2018 (4) TMI 915 - HC - Indian Laws

Recovery of outstanding dues which were admitted - cancellation of conditional bail - misappropraition of shares - The defendant s only plea is that due to cancellation of conditional bail, MOU dated 03.04.2013 executed between the parties became null and void and its terms and conditions cannot be enforced - Held that - When the defendant did not comply with the terms and conditions of the MOU executed before the court, the plaintiffs were within their right to avail legal remedies seeking cancellation of bail for violation of terms and conditions of MOUs. Learned Additional Sessions Judge committed no error in cancelling the conditional bail due to non-compliance of terms and conditions of MOU. The MOU did not debar the plaintiffs to avail civil remedies to recover the said amount. Settled position of law is that the criminal and civil proceedings are two different and separate independent remedies. Filing of the FIR and even of the proceedings under Section 138 Negotiable Instruments Act did not debar the plaintiffs to avail the civil remedy to recover the outstanding amount. The defendant s arrest pursuant to the cancellation of bail did not absolve him of the liability to pay the outstanding dues. This Court finds no sufficient ground to grant leave to defend to the defendant - application dismissed.

Summary

Issues:
1. Recovery of funds transferred wrongfully by defendant from plaintiffs' father's demat accounts.
2. Validity and enforcement of Memorandum of Understanding (MOU) between parties.
3. Application for leave to defend raised by the defendant.
4. Entitlement of plaintiffs to interest on outstanding dues.

Issue 1: Recovery of Funds:
The plaintiffs filed a suit against the defendant seeking recovery of ?3,66,62,760 transferred wrongfully from their father's demat accounts. Allegations included the defendant transferring 90% of shares without consideration, forging letters, and issuing a cheque to the deceased father. The defendant's actions led to an FIR and subsequent settlement through an MOU, where the defendant admitted liability but failed to fulfill payment obligations, resulting in the suit for recovery.

Issue 2: Validity of MOU:
The defendant argued that the MOU became void due to his arrest and bail cancellation. However, the court found the MOU valid, as the defendant failed to comply with payment terms, justifying the plaintiffs' legal action for recovery. The court emphasized the independence of civil and criminal proceedings, allowing the plaintiffs to pursue the outstanding amount despite the defendant's arrest.

Issue 3: Application for Leave to Defend:
The defendant's application for leave to defend was dismissed as lacking substantial defense or triable issues. The court deemed the defendant's defense as frivolous and an attempt to evade legal consequences. The court concluded that the defendant's arguments did not warrant granting leave to defend, leading to the dismissal of the application.

Issue 4: Entitlement to Interest:
The plaintiffs claimed interest on the outstanding amount, although no agreement specified interest terms. The court awarded interest from the date each bounced cheque was presented, totaling ?56,13,870 at a rate of 10% per annum. Citing precedent, the court granted interest to the plaintiffs from the MOU date till the suit's institution, with further interest post-decree until realization.

This comprehensive analysis of the judgment highlights the key legal issues, arguments presented by both parties, and the court's decision on each matter, ensuring a thorough understanding of the case and its implications.