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TMI Blog2012 (8) TMI 213X X X X Extracts X X X X X X X X Extracts X X X X ..... erim orders in the suit. Mr. Kishore Rajaram Chhabria, the first defendant and the sixth defendant (BDA), a company BKC Enterprises Private Ltd. (BKC) and Allied Blenders and Distilleries Private Limited (Allied) unitedly opposed the prayers. They are collectively described as "the defendants". At one point of time SWC was a giant company dealing in spirits. It had a long chain of subsidiaries, large undertakings, a big market, reputation and so on. Cruickshank & Company Ltd. (CCL) was a wholly owned subsidiary of SWC. A company Parganas Investments Ltd. (PIL) was a subsidiary of CCL. PIL held the controlling number of shares in another company, Arunava Investments Ltd. (AIL). Thus, AIL was or was always believed to be a subsidiary of SWC. In any event SWC, AIL, CCL and PIL were part of a chain of holding and subsidiary companies or group companies of which the flagship was SWC. The sixth defendant (BDA) was incorporated on 25th February, 1986 as a private company limited by shares. AIL acquired the entire paid up share capital of BDA. These were 25,000 equity shares of Rs. 10/- each. Therefore, BDA was also added to the chain, in or about 1988. The name of the CCL was changed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thereafter in 1994 BDA became a wholly owned subsidiary of Herbertsons. Mr. Vijay Mallya and Mr. Kishore Rajaram Chhabria entered into a settlement. This agreement was entered into on 11th February, 2005. Herbertsons Ltd. would be retained by Mr. Vijay Mallya. B.D.A. would be delinked from Herbertsons and given to Mr. Kishore Rajaram Chhabria. Therefore, 100% shares of B.D.A. were transferred to two entities, Mozzart Traders (P) Ltd. and Cacomistle Finlease Investments (P) Ltd., two companies controlled by Mr. Kishore Rajaram Chhabria. Mr. Chhabria would give up his stake in Herbertsons. At that point of time, it appears that Mr. Vijay Mallya was negotiating the acquisition of SWC by the UB Group. The Vijay Mallya group bought the controlling interest in SWC on 14th June, 2005. He was appointed its chairman on the same day. Herbertsons merged with Mc Dowell & Co. Ltd., a Vijay Mallya Company. Mc Dowell changed its name to United Spirits Ltd., the present applicant. On 23rd June, 2006 the Karnataka High Court sanctioned a scheme under the Companies Act, 1956. On 5th September, 2006 the Bombay High Court sanctioned a similar scheme. The result was that all the assets and the liabili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... green ink in Annexure "ZL"; c) The plaint relating to the instant suit be amended as indicated in green ink in Annexure "ZL" hereto; d) Such amendments be carried out and incorporated in the plaint already filed herein within a fortnight and all necessary and consequential directions be given to effect such amendments and to reverify the plaint after the amendments are incorporated; e) Injunction restraining the defendant Nos. 1 to 5,6,10 and 11 and Allied Blenders And Distillers Pvt. Ltd. from issuing and/or causing to be issued any further shares of and in the defendant No. 6 and/or Allied Blenders And Distillers Pvt. Ltd. f) Injunction restraining the shareholders of defendant No. 6 and/or Allied Blenders And Distillers Pvt. Ltd. i.e. BKC Enterprises Private Limited, Officer's Choice Spirits Private Limited and Deepak Roy from dealing with, transferring or alienating their shareholding of and in the defendant No. 6 and/or Allied Blenders And Distillers Pvt. Ltd., as the case may be, in any manner whatsoever; g) Injunction restraining BKC Enterprises Private Limited and Deepak Roy from altering the share capital of ABADPL in any manner whatsoever; h) If necessary, leave be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... porate entities ceased a long time ago. The suit has abated. It cannot be revived by United Spirits Ltd. The next contention of United Spirits Ltd. is that the cause of action of SWC and Shaw Wallace Distilleries Ltd. against Mr. Kishore Rajaram Chhabria and BDA still survives. Therefore, United Spirits is entitled to pursue its claim in the suit against Mr. Kishore Rajaram Chhabria and B.D.A. B.D.A. has branched out into Allied to which the liquor business of BDA has been transferred. United Spirits is entitled to trace the liquor business to those hands into which the business has been transferred. It was submitted by Mr. S.N. Mookherjee learned senior Advocate that in paragraph 9 of the plaint in the Bombay suit, Mr. Kishore Rajaram Chhabria made some disclosures which would show that he had a hand in the taking over of BDA and which was suppressed from this Court. This was a fresh circumstance necessitating passing of the interim orders prayed for. It was also submitted by him that corporate entities are not like individual persons. When settlements are reached between living persons, it does not, in normal circumstances, create any right or obligation in body corporates. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be wrongful by the Division Bench of this High Court. This order was not disturbed by the Supreme Court. Therefore, at that point of time the link in the chain between SWC and BDA. was broken. Twenty years have passed since the above order. Since there was no restraint order upon Mr. Kishore Rajaram Chhabria, he and B.D.A. had arranged their business affairs in a manner so that the liquor business of B.D.A. was transferred to Allied, a separate corporate entity. It has other distilleries apart from the distillery acquired from B.D.A. No doubt it is controlled by Mr. Kishore Rajaram Chhabria. Now after twenty years the original claim in the suit, which is dead according to Mr. Sarkar should not be permitted to be revived. It would be most unjust and inequitable for the applicant to try to reopen an issue which is closed. Now, I come to the contention of the petitioner regarding substitution and amendment. According to Mr. S.N. Mookerjee, the rights and liabilities of SWC and SWDL have come to vest in United Spirits, by virtue of schemes of merger, demerger, amalgamation and so on sanctioned by the Calcutta, Karnataka and Bombay High Courts. Therefore, SWC and SWDL are dissolved b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rpretation of the term "legal representative" does not, in my opinion, include any successor-in-interest of a dissolved company, even by the most liberal canons of interpretation. This is because, the natural or ordinary grammatical meaning of the word "death" implies death of a natural person and not extinction of any body corporate. (See the Oxford Dictionary & Stroud's Judicial Dictionary of words and phrases Vol. I 6th Edition Pg. 610) shown by Mr. S.N. Mookherjee. Furthermore, the Administrator General has no known powers of looking after the affairs of dissolved companies or their successors. If Rules 1 to 5 of Order XXII were also to include, according to the intention of the legislature, devolution of interest on the dissolution of a body corporate, a large part of Rule 10 of Order XXII would become redundant. It is trite that the legislature does not enact anything which is superfluous. Furthermore, the opening words of Rule 10 are "in other cases". This plainly signifies that the legislature indicated a definite distinction between the death of a natural person and devolution of interest with regard to a body corporate. The case of Shree Choudhary Cold Storage (1972) vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of leave not being obtained, apart from the "obvious risk that the suit may not be properly conducted by the plaintiff on record" (See also the case of Jaskirat Datwani vs. Vidyavati and others reported in AIR 2002 SC 2180 para 5; See also our High Court judgment in Rai Charan Mandal and another vs. Biswanath Mandal and others reported in AIR 1915 Cal 103). All these cases were cited by Mr. S.N. Mookerjee. I do not think that after the above Supreme Court dicta, Goutami Devi Sitamony Vs. Madhavan Sivaranjan reported in AIR 1977 Kerala 83, Raghunath Dass Harakchand vs. Purushotham Dass reported in AIR 1936 Madras 714, Devisahi Premraj Mahajan vs. Govindrao Balwantro and others reported in AIR 1965 MP 275 and Sukhdip Singh vs. Arjan Singh Mihan Singh and another reported in AIR 1961 Punjab 326 cited by the defendants are good law on this specific issue. Hence, there was no abatement of this suit. LEAVE: In my judgment this leave is to be granted by the Court upon being satisfied that there is devolution of interest. The Court cannot make any further enquiry. If the Court is satisfied that devolution of interest has taken place, the Court will allow the applicant to be substitu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... algamation or mergers or demerger sanctioned by the Calcutta, Karnataka and Bombay High Courts. It is a fine technical issue but nevertheless it is an issue and this issue cannot be resolved except upon the trial of the suit. Mr. Kishore Rajaram Chhabria and his group of companies would have to show that he and Mr. Vijay Mallya are the alter ego of the respective network of holding and subsidiaring companies and that the agreement of 2005 bound the companies controlled by them. Furthermore, in an interlocutory application, in my opinion, there is no power in the Court to adjudge facts on affidavits and come to a conclusion that the cause of action in a suit is extinguished. There is no such provision, to my knowledge in the Code of Civil Procedure. The plaint may be rejected when the plaint discloses no cause of action or the suit has become barred by law (See Order VII Rule 11). Nothing stares on the face of the affidavits to warrant such a conclusion. Neither do I find any provision in the Code of Civil Procedure to permit this Court to declare on affidavits that the suit has served its purpose and should be dismissed. That decree can only be passed upon trial of the suit. Henc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lty of any wrong doing when BDA was divested from SWC, which was suppressed from this Court when it was considering the interim application. There is some substance in the submission of Mr. Prtap Chatterjee and Mr. Sudipto Sarkar that Mr. Vijay Mallya and his group of companies did not challenge the transfer of the shares of BDA in favour of Cacomistle and Mozzart in February 2005, which was made by Herbertson. Neither was any challenge made to the subsequent dissolution of Herbertson. Neither was any challenge made, when in 2007, BDA transferred, its liquor business and distillery at Aurangabad to Allied under a scheme which was sanctioned by the Bombay High Court. It is also absolutely true that if Mr. Kishore Rajaram Chhabria and his group of companies thought that by the schemes of merger and demerger the original cause of action of SWC was being given up, they were sadly mistaken. May be, his advisors had advised him that after the settlement of 2005, the said cause of action was gone. But that is not true. The settlement between two individuals cannot bind any body corporate. That is an elementary principle of company law. It can only bind a body corporate if it is shown th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rst and sixth defendants will be free, but the first defendant should not lose control of the company, Allied and its distillery at Aurangabad without the leave of this Court till the disposal of the suit for four reasons:
(i) The interim order is continuing for seven months, without challenge.
(ii) Its stay was prayed for and granted by the trial court but no appeal was preferred.
(iii) The order does not interfere with the management of any entity and thus, does not come into conflict with any existing order.
(iv) The prima facie case as it stands today, as discussed above and the balance of convenience is in favour of the order continuing with the above modification.
The application G.A. 1678 of 2011 is accordingly disposed of. The other applications being G.A. No. 2252 of 2006 being an application by the seventh and eighth defendants and G.A. No. 2205 of 2011 being an application by the sixth defendant for dismissal of the suit are also disposed of, by this judgment and order. No order as to costs.
Urgent certified photocopy of this judgment and order, if applied for, be supplied to the parties subject to compliance with all requisite formalities. X X X X Extracts X X X X X X X X Extracts X X X X
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