SMT. VIJAYALAKSHMI v. SRI V. LAKSHMINARAYANA

2. Sri D.R.Ravishankar, learned Senior Counsel appearing for Sri Rajendra S., advocate for appellant submitted that appellant was plaintiff in suit filed for partition and separate possession, mesne profits etc. In said suit, plaintiff filed I.A.no.1 under Order XXXIX Rule 1 and 2 of CPC for - 3 - NC: 2024:KHC:33599 MFA No. 8649 of 2023 temporary injunction restraining defendants from creating any kind of encumbrance over suit schedule ‘A’ and ‘B’ properties during pendency of suit. It was submitted under impugned order, trial Court reject I.A.no.1 on wholly untenable grounds.

3. It was submitted, defendant no.1 was trying to alienate suit schedule properties at 'below-market-price' apparently with view to frustrate reliefs sought in suit. In view of above, direction by trial Court to maintain accounts would be insufficient. It was submitted, defendants had filed also application under Order VII Rule 11 of CPC, wherein while rejecting application, trial Court had held present suit was maintainable. It was submitted, shareholding pattern of defendants no.2 and 3 – Companies i.e. 99% by defendant no.1 and remaining 1% by Smt.Sushma Murthy, clearly established them as proprietary concerns. Even though plaintiff had earlier filed suit for partition, same was got dismissed as withdrawn with liberty to file comprehensive suit. Present suit was filed in pursuance of liberty granted. Therefore, defendants no.2 and 3 being Companies and dismissal of earlier suit would not come in way of plaintiff claiming relief. - 4 - NC: 2024:KHC:33599 MFA No. 8649 of 2023

4. It was submitted, plaintiff had contributed substantial capital for incorporation of defendants no.2 and 3 – Companies, while relationship between plaintiff and defendant no.1 was intact. But, defendant no.1 had fraudulently misused fiduciary relationship between them and with funds/resources of plaintiff, incorporated defendants no.2 and 3 – Companies. It was submitted, incorporation of companies and transfer of assets and funds was with intention to bar claim by plaintiff. It was also submitted, defendant no.1 had assured about making plaintiff, a director in Companies once they began earning profits. But, later failed to keep his promise. Therefore, present case was fit for piercing corporate veil as properties were being alienated below market price in favour of employees/close associates of defendant no.1. Same, also substantiated need for temporary injunction sought for.

5. It was submitted, though defendant no.1 claimed plaintiff’s contribution was reimbursed by executing settlement deed, properties settled thereunder were those that earlier belonged to her father. It was submitted, plaintiff had produced copies of sale deed dated 02.03.1966, gift deed dated

27.03.2003, partition deed, deed of partnership, sale deed - 5 - NC: 2024:KHC:33599 MFA No. 8649 of 2023 dated 14.03.1983, incorporation certificate, reconstitution deed, list of shareholders in defendants no.2 and 3 – Companies, plaint in O.S.no.210/2016, petition, statement of objections and order sheet in M.C.no.640/2016, FIR/Complaint, plaint, written statement and order on I.A.no.I O.S.no.6411/2021, Sale deeds dated 26.04.2012, 14.11.2019,

12.11.2012, settlement deed dated 04.01.2022, revenue records and medical records of plaintiff. But, trial Court failed to appreciate documents which would substantiate her right over suit property and her investment in defendants no.2 and 3. Since 1997, till date properties held by company corresponded to investments by plaintiff.

6. It was submitted at instance of plaintiff's father, defendant no.1 was employed in Public Works Department in year 1970 on daily wages, later with financial assistance of plaintiff and her father of more than 50% of investment, defendant no.2 and 3 company was established. On other hand, defendant contended about establishing companies from his own resources, without producing documents. Thus there was prima facie material to establish plaintiff had contributed capital to defendants no.2 and 3 and entitled for share therein. - 6 - NC: 2024:KHC:33599 MFA No. 8649 of 2023

7. One of reasons assigned was, temporary injunction would be contrary to objects of incorporation and cause irreparable loss and injury. It however, failed to take note that schedule 'A' properties were standing in name of defendant no.1. Therefore order impugned is unsustainable and calls for interference.

8. Reliance was placed on decision of this Court in Mahadev V. Vishalakshmi & Anr., in RSA.no.7075/2013 disposed of on 31.03.2023, wherein it was held combined trading of Section 111 of Evidence Act and Section 16(1) and (3) of Indian Contract Act, clarified that in case of allegations of fraud by plaintiff burden would be on defendant to prove that gift deed was not induced by undue influence and was executed in good faith. It was submitted, said ratio was rendered considering fiduciary relationship between parties and therefore would apply to instant case.

9. Reliance was also placed on decision in case of Anil Rishi v. Gurbaksh Singh, reported in 2006 (5) SCC 558, to contend that for shifting of burden of proof, only requirement to be satisfied was that of existence of relationship of active - 7 - NC: 2024:KHC:33599 MFA No. 8649 of 2023 confidence. It was submitted, plaintiff and defendant no.1 were wife and husband, said requirement was met. Therefore, trial Court was required to cast burden on defendant than on plaintiff. For said proposition, reliance was also placed on ratio in Krishna Mohan Kul Alias Nani Charan Kul and Anr. v. Pratima Maity and Ors., reported in 2004 (9) SCC 468.

10. On other hand, Sri Ashwathappa D, learned counsel for respondents no.1 to 3 at outset submitted, when there was question about maintainability of suit, rejection of applications for temporary injunction by trial Court would be justified. Especially so when, plaintiff failed to establish even prima facie right over property.

11. It was submitted, under registered settlement deed and release deed, plaintiff had got certain properties, some of which were later, alienated by her. If plaintiff was aggrieved by settlement deed, she ought to have challenged same. Admittedly, there is no challenge. On other hand, sale of properties received thereunder would establish that deed of settlement was accepted and acted upon by her. Said aspect was taken note of by trial Court. - 8 - NC: 2024:KHC:33599 MFA No. 8649 of 2023

12. It was also submitted, present suit filed after lapse of more than 13 years after execution of settlement deed, was only to harass defendant no.1 and with intention to grab more properties. It was submitted, before marriage of plaintiff, her father was lorry driver and did not have sufficient income to contribute. In any case, no documents were produced to substantiate investment in Companies. Further, in case of investment, plaintiff would have been a shareholder, director or employee of company. Therefore, no ground of entitlement was made out by plaintiff. Considering said aspects, trial Court had rightly rejected application for temporary injunction.

13. Relying on Shub Karan Bubna @ Shub Karan Prasad Bubna v. Sita Saran Bubna, reported in 2009 (9) SCC 689, it was contended that generally, in suit for partition, existence of joint ownership and deprival/refusal of share in property has to be established. In instant case, admittedly, suit properties belong to defendants no.2 and 3 which are incorporated Companies having independent right to hold property. It is settled law, there cannot be claim for partition against properties of Company, overriding rights of investors and shareholders. It was submitted, merely on ground that - 9 - NC: 2024:KHC:33599 MFA No. 8649 of 2023 defendant no.1 was Managing Director in defendant no.2 and 3- Companies, suit for partition of Company properties would not be maintainable and in view of Section 430 of Companies Act, 2013, jurisdiction of Civil Court was barred. It was also submitted, plaint lacked pleading with particulars about investment in Companies.

14. It was also submitted, petition for divorce was pending between plaintiff and defendant no.1 and conduct of plaintiff in filing O.S.no.210/2016, earlier for same relief and thereafter withdrawing same, after failing to obtain temporary injunction, was taken note of by trial Court.

15. It was submitted that transactions sought to be relied upon in support of allegation about alienation of properties at below market price, were not included in suit properties. Relying on Bachhaj Nahar v. Nilima Mandai, reported in 2008 (17) SCC 491, it was contended no amount of evidence without specific plea could be looked into by Court. Further, in absence of specific prayer and pleading to support same, grant of relief would lead to miscarriage of justice as it would have deprived defendants of opportunity to oppose such relief. For said proposition, decision in Akella Lalitha v. - 10 - NC: 2024:KHC:33599 MFA No. 8649 of 2023 Konda Hanumantha Rao, reported in 2022 SCC Online SC 928 was also relied on.

16. On above grounds, learned counsel sought for dismissal of appeal.

17. Heard learned counsel and perused impugned order.

18. From above, it is seen, main ground of challenge is perversity regarding conclusions arrived at by trial Court, following points would arise for consideration: "1. Whether interference for failure by trial Court to consider relevant material on record? impugned order calls

2. Whether impugned order suffers from perversity and calls for interference?"

19. This is an appeal against order passed by trial Court under provisions of Order XXXIX Rules 1 and 2 of CPC, which are discretionary in nature. Hon'ble Supreme Court has held, this Court (High Court) while considering challenge against said orders, cannot exercise powers as an appellate Court. It's jurisdiction would be limited to examining whether order suffers from untenability or perversity. In instant case, challenge is both on count of failure to consider material on record as well - 11 - NC: 2024:KHC:33599 MFA No. 8649 of 2023 as about untenability of conclusions. Therefore, re-statement of facts and circumstances, but in brief, would be necessary.

20. As per plaintiff, she was married to defendant no.1. Since he did not have sufficient source of income to maintain family, plaintiff's father invested his money and formed a Partnership Firm - M/s.Theju Constructions on 24.12.1982 in which plaintiff was holding 40% share and her brothers 15% shares each. It was stated that plaintiff was Managing Partner of Firm, managed business and took care of family. Said firm did good business. From profits and with assistance of her father, she purchased property on 14.03.1983 at Banashankari, constructed house and was residing therein with defendant no.1 and children. Noticing that firm was doing well, defendant no.1 left his job and requested her for assistance to incorporate company to do real estate business. Thereafter with financial assistance provided by plaintiff and her father and brothers, defendant no.2 was incorporated. She claimed that plaintiff's investment in defendant no.2 was on condition that after defendant no.2 began earning profit, she would be allotted half shares held by defendant no.1, towards her investment. It was also stated that her brothers and her first son were made - 12 - NC: 2024:KHC:33599 MFA No. 8649 of 2023 Directors in defendant no.2 - Company. Further, when defendant no.2 did well, plaintiff and her father gained confidence on defendant no.1, inducted him as partner of M/s. Theju Constructions. At same time, her brothers resigned. Consequently, defendant no.1 held 60% share and made Managing Partner. Subsequently, her brothers resigned from Directorship of Company also. At that time, plaintiff has dutiful wife and mother concentrated on growth and welfare of children, while defendant no.1 formed several residential layouts in and around Anekal/Jigani village and earned enormous profits. From same, defendant no.3 was incorporated, with only two Directors, namely defendant no.1 holding 7499 shares and Sushma Murthy [kept mistress (sic) - woman with whom defendant no.1 is alleged to have romantic or sexual relation outside of marriage] holding 1 share. It was also stated that defendant no.2 was also having only two directors namely, defendant no.1 holding 1,15,190 shares and SM Patil holding 10 shares.

21. Based on above pleadings, plaintiff sought half of half shares of defendant no.1 in defendants no.2 and 3 - Companies (schedule 'B' properties) and properties standing in - 13 - NC: 2024:KHC:33599 MFA No. 8649 of 2023 name of defendant no.1 (schedule 'A' properties). It is also stated that there were countless other properties standing in name of defendants, with regard to which plaintiff was collecting information. It was also alleged that during pendency of suit, defendants were alienating properties, which if not interfered with would cause irreparable loss and injury and therefore, prima facie case, balance of convenience and irreparable loss and injury lie in favour of plaintiff.

22. Sum and substance of written statement of defendant no.1 adopted by defendants no.2 and 3 as their objections to IAs is, firstly questioning maintainability of suit on ground that plaintiff-wife has no legal right to claim share from defendant no.1-her husband, during his lifetime.

23. While admitting relationship between plaintiff and defendant no.1, they deny plaintiff's father owning huge amount of properties, his running transport business and purchase of properties in name of plaintiff. It was stated after his death, properties were partitioned amongst his legal representatives under deed of partition in year 2006. Execution of gift deed by plaintiff's mother-Lingamma in favour of plaintiff and her siblings is also denied. It was asserted that plaintiff's - 14 - NC: 2024:KHC:33599 MFA No. 8649 of 2023 father was a lorry driver, who could not maintain his family from his income. It was stated, plaintiff belong to poor family and got married to defendant no.1 for better life. Thereafter due to his educational qualification, he got job in Bengaluru City Corporation. During service, he quit job and started real estate business. He was also a Class-1 contractor and incorporated defendant no.2-Company. Though, initially, plaintiff's brothers and son were directors, within three months on 09.08.1995, they resigned. There was absolutely no contribution by them, by plaintiff or her father and they were made directors as formality.

24. It was further stated, after marriage defendant no.1 provided her and their children with luxurious life. But, plaintiff failed to take care of family properly leading to his first son Bharatraj given to vices. Due to same, he had disturbed marriage ending in divorce twice, wherein defendant no.1 had to give money and properties for divorce settlements. For purposes of his bad habits, Bharatraj, used to demand money from defendant no.1 and resorted to blackmail in case of refusal. He was supported by plaintiff. In order to come out of such harassment, he executed registered settlement deeds on - 15 - NC: 2024:KHC:33599 MFA No. 8649 of 2023

05.08.2010 settling properties in their names. After taking properties under settlement deed, they sold some of them and as defendant had continued to grow financially, they once again began harassing him for property and money.

25. Due to same, he had filed divorce petition against his wife. As a counter blast, plaintiff had woven false story and filed O.S.no.210/2016 in collusion with Bharatraj. After defendant no.1 entered appearance and filed written statement, plaintiff did not proceed to lead evidence and instead filed application for withdrawal of suit with liberty to file fresh suit. Though, permission was granted under protest, fresh suit was not filed within time, therefore it was not maintainable.

26. On perusal of impugned order, reasons assigned for rejection of applications are, bar of limitation, statutory bar under Companies Act as well as settlement deed.

27. Referring sale deed dated 02.03.1966, whereunder Smt.Lingamma-plaintiff's mother purchased immovable property and Gift Deed dated 27.03.2003 executed by her in favour of plaintiff and her two sons and also - 16 - NC: 2024:KHC:33599 MFA No. 8649 of 2023 registered partition deed dated 28.09.2006, executed by Smt.Lingamma and her sons. It also referred to partnership deed of M/s Teju Constructions, its Reconstitution Deed dated

06.03.1987, sale deed dated 14.03.1983, documents regarding matrimonial proceedings between plaintiff and defendant no.1.

28. Trial Court also referred to documents produced by defendants namely settlement deeds. It observed plaintiff's claims were matters of evidence requiring trial. However, it observed that burden would be on her to establish contribution by herself and her brothers for incorporation of defendants no.2 and 3-Companies.

29. After referring to preliminary objections about maintainability of suit claim in view of registered settlement deed and on ground that defendants no.2 and 3 were Companies, wherein plaintiff was seeking shares, trial Court held plaintiff had established prima facie case for trial.

30. Thereafter it refers to shareholding in defendants no.2 and 3-Companies and on ground that plaintiff was not holding any shares, it concludes plaintiff's claim would be matter for trial. On said conclusion, it held plaintiff having failed - 17 - NC: 2024:KHC:33599 MFA No. 8649 of 2023 to establish prima facie case for purposes of temporary injunction. On same reasoning, it held balance of convenience, irreparable loss and injury against plaintiff. However, taking note of fact that defendants were in real estate business, where grant of temporary injunction against dealing with properties would have disastrous consequences, it found fit to balance interests by directing defendants to furnish account with regard to profit and loss till disposal of suit.

31. From above, it is seen contention that trial Court had failed to consider documents furnished by plaintiff would not be substantiated. Point no.1 is, therefore, answered in negative.

32. Insofar as challenge on ground of perversity or untenability of conclusions, indeed, learned Senior Counsel for plaintiff would be justified in contending that rejection of application filed under Order VII Rule 11(d) of CPC holding maintainability of suit, observation by trial Court entertaining doubt regarding maintainability of suit would not be justified.

33. Though, existence of marital relationship between plaintiff and defendant no.1 is admitted, for reversal of burden of proof, requirement of law as per Anil Rishi, Krishna Mohan - 18 - NC: 2024:KHC:33599 MFA No. 8649 of 2023 Kul and RSA no.7075/2013, (supra), factum of 'active confidence' would require to be established. It is held only upon proof 'active confidence', burden would shift on defendant. Therefore, conclusion by trial Judge about facts and circumstances of present case requiring trial cannot be faulted with. In this context, it is held that plaintiff has established triable case, but not prima facie case for grant of temporary injunction.

34. And though, learned Senior Counsel would be justified in casting aspersions on conduct of defendants while dealing with non-suit properties, settled legal position being without establishing prima facie case, merely on ground that plaintiff has established balance of convenience or irreparable loss and injury, temporary injunction cannot be granted.

35. In this regard, trial Court has rightly taken note of fact that defendants are involved in real estate business, where timely decisions regarding acquisition and disposal of properties would be essential, and binding defendants/suit properties in injunctions would have disastrous results, it has in its inherent powers directed defendants to furnish accounts of profit and loss. Only possible indulgence under above circumstances, - 19 - NC: 2024:KHC:33599 MFA No. 8649 of 2023 would be to direct early disposal of suit. Point no.2 is, therefore answered in negative.

36. Hence following: ORDER Appeal is dismissed, however, Trial Court is directed to expedite disposal of suit as far as possible within outer limit of one year, by setting specific timeline for each stage of suit. Both parties are directed to cooperate for same. All contentions of both parties are kept open and observations/conclusions by trial Court and this Court are confined to interim stage and shall not come in way of trial Court while passing appropriate judgment on basis of evidence adduced during trial. Psg* List No.: 1 Sl No.: 21 Sd/- (RAVI V. HOSMANI) JUDGE