Bombay High Court
Sunil Biyani vs R.B.Mining And Company And 4 Ors on 7 March, 2022
Bench: N. J. Jamadar
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
INTERIM APPLICATION (L.) NO. 20000 OF 2021
Digitally
signed by IN
SHRADDHA
SHRADDHA KAMLESH COMMERCIAL SUMMARY SUIT NO. 63 OF 2021
KAMLESH TALEKAR
TALEKAR Date:
2022.03.07
(UNDER ORDER XXXVII OF THE CODE OF CIVIL PROCEDURE,
20:53:55
+0530
1908)
Sunil Biyani ...Applicant
In the matter between :
Sunil Biyani .. Plaintiffs
Versus
1. M/s. R.B. Mining and Company
& 4 Ors. ... Defendants
****
Mr.Yuvraj Choksy with Mr.Ranjit Shetty, Mr.Luckyraj Indorker i/b
Argus Partners for applicant-plaintiff.
Mr.Ghanshyam Upadhyay a/w. Mr.Vishal Shukla i/b Law Juris for
defendant Nos. 1, 2, 4 and 5.
Mr.Simil Purohit a/w. Mr.Mittal Munoth i/b Kookada and
Associates for defendant No.3.
****
CORAM : N. J. JAMADAR, J.
CLOSED FOR ORDER : 23rd DECEMBER 2021
PRONOUNCED ON : 7th MARCH 2022
ORDER :
1. This is an application for attachment before judgment under
the provisions of Order XXXVIII coupled with temporary
injunction under the provisions of Order XXXIX and section 151 of
the Code of Civil Procedure, 1908 ('the Code') in a Summary Suit
instituted by the applicant-plaintiff under the provisions of Order
Shraddha Talekar, PS 1/33
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XXXVII of the Code.
2. Shorn of unnecessary details, the background facts, can be
stated as under :
(a) The defendant No.1 is a partnership frm
registered under the Indian Partnership Act, 1932. The
defendant No.2 and defendant No.3 are the partners of
defendant No.1. Defendant Nos.4 and 5 are the sons of
defendant No.2. The defendant No.1-frm is engaged in
the business of mines and minerals. The defendant No.1
has acquired a lease to search for, win and work as a
lessee of the mines and minerals in respect of soap stone,
china clay and red ochre on the land bearing C.S. No. 45/
O/3, situated at Village Omkarpura, Tahsil, Kothri, Dist.
Bhilwara, Rajasthan.
(b) The plaintiff asserts that, during the period
November 2015 to March 2018, the plaintiff was induced
to pay a sum of Rs.22.16 crore for being inducted as a
partner in the defendant No.1-frm, with 50% share in the
profts of defendant No.1. However, the defendants failed
to induct the plaintiff as a partner in the said frm, as
promised. A dispute arose.
Shraddha Talekar, PS 2/33
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(c) The dispute was resolved by executing a
Memorandum of Understanding, dated 16 th November
2018 ('the frst MOU') between defendant Nos.1 and 2 and
the plaintiff, whereunder the defendant No.2
acknowledged the receipt of consideration of Rs.22.16
Crores and undertook to repay the same on or before 16 th
May 2020 along with interest @ 12% per annum.
Pursuant to further negotiations, another Memorandum
of Understanding dated 29th July 2019 ('second MOU')
came to be executed between the plaintiff and defendant
No.2. Under the second MOU, the defendant No.2 again
agreed to repay a sum of Rs.22.16 Crore, within 90 days
thereof or 30th October 2019, whichever was earlier, along
with interest @ 12% per annum from 16 th November 2018.
Pursuant thereto, the defendants issued post-dated
cheques. However, the cheques were dishonoured on
presentment and the plaintiff was constrained to initiate
the proceedings under section 138 of the Negotiable
Instruments Act, 1881.
(d) The plaintiff, having realized that he had been
deceived, lodged a report with Meghwadi Police Station,
Shraddha Talekar, PS 3/33
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Mumbai (F.I.R.No. 289 of 2020) for the offences
punishable under section 120B and 420 read with 34 of
the Indian Penal Code, 1960 ('the Penal Code'). The
anticipatory bail applications of the defendant No.2, 4
and 5 were rejected by the Sessions Court. No relief was
granted by the High Court, as well. After investigation
was transferred to Economic Offences Wing, Unit-9,
Mumbai, the defendant No.5 came to be arrested.
Thereupon, the defendant No.2 again approached the
plaintiff for an amicable settlement. Eventually, the Final
Settlement Agreement, dated 23rd November 2020 came to
be executed between the plaintiff and the defendants.
(e) In the Final Settlement Agreement, the
defendants, particularly defendant Nos.2 and 5
acknowledged in clear and explicit terms that a sum of
Rs.22.16 crore was received from the plaintiff and they
undertook to repay to the plaintiff the said amount in
installments as mentioned therein.
(f) Defendant No. 5 also gave a written
undertaking, dated 21st November 2020, before the Court
of the learned Addl. Chief Metropolitan Magistrate, to
Shraddha Talekar, PS 4/33
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repay the plaintiff a sum of Rs.25 Crores in a staggered
manner.
(g) Believing the representations of the defendants,
the plaintiff gave 'no objection' to the application for
release of defendant No.5 on interim bail. After recording
the undertaking of the defendant No.5, the learned
Magistrate released the defendant no.5 on bail.
(h) Despite having given repeated undertakings and
even obtained favourable orders in judicial proceedings,
the defendants did not comply with the undertakings.
Hence, the plaintiff was constrained to institute the suit
on the basis of written contract, as refected in the Final
Settlement Agreement dated 23rd November 2020.
3. The plaintiff asserts that the amount due and payable by the
defendants under the said Final Settlement Agreement is an
admitted, crystallized and ascertained sum of money. The
defendants have never disputed the said liability. Nor the
defendants have any conceivable defence.
4. The plaintiff has preferred this application with the
assertion that in order to delay or defeat the decree, which is
Shraddha Talekar, PS 5/33
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likely to be passed in the Summary Suit, the defendants have
initiated steps to sell their immovable assets, described in
paragraph 13 of the application, including RB Mines, owned by
defendant No.1-frm. The plaintiff has furnished details of the
persons whom the defendants approached to facilitate the sale of
the assets. Affdavits of those persons are fled in support of the
application.
5. The plaintiff, therefore, asserts that in the event the
defendants succeed in disposing of their assets before
adjudication of the suit, the plaintiff would be left in the lurch as
no property would be available against which the plaintiff can
proceed to execute the decree. Hence, this application for direction
to the defendants to furnish security and, in default, attach the
property of the defendants and also to restrain the defendants
from alienating or otherwise dealing with the properties, which
the defendants may be directed to be disclosed on affdavit, till the
disposal of the suit.
6. The defendant Nos.1, 2, 4 and 5 have fled an affdavit-in-
reply. An additional affdavit-in-reply, which was initially styled as
written statement, has also been taken on record by the Court,
Shraddha Talekar, PS 6/33
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post-amendment therein, with clarifcation in the order dated 29 th
September 2021. At the threshold, the defendants contend that
the plaintiff is guilty of suppressio veri and suggestio falsi. The
plaintiff has suppressed the nature of the transaction, varying
relationships which came into existence at different points of time
between the plaintiff and defendant Nos.1 and 2 and the
documents which evidence those transactions with a malafde
intent. Since the plaintiff has not approached the Court with
clean hands, the plaintiff is not entitled to any equitable relief.
7. The substance of the resistance put-forth by defendant
Nos.1, 2, 4 and 5 is that initially the plaintiff had approached the
defendant with an offer to purchase the mines of defendant No.2
for a consideration of Rs.85 Crore. The negotiations between the
parties were refected in the exchange of correspondence. The
plaintiff, however, did not make the payment, as promised. The
plaintiff took a stand that he had incurred expenses for
enhancing the capacity of mines. Later on, instead of an outright
purchase, the plaintiff evinced desire to become a partner of
defendant No.1-frm by making payment of certain amount and
not claiming profts for a certain period. Pursuant thereto, two
Memorandum of Understandings, dated 8 th December 2016 were
Shraddha Talekar, PS 7/33
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executed for joint venture operations. As the plaintiff desired not
to act upon the aforesaid MOUs, the said MOUs were
subsequently cancelled. Thereafter, the plaintiff desired to operate
as an agent of the defendant No.1 and recover the sum of
Rs.2,65,00,000/- which was, by then, paid by the plaintiff to
defendant No.2 and the further amount which the plaintiff
claimed to have spent for enhancing the mining capacity. The
defendant No.2 was coerced to execute an agency agreement on
19th July 2017.
8. In the meanwhile, the mining capacity of mines was
enhanced from 1 lakh metric tons per annum to 9.50 lakhs metric
tons per annum, with the efforts and intervention of the plaintiff.
The latter now insisted upon the defendant No.2 to induct him as
a partner of defendant No.1-frm with 33% share in the profts.
The plaintiff unjustifably claimed that in all the defendant No.2
owed a sum of Rs.22,16,20,000/- to the plaintiff. At the threat of
cancellation of the mining license, the plaintiff coerced the
defendant No.2 to execute the frst MOU, dated 16 th November
2018 acknowledging the liability to pay Rs.22,16,20,000/-, which
was non-existent.
Shraddha Talekar, PS 8/33
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9. The defendant Nos.1, 2, 4 and 5 have contended that the
second MOU, issue of cheques thereunder, and the execution of
the Final Settlement Agreement were all the outcome of the
duress and coercion exercised by the plaintiff. The execution of
the Final Settlement Agreement, acknowledgment of non-existent
liability and undertakings, were all under the weight of the
coercive circumstances brought to bear upon, by the plaintiff.
Apart from a sum of Rs.2,65,00,000/-, the plaintiff has not paid
any amount to the defendant No.2. Hence, the instant application
does not deserve to be countenanced.
10. The defendant No.3 has also resisted the application by
fling an affdavit-in-reply. According to defendant No.3, there is no
privity of contract between the plaintiff and defendant No.3 and
the defendant No.3 has been unnecessarily dragged in the
proceedings for being a partner of the defendant No.1-frm. None
of the agreements and/or documents, referred to and relied upon
by the plaintiff in support of his claim, is executed by defendant
No.3. He is not a party to the Final Settlement Agreement, on
which the Summary Suit is based. The defendant No.3 further
contends that even no case is made out against the defendant
No.1-frm. Thus, neither the defendant No.1 nor the defendant
Shraddha Talekar, PS 9/33
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No.3 owes any debt or liability, much less the huge sum of Rs.25
Crores to the plaintiff. The defendant No.3 has also assailed the
claim on the ground that the plaintiff has approached the Court
with unclean hands and does not deserve any equitable relief.
11. In the light of the aforesaid pleadings, I have heard
Mr.Yuvraj Choksy, the learned counsel for the plaintiff-applicant,
Mr.Ghanshyam Upadhyay, the learned counsel for defendant
Nos.1, 2, 4 and 5 and Mr.Simil Purohit, the learned counsel for
defendant No.3, at length. With the assistance of the learned
counsels for the parties, I have perused the pleadings, documents
annexed with the plaint, and fled in support of the respective
claims by the parties.
12. At the outset, it is imperative to note that in the instant
application, the Court is called upon to consider whether the
plaintiff is entitled to interim reliefs in the nature of attachment
before judgment and temporary injunction before the aspect of the
grant of leave to defend and/or judgment in a Summary Suit is
considered. The plaintiff has approached the Court on the
premise that the defendants, in order to delay or defeat the
decree, which is likely to be passed in this case, in the Summary
Shraddha Talekar, PS 10/33
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Suit, are making efforts at disposal of their immovable properties.
In paragraph No.13 of the application, the plaintiff has
enumerated the properties which the plaintiff believes the
defendants own and propose to sell and dispose of, as under :
(i) RB Mines Village Omkarpura, Tahsil Kothri,
District Bhilwara, Rjasthan. (Owned by Defendant No.1);
(ii) Offce at Aarji No. 2765/2, Opp. Pratap Nagar
School, Near La Eden Restaurant, Pur Road, Bhilwara
(Rajasthan) 311001. (Owned by Defendant No.3 and his
family)
(iii) Residential House B-382, Shastri Nagar, Bhilwara,
Rajasthan 311001 (Owned by Defendant No.3 and his
family).
13. On the aforesaid premise, the question that arises for
consideration is whether the plaintiff is entitled to an order in the
nature of attachment before judgment and/or restraining the
defendants from alienating and/or dealing with aforesaid
properties?
14. Mr.Yuvraj Choksi, the learned counsel for the plaintiff
submitted that the fact that the defendants have executed the frst
MOU, second MOU and the Final Settlement Agreement is
uncontroverted. These instruments constitute a clear and
unequivocal acknowledgment of the liability to pay the sum of
Rs.22.16 Crore. In the face of indisputable execution of multiple
Shraddha Talekar, PS 11/33
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instruments, coupled with undertakings not only in the
applications preferred before the Criminal Courts, for bail but also
for obtaining order of bail, the defendants can be said to have no
conceivable defence and, thus, the plaintiff becomes entitled to
judgment forthwith. According to Mr.Choksy, the fact that the
Memorandums of Understanding and the Final Settlement
Agreement have been executed by the defendants, who are
seasoned businessmen, reinforces the presumption that the
executants have executed the documents with full understanding
and responsibility. A faint attempt now being made by the
defendants to show that those documents were executed under
duress or coercion does not merit acceptance. Mr.Choksy
strenuously submitted that the apprehension entertained by the
plaintiff about the disposal of the property by the defendants
cannot be said to be unfounded as it is supported by affdavits of
four persons who were directly involved in the negotiations for the
disposal of those properties, initiated by the defendants. There is
no reason to discard their version, urged Mr. Choksy.
15. In the event of refusal to grant the interim reliefs, the
plaintiff would suffer irreparable loss as he would be left in the
lurch despite having obtained a decree.
Shraddha Talekar, PS 12/33
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16. Mr. Upadhyay, the learned counsel for defendant Nos.1, 2, 4
and 5 countered the submissions of Mr. Choksy. Taking the Court
through the documents evidencing the transactions between the
plaintiff and defendant No.2 since the year 2015, Mr.Upadhyay
urged with a degree of vehemence that the plaintiff does not
deserve to be heard at all on account of the deliberate suppression
of facts bordering on practicing fraud on the Court. On this count
alone, according to Mr.Upadhyay, not only the instant application
but even the Summary Suit deserve to the summarily dismissed.
It was submitted that a party cannot be permitted to obtain
advantage of one's own wrong. The factum of the execution of the
Memorandums of Understanding and Final Settlement Agreement
cannot be the be all and end all of the matter. If the totality of
circumstances are considered, especially the circumstances which
attended the execution of the Final Settlement Agreement while
the defendant No.5 was in custody, the agreements loose
credence.
17. In any event, according to Mr. Upadhyay, the varying stands
of the plaintiff at different points of time and the
contemporaneous record run counter to the claim of the plaintiff
Shraddha Talekar, PS 13/33
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that he had invested the amount of Rs.22,16,20,000/- for
inducting him as a partner in the defendant No.1-frm with 50%
share in the profts. Once, this claim of the plaintiff is shown to be
untrustworthy, the entire edifce crumbles.
18. Mr.Purohit, the learned counsel for defendant No.3 assailed
the very tenability of the suit under Order XXXVII of the Code.
Since the interim reliefs are to be granted in aid of the fnal relief,
in the circumstances of the case, according to Mr.Purohit, the
plaintiff would not be entitled to any interim relief. It was urged
that the Final Settlement Agreement dated 23rd November 2020,
which constitutes the foundation of the plaintiff's claim does not
make out any liability of the defendant No.3. Nor the defendant
No.1-frm can be fastened with any liability. The fact that the
defendant Nos.1 and 3 were not at all liable to discharge the
liability becomes evident from the Agreement dated 29 th July
2019, referred to in the plaint; the plaintiff has deliberately
suppressed. On this count alone, the payers qua the defendant
Nos.1 and 3 do not deserve to be entertained. Mr. Purohit made a
strenuous effort to demonstrate that the claim of the plaintiff of
having advanced the amount aggregating to Rs.22,16,20,000/- in
the additional affdavit dated 20th October 2021 is belied by the
Shraddha Talekar, PS 14/33
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documents on record. Lastly, placing reliance on the judgment of
the Supreme Court in the case of Raman Tech. and Process
Engineering Co. & Ors. V/s. Solanki Traders 1, Mr. Purohit would
urge that no case much less a strong prima-facie case for grant of
relief in the nature of attachment before judgment is made out.
19. The aforesaid submissions now fall for consideration.
20. The plaint proceeds on the premise that the Final
Settlement Agreement, dated 23rd November 2020 constitutes a
written agreement where-under the liability is unequivocally
acknowledged. The said Final Settlement Agreement, after
recording the history of transactions between the parties,
incorporates the terms of the settlement, inter-alia, as under :
1. The party of the First Part, the Parties of the
Second Part ("RKM PRM" "PM"), under take, confrm
and admit that an amount of Rs.22,16,20,000/- was
received during the period of November 2015 to March
2018 from the Party of the Third Part and same was
entrusted to them for investment in the business of the
Party of the First Part and for an offer of 50%
Partnership in the Party of the First Part. The parties of
the First and Second Part also admit and confrm what
is stated hereinabove in the recitals "A" to "N" of this
MOU.
2. It is undertaken, agreed and confrmed by the
Party of the First Part, Parties of the Second Part
("RKM", "PRM", "PM"), that an amount of Rs.25 Crores
shall be repaid to the Party of the Third Part on or
before 30.12.2020. Further the amount of Rs.25 Crores
shall be paid in the following manner :
1 (2008) 8 SCC 302
Shraddha Talekar, PS 15/33
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DATE OF PAYMENT AMOUNT
On or before 23.11.2020 Rs. 1 Crore
On or before 28.11.2020 Rs. 3 Crore
On or before 5.12.2020 Rs. 10 Crore
On or before 10.12.2020 Rs. 4 Crore
On or before 20.12.2020 Rs. 4 Crore
On or before 30.12.2020 Rs. 3 Crore
21. In addition, the plaintiff has relied upon the undertaking
given by the defendant No.5 Piyush in RA/32/2020(EOW/Crime/
26 of 2020/FIR No. 289 of 2020), and the averments in the
application for bail wherein also the aforesaid liability was
acknowledged and the defendant No.5 undertook to pay the
amount in installments, as indicated above.
22. Mr.Choksy, the leaned counsel for the plaintiff would urge
that the aforesaid clear and unequivocal admissions not only in
the Final Settlement Agreement but also in judicial proceedings
make out an impregnable case for the plaintiff. A party who has
given such unconditional undertaking shall not be permitted to
resile therefrom and turn around to assert that those
undertakings were obtained under coercion and duress. Since
there is no dispute about execution of the Final Settlement
Agreement and making applications and furnishing undertakings
before the Criminal Court, the submissions appear attractive at
Shraddha Talekar, PS 16/33
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the frst blush. However, the Final Settlement Agreement is
required to be read as a whole to appreciate the exact jural
relationship between the parties and the rights and liabilities
which emanate therefrom.
23. The Final Settlement Agreement records the history of
transactions between the parties. It refers to a Memorandum of
Understanding executed between the plaintiff and the defendant
Nos.1 and 2 on 10th November 2016. Reference is made to the frst
MOU, dated 16th November 2018 and the second MOU dated 29 th
July 2019. None of these agreements have been annexed to the
plaint. The defendant Nos.1, 2, 4 and 5 annexed the copies of
those agreements to the additional affdavit-in-reply. It must be
recorded that it was submitted on behalf of the plaintiff that the
plaintiff would proceed on the basis of denial as regards the
contentions in the additional affdavit-in-reply.
24. It would also be contextually relevant to note that the
additional affdavit-in-reply refers to a series of correspondence
between the parties. However, at this stage, it may be expedient to
briefy look into those documents which fnd reference either in
the Plaint or the Final Settlement Agreement dated 23 rd November
Shraddha Talekar, PS 17/33
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2020.
24.1 The frst document which evidences the transaction
between the parties is the Memorandum of Understanding, dated
10th November 2016. It was in the nature of 'term-sheet' to record
the main rights and obligations of the parties, (subject to further
negotiations and conclusions of the defnitive agreements to be
executed subsequently), for transfer of 50% of the rights in the
defendant No.1-frm, on 'as is where is basis'. The plaintiff agreed
to pay a sum of 22.5 Crore. It was recorded thereunder that the
defendant Nos.1 and 2 had already been paid a sum of Rs.7.5
Crore and the balance payments were to be made stage-wise.
24.2 On 8th December 2016, a Memorandum of
Understanding was executed between defendant No.1-frm
through its partner Mr.Ratneshwar Kumar-defendant No.2, the
plaintiff and Mr.Ramesh Chakra Shenigarapu to record that the
parties decided to form a Joint Venture Company (JVC) for the
purpose of undertaking business of extraction of the minerals in
terms of Mineral Extraction Plan approved by the Competent
Authority. At closing, the parties agreed to acquire the existing
securities of JVC of Rs.1 lakh, and, thereafter, the shareholding of
the parties in the JVC would be as under :
Shraddha Talekar, PS 18/33
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1) Plaintiff : 28%
2) Mr.Ramesh Chakra Shenigarapu : 22 %
3) Defendant No.2 : 50%
24.3 On 9th December 2016, an agreement was executed
between defendant No.1-frm and Shree Balaji Collateral
Management Private Limited ('SBCMPL') through the plaintiff.
Under the said agreement, the obligation of SBCMPL, inter-alia,
was to ensure that the current limit of the mining lease of 1 lakh
metric ton per year was increased to 9 lakh metric ton per year,
with the approval of the Competent Authority. SBCMPL was under
obligation to extract the minerals from the said mine/land at its
own cost; to carry out the mining activities (extraction of minerals)
by using all assets and equipments of defendant No.1. SBCMPL
was to pay a sum not less than Rs.100/- per ton for the minerals
extracted from the said land to defendant No.1
24.4 The aforesaid agreements, dated 8th December 2016
and 9th December 2016 were cancelled by letters dated 4th May
2017 and 7th May 2017.
24.5 On 19th July 2017, an Agency Agreement was executed
between the plaintiff and defendant Nos.1 and 2. Under the
Agency Agreement, the plaintiff came to be appointed as an agent
Shraddha Talekar, PS 19/33
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to represent the defendant No.1-frm and promote, market and
cause/facilitate sale of the minerals extracted from mine. For the
said contract of agency, the plaintiff was to be paid a nominal
remuneration of a sum equivalent of Rs.5/- per metric ton of
material sold by the plaintiff. Under clause 4.2, the defendant
Nos.1 and 2 agreed that with the growth and expansion of the
business of the frm, and achievement of the milestones of the
sale of the minerals, the plaintiff or his nominee would be
admitted as the partner of the frm with a 50% share in the
profts. Under this agreement, it seems, the plaintiff and
defendant No.2 agreed that initially the plaintiff would act as an
agent of the frm on a nominal remuneration to enhance
production capacity of mines and increase the sale of the minerals
and in consideration thereof, after achieving targets, the plaintiff
was to be admitted as a partner of the frm.
24.6 The aforesaid agreements were followed by two other
agreements executed by and between the defendant No.1 and,
Shwet Minchem Private Limited, and Dhawal Minechem Private
Limited, both through its Director Mr.Sunil Biyani, the plaintiff, to
purchase 5,00,000 metric ton of the extracted mineral per annum
from the defendant No.1-frm.
Shraddha Talekar, PS 20/33
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24.7 The frst MOU was again executed between the
defendant No.1-frm through defendant No.2, defendant No.2 and
the plaintiff. The relevant part of the frst MOU which constitutes
the substratum of the plaintiff's case, reads as under :
D. In terms the said Arrangement, Shri Sunil Biyani
has extended fnancial assistance for an amount of
Rs.22,16,20,000/- (Twenty Two Crores and Sixteen
Lakhs and Twenty Thousand Only) over a period of time
upto 16-11-2018, as under :
In the Books of RB Mining and Company
IRAA Clothing Pvt.Ltd. 183.79 Lacs
IRS Minerals Pvt. Ltd. 265.00 Lacs
Excavator Cost 100.00 Lacs
Received by R.K. Maheshwari 1667.41 Lacs
Total 2216.20
The receipt of which is hereby admitted and confrmed
by Shri Ratneshwar Kumar Maheshwari, the Firm and
its Partners.
24.8 Under the said agreement, the defendant Nos.1 and 2
purportedly agreed to repay the said amount of Rs.
22,16,20,000/- and also issued cheques for the same. What is of
material signifcance is the fact that under the First MOU, the
parties agreed that all the previous agreements, whether written
or oral, stood cancelled; which include the agreements, and
Memorandums of Understanding, referred to above. These
recitals in the frst MOU constitute an unequivocal
acknowledgment that there were previous agreements/
Shraddha Talekar, PS 21/33
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arrangements between the parties and the frst MOU was to be in
suppression thereof.
24.9 The frst MOU was followed by the second MOU, dated
29th July 2019 executed between the defendant No.2 in his
individual capacity and the plaintiff. Under the second MOU, it
was recorded that the plaintiff stood inducted into the defendant
No.1-frm as a partner with 33% share capital. Upon the
defendant No.2 refunding the amount of Rs.22,16,20,000/- to the
plaintiff, within the period stipulated therein, the plaintiff shall
transfer the said 33% of the capital in favour of the defendant
No.2.
25. The aforesaid agreements/Memorandums of Understanding
executed primarily between defendant No.2 and the plaintiff
indicate that the parties had entered into various forms of
arrangements, ranging from investment to get inducted into the
frm, agency to extract the minerals, enhance the capacity of
mining license and extract and sale the minerals etc.
26. In contrast, in the Plaint, the plaintiff avers that the plaintiff
was induced to part with a huge sum of Rs.22,16,00,000/-
towards investment for being inducted as a partner in the
defendant No.1-frm. The fact that the plaintiff asserted that the
Shraddha Talekar, PS 22/33
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said payment was made during the period November 2015 to
March 2018, in itself vouches for the transactions between the
parties over a period of time. Evidently, the jural relationship
between the plaintiff and defendant Nos.1 and 2, even if it is
assumed that the defendant No.2 had the authority to bind the
defendant No.1-frm fully, varied across the spectrum. Since the
frst MOU, dated 16th November 2018 expressly recorded that there
were previous agreements/arrangements between the parties, and
professed to cancel all those agreements/memorandums of
understanding, the plaintiff's attempt to wriggle out of the
situation and the consequences which emanate from the aforesaid
agreements/memorandums of understanding, which portray a
different picture of the transactions between the parties, does not
merit acceptance.
27. Viewed through this prism, the submission on behalf of the
defendants that the plaintiff suppressed the material facts cannot
be said to be unsustainable. As the Final Settlement Agreement
referred to the First and Second memorandums of understanding
and the First MOU, in turn, refers to and cancels the previous
arrangements/agreements, the plaintiff ought to have made a
clean breast of the transactions. This factor assumes signifcance
Shraddha Talekar, PS 23/33
.. 24 .. IAL-20000-2021-COMSS-63-2021.doc
for the reason that the plaintiff, as the record suggests, relies
upon multiple sources of passing consideration for a multitude of
purposes and at different periods of time.
28. Had the plaintiff approached the Court with a case that
during a specifed period, the plaintiff had paid a certain amount
for the purpose of being inducted as a partner in the defendant
No.1-frm, different considerations would have come into play.
Under the frst MOU, as noted above, the defendant No.2 allegedly
received a huge sum of Rs.1667.41 Lakhs, in addition to the
payments by Iraa Clothing Private Limited and IRS Minerals
Private Limited. In the context of the said recital, the plaintiff was
directed to fle an affdavit in justifcation of his claim of having
parted with a huge sum of Rs.22,16,20,000/-. Thereupon, the
plaintiff fled an additional affdavit accounting for the said
payment as under :
3. As set out in the captioned Interim Application
and Summary Suit, from November 2015 to March
2018, an amount of Rs.22,16,20,000/- (Rupees Twenty
Two Crore Sixteen Lac and Twenty Thousand only)
("said Amount") was made available to the Defendants
pursuant to the Agreement between the Parties that I
would be inducted as a partner and would be entitled
to 50% share in the profts of Defendant No.1(Firm).
Details of the said Amount is as follows :
Shraddha Talekar, PS 24/33
.. 25 .. IAL-20000-2021-COMSS-63-2021.doc
No. Particulars Amount (in Rs.)
1. Through RTGS 6,40,00,000/-
2. Cash Payment 10,26,00,000/-
3. Charges towards rent and 1,83,79,000//-
commission of Excavators
4. Towards Excavators 1,00,00,000/-
purchased by Defendant
No.1 Firm from the
Plaintiff
5. Settled/Agreed Interest 2,66,41,000/-
and Profts
Total : 22,16,20,000/-
29. Evidently, a huge sum of Rs.10,26,00,000/- was allegedly
paid in cash. Moreover, the plaintiff has included the amounts
towards the purchase price of the excavators by the defendant
No.1-frm and charges towards rent and commission of excavators.
The payments, in cash and through RTGS, were sought to be
substantiated by placing reliance on an e-mail, dated 24 th
January 2019 allegedly addressed by Mr.Anil Lohiya, the Chief
Financial Offcer of defendant No.1 and Suzuki Textiles Ltd.,
which was stated to be one of the Group Companies managed and
controlled by the defendant No.2, acknowledging the payment and
liability. (Exh.A to the additional affdavit).
30. Mr.Purohit and Mr.Upadhyay took pains to point out
multiple discrepancies in the said statement (Exh.A) and how the
entries therein contradict the case of the plaintiff. A detail
Shraddha Talekar, PS 25/33
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analysis, at this stage, is not at all warranted. It would be suffce
to note that the payments recorded under Caption (A) therein
appeared to have been made by different entities like Iraa Clothing
Private Limited, Neeharika Infrastructure Pvt. Ltd. and Seema
Textiles. The payments under caption (B), aggregating to Rs.265
Lakhs were made by IRS Minerals Pvt. Ltd. in the books of
defendant No.1. This payment is not disputed on behalf of
defendant Nos.1, 2, 4 and 5. The payment in cash under caption
(C), merely records multiple persons to whom money was paid in
cash at different places aggregating to Rs.1033.5 Lakhs.
31. The situation which thus obtains is that multiple parties
having distinct juristic status, were involved in multiple
transactions. The endeavour on the part of the plaintiff seems to
be to make out a case that since he was associated with the
entities, in some capacity or other, the payment made to
defendant No.1 or defendant No.2 or any of the concerns with
whom defendant No.2 was associated with, ought to be
appropriated towards the alleged payment for inducting him as a
partner in defendant No.1-frm.
32. I fnd it rather diffcult to accede to such an over-simplistic
approach in justifcation of the claim that the plaintiff had parted
Shraddha Talekar, PS 26/33
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a huge sum of Rs.22,16,20,000/- pursuant to the agreement
between the plaintiff and defendant No.1-frm and its partners.
The prima-facie suppression of the genesis of the transaction,
developments over the period of time, and how the jural
relationship oscillated from one end to another, further erode the
credibility of such claim.
33. At this juncture, the fact that the defendant No.3, who is
admittedly a partner of defendant No.1-frm, was not a party to
any of the agreements/Memorandums of Understanding assumes
critical signifcance. In the Final Settlement Agreement, dated 23 rd
November 2020, it was inter-alia recorded that in November 2018,
the plaintiff learnt that the defendant No.2 and Mr. Bhagwan
Swaroop Mandowara, another partner of defendant No.1-frm
executed a Partnership Deed with the defendant No.3 on 25 th
September 2016 to induct the later as a partner in the defendant
No.1-frm with 50% share in the profts. An endeavour was made
to show that the induction of defendant No.3 as a partner in
defendant No.1-frm triggered the dispute.
34. Mr. Upadhyay, the learned counsel for defendant Nos.1, 2, 4
and 5 invited the attention of the Court to the allegations in the
Shraddha Talekar, PS 27/33
.. 28 .. IAL-20000-2021-COMSS-63-2021.doc
FIR lodged by the plaintiff, wherein also the induction of
defendant No.3 as a partner in the frm was stated to be a
dishonest act. Mr.Upadhyay would urge that as back as December
2016 itself, the plaintiff was aware that Mr.Chhabriya had a stake
in the defendant No.1-frm and recorded the said fact in the e-mail
dated 2nd December 2016 (Exh.G to the affdavit-in-reply). Indeed,
it does not appeal to human credulity that with such an intensive
involvement of the plaintiff with the defendant Nos.1 and 2 since
the year 2015 and execution of multiple agreements/
memorandums of understanding, the plaintiff would not have
known that the defendant No.3 was a partner of defendant No.1-
frm.
35. In contrast, prima-facie, a legitimate inference can be drawn
that the plaintiff entered into the transactions with defendant
No.2 sans the concurrence of the rest of the partners of defendant
No.1-frm. Mr. Purohit was justifed in canvassing a submission
that in the circumstances of the case, especially in the absence of
the execution of the Final Settlement Agreement on behalf of
defendant No.1-frm, though it was shown as a party of the First
Part, no liability can be fastened on the defendant No.3 as it
cannot be said that the liability was incurred by defendant No.1-
Shraddha Talekar, PS 28/33
.. 29 .. IAL-20000-2021-COMSS-63-2021.doc
frm.
36. The endeavour of Mr.Choksy to salvage the position by
invoking the principle of joint liability under section 25 of the
Indian Partnership Act, 1932, in the circumstances of the case,
does not appear to be well merited. We have noted that not only
the Final Settlement Agreement is not at all executed on behalf of
defendant No.1-frm, though it is made a party thereto, but also
under the second MOU, dated 29 th July 2019, the liability was
incurred by defendant No.2 in his individual capacity as all the
undertakings were given by defendant No.2.
37. A proftable reference, at this stage, can be made to the
judgment of the Supreme Court in the case of Raman Tech. And
Process Engg. Co. and Ors. Vs. Solanki Traders 2, wherein the
Supreme Court expounded the legal position as regards the
exercise of the powers under Order XXXVIII Rule 5 of the Code.
Before the Court ventures to exercise the said power, it must be
satisfed that there is a reasonable chance of a decree being
passed in the suit against the defendant, which implies strong a
prima facie case. Secondly, the Court must be further satisfed
that the defendant is attempting to remove or dispose of his assets
2 (2008) 2 SCC 302
Shraddha Talekar, PS 29/33
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with the intention of defeating the decree that may be eventually
passed. The observations of the Supreme Court in paragraph Nos.
4 to 6 are instructive, and hence, extracted below :
4 The object of supplemental proceedings (applications
for arrest or attachment before judgment, grant of
temporary injunctions and appointment of receivers) is to
prevent the ends of justice being defeated. The object of
order 38 rule 5 CPC in particular, is to prevent any
defendant from defeating the realization of the decree that
may ultimately be passed in favour of the plaintiff, either by
attempting to dispose of, or remove from the jurisdiction of
the court, his movables. The Scheme of Order 38 and the
use of the words `to obstruct or delay the execution of any
decree that may be passed against him' in Rule 5 make it
clear that before exercising the power under the said Rule,
the court should be satisfed that there is a reasonable
chance of a decree being passed in the suit against the
defendant. This would mean that the court should be
satisfed the plaintiff has a prima facie case. If the
averments in the plaint and the documents produced in
support of it, do not satisfy the court about the existence of
a prima facie case, the court will not go to the next stage of
examining whether the interest of the plaintiff should be
protected by exercising power under Order 38 Rule 5CPC.
It is well-settled that merely having a just or valid claim or
a prima facie case, will not entitle the plaintiff to an order
of attachment before judgment, unless he also establishes
that the defendant is attempting to remove or dispose of his
assets with the intention of defeating the decree that may
be passed. Equally well settled is the position that even
where the defendant is removing or disposing his assets,
an attachment before judgment will not be issued, if the
plaintiff is not able to satisfy that he has a prima facie
case.
5. The power under Order 38 Rule 5 CPC is drastic and
extraordinary power. Such power should not be exercised
mechanically or merely for the asking. It Should be used
sparingly and strictly in accordance with the Rule. The
purpose of Order 38 Rule 5 is not to convert an unsecured
debt into a secured debt. Any attempt by a plaintiff to
utilize the provisions of Order 38 Rule 5 as a leverage for
coercing the defendant to settle the suit claim should be
discouraged. Instances are not wanting where bloated and
doubtful claims are realised by unscrupulous plaintiffs by
obtaining orders of attachment before judgment and forcing
Shraddha Talekar, PS 30/33
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the defendants for out of court settlement, under threat of
attachment.
6. A defendant is not debarred from dealing with his
property merely because a suit is fled or about to be fled
against him. Shifting of business from one premises to
another premises or removal of machinery to another
premises by itself is not a ground for granting attachment
before judgment. A plaintiff should show, prima facie, that
his claim is bonafde and valid and also satisfy the court
that the defendant is about to remove or dispose of the
whole or part of his property, with the intention of
obstructing or delaying the execution of any decree that
may be passed against him, before power is exercised
under Order 38 Rule 5 CPC. Courts should also keep in
view the principles relating to grant of attachment before
judgment (See - Prem Raj Mundra v. Md. Maneck Gazi, AIR
(1951) Cal 156, for a clear summary of the principles.)
38. In the case at hand, the aforesaid analysis would clearly
indicate that the plaintiff has not succeeded in making out a
strong prima-facie case. The plaintiff has multiple impediments to
surmount. One, the nature of the transaction. Two, the quantum
of the amount allegedly parted with. Three, the purpose for which
the amount was paid. Four, the circumstances in which the Final
Settlement Agreement was executed and the undertakings were
given by the defendant No.2 and defendant No.5. Moreover, by the
present application, the plaintiff proposes to attach the property
to defendant No.3 (Item Nos.2 and 3, extracted above), against
whom the case of the plaintiff stands on an even weaker
foundation. Even the endeavour of the plaintiff to proceed against
the property of defendant No.1-frm, is not free from infrmities.
The mere fact that the plaintiff has placed on record affdavits of
Shraddha Talekar, PS 31/33
.. 32 .. IAL-20000-2021-COMSS-63-2021.doc
persons to indicate that there were attempts and negotiations for
the sale of those properties, in the absence of a strong prima facie
case in favour of the plaintiff does not advance the cause of the
plaintiff qua the property of defendant No.1-frm.
39. Undoubtedly, the defendant Nos.1 and 2 admit that a sum of
Rs.2.65 Crore has been paid by the plaintiff to defendant No.2.
The question as to whether the defendant Nos.1 and 2 would be
entitled to a leave to defend the suit, in the backdrop of the said
admitted claim, is an aspect which can be legitimately considered
when the Court is called upon to exercise the jurisdiction under
Order XXXVII of the Code. At this stage, in the totality of the
circumstances, no mileage can be drawn by the plaintiff from the
said admission of defendant Nos.1 and 2 that a sum of Rs.2.65
Crore has been paid. All questions as regards the entitlement of
the defendants to defend the suit are expressly kept open for
consideration and Court has not delved into the said aspect of the
matter at all.
40. The upshot of the aforesaid consideration is that the plaintiff
is not entitled to any of the interim reliefs. The application,
therefore, deserves to be dismissed.
Shraddha Talekar, PS 32/33
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41. Hence, the following order :
ORDER
The application stands dismissed.
Costs in cause.
(N. J. JAMADAR, J.)
Shraddha Talekar, PS 33/33
