The Delhi High Court recently held that plaintiff cannot take fresh pleas which would enlarge the scope of the suit.
Plaintiffs had filed a suit for Partition and Rendition of Accounts of the assets of the S.N. Dalmia and Sons HUF/ Defendant No. 2. The Plaintiffs and Defendant No. 1 were the members of the HUF, whereas the Karta S.N. Dalmia was the Defendant No. 3.
The Karta of the HUF was holding 15,650 shares in Durga Enterprises Pvt Ltd and the HUF was holding 2350 shares in the same company. The Petitioner alleged that Karta fraudulently transferred 2350 shares held by the HUF in his favour and thereafter, during the period from 01.10.2011 to 29.09.2012, the Karta gifted all the shares held by him i.e. 15,650 + 2350 = 18,000 in favour of his sister, the Defendant No. 6.
The Defendant No. 6 sold these shares for a consideration of Rs. 8500 per share in favour of M/s Pyramid Commodities Pvt. Ltd for a sum of Rs. 15,30,00,000/-. Thereafter, Pyramid Commodities Pvt. Ltd transferred it to third parties, namely, Shri Surender Kumar Gupta, Smt. Anita Chaudhary and Shri Vinay Kumar Chaudhary.
The Plaintiffs contended that all the shares held by the Karta were put in the HUF and were misappropriated. Upon learning the same, the Plaintiffs sought Amendment of the Plaint and Impleadment of successive transferees/ purchasers of the shares.
The Counsel for the Plaintiffs argued: -
- that all the shares that were held by Defendant Karta were also thrown in the common hotchpotch of the Defendant HUF. And therefore, the 18,000 shares in Durga Enterprises Pvt Ltd, which is an asset of the Defendant HUF has been misappropriated.
- The Plaintiffs knew that the HUF was a substantial shareholder in Durga Enterprises Pvt Ltd, but did not know the extent of shareholding.
- The exact shareholding were known after inspection of Court records in another case instituted by the Defendant No. 10 concerning the shares of Durga Enterprises Pvt Ltd.
The Counsel for the Defendant No. 2 argued: -
- that the proposed amendments are completely unrelated to the subject matter of the dispute.
- that by seeking to make amendment with respect to the shares in Durga Enterprises Pvt Ltd, the plaintiffs are trying to incorporate time barred reliefs.
- that the plaintiffs are estopped from raising this issue based on the principle of waiver, since the Plaintiff No. 4, was aware of the shareholdings since he was Defendant in the Suit in which inspection of records of shareholding was carried out.
The Delhi High Court observed that while the Plaintiffs have filed the present suit for Partition and Rendition of the assets of the defendant No. 2 HUF in 2017, the Plaintiffs by way of these amendments are trying to include shares owned by the Defendant HUF which were allegedly alienated by the Karta before the institution of the present suit i.e. from 01.10.2010 to 30.09.2011.
The Court while placing reliance on Sri Narayan Bal and Others vs. Sridhar Sutar and Others, 2 (1996) 8 SCC 54 held that though the Karta of HUF can alienate assets of the HUF for fulfilling legal necessities, the coparceners pursuant to the alienation has a right to challenge the alienation and therefore the only remedy is to challenge the same by seeking cancellation of sale of shares.
The High Court further held that the Plaintiffs cannot take fresh pleas and reliefs which would enlarge the scope of the Suit. While placing reliance on M. Revanna vs Anjanamma (Dead) by legal representatives and others, (2019) 4 SCC 332, it was held that amendments which change the fundamental character of Suit would be rejected and came to a finding that in a Suit for Partition and Possession, if relief of Declaration is sought by way of amendment, the same would be impermissible and therefore rejected.
The Court while dismissing the Application under Order VI Rule 17 and Order I Rule 10 held that: -
“20. Therefore, even if it is assumed that plaintiff Nos. 1 to 3 only recently came to know about the transfer of shares belonging to the defendant no. 2 HUF by the Karta/ defendant No. 3, the only remedy available with them is to seek cancellation of the transfer of shares. However, introducing such fresh pleas and reliefs, apropos the shares already alienated before the institution of the present case, would enlarge the scope of the suit.
21. The Apex Court in M. Revanna vs Anjanamma (Dead) by legal representatives and others , (2019) 4 SCC 332 held that applications for amendment of pleadings ought to be rejected if the amendments change the fundamental character of the suit.
22. In a suit for Partition and Possession, if a relief of Declaration is being sought by way of an amendment, such an amendment would be impermissible as it would change the nature of the suit as held in the case of Basavaraj vs Indira , (2024) 3 SCC 705.
23. Moreover, the plaintiff could only claim partition of the assets of the HUF as held on the date of institution of the suit. Therefore, the amendments to the plaint sought by plaintiff Nos. 1 to 3 cannot be permitted.”
The Defendant No. 2 and 3/ HUF and Karta of HUF were represented by Mr. Arjun Syal and Mr. Raghuveer Kapur, Advocates.
