Veena Solanki & Ors Vs Karuna Singh & Ors (Delhi High Court)
The Delhi High Court dismissed an appeal under Section 43 Rule 1 CPC challenging the Trial Court’s order under Order XXXIX Rule 2A read with Section 151 CPC. The dispute concerned the shareholding and management of M/s Moral Properties (Pvt.) Ltd., in which an interim order dated 29.11.2005 restrained the defendants from selling, alienating, mortgaging, creating third-party interest or parting with possession of the company’s movable and immovable properties. During the subsistence of that order, the company’s Board resolved on 28.06.2017 to allot 964 fresh equity shares, increasing issued shares from 36 to 1,000 and introducing two new shareholders. The Trial Court found that the allotment altered the existing shareholding structure and created third-party rights, directing restoration of the shareholding position existing on 28.11.2005.
The appellants argued that shares were shareholders’ property rather than company assets and that the allotment did not transfer company property or alter effective control. The High Court distinguished ownership of company assets from alteration of the shareholding structure, noting that the pending suit itself concerned shareholding and management rights. It held that the substantial increase from 36 to 1,000 shares altered the relative shareholding and created enforceable rights in favour of persons who were previously not shareholders. The Court also found the conduct wilful for purposes of Order XXXIX Rule 2A CPC, given the formal Board resolution, implementation of the allotment and filing of Form PAS-3. The appeal was dismissed and the restoration direction was upheld.
