The court reaffirmed that civil courts retain jurisdiction over contested ownership of shares and related disputes, despite the company's dissolution and the provisions of the Companies Act restricting jurisdiction to NCLT.

JUDGMENT

Chandra Dhari Singh, J.

1. The instant appeal has been filed under Section 96 of the Code of Civil Procedure, 1908 (hereinafter referred to as `the Code') read with Order 43 Rule 1 of the Code, assailing the order dated 21st March 2022 passed by the learned trial Court whereby, the plaint of the Appellants herein (hereinafter referred to as `plaintiff companies') was rejected under Order VII Rule 11(d) of the Code against the Respondents herein.

FACTUAL MATRIX

2. The facts necessary for the disposal of the present appeal are that the plaintiff companies held 50.21% equity shares in Tirupati Ceramics Limited (hereinafter referred to as `TCL') being 30,00,000 equity shares of Rs. 10/- each and also have a nominee Director on the Board of said company. TCL was declared as a sick company and consequently, proceedings were pending before the Board for Industrial and Financial Reconstruction (hereinafter referred to as `BIFR'). The plaintiff companies applied for impleadment as a party to such proceedings to which the Respondent No.1 and 2 through TCL opposed but the BIFR allowed the impleadment application. This order allowing impleadment was challenged by TCL before the Appellate Authority for Industrial and Financial Reconstruction, Delhi (hereinafter referred to as `AAIFR') which was dismissed and a further appeal to the Delhi High Court in W.P. (C) No. 11327/2015 was also dismissed by the Division Bench of this Court.

3. During the pendency of the proceedings before BIFR, the plaintiff companies entered into a Memorandum of Understanding (hereinafter referred to as `MoU') dated 25th January 2011 with Respondent No.3 to transfer the said 50.21% of the issued share capital of TCL to the Respondent No.3, and the Respondent No.3 in return agreed to deposit Rs. 60 lakhs with the plaintiff companies as security for the performance of the said MoU. In furtherance of the MoU, the plaintiff companies delivered the original share certificates covering the shares along with a Transfer Deed signed in blank as a security for the fulfilment of its obligation under the MoU. It was further agreed between the parties to the said MoU that the Respondent No.3 will not lodge the said shares for transfer until the conclusion of the proceedings before the BIFR and hence, till such time the plaintiff companies would remain as the owners of the respective shares and that the said MoU does not confer any right or title in the Respondent No.3 in the said shares except merely an option to purchase the same after conclusion of the proceedings before the BIFR.

4. Subsequent to the above-mentioned events, the erstwhile Chairman, Mr. VN Dhoot, of the plaintiff companies was approached by the Respondent No.2 with an offer to purchase the said shareholding of the plaintiff companies in TCL. At this stage, the plaintiff companies have claimed in the present appeal that their erstwhile Chairman due to lack of communication of the MoU entered into by the plaintiff companies and on account of serious mistake accepted the offer of Respondent No.2 to purchase the shares of TCL. In furtherance of his acceptance, he accepted Rs. 60,00,000/- (sixty lacs rupees) in favour of the plaintiff no.1 and Rs. 30,00,000/- (thirty lacs rupees) in favour of plaintiff No.2 and also addressed separate letters each dated 26th July 2013 to the BIFR and the operating agency stating therein, that the Videocon Group has sold its entire shareholding to the Respondent No.1 & 2 and accordingly, wish to withdraw their impleadment from BIFR in case No. 65/2002.

5. Not only this, Mr. Dhoot also addressed a letter dated 26th July 2013 to TCL that the original share certificates have been misplaced and that the Respondent No.1 may apply for duplicate share certificates from TCL; and another letter on the same date to the company that the Nominee of the plaintiff companies on the Board of Directors of the company is being withdrawn. On 5th September 2013, the nominee Director o