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TMI Blog2020 (2) TMI 918X X X X Extracts X X X X X X X X Extracts X X X X ..... t by company, in this case ATPL, to file return under Section 89(6) and on the plea of the plaintiff of having made a declaration, the plaintiff is entitled to maintain the suit, but am unable to hold so. The records required to be maintained by a company qua beneficial interest in shares, are public records, open to inspection by all and the conduct of the plaintiff, of inspite of such declaration being not made, keeping quite till now, speaks volumes of natural course of human conduct. The plaintiff had option under Section 59 of the 2013 Act to apply for rectification of register of members, but failed to exercise the said option. The claim of beneficial ownership of shares of ATPL, even otherwise stands on the edifice of beneficial ownership of HRLIPL and which is unsustainable under Section 187C(6). The right of the plaintiff even if any, as beneficial owner of shares in the name of Samta Khinda in HRLIPL or shares in the name of JFL in ATPL could be only to exercise rights as a shareholder and not otherwise. It is not the plea of the plaintiff that the plaintiff as shareholder exercised any such rights or even made any attempt to exercise such rights. On the contrary t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary of the shareholding of JFL in ATPL; (vii) thus the plaintiff is the real owner of the entire subject farmhouse and which position has been undisputed for the last six years; (viii) the plaintiff was 50% shareholder of HRLIPL and the remaining 50% shares of HRLIPL were held by one Jaswant Singh Chawla and the plaintiff and said Jaswant Singh Chawla were the only Directors of HRLIPL; (ix) the plaintiff had a close relationship with Sandeep and his wife Samta Khinda and Sandeep was also inducted as a Director on the Board of HRLIPL; (x) JFL, in the year 2005, owned land at Sohna Road; (xi) the plaintiff, to acquire the said land of JFL, made HRLIPL acquire 96.82% shareholding of JFL; the plaintiff and his family members acquired 1.94% shares of JFL and Jaswant Singh Chawla aforesaid and his family acquired the remaining 1.24% shares of JFL; the plaintiff, the said Jaswant Singh Chawla and Brij Mohan Mahajan, father of the plaintiff were in May, 2005 inducted on the Board of Directors of JFL; (xii) in September, 2011, due to efforts of plaintiff, a buyer for the land of JFL at Sohna Road was identified; (xiii) on 28th September, 2011, the plaintif ..... 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JFL but retained vital commercial interests in both, as HRLIPL/Samta Khinda owed ₹ 25,16,05,000/- to the plaintiff towards balance sale consideration of shares of HRLIPL transferred by plaintiff to Samta Khinda and owing whereto the plaintiff continued to hold beneficial interest in the shares of HRLIPL held by Samta Khinda; (xxii) the amount of ₹ 25,16,05,000/- so owed to the plaintiff was required to be paid by the wholly owned subsidiary of HRLIPL, namely JFL, inasmuch as the basis of valuation of the shares of HRLIPL was the value of the land held by JFL; (xxiii) sometime around 2013, the plaintiff identified the subject farmhouse owned by ATPL and requested Samta Khinda to make payment of ₹ 25,16,05,000/- owed by her to the plaintiff for purposes of acquiring the subject farmhouse; (xxiv) Samta Khinda informed the plaintiff that she would be discharging her obligations by making payment of the said amount by utilizing her share of the sale proceeds received from the sale of the land at Sohna Road of JFL in the capacity of a shareholder of HRLIPL, being the holding company of JFL; (xxv) on 7th August, 2013, a Settlement Agreement was execut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mta Khinda including ownership and control of JFL and HRLIPL where Samta Khinda held 1.24% and 9.09% shares respectively and Samta Khanna also ceased to be Director of JFL and HRLIPL; (xxxvi) disputes arose between Sandeep and Samta Khinda but were settled vide Settlement Agreement dated 23rd August, 2018 whereunder Samta Khinda give up her entire shareholding and Directorship, in both JFL and HRLIPL in favour of Sandeep; (xxxvii) Sandeep has filed various frivolous and vexatious complaints against the plaintiff including an application under Sections 241 and 242 of the 2013 Act before the National Company Law Tribunal (NCLT) and a complaint under Section 452 of the 2013 Act before the Special Judge, South West, Dwarka Courts; (xxxviii) by way of the complaint under Section 452 of the 2013 Act, Sandeep has for the first time since 2014 sought to challenge the possession of the plaintiff of the subject farmhouse; and, (xxxix) from the complaint filed by Sandeep against the plaintiff under Section 241 and 242 of the 2013 Act, the plaintiff realized that Sandeep was claiming to be a majority shareholder to the extent of 90% in HRLIPL; and, (xl) the cause of ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving become aware that Sandeep was challenging the possession of the plaintiff of the subject farmhouse, are concerned, even if the legal proceedings initiated by Sandeep challenge the possession of the plaintiff of the subject farmhouse, the remedy of the plaintiff is to contest the said legal proceedings initiated by Sandeep and not by way of commencing another legal proceeding, as has been done by instituting this suit. From the averments in paragraph 54 reproduced above, it is clear that the present suit has been instituted to scuttle the proceedings in the complaint initiated against the plaintiff under Section 452 of the 2013 Act i.e. of wrongful withholding of the property of a company i.e. ATPL and which is pari materia to Section 630 of the 1956 Act. 8. The senior counsel for the plaintiff has contended that paragraph 54 supra is a case of bad drafting and be ignored and the suit be treated as one for the relief of declaration sought and the need for which declaration has occurred on possession of the plaintiff of the subject farmhouse being challenged by institution of the complaint aforesaid under Section 452 of the 2013 Act. It is contended that the Court of the Addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... namely JFL, inasmuch the basis of valuation of the shares held by the shareholders of HRLIPL was the land at Sohna Road held by JFL; thus, the plaintiff retained an interest in JFL as well; (iii) Samta Khinda, in whose 50% shareholding in HRLIPL the plaintiff had beneficial interest, in discharge of the balance sale consideration payable to the plaintiff, called upon JFL to subscribe to 50% of the shareholding of ATPL; (iv) JFL agreed that the 50% shares held by it in ATPL would be held by it in trust for the plaintiff who shall be the beneficial holder thereof; and, (v) thus plaintiff is the beneficial owner of the 50% shares held by JFL in ATPL. 12. The senior counsel for the plaintiff has drawn attention to page 27 of Part-III(A) file, being a photocopy of a document titled Settlement Agreement dated 7th August, 2013 between plaintiff, Samta Khinda and JFL, recording that JFL shall subscribe to 50% shareholding of ATPL in discharge of the obligation of Samta Khinda under the Share Transfer Agreement dated 28th September, 2011 between plaintiff, HRLIPL and Samta Khinda and the shares held by JFL in ATPL shall be perpetually held in trust for the plaintiff. 13. The aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time and in such form as may be prescribed, make a declaration to the company specifying the name and other particulars of the person who holds the beneficial interest in such share. (2) Notwithstanding anything contained elsewhere in this Act, a person who holds a beneficial interest in a share or a class of shares of a company shall, within thirty days from the commencement of the Companies (Amendment) Act, 1974 (41 of 1974) or within thirty days after his becoming such beneficial owner, whichever is later, make a declaration to the company specifying the nature of his interest, particulars of the person in whose name the shares stand registered in the books of the company and such other particulars as may be prescribed. (3) Whenever there is a change in the beneficial interest in such shares the beneficial owner shall, within thirty days from the date of such change, make a declaration to the company in such form and containing such particulars as may be prescribed. (4) Notwithstanding anything contained in section 153 where any declaration referred to in sub-section (1), subsection (2) or sub-section (3) is made to a company, the company shall make a note of suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and other particulars of the person who holds the beneficial interest in such shares. (2) Every person who holds or acquires a beneficial interest in share of a company shall make a declaration to the company specifying the nature of his interest, particulars of the person in whose name the shares stand registered in the books of the company and such other particulars as may be prescribed. (3) Where any change occurs in the beneficial interest in such shares, the person referred to in sub-section (1) and the beneficial owner specified in sub-section (2) shall, within a period of thirty days from the date of such change, make a declaration to the company in such form and containing such particulars as may be prescribed. (4) The Central Government may make rules to provide for the manner of holding and disclosing beneficial interest and beneficial ownership under this section. (5) If any person fails, to make a declaration as required under sub-section (1) or sub-section (2) or sub-section (3), without any reasonable cause, he shall be punishable with fine which may extend to fifty thousand rupees and where the failure is a continuing one, with a further fine whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leaded having made declaration with respect to the beneficial interest held in the shares of HRLIPL and in paragraph 33 of the plaint has pleaded having made declaration under Section 89 of the 2013 Act with respect to the beneficial interest held in the shares of ATPL. 22. I have next enquired from the senior counsel for the plaintiff, whether HRLIPL, in accordance with Section 187C(4) filed the return in the prescribed form with the ROC with regard to the declaration claimed to have been made by the plaintiff. 23. The senior counsel for the plaintiff states that the plaintiff has also pleaded having called upon HRLIPL to file the said return with the ROC but does not know whether it was filed or not. 24. I may record, that no attempt to obtain proof of filing of such return if any with the ROC has been made. 25. I have next drawn attention of the senior counsel for the plaintiff to Section 187C(6) supra which was in force on 28th September, 2011 when beneficial interest in the shares of HRLIPL is claimed to be created in favor of the plaintiff and enquired, how without the said return having been filed, the plaintiff can lay a claim on the basis of beneficial interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to enforce any right in respect of any property held benami against the person in whose name the property was held, by a person claiming to be the real owner of such property. It also barred any defence based on any right in respect of any property held benami against the person in whose name the property was held. Though the Benami Act did not make any exception with respect to benami holding of shares but notwithstanding the promulgation of the Benami Act in the year 1988, Section 187C, providing a procedure for declaration of shares in a company held benami, continued on the statute book. Not only did it so continue in the 1956 Act even after 1988 but a reincarnation thereof in the 2013 Act also finds mention in the form of Section 89. 29. I have in Ashwani Sharma Vs. Kanta Sharma 2017 SCC OnLine Del 6623 held that till the coming into force of the Benami Act in 1988, benami transactions were recognized and permitted in India. It was for the first time in 1988, on coming into force of the Benami Act, that the same were prohibited and entering into benami transactions made an offence. The claim of the plaintiff of, in September, 2011 becoming the beneficial owner of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by providing for public declaration thereof in ROC and if kept hidden, cannot be enforced. The plaintiff has not pleaded having exercised any right or got any benefit or having been treated as beneficial owner of shares in HRLIPL, since 28th September, 2011 or as beneficial owner of shares in ATPL since 7th August, 2013. The records required to be maintained by a company qua beneficial interest in shares, are public records, open to inspection by all and the conduct of the plaintiff, of inspite of such declaration being not made, keeping quite till now, speaks volumes of natural course of human conduct. The plaintiff had option under Section 59 of the 2013 Act to apply for rectification of register of members, but failed to exercise the said option. The claim of beneficial ownership of shares of ATPL, even otherwise stands on the edifice of beneficial ownership of HRLIPL and which is unsustainable under Section 187C(6) supra. 31. The claim of the plaintiff even otherwise is not plausible and the plaintiff has spun a web, only to have this suit entertained and to use the same to defeat his prosecution under Section 452 of the 2013 Act. The claim of the plaintiff is that the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n been impleaded as a party to the suit though on the same being put, the senior counsel for the plaintiff states that she can always be added. However the question is not of who can be added and who cannot be added but of the frame of the suit by the plaintiff. According to the averments in the plaint, it is Samta Khinda who owed monies to the plaintiff and it is at the insistence of Samta Khinda that HRLIPL, as shareholder of JFL, made JFL acquire 50% shares of ATPL to be held by JFL with plaintiff having beneficial interest therein. Samta Khinda was thus the most important link whom the plaintiff has not even deemed necessary to implead. 33. The right of the plaintiff even if any, as beneficial owner of shares in the name of Samta Khinda in HRLIPL or shares in the name of JFL in ATPL could be only to exercise rights as a shareholder and not otherwise. It is not the plea of the plaintiff that the plaintiff as shareholder exercised any such rights or even made any attempt to exercise such rights. On the contrary this suit is only to retain possession of immovable property of ATPL. The plaintiff, even as beneficial owner of shares of ATPL in name of JFL, is not entitled to hold ..... X X X X Extracts X X X X X X X X Extracts X X X X
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