Gujarat High Court
Hirenbhai Sureshbhai Patel vs Babulal Jivrajbhai Sangani on 4 September, 2018
Author: N.V.Anjaria
Bench: N.V.Anjaria
C/SCA/10143/2018 CAV ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 10143 of 2018
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HIRENBHAI SURESHBHAI PATEL Versus BABULAL JIVRAJBHAI SANGANI ========================================================== Appearance:
DHARA P BHATT(7530) for the PETITIONER(s) No. 1,2 MR MEHUL SURESH SHAH, SR. ADVOCATE WITH MR PARTH H BHATT(6381) for the PETITIONER(s) No. 1,2 MR ANUJ K TRIVEDI(6251) for the RESPONDENT(s) No. 1 MS NIDHI J DALAL(9845) for the RESPONDENT(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE N.V.ANJARIA Date : 04/09/2018 CAV ORDER Heard learned senior advocate Mr.Mehul Suresh Shah assisted by learned advocate Mr.Parth Bhatt for the petitioners and learned advocate Mr.Anuj Trivedi for the respondent.
2. The present petition under Article 227 of the Constitution, arises from order dated 15th June, 2018 passed by learned Additional Civil Judge, Gandhinagar, whereby the learned Judge allowed application Exh.31 of the plaintiff for adjournment. The Court below observed that it was not going into the merits of the application Exh.5 which was pending, however taking recourse to Section 151 of the Code of Civil Procedure, 1908, the parties were directed to maintain status quo with regard to the suit properties.
Page 1 of 10C/SCA/10143/2018 CAV ORDER 2.1 Original defendant Nos.1 and 2 have sought
to assail the said order below Exh.31 impugning the same in the present petition.
3. The original plaintiff - respondent herein as well as the petitioners - defendants are the Directors of a private company registered under the provisions of the Companies Act, 1956 in the name of Landmark Prodevelopers Private Limited, which is engaged in the business of infrastructure development and real estate. A construction scheme in the name and style of 'Landmark Living' was floated by the company in the year 2014. It appears that a dispute arose between the Directors.
3.1 The case of the petitioners herein is that in connivance, plaintiff raise false bills and invoices in the accounts of the company. This led institution of Regular Civil Suit No.75 of 2018 by the respondent - plaintiff praying for relief of declaration and permanent injunction to restrain the petitioners - defendants from dealing with the suit properties of the company by way of sale, transfer, alienation and creation of any encumbrance, etc. 3.2 Application Exh.5 for interim injunction was filed in the aforesaid suit which is pending. It was further stated that the petitioners have also preferred an application under Order VII Rule 11 of the Code of Civil Procedure, 1908 on the ground that the suit of the plaintiff is barred in view of Section 430 of the Companies Act. The said application was rejected by the learned Judge, Page 2 of 10 C/SCA/10143/2018 CAV ORDER against which order dated 24th May, 2018 passed below Exh.19, the petitioners have preferred Civil Revision Application No.356 of 2018 before this Court.
3.3 The above Civil Revision Application is pending having been subjected to issuance of notice, "Notice returnable on 11th of June 2018. In the meantime, if an application for adjournment of suit proceedings is made, the trial Court shall adjourn the said proceedings to the 12th of June 2018. Direct service today is permitted." Thus the proceedings were adjourned to 12th June, 2018 and thereafter, it appears that that due to leave note, the proceedings of the Civil Revision Application was adjourned to 19th June, 2018.
3.4 In the said application Exh.31, the defendants mentioned as a ground, about issuance of notice in the Revision Application by this Court and the date on which the proceedings of the Revision Application was adjourned, that is 19th June, 2018. Further, it was stated by the defendants that the court has extended the observations about the adjourning the proceedings and that the order was awaited.
3.5 The application Exh.31 was contested on behalf of the respondent - plaintiff who submitted that on one hand application Exh.5 for interim injunction was kept pending before the court and on the other hand, the defendants had been conducting themselves to prolong the proceedings and in the meantime the defendants had been also indulging into Page 3 of 10 C/SCA/10143/2018 CAV ORDER the acts of transferring the properties.
3.6 The learned Judge observed that if the suit properties were transferred, it would frustrate the proceedings of Exh.5 which was still to be decided after hearing both the sides. Therefore on this reason, while granting adjournment as prayed for in application Exh.31, the learned Judge invoked the powers under Section 151, CPC and directed both the sides to maintain status quo with regard to the suit properties.
3.7 This Court issued notice on 04th July, 2018 making it returnable on 24th July, 2018 by directing that further proceedings of the suit shall remain stayed. Before the said returnable date arrived, the original petitioners moved Civil Application on 18th July, 2018 seeking clarification of the interim order passed by this Court. The said intervening Civil Application was found to be no well taken, to say the least. It prima facie appeared to be an attempt by the defendants to take undue advantage of the interim stay granted by this Court while issuing notice.
3.8 The said Civil Application No.01 of 2018 resulted into following order passed by this Court.
"2. In this interim application what is prayed for is clarification in respect of order dated 04.07.2018 which is passed in Special Civil Application No.10143 of 2018, as under, "to clarify that in light of the ad interim order passed by this Hon'ble Court dated
04.07.2018, all the retrospective as well as prospective proceedings of Regular Civil Suit No.75 of 2018 pending before Page 4 of 10 C/SCA/10143/2018 CAV ORDER Additional Civil Judge, Gandhinagar stands stayed including the order dated 15.06.2018 passed below Exhibit 31 annexed at page No.18 to 21 in the aforesaid special civil application."
3. The clarification is asked for by submitting that while the Court has stayed further proceedings of the suit by granting ad-interim relief, the Sub- Registrar, Gandhinagar, has been treating the interim order in his own way. Paragraph 7 in this application makes the following submissions, "The company approached the sub registrar Gandhinagar, who is the existing authority for the various dates and documentation for the purpose of convenience of the residential premises owned by the company. To the shock and surprise of the applicant herein, the sub registrar came up with a query to the effect that considering the contents of paragraph No.5 of the order passed by the Hon'ble High Court of Gujarat, only to further proceedings of the regular civil suit No.75 of 2018 have been stayed and therefore as per the interpretation of the sub registrar Gandhinagar the aforesaid illegal order dated 15.06.2018 was still in subsistence...."
4. It was submitted that implication of the order was differently taken. It appears in the facts and circumstances of the case and in the context of the submissions now raised that the parties to the proceedings are not liable to alter the equities and cannot be permitted to create fresh equitable rights against one another.
5. The original order dated 04.07.2018, passed in Special Civil Application No.10143 of 2018 is required to be modified. It is directed that no new equities in any manner shall be created by either of the sides against each other and both the parties shall maintain status-quo with regard to the subject-matter property till the hearing of the main petition. Ordered accordingly.
6. Main Special Civil Application No.10143 of 2018 may be listed on 01.08.2018.
7. With the clarification that the original order passed in the main petition dated 04.07.2018 shall read with the aforesaid modification-cum-addition, the present Civil Application is disposed of."
Page 5 of 10C/SCA/10143/2018 CAV ORDER 4. The impugned order below Exh.31 in the
petition was assailed by learned senior advocate for the petitioners by submitting that when interim injunction application was pending, learned Judge could not have exercised powers under Section 151, CPC, and could not have directed the parties to maintain status quo. He submitted that it was preemption of Exh.5 proceedings which were yet to be decided and that such recourse to Section 151, CPC, was not permissible in law.
4.1 Learned advocate for the respondent - plaintiff contested the petition by filing detailed affidavit-in-reply inter alia raising various contentions on merits also. Learned advocate for the respondent further pressed into service the decision of the Supreme Court in Vareed Jacob v. Sosamma Geevarghese [(2004) 6 SCC 378] as well as decision in K.K. Velusamy v. N. Palanisamy [(2011) 11 SCC 275] to submit that powers under Section 151, CPC could be rightly exercised by the learned Judge below in the facts of the case.
4.2 Both the sides raised lengthy contentions and delved into the merits of their respective cases in relation to the proceedings of the suit by raising arguments on those lines. This Court, in the present petition, is concerned with order below Exh.31 and the attendant events, circumstances and the merits confined to it, and indeed not with the merits of the case of the either side in the suit proceedings.
Therefore, those submissions and contentions
Page 6 of 10
C/SCA/10143/2018 CAV ORDER
canvassed by both the sides on the score of main suit proceedings were not germane.
5. Adverting to the impugned order passed by the learned Judge in Application Exh.31, it was an exercise of powers irregular in law. Learned Judge though, was not to be faulted for the reasoning adopted that the defendants were not justified and they could not have been permitted to transfer the suit properties merely because application Exh.5 was pending and the proceedings were getting prolonged for one reason or another. However, the error which was committed by learned Judge was to invoke Section 151 to grant the injunction, instead of taking up the hearing of Exh.5 application immediately. The procedure adopted by learned Judge in invoking Section 151 to grant the injunction under Order XIV Rule 1 for which application was pending and could have been heard, was an error. The order below Exh.31 was required to be quashed for that limited reason.
5.1 But then this Court exercising supervisory jurisdiction under Article 227 of the Constitution cannot overlook the aspect that pending the decision in interim injunction application, if defendants are allowed to sell-off the properties, they would take undue advantage in the proceedings and the other side would be put to serious prejudice in his case and new equities would be created.
6. While the proper course is to ensure that hearing of Exh.5 application takes place at the earliest on merits by affording opportunities to both Page 7 of 10 C/SCA/10143/2018 CAV ORDER the sides, at the same time, the petitioners cannot be allowed to deal with the suit properties by transferring the same and create in their favour new equities and rights to frustrate the rights of the other side in the suit.
6.1 It is clarified at the same time that these observations are for limited purpose of this proceedings, and any order which may be passed would be passed by the learned Judge below in application Exh.5 after considering and evaluating the case of both the sides and on the basis of factual merits.
6.2 While concluding, it has to be mentioned that in course of the submissions on behalf of the petitioners, learned senior counsel for the petitioners submitted that the petitioners were willing to adopt the course wherein the petitioners would open the escrow account in the joint name of the parties and whatever amount is received out of the realisation from the sale of the suit properties, the entire such amount shall be deposited in the said escrow account and that no expenses therefrom shall be incurred except that the amount would be utilised for repayment of liability of loan. It was submitted that if this proposal would be accepted, it would narrow the area of disputes between the parties. It was stated that the petitioners would stand-by in their aforesaid submission, even in course of the trial of the suit and the proceedings before the trial court. It is for the court below and the parties to look into and consider the submission.
Page 8 of 10C/SCA/10143/2018 CAV ORDER
7. As a result of the aforesaid discussion, the following order is passed.
(i) Order dated 15th June, 2018 passed by learned Additional Civil Judge, Gandhinagar, below Application Exh.31 in Regular Civil Suit No.75 of 2018 is hereby set aside;
(ii) Learned Civil Judge is hereby directed to take up hearing of interim injunction application Exh.5 which is pending in the suit immediately and complete the same including passing an appropriate order therein within a period of three weeks from the date of receipt of this order;
(iii) During the time of injunction application is heard and decided, it is directed that no new equities in any manner shall be created by either of the sides against each other and both the parties shall maintain status quo with regard to the subject-
matter property;
(iv) The petitioners - defendants shall not transfer, alienate or encumber in any manner the suit properties till the hearing of Exh.5 Application and the order which may be passed therein shall govern the further rights of the parties;
(v) Proceedings initiated under Order VII Rule 11, CPC, which are at the stage of pending Civil Revision Application No.356 of 2018 before this Court shall take its own course.
8. This Court has not expressed any opinion on Page 9 of 10 C/SCA/10143/2018 CAV ORDER the merits of the case of the either side in application Exh.5 or in the main suit. Whatever observations and directions issued in this order are confined to the issues involved in this petition. Neither the observations made hereinabove, nor the order impugned or the present order shall influence the trial court in deciding the application Exh.5, which shall be decided on the basis of the rival merits and in accordance with law.
9. The present petition stands disposed of in terms of aforesaid directions and observations.
(N.V.ANJARIA, J) Anup Page 10 of 10