2025 (3) TMI 205 - HC - Companies Law

Illegal share transfer - Maintainability of petition - present petition is barred by delay and latches or not - suppression of material facts and continuance of the present petition would tantamount to an abuse of process of law or not - issues raised in the present petition are barred by Res Judicata or not. Whether or not the present petition is barred by delay and latches? - HELD THAT - The substratum of the dispute relates to illegal share transfer and the same has been litigated and reagitated time and again and no useful purpose will be served in oppressing the opposite parties herein. The only addition in the present petition is to create a cause of action seems to be that certain RTI applications have been made by various parties and no suitable response has been received with regard to them which seems to be more like an afterthought which has been introduced to create a fresh cause of action in order to make the present petition maintainable. Even otherwise the present petition raises disputed question of facts thus a Writ Court not the appropriate remedy especially given the fact that the Companies Act is a self-contained Code and in relation to matters therein there is a specific bar from other Courts entertaining pleas which are the subject matter of the said Act. However in the present scenario this Court deems it fit to go into other issues as well and does not incline to reject the present petition on the ground of maintainability alone. Whether or not the present petitioners are guilty of suppression of material facts and continuance of the present petition would tantamount to an abuse of process of law? - HELD THAT - This Court cannot ignore the fact the Petitioners might be in cahoots with other setup unscrupulous persons who have earlier agitated the self-same issue guised as public interest petitions . Although a party is never precluded from raising genuine claims in collusion with others are indulging in blatant forum-shopping and are taking recourse to multiple parallel proceedings for the same subject matter. It is well-settled that re-litigation of the same matter itself amounts to an abuse of the process of law and ought to be nipped at the bud. This Court in the given factual backdrop is constrained to hold that not only has there been a suppression of material facts but in fact there are persons who seem to be relentless in their pursuit to oppress Opposite Party No. 8 company for reasons best known to them. Such a fact cannot be lost sight of and is a matter of grave concern and needs to be dealt with sternly. In the case of Prestige Lights Ltd. v. SBI 2007 (8) TMI 446 - SUPREME COURT it was held that in exercising power under Article 226 of the Constitution of India the High Court is not just a court of law but is also a court of equity and a person who invokes the High Court s jurisdiction under Article 226 of the Constitution is duty-bound to place all the facts before the Court without any reservation. If there is suppression of material facts or twisted facts have been placed before the High Court then it will be fully justified in refusing to entertain a petition filed under Article 226 of the Constitution. The Petitioners have dishonestly not disclosed the above material facts in the present writ petition. The Petitioners have abused the process of law by suppressing the aforesaid litigations. It is well-settled that writ remedy is an equitable remedy and since the Petitioners have not approached the court with clean hands it is appropriate that their challenge deserves to be rejected. Whether the issues raised in the present petition are barred by Res Judicata? - HELD THAT - . The Hon ble Supreme Court recently in the case of Celir LLP Vs Sumati Prasad Bafna Ors. 2024 (12) TMI 879 - SUPREME COURT has exhaustively dealt with the principle of Res Judciata/ Constructive Res Judicata and has propounded the Henderson principle as a corollary of Constructive Res-Judicata. It is therein been recognized that the is intrinsically tied to issue estoppel and cause of action estoppel . The Supreme Court in the case of Devilal Modi v. Sales Tax Officer Ratlam 1964 (10) TMI 43 - SUPREME COURT clarified and highlighted the need to extend rule of constructive res judicata to writ proceedings. It was held that it would not be open to the party to take one proceeding after another and urge new grounds every time and would be inconsistent with considerations of public policy. The Petitioner No. 2 herein who had petitioned this Court earlier could have and ought to have relied upon the grounds with relation to the applications made to the registrar of companies (between 2013 to 2015) at the time of filing of that Writ Petition. After having not being done it would be impermissible to allow the same petitioners to urge the said facts which were otherwise had occurred at that point in time when that prior Writ Petition had been filed. That being the case the instant case is squarely covered by the discussion here in above. The subsequent/ successive petition i.e. the present petition would be barred by the principles of constructive res judicata by applying the Hendersen principle . Conclusion - This Court arrives at a clear and unequivocal conclusion that the present Writ Petition is not only liable to be dismissed at the very threshold on account of the principles discussed and issues framed hereinabove. But also on account of the fact that the Petitioners have approached this court with unclean hands and the conduct of the petitioners herein leaves much to be desired. This Court can only express hope that the petitioners will be well advised not to indulge in such unbecoming practice of abusing the process of law in the future. Petition dismissed.

ISSUES PRESENTED and CONSIDERED

(A) Whether or not the present petition is barred by delay and laches.

(B) Whether or not the present petitioners are guilty of suppression of material facts and continuance of the present petition would tantamount to an abuse of process of law.

ISSUE-WISE DETAILED ANALYSIS

(A) WHETHER OR NOT THE PRESENT PETITION IS BARRED BY DELAY AND LACHES.

The petitioners filed the present Writ Petition on 22.01.2020 seeking to quash Annexure-26 dated 16.01.2018. The petition was filed more than two years after the impugned order, which stated that similar complaints had been previously inspected under Section 209 of the Companies Act, 2013. The petitioners' claim is based on alleged fraud regarding share transfers dating back to 1970, making the claim barred by delay and laches. The Court found that the petitioners' claim was hopelessly barred by delay, as the alleged fraud occurred several decades ago.

The Court also noted that the writ petition raised private law questions, making it unsuitable for a writ court. However, the Court chose to address other issues rather than dismiss the petition solely on maintainability grounds.

(B) WHETHER OR NOT THE PRESENT PETITIONERS ARE GUILTY OF SUPPRESSION OF MATERIAL FACTS AND CONTINUANCE OF THE PRESENT PETITION WOULD TANTAMOUNT TO AN ABUSE OF PROCESS OF LAW.

The Court examined the backdrop of other proceedings involving similar issues and parties. It found that the petitioners failed to disclose material facts, including previous civil suits and writ petitions that had been dismissed. The petitioners were involved in Civil Suit No. 18 of 2015, which was dismissed for being barred by law and limitation. The suit was dismissed under Order 7 Rule 11 of the CPC, and the decision was upheld on appeal.

The Court noted that the petitioners had filed multiple petitions on the same subject matter, which were dismissed at various judicial levels, including the Supreme Court. The Court concluded that the petitioners were guilty of suppressing material facts and abusing the process of law by attempting to re-litigate issues that had already been decided.

(C) WHETHER THE ISSUES RAISED IN THE PRESENT PETITION ARE BARRED BY RES JUDICATA.

The Court applied the principle of Res Judicata, including the "Henderson Principle," which bars re-litigation of issues that could and should have been raised in previous proceedings. The Court found that the petitioners' claims were barred by Res Judicata, as the issues had been previously adjudicated in multiple proceedings.

The Court cited several judgments, including Devilal Modi v. Sales Tax Officer and Shankara Coop. Housing Society Ltd. v. M. Prabhakar, to support its conclusion that the petitioners were barred from raising issues that were or could have been addressed in earlier proceedings.

The Court emphasized that the petitioners' conduct amounted to an abuse of the judicial process, as they sought to re-litigate matters already decided by competent courts. The petitioners' actions were seen as a deliberate attempt to fragment disputes and prolong litigation.

SIGNIFICANT HOLDINGS

The Court dismissed the writ petition, finding that the petitioners were guilty of delay, suppression of material facts, and abuse of the judicial process. The petitioners were ordered to pay costs of Rs. 20,000 to the Orissa High Court Bar Association Welfare Funds within four weeks.

The Court held that the petitioners' claims were barred by Res Judicata, as they had been previously adjudicated in multiple proceedings. The Court emphasized the importance of finality in litigation and the need to prevent re-litigation of issues that could have been raised earlier.

The Court expressed hope that the petitioners would refrain from abusing the legal process in the future and advised them to avoid engaging in vexatious litigation.

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