R.L. Khurana, J.@mdashThis order will dispose of the above mentioned two applications. OMP No. 18 of 2000 has been made by the Plaintiff under Order 39 Rules 1 and 2, read with Section 151 Code of Civil Procedure, for the grant of ex-parte ad-interim injunction for restraining the Defendants No. 1, 3 to 5 and 10 to 19 from:
(a) selling, alienating, wasting, damaging, disposing or otherwise causing injury to the Plaintiff in relation to the shares of Defendant No. 2 held by or for them bearing distinctive Nos. 3733204-3941867, 1999838-2088837, 2131971-2132452, 495139-496707, 228879-229103, 3946868-3976767, 200587-200632, 4486-4680, 1181081-1181112, 68076-68121, 1993738-1993837, 75154-87153, 10725-11033, 886914-896913, 290693-294917, 547094-547741,921664-926013, 403898-405166, 362612-378261, 1962838-1993737, 251658-251837 and 222109-222208 and any bonus shares issued thereon, since, 15.7.1969; and
(b) exercising any right, benefit or privilege in respect of the shares specified at (a) above.
2. OMP No. 56 of 2000 has been made by the Defendants No. 1 to 6 and 8 to 18 under Order 39 Rule 4, reed with Section 151, Code of Civil Procedure, for the vacation of the ad-interim injunction granted by this Court on 8.2.2000, whereby Defendants No. 1, 3 to 5 and 10 to 19 were restrained by way of an ad-interim injunction as at (a) above till further orders.
3. Briefly, the facts of the case may be thus stated. Defendant No. 2 Messrs Mohan Meakin Limited is a listed public company limited by shares, duly incorporated under the Companies Act, 1956, having its registered office at Solan. The authorised share capital of Defendant No. 2 is Rupees Ten crores, comprising of two crores equity shares of Rs. 5 each. The issued and fully paid-up shares capital of Defendant is approximately Rupees 4.25 crores, comprising of 85,08,479, equity shares.
4. Defendant No. 1 who is the real paternal uncle of the Plaintiff is the Managing Director-cum-Chairman of Defendant No. 2, while the Plaintiff and Defendants No. 4 to 9 are the Directors thereof. Defendants No. 3 and 10 to 19 are public charitable trusts. Defendant No. 1 presently is the Chairman of all these public trusts.
5. The Defendant No. 2 company was originally incorporated in the year 1934 under the name and style of Messrs. Dyer Meakin Breweries Limited. The management and control of Defendant No. 2 was acquired by Shri N.N. Mohan (grand-father of the Plaintiff and father of Defendant No. 1) soon after the partition of the country and the name of the company was changed to Mohan Meakin Brewaries Limited. Shri N.N. Mohan till his death which took place on 15.7.1969 was the Chairman-cum-Managing Director of the company and thus was having complete control and charge of the affairs of the Defendant No. 2 company. During the life time of Shri N.N. Mohan, the father of the Plaintiff Shri V.R. Mohan was the Deputy Managing Director of the Company. After the death of Shri N.N. Mohan, Shri V.R. Mohan, father of the Plaintiff became the Managing Director and Defendant No. 1 came to be inducted as Deputy Managing Director. The name of Defendant No. 2 company was further changed to Mohan Meakin Limited with effect from 24.4.1980.
6. Shri N.N. Mohan owned a number of shares of the Defendant No. 2 company. On 16.12.1968, two lac ninety nine thousand shares owned by Shri N.N. Mohan bearing distinctive numbers 3733204-3941867, 1999838-2088837,2131971-2132452,495139-496707 and 228879-229103 were transferred in favour of Shri V.R. Mohan, the father of the Plaintiff and Defendant No. 1. Such shares were shown to have been donated by Shri N.N. Mohan in favour of Defendant No. 3 and the transfer was shown in the name of Shri V.R. Mohan and Defendant No. 2 as trustees of Defendant No. 3. Similarly one lac shares held by Shri N.N. Mohan were transferred on 24.12.1970 in the name of Shri V.R. Mohan and Defendant No. 1 as trustees of Defendant No. 3. In 1985, the corpus of all the shares was transferred by Defendant No. 1 from Defendant No. 3 to Defendants No. 10 to 19.
7. The case of the Plaintiff is that the Defendant No. 1 after the death of Sarvshri N.N. Mohan and V.R. Mohan, on becoming Chairman-cum-Managing Director of the Defendant No. 2 company, in order to gain absolute control over the shares of Defendant No. 2 forming part of the estate of Shri N.N. Mohan, hatched a conspiracy and thereby fabricated the record of the Defendant No. 2 by showing transfer of a large proportion of the shares held by Shri N.N. Mohan in the joint name of Shri V.R. Mohan and Defendant No. 1 as trustees of Defendant No. 3.
8. The Plaintiff, therefore, filed a suit claiming the following reliefs:
(i) declaration to the effect that transfers in the Register of Members of Defendant No. dated 16.12.1968 in respect of its shares being distinctive numbers 3733204-3941867, 1999838-2088837, 2131971-2132452, 495139-496707 and 228879-229103, and the transfer dated 24.12.1970 in respect of shares bearing distinctive numbers 3946868-3976767, 200587-200632, 4486-4680, 1181081-1181112, 68076-68121, 1993738-1993837, 75154-87153,10725-11033,886914-896913,290693-294917,547094-547741,921664-926013,403898-405166, 362612-378261, 1962838-1993737, 251658-251837 and 222109-222208 from N.N. Mohan to the joint names of Shri V.R. Mohan and Defendant No. 1 to be vitiated by fraud and void ab-initio;
(ii) Direction to Defendant No. 2 rectify its register of members to the effect that the shares specified at (i) above and any bonus shares issued thereon since 15.7.1969 being the exclusive property of Shri V.R. Mohan, be registered as transmitted in favour of the legal heirs of Shri V.R. Mohan;
(iii) Prohibitory injunction for restraining Defendants No. 1, 3 and 10 to 19, their agents, assigns and successors from selling transferring, alienating, charging or creating any third party interests in the shares specified at (i) above and from exercising any rights give the said shares;
(iv) Mandatory injunction directing the Defendants No. 1, 3 and 10 to 19 to restore to the Plaintiff and other class I legal heirs of late Shri V.R. Mohan, the dividends with interests, bonuses, rights and any other benefits accruing since 15.7.1969 on the shares specified at (i) above; and
(v) Any other relief as the court may deem fit on the facts and in the circumstances of the case.
9. As stated above, an ad-interim injunction was granted by this Court on 8.2.2000 against the Defendants 1, 3 and 10 to 19 and in favour of the Plaintiff.
10. The stand taken by the Defendants 1, 3 and 10 to 19 in their reply to OMP No. 18/2000 as well as in their application being OMP No. 56/2000 is the same. It has been pleaded that the Plaintiff has not been able to make out a prima facie case in his favour. The Plaintiff has conjured and concocted non-existent apprehensions for extraneous purposes and as such not entitled to the equitable relief of injunction. Existence of balance of convenience in favour of the Plaintiff and that the Plaintiff would suffer irreparable loss in case the temporary injunction was not granted, was further denied. It was pleaded that the doctrine of lis-pendence would be applicable and remedy of damages would always be available to the Plaintiff to which he may be found entitled to. Legal objections as to locus standi of the Plaintiff, suit being bad for non-joinder of parties, limitation, Plaintiff being guilty of suppression of true and correct facts and the Plaintiff not having approached the court with clean hands, were also raised.
11. The Plaintiff in his reply and rejoinder has reiterated the pleadings set out earlier by him in his plaint as well as his application being OMP No. 26/2000.
12. I have heard the learned Counsel for the parties and have also gone through the record of the case.
13. It is by now well settled that in granting or refusing to grant a temporary injunction, the courts have a very wide discretion and such discretion has to be exercised in a judicial manner depending on the facts and circumstances of each case. No hard and fast rule can be laid down as regards the exercise of such discretion. Ordinarily, in order to justify the issuance of a temporary injunction, the following three conditions are required to be satisfied:
(a) Existence of a prima facie case;
(b) Accruing of irreparable loss and injury, which cannot be compensated with costs/damages, in case the injunction is not granted; and
(c) Existence of balance of convenience in favour of the Plaintiff in comparison to the opposite party.
14. All the above three conditions must co-exist and absence of one may be sufficient to refuse the grant of temporary injunction.
15. In addition to the above conditions, factors such as, non-existence of any other efficacious remedy, conduct of the party seeking temporary injunction and public interest also play important part, on the facts and circumstances of the case, for the exercise of discretion in favour of or against the party claiming temporary injunction.
16. In order to determine whether a prima facie case exists, it is necessary for the court to enter to some degree, into the merits of the case. To what degree the court will enter into the merits of the case will vary with the facts of each case. See :
17. The Plaintiff by virtue of the suit has assailed and challenged the transfer of shares which took place on 16.12.1968 and 24.12.1970 on the ground of forgery and fraud alleged to have been committed by Defendant No. 1. The suit was filed on 7.2.2000, that is, about 30 to 32 years of the alleged transfer of shares.
18. It has been contended on behalf of the Defendants that the suit, on the face of it is hopelessly barred by time, therefore, it cannot be said that the Plaintiff has been able to make out a prima facie case.
19. The learned Counsel for the Plaintiff, on the other hand, has contended that the suit would be governed by either Article 56 or 58 or Article 59. Limitation Act, 1963 and the suit having been filed within the period stipulated under these Articles is within time.
20. Article 56, Limitation Act, 1963, prescribed a period of limitation of three years for a suit to declare the forgery of an instrument issued or registered. The period of limitation is to be reckoned from the date when the issue or registration of the instrument becomes known to the Plaintiff.
21. Under Article 58 a period of limitation of three years, beginning from the date when the right to sue first accrued, for a suit to obtain any other declaration. Article 59 governs a suit to cancel or set aside an instrument or decree or for recession of a contract. The period of limitation for such a suit is three years beginning from the date when the facts entitling the Plaintiff to have the instrument or decree cancelled or the contract rescinded first become known to him.
22. At this stage, it would be proper to refer to the relevant pleadings as contained in paragraphs 36, 39, 41 and 42 of the plaint (reliance on which was placed by the learned Counsel for the Plaintiff during the course of hearing in order to show that the suit as laid is within time). These paragraphs read:
36. The present cause of action arose in favour of the Plaintiff when in 1999, the Plaintiff learnt of the conspiracy after Defendant No. 1 compromised company petition No. 4 of 1996 before the Principal Bench of the Company Law Board ("CLB"). The Plaintiff submits that the said action to which the Plaintiff was party was compromised on the insistence of Defendant No. 1. The Plaintiff was given to understand by the said Defendant that the compromise was advisable as there were no chances of success in that action. However, the Plaintiff has since discovered that the compromise was entered solely because other interested parties had threatened to expose the conspiracy committed by Brig. Kapil Mohan to deprive the Plaintiff of the rightful shares in MML.
* * * *
39. The Plaintiff learnt of the reasons for the above compromise from various quarters and started inquiring about it from every possible source. The Plaintiff''s inquiries from his father''s old records and inspection of the Defendant company''s records confirmed the fact of Defendant No. 1 entering into a conspiracy to deprive his family of their rightful share of MML shares.
* * * *
41. However, Defendant No. 1 thereafter approached the Plaintiff in December 1999 and offered to relinquish all control and management of the company and the Defendant Trusts in his favour. The Plaintiff discussed the matter with Defendant No. 1 in good faith and expressed his desire to settle the matters amicably. But the Plaintiff soon realised that this was a exercise in futility as Defendant No. 1 had actually been consolidating his hold on the company by surreptitiously purchasing shares through agents and front companies apparently after learning of the Plaintiff''s investigations. The Plaintiff was therefore left with no option but to seek relief''s from this Hon''ble Court by way of this suit. The Plaintiff craves leave to initiate such further actions in other courts and forums that arise from the same facts but are independent and distinct remedies available to him in law.
42. The Plaintiff says that the cause of action arose in his favour in August 1999 when the Plaintiff concluded his inspection of the family''s records and verified the facts. The cause arose on various dates in August 1999 and thereafter when the discovery of the documents and information on the statutory records of the Defendant company confirmed the fabrication of such records. The cause of action again arose when Defendant No. 1 owned up to the various illegal acts in December 1999 and agreed to relinquish control of the company in favour of the Plaintiff. This suit is as such within limitation.
23. As stated above, the Plaintiff''s case challenging the transfer of shares purported to have been made on 16.12.1968 and 24.12.1970, is based on fraud. Therefore, the provisions contained in Section 17, Limitation Act, 1963, would be applicable. The said section insofar as it is material for the purpose of the present case, provides:
Where, in the case of any suit or application for which a period of limitation is prescribed by this Act-
(a) the suit or application is based upon the fraud of the Defendant or Respondent or his agent; or
(b) the knowledge of the right or title on which a suit or application is founded is concealed by fraud of any such person as aforesaid; or
(c) the suit or application is for relief from the consequences of a mistake; or
(d) where any document necessary to establish the right of the Plaintiff or Applicant has been fraudulently concealed from him;
the period of limitation shall not begin to run until the Plaintiff or Applicant has discovered the fraud or the mistake or could, with reasonable diligence, have discovered it; or in the case of a concealed document, until the Plaintiff or the Applicant first had the means of producing the concealed document or compelling its production. Provided that....
(Emphasis supplied)
24. Section 163 of the Companies Act, 1956, stipulates that the register of members commencing from the date of registration of the company, the index of members, the register and index of debenture holders, and copies of all annual returns prepared under Sections 159 and 160 together with the copies of the certificates and documents required to be annexed thereto under Sections 160 and 161, shall be kept at the registered office of the company. Sub-section (2) of Section 209-A, Companies Act, 1956 casts a duty on every director, other officer or employee of the company to produce all books of account and other books and papers of the company to the person making inspection of such records under Sub-section (1) of Section 209-A.
25. It is the admitted case of the parties that the Plaintiff is the Executive Director of the Defendant No. 2 Company since 1989. Being such Director, he was having access to and control over the records of the Defendant No. 2. Therefore, he was having all the opportunities to inspect the records of the Defendant No. 2 company. If the Plaintiff failed to inspect such record, he cannot be said to have acted diligently. The Plaintiff would have come to know of and discovered the alleged fraud and forgery had he acted with reasonable diligence. On the failure of the Plaintiff to exercise diligence after he became a Director of the Defendant No. 2 company, he cannot be allowed to plead and say that he came to know about the forgery and fraud only in August 1999.
26. A bare reading of paragraph 39 of the plaint shows that the Plaintiff is in possession of the old records of his father Shri V.R. Mohan. However, it appears that he did not bother to look into such records till 1999. As per his own case, he looked into such record only in the year 1999 after the Company Petition No. 4 of 1996 was compromised before the Principal Bench of the Company Law Board. On this score also the Plaintiff failed to exercise due diligence. Therefore, the suit of the Plaintiff as laid does not appear to be within time.
27. Even on merits, the Plaintiff has failed to make out a prima facie case for the exercise of discretion in his favour. Vide Transfer Deed dated 5.12.1968, 7, 99, 940 equity shares bearing distinctive numbers 3733204-3941867, 1999838-2088837, 2731971-2132452, 495139-496707 and 228879-229103 are shown to have been transferred by Shri N.N. Mohan in favour of Shri V.R. Mohan and Defendant No. 1. This deed is signed by Shri N.N. Mohan as "Transferor" and Sarvshri V.R. Mohan alongwith Defendant No. 1 as "transferees". This transfer of shares is shown to have been given effect to by the Defendant No. 2 company on 16.12.1968.
28. The case of the Plaintiff is that Defendant No. 1 had forged the signatures of Shri N.N. Mohan in the transfer deed dated 5.12.1968. As stated above such transfer deed is also signed by Shri V.R. Mohan, the father of the Plaintiff, as one of the transferee. The Plaintiff has pleaded in paragraph 19 of the plaint in the following terms:
It is the Plaintiff''s belief that Brig. Kapil Mohan fabricated share transfer deeds purporting to transfer MML shares from N.N. Mohan''s estate, destroyed the original share certificates and substituted counterfeit certificates in respect of 2.99 lac shares bearing the following distinctive numbers: 3733204-3941867,1999838-2088837, 2131971-2132452, 495139-496707, 228879-229103; forged the signatures of his father and or his brother on valuable securities and falsified statutory books and records of the company in support of the fraudulent certificates and transfers. Towards this end Defendant No. 1 first fabricated the transfer of 2.99 lac shares of MML jointly to himself and Col. V.R. Mohan. This transfer was dated 28th March, 1969, about three month''s prior to N.N. Mohan''s demise. The transfer was made to Defendant No. 3 to remove this tranche of shares from the operation of N.N. Mohan''s will and to prevent their transmission to Col. V.R. Mohan''s estate in terms thereof.
29. Shri N.N. Mohan died on 15.7.1969. After his death, Shri V.R. Mohan, the father of the Plaintiff, became the Chairman-cum-Managing Director of Defendant No. 2 company. Shri N.N. Mohan, during his life time had executed a Will on 9.5.1969. Vide this Will he had bequeathed all his shares in the Defendant No. 2 company in favour of his eldest son Shri V.R. Mohan, father of the Plaintiff. All other properties in the form of shares of other companies were bequeathed in equal shares in favour of his three sons, that is, Shri V.R. Mohan, Defendant No. 1 and Shri Sukhdev Mohan, The father of the Plaintiff Shri V.R. Mohan was named as the Executor under the Will. The said Shri V.R. Mohan applied for probate of the Will being Probate Case No. 7 of 1970 before the Delhi High Court. The probate was granted on 18.12.1970 and Shri V.R. Mohan came to be formally appointed as Executor of the Estate of late Shri N.N. Mohan.
30. The copy of the petition for probate as well as the probate granted by Delhi High Court, placed on the record by the Defendants, shows that the shares in question were never included in the estate of late Shri N.N. Mohan by Shri V.R. Mohan. Similarly, while submitting the Estate Duty return in respect of late Shri N.N. Mohan, the father of the Plaintiff, Shri V.R. Mohan had not included the shares in question as a part of the estate of the deceased.
31. The non-inclusion of the shares in question in the probate case as well as Estate Duty return submitted by the father of the Plaintiff himself shows that the transfer of shares in question was admitted and acknowledged by him. It is not the case of the Plaintiff that his father Shri V.R. Mohan was also a party to the conspiracy, fraud and forgery. The father of the Plaintiff died on 28.1.1973. He remained Chairman-cum-Managing Director of the Defendant No. 2 company till his death. He also remained Chairman of the Trust Defendant No. 3 from 31.3.1969 till his death.
32. Copy of the minutes of the meeting of the Board of Trustees of Defendant No. 3 further shows that the donation of 2,99,940 equity shares in its favour by late Shri N.N. Mohan was duly acknowledged. These were the shares which were transferred vide transfer deed dated 5.12.1968 in the joint names of Shri V.R. Mohan and Defendant No. 1, who were to hold the shares as trustees of Defendant No. 3. This acknowledgment by the Board of Trustees of Defendant No. 3, to which father of the Plaintiff himself was a party as Chairman of the trust, belies the case of fraud and forgery as set up by the Plaintiff.
33. Admittedly, the shares in dispute are presently held by Defendants 3 and 10 to 19, Public trusts of which, besides Defendant No. 1, the mother of the Plaintiff is also a trustee. These are public charitable trusts. Such trusts are being run and financed, apart from the donations, by the income they are deriving in the form of dividends on the shares respectively held by them.
34. Considering the facts and circumstances of the case and the material placed on the record by the parties, the only irresistible conclusion is that the Plaintiff has not been able to make out a prima facie case in his favour.
35. An injunction under Rule 1 of Order 39, Code of Civil Procedure, can be granted only if there is a real danger of the subject matter of the suit being wasted, damaged or alienated by the opposite party. Therefore, the party claiming temporary injunction must plead and prove actual or reasonably apprehended danger of such waste, damage or alienation. A mere allegation of waste etc. is not enough. The question as to what constitutes sufficient danger of waste or damage depends upon the facts and circumstances of each case. In order to show that the property is in danger of being alienated, some overt act towards the alienation of the property, such as negotiations or offers for sale should be alleged and proved.
36. In the present case, there are no allegations, either in the plaint or in the application seeking temporary injunction, of danger of the shares in question being wasted, damaged or alienated. The application made by the Plaintiff for temporary injunction is liable to be dismissed on this short ground alone.
37. Once it is held that there is no prima facie case in favour of the Plaintiff, neither the balance of convenience would be in his favour nor he would suffer irreparable loss and injury which cannot be compensated by costs and damages.
Resultantly, the application made by the Plaintiff being OMP No. 18/2000 for the grant of temporary injunction is dismissed, while the one made by the Defendants being OMP No. 56/2000 is allowed. The ad-interim injunction granted on 8.2.2000 shall stand vacated. Be it stated, that the observations made hereinabove are purely for the purpose of disposal of the above referred two applications and the same shall not be construed as an expression of opinion over the merits of the case nor the same shall have any bearing on the merits of the case.
