IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION APPEAL NO. 866 OF 2005 IN NOTICE OF MOTION NO. 2620 OF 2005 IN SUIT NO. 2425 OF 2005 WITH NOTICE OF MOTION NO. 2620 OF 2005 IN SUIT NO. 2425 OF 2005 Sudha Chowgule .. Appellant (Ori. Defendant No.1) V/s 1. Parmanand Patel 2. Indu Patel .. Respondents No.1 & 2 (Ori. Plaintiffs No.1 & 2) 3. Jaya Patel 4. Arjun Chowgule 5. Shiraj Salelkar 6. Tulsiram V. Patel (Pvt) Ltd. 7. Union Bank of India .. Respondents No.3 to 7 (Ori. Defendants No.2 to 6) Aspi Chinoy, Senior Advocate with Mr.Navroz Seervai, Mr.D.D. Madon, Senior Advocates, and Mr.A.M. Sethna i/b Crawford Bayley & Co. for the Appellant. Mr.Iqbal Chagla, Senior Advocate with Mr.J.P. Sen, Mr.Ketan Parikh, Mr.Khatlawala and Ms.Sheetal Mody i/b Little & Co. for Respondents No.1 and 2. Mr.F.E. Devitre, Senior Advocate with Mr.Jimmy Avasia, Mr.Pecy Mody and Mr.Farhan Dubash i/b Federal & - 2 - Rashmikant for Respondent No.3. Mr.Janak Dwarkadas, Senior Advocate and Mr.K.K. Shroff i/b Bachubhai Munim & Co. for Respondent No.4. Mr.N.N. Amin i/b N.N. Amin & Co. for Respondent No.7. CORAM : H.L. GOKHALE & V.R. KINGAONKAR, JJ. DATE OF RESERVING THE JUDGMENT : 14TH AUGUST 2006 DATE OF PRONOUNCING THE JUDGMENT: 7th September 2006 JUDGMENT JUDGMENT JUDGMENT: (Per H.L. Gokhale, J.) 1. This Appeal by Defendant No.1 to Suit No.2425 of 2005 seeks to challenge the ad-interim order dated 16th September 2005 in Notice of Motion No.2620 of 2005 passed by a learned Single Judge containing certain ad-interim directions and restrictions against the Appellant. 2. The Appellant - Sudha (aged about 49 years) and Respondent No.3 - Jaya (aged about 46 years) are daughters of Respondent No.1/Plaintiff No.1 - Parmanand Patel (aged about 80 years) and Respondent No.2/Plaintiff No.2 - Induben (aged about 74 years). In para 1 of the plaint, it is stated that Plaintiff No.1 suffers from mental infirmity and incapacity and is not capable of protecting his interest. The suit is stated - 3 - to be filed by Plaintiff No.1 under Order 32 Rule 15 of Civil Procedure Code through his next friend, i.e. his wife (Plaintiff No.2). Plaintiff No.2 is stated to have no interest adverse to Plaintiff No.1 and does not seek any reliefs for herself in the suit. The prayers in the suit and the motion therein are essentially directed against Sudha (the Appellant herein). Defendant No.3 to the suit is Arjun, son of Sudha, Defendant No.5 is their Advocate and Defendant No.6 is Union Bank of India. We will refer the parties as Plaintiffs or Defendants or by their names, depending upon the narration. 3. The said Plaintiffs No.1 and 2, Defendant No.1 (Sudha) and Defendant No.2 (Jaya) are directors of a private limited company known as "Tulsidas V. Patel (Pvt.) Ltd. (Defendant No.5 to the suit) with their shareholdings being as follows:- Plaintiff No.1 : 85% Plaintiff No.2 : 5% each Defendant No.1 Defendant No.2 The said Tulsidas V. Patel (Pvt.) Ltd. [for short "TVP (Pvt.) Ltd."] has its assets consisting of shares in different companies and immovable properties at various places, the principal amongst them being the flats in a building known as "Kanchanjunga" and another building known as "D-Tower Building" both at Peddar Road and a bungalow known as "Bella Vista" also situated at Peddar - 4 - Road, Mumbai. The Plaintiffs have given the particulars of the main assets of the said TVP (Pvt.) Ltd. in para 30 and Exhibit-F to the plaint and their approximate value comes to Rs.367 crores. This list mentions that the TVP (Pvt.) Ltd. owns only two flats in Kanchanjunga Building. Defendant No.1 (Sudha) has stated with reference to this para 30 that she does not admit the correctness of the valuation and, according to her, TVP (Pvt.) Ltd. is entitled to many more flats in the said building. According to a chart given by their counsel in this court, the value of the properties owned by TVP (Pvt.) Ltd. and its subsidiaries comes to about Rs.1120 crores and it owns some 23 flats in Kanchanjunga Building. They are stated to be given on licence to various foreign consulates or companies and earn huge monthly compensation. 4. Plaintiff No.1 is stated to have executed a Will on 23rd January 2005 (Exhibit-G to the plaint) giving 50% of his personal property to Sudha and 50% to Jaya and none to his wife Induben. On the same day, he is stated to have signed two letters (Exhibits J and K to the plaint) addressed to Sudha and Jaya respectively. In the letter addressed to Sudha, he has recorded that he has given all of his shares to her with a direction that she should retain 46% to herself and give 39% to Jaya. No shares are however given to his wife. This - 5 - gift is made to Sudha and to Jaya on certain conditions stated in the two letters so that ultimately both of them get 50% of the assets in TVP (Pvt.) Ltd., as it will be pointed out hereafter. 5. The suit is filed by the Plaintiffs for a declaration that the said Will and the two letters and the purported gift / transfer of shares are null and void and have no effect in law and the same be cancelled. In the suit, interim injunction is sought from transferring and/or claiming or exercising any rights or benefits in respect of 85% share and operating the bank account of TVP (Pvt.) Ltd. with Union Bank of India (Defendant No.6 to the plaint). Interim injunction is also sought restraining Sudha from acting as chairperson of TVP (Pvt.) Ltd. and for restraining Defendants No.3 and 4 from acting as its directors. This is apart from the other reliefs in the plaint and the motion. A Receiver is also sought in respect of this 85% share. It is material to note that the Plaintiffs have been staying in the bungalow by name "Bella Vista" and their younger daughter Jaya with her husband Vishal Salgia stay with them. At the time when the above Will and the two letters were executed, Jaya had gone to USA for her second delivery, but her husband continued to stay with the Plaintiffs. - 6 - 6. Now if we look at the typed copy of the Will annexed to the plaint, it is seen that it is executed in the presence of one Dr.Zarir Udwadia and Mr.R.A. Shah, a solicitor. It appoints one Dr.Hemant Patel, a practicing surgeon and brother of Indu Patel as the executor. The Will authorises the executor to divide the personal properties of Plaintiff No.1 equally between Sudha and Jaya. The Will states in para 5 thereof that the testator has provided sufficiently for his wife Induben and she has sufficient resources for her maintenance and upkeep. Hence, no provision was being made for her in the Will. 7. The letter dated 23rd January 2005 (Exhibit-J to the plaint) addressed to Sudha records that Plaintiff No.1 has handed over to her the share certificates with duly executed transfer deeds to represent his 85% interest in the equity share capital of TVP (Pvt.) Ltd. Paragraph 3 of this letter records that he is mentally fit and intellectually alert to form rational judgment and take clear and judicial decision. It further states that during this time, he wanted to ensure that his assets are equitably and evenly subdivided between his two daughters. Paragraphs 4 and 5 of this letter record as follows:- - 7 - "4. In the above background and to that end and intent, I gifted to you 85% in the said company so that you retain 46% interest in the said company as also the 5% interest you already hold and transfer 39% interest in the said company to your sister Jaya after intimating to you in writing that she has accepted the conditions which I have attached to the proposed gift of 39% interest in the company through you on her return. 5. In the unlikeliest event of Jaya not accepting the conditions, I want you to hold the entire 85% of the interest gifted to you and deal with 39% as separately set out in paragraph 6(B) hereinafter." 8. (i) Thereafter paragraph 6(A) of this letter records that in the event Jaya accepts the conditional gift, Sudha had agreed to transfer forthwith the 39% interest in the company from the 85% gifted to her to Jaya by executing all necessary transfer deeds. Thereafter she will make a scheme of arrangement under sections 391 to 394 of the Companies Act and incorporate a new company, to which assets representing 50% in value or as close to - 8 - that will be transferred. Paragraph 6(A)(iv) of this letter reads as follows:- "After the scheme is accepted and approved, the assets in the company would stand divided as desired by me hereinabove, 50% each or as close to that as would be possible and Jaya will have the first right to choose either the company or the transferee company, to which 50% assets have been spun off." Ultimately, it is provided that Sudha on one hand and Jaya and Induben on the other will own the two companies in such a way that each of the two companies have 50% of the assets of TVP (Pvt.) Ltd. . (ii) Paragraph 6(B) of this letter, however, provided that in case Jaya does not accept the conditional gift, Sudha will hold 39% of the shares for the benefit of Jaya and her children and she will distribute the corpus upon her children on their attaining the age of majority. In such an eventuality, Sudha will continue to hold 51% of the shares for herself, 39% on behalf of Jaya and her children and 5% each will be held by Jaya and Induben as they presently hold. The letter dated 23rd January 2005 addressed to - 9 - Sudha (Exhibit-K to the plaint) contains the similar conditions and expectations addressed to Jaya. 9. The Plaintiffs have contended that Plaintiff No.1 was mentally infirm and not capable of protecting his interest and this entire action of executing the Will and the two letters was manoeuvred by Sudha. It is their case that he was so incapable on 23rd January 2005 and thereafter also he continues to be so and in fact his condition had deteriorated. It is their case that the Plaintiffs were all the while acting under the aid and advise of one Subhash Patel, son of the eldest brother of Plaintiff No.1 and one Shirish Patel, a Chartered Accountant, who is the son of the elder brother of Plaintiff No.1. It is their case that since May 2001, Plaintiff No.1 was diagnosed as suffering from kidney failure and for that he visited U.K. and then to U.S.A. and has been under treatment over there as well as in Mumbai and he was required to undergo dialysis regularly. It is their further case that since July 2002, it is noticed that he started suffering from memory loss also and for that purpose he has been under the advise and treatment of a panel of leading neurologist in the U.S.A. led by Dr. Louis Caplan and various Indian doctors. They rely upon the record of medical treatment and the notings made by various - 10 - doctors from time to time to contend that he was incapable of making any such arrangement on 23rd January 2005. 10. Thereafter they have stated that based on these documents, Defendant No.1 (Sudha) has purported to get her appointed as Chairman of TVP (Pvt.) Ltd. This is without any authority to do so and without the consent or knowledge of the Plaintiffs or Defendant No.2 and without holding any meeting of the Board of Directors. In para 63 of the plaint, it is stated that she has purported to do so on the basis of the impugned documents. Thereafter she has got appointed as directors her son Arjun (Defendant No.4) and Shiraj Salelkar, an advocate who is assistant to Mr.R.A. Shah, Solicitor. It is therefore that they have sought Receiver in respect of 85% shares of TVP (Pvt.) Ltd. and also an injunction restraining Defendants No.1, 3 and 4 from disposing of or transferring 85% shares or exercising any rights based thereon, from operating the bank account of TVP (Pvt.) Ltd. with Union Bank of India (Defendant No.6), restraining Defendant No.1 from acting as chairperson and Defendants No.3 and 4 as directors. 11. The disputed documents are stated to be signed - 11 - on 23rd January 2005, but they are claimed to have been received by Jaya (Defendant No.2) along with the letter dated 20th May 2005 from Mr.R.A. Shah, Solicitor of M/s Crawford Bayley & Co. This is what Induben has recorded in her letter dated 1st June 2005 addressed to Mr.R.A. Shah. It is at this time that Jaya is supposed to have come back from U.S.A. after giving birth to twins, one of whom has survived. This letter is very significant since it is the first record from Plaintiff No.2 with respect to the documents executed on 23rd January 2005 and to which we will revert to later on. On coming to know about these two letters and the Will, this suit is filed for the aforesaid declaration and injunction on 12th September 2005. It was immediately moved for ad-interim orders before a learned Single Judge. At that time, no reply had been filed by Sudha, the Appellant herein. 12. The learned Judge heard the counsel for the Plaintiffs, Sudha as well as Jaya. He noted the submissions of the Plaintiffs and the allegations made in the plaint and that there was much material produced pertaining to mental and physical health of Plaintiff No.1. He noted that according to Defendant No.1 (Sudha), the story of the Plaintiffs was totally untenable. He referred to the fact that a number of - 12 - medical papers as well as documents executed by Plaintiff No.1 during the contemporaneous period were brought to his notice. He however took into consideration the fact and the right claimed by Defendant No.1 in respect of 85% shares was based on a gift deed. He therefore formed an opinion that till the hearing and final disposal of the motion, the shares are required to be frozen and that it was not possible to permit Defendant No.1 at that stage to act as if there was a valid Will. Therefore, in paragraphs 2, 3 and 4 of his order, he imposed certain restrictions which are as follows:- (i) None of the parties will exercise any right in respect of the said 85% shares which are gifted to Defendant No.1. (ii) A panel of doctors drawn from J.J. Hospital, Bombay Hospital and Lilavati Hospital dealing with Psychiatry and Neurology Department will examine Plaintiff No.1 and directly report to the Court. (iii) Union Bank of India will continue the arrangement of joint operation of the bank account between Defendant No.1 and 2. - 13 - (iv) As far as the assets of the company are concerned, Plaintiff No.2 (Induben), Defendant No.1 (Sudha) and Defendant No.2 (Jaya) will maintain those assets as they were and will not sell or dispose them of or create any third party rights except in the ordinary course of business. (v) Plaintiff No.2 (Induben) and Defendant No.2 (Jaya) will keep Defendant No.1 (Sudha) informed about the business decisions, if any, taken by them. 13. Being aggrieved by this ad-interim order, this Appeal has been filed by Defendant No.1 (Sudha). This Appeal came up for consideration before another Division Bench (S. Radhakrishnan & S.C. Dharmadhikari, JJ.) from time to time. The concerned Division Bench passed an order on 11th October 2005 wherein it referred to paragraph 3 of the order of the learned Single Judge, in which he had directed constitution of panel of doctors to examine Plaintiff No.1. To prima facie satisfy themselves regarding mental condition of Plaintiff No.1, the judges personally interviewed him in chambers. They found him, as recorded by them, "totally incoherent and - 14 - confused". Thereafter they directed a panel of doctors from these three hospitals to examine Plaintiff No.1. The panel was to consist of one doctor from Psychiatry and Neurology Departments of each of the three hospitals. 14. It appears that the panel of doctors examined Plaintiff No.1 on 7th December 2005 and gave its report on 31st January 2006. The appeal thereafter appeared before another Division Bench (Kshitij Vyas, CJ. & A.S. Oka, J.) on 12th June 2006, when the Division Bench made the following order:- "With the consent of the parties, Notice of Motion No.2620 of 2005 be placed before us for hearing and final disposal on 27th June 2006. In the meanwhile, to complete the pleadings, all parties to the notice of motion are directed to file replies, rejoinder on or before 26th June 2006." Since the motion itself was to be heard by a Division Bench, the Appellant (Sudha) has thereafter filed her affidavit in reply affirmed on 23rd June 2006. Plaintiff No.2 (Induben) has filed her rejoinder rather belatedly, i.e. on 3rd August 2006, which was during the course of hearing when the matter was placed before - 15 - this Bench. Defendant No.2 (Jaya) has also filed her affidavit in reply affirmed on 3rd August 2006 and she has supported the motion moved by the Plaintiffs. Since the appeal and the motion have been allotted to this Bench, we have heard them from day to day with the assistance of the counsel. Apart from the pleadings, the Plaintiffs have filed a compilation consisting of list of their medical reports and another consisting of correspondence between the parties. Defendant No.1 (Sudha) has separately filed an affidavit affirmed on 27th March 2006 containing her objections to the report dated 31st January 2006 made by the panel of doctors. She has enclosed therewith the medical literature on the kind of problems which Plaintiff No.1 is suffering and the documents showing the activities which he has been undertaking during the contemporaneous period. She has also placed on record (i) the statement showing approximate market value of the properties owned by TVP (Pvt.) Ltd. with enclosures thereto, (ii) the correspondence and the documents concerning the loss of ration card and the application made by Plaintiff No.1 to include Sudha’s name also in his ration card. The counsel have taken us through relevant authorities as well. SUBMISSIONS ON BEHALF OF THE PLAINTIFFS SUBMISSIONS ON BEHALF OF THE PLAINTIFFS SUBMISSIONS ON BEHALF OF THE PLAINTIFFS: - 16 - 15. It is submitted on behalf of the Plaintiffs that Plaintiff No.1 had first suffered the problems concerning kidneys. This was from May 2001 when he was first treated in U.K., then in U.S.A. and subsequently he has been under treatment in Mumbai and he has to undergo dialysis from time to time. It is their further case that in July 2002 when Plaintiff No.1 went to Manchester and consulted one Dr. Ram Gokal for the purposes of his kidney problem, he was advised to get assessment for his mental health also. He was examined by a neurologist Dr.Jeremy Dick and it was revealed that he was suffering from memory loss. It was secondary to cerebral vascular disease. It is thereafter stated in the plaint that in September 2002, he was examined in U.S.A. by a neurologist Dr.Louis Caplan in Beth Israel Deaconess Hospital at Boston. The medical papers of his treatment are produced and the first report of Dr.Caplan, which is dated 20th September 2003, records the history of his problem and as to how Dr.Caplan examined him and, in the last paragraph, the report states:- "I think that it is a toxic metabolic encephalopathy with multiple features. I don’t think that this is a degenerative vascular disease or alzheimer like dementia. I do think - 17 - that it is reversible." Plaintiff No.1 was diagnosed to be suffering from Idiopathic Normal Pressure Hydrocephalus wherein fluid gets collected near the brain and one of the procedures suggested is to remove that fluid. This is to be done by installing a shunt near the brain. Accordingly, a shunt was installed in April 2003 whereafter Plaintiff No.1 became mobile and much better. Another shunt was put in June 2003 and it was replaced in December 2003. There are two further reports of Dr.Caplan dated 11th December 2003 and 22nd January 2004. The first appears to be one before the change of the shunt effected in December 2003 which can be noticed in the subsequent letter dated 22nd January 2004. In the earlier report, he states that on examination, he found him considerably worse. He was less spontaneous. His answers were brief and he had difficulty persevering, for example in counting backwards from ten or naming articles of clothing. The doctor did not notice any grammatical or actual word errors. His gait was quite poor with loss of balance and difficulty initiating gait. As against this, in the subsequent report, he states that his walking was a little better although he was still a little unsteady. He was able to count backward from 20 to 0 and was able to complete the task. He was able to - 18 - name 6 fruits and about 6 cities in India which is much better. The doctor then records that he understands that shunt was changed on 12/31 and he was encouraged about the improvement. Thereafter he states that he continued to think that his neurological problems were related to fluid accumulation in his head. Thereafter he states - "I do think however it is rather complex and it also relates to his kidney function and his fluid balance". These reports are emphasised by Mr.Chagla, counsel for the Plaintiffs, that if this was his position in January 2004, surely he was not capable of understanding as to what was done in January 2005. 16. It is the case of the Plaintiffs that at the relevant time, Plaintiff No.1 was above 79 years of age (he is born on 2nd June 1925). It is their case that in view of the protest by the Plaintiffs, on 23rd January 2005 a further writing was executed and was signed by both the Plaintiffs on the same day. The original of it was handwritten one. It is the case of the Plaintiffs that they have not written the same. This writing is to the following effect:- - 19 - " TO WHOMSOEVER IT MAY CONCERN TO WHOMSOEVER IT MAY CONCERN TO WHOMSOEVER IT MAY CONCERN All the documents which I have signed today shall be revised by my nephew Mr.Shirish Patel (C.A.). His suggestion will be incorporated in these documents. My (Mrs. Indu Patel) 5% interest in the Tulsidas V. Patel will be given equally to my daughter Sudha and Jaya upon my demise." sd/- P. Patel sd/- I.P. Patel Mumbai Dated 23-1-2005 sd/- R.A. Shah, Solicitor" It is material to note that the second part of this document beginning with "My (Mrs.Indu Patel) onwards" appears to be written subsequently and it is perhaps in a different handwriting. It is the Plaintiffs’ further case that Subhash Patel was given a copy of the Will, but the copies of the two letters addressed by Plaintiff No.1 to Defendant No.1 (Sudha) and Defendant No.2 (Jaya) were received by the Plaintiffs only when Jaya returned from U.S.A. It is Jaya who is claimed to have been - 20 - given copies of these two letters by Mr.R.A. Shah, Solicitor. This is what stated in Induben’s letter dated 1st June 2005 addressed to M/s Crawford Bayley & Co. drawing attention of Mr.R.A. Shah. It is stated in the plaint that Plaintiff No.1 was pressurised to sign some documents on 23rd January 2005 and that he has been made to sign them when he was incapable of understanding as to on what