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TMI Blog2022 (4) TMI 631X X X X Extracts X X X X X X X X Extracts X X X X ..... he NCLT. Furthermore, there cannot be a partial rejection of a suit under the provisions of Order VII Rule 11 of the CPC. In any event, the proceedings before the NCLT had been instituted by the defendant no.7 and not by the plaintiffs herein. Just because one of the shareholders has chosen to invoke their grievance under the provisions of the Companies Act, cannot imply that another shareholder with similar grievance cannot invoke their grievance before a Civil Court, if the jurisdiction of the Civil Court is otherwise made out. In respect of the contention of the contesting defendants that the present suit, filed as a derivative suit, is not maintainable as the plaintiffs are majority shareholders in the defendant no. 4 Company, it may be relevant to note that a derivative action on behalf of a company is filed to redress a wrong done to a company by the persons in control of the company. In the normal circumstances, the company itself would have filed a suit, but is unable to do so on account of the wrong doers being in control of the company. Therefore, the concept of derivative action was derived by courts in the United States of America, where shareholders/persons file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... February, 2021 and 5th May, 2021 respectively and replies have been filed on behalf of the plaintiffs. 3. Upon a reading of the plaint it emerges that the plaintiffs are shareholders in the defendant no.4 Company, RC Healthcare Private Limited. The defendant no.5, SpectraRC Medicare Private Limited and the defendant no.6, Sight Avenue Private Limited, are companies having the same registered office as the defendant no.4 Company. The defendant no.1, Dr. Suraj Munjal and the defendant no.2, Dr. Ashita Munjal, are shareholders in the defendant no.4 Company. The defendant no.1 is also a director and shareholder of the defendant no.5 and the owner of the trade name The Sight Avenue , used by the defendant no.6. The defendant no.2 is also a shareholder of the defendant no.6. The defendant no.3, Mr. Daya Shanker Sharma, is a former director and shareholder of the defendant no.5. 4. The suit has been filed by the plaintiffs, inter alia, seeking mandatory and permanent injunction against the defendants no.1, 2, 3, 5 and 6, restraining them from passing off and violating the registered trademark and trade names of the defendant no. 4 Company, which owns and runs a famous eye hospital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plaintiffs no.1 and 2, has already filed a company petition before the National Company Law Tribunal (NCLT), being CP No. 227/2017, in respect of similar reliefs, which are subject matters of present plaint. The said company petition is still pending. The plaintiffs and the defendant no. 7 are represented by the same counsel in various proceedings and are supporting each other in the present suit as well as in the proceedings before the NCLT. (iii) In the aforesaid company petition, the defendant no. 7 has filed an application being C.A. No. 147/2020 (page 447 of the defendants documents), seeking exactly the same reliefs, which have been sought in the present suit by the plaintiffs. The factum of the filing of this application has been concealed by the plaintiffs in the present suit. (iv) The present suit has been filed only because the defendant no. 7, the petitioner in the aforesaid company petition, could not succeed in getting the reliefs before the NCLT. (v) In the aforesaid company petition, the management of the defendant no.4 Company was bestowed upon the defendant no.1 by means of the consent order dated passed on 4th October, 2017, which was slightly modi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt does not have the territorial jurisdiction to entertain the present suit: (i) This Court has the territorial jurisdiction to entertain the present suit as the present case is covered under the proviso to Section 16 of the CPC, as the reliefs claimed are capable of being enforced through personal obedience of the defendant no.1, who admittedly works for gain in Delhi. Reliance in this regard is placed on the judgment in Shivnarayan (Dead) By Legal Representatives Vs. Maniklal (Dead) Through Legal Representatives and Ors., (2020) 11 SCC 629. (ii) The present suit would be maintainable before this Court even if one of the suit properties falls within the territorial jurisdiction of this Court. In this regard reliance is placed on Section 17 of the CPC read with Section 39(1)(c) of the CPC. (iii) Even otherwise, the present suit is maintainable before this Court as part of the cause of action has arisen in Delhi. Reliance in this regard is placed on Section 20 of the CPC. The cause of action for filing the present suit arises from siphoning off of funds from the bank accounts of defendant no.4 Company held in Delhi, siphoning off of the business of the defendant no.4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any partial rejection of the plaint. Either the plaint has to be rejected has a whole or there can be no rejection at all. Reliance in this regard is made on the judgment in Madhav Prasad Aggarwal and Anr. Vs. Axis Bank Limited And Anr., (2019) 7 SCC 158 and Roop Lal Sathi Vs. Nachhattar Singh Gill, (1982) 3 SCC 487. 12. On the question of concealment and no cause of action arising, the senior counsel for the plaintiffs has made the following submissions: (i) Objections with regard to concealment cannot be a ground for rejection of the plaint under Order VII Rule 11 of the CPC. This is without prejudice of the contention of the plaintiffs that there has been no concealment. (ii) The cause of action for filing the present suit are subsequent facts, which either occurred at a later point of time or came to the knowledge of plaintiffs at a later point of time after filing of the petition before the NCLT. (iii) The present suit is a derivative suit filed on behalf of the plaintiffs to protect the interests of the defendant no.4 Company. Reliance in this regard is placed on the judgment in Starlight Real Estate (Ascot) Mauritius Limited Anr. Vs. Jagrati Trade Ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 746/2021 and prayer H, whereby, the plaintiffs seek a direction to the defendant no.4 Company, to pay amount of requisite Court fees, no provision of law has been cited on behalf of the plaintiffs. 15. I have considered the rival submissions made by the parties and the record of the suit. 16. At the outset, it is relevant to set out the prayers in the plaint with regard to the reliefs as prayed for in the present suit: In the facts and circumstances mentioned above, it is therefore most respectfully prayed that this Hon ble Court be pleased to decree the present suit and grant the following reliefs: A. Declare that the pecuniary advantage and assets identified to have been gained by the Contesting Defendants individually or severally by siphoning off the monies and/ or by diverting business from the Defendant No.4 Company and hence, are in law, the assets of the Defendant No. 4 Company, and consequential reliefs and/ or directions in relation thereof for bringing the siphoned monies and/or assets back to the fold of the Defendant No. 4 Company may be passed for, including but not limited to: a. Plot No. 243P, Sector 38, admeasuring 420 square meters, Guru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s proprietors, partners, promoters, directors, servants, principal officers, dealers, distributors, agents, franchisees and/ or any one acting for or on their behalf from using marks, tradenames, devices, brands which are identical or deceptively similar to or are a colourable imitation or substantial reproduction of the marks, tradenames, devices, brands owned by the Defendant No. 4 having all or some of the distinctive features which form an integral part of the registered trademark owned by the Defendant No. 4, for business other than that of the Defendant No. 4 which would otherwise amount to infringement of the Plaintiffs' statutory and common law rights; F. Direct the Defendants No. 1, 2, 3, 5 and 6, its proprietors, partners, promoters, directors, servants, principal officers, dealers, distributors, agents, franchisees and/ or any one acting for or on their behalf to deliver all the infringing material bearing the marks, tradenames, devices, brands which are identical or deceptively similar to or are a colourable imitation or substantial reproduction of the marks, tradenames, devices, brands owned by the Defendant No. 4 having all or some of the distinctive features ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en claimed in the present suit, are located in Gurugram, Haryana and the reliefs of declaration and possession in respect of the aforesaid properties cannot be granted by this Court. 19. It may be relevant to refer to the applicable provisions of the CPC with regard to territorial jurisdiction of a Court to entertain a suit, which read as under: 16. Suits to be instituted where subject-matter situate.- Subject to the pecuniary or other limitations prescribed by any law, suits- (a) for the recovery of immovable property with or without rent or profits, xxxx xxxx xxxx (d) or the determination of any other right to or interest in immovable property, xxxx xxxx xxxx shall be instituted in the Court within the local limits of whose jurisdiction the property is situate: Provided that a suit to obtain relief respecting, or compensation for wrong to, immovable property held by or on behalf of the defendant may, where the relief sought can be entirely obtained through his personal obedience, be instituted either in the Court within the local limits of whose jurisdiction the property is situate, or in the Court within the local limits of whose juris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intiffs have sought a specific direction to the defendant no.1 in prayer B to hand over possession of the immovable properties. Therefore, a relief has been sought that can entirely be obtained through the personal obedience of the defendant no.1. Clearly, this is covered under the proviso to Section 16 of the CPC, as admittedly, the defendant no.1 resides and works for gain within the territorial jurisdiction of this Court. 22. Furthermore, one of the properties in respect of which the reliefs have been claimed in the present suit, is located in Greater Kailash, Part-I, Delhi, which lies within the territorial jurisdiction of this Court. Therefore, in terms of Section 17 of CPC, the present suit has been validly instituted before this Court. In this regard, reference may be made to the observations of the Supreme Court in Shivnarayan (Deceased) By Lrs. (supra), as relied upon by the plaintiffs, with regard to Sections 16 and 17 of the CPC, which are set out as under: 33. Sections 16 and 17 CPC are part of the one statutory scheme. Section 16 contains general principle that suits are to be instituted where subject-matter is situate whereas Section 17 engrafts an exception t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that passing a decree by a court with regard to immovable property situate outside the local jurisdiction of the court passing the decree may not only confine to Section 17 but there may be other circumstances where such decree is passed. Section 20 CPC may be one of the circumstances where decree can be passed against the defendant whose property may situate in local jurisdiction of local limits of more than one court. 24. The counsel for the defendants has placed reliance on the judgment of the Supreme Court in Harshad Chiman Lal Modi (supra), to contend that the proviso to Section 16 of the CPC cannot be interpreted so as to enlarge the scope of main provisions of Section 16. 25. There is no quarrel with the proposition of law that a proviso cannot be given a wide interpretation so as to the defeat the main provisions. However, it has specifically been noted in Harshad Chiman Lal Modi (supra) that the proviso would apply, if the relief sought in the suit can be obtained through the personal obedience of the defendant. In fact, in the same judgment in paragraph 13, the Supreme Court has specifically noted that Section 17 of the CPC supplements Section 16 of the CPC and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontesting defendants have failed to make out a case for the return of the plaint under Order VII Rue 10 of the CPC. 33. Next, I proceed to consider I.A No. 4637/2021 preferred on behalf of the defendant no. 1 under Order VII Rule 11 of the CPC. 34. The first ground taken by the contesting defendants for rejection of the plaint is that under Order VII Rule 11(d) that the plaint is barred by Section 430 1 of the Companies Act. In this regard, it has been contended on behalf of the contesting defendants that most of the reliefs sought under the present plaint lie within the domain of the NCLT under Sections 241 and 242 of the Companies Act and, therefore, in terms of the bar under Section 430 of the Companies Act, this Court is debarred from granting such reliefs. In fact, a Company Petition bearing CP No. 227/2017 has already been filed before the NCLT by the defendant no.7, who is acting in concert with the plaintiffs herein. In this regard, prayers A, C, D, and J are those prayers in respect of which, the contesting defendants have contended that the jurisdiction of this Court is barred. 35. At this stage, it is deemed prudent to reproduce the reliefs as prayed for in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. The determination of the aforesaid issues would require detailed evidence. In fact, as observed from a perusal of the reliefs sought in the Company Petition bearing CP No.227/2017, no such reliefs have been claimed as a part of the company petition. 38. In this regard, the senior counsel for the plaintiffs has correctly relied upon the decision of the Supreme Court in Aruna Oswal (supra), wherein it has been observed that question of right, title and interest is essentially a question of civil rights between the parties and can only be decided in a civil suit. The relevant observations of the Supreme Court in paragraphs 29 and 31 are reproduced below: 29. It is also not disputed that the High Court in the pending civil suit passed an order maintaining the status quo concerning shareholding and other properties. Because of the status quo order, shares have to be held in the name of Mrs Aruna Oswal until the suit is finally decided. It would not be appropriate given the order passed by the civil court to treat the shareholding in the name of Respondent 1 by NCLT before ownership rights are finally decided in the civil suit, and propriety also demands it. The question of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs before the NCLT. Furthermore, in my view, there cannot be a partial rejection of a suit under the provisions of Order VII Rule 11 of the CPC. Reference in this regard may be made to the observations of the Supreme Court in Madhav Prasad Aggarwal Anr. (supra), relevant paragraphs whereof are set out below: 10. We do not deem it necessary to elaborate on all other arguments as we are inclined to accept the objection of the appellant(s) that the relief of rejection of plaint in exercise of powers under Order 7 Rule 11(d) CPC cannot be pursued only in respect of one of the defendant(s). In other words, the plaint has to be rejected as a whole or not at all, in exercise of power under Order 7 Rule 11(d) CPC. Indeed, the learned Single Judge rejected this objection raised by the appellant(s) by relying on the decision of the Division Bench of the same High Court. However, we find that the decision of this Court in Sejal Glass Ltd. is directly on the point. In that case, an application was filed by the defendant(s) under Order 7 Rule 11(d) CPC stating that the plaint disclosed no cause of action. The civil court held that the plaint is to be bifurcated as it did not disclose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14. A fortiori, these appeals must succeed on the sole ground that the principal relief claimed in the notice of motion filed by Respondent 1 to reject the plaint only qua the said respondent and which commended to the High Court, is replete with jurisdictional error. Such a relief cannot be entertained in exercise of power under Order 7 Rule 11 (d) CPC. That power is limited to rejection of the plaint as a whole or not at all. 42. Though, the contesting defendants have relied upon various judgments in support of the contention that the partial rejection of the plaint is permissible, in view of the categorical observations of the Apex Court in Madhav Prasad Aggarwal and Anr. (supra), no reliance can be placed on the said judgments. 43. In any event, the proceedings before the NCLT had been instituted by the defendant no.7 and not by the plaintiffs herein. Just because one of the shareholders has chosen to invoke their grievance under the provisions of the Companies Act, cannot imply that another shareholder with similar grievance cannot invoke their grievance before a Civil Court, if the jurisdiction of the Civil Court is otherwise made out. 44. In respect of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ants. In my opinion, whether the reliefs, in terms of prayers A and B qua the properties, allegedly purchased from the siphoned off funds, can be granted or not cannot be the basis of rejection of plaint under Order VII Rule 11 of the CPC. The Court has ample powers to mould reliefs at the time of passing the final judgment and whether the reliefs as claimed in the plaint can be granted or not cannot be determined at this stage. 46. It has been vehemently contended on behalf of the contesting defendants that the factum of the filing of C.A. No. 147/2020 by the defendant no.7 has been supressed by the plaintiffs. As regards the alleged suppression/concealment on behalf of the plaintiffs, in the said application, interim reliefs against the respondents therein have been sought to restrain them from carrying on competing business. However, no declaratory reliefs in respect of the title of the suit properties and reliefs based on intellectual property rights have been sought. The proceedings before the NCLT and the order dated 4th October, 2017 have been duly disclosed by the plaintiffs in the plaint. In this regard, reference may be made to the documents filed by the plaintiffs, of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19. In the present case, the reference to ₹ 40 or 50 crores firstly relates only to renovation and furnishing of the hotel and does not even on the bare reading of the plaint, reflect to be the entire value of the assets and accounts of the partnership or as a true and correct depiction of the settled account or share of an individual partner. The figure arrived at by the plaintiffs should be definite and essentially must be based upon such determining factors which ex facie indicate an acceptable value of the assets of the partnership and its business, including all its aspect. Merely because some figure has been indicated in the pleadings or correspondence exchanged between the parties in regard to renovation and furnishing of the hotel, would not determine the complete settled accounts of the partnership so as to make the plaintiffs liable to pay the ad valorem court fee on the fond hope or an estimated figure. The plaintiffs would obviously be liable to pay the court fee on final determination arrived at by the court upon true and correct rendition of accounts, as admittedly the defendants are carrying on the business, though their pleading is that the partnership has a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court fees on the said figure. Since in the present case also, the plaintiffs have already given an estimate, they can avail the benefit the making up the deficiency once the accounts are settled and the amount is determined. In this regard, the contesting defendants reliance placed on the provisions of Order XII Rule 6 of the CPC is misplaced as there is no clearcut admission on behalf of the plaintiffs. The above valuation has been done on the basis of an estimate available with the plaintiffs on the basis of the limited documents available with respect to the defendant No.4 Company. Furthermore, the plaintiffs have undertaken to deposit such Court fees, as be directed by this Court to be paid in respect of the reliefs being sought in the present suit. Thus, the plaintiffs would only be liable to pay the Court fees upon the final determination that is arrived by the Court, of the amounts payable after rendition of accounts. 51. The judgment in Dr. Zubair Ul Abidin Ors. (supra) cited on behalf of the contesting defendants was in the context of the plaintiff not paying Court Fees on the estimated amount of damages in the suit. The same was not in the context of Court Fees pay ..... 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