Pioneer Multifilms vs M/S Pacquick Industries Ltd.
2013 Latest Caselaw 2819 Del

*           IN THE HIGH COURT OF DELHI AT NEW DELHI

                                                  Reserved on: 4th July, 2013
%                                            Date of Decision:8th July, 2013

+      CO.APP. NOS.906/11, 13/2012 & 2437/12 IN CO.PET. 194/2006

       PIONEER MULTIFILMS                                 ..... Petitioner
                    Through:            Mr. Vivek Sibal with Ms.Pooja,
                                        M.Saigal, Advocates for the
                                        applicant Darshan Khurana.
                           versus

       M/S PACQUICK INDUSTRIES LTD.             ..... Respondent

Through: Mr.Sandeep Aggarwal, Advocate for PICUP.

                              Mr.Pankaj      Kumar         Singh,
                              Advocate for the applicant in
                              Co.App.No.2094/2012.
                              Mr.Preet     Pal       Singh    for
                              respondents 1 to 3.

CORAM:
MR. JUSTICE R.V. EASWAR

R.V. EASWAR, J.:


1.     A brief history of the case requires to be noted.      M/s. Pacquick

Industries Ltd., hereinafter referred to as the "Company", had borrowed a sum

of `11 crores (approximately) from M/s. Pradeshya Industrial and Investment

Corporation of UP Ltd., Lucknow, hereinafter referred to as "PICUP", for the

purpose of its business. The Company had obtained the loan by mortgage of

the property at B-54, Sector-57, Noida, U.P. along with the plant and

machinery. The title deeds relating to the property were handed over to

PICUP. Soon the Company ran into rough weather and was unable to re-pay

the amount to PICUP. The Company had also borrowed a sum of

`62,53,375/- from one Darshan Khurana, sole proprietor of Pioneer

Multifilms of Delhi. The Company was unable to re-pay the aforesaid

amount also due to falling business. In these circumstances, Darshan

Khurana filed Company Petition No.194/2006 for winding up of the

Company under Section 433(e) read with Section 434 (1)(a) of the Companies

Act, 1956.

2. In order to help the Company tide over its financial difficulties and

revive its business, a one-time settlement („OTS‟, for short) was entered into

between PICUP and the Company under which the debt to PICUP was settled

at `2,29,85,000/-. The understanding was that on payment of the aforesaid

sum, PICUP would return the title deeds to the Company and the Company

would strive to revive its business.

3. In the meantime a joint application under Order 23, Rule 3 of the CPC

was filed in C.A. No.10/2011 recording a settlement arrived at between

Darshan Khurana and the Company. The brief terms of the settlement were

that Darshan Khurana will pay the amount of `2,29,85,000/- to PICUP and

when the company obtains the title deeds from PICUP, the property would be

sold to Darshan Khurana. C.A. No.11/2011 was an application filed for

impleadment of PICUP in the settlement proceedings.

4. On 07.01.2011 this Court issued notice in both the applications to the

standing counsel for PICUP and directed him to file a reply within three

weeks. In the interim and subject to further orders of this Court, it was

directed that the OTS offer be complied with by the parties by depositing the

amount with PICUP. The matter was directed to be fixed again on

01.03.2011.

5. On 01.03.2011 both the applications were taken up by this Court for

disposal. The impleadment application (C.A. No.11/2011) was allowed with

the consent of the parties and PICUP was impleaded as a party to the

proceedings. On the same date this Court also passed an order in C.A.

No.10/2011 recording the fact that the OTS amount was already paid by

Darshan Khurana to PICUP (on 10.01.2011).

6. On 07.03.2011 this Court passed another order in C.A. No.10/2011

directing that on the filing of an affidavit undertaking payment of RC

collection charges levied on PICUP by the concerned District Authorities,

"M/s. PICUP is directed to release the original title deeds of documents,

property and machinery to the petitioner within a period of two weeks

thereafter". A company petition was filed by PICUP in C.A. No.749/2011

seeking modification of the order dated 07.03.2011, the modification sought

for being that PICUP may be directed to release the title deeds to the company

and not to Darshan Khurana (who was the petitioner) and also direct the

guarantors of the company to file an undertaking to pay the RC collection

charges. While disposing of this application by order dated 25.04.2011, this

Court directed that keeping in view the terms of the settlement between the

parties, PICUP should deposit the title deeds of the property in question with

the Registrar of this Court within one week. This order was complied with by

PICUP and as of now the title deeds to the property are in the custody of the

Registrar of this Court.

7. I have before me today three applications for consideration. Company

Application No.906/2011 is an application filed by PICUP asking this Court

to issue directions that the title deeds to the property shall not be handed over

to Darshan Khurana. Company Application No.13/2012 is also filed by

PICUP seeking return of the title deeds deposited with this Court. Company

Application No.2437/2012 is filed by one Raj Kumar Arora seeking to

purchase the property for `3.25 crores or in the alternative to permit an

auction of the property, since according to him the property has been wholly

undervalued and was sought to be sold to Darshan Khurana only at

`2,29,85,000/-.

8. Before I take up the aforesaid three applications for disposal on the

basis of the arguments heard by me from the Company as well as PICUP, I

must refer to an order dated 10.04.2013 passed by this Court in Company

Petition No.194/2006. In this order it was observed that the action taken by

PICUP to cancel the OTS on the ground that the parties did not make full

disclosure of the facts cannot be faulted. Apart from this observation, this

Court recognised the difficult situation in which Darshan Khurana was placed

inasmuch as he had not only not got back the amount of `62 and odd lakhs

due from the company, but he has also paid PICUP a further sum of

`2,29,85,000/- without getting anything in return till date. Ultimately this

Court noted that the Company and Darshan Khurana have certain proposals to

make to PICUP and directed them to make them before the Managing

Director of PICUP within 10 days, with the further direction that the MD may

meet the parties at any date between 13th and 20th May, 2013 after giving at

least one week‟s advance notice. The decision taken by the MD was directed

to be placed before this Court by 4th July, 2013.

9. At the outset, the learned counsel for PICUP stated that no meeting had

taken place between Darshan Khurana and the Company on the one hand and

the Managing Director of PICUP on the other till today. He therefore

submitted that the proceedings have become infructuous and nothing further

needs to be done. That may be so, but that does not impinge on the disposal

of the other three applications taken up for hearing today.

10. In support of the applications filed by PICUP, it is contended that the

Company and Darshan Khurana have colluded and played a fraud on PICUP.

It is stated that the sale of the property mortgaged to PICUP, in favour of

Darshan Khurana was contrary to the terms of the OTS and once it came to

the knowledge of PICUP, the OTS was cancelled. It is further stated that

against the cancellation of the OTS, the Company has filed a writ petition

before the Lucknow Bench of the Allahabad High Court and notices have

been issued. It is pointed out that the limited scope of the present proceedings

is only whether the title deeds should be returned to PICUP pursuant to the

cancellation of the OTS. This in fact is the prayer in Company Application

No.13/2012. The contention of PICUP in Company Application No.906/2011

is that the title deeds to the property can in no event be handed over to

Darshan Khurana as that would prejudice the claims of PICUP drastically. In

effect, it is submitted that the logical result of the cancellation of the OTS is

that the title deeds should be returned to PICUP.

11. The contention of the learned counsel for the petitioner (Darshan

Khurana, Proprietor: Pioneer Multifilms) however, is that the amount of

`2,29,85,000/- was paid by him and there is ample documentary evidence on

record to prove the same and once the amount has been paid to PICUP in

terms of the OTS, and when subsequently the OTS is cancelled, it is idle on

the part of PICUP to seek return of the title documents and also seek to hold

on to the monies. It is contended that PICUP cannot at the same breath

contend that the OTS has been cancelled and also refuse to return the monies

to Darshan Khurana. It is pointed out that Darshan Khurana, the petitioner, is

not the borrower from PICUP and what he did was only to discharge the

amount due to PICUP by the Company. It is further submitted that the terms

of settlement between the Company and Darshan Khurana were known to

PICUP since PICUP was impleaded as party to the proceedings by an order of

this Court passed on 01.03.2011 in Company Application No.11/2011, which

order has become final. In these circumstances, it is contended that if PICUP

wants to get back the title deeds from the Registrar of this Court, it can do so

only on paying the amount of `2,29,85,000/- to Darshan Khurana.

12. I find sufficient force in the submission of Mr. Sibal, appearing for the

respondent Darshan Khurana, Proprietor, Pioneer Multifilms in the

application filed by PICUP. As rightly pointed out by him, PICUP was

impleaded in the settlement arrived at between Darshan Khurana and the

Company. After impleadment, PICUP cannot say that any fraud was sought

to be played upon it by the Company and Darshan Khurana. In fact, this

Court has recorded in its order dated 01.03.2011 in Company Application

No.11/2011 that the application for impleading PICUP was allowed with the

consent of the parties. PICUP, having consented to the impleadment, cannot

now turn around and say that it was not aware of the proposed sale of the

property in favour of Darshan Khurana. I am not in the present proceedings

concerned with the validity of the action taken by PICUP in cancelling the

OTS, which is the subject matter of separate proceedings before the Lucknow

Bench of the Allahabad High Court. Even assuming that the cancellation was

valid, it gives no right to PICUP to retain the monies which it received from

Darshan Khurana on account of the dues of the Company and in full

discharge thereof as per the OTS which was then operational. PICUP cannot

take a contradictory stand that it would cancel the OTS and also not return the

monies to Darshan Khurana. The argument of the learned counsel for PICUP

that PICUP does not recognise Darshan Khurana as its debtor cannot, in the

circumstances of the case, be accepted. Technically and legally speaking,

Darshan Khurana himself was not the debtor; but the monies came from

Darshan Khurana and this was within the knowledge of PICUP. PICUP was

also aware of the source of the monies by being party to the settlement arrived

at between Darshan Khurana and the Company. With such awareness,

PICUP cannot say that it is entitled to the return of the title deeds and is also

entitled to retain the monies paid by Darshan Khurana on account of the debt

due by the Company.

13. Mr. Sibal submitted in Court that he should either get the title deeds to

the property or get back the money paid to PICUP in discharge of the dues of

the Company. For the reasons stated above, I am of the view that PICUP

should return the amount of `2,29,85,000/- to Darshan Khurana. It is directed

to do so within three weeks. Once the amount is paid as directed, PICUP will

be entitled to get back the title deeds from the Registrar of this Court by

making a separate application. C.A. No.13/2012 is disposed of in these terms.

14. C.A. No.906/2011 which has been filed by PICUP is that the title

deeds shall not be handed over to Darshan Khurana. In the light of the order

passed in C.A. No.13/2012, the question of handing over the title deeds to

Darshan Khurana does not arise. The application is disposed of accordingly.

C.A. No.2437/2012

15. This application has become infructuous in the light what is stated

above and is dismissed as such.

CO. PET. 194/2006

Renotify on 19.09.2013.

(R.V. EASWAR) JUDGE July 08, 2013 hs