Karnataka High Court
Catalyst Trusteeship Limited vs Mantri Infrastructure Pvt Ltd on 12 November, 2024
Author: H.P.Sandesh
Bench: H.P.Sandesh
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 12TH DAY OF NOVEMBER, 2024
BEFORE
THE HON'BLE MR. JUSTICE H.P. SANDESH
M.F.A. NO.6760/2024 (CPC)
BETWEEN:
1. CATALYST TRUSTEESHIP LIMITED
REGISTERED OFFICE AT GDA HOUSE
FIRST FLOOR, PLOT NO.85,
S.NO.94 AND 95,
BHUSARI COLONY (RIGHT),
KOTHRUD, PUNE,
MAHARASHTRA-411038,
REPRESENTED BY ITS
AUTHORISED REPRESENTATIVE. ... APPELLANT
(BY SRI DYAN CHINNAPPA, SENIOR COUNSEL FOR
SRI PRASHANTH V.G., ADVOCATE)
AND:
1. MANTRI INFRASTRUCTURE PVT. LTD.,
A COMPANY HAVING ITS
REGISTERED OFFICE AT
C-5, RICH HOMES,
NO.5/1, RICHMOND ROAD,
BENGALURU-560 025.
2. MANTRI DEVELOPERS PVT. LTD.,
A COMPANY HAVING ITS
REGISTERED OFFICE AT
C-5, RICH HOMES,
NO.5/1, RICHMOND ROAD
BENGALURU-560 025.
2
3. SHORE DWELLINGS PVT. LTD.,
A COMPANY HAVING ITS
REGISTERED OFFICE AT
C-5, RICH HOMES,
NO.5/1, RICHMOND ROAD
BENGALURU-560 025.
4. AGARA TECHZONE PVT. LTD.,
A COMPANY HAVING ITS
REGISTERED OFFICE AT
MANTRI HOUSE NO.41
VITTAL MALLYA ROAD
BENGALURU-560 025.
5. MINERVA INFRATECH PVT. LTD.,
A COMPANY HAVING ITS
REGISTERED OFFICE AT
MANTRI HOUSE , No.41,
VITTAL MALLYA ROAD
BENGALURU-560 025.
6. MANTRI RESI STRUCTURES PVT. LTD.,
A COMPANY HAVING ITS
REGISTERED OFFICE AT
MANTRI HOUSE, NO.41,
VITTAL MALLYA ROAD
BENGALURU-560 025.
7. CASTLES VISTA PVT. LTD.,
A COMPANY HAVING ITS
REGISTERED OFFICE AT
C -5, RICH HOMES,
NO.5/1, RICHMOND ROAD,
BENGALURU-560 025.
8. PLAZA AGENCIES PVT LTD
A COMPANY HAVING ITS
REGISTERED OFFICE AT
MANTRI HOUSE, NO.41,
3
VITTAL MALLYA ROAD
BENGALURU-560 025.
9. SUSHIL MANTRI
AGED MAJOR
HAVING OFFICE AT
MANTI HOUSE NO.41,
VITAL MALLYA ROAD
BENGALURU-560 001.
10 . INDIABULLS HOUSING FINANCE LIMITED
PRESENTLY KNOWN AS
SAMMAAN CAPITAL LIMITED
A COMPANY IN CORPORATED UNDER
COMPANIES ACT, 1956
REGISTERED OFFICE AT
5TH FLOOR, BUILDING NO.27,
KG MARG, CONNAUGHT PLACE
NEW DELHI-110 001.
AND ALSO HAVING AN
OFFICE AT PLOT NO.87/6,
GROUND MEZZDINE INDIA BULLS HOUSE,
RICHMOND TOWN,
BENGALURU-560 025.
11 . INDIABULLS COMMERCIAL CREDIT LIMITED
REGISTERED OFFICE AT
5TH FLOOR, BUILDING NO.27,
KG MARG, CONNAUGHT PLACE
NEW DELHI-110 001.
12 . ERIDANI INFRASTRUCTURE PRIVATE LIMITED
REGISTERED OFFICE AT
E-903, LOTUZ HOMEZ
SECTOR --111
PALAM VIHAR
HARYANA-122 017.
4
13 . ASLEEK BUILDWELL PRIVATE LIMITED
REGISTERED OFFICE AT
L-62/1, L-BLOCK,
SECOND FLOOR,
NEW DELHI-110 001.
14 . AUROKIRAN CAPITAL INVESTMENT ADVISORS
PRIVATE LIMITED
REGISTERED OFFICE AT L-62/1,
L-BLOCK, SECOND FLOOR
NEW DELHI-110 001.
15 . DEUTSCHE BANK AG
REGISTERED OFFICE AT
DEUTSCHE BANK HOUSE
HAZARIMAL SOMANI MARG
MUMBAI-400 001.
16 . NILESH SABOO
AGED MAJOR
SENIOR EXECUTIVE AT
DEUTSCHE BANK HOUSE
HAZARIMAL SOMANI MARG
MUMBAI-400 001. ... RESPONDENTS
(BY SRI B.K.SANJAY, ADVOCATE FOR C/R1 TO R9)
THIS M.F.A. IS FILED UNDER ORDER 43 RULE 1(r) OF THE
CPC, PRAYING TO SET ASIDE THE ORDER DATED 05.10.2024
PASSED ON IA NO.2 IN O.S.NO.7166/2024 ON THE FILE OF THE
IX ADDITIONAL CITY CIVIL AND SESSIONS JUDGE, BENGALURU
CITY.
THIS APPEAL HAVING BEEN HEARD AND RESERVED FOR
JUDGMENT ON 04.11.2024 THIS DAY, THE COURT
PRONOUNCED THE FOLLOWING:
5
CORAM: HON'BLE MR JUSTICE H.P.SANDESH
CAV JUDGMENT
Heard the learned Senior counsel for the appellant and
learned counsel for the caveator-respondent Nos.1 to 9.
2. This miscellaneous first appeal is filed praying this
Court to set aside the order of status-quo granted by the Trial
Court dated 05.10.2024 in O.S.No.7166/2024 passed on
I.A.No.2 filed by respondent Nos.1 to 9 and grant such other
relief as deems fit in the circumstances of the case.
3. The respondents/plaintiffs before the Trial Court also
sought for the relief of temporary injunction restraining the
defendant Nos.1, 2 and 3 from enforcing or acting upon the
invocation notice dated 28.09.2024 and from taking any further
action regarding transfer or encumbrance of the pledged shares
of Mantri Infrastructure Pvt. Ltd. (100%), Mantri Developers Pvt.
Ltd. (51%) or Agara Techzone Pvt. Ltd. (12%) or from enforcing
any security under the Bond Trust Deed and Pledge Agreements,
until final adjudication of the rights of the parties by the Trial
Court and inter alia sought for the relief on I.A.No.2 to restrain
the defendant Nos.1 to 3 from enforcing or acting upon
invocation notice dated 28.09.2024. The respondents also filed
applications and order is passed only on I.A.Nos.2 to 4. It is also
borne out from the records that caveat was also filed and
learned counsel for both the parties were heard and suit was
filed before the Vacation Court and I.A.No.1 was filed under
Section 11(3) of Bengaluru City Civil Court Act to take up the
matter before the Vacation Court and the same was allowed.
4. The Trial Court having heard learned counsel for
both the parties, passed an interim order on I.A.Nos.2 and 4 and
comes to the conclusion that there should be some status-quo
order as against invocation notice dated 28.09.2024 issued by
the defendants, till the disposal of I.A.No.2 for providing a
natural justice and for fair justice. The said order has been
challenged in this appeal contending that the very impugned
order is perverse and contrary to settled principles of law and
Trial Court has erred in entertaining the suit, since the suit itself
is not maintainable. The relief sought in the application had been
rendered infructuous by the concluded transfer of the pledged
shares in favour of the appellant. It is also contended that the
Trial Court failed to appreciate that the present suit is barred by
res-judicata. The conduct of the respondent No.1 was
disingenuous inasmuch as it deliberately suppressed that it had
previously filed a commercial suit against the same parties in
respect of same cause of action. The Trial Court committed an
error in entertaining the suit, since there is no jurisdiction as the
disputes between the parties falls within the meaning of Section
2(1)(c) of the Commercial Courts Act, 2015 and ought not have
entertained the same.
5. It is also contended that when the Court is lagging
competent jurisdiction, the impugned order would not have been
passed and order is also a non-speaking order which is in
contravention of settled legal principles and the Trial Court also
does not refer or deal with any of the submissions made by the
learned counsel for the appellant and even failed to appreciate
that the appellant in its capacity pledgeee, possesses an
unfettered contractual right to invoke the pledged shares, and
any actions taken in exercise of this right. The counsel also
would contend that even several judgments have been relied
upon before the Trial Court, wherein the Courts have settled the
position of law regarding pledgee's contractual right to invoke
the pledged shares and the very narrow scope of judicial
interdiction to such right. The Trial Court failed to recognize the
malicious conduct of respondent Nos.1 to 9 in approaching the
Trial Court with unclean hands and the respondent Nos.1 to 9
must have placed the documents of Bond Trustee Agreement
dated 02.06.2018, Common Security Agreement dated
02.06.2018, Bond Trust Deed dated 04.06.2008, Pledge
Agreement dated 04.06.2018, Deed of Hypothecation dated
04.06.2018, First Amendment Deed to the Bond Trust Deed
dated 12.06.2018, First Addendum Agreement related to an
account agreement dated 30.06.2018, First and Second
Addendum to the Deed of Hypothecation dated 30.06.2018,
Deed of Rectification to the First Amendment dated 29.01.2019,
Rectification Deed to Supplementary Memorandum of
Engagement (MOE) dated 29.01.2019, Reservation of Rights
Letter dated 03.04.2020, Notice (Regarding Springing Pledge)
dated 24.04.2020, Reservation of Rights Letter dated
17.07.2020, Guarantee Demand Notice dated 14.08.2020,
Reservation of Rights Letter dated 28.07.2021, SARFAESI Notice
dated 14.03.2022 and Acceleration Notice dated 25.03.2022.
When the plaintiffs have not approached the Court with clean
hands, the Trial Court ought not to have entertained the
application.
6. Learned Senior counsel for the appellant in his
argument would vehemently contend that dues from the
respondents is more than Rs.530 Crores and without payment of
single penny, the respondents have approached the Trial Court
and the Trial Court granted the relief passing such an ad-interim
order of status-quo. Learned Senior counsel would vehemently
contend that the Court has to take note of fraudulent act of the
respondents in approaching the Court and seeking the relief,
even inspite of Guarantee Demand Notice was issued in 2020
and Reservation of Rights Letter was issued in 2021 and the Trial
Court committed an error in granting the relief, inspite of
detailed argument was made before the Trial Court.
7. Learned Senior counsel for the appellant, in support
of his argument, relied upon the judgment in YASHODA (ALIAS
SODHAN) VS. SUKHWINDER SINGH AND OTHERS reported
in (2022) 17 SCC 307 and brought to notice of this Court
paragraph No.30, wherein the Apex Court has observed that
"material fact" would mean material for the purpose of
determination of the lis. It is also held that a person invoking the
discretionary jurisdiction of the Court cannot be allowed to
approach it with a pair of dirty hands and filing of the earlier suit
and withdrawal thereof without liberty to file another suit was a
material fact. The counsel referring this Court would contend
that the Trial Court failed to take note of the same.
8. The counsel also relied upon the judgment in K.S.
BHOOPATHY AND OTHERS VS. KOKILA AND OTHERS
reported in (2000) 5 SCC 458 and brought to notice of this
Court paragraph No.10, wherein discussion was made with
regard to withdrawal and adjustments of suits and where the
plaintiff abandons any suit or part of claim under sub-rule (1); or
withdraws from a suit or part of a claim without the permission
referred to in sub-rule (3), he shall be liable for such costs as the
Court may award and shall be precluded from instituting any
fresh suit in respect of such subject-matter or such part of the
claim. Learned Senior counsel also brought to notice of this
Court discussion made in paragraph No.13 with regard to Order
XXIII Rule 1 CPC and also paragraph No.14, wherein discussion
was made with regard the judgment in BAKHTAWAR SINGH
VS. SADA KAUR reported in (1996) 11 SCC 167 regarding
question of grant of permission to file a fresh suit on the same
cause of action.
9. The counsel also brought to notice of this Court
memo filed before the Commercial Court for withdrawal of the
earlier suit as 'Not Pressed' with liberty to file a fresh suit on the
same cause of action. Though the Commercial Suit was
dismissed as not pressed, no such liberty was given.
10. The counsel also relied upon the judgment in
LALLAN PRASAD VS. RAHMAT ALI AND ANOTHER reported
in AIR 1967 SC 1322 and brought to notice of this Court
paragraph Nos.16 and 17, wherein a discussion was made with
regard to pledge is a bailment of personal property as a security
for some debt or engagement.
11. The counsel also relied upon the judgment in
TENDRIL FINANCIAL SERVICES PVT. LTD. & ORS. VS.
NAMEDI LEASING & FINANCE LTD. & ORS. reported in 2018
SCC ONLINE DEL 8142 and brought to notice of this Court
paragraph No.21, particularly, paragraph No.21(C) and (E),
wherein discussion was made with regard to pledge is
concerned.
12. The counsel also relied upon the judgment in FAO
(OS) (COMM) 75/2020 and brought to notice of this Court
paragraph No.21, wherein discussion was made with regard to
Section 176 of Indian Contract Act, 1872, wherein it is observed
that law recognizes the absolute discretion of the pawnee to
decide whether or not to sell the pledged goods and if so when
and to what extent or to further retain the pledged goods as
collateral in case a recovery suit is preferred.
13. The counsel also relied upon the judgment in
AVANTHA HOLDINGS LIMITED VS. VISTRA ITCL INDIA
LIMITED reported in 2020 SCC ONLINE DEL 1717 and
brought to notice of this Court paragraph Nos.43 to 46 and 60 to
62, wherein discussion was made with regard to interim-
measures which can be ordered by the Arbitral Tribunal and also
discussion was made with regard to events of default.
14. The counsel also relied upon the judgment in PRIME
BROKING COMPANY (INDIA) LTD. VS. NATIONAL
SECURITIES CLEARING CORPORATION LTD. reported in
2017 SCC ONLINE BOM 43 and brought to notice of this Court
paragraph No.16, legal position as to relationship between
pledger and pledge arising out of Section 176 of Indian Contract
Act, 1872.
15. Per contra, learned counsel for the caveator
respondent Nos.1 to 9 in his argument would vehemently
contend that the very contention that Civil Court has no
jurisdiction and ought to have filed the suit before the
Commercial Court, since the dispute is commercial in nature
cannot be accepted. The counsel would contend that when
memo was filed to withdraw the suit, liberty to file a suit on the
same cause of action was also sought. The counsel also would
contend that, if pledged shares are sold, they will lose the
amount which fetches more amount than the liability. The
counsel would vehemently contend that plaintiffs are nine in
number and notices are given only to three persons and relief is
sought in the plaint itself with regard to 'OTS Scheme' and when
the relief is sought directing the defendant Nos.2 and 3 to
deposit the original OTS agreement before the Court, pending
final disposal of the suit to ensure enforcement of the settlement
reached between the parties, relief is sought for a declaration to
declare the invocation notice issued on 28.09.2024 as null, void
and unenforceable and no legal effect as the underlined debts
have to be discharged through execution of OTS agreement.
The suit is also filed for the relief of permanent injunction, apart
from declaration and the Trial Court taken note of the fact that
not given five working days after the date of notice and notice
period is not completed and reasons are also assigned while
passing the interim order of status-quo.
16. The counsel also relied upon the judgment rendered
by this Court in OZONE ELEGANT DEVELOPERS LLP, OZONE
INFRA DEVELOPERS PRIVATE LIMITED, OZONE REALTORS
PRIVATE LIMITED VS. M/S. ARYA FOUR SEASONS in CIVIL
REVISION PETITION NO.148 OF 2023 decided on
25.07.2023 and brought to notice of this Court paragraph
Nos.3, 7 and 12 with regard to jurisdiction and Commercial
Courts Act, Trial Court's reasoning on jurisdiction, wherein the
Trial Court also considered the judgment in the case of AMBALA
SARABHAI ENTERPRISES LIMITED VS. K.S.
INFRASTRUCTURE LLP AND ANOTHER reported in (2020)
15 SCC 585, wherein it is held that present dispute does not
come within the definition of a Commercial Dispute, as outlined
in the Commercial Courts Act, and thus, the Civil Court has
jurisdiction to try the suit. The counsel also brought to notice of
this Court order passed in WRIT APPEAL NO.5893 OF 2000,
wherein it is observed that the petitioner, through counsel,
submitted a memorandum requesting to withdraw the writ
petition while reserving the right to file a fresh petition based on
the same cause of action, if necessary in the future and also
relied upon the decision reported in AIR 1975 KANT 101,
wherein it is held that the Court ought either to reject as a whole
an application under Order 23 Rule 1(2) CPC to withdraw the suit
with permission to file fresh suit on the same cause of action or
grant it as whole.
17. The counsel also relied upon number of judgments of
different Courts with regard to pledge is concerned and also
several judgments of the Apex Court with regard to pledge and
right of pledge as against the judgments given by the learned
counsel for the appellant.
18. Having heard the learned Senior counsel for the
appellant, learned counsel for the caveator respondent Nos.1 to
9 and the grounds which have been urged and also the principles
laid down in the judgments, the scope of this appeal is very
limited. This Court cannot look into the merits of the case, since
the order is not passed by the Trial Court on merits of the I.As.
The relief is granted only to maintain status-quo and the records
also disclose that the appellant sought time to file detailed
objections to I.As. and the said order has been passed by the
Vacation Court.
19. No doubt, learned counsel for both the parties relied
upon the judgments with regard to jurisdiction of the Court,
admittedly, learned Senior counsel for the appellant made the
submission that already the appellant has filed an application
before the Trial Court invoking Order 7 Rule 10 CPC and he had
already addressed the arguments on the I.A. and the counsel for
the respondents is yet to argue on the said application. It is also
important to note that with regard to grant of relief is concerned,
main contention of the learned Senior counsel for the appellant
is that the Trial Court committed an error in passing such an
order. No doubt, it is brought to notice of this Court that
Demand Notice was given in 2020 and Acceleration Notice was
given in 2022, relief is sought against the appellant in the main
suit as regards the invocation notice dated 28.09.2024 and
admittedly, the debentures are transferred in favour of the
appellant, but they are yet to sell the same.
20. It is the main contention of the learned Senior
counsel for the appellant that they are having right to sell in
terms of the agreements which have been relied upon by the
appellant. On the other hand, it is the contention of the
respondents that the share amount is more than what the
appellant is claiming and if the same is sold for lesser price, the
respondents will lose the actual price. This Court does not want
to discuss in detail with regard to the rights of the parties is
concerned, since the appellant claim dues more than Rs.530
Crores and contend that not even a single penny has been paid
by the respondents and respondents press for invocation of 'OTS
Scheme' and if the same is invoked, they are ready to pay the
amount. When the applications are not considered on merits
and only interim-prayer is sought, the Court has to look into the
reasoning given by the Trial Court.
21. The man contention of the learned Senior counsel for
the appellant is that the Trial Court ought not to have passed
such an order and no jurisdiction. I have already pointed out
that both on the aspect whether the Court has got jurisdiction or
not as well as granting the relief of status-quo is concerned, the
matter has to be adjudicated before the Trial Court, since the
applications are pending before the Trial Court and order is not
passed on merits of the applications which have been filed.
While entertaining this appeal assailing the order of status-quo,
the Court has to take note whether the Trial Court has assigned
reasons while passing the interim-order of status-quo. It has to
be noted that, the first prayer is in respect of validity of
invocation notice in the main suit.
22. Admittedly, notice was issued on 28.09.2024 and the
main contention of the plaintiffs is that the defendant No.1 has
given notice on 28.09.2024 and to give five business days after
the date of notice for sale, that notice period is not completed.
The Trial Court has also taken note of the fact that the appellant
made the submission that the sale has not taken place, but
debentures are transferred in the name of the defendant No.1
i.e., the appellant and also taken note of the contention that the
plaintiffs have not produced Bond Trustee Agreement,
Acceleration Notice and these are the grounds urged invoking
the conditions contemplated in the said notice and the same has
not been perused by the Trial Court. However, taken note of the
fact that given four business days after the date of notice for
sale includes only 30.09.2024, 01.10.2024, 03.10.2024 and
04.10.2024 and also given the reason that as this case is in
Bengaluru and both the parties hail from Bengaluru, Saturday
and Sunday are not treated as business day. The Trial Court also
taken note that 06.10.2024 is the time limit given in the notice
and it infringes the rights of the appellant and also noticed that it
is only a transfer of debentures in the name of appellant-
defendant No.1 and the appellant-defendant No.1 has not made
any sale and Saturday is working day or not also to be taken
note of by the Trial Court, while considering the applications on
merits.
23. The Trial Court further taken note of the fact that
learned counsel for the respondents/plaintiffs made the
submission that they are ready for settlement for which
appellant/defendant No.1 made the submission that they have to
pay the amount to the office of the defendant No.1, but not
made any payment till date. However, taking into note that
when the defendant No.1 sought time to file elaborate objections
to I.A.Nos.2 and 4, an arrangement was made to maintain
status-quo as against the invocation notice dated 28.09.2024 till
disposal of I.A.No.2. When such order has been passed, having
taken note of grounds which have been urged, particularly
taking note of the notice dated 28.09.2024, fixing the date as
06.10.2024, admittedly, already shares are transferred in the
name of defendant No.1, but sale has not taken place. Hence, it
is appropriate to direct the Trial Court to dispose of I.A.Nos.2
and 4 within 15 days from today. It is also brought to notice of
this Court that an application is filed under Order 7 Rule 10 CPC
contending that there is no jurisdiction and issue is also raised
by learned counsel for both the parties regarding maintainability
of the suit relying upon judgments and this Court does not want
to discuss the same in detail and when the application is pending
before the Trial Court under Order 7 Rule 10 CPC, the same has
to be considered by the Trial Court or otherwise, it leads to
expressing opinion on the merits of the applications which are
pending.
24. In view of the discussion made above, I pass the
following:
ORDER
(i) The miscellaneous first appeal is disposed of.
(ii) The parties are directed to maintain status-quo
for a period of 15 days from today. Learned
counsels for both the parties are directed to
conclude the arguments within one week from
12.11.2024 and conclude the same on or
before 19.11.2024 without unnecessarily
arguing the matter in length and make
submissions within the scope of the
applications.
(iii) The Trial Court is directed to pass orders on
I.A.Nos.2 and 4 and also on I.A. filed under
Order 7 Rule 10 CPC on 25.11.2024 as the
recovery is high stake of crores .
(iv) The respective counsels are directed to
communicate this order today itself to the Trial
Court, to enable the Trial Court to up the
matter immediately.
Sd/-
(H.P. SANDESH)
JUDGE
ST
