text of appeal from order 176/2003 made before the gujarat high court

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

DISTRICT: AHMEDABAD


APPEAL FROM ORDER NO 176 OF 2003



1. PANKAJ SURESHCHANDRA MODY
HINDU, ADULT, RESIDING AT 40 BRAHMAN
MITRA MANDAL SOCIETY, PALDI,
AHMEDABAD 380006 ….. ……. APPLICANT



VERSUS


1. DHANYUSHYA FINANCIAL LTD
2. MR. JATIN JALUNDHALA
3. M/S CORE HEALTH CARE LIMITED

ALL SITUATED AT CORE TOWERS
NEAR PARIMAL RLY CROSSING
OPPOSITE DOCTOR HOUSE
AHMEDABAD
4. GLOBAL TRUST BANK …….. OPPONENTS
C.G ROAD , AHMEDABAD 9



A PPEAL FROM ORDER AGAINST THE JUDGMENT AND ORDER
DATED 8-4-2003 RENDERED BY THE LEARNED CITY CIVIL
JUDGE AT BHADRA IN SUIT 5827 OF 2001
===================================================



MOST RESPECTFULLY SHEWETH:

1. I , the above referred applicant has filed suit in city civil court vide suit 5827/2001 as well as stay application to restrain the respondents 1 to 4 from disposing the property referred therein. I had also sought appointment of Court Commissioner to take documents in avaljapti.

2. The applicant above-named original plaintiff in civil suit no 5827/2001 being aggrieved and dissatisfied with the judgment and order dated 8-4-2003 rendered by Learned Judge Shri Modi of City Civil Court, Ahmedabad passed following order- “ notice of motion of the plaintiff fails and it is hereby dismissed.” The applicant beg to file this appeal from order and prays that this Honourable Court be pleased to call for the records and proceeding of the suit no 5827/2001 from the file of the Chamber court of City Civil Court, Bhadra , be pleased to peruse and examine the same and further be pleased to quash and set aside the impugned judgment and order in facts and circumstances and on the grounds mentioned herein below:-

3. The facts giving rise to the present appeal are as under:-

4. On 8th January 2002, defendants 1 to 3 gave assurance to the Court Commissioner that they shall produce the documents on 10th January 2002 but did not honor their assurance. On 10th January 2002, they did not appear in their office and defendant 1 chose to file civil revision application 25 and 26 in the Gujarat High Court without making reference of assurance given to the court commissioner that they shall furnish all the necessary information. Original plaintiff and defendant 2,3,4 were made opponents. The applicant for civil revision application had been filed by Shri Amar Bhatt and Mr. Soparkar appeared as counsel in the said matter. It is interesting to that no one appeared for derfendant 2,3,4 in this civil revision application. Mr. Soparkar deliberately did not disclose to the Honorable Judge about his role between the two parties to veil his misdeeds and at the same time obtain favorable orders so that the acts and omissions do not get exposure. The sole purpose was to create hurdles, deny natural justice and gain time to tamper the evidence. Defendant 4 furnished to the court commissioner, the documentary evidence of defendant 2 being appointed as additional director of companies involved and copy of title deed register maintained by them but could not furnish any evidence as to the plaintiff does not continue as director.

5. On April 15,2002 the Honorable Judge Shri Trivedi gave directions in CRA 25 and CRA 26 that without expressing anything on the contentions raised, the petitioner defendant shall file reply to the application Exhibit 5 on or before 26-4-2002 and the learned chamber judge decides the application exh 5. The said exhibit 5 stated that defendants are hereby directed to produce on record all relevant information and details supported by the documentary evidence as asked for by the plaintiff in the letter dated 29-7-1999 as conveyed to the advocate of defendant 1 when the honorable judge gave directions on April 15th 2002. Both of them were proceeding abroad as informed to the honorable judge but they assured that the said directions would be complied.

6. The defendant 1to 3 filed common reply in August 2002 but without any supporting evidence in this regard. On the basis of information, the learned chamber judge passed order dated 25-11-2002- “ The defendant was directed to maintain status quo at the time of filing of the suit. It is confirmed till final disposal of the suit.” Defendant 1 furnished some information on 2-12-2002 while giving lame excuses for delay in filing the same. Defendant 4 furnished reply with annexures on 9-12-2002.

7. At the time of final hearing and after oral submissions made by Shri U.D Shukla on behalf of all the defendants. The plaintiff’s advocate Shri Syaid submitted written arguments on 11-3-03 and 17-3-03.

8. The learned judge pronounced orders on 8-4-03 under Exh 6-the notice of motion by the plaintiff fails and it is hereby dismissed.” However, the learned judge extended the status quo as per the subsequent order on 8-4-2003 –“ It is true that the Honorable High Court has granted status order and it is the say of the plaintiff that he opposes to challenge the order and if the said order which is in operation since 16-4-2002 would not be extended then it would deprive the plaintiff of his right to challenge for a further period of three weeks to facilitate the plaintiff to challenge the order passed today. On 28-4-03 a further extension of status quo by one more week from 28-4-03 was granted by the learned judge Shri Modi and this is in force even now. A certified copy of the same is already requested and is under Exhibit 66.

9. The defendants were called to furnish following documentary evidences primarily as referred in para 21(b) of the stay application:-
a) Statutory records such as minute book of directors and shareholders of Rupmanglam
b) Share certificates pertaining to Rupmanglam
c) Share transfer forms pertaining to Rupmanglam .
d) Share Registar of Rupmanglam
e) Audited balance sheet from 96 onwards in relation to Rupmanglam along with acknowledgment of income tas return filed and assessment orders.
f) 37-I permission from the income tax department in relation to property owned by Rupmanglam in particular.
g) Copy of all documents furnished to the Registar of Companies along with copy of acknowledgement from 31-3-1995.
h) All correspondence with directors and shareholders.
i) All correspondence and documents for availing facility from defendant 4.
j) Auditor report for share transfer in respect of shares of Rupmanglam Investment
k) Audited balance sheet of defendant 1 from 1996 onwards till date.

The learned judge would have made observation that instead of all relevant information and details supported by documentary evidence as stated in exhibit 5 including as referred above, mostly irrelevant information and evidence has been furnished by defendant 1 on 2-12-2002 and defendant 4 on 9-12-2002 with an intention of deliberate delay and concealment. This has been done to cloud the mind of the learned judge with irrelevant facts and conceal true position. The honorable judge has erred in denying natural justice to the plaintiff and has been prejudiced by passing orders against plaintiff.


10. The learned judge has not taken into consideration the following factual position delivering the judgment that:-

I. Defendants 2 and his colleague has not furnished any documentary evidence in form of minute book records, auditor report, operation of bank account, etc that the defendant 2 and his colleague Ameet Desai continue as directors even after the expiry of their term as additional director. Their term as additional director was covered up to the next annual general meeting only and no more.
II. The applicant has already furnished evidence that he continues as director even after the alleged resignation on 17-9-96 in view of exhibit of acknowledgment copy of return filed in March 97 with the income tax department which has signature of the plaintiff and also the letter addressed by the appropriate authority of the income tax department in September 2001 addressed to the plaintiff as the director of the referred company calling for information as regards to filing of 37-I form.
III. Defendants 1,2 have not furnished any evidence that they are legal shareholders of Rupmanglam Investment Private Ltd.
IV. The defendants have not furnished any Permission as regards to 37-I permission for Rupmanglam and Flovin.
V. Defendants 4 furnished copy of Title deed register as maintained by them but it does not reflect any information on alleged resignation as well as particulars on legal board of directors. The above information was given at the time of court commissioner report on 10th January 2002. Only in December 2002, defendant 4 has furnished form under S 302(2) on alleged resignation on 17-9-96 filed on 1-10-97 which does not establish that the signatories were authorized to sign such form for the said purpose and submit the same to the Registar of Companies on behalf of the company. Even as per the traditional practice this not the way form is filled up and submitted. Besides no documentary evidence has been adduced by defendant 1,2 that defendant 2 continues as director of the company to accept the alleged resignation.
VI. Defendant 4 has been served notice on 21-12-1999 through applicants advocate Shri J.J. patel and where all the necessary evidence from the Auditor of Rupmangalm is called for such as legal board of directors, information on resignation, share ownership. The defendant 4 has not been able to furnish such evidence at all. The said letter addressed to them is enclosed in the original plaint filed by the applicant in suit 5827/2001.
VII. The title deed register furnished by defendant 1 only show deposit of title deeds pertaining to 19% share owned by defendant 1 only. No such deposition of title deed in respect of Rupmanglam and Flovin is furnished and therefore also the applicant needs to be protected.
VIII. Based on the information to the applicant, the shares belonging to parents and brothers family were not handed over by the escrow persons at least till first quarters meaning that till them there was no compliance to warrant the alleged resignation. Defendant 1,2 have not furnished any confirmed and detailed statements from the escrow persons. The applicant has written letters to the escrow persons and their silence shows that they do not support the case of defendant 1,2 only.
IX. Defendants do not have statutory records such as minute book records ,etc reflect the transition from old management to establish that the full control and authority is vested in the defendants to carry on conduct of managing the affairs of the company.

11. The learned judge has not taken cognizance of the fact that defendant 1,2,3 has not honored the assurance given to the court commissioner on 8th January that they shall furnish all necessary information on 10th January 2002 and there is total absence of compliance. This information has not been covered while delivering the judgment.
12. The learned judge has not taken cognizance of the directions given by the Honorable judges of Gujarat High Court on April 15th 2002 while delivering the judgment. Shri U.D.SHUKLA advocate for defendants 1,2,3 has mis-informed the learned judge that status quo is not continuing as per the directions by the Gujarat High Court and only after delivering the judgment he learnt from the copy furnished by the plaintiff that the status quo has been granted by the high court till the trial court decided the matter and this came as surprise and it can be observed from the wording when plaintiff made application on 8-4-2003 for extension of status quo. There has been no reference as well as coverage as to the directions given by the high court given on April 15 2002 while delivering the judgment has been delivered with prenotion of the status quo has not been granted by the Honorable Judge of Gujarat High Court. He has given the judgment based on frame of mind by totally relying on high pitched verbal communication ability of Mr. U.D.Shukla instead of drawing inference from what is concealed by him. As learned judge has delivered judgment on the basis, the said order has to be quashed.

13. The learned judge has missed the object of stay application and direction given under the original exhibit 5 to call for documentary evidence from the defendants and the plaintiff is not required to justify any documentary evidences at all from the auditor as referred in the judgment as the auditor is being in collusion with the defendants.
14. The learned judge has not taken note of exhibits annexed by the plaintiff and has not dealt the matter in the preamble to the judgment pronounced by him. Some of the exhibits referred are:-
Ø Letter dated 1-2-99 addressed to defendants 1 advocate.
Ø Notice issued to defendant 4 through J.J.Patel calling for information from the auditor of Rupmanglam.
Ø Letter dated 24-7-1999 to the defendant 4 and detailed findings in this regard including letter dated 21-10-1999 from the defendant 4.
Ø Observations on news items that RBI objects fast sanctions by defendant 4.
Ø Observations on the letter addressed to auditor Mr. Kashiparekh on 29-7-`99 , auditor of Rupmanglam and calling for reply through defendfant 1,2 in this regard.

15. When the plaintiff’s right , title and interest are being jeopardized in Rupmanglam who owns 62% share in the immoveable property under no circumstances at this stage, defendants be permitted to obstruct plaintiffs right as defendant 1 owns only 19% share in the property and defendant 1 has not furnished before the honorable judge any convincing full-proof evidence as to how they legally claim ownership of balance 81% share in the property.

16. In exhibit 31 defendant 4 has furnished report from Wadia Ghandy dated 31-7-99 based on the finding from Registar Of Companies, the above letter is dated 31-7-1999 has referred in exhibit 35 stamp bearing serial no 9005 dated 4/8/99 for alleged resignation in FPPL. It is apparent from exhibit 33 and 35 that on the date of such letter dated 31-7-1999 , the information was not sought from the Registar of Companies. This shows that report from Wadia Ghandy is not reliable, exhaustive and they are incompetent to carry out detailed investigation. As independent persons who were to protect the dependant 4 interest had to minutely give findings as to observation of type, fonts, alignment on alleged resignation, the dates, the submissions were made to the Registar of Companies. They have not included in their record as to what other documents have been furnished in relation to these companies pursuant to vigilance inquiry letter from plaintiff dated 24-7-`99.

17. The present appeal is maintainable filed before this on the following main grounds amongst other grounds that may be urged at the time of hearing of this appeal.



GROUNDS:

(1) That the judgment and order of the learned trial court is contrary to proved facts and evidence on record and therefore, the same need to be quashed and set aside.
(2) That the impugned order of the trial court is ex-facie bad, perverse , iIlegal against the provision of law and evidence on record.
(3) The trial court has failed to appreciate that the defendant have not placed all relevant information and documentary evidences and the Learned judge has not examined the same from this perspective to give proper justice to the applicant.
(4) The trial court has not followed impartial approach and have not extended undue favour when the defendants were specifically given directions to furnish all the relevant information and documentary evidence latest by April 26 2002 failing which they were to grant injunction order latest by 30-6-2002 in favour of the applicant.
(5) The learned judge had given judgment based on presumption that the status quo has not been granted by the honourable judge of Gujarat High Court and this is apparent from absence of any noting as preclude to the judgment as well as notings made at the time of application for extension on status quo position 8-4-2003. The learned judge has turned blind eye to the deliberate concealment made by the defendants of all relevant information and documentary evidence and thereby depriving the applicant of natural justice.
(6) The learned judge has primarily based his conclusion on the basis of :-
(i) the status quo is presumed to be not in operation as per the High Court Order.
(ii) Relying only on 37I permission for 19% sale deed only.
(iii) Permission obtained by the revenue department.
(iv) On the basis of advance amount made the control and authority is assumed to be vested in defendant 1,2.
(v) has assumed that the defendant 2 continues to be the director after the expiry of term as additional director.
(vi) Without giving detailed noting on alleged resignation as Submitted in written arguments to the applicant.

(7) As referred in Para 30 of the orders passed by the learned judge has erred in FITST examining the issue whether applicant continues to be the director of Rupmanglam Investment Private Limited instead of FIRST focusing on the issue of defendant 2 continues to be the Director as per the written arguments presented to him. The issue of Applicant’s alleged resignation arises ONLY after ascertaining that the Defendant 2 and Ameet Desai are continuing as the directors of Rupmanglam Investment Private Ltd to accept the resignation of the Applicant. The defendants has not furnished any confirmation backed by all relevant documentary evidences from the auditor Mr. Kashiparekh that defendant 2 is the director along with minute book records. In view of provisions of the memorandum of understanding the Defendant 2 could have obtained so called Form 32 (for alleged Resignation) ONLY from the escrow persons consisting of Mr. H. Kashiparekh and Mr. Saurabh Soparkar. The learned judge has failed to observe that such form is fabricated, misused, fraudulent and cannot be taken on record at all. The defendants are the one furnished the form to the Registar of Companies after passing necessary resolution as stated in case 3326/99 in the metropolitan court against the applicant. The learned judge has not examined and discussed at length on written arguments furnished by the applicant which shows clearly non application of mind.

(8) Before drawing any inferences as stated in Para 31, the learned judge should have noted all the relevant records and facts re being submitted to the chamber court by the defendants as regards to so called amalgamation. The defendants have not furnished ANY documents on so called amalagation and it can be inferred that it would expose their own misdeeds, illegalities as well as that of advocate connected with the matter. At the stage of injunction, it is not necessary to have them impleaded. As the present applicant asserts that he is director of Rupmanglam and not defendant 2, it is not necessary to have Rupmanglam impleaded as party.

(9) As referred in Para 32, the learned judge has not applied his mind and not examined the matter in right perspective that 37-I permission which has been furnished for sale deed executed with Shri Suresh Modi is totally IRRELEVANT. The fact is that for property belonging to Rupmangalm Investment Private Ltd, 37-I has to be obtained under the provisions of the Chapter XX-C of the Income Tax Act even if the said transfer of property is by shares. When such permission is not obtained any transfer of property Is illegal, void-ab-initio. This has also to be seen in light of constructed portion being shown on creation of charge by defendant 1. It is to be noted That the constructed portion exclusively belongs to Rupmanglam Investment Private Ltd as stated in written arguments.

(10) As stated in para 33 and 34 the learned judge has wrongly concluded on the basis of complete payment alleged to have been made by defendant 1,2,3that property title as well as the ownership of Rupmanglam Investment Limited has been vested in defendant 1 and 2 even when the defendants has failed to furnish all relevant information and documentary evidence in this regard while passing orders on 31-12-2001. In absence of documentary evidence furnished the learned judge has erred in concluding that there was no objection by the vendors at the time of alleged resignation of applicant. The evidence is taken on record and NOT based ONLY on the statements made by the defendants. The learned judge has not covered in the preamble to the orders passed that all the share certificates, transfer deeds, letters of resignation as per the MOU copies furnished by the defendants were with the escrow persons consisting of Mr. H. Kashiaprekh and Mr. S. Soparkar and the defendants have not furnished documentary evidence from the escrow Persons that they have handed such documents to the defendants. In absence of confirmation from the escrow persons as regards to compliance to satisfaction of the vendors, the learned judge cannot proceed on assumptions only as it was defendants responsibility to furnish all relevant information and documentary Evidence. The learned judge observations are arbitary, perverse and without application of mind.
(11) Referring to para 35, the learned judge has failed to observe that Defendant 4 has not incorporated letter dated 25-1-1999 from the Revenue department while creating charge on 1-3-1999 as no reference has been made in the list of documents, letters furnished while creating charge. The learned judge cannot grant any relaxation where there was abuse of stay of the revenue department.
(12) The learned judge failed to appreciate that such action by defendants to create charge in 1998 is illegal and void. For the purpose of this stay application the relevant date is creation of charge on March 1,99 which came to knowledge of the applicant around June 1999 only. There was no way any speculation or inference can be made by the applicant.

(13) The learned judge has not examined the particulars as regards to articles of association and memorandum that the transfer is restricted and is covered by the provisions and compliance of clause 10 to 17 of AA/M and all relevant information and documentary evidences has to furnished by the defendants as referred in the oral submissions by the Plaintiff’s advocate Shri Syaid. The learned judge has to examine whether the defendants 1,2 has furnished the records as called for inPara 21(b) and in absence of such documents he cannot draw or take any adverse decision against the plaintiff. There is complete lack of Application of mind on the part of the learned judge.

(14) The learned judge in para 38 has erred in guided and relied totally on the and has ignored to make minute observations that there is no substance in defendants only and this shows total lack of application of mind and has ignored to make minute observations that there is no substance in defendants submissions as the have not furnished all the relevant information and documentary evidence on record at all. Besides, it settled principle of Law that at the time of adjudication of interlocutory application , no question can be decided with the effect of finality. The question of limitation, delay ,laches, etc are missed issue of law and facts. Hence, same could not be decided by deciding the injunction application inspite of the legal position, the learned judge has erred in deciding the said fact in the interlocutory application of the impugned order. Therefore, the order is contrary to law and perverse and therefore, same is required to be set aside. The learned judge has erred in relying on the statement by the defendant 4 and has not taken into account the submissions made by the learned advocate of the plaintiff at the time of oral submissions drawing attention to various aspects. The defendant 4, bank at the time of appraisal and sanction has not collected any information from the auditors of Rupmangalm as regards to audited balance sheet, directors, inspection of records with Registar of Companies, particulars of bank accounts and the persons who were operating the bank accounts. The defendant has not adduced any documentary evidence in this regard at all . At the time of creation of charge, the defendants did not have any record which showed alleged resignation. Only after the applicants letter to the defendant 4 on 24-7-99 they have got the inspection carried out from the Registrar of Companies and they have failed to make minute observations whether the defendant 1,2 has absolute control of Rupmanglam Investment Private Ltd to create charge.
(15) The learned judge has erred in relying on the statement by the defendant 4 and has not taken into account the submissions made by the learned advocate of the plaintiff at the time of oral submissions drawing attention to various aspects. The defendant 4, bank at the time of appraisal and sanction has not collected any information from the auditors of Rupmangalm as regards to audited balance sheet, directors, inspection of records with Registar of Companies, particulars of bank accounts and the persons who were operating the bank accounts. The defendant has not adduced any documentary evidence in this regard at all . At the time of creation of charge, the defendants did not have any record which showed alleged resignation. Only after the applicant’s letter to the defendant 4 on 24-7-99 they have got the inspection carried out from the Registrar of Companies and they have failed to make minute observations whether the defendant 1,2 has absolute control of Rupmanglam Investment Private Ltd to create charge.

(16) While referring para 40, the learned has ignored to take notice of letter dated September 18,2001 from the Appropriate Authority of Income tax department addressed to the applicant as DIRECTOR of Rupmanglam Investment Private Ltd in relation to inquiry on 37-I and submitted in the original plaint. The learned judge has also not taken note of the acknowledgment copy of income tax department showing the plaintiff signature in February 97 and submitted to the department in 97 which shows that the applicant continued to be the director of Rupmanglam that applicant continued to be the director even after the date 17-9-96 of alleged resignation.

(17) The learned judge Shri Modi has erred in passing orders on 8-4-2003 on behalf of chamber court after 31-3-2003 as he ceases to pass such orders once he leaves the chamber court to hold office elsewhere. In view of this situation the order passed by him has to be set aside.

(18) The applicant crave leave to add to, amend, delete, modify, vary and/or rescind any of the grounds stated hereinabove, if and when found necessary.

(19) That on the grounds stated hereinabove and that may be urged at the time of hearing of this appeals, the applicant most respectfully pray after perusing the records and proceedings of the case, this Honourable Court be pleased to quash and set aside the impugned judgment and order dated 8-4-2003 rendered by the learned judge of the city civil court below application Exh 6 in Civil suit no 5827/2001 filed by the present applicant herein.


AND FOR THIS ACT OF KINDNESS, THE APPLICANT SHALL, AS
IN DUTY BOUND, FOR EVER PRAY.


AHMEDABAD.


DATED: 05-2003 2003 pankaj s mody
APPLICANT
PARTY IN PERSON