ARUN MEHRA Vs. RAVINDER NANDA

JUDGEMENT

(1.) The present appeal is directed against the judgment and order of a Learned Single Judge, rejecting the plaint in a suit filed by the appellant (hereafter "the Plaintiff") claiming permanent injunction.

(2.) The brief facts relevant for the purpose of deciding these applications are that the plaintiffs entered into a share purchase agreement dated 19th May, 1997 to purchase 100% shares of M/s. Durga Builders from its erstwhile shareholders i.e. the defendants. The original share certificates were handed over to the plaintiffs bearing endorsements of defendants on each share certificate. They also rely on a Board Resolution dated 19th May, 1997 of the company in respect of authorities/power of attorneys given to the defendants by the company. The plaintiffs alleged that they and their group companies made substantial investments in M/s. Durga Builders (P) Ltd. to the extent of Rs.10 Crores in the form of work executed, lending and arranging finances. The shares were transferred by defendants since they were not able to run the company and the plaintiffs had taken over the company in order to secure the investments made by the plaintiffs in the company. Under the agreement of share transfer, the company was entitled to all assets described in the balance sheet as available on the date of agreement. A detail of the plots available was attached as Annexure I to the agreement which showed that there were 2408 plots, mostly smaller plots, that had been allotted to third parties, while the larger plots of the area 502 Sq.yards, 418 Sq. yards and 289 Sq. yards had not been allotted to third parties and were lying vacant. The company also owned over 6000 Sq. yards of vacant land. 55% of the land of the company was unallotted and owned by the company at the time of purchase by the plaintiffs. These lands were situated at Okhla Enclave, Faridabad. The major assets of the company were immovable properties; it did not engage itself in any other business. The agreement provided that defendants would not make any commitments or incur any liability or remove or encumber any assets without the prior approval of the plaintiffs in writing, after signing the agreement. The defendants also represented to the plaintiffs that they were not engaged in any litigation.

(3.) The plaintiffs alleged that they learnt that the defendants had created unwarranted liabilities by making illegal bookings of plots far in excess of the number available and misappropriated the sale proceeds by diverting amounts to their personal accounts.