Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2022 Supreme(Telangana) 319

IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
P.NAVEEN RAO, G.RADHA RANI, JJ.
M/s. Crystal Dwellings Private Limited – Appellant
Versus
Surat Singh Malhotra S/o. Late Jagdish Singh Malhotra – Respondent
Civil Miscellaneous Appeal Nos.274, 281 of 2022 and Cross Objections No. 24 of 2022
Decided on : 04-08-2022

Advocates:
Advocate Appeared:
For the Appellant : Sri A. Venkatesh
For the Respondents: Sri S Ravi, Senior counsel for M/s. R.S.Associates

Point of law: There is specific bar excluding jurisdiction of civil Court on any matter, which is also traceable to Companies Act, jurisdiction of civil Court to decide civil dispute is not ousted.

Headnote:
Civil Procedure Code, 1908 – Section 151, 9, 22 – Order XXXIX Rules 1 and 2 –Indian Companies Act, 1956 – Section 293, 299, 430, 241, 242, 59 – Courts to try all civil suits unless barred - Powers of Tribunal - Application to Tribunal for relief in cases of oppression, etc - Whether suit of appellant is maintainable in civil Court - Whether appellant is entitled to injunctions prayed for - Elementary principles to consider application to grant injunction pending trial of a suit are prima facie case, balance of convenience and irreparable loss and hardship to plaintiff. (Para 33)
Finding of the court:
Sale deeds may reflect payment of full sale consideration, but in 49 sale deeds he represented company as vendor and he is vendee and in 15 other sale deeds his family members are vendees. Therefore, it was only nominal transaction. At any rate, sale proceeds are not credited to company account. As no money is credited to bank accounts of company, prima facie, it cannot be said that sale of land was in interest of company. Allegations leveled by appellant, if proved, are serious. It may be possible that what all was done by first respondent was justified and in interests of company. Parties are entitled to lead evidence in support of respective claims. While so, if injunction is not granted, respondents/defendants are free to change physical features of land and create third party interests. If that happens, in event of plaintiff succeeding in suit it would be difficult to enforce decree and secure possession of land and might lead to more litigation
Results: Appeals allowed.

JUDGMENT :

P.Naveen Rao, J.

Heard Mr. A.Venkatesh learned counsel for the appellant and Sri S.Ravi learned senior counsel for the respondents.

2. The appellant is the company, registered under the provisions of The Indian Companies Act, 2013, represented by Sri Mahesh Kedia, Managing Director of the company. The first respondent was initially appointed as Managing Director of the petitioner company on 02.05.2015 and subsequently, his term was extended for a period of five years with effect from 02.05.2019 to 01.05.2024.

3. Appellant alleges that during his tenure, the first respondent has committed several illegalities, played fraud and acted against the interest of the appellant company, misappropriated crores of rupees belonging to the appellant by withdrawing them or depositing them into his own account or to his family members’ accounts, increased his shareholding from 1,25,000 shares to 19,65,000 shares illegally. The first respondent misused his capacity as Managing Director of the company and had transferred lands belonging to the appellant company illegally in his favour and in favour of his family members, who are the respondents 2 to 6 herein.

4. It is further case of the appellant that the first respondent had executed 49 sale deeds in his favour in his personal capacity and executed one sale deed in favour of the second respondent, who is his wife, four sale deeds in favour of respondent no.3, one sale deed in favour of respondent no.4, four sale deeds in favour of respondent no.5 and five sale deeds in favour of respondent no.6. The respondents 2 to 6 are his wife, sons and daughter-in-law. The respondent no.1 was also instrumental in executing the sale deeds in favour of respondent nos.15 to 21, who are other employees of the petitioner company, wife of the Chartered Accountant and Company Secretary of the company. It amounts to personal gain and unjust enrichment and thereby depriving the company of its legitimate assets and money. It is further contended that all the transfers affected by the respondent no.1 are illegal, without any authorization of the Board and as such they are liable to be cancelled.

5. It is further alleged that the first respondent had created Board Resolutions dated 22.04.2021 and 16.06.2021, where under authorized one J.Ramaswamy Sastry, employee of the company to execute sale deeds in favour of the respondent nos.15, 17 to 21. It is further alleged that the respondent no.1 failed to handover the records and documents belonging to the company.

6. Having come to know of the misdeeds by first respondent, in the Board Meeting conducted on 14.07.2021, the first respondent was removed from the Office of the Managing Director of the appellant company and in his place, Sri Mahesh Kedia was appointed as Managing Director. The appellant company issued legal notice dated 16.07.2021 calling upon the first respondent to return all the records and documents of the company, but there is no response from the first respondent. The appellant company has initiated proceedings under Section 452 of the Indian Companies Act for not returning the records and documents of the company.

7. The appellant instituted O.S.No.119 of 2021 in the Court of Principal District and Sessions Judge at Sanga Reddy praying to grant decree to cancel all the sale deeds where under properties of the appellant company were sold and to grant mandatory injunction in favour of the plaintiff and against the defendants directing defendants 1 to 6 and 15 to 21 to return the original link documents pertaining to the properties mentioned in the schedule to the plaint.

8. I.A.No.771 of 2021 is filed by the appellant/plaintiff under Order XXXIX Rules 1 and 2 read with Section 151 of Code of Civil Procedure, 1908, (for short, ‘CPC’) to grant ex parte ad-interim injunction restraining the respondents 1 to 6 and 15 to 21, their agents, workmen from changing the nature of the suit schedule properties.

9. I.A.No.772 of 2021 is filed by the appellant/plain