Delhi District Court
Charanjit Singh S/O Late Sh. Dilbagh ... vs Wimpy International Limited on 22 February, 2014
IN THE COURT OF Ms. TANVI KHURANA, CIVIL JUDGE01 (South)
SAKET COURTS NEW DELHI
In the Matter of
Civil Suit No.222/13
Case ID No. 02406C0208442012
Charanjit Singh S/o Late Sh. Dilbagh Singh
R/o 11D, Sagar Apartments, 6, Tilak Marg,
New Delhi110001. .........Plaintiff
Versus
1.Wimpy International Limited
Through Authorised Representative
Registered Office: 1110, Devika Tower6,
11th Floor, Nehru Place, Delhi110019.
2. Mr. Kanwaljit Singh Sidhu
Director, Wimpy International Limited.
1110, Devika Tower6, 11 Floor,
Nehru Place, Delhi110019.
3. Mrs. Sukhvender Kaur Sidhu
Director, Wimpy International Limited.
1110, Devika Tower6, 11 Floor,
Nehru Place, Delhi110019. .........Defendants
Application on behalf of defendant no. 2 U/O VII Rule 10 and 11 read
with Section 151 CPC, 1908 for rejection/ return of plaint.
Present: Ld. counsel for the plaintiff.
Ld. Counsel for the defendant no. 1 and 3.
Ld. Counsel for the defendant no. 2.
Suit No. 222/13
Charanjit Singh Vs. Wimpy International Ltd. & Ors Page1 of 12
Order:
This order shall dispose of the application filed by the
defendant under Order VII Rule 10 and Rule 11 read with Section
151 CPC on the ground that the suit is not maintainable as it is
barred by law of limitation, the court does not have jurisdiction to
entertain the matter and there is no cause of action against the
defendants in the present suit. It is prayed that the plaint be
rejected and in alternative, plaint be retuned to be presented before
competent court.
2. Succinctly, the averments made in the application are that
the plaintiff/respondent has filed the suit for declaration that the
documents including the minutes of meeting of the board of defendant no. 1 and share transfer form evidencing the transfer of 10,100 shares originally held by plaintiff in favour of defendant no.2 be declared null and void. The plaintiff has also sought the declaration that the plaintiff is the owner of 10,100 shares in the defendant no. 1. It is averred that the defendant no. 2 seeks rejection of the plaint as the plaint fails to disclose any cause of action and is barred by law under various Statutes. It is stated that the alleged transfer of shares took place in 2001 and the suit has been filed after a period of more than 11 years and therefore, is time barred. It is further submitted that as per the case of plaintiff, the annual returns of defendant no.1 for the year 2004 and onwards have incorporated the transfer therefore, again the suit is time barred as it has been filed after a period of eight years.
3. Then again, another ground raised in the application is that the plaintiff by way of present suit has sought rectification in the Suit No. 222/13 Charanjit Singh Vs. Wimpy International Ltd. & Ors Page2 of 12 register of members of defendant no. 1 and declaration that the minutes of meeting of the board of defendant no. 1 dated 04.10.2011 recorded in terms of Section 193 and share transfer form executed in terms of Section 108 (1) A of Companies Act as null and void. Whereas, it is company law board which is authorized to determine these issues and the present court does not have jurisdiction to decide the matter.
4. Further, it is alleged that the plaintiff is guilty of concealment and suppression of material facts as it has been concealed that the plaintiff had resigned from the post of the Director of defendant no. 1 w. e. f. 01.09.2001 and the affidavit was also tendered by him. He has concealed the factum of transfer as well. In addition to that, it is alleged that the plaintiff has also concealed the receipt of cheque no. 425402 dated 01.09.2001 for an amount of Rs. 1,01,000/ and execution of Spot Delivery Agreement dated 01.09.2001. Reliance has been placed upon T. Arivanandam Vs. T. Satyapal, AIR 1977 SC 2421. Therefore, rejection / return of the plaint has been sought.
5. On notice, the reply was filed by the plaintiff/ respondent wherein the plaintiff has submitted that the present application is not maintainable. It has been stated that the application is bereft of any merits. On merits, it was submitted that the plaintiff has not filed the suit for declaration that share transfer forms are null and void as no such forms exists. Further, the plaintiff became aware about the transfer in the year 2011 and not before that therefore, the suit is within limitation. It is also submitted that since there are complicated issues of fact involved hence, civil suit is the only remedy available to the plaintiff. The factum of affidavit dated Suit No. 222/13 Charanjit Singh Vs. Wimpy International Ltd. & Ors Page3 of 12 01.09.2001 is not denied but it is maintained that the affidavit was prepared only for severance of the relationship as Director from defendant no. 1. It does not make any reference to the number of shares or transfer thereof. The receipt of any cheque was vehemently denied. It was prayed that the application be dismissed.
6. I have heard the rival contentions raised by both the counsel and have also perused the plaint and documents attached to it meticulously with their kind assistance. Defendant no. 1 and 3 though had not filed this application but had taken similar objections in their written statement and hence, they were also heard.
7. Broadly, all the issues raised in the application can be summed up as follows:
A. Ground for Limitation.
B. Cause of action.
C. Concealment and suppression of material facts. D. Jurisdiction of this court.
8. For sake of convenience, all these issues are decided under separate heads.
A. Ground for limitation:
A1. As far as the question as to period of limitation is concerned, defendant no. 2 has stated that the transfer of the shares took place in the year 2001 and suit has been instituted in 2012, therefore, it is hopelessly time barred. It was submitted that all relevant documents were executed by the plaintiff for transferring the shares in 2001. Further, the factum of transfer was also reflected in the Suit No. 222/13 Charanjit Singh Vs. Wimpy International Ltd. & Ors Page4 of 12 annual returns of the company from 2004 and the annual returns are available on the Internet as it is in the public domain and therefore, again the suit is time barred.
A2. During the arguments defendant no. 2 also stated that a criminal complaint was also filed against the plaintiff of which he had sufficient notice as the FIR was lodged against him on 03.09.2004. The anticipatory bail was also sought by the plaintiff on 13.01.2005. Therefore, it was within the knowledge of the plaintiff in the year 200405 and hence, the suit is time barred. Reliance was placed upon Anita Malhotra Vs. Apparel Export Promotion Council & Anr.,AIR 2012 SC 31.
A3. Ld. Counsel for the defendant no. 1 and 3 took similar objection and argued that the plaintiff was aware about the transfer of shares in the year 2001 as he had executed the "Spot Delivery Agreement" and had tendered his affidavit on 01.09.2001 of which the cheque of Rs. 1,01,000/ was also received on the same date. She also stressed that the criminal complaint was filed by the defendant no. 1 against some people including plaintiff in which the FIR was lodged on 03.09.2004. The complaint had a mention that the plaintiff is not a share holder. Also, in the anticipatory bail application the plaintiff himself had stated that he had no concern with the company.
A4. Per contra, the plaintiff argued that the suit is within limitation. The plaint was filed in the year 2004. He stated that he came to know about the commission of fraud by the defendants when he was asked by one Mr. Sandhu to appear in the committal proceedings at the High Court of Justice at London wherein Suit No. 222/13 Charanjit Singh Vs. Wimpy International Ltd. & Ors Page5 of 12 defendant no.3 in his statement of truth dated 01.12.2009 claimed that on 09.03.2001 the share transfer took place. Hence, plaintiff became aware of these facts for very first time in the year 2011 and 2012. He also stated that it was submitted by "Truth Foundation Lab" vide report dated 12.07.2012 that the share transfer form dated 26.08.2001 and letter dated 05.09.2001, the signatures of defendant no.2 showed prominent tremors. He further argued that there is no transfer form as alleged by the defendants. He further maintained that the annual returns for the years 200102, 200203 and 200304 reflected him to be share holder of the defendant company. It was argued by him that the plaintiff has filed the present suit within time as knowledge of the fraud was obtained only in the year 2011 and not before that and hence, the suit is within limitation. A5. It was decided in Anita Malhotra (Supra) that annual return is a public document and same is reliable and legally acceptable so far as the contents of the same are concerned.
A6. The question of limitation is mixed question of fact and of law. It is not a pure legal question. It becomes conflict of evidence once dispute as to knowledge is arisen. In the present matter, similar dispute has arisen as the plaint discloses the knowledge of the alleged fraud in the year 2011. Whereas, all the defendants have maintained that the transaction took place in the year 2001. However, at this stage, in dearth of evidence and while deciding application U/O VII Rule 11 it can not be decided demurrer. Therefore, the question of limitation would be decided after framing an issue regarding limitation.
Suit No. 222/13Charanjit Singh Vs. Wimpy International Ltd. & Ors Page6 of 12 B. Cause of action:
B1. Ld. Counsel for the defendant no. 2 argued that the annual returns of the company for the year 2004 and onwards incorporat the factum of the transfer and therefore, there is no cause of action and suit has been filed beyond statutory period. It was also argued that as the plaintiff has himself transferred the shares therefore, there is no cause of action against the defendant no. 2 in the present case.
B2. Similarly, Ld. counsel for defendant no. 1 and 3 has also argued raising the same contentions that the transaction took place in the year 2001 and proper consideration was also given to the plaintiff. Thus, there is no cause of action against the defendant no. 1 and 3.
B3. To the above contentions, plaintiff replied that there is a difference between no cause of action and non disclosure of cause of action. It was argued that it is trite law that for rejection of a plaint, the averments in the plaint are to be accepted as correct and thereupon, the court is too look whether, if the allegations made are accepted as true, has there been disclosure of any cause of action. B4. I find force in the arguments of Ld. counsel for plaintiff. It is settled law that there is sea difference between non disclosure of cause of action and no cause of action. Order VII Rule 11 provides for a ground for rejection of plaint in case the plaint does not disclose any cause of action. It can not be stretched to include no cause of action. Absence of cause of action against the defendants can only be decided after trial. It can not be decided in limine. This issue can also be decided only on trial.
Suit No. 222/13Charanjit Singh Vs. Wimpy International Ltd. & Ors Page7 of 12 C. Concealment and suppression of material facts:
C1. Both defendant no. 2 and defendant no. 1 and 3 jointly have pressed for plaint to be rejected on concealment and suppression of material facts.
C2. Defendant no. 2 has submitted that the plaintiff is guilty of concealment of material fact as he has not disclosed that he had resigned from the post of Director of defendant no. 1 w.e.f. 01.09.2001 and had tendered the affidavit. It has been admitted by the plaintiff in his reply to the present application. It is also alleged that the factum of transfer of shares has also been concealed.
Further more the receipt of cheque and execution of Spot Delivery Agreement has also been concealed.
C3. Defendant no. 2 has also argued that the plaintiff has submitted that certain blank documents were signed by him which were converted into the alleged Spot Delivery Agreement. However, in his affidavit dated 16.03.2012 filed before the London High Court the plaintiff had stated that "I had prepared the documents to transfer my share in 2001, it was only when I resigned in 2002, that I tendered my shares (and the transfer documents) for sale to the first respondent".
C4. It is also argued that the plaintiff had severed his relationship from defendant no. 1 due to alleged money laundering activity of defendant no.2, however, still he handed blank stamp papers to defendant no. 2. It was argued that it is not plausible. C5. Defendant no. 1 and 3 have also raised the concealment of material facts i.e. facts of transfer of shares, receipt of consideration, execution of agreement, tendering of affidavit and so on. It was Suit No. 222/13 Charanjit Singh Vs. Wimpy International Ltd. & Ors Page8 of 12 further argued that the factum of pending criminal litigation against the plaintiff has also not been brought forth by the plaintiff. C6. Per contra, the plaintiff has stated that he has not disclosed the agreement, transfer forms, cheque and other documents of the alleged transfer as there was no transfer by the plaintiff. He asserted that these documents are forged. It was also argued on his behalf that all material facts within his knowledge were disclosed. It was also argued that a triable issue is raised as even after the alleged date of payment of consideration, it was the plaintiff who had received dividend. He maintained that dividend follows the shares and if shares were transferred he would not have received the dividend even after the so called alleged transfer. The contentions raised were denied and it was maintained that the blank stamp papers were signed for more shares and was handed to Col. Kalyan Singh and not defendant no. 2.
C7. Though the contentions raised from both sides require pondering, however, it can be adjudicated only in the trial. These are complex issues of evidence which need comprehensive adjudication. At the stage of deciding application U/O VII Rule 11, the conflict of evidence can not be decided. This issue also requires to be decided on trial.
D. Jurisdiction of this court:
D1. Out of all issues, the issue of jurisdiction requires special focus as it snatches away the competence of the court to decide or entertain the matter. The ground for raising this issue has arisen as it has been argued by defendant no. 2 that civil court does not have jurisdiction under Section 10 (gb), Companies Act. It has been Suit No. 222/13 Charanjit Singh Vs. Wimpy International Ltd. & Ors Page9 of 12 maintained that the relief sought by the plaintiff requires rectification of registers and only Company Law Board is empowered by the Act for rectification. It is argued that it is the Company Law Board which has the requisite powers for passing the desire interim orders and decide the issue of the title and status of share transfer form.
D2. Defendant no. 1 and 3 also argued the issue of jurisdiction at length. It was argued that the plaintiff has claimed declaration that the alleged transfer is null and void, the minutes of meeting dated 04.10.2001 is again void and that the plaintiff is the owner of 10,100 shares in the defendant no. 1 company along with permanent injunction against defendants. From these reliefs, it is apparent that rectification of register of share holders is necessary. It can be done only under the Companies Act which is the specific Act. Section 111 of the same Act empowers Company Law Boards to decide such issues. Reliance was placed upon Ammonia Supplies Corporation (P) Ltd. Vs. Morden Plastics Containers Pvt. Ltd., AIR 1998 SC 3153. Similarly, Vishnu Manglani & Anr. Vs. M/s Reliance Industries, decided on 08.12.2010 in FAO 34748 of 2005. Canara Bank Vs. Nuclear Power Corporation of India was also discussed.
D3. Per contra, it was argued by the plaintiff that the contention is based upon assumption that the plaintiff is only seeking rectification of the register. However, it is complex issue of fraud, back dated signatures and other such issues which can be decided only after the trial. Reliance was placed upon Shirish Finance and Investment Pvt. Ltd. Vs. M. Sreenivasulu Reddy, 2002 (1) Bom. C. R. Suit No. 222/13 Charanjit Singh Vs. Wimpy International Ltd. & Ors Page10 of 12
419. D4. I find force in the arguments of Ld. counsel for the plaintiff. On perusal of Section 111 of Companies Act the grievance related to rectification of registers and its appeal can only be filed at Company Law Board. However, the present issue is not just about rectification of registers rather, it is complex issue that whether any transfer had taken place at the first instance or not. Similarly, the issue that whether the plaintiff is still the owner of the alleged shares. It is in the humble opinion of this court that it is not within the purview of Section 111 Companies Act 1956.
D5. Consequently, this court has jurisdiction to try the present matter.
9. Consequent to the above discussion, the relief sought under Order VII Rule 10 and 11 are not madeout. However, Ld. Counsel for the defendant no. 2 also argued that the application is also filed U/S 151 CPC and hence, it also calls for dismissal of the suit due to concealment of material facts. He placed reliance upon Swarn Singh Vs. Surender Kumar and Ors. decided on 22.12.2010 in CS (OS) No. 166/97 by Hon'ble High Court of Delhi wherein it was held that the suit has to be dismissed if the plaintiff is guilty of concealment of material facts. It was held that Section 151 can be used by the court at any stage of the trial, as it is repository of inherent powers of the court to pass such orders in interest of justice as the situation may warrant in a given case including the trial of the case. The principle applicable while deciding rejection of plaint are not applicable U/S 151 suit can be dismissed. Similarly, reliance was placed upon S. P. Chengalvaraya Naidu (dead) Vs. Suit No. 222/13 Charanjit Singh Vs. Wimpy International Ltd. & Ors Page11 of 12 Jagannath (dead) & Ors, 1994(1) SCC 1.
10. In the humble opinion of this court, both the authorities submitted contain the correct position of law, however, as has been discussed above, the court is not conclusively determined on the aspect of concealment of material facts. It requires evidence to substantiate the contention that the true and material facts are concealed. Without evidence making it crystal clear it can not be conclusively inferred that the facts have been concealed. It is agreeable that it is preponderance of probabilities and not beyond reasonable doubt, however the probability has to be prepondered first.
11. In light of above discussion, this court does not find any merit in the application at the stage. Hence, the application is accordingly dismissed.
(TANVI KHURANA) Civil Judge01 (South) Saket Courts/New Delhi 22.02.2014 Note: All twelve pages of this order have been checked and signed.
(TANVI KHURANA) Civil Judge01 (South) Saket Courts/New Delhi 22.02.2014 Suit No. 222/13 Charanjit Singh Vs. Wimpy International Ltd. & Ors Page12 of 12