Blb Ltd. vs The Calcutta Stock Exchange
2014 Latest Caselaw 5447 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                  Order delivered on: 3rd November, 2014

+                      O.A. No.11/2013 in CS(OS) No.272/2004

       BLB LTD.                                                   ..... Plaintiff
                               Through      Mr.Anil Sapra, Sr. Adv. with
                                            Mr.P.Nagesh and Mr.A.M.Mishra,
                                            Advs.

                               versus

       THE CALCUTTA STOCK EXCHANGE           ..... Defendant
                    Through Mr.Raman Kapur, Sr. Adv. with
                            Mr.S.Bhowmick, Adv.

       CORAM:
       HON'BLE MR.JUSTICE MANMOHAN SINGH

MANMOHAN SINGH, J.

1. The abovementioned Chamber Appeal has been filed by the defendant/appellant under Rule 4 read with Chapter II of Delhi High Court (Original Side) Rules, 1967 against the order dated 6th December, 2012 passed by the Joint Registrar to the extent of order passed in I.A. No.6903/2012 (under Order XVI Rule 1 CPC).

2. Some relevant facts about the progress of the suit are necessary for the disposal of the present appeal. The same are that the plaintiff filed the suit for recovery of Rs.11,89,86,521/- against the defendant. The suit was filed on 16th March, 2004. The admission/denial of the documents was completed by the parties on 8th July, 2005. Issues in the above said matter were framed on

24th April, 2006. The plaintiff was given time to file the affidavit by way of examination-in-chief. The said affidavit was filed by the plaintiff on 14th September, 2006. PW-1 was cross-examined partly on 31st October, 2006. The said cross-examination was completed by the defendant on 2nd March, 2010. In the meanwhile, the defendant who was under the cross-examination filed the application being I.A. No.6903/2012 under Order XVI Rule 1 CPC. In terms of the order dated 24th May, 2012, both the sides filed additional affidavits pertaining to the proceedings pending in Calcutta High Court. Through the said application, the defendant sought summoning of the record of business transactions of the plaintiff- Company as per the details given in para 2 of the application.

3. The application was strongly opposed by the plaintiff, mainly, on the ground that earlier the learned Single Judge of this Court has declined to accept the request of the defendant. The said order dated 19th January, 2009 was challenged by the defendant before the Division Bench by filing of an appeal being FAO(OS) No.40/2009. The said appeal was dismissed with cost of Rs.10,000/- vide order dated 3rd March, 2009. The Division Bench while passing a detailed order also observed that the learned Single Judge has in para 8 of the impugned order given liberty to the appellant/defendant to summon the documents in accordance with law in support of its case.

4. The defendant in the year 2012 filed an application being I.A. No.6903/2012 before the Joint Registrar for seeking direction to disclose the documents. The said application of the defendant was

dismissed by the impugned order dated 6th December, 2012. The said order has been challenged by the defendant by filing of the present chamber appeal.

5. The contention of the learned Senior counsel appearing on behalf of the plaintiff is that in the order dated 19th January, 2009 earlier passed by this Court, the liberty was only granted to the defendant to summon the documents, if any, in accordance with law. As there is no law that enables the defendant/appellant to summon the documents in question from the plaintiff at the time of cross- examination of the defendant's witnesses, the application has to be dismissed. The Joint Registrar has stated that the orders dated 21st September, 2007 and 9th January, 2008 passed by the Calcutta High Court in the other suit between the same parties, the defendant was restrained from looking into the documents as sought to be summoned by the defendant in the present case. The contention of the plaintiff is that the said order is operational and continues to bind the defendant. The argument of the plaintiff is that it is malafide on the part of the defendant for calling to obtain the said documents for other collateral purposes. Learned Senior counsel states that it is done in order to cause further delay in the matter, as the suit was filed in 2004 and for the last 10 years, the defendant on one pretext or the other is delaying the further proceedings in the matter.

6. The defendant has admitted that the plaintiff paid a sum of Rs.8.76 crores to the defendant in response to the specific demand of the defendant made at Kolkata. The case of the defendant is that

the said amount was paid by the plaintiff in due discharge of the plaintiff's obligation to the defendant. Learned Senior counsel appearing on behalf of the defendant argues that the liability of the plaintiff arose out of the collusive and non-bonafide transactions, as the plaintiff had entered into with various co-brokers who were subsequently declared as defaulters by the Defaulters Sub- Committee and ultimately, they were expelled from the membership of the Exchange. Counsel states that under the said affair, the plaintiff has paid the said amount to the defendant in order to discharge its liability. During the said investigation, the SEBI has recorded violation of various provisions of SEBI (Stockbrokers and Sub-Brokers) Rules and Regulations. Following the terms of the instructions of SEBI, the defendant issued a letter dated 14th August, 2003 for investigation and inspection of the books of accounts and records of the plaintiff under the provisions of Securities Contracts (Regulation) Rules, 1957 and Byelaws.

7. It is argued that the plaintiff in the present case has not questioned the authority of the defendant to call for production of such books or for inspection of the said records and/or accounts for the said periods. Therefore, the documents sought are relevant and would be required for a fair adjudication of the disputes between the parties and unless the plaintiff discloses and/or allows inspection of such documents, the trial of the suit is liable to be stayed.

8. Learned Senior counsel appearing on behalf of the plaintiff has argued that the intention of the defendant seeking summoning of the

documents is for investigation. The intention is not the defence of the suit but for another collateral proceeding which is not connected with the present suit. It is stated that after withdrawal of the petition, the plaintiff filed the suit for declaration before the Calcutta High Court being CS(OS) No.219/2007 in which the Calcutta High Court has restrained the defendant from acting on the basis of the letters dated 14th August, 2003, 26th September, 2003 and 3rd November, 2003. Therefore, it is apparent that the defendant is not only inspecting and summoning the said documents for the purposes of defence in the present suit but also they are calling upon the plaintiff for production of documents for another collateral proceeding.

9. The learned Joint Registrar in the impugned order while disposing of the application has come to the following conclusion:-

"Suit filed by plaintiff is recovery of money. Admittedly, defendant has not specifically pleaded about the plaintiff's transactions which are sought to be proved through the documents now sought to be summoned. The relevance of the documents now sought to be summoned is explained by the learned senior counsel for defendant stating that the said documents would establish the defendant's charge that there was siphoning off of funds in the plaintiff company by way of various transactions and it is further submitted by learned senior counsel for defendant that SEBI had directed the defendant to investigate the financial transactions of the plaintiff company.

In my considered view, scope of the trial in a civil suit cannot be extended to cover investigation sought to be conducted by the defendant into the financial transactions of plaintiff company.

What is to be seen is as to whether the documents sought to be summoned would be relevant for effective disposal of the present suit and if so, the defendant deserves to be granted relief as sought.

At the same time, for the purposes of Order XI Rule 12 and 14 CPC also the criteria is that the documents sought to be produced must be relevant for the purposes of adjudication of the suit. Once the Hon'ble Single Judge came to the conclusion that the documents sought to be produced were not relevant for the adjudication of the suit and the order was also upheld by the Hon'ble Division Bench, the issue of relevance cannot be reopened by the Joint Registrar. Further, the suit filed in the Calcutta High Court is based on the documents now sought to be summoned and in the said suit, Hon'ble Single Judge of Calcutta High Court in order dated 09.01.08 restrained the present defendant from seeking discovery of the said documents. Learned senior counsel for defendant contends that the said order of the Hon'ble Single Judge ceases to have effect in view of order dated 24.12.08 whereby the application under Section 8 of Arbitration and Conciliation Act was admitted, but the present plaintiff did not go to the arbitral tribunal under Section 9 of the Act. Admittedly, the present defendant also did not seek vacation of the said interim injunction order of the Hon'ble Single Judge and despite specific observations in order dated 24.12.08 clarifying that the said order of admitting the application under Section 8 of the Act was only the interim order which would not prevent the parties from filing any interlocutory application, if occasion arises."

10. Having gone through the entire gamut of the matter and particularly, the pleadings in the application as well as the impugned

order, I am not inclined to interfere with the order passed by the Joint Registrar on 6th December, 2012 on the following reasons:-

(a) Firstly, it appears that the present suit is a simple suit for recovery of the amount which was paid by the plaintiff to the defendant. It also appears from the averments made in the application as well as the grounds raised in the appeal that the defendant seeks production of the documents for investigation which is pending against various parties in collateral proceedings. The power of investigation, if any, under Section 11C of the Securities and Exchange Board of India Act, 1992 is with Securities Exchange Board of India.

(b) The operation of the letters issued by the defendant has already been stayed by the Calcutta High Court.

(c) It is also a matter of fact that under Order XLIII Rule 1 of the Code of Civil Procedure, 1908, the impugned order is not an appealable order. Order XLIII CPC does not contemplate an appeal against the order passed in application under Order XVI Rule 1 CPC.

(d) It also appears from the record that the defendant has attempted on many dates to delay the completion of the trial on one pretext or the other. The suit filed by the plaintiff is merely a suit for recovery of the amount. The said fact has not been denied. The said documents cannot be summoned from the plaintiff at the time of cross-examination of the defendant's witnesses. It is evident that those documents

are actually required by the defendant for pending investigation for the purposes of collateral proceedings.

11. In view of the above, there is no merit in the appeal. The same is accordingly dismissed.

CS(OS) No.272/2004

List before the Joint Registrar for defendant's evidence on 25th November, 2014 the date already fixed.

(MANMOHAN SINGH) JUDGE NOVEMBER 03, 2014