Lallubhai Amichand Limited v. Sunil Jagmohandas Shah

(cc) Whilst the terms of this family arrangement were being negotiated,

Plaintiff No. 1 was advised that with the exit of his two brothers, namely Defendant Nos. 8 and 9, Plaintiff No. 1 (Jagmohandas branch) would for the first time be in a numerical shareholding minority. Until then, apart from the fact that Defendant No. 4 was run on the foundational basis / oral understanding of equality between the two-family groups, technically, there was also equality in shareholding. The negotiations between the family members were with the intervention and/or involvement of their Solicitor, Mr. Mahendra Ghelani. Initially, it was contemplated that a Minority Protection Agreement would take care of this imbalance. Accordingly, a draft thereof was prepared. The same was discussed with Defendant Nos. 1, 3 and late Sanjiv. However, they insisted that something this fundamental need not be reduced to writing since the very basis of the company had always been the foundational basis / oral understanding which respected the equality of the family groups. They assured Plaintiff No.1 that his pre-existing position in Defendant No. 4 would remain undisturbed irrespective of the reduction of the shareholding of the Jagmohandas branch. It is on account of this assurance and confirmation of a long-standing foundational basis/oral understanding within the family, which had been acted upon for decades, that the parties arrived at the arrangement /understanding which finds mention in the MOU dated July 1, 2025 September 2010.

(dd) In paragraph 39 of the Plaint, the longstanding foundational basis / oral understandings as narrated above are broadly summarized; the MOU with its express and implied rights and obligations which respected the pre-existing status of the family members are collectively referred to as the "Family Arrangement". (ee) The entire object of the Family Arrangement was that each of the branches of the Shah family would be perpetually entitled to continue to participate in the management of the Defendant No. 4 and each of the divisions were to be run by the respective members. The entitlement of the respective members of the family to run their respective divisions, was therefore, one of the essential facets of the Family Arrangement. The Family Arrangement was so structured to ensure that some of the family members do not use their shareholding majority to interfere with or defeat the rights of each group of the family. (ff) Pursuant to the Family Arrangement, the shareholding in Defendant No.4 stood as under: Sr. No. Name of Shareholder Shares (% age) Jagmohandas Shah branch – 25.98%

1. Sushilaben Shah (Defendant No. 13) (6.66)

2. Sunil (2064),Sunil’s HUF (260), Sunil J. Shah Trust (300), Sunil (17.16)

3. Jayshree Shah Trust (1.08)

4. Neela Shah Trust (1.08) Rameshchandra Shah branch – 72.59%

5. Indiraben Shah (Defendant No. 14) (6.66)

6. Dhiren Shah (2351), Dhiren Shah Trust (153), Dhiren Shah HUF (180), Dhiren Maintenance Trust (160) (17.16)

7. Rajeshri Sanjiv Shah (2402), Sanjiv Shah Trust (162), Sanjiv Shah HUF (300) (17.16)

8. Paresh Shah (2334), Paresh Shah Trust (350), Paresh Shah HUF (180) (17.16)

9. Alka Shah Trust (1.08)

10. Sangita Shah Trust No. 1 (1.08)

11. Sangita Shah Trust No. 2 (0.36)

12. Jasmina Shah (Defendant No. 21) (4.85)

13. Lallubhai Amichand Ltd. Employees Educational Welfare Trust (3)

14. Lallubhai Amichand Ltd. Employees General Welfare Trust (3.3)

15. Bombay Conductors & Electricals Ltd. Employees General Welfare (gg) Post the Family Arrangement and in implementation thereof, the Parties undertook the following: (a) in or about 2011, Defendant No. 7 (ie. Elite Housing Developers LLP) was formed. Plaintiff No. 1, Defendant Nos.[1] and 3 and late Sanjiv were the founding Partners of Defendant No. 7 and post the demise of Sanjiv, his wife Rajeshrsi Sanjiv Shah (Defendant No. 16) was automatically made a partner of Defendant No.7. The purpose of incorporating Defendant No.7 was to develop a 22storey residential high rise at the Tardeo property which is held by the Hirabhai Vithaldas Shubh Trust. (b) Considering the experience Plaintiff No. 2 had gained over the past 4-5 years, when Defendant No.7 was starting its project Elite Crest at Tardeo, Plaintiff No.2 was appointed as the Project Manager. During this time, he worked closely with one Anil Thacker, who had been the architect of the family for its businesses for over 20 years.

(c) Alco, Metal Rolling and Rameshchandra Ltd. were merged with

Defendant No.4 as a single entity to be run as a quasipartnership. This was achieved by filing appropriate petitions in this Court by way of a scheme of amalgamation. By an Order dated 20th July 2012 the said merger was sanctioned by this Court.

(d) Hence, the different businesses which were originally being run through subsidiaries were brought into Defendant No.4 in the backdrop of the Family Arrangement and the understanding that the rights of management control enjoyed by different members of the families (which they were originally enjoying through the subsidiaries) would continue to be respected by accepting different divisions within Defendant No.4. (e)Further, to protect the interests of the existing members of Defendant No.4 and their respective family members who continued as its shareholders, it was ensured that they enjoyed representation in the management and it is for this reason that each family group which held 25% had full autonomy and managed and controlled its own division within Defendant No.4. (hh) Even prior to and post 2010/2012, Plaintiff No.1, Defendant Nos. 1 and 3 and late Sanjiv ran separate businesses under their respective agreed divisions as under: Sr. No. Continuing Member Division

1. Defendant No. 1. Subsequently, his son, Sajil in 2016. Metal Rolling and Rod

2. Defendant Nos. 1 and 3. Subsequently, their sons, Sajil and Shival, in 2016 and 2015 respectively. Elite Cookware (closed in 2020)

3. Sanjiv, until his demise on 18th May, 2022. After Sanjiv’s demise, Defendant Nos. 1 and 3 alongwith their sons Shival and Sajil, respectively. Trading

4. Plaintiffs Export and Aluminium

5. Plaintiffs Aluminium retail shop

(ii) In fact, the aforesaid divisions maintained their separate bank accounts with more than one signatory. Defendant No 3 used to also look after and manage the accounts and compliance requirements of the entire Group. It is pertinent to note that before filing the accounts of Defendant No.4, a division wise break up was always prepared to assess the progress or deterioration of each of the divisions being managed by each of the directors. (jj) Plaintiff No.1, along with his son, Plaintiff No.2, took various steps to grow the Export Division, including, but not limited to, adding new machinery and introducing new products to cater to the changing demand in the export markets. Due to Plaintiff No.1's continuous efforts and innovative ideas, the Export Division became not only the most revenue generating division but also the backbone of Defendant No.4, and supported the other loss-making divisions. From the balance sheet of Defendant No.4, it is evident that the Export Division, which was singlehandedly managed by Plaintiff No.1 and his son, was the only significant profit-making division in Defendant No.4. (kk) In marked contrast, the divisions handled by Defendant Nos. 1 and 3 had been consistently and deliberately recording losses in the books, resulting in a drastic drop in Defendant No.4's overall profits, ultimately affecting the earnings of Plaintiff No. 1. This is clear from the following chart: Table – Lallubhai Amichand Company Wise Profitability – 2011 - 2021 Sr. No. Director / Executive in Charge Division Accumulated Profit/ Loss from 2011- 21

1. Plaintiff No.1 Retail Shop Profit – 94,70,795 Export / Aluminium Profit – 27,93,19,611 Total Profit – 28.87 cr.

2. Late Sanjiv Shah Defendant Nos. 1 and 3 Wire Rods (Dhiren and Paresh) Loss – 11,53,34,041 Elite Cookware Loss – 11,88,02,419 Total Loss Rs. 22.50 cr.

(ll) Since Plaintiff No.1's division was the only profit-making division,

Plaintiff No.1's division infused monies in the other divisions of Defendant No.4. The salaries of employees and other expenses of Defendant No.4 were largely borne by Plaintiff No.1's division in addition to the fact that Plaintiff No.1's division advanced loans to Defendant Nos. 1 and 3 for various business purposes. As far as Plaintiff No.1 recollects, till date Plaintiff No.1's division has advanced a sum of approximately Rs. 2.[5] crores to the Elite Cookware Division and Rs.40- 50 lakhs to the Metal Rolling and Rod Division.

(mm) From 2012 onwards i.e. after the merger of the various entities into

Defendant No.4, Plaintiff No.1 learnt that Defendant Nos.[1] and 3 and late Sanjiv were mismanaging the accounts of Defendant No.4 and transacting the majority of their business in cash for the divisions handled / managed by them. On several occasions, Plaintiff No.1, confronted and requested Defendant Nos. 1 and 3 and Sanjiv not to do so and called upon them to correct all their wrongdoings. (nn) In particular, the Metal Rolling and Rod Division of Defendant No.4 had been transacting their business in cash with a view to evade the statutory liabilities and had been siphoning monies from Defendant No.4, with the assistance of Defendant No.3, without maintaining any records of such cash transactions. (oo) The following are some of the instances which the Plaintiffs rely upon to demonstrate the breach of trust and faith committed by Defendant Nos 1 and 3 and their family group: (a) Defendant Nos. 1 and 3 have siphoned cash from Defendant No.4 without Plaintiff No.1's knowledge and/or giving any proper accounts to Plaintiff No.1 and despite several regular follow-ups by Plaintiff NO. 1. (b) A large amount of the business of Defendant No.4 was being conducted in cash. As a result, there was a cash book maintained which would account for the transactions. The said Cash Book was accessible by the family members. The Cash Book was maintained in a manner which would reveal which one of the three brothers was instructing the cash flow. This was indicated by assigning their respective initials viz "DRS" stood for Defendant No.1, Dhiren Rameshchandra Shah, "PRS" stood for Defendant No.3, Paresh Rameshchandra Shah etc. Due to limited access, Plaintiff No. 1 has been able to ascertain the following instances from the extracts of the Cash Book available with them which show that:-

(i) Unusually large amounts of cash were being credited on account of one entity VK Enterprises which was run by one Keyurbhai and which had dealings with the Metal Rolling division managed by Defendant No.1.

(ii) As far as the Plaintiffs are aware, VK

Enterprises did not have any significant business dealings with the division but was merely employed as a means to route the cash. This was done with a view to reduce profits, and evade statutory liabilities and not provide accounts to Plaintiff No.1. An extract of the Cash Book in respect of VK Enterprises would show huge amounts of cash transactions without any business dealings, which for reference purposes have in most cases been earmarked with the words "entry" or "e" to denote that the same were merely entries without any underlying business transactions.

(iii) Similar entries are also found in respect of one Ashok of Shah Jawanmal Hajariwal & Co., a supplier and client of Metal Rolling whose name was also employed to achieve the same object of siphoning off/routing illegal cash.

(iv) As far as Plaintiffs are aware, the said transactions were merely fraudulent entries only maintained to keep a track of the cash being routed and siphoned off from Lallubhai Amichand. Plaintiffs verily believe that a thorough investigation of the books of accounts of Defendant No.4 would reveal the enormity of the cash transactions by which Defendant Nos. 1 and 3 siphoned off monies.

(c) The Metal Rolling Division (which was under the control of Defendant No.1 and his son and Defendant No.3) used to maintain an informal and formal accounting system side by side. By employing this system, cash transactions would be shown in a column shown as "others" whereas the official transactions would be shown under usual legitimate heads. The said system was adopted to window dress the accounts to show lesser profits, pay lesser taxes, but undertake transactions in cash, and siphon off the corresponding profit made in cash. This is evident from one such Profit and Loss Account of August 2022 available with the Plaintiffs. The said Profit and Loss Account shows that whilst Electricity Charges are being paid to the tune of Rs. 3,19,110, the total official revenue is shown as Rs. 2,37,087. It is inconceivable that if the level of production requires payment of electricity charges to the tune of Rs. 3,19,110, the revenue would be a mere Rs.2,37,087. Further, while the total unofficial revenue is shown as Rs.37,11,934, and the unofficial net profit is shown as Rs.17,28,196, officially a Net Loss of Rs. 13,47,727 is reported. This makes it evident that a large amount of business was being conducted off the record to siphon off monies.

(d) Writing-off receivables without following the due process and without taking any legal action for recovery. (e) At the instance of Defendant No.3, who was handling the Accounts Division, a sum of Rs. 2,00,00,000/- (Rupees Two Crores only) was advanced to one Mr. Kamal Shah, Defendant No.1's brother-in-law, on the assurance that Defendant No.3 would be responsible to recover the money. However, the money was never recovered from Mr. Kamal Shah, despite several reminders from Plaintiff No.1. (f) Saloni (executive director and lawyer by profession) along with Shival has, since about 2018, been running a business of agricultural, horticulture and forestry products under the brand name, "Mansai" and "Tillage" on the land owned by the Mansa Gaushala Trust where the Directors of the Defendant No.4 are the Trustees. This business was originally started by Saloni, Shival and Sajil. The business is run "in association" with Defendant No.4 using its resources and factory premises as a godown. In fact, Saloni is the proprietor of a registered trademark, "Mansai" and the proprietor address is that of the Defendant No.4. However, despite using the resources of Defendant No.4 and taking away hundreds of kilograms of produce of organic millets and grains of Mansa Gaushala Trust, [the audited balance sheet of the Trust/ Company do not show the requisite disclosure in this regard], the Jagmohandas branch was never fully made aware of this business. (g) Unilateral transfers of about Rs.1,00,00,000/- (Rupees One Crore only) by Saloni from Defendant No.7 to a bank account of Defendant No 4, which was solely managed by Paresh and Dhiren, to utilise the funds to obtain a Letter of Credit for their trading business purposes without Plaintiff No.1's knowledge. Similarly, another unilateral transfer of Rs. 80,00,000/- (Rupees Eighty Lakhs only) to the account of one IJI Realty was done without informing the other partners on 6 February 2021. (pp) Hence, whilst the export division of Defendant No.4 was being managed by Plaintiff No.1 and was the only division generating a profit, the other divisions managed by Defendant Nos. 1 to 3 were booking losses. These losses were substantially artificial losses. Since a large chunk of their business was being carried out in cash, the accounts of Defendant No.4 became lopsided and financially disadvantageous and unviable for Plaintiff No. 1. (qq) It is because of the above situation and due to the various illicit methods of business adopted by Defendant Nos. 1 and 3, that Plaintiff No.1 started insisting that Defendant Nos. 1 and 3 and Sanjiv provide him a fair exit from the business. However, being in the majority, the three brothers ignored Plaintiff No.1's stand and marginalized him. While the Plaintiffs enjoyed functional autonomy and authority, they were at a disadvantage, in terms of their share. The other group enjoyed thrice the share that the Plaintiffs had. Therefore, precipitating matters would take matters nowhere and a consensual separation was the realistic and practical way forward. On this account, and as they were his family members and partners, Plaintiff No.1 did not take any steps against them. On several occasions, Plaintiff No.1 requested for accounts for loans, cash books maintained for other businesses and trusts etc. which were deliberately withheld by Defendant Nos. 1 and 3. It was clear to Plaintiff No 1 that Defendant Nos. 1 and 3 and Sanjiv were avoiding a separation as they were aware that a separation would prove disastrous for them. They were aware that, under their Family Arrangement, Plaintiff No. 1 had been running the Export Division and making handsome profits. Since the Family Arrangement was that the Export Division was his baby, he would expected to take that business with him. Even if he did not and was to be compensated, there would be a huge pay out. In addition, they lacked the resources /ability to run it as well as Plaintiff No.1. Moreover, any separation, would inevitably lead to an accounting exercise which would have revealed the infractions of the Rameshchandra branch and would have led to a separation of the only profit making division from the Lallubhai Amichand Group i.e. the Export Division which was singlehandedly run by Plaintiff No. 1 and his family. (rr) It is amidst the context of the exit discussions/negotiations ongoing between Plaintiff No. 1, Defendant Nos. 1 and 3 and Sanjiv that, in 2014, Plaintiff No.1, along with his son, incorporated a company namely Absolink Enterprises Pvt. Ltd.(“Absolink”). The following demonstrates that Defendant Nos 1 to 3 were aware of Absolink and the limited quantum of business which the Plaintiffs had undertaken through this entity. (a) Absolink's business was run from the common offices of Defendant No.4 with the help of various teams (including accounts team headed by Defendant No.3) of Defendant No.4. (b) The financials and bank statements of Absolink were regularly emailed to the registered email id of Defendant No.4 viz. lal.accounts@hotmail.com to which all the directors of Defendant No.4 had access.

(c) Thus, it is evident that Absolink was incorporated and had commenced its business with consent and full knowledge of Defendant No.4 and its directors since inception. The other directors were wellaware of the business conducted by the Absolink, since the Plaintiff No.1's expertise has always been in exports. They did not raise any objections to the same. (ss) The revenue of the Export Division of Defendant No.4 remained unaffected even after Absolink was incorporated by the Plaintiffs. In fact, Absolink was barely doing any business. It was really incorporated in view of the on-going discussions between the family members in relation to the Plaintiffs' exit from the family business / Defendant No.4 and the aforesaid is evident from the revenues of Absolink. Even though Absolink was incorporated in the year, 2014, the total revenue generated till date is a mere sum of Rs. 2,77,69,630/- (out of which only Rs. 1,58,69,630/- is from exports) whereas, during the period of 2014 to 2021, Defendant No.4 has generated revenues in the sum of Rs. 357,35,52,709/-. (tt) Upon the demise of Sanjiv in the year 2022, his daughter, Saloni, was made an Executive Director in Defendant No.4, as per the Family Arrangement and course of conduct of business adopted by Plaintiff No.1, Defendant Nos. 1 and 3 and their families such that each branch thereof shall have equal representation in the management. (uu) After continuous follow up from Plaintiff No. 1 to provide him a fair exit, Defendant Nos. 1 to 3 reluctantly attended meetings with their Chartered Accountant, Mr. Bhuta Shah, and thereafter with the Solicitor, Mr. Mahendra Ghelani. Accordingly, pursuant to advice received in multiple meetings held with the aforesaid professionals, a valuation of the various properties of Defendant No.4 was agreed to be conducted. In view of the same, with efforts of Plaintiff No.1, a valuer (Mr. Anmol Sekhri) was appointed in October 2022 for which the advance payments were made by Defendant No.4. Defendant Nos. 1 to 3 were informed that the draft Valuation Reports were to be shared by the Valuer in December / January 2023. The final Reports were to be shared with Defendant Nos. 1 to 3 in the last week of March 2023. On 8th April 2023, Plaintiff No. 1 informed Defendant No.3 that the Valuation Reports were now ready and would be shared on 10th

2023. In fact, Defendant No.3 had enquired about the same on 11th 2023 with Plaintiff No.1 and on 25th May 2023, Anmol Sekhri, the appointed valuer, sent a mail to Defendant Nos. 1 and 3 attaching Valuation Reports for all the properties.

(vv) However, Defendant Nos. 1 to 3 having realized that the Plaintiff No.1 July 1, 2025 would have to be provided his fair share post accounts being drawn up for all entities/trusts etc. including hiving off the only profitable division, instead planned to oust Plaintiff No. 1 from the business altogether. (ww) On 13th April 2023, the Plaintiffs were shocked to learn that an ex-parte Order dated 5th April 2023 had been passed by this Court in Commercial (IP) Suit No. 177 of 2023 ("IP Suit") filed by Defendant No.4 against Absolink, Plaintiff No.1 and his son Plaintiff No.2, wherein it was falsely represented to this Court that an allegedly competing business was being carried out by Plaintiffs in Absolink leading to huge profits without the knowledge of the other directors of Defendant No.4. The said IP Suit and the Interim Application taken out therein, sought drastic and far reaching reliefs whose intent and import very clearly was to throw Plaintiff No.1 out of the family business. In the IP Suit, by misleading this Court, by practising suppressio veri and/or suggestio falsi, an ex-parte Order, interalia, which barred the Plaintiffs from visiting or accessing their office/business premises or accessing any physical/digital documents was sought and obtained. Also sought and obtained were reliefs for the Court Receiver to take search of the various premises of Absolink and Plaintiff No.1 on 13th April 2023.

(xx) Post receipt of the ex-parte order and realizing that they had moved this

Court without full disclosure, and that the said Order would be vacated upon the correct and true facts being brought to the attention of this Court, the ex-parte Order was sought to be maliciously employed by Defendant Nos. 1 to 3 to initiate the process of ousting Plaintiff No. 1 from participation in the management and control of Defendant No.4, with the design that events would overtake the Plaintiffs and present the Plaintiffs with a fait accompli, which would make any attempt to get the order vacated meaningless. (yy) Whilst the Court Receiver was actually visiting Absolink's premises in Ahmedabad, Defendant No.1 addressed an email at about 12.55 p.m. annexing a Special Notice dated 13th April 2023, under Sections 100, 115 and 169 of the Companies Act, 2013, for calling an Extra Ordinary General Meeting for removal of Plaintiff No.1 as a director of Defendant No.4. An email enclosing a Requisition to convene the Board meeting of Defendant No. 5 was addressed by Defendant No.1 at around 3.25 p.m. Acting in concert, Defendant No.3 purported to email separate Requisitions, both dated 13th April 2023, at around 5.48 pm and 7.08 pm, calling for a meeting of the Board of Directors of Defendant No.4 and Defendant No. 5, respectively, on 21st April 2023. The said requisitions proceed entirely on the same basis as the allegations made in the IP Suit. (zz) In continuation of the pre-meditated strategy, on 14 April 2023, a circular was addressed to the clients of Defendant No.4 falsely informing them that Plaintiff No.1 was no longer involved in the management of Defendant No.4. Simultaneously, letters were addressed to Plaintiff Nos. 1 and 2 informing them of a purported termination from their employment with Defendant No.4. Defendant Nos. 1 to 3 threatened Defendant No.4’s common employees, Chartered Accountants and other third-party providers to refrain from even communicating with Plaintiff No.1 or his family, failing which they would face dire legal and other consequences. Similar letters were also addressed to all the clients of the export division of the Defendant No.4 defaming and maligning Plaintiff No.1's hard earned reputation and goodwill. (aaa) On 17th April 2023, upon a request made by the Plaintiffs’ erstwhile Advocate, the Advocates for Defendant No.4 provided a copy of the IP Suit and Interim Application (L) No.8399 of 2023 therein. A perusal of the Plaint made it demonstrably clear that Defendant Nos.[1] to 4 had intentionally set up the following false case: (a) that in 2015, the Plaintiffs had incorporated Absolink and, when Plaintiff No.1 was confronted by Defendant Nos.[1] to 4 about the incorporation of Absolink, he informed them that the same had been formed to handle his personal investments; (b) that it was only in December 2022 that Defendant Nos. 1 to 4 realized that the Plaintiffs were in fact carrying on a business through Absolink which was competing with the business of Defendant No 4; and

(c) the same constituted a breach of fiduciary duties, confidence and trust as well as infringement of the Defendant No 4's trademark. (bbb) Despite Defendant No.4's IP Suit being replete with falsehoods, the same contains unequivocal admissions on the part of Defendant Nos. 1 to 4 of the fact that Defendant No.4 is a family company and a quasipartnership and that different directors were managing different divisions of the company. This is more than apparent from a bare perusal of paragraphs 10.3, 11, 11.1, 11.2, 13, 41 and 42 of the Plaint. Considering the fact that Defendant Nos. 1 to 4 have unequivocally committed themselves to the position that Defendant No.4 is a family company run as a quasi-partnership and that the Plaintiffs should be held accountable on those principles, Defendant Nos. 1 to 4 must be held equally liable and accountable on those same principles and standards.

(ccc) Be that as it may, in order to have the ex-parte ad-interim order dated

5th April 2023 vacated, the Plaintiffs herein filed an Affidavit in Reply and a limited Additional Affidavit dated 19th April 2023 and 6th June 2023, respectively. By these Affidavits, the Plaintiffs placed on record the various facts and circumstances which Defendant Nos.[1] to 4 had suppressed from this Court at the time of applying for ex parte ad-interim reliefs. To summarise, these Affidavits elaborated on the fact that (a) whilst Defendant No.4 was undisputedly a quasipartnership in which all members of the various branches of the families had joint ownership, there was a family arrangement of 2010, (b) this had been acted upon and implemented; (c) pursuant thereto, Plaintiff No. 1 was solely entitled to management control of the aluminium export division of Defendant No.4; (d) this had been accepted by Defendant Nos 1 to 3; (e) it is the illicit business activities of Defendant Nos 1 to 3, the losses being incurred by them, and the cash business being conducted by them, which necessitated exit negotiations between the Plaintiffs and Defendant Nos. 1 to 3; (f) it is in the midst of these exit negotiations that Defendant Nos.[1] to 4 intentionally propounded the false case of the Plaintiffs indulging in a diversion of business and clients and carrying out his business through Absolink. It was pointed out that these allegations were factually incorrect; that the business done through Absolink was minuscule, and that Defendant Nos 1 to 3 were all along aware of the existence and functioning of Absolink.

(ddd) The present Advocates of the Plaintiffs entered appearance on 23/24 May 2023 in the IP Suit. Thereafter, correspondence was addressed particularly between 24th and 26th May 2023 referring to the inexplicable manner in which the Interim Application (L) No. 8399 of 2023 and IP Suit had been filed, moved and heard by circumventing various processes and procedures. In particular, by a letter dated 26th May 2023, Plaintiff No.1's Advocates addressed a letter to the Defendant No. 4 and its Directors setting out in detail the malicious, unilateral and illegal behavior of Defendant Nos. 1 to 3 in getting issued various notices and convening an EGM. In view of the contents of the said letter they were called upon to adjourn the meeting without transacting any business. No response was however received to the said letter. (eee) Due to the fact that no reply had yet been received, Plaintiff No.1's Advocates, by a further letter dated 27th May 2023, inquired from the Advocates on behalf of Defendant No.4 whether the EGM had been held, and, if so, the names of the persons who attended the said meeting, the business transacted at the said meetings, etc. However, despite an express request for an early response, no reply was received, compelling Plaintiffs’ Advocates to address another letter in this regard on 29th May 2023. (fff) A day prior to the hearing scheduled in the Interim Application (L) NO. 8399 of 2023 on 6th June 2023, the Advocates of Defendant No.4 addressed a letter responding to the various letters addressed by Plaintiffs' Advocates. It was only by this letter that the Plaintiffs received a copy of the purported Minutes of the Meeting and the copy of the Resolution passed at that meeting held on 27th May 2023 whereby Plaintiff No.1 was removed as a director of Defendant No.4. (ggg) In the meantime, from the date of the ex-parte Order dated 5th 2023 till date, the Defendants, and particularly Defendant Nos.[1] to 3, have taken various unilateral, malicious and far reaching steps to disturb the status quo. These actions have only been taken with a view to cause prejudice to Plaintiff No.1's rights and interest in Defendant No.4 and the various family entities and trusts. (hhh) Whilst the aforesaid IP Suit was sub-judice, in aggravation of their illegal and malafide pre-meditated acts, Defendant No.1 to 3 malafide and illegally accessed, packed and literally threw out Plaintiff No.1’s/his family’s electronics, furniture etc., without his permission or knowledge in the compound of the office of Defendant No.4 on 9th June 2023 in gross over reach of the orders of this Court. The illegal and malafide acts were to literally dispossess the Plaintiff from his office premises of 40 years under the garb of the ex-parte ad-interim order dated 5th

2023.

(iii) Thereafter, Interim Application (L) No.8399 of 2023 in the IP Suit was heard on various occasions, and by an Order dated 3rd July 2023 this Court vacated the ex-parte Order dated 5th April 2023 interalia stating as under: "In my view, there has been a failure on the part of Plaintiff to disclose material facts, which if disclosed, the ex-parte order may not have been passed.... It is made clear that this Court has not gone into merits of the application, particularly considering that the Defendants by virtue of the ex-parte order have not been able to access relevant material which would offer them an opportunity of putting up a defense to the Interlocutory Application of the Plaintiff. …… In view thereof, the ex-parte order dated 5th April, 2023 is vacated." The Defendants shall file their additional Affidavit in Reply to the Interim Application on merits within a period of three weeks from the date of this Order. The Plaintiff is at liberty to file their Affidavit in Rejoinder within a period of two weeks thereafter.” (jjj) The Plaintiffs, thereafter, in the Plaint, refer to the subsequent correspondence exchanged between the parties and state that, in these circumstances, the present Suit was filed.

5. The Plaintiffs filed Interim Application (L) No.22820 of 2023 in the present Suit seeking interim and ad-interim reliefs, wherein they reiterated the contents of the Plaint.

6. Saloni Shah (Defendant No.2) filed a Limited Affidavit dated 29th August 2023, on behalf of Defendant No.4, opposing the grant of ad-interim reliefs, which states as under: a) That the ad-interim reliefs ought not to be granted for the following reasons: i) There is no urgency whatsoever which warrants the grant of any urgent ad-interim reliefs; ii)There is in fact delay on the part of the Plaintiff in approaching this Hon'ble Court on the cause of action as stated in the Plaint; iii)The reliefs sought are in the nature of mandatory injunction/final reliefs, which in the current facts and circumstances are not warranted and cannot be granted; iv)The status quo which is sought to be restored is as on 4 April 2023, which cannot be granted. v) The entire cause of action is defective and the suit in its current form is not maintainable; vi)The suit suffers from misjoinder of causes of action; and vii)The Plaintiffs' entire conduct is such that it disentitles them from grant of any equitable relief. b. Defendant No.4 was constrained to file the IP Suit on account of the fact that the Plaintiff, while being a Director of Defendant No.4, was conducting a competing business. c. From the said averments in the Plaint of the IP Suit, it is evident that:

(i) Plaintiff No.1 was competing with the business of this Defendant through his own company viz. Absolink Enterprise Pvt. Ltd. ("Absolink") of which he was in complete control, ownership and management and of which he was a Director along with Plaintiff No. 2.

(ii) The Plaintiffs were also conducting a competing business through various devices and stratagems interalia such as: (ii-1) Representing to customers of Defendant No.4 that the said Absolink was a sister concern of (ii-2) Infringing the trademark(s) of Defendant No.4; (ii-3) Diverting the commissions and revenues of Defendant No.4 to his own personal use and interalia into the accounts of son (Plaintiff No. 2), daughter and wife; (ii-4) Soliciting Defendant No.4’s agents and customers, (ii-5) Surreptitiously running a parallel establishment for the purposes of his said competing business in close proximity to Defendant No.4's premises, and (ii-6) Diverting and misappropriating the resources of Defendant No.4. d. With a view to preserve the material and evidence concerning such illegal competition being conducted by the Plaintiffs, Defendant No.4 approached this Court in the IP Suit for an ex-parte order. e. On 5th April 2023, the Learned Single Judge of this Court granted an ex-parte order in the terms stated therein. The said ex-parte order was duly acted upon by the Court Receiver. The Court Receiver filed his Report dated 18th April 2023 in this regard. f. In the meanwhile, Defendant No.1 issued a Special Notice dated 13th April 2023, pursuant to Sections 100, 115 and 169 of the Companies Act, 2013, calling for the convening of an Extra-Ordinary General Meeting to interalia consider removal of the Plaintiff. The resolution to remove the Plaintiff was interalia on account of his acts against the interest of Defendant No.4 by indulging in competing business, his acts of solicitation of Defendant No.4’s clients by making false representations saying that Absolink is a sister concem Company and his acts of engaging the Company's employees for facilitating the business of Absolink. g. Also, on 13th April 2023, Defendant No.4, by letters of the same date issued to the Plaintiff No.1 and 2 respectively, terminated their employment with Defendant no.4. h. On 13th April 2023, Defendant No.4 also issued a Notice of a Board Meeting which was to be held on 21st April 2023. The agenda for this Board Meeting was also annexed to the Notice of the Board Meeting. i. Subsequently, on 20th April 2023, this Defendant issued and sent to all (including Plaintiff No. 1) a Notice titled "Change of venue for the 1st Meeting of the Board of Directors" in furtherance to the above Notice of the Board Meeting of the same date. By this notice, the venue of the Board Meeting to be held on 21st April 2023 was changed. Previously the venue decided for the abovementioned board meeting was the office of Defendant No.4 at Tardeo, Mumbai, which could not be attended by Plaintiff No. 1 in terms of the Order of the Learned Single Judge dated 5th April 2023. Accordingly, the venue was changed from the office of Defendant No.4 at Tardeo, Mumbai, to Orritel Arbitration and Business Centre, Fort, so as to enable the Plaintiff NO. 1 to attend. j. On 19th April 2023, the Plaintiffs herein e-filed an affidavit in the IP Suit bearing the title "Affidavit in Reply on behalf of the Defendants", which was served upon Defendant No.4 herein on 20th April 2023. In the said Affidavit, the Plaintiffs herein interalia prayed that: "m. In view of the above, I humbly pray as under: i. The Ex-Parte Order dated 5 April 2023 to be vacated; ii. The Defendant No. 3 and 1 be allowed to enter the premises of the Plaintiff. iii. The evidences confiscated by the receiver be returned and in the alternative, the copies of all the documents seized by the Court Receiver be handed over to the Defendants. iv. The meeting scheduled on 21 April 2023 for formally removing me as a director is stayed". k. As such, it is evident that the Plaintiff was challenging the notice seeking to remove him as a director and that, at least from the date of this Affidavit, i.e., 19th April 2023, the Plaintiff was fully conscious and aware of the need to take action against his removal as a director. l. On 21st April 2023, when the Board Meeting of Defendant No.4 was held, it was attended by Plaintiff No.1 and Siddhartha Puthoor from Mehta and Padamsey Advocates & Solicitors for Plaintiff No.1. Thus Plaintiff No.1 attended the Board Meeting with his Advocates. Further, as can be seen from a reading of the Minutes, Plaintiff No. 1 had sent across a representation dated 20th April 2023 and also made representation/ letter dated 21st April 2023. The following resolutions interalia came to be passed at the Board Meeting of Defendant No.4 held on 21st 2023: "(Resolution No. 1) "RESOLVED THAT the notice of interest in Form MBP-1 received from Mr. Dhirendra Rameshchandra Shah (DIN:00646825), Mr. Paresh Rameshchandra Shah (DIN: 00646745), Mr. Sunil Jagmohandas Shah (DIN: 00646793) and Mrs. Saloni Shah Anchan (DIN: 09697034), directors of the Company pursuant to the provisions of Section 184(1) of the Companies Act, 2013 read with Rule 9(1) of the Companies (Meetings of Board and its Powers) Rules, 2014, be and are hereby noted and taken on record by the Board." (Resolution No. 2) RESOLVED THAT pursuant to section 164 of the Companies Act, 2013, the declarations received in Form DIR-8 from Mr. Dhirendra Rameshchandra Shah (DIN: 00646825), Mr. Paresh Rameshchandra Shah (DIN: 00646745), Mr. Sunil Jagmohandas Shah (DIN: 00646793) and Mrs. Saloni Shah Anchan (DIN: 09697034), directors of the Company be and are hereby noted and taken on record by the Board." (Resolution No. 3) RESOLVED THAT pursuant to the provisions of Section 115, 169 and other applicable provisions, (if any) of the Companies Act, 2013 and the rules made there under (including any statutory modification(s) or re-enactment(s) thereof for the time being in force) and relevant provisions of the Articles of Association of the Company and subject to the approval of the members, Mr. Sunil Jagmohandas Shah (DIN: 00646793) be and is hereby removed from his office as a Director of the Company and all the powers and responsibilities given to him in executive capacity of the company with immediate effect from the date of this meeting RESOLVED FURTHER THAT the Board of the Directors of the Company be and is hereby severally authorized to do all acts, deeds, matters and things as deem necessary, proper or desirable and to sign and execute all necessary documents, applications and returns along with filing of necessary E-forms with the (Resolution No. 4) "RESOLVED THAT the Extra-Ordinary General Meeting of the Company be convened at ORRITEL ARBITRATION AND BUSINESS CENTER, 89 ARARAT BUILDING, KALAGHODHA FORT MUMBAI 400023 at 11:00 am on FRIDAY, 15th MAY 2023.

RESOLVED FURTHER THAT the draft notice along with map of the venue as placed before the meeting, be and is hereby approved and the same be issued to the shareholders of the Company under the signatures of any of the Directors of the Company for and on behalf of the Company.” m. On 16th May 2023, Defendant No.4 adjourned the Extra-Ordinary General Meeting (notice of which had been given on 13th April 2023) to 27th May 2023 to be held at the same venue as decided earlier, i.e., Orritel Arbitration and Business Centre, Fort, at 11 am, by way of its "Notice of Adjourned Extra-Ordinary General Meeting" which was issued and sent to all including Plaintiff No.1. n. The Extra-Ordinary General Meeting of Defendant No.4 was held on 27th May 2023 and was attended by the following persons:

1. Mr. Dhirendra R. Shah Member and Director

2. Mr. Dhirendra R. Shah Karta of Dhirendra Shah HUF

3. Mr. Paresh R. Shah Member and Director

4. Mr. Paresh R. Shah Karta of Paresh Shah HUF

5. Mrs. Rajeshri Sanjiv Shah Member

6. Mrs. Brinda Rahul Kapur Karta of Sanjiv Shah HUF

7. Mr. Shival Paresh Shah Proxy for Indira R. Shah

8. Mr. Sajil Dhirendra Shah Proxy for Jasmina V. Shah o. Item No. 3 of the Minutes of the said EOGM record the events with regard to the removal of the Plaintiff No. 1 from the post of director and read as under: "REMOVAL OF MR.

SUNIL JAGMOHANDAS SHAH (DIN:

00646793)

FROM THE POST OF THE DIRECTOR: The Chairman briefed the shareholders about the reason for the adjourning the meeting to this date and informed about the requisition and a special notice received on 13th April 2003 (the "Requisition"), in terms of Section 169 read with Section 115 of the Companies Act, 2013 and the rules framed thereunder for convening an EGM, by the below mentioned requisitionist (the "Requisitionist") for removal of Mr. Sunil Jagmohandas Shah (DIN: 00646793) us the Director of the Company: Name of Requisitionists Percentage of paid-up capital of the Company Dhiren R. Shah 15.17% Pursuant to the provisions of Section 115, 169 of the Companies Act, 2013 read with relevant rules made thereunder, the Board of Directors in their meeting held on 22nd April 2023 has decided to remove Mr. Sunil Jagmohandas Shah (DIN: 00646793) on the grounds of running competing business and also for nonperformance of the fiduciary duties and issues concerning transparency and integrity. The Chairman gave a detailed presentation about the grounds proposed for the removal of Mr. Sunil Jagmohandas Shah by reading the extract. He also read the extract from the petitions filed with the Hon'ble Bombay High Court and the orders connected with the matter. Copies of such extract is attached herewith as Annexure-A. The Chairman also informed that pursuant to FIR filed by the Company, Mr. Sunil Jagmohandas Shah has applied for the anticipatory bail from the appropriate Court. The Chairman read out various conditions laid by the Court for granting such anticipatory bail. He also provided answers to various questions raised by the shareholders in this regard and the allegations made by the Company on Mr. Sunil Jagmohandas Shah. The Chairman informed that despite being served with the notice and the agenda for the present meeting, Mr. Sunil Jagmohandas Shah has not come to the meeting to make his representation before the shareholders. Hence, the Chairman read out the representation sent by Mr. Sunil Jagmohandas Shah to the Board of the Company and the same is attached herewith this minutes as Annexure-B and C. After detail discussion following resolution was unanimously passed by the member of the Company as Ordinary Resolution: Proposed By: Mr. Dhirendra R. Shah Seconded by: Mrs Rajeshri R. Shah (Resolution No. 1) "RESOLVED THAT pursuant to the provisions of Section 115, 169 and other applicable provisions, (if any) of the Companies Act, 2013 and the rules made there under (including any statutory modification(s) or re-enactment(s) thereof for the time being in force) and relevant provisions of the Articles of Association of the Company, Mr. Sunil Jagmohandas Shah (DIN:

00646793) be and is hereby removed from his office as the director of the company and all the powers and responsibilities given to him in executive capacity of the company with immediate effect from the date of this meeting.

RESOLVED FURTHER THAT Board of the Directors of the Company be and is hereby severally authorized to do all acts, deeds, matters and things as deem necessary, proper or desirable and to sign and execute all necessary documents, applications and returns along with filing of necessary E-forms with the p. There is no dispute with regard to the Minutes of the said EOGM, and these clearly record that: “i. despite service of the said Special Notice of the EOGM, the Plaintiff No.1 did not attend the meeting and did not in any way, therefore, at the meeting press his case against his removal as a Director of Defendant No.4; ii. that the decision to remove the Plaintiff No. 1 as a Director was on account of the fact that he was running a competing business and for breach of his fiduciary duties and lack of transparency and integrity, iii. the Chairman read relevant extracts from the said Defendant Suit and from the orders passed by this Court; iv. the Chairman informed the general body of the FIR filed and the fact that the Plaintiff had applied for anticipatory bail and read out various conditions set out by the Court for the grant of anticipatory bail; and v. the Chairman specifically pointed out that despite notice, the Plaintiff No. 1 did not attend the meeting to make his representations before the shareholders.” q. By a letter dated 6th June 2023, a copy of the said Minutes of the EOGM was sent by Defendant No.4's Advocates to Plaintiffs' Advocates. Accordingly, it is evident that, from 6th June 2023, the Plaintiff No.1 was aware that he had been removed as a Director of Defendant No. 4 company. r. Thereafter, various pleadings were filed by the Plaintiffs, including an Affidavit titled 'Limited Additional Affidavit on behalf of Defendants’ dated 6th June 2023". The said Affidavit speaks of the alleged family arrangement. However, despite raising this point in the said Affidavit dated 6th June 2023, no proceedings were filed for reinstatement as a director/challenging his removal as a director. By an Order dated 3rd July 2023, the Learned Single Judge vacated the ex-parte order dated 5th April 2023. The Order dated 3rd July 2023 did not go into the merits of the Application. This is also evident from the fact that the Defendants were given an opportunity to file an Additional Affidavit in Reply. The Plaintiffs therein were given an opportunity to file an Affidavit in Rejoinder, and the Interim Application was posted for further consideration thereafter. s. Thereafter, the Plaintiffs Advocates wrote various letters to Defendant No.4's Advocates making various false and frivolous claims and allegations which were responded to by the Defendants Advocates. Since 27th May 2023 and/or 6th June 2023, the Plaintiff No. 1 has not once taken proceedings to set aside his removal as a Director of Defendant No.4. t. In fact, for the first time, the present Suit was filed on 19th August 2023 wherein the Plaintiffs prayed for the same and impugned the removal of Plaintiff No.1 as a Director of Defendant No.4. The Plaint makes out no substantial challenge whatsoever to the procedure and the manner in which Plaintiff No. 1 was legitimately removed as a Director of Defendant No.4. u. Rest of the said Affidavit contains a paragraph-wise response to the Interim Application.

7. By the impugned Order dated 25th October 2023, the Learned Single Judge has come to the conclusion as under: a) that there exists a family arrangement and that the same can be implemented as the Defendant No.4 company is a party to it. b) that Article 145 of the Articles of Association of Defendant No.4 are not inconsistent with the provisions of Section 169 of the Companies Act, 2013. c) Since Plaintiff No.1 was removed by passing an ordinary resolution in the extraordinary general meeting of Defendant No.4, the same cannot be said to be as per Article 145 and therefore, the removal cannot be said to be valid in the eyes of law. d) That the grant of mandatory injunction is an equitable relief and it is based on equitable principles. If one of the litigants, by taking shelter of law, wants to defeat the equitable principles, Court cannot shut its eyes. Ultimately, the background in which the provisions of Section 169 of the Companies Act are invoked cannot be overlooked. Court cannot forget the fact that during the pendency of ad-interim relief in an Infringement Suit, the power to remove the director was exercised and the urgency for Defendant No.1 to Defendant No.3 to exercise that power. The Learned Single Judge found that there was no urgency. The Learned Single Judge also found that there cannot be any intention other than intention to defeat the legitimate claim of exercise of right by Plaintiff No.1. The Learned Single Judge held that if such an unjustified act were to be continued till further hearing, it will send a message that wrongdoers can be protected under the guise of law. The Learned Single Judge further held that if Plaintiff No.1 is not a director, Defendant No.1 to Defendant No.3 will take certain decisions which will be detrimental to the interests of Plaintiff No.1. So a case for interim mandatory injunction was made out.

8. On the basis of these findings, the Learned Single Judge granted ad interim relief directing Defendant Nos.[1] to 7 to jointly and / or severally restore the status quo ante in respect of Plaintiff No.1 as it was existing from 3rd July 2023 after the passing of the said Order in Interim Application (L) No.8399 of 2023 in I.P.Suit No.177 of 2023.

9. By an Order dated 10th November 2023, passed in an Application for speaking to the minutes of the Order dated 25th October 2023, the Learned Single Judge clarified that the status quo granted in favour of the Plaintiffs would be as a Director. The said Order is also the subject matter of two Appeals filed before us, as stated hereinabove.

FINDINGS AND CONCLUSIONS

10. We have heard Mr. Zal Andhyarujina, the learned Senior Advocate appearing on behalf of the Defendants (Appellants) and Mr.Karl Tamboly, the learned Advocate appearing on behalf of the Defendants (Appellants). We have also heard Mr. Sharan Jagtiani, the learned Senior Advocate appearing on behalf of the Plaintiffs (Respondents). We have heard all these Advocates at great length.

11. Broadly speaking, the parties before us have addressed arguments on the following three main issues: a) The family arrangement and MOU dated 3rd September 2010 and principle of quasi-partnership. b) Whether removal of Plaintiff No.1 as a Director is contrary to Article 145 of the Articles of Association of Defendant No.4. c) Whether Plaintiff No.1 has vacated the office of a Director by virtue of Article 144(g) of the Articles of Association of Defendant No.4.

12. We will first deal with the issue regarding family arrangement, MOU dated 3rd September 2010 and quasi-partnership.

13. The question that we have to consider is whether the Learned Single Judge was right in granting, at an ad-interim stage, a mandatory injunction reinstating Plaintiff No.1 as a director of Defendant No.4.

14. In this regard, it is the case of the Plaintiffs that the Learned Single Judge has taken a correct view, or at the very least, a very possible and a plausible view on a prima facie appreciation of all the facts and factors to conclude that every branch gets representation in the functioning of Defendant No.4. The Learned Single Judge has also prima facie held by reference to the MOU that there was a family arrangement, thereby giving protection to Plaintiff No.1. Having rightly come to a prima facie conclusion as to the family arrangement and a right to participate in the managment arising from that, the Learned Single Judge had to consider, and which he has, whether this right was taken away justifiably, at least prima facie, at the time when it was done and in the manner in which it was done. In other words, the relevance of the MOU and the Family Arrangement is that such an important right cannot, without good cause, be taken away only because the Defendants have the numerical majority to oust or remove Plaintiff No.1 as a director, and in doing so, repudiate the relationships that exist as between them in their capacity as partners in a quasi-partnership as also in their capacity as family members who have signed the MOU which is a family understanding or family arrangement. The argument of the Plaintiff which has been accepted is that there is an important and a valuable right, and in the circumstances of this case, especially after the ex parte Order dated 5th April 2023 has been vacated, this valuable right emanating from the MOU or the Family Arrangement, more generally, must be preserved or protected at the interlocutory stage. This could only be done by the grant of a mandatory order of injunction to reinstate Plaintiff No.1 as a director so as to continue the status he enjoyed under the Family Arrangement, as a quasi-partner, and under the MOU as interpreted by the Learned Single Judge in the Impugned Order dated 25th October 2023.

15. We have been at pains to set out the case pleaded in the Plaint as the same clearly shows that Defendant No.4 is a quasi-partnership and that there is a family arrangement between the parties. The pleadings in the plaint also show that, as a result of Defendant No.4 being a quasi-partnership and also as a result of the family arrangement, each branch of the family had a right to participate in the management of Defendant No.4.

16. In this context, paragraph 39 of the Plaint describes the ‘family arrangement’ as under: “The longstanding foundational basis / oral understandings as narrated above and broadly summarized; the MOU with its express and implied rights and obligations which respected the pre-existing status of the family members are hereinafter collectively referred to as the "Family Arrangement".

17. Para 40 of the Plaint then pleads the object of the family arrangement and reads as follows: “The entire object of the Family Arrangement was that each of the branches of the Shah family would be perpetually entitled to continue to participate in the management of the Defendant NO. 4 and each of the divisions were to be run by the respective members. The entitlement of the respective members of the family to run their respective divisions, was therefore one of the essential facets of the Family Arrangement. The Family Arrangement was so structured to ensure that some of the family members do not use their shareholding majority to interfere with or defeat the rights of each group of the family. [This protection is therefore contractual both express and necessarily implied from various terms of the Family Arrangement.]”

18. The Plaint, consistent with the pleaded case of a family arrangement as being based on oral understandings as also the MOU, gives instances of how this family arrangement has been acted upon and from which its existence can be inferred even prior to the execution of the MOU dated 3rd September 2010. The factual instances, which establish the existence of the family arrangement, as also its content, are set out with particulars in the following paragraphs of the Plaint: a) Paragraph 4 of the Plaint states that, in 1911, the efforts of the forefathers of the Plaintiffs and Defendant Nos.[1] to 3 led to the expansion of the family business. b) Paragraphs 7 and 8 of the Plaint state that, in 1943, Gokaldas passed away. After Gokaldas’ demise, disputes arose between Amichand and Vithaldas with Amichand insisting that Gokaldas’ share be divided between Amichand and Vithaldas. Vithaldas resisted it since he wanted Gokaldas’ share to devolve on his widow – Bai Mangubai and their children, namely, Jagmohandas and Rameshchandra. To this end, Vithaldas contested Suit NO. 37 of 1948 before this Court and after great perseverance raised finances to purchase the firm altogether. This culminated in an oral understanding between Vithaldas and Bai Mangubai and showed the intention of Vithaldas to ensure that the family benefits from the family businesses. c) Paragraph 10 of the Plaint states that, on 16th December 1948, Lallubhai Amichand ceased to be a partnership, and was incorporated as a company under the Companies Act, 1913, on the aforesaid understanding, with the families of Gokaldas and Vithaldas being the principal shareholders. d) Paragraph 13 states that Defendant No.4 is, from inception, a family company established to be nothing but quasi-partnership, as evident from the understanding between Vithaldas and Bai Mangubai However, considering the seniority of Vithaldas, he was made a permanent Managing Director. But considering that Vithaldas was heirless, the business would automatically devolve on Jagmohandas and Ramchandra. e) Paragraph 15 of the Plaint states that whilst Mangubai was made a Director in Defendant No.4, once her children i.e. Jagmohandas and Rameshchandra became adults, the share of their mother was transferred to them, they became directors and looked after sales and manufacturing respectively. f) Paragraph 16 states that, whilst it was understood that Jagmohandas and Rameshchandra would sustain the family through the family business, the expenses were met from a common pool of funds on the basis that they were equal, and both the families even resided together until 1965 when they all moved to a new apartment. g) Paragraph 17 states that in line with the understanding, several expenses were paid for by Defendant No.4. For instance, Rameshchandra’s expenses for staying in Switzerland in 1960 were paid for by Defendant No.4. h) Paragraph 22 then states that, in 1984, Vithaldas passed away. Thereafter in 1984 and 1988 respectively Jagmohandas and Rameshchandra passed away. i) Paragraph 24 then points out that Defendant No.1 was appointed as a Director on 1st January 1984. Plaintiff No.1 was appointed as a Director on 2nd June 1984 and his real brother Harshad (Defendant No.9) was appointed as a Director on 5th July 1984. Defendant No.3 was appointed as a Director on 1st January 1990. Sanjiv, father of Defendant No.2, was appointed as a Director on 5th June 2002 along with Plaintiff No.1’s other real brother Ketan (Defendant No.8). j) Paragraph 25 of the Plaint shows that the Jagmohandas branch and the Rameshchandra branch had equal representation in the interests, control and management of Defendant No.4 and its group entities. k) Paragraph 26 of the Plaint summarizes, based on material particulars stated in the previous paragraphs, the salient features of the foundational basis and oral understanding. Central to the functioning of the foundational basis of the understanding was a right to participate in the management of the family business through Defendant No.4 and its group companies. l) The Plaintiff further and specifically pleads the existence of a quasipartnership and the understanding between the quasi partners, which included the understanding in respect of the right to participate in management and functional autonomy in respect of the various units or divisions that were allocated to the administration of different members of the family. This is then expanded in paragraphs 27 to 29 of the Plaint. m) The understanding of the Defendant No.4 being a quasi-partnership further extended to the family / companies dealing in properties and these instances have been illustrated in paragraphs 30 to 32 of the Plaint. n) Paragraphs 36 to 38 of the Plaint refer to the MOU dated 3rd September

2010. Paragraph 38 indicates the salient features of MOU. o) The Plaint then pleads the steps taken after the MOU and in furtherance of the implementation of the family arrangement. These are indicated in paragraphs 42, 43, 44 and 46 of the Plaint.

19. Further, the fact that Defendant No.4 is a quasi-partnership / family company is not a matter in dispute. This is because the status of Defendant No.4 being a quasi-partnership is explicitly admitted by Defendant No.4 in its Plaint in Commercial IP Suit No.177 of 2023. The relevant admissions in paragraphs 41, 42 and 44 as to this fact are as under:

20. Further paragraph 13 of the plaint in IP Suit also shows the quasi-partnership nature of the business and reads as under:

21. Therefore, even according to the Defendants, Defendant No.4 is a quasi-partnership, being in the nature of a family business, to which principles recognized under Indian law akin to partnership principles are applicable and as a part of which quasi-partnership understanding directors are permanent directors subject only to the office of the directorship being vacated under Article 144 of the Articles of Association.

22. Further, the family arrangement described in detail in the plaint is also referred to in the Interim Application in the present Suit. The Defendants filed a Limited Affidavit to oppose the ad-interim reliefs, affirmed on 29th August 2023, of Saloni Shah (Defendant No.2). Saloni Shah is the daughter of Sanjiv Shah. She is 33 years of age and, therefore, would obviously have no knowledge of the various particulars which have been pleaded in the Plaint to support and buttress the family arrangement as it existed before the MOU dated 3rd September 2010 and limited knowledge in respect of the particulars pleaded in the Plaint and the Interim Application to show how the MOU, as an aspect of the family arrangement, was acted upon after its execution.

23. Paragraph 35 of the said Limited Affidavit, at paragraphs 35.[2] and 35.3, proceeds virtually on the basis of a bare denial of the family arrangement. Properly read, it is not even so much a denial of the family arrangement in the sense of a right to participate in management through board representation but more a denial of there being any family arrangement which recognizes Plaintiff No. 1 having exclusive management and control of Defendant No. 4’s export division. This is reiterated in paragraph 35.[8] and the thrust of the denial is in respect of any exclusive management and control over the Aluminium and Stainless Steel Export Division. In paragraph 35.[9] (which answers paragraph 6 of the Interim Application), there is no denial to Defendant No. 4 being a family company and a quasi-partnership. The denial is qualified only to the extent of it being incumbent that the family arrangement would be given effect to by restoration of status-quo ante.

24. The aforesaid shows that, as regards the family arrangement that is extensively pleaded in the Plaint, showcasing events that occurred much prior to the MOU and for several years (which has been extensively set out hereinabove), there is no effective denial in the said Limited Affidavit filed on behalf of Defendant No.4.

25. Further, the pleading of the Defendants in the IP Suit, to the extent there is a quasi-partnership and a family company with a permanent right of directorship and referencing Plaintiff No.1’s control over the Export Division, are all consistent with the particulars that have been set out in the Plaint of conduct prior to the MOU.

26. In these circumstances, in our view, at the ad-interim stage, a more than prima facie case has been made out not only as to Defendant No.4 being a quasi-partnership and a family company, but also that the contents of the family arrangement and MOU dated 3rd September, 2010, which existed in respect of this quasi-partnership, very much included a right to participate in the management of Defendant No. 4. Further, a prima-facie case is also made out that, in the administration of the affairs of Defendant No.4, each branch had charge or control over a specific division of the Company. However, obviously, the right to participate in the management of Defendant No. 4 is manifested by board representation.

27. As far as MOU dated 3rd September, 2010 is concerned, the following recitals and operative clauses are relevant and are set out here under: “Rectials WHEREAS:- ….

8. Consequent upon such settlements, the Parties have arrived at a family settlement and have in pursuance thereof agreed to reconstitute and re-organize their financial and commercial affairs, whereby the party of the First Part along with the members of the respective branches have agreed to severe all their interest, holdings association and connection in the Parties of the Sixth to Eleventh Parts, and the Party of the Fifth part has agreed to take over all the said parties of the First part and Fifth part and the Companies and entities hithertofore held and controlled by them, have agreed to take over the same, on the understanding, terms, conditions and covenants mutually agreed. The Parties hereto are desirous of recording the said family Arrangement as hereinafter appearing. Each of the parties hereto agree and declare that he/she is entering into this Memorandum of Understanding recording the arrangement on his/her own behalf, on behalf of his respective family members and each of the parties hereto represents to the others that he/she has the authority from his family members to enter into and execute on their behalf this Memorandum of Undertaking. Accordingly, the arrangement arrived at as recorded herein is binding also on the other family members, their heirs, executors and administrators. … Operative clauses

1. The recitals hereinabove shall be treated as and shall form part and parcel of the operative part, as if the same were set out and reproduced, verbatim.

5. The Party of the First Part and the members of their respective families shall transfer their complete shareholding in the Parties of the Sixth to Eleventh parts and shall resign as Directors therein, so as to ensure full management and control thereof and each of them by the party of the Fifth Part. The transfer of shares shall be made as particular set out in Annexure “8” hereto.

6. The Party of the First Part shall also resign as the Executives of the Party of the Seventh Part. 10.........It is agreed clarified and confirmed that on and from the execution of this MOU the parties of 5th to 11th part and/or their immediate family members and/or their nominees, shall have no right of participation in the management of Sincere Realty Pvt. Ltd. and shall have no share holding in the said Sincere Realty Pol. Ltd., and shall not be entitled to claim their rights in the properties and assets of the said Sincere Realty Pvt. Ltd.,...

12. To effectuate the aforesaid, if required Board Meetings and Extraordinary General Body Meetings of all the Companies will have to be held in which Unanimous Resolutions required to put into effect the aforesaid, shall be passed and which may include Amendment of Memorandum and Articles of Association. …

13. If any claims are made by any female Member claiming rights to the said larger G. H. HUF, the same shall be jointly dealt with and all liabilities if any incurred thereunder, shall be shared by both Groups viz., namely First and Fifth Parts i.e. each member in both the parts will be equally responsible.

14. As regards Partitions of the smaller HUFs, which also are effective as of 01.04.2010, if any claims are made by any female Members, the same will be dealt with and satisfied by the concerned Group i.e. J. G. HUF and R.G. HUF of which such female is a Member, and such HUFs shall indemnify the other HUF against such liability. Appropriate Deeds of Partition will be executed.

15. The provisions hereinabove shall be given effect to and implemented by execution of papers, documents and writings and as far as possible the same shall be done simultaneously within the period of one month from the date hereof, time being of the essence.

18. It is agreed, clarified and confirmed that at no stage hereafter, the Party of the First and/or any immediate members of their respective families shall have any right of participation in the management of any of the Companies being Parties of the Sixth to Eleventh parts and in any of which, from and after the date of execution hereof, they do not shall not have any Shareholding. If however, at any time hereafter, any of the Parties of the First Part and/or the immediate members their respective families become entitled to any Shares of the party of the Sixth Part consequent upon transfer and/or inheritance and/or bequest of any Shares by Smt. Sushila Jagmohandas Shah, being Party of the Twelth (A) Part, the said Shri Sunil Jagmohandas Shah of the Party of the Fifth Part, shall have the first right and option to transfer the same for himself and/or his Nominees, such Shares or any of them at a negotiated price to be mutually agreed upon or in default at the price to be determined by the Statutory Auditors of the said Company on the basis of its fair market value & until refusal by the said Shri Sunil of the Party of the Fifth Part, neither the said Smt. Sushila Jagmohandas Shah for such purchase, nor any Transferee thereof by way of inheritance or bequest, shall be entitled to transfer the same in favour of anyone else. It is also agreed clarified and confirmed that the said Smt. Sushila Jagmohandas Shah during her lifetime shall not be entitled to transfer the said Shares, to anyone expect the said Shri Sunil Jagmohandas Shah of the Party of the Fifth Part as stated above.

19. The parties hereto hereby agree and declare that this settlement is executed as an arrangement as recited hereinabove and that the terms of the terms of the arrangement arrived at between them and recorded herein are fair, bona fide and in the interest of all the Parties hereto and shall not be questioned or challenged by any one of them on any ground whatsoever.

20. It is agreed that this settlement of compromise is arrived at on the footing that the parties hereto had rights and interest in various business concerns, properties and related matters set out herein and this settlement is a bona fide settlement of conflicting claims in respect of such various business concerns, properties and related matters setout herein.

28. As is evident, the MOU has been executed separately by Defendant No. 4. Whilst the MOU envisaged that the Articles of Association of Defendant No.4 may be amended so as to incorporate the MOU, it was not, in the language of the MOU, mandatory.

29. Further, the MOU is clearly in the nature of a family arrangement which was entered into by the family members and their companies to “reconstitute and re-organize their financial and commercial affairs” as stated in Recital 8 and was not only limited to the exit of Ketan and Harshad.

30. Further, clause 5 of the MOU provides that the party of the First Part and the members of their respective families shall transfer their complete share holding in the parties of the Sixth to Eleventh Parts and shall resign as directors therein, so as to ensure “full management and control” thereof in each of them by the party of the Fifth Part. Thus, clause 5 gives full management and control of the parties of the Sixth to Eleventh Parts and in each of them to the party of the Fifth Part. The party of the Sixth Part is Defendant No. 4. Therefore clause 5 of the MOU gives full management and control of Defendant No.4 to the party of the Fifth Part. The party of the Fifth Part includes Plaintiff No.1, and therefore, right has been given under the MOU even to Plaintiff No.1 to be in management and control of Defendant No. 4.

31. Another important feature that appears throughout the MOU is that the MOU binds not only the family members who have signed the MOU but their heirs, executors, administrators and members of their respective family units. This appears for example in Recital 8 and in the description of the parties. This is significant because it underscores and reiterates the real nature of Defendant No.4 and of the understanding and that it recognizes that this understanding is so fundamental and implicit that it would extend even to those who are not formally a party to the MOU, both in terms of the rights that it creates as also in terms of the obligations that it casts. So much so, that it would apply and extend even to the heirs of the family members who have signed the MOU.

32. The relevance of the MOU in the overall scheme of grant of adinterim reliefs has been considered by the Learned Single Judge in various paragraphs of the impugned Order dated 25th October, 2023. More specifically the MOU/ family arrangement has been referred to in paragraphs 5 to 7 and 16 to 27. The discussion and the findings as also a connection between this issue and the ultimate relief that was granted is to be found starting from paragraph 16 of the said Order. The Learned Single Judge has very rightly referred to the historical facts which have been mentioned above, as part of the pleadings. This appears in paragraphs 18 to 21 of the said Order. In paragraphs 22 and 23, the Learned Single Judge makes a reference to the MOU and the manner in which it was implemented as contended by Plaintiff No. 1.

33. The findings rendered by the Learned Single Judge in this regard are primarily in paragraphs 25 to 27, read with paragraphs 57 and 61 of the Order dated 25th October, 2023. Paragraphs 25,26, and 27 read as under: "25. It is true that the Company has not disputed about the family business. And even not disputed about execution of MoU. In the affidavit in reply filed by Defendant No.4, they have adopted the pleadings in Intellectual Properties Suit. Whereas, in Intellectual Properties Suit, present Defendant No.4 who is the Plaintiff have admitted about MoU but objected about its relevancy. So, on the basis of these circumstances, we can certainly infer that the business is a family business. It is also a fact that earlier it was run on partnership basis and in the year 1948, the firm was converted into a Limited Company. There are various subsidiary companies of Defendant No.4, who is the parent Company. There are also instances wherein after the death of a director, his heir was made as a director. If we see the transfer of shares after exiting by Defendant No.8 and Defendant No.9, every member from broadly two groups gets at least 17% shareholding. Even the services of employees of Defendant No.4 were availed for the working of other subsidiary companies. So, it indicates that every branch gets representation in the functioning of the Company.

26. During hearing of the arguments, two principles have evolved:a. It is in respect of the terms of 'Family Arrangement' whether in consonance with the provisions of Company Act and statutory documents and what will be the effect of provisions of Section 6 of 2013 Act. b. Second principle is whether the Articles of Association are really amended so as to bring them in tune with the provisions of 'Family Arrangement'. Amendment to Articles

27. When we apply the principles enunciated above to the facts before us, we may find that case of the Plaintiff is about 'Family Arrangement' on the basis of various events and conduct of the parties and as recorded in the MoU. It is a matter of record that Defendant No.4 was a party to the said MoU. I do not think that merely because non shareholders of the Company are party to that MoU and it deals with various subjects as contended by Mr.Andhyarujina, it cannot be acted upon. In earlier part of the order, I have narrated those events and contents of MoU on the basis of which, it can be said that there was a 'Family Arrangement' thereby giving protection to Plaintiff No.1. I do not think that merely because Article of Association is not amended, the 'Family Arrangement' cannot be implemented. Because the Company is a party to it."

34. In our view, the Learned Single Judge has taken a correct view, or, at the very least, a very possible view, on a prima-facie appreciation of all the facts and factors, to conclude that every branch gets representation in the functioning of the Defendant No.4. The Learned Single Judge has also primafacie held, by reference to the MOU, that there was a family arrangement, thereby giving protection to Plaintiff No.1. Having rightly come to the prima facie conclusion as to the family arrangement and the right to participate in the management arising from that, the Learned Single Judge had to consider whether this right was taken away justifiably, atleast prima-facie, at the time when it was done and the manner in which it was done.

35. In other words, the relevance of the MOU and the family arrangement is that such an important right cannot, without good cause, be taken away because the Defendant Nos. 1 to 3 have the numerical majority to oust or remove Plaintiff No. 1 as a director, and in doing so, repudiate the relationships that exist as between them in their capacity as partners in a quasi-partnership as also in the capacity of family members who have signed the MOU, which is a family understanding or a family arrangement. The argument that has been accepted by the Learned Single Judge is that there is an important and a valuable right, and, in the circumstances of the case, especially after the ex-parte order dated 5th April, 2023 had been vacated, this valuable right emanating from the MOU or the family arrangement, more generally, must be preserved or protected at the ad-interim stage. This could only be done by the grant of the mandatory order of injunction to reinstate Plaintiff No.1 as a director so as to continue the status he enjoyed under the family arrangement, as a quasi-partner, and under the MOU, as interpreted by the Learned Single Judge in the Order dated 25th October, 2023.

36. We are therefore of the view that the Learned Single Judge was right in granting the mandatory injunction reinstating Plaintiff No.1 as a director on the basis of the family arrangement, the MOU and on the basis that Defendant No.4 is a quasi-partnership.

37. Whilst considering these aspects of the matter regarding family arrangement and quasi-partnership, it would be appropriate to refer to the law laid down on these subjects.

38. It is well settled that family arrangements are entitled to special equities in law and Courts have time and again leaned in favour of upholding family arrangements. The parties to the family arrangement who have acted in consonance with such understandings have not been permitted thereafter, to resile from them. Paragraphs 9 and 10 of the Judgement of the Hon’ble Supreme Court in Kale and Others vs. Deputy Director of Consolidation and Ors. (1976) 3 SCC 119 are relevant in this regard and are set out hereunder: “9. Before dealing with the respective contentions put forward by the parties, we would like to discuss in general the effect and value of family arrangements entered into between the parties with a view to resolving disputes once for all. By virtue of a family settlement or arrangement members of a family descending from a common ancestor or a near relation seek to sink their differences and disputes, settle and resolve their conflicting claims or disputed titles once for all in order to buy peace of mind and bring about complete harmony and goodwill in the family. The family arrangements are governed by a special equity peculiar to themselves and would be enforced if honestly made. In this connection, Kerr in his valuable treatise Kerr on Fraud at p. 364 makes the following pertinent observations regarding the nature of the family arrangement which may be extracted thus: “The principles which apply to the case of ordinary compromise between strangers do not equally apply to the case of compromises in the nature of family arrangements. Family arrangements are governed by a special equity peculiar to themselves, and will be enforced if honestly made, although they have not been meant as a compromise, but have proceeded from an error of all parties, originating in mistake or ignorance of fact as to what their rights actually are, or of the points on which their rights actually depend.” The object of the arrangement is to protect the family from longdrawn litigation or perpetual strifes which mar the unity and solidarity of the family and create hatred and bad blood between the various members of the family. Today when we are striving to build up an egalitarian society and are trying for a complete reconstruction of the society, to maintain and uphold the unity and homogeneity of the family which ultimately results in the unification of the society and, therefore, of the entire country, is the prime need of the hour. A family arrangement by which the property is equitably divided between the various contenders so as to achieve an equal distribution of wealth instead of concentrating the same in the hands of a few is undoubtedly a milestone in the administration of social justice. That is why the term "family" has to be understood in a wider sense so as to include within its fold not only close relations or legal heirs but even those persons who may have some sort of ante-cedent title, a semblance of a claim or even if they have a spes successionis so that future disputes are sealed for ever and the family instead of fighting claims inter se and wasting time, money and energy on such fruitless or futile litigation is able to devote its attention to more constructive work in the larger interest of the country. The Courts have, therefore, leaned in favour of upholding a family arrangement instead of disturbing the same on technical or trivial grounds. Where the Courts find that the family arrangement suffers from a legal lacuna or a formal defect the rule of estoppel is pressed into service and is applied to shut out plea of the person who being a party to family arrangement seeks to unsettle a settled dispute and claims to revoke the family arrangement under which he has himself enjoyed some material benefits. The law in England on this point is almost the same. In Halsbury's Laws of England, Vol. 17, Third Edition, at pp. 215- 216, the following apt observations regarding the essentials of the family settlement and the principles governing the existence of the same are made: A family arrangement is an agreement between members of the same family, intended to be generally and reasonably for the benefit of the family either by compromising doubtful or disputed rights or by preserving the family property or the peace and security of the family by avoiding litigation or by saving its honour. The agreement may be implied from a long course of dealing, but it is more usual to embody or to effectuate the agreement in a deed to which the term "family arrangement" is applied. Family arrangements are governed by principles which are not applicable to dealings between strangers. The Court, when deciding the rights of parties under family arrangements or claims to upset such arrangements, considers what in the broadest view of the matter is most for the interest of families, and has regard to considerations which, in dealing with transactions between persons not members of the same family, would not be taken into account. Matters which would be fatal to the validity of similar transactions between strangers are not objections to the binding effect of family arrangements.

10. In other words to put the binding effect and the essentials of a family settlement in a concretised form, the matter may be reduced into the form of the following propositions: (1) The family settlement must be a bona fide one so as to resolve family disputes and rival claims by a fair and equitable division or allotment of properties between the various members of the family; (2) The said settlement must be voluntary and should not be induced by fraud, coercion or undue influence; (3) The family arrangement may be even oral in which case no registration is necessary: (4) It is well-settled that registration would be necessary only if the terms of the family arrangement are reduced into writing. Here also, a distinction should be made between a document containing the terms and recitals of a family arrangement made under the document and a mere memorandum prepared after the family arrangement had already been made either for the purpose of the record or for information of the Court for making necessary mutation. In such a case the memorandum itself does not create or extinguish any rights in immovable properties and therefore does not fall within the mischief of Section 17(2) of the Registration Act and is, therefore, not compulsorily registrable; (5) The members who may be parties to the family arrangement must have some antecedent title, claim or interest even a possible claim in the property which is acknowledged by the parties to the settlement. Even if one of the parties to the settlement has no title but under the arrangement the other party relinquishes all its claims or titles in favour of such a person and acknowledges him to be the sole owner, then the antecedent title must be assumed and the family arrangement will be upheld and the Courts will find no difficulty in giving assent to the same; (6) Even if bona fide disputes, present or possible, which may not involve legal claims are settled by a bona fide family arrangement which is fair and equitable the family arrangement is final and binding on the parties to the settlement.”

39. In Dinesh Gupta and Ors. vs. Rajesh Gupta and Ors. (2018) SCC OnLine Del 21387, a declaration was sought to declare notices issued under Section 100 of the Companies Act, 2013 as null and void and an injunction to restrain the Defendants from acting contrary to the family settlement. On the question of jurisdiction, the Delhi High Court held that the suit was maintainable as it pertains to a family settlement which has always been accorded a high sanctity as held in Kale and Others (supra). The Court also granted a stay of a resolution seeking to remove the director, as being contrary to a family settlement.

40. Ebrahimi vs. Westbourne Galleries Ltd. (1972) 2 ALL ER 492 was a case of just and equitable winding up. The dispute arose out of an ordinary resolution passed by the majority of shareholders (Mr.Nazar and Mr.George Nazar) to remove the third shareholder Mr.Ebrahimi from the directorship of the Company Westbourne Galleries Ltd. The aggrieved shareholder invoked the principles of quasi-partnership to contend that because the Company was in its true nature and character a quasipartnership, or akin to a partnership, the majority could not have used their shareholder strength to remove him as a director or to interfere with his right to participate in the management of the Company as a director. The trial Court allowed winding up. This was reversed by the Court of Appeal. The House of Lords reversed the Court of Appeal’s Judgement and restored the order of winding up. The following portions of the said judgement are relevant and are set out hereunder. “In Re Wondoflex Textiles Pvt. Ltd. [1951] V.L.R. 458 was a case where again the company was held to resemble a partnership. The petitioner, owner of a quarter share, was removed from office as director by the governing director exercising powers under the articles. Thus the issue, and the argument, closely resembled those in the present case. The judgment of Smith J. contains the following passage: 'It is also true, I think, that, generally speaking, a petition for winding up, based upon the partnership analogy, cannot succeed if what is complained of is merely a valid exercise of powers conferred in terms by the articles:... To hold otherwise would enable a member to be relieved from the consequences of a bargain knowingly entered into by him:... But this, I think, is subject to an important qualification. Acts which, in law, are a valid exercise of powers conferred by the articles may nevertheless be entirely outside what can fairly be regarded as having been in the contemplation of the parties when they became members of the company; and in such cases the fact that what has been done is not in excess of power will not necessarily be an answer to a claim for winding up. Indeed, it may be said that one purpose of [the just and equitable provision] is to enable the Court to relieve a party from his bargain in such cases.' The whole judgment is of value. In New Zealand, the Court of Appeal has endorsed the potential application of the principle to exclusion cases: Tench v. Tench Bros. Ltd. [1930] N.Z.L.R. 403; see also In re Modern Retreading Co. Ltd. [1962] E.A. 57, also a case of exclusion from management, and cf. In re Sydney and Whitney Pier Bus Service Ltd. [1944] 3 D.L.R. 468 and In re Concrete Column Clamps Ltd. [1953] 4 D.L.R. 60 (Quebec). My Lords, in my opinion these authorities represent a sound and rational development of the law which should be endorsed. The foundation of it all lies in the words 'just and equitable' and, if there is any respect in which some of the cases may be open to criticism, it is that the Courts may sometimes have been too timorous in giving them full force. The words are a recognition of the fact that a limited company is more than a mere legal entity, with a personality in law of its own: that there is room in company law for recognition of the fact that behind it, or amongst it, there are individuals, with rights, expectations and obligations inter se which are not necessarily submerged in the company structure. That structure is defined by the Companies Act 1948 and by the articles of association by which shareholders agree to be bound. In most companies and in most contexts, this definition is sufficient and exhaustive, equally so whether the company is large or small. The 'just and equitable' provision does not, as the respondents suggest, entitle one party to disregard the obligation he assumes by entering a company, nor the Court to dispense him from it. It does, as equity always does, enable the Court to subject the exercise of legal rights to equitable considerations; considerations, that is, of a personal character arising between one individual and another, which may make it unjust, or inequitable, to insist on legal rights, or to exercise them in a particular way. It would be impossible, and wholly undesirable, to define the circumstances in which these considerations may arise. Certainly the fact that a company is a small one, or a private company, is not enough. There are very many of these where the association is a purely commercial one, of which it can safely be said that the basis of association is adequately and exhaustively laid down in the articles. The superimposition of equitable considerations requires something more, which typically may include one, or probably more, of the following elements: (i) an association formed or continued on the basis of a personal relationship, involving mutual confidence - this element will often be found where a pre-existing partnership has been converted into a limited company; (ii) an agreement, or understanding, that all, or some (for there may be 'sleeping' members), of the shareholders shall participate in the conduct of the business; (iii) restriction upon the transfer of the members' interest in the company so that if confidence is lost, or one member is removed from management, he cannot take out his stake and go elsewhere. It is these, and analogous, factors which may bring into play the just and equitable clause, and they do so directly, through the force of the words themselves. To refer, as so many of the cases do, to 'quasipartnerships' or 'in substance partnerships' may be convenient but may also be confusing. It may be convenient because it is the law of partnership which has developed the conceptions of probity, good faith and mutual confidence, and the remedies where these are absent, which become relevant once such factors as I have mentioned are found to exist: the words 'just and equitable' sum these up in the law of partnership itself. and in many, but not necessarily all, cases there has been a pre-existing partnership the obligations of which it is reasonable to suppose continue to underlie the new company structure. But the expressions may be confusing if they obscure, or deny, the fact that the parties (possibly former partners) are now co-members in a company, who have accepted, in law, new obligations. A company, however small, however domestic, is a company not a partnership or even a quasi-partnership and it is through the just and equitable clause that obligations, common to partnership relations, may come in. My Lords, this is an expulsion case, and I must briefly justify the application in such cases of the just and equitable clause. The question is, as always, whether it is equitable to allow one (or two) to make use of his legal rights to the prejudice of his associate(s). The law of companies recognises the right, in many ways, to remove a director from the board. Section 184 of the Companies Act 1948 confers this right upon the company in general meeting whatever the articles may say. Some articles may prescribe other methods: for example, a governing director may have the power to remove (compare In re Wondoflex Textiles Pty. Ltd. [1951] V.L.R. 458 ). And quite apart from removal powers, there are normally provisions for retirement of directors by rotation so that their re-election can be opposed and defeated by a majority, or even by a casting vote. In all these ways a particular director-member may find himself no longer a director, through removal, or non-re-election: this situation he must normally accept, unless he undertakes the burden of proving fraud or mala fides. The just and equitable provision nevertheless comes to his assistance if he can point to, and prove, some special underlying obligation of his fellow member(s) in good faith, or confidence, that so long as the business continues he shall be entitled to management participation, an obligation so basic that, if broken, the conclusion must be that the association must be dissolved and the principles on which he may do so are those worked out by the Courts in partnership cases where there has been exclusion from management (see Const. v. Harris (1824) Tur. & Rus. 496, 525) even where under the partnership agreement there is a power of expulsion (see Blisset v. Daniel (1853) 10 Hare 493; Lindley on Partnership, 13th ed. (1971), pp. 331, 595). I come to the facts of this case. It is apparent enough that a potential basis for a winding up order under the just and equitable clause existed. The appellant after a long association in partnership, during which he had an equal share in the management, joined in the formation of the company. The inference must be indisputable that he, and Mr. Nazar, did so on the basis that the character of the association would, as a matter of personal relation and good faith, remain the same. He was removed from his directorship under a power valid in law. Did he establish a case which, If he had remained in a partnership with a term providing for expulsion, would have justified an order for dissolution? This was the essential question for the judge. Plowman J. dealt with the issue in a brief paragraph in which he said [1970] 1 W.L.R. 1378, 1389: '... while no doubt the petitioner was lawfully removed, in the sense that he ceased in law to be a director, it does not follow that in removing him the respondents did not do him a wrong. In my judgment, they did do him a wrong, in the sense that it was an abuse of power and a breach of the good faith which partners owe to each other to exclude one of them from all participation in the business upon which they have embarked on the basis that all should participate in its management. The main justification put forward for removing him was that he was perpetually complaining, but the faults were not all on one side and, in my judgment, this is not sufficient justification. For these reasons, in my judgment, the petitioner, therefore, has made out a case for a winding up order.' Reading this in the context of the judgment as a whole, which had dealt with the specific complaints of one side against the other, I take it as a finding that the respondents were not entitled, in justice and equity, to make use of their legal powers of expulsion and that, in accordance with the principles of such cases as Blisset v. Daniel, 10 Hare 493, the only just and equitable course was to dissolve the association. To my mind, two factors strongly support this. First, Mr. Nazar made it perfectly clear that he did not regard Mr. Ebrahimi as a partner, but did regard him as an employee. But there was no possible doubt as to Mr. Ebrahimi's status throughout, so that Mr. Nazar's refusal to recognise it amounted, in effect, to a repudiation of the relationship. Secondly, Mr. Ebrahimi, through ceasing to be a director, lost his right to share in the profits through directors' remuneration, retaining only the chance of receiving dividends as a minority shareholder. It is true that an assurance was given in evidence that the previous practice (of not paying dividends) would not be continued, but the fact remains that Mr. Ebrahimi was henceforth at the mercy of the Messrs. Nazar as to what he should receive out of the profits and when. He was, moreover, unable to dispose of his interest without the consent of the Nazars. All these matters lead only to the conclusion that the right course was to dissolve the association by winding up.”

41. ‘O’Neill vs. Philips (1999) 2 ALL ER 961 (HL) is another decision of the House of Lords on the principle of quasi-partnership. Whilst, in the ultimate analysis, the House of Lords came to the factual determination that the promises relied upon the aggrieved shareholders were not established, the judgement nevertheless laid down principles in the context of the quasipartnerships, its meaning and its importance. It makes reference to the prior leading authorities on the subject. After reference to these judgements, the House of Lords discusses the features of a quasi-partnership company as follows:- “….In a quasi partnership company, they will usually be found in the understandings between the members at the time they entered into association. But there may be later promises, by words or conduct, which it would be unfair to allow a member to ignore. Nor is it necessary that such promises should be independently enforceable as a matter of contract. A promise may be binding as a matter of justice and equity although for one reason or another (for example, because in favour of a third party) it would not be enforceable in law." (Emphasis supplied)

42. Significant in this discussion in the said judgement is the fact that is refers to an understanding between the members at the time they entered into the association but also that there may be later promises by words or conduct which would be unfair to allow a member to ignore, nor is it necessary that such promises should be independently enforceable as a matter of contract. A promise may be binding as the matter of justice and equity although for one reason or another, for example, because it is in favour of a third party, it would not be enforceable in law.

43. The judgements of ‘O’Neill (supra) and Ebrahimi (supra) have been referred to in various Indian decisions rendered by the Hon’ble Supreme Court, by High Courts and also by the Company Law Board / NCLT. In Sangramsinh P. Gaekwad v. Shantadevi P. Gaekwad (2005) 11 SCC 314, which which arose out of an action for oppression and mismanagement, the Hon’ble Supreme Court had occasion to discuss quasi-partnerships. In this context, the Hon’ble Supreme Court referred to the decision of Kapila Hingorani vs. State of Bihar (2003) 6 SCC 1, which recognized as a form of ‘family company’, a private company and a public limited company. It further went on to recognize that the principles of quasi partnership are not foreign to the concept of the Companies Act and that, for the purposes of grant of relief, the principles of partnership have been applied even in a public limited company. In discussing the judgement in the case of Kilpest (P) Ltd. v. Shekhar Mehta, the Hon’ble Supreme Court stated that the real character of the Company as noticed hereinbefore for the purposes of dealings between the parties and the transactions which are impure may assume significance and in such an event the principles of quasi-partnership in a given case may be invoked and this is also reiterated when discussing the Supreme Court Judgement in the case of Needle Industries, where the Supreme Court states that the true character of the company and other relevant factors shall be considered for the purpose of grant of relief. Whilst these observations were made by the Hon’ble Supreme Court in a matter arising from a Petition under oppression and mismanagement, the notion, that it is important to take into account the real character of the Company as being a quasi-partnership to judge the dealings between its members, is an observation or a notion which is clearly universal and by no means is restricted only to the invocation of quasi-partnership in the context of an oppression and mismanagement petition. It could apply clearly in any case, especially one where there is a admittedly a quasipartnership in existence as between the parties.

44. In Hind Overseas v. Raghunath Prasad Jhunjhunwala, (1976) 3 SCC 259, the Hon’ble Supreme Court was primarily concerned with the test for determining whether a company can be regarded as a quasi-partnership. This is not an aspect which is of any importance in the present matter because of the admissions as between the parties that Defendant No.4 is a quasipartnership. The said judgment is relevant because of its understanding of the decision in the case of Ebrahimi (supra). Paragraphs 16 to 21 of the said judgement are relevant and read as under: “16. On the other hand, according to the appellate Court the principles in Yenidje's case (supra) were to the effect that if a private company could be fairly called a partnership in the guise of a private company then the things which might be a ground for dissolution of a partnership will apply also in the case of a private company and that in this connection deadlock is not material. The appellate Court then described the circumstances which according to Lindley justify the dissolution of the partnership: (1) if the partnership agreement is willfully or persistently violated: (2) if one partner so behaves in matters relating to the partnership business that the other partners find it impossible to carry on business in partnership with him: (3) if some partners are in effect excluded from the concern; (4) if the misconduct of one or more partners is such that the mutual confidence which must subsist in a partnership is destroyed; (5) if there is a state of animosity which precludes all reasonable hope of reconciliation and friendly cooperation: (6) if it is impossible for the partners to place that confidence in each other which each has a right to expect, provided that the impossibility has not been caused by the persons seeking to take advantage of it. Having noted the above, the appellate Court held that conditions (2), (3) and (4) were unquestionably fulfilled in this case and, therefore allowed the application and rejected the stay application.

17. Before we proceed further we may refer to a recent decision of the House of Lords in Ebrahimi and Westbourne Galleries Ltd. (briefly Ebrahimi's case) wherein after reviewing all the earlier cases it was held as follows: The foundation of it all lies in the words 'just and equitable' and, if there is any respect in which some of the cases may be open to criticism, it is the the Courts may sometimes have been too timorous in giving them full force. The words are a recognition of the fact that a limited company is more than a mere legal entity, with a personality in law of its own that there is room in company law for recognition of the fact that behind it, or amongst it there are individuals with rights, expectations and obligations inter se which are not necessarily submerged in the company structure. That structure is defined by the Companies Act and by the articles of association by which shareholders agree to be bound. In most companies and in most contexts, this definition is sufficient and exhaustive, equally so whether the company is large or small. The 'just and equitable’ provision does not, as the respondents suggest, entitle one party disregard the obligation he assumes by entering a company, nor the Court to dispense him from it. It does, as equity always does, enable the Court to subject the exercise of legal rights to equitable considerations: considerations that is of a personal character arising between one individual and another, which may make it unjust, or inequitable, to insist on legal rights, or to exercise them in a particular way. The superimposition of equitable considerations requires something more which typically may include one or probably more of the following elements:

(i) an association formed or continued on the basis of a personal relationship, involving mutual confidence - this element will often be found where a pre-existing partnership has been converted into a limited company:

(ii) an agreement, or understanding, that all, or some (for there may be ‘sleeping’ members), of the shareholders shall participate in the conduct of the business:

(iii) restriction upon the transfer of the members' interest in the company so that if confidence is lost, or one member is removed from management, he cannot take out his stake and go elsewhere.

18. The respondents have laid great emphasis on the ratio of the above decision. It is true that Section 222(f) of the English Companies Act, 1948 which the House of Lords was considering corresponds to Section 433 (f) of the Act. In the above decision the House of Lords had to deal with a private limited company consisting of three members, the petitioner therein, being one of the three. Lord Wilberforce delivering his reasoned speech has himself noted that it is a fact of cardinal importance that since about 1945 the business had been carried on by the appellant and Mr. Nazar as partners, equally sharing the management and the profits. It was also noticed that the company made good profits, all of which were distributed as directors' remuneration. No dividends have ever been paid, before or after the petition was presented.

19. In Ebrahimi's case (supra) the company which was first formed by the two erstwhile partners, Ebrahimi and Nazar, was joined by Nazar's son, George Nazar, as the third director and each of the two original shareholders transferred to him 100 shares so that at all material times Ebrahimi held 400 shares, Nazar 400 shares and George Nazar 200 shares. The Nazars. father and son, thus had a majority of the votes in general meeting. Until the dispute all the three remained directors. Later on an ordinary resolution was passed by the company in general meeting by the votes of Nazar and George Nazar removing Ebrahimi from the office of director. That led to the petition for winding-up before the Court.

20. The following features are found in Ebrahimi's case: (1) There was a prior partnership between the only two members who later on formed the company. (2) Both the shareholders were directors sharing the profits equally as remuneration and no dividends were declared. (3) One of the shareholders' son acquired shares from his father and from the second shareholder, Ebrahimi, and joined the company as the third shareholder each - director with two hundred shares (one hundred from each). (4) After that, there was a complete ouster of Ebrahimi from the management by the votes of the other two directors, father and son. (5) Although Ebrahimi was a partner, Nazar had made it perfectly clear that he did not regard Ebrahimi as a partner but regarded him as an employee in repudiation of Ebrahimi's status as well as of the relationship. (6) Ebrahimi through ceasing to be a director lost his right to share in the profits through directors remuneration retaining only the chance of receiving dividends as a minority shareholder. Bearing in mind the above features in the case, the House of Lords allowed the petition for winding-up by reversing the judgment of the Court of appeal and restoring the order of Plowman, J.

21. None of the parties questions the principles as such adumbrated by the House of Lords in Ebrahimi's case (supra) or even those in the earlier Yenidje's case (supra) and indeed these are sound principles depending upon the nature, composition and character of the company. The principles, good as they are, their application in a given case or in all cases, generally, creates problems and difficulties. The respondents' Counsel is well cognizant of this difficult aspect and, therefore, rests his argument on the footing that the company is in substance a partnership and necessarily, therefore, according to him, the principles of partnership should be attracted. In this case, the Court did not apply the partnership principles because it came to a conclusion that the company in question was not in the nature of a quasi-partnership.

45. The Calcutta High Court in the case of Murlidhar Ratanlal Exports Ltd. v. Bijay Kumar Kajaria (2013) SCC Online Cal 5656, made a reference to the concept of a family company. The decision goes on to make a reference to some of the leading judgments and proceeds to state as follows: "In fact at this stage it is to be assumed that the platform of this company resting on a pivot is to be kept in equilibrium. The platform is kept in equilibrium by recognition of rights, obligations, expectations of every family member who constitutes a small family company and resembles a partnership as recognized in the above case and in O'Neill's case and the Madras decision (supra).”

46. In Jagjit Singh Chawla v. Tirath Ram Ahuja (2001) SCC Online CLB 27, the Principal Bench of the Company Law Board considered the concept and principles of quasi-partnership and special understanding in relation to a closely held family company. As an exception to the rule that a directorial complaint cannot be entertained or agitated in a Petition for oppression and mismanagement, it was noted that the Company Law Board has been taking a view that the principle cannot be strictly applied in family companies, companies with a few identifiable groups of shareholders or companies in the nature of partnership wherein there has been active management participation by all the groups of shareholders. In that case, the Petitioners had invoked the principles of partnership and had sought for a place on the Board of the Company on the basis of active participation in the management by all the groups of shareholders. As an exception to the rule that a shareholder cannot demand a place in the management of the Company, the Company Law Board observed that, in this connection, it was worthwhile referring to the case Vijay Krishnan Jaidka vs. Jaidka Motors Co.Ltd. (1997) 1 Comp.LJ 268 (CLB), wherein, after discussing various decided cases, practically all the objections as in this case were examined by the board and it concluded that to treat a company as a partnership, it was not necessary to have equal shareholding, no need for deadlock, no need for preexisting partnership, etc. It also observed that an analysis of various decisions showed that the Courts have been looking for some basic understanding written or unwritten between parties. Therefore, if the facts revealed some basic understanding between the parties that the Company would be managed on partnership principles, the same can be applied in a Section 397/ 398 Petition. The Company Law Board made a reference to a decision in the case of Dipak G. Mehta v. Anupar Chemicals (India) Pvt.Ltd. (1999) 98 Comp Cas 575 to the effect that the facts have to be examined as to whether they reflect the existence of any understanding of joint management justifying the claim of legitimate expectation of being on the board by the Petitioners. In paragraph 17 of the judgement, after reference to Smt.Nupur Mitra vs. Basubani (P) Ltd. (2001) 41 CLA 306 (CLB), the Company Law Board concluded “in the same way, in the present case, we have only to see in the absence of any written agreement and provisions in the articles and in the absence of any original promoters, whether circumstances exist to draw a presumption of an unwritten agreement relating to joint management giving rise to legitimate expectation as that of a partnership as claimed by the Petitioners”. In conclusion, at paragraph 20, the Company Law Board observed as under: "Thus, on an overall assessment of the facts of the case, we are convinced that the company is in the nature of partnership with the understanding of joint management by all the three families of the promoters. Presently, the company is managed only by one family, that is, the Ahujas' in exclusion of the other two families and therefore, the Petitioners have legitimate grievance of being oppressed by the majority shareholders, viz., the Ahujas. Therefore, their claim of being taken on the board is justified?"

47. Further, the principles of quasi-partnership have been invoked even by Civil Courts in Civil Suits for the purpose of granting reliefs/interim reliefs. In Sreejaya Bhattacharjee Godfrey v. Shreejaya Tea & Industries (2013) SCC OnLine Cal 23018, the Calcutta High Court had before it a Suit alleging that a director in a family company was acting on his own, which was contrary to the Articles. His actions included appointing additional Directors. The Court emphasized that the company was a family company and held as under: "34. I am not unmindful of the fact that both these companies are family companies where members of a particular family hold the entire shares or an overwhelming number of shares. Each sibling has more or less an equal stake, one a little less, one a little more. Two siblings are in a position to control the company, with the possibility of the third being left out. It needs no reiteration that such a closely held family company is considered like a family partnership. Like each and every member of the family is usually a partner in a family partnership, members of a family are allowed to participate in the affairs of the family company. Every effort should be made that every major interest in the family is represented on the Board."

35. I would like to read two paragraphs from Ramaiya's Companies Act, 15th Edition at Pg. 3107 and 3109. "Where a shareholder-cum-director of a small private company who was also under service agreement as a production director was summarily dismissed by the company and thereafter excluded from participation in management, he was allowed to claim relief under section 459 of the [English] 1985 Act and was held to be entitled to an order that his shares should be purchased. His legitimate expectation of participation in management as a director beyond the scope of his service agreement involved mutual confidence, the articles restricted the right of transfer of members' interest in the company, these factors showed the elements of a quasi-partnership, though he knew that he would be a junior partner with a dominant senior partner, his rights were not restricted to his strict rights under the constitution of the company and his conduct did not justify his dismissal and exclusion from management, his shares were ordered to be purchased on a pro rata basis, without any discount for the fact that he was a minority shareholder. Quinlan v. Essex Hinge Co. Ltd., (1996) 2 BCLC 47 (ChD)." …………………………………………………………………….. "In a case in which the shares of a founding member, who had earlier gifted his shares to his sons controlling the company, were purchased by the company at a higher value then their market price, a minority shareholders action questioning the validity of the transaction was allowed. The Court stated: "... because of the fundamental resemblance of the close corporation to the partnership, the trust and confidence which are essential to this scale and manner of enterprise, and the inherent danger to minority interests in the close corporation, we hold that stockholders in the close corporation owe one another substantially the same fiduciary duty in the operation of the enterprise that partners owe to one another. In our previous decisions, we have defined the standard of duty owed by partners to one another as the 'utmost good faith and loyalty'... Stockholders in close corporations must discharge their management and stockholder responsibilities in conformity with this strict good faith standard. They may not act out of avarice, expediency or self interest in derogation of their duty of loyalty to the other stockholders and the corporation." Donahue v. Rodd Electrotype Co. of New England Inc., (1975) 328 NE 2d 505 at 511 (Supreme Judicial Court).

36. In this company also the need is for this. Therefore, the interim order that I pass today is that at least for the time being the plaintiffs and the second defendant will constitute the Board of Directors." As an incident of a company being a family company and equated with a family partnership, the Court made the observation that usually every member of the family usually being a partner in a family partnership and therefore allowed to participate in the affairs of the family company. The Court further observed that every effort should be made that every major interest in the family is represented on the board and passed an interim order as mentioned above.

48. In Sita Chaudhary v. Verinder Singh (2022) SCC OnLine Del 2235, the Delhi High Court applied the principles of quasi partnership as enunciated in Sangramsinh Gaekwad (supra) to determine the true nature of the company and grant relief. Consequently, various injunctions were passed against the Defendants to ensure the protection and preservation of the suit properties. Paragraphs 62 to 65 and paragraphs 87 to 89 of the said judgement are relevant and set out here under: “62. On the other hand, the counsel for the plaintiff has relied upon the judgment in Sangramsinh P. Gaekwad v. Shantidevi P. Gaekwad (Dead) Through LRS., (2005) 11 SCC 314 in support of his contention that the various defendant companies, including the defendant no. 13 company, were basically familyowned companies and in the nature of quasi-partnerships. Therefore, the Court has the power to lift the corporate veil to determine the real character of the said companies. The relevant observations in Sangramsinh P. Gaekwad (supra) are reproduced below: Quasi-partnership-family company – corporate veil

225. A company incorporated under the Companies Act is a body corporate. However, in certain situations, its corporate veil can be lifted. (See Kapila Hingorani. State of Bihar ((2003 v ) 6 SCC 1: 2004 SCC (L&S) 586]).

226. The Court, however, has made a clear distinction between a family company, a private company and a public limited company. The true character of the company the business realities of the situation should not confined to a narrow legalistic view. (See Needle Industries [(1981) 3 SCC 333].)

227. It is now well known that principles of quasi-partnership are not foreign to the concept of the Companies Act. For the purpose of grant of relief the principles of partnership have been applied even in a public limited company. (See Loch v. John Blackwood Ltd. [[1924] A.C. 783: 1924 All ER 200] and Ebrahimi v. Westbourne Galleries Ltd. [(1972) 2 All ER 492: [1973] A.C. 360: [1972] 2 WLR 1289 (HL)]) xxx xxx xxx

230. Kilpest (P) Ltd. v. Shekhar Mehra [(1996) 10 SCC 696] whereupon Mr Desai placed strong reliance, thus, cannot be said to be an authority for the proposition that for no purpose whatsoever can the principles of quasi partnership be applied to an incorporated company. The real character of the company, as noticed hereinbefore, for the purpose of Judging the dealings between the parties and the transactions which are impugned may assume significance and in such an event, the principles of quasi-partnership in a given case may be invoked.

231. The ratio of the said decision, with respect, cannot be held to be correct as a bare proposition of law, as was urged by Mr. Desai. being contrary to larger Bench judgments of this Court and in particular Needle Industries (1981) 3 SCC

3331. It is, however, one thing to say that for the purpose of dealing with an application under Section 397 of the Companies Act, the Court would not easily accept the plea of quasi-partnership but as has been held in Needle Industries [(1981) 3 SCC 3331 the true character of the company and other relevant factors shall be considered for the purpose of grant of relief having regard to the concept of quasipartnership."

63. Initially, almost the entire shareholding in these companies/LLPs was held directly or indirectly by late Sh. Devinder Chaudhry and the plaintiff (see Table 1 above). After the transfer/gift of the shares in favour of the defendant no. 4 and 9, almost the entire shareholding in the said companies now vest with the defendants.no. 4 and 9 (see Table III above). It is pertinent to note that the defendants no. 4 and 9 have not disputed the shareholding position as given in the aforesaid table.

64. Table III above shows that the defendants no. 4 and 9 are the only significant shareholders in the aforesaid entities and are also the directors/partners. There is negligible amount of outside shareholding. At all points of time, the companies were closely held and did not have any substantial shareholding outside the family. Except for the defendant no. 13 company, none of the companies/LLPs had any running business. Therefore, I find merit in the submission of the plaintiff that the various defendant companies/LLPs, other than the defendant NO. 13 company, have always been asset holding companies/LLPs. Even in respect of the defendant no. 13 company, almost 83% is held by the defendant no. 4, as is evident from the Form No. BEN-1 dated 10th September, 2019 filed on behalf of the defendant no. 4 and the outside Shareholding is only 6.8%. The defendant companies/LLPs are mere alter egos of the Defendants 4 and 9 in the nature of quasi-partnerships. The defendants no. 4 and 9 have been treating these companies/LLPs as their personal fiefdoms, as is evident from the various instances of properties/assets being disposed of. Loans have been doled out and monies siphoned off in an arbitrary manner and without any commercial logic, solely on account of the fact that the defendants no. 4 and 9 control these Companies/LLPs.

65. Therefore, in my prima face view, the principles laid down in Sangram Singh Gaikwad (supra) can be applied to the facts of the present case and the Court can look into true character of the company for the purposes of grant of relief. Conclusion

87. In view of the discussion above, my prima facie findings may be summarized as under:

(i) Under the Will dated 26th March, 2004, the plaintiff had only a limited beneficial interest in the estate of late Sh. Devinder Chaudhary, which did not culminate into an absolute interest under Section 14(1) of the Hindu Succession Act.

(ii) There is a doubt whether the Will dated 26th March, 2004 is the last and final will of the late Sh. Devinder Singh Chaudhary, as the defendant no. 2 has propounded a Will dated 2008, in respect of which probate proceedings are pending.

(iii) Therefore, the plaintiff could not have transferred the shareholding and interest in the estate of late Sh. Devinder Singh Chaudhary in favour of the defendants no. 4 and 9.

(iv) The transfers of shares/interest in the defendant companies/LLPs made in favour of the defendants no. 4 and 9 by the plaintiff were on account of undue influence exercised by the defendants no. 4 and 9 over the plaintiff. Therefore, there a doubt is created in respect of the title of the defendants no. 4 and 9 over the shares/interest in the defendant companies/LLPs, transferred by the plaintiff.

(v) The various defendant companies/LLPs are nothing but alter egos of the defendants no. 4 and 9 and in the nature of quasipartnerships. Therefore, following the ratio of Sangramsinh P. Gaekwad (supra), this Court is entitled to restrain the aforesaid companies/LLPs from disposing of their immovable properties.

(vi) Various loans have been taken and unauthorized transfers made from the defendant companies/LLPs and other familyowned companies/LLPs in favour of the defendants no. 4 and 9. These have been used to acquire properties/assets in their own names.

(vii) Various properties of late Sh. Devinder Singh

Chaudhary/plaintiff and the defendant companies/LLPs have been disposed of or attempted to be disposed of by the defendants no. 4 and 9 after acquiring control of these companies/LLPs.

88. In view of the above, the plaintiff has made out a prima facie case in her favour for grant of interim injunction. Balance of convenience requires that the properties in the names of the defendant companies/LLPs are preserved and the defendants NO. 4 and 9 are restrained from disposing of the said properties held by the defendant companies/LLPs on the basis of the shareholding/interest acquired by the defendants the no.4 and 9 in the aforesaid companies/LLPs till the final adjudication of the suit. Further the defendants no. 4 and 9 should also be restrained from selling or disposing Immovable properties acquired by them till the final adjudication of the suit. Irreparable harm and injury would be caused to the plaintiff as well as other legal heirs of the plaintiff and late Sh. Devinder Singh Chaudhary if the assets/properties belonging to the defendant companies/LLPs are frittered away by the defendants no. 4 and 9 during the pendency of the present suit. Ultimately if the Court decrees the suit in favour of the plaintiff and the assets/properties of the defendant companies/LLPs have been alienated or sold, the decree would be rendered otiose.

89. Consequently, an interim injunction is passed in favour of the plaintiff and against the defendants in the following terms:

(i) No third party interest, including sale, transfer and encumbrance, shall be created in respect of the properties owned by the defendants no. 13 to 17;

(ii) The defendant no. 4 and 9 are restrained from transferring, selling, alienating and creating third party interest in the properties, being property/office in Building No. 7, Basantlok, Vasant Vihar, New Delhi; flat at Magnolia, Gurgaon; accommodation on the first and second floor of Tower B, Magnum Towers, Golf Course Extension Road, Sector 58, Gurgaon; factory land and building at Village Khanpur purkazi Laksar Road, Dist. Uttarakhand-247663.

(iii) The aforesaid directions shall not come in the way of the defendant no. 13 selling/transferring plots developed in Madhuban Colony situated in Rajpura, Punjab.”

49. In NAS v. Delhi Guest House Services Private Limited (2022) SCC OnLine Del 3106, the suit was one for a permanent injunction against dispossession. It was urged that the suit property was a family property merely held by the Defendant for the family. The Defendants were not then permitted to introduce the garb of a corporate structure to defeat what were essentially family owned properties. The Court then injuncted the Defendants from dispossessing the Plaintiff. Paragraphs 38 to 43 and 53 of the judgement are relevant and set out here under:

50. In our view, considering the aforesaid position in law, the Learned Single Judge was right in granting a mandatory injunction to reinstate Plaintiff No.1 as a director at the ad-interim stage on the basis of a family arrangement and on the basis that Defendant No.4 is a quasi partnership, and therefore Plaintiff No. 1 has a right to participate in the management of Defendant No.4. Submissions of the Defendants

51. The Defendants submitted that the Plaintiffs’ reliance on the purported Family Arrangement and / or MOU is utterly misplaced and misconceived. In this context, it was submitted that the context in which the MOU was executed is relevant. A plain reading of the MOU evinces that the MOU was entered into in order to facilitate and record the exit of Harshad Shah and Ketan Shah, brothers of Plaintiff No.1, from Defendant No.4 and other group entities.

52. Further, the Defendants submitted that in any event, on a plain reading of the MOU, it was clear that there was no such provision regarding directorship of Plaintiff No.1 or any other director / family member.

53. The Defendants submitted that a bare perusal of Clause 5 of the MOU makes it evident that, upon the exit of Harshad Shah and Mr.Ketan Shah, the management and control in each of the entities, being parties of the Sixth to Eleventh part, was to continue with the parties of the Fifth Part. Clause 5 in no manner refers or implies that the nature of such management is permanent or there exists a vested right in the management. The said clause does not in any manner entrench directorship of Plaintiff No.1, or any other director in the 4th Defendant Company. In order to make out a case for entrenchment, there must be an express clause for permanent directorship, which the MOU does not contain. In fact, the word “director” is not contemplated at all.

54. The Defendants further submitted that the Plaintiffs had argued that “each of them” appearing in Clause 5 of the MOU refers to each of the parties of the Fifth Part and, therefore, as one of the parties in the Fifth Part, Plaintiff No.1 is entitled to permanent directorship. However, a bare perusal of the aforesaid clause would make it clear that “each of them” refers to each of the entities being parties of the Sixth to Eleventh part i.e. the companies and not each of the parties of the Fifth Part.

55. The Defendants submitted that it is evident that when “each of them" is read as “Parties of the Sixth to Eleventh Part,” the clause reads to mean that the Parties of the First Part are transferring their shareholding to the Party of the Fifth Part so as to ensure that full management and control of each of the entities, i.e. “Parties of the Sixth to Eleventh Part” continues with the “Party of the Fifth Part”.

56. The Defendants further submitted that it was alleged by the Plaintiff that even if this Court was to hold that “each of them" referred to in Clause 5 refers to the companies i.e. “Parties of the Sixth to Eleventh Part,” and not the “Parties of the Fifth Part”, the definition of the Fifth Part includes each of those named therein, thus vesting a right to permanent directorship in Plaintiff No.1. The Defendants submitted that this is erroneous as the words “mean and include each of them” appearing in the description of the parties to the MOU is with reference to “the said L.A. Group” which finds no place in Clause 5 of the MOU.

57. The Defendants submitted that in view of the above, the directorship of Plaintiff No.1 is neither entrenched nor permanently vested in Plaintiff No.1 under Clause 5 or under any other provision of the MOU.

58. Further, the Defendants submitted that, even assuming that the MOU does provide for permanent directorship, then the MOU would be inconsistent with the provisions of Section 169 of the Companies Act, 2013 July 1, 2025 which provides that a company may remove its director by an ordinary resolution.

59. As far as the above mentioned submissions of the Defendants are concerned, it is not the case of the Plaintiffs that the family arrangement is recorded only in the MOU dated 3rd September 2010. According to the Plaintiffs, the family arrangement is recorded in paragraph 39 of the plaint. Paragraph 39 of the plaint states that the longstanding foundation basis/oral in existence as narrated above and broadly summarised; the MOU with its express and implied rights and obligations which respected the pre-existing status of the family members are hereinafter collectively referred to as a Family Arrangement. According to the Plaintiffs, it is this family arrangement, and the admitted fact that Defendant No.4 is a quasi-partnership, that gives Plaintiff No.1 the right to participate in the management of the Defendant No.4.

60. Further, clause 5 of the MOU, which is set out hereinabove, gives full management and control of the companies of the Sixth to Eleventh Part and of each of these companies to the party of the Fifth Part. The Party of the Fifth Part includes Plaintiff No.1. This shows that the Plaintiff No.1 was ensured management and control of Defendant No.4.

61. Further, as set out above in detail, apart from Clause 5 of the MOU, various other recitals and clauses of the MOU show the existence of a family arrangement which is being enforced by the present Suit.

62. In these circumstances, we are unable to accept the abovementioned submission of the Defendants.

63. The next submission of the Defendants is that the concept of quasi-partnership has no bearing on the Plaintiffs’ removal. In this context the Defendants submitted that the the doctrine of just and equitable is applicable to companies in the context of winding up. This means that a company may be wound up if there are just and equitable grounds to do so. A classic example of such a ground is deadlock in the board of directors. Another example is if in quasi-partnership and family companies, understandings between the shareholders are breached to destroy the character of those quasi partnership/family companies. The Defendants submitted that to characterize a company as a quasi-partnership is merely to say that the principles of partnership will apply so far as applicable to the inter se relations between the shareholders. The decisions in the case of Ebrahimi (supra) and O’Neill and Another (supra) are authorities for this proposition.

64. The Defendants further submitted that, by contrast to the equitable nature of the just and equitable jurisdiction, it is well settled that the right to remove a director conferred upon the general body is an absolute right and is not in any way controlled by just and equitable considerations. The Defendants submitted that in the judgement in Life Insurance Corporation v/s. Escorts Limited (1986) 1 SCC 264, the Hon’ble Supreme Court has expressly affirmed the position laid down in Ebrahimi (supra) that the only recourse available to a director who is removed contrary to any special underlying obligations which his fellow members owe to him in good faith or confidence is to seek winding up/dissolution of the company on the ground that it is a quasi-partnership. There is no remedy for reinstatement. In this context, the Defendants referred to paragraphs 98 and 99 of the judgement of the Supreme Court in Escorts Limited (supra), which read as under: "98. In Inderwick v. Snell [42 ER 83] the deed of settlement of a company provided for the removal of any Director "for negligence, misconduct in office or any other reasonable cause". Some directors were removed and others were appointed. The Directors who were removed sued for an injunction to prevent the new directors from acting on the ground that there was no reasonable cause for their removal. The Court negatived the claim for judicial review of the reasons for removal and made the following interesting observations: "The argument for the plaintiffs rested on the allegation that the general cause of removal referred to in the clause being expressed to be reasonable' prevents the power referred to from being a power to remove at pleasure arbitrarily or capriciously, and made it requisite that the proceeding for exercising the power should be in its nature judicial, and that the reasonable cause should be such as a Court of Justice, would consider good and sufficient. If this argument could be sustained, all the proceedings at such meetings would be subject to the review of the Courts of Justice, which would have to inquire whether the cause of removal which was charged was in their view reasonable, whether the charges were bona fide brought forward, whether they were substantiated by such evidence as the nature of the case required, and whether the conclusion was to come upon a due consideration of the charge and evidence. But the deed is silent as to these matters and the question is whether any such power of control in the Courts of Justice is to be interred from the words reasonable cause' contained in the 27th clause; whether the expression 'reasonable cause' contained in such a deed of a trading partnership can be held to be such a cause, as upon investigation in a Court of Justice must be held to be bona fide founded on sufficient evidence and just; or whether it ought not to be held to mean such cause as in the opinion of the shareholders duly assembled shall be deemed reasonable. We think the latter is the true construction and effect of the deed. In a moral point of view, no doubt every charge of a cause of removal ought to be made bona fide, substantiated by sufficient evidence, and determined on a due consideration of the charge and evidence; and those who act on other principles may be guilty of a moral offence: they may be very unjust, and those who (being misled by the statements made to them), have no doubt a just right to complain that they have been led to concur in an unjust act. But the question is, whether by this deed the shareholders duly assembled at a general meeting might not, or had not a right to, remove a director for a cause which they thought reasonable, without it being incumbent upon them to prove to this or any other Court of Justice that the charge was true and the decision just, or that the case was substantiated after a due consideration of the evidence and charge. We cannot take upon ourselves to say that in the case of a trading partnership like this, this Court has upon such a clause in the deed of partnership jurisdiction or authority to determine whether, by the unfounded speech of any supporter of the change, the shareholders present may not have been misled or unduly influenced. All such meetings are liable to be misled by false or erroneous statements, and the amount of error or injustice thereby occasioned can rarely, if ever, be appreciated. This Court might inquire whether the meeting was regularly held, and in cases of fraud clearly proved, might perhaps interfere with the acts done; but supposing the meeting to be regularly convened and held, the shareholders assembled at such meeting may exercise the powers given them by the deed. The effect of speeches and representations cannot be estimated, and for those who think themselves aggrieved by such representations, or think the conclusion unreasonable, it would seem that the only remedy is present defence by stating the truth and demanding time for investigation and proof, or the calling of another meeting, at which the whole matter may be reconsidered. The plaintiffs, objecting to this meeting and considering it illegal, protested against it, but abstained from attending, and, therefore, made no answer or defence to, and required no proof of, the charges made against them. The adoption of this course was unfortunate, but does not afford any grounds for the interference of this Court. "

99. Again in Bentley Stevens v. Jones [(1974) 2 All ER 653] it was held that a shareholder had a statutory right to move a resolution to remove a Director and that the Court was not entitled to grant an injunction restraining him from calling a meeting to consider such a resolution. A proper remedy of the Director was to apply for a winding-up order on the ground that it was "just and equitable" for the Court to make such an order. The case of Ebrahimi v. Westbourne Galleries Ltd. /(1972) 2 All ER 492/, was explained as a case where a winding-up of order was sought. In the case of Ebrahimi v. Westbourne Galleries Ltd. /Re Wondoflex Textiles Pty. Ltd., 1951 VLR 458/, the absolute right of the general meeting to remove the Directors was recognised and it was pointed out that it would be open to the Director sought to be removed to ask the Company Court for an order for winding-up on the ground that it would be "just and equitable" to do so. The House of Lords said: “My Lords, this is an expulsion case, and I must briefly justify the application in such case of the just and equitable clause.... The law of companies recognises the right, many ways, to remove a director from the Board. Section 184 of the Companies Act, 1948 confers this right on the company in the general meeting whatever the articles may say. Some articles may prescribe other methods, for example a governing director may have the power to remove. [Re Wondoflex Textiles Pty. Ltd., 1951 VLR 458] And quite apart from removal powers, there are normally provisions for retirement of directors by rotation so that their re-election can be opposed and defeated by a majority, or even by a casting vote. In all these ways a particular director-member may find himself no longer a director, through removal or non-re-election; this situation he must normally accept, unless he undertakes the burden of proving fraud or mala fides. The just and equitable provision nevertheless comes to his assistance if he can point to, and prove, some special underlying obligation of his fellow member (s) in good faith, or confidence, that so long as the business continues he shall be entitled to management participation, an obligation so basic that if broken, the conclusion must be that the association must be dissolved.”

65. The Defendants submitted that it is evident from the said judgement that the right to remove a director is an absolute right of a general body of shareholders, and the recourse a director would have in the case of a family company or quasi partnership would be applying for winding up on the ground that it is “just” and “equitable”.

66. We are unable to accept that the Hon’ble Supreme Court in Escorts Limited (supra) has laid down such a broad proposition that a director, who has been removed from his position as a director, in breach of a family arrangement and a right to participate in the management of the company which is a quasi partnership, can only ask for winding up of a company on the just and equitable ground, and take no other action in law in that regard.

67. In the present case, Plaintiff No.1 was sought to be removed as a director on the ground that he was carrying on a business which competed with the business of Defendant No. 4. On the same ground, the IP suit was filed wherein an ex-parte order dated 5th April 2022[3] was obtained granting an injunction against Plaintiff No.1. On an application made by Plaintiff No.1, by an Order dated 5th July 2023, the said ex-parte order was set aside on the ground that, if all the material facts and documents were placed before this Court, then it would not have granted the ex-parte order. In this scenario, the Learned Single Judge was right in granting an ad-interim order reinstating the Plaintiff No.1 interalia on the ground of a family arrangement and quasi partnership and the right of Plaintiff No.1 to participate in the management of Defendant No.4. In our view, the judgement of the Hon’ble Supreme Court in Escorts Limited (supra) does not bar such an ad-interim order being passed.

68. The Defendants submitted that the case of Ebrahimi (supra) also considered the expulsion of a director, as in the present case. It was this expelled director who had then applied for winding up under the just and equitable clause, and it was in this context that the observations were made. In fact in Ebrahimi (supra) itself, the House of Lords made it clear that even though the just and equitable provision may come to the assistance of the expelled director where some special underlying obligation can be proved, and even though the expelled director may be able to show that he shall be entitled to management participation for as long as the business continues, and that the obligation is so basic that, if broken, the association itself must be dissolved, the director must normally accept if he finds that he is no longer a director through removal or non-election.

69. For the reasons given by us hereinabove, with respect to the case of Escorts Limited (supra), we are unable to accept this submission of the Defendants.

70. With regard to the decision of House of Lords in O’Neill (supra), the Defendants submitted that the same is entirely in a different context and the observations have to be understood in their own factual context. The petition in the O’Neill (supra) case was on the basis that the company’s affairs were being conducted in a manner unfairly prejudicial to that of a minority shareholder. Thus, the Petition was filed under Section 459 of the Companies Act, 1985. In India as well, the petition would fall squarely within the scope of oppression and mismanagement under Sections 241 and 242 of the Companies Act, 2013. As such, the jurisdiction of the Court in the case of O’Neill (supra) was itself altogether different and was the equitable jurisdiction of Section 459 of the UK Companies Act, 1985, which provided for protection of minority interests. Accordingly, the observations in so far as the valid exercise of powers giving way to equity are not applicable to a civil Court considering the removal of a director in a suit, particularly since Courts only interfere in a removal of director if there is a procedural defect in such removal. As such, the case of O’Neill (supra), is entirely distinguishable both on facts and being in an entirely different jurisdiction. The Defendants submitted that, in view of the above, it is evident that any argument or claim on the basis of minority representation and protection of right to management would be a consideration only where a Court was considering whether there has been oppression and mismanagement as the very test for oppression is unfair prejudice to a minority shareholder.

71. The judgement in O’Neill (supra) clearly lays down that in a quasi-partnership there may be provisions made, by words or conduct, which it would be unfair to allow a member to ignore. It also lays down that such a promise may be binding as a matter of justice and equity. We are unable to accept the submission of the Defendants that this proposition is applicable only in cases of oppression and mismanagement and is not applicable to a Civil Court considering the removal of a director in a Suit. In our view, neither the judgment in O’Neill (supra), nor any other judgment cited before us takes such a narrow view. In fact, in the judgements referred to by us earlier, this proposition is applied even in a Civil Suit.

72. With regard to the decision of the Hon’ble Supreme Court in Sangramsinh P. Gaekwad (supra), the Defendants submitted that this decision is once again in the oppression and mismanagement jurisdiction (Sections 397 and 398 of the Companies Act, 1956). Further, the observations that the principles of quasi-partnership can be invoked in an application under Section 397 of the Companies Act, 1956, which have been relied upon by the Plaintiffs, are not in dispute whatsoever. The Defendants submitted that, however, the present case is not in the jurisdiction of Section 397 and 398/Sections 241 and 242 (oppression and mismanagement) but is the civil jurisdiction of a suit.

73. We are unable to accept this submission of the Defendants. Whilst it is true that the observations in Sangramsinh P. Gaekwad (supra) were made in a matter arising from a petition under oppression and mismanagement, the observation that it is important to take into account the real character of the Company as being a quasi-partnership to judge the dealings between its members, is an observation which is clearly universal and by no means is restricted only to the invocation of quasi-partnership in the context of an oppression and mismanagement petition. It could apply clearly in any case, especially one where there is admittedly a quasipartnership in existence as between the parties.

74. With regard to the decision in Murlidhar Ratanlal Exports Ltd. (supra), the Defendants submitted that this case was once again in relation to an application under Sections 397 and 398 of the Companies Act, 1956 (oppression and mismanagement) and was accordingly under another jurisdiction altogether. Further, the Defendants submitted that the facts involved a rights issue when there was already a company petition for oppression and mismanagement pending against the company, and the observations relied upon by the Plaintiffs that the platform of a family company resting on a pivot is to be kept in equilibrium, is in the facts of the case where such rights issue was being initiated, pending hearing of the petition, to disturb the equilibrium. The Defendants submitted that the facts in Murlidhar Ratanlal Exports Ltd. (supra), are entirely different.

75. In our view, the observations in Murlidhar Ratanlal Exports Ltd. (supra), relied upon by the Plaintiffs to the effect that the platform of the company resting on a pivot is to be kept in equilibrium and that the platform is kept in equilibrium by recognition of rights, obligations, expectations of every family member who constitutes a small family company and resembles a partnership, are not, and cannot be, confined only to cases of oppression and mismanagement.

76. The Defendants submitted that the decision of the Company Law Board in Jagjit Singh (supra) was also a decision under Sections 397 and 398 of the Companies Act, 1956 (oppression and mismanagement). The Defendants submitted that, in the said case, the principle of quasi-partnership was invoked to submit that the exclusion of one family, out of the three families that were running the company, would amount to oppression on the part of the majority, and an order of winding up on the just and equitable grounds should follow. The Defendants submitted that, therefore, it was evident that the jurisdiction, in which the principles were invoked, was altogether different. Further, the Defendants submitted that the decision in fact supported the case of the Defendants that the argument of equal representation of a family branch in a quasi-partnership falls within oppression and mismanagement and cannot be maintained in a suit challenging removal of a director or in a suit for specific performance (as is the frame of the present Suit, i.e. specific performance of the Memorandum of Understanding dated 3rd September 2010). The Defendants also submitted that the decision in Jagjit Singh (supra) makes it clear that normally directorial complaints cannot be agitated in an action for oppression and mismanagement unless in cases where the company is a family company or in the nature of a partnership (quasi-partnership), in which case the principles of quasi-partnership can be invoked.

77. In our view, the said decision does not support the case of the Defendants that the argument of equal representation of a family branch in a quasi-partnership company falls within oppression and mismanagement and cannot be maintained in a suit challenging the removal of a director or in a suit for specific performance. In this context, it is important to note that, in the said judgement, the Company Law Board concludes in paragraph 20 as under: "Thus, on an overall assessment of the facts of of the case, we are convinced that the company is in the nature of partnership with the understanding of joint management by all the three families of the promoters. Presently, the company is managed only by one family, that is, the Ahujas' in exclusion of the other two families and therefore, the petitioners have legitimate grievance of being oppressed by the majority shareholders, viz., the Ahujas. Therefore, their claim of being taken on the board is justified"

78. Further, paragraph 22 of the Company Law Board’s decision shows that the option was given to the Respondents therein either to induct one of the nominees of the Petitioners as a working director on the board or to purchase the shares held by the Petitioners at the fair value to be determined by an independent valuer so that they also share the benefit of the efforts of the Chawlas when they were on the board. Thus, in the said decision, the principles of quasi partnership were invoked and one of the options given to the Respondents was to induct one of the nominees of the Petitioners as a working director on the board.

79. The Defendants further submitted that the only cases relied upon by the Plaintiffs in which the principles of quasi-partnerships have been applied to suits are the decisions of the Delhi High Court in Sita Chaudhary (supra), NAS (supra) and Arrena Overseas Private Limited vs. Batra Art Press, (2022) SCC OnLine Del 3543. The Defendants submitted that all the three decisions are of the same judge. The decision in NAS (supra) has relied on the decision in Sita Chaudhary (supra), and the decision in Arrena Overseas Private Limited (supra) has relied on the decision in NAS (supra). The Defendants further submitted that, in any event, the facts in the said cases were entirely different from that of the present case. The said cases were not suits challenging removal of director, but on the true nature of a company and its property. As such, the observations in the above cases do not support the Plaintiffs. Further, in the case of Sita Chaudhary (supra), which was effectively followed by the rest, the principles of quasi-partnership were invoked to lift the corporate veil, and the observations made were in that context.

80. We are unable to agree with the submissions of the Defendants that the said cases are not relevant. In Sita Chaudhary (supra), the Court applied the principles of quasi-partnership as enunciated in Sangramsinh Gaekwad (supra) to determine the true nature of the company and consequently granted an injunction against the Defendants therein to ensure the protection and preservation of the suit properties. In NAS (supra), the suit was one for a permanent injunction against dispossession. It was urged inter alia that the suit property was a family property merely held by the Defendants therein for the family. The Defendants therein were not then permitted to introduce the garb of a corporate structure to defeat what were essentially family owned properties and the Court injuncted the Defendants therein from dispossessing the Plaintiff. In Arrena Overseas Private Limited (supra), the Delhi High Court was concerned with the Plaintiff company’s application under Order XII Rule 6 r/w Order XIII A seeking possession. The same was contested. Following the decision in NAS (supra), the Court held that since the company is, in essence, a family company, the real owner of the property would therefore be the patriarch who had now passed away. As such the property would devolve on the heirs. Therefore, the Application was dismissed as there were issues to be determined at the trial.

81. With regard to the decision in Sreejaya Bhattacharjee Godfrey (supra), the Defendants submitted that the facts of the said case were entirely different and distinguishable. In that case, two of the three directors of the company had passed away. On the other hand, by statute they were required to have two directors in order to take decisions and function as a board of directors as required under law. However, in order to appoint directors validly and call for a general meeting, they also required a board of directors consisting of two. In these circumstances, instead of approaching the Company Law Board to call for the meeting, the sole director started acting on his own. It was in this context that the observations relied on by the Plaintiffs were made and it was in that context that the relief was granted.

82. Again, we are unable to agree with the submissions of the Defendants regarding Sreejaya Bhattacharjee Godfrey (supra). As an incident of a company being a family company and equated with a family partnership, the Court made the observation that usually every member of the family being in the family partnership is therefore allowed to participate in the affairs of the family company. The Court further observed that every effort should be made that every major interest in the family is represented on the board and passed an interim order that, for the time being, the Plaintiffs and the Defendant No.2 therein will constitute the board of directors. Hence, this is a case where the principles of quasi-partnership have been followed and a director was appointed on the board of directors of the company by the Company Law Board.

83. The Defendants further relied on V. B. Rangaraj vs. V. B. Gopalkrishnan & Ors (1992) 1 SCC 160 and submitted that, unless the MOU dated 3rd September 2010 was incorporated in the Articles of Association of Defendant No.4, it remains unenforceable.

84. In V.B.Rangaraj (supra), the facts were that the company was not a party to the oral family agreement. In the present case, the Defendant No.4 is a party to the MOU dated 3rd September 2010. In these circumstances, the decision in V.B.Rangaraj (supra) is clearly distinguishable on the facts of the case.

85. On the issue of granting of a mandatory injunction, the Defendants have relied upon the decisions of the Hon’ble Supreme Court in Dorab Cawasji Warden v/s Coomi Sorab Warden (1990) 2 SCC 117, Samir Narain Bhojwani v/s Aurora Properties and Investments and Another (2018) 17 SCC 203, Deoraj v/s State of Maharashtra and Ors. (2004) 4 SCC 697, and Hammad Ahmed v/s Abdul Majeed and Others (2019) 14 SCC 1.

86. On the basis of the aforesaid judgements, the Defendants submitted that the mandatory injunctions at any stage, let alone the adinterim stage, should only be granted in the following circumstances: a. where the Plaintiff's case for trial is stronger and that of a higher standard than that of a prima facie case as is normally required for a prohibitory injunction; b. where the failure to grant a mandatory injunction would result in such injustice that the Court at the end of the matter would not be able to vindicate it; c. where the withholding of mandatory injunction would be in the nature of a dismissal of the main petition in itself because by the time the matter comes up for hearing there would be nothing left to be allowed in terms of reliefs; d. where the considerations of balance of convenience and irreparable injury would forcefully tilt the balance of the case totally in favour of the applicant; e. where it is absolutely necessary to prevent irreparable or serious injury which cannot be compensated in terms of money; f. Where withholding of it would prick the conscience of the Court and do violence to the sense of justice; and g. Such cases required a mandatory injunction would be rare cases accompanied by compelling circumstances, where the injury complained of is immediate and pressing and could cause extreme hardship.

87. The Defendants submitted that it is evident that the grant of a mandatory injunction requires compelling or exceptional circumstances and that it is a remedy that is not easily granted. The Defendants further submitted that in fact, the test, as further refined in the cases of Deoraj (Supra) and Hammad Ahmed (Supra) is that the case for grant of mandatory injunction must be such that withholding of such relief would render the petition futile or dismissal of the petition, as there would be no reliefs left to grant.

88. The Defendants submitted that as such, judicial discretion for the grant of such relief has to be exercised within the cornerstones of the above principles set out by the Supreme Court. More so, at the time of adinterim relief, the discretion to grant a mandatory injunction must be exercised even more cautiously.

89. The Defendants submitted that the Learned Single Judge has erred in granting such relief for various reasons, some of which are as follows: a. The Learned Single Judge has not delved into the factors necessitating the grant of ad-interim relief at all in the course of the Impugned Order dated 25th October 2023 despite substantial arguments on the same being advanced by both sides. b. The Learned Single Judge with regard to the facts necessary for the grant of ad-interim factors held as follows:

50. I am not going into further details. So also, Mr. Andhyarujina invited my attention to various WhatsApp messages wherein Plaintiff No.1 himself has come forward to sell the premises wherein Export Division was functioning. An attempt is also made by Mr. Dhond to show me a cash-book showing withdrawal of an amount in lakhs of rupees by other directors. I have not dealt with these aspects as I am satisfied that a case of interim mandatory injunction is made out for the reasons stated hereinabove. All these instances only shows the intentions of the parties. These instances have taken place when there was a cordial relationship and had happened when they have started the process of separation and have happened once Plaintiff No.1 was removed without following the procedure of law. It is true that background for instituting the Infringement Suit is the act of selling the products by Plaintiff No. 1 and No.2 through Absolink Private Limited." As such, the Learned Single Judge has not made any finding as regards why the grant of mandatory injunction at the ad-interim stage was necessary in the facts of the present case. c. The Learned Single Judge has erred in not assigning special reasons for the grant of mandatory injunction. In this regard, reliance is placed on the judgement of the Hon’ble Supreme Court in the case of Srikrishna & Ors vs. Aniruddha Singh & Ors. (2005) 12 SCC 389 which set aside an order granting mandatory injunction on the ground that no special reasons were cited. d. The facts which were presented in the Plaint to demonstrate necessity of urgent and ad-interim reliefs and the fact that the Defendants had allegedly "taken various unilateral, malicious and far-reaching steps to disturb the status quo" are set out in paragraphs 78(a) to 78(e) of the Plaint and the Defendants’ response at paragraph 36 of the Defendants’ Limited Affidavit in Reply had not been dealt with in the Impugned Order.

90. In our view, in paragraphs 54 to 57 of the Order date 25th October 2023, the Learned Single Judge has given various reasons for granting the mandatory injunction at the ad interim stage. Paragraphs 54 to 57 read as under: “54. Both of them vehemently argued for granting the relief and refusing the relief at this stage. Both of them relied upon various citations. Learned Senior Advocate Mr.Dhond relied upon following citations:- (a) Samir Narain Bhojwani V/s. Aurora Properties and Investments and Another [(2018) 17 Supreme Court Cases 203] (b) Hammad Ahmed V/s. Abdul Majeed and Others [(2019) 14

(c) Deoraj V/s. State of Maharashtra and Others [(2004) 4

(d) Champsey Bhimji & Co. V/s. Jamna Flour Mills Co. Ltd.,

[1914 SCC Online Bom 41] (e) Baban Narayan Landge v/s. Mahadu Bhikaji Tonchar and Others [1989 Mh.L.J. 146] (f) Nandan Pictures Limited V/s. Art Pictures Ltd. [AIR 1956

55. Whereas, learned Senior Advocate Mr.Andhyarujina relied upon following judgments:- (a) Samir Narain Bhojwani V/s. Aurora Properties and Investments and Another [(2018) 17 Supreme Court Cases 203] (b) Dorab Cawasji Warden V/s. Coomi Sorab Warden and Others [(1990) 2 Supreme Court Cases 117]

(c) Deoraj V/s. State of Maharashtra and Others [(2004) 4

56. If we read observations therein, we may find that in a given case, Court can certainly grant mandatory injunction at an interim stage. However, there is a caution, because, prohibitory injunction is in negative format, whereas, mandatory injunction is in a positive format. Once the trial is conducted, the Court has wide scope of scrutinizing the materials. However, at an interim stage, the inquiry is conducted on the basis of affidavit and documents. Both the learned Senior Advocates read over relevant observations from these judgments. On their conjoint reading, the principles can be culled out as follows:a. Passing of mandatory injunction at an interim stage is justified only when the circumstances are clear and prima facie material clearly justifies a finding that a status quo has been altered by one of the parties to the litigation and interest of justice demanded that status quo ante by restoring by way of an interim order. b. If granting of relief is delayed till disposal of final petition, nothing would remain to be allowed as a relief. c. A strong prima facie case higher than normal prima facie case has to be made out to prevent irreparable injury not compensable in terms of money along with Balance of convenience. d. Power is not to be exercised unless Court feels that high degree of assurance that at the trial similar injunction would in all probabilities would be granted. Injunction which is in the form of equitable relief have to be adjusted in aid of equity and justice. So certainly interim mandatory injunction can be granted if the facts and circumstances justify. Conclusion

57. For the reasons stated above, I am inclined to grant interim mandatory injunction. The grant of mandatory injunction is an equitable relief and it is based on equitable principles. If one of the litigants by taking shelter of law wants to defeat the equitable principles, Court cannot shut its eyes. Ultimately, the background in which the provisions of Section 169 of the Companies Act are invoked cannot be overlooked. Court cannot forget the fact that during the pendency of ad interim relief in an Infringement Suit, the power to remove director was exercised and the urgency for Defendant No.1 to Defendant No.3 to exercise that power. I find no urgency. There cannot be any intention other than intention to defeat the legitimate claim of exercise of right by Plaintiff No.1. If such an unjustified act will be continued till further hearing, it will send a message that wrongdoers can be protected under the guise of law. It is also true that when Plaintiff No.1 is not a director, Defendant No.1 to Defendant No.3 will take certain decisions which will be detrimental to the interest of Plaintiff No.1. So case for interim mandatory injunction is made out.”

91. We are in respectful agreement with the findings of the Learned Single Judge. In our view, the Learned Single Judge has considered the principles for granting mandatory injunction laid down by the Hon’ble Supreme Court, and, on the basis of these principles, has correctly granted the mandatory injunction.

APPEALS AGAINST ORDER DATED 10th NOVEMBER 2023

92. As far as the Appeals against the Order dated 10th November 23 are concerned, by the Order dated 25th October 2023, the Learned Single Judge was pleased to pass an ad-interim order directing Defendant Nos.[1] to 7 to jointly and severally restore status quo ante in favour of Plaintiff No.1 as it was existing from 3rd July 2023 after passing of the order in Interim Application (L) No. 8399 of 2023 in Commercial IP Suit No.177 of 2023. In an Order dated 10th November 2023 passed pursuant to an application made for speaking to the minutes of the Order dated 25th October 2023, the Learned Single Judge clarified that the status quo was granted in favour of the Plaintiff No.1 Sunil Shah as a director from 3rd July 2023. It is the submission of the Defendants that such a clarification could not have been granted in an application for speaking to the minutes of the Order dated 25th October 2023.

93. We are unable to agree with the same. If the Order dated 25th October 2023 is read in its entirety, it is obvious that the Learned Single Judge was granting restoration of status quo qua Plaintiff No.1 as a director. As the words “as a director” were missed out in Order dated 25th October 2023, the Learned Single Judge correctly clarified the same by the Order dated 10th November 2023 passed in an Application for speaking to the minutes of the Order dated 25th October 2023.

94. Further, we, as the Appellate Court, also find that, for all the reasons mentioned in this judgement, Plaintiff No.1 one should be reinstated as a director with effect from 3rd July 2023. Hence we see no merit in these Appeals.

95. Since we have come to the conclusion that the ad-interim mandatory injunction granted by the Learned Single Judge is justified on the basis that there was in existence a family arrangement and Defendant No.4 was a quasi-partnership, and since these Appeals are from an ad-interim order, we are not inclined to go into the issues as to whether the removal of Plaintiff No.1 as a director is contrary to Article 145 of the Articles of Association of Defendant No.4 and whether Plaintiff No.1 has vacated the office of the director by virtue of Article 144G of the Articles of Association of Defendant No.4. These issues can be gone into by the Learned Single Judge hearing the Interim Application.

96. We also clarify that our findings on family arrangement and quasi-partnership are only for the purpose of confirming the ad-interim order.

97. For all the reasons stated hereinabove, we pass the following order: ORDER a. Appeal (L) Nos. 30581 of 2023, 32111 of 2023 and 33445 of 2023 are dismissed. In view of the disposal of the above Appeals, nothing survives in any of the pending Interim Applications therein and the same are disposed of accordingly. b. Pending the hearing and final disposal of the Interim Application (L) No.22820 of 2023, pending before the Learned Single Judge, Plaintiff No.1 is reinstated as a director of Defendant No.4 from 3rd July 2023 onwards. Hearing of Interim Application (L) No. 22820 of 2023 is expedited. c. In the facts of the case, there will be no order as to costs.

98. This order will be Personal Assistant of this Court. All concerned will act on production by fax [FIRDOSH P. POONIWALLA, J.] [B. P. COLABAWALLA, J.]

99. At this stage, Mr. Andhyarujina, the learned Senior Counsel appearing on behalf of the Appellants sought a stay of the direction passed by us reinstating Plaintiff No.1 as a Director of Despondent No.4. This request is made because the Appellants would like to test the above order before the Hon’ble Supreme Court.

100. To enable the Appellants to test this order before the Hon’ble Supreme Court, we order that the direction given in paragraph 97 (b) of the above order shall not be given effect to for a period of two weeks from today. This is, however, subject to the fact that Defendant Nos.[1] to 4 shall not deal with any of the immovable properties of Defendant No.4 for the aforesaid period, and shall also not deal with the bank accounts of Defendant No.4 except in the usual course of business.

101. Mr. Tamboly, the learned counsel appearing inter alia on behalf of Defendant Nos.[1] to 3, as well as Mr. Andhyarujina, the learned Senior Counsel appearing on behalf of Defendant No.4, have stated that they have not created any third party right, title or interest in any of the immovable properties of Defendant No.4, save and except the basement office in 225/227 “Dun Apartments” admeasuring 1500 sq.ft. situated at J. Dadaji Road, Tardeo, Mumbai-400 007. The said statement is accepted as an undertaking given to the Court.

102. This order will be Personal Assistant of this Court. All concerned will act on production by fax [FIRDOSH P. POONIWALLA, J.] [B. P. COLABAWALLA, J.]