Bombay High Court
Sanjay Shrikrishan Jindal vs Shrikrishan Parmeshwaridas Jindal And ... on 25 June, 2021
Author: G.S. Patel
Bench: G.S. Patel
1-IAL10322-2021 IN SL10304-2021.DOC
Atul
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
INTERIM APPLICATION (L) NO. 10322 OF 2021
IN
SUIT (L) NO. 10304 OF 2021
Sanjay Shrikrishan Jindal ...Plaintiff
Versus
Shrikrishan Parmeshwaridas Jindal & Ors ...Defendants
Mr Dinyar Madon, Senior Advocate, with Cyrus Ardeshir, Atul
Daga, Shailesh Mahimtura, Amit Mehta, & Ishaan Mahimtura,
i/b Mahimtura & Co., for the Plaintiff.
Mr Janak Dwarkadas, Senior Advocate, with Fereshte Sethna,
Aniket Nimbalkar & A Pandlik, i/b DMD Advocates, for
Defendants Nos. 1 to 6 and 13.
Mr Rafiq Dada, Senior Advocate, with Prakash Shah & Durgadas
Poojari, i/ b PDS Legal, for Defendant No. 12.
Ms Kunal Bhanage, for Defendant No.15.
Mr Rohaan Cama, with Chirag Kamdar, Sachi Udeshi & Aryan
Srivastava, i/b Wadia Ghandy & Co, for Defendants Nos. 7 to 11
and Defendant No. 16.
CORAM: G.S. PATEL, J
(Through Video Conferencing)
DATED: 25th June 2021
PC:-
1. Heard through video conferencing.
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2. This is a dispute in an extremely wealthy family. The Plaintiff
("Sanjay") is the son of Defendant No. 1 ("Shrikrishan") and
Defendant No. 2. Defendant No. 3 ("Ajay") and Defendant No. 7
("Vijay") are Shrikrishan's other two sons, Sanjay's brothers.
Defendants Nos. 4, 5 and 6 are Ajay's family and Defendants Nos.
8, 9, 10 and 11 are Vijay's family. Defendants Nos. 12 to 16 are all
corporate entities closely held by the Jindal family in various
shareholding patterns.
3. Sanjay seeks a declaration that there was in 2013 a family
arrangement, the details of which he sets out in paragraphs 13(b) to
13(d). He says that these have been overridden by the terms of a
January 2017 arbitral consent Award, Exhibit 'D' at page 158. The
consent terms in the Award were in an arbitration between Vijay as
the claimant and Shrikrishan, Ajay and Sanjay as some of the
Respondents.
4. Sanjay then seeks a decree of specific performance of this so- called 'composite' family arrangement of 2013 with the arbitration award modification of January 2017. The substance of this composite family arrangement, Sanjay says, is the division by the father of almost the entirety of the family business in menthol, cocoa, and finance and investments. Shrikrishan suffered two heart attacks in 2012. It is then that he decided, or so Sanjay says, that the family business would be divided between his three sons equally. As we know, including from classical literature, such plans seldom go as planned -- King Lear being only one example. The trajectory of this story is not very different.
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5. The reliefs sought in the Interim Application are these:
"(a) pass an order injuncting/restraining the Defendants form interfering with the Plaintiff's possession of:
office No. 52 on the 5th floor of Bajaj
Bhavan, 226, Nariman Point, Mumbai;
residential Flat No. 343-B, Tahnee
Heights;
residential Flat 3801-3802, Lodha
Altamount; and
two cars viz, BMW saloon bearing
Registration No. DDO3J2371 and BMW
X5 bearing Registration No.
DDO3K0935.
(b) pass an order injuncting/restraining the Defendants
from interfering with the Plaintiff in managing and operating Defendant No. 15 Company, in any manner whatsoever;
(c) pass an order injuncting / restraining Defendant No. 12 Company and its Directors and Officers from making any withdrawals or doing any act or deed whereby the reserves of Rs. 748 crores standing in name of Defendant No. 12 is in any manner impaired or reduced;
(d) issue directions, pass orders, make enquiries and take accounts, as may be necessary, for the purposes aforesaid;
(e) appoint a Trustee or Receiver and direct Defendant No. 12 to deposit with the Trustee / Receiver the said funds of Rs. 746 crores, which is available as reserves with Defendant No. 12, with directions to suitably invest the said funds;"1 1 Parties need to stop using bullets in pleadings. These are formal documents filed in a Court, where specific references are essential. Our rules require sequential paragraph numbering. This applies to prayers Page 3 of 11 25th June 2021 ::: Uploaded on - 28/06/2021 ::: Downloaded on - 18/09/2021 03:44:31 ::: 1-IAL10322-2021 IN SL10304-2021.DOC
6. There is a very long narrative in Sanjay's plaint about his Herculean labours to build the family business. These are, of course, (and predictably) denied by Shrikrishan and Ajay. Ajay in particular attempts to portray Sanjay as being more than somewhat prodigal. That is of no concern at this stage.
7. Very broadly stated, Sanjay's case is that in 2013 he was entitled to a one-fourth share, right, title and interest in all the family assets. Defendants Nos. 12, 13, 14 and 16 are equally susceptible, Sanjay maintains, to such a division because they are glorified partnerships or corporates in the nature of quasi partnerships. Sanjay accepts that Defendant No. 15 ("Jindal Multitrade") was set up as a wholly-owned subsidiary of Defendant No. 12 ("Jindal Drugs"). Jindal Multitrade was to be the entity in which the whole or part of Sanjay's fourth entitlement was to be housed. Sanjay would relinquish his directorships and shareholding in Jindal Drugs. The assets in Jindal Multitrade would belong to Sanjay exclusively just as the assets of Defendant No. 16 were said to be the exclusive assets and domain of Vijay. The arbitral award, Sanjay says, effectively hived off Vijay. This means, in Sanjay's reckoning, that he is now entitled to one-third of the family assets, the division to be between Shrikrishan, Ajay and himself.
8. The prayers in the Interim Application are divided in three parts. The first pertains to three immovable properties and two cars.
too. Bullets are not numbers.
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9. The following position is undisputed. Both cars are today registered to Jindal Multitrade. Sanjay operates and manages that company. He has exclusive use of those two cars. Obviously, that cannot be disturbed. As regards the three properties, the title to all three is in the name of Jindal Drugs. Yet there is not the slightest doubt that the title deeds to all three properties are physically with Sanjay. We know this because there are two documents that put it beyond all controversy. The first is Exhibit 'F' to the Plaint at page 166, a letter of 16th October 2020 from Sanjay to Shrikrishan and Ajay confirming precisely this: that he holds the documents of all three properties. The second is the explicit statement made on oath by Shrikrishan in his Affidavit in Reply in paragraphs 28 and 29 at pages 825 and 826, which read thus:
"28. I had decided, back in June 2018, to make an independent gift to each the Plaintiff and Defendant No. 7 of Rs. 100 crores, in cash or cash equivalents, of my own free will and volition.
29. In the course of direct engagement and discussion with the Plaintiff, I personally delivered to the Plaintiff the title deeds pertaining to three realty assets held in the ownership of Defendant No. 12, i.e. commercial office at 52, Bajaj Bhavan, residential flats at 3801-3802 Lodha Altamount and 343-B Tanhee Heights, on the understanding that details for implementation of the gift will be worked out with professional advisors, after which I would revert to the Plaintiff around arrangements for transfer thereof to the Plaintiff."
10. The position, therefore, is that the three immovable properties are assets on the books of Jindal Drugs. But their title Page 5 of 11 25th June 2021 ::: Uploaded on - 28/06/2021 ::: Downloaded on - 18/09/2021 03:44:31 ::: 1-IAL10322-2021 IN SL10304-2021.DOC deeds are with Sanjay. The possession is with Sanjay. I see no reason to disturb this status quo at present.
11. Mr Dada for Jindal Drugs expresses an apprehension that Sanjay may part with possession or alienate or encumber one or more of these properties. I do not see how it is possible for Sanjay to do that without a supporting resolution from the entity that has legal title to the properties, namely, Jindal Drugs. Mr Dada also says that Sanjay may create a license. That can hardly be prejudicial. But, in any case, any prudent licensee will also undoubtedly seek to know whether Sanjay has the authority to create such a license. I am making no observations in that regard at this stage.
12. Mr Dada also says that Sanjay does not need the two-bedroom flat in the distinctly upmarket Tanhee Heights building because he has an even more splendid accommodation at an even more upmarket address place at Lodha Altamont --he has the entire 38th floor (apparently all of them have a floor each). It is not for me to comment on what the bare necessities of these parties are. I am concerned only with the legal standing of the title and possession of these properties. What Sanjay needs or does not need is hardly the issue. Once Shrikrishan has made the position clear in opposition to Sanjay's plaint, it is not for Jindal Drugs to question what Sanjay 'needs'. This argument could extend to anything and everything, all to no purpose. The only question is what it is that Sanjay can show he was assured as part of the agreement of which he demands specific performance, and, at this stage, what case he makes out for ad-interim relief. His 'needs' are irrelevant.
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13. Passing on to prayer clause (b), this is where Sanjay seeks a restraint against the Defendants from interfering with his operations in Jindal Multitrade. That entity is a wholly owned subsidiary of Jindal Drugs. That is an admitted position.
14. Whatever be Sanjay's case on the family arrangement, this is what Shrikrishan says into the agreement of Sanjay exiting both Jindal Drugs and Defendant No. 13 ("Eskay Management").
"21. It came to be agreed between the Plaintiff and me, with the knowledge and consent of Defendant Nos. 3 and 7, that: (a) payment of the Plaintiff's entitlement to Rs. 120 crores, against the shareholding interests of the Plaintiff in Defendant Nos. 12 and 13, would be capitalized into a subsidiary to be formed by Defendant No. 12, which the Plaintiff will manage, pending professional advice to be obtained by the Plaintiff for a tax efficient mechanism to transfer the assets/interests of such subsidiary over to himself, in corporate form, whether through demerger or business transfer agreement or analogous arrangement; (b) that upon receipt of Rs. 120 crores into the subsidiary, the Plaintiff shall tender a formal letter of resignation from the office of director of Defendant No. 12 to manifest and symbolize his 'exit' from Defendant No. 12; (c) the Plaintiff shall effectuate transfer of his shareholding interests in Defendant Nos. 12 and 13 upon my request, over to myself, of my nominee; (d) pending transfer of shareholding, the Plaintiff shall not exercise rights or stake any claim whatsoever in relation to Defendant Nos. 12 and 13, by virtue of the Plaintiff's exit from Defendant No. 12; and, (e) the Plaintiff shall not stake claim to any shareholding or any other rights at all in relation to Defendant Nos. 12 and 13, whether through Defendant No. 14, or at all (2013 Agreement)."Page 7 of 11
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15. Mr Madon for Sanjay has of course had to proceed on denials of this Affidavit. Much the same averment has been made by Ajay in his Affidavit in Reply. In Rejoinder Sanjay has denied the correctness of it.
16. The difference between two versions is that Sanjay today claims that he is entitled to interim protection because there is an agreement which assures him of a one-third right in the global family assets, today reckoned to be well in excess of Rs. 2,200 crores. All that Sanjay says he has receivedis the infusion of a 'mere' Rs. 120 crores into Jindal Multitrade, the entire shareholding of which is with Jindal Drugs. Of necessity, a trivial percentage of the shareholding of Jindal Multitrade is held by Sanjay personally.
17. It is impossible at this interim stage to arrive at any sort of conclusion, even prima facie, about which of these competing versions is correct. But let us take Shrikrishan's version. What he puts forward in paragraph 21 is that Sanjay was entitled to Rs. 120 crores. Against this, Sanjay would surrender his shareholding in Jindal Drugs and in Eskay Management. Rs. 120 crores would be put into a subsidiary of Jindal Drugs. Sanjay would manage the subsidiary ( Jindal Multitrade) until the parties obtained professional advice for the transfer of these assets to him either through a demerger or through some other arrangements. Sanjay was to resign as a director of Jindal Drugs. He did that in 2014. He was to transfer his shareholding in Jindal Drugs and Eskay Management either to his father or his father's nominee (and this is why Mr Madon maintains that these companies are quasi partnerships). Pending that shareholding transfer Sanjay was not to exercise any Page 8 of 11 25th June 2021 ::: Uploaded on - 28/06/2021 ::: Downloaded on - 18/09/2021 03:44:31 ::: 1-IAL10322-2021 IN SL10304-2021.DOC shareholders rights in Jindal Drugs or Eskay Management or stake any claim to that shareholding.
18. That the subsidiary, Jindal Multitrade, has been established, that Rs. 120 crores has been infused into it and that Sanjay has resigned from his directorship in Jindal Drugs are matters of record and cannot be disputed.
19. This leaves me to believe that for prayer clause (b) Sanjay has been able to establish a sufficient prima facie case. This is not to be held to mean that I have accepted or found that his entire case on the family arrangement (as modified) is correct. This prima facie finding is limited to his right to continue to manage the affairs of Jindal Multitrade. That is what his father Shrikrishan says was indeed the intent of incorporating Jindal Multitrade.
20. But Sanjay wants more. Much more. Prayer clause (c) virtually asks for a restraint against Jindal Drugs from using its capital reserves -- or what I suppose is one-third of its reserves -- stated to be Rs. 746 crores. This claim is mounted on the basis that Sanjay has made out an overwhelming prima facie case that he is entitled to a one-third division of the assets of the family and the companies, such assets to be valued as they now stand Mr Madon says that because of the consent terms in the arbitration to which I have referred, Vijay has got his share and what remains now is a three-way split between Shrikrishan, Ajay and Sanjay. He is, therefore, entitled to one-third of the global assets including those of Page 9 of 11 25th June 2021 ::: Uploaded on - 28/06/2021 ::: Downloaded on - 18/09/2021 03:44:31 ::: 1-IAL10322-2021 IN SL10304-2021.DOC the quasi-partnership companies. This is the foundation of prayer clause (c).
21. I do not see how Sanjay can be said to have made out the kind of prima facie case that is necessary for the grant of such a wide relief. The statements that Shrikrishan and Ajay make, though Sanjay denies them, are broadly consistent but do not go beyond prayer clauses (a) and (b). The Consent Terms to which Sanjay refers do not, in my view, indicate that there was an agreement for an equal division of assets between the four men. The Consent Terms speak of Vijay's entitlement in the arbitration in which he was the Claimant. Prima facie, I am unable to accept the submission that these Consent Terms resulted in a modification of the Family Arrangement entitling Sanjay to a one-third share of the global assets.
22. Whether the Family Arrangement covered a one-time payout of Rs. 120 crores (plus the flats and the cars) or was supposed to be more are matters that will require evidence possibly from both sides. Sanjay will have to establish the correctness of what he asserts and merely referring to this or that document at this stage and asking me to infer this agreement is insufficient.
23. Mr Dada expresses an apprehension that Sanjay may try to disrupt the operations or working of Jindal Drugs. Mr Madon on his part apprehends that Jindal Drugs and other entities controlled by Shrikrishan and Ajay will be stripped of their assets. Nothing can be made of such apprehensions. There is no discernible basis on either Page 10 of 11 25th June 2021 ::: Uploaded on - 28/06/2021 ::: Downloaded on - 18/09/2021 03:44:31 ::: 1-IAL10322-2021 IN SL10304-2021.DOC side. As to Jindal Drug's apprehensions, they can take us nowhere
-- Jindal Drugs has filed no petition or suit or application of any kind, and I do not see how it can get an injunction in Sanjay's Interim Application in his suit.
24. I am rejecting prayer clause (c) and consequently prayer clauses (d) and (e).
25. There will be an order in terms of prayer clauses (a) and (b).
26. All parties to apply should the need arise with at least four days' prior written notice to the Advocates for the either side.
27. No further orders are required in the Interim Application. It is disposed of in these terms. There will be no order as to costs.
28. All concerned will act on production of an ordinary copy of this order.
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