VLS Commodities Private Limited v. Late Somesh Mehrotra through Sadhna Mehrotra & Ors.

1. This is an application on behalf of the plaintiff seeking interim restraint on grant of succession certificate with respect to 23,85,530 (twenty three lakhs eighty five thousand five hundred thirty) shares of VLS Capital Ltd, registered in the name of defendant no. 1. 2022:DHC:3177

2. It is the case of the plaintiff that by order dated 30.04.2019, this Court had directed that status quo be maintained with respect to the aforesaid shares. Despite the aforesaid order, the defendant no. 1 and 2 are aggressively pursuing the succession proceedings in respect of the aforesaid shares.

3. The present suit has been filed by the plaintiff seeking recovery of loan of Rs. 1,50,00,000/- (Rupees One Crore fifty lakhs only) extended to late Mr. Somesh Mehrotra during 2007-2008, along with interest calculated @12% per annum until the date of realisation. It is submitted that at the time of grant of loan, late Mr. Somesh Mehrotra was a Director in the plaintiff company and also had its 2000 preference shares. The total amount due and recoverable by the plaintiff on the date of filing of the suit on 30.04.2017, was Rs. 4,18,61,406/- (Four crores, eighteen lakhs sixty one thousand four hundred six). The said amount as on 30.09.2020 was Rs. 6,17,59,830/- (Six crores seventeen lakhs fifty nine thousand eight hundred thirty).

4. It is submitted on behalf of the plaintiff that late Mr. Somesh Mehrotra held 96,38,020 shares in VLS Capital Ltd. Out of the said shares, 27,60,400 (Twenty seven lakhs sixty thousand) shares were gifted to him by Mr. M.P. Mehrotra on behalf of Mr. Vikas Mehrotra. 44,92,090 (forty four lakhs ninety two thousand ninety) shares were gifted to him by Mr. M.P. Mehrotra on behalf of M.P. Mehrotra HUF, in which Mr. Vikas Mehrotra is a coparcener and had vital financial interest. It is submitted that the title of late Mr. Somesh Mehrotra to the aforesaid 72,52,490 (Seventy two lakhs fifty two thousand four hundred ninety) shares were disputed by Mr. Vikas Mehrotra by challenging the aforesaid gift deeds in CS (OS) No. 3067/2015 and CS (OS) No. 3314/2015. The said suit proceedings are pending till date. It is submitted that in the aforesaid proceedings, status quo was granted with respect to 72,52,490 (Seventy two lakhs fifty two thousand four hundred ninety) shares of VLS Capital Ltd.

5. It is further submitted on behalf of the plaintiff that apprehending misuse/dilution/alienation of the balance shares of VLS Capital Ltd. owned by late Mr. Somesh Mehrotra, the plaintiff sought a status quo with respect to the balance 23,85,530 (twenty three lakhs eighty five thousand five hundred thirty) shares in the present proceedings in order to secure the recovery amount. As per the plaintiff, status quo order was granted by this Court by way of order dated 30.04.2019. However, the aforesaid security only secures the plaintiff to the extent of Rs. 2,38,55,300 (Rupees Two crores thirty eight lakhs fifty five thousand three hundred only) whereas the total outstanding is more than Rs. 6, 00,00,000/- (Rupees six crores only).

6. It is contended on behalf of the plaintiff that the defendants NO. 1 and 2 have started aggressively pursuing the proceedings for grant of succession certificate for assets of late Mr. Somesh Mehrotra, including shares of VLS Capital ltd., despite the aforesaid status quo orders. In view of this, the plaintiff in CS (OS) 3067/2015 and CS (OS) No. 3314/2015 were constrained to approach this Court for clarification of the status quo orders passed therein with respect to the shares of VLS Capital Ltd.

7. Thus, by order dated 17.07.2019, this Court in CS (OS) NO. 3067/2015 and CS (OS) No. 3314/2015 observed that the succession proceedings with respect to shares of VLS Capital Ltd. could continue despite pendency of the proceedings in the said suits and status quo orders were passed therein. Against the said order dated 17.07.2019, the plaintiffs in the said suit preferred appeals. By order dated 24.02.2020, in FAO (OS) No. 209/2019 and FAO (OS) No. 217/2019, DB of this Court observed that no final orders be passed in the succession proceedings till disposal of the aforesaid appeals.

8. It is contended on behalf of the plaintiff that the status quo order passed on 30.04.2019 with respect to the balance 23,85,530 (Twenty three lakhs eighty five thousand five hundred thirty) shares would be rendered meaningless if succession to the said shares is allowed. It is submitted that the plaintiff apprehends that if the defendant no. 1 succeeds to 23,85,530 (Twenty three lakhs eighty five thousand five hundred thirty) shares of VLS Capital Ltd, she would get unfettered right to misuse her rights as a shareholder and the present recovery proceedings will be rendered otiose. It is, thus, prayed on behalf of the plaintiff that a restraint order be passed in respect of succession of 23,85,530 (Twenty three lakhs eighty five thousand five hundred thirty) shares of VLS Capital Ltd in favour of defendant no. 1 and 2.

9. On the other hand, it is argued on behalf of the defendants that an earlier application on behalf of the plaintiff under Order 39 Rules 1 and 2 CPC has already been decided on 30.04.2019, and as such a second application is not maintainable. The succession proceedings are independent of the present suit, thus, no orders can be passed in that regard.

10. Defendants 1 and 2 have denied that they are aggressively pursuing the succession proceedings in respect of the aforesaid shares. They, however, do not deny the fact that by order dated 30.04.2019, status quo was directed to be maintained by this Court.

11. This Court has considered the submissions made on behalf of both the parties and has perused the various documents on record.

12. Various orders have been passed time and again with respect to the succession proceedings, as follows:-

I. Order dated 09.10.2015 passed in CS (OS) No. 3067/2015, wherein it was directed that defendants are restrained from selling, transferring or alienating or encumbering the shares worth Rs. 27,60,400/- (Twenty seven lakhs sixty thousand four hundred) that were held by the plaintiff (Vikas Mehrotra) in the defendant no. 1 company (VLS Capital Ltd. )

II. Order dated 04.11.2015 passed in CS (OS) No. 3314/2015, wherein it was directed that till further orders, the defendants are restrained from transferring, alienating, disposing of the entire 44,92,090 (Forty four lakhs ninety two thousand ninety) fully paid up equity shares of defendant no. 1 company (VLS Capital Ltd.) owned by the HUF to any third party.

III. Order dated 17.03.2017 passed in Succession Case No. 1554/2016, wherein the parties themselves have given no objection to the petion being continued for 23,85,530 (Twenty three lakhs eighty five thousand five hundred thirty)shares of VLS Capital Ltd.