Delhi District Court
M/S James Martin vs Satish Jha & Anr on 31 July, 2017
M/s James Martin vs Satish Jha & Anr
IN THE COURT OF SH. ANIL KUMAR, ADDL. DISTRICT JUDGE
05, ROOM NO. 605, SOUTH DISTRICT, SAKET COURTS, NEW
DELHI
In the matter of
1. Suit No. 9503/16(CNR No. DLST010073292016)(Old Case no. 130/2002)
2. Suit No. 9502/16(CNR No. DLST010073302016)(Old Case no. 1040/2002)
3. Suit No. 9501/16(CNR No. DLST010073312016)(Old Case No.1041/2002)
I. Suit No. 9503/16 Instituted on 17.01.2002
SUIT FOR RENDITION OF ACCOUNTS, RECOVERY AND PERPETUAL INJUNCTION
M/s James Martin & Co. Pvt Ltd.
Thapar House, 124, Janpath
New Delhi .............Plaintiff
Versus
1. Satish Jha,
S/o Sh. K.D.Jha
R/o N150, Panchsheel Park
New Delhi110017
2. M/s Headstrong India Pvt Ltd
N150, Panchsheel Park
New Delhi110017 ..............Defendants
Date of Institution : 22.01.2002
II.
Suit No. 9502/16 Instituted on 29.05.2002
SUIT FOR DECLARATION, CANCELLATION OF DOCUMENTS AND PERPETUAL INJUNCTION
M/s James Martin & Co. Pvt Ltd.
.............Plaintiff
Versus
1. Satish Jha,
S/o Sh. K.D.Jha
2. Samyak Singh
S/o Sh. Sudish Singh
R/o BW113A, Shalimar Bagh,
Delhi
Suit No.9503/16 Page 1 of 20
M/s James Martin vs Satish Jha & Anr
3. Vinit Choudhary,
S/o Sh. H.M.Choudhary
R/o 495, Saraswati Vihar,
New Delhi
4. Ms. Anupama Jha
D/o Sh. S.N.Jha,
R/o East West Apartments,
Mayur Vihar, Phase 2
New Delhi
5. The Registrar of Companies
NCT of Delhi & Haryana
Paryavaran Bhavan, B Block,
CGO Complex, Lodhi Road,
New Delhi ..............Defendants
Date of reserving judgment : 31.07.2017
Date of pronouncement : 31.07.2017
III.
Suit No. 9501/16 instituted on 29.05.2002
SUIT FOR DECLARATION, CANCELLATION OF DOCUMENTS AND PERPETUAL INJUNCTION
M/s James Martin & Co. Pvt Ltd.
.............Plaintiff
Versus
1. Satish Jha,
S/o Sh. K.D.Jha
2. The Registrar of Companies
NCT of Delhi & Haryana
..............Defendants
Suit No.9503/16 Page 2 of 20
M/s James Martin vs Satish Jha & Anr
JUDGMENT
1. Vide order dated 14.03.2007, suit no. 9502/16 (Old
No. 1040/2002) and no. 9501/16(Old No.1041/2002) was
consolidated with the main suit i.e. suit no.9503/16 (Old No.
130/2002) for the purpose of trial and adjudication and the
evidence was recorded in suit no 9503/16.
2. By this common judgment all the three suits shall be
disposed off.
FACTS OF THE CASES:
Suit No. 9503/16 (Old No. 130/2002)
3. This is a suit for rendition of accounts, recovery and perpetual injunction filed by plaintiff company against the defendants.
4. It is stated that in 1981, Dr. James Martin founded James Martin Associates, which later became James Martin & Suit No.9503/16 Page 3 of 20 M/s James Martin vs Satish Jha & Anr Co. Worldwide (JMW). JMW had a subsidiary, James Martin Holdings Ltd. (JMH). In 1992 JMH entered into a joint venture agreement (the JV) with the defendant no.1 and one Mr. Anil Nagar. Pursuant to the JV, plaintiff was incorporated, in which JMH and defendant no.1 each held 50% of the equity shares. Defendant no.1 was to be responsible for the management and marketing of James Martin & Co. in India and was appointed Chairman and Managing Director of the plaintiff.
5. Plaintiff commenced the business of provision of software development and integration strategies and systems in the Indian market including the provision of consultancy, education and knowledge base products, system development, system solutions and strategic planning in the use of information technology as per JV and acquired reputation in the field of real time solutions and build up a good clientele in India.
6. In March 2000, JMW changed its name to Headstrong Corporation (H Corp) and JMH, to Headstrong Consulting Worldwide (H.Con). On 10 th April, 2000 a Suit No.9503/16 Page 4 of 20 M/s James Martin vs Satish Jha & Anr Memorandum of Understanding was entered into between defendant no.1 and Ballarpur Industries Ltd (BILT) and its associates. Thereafter an agreement dated 29 th September, 2000 (the Agreement) was executed between defendant no.1 and BILT Trading & Infrastructure (BIL). However, approval for use of the James Martin brand was not obtained by defendant no.1, nor did he provide any appropriate or acceptable plan for the establishment of the Newco. A financial due diligence of the plaintiff was conducted by M/s BILT Investment Ltd which revealed that the value of the Shares was Rs 55 lacs, a value agreed to by defendant no.1. It is further stated that as a result, the MOU was superseded by the Share Purchase Agreement dated 30th April, 2001 by which defendant no.1 agreed to sell the shares for a total consideration of Rs 55 lacs. As per the SPA defendant no.1 agreed that he would not directly or indirectly, establish or take steps to establish any business in competition with the plaintiff for the period of three years. Pursuant to the SPA:
(i) BIL made payment to Defendant no.1 of a sum of Rs 55 lacs.
Suit No.9503/16 Page 5 of 20M/s James Martin vs Satish Jha & Anr
(ii) Defendant no.1 signed the share transfer forms and delivered them to BIL.
(iii) The transfer of shares was approved by the Plaintiff's Board of Directors
(iv) Defendant no.1 and Mr. Samyak Singh, another Director of the Plaintiff, tendered their resignations as directors of JMC on 1.05.2001.
(v) These resignations were accepted on the same day at a Board meeting in which resolution to that effect was passed.
(vi) Resignations were forwarded to the office of the concerned Registrar of Companies.
7. It is further stated that hereafter, defendant no.1 was not left with any surviving right, interest or lien over the Shares, nor was he entitled to represent the plaintiff, H Corp and/or H.Con. It is further stated that despite this defendant no.1 continued to represent that he holds 50% shares in the plaintiff and is entitled to represent the three companies and continued to conduct business, holding out that they represent H Corp and H. Con despite legal notice. Further that the Suit No.9503/16 Page 6 of 20 M/s James Martin vs Satish Jha & Anr business of defendants is similar to and in competition with that of the plaintiff. It is further stated that defendants claimed that the plaintiff no longer exists and that it has been renamed Headstrong India Pvt ltd., defendant no.2. Same was made by the defendants to the Sales Tax Department Govt of J & K, Srinagar in order to fraudulently obtain a contract actually awarded to the plaintiff. It is further stated that defendants have been acting without any right or authority given by the plaintiff and continue to carry business in competition with it. It is further stated that defendants are under obligation to render to the plaintiff true and proper accounts of the profits earned by them by such business with the plaintiff as well as with respect to those earned by holding out that they represent H. Corp and H Con. Further that defendant no.1 was managing the affairs of the plaintiff and has access to methodologies, data bases and processes belonging to it, client and contact lists, copies of files relating to past projects and copies of files relating to leads prospects etc and thus defendants are liable to be restrained from using the same as they are unauthorizedly utilizing such information in the similar business in competition with the Suit No.9503/16 Page 7 of 20 M/s James Martin vs Satish Jha & Anr plaintiff.
8. Plaintiff served notice dated 22.12.2001 to the defendants but to no avail. Hence, the suit.
9. Defendants filed written statement taking preliminary objection that the suit is not properly valued for the purpose of court fee and jurisdiction and that the suit is not instituted by the authorized person. It is further stated that plaintiff commenced its business in the leadership of the defendant no.1 as its principal officer. All the allegations made in the plaint are denied. It is submitted that defendant no.1 owns the share and has not resigned as Director of the plaintiff company. It is further stated that defendant no.1 is the only person through whom any one in India can claim the business of the global company and plaintiff have no independent right to have a restraint order against him. Dismissal of the suit was prayed.
10. Plaintiff filed replication reiterating the facts stated in Suit No.9503/16 Page 8 of 20 M/s James Martin vs Satish Jha & Anr the plaint and denying the allegation made in the WS.
FACTS OF SUIT NO. 9502/16(OLD CASE NO. 1040/2002):
11. In addition to aforesaid facts of case bearing no.
9035/16 (Old No. 130/2002), it has been pleaded in suit no. 9502/16 that on inspections, plaintiff came to know that following false and fabricated documents have been filed with defendant no.5:
(i) Form No.32 filed on 03.12.2001 dated 27.04.2001 representing that defendant no. 3 and 4 were appointed Directors of the plaintiff on 27.04.2001.
(ii) Form No. 32 filed on 18.01.2002, dated 07.01.2002 representing that defendant no.1 and 2 were appointed Directors of the plaintiff from 07.01.2002.
(iii) Annual return form filed on 28.09.2001 representing that defendant no.1 to 4 are Directors of the plaintiff.
12. It is further stated that no resolution has been passed nor any meeting was held to appoint defendant no.1 to Suit No.9503/16 Page 9 of 20 M/s James Martin vs Satish Jha & Anr 4 as the directors of plaintiff nor are they its director. The afore stated three documents are false and fabricated and are liable to be declared as such and canceled. It is further stated that plaintiff is entitled to decree of declaration and injunction that defendant no.1 to 4 are not directors of the plaintiff and are barred from holding out as such.
FACTS OF SUIT NO. 9501/16(OLD CASE NO. 1041/2002):
13. In addition to aforesaid facts of case bearing no.
9035/16 (Old No. 130/2002), it has been pleaded in suit no. 9502/16 that inspections, which the plaintiff conducts periodically, revealed that defendant no.1 filed Return of Allotment (RA), with defendant no.2 which purports to show an increase in the capital of the plaintiff from Rs 12,00,000/ to Rs 25,00,000/ and a consequent increase in the total number of equity shares from 12000 to 25000. It is further stated that the RA also represents that the 13000 shares of Rs 100/ each by which the capital has been increased from Rs 12 lacs to Rs 25 lacs have been allotted to defendant no.1. Plaintiff further Suit No.9503/16 Page 10 of 20 M/s James Martin vs Satish Jha & Anr states that the information in the RA is false and incorrect. The total capital of the plaintiff is Rs 12 lacs divided into 12000 equity shares of Rs 100/ each. After execution of the SPA, defendant no.1 sold the shares, 6000 in all, comprising 50% of the equity shareholdings of the plaintiff and that thereafter ownership of shares vested with BIL and no increase of share capital on fresh allotment of shares could have taken place.
14. It is further stated that the RA and Return submitted by defendant no.1 with defendant no.2 are forged, false and fabricated and that RA and Return are the valuable security. No resolution was ever passed by the plaintiff for the alleged increase in its share capital. Defendant no.1 has no authority to enhance the share capital of the plaintiff, nor any authority to file such documents. It is further stated that original RA and Return are filed with the defendant no.2. It is further stated that plaintiff had provided professional services to M/s Telecon Consultants of India Ltd. (TCIL). On or about 20.05.2002 , plaintiff came to know that defendant no.1 has falsely represented TCIL that he is a major shareholder of the plaintiff Suit No.9503/16 Page 11 of 20 M/s James Martin vs Satish Jha & Anr and that he is its director which amounts to wrongful interference in the plaintiff's business. Hence, this suit seeking decree of declaration and injunction that the alleged enhancement/increase in the share capital of the plaintiff from Rs 12 lacs to Rs 25 lacs and the issue of 13000 shares allegedly alloted to defendant no.1 are void, nonest, unenforceable and not binding on the plaintiff and restraining the defendant no.1 from holding out as such. Further decree of cancellation ordering the defendants to deliver the RA and the Return and any other document or record of proceedings which make such claims and cancelling the same.
15. At the stage of admission/denial of documents, on account of non appearance on behalf of defendants, they are proceeded ex parte vide order dated 02.12.2009. Thereafter, plaintiff led ex parte evidences in these matters. At the stage of final arguments, this case was transferred from Hon'ble High Court of Delhi to District court due to change in pecuniary jurisdiction.
Suit No.9503/16 Page 12 of 20M/s James Martin vs Satish Jha & Anr
16. Plaintiff lead his common ex parte evidence in suit no. 9503/16 old no. 130/2002 by examining PW1, Sh. R.K.Chopra, PW2, Sh. Ajesh Tuli and PW3 Sh. Jagdish Salwan got exhibited documents as under: (1) Ex.PW1/1 MoM of Board of Directors (2) Ex.PW1/2 Certificate of Incorporation (3) Ex.PW1/3 MoM dated 11.01.2002 (4) Ex.PW1/4 MoM dated 21.05.2002 (5) Ex.PW1/5 Joint Venture Agreement (6) Ex.PW1/6 MoU dated 10.04.2000 (7) Ex.PW1/7 Agreement dated 29.09.2000 (8) Ex.PW1/8 MoM dated 02.11.2000 (9) Ex.PW1/9 True copy of valuation (10) Ex.PW1/10 Agreement dated 30.04.2001 (11) Ex.PW1/11 Cheque dated 04.05.2001 (12) Ex.PW1/12 Certificate dated 24.11.2001 (13) Ex.PW1/13 Share Transfer Form (14) Ex.PW1/14 MoM dated 01.05.2001 (15) Ex.PW1/15 Resignation letters (16) Ex.PW1/15A Certified copies of Form 32 Suit No.9503/16 Page 13 of 20 M/s James Martin vs Satish Jha & Anr (17) Ex.PW1/16 Public Notice (18) Ex.PW1/17 Certified copy of form 32 dt 27.04.2001 (19) Ex.PW1/18 Certified copy of form 32 dt 07.01.2002 (20) Ex.PW1/19 Copy of Annual Return (21) Ex.PW1/20 Return of allotment (22) Ex.PW1/21 Legal Notice dated 14.09.2001 (23) Ex.PW1/22 Legal Notice dated 19.10.2001 (24) Ex.PW1/23 Legal Notice dated 07.11.2001 (25) Ex.PW1/24 Legal Notice dated 07.11.2001 (26) Ex.PW1/25 Legal Notice dated 07.11.2001 (27) Ex.PW1/26 Reply dated 18.12.2001 (28) Ex.PW1/27 Reply dated 18.12.2001 (29) Ex.PW1/28 Reply dated 18.12.2001 (30) Ex.PW1/29 Postal Receipts (31) Ex.PW1/30 Notice dt 18.12.2001.
(32) Ex.PW1/31 Legal Notice dated 21.12.2001
(33) Ex.PW1/32 Postal Receipts
(34) Ex.PW1/33 Acknowledgment card
(35) Ex.PW1/34 Copy of article of association
(36) Ex.PW1/35 Copy of memorandum of association
Suit No.9503/16 Page 14 of 20
M/s James Martin vs Satish Jha & Anr
(37) Ex.PW1/36 Reply dated 28.11.2001
(38) Ex.PW1/37 Notice dated 31.12.2001
(40) Ex.PW1/38 Reply dated 15.12.2001
(41) Ex.PW1/39 Notice dated 21.12.2001
(42) Ex.PW1/40 Reply dated 07.01.2002
(43) Ex.PW1/27 Award dated 14.07.2003
(44) Ex.PW3/1 Statement of accounts
17. The Court has considered the pleadings and evidence and documents on record.
18. In view of the unrebutted and uncontroverted testimony of the plaintiff's witness, I find nothing to doubt the testimony of plaintiff's witnesses and documentary evidences tendered in this case. Documentary evidences led in present cases are deserve to be accepted on their face value. In view of oral testimony of PWs and documentary evidences as mentioned above, I find that plaintiff has been able to prove material facts pleaded in the plaint and that the defendant no.1 has not left with any surviving right, interest or lien over the Suit No.9503/16 Page 15 of 20 M/s James Martin vs Satish Jha & Anr shares, nor was he entitled to represent the plaintiff, H Corp and/or H Con and no longer owns the shares as has resigned as its director. Further that defendant no.1 is not entitled to act or represent or purport to act on behalf of plaintiff. Plaintiff has also been able to prove in suit no. 9502/16 that the defendant no.1 to 4 therein were not appointed as the Director of the plaintiff by plaintiff.
19. Plaintiff has deposed that Form 32 and RA were deposited with Registrar of Companies by the defendant no.1 after his resignation dated 01.05.2001, purporting himself to be the Director of the plaintiff. Documents prepared by defendant no.1 after his resignation are without any authority and hence, are of no value.
20. Prayer for rendition of accounts is denied as plaintiff has filed another suit against defendant no.1 and M/s Headstrong India Pvt Ltd for permanent injunction, passing of infringement and rendition of accounts. In para 26 of plaint in suit no. 9501, plaintiff has mentioned that in suit no. 106/02, Suit No.9503/16 Page 16 of 20 M/s James Martin vs Satish Jha & Anr (which appears to be filed before suit no. 9503 (Old Case 130/02). In the said suit prayer was made for interalia for directions to defendants to render the account of profit. There is nothing to know about the fate of prayer for rendition of accounts. In suit no. 9503/16 it appears that rendition of account has been sought by the plaintiff in respect to breach/violation of clause 3(a) of Share Purchase Agreement dated 30.04.2001. This court is of opinion that plaintiff could have claimed specific damages if there was any breach of contract.
21. In view of aforesaid, these suit are decreed in following terms:
RELIEF: SUIT NO. 9503/16 (OLD NO. 130/2002)
22. This suit bearing no.9503/16 old no. 130/2002 is decreed ex parte in favour of the plaintiff and against the defendants and thereby defendants jointly & severely, their Suit No.9503/16 Page 17 of 20 M/s James Martin vs Satish Jha & Anr agents, representatives, nominees, executors are restrained to conduct business by holding out that they represent Headstrong Corporation and/or Headstrong Consulting Worldwide. Defendants, their agents, representatives, nominees, executor, assigns are further restrained from holding out that the plaintiff has been renamed M/s Headstrong India Pvt Ltd and/or acting on its behalf.
23. Plaintiff has further prayed to restrain the defendants jointly and severally, their agents, representatives, nominees, executors and assigns from conducting any business in competition with or similar to that of the plaintiff for a period of three years. Since three years period has already passed, hence, this prayer has become infructuous.
SUIT NO. 9502/16 (OLD NO.1040/2002)
24. This suit bearing no. 9502/16 Old no. 1040/2002 is decreed ex parte in favour of the plaintiff and against the defendants and it is declared that defendant no.1 to 4 are not Suit No.9503/16 Page 18 of 20 M/s James Martin vs Satish Jha & Anr the directors of the plaintiff and no resolution of meeting has ever been passed or held to appoint them as such and that any resolution or meeting held is void, non est, unforceable and not binding on the plaintiff. Defendant no. 1 to 4 are also held not connected or associated with the plaintiff in any manner and documents such as Form 32 statements and the Return prepared by the defendants no.1 to 4 on or after 01.05.2001 are null and void.
SUIT NO. 9501/16 (OLD NO. 1041/2002)
25. This suit bearing no. 9501/16 Old no. 1041/2002 is also decreed ex parte in favour of the plaintiff and against the defendants and it is declared that there has been no increase in the share capital of the plaintiff in excess of Rs 12 lacs to Rs 25 lacs, nor any increase in the number of its equity shares in excess of 12000 of a value of Rs 100 each and that the Return of Allotment and annual return are null and void and not binding on the plaintiff and defendant no.1 is not connected or associated with the plaintiff in any manner whatsoever.
Suit No.9503/16 Page 19 of 20M/s James Martin vs Satish Jha & Anr
26. Defendant no.1, his servants, agents, representatives, nominees, executor and/or assigns are also restrained from acting, claiming or holding out that there has been increase in the share capital of the plaintiff is excess of Rs 12 lacs or that there has been an allotment of 13000 equity shares of plaintiff to defendant no.1.
27. Costs of the suits are also awarded in favour of the plaintiff.
28. Decree sheet be accordingly prepared separately.
29. Copy of this order be kept in each connected file.
30. File be consigned to record room.
Announced in the open (ANIL KUMAR)
Court on 31.07.2017 ADJ05 (SOUTH DISTRICT)
(Judgment contains 20 pages) SAKET COURTS, NEW DELHI
Suit No.9503/16 Page 20 of 20