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TMI Blog2017 (11) TMI 1969X X X X Extracts X X X X X X X X Extracts X X X X ..... son whose property is to be affected by the order of injunction. On the material carried to court, the plaintiff does not appear to be a creditor of the second defendant. It is with considerable regret and diffidence that it needs to be observed that the filter that was traditionally in place before a matter reached the court may have been considerably eroded in value and diluted in its moral content. The judiciary is not a system of a judges alone; the object of the exercise in a court is not to obtain an unworthy order or defeat a worthy cause, the pursuit is of justice - Even though justice cannot be pursued in the adversarial system by ensuring the removal of injustice, the shared responsibility to prevent unjust causes being espoused in court cannot be shrugged off at the Bar. The judiciary cannot stand, far less remain upright, if either pillar of the Bench or the Bar falters. There comes a time when a system must assert itself, if only to survive against the vicious onslaught of such unscrupulous litigants and their advisors as the present plaintiff. If dockets are not to be clogged with unworthy claims and false defences, litigants who carry vexatious causes must be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... form the fulcrum of the plaintiff's claim: 2. In or around January 2014, the defendant Nos. 1 and 2, through the defendant No. 3, their authorized person and Director represented to the plaintiff followings amongst others: a) Defendant No. 2 (previously named as DLF Hilton Hotels Ltd. and thereafter DLF Hotels Hospitality Ltd. ) is a long term lessee under Kolkata Municipal Corporation ( KMC ) in respect of a large plot of land (5.59 acres approx) being premises No. 8, JBS Haldane Avenue, Kolkata-700 105 which was being developed through the defendant No. 1. The said lease hold land and premises is more fully described in a schedule annexed hereto and marked with the letter A . b) KMC have sanctioned a building Plan ( the plan ) for construction of two towers comprising service apartments at the said premises. The project was named Avani Grand . c) For the purpose of undertaking development of the service apartment area within the said premises, defendant No. 2 has entered into a term sheet/Agreement in or about June 2012 with the defendant No. 1 whereby, the defendant No. 1 has agreed to undertake construction, erection and completion of the new buildings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of ₹ 8 crores by way of compensation and the plaintiff would agree upon termination of allotment of 21000 sq.ft. of super built up areas in the service apartment of the said project. The plaintiff being pressurized and assured by the defendants of payments as aforesaid, ultimately agreed to the said proposal. 5. The repayment allegedly promised by the defendants to the plaintiff was recorded in a letter of November 15, 2014. A copy of such letter is appended to the plaint and the two key paragraphs from such letter need to be noticed: This is to place on record that we have agreed to allot. All that 21,000 square feet of superbuilt-up area consisting in the Service Apartment, in the project named AVANI GRAND located at Municipal Premises No. 8, J.B.S. Haldane Avenue, Kolkata-700 105 and in respect of such allotment you have already paid a sum of ₹ 21 Crores (Rupees Twenty One Crores only) towards the full and final consideration amount. Since the construction of the project is delayed we shall be liable to pay interest on the amount paid by you at the rate of 18% p.a. till the amount is repaid and damages totaling to ₹ 8 Cr (Rupees Eight Crores ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of insufficiency of funds. Thus, a case was made out in the plaint of a certain sum of money being invested in a project and money being promised to be returned within months of the payment being made on the ground of the delay in undertaking the project and the cheques issued by way of repayment being dishonoured upon presentation. 9. For the rest of the plaintiff's version that it carried to this court, its interlocutory petition has now to be seen. After the narration in the plaint was substantially reproduced in the petition, the plaintiff claimed that in April, 2017 it had downloaded the annual report of the first defendant for the year ended March 31, 2015, which report included the annual report of its subsidiary, the second defendant in the suit. A copy of such report was appended to the petition. The conclusion drawn by the plaintiff on a reading of the said annual report was that the respondent Nos. 1 and 2 are in very bad financial condition (Paragraph 25 of the petition). 10. Over the next several pages in the remarkable petition, the plaintiff asserted that it had discovered from the material pertaining to the first defendant company downloaded by the pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms: The respondent shall not create any further encumbrance in respect of premises No. 8, JBS, Haldane Avenue, Kolkata - 700 105 till the returnable date. 14. May 17, 2017 was one of the last working days before this court closed for a fortnight on May 19, 2017 for its annual summer vacation. The plaintiff's interlocutory petition was next taken up on June 14, 2017. The appearance on behalf of the parties at the top of the order indicated lawyers representing the respondents and advocate representing Reliance Commercial Finance. In the opening paragraph of the order dated June 14, 2017 the submission attributed to the respondents is as follows: It has been submitted on behalf of the respondents that the respondent No. 1 may not have any defence to the claim of ₹ 21 crore. 15. It appears to have also be submitted on behalf of the defendants that a mortgage had been created in respect of the Avani Grand property in favour of Reliance Commercial Finance and pursuant to such mortgage a sum of ₹ 270 crore was disbursed by the said company for the instant project . A further submission was also recorded in the order that another company belongin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... defendant was entitled to obtain project finance and loans. In September, 2012 the second defendant created a mortgage in respect of the bypass property by deposit of title deeds to R-Com and a registered deed of mortgage was subsequently executed on October 10, 2012. Several other documents were simultaneously executed by the second defendant and R-Com, including a facility agreement, a deed of pledge, a deed of charge, a deed of guarantee and a deed of termination. 20. The affidavit of the second defendant used in the interlocutory court reveals that an initial finance for ₹ 278 crore was sanctioned by R-Com and a further loan was granted by another company from the Reliance stable, Reliance Home Finance Limited, in whose favour of a pari passu charge in respect of the bypass property was created. The entire share holding of and in the second defendant is pledged with R-Com as security for the project loan. 21. R-Com applied before the interlocutory court by way of GA No. 1919 of 2017 for leave to intervene in the proceedings and for vacating the order dated May 17, 2017. According to the petition filed by R-Com, the bypass property measures about 5.59 acre and, as p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icious design of causing prejudice the second defendant and R-Com to try and defeat the rights of R-Com pertaining to the bypass property, its pledge in respect of the shares in the second defendant and the money it has pumped into the project. 25. In course of the judgment impugned herein, the interlocutory court was constrained to insinuate that it had been misled into passing the ex parte order on May 17, 2017: The Court was not aware of the existence of a prior mortgage nor that the entire share of the defendant No. 2 has been pledged with the applicant (R-Com) on 17th May, 2017. If these full facts were known to the Court, the Court would not have passed any order concerning the said property at this stage. 26. Elsewhere in the judgment, the interlocutory court observed that the claim was essentially against the defendant No. 1 and that the letter dated November 15, 2014 on which much emphasis has been laid on behalf of the plaintiff, in my view, prima facie is not enforceable against the defendant No. 2 and more so in respect of the present property. 27. The action instituted by the plaintiff, the disingenuous manner in which its petition before the interloc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ues were issued only in February, 2017 and which cheques were presented a few days before the suit was lodged. In fact, there is nothing to dispel the suspicion that the documents relied upon by the plaintiff in support of its claim may have been brought into existence after the plaint was prepared. The only set of relevant documents that may not have emanated from the plaintiff and the third defendant is the bunch of memoranda of dishonour pertaining to the cheques and such memoranda preceded the filing of the suit by no more than ten days. The plaintiff and the plaintiff's purported claim have no nexus with the bypass property and the entire malicious essay was to embroil the second defendant in litigation and have a receiver appointed over its valuable property to destroy a project that the third defendant as the person in control of the first defendant knew he could not deliver in terms of the development agreement despite obtaining substantial funds from R-Com and its sister concern. 31. Though the interlocutory prayers in the plaintiff's petition specifically referred to attachment before judgment, there was a change of tack in course of the appeal to suggest that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rst defendant's letter of February 8, 2017 promised that the first defendant would not intimate its bankers to stop payment of the post-dated cheques or request the plaintiff to not present the cheques. There was no reason for the plaintiff to timidly accept the alleged oral request made on behalf of the defendants to not immediately present the post-dated cheques, despite the written assurance in the purported letter of February 8, 2017. 34. The simple case sought to be made out by the plaintiff that the entire transaction was on the basis of the representation of the third defendant and that it is the third defendant who controls the second defendant, is not acceptable in the light of the principal asset of the second defendant being mortgaged to R-Com and even the shareholding of the first defendant in the second defendant being pledged with R-Com. If the corporate veil is lifted, the third defendant may not be found lurking behind it in the guise of the second defendant, it is R-Com who looms large all over the second defendant. 35. The collusion between the plaintiff and the third defendant is also evidenced by the fact that the representation in court on behalf of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In particular, costs must be used as a deterrent in commercial matters that are needlessly dragged on. 38. The extent of the complicity between the plaintiff or the Bagri in control thereof and third defendant Daga is stark in the plaintiff disowning the order passed by the interlocutory court by which the residual rights of the first defendant in respect of a particular property have been attached. It has been repeated over and over again that the plaintiff did not seek such order and the same should not be continued. The ostensible reason is that such order is virtually ineffective since the asset is under the control of a bank and is subject to the measures to be taken under the Securitisation and Reconstruction of Financial Assets and Enforcement Security Interest Act, 2002. The real purpose of such submission and the pains to ensure that the order of attachment passed by the interlocutory court is undone, as is plain to see, is so that there is no embarrassment or inconvenience to the third defendant who is in control of the first defendant company. 39. Since the plaintiff has not been able to show in the remotest form any modicum of a claim against the second defend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad interim order on an interlocutory petition of an unsecured creditor. Courts must be alive to the extent of prejudice that such an order may cause to a defendant. Even the best arguable case of the plaintiff in this matter, without the deception that has been subsequently discovered, could not have earned this plaintiff an order so overwhelmingly disproportionate to the limited claim that was passed on May 17, 2017. 42. There comes a time when a system must assert itself, if only to survive against the vicious onslaught of such unscrupulous litigants and their advisors as the present plaintiff. If dockets are not to be clogged with unworthy claims and false defences, litigants who carry vexatious causes must be appropriately dealt with in the award of costs. For the plaintiff's colossal attempt to hoodwink the court and try and obtain an undeserving order, the plaintiff-appellant in this case will pay costs assessed at ₹ 15 lakh each to the second defendant and R-Com. Though the costs are intended to be punitive and exemplary in character, in effect, such sums may only cover a part of the expenses incurred by the second defendant and R-Com to undo the mischief that t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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