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TMI Blog2023 (5) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... iled by the 9th respondent before the Hon ble Judge. Therefore, the prayer in OA.No.520/2013 even on the date of application is not maintainable. As it is pointed out earlier, there cannot be an injunction to over turn an event that has occurred by operation of law. The very object behind this litigation by filing a suit under Section 92 of CPC is on the basis of serious allegation that the 2nd respondent/2nd defendant, the promoter of 9th respondent Company after his induction in the 1st respondent Trust, diverted the funds of the Trust by formulating a systematic and a calculated design. It is admitted that no document is produced by the petitioners to show systematic diversion of funds of Trust in favour of 9th respondent Company. The plaintiffs now rely upon the interim report of the Advocate Commissioner pointing out that he could not collect the Books of Accounts and other details from the 1st respondent/Trust. The object of the Trust is not to carry on business and no activity with profit motive. No one could assume accumulation of huge funds by Trust. The 9th respondent is an independent Company incorporated under the Companies Act, 1956. The 2nd respondent is not in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Respondent : R1 - No Such Company, Dr.N.Sethuraman, S/O.Mr.Nalliah Servai, Mr.N.Rajagopal S/O.Mr.Nalliah Servai, Indian Bank, Nationalized Bank And Others ORDER S.S.SUNDAR, J. (1) The petitioners in CMP.No.7981/2022 in OSA.No.101/2014 are plaintiffs 2 and 3 in the suit in CS.No.143/2012 and appellants 2 and 3 in the above Original Side Appeal. The contesting 9th respondent in CMP.No.7981/2022 has filed CMP.No.13117/2022 in CMP.No.7981/2022 in OSA.No.101/2014 to vacate the status quo order dated 28.04.2022 passed in CMP.No.7981/2022 in OSA.No.101/2014. (2) Brief facts that are necessary for the disposal of CMP.No.13117/2022 and CMP.No.7981/2022 are as follows:- (3) The petitioners in CMP.No.7981/2022 who are appellants 2 and 3 in OSA.No.101/2014 are the plaintiffs 2 and 3 in the suit in CS.No.143/2012. The 1st plaintiff who is the wife of the 2nd defendant in the suit along with the petitioners, filed the suit in CS.No.143/2012 under Section 92 of CPC for the following reliefs:- (a)Removing the defendants 2 to 8 from the Trusteeship of the 1st defendant Maha Semam Public Charitable Trust; (b)Directing the defendants 2 to 8 to render accounts relating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondent who is the 9th defendant in the suit from proceeding further in the process of obtaining Cancellation Certificate granted to it by the Reserve Bank of India so as to initiate voluntary liquidation process pursuant to the Business Transfer Agreement entered into between the 9th defendant and M/s.Northern ARC Capital Limited, a company incorporated under the Companies Act, 1956. (7) A Division Bench of this Court, by order dated 28.04.2022, directed the respondents to maintain status quo as on date after recording the submission of the learned Senior counsel appearing for the petitioners in CMP.No.7981/2022 that the appeal itself would become infructuous and the interest of the beneficiaries of the 1st respondent-Trust would be at stake if the 9th respondent was permitted to transfer the interest in favour of a third party. Thereafter, the 9th respondent who is also the 9th defendant in the suit, namely, M/s.SMILE Micro Finance Limited, filed CMP.No.13117/20122 in CMP.No.7981/2022, to vacate the order of status quo dated 28.04.2022 passed in CMP.No.7981/2022 in OSA.No.101/2014. (8) By a common order dated 01.09.2022, a Division Bench of this Court disposed of the petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ior counsel appearing for the 9th respondent who is also the petitioner in CMP.No.13117/2022, referred to the findings of the Hon ble Judge for dismissing OA.No.520/2013 and referred to relevant facts which are stated not only in the counter affidavit filed by the 9th defendant before the learned Judge, but also the affidavit filed in support of the petition in CMP.No.13117/2022. (13) Learned Senior counsel submitted that the prayer in the application in OA.No.520/2013 became infructuous even when the application was filed in 2013 as the prayer for injunction restraining defendants 9 to 17 from transferring the control of the 9th defendant Company in favour of a company by name M/s.DWM Investments [Cyprus] Limited [hereinafter referred to as M/s.DWM ] did not survive in view of the transfer of control by operation of law well before the application and that the application in OA.No.520/2013 itself is not sustainable as the application for injunction was only an attempt to over turn an event that has occurred by operation of law. Referring to the specific findings of the Hon ble Judge regarding the maintainability of suit as well as the collusion and regarding the true object an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the 1st defendant- Trust by name Mahasemam Trust. (18) It is seen that the plaintiffs have made several allegations against the 2nd respondent, husband of 1st plaintiff, the 11th respondent-daughter of 1st plaintiff and the company which is being run by her son by name Mr.S.Ramesh and few other Companies by 1st plaintiff s son and her daughter. No doubt, the plaint contains serious allegations against the trustees in relation to the affairs of the Trust. Since the bona fides of this litigation is doubted by the 9th respondent and a specific stand is taken by the respondents, the learned Judge while disposing the applications, was inclined to examine almost all documents that are available and came to the conclusion that the application in OA.No.520/2013 and the suit itself is a collusive, one designed, invented and engineered by the family members of Dr.N.Sethuraman. Therefore, this Court having regard to the prayer in the interim application filed by the plaintiffs, has to necessarily consider the bona fides of petitioners. (19) The suit came to be filed by the wife of 2nd defendant under Section 92 of CPC by getting the leave of Court under Clause 12 of Letters Patent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr.S.Ramesh. [b]The son of 1st plaintiff Mr.S.Ramesh is receiving a sum of Rs.35,000/- per month from the 1st respondent Trust as a consultant. [c]The 1st plaintiff s son is collecting a sum of Rs.13,000/- as rent for the property taken on rent by the 1st respondent Trust and a sum of Rs.15,40,000/- has been paid to him unauthorisedly from out of the funds of 1st respondent Trust towards consultation charges. [d]The 11th respondent namely Dr.S.Brathiba, who is the daughter of 1st plaintiff and 2nd defendant and who is also the President of Trust and Chairman of M/s.SMILE Microfinance Ltd., was receiving a monthly salary of Rs.1,55,000/- and a rent of Rs.15,000/- from the 1st defendant trust from July 2010 and she has been so far paid a sum of Rs.27,20,000/- from the Trust funds. [e]By an Agreement dated 05.04.2007,the 21st defendant who is represented by the 11th defendant, the daughter of 1st plaintiff, has made a fake claim against 9 t h respondent by way of arrears for the usage of software from the year 2007 to the tune of Rs.5,51,79,000/-. [f]Under the guise of granting small business loans to fictitious members of the 1st defendant Trust, defendants 2 and 4 hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1st respondent Trust. No application is filed to restrain the 2nd respondent which is normally required to protect the interest of Trust, having regard to the serious allegations. (25) When a specific allegation is made against the son of 1st plaintiff who is the Managing Director of 20th respondent Company about siphoning of funds of 1st respondent Trust to the tune of Rs.1.50 Crores, no interim direction is sought for by the plaintiffs to protect the interest of the 1st respondent Trust in getting back the huge amount stated to have been illegally siphoned off from the 1st respondent Trust with the help of 2nd respondent Dr.N.Sethuraman. (26) As admitted by the parties before this Court, 9th respondent/9th defendant is an independent financial Organization incorporated under the Companies Act, 1956. It is true that the said Company was promoted by the 2nd respondent/2nd defendant. Though the 9th respondent Company was promoted by Dr.N.Sethuraman and his family members in the year 2003, it is stated that the authorised share capital of 9th respondent Company was increased to Rs.20 Crores in the year 2009. It is not disputed that in order to infuse more capital, a foreign inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 17 from transferring the control of 9th respondent Company in favour of M/s.DWM cannot be sustained. As stated by the 9th respondent, the application for injunction restraining transfer of control is nothing but illusory. In other words, an injunction cannot be granted by the Court to over turn an event that has occurred by operation of law. The undesirable situation can be understood if we examine the consequences of the interim order hypothetically. (27) The petitioners have made serious allegations against the 2nd respondent for illegal siphoning of funds from the 1st defendant/1st respondent Trust to the 9th respondent. Allegation is made against 2nd respondent to transfer funds illegally from 9th respondent to his daughter's company. The petitioners sought for an interim order to enable the 9th respondent a minority shareholder to have control over the 9th respondent Company. When the plaintiffs have made several allegations against the 2nd respondent for his illegal acts, affecting the interest of a public Trust and the plaintiffs believe that the 2nd respondent is capable of manipulating things to gain illegal profits for himself at the cost of even the public Trust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plaintiffs have made several allegations, still continues as a Trustee, even as per the Supplementary Deed of Trust executed on 04.04.2019 which is produced now before this Court by the learned Senior counsel for the petitioners in the course of arguments. Today, the Trust is under the control of Dr.N.Sethuraman and appearance of Senior counsel for the Trust and for the plaintiffs cannot be comprehended if there is no collusion. PRIMA FACIE CASE:- (32) The Hon ble Judge while dismissing the application in OA.No.520/2013 along with other applications, prima facie found that the suit itself is not maintainable under Section 92 of CPC. The Hon ble Judge, after referrring to every plaint document and the advocate commissioner s Report, found that the plaintiffs have falsified the address of the 1st defendant Trust and held that describing the registered office of 1st defendant Trust at Chennai, is a deliberate falsehood. The Hon ble Judge held that the plaintiffs have misled the Court by giving a wrong address within the jurisdiction of this Court and that the plaintiffs are thus guilty of coming to Court with unclean hands. The 1st document in the plaint is the original Deed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned against 1st defendant whose registered office is in Madurai. (34) We have already seen that the control of the 9th respondent Company was transferred to M/s.DWM [a foreign investor] following the revocation of proxies on 25.10.2011 coupled with the subsequent change in Board composition by resignation of 2nd and 9th respondents successively on 25.10.2011 and 29.11.2011 respectively. These facts are not in dispute as the plaintiffs have not denied the factual events stated in the counter affidavit filed by the 9th respondent before the Hon ble Judge. Therefore, the prayer in OA.No.520/2013 even on the date of application is not maintainable. As we have pointed out earlier, there cannot be an injunction to over turn an event that has occurred by operation of law. (35) The very object behind this litigation by filing a suit under Section 92 of CPC is on the basis of serious allegation that the 2nd respondent/2nd defendant, the promoter of 9th respondent Company after his induction in the 1st respondent Trust, diverted the funds of the Trust by formulating a systematic and a calculated design. It is admitted that no document is produced by the petitioners to show systematic d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 38) This Court has already referred to the findings of the Hon ble Judge regarding collusion among family members of the 1st respondent Trust. It appears that the 1st plaintiff is no more. The petitioners are not the shareholders or persons interested in the affairs of the 9th respondent Company. This Court is also convinced that the suit was engineered by the 2nd respondent/2nd defendant in collusion to get an order what the 2nd respondent may require but would not get directly against 9th respondent. (39) The Hon ble Judge while deciding the interlocutory application has taken much care to consider all the documents which are produced and made available by the Advocate Commissioner. (40) Despite specific findings of the Hon ble Judge, the learned Senior Counsel for the petitioners has just ignored referring to any of the findings and hence, this Court presume that he has no valid arguments at least to point out that the findings are neither warranted nor proper or at least to show that the petitioners will be in a position to prove their allegations. Except some apprehensions based on some guess work, this Court is unable to find any substance in the whole case conceived by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th respondent has filed an affidavit in support of the petition filed to vacate the order of status quo. After pointing out elaborately the findings of the Hon ble Judge in OA.No.520/2013, serious prejudice that would be caused to 9th respondent on account of status quo order is sequenced as follows:- (a) The consideration amount to the tune of Rs.111,62,90,724.00 has been lying idle in savings account of the Company. In view of the status quo order, the 9th respondent is unable to conduct board meeting and obtain approval for depositing the amount in Fixed deposits. As a result, the 9th respondent company is currently losing approximately a lakh per day. (b)The approval of the audited financial relating to FY 2021-2022 is yet to be done. (c) The Reserve Bank of India had conducted the annual inspection and subsequently issued the final Supervisory letter and Risk Management Plan, which the Company directors were expected to acknowledge, agree and respond by mid of May 2022. (d) The company has 11,144 very small holding women shareholders mostly untraceable. As per MCA regulation, their shareholding and dividend must be transferred to Investor Education and Prot ..... X X X X Extracts X X X X X X X X Extracts X X X X
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