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IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
ANIL KSHETARPAL, J.
Avtar Singh - Appellant
Versus
Indian Sulphacid Industries Ltd. - Respondent
RSA No.2069 of 2012 (O&M)
Decided On : 06-12-2017
Joint Hindu Family - Conversion of Business into Limited Company - Indian Companies Act, 1913, Section 263 - The court allowed the application for permission to lead additional evidence under Order 41 Rule 27 of the Code of Civil Procedure to produce copies of judgments and decrees passed by the learned first appellate Court. The judgments and decrees passed by the learned first appellate Court were allowed to be led in additional evidence. The court found that on conversion of a Joint Hindu Family business into a limited company, the assets of the business of Joint Hindu Family vest in the company in terms of Section 263 of the Indian Companies Act, 1913. The court also held that the owner of the property is not required to get the sale deed executed by the persons who are not the owners set aside before seeking possession of the property, as the owner can just ignore the sale deed being void ab-initio and nullity.
Fact of the Case:
A Joint Hindu Family converted their business into a limited company under the Indian Companies Act, 1913. Disputes arose regarding the ownership and possession of the property, leading to multiple suits and appeals. The main question was whether the assets of the Joint Hindu Family business vested in the company upon conversion.
Finding of the Court:
The court found that the assets of the Joint Hindu Family business vested in the company upon conversion, as per Section 263 of the Indian Companies Act, 1913. It also held that the sale deeds executed by non-owners were void ab-initio and nullity, and the owner did not need to set them aside before seeking possession.
Issues: The main issues were the vesting of assets upon conversion of a Joint Hindu Family business into a limited company and the validity of sale deeds executed by non-owners.
Ratio Decidendi: The court's decision was based on the interpretation of Section 263 of the Indian Companies Act, 1913, which mandates the vesting of all property, movable and immovable, in the newly incorporated company. The court also relied on precedents and legal principles to establish the nullity of sale deeds executed by non-owners.
Final Decision: The appeals filed by the plaintiff-company were allowed, and the remaining appeals filed by the defendants-appellants were dismissed. The court also disposed of related miscellaneous applications.
Please provide the legal document content within
ANIL KSHETARPAL, J.
C.M.No.8807-C-2012 in RSA No.3308 of 2012
C.M.No.8963-C-2012 in RSA No.3346 of 2012
C.M.No.5751-C-2012 in RSA No.2070 of 2012
C.M.No.5753-C-2012 in RSA No.2071 of 2012
C.M.No.5755-C-2012 in RSA No.2072 of 2012
C.M.No.5757-C-2012 in RSA No.2073 of 2012
C.M.No.5759-C-2012 in RSA No.2074 of 2012
C.M.No.5761-C-2012 in RSA No.2075 of 2012
C.M.No.5972-C-2012 in RSA No.2150 of 2012
C.M.No.6137-C-2012 in RSA No.2196 of 2012
C.M.No.7383-C-2012 in RSA No.2734 of 2012
C.M.No.7385-C-2012 in RSA No.2735 of 2012 &
C.M.No.7820-C-2013 in RSA No.2942 of 2012
1. Prayers in these applications are for permission to lead additional-evidence under Order 41 Rule 27 of the Code of Civil Procedure to produce-copy of judgments and decrees passed by the learned first appellate Court.
2. These judgments and decrees are subject matter of the appeals in this bunch of appeals being decided by common judgment.
3. Applications are allowed, the judgments and decrees passed by the learned first appellate Court are allowed to be lead in additional-evidence.
4. Counsel for the respondent-company has waived his right to lead any rebuttal evidence.
MAIN CASE
5. By this common judgment, these 34 appeals are being disposed of as common question of law and almost similar facts are involved.
6. In the considered opinion of this Court, following questions of law arise for determination:-
(i) Whether on conversion of a Joint Hindu Family business into a limited company, the assets of the business of Joint Hindu Family vest in the company in terms of Section 263 of the Indian Companies Act, 1913?
(ii) Whether the owner of the property is required to get the sale deed executed by the persons who are not the owners, set aside before seeking possession of the property or the owner can just ignore the sale deed being void ab-initio and nullity?
FACTS
7. A Joint Hindu Family Shambhu Nath Kapoor and Sons was running a industry on a land measuring 29690 Sq. Yads comprised in various khasra numbers given in the plaint. The Joint Hindu Family decided to convert the joint family business into a limited company and for that purpose, Shambhu Nath and Sons Private Limited was got incorporated under the Indian Companies Act, 1913 on 02.03.1933. Vide resolution dated 01.04.1933, the family members appointed Directors and decided that the entire family business including properties shall vest with the company got incorporated.
8. Two mortgage deeds were executed, one in the year 1956 and the other in the year 1960 in favour of Punjab Financial Corporation for getting the loan. In these mortgage deeds, it was specifically recorded that the properties of the erstwhile Joint Hindu Family vests with the plaintiff company got incorporated and the members of the erstwhile Joint Hindu-Family have no further right, title or interest in the property.
9. It is asserted by the plaintiff that the loan raised from the Punjab Financial Corporation was re-paid and the mortgages were redeemed.
10. There was some dispute between the members of the Joint Hindu Family and the company changed hands on account of sale of the shares. The company i.e. Shambhu Nath and Sons Private Limited (subsequently the company was incorporated as a Public Limited Co.), filed a suit for permanent injunction restraining the defendants from interfering in their possession on 17.01.1978. In the suit, various family members of the erstwhile Joint Hindu Family were impleaded as defendants.
11. The aforesaid suit was decreed vide judgment and decree dated 16.04.1979 and defendants were restrained from interfering with the possession of the company i.e. Shambhu Nath and Sons Private Limited of the factory premises consisting of the land measuring 29690 Sq. Yds. And from transferring the property in any manner whatsoever.
12. However, it appears that due to bad law and order situation on account of terrorism in the State of Punjab, the Civil Court decree was violated forcing the company to file two suits, one for injunction on16.0
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