The main legal point established in the judgment is that the court has the power under Section 151 of the CPC to dismiss a suit as having been rendered infructuous due to subsequent events, even if the suit cannot be rejected under Order VII Rule 11 of the CPC.

JUDGMENT

IA 16612/2022

1. This application has been filed by the defendant no.1 praying for rejection of the plaint under Order VII Rule 11 of the Code of Civil Procedure, 1908 (hereinafter referred to as the CPC), contending therein that in view of the Initial Settlement dated 22.01.2022; Settlement dated 22.04.2022; and the Minutes of Meeting dated 30.07.2022, executed between the parties and placed reliance on by the plaintiff himself in I.A. No.14714/2022, the present suit has been rendered infructuous and the plaint is liable to be rejected.

2. The plaintiff has filed the present suit contending therein that he represents, along with other of his family members, 50% of the total paid up and subscribed share capital of the defendant no.6. He is also one of the Directors of the defendant no.6. The defendant no.1, who is the first cousin of the plaintiff, along with the defendant no.2 and other family members of the defendant no.1, owns and controls the remaining 50% of the shareholding of the defendant no.6. It is alleged that the defendant no.2 is the son of the first defendant, while the defendant no.3 is the wife of the defendant no.2. Defendant no.4 is also related to the first defendant. Though he has no personal shareholding in the defendant no.6, he is an employee and a Director of the defendant no.6. It is further alleged that the defendant no.6 was started by the plaintiff and his parents, and the defendant no.1 later joined the said business.

3. In the plaint, it is alleged that the defendant no.5 has been set up by the defendants nos.2 and 3 with active support and encouragement from the first defendant, and is a competitor of the defendant no.6. The plaintiff further asserts as under:

"The prime mover in this conspiracy is the first defendant, who conceived the grand plan of looting and internally hemorrhaging a successful business entity with a highly successful business model, merely to make more monetary benefits than he was entitled to and to divert profits to himself and his immediate family members, using defendant no. 5 entity as a vehicle for the said nefarious plans. In so doing, the first defendant breached his fiduciary duties and his duties and obligations under the Companies Act and to put it more specifically, grossly violated the duties cast on him under Section 166 of the Companies Act, 2013. Defendants 2 and 3, being the son and daughter in law respectively, of the first defendant, in fact actually set up the Limited Liability Partnership which is arrayed as defendant no. 5 herein, purely with a view to diverting the business and profitability of the sixth defendant company into the same. They consciously and intentionally set up the said entity with an idea of illegally using the goodwill and the fair name of defendant no. 6, which has been established over decades of hard work of premium quality. By adopting a deceptively similar name like HI TECH, which has become synonymous with the excellent quality and high value goods and services that have been provided by defendant no. 6 to its customers in the past, they continue to unfairly and unlawfully cash in on the same. Besides using the name and goodwill and besides making a brazen attempt at passing off their entity as something connected with and promoted by defendant no. 6, the first defendant, in league and conspiracy with defendant no. 4, has been diverting the business and assets of defendant no. 6 blatantly and brazenly to the benefit of defendant no. 5 and to the detriment of defendant no. 6. They are thereby causing serious prejudice to the interest of the shareholders of the sixth defendant. In fact, besides using their position as directors of the sixth defendant, defendants no.1 and 4 have been blatantly and openly giving orders to the employees on the payroll of the sixth defendant to perform tasks for and to illegally work for defendant no.5, all the while drawing wages and benefits from defendant no. 6."

4. Though various alleg