I.A.12261/2021 (by the plaintiffs under Order XXXIX Rules 1 & 2 CPC)
1. The suit [CS(COMM) 461/2021] has been filed by the plaintiffs for specific performance of a Family Settlement/Agreement dated 23rd January, 2020 (for short, “Mediated Agreement”), which the plaintiffs claim had been arrived at between the plaintiffs and the defendants No.2 to 7 and the defendants No.14 & 15 for the division of the joint ownership, management and control of the various companies, partnerships and entities, under the “Wings Group” arrayed as defendants No.1, 10, 11, 12 and 13.
2. Mr. S.K. Sharma, learned counsel for the defendants No.1 to 15, raised two initial objections regarding the payment of the court fee as also the jurisdiction of this Court, claiming that Section 430 of the Companies Act, 2013 barred the jurisdiction of the civil court and the matter had to be heard by the National Company Law Tribunal (for short, “NCLT”). It may be noted that vide orders dated 21st September, 2021, this Court had directed the plaintiffs to file the requisite court fees on their own valuation of the suit at Rs.11 crores, which has been complied with.
3. In respect of the objection that the suit was barred under Section 430 of the Companies Act, 2013, Mr.Jayant Mehta, learned senior counsel for the plaintiffs, submitted that the suit was for the implementation of a Family Settlement and therefore, the suit was not barred. Reliance has been placed on the judgment of this Court in Dinesh Gupta and Others v. Rajesh Gupta & Others, 2018 SCC OnLine Del 12387 in this regard. It was submitted that in the said case, which involved a similar issue, it was held that the civil court had jurisdiction and the relief of injunction was also granted in favour of the plaintiffs therein.
4. Though arguments were heard in I.As.12261/2021 and 12262/2021, in part, summons and notices were directed to be issued on 28th September, 2021. The written statements and the replies are yet to come on record. However, Mr.Jayant Mehta and Mr.Krishnendu Datta, learned senior counsel for the plaintiffs, prayed for interim protection till the completion of the pleadings, which was opposed by Mr.S.K.Sharma, learned counsel for the defendants No.1 to 15. It may be mentioned that the defendants No.16 and 17 are the Mediators, who worked out the said Mediated Agreement, and against whom directions have been sought for preservation of the records of the proceedings which led to the Mediated Settlement. The defendants No.16 and 17 have been represented by Mr.Krishan Kumar, Advocate, who has informed the Court and has also placed on the record the affidavits of the defendants No.16 and 17 to the effect that the said Mediated Agreement was torn and burnt on account of an incident that occurred on 3 rd March, 2020, and that therefore, they could not produce the original record. However, in this regard, learned senior counsel for the plaintiffs submitted that assuming that the original Mediated Agreement/Family Settlement had been destroyed, as claimed, there were many other communications exchanged between the parties, which would have material bearing on the present matter and which are still in the custody of these defendants and which were required to be preserved and produced before the court.
5. An additional affidavit has been filed by the plaintiffs to submit that even after the suit had been filed, the defendants No.2 & 3 were still indulging in acts that were detrimental to the interests of the defendant No.1/Company, such as, changing the email id for the defendant No.1/Company?s current Account No.164805000396 held with the ICICI Bank, Punjabi Bagh Wealth Branch, 24, NWA Club Road, Punjabi Bagh Extension, Delhi -110026 on 21st September, 2021, by removing the existing one being “email@example.com” and substituting it with the email of the defendant No.2 being “firstname.lastname@example.org”. Thus, it was claimed that despite knowledge of the pendency of this suit and the defendants attending the hearing on 21st September, 2021, further effort was made to prevent the flow of information regarding the operation of the said account. It is also stated in the additional affidavit that on 21st September, 2021, the defendants No.2 & 3 have authorized a third person, namely, Mr.Santosh Kumar, to approve or cancel the payments of the defendant No.1/Company, when the said Santosh Kumar was not even an employee of the defendant No.1/Company. Further, the defendants No.2 & 3 had stopped the payment of Group Insurance Premiums, due and payable to ICICI Lombard for the employees of the defendant No.1/Company and their family members, which was due on 23rd September, 2021, thus leading to disgruntlement amongst the employees with the ultimate aim of harming and hurting the business and operation of the defendant No.1. Similar non-payments have been further highlighted in the said additional affidavit.
6. In response, Sh.S.K.Sharma, learned counsel for the defendants No.1 to 15, submitted that the averments were motivated as the complaints stated to have been received by the plaintiffs were subsequent to the filing of the suit and intended only to portray the defendants No.2 & 3 in poor light, whereas the defendants No.2 & 3 have not received the fees for their position as Directors of the defendant No.1/Company, but have released payments to the plaintiffs, particularly, the plaintiff No.1. Moreover, learned counsel pointed out that the email ID of the defendant No.1/Company was updated much before the filing of the suit on 18 th September, 2021. It was also submitted that all payments had been made till 21st October, 2021. There were no pending bills, as they were being cleared as and when the date for payment was reached. In short, learned counsel for the defendants No.1 to 15 submitted that the additional affidavit was a mischievous one and did not deserve consideration by this Court.
7. The bone of contention is fundamentally, a settlement described by the plaintiffs as a Family Settlement dated 23rd January, 2020, copy of which has been placed at page No.4 in the “Documents Folder” filed by the plaintiffs. The document is titled as “Mediation Agreement for Family Settlement” dated 23rd January, 2020 (“Mediated Agreement”). Learned senior counsel for the plaintiffs contended that this Mediated Agreement reflected a binding Family Settlement between the parties. The parties were divided into two groups i.e., Group „A? and Group „B?. Sh.Rajinder Prasad Arora, plaintiff No.1, represented the Group „A? while Sh.Rakesh Kumar Arora, defendant No.2, represented the Group „B?. The defendant No.2 was to prepare two Bouquets in terms of the Mediated Agreement for division of the businesses between the said two Groups and he did so and the Bouquets were duly selected on 26th January, 2020.
8. This Bouquet Selection Document, copy of which has been placed at page No.12 in the “Documents Folder” filed by the plaintiffs, outlined and detailed the distribution of the assets and entities amongst the two Groups. The plaintiffs chose to receive the assets detailed under Bouquet No.1 and the defendants No.2 to 7 and 14 & 15 received the assets detailed under Bouquet No.2. As per this Mediated Agreement, the defendant No.1/Company fell into the share of the plaintiffs and steps were initiated to put this Mediated Agreement into action. The learned counsel submitted that these actions were taken despite the alleged destruction of the documents on 3rd March, 2020 and included the creation of a new account on 2 nd March, 2020 of which the authorized signatories were the plaintiffs No.1 and 2, the amalgamation of pro forma defendants No.18 to 20 into the defendant No.1/Company vide final orders dated 29th July, 2020 of the NCLT, the transfer of the brand and business of the OTC and GENWIN divisions previously operated by the defendant No.13 to the defendant No.1/Company on 1st April, 2021 and the transfer of all personnel employed by the defendant No.13 from the defendant No.13 to the defendant No.1/Company.
9. Learned senior counsel for the plaintiffs drew attention of this Court to the packaging at pages No.143 to 150 in the “Vol-I., Documents Folder” filed by the plaintiffs, to show how prior to 1st April, 2021, the medicines were marketed in the name of the defendant No.13, whereas thereafter, these medicines were marketed with a different get up in the name of the defendant No.1/Company. Learned senior counsel further submitted that new contracts were executed with various CSA agents in view of the division of the business between Group „A? and Group „B? and business being consolidated in the defendant No.1/Company and the defendant No.13 respectively. It was submitted that on 13th April, 2021, the defendant No.13, which was earlier a partnership concern, was converted into an LLP, which allowed the withdrawal of the plaintiff No.1 from the partnership firm without impacting the continuity of the business.
10. Learned senior counsel for the plaintiffs submitted that since the month of May, 2021, the defendants No.2 to 7 and 14 & 15 began to create hurdles in the further execution of the Mediated Agreement and the functioning of the plaintiffs in accordance with its terms, so much so that on 18th August, 2021, a Board of Directors meeting of the defendant No.1/Company was called with the proposed agenda to reverse the appointment of the plaintiffs No.1 and 2 as the authorized signatories in the bank accounts of the defendant No.1/Company. The plaintiff No.1 claimed that due to his ill-health, he was unable to attend the said Board meeting physically and sought a link for a video conference, which was not forwarded to him. Thereafter, on 26th August, 2021, he was informed that the Board of Directors meeting had been held and the Minutes thereof would be circulated. Learned senior counsel for the plaintiffs submitted that this Board meeting was illegal and the Resolution passed was also illegal. Moreover, the ICICI Bank is claimed to have changed the authorized signatories vide communication dated 4th September,2021, on the basis of communication sent by the defendant No.2, forwarding a Resolution, whereas the Minutes of the Meeting were actually forwarded to the plaintiffs only after the first hearing of this case on 21st September, 2021. Thus, not only was the action of substituting the authorized signatories bad in law, but also reflected the deceitful attitude of the defendants No.2 to 7 and 14 & 15.
11. It was also submitted that the arguments on behalf of the defendants that since they were also 50% shareholders in the defendant No.1/Company, there was no occasion for them to do anything contrary to the interests of the defendant No.1/Company, were specious in view of the fact that the business of the defendant No.1/Company was to come to the plaintiffs and by ruining its business and emptying out the accounts only a shell would be transferred to the plaintiffs, with disgruntled employees and customers, additionally.
12. In these circumstances, learned senior counsel for the plaintiffs pressed for the grant of the following prayers, as an interim measure: -
"a) Pass an ad-interim order injunction restraining the Defendant Nos. 2 to 7 and 14 to 1 5 and their associates, agents, employees, etc. or anyone acting on their behalf from alienating, selling off, or creating any thirds party rights or encumbrance on the assets, shareholding, divisions, brands, and trademarks of the Wings Group of companies, partnerships, and entities listed at Defendant No. 1 and 8 to 1 3;
b) Pass an ad-interim order restraining the Defendant Nos. 1, 2 and 3 their associates, agents, employees, etc. or any acting on their behalf from enforcing or utilizing from taking or implementing any step or action pursuant to the Notice of Board Meeting dated 18.08.2021, the Resolutions passed at the Board Meeting dated 26.08.2021 and / or any further steps taken by the said Defendants pursuant thereof
c) Pass an ad-interim injunction upon the Defendants to maintain status quo ante in respect of the Authorized Signatory of the Current Account No. 164805000396 held with the ICICI Bank, Punjabi Bagh Wealth Branch in the name of the Defendant No.1;
d) Pass an ad-interim order appointing the Plaintiff No. 2 or his nominee as a director on the Board of directors of the Defendant No.1;
e) Pass an ad-interim order directing the Defendant Nos. 2 to 7 and 14 to 1 5 to take and implement all steps, actions, and things for implementing and effectuating the Mediation Agreement for Family Settlement dated 23.01 .2020, the Loan Licensing Agreement dated 25.01 .2020 and Bouquet Selection Document dated 26.01.2020 (together comprising the Family Settlement) by the Defendant Nos. 2 to 7 and 14 to 15;
f) Pass an ad-interim order in favor of the Plaintiffs and against the Defendant Nos. 2 to 7 and 14 to 15, restraining the said Defendants, their associates, shareholders, etc. from acting, taking or implementing any step or action in contravention of the Family Settlement as described in prayer (a) above;
g) Pass an ad-interim order restraining the Defendant Nos. 2 and 3, their associates, agents, employees, etc. or any acting on their behalf from enforcing or utilizing their shareholder rights in the Defendant No.1 company to breach the Family Settlement including the right, title, and interest of the Plaintiffs under the Family Settlement;
h) Pass an ad-interim order restraining the Defendants from opening any new bank accounts in the name of Defendant No.1 pursuant to the resolutions passed at the Board Meeting dated 26.08.2021, or in any other manner whatsoever;
i) Pass an ad-interim order appointing any reputed agency or professional to implement and effectuate the Family Settlement and disgorge the shares / interests of each Group from the other;
j) Pass an ad-interim order against the Defendant Nos.1, 2 and 3 from taking any steps, actions, or things for changing the authorized signatories of the Bank Account No 1 64805000396 of the Defendant No.1 company, held with the ICICI Bank, Punjabi Bagh Wealth Division, 24, NWA Club Road, Punjabi Baugh Extension, Delhi - 110026;
k) Pass an ad-interim order directing the Defendant Nos. 16 and 17, and the advisors, Mr. Anil Jain and Mr. Ved Jain, to retain and preserve all the records and documents pertaining to the Family Settlement and handover the originals thereof to a Local Commissioner appointed by this Hon'ble Court;
l) Pass ad-interim ex pa rte order in terms of the foregoing or as this Hon'ble Court may deem fit and appropriate; and
m) Pass any such or further order(s) that this Hon'ble Court might deem fit in the present facts and circumstances.”
13. Learned counsel for the defendants, on the other hand, submitted that there was no Family Settlement that had been arrived at between the parties, inasmuch as the so-called settlement actually reflected points for working out a Family Settlement through mediation. Since very difficult negotiations had been conducted by the defendants No.16 &17, the socalled Mediated Agreement for Family Settlement, only set out the issues that required resolution. The Mediated Agreement noted that information was to be shared for the purposes of implementing the “on-going” Family Settlement, which meant that the said documents did not record a final settlement. It was also submitted that if it was a Family Settlement, a time-line would have been also prescribed and agreed to for the purposes of various activities. This also reflected that a final settlement had not been arrived at. The Bouquets were prepared as the settlement recorded that it was intended to “smoothly reach a settlement”. Moreover, if within 30 days, no agreement had been reached, the entire matter stood rescinded. Since nothing happened within a month, the entire talks had fallen through. Learned counsel explained that even the division of assets in the Bouquets did not complete the settlement, as till the monies were paid to the respective Groups and assets divided, there was nothing subsisting. Thus, the Mediated Agreement was only a tentative document and the plaintiffs could not seek any specific performance of the same.
14. Learned counsel for the defendants further argued that the claim of the transfer of companies was also hollow as no document in this regard had been executed. Moreover, there were no other documents that recorded that action was being taken in furtherance of the settlement. The change in packaging was a common practice in Pharma Business, to ensure that the get-up was not copied by others. The medicine remained the same.
15. It was submitted that nothing had been done behind the back of the plaintiffs as all documents and communications were forwarded to the plaintiff No.1 and signatures were also duly obtained by sending papers to his residence. The defendant No.1/Company was functioning smoothly and the sales had improved over the last one and a half months. As regards the convening of the AGM, it was because the audited balancesheets were to be filed, but when the Government extended the time for submission of the balance-sheets, the AGM was cancelled. In the circumstances, there was no occasion to issue any interim directions.
16. It was further submitted that the defendants had no intention of alienating, selling off, or creating any third party rights or encumbrances on the assets, shareholding, divisions, brands, and trademarks of the Wings Group of companies, partnerships, and entities listed at Defendants No. 1 and 8 to 13. The prayer „c? for directing status quo ante could not be granted at this stage and there was no reason to make the plaintiffs the sole signatories. Learned counsel further submitted that there could be no expansion of the Board of Directors, as sought in the prayer „d?. The relief in prayers „e? and „f? could be granted only after trial, as the defendants were not accepting that there was a settlement, which could be enforced at this stage. Furthermore, learned counsel submitted that prayer „g? could not be granted as the defendants No.2 & 3 being Directors in the defendant No.1/Company could not be injuncted from enforcing and exercising their rights. As regards prayer „h?, learned counsel submitted that the defendants were not intending to open any new account on behalf of the defendant No.1/Company, but placed a rider saying that the need for opening a fresh account may arise if the plaintiff No.1 played mischief and wrote to the Bank to freeze the bank accounts on account of the family dispute. The prayer „j? has become infructuous and prayer „k? could not be allowed in view of the affidavits of the defendants No.16 & 17 that the documents had been destroyed at the instance of the plaintiffs themselves.
17. Though detailed arguments have been addressed, since the learned counsel for the defendants also sought time to file the written statements and the replies to the application under Order XXXIX Rules 1 & 2 CPC, it is considered appropriate to refrain from discussing in detail the merits of the rival contentions of the parties. Suffice it to note that on a prima facie view, the plaintiffs have disclosed a case in their favour. The Mediated Agreement, the Bouquets that were created and chosen, and the follow up actions of opening of a new bank account and appointment of the plaintiffs No.1 and 2 as the signatories thereof, the change in the nature of packaging, the change in the nature of defendant No.13, all point out to the fact that pursuant to the parties reaching a settlement, they understood that the business of the defendant No.1/Company would be falling into the share of the plaintiffs while defendant No.13 would be falling into the share of the defendants No.2 to 7 and 14 & 15. Yet, they have been prevented from acting, as the plaintiffs are in minority in the Board of the Directors of defendant No.1/Company, where only the plaintiff No.1 and the defendants No.2 & 3 form the Board and the decisions are being taken by the defendants No.2 & 3 in respect of a company that has been earmarked for the plaintiffs. By changing the email account in the absence of
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approved Minutes and thus excluding the plaintiffs from receiving information about the operation of the bank accounts and the transfer of about Rs.4 crores by the defendants No.2 & 3 from the bank account of the defendant No.1/Company into the bank accounts of the defendant No.13, soon after declaring themselves to be authorized signatories in respect of the Account No.164805000396 of the defendant No.1/Company, all point out to the fact that the plaintiffs will suffer “irreparable loss and injury” if no protection was extended to them. The “balance of convenience” lies in their favour as their rights are more directly affected, while the defendants No.2 & 3 seem to be in full control of the businesses. 18. This Court is, therefore, of the considered view that till the completion of the pleadings in the suit and the applications, some interim orders are called for in the matter. Accordingly, the status quo ante with regard to the operation of the defendant No.1/Company?s current Account No.164805000396 held with the ICICI Bank, Punjabi Bagh Wealth Branch, 24, NWA Club Road, Punjabi Bagh Extension, Delhi -110026 is restored till the disposal of this application [I.A.12261/2021] under Order XXXIX Rules 1 & 2 CPC. Further, the concurrence of the plaintiff No.1 will be taken in writing before further expenditures are undertaken from the accounts of the defendant No.1/Company. Lastly, the defendants No.16 & 17 are directed to preserve all communications, notes, etc., in respect of the Mediated Agreement and efforts towards reaching at it as also in respect of the drawing up of the Bouquets, their selection, etc., till the disposal of this suit. The defendants will remain bound by the assurances given to the Court qua alienation of assets and opening of bank accounts, and shall seek permission of the court before doing so. CS(COMM) 461/2021, I.As.12262/2021 (by the plaintiff under Section 12A of the Commercial Courts Act, 2015 r/w Section 151 CPC seeking exemption from conducting pre-institution mediation) 19. List before the Joint Registrar on 24th January, 2022 for completion of pleadings. 20. List before the court on 12th May, 2022. 21. The order be uploaded on the website forthwith.