Madras High Court
K.B.Radhakrishnan vs Agate International Pvt. Ltd on 11 September, 2024
C.S.No.140 of 2015
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON : 26.03.2024
PRONOUNCED ON : 11.09.2024
CORAM:
THE HONOURABLE MR.JUSTICE A.A.NAKKIRAN
C.S No.140 of 2015
K.B.Radhakrishnan ... Plaintiff
..Vs..
1.Agate International Pvt. Ltd.,
rep. by its Director Suriyaprakasam
Prakadeesh Kumar and
Ramasamy Suriyaprakasam
No.916, Secto-4, Poctut C
Vasant Kunj
New Delhi-110 070
2.Agate Finance Ltd.,
formerly known as Agate Madras
International Finance Ltd.,
Represented by its Directors
Naina Mohamed, Suriyaprakasam
Prakadeesh Kumar and
Ramasamy Suriyaprakasam
(Defendants 1 & 2 amended as per
order dated 22.06.2023 in A.No.
2278 of 2023 in C.S No.140 of 2015)
3.K.N.Natarajan
1/21
https://www.mhc.tn.gov.in/judis
C.S.No.140 of 2015
4.Sultan Abdul Kadir
5.Francis Sekar Raja
6.Naina Mohamed
7.N.Raveendran
8.Thrivikraman Thambi
9.V.Ravi Karthikeyan
10.T.Sathya Rajeswari .. Defendants
Prayer: Civil Suit has been filed under Order IV Rule 1 of O.S Rules and
Order VII Rule 1 CPC, praying to pass the following judgment and decree
against the defendants:
a) directing the defendants 1 to 6 to pay the plaintiff a sum of
Rs.1,17,00,000/- (Rupees One Crore Seventeen Lakhs only) along with
interest of Rs.1,01,20,356/- (Rupees One Crore One Lakh Twenty
Thousand Three Hundred and Fifty Six only) calculated at the rate of 15%
per annum simple interest till 14.02.2013 on daily product basis on the
monies invested by the plaintiff in 1st and 2nd defendant companies and
future interest from the date of plaint till the date of payment.
b) to declare the sale of the schedule mentioned property belonging to
the 2nd defendant to defendants 9 and 10 under the deed of sale dated
10.08.2012 registered as Doc No.1647 of 2012, on the file of SRO
Thiyagaraya Nagar as sham, illegal, null and void.
2/21
https://www.mhc.tn.gov.in/judis
C.S.No.140 of 2015
c) for costs of the suit.
For Plaintiff : M/s.Adithya Reddy
For Defendants : Mr.Sai Bharath & Ilan for D7
D3 to D6 & D8 to D10 - Set Exparte
D1 & D2 - Name printed
****
JUDGMENT
This Civil Suit has been filed seeking for the relief as stated therein.
2. The case of the Plaintiff, as set out, in the plaint is as follows:-
(i) The plaintiff is a resident of Pollachi and he is carrying on primary
business as a trader in pulses, nuts, jaggery and yarn for the last three
decades. He has been awarded contract by Sabarimala Iyyappan
Devasthanam for supply of Jaggery and other material continuously since
1993 till date. He had acquainted with the 3rd defendant at or about the
year 2003-2004. The 3rd defendant during one of the visits to the plaintiff
at the city of Chennai had introduced to the 5th defendant who represented
to be the Director of the 2nd defendant company. The said meeting took
place at 2nd defendant company's office in Chennai. The 5th defendant
https://www.mhc.tn.gov.in/judis
represented the plaintiff that they are carrying on business as Coal
Exporters and Importers and the 2nd defendant company was generating
huge profits and made tall claims and representations.
(ii)The 5th defendant had specifically held out that the 2nd defendant
company was promoted by the 4th and 6th defendants who are citizens of
Malaysia and that the said persons are behind the running and profitable
functioning of the 2nd defendant company. Subsequently, the 5th
defendant had introduced the plaintiff to the 4th defendant as the
Managing Director of the 1st and 2nd defendant Companies. The 4th
defendant also confirmed the same and made tall claims and
representations. Based on the specific representations and guarantees
made by the 4th defendant and induced by the same, the plaintiff had
invested and agreed to invest amounts in the business activity of the
companies. The 4th defendant had also specifically held out and
represented that he was carrying on various business activities inclusive
and not restricted to trading in scrap. The plaintiff was doing yarn business
along with the 3rd defendant in the years 2003-2004. The 3rd defendant
introduced the plaintiff to the 5th defendant who claimed to be a Director
in the 2nd defendant company in the year 2005. The 3rd and 5th
https://www.mhc.tn.gov.in/judis
defendants attempted to convince the plaintiff to invest monies in the 1st
and 2nd defendant companies by making claims regarding the company's
performance and projections for future. The 5th defendant informed the
plaintiff that the 1st and 2nd defendant companies were promoted by 4th
and 6th defendants who are Malaysian citizens. The defendants 4 to 6
were the major shareholders in both the 1st and 2nd defendant Companies.
(iii)The plaintiff was promised by the 4th defendant that a new joint
venture company will be incorporated in which the plaintiff would be given
equal shareholding. The plaintiff was made to fly to Malaysia more than 8
times, during the course of which he was even shown a few scrap yards
and two coal fields said to be belonging to the 4th defendant and his
Companies in order to impress the plaintiff. Believing the statements of the
defendants to be true the plaintiff invested huge sums of money into the 1st
and 2nd defendant companies. The details of the investments made by the
plaintiff in the 2nd defendant company are as follows:
Date Amount Mode of Payment 2nd Defendant's
Bank
04.04.2007 50,00,000/- Cheque No.003905 ICICI Bank,
(Fifty Lakhs) of SBI, Ernakulam Chennai.
09.06.2007 12,00,000/- Cheque No.003912 IOB, Chennai
(Twelve Lakhs) and 003913 of SBI,
https://www.mhc.tn.gov.in/judis
Date Amount Mode of Payment 2nd Defendant's
Bank
Ernakulam
15.06.2007 15,00,000/- ICICI Bank,
Chennai
(iv)Apart from the above payments made to the 2nd defendant, the
plaintiff invested another Rs.50,00,000/- in the 1st defendant company by
way of RTGS transfer from the plaintiff's Indian Bank a/c, Vyttila Branch,
Ernakulam to the 1st defendant company's account with Punjab National
Bank on 24.10.2007. Therefore, the plaintiff had invested a sum of
Rs.1,27,00,000/- in total in the 1st and 2nd defendant companies. The
plaintiff had invested these sums with the understanding that the plaintiff
would be allotted shares equivalent to the amounts invested as well as on
the assurance that the plaintiff would be made a Director in both the
Companies. However the plaintiff was not given any share certificates in
lieu of the investment and it is not known as to how the sums invested by
the plaintiff have been accounted for in the books of the companies. The
plaintiff kept requesting the defendants to convene a meeting of the Board
of Directors and shareholders of the company. However, ever since the
plaintiff made the investments not a single Board meeting or AGM has
been called for the Companies to the plaintiff's knowledge. Despite
https://www.mhc.tn.gov.in/judis
repeated requests, the plaintiff was not provided with the Company's
balance sheets and accounts. In fact, after this turn of events the plaintiff
independently made enquiries in the affairs of the 1st and 2n defendant
companies and found out that neither the 4th defendant nor any of the
other defendants were involved in coal mining activity.
(v)After the monies were involved, the defendants 4 to 7 completely
avoided the plaintiff and refused to give him any particulars regarding the
investments made by him. They also kept the plaintiff in the dark
regarding the functioning of the companies. The plaintiff was given no
returns either in the form of dividend or interest for the investments made
by him. Therefore, from 2009, left with no option the plaintiff demanded
that his investments be returned by the 4th to 7th defendants immediately.
The defendants completely avoided the plaintiff. On 14.03.2009 after
repeated demands by the plaintiff for returning the money the plaintiff was
invited to Malaysia for settling the amount during which the defendants 3,
4, 5 and 7 met the plaintiff. As would be evident from the so-called minutes
of the said meeting which was provided to the plaintiff , the amount of
Rs.1,27,00,000/- is specifically acknowledged. However, none of the other
statements recorded in the minutes of meeting reflect the actual position of
https://www.mhc.tn.gov.in/judis
what transpired at the meeting. The plaintiff was forced to sign the minutes
under duress. The plaintiff was promised that on signing the minutes he
would be given the money immediately. The plaintiff did not pursue
education beyond 4th standard, which he pursued in a rural school and
therefore is not at all conversant with English. The statement in the alleged
minutes that the plaintiff had taken back Rs.15,00,000/- and agreed to
resign and transfer his shares in the 1st defendant company and the
Indonesian Company P.T. Agate Resources Indonesia is false and baseless.
In fact, the plaintiff had not received even a single rupee in return of the
investments made by him. It was only a few months later that the plaintiff
was given two cheques from the company being Cheque No.672514 and
672515 dated 04.05.2009 for Rs.5 lakhs each, were paid to the plaintiff.
Therefore, out of Rs.1,27,00,000/- only Rs.10,00,000/- was refunded to
the plaintiff. Also, there was no understanding that the plaintiff would be
refunded his money only after completion of some alleged coal mine sale
transactions in Indonesia in the future. In fact the plaintiff believes that the
defendants 1 to 7 did not own any coal mines anywhere. Therefore, the
plaintiff kept insisting that his investments be refunded through emails.
(vi)While that be so, the plaintiff was shocked to receive a legal notice
https://www.mhc.tn.gov.in/judis
dated 16.07.2010 from the defendants 4, 5 and 7 as Directors of the 1st
defendant company wherein it was claimed that the plaintiff was made a
Director of the 1st defendant company and on P.T Agate Resources,
Indonesia. It was alleged in the said notice that the plaintiff has withdrawn
some amounts invested by him either through himself or through the 3rd
defendant. It was also alleged that the 2nd defendant company had
advanced loans to the 3rd and 8th defendants and that the plaintiff was
personally responsible for the said amounts. While admitting that a sum of
Rs.1,27,00,000/- was invested by the plaintiff, it was claimed in the said
notice that after deducting the alleged withdrawals and alleged loans lent to
3rd and 8th defendants only a sum of Rs.58,70,000/- was due to the
plaintiff. The plaintiff denied the allegations in the said notice and refused
to accept the sum so offered.
(vii) Left with no choice and after repeated attempts at negotiation and
communication, the plaintiff caused the issuance of a legal notice dated
21.09.2011 to the defendants 4 to 7 wherein the plaintiff made it clear that
he was in no way connected to the 3rd and 8th defendants in these
transactions and cannot in any way be responsible for the alleged loans
advanced to them. It was pointed out that none of the alleged withdrawals
https://www.mhc.tn.gov.in/judis
or payments made from the company was towards the plaintiff's refund of
investment. The plaintiff therefore demanded that the sum of
Rs.1,27,00,000/- be paid along with interest and out of which,
Rs.10,00,000/- was repaid through cheques, dated 04.05.2009. The
defendants 1, 2, 4, 5, 6 and 7 replied to the said notice vide reply dated
26.10.2011, claiming that the sum of Rs.1,27,00,000/- invested by the
plaintiff was given only as loan to the 1st and 2nd defendant companies.
This allegation is being made for the first time which itself shows that it is
an afterthought and false. It was claimed that the plaintiff had withdrawn
various amounts from the companies through the 3rd and 8th defendants
and therefore, only a sum of Rs.48,70,000/- was due to the plaintiff. The
said statement is entirely false and baseless. The reference that the alleged
minutes of 14.03.2009 record that a sum of Rs.14,00,000/- was allegedly
paid to the 3rd defendant is totally irrelevant to the plaintiff. In the said
reply notice, the defendants 1, 2, 4 to 7 have categorically admitted receipt
of a sum of Rs.1,27,00,000/- and alleged the same was towards loan given
to the second defendant.
(viii).The plaintiff has nothing to do with the 3rd and 8th
https://www.mhc.tn.gov.in/judis
defendants with respect to their dealing with the 1st and 2nd defendant
companies. The 3rd defendant merely introduced the plaintiff to the 5th
defendant and the 3rd defendant knew the defendants 4 to 7 from much
before, the time the plaintiff was introduced to them. Therefore, there can
be no presumption that the monies withdrawn by the 3rd to 8th defendants,
with whom the plaintiff might have independent business dealings, were
withdrawn on behalf of the plaintiff. The defendants 1, 2, 4, 5, 6 & 7 in
their reply notice dated 26.10.2011 also claimed that the plaintiff has to
repay the 5th defendant a sum of Rs.2,16,65,000/-. There are absolutely no
particulars regarding how and why this amount is payable to the 5th
defendant. To the said reply, the plaintiff sent a rejoinder notice dated
10.11.2011. Regarding the averment that the plaintiff owned the 5th
defendant Rs.2,16,65,000/-, it was pointed out that the 5th defendant had
made some part payment towards assignment of a sale agreement in his
favour but failed to perform his obligations under the assignment fully
thereby causing serious loss to the plaintiff. It was also stated that the
plaintiff will initiate separate legal proceedings against the 5th defendant
for damages in relation to his failure to perform his obligations under the
assignment. It was pointed out that the said transactions are entirely
https://www.mhc.tn.gov.in/judis
different and unconnected to the plaintiff's payments to the 1st and 2nd
defendant companies. Therefore, it is clear that the defendants 4 to 7 have
conspired to play a fraud on the plaintiff and have been attempting to
defeat his genuine claim for refund of the sum of Rs.1,17,00,000/- along
with interest.
(ix)While that be so, it has come to light that a property held by the
2nd defendant company, being 2965 sq.ft. of plot and building at Door
No.46, Ramakrishna Street, T.Nagar, Chennai-17 has been alienated to the
9th and 10th defendants vide sale deed dated 10.08.2012. Revenue
records show that the said property was originally purchased in the name
of Agate Madras International Finance Ltd., the erstwhile name of the 2nd
defendant company. Though the said name was changed to Agate Finance
Ltd., i.e 2nd defendant, the revenue records of the property reveal that even
at the time of sale to the 9th and 10th defendants on 10.08.2012 the
property stood in the name of Agate Madras International Finance Ltd. It
is reliably learnt that the resolution of the 2nd respondent company's
members authorizing the sale of the property was forged by the defendants
4, 5 and 7 as there was no such meeting held in which the proposal to sell
the property was approved. Therefore, the entire sale to defendants 9 and
https://www.mhc.tn.gov.in/judis
10 is invalid and void. The plaintiff suspects the sale consideration from
the said sale has been misappropriated by the defendants 4, 5, 6 and 7
thereby leaving the other shareholders and creditors of the 2nd defendant
company in lurch. Having huge sums of money to acquire shares in the
2nd defendant company, the plaintiff is vitally interested in the assets of the
company. The assets are being alienated only to defeat the plaintiff's
claims. Hence the suit.
3.On the side of the Plaintiff, the plaintiff examined himself as PW1
and Ex.P1 to Ex.P20 were marked. Though summons were served on the
defendants 3, 4, 5, 6, 7, 8, 9 and 10, they did not enter appearance before
this Court and no written statement has been filed by them. Hence, they
were set ex-parte on 16.03.2023.
4.The learned counsel for the plaintiff submits that the plaintiff
has invested the amount of Rs.1,27,00,000/- in the business activity of the
1st and 2nd defendant company with the understanding that he would be
allotted shares equivalent to the amounts invested as well as on the
assurance that he would be made a Director in both the companies. ie. 1st
https://www.mhc.tn.gov.in/judis
and 2nd defendants herein. However, neither share certificates were given
nor he was made as a Director in both companies by convening the Board
of Directors meeting.
5. It has been further submitted that after investment of the amount
of Rs.1,27,000,00/-, the defendants 4 to 7 completely avoided the plaintiff
and refused to give him any particulars regarding the investments made by
him. Further, the plaintiff was given no returns either in the form of
dividend or interest for the investments made by him. Hence, the plaintiff
demanded the defendants 4 to 7 to refund the amount along with interest.
after repeated demands, two cheques from the company being Cheque
No.672514 and 672515 dated 04.05.2009 for Rs.5 lakhs each, were paid
to the plaintiff. Therefore, out of Rs.1,27,00,000/- only Rs.10,00,000/-
was refunded to the plaintiff and the balance of Rs.1,17,00,000/- is to be
refunded by the defendants 4 to 7 who are the directors of the said
companies.
6.The learned counsel for the plaintiff further submits that even the
https://www.mhc.tn.gov.in/judis
payment of Rs.1,27,00,000/- was admitted by the defendants 4, 5 & 7 in
their the Legal Notice dated 16.07.2010 vide as Exhibit P-10, they have
stated that as the plaintiff had withdrawn various amounts from the
companies through the 3rd and 8th defendants, the balance amount of
Rs.58,70,000/- is only to be refunded to the plaintiff after showing
withdrawals of unrelated persons as loan. In reply notice dated
21.09.2011, vide Ex.P15, the plaintiff made it clear that he was in no way
connected to the 3rd & 8th Defendant in these transactions and cannot in
any way be responsible for the alleged loans advanced to them. It was
pointed out that none of the alleged withdrawals or payments made from
the Company was towards the plaintiff. Hence, he therefore demanded the
sum of Rs. 1,17,00,000/- (Rupees One Crore Seventeen Lakhs only) to be
paid immediately along with interest.
7. It has been further submitted by the learned counsel for the
plaintiff that the Defendants 1, 2, 4, 5, 6 and 7 replied to the aforesaid
notice vide Ex.P16 wherein they have accepted for the receipt of the
amount of Rs.1,27,00,000/- as loan and it is shown as the various amount
has been withdrawn by the plaintiff through the 3rd & 8th defendants and
https://www.mhc.tn.gov.in/judis
therefore only a sum of Rs. 48,70,000/- (Rupees Forty-Eight Lakhs Seventy
Thousand only) was due to the plaintiff without any documentary evidence.
In the rejoinder notice issued by the Plaintiff to reply from 1st, 2nd, 4th,
5th, 6th and 7th Defendants dated 10.11.2011 vide Exhibit P-17, it is
stated that the defendants are not having any right to deduct the amount
paid to Natarajan and Thiruvikarmanambi and they are liable to refund of
the amount along with interest. Hence, the defendants 1 to 6 are liable to
pay a sum of Rs.1,17,00,000/- (Rupees One Crore Seventeen Lakhs only)
to the plaintiff after deducting the refund of Rs.10 lakhs along with interest
of Rs.1,01,20,356/- (Rupees One Crore One Lakh Twenty Thousand Three
Hundred and Fifty Six only) calculated at the rate of 15% per annum
simple interest till 14.02.2013 on daily product basis on the monies
invested by the plaintiff in the 1st and 2nd defendant companies and future
interest from the date of plaint till the date of payment and other relief
stated in the suit.
8. Heard the learned counsel for the plaintiff and as there is no
https://www.mhc.tn.gov.in/judis
appearance on the side of the defendants and no written statement was
filed even after notice was served on them, they were set exparte.
9. On perusal of the Notice dated 16.07.2010 vide Ex.P10,
issued by the defendants 4, 5 and 7 as Directors of the 1st defendant
company, it is seen that the amount of Rs.1,27,00,000/- has been reflected
in their notice and even they are also accepting for the receipt of the said
amount, it is stated therein that the plaintiff has withdrawn the said loan
amount through the 3rd and 8th defendants, the balance sum of
Rs.58,70,000/- is only to be refunded to the plaintiff. Further, in the Reply
Notice dated 26.10.2011, it is also confirmed for the receipt of amount of
Rs.1,27,00,000/- from the plaintiff and stated only a sum of Rs.48,70,000/-
was due to the plaintiff after showing the statement of return of payment
and minutes of meeting of the company.
10.From the Ex.P.10 and Ex.P16, it is reflected the amount of
Rs.1,27,00,000/- on their account and further, the defendants have not
come forward to deny the plaint averments. At the same time, the plaintiff
has proved his case by way of oral and documentary evidence. Hence, the
https://www.mhc.tn.gov.in/judis
the Defendants 1, 2, 4 to 6 are liable to pay a sum of Rs.1,17,00,000/-
along with interest @9% p.a. from the date of plaint till the date of
Judgment.
11. In fine, this Civil Suit is partly decreed. No costs.
11.09.2024
Index:Yes/No
Web:Yes/No
Speaking/Non Speaking
lbm
Witnesses examined on the side of the plaintiffs:
1. P.W.1. - K.B. Radhakrishnan
https://www.mhc.tn.gov.in/judis
2. Exhibits produced on the side of the plaintiffs:
S.No. Exhi Description
bits
1. P-1 The certified copy of the Memorandum of
Association of 2 defendant.
2. P-2 The certified copy of the Articles of Association of
2nd defendant.
3. P-3 The certified copy of the certificate of incorporation
of 2nd defendant pursuant to name change.
4. P-4 The printout copy of the statement of plaintiff's
bank account with State Bank of India, Commercial
Branch, Kochi. (Affidavit under Section 65 B of the
Indian Evidence Act filed and recorded)
5. P-5 The printout copy of the statement of plaintiff's
bank account with Indian Bank, Vyitila.(Affidavit
under Section 65 B of the Indian)
6. P-6 The photocopy of the visa entries in plaintiff
passport No. 2854203. (proof and relevance)
7. P-7 The photocopy of the visa entries in plaintiff
passport No. Z1744747 (proof and relevance)
8. P-8 The purported minutes of meeting attended by
plaintiff 3rd, 4th, 5th 6th and 7th defendants.
9. P-9 The statement plaintiff's bank account with Tamil
Nadu Mercantile Bank, Pollachi.
10. P-10 The original legal notice issued on behalf of 4th 5th
and 7th defendant.
11. P-11 The certified copy of the profit & Loss account of
2nd defendant company.
12. P-12 The certified copy of the annual returns of 2nd
defendant company.
https://www.mhc.tn.gov.in/judis
S.No. Exhi Description
bits
13. P-13 The certified copy of the compliance certificate of
2nd defendant company under companies Act, 1959.
14. P-14 the certified copy of the balance sheet of the 2nd
defendant.
15. P-15 the original legal notice issued on behalf of plaintiff
counsel to defendant 1,2 and 4-7.
15. P-16 is the original reply on behalf of defendants 1,2 and
47 to plaintiff's legal notice dated 21.09.2011
15. P-17 the original rejoinder notice issued by plaintiff
counsel to reply form defendant 1,2 and 4-7 dated
26.10.2011.
P-18 the photocopy of the purported resolution of
extraordinary General meeting of 2nd defendant
company. (Proof and relevance)
P-19 the certified copy of the sale deed executed on
behalf o 2nd defendant company in favour of 9nd
and 10 defendants.
P-20 the original encumbrance certificate with respect to
schedule mentioned property.
3.On the side of the defendants, no witness was examined nor documents
were marked.
11.09.2024
A.A.NAKKIRAN, J.
lbm
https://www.mhc.tn.gov.in/judis
Pre-Delivery Judgement in
11.09.2024
https://www.mhc.tn.gov.in/judis
