Vikas Mehrotra v. VLS Capital Ltd

1. The appellants have filed the present appeals impugning an order dated 17.07.2019 passed by the learned Single Judge in applications filed by the appellants (plaintiffs in the suits) under Order XXXIXRules 1&2 of the Civil Procedure Code, 1908 (CPC).

2. Mr. Vikas Mehrotra, the appellant in FAO(OS) 209/2019 filed a suit, inter alia, challenging the transfer of 27,60,400 equity shares of VLS Capital Ltd. in favour of his brother Mr. Somesh Mehrotra, since deceased. Sh. Vikas Mehrotra and his sister Ms. Divya Mehrotra filed another suit being suit no. CS(OS)3314/2015, challenging the transfer of 44,92,090 shares of VLS Capital Ltd. belonging to HUF by their father, in favour of their deceased brother, Mr. Somesh Mehrotra.

3. In CS(OS) 3067/2015, an ad interim order was passed on 09.10.2015 and in CS(OS) 3314/2015, an ad interim order was passed on 04.11.2015. The said order reads as under:- “I.A. No.23294/2015 (exemption) Exemption allowed, subject to just exceptions. The application is disposed of. I.A. No.23293/2015 (under Section 149 CPC) Counsel for the plaintiffs states that the amount has beendeposited to take the court fee which is likely to be received veryshortly and the same would be filed within four days. Let deficient court fee be filed within four days. The application is disposed of. CS(OS)No.3314/2015 Let the plaint be registered as a suit. Issue summons to the defendants, on filing of process fee and Regd. A.D. Covers within a week, returnable on 13th January, 2016. I.A. No.23295/2015 (u/o XXXII R 3 CPC) Notice for the date fixed. I.A. No.23292/2015 (u/o XXXIX R.l& 2 CPC) Issue notice to the defendants, for the date fixed. Learned counsel for the plaintiffs is pressing for adinterimorder. He has referred the Declaration of Gift by which Mr. M.P. Mehrotra, Karta of Mahesh Prasad Mehrotra (HUF), has gifted 4492090 equity shares of Rs.10/- fully paid up of VLS Capital Ltd. in favour of Mr. Somesh Mehrotra son of Sh.M.P. Mehrotra. Counsel for the plaintiffs states that the said Declaration of Gift is unstamped, undated and unregistered document which is not admissible in evidence. He further submits that there is a prescribed procedure for transferring the shares which has not been followed before transferring the shares of defendant No.l. He referred para 38 of the Memorandum of Article of Association of defendant No.l. He has also relied upon the order dated 9th October, 2015 passed in CS(OS) No.3067/2015 in which the defendant No.2 is Karta of the company tried to dispose of the shares of the plaintiff No.l, in the said suit interim order was passed in the said order restraining the defendants from selling, transferring or alienating or encumbering the fully paid up equity shares of Rs.10/- each, worth Rs.27,60,400/- that were held by the plaintiff in the defendant No.l company. The said order was subsequently clarified by order dated 19th October, 2015. In view of the averments made in the plaint and material placed on record, it appears that the plaintiffs have been able to make out a prima facie case for the grant of an ex parte ad-interim injunction. In case the interim order is not passed, the plaintiffs will suffer irreparable loss and injury. Hence, it is directed that till further orders, the defendants are restrained from transferring, alienating, disposing of the entire 44,92,090 fully paid up equity shares of Rs.10/- each of defendant No.l company owned by the defendant No.2 HUF to any third party. Compliance of Order XXXIX Rule 3 CPC be made within oneweek. Dasti.”

4. In the meantime, the legal heirs of Mr. Somesh Mehrotra had filed proceedings for securing the succession certificate (which was numbered as SS No.114/2015). The said proceedings are pending before the Administrative Civil Judge, Saket District Courts, New Delhi. It is pointed out that in the said proceedings an order dated 17.03.2017 was passed where the parties had agreed that in view of the proceedings before the High Court in respect of 72,52,490 shares of VLS Capital Ltd. (27,60,400 shares which were a subject matter of CS(OS) 3067 and 44,92,090 shares which were a subject matter of suit no.3314/2015.), the parties would continue the said proceedings in respect of the balance shares held by Mr. Somesh Mehrotra (2,385,530 shares of VLS Capital Ltd.).

5. The appellants claim that in the aforesaid context the learned single Judge had erred in modifying the ad interim orders to permit the proceedings before the Administrative civil Judge to continue in respect of all shares registered in the name of late Somesh Mehrotra.

6. The appellants are essentially aggrieved by the paragraph no.5 of the impugned order which reads as under:-

7. According to the appellants, the said order has the effect of directing that the question as to the title of the 72,52,492 shares be decided by the Administrative Civil Judge, Saket District Courts in SS No.114/2015 (new no. SS No. 1554/2016] and this would foreclose their rights in the suits filed by the appellants [CS(OS) 3067/2015 and CS(OS) 3314/2015].

8. The proceedings in SS No.114/2014 (re-numbered as SS No.1554/2016), relate to determining the heirs, who succeed to the assets of late Mr. Somesh Mehrotra. Clearly, the succession certificate would not confer any better title in respect of the shares in question on Mr. Somesh Mehrotra’s heirs than the title held by him. The question whether the said shares in question were been illegally transferred – which is the allegation made by the appellants in their suits – is not a question that is required to be decided in the said proceedings.

9. The present appeal proceeds on the erroneous premise that the observations made by the learned Single Judge in the first sentence of paragraph no.5 (as noted above) forecloses their rights in the suits filed by them. This understanding is clearly erroneous. The learned counsel appearing for the respondents has also clarified that this is not the understanding of the respondents as well.

10. The question as to who would inherit the assets of late Mr. Somesh Mehrotra is a subject matter of SS No.1554/2016 and not dispute regarding the title of the shares, which is a subject matter of the suits in question.

11. We find merits in the contention of the respondents that the appellants have no real grievance and that they have preferred the present appeal only to further protract the proceedings and the same should be dismissed with costs.

12. The appellants have premised the present appeal on an unsustainable reading of the impugned order and on an illusionary grievance.

13. The appeals are, accordingly, dismissed with costs quantified at ₹50,000/- and the same shall be paid to the contesting respondent within a period of two weeks from today.

VIBHU BAKHRU, J AMIT MAHAJAN, J MARCH 2, 2023