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2023 (5) TMI 45 - HC - Indian LawsSeeking removal of defendants 2 to 8 from the Trusteeship of the 1st defendant Maha Semam Public Charitable Trust - seeking direction to defendants 2 to 8 to render accounts relating to the Maha Semam Public Trust properties along with the original documents, title deed etc - seeking to order inventory of the movable and immovable properties of the 1st defendant Maha Semam Trust - seeking for settling a scheme for a proper administration of the 1st defendant Maha Semam Trust in future - seeking to direct payment of cost of this suit. Prima Facie case - HELD THAT - The control of the 9th respondent Company was transferred to M/s.DWM a foreign investor following the revocation of proxies on 25.10.2011 coupled with the subsequent change in Board composition by resignation of 2nd and 9th respondents successively on 25.10.2011 and 29.11.2011 respectively. These facts are not in dispute as the plaintiffs have not denied the factual events stated in the counter affidavit filed by the 9th respondent before the Hon ble Judge. Therefore, the prayer in OA.No.520/2013 even on the date of application is not maintainable. As it is pointed out earlier, there cannot be an injunction to over turn an event that has occurred by operation of law. The very object behind this litigation by filing a suit under Section 92 of CPC is on the basis of serious allegation that the 2nd respondent/2nd defendant, the promoter of 9th respondent Company after his induction in the 1st respondent Trust, diverted the funds of the Trust by formulating a systematic and a calculated design. It is admitted that no document is produced by the petitioners to show systematic diversion of funds of Trust in favour of 9th respondent Company. The plaintiffs now rely upon the interim report of the Advocate Commissioner pointing out that he could not collect the Books of Accounts and other details from the 1st respondent/Trust. The object of the Trust is not to carry on business and no activity with profit motive. No one could assume accumulation of huge funds by Trust. The 9th respondent is an independent Company incorporated under the Companies Act, 1956. The 2nd respondent is not in the Management of 9th respondent Company and is no more in control of 9th respondent Company after the increase of share capital with the investment of Rs.50 Crores from M/s.DWM. The Court is unable to find anything to probablise the case of petitioners. This Court has already referred to the findings of the Hon ble Judge regarding collusion among family members of the 1st respondent Trust. It appears that the 1st plaintiff is no more. The petitioners are not the shareholders or persons interested in the affairs of the 9th respondent Company. This Court is also convinced that the suit was engineered by the 2nd respondent/2nd defendant in collusion to get an order what the 2nd respondent may require but would not get directly against 9th respondent. In the case on hand, this Court has already found that the Hon ble Judge while disposing of the application, has gone in depth to lift the veil and identify the real cause for the litigation and the real person behind the litigation. Therefore, the conduct of petitioners in this case militates against the bona fide as held by this Court earlier. Further, from the whole gamet of facts, this Court finds that the petitioners have not come to Court with clean hands. Legal Injury - HELD THAT - The Hon ble Judge already recorded the finding that the petitioners have not come with clean hands. In the present case, this Court has already indicated that the petitioners have not sought for any interim relief to protect the interest of the 1st respondent/Trust in relation to the mischief as stated in the plaint, played by the 2nd defendant and his family members who allegedly diverted funds of Trust. This would also show the conduct of the petitioners targeting the 9th respondent Company alone - this court finds no prima facie case or balance of convenience in favour of petitioners/plaintiffs to grant any interim injunction as prayed for and we also find that serious injury is likely to be caused to the 9th respondent in case this Court extend the order of status quo any further. Petition dismissed.
Issues Involved:
1. Removal of Trustees and Management of Maha Semam Public Charitable Trust. 2. Allegations of Misappropriation and Diversion of Trust Funds. 3. Interim Injunction Against Transfer of Control of 9th Respondent Company. 4. Maintainability of Suit Under Section 92 of CPC. 5. Collusion Among Family Members and Bona Fides of Litigation. Summary: 1. Removal of Trustees and Management of Maha Semam Public Charitable Trust: The plaintiffs filed a suit under Section 92 of CPC seeking removal of defendants 2 to 8 from the Trusteeship of Maha Semam Public Charitable Trust, directing them to render accounts, ordering inventory of properties, and settling a scheme for proper administration. The Trust was registered on 07.07.1999, and the 1st plaintiff was the founder Trustee who later resigned, and her son was inducted as a Trustee. 2. Allegations of Misappropriation and Diversion of Trust Funds: The plaintiffs alleged that the 2nd defendant and his family members diverted Crores of rupees from the Trust to new Trusts and companies floated by them. Specific allegations included unauthorized payments, consultancy fees, and rents paid to family members, and siphoning funds to the 9th respondent Company. However, no documents were produced to substantiate these allegations, and the Advocate Commissioner could not collect relevant records. 3. Interim Injunction Against Transfer of Control of 9th Respondent Company: The plaintiffs sought an interim injunction to restrain the 9th respondent from proceeding with the voluntary liquidation process. The Division Bench initially directed the respondents to maintain status quo. However, the 9th respondent argued that the control of the Company had already transferred to a foreign investor, M/s.DWM, by operation of law, making the application for injunction unsustainable. 4. Maintainability of Suit Under Section 92 of CPC: The Hon'ble Judge found that the suit was not maintainable under Section 92 of CPC as the plaintiffs had misled the Court by providing a false address for the Trust. The Trust's registered office was in Madurai, not Chennai, and leave to sue was not obtained against the 1st defendant. The Judge held that the plaintiffs were guilty of coming to Court with unclean hands. 5. Collusion Among Family Members and Bona Fides of Litigation: The Court found that the litigation was collusive, designed by the family members of the 2nd defendant to settle scores with the foreign investor. The 2nd defendant continued as a Trustee, and the plaintiffs did not seek any interim relief against him, indicating collusion. The Court concluded that the plaintiffs had not come with clean hands and found no prima facie case or balance of convenience in their favor. Conclusion: The Court dismissed CMP.No.7981/2022 and allowed CMP.No.13117/2022, finding no prima facie case or balance of convenience in favor of the plaintiffs. The Court also noted that serious injury would be caused to the 9th respondent if the status quo order was extended further.
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