IN THE HIGH COURT OF DELHI AT NEW DELHI
Vibhu Bakhru, Amit Mahajan, JJ.
Vikas Mehrotra – Appellant
Versus
Vls Capital Ltd. & Ors. – Respondents
FAO(OS) 209 of 2019 & CM APPL. 46402 of 2019 & FAO(OS) 217 of 2019 & CM APPL. 48241 of 2019
Decided On : 02-03-2023
CPC - Civil Procedure Code - Order XXXIX Rules 1&2 - CS(OS) 3067/2015, CS(OS) 3314/2015 - 149 CPC, XXXII R 3 CPC, XXXIX R.l& 2 CPC
Fact of the Case:
The appellants challenged the transfer of equity shares of VLS Capital Ltd. in separate suits. The court passed ad interim orders restraining the defendants from transferring the shares. The legal heirs of the deceased filed proceedings for securing the succession certificate.
Finding of the Court:
The court found that the succession certificate proceedings were separate from the suits filed by the appellants and did not foreclose their rights. The court dismissed the appeals, stating that the appellants had no real grievance and had filed the appeal to protract the proceedings.
Issues: The main issue was the effect of the succession certificate proceedings on the suits filed by the appellants and whether the ad interim orders should continue.
Ratio Decidendi: The court clarified that the succession certificate proceedings did not decide the title of the shares, which was the subject matter of the suits. The court found that the appellants' understanding of the impugned order was erroneous.
Final Decision: The appeals were dismissed with costs quantified at Rs.50,000/- to be paid to the contesting respondent within two weeks.
JUDGMENT
Vibhu Bakhru, J.
1. The appellants have filed the present appeals impugning an order dated 17.07.2019 passed by the learned Single Judge in applications filed by the appellants (plaintiffs in the suits) under Order XXXIX Rules 1&2 of the Civil Procedure Code, 1908 (CPC).
2. Mr. Vikas Mehrotra, the appellant in FAO(OS) 209/2019 filed a suit, inter alia, challenging the transfer of 27,60,400 equity shares of VLS Capital Ltd. in favour of his brother Mr. Somesh Mehrotra, since deceased. Sh. Vikas Mehrotra and his sister Ms. Divya Mehrotra filed another suit being suit no. CS(OS)3314/2015, challenging the transfer of 44,92,090 shares of VLS Capital Ltd. belonging to HUF by their father, in favour of their deceased brother, Mr. Somesh Mehrotra.
3. In CS(OS) 3067/2015, an ad interim order was passed on 09.10.2015 and in CS(OS) 3314/2015, an ad interim order was passed on 04.11.2015. The said order reads as under:
"I.A. No.23294/2015 (exemption)
Exemption allowed, subject to just exceptions.
The application is disposed of.
I.A. No.23293/2015 (under Section 149 CPC)
Counsel for the plaintiffs states that the amount has been deposited to take the court fee which is likely to be received very shortly and the same would be filed within four days. Let deficient court fee be filed within four days. The application is disposed of.
CS(OS)No.3314/2015
Let the plaint be registered as a suit.
Issue summons to the defendants, on filing of process fee and Regd. A.D. Covers within a week, returnable on 13th January, 2016.
I.A. No.23295/2015 (u/o XXXII R 3 CPC)
Notice for the date fixed.
I.A. No.23292/2015 (u/o XXXIX R.l& 2 CPC)
Issue notice to the defendants, for the date fixed.
Learned counsel for the plaintiffs is pressing for ad- interim order. He has referred the Declaration of Gift by which Mr. M.P. Mehrotra, Karta of Mahesh Prasad Mehrotra (HUF), has gifted 4492090 equity shares of Rs.10/- fully paid up of VLS Capital Ltd. in favour of Mr. Somesh Mehrotra son of Sh.M.P. Mehrotra. Counsel for the plaintiffs states that the said Declaration of Gift is unstamped, undated and unregistered document which is not admissible in evidence. He further submits that there is a prescribed procedure for transferring the shares which has not been followed before transferring the shares of defendant No.l. He referred para 38 of the Memorandum of Article of Association of defendant No.l. He has also relied upon the order dated 9th October, 2015 passed in CS(OS) No.3067/2015 in which the defendant No.2 is Karta of the company tried to dispose of the shares of the plaintiff No.l, in the said suit interim order was passed in the said order restraining the defendants from selling, transferring or alienating or encumbering the fully paid up equity shares of Rs.10/- each, worth Rs.27,60,400/- that were held by the plaintiff in the defendant No.l company. The said order was subsequently clarified by order dated 19th October, 2015.
In view of the averments made in the plaint and material placed on record, it appears that the plaintiffs have been able to make out a prima facie case for the grant of an ex parte ad-interim injunction. In case the interim order is not passed, the plaintiffs will suffer irreparable loss and injury. Hence, it is directed that till further orders, the defendants are restrained from transferring, alienating, disposing of the entire 44,92,090 fully paid up equity shares of Rs.10/- each of defendant No.l company owned by the defendant No.2 HUF to any third party.
Compliance of Order XXXIX Rule 3 CPC be made within one week. Dasti."
4. In the meantime, the legal heirs of Mr. Somesh Mehrotra had filed proceedings for securing the succession certificate (which was numbered as SS No.114/2015). The said proceedings are pending before the Administrative Civil Judge, Saket District Courts, New Delhi. It is pointed out that in the said proceedings an order dated 17.03.2017 was passed where the parties had agreed that in view of the proceedings before the
The succession certificate proceedings did not foreclose the rights of the appellants in the suits filed by them.
The central legal point established is the significance of maintaining status quo in the context of succession proceedings and the court's authority to record undertakings to maintain status quo.
The court enforced status quo orders regarding estate shares to secure loan recovery, affirming proper conduct in succession matters amid ongoing litigation.
The court ruled that a plaintiff’s limited interest in property, dictated by the will, cannot be construed as absolute ownership; undue influence invalidates share transfers.
Violation of a court injunction has legal consequences, rendering the transactions illegal and not binding.
An injunction in a partition suit is not maintainable without including all co-sharers who have transferred their shares.
The necessity of reasoned orders in judicial proceedings is mandated, as a non-speaking order is void and impacts the legality of such decisions.
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