* % + IN THE HIGH COURT OF DELHI AT NEW DELHI Date of decision:
19. h November, 2018 CS(OS) 1876/2008, IA No.5279/2018 & IA No.5477/2018 (both u/O XXII R-3 CPC) and IA No.9674/2018 (u/O XXII R-10 r/w O I R- 10, O VI R-17, O XXII R-9 CPC) RISHI PROMOTERS PRIVATE LTD. & ANR. ..... Plaintiffs Through: Mr. Dinesh Garg & Ms. Rachna Agrawal, Advs. Versus ANJU ARORA (NEE MS. ANJU BAJAJ) & ORS..... Defendants Through: Mr. Raman Duggal, Ms. Aayushi Gupta & Ms. Ojusya Joshi, Advs. for D-1. Mr. Gaurav Puri, Mr. Aditya Bali, Ms. Neha Bhutani & Ms. Tanya Chawla, Advs. for D-3. CORAM: HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW1 IAs No.5279/2018 and 5477/2018 of the defendant no.3 and defendant no.1 respectively, both under Order XXII Rule 3 CPC for dismissal of the suit as abated, and IA No.9674/2018 of the plaintiffs under Order XXII Rule 10 CPC read with Order I Rule 10, Order VI Rule 17 and Order XXII Rule 9 CPC are for consideration.
2. The counsel for the defendant no.3 has argued that (i) the plaintiffs have filed this suit for specific performance of sale of immovable property; (ii) the said suit is being contested by the defendant no.1 as well as by the defendants no.2 and 3; (iii) issues were framed in the suit and Mr. Rajesh Gupta, as Director of the plaintiff no.1 company, filed an affidavit dated 26th May, 2010 of examination-in-chief; (iv) the cross-examination of the said CS(OS) No.1876/2008 Page 1 of 8 Mr. Rajesh Gupta by counsels for the defendants commenced on 7th May, 2013 and was going on till 2017 when the counsel for the defendants no.2 and 3 learnt of the order dated 20th February, 2013 of this Court in Company Petition No.287/2012 in Re: BDR Homes Pvt. Ltd. & Ors. and upon reading whereof it was realized that the plaintiff no.1 company, with effect from 20th February, 2013, stood amalgamated with BDR Builders & Developers Pvt. Ltd.; (v) neither the plaintiffs nor Mr. Rajesh Gupta during his cross- examination however informed of the said development for over five years and continued to pursue the suit as if the plaintiff no.1 company was still existing when in fact the plaintiff no.1 company had ceased to exist. The defendant no.3 has thus sought dismissal of the suit as abated.
3. The counsel for the defendant no.1, in addition has argued that the plaintiffs herein, in some other suits, informed the Court of the amalgamation and were substituted by BDR Builders & Developers Pvt. Ltd. and which indicates that the plaintiffs and BDR Builders & Developers Pvt. Ltd. were aware of the procedure required of making an application and it was not made in this suit.
4. I have enquired from the counsels for the defendants no.2 and 3 and the counsel for the defendant no.1, what prejudice has been suffered by the defendants and as to what provision of law has been violated.
5. The counsel for the defendants no.2 and 3 draws attention to Order XXII Rule 10A of the CPC and contends that it was the duty of the plaintiffs to inform this Court.
6. The counsels for the defendants no.2 and 3 however on enquiry whether Mr. Rajesh Gupta continued to be a Director of BDR Builders & Developers Pvt. Ltd. states, “that he claims so”. CS(OS) No.1876/2008 Page 2 of 8 7. The counsel for the defendant no.1 argues that once the plaintiff no.1 died on the date of amalgamation i.e. 20th February, 2013, Mr. Rajesh Gupta ceased to be the Director and has been misrepresenting before this Court. It is further argued that the plaintiff no.1 has not even bothered to file a reply to the application of the defendant no.1. It is further argued that BDR Builders & Developers Pvt. Ltd. was also required to apply for setting aside of the abatement and which has not been done. It is contended that the principle of legal representation will not apply to BDR Builders & Developers Pvt. Ltd. which is in fact an assignee and the Scheme of amalgamation has also not been placed on record. It is also contended that as per the Director Identification Number (DIN) number of Mr. Rajesh Gupta enquired into by the defendant no.1, Mr. Rajesh Gupta is not a Director of BDR Builders & Developers Pvt. Ltd.
8. The counsel for the plaintiffs has in Court handed over a copy of the order dated 20th February, 2013 of amalgamation, which is taken on record, but is not possessed of the Scheme of amalgamation. He contends that since the defendants, in their applications admit the amalgamation of plaintiff no.1 with BDR Builders & Developers Ltd. and on which amalgamation all rights and liabilities of the plaintiff no.1 will vest in BDR Builders & Developers Pvt. Ltd., need was not felt to place the Scheme on record.
9. With respect to Directorship of Mr. Rajesh Gupta, it is stated that Mr. Rajesh Gupta has been authorized vide Resolution of BDR Builders & Developers Pvt. Ltd. to appear as a witness in the suit.
10. The counsel for the defendants no.2 and 3 states that the Resolution as well as the affidavit accompanying the application do not disclose that the said Mr. Rajesh Gupta was a Director. CS(OS) No.1876/2008 Page 3 of 8 11. The counsel for the plaintiffs states that the aforesaid statement is factually wrong. It is stated that though Mr. Rajesh Gupta was a Director but as of today he is not a Director. It is also stated that plaintiffs as well as BDR Builders & Developers Pvt. Ltd. are a family company.
12. I have considered the rival contentions.
13. Order XXII of the CPC providing for „Death, Marriage and Insolvency of Parties‟ in Rule 10 thereof provides that in other cases of an assignment, creation or devolution of any interest during the pendency of a suit, the suit may, by leave of the Court, be continued by or against the person to or upon whom such interest has come or devolved.
14. Article 120 of the Schedule to the Limitation Act, 1963 prescribes limitation of 90 days with effect from the date of death of the plaintiff, appellant, defendant or respondent, as the case may be, to have the legal representative of a deceased plaintiff or appellant or of a deceased defendant or respondent, made a party. Article 121 provides for limitation of 60 days commencing from the date of abatement for an order to set aside an abatement.
15. Section 394 of the Companies Act, 1956, which all counsels agree would apply to the order of amalgamation of the plaintiffs in the present case, provides for the Court to sanction the compromise or arrangement or make a provision for all or any of the matters provided therein and which inter alia provides for transfer to a transferee company of the whole or any part of the undertaking, property or liabilities of any transferor company, the allotment or appropriation by the transferee company of any shares, debentures, policies or other like interests in that company which, under the compromise or arrangement, are to be allotted or appropriated by that CS(OS) No.1876/2008 Page 4 of 8 company for continuation by or against the transferee company of any pending legal proceedings.
16. A perusal of the order dated 20th February, 2013 aforesaid shows that the Company Petition No.287/2012 was filed by the plaintiff no.1 Rishi Promoters Pvt. Ltd. along with eleven other companies, under Sections 391 and 394 of the Companies Act, and in which order the plaintiff no.1 Rishi Promoters Pvt. Ltd. was described as transferor no.8 and BDR Builders & Developers Pvt. Ltd. was described as transferee company. The order further shows that as per the Scheme, the transferee company agreed to allot to the shareholders of the plaintiff no1. Company, described as transferor company no.8 as aforesaid, in proportion of two equity shares of Rs.10/- each in the equity share capital of the transferee company for every one paid up equity share of Rs.10/- each in the plaintiff no.1 company. This Court vide order dated 20th February, 2013 granted approval to the said Scheme.
17. There is thus no iota of doubt that the plaintiff no.1 company stands amalgamated, as claimed by the defendants no.2 and 3 and the defendant no.1 also, with BDR Builders & Developers Pvt. Ltd. and as a consequence of which amalgamation, BDR Builders & Developers Pvt. Ltd. will have a right to continue with this suit.
18. The only aspect which remains is, of no information thereof having been given and effect if any thereof and misrepresentation if any practiced.
19. The counsel for the plaintiffs has referred to International Tractors Ltd. Vs. Punjab Tractors Ltd. (2016) 229 DLT286(DB) (SLP(C) No(s) 12103/2016 preferred whereagainst was dismissed on 6th May, 2016), holding that (i) to a case of amalgamation or merger of a company, duly sanctioned by a Court, Order XXII Rule 10 and not Order XXII Rules 3 and CS(OS) No.1876/2008 Page 5 of 8 4 apply; (ii) Order XXII Rule 10 specifically deals with the assignment, creation or devolution of any interest during the pendency of the suit; (iii) Supreme Court in Dhurandhar Prasad Singh Vs. Jai Prakash University (2001) 6 SCC534held that if no step under Order XXII Rule 10 of the CPC is taken, the suit may be continued with the original party and the person on whom the interest has devolved will be bound and can have the benefit of the decree, as the case may be, unless it is shown in a properly constituted proceeding that the original party being no longer interested in the proceeding, did not vigorously prosecute or colluded with the adversary, resulting in decision adverse to the party upon whom the interest had devolved; (iv) the legislature while enacting Rules 3, 4 and 10 has made a clear-cut distinction; (v) while in the case of Rules 3 and 4, if right to sue survives and no application for bringing the legal representatives of a deceased party is filed within the time prescribed, there is automatic abatement of the suit and procedure has been prescribed for setting aside of the abetment, in cases covered by Rule 10, the legislature has not prescribed any such procedure in the event of failure to apply for leave of the Court to continue the proceeding by or against the person upon whom interest has devolved, which shows that the legislature was conscious of this eventuality and yet did not prescribe that failure would entitle dismissal of the suit; (vi) the only risk which a party takes, if does not seek substitution, is of the original plaintiff not properly contesting the suit; and, (vii) there is no limitation for filing an application under Order XXII Rule 10 of the CPC.
20. Mention may also be made of Sardar Amarjit Singh Kalra Vs. Pramod Gupta (2003) 3 SCC272wherein it was held that the provisions contained in Order XXII CPC are devised to ensure continuation and CS(OS) No.1876/2008 Page 6 of 8 culmination in an effective adjudication and not to retard the further progress of the proceedings. The same was reiterated by a Division Bench of this Court in Yapi Kredi Bank Vs. Ashok K. Chauhan (2013) 198 DLT697(DB) in the context of Order XXII Rule 10 CPC, further holding that (i) procedural laws are meant to regulate the object of doing substantial and real justice and not to foreclose adjudication on merits; (ii) the court is mindful of the fact that even when personal right of action dies with the death of the person, other claims do not extinguish and can be continued; (iii) a creditors claim to his dues therefore does not die; and, (iv) even where abatement occurs and the limitation prescribed for setting aside the abatement under Article 120 of the Schedule to the Limitation Act expires, the creditor / claimant through the successor or the successor, as the case may be, can request the Court to condone the delay in moving an application, under Section 5 of the Limitation Act. SLP (C) No.018757-018758/2013 preferred thereagainst was dismissed on 9th May, 2013 with a clarification that if by lapse of time, right title or interest in the successor company has extinguished, such plea of limitation may be raised by the respondent in the written statement and upon such a plea being raised, the issue will be framed and tried in accordance with law. Review Petition No.1763-1764 preferred whereagainst was dismissed vide order dated 19th September, 2013.
21. In view of the dicta aforesaid of the Supreme Court and the Division Bench of this Court, I need not add anything more.
22. However, the counsel for the defendant no.1 still insists and states that in para no.11 of the order dated 20th February, 2013, there is no mention of the plaintiff who is transferor No.8. CS(OS) No.1876/2008 Page 7 of 8 23. The aforesaid contention suffers from a misreading of the order in entirety. What is recorded in para no.11 is the response to the contention of the counsel for the Regional Director (RD) recorded in para no.10 of the order. Else, it is clear that the scheme of transfer of the plaintiff No.1 to BDR Builders & Developers Pvt. Ltd. was sanctioned.
24. Resultantly, IAs No.5279/2018 and 5477/2018 of the defendant no.3 and defendant no.1 respectively are dismissed and IA No.9674/2018 of the plaintiffs is allowed and BDR Builders & Developers Pvt. Ltd. is permitted to continue the suit.
25. Amended memo of parties is taken on record.
26. List before the Joint Registrar on 6th December, 2018 for scheduling further dates for recording of evidence. RAJIV SAHAI ENDLAW, J.
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