Bangalore District Court
M/S.Ranjith Engineering Pvt.Ltd vs Mukul Bhargav on 29 November, 2018
IN THE COURT OF THE III ADDL.CITY CIVIL & SESSIONS
JUDGE, BENGALURU CITY (CCH.25).
Dated: This the 29th day of November 2018
Present: Sri.Ron Vasudev, B.Com. LL.B, (Spl),
III Addl.City Civil & Sessions Judge, Bengaluru.
O.S.4188/2002
Plaintiff: M/s.Ranjith Engineering Pvt.Ltd.,
No.157/18, St.Patrick's Complex,
Brigade Road, Bengaluru-560025.
- represented by its Director,
Smt.Vidhyavathi Gupta
(By Sri DSV, Advocate)
V/S
Defendants: 1. Mukul Bhargav
2. Om Shankar Bhargav
- dead, by his L.Rs-
2(a) Madhuri Bhargav
2(b) Mandeep Bhargav
2(c) Preeti Bhargav
Partners of M/s.Roto Packaging,
No.79/80, Peenya Industrial Area,
3rd Phase, Bengaluru-560058.
3. Sri G.S.Gupta, S/o.late Ranjith
Singh-DEAD
4. M/s.Roto Packaging, a Partner-
ship Firm, No.79/80, Peenya
Industrial Area, 3rd Phase,
Bengaluru-560058.
- represented by defendant
No.1 and 2, its partners.
5. M/s.Bhargava Roto Pack Pvt.Ltd.,
a Private Limited Company, regis-
tered under the provisions of The
Companies Act, having its regis-
2 O.S.4188/2002
tered office at No.79/80, Peenya
Industrial Area, 3rd Phase,
Bengaluru-560058.
- represented by its Director,
Sri Mukul Bhargava
(D.1, 5 & L.Rs of D.2 - By Sri JRR, Adv,
D.3- DEAD, D.4- By Sri RSM, Advocate)
Date of Institution : 28.06.2002
Nature of Suit : For declaration, possession,
mandatory injunction,
compensation and for
mesne profits
Date of commencement of : 13.07.2010
evidence
Date of pronouncement of : 29.11.2018
Judgment
Total Duration : Year/s Month/s Day/s
16 05 01
(RON VASUDEV)
III Addl.City Civil & Sessions Judge,
Bengaluru.
JUDGMENT
This is a suit for declaration, possession, mandatory injunction, compensation and for mesne profits.
2. The suit property is the industrial land bearing plot No.79, in Sy.No.94 of Peenya and plot No.80 in Sy.No.145 and 146 of Laggere village, Peenya Industrial Area, 3rd Phase, Yeshwanthpura Hobli, Bengaluru North District, measuring 20,736 sq.ft., or 1926.40 sq.mtrs., and bounded by-
3 O.S.4188/2002East- 100 feet Ring Road West- plot No.81 North- Industrial sheds and vacant site belonging to vendor South- 40 feet wide road
3. The sum and substance of the plaint averments is that, plaintiff is a Private Limited Company having its registered office at the address shown in the cause title. That it purchased larger extent of the schedule property viz plot No.79 and plot No.80, measuring 1 Acre 2 Guntas and 26 Sq.yards in Sy.No.94 of Peenya Village and Sy.Nos.145 & 146 of Laggere Village, Peenya Industrial Area under registered sale deed dated 05.09.1984 from KIADB. That the Director of the plaintiff-company is an uneducated lady and she is not acquainted with reading or writing of English or Kannada language, except signing in Hindi, so taking undue advantage of the same the defendant No.3, who was managing the affairs of the company, hatched a criminal conspiracy with defendant No.1 and 2, who were the tenants of the plaintiff, and sold the schedule property them for a meager sum of Rs.1,05,000/-. Thus the plaintiff was cheated by the clandestine act of defendant No.1 to 3. The said sale deed executed by defendant No.3 in favour of defendant No.1 and 2 on 17-7-87 shows that the said defendant No.3 was never authorized to sell the schedule property or to part with its possession on behalf of the plaintiff-company. The schedule property being asset of the plaintiff-company, the defendant No.3 could not have sold it without the sanction or approval 4 O.S.4188/2002 of the Board of Directors of plaintiff, therefore the said sale deed is bad in law and it cannot be sustained. The defendant No.3 could not have dealt with the said property as if it is his individual property as such his said action does not bind the plaintiff. The entire sale transaction was secretively held without the knowledge of the other Directors of plaintiff. Infact as per the conditions of allotment of KIADB the plaintiff could not have alienated the said property. Since the said transaction took place behind the back of the other Directors of the plaintiff-company Smt.Vidhyavathi Gupta was totally unaware of it till 06.02.2002, the day on which one Irshad Ahmed @ Babu approached her and introduced himself as real estate agent and informed that the defendant No.1 and 2 are interested to buy the remaining portion of that property. Upon hearing the same the other Directors of the plaintiff were shocked. Infact when the plaintiff applied for the encumbrance certificate on 07.03.2002 to ascertain regarding the said sale transaction it did not reflect the impugned sale. On coming to know about the said transaction Smt.Vidhya- vathi Gupta proceeded to the premises of the company and was surprised to notice that the schedule property was severed from the company's other land and these defendants No.1 and 2 had made construction in it illegally. When she tried to know from them about the information given by Irshad Ahmed they were not available and on enquiry they produced copy of the sale deed dated 17.07.1987. That as on the date of the impugned sale the schedule property was more than Rs. 5 lakhs worth, but in the said sale deed the sale consideration is shown as Rs.1,05,000/-, which is 5 O.S.4188/2002 substantially low. Noticing the illegal transaction of defendant No.1 to 3 the plaintiff caused legal notice on 28.03.2002 calling upon them to restore the land within 10 days, but it was untenably replied by the defendant No.1 and 2, whereas the defendant No.3 remained silent. Wherefore alleging that cause of action for the suit arose on 06.02.2002, the date on which the Director of the plaintiff came to know about the alienation and again on 07.03.2002, when encumbrance certificate obtained by the plaintiff did not show the impugned transaction and it again arose on 28.03.2002, when legal notice was issued to defendants No.1 to 3, the plaintiff prays to declare that the alienation made by defendant No.3 in favour of defendants No.1 and 2 is illegal without any authority and propriety as such it is not binding on it and further that the alleged transaction is void and illegal and to restore the schedule property by canceling the sale deed dated 17.07.1987; to deliver vacant possession of the said property; to direct defendants No.1 and 2 to remove the illegal structure put up there by granting the relief of mandatory injunction; to award compensation for use and enjoyment of the said property by defendant No.1 and 2 for all these days by awarding Rs.50,000/- as damages and to hold enquiry under Order XX Rule 12 of CPC for current and future mesne profits as well as for cost of the suit.
4. In response to the suit summons defendant No.1 appeared, but he has not taken interest to contest by filing his counter.
6 O.S.4188/20025. The defendant No.2 appeared and filed the written statement and in nutshell the contents of the same are that, suit is liable to be dismissed in limine as it is bereft of merit. That there is no cause of action under Order II Rule 3 of CPC as against this defendant and since the plaintiff has not sold any property to this defendant. It is also liable to be dismissed for non-joinder of necessary party and misjoinder of unnecessary parties. That the court fee paid on the plaint is insufficient and present market value of the schedule property is more than Rs.15 lakhs. The suit is also barred by limitation as impugned transaction has taken place in the year 1987 and it was not questioned for all these days. The true facts are that M/s.Roto Packaging was a partnership firm and it has been converted into Private Limited Company in accordance with law. All the assets and liabilities of the said partnership firm were transferred in the name of the said Private Limited Company as such suit against the defendant No.1 to 3 in their individual capacity is liable to be dismissed. The schedule property was sold by M/s.Ranjit Engineering Works Pvt.Ltd, wherein Smt.Vidhyavathi Gupta was also one of the Director to the said firm. The other Directors were none other than the defendant No.3 and their son. That all the while Smt.Vidhyavathi Gupta was very much aware of the sale transaction and as there was authorization to the defendant No.3 he acted on behalf of the said M/s.Ranjit Engineering Works Pvt.Ltd. Company, which is hereinafter referred to as the "said company". The said company got allotted the land from KIADB and the sale deed was taken on its behalf by none other than the defendant No.3 as its 7 O.S.4188/2002 Managing Director. That before executing the sale deed in favour of M/s.Roto Packaging partnership firm the said company obtained permission of the competent authority under the Urban Land Ceiling Act and the sale consideration was more than the market price then prevailing. The sale of the schedule property by the said company was discussed in its Annual General Body Meeting and when the report of the Auditor was placed Smt.Vidhyavathi Gupta was also one of the signatory to the decision taken in that meeting. The very fact that Smt.Vidhyavathi Gupta did not take any action against the other Directors viz her husband and son shows that all the plaint allegations are got up for the purpose of this case. It is surprising that Smt.Vidhyavathi Gupta did not visit the premises of the company nearly for 15 years and she visited it only after the fictitious person viz Irshad Ahmed informed her about the sale in favour of defendant No.1 and 2 and noticed the severance of the schedule property and the construction made in it by defendants No.1 & 2. Since the sale transaction was between the said company and the partnership firm, in the absence of the said juristic persons the suit is not maintainable. Even the said company has not issued legal notice to defendants No.1 and 2, but it has been duly replied by them. Since the said company was under loss and it had no other business except to construct the industrial lands and let out them for augmenting its income, the sale deed was executed by defendant No.3 as a Managing Director of the said company in favour of the said partnership firm. Four cheques issued by the defendant No.2 towards payment of sale consideration on different dates were realized 8 O.S.4188/2002 by the company. Therefore all the contrary plaint averments made herein are false, frivolous and vexatious to the knowledge of Smt.Vidhyavathi Gupta, who has instituted this suit on behalf of the company, which has not alienated that land to the firm. That suit is highly barred by time. So on these grounds and other grounds defendant No.2 prays to dismiss the suit with cost.
6. During the pendency of the suit defendant No.2 died and his L.Rs were brought on record. The said L.Rs, D.2(a) to D.2(c) filed their separate written statement stating that they have acquired devolutionary interest. While filing the said written statement they adopted the written statement filed by defendant No.2 and they too contended that the suit is barred by limitation and plaintiff is not the company which alienated the schedule property to the firm. Since the suit is by wrong company on that count also suit is liable to be dismissed.
7. During the pendency of the suit realizing the patent error plaintiff filed I.A.6 to implead M/s.Roto Packaging, the partnership firm, as defendant No.4. Though the said defendant No.4 impleaded and it appeared, it has not filed its separate written statement.
8. In order to set rest the dispute once for all, M/s.Bhargava Roto Pack Pvt.Ltd., by filing I.A.22 and got impleaded itself as defendant No.5 and contended that the defendant No.4 is no longer in existence and it is converted in to Private Limited Company, wherein the defendant No.1 and 2 are the Directors along with others.
9 O.S.4188/20029. The summary of the written statement of the defendant No.5 is that previously M/s.Roto Packaging, a partnership firm viz the defendant No.4, was constituted by defendant No.1 and 2 and others and later it was got converted into Private Limited Company and it is the successor in interest of the said partnership firm having took over all the assets and liabilities of that firm. That the defendant No.5 is the absolute owner and in lawful possession and enjoyment of the schedule property by virtue of the sale deed dated 17.07.1987 executed by the plaintiff- company. It is reiterated that before sale of that land the plaintiff-company obtained order from the competent authority under Urban Land Ceiling Act and even before execution of the impugned sale deed there was a sale agreement by the plaintiff-company in favour of the 4th defendant on 29.05.1985 to alienate the schedule property for Rs.85,000/-. Under the said agreement of sale certain amount was also paid as advance towards the execution of the sale deed, but later the defendant No.4 enhanced the sale consideration voluntarily and by paying Rs.1,05,000/- in all the sale deed was taken from the plaintiff-company on 17.07.1987. In that sale deed the cancellation of the earlier agreement of sale is recited and also the enhancement of the sale consideration as it was required for the plaintiff- company's for its accounting. It is true that M/s.Ranjit Engineering Works Pvt. Ltd., was the original allottee of that land by KIADB and it took the sale deed from that authority on 05.09.1984. However it is not known when the said company was renamed as "M/s.Ranjith Engineering Pvt.Ltd."
10 O.S.4188/2002Since the entire records are in the custody of the said company, the possibility of tampering them or fabricating different documents cannot be ruled out. Since the plaintiff- company was a family company established by defendant No.3, his wife-Smt.Vidhyavathi Gupta and their son, all the transactions were done by defendant No.3 as Managing Director and CEO and he had all the authority to alienate the schedule property. Since there was a litigation between the plaintiff-company and the defendant No.4 for eviction, in order to take revenge this vexatious suit is filed. Like other defendants it also contended that suit is barred by time and court fee paid on the plaint is insufficient. Thus on these grounds and other grounds it has prayed to dismiss the suit with cost.
10. Upon amendment of the plaint defendant No.2(a) to (c) and 5 have filed their additional written statement. Even in that additional written statement they have reiterated that suit is barred by time and the prayer-(a) of the plaint is totally cumbersome and there is no preciseness in the approach of the plaintiff. So through that additional written statement once again they have prayed to dismiss the suit with cost.
11. Based on the said pleadings my predecessor in office has framed the following issues.
ISSUES
1) Whether plaintiff proves that the alienation made by the defendant No.3 in favour of defendants-1 and 2 is illegal and not 11 O.S.4188/2002 binding on the plaintiff?
2) Whether plaintiff proves that it is the owner of suit property?
3) Whether plaintiff proves that defendants-1 and 2 have put up structures on the suit schedule property illegally?
4) Whether defendant No.2 proves that suit is liable to be dismissed under Order II Rule 3 CPC as contended?
5) Whether defendants-1 and 2 have derived their title and interest over the suit schedule property as contended in paras-
13 to 19 and 21 of their written statement?
6) Whether defendants-1 and 2 prove that defendant No.3 had right, title and interest to alienate the suit schedule property as alleged?
7) Whether suit of the plaintiff is within time?
8) Whether suit of the plaintiff is bad for mis-
joinder and non-joinder of parties?
9) Whether valuation made and court fees paid by the plaintiff is correct?
10) Whether plaintiff is entitled to the relief of damages/compensation claimed?
11) Whether plaintiff is entitled to the relief sought for?
12) What order or decree?
12 O.S.4188/200212. In support of its case plaintiff initially examined D.P.Gupta s/o.Smt.Vidhyavathi Gupta as PW.1 by autho- rizing him through Power of Attorney, and he got marked 8 documents. Since he did not turn up and later Smt.Vidhya- vathi Gupta died during the pendency of the suit, another Director of the plaintiff viz Smt.Anjana Gupta examined herself as PW.2 and in addition to the 8 documents already on record she got marked Minutes of the Board Meeting as Ex.P.9. Thus in all oral evidence of PW.2 and Ex.P.1 to P.9 are available for analysis. On the other hand defendant No.1, who has not filed his written statement entered witness box and gave evidence on behalf of L.Rs of defendant No.2 through Power of Attorneys and he got marked 14 documents.
13. I have heard the arguments of Sri DSV Advocate for the plaintiff and Sri JRR Advocate for defendant No.1,5 and L.Rs of defendant No.2. During the pendency of the suit defendant No.3 died and memo was filed stating that as he was sued as a Director of the Company cause of action will not survive to his heirs. There was no representation for defendant No.4. Perused the file.
14. My findings on the above issues are as under:
Issue No.1: In the negative
Issue No.2: In the negative
Issue No.3: In the negative
Issue No.4: In the affirmative
13 O.S.4188/2002
Issue No.5: In the affirmative
Issue No.6: In the affirmative
Issue No.7: In the negative
Issue No.8: No longer survives for
consideration
Issue No.9: In the negative
Issue No.10: In the negative
Issue No.11: In the negative
Issue No.12: As per final order below,
for the following:
REASONS
15. ISSUE No.1 TO 3, 5 AND 6: On going through the pleadings and rival submissions of the parties as rightly pointed out by both the Advocates there was no need to frame so many issues to decide the core controversy involved in this case. As can be seen from the pleadings, which reflect the confused state of mind of not only the plaintiff, even the L.Rs of defendant No.2 and also the defendant No.5, in my opinion framing of one issue with respect to the title of the schedule property was enough in that context, however as neither the plaintiff raised any grievance for framing so many issues nor the defendants at the appropriate time, I am required to answer them. At the same time if one reads those issues it is evident that the findings of issue No.1 to 3 will automatically resolve issue No.5 and 6, which call upon the defendants to prove their defence. I also notice that while framing issue No.5 and 6 my learned predecessor has also called upon the 14 O.S.4188/2002 defendant No.1 to prove the said issues throwing burden on him, when there is no written statement by him nor he adopted the written statement of defendant No.2. Even this aspect has also gone unnoticed by the parties on record. Be that as it may, by taking the things as they are on record I will try to find out whether there is any substance in the contention of plaintiff that sale deed dated 17.07.1987 has no sanctity in the eye of law and the defendant No.4, which took that sale deed, did not derive valid title to the schedule property. During the examination of PW.1 copy of that sale deed was marked as Ex.P.3. Before I record my findings on the impugned Ex.P.3 it is necessary to advert to the undisputed facts.
16. It is not in dispute that M/s.Ranjit Engineering Work Pvt.Ltd., was the allottee of 1 acre 2 guntas and 26 square yards of land by KIADB for industrial purpose and the sale deed was came to be executed by KIADB in favour of the said M/s.Ranjit Engineering Works Pvt.Ltd., on 05.09.1984. Plaintiff has produced the notarized copy of the said sale deed at Ex.P.4. Since the contesting defendants also allege to have derived title from M/s.Ranjit Engineering Works Pvt. Ltd., they cannot dispute the Ex.P.4 and naturally they have not disputed it. The contents of Ex.P.4 show that on 05.09.1984 KIADB sold the larger extent of schedule property for a consideration of Rs.31,518/- in favour of M/s.Ranjit Engineering Works Pvt.Ltd. and sale deed was taken by none other than the defendant No.3 in the capacity as a Managing Director of the said company. Ex.P.4 is also annexed with 15 O.S.4188/2002 sketch showing the dimension of that land. Though initially it was the trump-card of the defendant No.2, his heirs as well as the defendant No.5 that said purchaser company is not before the court, later it was withered away with the very contention of the defendant No.5 in paras-18 and 24 to 26 that it is the plaintiff-company which sold to the firm. There defendant No.5 conceded that earlier the plaintiff-company was known as M/s.Ranjith Engineering Works Pvt.Ltd.and now it is renamed as M/s.Ranjith Engineering Pvt.Ltd. and the word "Works" is left out. Likewise though lot of hue and cry was also made regarding the transformation of defendant No.4, the "firm" into a "Private Limited Company" known as "M/s.Bhargava Roto Pack Pvt.Ltd."(defendant.No.5) and lot of things were canvassed that the said partnership firm is not a party and M/s.Bhargava Roto Pack Pvt.Ltd., is also not impleaded etc, but with the impleading of the defendant No.4 and 5 things were made more simpler. Even before the end of the trial both sides conceded that it is the plaintiff-company which alienated the schedule property in favour of defendant No.4 and now the said defendant No.4 is no longer in existence and it is converted into a Private Limited Company, viz, the defendant No.5. If these things are well understood, it will be comparatively easy to understand the whole dispute.
17. According to the plaintiff nonetheless defendant No.3 had no right to execute the sale deed he alienated the schedule property in favour of defendant No.4 as if it is his individual property. Denying that averment the defendant No.2 as well as defendant No.5 submitted that since it was a 16 O.S.4188/2002 family concern, wherein defendant No.3, Vidhyavathi Gupta, and their son were the only Directors, the defendant No.3 had an authority to execute the sale deed etc, but they have not come up with a document to show that the Board of Directors of plaintiff-company had authorized the defendant No.3 to execute the sale deed. Regarding this hard truth suggestion made in the cross examination of PW.2 on page No.19 is worth to reproduce. There Sri JRR Advocate suggested that as the defendant No.3 was a Managing Director there was no need for him to get GPA or any other authority to sell the schedule property. No doubt the said suggestion was not directly answered by the PW.2, however she reiterated that as per her understanding the whole sale transaction is invalid. According to me just for the sake of want of resolution of Board of Directors authorizing the defendant No.3 to alienate the suit property it cannot be said that the transaction in Ex.P.3 is altogether void. For this I assign two reasons.
18. Firstly, the Resolution Book and all other relevant Books will be with the plaintiff-company and in the given circumstance it is difficult to expect the defendant No.4 to produce the same. Of course on that reason one cannot shirk away from the responsibility of producing the said resolution copy when the defendant No.4 and its partners viz defendant No.1 and 2 were aware of the mode to purchase an immovable property from a company. But there are other circumstances which would amply demonstrate that Smt.Vidhyavathi Gupta and her son were very much aware of the execution of the sale deed by defendant No.3 and they 17 O.S.4188/2002 consented for the same. The said three persons being the Directors of the plaintiff-company then, question of consent of others or a formal resolution of BOD of company cannot outweigh other things. It is not the case of plaintiff that in addition to Vidhyavathi Gupta, defendant No.3 and their son, some other persons were also members of the Board of Directors. I would demonstrate how the plaintiff-company itself involved in the sale transaction, that too through defendant No.3.
19. The first and foremost document would be the agreement of sale executed by defendant No.3 on 29.05.1985 agreeing to sell the schedule property to the defendant No.4 for consideration of Rs.85,000/-. The said agreement is marked as Ex.D.10. It may be noted that under the said agreement out of the sale consideration of Rs.85,000/- the defendant No.1, 2 and the defendant No.4 i.e partners and their firm paid Rs.20,000/- on 15.04.1985 by way of cheque bearing No.520606 and another sum of Rs.20,000/- by another cheque No.520641 dated 22.05.1985, both drawn on Canara Bank, K.P.West, Bengaluru. It was further agreed that balance amount has to be paid at the time of taking the sale deed. When this document was produced by DW.1 absolutely he was not cross examined touching to this document or disproving its genuinety. Only on the reason that defendant No.4 or defendant No.1 and 2 failed to produce the documents in proof of the said payment of Rs.40,000/- by way of cheques, one cannot doubt it, the very Ex.P.3 and its contents affirm the authenticity of Ex.D.10. In the said sale 18 O.S.4188/2002 deed acknowledging the receipt of Rs.60,000/- as earnest amount under three cheques, of which two have been shown in the Ex.D.10 for Rs.20,000/- each and conceding the receipt of another sum of Rs.20,000/- by cheque No.514308 drawn on Canara Bank, it is averred that because of enhancement of the sale consideration from Rs.85,000/- to Rs.1,05,000/- the said agreement has been canceled and amount is settled. The defendant No.3 executed that sale deed as a representative of the plaintiff-company as well as its Managing Director. Regarding receipt of balance Rs.45,000/- the sale deed also recites that it was paid through cheque No. 0049349 of Canara Bank dated 17.07.1987. Intentionally I am referring to the cheques and payments made under them to show that the sale consideration was received by the plaintiff and it consciously executed the Ex.P.3 conferring title to the defendant No.1 and 2 and to their firm.
20. It is not that the said Ex.P.3 is an isolated document and one cannot ignore it for its failure to recite the resolution number of Board of Directors of the plaintiff- company. There is an another document which speaks regarding the voluntary act of plaintiff in alienating that property. The said document is none other than the Government Order dated 06.04.1987. The contesting defendants have produced the copy of that order at Ex.D.12, having failed in their attempt to get its original from the custody of plaintiff by causing notice to it. The said Government Order shows that before alienating the schedule property the plaintiff applied for permission of the 19 O.S.4188/2002 Government under the provisions of the Urban Land Ceiling Act. In its application plaintiff stated that it has suffered huge loss due to heavy competition from non-power units manufacturing the steel folding chairs, so in order to repay the debt borrowed by it from M/s.Indian Bank it is necessary to alienate 1926.40 sq.mtrs., out of 4249.18 sq.mtrs owned by it. It is also stated that turn over of the company has come down over the years. Considering the said written request of the plaintiff dated 04.12.1986 the State Government accorded its sanction to alienate the schedule property in plot No. 79 and 80 within a period of one year from the date of said order and to utilize the sale proceeds to clear the debts. Accordingly the plaintiff executed the sale deed as per Ex.P.3 on 17.07.1987 i.e within a span of three months of obtaining that order. In respect of this Ex.D.12 also absolutely there was no cross examination of DW.1.
21. There is one more document which shakens the very contention of Smt.Vidhyavathi Gupta, who presented the plaint with the allegation that there was a conspiracy by defendant No.1 to 3 to cheat the plaintiff-company. Her further allegation that she had no knowledge of the said sale transaction till Irshad Ahmed came and informed her on 06.02.2002 is also proved a complete falsehood with the Ex.D.2. It is the certified copy of Auditor's Report of the plaintiff-company for the year ending 31.12.1987. This document was marked during the cross examination of PW.2. The said document reveals that after deliberating on the Auditor's Report in the Annual General Body Meeting held on 20 O.S.4188/2002 23.06.1988 the very Vidhyavathi Gupta and defendant No.3 accepted it having attended that meeting and discussed there. The said Vidhyavathi Gupta has also signed that Report in Hindi and her signature was marked as Ex.D.2(a). In that very Ex.D.2 under the caption "FINANCIAL RESULTS" it was declared that total receipts including profit on sale of part of land is Rs.2,19,000/-, profit before depreciation is Rs.9,000/- and the loss after depreciation is Rs.9,000/-. The said amount of Rs.2,19,000/- invariably suggests that the company had sold the schedule property and it had made gain on the same in the year 1987. Therefore the plaint allegations that Vidhyavathi Gupta had no knowledge of the said sale transaction cannot be accepted. The said report having been filed in the office of the Registrar of Companies, nobody raised any objection to the said sale of land to the firm, including Smt.Vidhyavathi Gupta, who has brought this suit alleging conspiracy on the part of defendant No.3. Therefore one cannot say that merely for non production of resolution of Board of Directors to part with the schedule property the whole sale transaction at Ex.P.3 has to be annulled.
22. Another document produced and heavily relied by the plaintiff viz Ex.P.5 speaks against it and tells true story of plaintiff's then financial condition. It is the encumbrance certificate issued by the Sub-Registrar, Bengaluru North Taluk, Bengaluru on 07.03.2002 in respect of land bearing Sy.No.79, 80 and 94. By producing the same at Ex.P.5 the plaintiff contended that even after obtaining the said 21 O.S.4188/2002 document it was not possible for Vidhyavathi Gupta to know about the sale of the schedule property by defendant No.3 in favour of the firm and she came to know the same only when copy of that sale deed was produced by defendants No.1&2. Pleading to that effect can be seen in para-13 of the plaint. If that was the case, then plaintiff has to explain why the other pieces of lands were also sold and leased by it to M/s.D.S.Indal Corporation Pvt.Ltd., M/s.Indo Tech Tooling, M/s.Vikram Engineering and Consultant and M/s.Karnataka Alloy Cast Pvt.Ltd., through deeds dated 03.04.1987, 03.06.1987, 01.05.1987 and 20.02.1987. In so far as M/s.D.S.Indal Corporation Pvt.Ltd., is concerned, land measuring 37 ½ x 32 feet was sold for Rs.2,16,000/- on 03.04.1987, whereas to other companies plaintiff leased its land through registered documents. This itself shows the precarious financial condition of the plaintiff, which compelled it to sell the schedule property. Moreover the very object of the plaintiff in purchasing that industrial land from the KIADB was to erect the industrial sheds and alienate them for consideration or to lease them on rental basis. That being the case just for want of the Board Resolution all the while plaintiff attacked the Ex.P.3, which is totally unacceptable.
23. Having extensively referred to the documentary evidence made available by the parties, now I will make a cursory observation on the oral evidence of the plaintiff, whether at least the said oral evidence would help it in proving the issues thrown on it. As I said earlier, PW.1 after 22 O.S.4188/2002 adducing his examination-in-chief and getting marked Ex.P.1 to P.8, did not turn up for cross examination, so left with no option the present Director of the plaintiff viz PW.2 entered the witness box and adopting the documentary evidence of PW.1 she got marked Ex.P.9, which authorized her to represent the plaintiff. The gist of her evidence is that she married Sunil Gupta, another Director of the plaintiff, on 08.07.1992 and about 5 years back from the date of her cross examination recorded on 15.02.2018 she became the Director of the plaintiff and she has no knowledge what transpired in the year 1987. Giving go-bye to their defence in the very beginning of her cross examination the contesting defendants suggested that the initially plaintiff-company was known as "M/s.Ranjit Engineering Works Pvt.Ltd.", and now it is renamed. She conceded that out of the land purchased from the KIADB 20,736 sq.ft., was sold to defendant No.4 and after alienating that portion the plaintiff is in possession of the remaining extent. She also admitted that previously plaintiff had filed suit against defendant No.4 for eviction, leading to an inference that there is an ill-will between the plaintiff- company and defendant No.4 and after purchasing its portion defendant No.4 has put up fence surrounding the schedule property. She has also admitted that though the impugned sale deed was executed in the year 1987, till the death of defendant No.3 no legal action was taken against him nor he was removed from the Board of Directors. Even after producing and getting exhibited Ex.P.5 she was not able to explain for what purpose the said document was produced. She expressed her total ignorance about the other sale 23 O.S.4188/2002 transaction and leasing of other pieces of land by the plaintiff and thereby she demonstrated that she is totally a worthless witness. When she was confronted by suggesting that plaintiff collected all the four cheques issued by defendant No.4 towards payment of sale consideration, she expressed her ignorance. She further admitted that in the balance-sheet for the year ending 31.12.1987 produced at Ex.D.2 there is a reference to the alienation made by the plaintiff and the said document is signed by Smt.Vidhyavathi Gupta, her mother- in-law. When her attention was drawn to the proceedings of Government Order under the Urban Land Ceiling Act, she could not reply. Therefore what I can say is that the oral evidence of PW.2 instead of helping the plaintiff, it destroyed its case further.
24. Marking of Ex.D.1 in the cross examination of PW.1 viz the resolution of the plaintiff dated 27.09.1997 signed by Smt.Vidhyavathi Gupta would reveal that though that resolution is in English, she signed as a Director and apart from that she also signed the Ex.D.2, which is completely in English, as well as the plaint in that language. Therefore the contention of Smt.Vidhyavathi Gupta that she had no knowledge of English and Kannada except signing in Hindi and that was misused by defendant No.3, to cause loss to the plaintiff, wherein herself, her said husband (defendant No.3) and their son were the only Directors, cannot be accepted.
24 O.S.4188/200225. During his argument referring to Section 2(26) of the Companies Act and proviso contained to it, Sri DSV Advocate argued that since it is not possible to prove the negative thing that there exists no resolution authorizing the defendant No.3 to alienate the schedule property, if such resolution really exists it is for the contesting defendants to prove the same and as they have failed to bring such document on record, as per Section 2(26) of the Companies Act the Managing Director having no exclusive power to deal with the assets of the company, the sale made by the defendant No.3 in favour of defendant No.4 is illegal, null and void. In order to substantiate his argument regarding on whom the burden of proof lies, he invited my attention to the decision reported at (1977) 1 SCC 133 (Narayan Govind Gavate and others /vs/ State of Maharashtra and others. On the other hand, Sri JRR Advocate contended that it is not that plaintiff is expected to prove the negative thing, because he being the custodian of the Resolution Books, Board Meetings as well as Accounts Books, it was the duty of the plaintiff to bring all the records before the court and for non- producing of the said documents court has to draw an adverse inference.
26. Having heard the learned Advocates in sufficient length, I would reiterate by referring to my earlier discussion that since the defendant No.4 is a partnership firm and defendants No.1 and 2 are businessmen as well as partners of the said firm, they cannot be expected to plead their ignorance regarding the provisions of the Companies Act. At 25 O.S.4188/2002 the same time, as observed by me, for non-production of copy of the resolution passed by the Board of Directors of the plaintiff, per-se it cannot be said that the impugned transaction is null, void and not binding on the plaintiff. Admittedly the plaintiff being a family company and all the transactions having taken place under the very nose of Smt.Vidhyavathi Gupta and the other Director and when the sale deed was proceeded by an agreement of sale (Ex.D.10), order of the Government under ULC Act (Ex.D.12) and fallowed by accounts statement of the plaintiff (Ex.D.2), it is difficult to hold that the transaction between the plaintiff and defendant No.4 is illegal, null, void and not binding on the plaintiff. In the cross examination of DW.1 no doubt an attempt was made by the plaintiff regarding the only point it harped upon ie, want of resolution from Board of Directors and to some extent it was successful in proving it, but it is not enough to hold that sale deed at Ex.P.3 is not a valid document in the eye of law.
27. In view of the foregoing discussion, I conclude that it is the plaintiff which executed the impugned sale deed through the defendant No.3 and for its own benefit i.e to come out of its debt trap and having parted with the possession of the schedule property, now it cannot turn around and say that it is a clandestine act of defendant No.1 to 3. The very silence of the plaintiff taking no criminal action against the alleged erring defendant No.3 during his lifetime will fortify this finding. Hence rejecting the contention of plaintiff that the contesting defendants have failed to discharge their 26 O.S.4188/2002 burden and they have failed to prove the impugned sale transaction, I answer issue No.1 to 3 in the negative and issue No.5 and 6 in the affirmative.
28. ISSUE No.4 AND 8: Issue No.4 deals with dismissal of the suit under Order II Rule 3 of CPC and issue No.8 deals with non-maintainability of the suit for misjoinder of parties and non-joinder of necessary parties. Since these aspects would overlap to certain extent, I have taken them simultaneously.
29. In para-2 of his written statement defendant No.2 contended that there is no cause of action for the suit, as such it is liable to fail as per Order II Rule 3 of CPC and for non-impleading of M/s.Ranjit Engineering Works Pvt.Ltd., and the firm-M/s.Roto Packaging, which took the sale deed, canvassed that suit is bad for misjoinder of parties and non- joinder of necessary parties. It was his submission that there is no sale transaction between the plaintiff and the defendant No.1 and 2, so on this count alone suit is liable to be dismissed.
30. No doubt such defence was taken by the defendant No.2, but as pointed out by me while discussing on the earlier issues during the trial diluting the said aspect the defendants went on calling the plaintiff as their vendor and similar suggestion was also made in the cross examination of PW.1, to which I made reference earlier. Added to that, with the subsequent impleadment of defendant No.4 and 5, no longer the issue of non-joinder of necessary parties would 27 O.S.4188/2002 survive for consideration. When the parties went to the trial with the clear understanding that plaintiff is none other than the vendor of the defendant No.3, even the contention that plaintiff cannot maintain suit for the acts and deeds committed by M/s.Ranjit Engineering Works Pvt.Ltd., and further allegation that there is no pleading when M/s.Ranjit Engineering Works Pvt.Ltd., was renamed as "M/s.Ranjit Engineering Pvt.Ltd.", so this plaintiff has to fail etc loses their significance. If this finding is arrived then court has to examine whether there is any cause of action to maintain the suit.
31. In the written argument by contending that defendant No.1 and 2 are individuals and they ought not to have been sued in the absence of the firm, the defendants canvassed that suit has to fail for want of cause of action. However on appreciation of pleadings and evidence I am of the firm view that the suit has to fail for want of genuine cause of action and not for the reason as made out by the defendant No.2 and other defendants. At the cost of repetition I would say that plaintiff traces the cause to maintain the suit through Irshad Ahmed, who allegedly informed Smt. Vidhyavathi Gupta regarding the alienation of schedule property by the plaintiff when he approached her on 06.02.2002 and one more cause of action was made out by referring to the encumbrance certificate produced at Ex.P.5. In this regard it is not in dispute that plaintiff made no effort to examine the said Irshad Ahmed to show that such person is in existence and he really met Smt.Vidhyavathi Gupta on 28 O.S.4188/2002 06.02.2002, that too on behalf of defendant No.1 and 2 and disclosed that the said defendants are intending to purchase the remaining land of the plaintiff. In the absence of examination of the said witness the theory set up with reference to the name of the said person cannot be accepted. At least plaintiff has not pleaded the complete name of Irshad Ahmed and his residential address, so it is not possible to identify who is that Irshad Ahmed and what is his father's name and where he resides. If the cause of action through that person is altogether rejected, next comes the Ex.P.5. According to me, even that document will not help the plaintiff to imagine cause of action on the strength of the transactions shown in it. When the PW.2 could not explain regarding the other transactions that are reflected in that document, only on the reason that the concerned Sub- Registrar's office, which registered the Ex.P.3 gave that endorsement stating that there is no reference to Ex.P.3 in it, it cannot be imagined that plaintiff had no knowledge of the said sale transaction/s.
32. The further allegation of the plaintiff that after ascertaining from Irshad Ahmed Smt.Vidhyavathi Gupta proceeded to the company and came to know the severance of the company's property with the schedule property and was surprised and shocked by it is concerned, it is too childish to plead. When she actively participated in the Annual General Body Meeting and other Board Meetings, one cannot receive such falsehood on the face of it. Therefore the Ex.D.11 produced by the defendants viz the encumbrance certificate 29 O.S.4188/2002 issued by the Senior Sub-Registrar, Peenya, where Ex.P.3 was registered as it is permissible to register the document within the limits of Senior Sub-Registrar, the whole case of the plaintiff with the cause of action pleaded in para-18 of the plaint shall have to be rejected. In that event there is no other option except to hold that issue No.4 has to be answered in favour of defendant No.2 and issue No.8 as it no longer survives for consideration, accordingly they are answered.
33. ISSUE No.7: According to me, this is another crucial issue which goes to the root of the case.
34. It is well settled that issue of limitation is a mixed question of law and fact, and not of law alone as contended by the contesting defendants in their written arguments at para-12. The discussion made by me on the previous issues sufficiently demonstrate that Smt.Vidhyavathi Gupta had knowledge of the transaction of 1987 even before it took place and also after it. But her silence in keeping quite till the year 2002 and approaching the court with illusory cause of action would certainly reveal that only for the sake of maintaining the suit a fictitious person-Irshad Ahmed was created and Ex.P.5 was brought into existence. As rightly contended by the contesting defendants, whenever an executant of an instrument desires to get rid of or to avoid the document executed by him, he has to seek for cancellation of that instrument. But in the instant case by making a cumbersome prayer, which is a mixture of declaration and cancellation of 30 O.S.4188/2002 Ex.P.3, plaintiff has not only misdirected herself, at the same time she has failed to mislead the court.
35. In the decision reported at AIR 2010 SC 2807 (Suhrid Singh @ Sardool Singh /vs/ Randhir Singh and others) lucidly explaining under what circumstances what kind of relief is to be sought by a party to the suit, Hon'ble Supreme Court held that where the executant of the deed wants to cancel the deed he has to seek cancellation of it, but if non-executant seeks annulment of a deed, he has to seek a declaration that the deed is invalid or non-est or illegal or that it is not binding on him. The Hon'ble Court explained the differences between the two kinds of reliefs. In the instant case admittedly plaintiff is a party to the Ex.P.3, so it being a party to the said deed, it has to seek for cancellation of that deed and it cannot pray for declaration that the sale deed is null, void and not binding on it. Once it is held that plaintiff has to seek cancellation of the sale deed, then relief prayed by it would be governed by Article 59 of the Limitation Act. As per the said Article 3 years is the period of limitation and it commences from the date of knowledge of the said instrument. The discussion made by me in the foregoing paragraphs shows that Smt.Vidhyavathi Gupta had knowledge of Ex.P.3 in the year 1987 itself, therefore filing of suit in the year 2002 is hopelessly barred by time.
36. The ratio laid down in Suhrid Singh @ Sardool Singh's case was followed by our Hon'ble High Court in the decision reported at ILR 2016 KAR 2670 (Sri U.Vijaya 31 O.S.4188/2002 Kumar and another /vs/ Smt.Malini.V.Rao) and MANU/ KA/1858/2018 (Venkatesh.S /vs/ The State of Karna- taka). Particularly in U.Vijayakumar's case at Head Note-B(c) Hon'ble Court made a clear distinction between suit for cancellation of a deed affecting certain property and suit for declaration that a particular document is inoperative as against the plaintiff. Wherefore I hold that plaintiff has to fail on this count also. Before I part with my finding, I would also refer to the decision reported at ILR 1996 KAR 1340 (Alla Baksh /vs/ Mohd.Hussain), wherein by referring to Section 27 of the Limitation Act, our Hon'ble High Court held that the said Section is like an exception to the general principle that limitation bars remedy but not extinguishes the right. In this case right of the plaintiff to the schedule property has extinguished long back, so by no stretch of imagination it can seek to knock the doors of this court. Therefore without any second opinion, I answer this issue in the negative.
37. ISSUE No.9: This is another issue which requires a thorough discussion. While filing the suit, in so far as the relief of declaration and for possession is concerned, valuing the relief under Section 24 of KCF and SV Act the plaintiff has paid court fee and in respect of the damages of Rs.50,000/- is concerned plaintiff has paid the Ad-valorem fees as per Schedule-I to the said Act. So far as the relief of damages and court fee paid thereon the defendants have no grievance, they only attack the payment of court fee under Section 24 of KCF and SV Act for the relief of declaration and possession alleging that the said relief is not an appropriate relief in the given facts of the case. It may be noted that while paying 32 O.S.4188/2002 court fee under the said Section plaintiff pays the court fee on the sale consideration shown in the Ex.P.3. That is precisely the ground for attack of defendants. According to them as suit was filed in the year 2002 court fee ought to have been paid on the market value of schedule property. In this regard in para-4 of his written statement defendant No.2 contended that as on the date of filing of the suit the schedule property was worth more than Rs.15 lakhs. The L.Rs of the defendant No.2 and the defendant No.5 have adopted the written statement of the defendant No.2. In this background court has to examine this issue.
38. During his argument supporting the valuation made in the plaint, Sri DSV Advocate contended that plaintiff has valued the reliefs in the light of the Judgment of Hon'ble Supreme Court reported at (2014) 5 SCC 1286 (Polamra- setti Manikyam and another /vs/ Teegala Venkata Ramayya and another). It was his submission that even if Section 38 of KCF and SV Act, which deals with the cancellation of instruments is invoked in this case, value of the subject matter of the suit as referred to in the said Section indicates the consideration shown in the instrument. Therefore he argued that even if court fee is computed as per said Section on the sale consideration shown in the Ex.P.3 court fee paid by the plaintiff is just and sufficient.
39. On the other hand, Sri JRR Advocate argued that in so far as prayer-(a) is concerned, it is the cancellation of instrument that is required in the instant case and not the relief of declaration. He submitted that if the relief of 33 O.S.4188/2002 declaration is omitted then Section 24 of KCF and SV Act has no role to play. He argued that as plaintiff is party to the Ex.P.3 it cannot seek for declaration that sale deed is null and void and not binding on it, in view of the ratio laid down in Suhrid Singh @ Sardool Singh's case. He contended that the only option that was available to the plaintiff is to seek for cancellation of instrument and in that case plaintiff has to pay court fee under Section 38 of KCF and SV Act. In this context he also took assistance of the observation made in that Suhrid Singh @ Sardool Singh's case.
40. Having anxiously considered the rival sub- missions of the parties, I too find that plaintiff has intentionally under-valued the relief in order to mislead the court. Prayer-(a) is so framed as if this is a suit involving multifarious reliefs. While discussing on the earlier issues by referring to the Sardool Singh's case I have already pointed out that this plaintiff being the executant of Ex.P.3, it has to seek for cancellation of the said instrument and it is not open to it to seek declaration to hold that the sale deed is not binding on it, which is available to a third party of such deed. In that case the relief of declaration not being available to the plaintiff, there was no occasion for it to invoke Section 24 of KCF and SV Act. The appropriate section being Section 38 of the said Act, plaintiff ought to have paid court fee on the market value of the schedule property. When I say that it is the market value of the said property, then the question would be, whether market value as shown in the Ex.P.3 has to be taken into account or the market value of the said property as on the date of suit? Here having gone through 34 O.S.4188/2002 the Polamrasetti Manikyam's case, which was rendered in respect of Section 37 of the Andhra Pradesh Court Fees and Suits Valuation Act 1956, I would only say that unless the plaintiff proves that the provisions of the said Act are in pari- materia with the provisions of the KCF and SV Act, one cannot straight away import the ratio laid down in that case. Instead the decision of our Hon'ble High Court reported at ILR 2012 KAR 3558 (Mr.V.Prabhakar /vs/ Mr.K.Raja and others), which is directly on Section 38 of the KCF and SV Act, is of considerable assistance to the court. In that case at Head Note-B, Hon'ble Court observed that the expression "value of the subject matter" used in that Section means, it is the market value of the property as on the date of filing of the suit. This interpretation was made by Hon'ble Court by referring to Section 7 of the said Act. Therefore it is least to say that payment of court fee on the sale consideration shown in the Ex.P.3 is totally incorrect. The Ex.P.3 having come into existence on 17.07.1987 and this suit having been filed on 28.06.2002 i.e almost after 15 years, it is difficult to believe that in a city like Bengaluru the value of the immovable property stood constant during that period.
41. In his examination-in-chief DW.1 has not stated regarding the market value of the schedule property as on the date of suit. He only stated that valuation shown in the plaint is inadequate. Even in the cross examination of PW.2 the contesting defendants made no suggestion as to the market value of the schedule property as in the year 2002. In the absence of any document to prove the market value of the said property, only on the plaint allegation (para-15) that 35 O.S.4188/2002 in the year 1987 when Ex.P.3 was executed suit property was worth Rs.5 lakhs, court cannot imagine that it was worth Rs.15 lakhs as on the date of filing of this suit. Therefore it can only be said that the court fee paid on the plaint is insufficient, leaving the mathematics to calculate the same on the basis of the market value of the schedule property as on the date of suit to the office, based on the guidance value, if available as in those days and to recover the same while drawing the decree, I answer this issue in the negative.
42. ISSUE No.10 AND 11: These two issues deal with the reliefs to be granted to the plaintiff, hence I have taken them simultaneously.
43. With the negative findings on prime issues, it is only a formality to say that the plaintiff is not entitled for any of the relief as prayed for. During the argument Sri JRR Advocate contended that for unnecessarily bringing this suit and making the contesting defendants to suffer for all these years, court has to award realistic costs, so that such litigations should not recur again. Of course I could have subscribed to his view, provided defence set up by the contesting defendants is free from blemish. However the deliberation made above reveals that there is some kind of shortcoming on the part of contesting defendants also and that has been exploited by the plaintiff, so holding that parties shall have to bear their own costs, I answer both these issues in the negative.
36 O.S.4188/200244. ISSUE No.12: In the result I proceed to make the following:
ORDER Suit is dismissed.
Parties shall bear their own costs. Office to draw decree only upon payment of deficit court fee by plaintiff. (Dictated to the Stenographer, transcription computerized, then corrected and pronounced by me in open court this the 29th day of November 2018) (RON VASUDEV) III Addl. City Civil & Sessions Judge, Bengaluru.
ANNEXURE List of witnesses examined on plaintiff's side:
PW.1 D.P.Gupta PW.2 Anjana Gupta
List of documents exhibited on plaintiff's side:
Ex.P.1 Copy of Resolution dt. 05.06.2002,
of the plaintiff
Ex.P.2 Copy of General Power of Attorney,
executed by Smt.Vidyavathi Gupta in
favour of PW.1
Ex.P.3 Certified copy of sale deed dated
17.07.1987
Ex.P.4 Notarized copy of sale deed dated
05.09.1984
Ex.P.5 Encumbrance Certificate
Ex.P.6 Office copy of legal notice dt. 28.3.2002,
37 O.S.4188/2002
issued by plaintiff to defendants No.1
to 3
Ex.P.7 Postal acknowledgement
Ex.P.8 Reply notice dated 13.04.2002, issued
by defendant No.4
Ex.P.9 Extract of Minutes of Meeting dated
29.03.2016, of the plaintiff
List of witnesses examined on defendant's side:
DW.1 Mukul Bhargava List of documents exhibited on defendants' side:
Ex.D.1 Copy of Resolution dated 27.09.1997, of plaintiff Ex.D.2 Copy of Auditor's Report Ex.D.3 to Powers of Attorney, executed by D.5 defendant No.2(a), 2(b), 2(c) in favour of defendant No.1 respectively Ex.D.6 Registered Certificate of Incorporation Ex.D.7 Registered Memorandum of Association Ex.D.8 Registered Articles of Association Ex.D.9 Certified copy of lease deed dated 19.04.1984 Ex.D.9(a) Signature of defendant No.1 Ex.D.10 Agreement of Sale dated 29.05.1985 Ex.D.10(a) to Signatures of defendant No.3 D.10(e) 38 O.S.4188/2002 Ex.D.11 Encumbrance Certificate Ex.D.12 Copy of Government Order dated 06.04.1987 under provisions of ULC Act Ex.D.13 Letter addressed to defendant No.4, by the plaintiff Ex.D.14 Minutes of Meeting dated 27.03.2018, of defendant No.5 (RON VASUDEV) III Addl. City Civil & Sessions Judge, Bengaluru.