Cochin Malabar Estates Industries Ltd. v. P.V. Abdul Khader Ahammedkoya Thangal and K. Ramankutty

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE T.R.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE B.KEMAL PASHA FRIDAY, THE 8TH DAY OF NOVEMBER 2013/17TH KARTHIKA, 1935 Co.Appeal.No. 6 of 2010 ( ) ---------------------------(C.C.NO.7/2006 IN C.P.NO.49/2004 DATED 25.11.2009) APPELLANT(S)PLAINTIFFS: -------------------------------------------------------------------- 1. P.V.ABDUL KHADER AHAMMEDKOYA THANGAL, RESIDING AT KIZHAKKOTH, VILLAGE KOZHIKODE TALUK, KOZHIKODE DISTRICT. 2. K.RAMANKUTTY, AGED 63, S/O.CHATHUKUTTY, KLARIYIL HOUSE, KINALUR AMSOM, MUNDAKARA DESOM QUILANDY TALUK, KOZHIKODE DISTRICT. BY ADVS.SRI.O.RAMACHANDRAN NAMBIAR SRI.R.SREEHARI RESPONDENT(S)/DEFENDANTS: -------------------------------------------------- 1. THE COCHIN MALABAR ESTATES INDUSTRIES LTD, MALABAR HOUSE, 56 BRISTOW ROAD, WILLINGTON ISLAND, COCHIN REP.BY ITS CHAIRMAN, AND MANAGING DIRECATOR. 2. JIMMY J. GARDAR, CHAIRMAN AND MANAGING DIRECTOR, COCHIN MALABAR ESTATES AND INDUSTRIES LTD. MALABAR HOUSE, 56, BRISTOW ROAD, WILLINGTON ISLAND, COCHIN-682 003. (DELETED) 3. RAJENDRA KANTILAL DALAI, DIRECTOR, COCHIN MALABAR ESTATES AND INDUSTRIES LTD. DO. (DELETED) 4. P.K.C. AHAMMEDKUTTY, AGED 60, PARAKANDY UNNIKULAM P.O., UNNIKULAM AMSOM DESOM, KOILANDY TALUK, KOZHIKODE DIST. 5. THE MANAGER, FEDERAL BANK LTD., NORTH BRANCH, BANERJI ROAD, ERNAKULAM. - ADDL.R6: A. KESAVANUNNI, S/O. GOPALAN NAIR, AGED 66 YEARS, KAMBARATH HOUSE, VATTADA P.O., KOLLANGODE, PALAKKAD. ADDL.R7: JOLLYKUTTY VARGHESE, S/O. KURIAKOSE, KAILATH HOUSE, PULLIANGIMEDU, THAMARASSERY, KOZHIKODE. ADDL.R8: KERALA STATE ESTATE AND PLANTATION WORKERS UNION, KINALUR REPRESENTED BY THE PRESIDENT THANKAPPAN M.K. ADDL.R9:KADEESA, AGED 84 YEARS, MOTHER OF P.K.C. AHAMMEDKUTTY, PARAKANDY, UNNIKULAM P.O., UNNIKULAM AMSOM DESOM, KOYILANDY TALUK, KOZHIKODE DISTRICT, REPRESENTED BY POWER OF ATTORNEY HOLDER ANWAR, S/O. P.K.C. AHAMMEDKUTTY, DO. ADDL.R9: PATHUMMA, AGED 50 YEARS, W/O. P.K.C. AHAMMEDKUTTY, DO. REPRESENTED BY POWER OF ATTORNEY HOLDER ANWAR, DO. DO. ADDL.R10-HARIS, AED 35 YEARS, S/O. P.K.C. AHAMMEDKUTTY, DO. DO. ADDL.R11- ARIF, AGED 34 YEARS, DO. DO. ADDL. R12- ANAS, AGED 30, DO. DO. REPRESENTED BY POWER OF ATTORNEY HOLDER ANWAR, DO. DO. ADDL.R13- NASIYA, AGED 28 YEARS, D/O.P.K.C. AHAMMEDKUTTY, DO. DO. REPRESENTED BY DO. DO. ADDL.R14_ ANWAR, AGED 26 YEARS, S/O. P.K.C. AHAMMEDKUTTY, DO. DO. R1, BY ADV. SRI.DEVAN RAMACHANDRAN R, BY ADV. SRI.K.M.ANEESH R, BY ADV. SRI.SANTHOSH KUMAR.K ADDL.R7 BY ADV. SRI.LAL GEORGE R4 & ADDL R9 TO 14 BY ADV. SRI.P.K.SURESH KUMAR (SR.) R,R5 BY ADV. SRI.GEORGE VARGHESE (MANACHIRACKEL) R,R5 BY ADV. SRI.P.R.MILTON ADDL.R6 BY ADV. SRI.K.RAJESH SUKUMARAN ADDL.R8 BY ADV. DR.K.P.SATHEESAN (SR.) ADV. SRI.M.R.JAYAPRASAD BY ADV. SRI.P.MOHANDAS (ERNAKULAM) BY ADV. SRI.ANOOP.V.NAIR (R2 & R3 DELETED FROM THE PARTY ARRAY AS PER ORDER DT. 19/1/2011) (ADDL.R6 IMPLEADED AS PER ORDER IN IA 3327/2010 DT.19.1.2011 ADDL R7 IMPLEADED AS PER ORDER IN IA 1128/2010 DT.8/11/2013 ADDL.R8 IMPLEADED AS PER ORDER IN IA 2154/2013 DT.8/11/2013 ADDL. R9 TO 14 IMPLEADED AS PER ORDER IN IA 2337/2013 DT.8/11/2013) THIS COMPANY APPEAL HAVING BEEN FINALLY HEARD ON 05-11-2013, THE COURT ON 8/11/2013 DELIVERED THE FOLLOWING: ## **T.R.RAMACHANDRAN NAIR & B. KEMAL PASHA, JJ.** **- - - - - - - - - - - - - - - - - - - - - - - - - -** ## **COMPANY APPEAL No. 6 of 2010** **- - - - - - - - - - - - - - - - - - - - - - - - - -** ## **DATED THIS THE 8TH DAY OF NOVEMBER, 2013** ## **JUDGMENT** ## Ramachandran Nair, J. The appellants are the plaintiffs in C.S No.7/2006 which was disposed of by a learned Single Judge by the impugned judgment. Originally they filed a suit before the Sub Court, Kozhikode as O.S. No.131/2005 which was withdrawn to this Court to be tried along with C.P.No.49/2004 and other connected cases. The learned Single Judge, by the impugned judgment dismissed the suit. 2. We heard learned counsel for the appellants Shri O.Ramachandran Nambiar, Shri Devan Ramachandran learned counsel appearing for the first respondent Company, Shri P.K. Suresh Kumar, learned Senior Counsel appearing for the additional respondents impleaded as per order in I.A.No.2337/2013 and learned counsel Shri P.B. Krishnan, appearing for one of the respondents. 3. The copy of the plaint has been produced as Annexure A5. The following are the reliefs sought for in the suit: Co.A.No.6/2010 -2- “(a) holding and declaring that the defendants 1 to 3 have no authority under law in the light of the order passed by the Debts Recovery Tribunal, Ernakulam (Kerala & Lakshadweep) dated 12.5.2004 in I.A. No.1464 of 2003 in O.A. No.167/2000 to sell in part or as a whole the 'A' and 'B' schedule properties; (b) restraining the defendants 1 to 3 by a consequential perpetual prohibitory injunction from selling or otherwise alienating the 'A' and 'B' schedule properties in part or as a whole; (c) restraining the defendants 1 to 4, their men and agents by a perpetual prohibitory injunction from cutting down rubber trees, committing acts of wastes and inducting strangers into portions of 'A' and 'B' schedule properties and the buildings and houses situated therein; (d) directing the defendants to pay the plaintiffs an amount of Rs.1,00,000/- towards loss and damages; (e) directing the defendants to pay the plaintiffs the costs of this suit; and f) granting the plaintiffs such other relief that this Hon'ble Court Co.A.No.6/2010 -3- deems fit to grant in the circumstances of the case.” 4. The first respondent Company owns extensive properties and estates in Kerala and Karnataka. The plaintiffs are shareholders of the Company (50 shares each) which is a public limited company. The Company, it appears, was indebted to various financial institutions and the Federal Bank instituted O.A. No.167/2000 before the Debts Recovery Tribunal, Ernakulam. To discharge certain liabilities including that of the Federal Bank, the general body of the Company in a meeting convened on 7.12.2001 granted sanction to the Board of Directors to initiate steps for sale of immovable properties. A public notice was issued on 2.4.2002 calling upon prospective bidders to opt for a sale of an item of property belonging to the Company which is commonly known as Kinaloor Estate, measuring 987.27 hectares. It is at that stage proceedings were initially attempted by certain parties including one of the appellants herein who filed C.P.No.22/2002 seeking winding up of the Company. Finally the matter was considered by a Division Bench of this Court in M.F.A. No.1160/2002 which was disposed of on 13.2.2003 and the judgment is reported as **The** Co.A.No.6/2010 -4- **Cochin Malabar Estates and Ind. Ltd. & Another v. P.V. Abdul Khader** (2003 (2) KLJ 1). One Shri P.K.C. Ahammedkutty who was the fourth defendant in the suit, submitted his bid for purchase of the property which the Company offered for sale and an MOU was executed, a copy of which is produced as Annexure A1 along with the appeal. The Company had filed an application before the Company Law Board for proceeding with the sale of the property which was sanctioned as per Annexure A2 order passed by the Company Law Board dated 7.11.2003. Permission was granted subject to the Company obtaining approval of the Debts Recovery Tribunal for implementing the decision taken by the Board of Directors dated 7.9.2002. 5. Shri O. Ramachandran Nambiar, learned counsel for the appellants submitted that the learned Single Judge went wrong in dismissing the suit. It is submitted that the original fourth defendant (since died) did not deposit the amount in time and an application filed for extending the time was dismissed by the Debts Recovery Tribunal, as evident from Annexure A6 order. After noticing the same, the learned Single Judge took the view that as satisfaction has been recorded and the Co.A.No.6/2010 -5- debts have been discharged in O.A. No.167/2000, the interim order will not survive. It is submitted that if at all the Company wants to sell the property, they ought to have obtained permission from the Company Law Board. It is submitted that attempts have been made to induct strangers who are sub purchasers from the original fourth defendant and his legal representatives. It is therefore submitted that even though O.A. No.167/2000 has been disposed of recording satisfaction, prayer No.(c) in the suit will survive. 6. Shri Devan Ramachandran, learned counsel appearing for the Company, learned Senior Counsel Shri P.K. Suresh Kumar, appearing for the additional respondents who are the legal representatives of the deceased fourth respondent and Shri P.B. Krishnan submitted that no relief can be granted in this appeal, as the suit was rightly dismissed by the learned Single Judge. It is submitted that the cause of action shown in the plaint, as evident from paragraph 4, is the order passed by the Debts Recovery Tribunal dated 12.5.2004 (Annexure A6) which we have already noted. As the said Original Application no longer survives and the Company has already paid off the debt to the Federal Bank and the entire liabilities have Co.A.No.6/2010 -6- been discharged, the cause of action as far as the appellants herein are concerned, has ceased to exist. Therefore, none of the reliefs sought are relevant, which is the view taken by the learned Single Judge, which cannot be said to be wrong on any premise. Learned Senior Counsel Shri P.K. Suresh Kumar further submitted that the appellants being only individual shareholders, they cannot raise any objection against the decision of the general body, which legal point has already been found against them by a Division Bench of this Court in the earlier round of litigation in the reported decision in **The Cochin Malabar Estates and Ind. Ltd.'s case** (2003 (2) KLJ 1). On that score also it is submitted that the appeal is liable to be dismissed. Shri Devan Ramachandran also submitted that nothing is pending before the Company Law Board now. Therefore, there is no question of the Company seeking any permission for the transaction. It is submitted that the general body of the Company has again taken a resolution and the transactions later on have been undertaken based on the said resolution and as empowered by it and that no relief can be sought for in this suit. Shri P.B. Krishnan pointed out that since in O.A. No.167/2000 Co.A.No.6/2010 -7- satisfaction has been recorded, there is no violation of any of the steps taken by the Company to sell the properties, which is approved by a General Body of the Company. There is no statutory violation also in the matter. 7. It is pointed out by the learned counsel for the appellants that the appellants have sought for amendment of the plaint as I.A. NO.2801/2013. 8. We have considered the rival contentions. It is clear that the Company had incurred certain debts which led to the decision of the general body initially, authorising the Board of Directors to sell certain items of properties. The suit filed by the appellants herein, viz. O.S.No.131/2005 is stated to be one filed after the judgment of this Court in **The Cochin Malabar Estates and Ind. Ltd.'s case (** 2003 (2) KLJ 1). The averments in the plaint will show that they have been banking upon the order passed by the Company Law Board and the pendency of O.A. No.167/2000 before the Debts Recovery Tribunal to sustain the prayers sought for in the suit. We have already mentioned about the cause of action described in para 4 of the plaint which is solely based on the order of the Debts Recovery Tribunal produced as Annexure A6 herein. Co.A.No.6/2010 -8- 9. The learned Single Judge, by the impugned judgment, was of the view that the order passed by the Debts Recovery Tribunal including the interim orders were in relation to the proceedings pending before it as instituted by the Federal Bank against the first defendant Company. Ext.B1 marked in the suit will show that the Federal Bank has certified that the first defendant has fully settled all the outstanding liabilities under O.A. No.167/2000 and there is no outstanding dues in the name of the Company and the Bank has no objection in the charges created by the Company being released also. Ext.B2 produced is the copy of the memorandum of satisfaction of the mortgage issued for the Registrar of Companies of Kerala and Lakshadweep. Ext.B3 is the copy of the order dated 21.11.2008 of the Debts Recovery Tribunal in I.A. No.1640/2008 by which it was proved that full satisfaction has been recorded by the Presiding Officer of the Debts Recovery Tribunal and the title deeds have been directed to be returned. Therefore, the learned Single Judge was of the view that the order of the Tribunal relied upon by the plaintiffs as the cause of action for the suit, no more survives. Co.A.No.6/2010 -9- 10. Then, an argument was raised that Ext.A3 order dated 12.5.2004 (Annexure A6 produced herein) again will come to the rescue of the plaintiffs/appellants. By the said order, the Debts Recovery Tribunal refused permission to conduct sale of the estate to the bidder, as the time for deposit was over. While considering the said arguments, the learned Single Judge was of the view that the said order was only in relation to the enforcement of the recovery certificate that related to O.A. No.167/2000 and when the recovery certificate issued in O.A. No.167/2000 is discharged, all interlocutory orders in the form of interdictions against the defendants or their properties will get released and discharged and no interlocutory order will survive. Accordingly, the said contention was also rejected and the suit was dismissed. 11. Of course, learned counsel for the appellants submitted that as far as relief No.1 is concerned, it may not survive now since satisfaction has been recorded in O.A.No.167/2000. But it is submitted that relief No.3 and 4 will survive. As far as relief No.2 is concerned, it is only a consequential injunction that is sought. Co.A.No.6/2010 -10- 12. As we have already noted, the suit was filed relying upon the interlocutory order passed by the Debts Recovery Tribunal. The scenario changed subsequently, as the Company had paid off the debts to the Federal Bank and satisfaction has been recorded. In that view of the matter, according to us, the appellants cannot be heard to say that the Company cannot proceed to sell the properties, for the assumed violation of the order passed by the Company Law Board and by the Debts Recovery Tribunal. As far as the order passed by the Company Law Board as per Annexure A2 is concerned, the Company was permitted to implement the decision taken by the Board of Directors on 7.9.2002, subject to the approval of the Debts Recovery Tribunal. Therefore, as the Original Application before the Debts Recovery Tribunal has attained a finality, we are of the view that the appellants cannot advance their contention based on the order passed by the Company Law Board as per Annexure A2 or Annexure A6 interim order passed by the Debts Recovery Tribunal. The learned Single Judge was right in holding the view that as Exts.B1 to B3 will prove that the liabilities towards the Federal Bank has been fully settled and the mortgages have Co.A.No.6/2010 -11- been released and as title deeds have been directed to be returned after recording full satisfaction, the cause of action for the suit does not survive. It was rightly found that the interim order Ext. A3 dated 12.5.2004 will no longer survive as the recovery certificate issued in O.A. No.167/2000 stands discharged. 13. In that view of the matter, we find no reason to interfere with the judgment of the learned Single Judge. 14. In the application for amendment of the plaint filed as I.A.No.2801/2013 various subsequent events have been made mention of and the execution of a memorandum of understanding afresh dated 16.2.2005 for sale of Kinalur Estate is also made mention of. A new relief is also sought to be added by way of permanent prohibitory injunction from selling or alienating plaint A and B schedule properties in part or as a whole. As rightly pointed out by the learned counsel for the Company, since the plaintiffs cannot maintain the suit based on the original cause of action as the proceedings before the Debts Recovery Tribunal are already over, the amendment sought for also cannot be allowed. Shri Devan Co.A.No.6/2010 -12- Ramachandran further submitted that the decision afresh taken to execute the MOU was after a proper decision of the general body which is binding on the appellants also and there is no illegality in that regard. We are of the view that the learned counsel is right in making the said submissions. Therefore, we do not find any reason to allow the amendment of the plaint as sought for in I.A. No.2801/2013 and the said application is dismissed. Consequently, I.A. No.2811/2013 to amend the appeal will also stand dismissed. For all these reasons, we dismiss the Appeal. No costs. ## **(T.R.RAMACHANDRAN NAIR, JUDGE)** ## **(B. KEMAL PASHA, JUDGE)** **kav/**