Calcutta High Court (Appellete Side)
Macmet India Private Limited vs Apc System & Products Pvt. Ltd. And ... on 4 October, 2024
04.10.2024
IN THE HIGH COURT AT CALCUTTA
FRIDAY
Court : 04
Item : 188
CIVIL APPELLATE JURISDICTION
(AD)
APPELLATE SIDE
FAT 584 of 2018
with
IA NO: CAN 1 of 2018(Old CAN 9621 of 2018)
IA NO: CAN 2 of 2024
Macmet India Private Limited
Versus
APC System & Products Pvt. Ltd. and another
Mr. Sabyasaschi Chaudhury,
Mr. Rajarshi Dutta,
Mr. Somdutta Bhattacharyya,
Mr. Shounak Mukherjee,
Ms. Akshita Bohra
......for the Appellant
Mr. Aneek Pandit,
Ms. Labanyasree Sinha,
Ms. Sonakshi Mitra,
Mr. Ali Rizvi,
Ms. Ankita Sikdar
......for the Respondent No. 1
Mr. Avishek Guha,
Ms. Enakshi Saha
......for the Respondent No. 2
Re: CAN 1 of 2018
1. The appellant has prayed for stay of operation of the
judgment and decree dated 31st July 2018 and for
other relief. The learned Counsel Mr. Sabyasaschi
Chaudhury has made submissions and prays for the
relief of stay of operation of the judgment whereby
and whereunder the appellant/defendant has been
held liable to pay to the plaintiff the sum of Rs.
3,14,72,753/- (rupees three crore fourteen lakh
2
seventy two thousand seven hundred and fifty three
only).
2. Briefly stating the relevant facts are that the
defendant had placed an order to the plaintiff for
manufacturing and supply of certain air pollution
control systems. It was claimed in the suit filed by
the plaintiff that it had manufactured the equipment
to be supplied. Considerable expenses had been
incurred over manufacturing, payment to sub-
vendors, as well as designing and drawing. After
manufacturing of the equipment a notice was sent to
the defendant to inspect the goods. The defendant
did not inspect the goods and also did not take
delivery of the goods in question. Under the
circumstances, the plaintiff encashed the bank
guarantee of Rs. 52,00,000/- (rupees fifty two lakhs
only) which it had given against the advance made by
the defendant at the time of placing order.
3. Upon consideration of the case the Trial Court has
found the defendant liable to pay an amounts under
the following heads:-
• Manufacturing cost : Rs. 2,05,18,000/-
• Payment made to sub-vendors : Rs.
50,00,000/-.
• Expected reasonable profit : Rs. 50,00,000/-.
Coming to a total amount of Rs. 3,14,72,753/-
4. The appellant/ defendant has submitted that the
plaintiff was aware of the fact that the supply order
was made to the plaintiff pursuant to a back to back
3
agreement with one M/s. Adhunik Power and
Natural Resources Ltd. (hereinafter referred to as
'APNR'). The plaintiff was thus to effect the supply of
the manufactured goods only upon dispatch
clearance from APNR under the larger contract of
APNR with the defendant. Since the APNR did not
give the dispatch clearance there was no question of
the supply being affected by the plaintiff. It is also
submitted that the quantification of the amounts
under the different heads by the Trial Court is
without any basis whatsoever. Other than the
quantification, though not admitted, with respect to
payment made to sub-vendors (Rs.9,45,753/-), there
is no basis whatsoever to support the quantification
of amounts under the other heads for which the
money decree has been passed.
5. The Trial Court has assigned the reason that in spite
of several notices to inspect, the defendant did not
come forward to inspect the equipment claimed to
have been manufactured by the plaintiff. Having
omitted to do so the defendant is estopped from
denying or disputing the claim set forth by the
plaintiff in respect of manufacturing cost, drawing
and designing as also the expected reasonable profit.
The quantification is thus based only on estoppel.
The quantification is also assailed by submitting that
the sum is in violation of Section 73 of the Indian
Contract Act, 1872.
6. Since a strong prima facie case has been made out it
is submitted by the learned Counsel for the appellant
4
that this Court may exercise jurisdiction under Order
XLI Rule 5 C.P.C., to secure quantification of a
decretal amount only with respect to the alleged
amounts paid to the sub-vendors (Rs. 9,45,753/-).
Since other amounts quantified by the Trial Court
are illegal and without any basis the appellant
should not be put to terms requiring the appellant to
secure these amounts also, while granting stay of
operation of the judgment and decree.
7. Learned Counsel for the respondent on the other
hand, submits that a formal order of admission is
required in the present appeal before an order is
passed on the stay application. There is no lacunae
in evidence. The allegations in this regard are to be
considered when the appeal is heard on merits. The
appellant has filed the application for stay in the year
2018, which has been moved now in the year 2024.
It is thus submitted that the application has not
been moved without unreasonable delay.
8. It is also submitted that the appellant was granted
several opportunities to inspect the manufactured
goods, which opportunity of inspection he did not
avail. Such conduct of the appellant disentitles him
to deny or dispute the claim and quantification in
respect of manufacturing of goods, its drawing and
designing and expected reasonable profit. No prima
facie case is made out for grant of stay because the
Trial Court has taken into consideration 23 exhibits
on behalf of the plaintiff/respondent. Submission of
the learned Counsel for the appellant that the
5
quantifications of judgment and decree are without
any basis is, therefore, misplaced and untenable. It
is further submitted that the appellant cannot make
out a case of irreparable injury in respect of the
money decree as he is and would be entitled to
restitution in the event he succeeds in appeal.
9. Having considered the submission advance on behalf
of the parties, we propose first to deal with the
submission that an order of formal admission is
required in the present appeal. In this connection,
we consider it appropriate to refer to Chapter II Rule
2 as well as Chapter V Rule 17 of The Appellate
Side Rules of the High Court at Calcutta
hereinafter referred to as 'Appellate Side Rules' for
brevity) which reads as follows:
"Chapter- II
2. In addition to the powers conferred upon him by other
rules the Registrar shall have the following duties and
powers in relation to civil and criminal matters:
...
(3)To receive an appeal from the decree or order of a
subordinate Civil Court, and in the case of Second Appeals
and Appeals from Orders, if in order, to post them for
hearing under Order XLI, Rule 11, and, in the case of
Appeals from Original Decrees, to issue notices as soon as
the appeal is registered."(emphasis ours)
"Chapter-V
17. The officer to whom the memorandum is presented
under Rule 14 of this Chapter shall endorse on every such
Memorandum the date of the presentation and shall send
the same to the Stamp Reporter. The Stamp Reporter, if the
memorandum is not barred by limitation and is sufficiently
stamped and complies with the provisions of these Rules,
shall record a Report to that effect and shall, after the
Officer - in - Charge of the Judicial Department has
scrutinised the Memorandum and has satisfied himself that
the stamps have been properly punched and defaced under
the Rules and that there are no obvious defect -
(a)in the case of an Appeal from an Original Decree, an
Appeal under the Workmen's Compensation Act, an Appeal
from an Order under Article 226 of the Constitution [an
Appeal under the Indian Railways Act, 1890 (Act 4 of
1890), an Appeal under the Motor Vehicles Act, 1988], an
appeal preferred under section 37(I)(b) of the Arbitration
and Conciliation Act, 1996 thereby setting aside an
arbitral award under section 34 of the said Act, a First
appeal against a "deemed decree" provided in any statute,
if the said "deemed decree" is not passed in execution
proceedings, admit it and cause it to be registered and
Notice to issue to the Respondent,"(emphasis ours)
10. Plain reading of these two provisions makes it clear
that in the present case being an appeal against an
original judgment and decree the stage of admission
is crossed immediately after filing of the appeal. In
the present case by virtue of the above noted two
provisions in the Appellate Side Rules the present
first appeal is already admitted. We, therefore, find
no merit in the submission advanced by the learned
Counsel for the respondent that a formal order of
admission is required to be passed by this Court.
Such an order now would only be futile. We also fail
to see how not passing of such a formal order of
admission, when the appeal is already admitted,
would in any way prejudice the respondent. Reliance
placed by the learned Counsel for the respondents on
the decision in the case of Moti Lal vs. Bhagwan
Das reported in (2005) SCC Online All 148, in our
opinion, is unsustainable. Insofar as this decision
rendered by the Allahabad High Court we find that
the same did not take into consideration that there
was any such rules in the Allahabad High Court
Rules as is existing in Chapter II Rule 2 and Chapter
V Rule 17 of the Appellate Side Rules of this Court,
noted above.
11. The judgment has also been rendered in a different
context, being whether the defendant should be
given an opportunity of hearing at the stage of the
proceedings under Order XLI Rule 11 C.P.C., to find
out whether an appeal deserves to be admitted, or is
frivolous and without merit.
12. The learned Counsel for the appellant, on the other
hand has relied upon decision of the Apex Court in
the case of Sihor Nagar Palika Bureau vs.
Bhabhlubhai Virabhai & Co. reported in (2005) 4
SCC 1 referring to this report he has submitted that
this Court in exercise of its discretion may consider
the grant of stay of the judgment and decree under
appeal since a strong prima facie case has been
made out. He has also referred to a decision of the
Division Bench of the Bombay High Court in the case
of Ecopack India Paper Cup Pvt. Ltd. vs. Sphere
International reported in (2018) SCC Online Bom
540. Relying upon these reports he submits that a
party opposing grant of stay, as is being done in the
instant case cannot be permitted to assert a
proposition that imposition of a condition for stay is
a mandatory pre-requisite to grant of stay. He
submits that in an appropriate case as in the instant
case where a strong prima facie case has been made
out to show that quantum of a decretal amount
insofar as payment made to sub-vendors to the tune
of Rs. 50,00,000/- (rupees fifty lakhs only),
manufacturing costs Rs. 2,05,18,000/- (rupees two
crore five lakh and eighteen thousand only) and
reasonable profit Rs. 50,00,000/- (rupees fifty lakhs
only) is not based on any evidence and is without
any basis, then this Court ought to exercise its
discretion whether to impose any condition as the
Court may deem appropriate, or not to impose any
condition in the event a stay or injunction is granted.
Having considered the rival submissions we find that
the law is well settled that the Appellate Court in
exercise of discretionary power to grant stay, which
is equitable in nature should ensure that the
applicant for stay must do equity for seeking equity.
A stay is not to be granted merely because an appeal
has been filed. The applicant for stay is thus
required to be put to terms since the execution of the
decree would be delayed even though the decree
holder has a declaration in its favour. At the same
time, if the decree is given effect to, 'a substantial
loss' is likely to be caused to the party applying for
stay. The terms, however, are required to be
reasonable and having due regard to the facts and
circumstances of the case in which it is being
passed. While fixing such terms the Court is required
to strike an equilibrium considering the facts and
circumstances of the case so that the party emerging
successful in the appeal can be placed in the same
situation in which it would have been, if the interim
order would not have been passed against it. In
exercise of such discretion the Court is to be guided
by robust common sense and common knowledge of
human affairs gained by judicial experience in
addition to the material available on record. In this
case, this Court considers it apposite to refer to
decision of the Apex Court in the case of Atma Ram
Properties (P) Ltd. vs. Federal Motors (P) Ltd.
Reported in (2005) 1 SCC 705.
13. Upon consideration of the above submissions that
the decree is based only on estoppel and that there is
no evidence in support of the respondent/ plaintiff's
claim and quantification allowed by the Court; and
without expressing any opinion on the merits of the
appeal, wherein challenge to the above noted
quantifications and admissibility of the claim of the
plaintiff/respondent remains to be considered, we do
find that a strong prima facie triable case has been
made out for consideration in the appeal.
14. The appellant also has a valuable statutory right of
appeal to be availed in the present proceedings. At
the same time there is a decree in favour of the
respondent, the justification of which has seriously
been disputed in the above noted terms.
15. Having regard to the above facts and circumstances,
and the law in this regard, we are of the opinion that
execution of the decree be stayed subject to the
following condition/s:
i. The appellant shall deposit 20% of the due
decretal amounts with the Registrar General
of this Court within three weeks after the
Court reopens, post the ensuing puja
vacation.
ii. The amount so deposited shall be invested in
short term interest bearing fixed deposit in a
nationalised bank and shall be renewed from
time to time till disposal of the present appeal.
iii. The appellant shall furnish bank guarantee in
respect of the remaining 80% of the decretal
amount to the Registrar General of this Court
within the same period specified in (i) above.
The bank guarantee shall initially be for a
period of one year and renewed thereafter
every successive year.
iv. Till the time fixed for deposit of the above
amount i.e. till 22nd November, 2024 there
shall be unconditional stay on execution of the
judgment and decree under appeal.
v. The stay of the decree shall stand vacated in
the event the appellant fails to comply with
conditions (i) and (iii) above.
16. CAN 1 of 2018 is accordingly disposed of.
(Madhuresh Prasad, J.)
(Supratim Bhattacharya, J.)
