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2023 Supreme(Online)(SC) 21049
SUPREME COURT OF INDIA
HON'BLE MR. JUSTICE B.R. GAVAI, HON'BLE MR. JUSTICE VIKRAM NATH
DEVELOPER GROUP INDIA PVT. LTD. – Appellant
Versus
SURINDER SINGH MARWAH – Respondent
C.A. No.-000523-000523 - 2023
The court ruled that injunctions should not halt legitimate business operations and that the interests of claimants can be protected without stifling development.
Headnote:(A) Companies Act, 2013 - Sections 339, 340, 342, and 347 - Appeal against the Division Bench of the High Court allowing a Company Appeal and restraining six companies from alienating properties - The appellant contended that it had no connection to the company under liquidation and that the injunction was unfounded. (Paras 2, 10, 19)
(B) Winding Up - The Single Judge had vacated interim orders, directing an audit of the company’s accounts, but the Division Bench reinstated the injunction, which the appellant argued was unjustified. (Paras 3.8, 19)
Facts of the case:
The appeal arose from a restraining order against six land-owning companies involved in a stalled project, where the appellant claimed that the properties were purchased through legitimate funds, unrelated to the company in liquidation. (Paras 3.1, 3.3)
Findings of Court:
The court found that a blanket injunction was unjustified and could cause irreparable harm to the appellant while still protecting the interests of the claimants. (Paras 19, 20)
Issues: The main issues were the appropriateness of the injunction against the land-owning companies and the relationship of the funds used for property purchases to the company in liquidation. (Paras 10, 19)
Ratio Decidendi: The court held that the injunction should not stifle legitimate business operations and that the interests of the claimants could be safeguarded without halting the entire project. (Paras 19, 20)
Result: Appeal partly allowed; the injunction was set aside with directions for undertakings regarding property rights. (Paras 20, 21)
J U D G M E N T
B.R. GAVAI, J.
1. Leave granted.
2. The present appeal arises from the judgment and order dated 16th December 2019, passed by the Division Bench of the High Court of Delhi, thereby allowing a Company Appeal, being Company Appeal No. 10 of 2019, against an order dated 21st February 2019 passed by the learned Single Judge of the High Signature Not Verified Digitally signed by Deepak Singh Court of Delhi, in Company Petition No. 482 of 2009, wherein Date: 2023.01.25 Reason:
earlier interim orders of the learned Single Judge, dated 11th July 2018 and 16th August 2018, restraining the transfer, selling or alienating of 11 properties purchased by a consortium of six land-owning companies, had been vacated. In allowing the appeal, the Division Bench of the High Court, vide the impugned judgment and order, once again restrained these six companies from alienating the aforesaid properties.
3. The facts, shorn of unnecessary details, are as follows:
3.1 It is the allegation of the respondent Nos. 1 and 2 that in the year 2008, on the representation of one Dr. Rajesh Aeren, the Managing Director (MD) of respondent No.3 Company, they decided to invest in a commercial project called Festival City Mall at G.T. Road (National Highway No. 1), Ludhiana, Punjab, being launched by respondent No. 3 Company. In furtherance of the project, a term loan of Rs. 100 Crore was also availed from a consortium of banks. The interest of the respondent Nos. 1 and 2 was limited to 46% of the project, which now stands at 30%. The respondent Nos. 1 and 2 were assured of returns with effect from 1st August 2008, failing which respondent No. 3 and its Directors were to be jointly and severally liable to pay interest @ 2.15% per annum on the amount remaining unpaid to respondent Nos. 1 and 2. Respondent Nos. 1 and 2 were collectively allocated 17 shops in the project.
3.2 The project, however, ran into trouble and the construction was stalled. Neither the possession was offered nor was the assured return or the interest thereon given to respondent Nos. 1 and 2.
3.3 The respondent Nos. 1 and 2, in the year 2009 filed a winding up petition, being Company Petition No. 482 of 2009, before the High Court of Delhi, against respondent No. 3 Company. During the course of the winding up proceedings, the learned Single Judge of the High Court, vide its order dated 19th December 2015, directed respondent No. 3 to deposit a sum of Rs. 1.5 crore with the Registrar of the High Court. However, the said direction was not complied with, and, therefore, vide order dated 18th March 2016 of the learned Single Judge of the High Court, respondent No. 3 Company went into liquidation.
3.4 It is pertinent to note that there were several other investors who too had invested in the project. Various complaints were filed against respondent no. 3 Company and its Directors which resulted in an FIR No. 6 of 2015 being registered on 7th January 2015. Subsequently, the investigation thereon resulted in a charge sheet dated 2nd December 2016, wherein it was alleged that huge sums of money were diverted, defalcated and siphoned off from the corpus of respondent No. 3 Company, which was meant to be utilized for the construction of the project.
3.5 The appellant herein is a 100% FDI company with investors based in Singapore and Japan. In the year 2014, a development and management agreement was entered into between the appellant herein and a consortium of six land- owning companies i.e. Aeren R. Mallz Pvt. Ltd., Aeren R Township Pvt. Ltd., Yashraj Buildcon Pvt. Ltd., Yashvardhan Infrastructure Developers Pvt. Ltd., Aeren R Buildcon Pvt. Ltd. and PMC Entertainment Pvt. Ltd. (now, Fortune R Buildco Developers Pvt. Ltd., i.e., respondent No.4 herein), for exclusive developmental rights over 11 properties extending to 115 acres of land in a real estate project launched by the consortium of six companies for a consideration of Rs. 43 crores.
3.6 Neither the appellant herein nor the consortium of six
