Plaintiff not challenging either in the
original plaint or in the amended plaint the judgments of the Superior and
Appellate Court in Massachusetts to be null and void. The principle of
comity of jurisdictions precludes such a challenge particularly where the
Plaintiff has chosen to submit to the jurisdiction of those Courts and act by
way of acceptance of the finality of the said orders.
CS (OS) No. 665 of 2015 Page 13 of 16
17. There was no occasion for the Defendants to file any execution
proceedings in the Indian Courts since the orders of the USA Courts were
complied with by the parties. The Plaintiff, therefore, cannot rely on Section
44A and 47 of the CPC to seek permission to challenge the binding orders of
the Courts in the USA to which the Plaintiff is a party. The net result is that
there is no valid and subsisting cause of action that justifies the Plaintiff
filing the present suit. The plaint is vulnerable to rejection both in terms of
clauses (a) and (d) of Order VII Rule 11 CPC.
18. There is merit in the contention of the Defendants that the present suit
has been filed by the Plaintiff only to re-agitate the very issues that have
attained finality in the orders of the USA courts. In Rajesh Kumar
Aggarwal (supra), the Supreme Court observed in para 18 as under:
“18. As discussed above, the real controversy test is the
basic or cardinal test and it is the primary duty of the
court to decide whether such an amendment is necessary
to decide the real dispute between the parties. If it is, the
amendment will be allowed; if it is not, the amendment
will be refused. On the contrary, the learned Judges of
the High Court without deciding whether such an
amendment is necessary have expressed certain opinions
and entered into a discussion on merits of the
amendment. In cases like this, the court should also take
notice of subsequent events in order to shorten the
litigation, to preserve and safeguard the rights of both
parties and to subserve the ends of justice. It is settled by
a catena of decisions of this Court that the rule of
amendment is essentially a rule of justice, equity and
good conscience and the power of amendment should be
exercised in the largest interest of doing full and
complete justice to the parties before the court.”
CS (OS) No. 665 of 2015 Page 14 of 16
19. The Court is satisfied that permitting the amendments as sought would
amount to re-agitation of the very issues that have attained finality in the
proceedings between the parties in the US. The Court would also refer in
this context to the following observations made by the Supreme Court in
K.K. Modi v. K.N. Modi (1998) 3 SCC 573 :
“43. The Supreme Court Practice 1995 published by
Sweet & Maxwell in paragraphs 18/19/33 (p.344)
explains the phrase “abuse of the process of the court”
thus:
“This term connotes that the process of the court
must be used bona fide and properly and must not
be abused. The court will prevent improper use of
its machinery and will in a proper case, summarily
prevent its machinery from being used as a means
of vexation and oppression in the process of
litigation... The categories of conduct rendering a
claim frivolous, vexatious or an abuse of process
are not closed but depend on all the relevant
circumstances. And for this purpose considerations
of public policy and the interests of justice may be
very material.”
44. One of the examples cited as an abuse of the process
of the court is relitigation. It is an abuse of the process of
the court and contrary to justice and public policy for a
party to relitigate the same issue which has already been
tried and decided earlier against him. The reagitation may
or may not be barred as res judicata. But if the same issue
is sought to be reagitated, it also amounts to an abuse of
the process of the court. A proceeding being filed for a
collateral purpose, or a spurious claim being made in
litigation may also in a given set of facts amount to an
abuse of the court. Frivolous or vexatious proceedings
may also amount to an abuse of the process of the court
especially where the proceedings are absolutely
CS (OS) No. 665 of 2015 Page 15 of 16
groundless. The court then has the power to stop such
proceedings summarily and prevent the time of the public
and the court from being wasted. Undoubtedly, it is a
matter of the court's discretion whether such proceedings
should be stopped or not; and this discretion has to be
exercised with circumspection. It is a jurisdiction which
should be sparingly exercised, and exercised only in
special cases. The court should also be satisfied that there
is no chance of the suit succeeding."
20. The Court is satisfied that the above dictum applies to the case on hand
on all fours and that permitting this suit to continue would tantamount to
condoning what clearly is an abuse of the process of law. The Court is of the
view that the plaint ought to be rejected in terms of the Order VII Rule 11
(a) and (d) CPC.
21. Accordingly, IA No. 10155 of 2016 by the Plaintiff under Order VI Rule
17 CPC is dismissed and IA No. 7969 of 2015 by the Defendants under
Order VII Rule 11 CPC is allowed and the plaint is rejected. The suit is
dismissed.
S.MURALIDHAR, J
AUGUST 31, 2016
dn
CS (OS) No. 665 of 2015 Page 16 of 16