Research › Search › Judgment

Himachal Pradesh High Court · body

2016 DIGILAW 1210 (HP)

Des Deepak Khanna v. Sharda Devi Kanwar

2016-06-28

RAJIV SHARMA

body2016
JUDGMENT : Rajiv Sharma, J. 1. This Regular Second Appeal has been instituted against Judgment and Decree dated 24.11.2015 rendered by the learned Additional District Judge-I, Solan, District Solan, Himachal Pradesh in Civil Appeal no. 123-S/13 of 2012. 2. "Key facts" necessary for the adjudication of the present appeal are that the respondent-plaintiff (hereinafter referred to as 'plaintiff' for convenience sake) filed a suit for declaration and permanent prohibitory injunction under Sections 34 and 38 of the Specific Reliefs Act, against the appellant-defendant (hereinafter referred to as 'defendant' for convenience sake). According to the averments as made in the plaint, M/s Chander Tal Hotel is a private limited concern. Plaintiff is the Director of the same. Plaintiff is owner-in-possession of the suit land as detailed in plaint, in the capacity of Director of the company. Shri Devinder Singh Kanwar, husband of the plaintiff transferred the above said land in the name of M/s Chander Tal Hotel Company after seeking due permission from the State Government. Defendant was a good friend of the husband of the plaintiff. He approached for employment, therefore, Devinder Singh Kanwar appointed him as a Manager of the Company to look after affairs of M/s Chander Tal Hotel. Shri Devinder Singh was suffering from cancer. He could not recover from the ailment. He died in the year 2004. After the death of Devinder Singh Kanwar, plaintiff inducted her son as one of the Directors of the Company. Plaintiff became suspicious and asked about the progress of work from the defendant. Plaintiff was surprised that no development work was done on the site and defendant pretended himself to be the Director of the company. He was going to alienate the suit land to some other person. Defendant did not have any lawful authority to deal with the affairs of the company. It was in these circumstances that the civil suit was filed. 3. Suit was contested by the defendant. Defendant admitted that Shri Devinder Singh Kanwar was one of the Directors of the Company. Suit land was in his name before transferring in the name of the Company. Company was formed on 29.4.1992. Devinder Singh transferred the suit land in the name of M/s Chander Tal Hotel after obtaining permission of the State Government. Defendant admitted that Shri Devinder Singh Kanwar was one of the Directors of the Company. Suit land was in his name before transferring in the name of the Company. Company was formed on 29.4.1992. Devinder Singh transferred the suit land in the name of M/s Chander Tal Hotel after obtaining permission of the State Government. It was decided in the meeting of the Company held on 2.5.1992 that land was to be purchased by the Company from Devinder Singh Kanwar. The value of land was assessed at Rs.7.00 Lakh and consideration was paid. On 4.5.1992, meeting of the Company was held and resolution was passed that Additional Directors were to be appointed along with defendant as one of the Additional Directors. Husband of the plaintiff transferred the entire share of Rs.70,000/- to the defendant. He denied that the defendant came for employment. It is also denied that on 11.5.1992, defendant was appointed as Manager of the Company and authorized to sign documents on behalf of the Company. It is averred that Shri Devinder Singh has sold his entire shares to defendant and other Directors of the Company, and has retired from the company. He was not pretending to be the Director of the Company. 4. Replication was filed by the plaintiff. Issues were framed by the learned Civil Judge (Junior Division) on 28.10.2010. Learned trial Court decreed the suit as per judgment and decree dated 19.11.2012. Defendant filed an appeal before the Additional District Judge-I, Solan. He also dismissed the appeal on 24.11.2015. Hence, this Regular Second Appeal. 5. The Regular Second Appeal was taken for final hearing at the admission stage. 6. Mr. G.D. Verma, learned Senior Advocate on the basis of substantial questions of law framed has vehemently argued that the suit was barred by limitation. Learned Courts below have misconstrued oral as well as documentary evidence and have failed to consider the minutes of the meetings dated 2.5.1992, 4.5.1992 and 11.5.1992. He has also argued that his client was a bona-fide purchaser of the shares from plaintiff and her husband. First appellate Court has misread the Memorandum and Articles of Association and sale deed executed and registered on 25.8.2000. 7. Mr. G.C. Gupta, learned Senior Advocate has supported the judgments and decrees passed by both the learned Courts below. 8. I have heard the learned counsel for the parties and also gone through the record carefully. 9. First appellate Court has misread the Memorandum and Articles of Association and sale deed executed and registered on 25.8.2000. 7. Mr. G.C. Gupta, learned Senior Advocate has supported the judgments and decrees passed by both the learned Courts below. 8. I have heard the learned counsel for the parties and also gone through the record carefully. 9. Since all the substantial question of law are interconnected, hence, are taken up together for discussion in order to avoid repetition of evidence. 10. M/s Chander Tal Hotel was registered with the Registrar of Companies. Ext. PX is the certificate of incorporation issued by the Registrar of Companies. Memorandum and Articles of Association of the Company is Ext. PW-1/C. The share capital of company was fixed at Rs.10.00 Lakh divided into Rs.1.00 Lakh equity shares of face value of Rs.10/- each. Articles No. 7 and 8 of the Articles of Association read as under: “7. Any member desiring to sell any of his shares must notify to the Board of Directors the number of shares, the fair value and the name of the proposed transferee and the Board must offer to the other share holders the shares offered at the fair value and if the offer is accepted the shares shall be transferred to the acceptors and if the shares or any of them are not so accepted within one month, from the date of notice to the Board, the members proposing transfer shall at any time within two months afterward, be at liberty, subject to Articles 8 and 9 hereof, to sell and transfer the shares to any person at the same or at the higher price. 8. No transfer of shares shall be made or registered without the previous sanction of the Directors, except when the transfer is made by any member of the Company to another member or to the member’s wife or child or children or his heirs and the Directors may decline to give such sanction without assigning any reason subject to Section 111 of the Act.” 11. It is apparent from a plain reading of Article 7 of the Articles of Association that any member desiring to sell any of his shares must notify it to the Board of Directors, the number of shares, fair value and name of the proposed transferee and the Board must offer to the other shareholders the shares offered, at the fair value and if the offer is accepted the shares shall be transferred to the acceptors and if the shares or any of them are not so accepted within one month, from the date of notice to the Board, the members proposing transfer shall at any time within two months afterward, be at liberty, subject to Articles 8 and 9, to sell and transfer the shares to any person at the same or at the higher price. 12. Meeting was held under the Chairmanship of the husband of the plaintiff on 2.5.1992 at 3.30 PM. Value of the suit land belonging to the husband of the plaintiff was assessed at Rs.7.00 Lakh. He agreed to transfer it to the company in lieu of Rs.70,000/- shares of company each of the value of Rs.10/-. Subsequent meeting was held on 4.5.1992 at 11 AM under the Chairmanship of the husband of the plaintiff. This meeting was attended by the plaintiff as a Director. Meeting was also convened on 11.5.1992 at 10 AM under the chairmanship of the husband of the plaintiff. According to this meeting, 50,000 shares each of value of Rs.10/- of the husband of the plaintiff were shown to have been transferred in favour of the defendant, his father OP Khanna and his brother K.D. Khanna. There is no tangible evidence on record to establish that the Board of Directors had been informed by the husband of the plaintiff with respect to intention of transferring shares and a period of one month had been given to remaining shareholders to purchase these shares and that after expiry thereof, shares have been sold/transferred in favour of the defendant and his relatives as per Article 7 of the Articles of Association. Moreover, there is no tangible evidence on record to prove that intimation of transfer of the shares was sent to the Registrar of Companies. Even, the annual return/balance sheet has not been placed on record. 13. Moreover, there is no tangible evidence on record to prove that intimation of transfer of the shares was sent to the Registrar of Companies. Even, the annual return/balance sheet has not been placed on record. 13. Now, the Court will advert to the fact whether defendant was appointed as one of the Directors of the Company. According to the proceedings of the minutes book dated 4.5.1992, proposal was placed before the Board of Directors to appoint Additional Directors. Defendant was one of them. On 4.5.1992, only the proposal was placed before the Board of Directors to appoint Additional Directors, However, fact of the matter is that the defendant was not appointed as Additional Director of the Company. Intimation of the appointment of Additional Directors was required to be given to the office of Registrar of Companies to confirm the appointment of the Additional Directors in the annual meeting. Defendant while appearing as DW-1 has admitted categorically that no such intimation has been placed on record nor the intimation was sent to the Registrar of Companies regarding appointment of Additional Directors. Even in the meeting held on 11.5.1992, there is no mention of confirmation of the defendant as Additional Director. Form-32 was required to be sent to the Registrar of Companies. 14. Mr. G.D. Verma, learned Senior Advocate has argued that the plaintiff and her husband have resigned from the Company and resignation was accepted in the meeting by the Board of Directors after transferring their shares. Neither the defendant nor any other person was appointed as Additional Director. There is no question of submitting resignation before them. Defendant has not placed on record resignation letters of the plaintiff and her husband. Land has been transferred by Shri Devinder Singh in the name of the plaintiff in the capacity of Director. Proceedings dated 25.8.2000 have not been signed by the plaintiff. Defendant in his cross-examination admitted that intimation of the transfer of shares is required to be sent to Registrar of Companies office. It is also required to be mentioned in annual return. The annual return/balance sheet of the company has not been placed on record and no document or mode of transfer of shares has been placed on record. 15. Learned trial Court has specifically framed issue that whether the suit was time barred. However, the defendant has not led any evidence that how the suit was time barred. The annual return/balance sheet of the company has not been placed on record and no document or mode of transfer of shares has been placed on record. 15. Learned trial Court has specifically framed issue that whether the suit was time barred. However, the defendant has not led any evidence that how the suit was time barred. Learned Courts below have correctly appreciated Articles 7 and 8 of the Articles of Association. Learned Courts below have also correctly appreciated the minutes of the meetings held on 2.5.1992, 4.5.1992 and 11.5.1992 as well as sale deed dated 25.8.2000 (Ext. PW-1/D) and the minutes of the meeting held on 25.8.2000. Defendant has failed to prove that he was inducted as Additional Director of the Company. Transfer of shares in his name is also not in accordance with the Articles of Association. Resignation letters of the plaintiff and her husband have not been placed on record. No intimation has been given to the Registrar of Companies. Annual return has also not been placed on record to prove transfer of the shares. Appointment of the defendant as an Additional Director of the Company was never confirmed in the subsequent meetings. 16. The substantial questions of law are answered accordingly. 17. Accordingly, in view of the discussions and analysis made hereinabove, the present appeal has no merits and the same is dismissed. Pending applications, if any, also stand disposed of. No costs.