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TMI Blog1999 (3) TMI 542X X X X Extracts X X X X X X X X Extracts X X X X ..... the Company . 5. The third respondent is Grindlays Bank which gave a loan to the tune of Rs. 2,01,15,000 to the Company . Like other financial institutions, namely, Bank of America, National Trust and Saving Association, the Pradeshiya Industrial Investment Corpn. of Uttar Pradesh (PIC UP) and Vijaya Bank, the Grindlays Bank is also a secured creditor and a mortgagor in respect of the land, building, plant and machinery of the Company . 6. The Company on 23-12-1980 is alleged to have entered into a contract with the first respondent whereby, the first respondent was to supply to the Company various machines and accessories on the terms and conditions specified therein. The Company was required to pay to the first respondent sterling pound 6,40,143 for the supply of the machinery in the following manner : 1. A confirmed letter of credit for sterling pound 5,81,940 to be opened by the Company with a recognised London Bank against presentation of documents. 2. A second confirmed irrevocable letter of credit for sterling pound 29,097 to be opened by the Company with a recognised London Bank prior to the shipment of the above said articles from U.K. so that pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s (P.) Ltd. also entered the fray. Vide order dated 13-8-1987 the terms for the auction of the assets of the Company , including plant and machinery, were settled and auction was fixed to be held on 10-9-1987 at 3.00 P.M. in Court. For this purpose an advertisement was directed to be issued in all leading newspapers in India. Accordingly, on 10-9-1987 auction was held in Court pursuant to the order dated 13-8-1987. There were only two bidders Delhi Paper Marketing Ltd. and Pollar Chem Coats in the field. However, Delhi Paper Marketing Ltd. withdrew from the contest leaving behind the second respondent Pollar Chem Coats in the field. There being no other bidder, the bid of Pollar Chem Coats was accepted for Rs. 1.40 crores. Subsequently on 4-12-1987 it agreed to enhance its bid to Rs. 1.43 crores. Pursuant to the acceptance of the bid of the second respondent, possession of the assets of the Company , including plant machinery was handed over to it in compliance with the order dated 18-12-1987 of the Company Court. On 28-4-1988, the first respondent filed two applications being C.A. No. 829 of 1988 and C.A. No. 831 of 1988. Through C.A. No. 829 of 1988 the first respondent s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on is also dismissed as withdrawn." 8. From the above, it is clear that the first respondent withdrew the aforesaid applications as the Court was of the view that "the claim of the first respondent was barred by time on 22-12-1984". Liberty however was granted to the first respondent to move again as a creditor of the company provided it could satisfy the Court that its claim was within time by virtue of time being extended in the manner provided by law. On 20-7-1989, the first respondent moved a further application being C.A. No. 7567 of 1989 for seeking leave of the Court under section 446 of the Act read with rule 9 of the Companies (Court) Rules, 1959, to file a suit against the Company and the auction purchaser for the following reliefs : ( a )that the property in the machinery and equipment continues to vest in the respondent. ( b )the said machinery be returned to the respondent No. 1. ( c )that, in the alternative the sale proceeds of the said machinery with interest at the rate 18 per cent per annum be ordered to be paid to the respondent No. 1. 9. On 20-3-1990, Mahesh Chandra, J. allowed the application and permitted the first respondent to file a suit as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while CA 831/88 wherein substantive prayer for adjudication had been made, was merely dismissed as withdrawn." 11. J.K. Mehra, J. also noted that the first respondent instead of moving a fresh claim in terms of the leave granted by this Court in C.A. No. 329 and 331 of 1989, moved C.A. No. 7567 of 1989 seeking permission to file a suit without disclosing the factum of moving the earlier applications and their withdrawal, and the terms on which was allowed to move afresh in the matter. It was also noted that no notice of hearing was given either to the Grindlays Bank or the Auction Purchaser. Since the first respondent had failed to draw the attention of Mahesh Chandra, J. to the facts anterior to the filing of C.A. No. 7567 of 1989, the first respondent practised deception by concealment of facts. As a consequence thereof the Court fell into an error in passing the order dated 20-3-1990. In view of this position, J.K. Mehra, J. was of the view that the order granting leave to file the suit, is liable to be recalled. However, in the interest of justice, the matter was directed to be renotified for hearing on the question as to whether or not the claim of the first respondent co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s further contended on the basis of clause 6 that since the part of the sale price was still outstanding from the company, the title to the equipment remained with the first respondent, and as the title did not pass to the company the claim of the first respondent to recover possession of plant and machinery could be filed within three years of the taking over of the plant and machinery by the Official Liquidator or within three years of the taking over of the plant and machinery by the second respondent. According to the first respondent, the present case would be covered by Articles 68 and 69 of the Limitation Act, 1963. In support of his submission the learned counsel relied upon the following decisions : 1. Hemendra Lal Roy v. Indo Swiss Trading Co. AIR 1955 Pat. 375. 2. Akkipeddi Gopalasastry v. Vijayawada Eng. AIR 1968 AP 41. 3. Brijmohan Singh v. Bhagwatsingh AIR 1971 Raj. 255. 4. Kalicharan v. Ganeshi Lal AIR 1928 Oudh 47(1). 15. I have considered the submissions of the learned counsel for the parties. In order to appreciate the submissions of the learned counsel for the parties it will be necessary to notice some of the orders passed by my predeces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sterling 6,11,037 out of Pound Sterling 6,40,134, confirmed irrevocable letters of credit for an amount of Pound Sterling 5,81,940 and Pound Sterling 29,097 were opened. Since this was the position, the first respondent ought to have explained as to how on presentation of documents the amount under the second letter of credit for Pound Sterling 29,097 was not received by it through the nominated banker. No attempt has been made by the second respondent to render any explanation much less a satisfactory one despite the fact that in the order dated 20-5-1988 passed by Mahinder Narain, J. this aspect of the matter was highlighted and it was observed that the recovery of the amount was barred by time on 22-12-1984. 18. The first respondent without dispute has received Pound Sterling 581,940 in respect of the machinery supplied to the company. That means even according to the first respondent it had received bulk of the money for the machinery supplied by it. At no stage of the proceedings the first respondent offered to return the said amount or part of it after deducting suitable amount on account of compensation for use of the plant and machinery by the company, if it wanted to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and circumstances of this case, Jagannath obtained the preliminary decree by playing fraud on the court. The High Court, however, went haywire and made observations which are wholly perverse. We do not agree with the High Court that there is no legal duty cast upon the plaintiff to come to court with a true case and prove it by true evidence . The principle of "finality of litigation cannot be pressed to the extent of such an absurdity that it becomes an engine of fraud in the hands of dishonest litigants. The courts of law are meant for imparting justice between the parties. One who comes to the court, must come with clean hands. We are constrained to say that more often than not, process of the court is being abused. Property-grabbers, tax-evaders, bank-loan-dodgers and other unscrupulous persons from all walks of life find the court process a convenient lever to retain the illegal gains indefinitely. We have no hesitation to say that a person whose case is based on falsehood, has no right to approach the court. He can be summarily thrown out at any stage of the litigation." 20. The plea of the first respondent that the suit is within time as the title in the plant and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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