1 of 32
O.S.No.58 of 204
IN THE COURT OF THE I ADDITIONAL DISTRICT AND SESSIONS
JUDGE: SANGAREDDY
Present:-Sri. G. Sudarshan, I-Addl.Dist. & Sessions Judge, Sangareddy.
MONDAY, THE 22ND DAY OF APRIL, 2024
O.S.NO. 58 of 2014
Between:-
1.Ch. Krishna Murthy Died as per L.Rs. Plaintiff Nos. 7 and 8
2.Dr.Ch. Prabhakar (died) Per L.Rs. Plaintiff Nos. 3 to 6.
3.Dr. Ch. Kowsalya W/o late Dr.Prabhakar ( died per L.Rs. Plaintiff Nos. 4 to 6)
4.Dr.Swetha (daughter), D/o late Dr. Prabhakar, Aged about 31 years, occ: Doctor,
5.Ch. Jawahar (son)S/o late Dr.Prabhakar Aged about 29 years, Occ: Pvt. Employee
6.Dr.Ch. Prawahar Raj (son) S/o late Dr. Prabhakar Aged about 26 years, Occ: Doctor All are permanent R/o 1-8-702/54, St.No.3, Vidyanagar, Padma colony, Bagh Lingampally, Hyderabad.
7.Smt. Dhanvantari W/o late Ch.Krishna Murthy Aged about 70 years, OcC: octor,
8.Ch. Omprakash S/o late Ch. Krishna Murthy Aged about 46 yeas, Occ: Doctor Plaintiffs 7 and 8 are R/o 23-6-203 Dwarakanagar, Hunter Road, Warangal Plaintiff Nos. 7 and 8 are brought on record as the L.Rs of plaintiff No.1 vide order dated 22-11-2017, in I.A.No.674 of 2017.
…..Plaintiff Nos. 1 to 8
AND 2 of 32
O.S.No.58 of 204
1.Ch. Parameshwar S/o Govindarajulu, Aged: 49 years Occ: Managing Director, M/s Castvel Foundries and Fabrications Pvt. Ltd., R/o H.No.16-10-182/B, Yashoda hospital Lane, Old Malakpet, Hyderabad.
2.Jayanthi Lal Patel S/o Hirji Patel Aged about 49 years, occ: Business,
3.Smt. Maniben Patel,W/o Yayanthi Lal Patel Aged about 48 years, occ: Housewife
4.Ramesh Patel S/o Jayanthi Lal Patel, Aged: 27 years Occ: business, defendant Nos. 2 to 4 are R/o H.No.23-29/1, Jyothinagar, Ramachandrapuram.
5.Smt. Chandrakala W/o Ramesh Patel Aged about 34 years, occ: Housewife
6.Smt. Pushpa W/o Aravind Patel, Aged: 33 years occ: Housewife, Defendant Nos. 5 and 6 are R/o 23-25-4A, Jyothinagar, Ramachandrapuram.
7.Shanti lal Patel S/o Hirji Patel Age about 51 years, Occ: Business
8.Dinesh Patel S/o Hirji Patel, Aged: 46 years, Occ: Business Defenant Nos. 7 and 8 are R/o H.No.23-29/1, Jyothinagar, Ramachandrapuram.
9.Smt Kastur Patel W/o Eswar Patel, Aged: 42 years Occ: Housewife, R/o 11-9-129/5,Road No.3/A, Laxminagar Colony, Kothaguda, Hyderabad.
…..defendants 1 to 9
This petition came up before me for final hearing, on 15-04-2024 in the presence of M/s J. Venugopal, Sri M.Anthaiah, Advocates for the plaintiffs and Sri Joshi Narayan Rao, Advocate for defendant Nos. 2 to 9 while defendant No.1 set ex-parte, upon perusing the material papers on record and having stood over for consideration till this day, this Court delivered the following:
3 of 32
O.S.No.58 of 204
J U D G M E N T
1. This suit is filed by the plaintiffs for the relief of declaration to declare the sale deeds as null and void.
2. The brief averments of the paint are as follows:
(i) The plaintiff No.1 is the paternal uncle of plaintiff No.2 and defendant No.1. Plaintiff NO.2 is a Doctor by profession and own brother of defendant No.1. One B. Vinay Kumar is the brother-in-law of plaintiff
No.2 and defendant No.1. The plaintiffs, defendant No.1 and one M.
Ramkrishna Rao jointly incorporated a company under the Companies
Act, in the name and style of M/s Castvel Foundries and Fabrication
Private Limited ( hereinafter referred to as “Company” for brevity), which was registered on 21-12-1989 vide registered No.01-0804/1989- 90.
(ii) The plaintiffs subscribed for 200 shares each and defendant
No.1, B.Vinay Kumar and M. Ramakrishna Rao subscribed for 100 shares each. The above persons constituted the first directors of the company under the Memorandum and Articles of Association, The plaintiff No.1 is the Chairman cum Director and the defendant No.1 is the Managing
Director, the company purchased shed No.3 and 4 in Phase -I of IDA,
Patancheru admeasuring 4,000 Sq. yards from APSFC. Subsequently, sold to Assam Carson Limited. After sale of the same, their existed land 4 of 32
O.S.No.58 of 204
to an extent of 900 Square yards in shed No.3 and 4 . On 17- 09 1998, the company purchased shed Nos. 5A, 5B in Phase -I, IDA Patancheru under a registered sale deed vide document No.3312/1998 from SFC, under the said sale deed the company purchased land admeasuring 4969 square yards with ACC building construction of 3000 square feets under plot No.5A, 5B in phase -I, IDA, Patancheru, situated at
Patancheru ( hereinafter referred to as “ suit schedule property”).
(iii) It is further averred that M. Ramkrishna Rao and B.
Vinaykumar retired from the company by transferring their shares.
Defendant No.1 being Managing Director looking after the entire affairs of the company and its business from time to time. The company after purchase of the said schedule property to procure investment on 24-09- 1998 sold an extent of land admeasuring 10005.7 square yards to
Ramesh Patel, Aravind Patel under a registered sale deed vide document
No.3481/1998 and also sold an extent of land admeasuring 906.2 square yards to one T. Vanitha under a registered sale deed vide document No.1209/1999, dated 25-03-1999. The above two sale deeds were executed by defendant No.1 in the capacity of Managing Director of the company after due resolution passed by the Board of Chairman and Directors, authorizing the MD to execute sale deeds, in order to close the foundries unit and to clear the debts.
(iv) It is further averred that the company suffered losses and the unit was retained to restart new business at a later time. As the matter 5 of 32
O.S.No.58 of 204
stood thus, defendant No.1 without knowledge, consent and without any resolution passed by the Board of Directors to that effect authorizing the defendant No.1 to alienate the company assets, on 07-08-2015 entered into an agreement of sale with M/s Texas Lubricants pvt Limited, represented by its Managing Director Gopal Kishan Agarwsal in respect of the suit schedule property. He received Rs. 4,00,000/- as part sale consideration out of the total sale consideration of Rs. 55,00,000/- and agreed to execute register a sale deed within 45 days.
(v) Defendant No.1 in collusion with the said purchaser, the purchaser got filed a suit for specific performance of agreement of sale
dated 07-08-2005 vide O.S.No.14 of 2007 on the file of the District
Judge, Sangareddy against M/s Castvel Foundries and Fabrication Pvt.
Ltd., represented by its Managing Director, that is, defendant No.1. The said suit was ended in compromise before the District Legal Services
Authority under LAC No.2462/2008 on 24-03-2008. Under the said compromise, defendant No.1 on behalf of the company returned Rs. 55 lakhs to the purchaser and got the said agreement of sale dated 07-08- 2005 cancelled.
(vi) That on the same day of compromise, that is, 24-03-2008, defendant No.1 in the capacity of MD of company executed the registered sale deeds, as follows:
Sl.No.Extent of landConsiderationRegistered saleIn favour of amountdeed document Number and date 6 of 32
O.S.No.58 of 204
11249 Sq. yards36,38,000/-Defendant No.s 2, 4233/2008 3 and 4 2744 Sq. yards14,88,000/-Defendants 5 and 4234/2008 6 31040 Sq. yards20,80,000/-Defendant Nos. 7 4235/2008 and 8 4847 Sq. yards16,94,000/-Defendant No.9 4236/2008
Thus sold the entire suit schedule property of the company for the total sale consideration of Rs. 16,94,000/-. Defendant No.1 done all the above illegal acts in the capacity of Managing Director of the company without any knowledge and consent of the plaintiffs and the same has been perpetuated behind the back of plaintiffs with a malafide intention and oblique motive to deprive the plaintiffs legitimate right, title and share in the suit schedule property in collusion with defendant
Nos. 2 to 9.
(vii) It is further submitted that the entire sale consideration was not credited to the company account and defendant No.1 misappropriated the entire sale consideration.
(viii) It is pertinent to mention that the plaintiff No.1 and defendant No.1 are the joint authorized signatories to operate the company bank accounts. Inspie of the same defendant No.1 by playing fraud appropriated the amounts and did not choose to audit the accounts and submit the report to the board inspite of repeated demand 7 of 32
O.S.No.58 of 204
of the plaintiffs. The alienation of the suit schedule property by defendant No.1, Managing Director of the company without any knowledge, consent by the shareholders, plaintiffs and without any resolution of board of directors authorizing the defendant No.1 to alienate the suit schedule property is illegal, invalid and void and the same are not binding on the plaintiffs. As such, the alleged sale deeds are liable to be cancelled as null and void and the suit schedule property is liable to be restituted to the assets of the company.
(ix) It is further averred that on coming to know about the illegal acts of defendant No.1, in the month of March, 2009, the plaintiff questioned him for his illegal acts. But, defendant no.1 refused to answer. As such, the plaintiffs got issued a legal notice dated 31-05- 2009 to all the defendants calling upon defendant No.1 to cancel the impugned sale deeds executed in favour of defendant Nos. 2 to 9 and restore the suit schedule property in favour of the company. Defendant
No.1 and defendant Nos. 2 to 9 received the sale notices and got issued a reply notice dated 17-06-2009 and 06-06-2009, respectively with concocted stories.
(x) It is further submitted that the elders of the family convened number of meetings and in the said meetings the defendant No.1 assured to resolve the dispute. But, failed to do so. As such, the plaintiffs have no other alternate except to approach this Court by way of filing the suit. Hence, the suit.
8 of 32
O.S.No.58 of 204
3.Defendant No.1 remained exparte.
4.(i) Defendant Nos. 2 to 9 filed written statement denying the plaint averments. These defendants submitted that they were not aware about the relationship of plaintiff Nos. 1 and 2 and defendant
NO.1 and also about jointly incorporated the company under the
Companies Act, 1956 in the name and style of M/s Castval Foundries and Fabrication Pvt. Ltd.
(ii) It is further submitted that these defendants do not know about M. Rama Krishna Rao and B.Vinay Kumar retyring from the company and the other facts stated in Para No.2 of the plaint.
(iii) It is further submitted by denying the Para No.3 of the plaint, that the sale transaction made by defendant No.1 in favour of defendant Nos. 2 to 9 on behalf of the company were executed under proper resolution and the plaintiffs are having knowledge of the same.
The sales are effected legally after proper resolution. To deprive the rights of defendants 2 to 9, the plaintiffs in collusion with other family members have filed the false suits against defendant Nos. 2 to 9 in order to extract money on account of hike of prices of the land, without filing any resolution copies.
(iv) It is further submitted that out of the total sale consideration of Rs. 89,00,000/- paid by defendant Nos. 2 to 9, the company amount was paid to M/s Texas Lubrications Pvt. Ltd and got sale deed in the 9 of 32
O.S.No.58 of 204
name of defendant Nos. 2 to 9 on the same day.
(v) It is denied that defendant No.1 done all the above illegal acts in the capacity of Managing Director of the company without any knowledge and consent of the plaintiffs with a malafide intention to deprive the legitimate right, title and share in the suit schedule property.
The plaintiffs created a false story for the purpose of filing the suit.
(vi) It is further submitted that defendant Nos. 2 to 9 are the bonafide purchasers having purchased the same through registered sale deed from the company, represented by defendant No.1.
(vii) It is further submitted that the suit of the plaintiffs is barred by limitation and also bad for non inclusion of the properties and non joinder of the purchasers of the company. Hence, the suit of the plaintiff is liable to be dismissed.
(viii) The defendants further submitted by admitting about issuance of legal notice dated 31-05-2009 that defendant No.1 on his behalf and on behalf of defendant Nos. 2 to 9 and sent the reply notice on 17-06-2009. It is further submitted that the plaintiffs are not entitled to seek the relief of declaration to declare the registered sale deeds standing in the name of defendant Nos. 2 to 9. Hence, prayed to dismiss the suit with exemplary costs.
10 of 32
O.S.No.58 of 204
5.Basing on the above pleadings, the following issues were settled for trial on 05-12-2014:
1. Whether the plaintiffs are entitled for declaration of the registered sale deeds vide document Nos. 4233/2008, 4234/2008, 4235/2008 and 4236/2008, dated 24-03-2008, registered at District Registrar of Medak at
Sangareddy, as null and void and liable for cancellation?
2.Whether D.2 to D.9 are bonafide purchasers?
3.Whether the suit is barred by limitation?
4.Whether the suit is bad for non inclusion of all the properties and non joinder of all the purchasers of the company?
5.to what relief?
6.To prove case of the plaintiffs, plaintiffs filed chief affidavit of
P.W.1, Dr. Ch. Kowsalya. Since P.W.1 died, the chief evidence of P.W.1 was eschewed. On 06-09-2023. The plaintiff No.6, legal heir of plaintiff
No.3 filed his chief affidavit and examined as P.W.2. Exs. A.1 to A.12 marked through P.W.2. On behalf of the defendant Nos. 2 to 9, defendant No.2 examined as D.W.1 and no documents are marked on behalf of the defendants.
7.Heard arguments of both sides.
8.(a) The learned counsel for the plaintiffs argued that Ex.A.1 entered by defendant No.1 in his personal capacity. All the documents are executed by defendant No.1 in his personal capacity only. The learned 11 of 32
O.S.No.58 of 204
counsel for the plaintiffs further argued that for alienation of the suit schedule properties no resolution was passed by the company. The suit is filed by the individual persons against the individual. Therefore, the suit is very much maintainable. The defendant No.1 does not have any right to execute the documents in his personal capacity.
(b) He further submitted that the suit schedule properties are purchased by M/s Castvel Foundries and Fabrication Pvt. Ltd. When the properties are purchased on behalf of the company, there shall be a resolution of the Company Directors for alienation of the properties of the company. Defendant No.1 being the Managing Director of the company, he has sold the company properties as well as the suit schedule property to defendant Nos. 2 to 9. Therefore, the suit is filed to declare the registered sale deeds as null and void and the same are liable to be cancelled.
9. (a) The learned counsel for defendant Nos. 2 to 9 filed written arguments and also submitted that defendant No.1, who is Managing
Director of the company became set ex-parte. The company has not challenged the suit claim before the company law Tribunal. He further argued that P.W.1 has not filed any document to prove that he is the share holder of the company.
(b) He further argued that defendant No.1 alone sold the shed
Nos. 3 and 4 on behalf of the company as Managing Director. The 12 of 32
O.S.No.58 of 204
plaintiffs suppressed the documents that the above said sales are made by defendant No.1 due to resolution of the company. He further argued that it is an admitted fact that the company purchased lands under Ex.A.1 from APSFC.
(c ) The learned counsel for defendant Nos. 2 to 9 further argued that Exs.A.2 and A.3 documents are executed by defendant No.1 and it does not reflect the resolution date and passing of resolution in the said documents. The plaintiffs not challenged Exs. A.2 and A.3 documents.
(d ) He further argued that under Ex.A.11, suit filed against the company represented by defendant No.1. Subsequently, the matter was settled before Lok Adalat. The plaintiffs are having knowledge about filing of the suit and entered into the compromise by the plaintiffs in O.S.No.124 of 2007 with defendant No.1. The plaintiffs also have knowledge about the settlement before Lok Adalat and passing of award under Ex.A.12.k
(e) The learned counsel further argued that the plaintiffs have not filed any documents to prove that they were admitted or entered into the company as share holders. He further argued that the plaintiffs 1 and 2 have not filed any criminal case against defendant No.1 for misusing the power as Managing Director in selling its properties without their consent. The plaintiffs neither filed any complaint before the Registrar of Companies intimating them about the mismanagement 13 of 32
O.S.No.58 of 204
of defendant No.1. It is an admitted fact that the suit schedule property is not the family property of the plaintiffs and it belongs to the company. As such, as an absolute owner, defendant No.1 sold the suit schedule property to defendant Nos. 2 to 9 under Exs. A.4 to A.9. As such, the pitfalls have no right to challenge Exs. A.4 to A.9. Moreover, this suit is filed after lapse of three years.
(f) He further argued that the plaintiffs filed the suit only for cancellation of documents, Exs. A.4 to A.9 executed in favour of defendant Nos. 2 to 9. The plaintiffs did not seek relief of declaration of suit schedule property from defendant Nos. 2 to 9. As such, the suit is not maintainable.
(g) The learned counsel for defendant Nos. 2 to 9 further argued that the plaintiffs have not taken any steps for appointment of
Liquidator since the company is in defunct from 1994 on wards by assessing the assets and liabilities of the company.
(h) He further argued that the plaintiffs did not seek the relief of declaration and recovery of possession, which are the main reliefs. But, only sought for the ancillary relief of cancellation of sale deeds. As such, the suit is not maintainable. In fact, defendant Nos. 2 to 9 are the bonafide purchasers of the suit schedule property under Exs. A.4 to
A.9. Defendant No.1 as a Managing Director of the company executed the sale deeds under Exs. A.4 to A.9. In fact, the plaintiffs did not 14 of 32
O.S.No.58 of 204
challenge the other sale deeds executed by defendant No.1 as
Managing Director of the company under Exs. A.2 and A.3 and also the sale deeds in respect of the shed Nos. 3 and 4 sold to Assam Carson
Limited and Sunder Weigh Bridge. The plaintiffs willfully filed this suit against defendant Nos. 2 to 9.
(I) He further argued that as per Ex.A.8, the plaintiffs are having knowledge of sale of suit schedule property to defendant Nos. 2 to 9.
The plaintiffs did not file the suit within the stipulated period of three years as per Article 56 of Limitation Act. Hence, the suit is barred by law of Limitation.
(j) He further argued that the suit is bad for non joinder of necessary parties and the properties. In the plaint pleadings, the plaintiffs mentioned that the company represented by Defendant No.1 purchased the Shed Nos. 3 and 4 and sold away the same to Assam
Carbon Limited and Sunder Weigh Bridge under Exs. A.2 and A.3 by the company represented by defendant No.1. The plaintiffs did not challenge or did not include the properties sold under Exs. A.2 and A.3.
Even the said purchasers are also not included as purchasers. Simply the plaintiffs filed this suit against defendant Nos. 2 to 9 for cancellation of sale deeds, Exs. A.4 to A.9. Therefore, the suit is not maintainable.
(k) He further argued that the plaintiffs failed to establish their 15 of 32
O.S.No.58 of 204
right over the suit schedule properties. The defendant No.1 as
Managing Director of the company has dealt with the company properties and he has alienated the same under Exs. A.2 to A.7 and
A.12 in favour of defendant Nos. 2 to 9. As such, the suit of the plaintiffs is liable to be dismissed.
10.Before adverting on the issues, it is better to note admitted and undisputed facts. It is an undisputed fact that the suit schedule property is purchased by M/s Castvel Foundaries and Fabrication private Limited, represented by defendant No.1 under Ex.A1. It is an admitted fact that M/s Castvel Foundaries and Fabrication Private
Limited is not a party to the suit. It is an undisputed fact that the defendant No.1 as Managing Director of the company has sold the company property under Exs. A.2 and A.3. It is an undisputed fact that defendant No.1 as a Managing Director of the company has entered into an agreement of sale with M/s Texas Lubricants Private Limited. It is also an admitted fact that the M/s Texas Lubricants Private Limited company filed a suit against the company M/s Castvel Foundaries and
Fabrication Private Limited by its Managing Director for the relief of specific performance of agreement of sale.
It is also an admitted fact that the said suit was settled before the
Lok Adalat. Managing Director of of M/s Texas Lubricants Private
Limited paid an amount of Rs. 55,00,000/- in settlement of the said suit. It is also an admitted fact that on 24-03-2008, defendant No.1 in 16 of 32
O.S.No.58 of 204
the capacity of Managing Director of the company executed registered sale deeds under Exs. A.4 to A.7 in favour of defendant Nos. 2 to 9.
11. ISSUE Nos 1 and 2:
1. Whether the plaintiffs are entitled for declaration of the
registered sale deeds vide document Nos. 4233/2008,
4234/2008, 4235/2008 and 4236/2008, dated 24-03-2008,
registered at District Registrar of Medak at Sangareddy, as null
and void and liable for cancellation?
2. Whether D.2 to D.9 are bonafide purchasers?
(i) The plaintiffs filed the suit for the relief of declaration of registered sale deeds, Exs. A.4 to A.7 as null and void and the same to be cancelled. The main contention of the plaintiffs is that the plaintiffs 4 to 8 seeking the above said relief being the legal heirs of plaintiff
Nos. 1 and 2. The plaintiffs contention is that the deceased/plaintiff
Nos. 1 and 2 and defendant No.1, one B. Vinay Kumar and one
Ramakrishna Rao jointly incorporated company under the Companies
Act, 1956 in the name and style of M/s Castvel Foundaries and
Fabrication private Limited, which is registered on 21-12-1989. The above persons constituted as Directors of the Company. The plaintiff
No.1 was the Chairman-cum-Director and defendant No.1 is the
Managing Director. The company has purchased the properties from
Andhra Pradesh State Financial Corporation (APSFC). Subsequently, defendant NO.1 being the Managing Director of the said company sold 17 of 32
O.S.No.58 of 204
shed Nos. 3 and 4 and also sold some extent of land under Ex.A.1. Now, the plaintiffs are disputing the alienation made under Exs. A.4 to A.7 executed in favour of defendant Nos. 2 to 9.
(ii) It is an admitted fact that the company M/s Castvel
Foundaries and Fabrication Private Limited is not made as a party to the suit. This suit is filed by the plaintiffs in their individual capacity against the defendants on their individual capacity. The plaintiffs 4 to 8 claiming the suit relief as legal heirs of plaintiff Nos. 1 and 2. In the cross examination of P.W.2, who is plaintiff No.6 admitted that the suit schedule properties stands in the name of M/s Castvel Foundaries and
Fabrication Private Limited. He also admitted that each partner is having share of 33 percent in the company. P.W.2 also admitted that as per By-laws of the company, his father, plaintiff No.2 was having 200 shares in the above company.
(iii) P.W.2 further specifically admitted in the cross examination that M/s Castvel Foundaries and Fabrication Private Limited was not made as a party to this suit. Though the plaintiffs are filed the suit to declare the documents, Exs. A.4 to A.7 as null and void, under which the company property was sold in favour of defendant Nos. 2 to 9 by defendant No.1 as Managing Director of the company, P.W.2 in his cross examination stated that he does not know whether plaintiff Nos. 3 to 6 have made any application for transfer of shares of plaintiff No.2. Even the plaintiffs did not file any document to show that they were 18 of 32
O.S.No.58 of 204
incorporated as Directors and share holders of the M/s Castvel
Foundaries and Fabrication Private Limited by getting the transfer of shares on their name. P.W.2 in his cross examination specifically admitted that he is not directly related to the affairs of the company and he also admitted that subsequent to the death of the plaintiff Nos.
2 and 3, the plaintiffs 4 to 6 being the legal heirs did not file their pleadings stating that they are the share holders of the company in addition to the shares held by their father, plaintiff No.2.
This admitted evidence of P.W.2 shows that the company shares were not transferred in favour of plaintiff Nos. 4 to 6. In the same cross examination P.W.2 admitted that they have not filed the suit on behalf of the company, but they have filed the suit in their individual capacity.
Though the witness added that they have filed the suit as share holders of the company, but as admitted by P.W.2 they have not made any application for transfer of shares of P.Ws. 1 and 2. Even P.W.2 does not know the company affairs. In the cross examination he has stated that he did not verify the records from the Registrar of the Company that who are continuing as Directors of the Company and who are retired from the Company prior to their impleading in this suit.
(iv) It is an admitted fact by the plaintiffs that defendant No.1 was the Managing Director of the Company M/s Castvel Foundaries and
Fabrication Private Limited. P.W.2 admitted about purchase of Shed
Nos. 3 and 4 along with the suit schedule property by the company and 19 of 32
O.S.No.58 of 204
also in his evidence P.W.2 specifically stated that subsequently sole some properties of the company under Exs. A.2 and A.3 to Assam
Carbon Limited under Exs.A.2 and A.3 by the company represented by defendant No.1 as its Managing Director.
(v) Though P.W.2 in his cross examination denied the suggestion that in order to repay the debts of APSFC defendant No.1 being the
Managing Director of the company had sold the Shed Nos. 3 and 4, but in his evidence itself he has specifically stated that the company has sold shed Nos. 3 and 4 through registered sale deed , Ex.A.1.
(vi) P.W.2 himself in his cross examination categorically stated that he does not know what are the assets and liabilities of the company. He also stated that he does not know how much amount the company had borrowed from the private persons and its details.
Further, the entire plaint pleadings are silent with regarding to the company property, that is, shed Nos. 3 and 4 which were already sold under Ex.A.1. In cross examination P.W.2 stated that he does not know either his father or plaintiff Nos. 3 to 6 have filed the suit seeking the relief of declaration and recovery of possession to the extent of their share in shed Nos. 3 and 4.
(vii) It is an admitted fact that shed Nos. 3 and 4 are sold by the company represented by defendant No.1 as Managing Director of the company. The plaintiffs have not filed any document or resolution copy 20 of 32
O.S.No.58 of 204
showing that whether the company has passed any resolution authorizing the defendant No.1 to sell the shed Nos. 3 and 4. In the cross examination P.W.2 admitted that the plaintiffs did not file any case against defendant No.1 for sale of shed Nos. 3 and 4, unauthorizedly and he also stated that they have not filed any case against the said purchasers challenge their sale deeds.
(viii) The learned counsel for defendants confronted Ex.A.3 and he stated that the company represented by defendant NO.1 has sold part of suit schedule property to Smt. T. Vanitha. P.W.2 further admitted that the said Vanitha is not added as a party to the suit and not sought any relief against her. Even he admitted that in Ex. A.3, there is no reference of passing of resolution by the company authorizing the defendant NO.1 to execute Ex.A.3 on behalf of the company.
(ix) The admitted evidence of P.W.2 itself shows that defendant
No.1 being the Managing Director of the Company entered into an
Agreement of Sale and also sold some of the company properties.
Being silent by the other Directors itself shows that they have authorized defendant No.1 and approved his action. Admittedly, after death of plaintiff Nos. 1 and 2, P.W.2 and plaintiff Nos. 4 and 5 were not entered into company as Directors nor the share of plaintiff Nos. 1 and 2 were transferred in favour of P.W.2 and plaintiff Nos. 4 and 5, who are the legal heirs of plaintiff Nos. 2 and 3.
21 of 32
O.S.No.58 of 204
(x) In case Director of a Private company dies, then the provision for filing the casual vacancy is laid down under Section 152 (2) of
Companies Act, 2013. It states that unless expressly provided under the Act, every director of the Private Company shall be appointed by the Company in the general meeting. Therefore, the casual vacancy can only be filled up through appointment in a general meeting.
(xi) Admittedly, the plaintiffs neither demanded defendant No.1 for conducting of general meeting for filing up the vacancy of Directors in the place of plaintiff Nos. 1 and 2 nor they issued any notice to defendant No.1. Admittedly, as seen from the pleadings of the plaint, the plaintiffs and defendant No.1 are close relatives and the company founded on personal relationship involving mutual confidence between members of the family. However, the Company stopped its manufacturing operations and business. P.W.2 in cross examination stated that he does not know what is the nature of the business of the
Company Further, he stated that he does not know whether the name of the company is still continued in the Books of Registrars of the companies. Even he further stated that he did not verify the records from the Registrars of Companies that who are continuing as Directors of the company and who are retired from the company prior to his impleading in the suit to till now. Even he does not know anything about the company affairs.
22 of 32
O.S.No.58 of 204
In the same cross examination, he stated that he does not know what are the assets and liabilities of the company. Even he does not know how much the company had borrowed from private persons and its details.
On seeing the evidence in the cross examination of P.W.2, it shows that there are no business transaction or operations of the company.
(xii) As per the case of the plaintiffs and pleadings of the plaint, defendant No.1 mismanaged the company. When the plaintiffs questioned defendant No.1 for his illegal acts, defendant No.1 refused to answer. As such, the plaintiffs issued legal notice under Ex.A.8 demanding defendant No.1 and other defendants for cancellation of documents executed by defendant No.1 in favour of defendant Nos. 2 to 9. Defendant Nos. 2 to 9 issued reply notice under Ex. A.9 denying the entire allegations of the plaintiffs mentioned in Ex.A.8. Even defendant No.1 also issued reply notice under Ex.A.10 mentioning that when the company went in losses from 1993-94, since the company went in losses and to repay the loan obtained from APSFC and APIDC, shed Nos. 3 and 4 are sold. It is also mentioned that the Board also made a resolution to further sell the sheds 5A and 5B for clearing the bank loans and other creditors.
(xiii) It is further recited in the notice that the plaintiffs are in 23 of 32
O.S.No.58 of 204
knowledge of the same from time to time and also witnessed all the transactions. Admittedly, no rejoinder was issued to the reply notice
Exs. A.9 and A.10. The plaintiffs also not denied the facts stated in
Ex.A.10. However, when the affairs of the company have been or are being conducted in a manner prejudicial to the members or in a manner prejudicial to the interest of the company, the members may apply to the Tribunal by filing an application under the provisions of
Section 241 of the Companies Act, 2013 for the reliefs in case of operation and mismanagement in the affairs of the company as a right to apply under Section 244 of the Companies Act, 2013.
(xiv) P.W.2 in his cross examination admitted that the plaintiffs did not file any case against defendant No.,1 For sale of shed Nos. 3 and 4 unauthorizedly, and also stated that they have not filed any case against the said purchasers challenging their sale deeds. P.W.2 also admitted that they have not filed any application before the Tribunal.
He also admitted that they have not taken any steps for appointment of liquidator since their company in in defunct from 1994 on wards by assessing the assets and liabilities of the company.
(xv) Further, in the cross examination he admitted that he is not directly related to the affairs of the company and plaintiff Nos. 1 and 2 and defendant No.1 were taking care of the company affairs. In fact, as admitted by P.W.2, M/s Castvel Foundaries and Fabrication Private
Limited was not made as a party to this suit. Though P.W.2 and 24 of 32
O.S.No.58 of 204
plaintiffs Nos. 4 and 5 are added as legal representatives of plaintiffs 2 and 3, but even the plaintiffs 1 and 2 did not take any steps either by making an application before the Tribunal or challenging the actions of defendant No.1 for entering into an agreement of sale for selling of shed Nos. 3 and 4 and other properties and also for selling the suit schedule properties to Smt. T.Vanitha executed under Ex.A.3. The plaintiffs also not taken any steps when the company represented by the plaintiffs 1 and 2 and defendant No.1 have received Rs.
55,00,000/-. As per Ex.A.11, agreement of sale is for sale of suit schedule property.
The plaint pleadings as well as the evidence of P.W.2 shows that the plaintiffs without any right or authority seeking the relief claimed ni the plaint.
(xvi)That apart, P.W.2 himself in his cross examination admitted that M/s Castvel Foundaries and Fabrication private Limited was not made as a party to this suit. It is best known to the plaintiffs that without adding company as a party to the suit how they are entitled to claim the relief against the company properties. Inf act, the suit schedule properties are sold long back to defendant Nos. 2 to 9 and they were in possession and enjoyment of the suit schedule properties since the date of purchase of the same.
25 of 32
O.S.No.58 of 204
(xvii) The learned counsel for defendants argued that the plaintiffs did not seek the relief of declaration and recovery of possession which are main reliefs but only sought for the ancillary relief of cancellation of sale deeds of defendant Nos. 2 to 9. Hence, the suit is not maintainable and the plaintiffs are not entitled for the relief claimed in the plaint.
(xviii) In support of his contention, the learned counsel for the defendants relied on the judgment of the Hon’ble Supreme Court in a case of Vasantha (dead) their L.Rs. Vs. Rajalakshmi @ Rajam (dead) their L.Rs. 1 , wherein the Hon’ble Apex Court held that “the plaintiff not being in possession and claiming only declaratory relief, ought to have claimed the relief of recovery of possession”. When the plaintiffs were aware that the defendants were in possession of the suit schedule property, the plaintiff to seek relief of recovery of possession.
The learned counsel for the defendants also relied on another judgment of the Hon’ble Supreme court in Padhiyar Prahladji
Chenaji (Deceased) Through L.Rs. Vs. Maniben Jagmalbhai
(Deceased) through L.Rs. And others 2 .
(xix)In the instant case, the plaintiffs are seeking the relief of declaration and cancellation of sale deeds. It is an admitted fact that defendants 2 to 9 are in possession and enjoyment of the suit schedule 1Civil Appeal No.3854 of 2014. 2Civil Appeal No.1382 of 2022, (2022) 12 SCC 128.
26 of 32
O.S.No.58 of 204
property since the date of purchase. But, the plaintiffs without seeking the relief of recovery of possession simply filed the suit for cancellation of the registered sale deeds. Defendant No.2, who examined as D.W.1 in his chief affidavit stated that defendant Nos. 2 to 9 purchased the suit schedule property through registered sale deeds. After lapse of 6 years of purchase of the suit schedule property, the plaintiffs filed this suit. Further, in his evidence D.W.1 deposed that defendant NO.1 in order to repay the dues and to repay the loss availed from the private creditors they have entered into an agreement of sale with Texas
Lubrications Pvt. Ltd for a sale consideration of Rs. 55,00,000/-.
When the company failed to execute sale deed in their favour, as such, they field the suit under Ex.A.11. When defendant Nos. 2 to 9 agreed to purchase the suit schedule property the consideration was finalized at Rs. 89,00,000/-. Defendant Nos. 2 to 9 arranged an amount of Rs. 55,00,000/- to the company, represented by defendant No.1 to enable him to settle the disputes with their agreement holder under
Ex.A.11. Accordingly, defendant NO.1 through Lok Adalat settled the dispute under Ex.A.12 award and immediately, the company M/s Castel
Foundaries and Fabrications pvt. Ltd., represented by defendant No.1 executed Ex.A.4 sale deed in favour of defendant Nos. 2 to 4 and also executed Ex.A.5 in favour of defendant Nos. 5 and 6 and further executed Ex.A.6 in favour of defendant Nos. 7 and 8 and further executed Ex.A.7 in favour of defendant No.9 by receiving the balance 27 of 32
O.S.No.58 of 204
sale consideration of Rs. 34,00,000/-. From the date of purchase the defendant Nos. 2 to 9 are maintaining the possession as an absolute owners.
(xx) In the cross examination of D.W.1 nothing was elicited to impeach his evidence with regarding to the settlement of suit
O.S.No.124 of 2007 through Lok Adalat. Even the plaintiffs though in
the plaint pleadings and in the evidence of P.w.1 deposed about filing of the suit O.S.No.124 of 2017 and settlement of the same before the Lok adalat by compromise and also stated that defendant No.1 on behalf of the company returned Rs. 55,00,000/-, but P.W.1 did not state how the defendant No.1 arranged the said amount of Rs. 55,00,000/- which were paid to the plaintiffs in O.S.No.124 of 2007.
(xxi) P.W.2 in his cross examination stated that he does not know about filing of Ex.A.11 suit and even he does not know what is the resource of information to get Exs. A.11 and A.12. Further, he stated that he know that the company has repaid Rs.55,00,000/- to the agreement holder and got settled the issue through Lok adalat under
Ex.A.12. He also stated that he did not enqurie the source of repayment by the company for arranging Rs. 55,00,000/- to its agreement holders. This admitted evidence of P.W.2 itself shows that the plaintiffs even after knowing of the facts they simply filed this suit for cancellation of sale deeds executed in favour of defendant Nos. 2 to
9. Though the plaintiffs seeking the said relief as there is no resolution 28 of 32
O.S.No.58 of 204
of the Board of the Company for selling the suit schedule property, but admittedly, defendant NO.1 only dealing with all the matters including selling of the company properties and entering into the Agreement of sales. Even for settlement of O.S.No.124 of 2007 the defendant No.1 has only entered into compromise.
(xxii) Therefore, on the foregoing discussion and on seeing the entire evidence on record, it shows that the plaintiffs without any valid right are claiming the relief of cancellation of sale deeds of defendant
Nos. 2 to 9, who are the bonafide purchasers having purchased the suit schedule property by paying the valid sale consideration. Hence, issue
Nos. 1 and 2 are held against the plaintiffs.
12. Issue No.3: Whether the suit is barred by limitation?
(i) It is an admitted fact that defendant Nos. 2 to 9 purchased the suit schedule property under Exs. A.4 to A.7. Exs. A.4 to A.7 are executed in the year 2008 whereas this suit is filed in the year 2014.
(ii) Under Article 56 of Schedule ti the Limitation Act, to declare the forgery of instrument issued or registered the period of limitation is three years. Under Article 58 of the Schedule to the Limitation Act prescribes period of limitation to file a suit to obtain any declaratory relief as three years from the date when the right to sue first accrues.
(iii) As discussed above, defendant No.1 executed Exs. A.4 to A.7 in 29 of 32
O.S.No.58 of 204
favour of defendant Nos. 2 to 9 on 24-03-2008 whereas though the plaintiffs filed the suit on 05-06-2012, the same was returned with objections and it was resubmitted. After compliance of several objections, the same was numbered on 22-04-2014. Even though the date of first filing of the petitioner taken into consideration, the same was filed in the year 2012. But, the defendant No.1 executed Exs. A.4 to A.7 in favour of defendant Nos. 2 to 9 on 24-03-2008 and since then defendant
Nos. 2 to 9 are in possession and enjoyment of the suit schedule property.
Therefore, as per the Article 58 of the schedule to the Limitation Act clearly provides the period of limitation to file a suit to obtain any other declaration is three years from the date when the right to sue is accrues.
Therefore, on seeing the pleadings of the plaint and provisions of law, the suit of the plaintiffs is barred by limitation. Hence, issue No.3 is answered accordingly against the plaintiffs.
13. ISSUE NO.4: Whether the suit is bad for non inclusion of all the
properties and non joinder of all the purchasers of the company?
(i) In the plaint pleadings the plaintiffs pleaded that the company represented by defendant No.1 purchased shed Nos. 3 and 4 and sold the same to Assam Carson Limited., Ramesh Patel, Sunder Weigh Bridge during the period 1995-1997. Though P.W.1 denied the suggestion that in order to repay the debts shed Nos. 3 and 4 are sold , but however, 30 of 32
O.S.No.58 of 204
plaintiffs did not file any record to show the reasons for selling of shed
Nos. 3 and 4. P.W.2 also admitted that part of suit schedule property sold to Smt. T. Vanitha, W/o T.Sham sunder under Ex.A.3. P.W.2 further admitted that the said Vanitha is not at all added as a party to the suit and not sought any relief against her. Further, P.W.2 also admitted that there is no reference of passing of resolution of the company authorizing defendant No.1 to execute Ex.A.3 on behalf of the company. If at all defendant NO.1 has mismanaged the company and sold the company properties illegally, then the plaintiffs ought to have added all the properties including the purchasers of the said properties. But, as admitted by P.W.2 none of the said properties were added and even none of them were impleaded as parties to the suit.
Even the plaintiffs did not sought any relief in respect of the Ex.A.11, suit in O.S.No.124 of 2017 and even Ex.A.12, Lok Adalat award passed in O.S.No.124 of 2007.
(ii) On seeing the pleadings of the plaint as well as the evidence of P.W.2, it clearly shows that the plaintiffs filed this suit only against defendant Nos. 2 to 9, who are the bonafide purchasers of the suit schedule property under Exs. A.4 to A.7.
(iii) That apart, the plaintiffs have not shown any valid reasons for non inclusion of all the properties of the company and non adding of purchasers of the suit schedule property.
31 of 32
O.S.No.58 of 204
Therefore, on scrutinizing the evidence on record, it clearly goes to show that the suit is bad for non inclusion of the properties and non joinder of the purchasers of the property. Hence, issue No. 4 is answered accordingly against the plaintiffs.
14. Issue No.5; To what relief?
On the foregoing discussion on issue Nos. 1 to 4 and on entire facts and evidence on record, it is conclusively establishing that the suit of the plaintiffs is not maintainable and the same is liable to be dismissed.
15.In the result, the suit of the plaintiffs is dismissed with costs.
Dictated to Stenographer, transcribed and typed by her corrected and
pronounced by me in the open Court on this the 22 nd day of April, 2024.
I Additional District Judge, Sangareddy.
APPENDIX OF EVIDENCE.
WITNESSES EXAMINED FOR
PLAINTIFF DEFENDANTS
P.W.1: Dr. Ch. Kowsalya (achieved) D.W.1: Jayanthi Lal Patel
P.W.2: Dr. Ch. Prawahar Raj 32 of 32
O.S.No.58 of 204
EXHIBITS MARKED.
PLAINTIFFS
Ex.A.1: Certified copy of sale deed document No.3312/1998, dated 17- 09-1998
Ex.A.2:Certified copy of sale deed document No.3481/1998,
dt:24.09.1998.
Ex.A.3: Certified copy of sale deed document No.1209/1999, dated:25- 03-1999.
Ex.A.4:Certified copy of sale deed document No.4233/2008, dated 24- 03-2008.
Ex.A.5:Certified copy of sale deed document No.4234/2008, dated 24- 03-2008.
Ex.A.6:Certified copy of sale deed document No.4235/2008, dated: 24- 03-2008.
Ex.A.7:Certified copy of sale deed document No.4236/2008, dated 24- 03-2008.
Ex.A.8: Office copy of legal notice issued by plaintiff, dated: 31-05-2009.
Ex.A.9: Reply notice, dated 06-06-2009.
Ex.A.10: Reply notice dated 17-06-2009.
Ex.A.11: Certified copy of pliant in O.S.No.124/2007. On the file of Prl.
District Judge, Sangareddy, dated 21-11-2007.
Ex.A.12: Certified copy of Lok Adalat Award case No.2462/2008, in
O.S.No.124 of 2007, dated 24-03-2008.
DEFENDANTS
Nil
I Additional District Judge, Sangareddy.