Bombay High Court
P. PRABHAKARANversusASHOK KISANDA SUGANDHI ( DECEASED )
- Decided
- Disposal
- Disposed Off
Holding
The execution and operation of the impugned judgment and decree dated 21 December 2022 are stayed pending the final disposal of the appeal.
Summary
The appellant, a director of a company, challenged a district court judgment that declared a sale deed dated 19 June 2001, executed by the deceased plaintiff in his capacity as director, to be null and void. The appeal raised two substantive questions: whether the legal heirs of the deceased could sue to declare the deed void despite the principle that directors and shareholders are not owners of company property, and whether the lower court erred by placing the burden of proof on the defendants and misinterpreting evidence. The High Court admitted the appeal and, pending final disposal, stayed the execution of the district court's judgment and decree dated 21 December 2022. The court also restrained the appellant from transferring or creating any third‑party interest in the suit property. The interim application was disposed, and the parties were directed to file a private paper book within six weeks. The order aims to prevent irreparable loss to the appellant and protect the respondents from potential prejudice if the stay is lifted before the appeal is decided.
Issues considered
- In view of the settled position of law that directors and shareholders are not owners of the property of a company incorporated under the Companies Act, 1956, can the legal heirs of the deceased plaintiff, who executed the sale deed as a director, prosecute a suit for a declaration that the sale deed is null and void and not binding on the plaintiff?
- Did the learned District Judge err in placing the burden of proof on the defendants and misinterpret the evidence, thereby arriving at a finding that the sale deed was null and void, resulting in a miscarriage of justice?
Legislation cited
Subjects
- directors
- shareholders
- company property
- sale deed
- nullity
- burden of proof
- stay order
- appeal
- Companies Act, 1956
- legal heirs
Judgment
25 sa 66 of 2026.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
SECOND APPEAL NO.66 OF 2026
WITH
INTERIM APPLICATION NO.8896 OF 2024
P. Prabhakaran ... Appellant
versus
Ashok Kisanda Sugandhi (deceased)
thorugh legal heirs Shobha Ashok
Sugandhi and Ors. … Respondents
Mr Prasad B. Kulkarni, for Appellant.
Mr. Narendra V. Walawalkar, Sr. Advocate with Mr. Suresh M. Sabrad with Mr.
Amey C. Sawant for Respondent Nos.1 to 4.
SWAROOP Ms. Neha M. Zande with Ms.Eshwaree Kudalkar, for Respondent No.5.
SHARAD
PHADKE
Digitally signed by
CORAM: N.J.JAMADAR, J.
SWAROOP
SHARAD PHADKE
Date: 2026.09.08
18:19:20 +0530 DATE : 8 SEPTEMBER 2026
P.C.
1. Heard the learned Counsel for the parties.
2. The following substantial questions of law arise for consideration :
(i) In view of the settled position of law that, the directors and
shareholders are not the owners of the property of the company incorporated
under the Companies Act, 1956, could the legal heirs of the deceased
Plaintiff, who had executed the Sale Deed dated 19 June 2001, in the
capacity of the director of the Company, have prosecuted the suit for a
declaration that the said sale deed was null and void and not binding on the
Plaintiff ?
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25 sa 66 of 2026.doc
(ii) Whether the learned District Judge committed an error in placing
the burden of proof on the defendants and misconstrued the evidence to
arrive at the finding that the sale deed dated 19 June 2001 whereunder the
property of the company was purportedly sold, was null and void, and that
resulted in a mis-carriage of justice ?
3. Issue notice to the Respondents for final disposal, returnable on 28
October 2026.
4. Mr. Walawalkar, learned Counsel, waives service on behalf of
Respondent Nos.1 to 4 and Mr. Zanje waives service on behalf of
Respondent No.5.
5. Call R and P.
6. Printing dispensed with.
7. The Appellant shall file a private paper book within a period of six
weeks.
8. The parties are put to notice that an endeavour will be made to hear
and decide the appeal finally.
Interim Application No.8896 of 2024
9. The Second Appeal is admitted by framing aforementioned substantial
question of law. In the event, the Respondents / Plaintiffs enter into any
transactions on the basis of the impugned judgment and decree passed by
the District Court, the Appellant would suffer irreparable loss. At the same
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25 sa 66 of 2026.doc
time, if the Appellant deals with the suit property on the basis of the title
purportedly acquired under the Sale Deed dated 19 June 2001, which has
been declared null and void by the District Court, the Respondents – Plaintiffs
may be left in the lurch in the event the appeal is dismissed.
10. For the foregoing reasons, till the final disposal of the appeal, the
parties are required to be restrained from transferring, alienating, disposing
or otherwise creating third party rights in the suit property.
11. Hence, the following order :
ORDER
(i) The execution and operation of the impugned judgment and
decree 21 December 2022 shall remain stayed till the final disposal of the
appeal.
(ii) The Appellant shall not transfer, alienate, dispose of or otherwise
create any third party interest in the suit property, till the final disposal of the
appeal.
(iii) Interim Application stands disposed.
( N.J.JAMADAR, J. )
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