Mat Appeal Nos. 231 and 290 of 2016, High Court of Kerala at Ernakulam

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE ANIL K.NARENDRAN** **&** **THE HONOURABLE MR.JUSTICE P.G. AJITHKUMAR** **WEDNESDAY, THE 24[TH] DAY OF MAY 2023 / 3RD JYAISHTA, 1945 MAT.APPEAL NO. 231 OF 2016** **AGAINST THE JUDGMENT DT.28.05.2015 PASSED IN O.P.NO.1421 OF 2010 OF THE FAMILY COURT,ERNAKULAM** **APPELLANT/RESPONDENT NO.1:** **JAICKES JACOB S/O.JACOB M.I, MALAYIL HOUSE, 30/378 A, PATTAMCHERRY ROAD, POONITHURA P O, ERNAKULAM 682038** **BY ADV. SHRI.NASEER MOIDU** ## **RESPONDENT/PETITIONER AND RESPONDENTS NO.2 & 3:** - **1 TEENA D/O.BENNY PALAL, PALAL HOUSE, CHITTETHUKKARA, KAKKANAD, ERNAKULAM DISTRICT, PIN 682030** - **2 JACOB M I MALAYIL HOUSE, 30/378A, PATTAMCHERRY ROAD, POONITHURA P O, ERNAKULAM 682038.(DIED)** - **3 SUNFAB TECHNO DESIGNS (P) LTD HAVING ITS REGISTERED OFFICE PLOT NO 85/XXXIII, MAJOR INDUSTRIAL ESTATE, SOUTH KALAMASSERY, ERNAKULAM, REP BY MANAGING DIRECTOR** - **4 ADDL. R4. DENNIS JACOB, AGED 53 YEARS, S/O.JACOB.M.I., MALAYIL HOUSE, 30/378 A, POTTAMCHERRY ROAD, POONITHURA.P.O.,** 2 Mat Appeal Nos. 231 and 290 of 2016 ## **ERNAKULAM - 682038.** **5 ADDL.R5 THANKACHI JACOB AGED 72 YEARS, W/O.LATE JACOB.M.I., MALAYIL HOUSE, 30/376 A, POTTAMCHERRY ROAD, POONITHURA.P.O., ERNAKULAM - 682038. ADDL R4 AND R5 ARE IMPLEADED AS THE LR'S OF DECEASED R2 AS PER ORDER DATED 22/2/2022 VIDE I.A.NO.1 OF 22.** **BY ADVS. SRI.BOBY MATHEW SRI.BINOY DAVIS SRI.BINOY DAVIS K.PAUL KURIAKOSE SRI.REJI GEORGE SMT.K.MEERA ELDO KURIAKOSE K.A.ANISH T.A.RAFEEK (CHERTHALA) K.HABEEBULLA** **THIS MATRIMONIAL APPEAL HAVING COME UP FOR FINAL HEARING ON 08.03.2023, ALONG WITH Mat.Appeal.290/2016, THE COURT ON 24.05.2023 DELIVERED THE FOLLOWING:** 3 Mat Appeal Nos. 231 and 290 of 2016 ## **IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT** **THE HONOURABLE MR. JUSTICE ANIL K.NARENDRAN** **&** **THE HONOURABLE MR.JUSTICE P.G. AJITHKUMAR** **WEDNESDAY, THE 24[TH] DAY OF MAY 2023 / 3RD JYAISHTA, 1945 MAT.APPEAL NO. 290 OF 2016** **AGAINST THE JUDGMENT DT.28.05.2015 PASSED IN O.P.NO. 1421 OF 2010 ON THE FILE OF THE FAMILY COURT,ERNAKULAM APPELLANT/RESPONDENT NO.2:** - **1 JACOB M.I(DIED)* MALAYIL HOUSE, 30/378 A, PATTAMCHERRY ROAD, POONITHURA P.O., ERNAKULAM-682038.** - ***ADDL.APPELLANTS IMPLEADED** - **2* ADDL.A2.DENNIS JACOB S/O.JACOB M.J, MALAYIL HOUSE, 30/378A, PATTAMCHERRY ROAD, POONITHURA P.O., ERNAKULAM- 682038** - **3* ADDL.A3.THANKACHI JACOB W/O.LATE JACOB M.I, MALAYIL HOUSE, 30/378A, PATTAMCHERRY ROAD, POONITHURA P.O., ERNAKULAM – 682038** ***ARE IMPLEADED AS ADDL.APPELLANTS 2 AND 3 AS PER ORDER DATED 22.02.2022 IN I.A.NO.1 OF 2022 IN MAT.APPEAL NO.290 OF 2016.** **BY ADVS. SRI.REJI GEORGE K.PAUL KURIAKOSE SRI.BINOY DAVIS SMT.SIJI JOY** 4 Mat Appeal Nos. 231 and 290 of 2016 ## **ELDO KURIAKOSE** **K.A.ANISH** **T.A.RAFEEK (CHERTHALA)** - **K.HABEEBULLA** ## **RESPONDENTS/PETITIONER AND RESPONDENT NOS.1 & 3:** - **1 TEENA D/O.BENNY PALAL, PALAL HOUSE, CHITTETHUKKARA, KAKKANAD, ERNAKULAM DISTRICT, PIN 682030.** - **2 JAICKES JACOB S/O.JACOB M.I., MALAYIL HOUSE, 30/378 A, PATTAMCHERRY ROAD, POONITHURA P.O., ERNAKULAM-682038.** - **3 M/S.SUNFAB TECHNO DESIGNS PVT.LTD. PLOT NO.85, XXXIII, MAJOR INDUSTRIAL ESTATE, SOUTH KALAMASSERY, ERNAKULAM, PIN 683104, REPRESENTED BY ITS MANAGING DIRECTOR.** **BY ADVS.** - **K. MEERA (NO MEMO) SRI.A.M.NASEER K. MEERA NO MEMO SHRI.NASEER MOIDU** **THIS MATRIMONIAL APPEAL HAVING COME UP FOR FINAL HEARING ON 08.03.2023, ALONG WITH Mat.Appeal.231 OF 2016, THE COURT ON 24.05.2023 DELIVERED THE FOLLOWING:** 5 Mat Appeal Nos. 231 and 290 of 2016 ## **J U D G M E N T** ## P.G.Ajithkumar, J. O.P.No.1421 of 2010 was filed before the Family Court, Ernakulam by the 1[st] respondent in these appeals. She sought a decree of realisation of Rs.55,88,000/- from the respondents in O.P.No.1421 of 2010. That original petition was decreed allowing her to realise an amount of Rs.46,63,000/- along with interest at the rate of 6% per annum. The husband and the father in law who were respondent Nos.1 and 2 respectively in the original petition and their assets were held liable. The husband filed Mat. Appeal No.231 of 2016 and father in law filed Mat. Appeal No.290 of 2016 both under Section 19(1) of the Family Courts Act, 1984, challenging correctness and legality of the said decree. 2. The appellant in Mat. Appeal No.290 of 2016 expired and therefore his legal representatives came on record as additional appellants No. 2 and 3. The 3[rd] respondent in the appeals is a Private Limited Company to 6 Mat Appeal Nos. 231 and 290 of 2016 which husband and father in law were said to be the Directors. 3. There was delay in filing both these appeals. As per the order dated 26.06.2018, the delay was condoned. The appeals were admitted. Matter was referred for mediation, but the attempt for a settlement was unsuccessful. 4. Heard the learned counsel appearing for the appellants and the learned counsel appearing for the 1[st] respondent. 5. For convenience, the parties are referred to as per their ranks in the original petition. Marriage between the petitioner and the 1[st] respondent was solemnised on 18.04.2004. A girl child was borne on 29.04.2006. Their marriage was dissolved as per the judgment dated 30.11.2009 of the Family Court, Ernakulam in O.P.No.226 of 2009. 6. The petitioner filed the original petition with the following contentions: At the time of marriage, the 1[st] respondent had 7 Mat Appeal Nos. 231 and 290 of 2016 employment. Later, he resigned from that job and started business. Eventually, he and the 2[nd] respondent as Directors incorporated the 3[rd] respondent company. From 10 lakhs paid to the petitioner by her father at the time of marriage, the respondent withdrew Rs.2,00,000/- on the pretext of purchasing household articles. From that, he misappropriated Rs.1,75,000/-. Later, Rs.2,38,000/- was withdrawn from that account and the 1[st] respondent started a business of mobile sim cards. The balance amount in that account was also withdrawn by the 1[st] respondent stating that he wanted to start a new venture of manufacturing telephone cabins. While the petitioner was pregnant, the 1[st] respondent compelled her to mortgage her property, which she obtained by virtue of document No.1261 of 2005, with the bank for availing a loan of Rs.25,00,000/-. The loan amount was later enhanced for which also she was made to sign papers at the Bank. An amount of Rs.42,00,000/- fell due in that account. Father of the petitioner paid that amount by way of two cheques and the property was redeemed. Again, an amount of Rs.7.5 lakhs 8 Mat Appeal Nos. 231 and 290 of 2016 was paid to the 1[st] respondent in order to enable him to perform a contract with VSNL Ltd. The 1[st] respondent pledged a few gold ornaments of the petitioner and in order to redeem the ornaments, an amount of Rs.1,50,000/- was paid to the 1[st] respondent. None of the said amounts was returned by the 1[st] or 2[nd] respondent. Therefore the petitioner filed the original petition claiming a decree for realisation of Rs.55,88,000/from respondents No. 1 and 2. Besides, an amount Rs.10 lakhs towards permanent alimony and Rs.25,000/- towards litigation expenses were claimed by the petitioner from the 1[st] respondent. 7. The 1[st] respondent filed a written statement denying all the averments and contentions in the original petition. Allegations regarding receipt and appropriation of various amounts are denied by the 1[st] respondent. It was contended that Rs.42,00,000/- was advanced to the 3[rd] respondent company to which the petitioner and her father are also Directors. The said payment has no connection with the matrimonial relationship. Therefore, the Family Court has 9 Mat Appeal Nos. 231 and 290 of 2016 no jurisdiction to entertain the petition. The said payment to the 3[rd] respondent company was made by issuing cheques dated 04.04.2007 and 20.04.2007. Since the original petition was filed on 10.08.2010, it is barred by the law of limitation. Accordingly, the 1[st] respondent sought to dismiss the original petition. 8. The 2[nd] respondent also filed a written statement refuting various averments and allegations levelled against him in the original petition. Similar contentions as that of the 1[st] respondent were set forth by the 2[nd] respondent and the original petition was sought to be dismissed. 9. Petitioner was examined as PW1 and the 1[st] respondent was examined as RW1 before the Family Court. Exts.A1 to A7 and B1 to B4 were received in evidence. After considering the said evidence, the Family Court concluded that the petitioner was entitled to realise an amount of Rs.46.63 lakhs together with interest at the rate of 6% per annum from respondents 1 and 2 and their assets. Towards permanent alimony, Rs.5,00,000/- and towards litigation 10 Mat Appeal Nos. 231 and 290 of 2016 expenses, Rs.10,000/- were directed to be paid by the 1[st] respondent. 10. Respondent Nos.1 and 2 assail the judgment and decree in O.P.Nos.1421 of 2010 in the respective appeals on similar grounds. As regards the permanent alimony and the litigation expenses, there is no challenge. They seriously challenge that part of the decree which directs respondent Nos.1 and 2, the appellants, to pay an amount of Rs.46.63 lakhs to the petitioner. Their categoric contention is that Rs.42.50 lakhs was paid by the father of the petitioner to the 3[rd] respondent Company and therefore they have no obligation to pay the said amount back. It is their specific contention that the said payment has no connection with the matrimonial relationship between the petitioner and the 1[st] respondent and therefore the Family Court does not have jurisdiction to adjudicate that dispute. 11. The decree amount constitutes other two sums, namely 1.75 lakhs and 2.38 lakhs. Rs.1.75 lakhs is the 11 Mat Appeal Nos. 231 and 290 of 2016 amount allegedly misappropriated by the 1[st] respondent from Rs.2 lakhs withdrawn by him from the account of the petitioner. The other amount of Rs.2.38 lakhs was also alleged to have been withdrawn from the petitioner’s account and misappropriated by the 1[st] respondent. He however denied appropriation of the said amounts. His definite contention is that amounts were withdrawn by the petitioner herself and he is not liable to pay those amounts. 12. Two legal contentions set forth by respondent Nos.1 and 2 are that payment of Rs.42.50 lakhs was made to the 3[rd] respondent Company and therefore the Family Court did not have jurisdiction to consider the said dispute. Their second contention is that the said payment does not come within the purview of Section 10 of the Limitation Act, 1963 and O.P. No.1421 of 2010 having been filed beyond the period of three years after the date of payment, the claim is barred by the law of Limitation. The Family Court considered the aforesaid contentions in great detail. After appreciating the oral and documentary evidence the Family Court took the 12 Mat Appeal Nos. 231 and 290 of 2016 view that the payments by way of two cheques dated 04.04.2007 and 20.04.2007 to the 1[st] and 2[nd] respondents in consideration of the marriage. It was accordingly held by the Family Court that O.P.No.1421 of 2010 was a proceedings coming under Section 7(1) of the Family courts Act and the claim for return of the said amount of Rs.42.5 lakhs was not barred by limitation owing to the provisions of Section 10 of the Limitation Act. 13. The learned counsel appearing for the respective appellants would submit that going by the admitted case of the petitioner, Rs.42.50 lakhs was paid to the 3[rd] respondent Company and the same was remitted in the bank in order to repay the loan amount availed by the 3[rd] respondent Company. That sufficiently indicates that the payment was not to the husband or father in law and therefore, they have no obligation to repay the said amount. It is further submitted that besides respondents 1 and 2, the petitioner and his father were also Directors of the 3[rd] respondent Company and as such the said payment tantamount payments to the 13 Mat Appeal Nos. 231 and 290 of 2016 Company only and respondents No. 1 and 2 personally cannot be held liable. The learned counsel appearing for the appellants in Mat. Appeal No.290 of 2016 placed reliance in this regard on the decisions in **Sruthi Rajagopal A. v M.G.University, Kottayam and another [2014(3)KLJ 843]** ; **Nishad Patel v. State of Kerala [1998 (2) KLT 793]** and **Arcelormittal India Private Limited [2019(2) SCC (1)].** The learned counsel attempted with the aid of the said decisions to fortify his contention that there has not been sufficient materials to lift the corporate veil and cast liability on respondents No. 1 and 2 for repayment of Rs.42.50 lakhs. 14. The principle of law laid down in the aforesaid decisions is that the doctrine of “piercing the corporate veil” stands as an exception to the principle that a company is a legal entity separate and distinct from its shareholders with its own legal rights and obligations. It seeks to disregard the separate personality of the Company and attribute the acts of the company to those who are allegedly in direct control of its operation. It was held that generally and broadly speaking, 14 Mat Appeal Nos. 231 and 290 of 2016 the corporate veil may be lifted where a statute itself contemplates lifting the veil, or fraud or improper conduct is intended to be prevented, or a taxing statute or a beneficent statute is sought to be evaded or where associated companies are inextricably connected as to be in reality part of one concern. 15. Before deciding the question of lifting of the corporate veil it requires consideration whether the transaction in question was relating to the company. Here, the definite case of the petitioner is that Rs.42.5 lakhs was paid to the 1[st] respondent. The purpose for such payment is stated to be redemption of petitioner's immovable property mortgaged for availing a loan by the 3[rd] respondent-company. The fact that the said amount was paid to the bank and the petitioner's property was redeemed is not in dispute. Therefore the question is, whether the payment was to the 3[rd] respondentcompany by the petitioner in her capacity as a Director or whether it was a payment to the 1[st] respondent by the petitioner or on her behalf in consideration of their marriage. 15 Mat Appeal Nos. 231 and 290 of 2016 16. The petitioner as PW1 deposed that believing the words of her husband, she went to the bank and signed papers, and only later on she realised that her property was mortgaged and an amount of Rs.25 lakhs was availed as loan. The loan limit was later increased for which also the petitioner was made to sign papers. Indisputably, the said loan liability was discharged by the petitioner making payment of Rs.42.50 lakhs and the property was redeemed. It is averred in the written statement and deposed as RW1 in court by the 1[st] respondent that as a consequence of redeeming the mortgage, the 3[rd] respondent could no longer enjoy the loan facility and therefore the business of the 3[rd] respondent could not be taken forward. 17. The learned counsel appearing for the appellants highlighted that PW1 admitted during her cross examination in Court that she as well as her father were also directors of the 3[rd] respondent Company. She however, stated that such a document was manipulated after the payment. Ext.B1 would show that shares of the Company were allotted to the 16 Mat Appeal Nos. 231 and 290 of 2016 petitioner and her father. Ext.B1 is dated 30.04.2007 which was much after making payment of Rs.42.50 lakhs. The payments were on 04.04.2007 and 20.04.2007. There is no other evidence to show that the petitioner and her father were made Directors of the 3[rd] respondent Company before such payments. If so, the contention of the petitioner that the said amount was paid not in the capacity of a director of the company, but in her personal capacity to her husband, the 1[st] respondent and father in law, the 2[nd] respondent can only be said to be correct. Therefore, the said transaction can have no connection with the business activities of the 3[rd] respondent Company in spite of the fact that the said amount was utilised to discharge the liability of the company. By making such a payment, petitioner’s property was redeemed and it was eventually sold by her. Therefore the consideration for making such payment was not to salvage the 3[rd] respondent Company, but to get the petitioner's property released from encumbrance. The said aspect together with the version of PW1 that believing the words of her husband she had signed 17 Mat Appeal Nos. 231 and 290 of 2016 papers in the bank which turned out to be the papers relating to creation of mortgage would establish that the payment of the said amount was in consideration of the marriage. 18. In such circumstances, the finding of the Family Court that the claim for recovery of Rs.42.50 lakhs was a dispute comes within the purview of Section 7(1) of the Family Courts Act is legally and factually correct. We find no reason to interfere with the said finding. ## 19. In **Royson Mathew v. Minimol K and others** **[2020 (3) KHC 307]** , this Court held that there may be several transactions between the spouses during the subsistence of their marriage and the wife cannot claim recovery of all such amounts unless it is specifically pleaded and proved that such amounts were misappropriated by the husband. There shall also be pleading and proof that such amounts were entrusted with the husband and the same was misappropriated by him. The said principle of law was reiterated by this Court in **Abubakker Labba and another** 18 Mat Appeal Nos. 231 and 290 of 2016 ## **v. Shameena K.B and another [2018 (3) KHC 219].** 20. The evidence let in by the petitioner through her oral testimony and Exts.A1, A1(a) which are account details of her father would show that Rs.2 lakhs and Rs.2.38 lakhs were withdrawn from the account. But the evidence is scanty to show that such withdrawals were by the 1[st] respondent. The oral testimony of PW1 alone is not enough to prove that Rs.1.75 lakhs and Rs.2.38 lakhs were entrusted with the 1[st] respondent and such amounts were misappropriated by him. It is especially so since the 1[st] respondent as RW1 categorically denied receipt and appropriation of the said amounts. In the light of the said rival oral versions, a positive finding that such amounts were in fact appropriated by the 1[st] respondent is not possible unless there is independent evidence. In the absence of any such evidence, we are of the view that finding of the Family Court that the petitioner is entitled to realise Rs.1.75 and Rs.2.38 lakhs from the 1[st] respondent is not based on any reliable evidence. In the light of the law laid down in **Royson Mathew** and **Abubakker** 19 Mat Appeal Nos. 231 and 290 of 2016 **Labba** (supra), the decree allowing the petitioner to realise the aforesaid amounts of Rs.1.75 lakhs and Rs.2.38 lakhs is liable to be reversed. 21. As mentioned hereinbefore, the petitioner has succeeded in proving that respondents No.1 and 2 are liable to pay Rs.42.50 lakhs to the petitioner. The claim under the said head in the original petition is only Rs.42 lakhs. Although the evidence proved that the amount actually paid is Rs.42.5 lakhs by way of two cheques dated 04.04.2007 and 20.04.2007, a decree beyond the relief claimed cannot be granted. Therefore the said part of the decree is modified and the petitioner in O.P. No.1421 of 2010 is allowed to realise an amount of Rs.42 lakhs from respondents No.1 and 2 and their assets. The appeal is therefore partly allowed and the decree of the Family Court is modified as follows: The petitioner in O.P. No.1421 of 2010 is allowed to realise an amount of Rs.42 lakhs along with interest at the 20 Mat Appeal Nos. 231 and 290 of 2016 rate of 6% per annum from the date of filing of the original petition till realisation from respondents No.1 and 2 (appellants in Mat.Appeal Nos.231 of 2016 and 290 of 2016) and their assets. Liability of the appellants in Mat.Appeal No.290 of 2016 is to the extent they inherited property from the deceased 1[st] appellant. Sd/- ## **ANIL K. NARENDRAN, JUDGE** Sd/- **P.G. AJITHKUMAR, JUDGE** PV