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High Court Of Delhi
K.K.MODI - Appellant
Versus
K.N.MODI - Respondent
Interim Application 11137 of 1998
Decided On : 10/08/2001
Change in Circumstances - Injunction Orders - Section 151 Civil Procedure Code, Order 39 Rule 4 Civil Procedure Code - 55 of the Supreme Court order dated 4/2/1998, Order dated 2/08/1999 - The court discussed the change in circumstances that may warrant the modification or variation of the injunction order referred in the judgment of the Hon ble Supreme Court dated 4/2/1998 by way of directions to the Board of Directors of Modipon limited to consider and decide the issue of sale of shares of Godfrey Philips India Limited (in short gpi ),held by its subsidiaries so as to facilitate the Fibre Division of the Modipon Limited to liquidate and repay its debt to financial institutions and Banks. The court also discussed the ownership of the shares of MRL of Modipon (Fibre Division) Ltd. and gpi, and the implications of the Memorandum of Understanding on the ownership and transfer of shares.
Fact of the Case:
The case involved applications under Section 151 Civil Procedure Code and Order 39 Rule 4 Civil Procedure Code moved by defendant No. 2 and defendant No. 10, concerning the modification or variation of the injunction order referred in the judgment of the Hon ble Supreme Court dated 4/2/1998. The applications were resisted on the premise that the shares in question did not belong to the Fibre Division of Modipon Limited.
Finding of the Court:
The court found that the change in circumstances, including the ever-increasing defaults towards financial institutions and the defaults towards the banks, justified the modification of the injunction order. The court also found that the ownership of the shares of MRL and gpi was a subject of dispute, and the implications of the Memorandum of Understanding on the ownership and transfer of shares were discussed.
Issues: The issues included the change in circumstances justifying the modification of the injunction order, the ownership of the shares of MRL and gpi, and the implications of the Memorandum of Understanding on the ownership and transfer of shares.
Ratio Decidendi: The change in circumstances, including the ever-increasing defaults towards financial institutions and the defaults towards the banks, justified the modification of the injunction order. The court also considered the ownership of the shares of MRL and gpi in light of the Memorandum of Understanding.
Final Decision: The court allowed the applicant to sell 50% shares of GPI and MRL without prejudice to the rights and contentions of the parties as to the ownership of the impugned shares, with the sole object of saving the applicant from going sick and rendering 1500 employees jobless and also in the interests of public who has substantial stake. The proceeds were to be used towards liquidation and repayment of its debts to Financial Institutions and Banks.
( 1 ) BY this order the following applications shall stand disposed off:- i) IA 11137/98, 4120/2001 and 5547/2001 under section 151 Civil Procedure Code and under Order 39 Rule 4 Civil Procedure Code moved by defendant No. 2. ii) IA 3807/99 under Section 151 Civil Procedure Code moved by defendant No. 10.
( 2 ) THE solitary question arising from these applications is whether there is such a change in the circumstances that may warrant the modification or variation of the injunction order referred in the judgment of the Hon ble Supreme Court dated 4/2/1998 by way of directions to the Board of Directors of Modipon limited to consider and decide the issue of sale of shares of Godfrey Philips India Limited (in short gpi ),held by its subsidiaries so as to facilitate the Fibre Division of the Modipon Limited to liquidate and repay its debt to financial institutions and Banks. Ancillary to this is the question for varying or modifying the order dated 2/8/1999 passed by this Court in IA 7128/99 by way of directing the Modipon Limited-defendant No. 5 and its Board of Directors to participate in the offer of purchase of shares of Modi Rubber Limited (in short mrl ) floated by b. K. Modi and V. K. Modi of Group-B companies for using the sale proceeds and pay the debts to Banks and Financial institutions. Respondent/plaintiff and defendant no. 10 have resisted the application vehemently on the premise that since GPI shares do not belong to the Fibre Division of Modipon Limited, these cannot be allowed to be sold nor can Modipon Limited be allowed to participate in the offer of purchase of shares of MRL.
( 3 ) ORDER dated 4/2/1998 of the Supreme court is to the following effect:-
55. Pending the hearing and final disposal of the suit in the Delhi High Court and/or until any further orders are passed by the trial court if the exigencies of the situation then prevailing so require, no meeting of the Modipon Board shall be held for considering any matter relating to the suit (Group A) shall not sell any shares held in Godfrey Phillips India Ltd. provided the plaintiffs in the suit deposit in the Delhi high Court a sum of Rs. 5 crores (five crores) within four weeks from the date of this order. In the event of their failure to deposit the said amount within the aforesaid period, the order restraining the defendants (Group A) from selling the said shares shall stand vacated. The amount so deposited shall be invested by the High Court in fixed deposits within nationalised banks pending further orders, the interim order of 7/1/1998 will continue to operate in terms thereof. In the event of any change in the circumstances, the parties will be at liberty to apply to the High Court for any variation of this order. Appeals arising from Special leave Petitions Nos. 14905 and 18711 Of 1997 and Transfer Case No. 13 of 1997 are disposed of accordingly together with all interim applications. "
( 4 ) ORDER dated 2/08/1999 passed by this court is as under:-
"mr. SUMANT Batra, learned counsel appearing on behalf of defendant no. 3 states that he wishes to file reply to IA 7128/99. He may do so within two weeks. Rejoinder, if any, be filed one week thereafter. Mr. Batra further states that till the next date the defendant no. 3 or the IFCI shall not press for a discussion on the items mentioned in their notice dated 27/7/1999. In these circumstances, till the next date of hearing, the parties are restrained from considering the matters mentioned in the said notice.
( 5 ) THE Board meeting can be held as scheduled on the 5/8/1999 to consider other matters.
LIST the matter on 6/9/1999. Suit No. 2694/98 be also listed on the next date of hearing. Copy of this order be given dasti to the parties. " relevant facts need to be recapitulated in brief. By way of Memorandum of Understanding dated 24/1/1989, It was agreed between the parties that Group A will manage and/or control the various companies enumerated in clause 1. One of the companies so included
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