2024 (12) TMI 1204 - HC - Companies Law

Maintainability of suit - Seeking a decree of possession and permanent injunction mesne profit in its favour and against the Defendants - consequence of the Plaintiff Company's struck-off status on its capacity to initiate legal proceedings - HELD THAT - The present suit has been filed for seeking recovery of possession of the suit property from the Defendants on basis of the sale deed dated 30.10.1987 and sale deed dated 25.08.2011. However, the District Court on 15.09.2022 has granted a permanent injunction against the Plaintiff Company from relying upon the said documents and from interfering in the peaceful possession of the Defendants. In view of this permanent injunction, the present suit for recovery of possession is barred in law. The disputes between the parties arose in the year 2011 as acknowledged in the plaint at paragraphs 29 and 30. The Defendant Nos. 1 and 2, who were in possession and were threatened by the Plaintiff immediately to recourse to due legal process and filed the Civil Suit in year 2012, which culminated in the final judgment and order dated 15.09.2022 in favour of Defendant Nos. 1 and 2 as well as against the Plaintiff Company. The present suit filed after the passing of the final judgment and order dated 15.09.2022 is a gross abuse of process and is intended to nullify the binding effect of the said Judgment. A corporate entity is liable under the Companies Act, 2013 to make annual compliances with respect to its affairs by filing statutory returns. The Plaintiff Company would have been obliged between the year 2018 to 2024 to make several filings and would have immediately learnt that it is unable to do so since the company has been struck-off. This Court, therefore, finds no substance in the explanation offered by the Plaintiff Company - this Court is of the considered opinion that the captioned suit is liable to be rejected under Order VII Rule 11 (a) and (d) of the Code of Civil Procedure, 1908. The present suit is dismissed with actual costs awarded in favour of Defendant Nos. 1 and 2. Since, Plaintiff Company has been struck-off, Mr. Ram Dilawri will be personally liable for the costs awarded. List before the Taxing Officer/concerned Joint Registrar on 14.01.2025 - List before the Taxing Officer/concerned Joint Registrar on 14.01.2025.

Issues Involved:

1. Maintainability of the suit due to the Plaintiff Company's status as "struck off" by the Registrar of Companies.
2. Validity of the sale deeds relied upon by the Plaintiff Company for claiming ownership of the suit property.
3. Allegations of fraud and forgery concerning the title documents of the suit property.
4. The effect of prior judgments and orders on the current suit, including the permanent injunction against the Plaintiff Company.
5. The Plaintiff Company's failure to disclose material facts and abuse of the court process.
6. The consequence of the Plaintiff Company's struck-off status on its capacity to initiate legal proceedings.

Detailed Analysis:

1. Maintainability of the Suit:

The Defendants argued that the suit is not maintainable as the Plaintiff Company was struck off the register by the Registrar of Companies on 08.08.2018. The Plaintiff Company's status as "Strike Off" is reflected in the Master Data available on the Ministry of Corporate Affairs website. The Plaintiff Company's Directors' Identification Numbers were deactivated due to non-filing of DIR-3 KYC. Consequently, the affidavits filed by the Director of the Plaintiff Company were deemed incorrect and misleading, questioning the competency of the Plaintiff Company and its Directors to initiate the suit. The Plaintiff Company acknowledged its struck-off status but claimed ignorance of the notice and stated that it had filed an appeal for restoration before the National Company Law Tribunal, which was pending.

2. Validity of the Sale Deeds:

The Plaintiff Company relied on two sale deeds dated 30.10.1987 and 25.08.2011 to assert ownership of the suit property. However, the Defendants contended that these documents were declared null and void by a judgment dated 15.09.2022 from the District Court. The District Court found that the sale deed dated 30.10.1987 was a bogus document, and consequently, no title could have been transferred to the Plaintiff Company through the sale deed dated 25.08.2011. Therefore, the Plaintiff Company had no legitimate claim to the suit property.

3. Allegations of Fraud and Forgery:

The District Court's judgment established that the sale deed dated 30.10.1987 was a sham document, and the Plaintiff Company was precluded from asserting any title rights in the suit property. The Plaintiff Company's Director, Mr. Ram Dilawri, had previously argued in criminal proceedings that he was defrauded by Sh. Raj Singh Malik, which led to the dismissal of charges against him. The Plaintiff Company's claim of being defrauded was inconsistent with its current assertions of ownership based on the invalidated sale deeds.

4. Effect of Prior Judgments and Orders:

The District Court had issued a permanent injunction against the Plaintiff Company, restraining it from relying on the sale deeds dated 30.10.1987 and 25.08.2011 and from interfering with the Defendants' possession of the suit property. Despite this, the Plaintiff Company filed the present suit, which was deemed barred by the prior judgment and injunction. The Plaintiff Company's appeal against the District Court's judgment was pending, but no stay had been granted, and the judgment remained in effect.

5. Failure to Disclose Material Facts and Abuse of Court Process:

The Plaintiff Company failed to disclose the District Court's judgment in its plaint and misled the court by claiming that the related civil suit was pending. The court found that the Plaintiff Company's actions constituted an abuse of the court process, as it sought to nullify the binding effect of the prior judgment. The Plaintiff Company's failure to disclose material facts and the irregularities in filing the plaint led the court to conclude that the suit was filed without any cause of action.

6. Consequence of Struck-off Status:

The Plaintiff Company's struck-off status meant it ceased to exist as a juristic person and could not institute legal proceedings. The court rejected the Plaintiff Company's explanation of ignorance regarding its struck-off status, emphasizing the obligation to comply with statutory filings under the Companies Act. The suit was thus deemed not maintainable due to the Plaintiff Company's lack of legal standing.

Conclusion:

The court dismissed the suit, finding it to be an abuse of process and barred by prior judgments. The Plaintiff Company was ordered to pay actual costs to the Defendants, and Mr. Ram Dilawri was held personally liable for the costs due to the Plaintiff Company's struck-off status. Additionally, the Plaintiff Company and Mr. Ram Dilawri were directed to pay an additional cost to the Delhi State Legal Service Authority. The suit was rejected under Order VII Rule 11 of the Code of Civil Procedure, 1908, for lack of cause of action and being barred by law.

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