2017 (9) TMI 1977 - HC - Indian Laws

Revocation of leave under Clause 12 of the Letters Patent - dismissal of suit on the ground that the plaint does not disclose any cause of action against the defendant No. 1 - non-existent pre-incorporation agreement - HELD THAT - For rejection of plaint under Order 7 Rule 11 only contents of the plaint have to be seen and read as a whole and nothing else. As long as the plaint discloses cause of action mere fact that plaintiff may not succeed in suit cannot be ground for rejection of plaint - A plaint cannot be defeated due to lack of proof at this stage since in deciding an application in the nature of demurrer the Court is not supposed to assess as to whether the plaintiff would be ultimately able to prove its case. There is a distinction between lack of pleading and lack of proof. A plaint must fail if there is a lack of pleading leading to non-disclosure of a cause of action. The indeterminate ambit of unlawful means thus remains one of the principal causes of uncertainty as to the potential scope of liability under this tort. The issue has been the subject of some judicial deliberation in other common law jurisdictions - A party must be shown to have known that they were inducing a breach of contract. It is not enough that a defendant knows that he is procuring an act which as a matter of law or construction of the contract is a breach nor that he ought reasonably to have known that it is a breach. It was only on 4th August 2005 that the present suits came to be filed by the appellants in which a prayer for injunction was made with a view to enforce the terms of clauses 15 and 20 of the agreement which incorporated negative covenants prohibiting mining operation by anyone else except the appellants or without their permission. The use of the words during the subsistence of this agreement in clause 15 and during the pendency of this indenture in clause 20 of the agreement is significant. In the absence of a document renewing the original agreement for a further period of 5 years and in the absence of any declaration from a court of law that the original agreement stood renewed automatically upon the appellants exercising their option for grant of renewal it was held that the appellants cannot be granted relief of injunction for the simple reason that there is no subsisting agreement evidenced by a written document or declared by a court - the suit was held to be barred by limitation and accordingly dismissed under Order 7 Rule 11(d) of the Code of Civil Procedure. Application dismissed.

Issues Involved:
1. Application for revocation of leave under Clause 12 of the Letters Patent and dismissal of suit.
2. Existence and enforceability of a pre-incorporation agreement.
3. Allegations of tortious interference and conspiracy.
4. Admissibility of oral agreements and evidentiary requirements.
5. Rejection of plaint under Order VII Rule 11 of the CPC.

Issue-wise Detailed Analysis:

1. Application for Revocation of Leave and Dismissal of Suit:
The defendant No. 1 applied for revocation of leave under Clause 12 of the Letters Patent and for dismissal of the suit, arguing that the plaint does not disclose any cause of action against them. The defendant contended that the alleged pre-incorporation agreement, as mentioned in paragraph 6 of the plaint, does not exist, and no document evidences such an agreement. The Court cannot grant relief based on a non-existent agreement.

2. Existence and Enforceability of a Pre-incorporation Agreement:
The defendant argued that the Specific Relief Act, 1963, in Section 15(h), recognizes pre-incorporation agreements, which must be incorporated into the terms of the company's incorporation. However, the Memorandum and Articles of Association (MOA and AOA) of the plaintiff No. 1 company do not reflect the alleged pre-incorporation agreement. The Shareholders' Agreement dated 21st January 2010, and its amendment on 29th February 2016, supersede any prior agreements, contradicting the alleged pre-incorporation agreement. The Court noted that the Shareholders' Agreement is the entire agreement between the parties and is terminable, lacking any negative covenant.

3. Allegations of Tortious Interference and Conspiracy:
The defendant No. 1 was accused of colluding and conspiring to ensure that Arcelor Mittal Companies do not procure goods and services from the plaintiff No. 1 company. The Court highlighted that allegations of fraud, collusion, and conspiracy must be supported by sufficient particulars as per Order VI Rule 4 of the CPC. The Court found that the plaintiff's allegations lacked foundational pleadings and particulars, making them insufficient to constitute a cause of action. The essential elements of tortious interference, including the existence of a contract, knowledge of the contract, breach caused by unlawful means, and resultant damages, were not identifiable in the plaint.

4. Admissibility of Oral Agreements and Evidentiary Requirements:
The Court addressed the admissibility of oral agreements, stating that while oral agreements can be enforced, they must be proved by conduct and course of dealings between the parties. The plaintiff's failure to produce documents supporting the alleged pre-incorporation agreement was noted. The Court emphasized that the plaintiff must prove the agreement at trial, and the absence of documentary evidence at this stage does not warrant rejection of the plaint.

5. Rejection of Plaint under Order VII Rule 11 of the CPC:
The Court discussed the principles for rejecting a plaint under Order VII Rule 11 of the CPC, emphasizing that the plaint must disclose a cause of action. The Court must assume the averments in the plaint to be true and cannot look into the defense or evidence at this stage. The Court found that the plaint disclosed three causes of action against the defendant No. 1: breach of a pre-incorporation agreement, procuring a breach of contract with other defendants, and tortious interference with third-party contracts. The Court concluded that the plaint disclosed sufficient causes of action, and the application for rejection of the plaint was dismissed.

Conclusion:
The Court rejected the application filed by defendant No. 1 for revocation of leave and dismissal of the suit, finding that the plaint disclosed sufficient causes of action against the defendant. The application was dismissed, and no order as to costs was made.

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