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2025 DIGILAW 471 (HP)

Arvind Kumar Arora v. Suman Lata Gupta

2025-03-24

SATYEN VAIDYA

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JUDGMENT : (Satyen Vaidya, J.) Petitioners herein are plaintiffs in Civil Suit No.107/1 of 2019 pending on the files of learned Civil Judge, Court No.2, Nalagarh, District Solan, H.P. The plaintiffs have averred that they are share-holders in a Company named M/s Solan Spinning Mills Private Limited (for short, “Company”). The defendant (respondent herein) is also stated to be the share-holder in the Company. 2. According to plaintiffs, on 11.01.2018, the defendant had agreed to transfer her 86700 equity shares in the Company in favour of plaintiffs at the rate of Rs.44/- per share. As per plaintiffs, they had agreed to make the payment on or before 30.06.2018. It is also averred that the plaintiffs purchased number of shares against payment of consideration amount as detailed hereafter: Sr. No Plaintiff (s) No. of shares Total consideration(Rs) Date of payment Actual amount paid In (Rs.) 1. Plaintiff No.1 43111 18,96,884/- 26.06.2018 18,96,884/- 2. Plaintiff No.2 14922 6,56,568/- 26.06.2018 6,56,568/- 3. Plaintiff No.3 23705 10,43,020/- 27.06.2018 5,00,000/- 4. Plaintiff No.4 4962 1,96,080/- 27.06.2018 1,96,080/- 3. The plaintiffs have raised the grievance that despite receipt of consideration amount, the defendant has refused to transfer the shares in favour of the plaintiffs and has also threatened to transfer said shares in favour of third parties. 4. In above backdrop, the relief of permanent prohibitory and mandatory injunctions has been sought. It has been prayed that the defendant be restrained by a decree of permanent prohibitory injunction from selling and transferring her shares in the Company to third parties. Further a decree of mandatory injunction has also been claimed seeking direction against the defendant to transfer her entire shares in the Company in the name of plaintiffs. 5. The plaintiffs also filed an application under Order 39 Rule 1 & 2 of the Code of Civil Procedure (for short, “Code”) along with the suit with a prayer to restrain the defendant from selling or transferring her shares in the Company to third party during the pendency of the suit. The said application was registered on the files of learned trial Court as CMA No. 54/6 of 2019. 6. The defendant is contesting the suit by raising various legal objections. On facts, the claim of the plaintiffs has been denied in entirety. It is alleged that the husband of defendant remained one of the Directors in the Company. The said application was registered on the files of learned trial Court as CMA No. 54/6 of 2019. 6. The defendant is contesting the suit by raising various legal objections. On facts, the claim of the plaintiffs has been denied in entirety. It is alleged that the husband of defendant remained one of the Directors in the Company. He resigned as Director of the Company w.e.f. 11.01.2018 for the reason that the working of plaintiff No.1 and husband of plaintiff No.4 in the affairs of the Company was suspicious. The defendant along with her son has claimed to be holding 25% shares in the Company (18% by defendant and 7% by her son Shrey Garg). In this manner, the defendant claimed to be holding 1,63,476 shares and Shrey Garg holding 63,574 shares. According to defendant, 1% of the total shares are equal to 9082 shares. 7. As per the defendant, an oral agreement was entered into between the husband of defendant and plaintiff No.1 on 02.01.2018 at Delhi and it was agreed that the family of defendant would transfer 6% shares out of their share holding in the Company against sale consideration of Rs.55,50,000/- to the family of plaintiff No.1. Thus, the value of 1% shares i.e. 9082 shares was agreed at Rs.9,25,000/-. The defendant has also alleged that in pursuance to above deal, 6% shares out of the total 7% share holding of the son of defendant were transferred in the name of plaintiff No.1 and plaintiff No.2 on 15.01.2018, but the family of defendant was paid a sum of Rs.41,97,784/- only as against the total price of Rs.55,50,000/- keeping the balance of Rs.13,52,216/-. The defendant has placed reliance on record of Registrar of Companies to prima-facie establish the transfer of shares by the son of defendant in favour of plaintiffs No.1 and 2. 8. It is further the defence of defendant that on 17.01.2018, the husband of plaintiff No.4 signed a Memorandum of Understanding (for short, “MoU”) with the defendant and her son at Delhi with respect to transfer of balance 19% shares of the defendant and her son. The total sale consideration was agreed at Rs.1,75,75,000/-. The defendant claims to have transferred 9.45% shares out of 19% shares to plaintiff No.4 in the months of March and June, 2018. Again, reliance has been placed on record of Registrar of Companies to prima-facie establish such transfer. The total sale consideration was agreed at Rs.1,75,75,000/-. The defendant claims to have transferred 9.45% shares out of 19% shares to plaintiff No.4 in the months of March and June, 2018. Again, reliance has been placed on record of Registrar of Companies to prima-facie establish such transfer. In this transaction also defendant has alleged to have received less amount. It is claimed that against the total value of shares purchased by plaintiff No.4 from the defendant and her son priced at Rs.87,41,250/-, the defendant has been paid only a sum of Rs.49,46,081/- leaving a balance of Rs.37,95,170/-. 9. The defendant claims to be holding 9.55% balance of shares i.e. 86700 shares in the Company. Her further allegation is that the plaintiffs have filed false police complaints and FIRs against the defendant. Their motive is to pressurize the defendant to transfer her balance shares in their favour by dictating the terms and the present suit has also been filed with the same purpose. 10. Learned trial Court allowed CMA No. 54/6 of 2019 vide order dated 03.12.2019 and restrained the defendant from selling and transferring the shares in dispute till the final disposal of the main suit. The order dated 03.12.2019 passed by learned trial Court in CMA No. 54/6 of 2019 was assailed by the defendant by filing appeal under Section 43 rule 1 (r) of CPC registered as Civil Misc. Appeal No.1-NL/14 of 2020 on the files of Additional District Judge, Nalagarh. The appeal of the defendant has been allowed vide impugned order dated 18.07.2022 passed by learned Additional District Judge, Nalagarh and the application of the plaintiffs under Order 39 Rule 1 & 2 CPC has been dismissed. 11. I have heard learned counsel for the parties and have also gone through the records of the case carefully. 12. The order passed by learned trial Court reveals that it had come to a conclusion that the defendant had acknowledged existence of contract to sell the shares to plaintiffs. However, learned appellate Court has found the said fact to have been wrongly recorded. 13. Evidently, assumption drawn by learned trial Court that the defendant had acknowledged an agreement to sell shares had weighed with the said court to pass interim injunction in favour of the plaintiffs. 14. However, learned appellate Court has found the said fact to have been wrongly recorded. 13. Evidently, assumption drawn by learned trial Court that the defendant had acknowledged an agreement to sell shares had weighed with the said court to pass interim injunction in favour of the plaintiffs. 14. On the other hand, learned Appellate Court has concluded that both the parties are at variance as to the value of shares sought to be sold by the defendant to the plaintiffs. It has been observed that in case the price of the share was higher as alleged by the defendant, she was under no obligation to sell her balance shares to the plaintiffs at a lower price. Learned Appellate Court also held that the stand of the defendant with respect to the money already received by her from the plaintiffs and its variance with the money alleged to have been paid by the plaintiffs to the defendant remained unnoticed in the order of learned trial Court. Thus, learned Appellate Court has held that the plaintiffs had failed to prove existence of prima-facie case as their allegations were without any material to support. Further, learned Appellate Court has refused to exercise discretion in favour of the plaintiffs on the premise that keeping in view the nature of dispute, the plaintiffs even if succeeded in the suit could be adequately compensated in terms of money. 15. Learned counsel for the plaintiffs has placed reliance on judgment passed by Hon’ble Supreme Court in Wander Ltd. And Another vs. Antox India P. Ltd. 1990 (Supp) SCC 727 to assert that learned trial Court had passed a reasoned order and the same could not have been set-aside by learned Appellate Court merely because on reappreciation it had arrived at different factual conclusion. Para-14 of the aforesaid judgment reads as under: “14. The appeals before the Division Bench were against the exercise of discretion by the Single Judge. In such appeals, the Appellate Court will not interfere with the exercise of discretion of the court of first instance and substitute its own discretion except where the discretion has been shown to have been exercised arbitrarily, or capriciously or perversely or where the court had ignored the settled principles of law regulating grant or refusal of interlocutory injunctions. An appeal against exercise of discretion is said to be an appeal on principle. An appeal against exercise of discretion is said to be an appeal on principle. Appellate Court will not reassess the material and seek to reach a conclusion different from the one reached by the court below if the one reached by the court was reasonably possible on the material. The appellate court would normally not be justified in interfering with the exercise of discretion under appeal solely on the ground that if it had considered the matter at the trial stage it would have come to a contrary conclusion. If the discretion has been exercised by the Trial Court reasonably and in a judicial manner the fact that the appellate court would have taken a different view may not justify interference with the trial court's exercise of discretion. After referring to these principles Gajendragadkar, J. in Printers (Mysore) Private Ltd. v. Pothan Joseph (1960) 3 SCR 713 : “... These principles are well established, but as has been observed by Viscount Simon in Charles Osention & Co. v. Jhanaton 1942 AC 130 ‘….. the law as to the reversal by a court of appeal of an order made by a judge below in the exercise of his discretion is well established, and any difficulty that arises is due only to the application of well settled principles in an individual case’.” The appellate judgment does not seem to defer to this principle.” 16. The contention so raised on behalf of the plaintiffs will not be applicable in the instant case for the reasons firstly that the defendant had availed the remedy of statutory appeal under Section 43 Rule 1 (r) of CPC and the Appellate Court was within its jurisdiction to re-appraise the merits of the rival contentions. Secondly, no doubt, the grant of injunction is an equitable and discretionary relief but such aspect is only one of the parameters governing the field. The Court has to arrive at conclusions as to existence of prima-facie case, balance of convenience and irreparable loss in favour of the plaintiffs/applicants on objective considerations for which the material on record becomes relevant. Lastly, learned Appellate Court has interfered with the order of learned trial Court after holding that the said Court had passed the order on assuming certain facts which otherwise were not existing. 17. As noticed above, the plaintiffs have claimed that they have made total payment of Rs.32,49,532/- to the defendant. Lastly, learned Appellate Court has interfered with the order of learned trial Court after holding that the said Court had passed the order on assuming certain facts which otherwise were not existing. 17. As noticed above, the plaintiffs have claimed that they have made total payment of Rs.32,49,532/- to the defendant. On the other hand, the defendant had admitted receipt of total sum of Rs.91,43,865/-. The plaintiffs have made a mention about the transfer of total 86700 equity shares at the rate of Rs.44/- per share. The total sale price of 86700 equity shares as claimed by the plaintiffs will be much less than the amount already received by the defendant from the plaintiffs. That being so, it remained unexplained as to why the excess amount was paid by the plaintiffs. In the given circumstances, the defence raised by the defendant could not be rejected out rightly. 18. Further, the plaintiffs have not made any assertion with respect to deal, if any, with the defendant for other shares held by her. The defendant claims to have held 25% shareholding along with her son in the Company. Now she is stated to be left with only 9.5% of the holding amounting to 86700 shares. The plaintiffs have not even made a whisper as to how the other shares of the defendant and her son were utilized, if the same were not sold to the plaintiffs as alleged by the defendant. 19. In this background a lot of gaps are visible as far as claim of the plaintiffs is concerned. Thus, it cannot be said that the plaintiffs have been able to place on record such material which reveals existence of prima-facie case in their favour. 20. As regards the other two ingredients of balance of convenience and irreparable loss, the same also cannot be said to be favouring plaintiff. The dispute is with respect to the equity shares in the holding, which have market value. In case the plaintiffs succeed, they can be compensated adequately in terms of money and on the other hand in case they fail, the defendant shall be unnecessarily detained from utilizing her property in the manner she likes. Indisputably, the final disposal of the civil suit is likely to take considerable time. 21. The relief of mandatory injunction can be granted only if the contract is capable of being specifically enforced. Indisputably, the final disposal of the civil suit is likely to take considerable time. 21. The relief of mandatory injunction can be granted only if the contract is capable of being specifically enforced. It is admitted case of the parties that they had entered into an agreement for sale and purchase of shares in January, 2018 and the money was also exchanged between the parties till June, 2018. The variance in the respective stands of parties is with respect to terms of agreement and price of shares. At that time of alleged agreement between parties, the Specific Relief Amendment Act, 2018 had not been enforced, therefore, the parties would be governed by the un amended act wherein there was a bar to specifically enforce a contract the breach of which could be adequately compensated in terms of money. 22. In result, I do not find any illegality, perversity or error of jurisdiction in the impugned order passed by learned Additional District Judge, Nalagarh on 18.07.2022 in Civil Misc. Appeal No.1-NL/14 of 2020. Accordingly, the petition is dismissed. 23. It is, however, clarified that the observations made hereinabove are only for the purposes of disposal of this petition and will not be construed to have any bearing on the merits of the Civil Suit pending adjudication before learned trial court. 24. The petition stands disposed of, so also the pending application(s) if any.