Madras High Court
Bharat Petroleum Corporation ... vs Atm Constructions Limited on 19 July, 2021
O.S.A.(CAD) Nos.5, 6 and 7 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 19.07.2021
CORAM :
THE HON'BLE MR.SANJIB BANERJEE, CHIEF JUSTICE
AND
THE HON'BLE MR.JUSTICE SENTHILKUMAR RAMAMOORTHY
O.S.A.(CAD) Nos.5, 6 and 7 of 2021
1.Bharat Petroleum Corporation Limited,
Having its registered office at Bharath Bhavan,
No.4 and 6, Currimbhoy Road,
Bellard Estate, Mumbai – 400 028
rep. by its Senior Manager – Legal (South),
No.1, Rangamohan Gardens,
115, Main Road, Anna Nagar,
Chennai – 600 040.
2.Bharat Petroleum Corporation Limited,
rep. By its Territory Manager (Retail),
No.35, Vaidyanathan Street,
Tondiarpet, Chennai – 600 081. .. Appellants
Vs.
ATM Constructions Limited,
rep. by its Director Faiz Mohammed,
No.288, Lloyds Road, Royapettah,
Chennai – 600 014. .. Respondent
Prayer: Appeals under Order 13(1) of the Commercial Courts Act,
2015 against the order dated 19.4.2021 passed in A.Nos.650 and 651
of 2020 and 668 of 2021 in C.S.(Comm) No.62 of 2020.
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O.S.A.(CAD) Nos.5, 6 and 7 of 2021
For Appellants : Ms.Geethi Ara
in all appeals for M/s.S.Ramasubramaniam
and Associates
For Respondent : Mr.R.Balachandran
in all appeals
COMMON JUDGMENT
(Delivered by the Hon'ble Chief Justice)
The three appeals are directed against a common judgment
and order of April 19, 2021 passed in a commercial suit.
2. Three applications were before the trial court: Application
Nos.650 and 651 of 2020 were filed by the plaintiff for fixing interim
damages and for a direction on the defendant to furnish security in
respect of the claim, respectively. Application No.668 of 2021 was
taken out by the defendant for filing its written statement beyond
time.
3. On the application for extension of time to file written
statement, the trial court condoned the delay with costs assessed at
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O.S.A.(CAD) Nos.5, 6 and 7 of 2021
Rs.1 lakh to be paid by the defendant, but observed that the
defendant really did not make out a case for enlargement of the
time.
4. Since the suit is a commercial suit, in view of Section
13(1A) of the Commercial Courts Act, 2015, no appeal lies against
an order enlarging the time to file the written statement or refusing
to do so.
5. Accordingly, the relevant appeal O.S.A.(CAD) No.7 of 2021
is dismissed as not maintainable.
6. The other two appeals are clearly maintainable, in as much
as interim damages have been fixed by the trial court and
substantial security has been directed to be furnished.
7. As to the assessment of interim damages, the trial court
noticed that the suit was for recovery of a sum in excess of Rs.128
crore. The trial court noticed the plaintiff's claim of Rs.30.50 lakh
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O.S.A.(CAD) Nos.5, 6 and 7 of 2021
per month towards damages for the occupation of the relevant
premises by the defendant. The trial court recorded that the
quantum of liquidated damages could be accurately ascertained
only after witness action and after receiving evidence. However,
based on the State guideline values, the trial court assessed the
value of the property to be Rs.12,730 per square foot as on June 9,
2017. On such basis, the trial court tentatively fixed the ground
rent at Rs.50/- per square foot per month, which was around five
per cent of the guideline value. The trial court held that the
monthly occupation charges payable by the defendant to the
plaintiff would be Rs.6 lakh.
8. On the basis of the material before the trial court, it
appears that the interim adjudication as to the occupation charges
has been made on a conservative basis at roughly five per cent of
the guideline value of the property. Indeed, the plaintiff asserts
that the plaintiff is aggrieved by such part of the order, though no
appeal has been preferred by the plaintiff.
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O.S.A.(CAD) Nos.5, 6 and 7 of 2021
9. Since the interim assessment of the occupation charges has
resulted in only a nominal part of the plaintiff's claim to be allowed,
subject to the outcome at the end of the trial and the figure is
based on the guideline value of the property, such part of the order
does not call for any interference. Accordingly, O.S.A.(CAD) No.5 of
2021 is disposed of without interfering with the quantum of
occupation charges assessed at the interim stage.
10. The last of the appeals is against the direction to furnish
security in the sum of Rs.60 crore within 45 days from the date of
the order.
11. The only basis for such direction is found at paragraph 34
of the impugned judgment and order.
12. The trial court merely recorded that the plaintiff had
alleged that the defendant company was negotiating with third
parties to sell off the company. The plaintiff now seeks to rely on
certain other material to suggest that serious steps are being taken
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O.S.A.(CAD) Nos.5, 6 and 7 of 2021
by the Union Government to privatise the defendant company or, in
effect, sell the Union's shareholding therein to private parties.
13. If the liability fastens to the defendant, the perceived
change in the ownership of the defendant can scarcely be a relevant
consideration in assessing whether security ought to be directed to
be furnished. Further, a high order in the nature of attachment
before judgment requires two conditions to be met: the
unimpeachable character of a substantial part of the claim; and, the
acceptance by the court that unless the security is furnished, there
would be no assets left to satisfy the decree which is almost certain
to be passed.
14. Though in the present days, the high tests that were
earlier required to be discharged to obtain an order in the nature of
attachment before judgment may no longer be relevant, particularly
in view of civil suits languishing in courts for years without end,
there has to be some modicum of a case made out that the
defendant may not be able to satisfy the decree that is almost sure
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to be passed.
15. There is no doubt that even going by the interim
assessment of the occupation charges as made by the trial court, a
substantial amount remains due and owing from the defendant to
the plaintiff for occupying the prime property. The impecuniosity of
the defendant does not appear to have been made out to warrant a
high order in the nature of attachment before judgment. Indeed,
the Court merely relied on the plaintiff's allegation that the
defendant company may be privatised, but did not embark on any
process to verify the same. An order in the nature of attachment
before judgment is a high order and cannot be passed for the mere
asking. After all, the defendant is considered as a Maharatna and
as of now, the defendant is controlled by the Union and debts of the
defendant would naturally be required to be met by the Union till
such time that the Union exercises control over the defendant.
16. Notwithstanding the dilution of the high tests for obtaining
an order in the nature of attachment before judgment, such an
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order may not be passed for the mere asking or without a serious
inquiry into the relevant aspect by the Court. The order impugned
almost reveals that there was no application of the independent
mind to the matters in issue qua an order in the nature of
attachment before judgment and the trial court proceeded to pass
the order only because there was a huge sum that was perceived to
be due from the defendant to the plaintiff.
17. As a consequence, the order directing security to be
furnished cannot be sustained, as there is no satisfaction recorded
in the order impugned as to the veracity of the allegations levelled
by the plaintiff or regarding the impecuniosity of the defendant.
Therefore, O.S.A.(CAD) No.6 of 2021 is allowed by setting aside the
order impugned dated April 19, 2021 in so far as it directs the
defendant to furnish security.
18. O.S.A.(CAD) Nos.5, 6 and 7 of 2021 stand disposed of on
the basis of the above.
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O.S.A.(CAD) Nos.5, 6 and 7 of 2021
There will be no order as to costs. Consequently,
C.M.P.Nos.9791, 9793 and 9794 of 2021 are closed.
(S.B., CJ.) (S.K.R., J.)
19.07.2021
Index : No
sasi
To
The Sub Assistant Registrar
Original Side
High Court, Madras.
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O.S.A.(CAD) Nos.5, 6 and 7 of 2021
THE HON'BLE CHIEF JUSTICE
AND
SENTHILKUMAR RAMAMOORTHY, J.
(sasi)
O.S.A.(CAD) Nos.5, 6 and 7 of 2021
19.07.2021
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