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Family Feud & Forbidden Benami: Supreme Court Nixes Property Suit Rejection

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The suit was filed against the mother’s elder son (Sandeep Gupta, defendant No. 1), his wife (Shaifali Gupta, defendant No. 2), and their two sons (Siddharth Gupta and Shantanu Gupta, defendants Nos. 3 and 4)2. Other family members (Shalini Gupta and Sankalp Gupta) and subsequent purchasers (Surya Prakash Mishra and Deepak Lalchandani, defendants Nos. 5 and 6) were also arrayed as defendants.

The suit sought partition, possession, declaration, mandatory & permanent injunction, and accounting of properties alleged to be family properties, purchased from the funds of the joint family or derived from the income of the joint family business4. The suit is essentially a family dispute between the mother and one son on one side, and the other son and his family on the other.

The family business, ‘Himalaya Tailors’, was jointly started by the two sons in 1982. Properties were purchased over time in the name of different family members, including some sold to defendant Nos. 5 and 6, which the plaintiffs alleged were void sales.

The main contesting defendants (including Shaifali Gupta) and the subsequent purchasers (defendants Nos. 5 and 6) sought to reject the plaint under Order VII Rule 11 CPC, primarily arguing that the suit was barred by the Benami Transaction (Prohibition) Act, 1988.

The court of first instance rejected the application under Order VII Rule 11 CPC on 25.02.2019, stating that the suit properties were Joint Hindu Family properties and the issue was to be adjudicated upon after evidence. This decision was upheld by the High Court, dismissing a revision petition.

Law Involved

Order VII Rule 11 of the Code of Civil Procedure, 1908 (CPC): This rule allows a court to reject a plaint in certain circumstances, including when the suit appears from the statement in the plaint to be barred by any law.

Benami Transaction (Prohibition) Act, 1988 (Benami Act): This Act prohibits benami transactions.

Section 4(1): Bars any suit, claim or action to enforce any right in respect of any property held benami against the person in whose name the property is held or against any other person claiming to be the real owner of such property.

Section 2(8) and 2(9): Define ‘benami property’ and ‘benami transaction’.

Section 2(9)(A) Exception (ii): An exception to the Benami Act’s bar, allowing properties held by a person in a fiduciary capacity or for the benefit of another person (e.g., properties purchased by a female Hindu and held by her as a full owner) to be considered.

Hindu Succession Act, 1956: The suit was considered essentially under this Act, with the properties being Hindu Joint Family properties and the relief claimed in the suit purely in respect of said properties.

Reasoning

  • On Order VII Rule 11 CPC: The Supreme Court emphasised that an application under Order VII Rule 11 CPC must be decided solely on the basis of the pleadings and allegations in the plaint, not on the basis of the defence or evidence. The question is whether, based on the plaint alone, the suit is barred by law.
  • On Benami Act applicability:

The plaintiffs specifically asserted that the properties were Joint Hindu Family properties or derived from the income of the joint family business.

The Court noted that properties purchased from the nucleus of a joint family may be in the exclusive name of some family members, but they fall under an exempted category as per Section 2(9)(A) Exception (ii) of the Benami Act. This means they are not considered benami for the purpose of the prohibition.

Therefore, the suit cannot be considered ex-facie barred by Section 4 of the Benami Act at the stage of rejecting the plaint811. Whether a property is benami or falls within the exception is a question of fact that requires evidence to be adduced.

The Court found that the defendants’ contentions, including the bar under Section 14 of the Benami Act, were not specifically pleaded or argued before the lower courts for rejection under Order VII Rule 11 CPC.

Furthermore, the Court noted that Shaifali Gupta (defendant No. 2), who preferred one of the Special Leave Petitions, had neither moved an application nor filed a revision challenging the order rejecting the plaint. The subsequent purchasers (defendants Nos. 5 and 6) also failed in the two courts below.

Holding

  • The Supreme Court found no error in the decisions of the courts below to reject the application under Order VII Rule 11 CPC.
  • The Court held that the plaint allegations do not, at the threshold, indicate the suit is barred by any provision of law. The defence and issues raised by the defendants are factual in nature and require evidence .
  • The Court also noted that there was no miscarriage of justice to permit the parties to contest the suit on merits, where they have the right to frame necessary issues.
  • Accordingly, the Special Leave Petitions filed by Smt. Shaifali Gupta and Deepak Lalchandani were dismissed.

Smt. Shaifali Gupta V. Smt. Vidya Devi Gupta And Others

Supreme Court: 2025 INSC 739: (DoJ 20-05-2025)

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Bridging Continents: Court Grants Father Video Access to Son

September 3, 2025 No Comments

The appellant, Manoj Dhankar, is the father of the minor son. Respondent No. 1 is the mother, and Respondents No. 2 and 3 are her parents. The appellant and Respondent No. 1 were married on 26 November 2012, and their son was born on 18 January 2016.

Matrimonial Dispute: A long-standing matrimonial and custody dispute exists between the parties.

The mother left the matrimonial home in 2017 and filed for divorce.

The father initiated proceedings for custody of the minor child in 2018.

An order on 19 March 2019 by the Family Court allowed the father to meet the child twice a month.

A settlement attempt involved filing for divorce by mutual consent and withdrawing earlier petitions, with an agreement regarding custody recorded on 28 August 2019; however, the compromise failed, and the mutual consent petition was withdrawn.

Custody Proceedings & Violations:

The father then instituted a petition under the Guardians and Wards Act, 1890, seeking custody.

An interim order on 3 February 2022 granted the father custody every Saturday and Sunday, subject to the condition that the child would not be taken out of Rohtak, Haryana.

The Family Court dismissed the father’s petition on 27 March 2023, finding that the appellant (father) had violated the terms of the interim order.

During the pendency of an appeal concerning this matter, the respondent-mother took the child to Ireland.

The High Court dismissed the father’s appeal on 4 October 2024, relying on the father’s breach of the interim custody arrangement and noting that the child had been living with the mother since 18 August 2017.

Current Appeal: The present appeal arises from the High Court’s order, with the father limiting his request to securing visitation rights through video-conferencing. The child is currently living with his mother in Ireland and appears settled.

Law Involved

Hindu Marriage Act, 1955 (HMA):

Sections 13(1)(ia) and (ib) for divorce petitions.

Section 13-B for divorce by mutual consent.

Guardians and Wards Act, 1890: Section 25 for seeking custody.

Reasoning

Child’s Best Interest: The core issue is the future of a young child, and the central question is what arrangement best serves the child’s emotional, mental, and physical well-being.

Parental Conduct: The court observed that the conduct of both parents has not been ideal, and their personal differences have led to a long and bitter conflict. The court’s priority is to prevent the child from becoming a casualty and to ensure the child grows up in an atmosphere of security, love, and care.

Current Situation: The child is currently living with his mother in Ireland and appears to be settled there.

Father’s Limited Request: The father’s request in this appeal is specifically limited to video-conferencing rights.

Right to Both Parents’ Affection: The court found that video interaction is fair and necessary, as every child has a right to the affection of both parents. Even when parents live apart or in different countries, it is important for the child to maintain a relationship with both.

Preventing Deprivation: Denying such contact would deprive the child of the love, guidance, and emotional support of the father.

Balancing Act: The court views the father’s request for video interaction as reasonable and necessary to balance the child’s current living situation with the need to ensure the father remains a part of the child’s life.

Holding

The appeal is allowed to the extent of granting video-conferencing rights.

The appellant (father) is entitled to interact with his son through video-conferencing for two hours every alternate Sunday from 10:00 AM to 12:00 noon (Ireland time).

Both parties are directed to cooperate to ensure the arrangement is carried out smoothly, without obstruction or hostility.

Any technical or logistical difficulties in arranging the video sessions are to be resolved mutually, with the interest of the child being paramount.

Manoj Dhankar Vs Neeharika & Ors.

Supreme Court: 2025 INSC 1068: (DoJ 02-09-2025)

2025 INSC 1068 Download Supreme Court File

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Supreme Court Overturns Anticipatory Bail in Caste Atrocity Case: Reaffirming SC/ST Act’s Protective Bar

September 3, 2025 No Comments

The case arises from a Criminal Appeal No. 201 of 2025 before the High Court of Judicature at Bombay, Bench at Aurangabad. The High Court had allowed pre-arrest bail to respondent No.1 under Section 438 of the Code of Criminal Procedure, 1973, after it was initially refused by the Additional Sessions Judge, Paranda.

The complaint, made by Mohini, alleged that on 25.11.2024, at around 11:00 AM, a group including the respondents, all residents of Kapilapuri, came to her house and abused her and her mother. They were angry that the appellant’s family had not voted in the assembly elections.

The accused allegedly used casteist slurs, stating, “Mangtyano, you have become arrogant, you are staying in the village and voting against me, we will burn your houses”.

They allegedly beat the appellant and her family with an iron rod, punched them, and inflicted internal injuries.

Property was damaged, including a gold mangalsutra, household utensils, and petrol bottles were thrown, with threats to burn their houses.

The appellant belongs to the Scheduled Caste community (“Mang” or “Matang”), while the respondent is not a member of a Scheduled Caste or Scheduled Tribe community, hailing from the ‘Jain’ community.

The incident occurred outside the appellant’s house, in public view.

The injured appellant was admitted to the hospital.

Law Involved

Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act, 1989 (SC/ST Act):

Sections 3(1)(o), 3(1)(r), 3(1)(s), 3(1)(w)(i), under which offences were registered. These sections pertain to punishments for various atrocities, including intentional insult or intimidation with intent to humiliate a member of an SC/ST in any public place, abusing by caste name, and intentionally touching a woman belonging to an SC/ST with sexual intent.

Section 18: This section bars the application of Section 438 of the Code of Criminal Procedure, 1973 (anticipatory bail) to persons accused of committing an offence under the SC/ST Act.

Section 18A(2): Further clarifies that Section 438 of the Cr.PC shall not apply.

Code of Criminal Procedure, 1973 (Cr.PC): Section 438, which deals with anticipatory bail.

Constitutional Provisions: The bar on anticipatory bail for SC/ST Act offences is seen as safeguarding the rights guaranteed by Article 14 (equality before law) and Article 21 (protection of life and personal liberty) of the Constitution.

Reasoning

High Court’s Error: The High Court had granted anticipatory bail, concluding that the appellant was “falsely implicated” and referred to “political overtures” and the “nature of the injuries and allegations”. The Supreme Court found this reasoning to have misdirected itself and overlooked the specific bar under Section 18 of the SC/ST Act.

Prima Facie Case: The Supreme Court meticulously reviewed the FIR and the material on record, concluding that a prima facie case of offences punishable under Section 3 of the SC/ST Act was clearly made out.

The caste identity of the appellant (Scheduled Caste) and the respondent (not SC/ST) was established.

The use of abusive casteist language (“Mangtyano”) in public view was explicitly alleged, directly linking the incident to caste-based animosity and a clear intention to humiliate the complainant.

The incident occurred outside the house of the appellant, satisfying the requirement of “place within public view”.

The allegations detailed physical assault with an iron rod, punching, and threats, establishing a clear nexus between the casteist abuse and the conduct of the accused.

Bar on Anticipatory Bail: The Court reiterated that Section 18 of the SC/ST Act imposes an absolute bar on the grant of anticipatory bail when a prima facie case for an offence under the Act is made out.

Referencing Vilas Pandurang Pawar vs. State of Maharashtra, the Court emphasised the duty to verify the averments in the complaint to determine if a prima facie case is present.

Citing Prathvi Raj Chauhan vs. Union of India, it was affirmed that the exclusion of Section 438 CrPC is to prevent the frustration of the Act’s purpose and ensure that offenders are not granted anticipatory bail as a matter of right, especially when it would be “unreasonable or violative of Article 14”.

The Court also relied on Shajan Skaria vs. The State of Kerala & Anr., which states that pre-arrest bail can only be granted when the court is satisfied that no prima facie case for the commission of an offence under the Act is made out.

No Mini-Trial: The Court stressed that at the stage of anticipatory bail, a “mini trial” or an extensive evaluation of the evidentiary value of the allegations is not permissible.

Holding

Leave granted in the appeal.

The Supreme Court found that the High Court’s order granting anticipatory bail to respondent No. 1 was a “manifest error” and a “clear illegality”.

Consequently, the anticipatory bail granted to respondent No. 1 by the High Court stands cancelled.

Kiran Vs Rajkumar Jivraj Jain & Anr.

Supreme Court: 2025 INSC 1067: (DoJ 01-09-2025)

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BIFR Restraint No Bar: Supreme Court Upholds Cheque Dishonour Prosecution

September 3, 2025 No Comments

The Appellant (Shree Nagani Silk Mills Pvt. Ltd.) was the original complainant, lodging separate complaints under Section 138 of the Negotiable Instruments Act (N.I. Act) against L.D. Industries Ltd. (accused company) and others.

The complaints alleged that the accused company issued cheques for supplies made by the complainant, which were subsequently dishonoured due to “insufficient funds”.

Notices were served, but the amount was not paid, leading to the complaints.

Upon being summoned, the accused company claimed it had been declared ‘SICK’ by the Board of Industrial and Financial Reconstruction (BIFR) under the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA).

The accused company argued that a legal embargo was imposed on the disposal of its assets, and proceedings under Section 138 N.I. Act were not sustainable.

The learned Magistrate dismissed the application seeking to recall the processes. However, the revisional court allowed the revision, and the High Court of Judicature at Bombay set aside the Magistrate’s order, effectively discharging the accused and quashing the criminal proceedings against them via impugned order(s) dated 5.10.2023.

Law Involved

Negotiable Instruments Act, 1881:

Section 138: Deals with dishonour of cheques for insufficiency of funds.

Section 141: Addresses offences by companies.

Section 118(b): Pertains to the presumption regarding the date on a cheque.

Sick Industrial Companies (Special Provisions) Act, 1985 (SICA):

Section 22: Provisions for suspension of legal proceedings, contracts, etc..

Section 22A: Directs a sick industrial company not to dispose of assets without Board’s consent.

Relevant legal precedents cited:

Adalat Prasad vs. Rooplal Jindal

In Re: Expeditious Trial of Cases under Section 138 of NI Act, 1881

Kusum Ingots & Alloys Ltd. vs. M/s. Pennar Peterson Securities Ltd. and others.

Reasoning

The Supreme Court considered the following points:

The High Court misconstrued the law laid down in Kusum Ingots and Adalat Prasad.

Section 22 of SICA does not create any legal impediment for instituting and proceeding with a criminal case on allegations of an offence under Section 138 of the N.I. Act against a company or its Directors.

A restraint order under Section 22A of SICA is not absolute; it applies to the disposal of assets but does not necessarily bar proceedings under Section 138 N.I. Act. In this case, the restraint order was issued on 21.08.2000, while the cheques in question were issued in 2001 for day-to-day operations. The court noted that current assets could be drawn upon for day-to-day operations.

The submission that the cheques were post-dated was rebutted by the presumption under Section 118(b) of N.I. Act that a cheque bearing a certain date was made on that date. Evidence would be required to rebut this presumption.

The primary objective of Section 138 N.I. Act is to ensure credibility of business transactions involving cheques. A criminal complaint for dishonour of cheques is distinct from civil remedies for recovery of money, which might be restrained by a BIFR order.

The High Court erred in interfering with the order of the learned Magistrate and in not correcting the mistake committed by the revisional court. The power to recall the summoning order does not exist where the Magistrate had rejected the recall application.

Holding

The Supreme Court allowed the appeals, setting aside the impugned judgment(s) and order(s) of the High Court dated 5.10.2023.

This effectively means the criminal proceedings under Section 138 read with Section 141 of the Negotiable Instruments Act are to continue against the accused company and its Directors.

Shree Nagani Silk Mills Pvt. Lmt. Vs L.D. Industries Ltd. & Ors.

Supreme Court: 2025 INSC 1064 (DoJ 02-09-2025)

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The Case of the Contested Shares: Oppression and Mismanagement

September 3, 2025 No Comments

Gift of Shares is invalid if it is not in conformity with the AoA, especially if Clause 16 prohibits such transfers to specific individuals. The first respondent, “Satori Global Limited,” initially known as Sargam Exim Private Limited, was incorporated on 13.04.2006. It later converted to a public limited company, Satori Global Limited, on 20.06.2011.

Initial Shareholding The company’s authorised share capital was Rs. 2 crores (2,00,00,000 equity shares of Rs. 10 each), with a paid-up capital of Rs. 3 lacs (30,000 equity shares). The Appellant’s husband, Mr. Ved Krishna, was an original promoter. He initially subscribed to 5,000 shares, and the second respondent subscribed to 25,000 shares. Subsequently, the second respondent transferred 24,500 shares to the Appellant, bringing her shareholding to 29,500 shares. The remaining 500 shares were transferred to the third respondent, Mr. Nirupam Mishra.

Appellant’s Dominant Stake The Appellant, Mrs. Shailja Krishna, acquired an additional 10,000 shares from the second respondent, increasing her total shareholding to 39,500 shares, representing more than 98% of the company’s shareholding.

Resignation and Alleged Gift The second respondent resigned from directorship on 01.02.2007 but was later inducted as a Director. The Appellant resigned on 17.12.2010. On the same day, a gift deed was executed in Faizabad, purportedly transferring the Appellant’s entire shareholding to the fourth respondent, Mrs. Manjula Jhunjhunwala (Appellant’s mother-in-law). A Share Transfer Form, dated 01.10.2010, was also used for this transfer, with its validity extending up to 12.11.2011.

Legal Battles Emerge The Appellant lodged multiple police complaints, alleging coercion into signing blank documents and concerns regarding the share transfers. She also filed a petition under the Protection of Women from Domestic Violence Act, 2006, and an FIR for criminal breach of trust.

NCLT’s Initial Ruling The Appellant filed a company petition (107/ND/2013) before the Company Law Board (CLB), later transferred to the National Company Law Tribunal (NCLT). The NCLT, Allahabad Bench, by its judgment dated 04.09.2018, allowed the petition. It restored the Appellant as an Executive Director and lawful owner of 39,500 equity shares, declaring the share transfer dated 18.11.2011 null and void due to overwriting, manipulation, and execution after its validity had expired. The NCLT also found the RoC lacked power to extend validity.

NCLAT’s Reversal The Company and two respondents appealed to the National Company Appellate Tribunal (NCLAT). The NCLAT, Principal Bench at New Delhi, set aside the NCLT’s judgment on 02.06.2023, stating that the NCLT lacked jurisdiction to decide issues of fraud, manipulation, and coercion.

Laws Involved

The core of the legal debate revolved around the application and interpretation of various statutes and company regulations:

Companies Act, 1956:

Sections 397 & 398: Empower the Tribunal to address acts of oppression and mismanagement.

Section 108 (1D): Pertains to the validity of share transfer forms.

Section 111A: Deals with the rectification of the register of members.

Sections 286, 193: Relate to the conduct and validity of board meetings, including notice requirements.

Companies Act, 2013:

Section 242: Empowers the NCLT to look into acts of oppression and mismanagement, including cases involving fraudulent share transfers.

Section 155: Grants power to rectify the register of members.

Articles of Association (AoA):

Clause 16: Governs the transfer of shares, particularly by way of gift, and was central to the validity of the gift deed to the mother-in-law.

Clause 53: Stipulates the quorum required for board meetings.

Clauses 30 & 61: Mandate the giving of notice for company meetings.

General Legal Principles: Concepts of fiduciary duty, fraud, coercion, and the maintainability of company petitions were extensively discussed.

Reasoning

The Supreme Court examined the findings of the NCLAT and the arguments from both sides to determine the maintainability of the petition, the NCLT’s jurisdiction, and the existence of oppression and mismanagement.

Jurisdiction of NCLT: The Appellant contended that NCLAT erred in concluding NCLT lacked jurisdiction to decide issues of fraud and manipulation, arguing that Section 242 of the Companies Act, 2013, allows the NCLT to address these matters within the context of oppression and mismanagement, even if they involve fraudulent share transfers. The court noted that jurisdiction under Sections 397/398 of the 1956 Act is broad enough to remedy oppression and mismanagement, which may involve allegations of fraud.

Validity of the Gift Deed and Share Transfers:

The Appellant asserted the gift deed dated 17.12.2010 was invalid, primarily because it violated Clause 16 of the AoA, which restricted the transfer of shares by gift, and was procured through fraud and coercion.

The share transfer forms were also challenged as fraudulent, expired, and invalid, with allegations of overwriting and mismatch of dates.

The Court noted that a gift deed is invalid if it is not in conformity with the AoA, especially if Clause 16 prohibits such transfers to specific individuals (like a mother-in-law).

Validity of Board Meetings: The Appellant challenged the board meetings held on 15.12.2010 and 17.12.2010, arguing they were invalid due to:

Lack of proper notice to the Appellant and third respondent.

Absence of a proper quorum, as stipulated by Clause 53 of the AoA, rendering resolutions passed at these meetings invalid.

Violations of the AoA and the 1956 Act. These meetings were crucial as they reportedly accepted the Appellant’s resignation and approved other company actions.

Definition of Oppression and Mismanagement: The Court considered the broad legal concept of oppression, noting it refers to conduct that is “burdensome, harsh or wrongful,” not necessarily illegal, and often involves a departure from fair dealing or an abuse of power. The conduct must be prejudicial to the public interest or members.

Holding

The Supreme Court delivered a decisive judgment:

Oppression Confirmed The Court found that the actions of the Company collectively demonstrate clear oppression and mismanagement, and that “probity is lacking, which is prejudicial to the appellant” .

NCLAT’s Decision Overturned The Court concluded that the NCLAT’s interference with the NCLT’s judgment and order was “quite unnecessary” .

Appeals Allowed Consequently, the common appellate judgment and order of the NCLAT were set aside, and the civil appeals were allowed .

Mrs. Shailja Krishna Vs Satori Gobal Limited & Ors.

Supreme Court: 2025 INSC 1065: (DoJ 02-09-2025)

2025 INSC 1065 Download Supreme Court File

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