Madras High Court
Dr.M.Arumugam vs M/S.International Sea Foods Private ... on 24 January, 2025
Bench: G.Jayachandran, C.V.Karthikeyan
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IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on : 08.01.2025
Pronounced on : 24.01.2025
CORAM
THE HONOURABLE DR. JUSTICE G.JAYACHANDRAN
AND
THE HONOURABLE MR. JUSTICE C.V.KARTHIKEYAN
C.S.No.121 of 2014
Dr.M.Arumugam ... Plaintiff
Vs
1.M/s.International Sea Foods Private Limited,
A company registered under the provision of
Companies Act, 1956, having its office at
No.17, Pantheon Apartments,
First Lane, Pantheon Road,
Egmore, Chennai – 600 008.
Represented by its Managing Director
Mr.Arjunlal Sunderdas
2.The Official Assignee,
Representing the Estate of Arjunlal Sunderdas,
Amended as per order dated 08.09.2014 made
in Appln. No.5277 of 2014 ... Defendants
This Civil Suit has been filed under Order VII Rule I of CPC r/w
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2/18
Order IV Rule 1 of O.S. Rules and Order XXXVII Rule 2 of O.S.Rules,
prayed for a judgment and decree against the defendants:
(a) directing the defendants to pay a sum of Rs.8,20,00,000/- with
future interest on Rs.7,00,00,000/- @ 12% p.a., as may accrue between the
filing of the plaint and the date of payment, and also the costs of this suit, on
some date to be named by the Court and in default that the said suit schedule
mentioned property may be sold, and the proceeds after defraying there out
the expenses of the sale applied in and towards payment of the amount of the
said interest, principal and cost;
b) That, if the said proceeds shall not be sufficient for the payment in
full of such amounts, the defendants may be ordered to pay the plaintiff the
amount of deficiency with interest thereon @ 12% per annum until
realization;
c) That, for that purpose, all proper directions may be given and
account taken by the Court;
d) Costs of this suit.
For Plaintiff : Mr.S.R.Raghunathan
For 1st Defendant : No appearance. Process held
completed by order dated 13.01.2015
by the learned Master
For 2nd Defendant : Mr.K.V.Ananthakrushnan
Assisted by Ms.A.Janani
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3/18
JUDGMENT
The suit had been filed under Order XXXVII Rule 2 of Original Side
Rules, Madras High Court, seeking a judgment and decree against the
defendants, International Sea Foods Private Limited, a company registered
under the provisions of Companies Act, 1956 represented by Arjunlal
Sunderdas and Arjunlal Sunderdas as the 2nd defendant to pay a sum of
Rs.8,20,00,000/- with interest on Rs.8,20,00,000/- with interest of
Rs.7,00,00,000/- at 12% per annum from the date of plaint till the date of
realization and for costs of the suit and in default to bring the property,
described in the schedule to the plaint to sell and apply the proceeds towards
payment of the aforementioned principle amount and interest and costs.
2.The plaintiff also seeks that if the sale proceeds are not sufficient for
payment of the claim, a decree may be passed against the defendants to pay
the amount together with interest at 12% p.a., till realization. The property
described in the schedule was land and building at plot No.1A, New Door
No.23, Anderson Road, Nungambakkam, Chennai. Pending the suit, the 2nd
defendant, Arjunlal Sunderdas had been adjudicated as insolvent and
consequently by an order dated 08.09.2014 in A.No.5277 of 2014, the
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Official Assignee was impleaded as the 2nd defendant as representing the
estate of Arjunlal Sunderdas.
3.It is the case of the plaintiff that he had paid a sum of
Rs.7,00,00,000/- to Arjunlal Sunderdas towards purchase of a flat in
property bearing Old Door No.3/2A. New Door No.34, College Road,
Nungambakkam, Chennai, which was proposed to be developed by the 2nd
defendant. The details of payment are as follows:
S.No. Date Amount
1 14.01.2011 Rs.5,00,000/-
2 08.08.2011 Rs.75,00,000/-
3 11.08.2011 Rs.120,00,000/-
4 24.08.2011 Rs.100,00,000/-
5 14.09.2011 Rs.100,00,000/-
6 16.10.2011 Rs.100,00,000/-
7 28.10.2011 Rs.100,00,000/-
8 10.11.2011 Rs.100,00,000/-
4.It had been further stated that the proposal for development of the
property did not commence. The 1st defendant had therefore deposited the
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original title deeds with respect to the property at New Door No.23,
Anderson Road, Nungambakkam, Chennai and a memorandum in this
regard had also been executed on 14.01.2011 acknowledging receipt of a
sum of Rs.7,00,00,000/- from the plaintiff. The plaintiff also came to know
that the property which was proposed to be developed at College Road,
Nungambakkam, Chennai, had been sold to Amarnath Reddy on 27.07.2012.
The plaintiff therefore lodged a complaint before the Commissioner of
Police, Chennai, on 07.09.2013. The 2nd defendant, Arjunlal Sunderdas filed
an application seeking anticipatory bail in Crl.O.P.No.26317 of 2013 before
this Court. A memorandum of compromise was entered into between the
plaintiff and the 1st defendant represented by Arjunlal Sunderdas as
Managing Director and also in his personal capacity on 11.11.2013, whereby
there was an admission of debt of Rs.7,00,00,000/- and the defendants
undertook to pay a sum of Rs.8,20,00,000/- to the plaintiff on or before
31.01.2014. In view of the memorandum of compromise, the Criminal
Original Petition was closed. Since the defendants did not honour their
commitment to pay the aforementioned sum of Rs.8,20,00,000/- the suit had
been filed on the basis of the memorandum of deposit of title deeds as a
mortgage suit claiming a judgment and decree for the said sum together
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with interest on the principle amount of Rs.7,00,00,000/-, and on failure to
bring the property at New Door No.23, Anderson Street, Nungambakkam,
Chennai to sale and apply the proceeds towards the decreetal amount and if
the decree amount is not satisfied for a personal decree against the
defendants for the differential amount. The plaintiff also sought costs of the
suit. During pendency of the suit, the 2nd defendant had been adjudicated as
an insolvent by order in I.P.No.25 of 2014 on 21.04.2014. The Official
Assignee was therefore impleaded as the 2nd defendant.
5.The learned Master had directed paper publication to be effected
against the 1st defendant. Paper publication was effected and process was
deemed to be completed by order dated 13.01.2015. The 1st defendant had
taken a conscious decision not to participate in the judicial proceedings.
6.The 2nd defendant / Official Assignee filed a written statement
denying and disputing the claim of the plaintiff. It had been contended that
the burden was on the plaintiff to prove the claim. It was also stated that the
mortgage had been falsely created without sanction of law. It had also been
stated that a reasonable presumption can be drawn that the memorandum of
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compromise had been obtained in coercion. In effect, the Official Assignee
disputed the claim of the plaintiff.
7.The plaintiff also filed a reply statement, wherein, the claim was
again reiterated. It had also been stated that the Official Assignee was
estopped from denying the claim, particularly since Arjunlal Sunderdas had
admitted to the claim and the Official Assignee had only stepped into the
shoes of the insolvent. It had also been stated that in Application No.156 of
2017, the claim of the plaintiff had been examined by this Court and it had
been categorical observed that it would be addressed at the time when the
properties are brought to sale and amounts are disbursed to the creditors. The
plaintiff reiterated that the claim was genuine and that the plaintiff is entitled
for the decree as prayed for.
8.On the basis of the aforementioned pleadings, the following issues
arise for consideration:
“1.Whether the alleged borrowings to the tune of
Rs.7,00,00,000/- on several dates by cash by the 1st defendant
was a genuine transaction done in the ordinary business course
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of transaction?
2.Whether the alleged deposit of the title deeds dated
14.01.2011 creating a mortgage on the property was with an
intention to create mortgage or to avoid criminal proceedings?
3.Whether the alleged deposit of title deeds dated
14.01.2011 is genuine and true or subsequently created on
13.11.2013?
4.Whether the deposit of title deeds created on 14.01.2011
with recitals on a stamp paper reduced in writing requires
registration?
5.Whether the borrowings was between the plaintiff and
Arjunlal Sundardas Insolvent or with International Sea Food
(P) Limited, the 1st defendant?
6.When the alleged mortgage was created by the 1st
defendant without registration of charge under Section 125 of
the Companies Act is valid and enforceable?
7.When the alleged mortgage by deposit of title deeds
dated 14.01.2011 is not true and genuine, whether the suit under
Order 34 of CPC maintainable?
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8.Whether the compromise entered in a criminal
proceedings for bail and orders passed at the behest of the
plaintiff valid binding on the defendants without proving the
debt as per procedure laid down by law?
9).To what relief the plaintiff is entitled to?”
9.The parties were then invited to tender evidence. The plaintiff filed
his proof affidavit and marked Exs.P1 to P15. Ex.P1 is the copy of the sale
deed dated 15.01.1980 relating to the property mortgaged. Ex.P3 was the
Board Resolution of the 1st defendant to borrow money as loan. Ex.P4 was
the deposit of title deeds dated 14.01.2011. Ex.P11 was the Board
Resolution of the 1st defendant authorizing the 2nd defendant to enter into
compromise with the plaintiff. Ex.P12 is the copy of the Memorandum of
Compromise dated 11.11.2013. Ex.P13 is the copy of the order in
Crl.O.P.No.26317 of 2013. Ex.P14 was the copy of the letter handing over
to the original title deed to the 2nd respondent by the plaintiff on 15.12.2018.
Issue Nos.1 to 9:
10.It is the claim of the plaintiff that towards purchase of a plot
proposed to be constructed in property at Old Door No.3/2A New Door
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No.34, College Road, Nungambakkam, Chennai, the plaintiff had advanced
a total sum of Rs.7,00,00,000/- to the 1st defendant, International Sea Foods
Privae Limited represented by the Managing Director, Arjunlal Sunderdas.
The amount had not been repaid. Arjunlal Sunderdas was impleaded as the
2nd defendant in the suit. The amount was not repaid by the defendants.
11.The original sale deed of yet another property at Old Door
No.3/2A New Door No.34, College Road, Nungambakkam, Chennai, had
been deposited with the plaintiff by letter dated 15.12.2018 and that
particular sale deed had been marked as Ex.P1. The extract of the Permanent
Land Register of the property was marked as Ex.P2. Since the defendants
had not repaid the amount, a memorandum of deposit of title deeds dated
14.01.2011 had been entered into between the parties and that document had
been marked as Ex.P4. The plaintiff then came to know that the property had
actually been sold to Amarnath Reddy on 27.07.2012. The plaintiff had
therefore lodged a criminal complaint on 07.09.2013 against the defendants.
The 1st defendant had authorized the 2nd defendant to enter into a
compromise with the plaintiff by Ex.P11. The defendants came forward to
compromise the issue. A Memorandum of Compromise dated 11.11.2013
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was executed and a copy of the same had been marked as Ex.P12. The order
in Crl.O.P.No.26317 of 2013 was marked as Ex.P13.
12.In the meanwhile, the 2nd defendant, Arjunlal Sunderdas was
declared as insolvent by order in IP.No.25 of 2014 by order dated
21.04.2014. An application was filed to implead the Official Assignee in the
place of Arjunlal Sunderdas in the suit and the application was also allowed.
13.The plaintiff filed A.No.156 of 2017 in I.P.No.25 of 2014 seeking
to exempt the property at No.23, Anderson Road, Nungambakkam,
Chennai, from the administration of the Official Assignee. An order was
passed by this Court on 27.07.2018 and this Court had ordered as follows
directing the right of the plaintiff in the schedule mentioned property as
mortgagee.
“149.In the result,
i).A.No.156 of 2017, seeking for a direction to exempt
the property at No.23, Anderson Road, Nungambakkam,
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Chennai – 6 from the administration of the Official Assignee
is dismissed, but, the claim of Applicant, as mortgagee, is
preserved and would be determined, at the time of applying
the sale proceeds.”
14.Thereafter, the plaintiff filed Review Application No.2 of 2018, by
an order dated 14.12.2018, the Review Application was dismissed, but in the
order it had been observed as follows:
“3. ... The observation of this Court in paragraph
Nos.149 (i) and 149(ii) of the order dated 27.07.2018 are
independent of each other and they are not mutually
destructive.
4.As far as Dr.M.Arumugam, the applicant in A.No.156
of 2017 is concerned, his rights as a mortgagee, in respect of
the property bearing No.23, Anderson Road, Nungambakkam,
Chennai – 600 006, is well protected under the order passed
by this Court dated 27.07.2018. We have held that
International Sea Foods Private Ltd., is a shell company of
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the Insolvent and his brother, only vis-a-vis the insolvent,
who, on behalf of International Sea Foods Private Ltd.,
created the mortgage in favour of Dr.M.Arumugam.
15.It is thus seen that this Court had preserved the right of the
plaintiff on direction of this Court. The plaintiff also deposited the title deed
details of the property at No.23, Anderson Road, Nungambakkam, Chennai,
in the office of the Official Assignee and letter of such deposit is marked as
Ex.P15. The property at No.23, Anderson Road, Nungambakkam, Chennai
was subsequently sold by auction by this Court. The Court had proceeded
further with the adjudication of claim in IP.No.25 of 2014 and proceeded to
declare the dividend to the creditors. It must be stated that while
adjudicating the claim petitions with respect to the estate of the insolvent,
this Court had, on examination of the facts, had observed that the claim of
the plaintiff could be settled.
16.At this juncture, the plaintiff filed an affidavit consenting to settle
the claim for a sum of Rs.5,00,00,000/-. The affidavit of the plaintiff reads
as under:
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“I, Dr.M.Arumugam, S/o. Murukiah Pillai, aged about 58
years having office at No.7, Khader Nawaz Road,
Nungambakkam, Chennai – 600 006 do hereby solemnly affirm
and sincerely state as follows:
1.I am the plaintiff in the above suit and as such I am well
acquainted with the facts and circumstances of the case.
2.I hereby agree to receive a sum of Rs.5,00,00,000/-
(Rupees Five Crores only) from the 2nd defendant representing
the estate of the Insolvent Late Arjunlal Sunderdas, in full and
final settlement of all my claims against the defendants in
C.S.No.121 of 2014.
3.I respectfully request that I may be permitted to seek a
refund the the court fee paid.”
17.This Court put across the proposal of settlement offered by the
plaintiff to the 2nd defendant. Considering the disputed facts and the interest
of the creditors to the insolvent waiting for the return of their money for
more than a decade, the 2nd defendant representing the creditors had not
expressed any objections for the proposal.
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18.We, after due consideration of the fact that this litigation cannot be
prolonged indefinitely to reach a logical end through adjudication, that will
not enure any benefit either to the plaintiff or to the creditors of the
insolvent, therefore the proposal to settle the claim by grant of decree in
terms of the offer by the plaintiff is viewed as appropriate, just and fair.
19.Accordingly, a decree is passed for a sum of Rs.5,00,00,000/-
(Rupees Five Crores only) to be paid by the Official Assignee directly to the
plaintiff from and out of the Estate of the insolvent. The plaintiff is entitled
for refund of Court fees paid.
20.In the result:
i).The suit is partly decreed for a sum of Rs.5,00,00,000/- (Rupees
Five Crores only) to be paid by the Official Assignee to the plaintiff from
and out of the Estate of the insolvent within a period of three weeks from
this date. The plaintiff would be entitled for interest of 18% on
Rs.5,00,00,000/- if there is a delay, for the number of days of delay in
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effecting payment by the Official Assignee.
ii).The plaintiff is entitled for refund of the Court fees paid at the time
of institution of the suit.
(G.J.,J.) (C.V.K.,J.)
24.01.2025
smv
Index: Yes/No
Internet: Yes/No
Speaking order: Yes/No
Plaintiff side Witnesses:
P.W.1 – Dr.M.Arumugam
Defendants side – Nil
Plaintiff side Documents:
Ex.P.1 15.01.1980 Photocopy of Sale Deed in favour of the 1st
defendant.
Ex.P.2 07.12.1998 Photocopy of extract from the Permanent Land
Register.
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Ex.P.3 12.01.2011 Photocopy of Board Resolution of the 1st defendant .
Ex.P.4 14.01.2011 Photocopy of Memorandum of Deposit of Title
Deeds.
Ex.P.5 21.09.2011 Photocopy of receipt of CMWSSB charges.
Ex.P.6 08.11.2011 Photocopy of Certificate Issued by the Indian Bank.
Ex.P.7 08.11.2011 Photocopy of receipt of the Property Tax.
Ex.P.8 08.11.2011 Photocopy of Encumbrance Certificate for the period
01.01.2000 to 07.11.2011.
Ex.P.9 01.07.2013 Photocopy of letter from SRO – Thousand Lights to
the plaintiff.
Ex.P.10 01.07.2013 Photocopy of the letter addressed by the plaintiff to
SRO – Central Chennai – Joint II.
Ex.P.11 11.11.2013 Photocopy of Board Resolution of the 1st defendant.
Ex.P.12 11.11.2013 Photocopy of Memorandum of Compromise.
Ex.P13 13.11.2013 Photocopy of order passed in Crl.O.P.No.26317 of
2013, High Court, Madras.
Ex.P14 04.02.2014 Photocopy of Encumbrance Certificate for the period
01.01.2011 to 03.02.2014.
Ex.P15 15.12.2018 Photocopy of Letter handing over the Title Deeds.
(G.J.,J.) (C.V.K.,J.)
24.01.2025
G.JAYACHANDRAN,J.
and
C.V.KARTHIKEYAN,J.
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smv
Pre-delivery Judgment in
24.01.2025
https://www.mhc.tn.gov.in/judis
