The Delhi High Court dismissed a petition challenging a trial court’s refusal to amend a partition plaint to include shares allegedly transferred before the father’s death, holding that the petitioner failed the due diligence test under Order VI Rule 17 CPC and that allowing the amendment would prejudice the respondent given pending NCLT proceedings on the share transfer’s legality. The judgment clarifies the interplay between amendment pleadings and parallel tribunal jurisdiction.
Background & Facts
The Dispute
The petitioner, Lokesh Dhawan, sought to amend his partition plaint to include shares of Dhawan Electricals Pvt. Ltd. that he alleged were fraudulently transferred to respondent Arun Dhawan prior to the death of their father, Late Sh. Krishan Chander Dhawan. The trial court had dismissed the amendment application under Order VI Rule 17 of the Code of Civil Procedure, 1908, prompting the present revision.
Key Facts
- Late Sh. K.C. Dhawan owned 850 out of 1000 shares (85%) in Dhawan Electricals Pvt. Ltd.; the petitioner held 10 shares.
- Late Sh. K.C. Dhawan died intestate on 17.06.2010; respondents allege he transferred all his shareholding to respondent Arun Dhawan on that date.
- A Minutes of Meeting dated 16.08.2010 was allegedly produced by respondent Arun Dhawan showing equal distribution of shares among legal heirs.
- The petitioner was ousted from the company in February 2011 and his salary as director ceased in 2011.
- The partition suit (CS No. 10994/2016) was filed on 21.04.2012 seeking division of immovable properties.
- A CLB petition under Sections 397, 398, 402, 403 of the Companies Act, 1956 was filed in August 2012 challenging the share transfer as illegal and seeking relief of voidance.
- On 04.05.2012 the trial court directed status quo over the suit properties.
- Issues were framed on 27.08.2013.
- The amendment application under Order VI Rule 17 was filed on 20.03.2014 seeking to add prayer for partition of movable properties including shares, bank accounts, fixed deposits, jewellery and cash.
- The trial court dismissed the amendment application on 26.08.2020.
- Respondents 2 and 3 were proceeded ex-parte by the High Court’s order dated 01.06.2022.
- The High Court reserved judgment on 02.09.2026 and delivered it on 21.09.2026.
Procedural History
- 21.04.2012: Partition suit instituted by Lokesh Dhawan.
- 04.05.2012: Trial court order maintaining status quo.
- 27.08.2013: Issues framed by trial court.
- August 2012: CLB petition filed challenging share transfer.
- 20.03.2014: Amendment application under Order VI Rule 17 filed.
- 26.08.2020: Trial court dismisses amendment application.
- 01.06.2022: High Court directs ex-parte proceedings against respondents 2 and 3.
- 02.09.2026: Judgment reserved.
- 21.09.2026: Judgment pronounced and uploaded.
Relief Sought
The petitioner sought to set aside the trial court’s order dated 26.08.2020, to allow the amendment of plaint to include the disputed shares, and to obtain consequential reliefs of partition, possession and injunction over the properties including movable assets.
The Legal Issue
The central question was whether the trial court erred in refusing to allow an amendment under Order VI Rule 17 CPC to include shares allegedly transferred before the father’s death, considering the petitioner’s alleged lack of prior knowledge and the pendency of proceedings before the National Company Law Tribunal challenging the legality of that transfer.
Arguments Presented
For the Petitioner
The petitioner contended that on 17.06.2010 he was unavailable at the hospital and thus lacked knowledge of the alleged share transfer; he only learned of it later through a Minutes of Meeting dated 16.08.2010 showing equal distribution. He argued that the trial court erred in presuming his knowledge, thereby misapplying the due diligence test. He further submitted that the trial court improperly compared the reliefs sought in the CLB petition with the proposed amendment and adopted an overly restrictive approach at the Order VI Rule 17 stage, contrary to the principle that amendments should be allowed to bring out the real controversy. He relied on BK Narayana Pillai v Parmeswaran Pillai & Ors., Rajesh Sharma v Krishan Pal & Anr., Baldev Singh & Ors. v Manohar Singh & Anr., Aruna Oswal v Pankaj Oswal & Ors. and Ammonia Supplies Corporation Private Limited v Modern Plastic Containers Pvt. Ltd. to assert that the NCLT lacks jurisdiction over inheritance and title disputes and that the amendment should be permitted.
For the Respondent
The respondent argued that the petitioner, being a director and shareholder drawing a salary until 2011, could not have been unaware of the transfer of the majority shareholding for approximately two years, thus failing the due diligence test. He emphasized that the suit was filed in May 2012 and the CLB petition challenging the transfer was filed in August 2012, making the 2014 amendment application a belated and inconsistent move. He relied on Section 430 of the Companies Act, 1956 and the coordinate bench judgment in M/S Karyan Global LLP v. Vivek Kumar Mishra & Ors. to assert a jurisdictional bar, maintaining that the trial court cannot adjudicate the share transfer while the same is sub-judice before the NCLT. He further submitted that the shares, having been transferred before the father’s death, do not form part of his estate and therefore cannot be partitioned in a suit seeking division of the estate.
The Court's Analysis
The Court first examined the jurisdictional objection under Section 430 of the Companies Act, 1956. It held that the NCLT possesses wide quasi-judicial powers in oppression and mismanagement cases, as affirmed in Radharamanan v Chandrashekhar Raja, Kamal Kumar Gupta v Ruby General Hospital Ltd., Tata Consultancy Services Ltd. v Cyrus Investments (P) Ltd. and Mrs. Shailja Krishna v Satori Global Limited & Ors. The transfer of shares dated 17.06.2010 was central to the dispute and squarely within the NCLT’s jurisdiction to determine legality. Consequently, the trial court could not include the disputed shares in the partition suit while their legality was pending before the NCLT, as doing so would cause significant prejudice to the respondent.
Turning to the due diligence test under Order VI Rule 17 CPC, the Court noted that the burden lies on the party seeking amendment to show lack of requisite information before commencement of trial or inability to obtain it with reasonable diligence. The petitioner’s position as a director and salary-drawing officer until 2011, coupled with the filing of the CLB petition in August 2012 challenging the transfer, demonstrated that he was aware of the shareholding changes. The amendment application filed in March 2014, approximately three years after his salary ceased, was therefore belated and inconsistent with his earlier stance of ignorance. The Court found that the petitioner had not met the due diligence standard.
The Court further observed that while a liberal approach is required at the Order VI Rule 17 stage, such liberality cannot permit an amendment that is contrary to law or would cause prejudice. Allowing the amendment to include shares whose transfer is pending adjudication before the NCLT would undermine the tribunal’s exclusive jurisdiction and lead to multiplicity of proceedings. The reliance on BK Narayana Pillai and Rajesh Sharma was misplaced because those cases dealt with situations where no parallel tribunal proceedings existed.
Thus, the Court concluded that the trial court’s dismissal of the amendment application was legally sound, suffering from no infirmity.
The Verdict
The petitioner’s revision petition was dismissed. The trial court’s order dated 26.08.2020 upholding the rejection of the amendment application under Order VI Rule 17 CPC was affirmed. No costs or monetary relief were granted. The petition along with any pending applications stands dismissed.
What This Means For Similar Cases
Amendment Pleadings Must Satisfy Due Diligence
Practitioners must ensure that any application to amend pleadings under Order VI Rule 17 CPC is filed promptly after acquiring knowledge of the facts sought to be introduced. A delay inconsistent with the party’s role or prior proceedings may be fatal, as the burden lies on the applicant to prove lack of knowledge or inability to obtain it with reasonable diligence.
Parallel Tribunal Proceedings Create a Jurisdictional Bar
When a dispute over share transfer or oppression and mismanagement is pending before the NCLT, civil courts cannot adjudicate the same subject matter in a partition or other suit. Including such disputed assets in the pleadings would prejudice the opposite party and offend the principle of avoiding multiplicity of proceedings.
Forum Shopping Is Disfavoured
Initiating parallel proceedings before different forums on the same core issue, especially after a delay, signals forum shopping. Courts will scrutinise the timing and consistency of the party’s conduct and may reject amendment applications perceived as attempts to circumvent jurisdictional bars or to revive stale claims.
