Delhi District Court
Divyansh Pratham Infracon Private ... vs Dwarika Infocom Private Limited on 9 May, 2024
IN THE COURT OF SHRI ARVIND KUMAR :
DISTRICT JUDGE (COMMERCIAL COURT-01)
EAST DISTRICT
KARKARDOOMA COURTS : DELHI
CS (Comm) No. 162/2022
Divyansh Pratham Infracon Pvt. Ltd.
A Company Incorporated Under
The Companies Act, 1956
Having its Registered Office at:-
18/63, Geeta Colony, Delhi-110031 ................Plaintiff
Versus
Dwarika Infocom Pvt. Ltd.
A Company Incorporated Under
The Companies Act, 1956
Having its Registered Office at:-
2, Park End, 3rd Floor, Vikas Marg
New Delhi - 110092
Corporate Office at:-
A-30, Sector-49, Noida,
Distt. Gautam Budh Nagar,
U.P.-201301 ...........Defendant
Date of institution : 28.05.2022
Date of reserving judgment : 08.04.2024
Date of judgment : 09.05.2024
JUDGMENT:
1. The plaintiff has filed the present suit for recovery of a sum of Rs.1,98,00,000/- against the defendant alongwith pendente lite and future interest and costs.
2. In brief, the facts as averred in the plaint are that the CS (Comm) No. 162/2022 Divyansh Pratham Infracom Pvt. Ltd. Vs. Dwarika Inforcom Pvt. Ltd. 1 of 33 plaintiff is engaged in the business of development of land and Mr. Ashok Kumar is one of the director of the plaintiff company and Mr. Ashutosh Bharti is the authorized representative and they are authorized by the Board of Directors to sign and verify the plaint and institute the present suit. The defendant is a private limited company and is engaged in the business of construction. It is averred that Sh. Raj Kishore Verma, one of the directors of the defendant, was already known to directors of the plaintiff as they had earlier purchased land for Group Housing Development from the said Director.
3. It is averred that defendant represented and held out to the plaintiff that defendant entered into Consortium Agreement dated 01.05.2012 with Edge Infrastructure Pvt. Ltd. and GSR Farms Pvt. Ltd. for formation of Consortium namely "Edge Dwarika JV" for the purpose of jointly developing an integrated Group Housing Project upon the lands being approx. 39371.25 square meter of land, Khasra No. 1085, 1086, 1088, 1089 and 1135 at Village Noornagar, Ghaziabad owned by defendant, Edge Infrastructure Pvt. Ltd. and GSR Farms Pvt. Ltd. and Memorandum of Understanding entered into between defendant and other two owners. It is further averred that Edge Dwarika JV applied for and was granted sanction of the building plan in respect of said Khasra numbers vide sanction letters dated 20.04.2013 and 19.12.2013 and the project was named as "Raj Garden City". It is further averred that the share of the defendant was 25% and that of Edge Infrastructure Pvt. Ltd and GSR Farms CS (Comm) No. 162/2022 Divyansh Pratham Infracom Pvt. Ltd. Vs. Dwarika Inforcom Pvt. Ltd. 2 of 33 Pvt. Ltd was 37.5% each. It is further averred that the defendant had exclusive rights for the development of said land with its share being 72.25% of the total developed/constructed area and balance to be divided amongst the other two consortium members. It is further averred that the defendant projected himself to be responsible for development and construction of the Project under the consortium / MOU and that defendant had received sanction of drawings by the GDA.
4. Further it is averred that believing the representations of defendant to be true, negotiations were held by defendant and defendants for purpose of joint development of the land and defendant offered to share 50% of its exclusive share of 63% of total constructed area on the said land for which plaintiff should pay 9 crores and share 50% of all future expenses towards development and construction. It is further averred that in order to secure the payment of Rs. 9 crores, the defendant shall transfer its shareholding to plaintiff/its companies/directors and the percentage of shareholding was to be mutually decided on the basis of valuation of shares.
5. It is further averred that at the time when negotiations were going on between defendant and plaintiff, the terms of consortium agreement and MOU dated 15.01.2014 were again changed by the defendant, Edge Infrastructure Pvt. Ltd. and GSR Farms Pvt. Ltd. and another MOU dated 23.05.2014 was executed. It is further averred that defendant sent a draft of MOU CS (Comm) No. 162/2022 Divyansh Pratham Infracom Pvt. Ltd. Vs. Dwarika Inforcom Pvt. Ltd. 3 of 33 dated 29.03.2014 containing proposed terms for collaboration between plaintiff and defendant in the proposed construction and development of the Multi-Story Group Housing Project alongwith its email dated 30.06.2014.
6. It is further averred that while negotiations were going on, defendant requested the plaintiff to pay some amount towards the project citing urgent requirement and on believing the representations of defendant to be true, plaintiff paid a sum of Rs.2,00,00,000/- (Rupees Two Crores) on 15.04.2014 and Rs.50,00,000/- on 11.06.2014 by way of transfer to the account of defendant. It is further averred that thereafter on 05.10.2014, Bhumi Pujan was done and the project was promoted under the joint banners i.e. of plaintiff and defendant. It is further averred that in the meantime, the defendant returned an amount of Rs.1,50,00,000/- on 14.11.2014 to the plaintiff after retaining an amount of Rs.1,00,00,000/-. It is further averred that as requested by defendant, two directors of the plaintiff i.e. Sh. Chandra Bhan and Sh. Ashok Kumar paid Rs.4,50,00,000/- on 13.11.2014 and 14.11.2014. It is further averred that as on 14.11.2014, a total sum of Rs.5,50,00,000/- has been received by defendant without finalization of terms of MOU and this fact is admitted by defendant as per statement filed by defendant before Ld. NCLT.
7. Further it is averred that vide emails dated 16.01.2015 and 28.01.2015, the defendant shared the proposed price list of the multi-story Housing Project with plaintiff. It is CS (Comm) No. 162/2022 Divyansh Pratham Infracom Pvt. Ltd. Vs. Dwarika Inforcom Pvt. Ltd. 4 of 33 further averred that the plaintiff had informed the defendant that it should get its MOU with other two consortium members registered as it had to avail loan facility for the proposed project from bank/financial institution. It is further averred that during the course of negotiations, the defendant vide its email dated 16.01.2015 and 20.01.2015 requested the plaintiff to provide the complete profile of group companies alongwith its directors, details of list of projects and complete details of loans availed by them for the said project and the plaintiff provided the same to defendant.
8. It is further averred that on 07.03.2015, the plaintiff sent its proposed MOU to the defendant and offered to share 40% out of defendant's exclusive share of 63% of total constructed area on the said land and that directors of plaintiff would pay Rs.7,20,00,000/- and will share 40% of all future expenses towards development and construction of the said land. It is further averred that vide emails dated 18.06.2015 and 02.12.2015, defendant sent presentation of the project and booklet of the project respectively. It is further averred that in June 2016, plaintiff became aware that the defendant has decided to abandon the project due to paucity of funds for commencement of construction and payment of stamp duty for registration of MOU. On 16.06.2016 and 23.08.2016 defendant sent emails regarding the sub-divisional plan and layout plan of 140 plots, respectively to the plaintiff. It is further averred that vide email dated 02.12.2016, defendant forwarded a letter from Ghaziabad CS (Comm) No. 162/2022 Divyansh Pratham Infracom Pvt. Ltd. Vs. Dwarika Inforcom Pvt. Ltd. 5 of 33 Development Authority dated 24.10.16 to the plaintiff, sanctioning the revised plan of development of plots by defendant. Further it is averred that another MOU dated 03.01.2017 was executed between the defendant and other two consortium members whereby they cancelled earlier MOU dated 23.05.14 and the share of the defendant was reduced to 25% as against 72.25% and cancelled the MOU dated 23.05.2014 and the amount paid by defendant to other members was returned by them with interest and the nature of project was changed from multi-storied group housing to plots. The defendant and two consortium members further entered into Supplementary Consortium Agreement dated 17.01.2017 with same terms of MOU dated 03.01.17 and registered the same.
9. It is further averred that plaintiff came to know about MOU dated 03.01.2017 and Supplementary Consortium Agreement dated 17.01.2017 in March/April 2017 when the plaintiff's Directors met the defendant and inquired about the status of the project/refund of its money to which defendant assured to refund the money to the plaintiff with interest and plaintiff demanded interest at commercial rate i.e. 24% per annum. It is further averred that as on 31.03.2017, defendant treated the payment received from the defendant as long term borrowing reflected as "unsecured loans" in its Balance Sheet and sent the Balance Confirmation of Account to the plaintiff for the period 01.04.2015 to 31.03.2016.
CS (Comm) No. 162/2022Divyansh Pratham Infracom Pvt. Ltd. Vs. Dwarika Inforcom Pvt. Ltd. 6 of 33
10. It is further averred that when defendant failed to return the money received from plaintiff, the plaintiff sent the legal notice on 28.02.2019 calling upon the defendant to repay the amount of Rs.1,00,00,000/- alongwith interest within 15 days of receipt of notice. It is further averred that on 25.03.19, defendant sent reply to the legal notice and acknowledged the receipt of Rs.1,00,00,000/- from plaintiff and Rs.4,50,00,000/- from the directors of the plaintiff.
11. It is further averred that the plaintiff, being financial creditor, filed an application under Section 7 of the IBC 2016 before Ld. NCLT wherein defendant filed reply and again admitted the aforesaid facts but the said application was dismissed by Ld. NCLT vide order dated 09.08.2019 with observation that since there was no written agreement between the parties of loan, the plaintiff cannot be said to be a financial creditor.
12. As per the plaintiff, it is entitled to a sum of Rs.1,98,00,000/- i.e. Rs.1,00,00,000/- as principal and Rs.98,00,000/- as interest @ 14% on Rs. One Crore from the last date of payment i.e. 11.06.2014. The plaintiff thereafter, filed application under Section 12A of the Commercial Court Act for initiating pre-litigation mediation but since defendant did not appear before the mediation centre despite issuance of summons, a non-starter report dated 24.11.2021 was issued.
13. Defendant filed written statement stating that the CS (Comm) No. 162/2022 Divyansh Pratham Infracom Pvt. Ltd. Vs. Dwarika Inforcom Pvt. Ltd. 7 of 33 defendant is in the business of construction and development of real estate projects and is having solid reputation and goodwill in the market. It is alleged that the defendant was the owner of land area measuring 39371.25 sq.mtr. out of Khasra No.1085, 1086, 1088, 1089 and 1135M at Village Noornagar, Ghaziabad and later it formed a Joint Venture with two other land owner companies i.e. M/s GSR Farms Pvt. Ltd. (GSR) and M/s Edge Infrastructure Pvt. Ltd.(EIPL) It is further alleged that their partnership was defined in the ratio of their lands i.e. 37.5% to GSR, 37.5% to EIPL and 25% to defendant and the project was sanctioned by Ghaziabad Development Authority in October 2013 through M/s Edge Dwarika Joint Venture which incurred payments of huge sums of money for paying government development charges, architect fees, liasoning fee and other expenses to get the map sanctioned by the GDA.
14. It is alleged that since the project was huge and construction required a lot of funds and technical expertise, the other two members showed their inability to make further investments in January 2014 and requested defendant to take up the project under its name and banner. Defendant took exclusive rights of development and sale of the Project Raj Garden City obtained through MOU dated 15.01.2014/23.05.2014 executed between the defendant and other two members and as per said MOU, developer/defendant was entitled to 63% of the total developed/constructed area and the three land owners were to get 37% of the total constructed area. The defendant was also a 25% CS (Comm) No. 162/2022 Divyansh Pratham Infracom Pvt. Ltd. Vs. Dwarika Inforcom Pvt. Ltd. 8 of 33 land owner and hence, total share of defendant was 72.5% in the project as per MOU dated 15.01.2014/23.05.2014. It is alleged that in MOU dated 29.03.14, executed with the plaintiff, the plaintiff was only partnering in the developer share i.e. 63% share of the project as a developer and share of defendant as land owner i.e. 9.25% fully constructed area will not be in any way disturbed and the plaintiff would not be having any right over that share.
15. It is alleged that the present suit is not maintainable in view of the fact that the plaintiff alongwith its sister concern Divyansh Infracon Pvt. Ltd. through its representatives Mr. Chandra Bhan and Mr. Ashok Huria approached defendant offering to participate in the development and construction of the project and to share 50% of all expenses towards development and construction in the said project i.e. 50% of the 63% of the fully constructed area on the land. It is further alleged that plaintiff informed that it had several prospective buyers at hand but didn't have enough inventories of flats and are hence, unable to offer flats to so many buyers and further that they have the expertise in construction and development projects and are working with best vendors, suppliers, contractors since last 5-6 years which will save great costs and time in the execution of project.
16. The plaintiff was given entry in the project but thereafter, plaintiff failed to make the payment of 50% share of the expenses. It is alleged that after fully understanding and satisfying the viability in the project, plaintiff had agreed to pay the Entering CS (Comm) No. 162/2022 Divyansh Pratham Infracom Pvt. Ltd. Vs. Dwarika Inforcom Pvt. Ltd. 9 of 33 Cost of Rs.9,00,00,000/- which was to be up-front, non- refundable and non-adjustable and only after payment, plaintiff would gain entry into the project otherwise it would have no right on the project. It is alleged that in the meeting dated 15.03.2014 between the plaintiff, its representatives and defendant, it was agreed that plaintiff would make payment of Rs.9,00,00,000/- to defendant as detailed in MOU dated 29.03.14 on or before 01.08.2014. Further, it is alleged that the plaintiff through its companies, could only make payment of Rs. 3,50,00,000/- and sought time for arranging funds till October 2014 and believing the plaintiff, defendant permitted the plaintiff to make the payment till 31.10.2014. However, plaintiff failed to make payment of complete 'entering cost' and as on October 2014, made payment of only an amount of Rs.5,50,00,000/- which was short of Rs.3,50,00,000/-. It is alleged that plaintiff made representations till October 2015 that it would make complete payment but the same was not made by the plaintiff.
17. It is alleged that in November 2014, plaintiff through its company, its directors and representatives, requested defendant to reverse an amount of Rs.1,50,00,000/- to the account of M/s Divyansh Pratham Infracon Pvt. Ltd., Rs.1,00,00,000/- to the account of M/s Divyansh Infrastructure Pvt. Ltd., an amount of Rs.2,00,00,000/- to Divyansh Infracon Pvt. Ltd. totalling to Rs.4,50,00,000/-. Further it was represented by Mr. Chandra Bhan and Mr. Ashok Huria that they would each make payment of Rs.2,25,00,000/- from their personal accounts towards Entering CS (Comm) No. 162/2022 Divyansh Pratham Infracom Pvt. Ltd. Vs. Dwarika Inforcom Pvt. Ltd. 10 of 33 Cost and further requested the defendant to reverse the payments made by them through their companies so that plaintiff can make entire payment of Rs.9,00,00,000/- through their personal accounts, due to change in their internal arrangement for which the defendant had agreed.
18. In December 2014, defendant again reminded the plaintiff that he had not paid the Entry fee and 50% of the huge investments and that GDA through letter dated 11.12.2014 had raised demand of approximately Rs.6,50,00,000/- copy of which was also sent to the plaintiff vide email dated 19.12.2014. Plaintiff assured the defendant that he will make payment of entire Entry Fee and also 50% of all the expenses by January 2015 alongwith 50% share of the demand by GDA and requested the defendant to pay its 50% of 6.5 crores as raised by GDA and rest shall be paid by plaintiff by January 2015 and defendant, believing his assurance, paid Rs.3.5 crore to the GDA through challan but plaintiff did not pay any amount even after January 2015.
19. It is alleged that around October 2015, the plaintiff and its representatives for the first time showed their inability to make payments of Entry fee and 50% of the expenses due to huge financial crunch in its company and are not in a financial position to pay the same as per MOU dated 29.03.2014 whereafter defendant told the plaintiff about the huge investments made in the project and that abandoning the project will cause huge losses in the project as a result of which the project was forced to be CS (Comm) No. 162/2022 Divyansh Pratham Infracom Pvt. Ltd. Vs. Dwarika Inforcom Pvt. Ltd. 11 of 33 cancelled and MOU dated 15.01.14/23.05.2014 was also cancelled by requesting the land owners and the project was converted from high rise of stilt - 22 floors to low rise of stilt - 4 floors and advance received from customers Rs.4.5 crore was refunded by the defendant.
20. Defendant further alleged that the contention of the plaintiff that he paid the money as a loan is just an afterthought and the plaintiff and its companies and other directors are jointly and severally liable to pay damages and compensation to defendant for the losses suffered by defendant on account of misrepresentations. It is alleged that the present suit is not maintainable due to lack of territorial jurisdiction as the subject matter i.e. development and sale of immovable property in question is situated at Ghaziabad, the MOU was executed in Ghaziabad, the corporate office of defendant is in Noida, UP.
21. In reply on merits, defendant alleged that the MOU dated 29.03.2014 was sent through email three months later on 30.06.2014 as a reminder to plaintiff of their agreed payment dates and the plaintiff never objected to the MOU or any of its terms and conditions rather the plaintiff acted upon the said MOU and also made initial payment of Rs.1 crore. It is alleged that plaintiff always acted as a partner in the project without even completing the payment of 'entering cost' as it took bookings and signed as Authorized Signatory on the said bookings even though it was not authorized to sign on behalf of defendant. Further, it is CS (Comm) No. 162/2022 Divyansh Pratham Infracom Pvt. Ltd. Vs. Dwarika Inforcom Pvt. Ltd. 12 of 33 alleged that the plaintiff through an email dated 07.03.2015 sent an 'undated' document to the defendant and proposed modification to the MOU wherein it intended to reduce its partnership to 40% from agreed 50% and reduce the Entry Fee from Rs.9 crore to Rs.7,20,00,000/- but the same was not acceptable to the defendants and even as per the plaintiff, it could not make the complete payment of Rs.7,20,00,000/-.
22. It is also alleged that the payment of Rs.75 lacs shown in email dated 07.03.2015 as alleged proposed MOU under Section 'Considerations' sub-section 'd', to be paid on or before 07.02.15 was also admittedly not paid by the plaintiff but is mentioned as already paid in the MOU. Other allegations were specifically and categorically denied.
23. The plaintiff filed replication to the written statement of the defendant and all the averments made in the plaint are reiterated and reaffirmed.
24. From the pleadings of the parties, following issues were framed on 06.10.2022 itself :
1) Whether the plaintiff is entitled for a decree against the defendant in the sum of Rs.1,98,00,000/- alongwith interest, if any and if yes, at what rate and for which period? OPP
2) Whether this court has no territorial jurisdiction to decide the present suit? OPD
3) Relief.CS (Comm) No. 162/2022
Divyansh Pratham Infracom Pvt. Ltd. Vs. Dwarika Inforcom Pvt. Ltd. 13 of 33
25. The plaintiff company examined Sh. Ashutosh Bharti as PW1. He deposed the facts as stated in the plaint, by way of affidavit Ex.PW1/A and tendered in evidence the documents which are as under :
Board Resolution dated 20.9.2021 passed in his favour as Ex.PW1/1. Sale Deed dated 28.2.2011 as Ex.PW1/2.
Copy of registered Consortium Agreement dated 11.5.2012 as Ex.PW1/3.
Copy of Sanction Letter from GDA dated 20.4.2013, as Ex.PW1/4. Copy of another Sanction Letter from GDA dated 19.12.2013, as Ex.PW1/5.
Copy of MoU dated 15.1.2014 with Board Resolution and Cheques as Ex.PW1/6.
Copy of an unregistered Consortium Agreement dated 23.5.2014 as Ex.PW1/7.
Print-out of an e-mail dated 30.6.2014 as Ex.PW1/8. Print-out of the draft proposed MoU sent on 29.4.2014 as Ex.PW1/9. Copy of an Invitation for Bhoomi Pujan to be held on 05.10.2014 as Mark P1.
True print of an e-mail dated 14.1.2015 vide which radio plan was shared with the plaintiff, used for promotion of project as Ex.PW1/11. True print of an e-mail dated 15.1.2015 vide which radio plan was shared with the plaintiff, used for promotion of project as Ex.PW1/12. True print of an e-mail dated 02.3.2015 vide which radio plan was shared with the plaintiff, used for promotion of project as Ex.PW1/13. Copy of Brochure of the Project, displaying prominently the brand of the plaintiff as Mark P2.
Print-out of e-mail dated 16.1.2015 with attachment of price-list as Ex.PW1/15.
Print-out of e-mail dated 28.1.2015 with attachment of price-list as Ex.PW1/16.
Print-out of two e-mails both dated 16.1.2015 for providing details of profile of the plaintiff/DPIPL/DIPL as Ex.PW1/17 and PW1/18.CS (Comm) No. 162/2022
Divyansh Pratham Infracom Pvt. Ltd. Vs. Dwarika Inforcom Pvt. Ltd. 14 of 33 Copy of document of loan furnished by the plaintiff/DIPL to the defendant as Ex.PW1/19.
Print-out of e-mail dated 07.3.2015 as Ex.PW1/20. Print-out of draft MoU sent by the plaintiff as Ex.PW1/21. Print-out of e-mail dated 18.6.2015 as Ex.PW1/22. Print-out of e-mail dated 02.12.2015 as Ex.PW1/23. Print-out of e-mail dated 16.6.2016 as Ex.PW1/24. Print-out of e-mail dated 23.8.2016 as Ex.PW1/25. Copy of Sanctioning Letter dated 24.10.2016 by GDA sent to the plaintiff with e-mail dated 02.12.2016 as Ex.PW1/26. Copy of the MoU dated 03.1.2017 as Mark P3. Copy of the Supplementary Consortium Agreement dated 17.1.2017 as Ex.PW1/28.
True copy of the financial statements of the defendant for the year 2016-2017 as Ex.PW1/29.
True copy of the financial statements of the defendant for the year 2017-2018 as Ex.PW1/30.
True copy of the legal notice as Ex.PW1/31. True copy of reply dated 25.3.2019 sent by the defendant as Ex.PW1/32.
True copy of the order dated 09.8.2019 passed by the Hon'ble NCLT, Delhi in IB 1159 (PB) of 2019 as Ex.PW1/33. True copy of reply filed by the defendant in IB 1276 (PB) of 2019 filed by one of the Director of the plaintiff namely Shri Ashok Kumar against the defendant as Ex.PW1/34.
True copy of the Sale Deed dated 04.12.2018 as Ex.PW1/35. Certificate by way of affidavit under Order 11 Rule 6 CPC as Ex.PW1/36, bearing my signatures at point X and Y. Copy of order dated 23.3.2020 passed by the Hon'ble Supreme Court in a suo moto Writ Petition (Civil) No. 03/2020 as Ex.PW1/37.
PW1 was cross-examined by Ld. Counsel for the defendant at length.CS (Comm) No. 162/2022
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26. Shri Anil Kumar Gupta - MTS, Ministry of Corporate Affairs, Office of the Registrar of Companies, NCT of Delhi and Haryana was examined as PW2. He has brought the certified copy of the financial statement of the defendant company for the financial year 2016-2017 and 2017-2018 alongwith other documents and proved the same as Ex. PW2/1 and Ex. PW2/2 respectively. He further proved certificate under Section 65-B of Indian Evidence Act in support thereof as Ex. PW2/3.
27. Shri Virender Kumar - LDC, NCLT, Delhi was examined as PW3. He was also a summoned witness who has brought the certified copy of IB-1159-PB-2019 in the matter of Divyansh Pratham Infracon Pvt. Ltd. vs Dwarika Infocom Pvt. Ltd. containing the documents as per Index dated 03.01.2023. He proved the said record as Ex. PW3/1(colly).
28. Shri Deepesh Kumar Thakur - Dy. Manager, Kotak Mahindra Bank Ltd., Noida, Sector-63 Branch, UP was examined as PW4. He brought the certified copy of the statement of account of Divyansh Pratham Infracon Pvt. Ltd. for the period/dates 14.11.2014, 11.06.2014 and 15.04.2014 which were collectively exhibited as Ex. PW4/1.
PW2, 3 & 4 were not cross-examined by the Ld. Counsel for the defendant.
29. Defendant examined Shri Raj Kishore Verma -
Authorized Representative/Director of defendant company as CS (Comm) No. 162/2022 Divyansh Pratham Infracom Pvt. Ltd. Vs. Dwarika Inforcom Pvt. Ltd. 16 of 33 DW1. He tendered his evidence by way of affidavit Ex. DW1/A stating the facts as stated in the written statement. He also tendered in his evidence the following documents:-
Copy of the payment receipt to the Ghaziabad Development Authority by the defendant as Ex. DW1/1.(The same is de-exhibited for mode of proof and marked as Mark A).
Copy of first page of Brochure of the defendant as Ex. DW1/2 (Admitted by the plaintiff) Copy of MGT Form 9 of the defendant as Ex. DW1/3 (The same is de-exhibited for mode of proof and marked as Mark B). Copy of statement of bank account of defendant as Ex. DW1/4. (Admitted by the plaintiff) Copy of relevant bank entries of the plaintiff as Ex. DW1/5.(The same is de-exhibited for mode of proof and marked as Mark C). Copy of statement of account of the Director of Plaintiff company i.e. Mr. Ashok Kumar as Ex. DW1/6.(The same is de-exhibited for mode of proof and marked as Mark D).
Copy of email dated 19.12.2014 as Ex. DW1/7.(Admitted by the plaintiff) Copy of the Balance Sheet of the plaintiff for the Financial Year 2014-2015 as Ex. DW1/8.(The same is de-exhibited for mode of proof and marked as Mark E).
Copy of the Balance Sheet of the plaintiff for the Financial Year 2015-2016 as Ex. DW1/9.(The same is de-exhibited for mode of proof and marked as Mark F).
Copy of the Price List shared by the defendant through email dated 06.06.14 as Ex. DW1/10.(Admitted by the plaintiff) Copy of photos of Bhoomi Poojan attended by the Directors of the DIPL/DPIPL as Ex. DW1/11 (colly).(Admitted by the plaintiff) Copy of emails dated 01.11.2014 and 19.11.2014 regarding booking of flat as Ex. DW1/12 (Colly).(Admitted by the plaintiff) Copy of Invoice dated 13.03.2015 of the Radio Advertisement as Ex.
DW1/13.(The same is de-exhibited for mode of proof and marked as Mark G).
CS (Comm) No. 162/2022Divyansh Pratham Infracom Pvt. Ltd. Vs. Dwarika Inforcom Pvt. Ltd. 17 of 33 Copy of Invoice dated 31.10.2014 of Star India Pvt. Ltd. as Ex. DW1/14.(The same is de-exhibited for mode of proof and marked as Mark H).
Copy of Email dated 08.05.2017 as Ex. DW1/15.(Admitted by the plaintiff) Copy of ITR of the defendant for the Assessment Year 2015-2016 and 2016-2017 as Ex. DW1/16 and Ex. DW1/17 respectively.(The same is de-exhibited for mode of proof and marked as Mark I and Mark J respectively).
Copy of Board Resolution dated 01.07.2022 as Ex. DW1/18. (The same is de-exhibited for mode of proof and marked as Mark K).
30. I have heard Shri HL Tiku - Ld. Senior Advocate, Shri Rahul Regmi and Ms. Rashmi - Ld. Counsels for the plaintiff and Shri Ravinder Rawat - Ld. Counsel for the defendant and have also gone through the written submissions filed by the both the Ld. Counsels, as well as records of the case.
31. Ld. Counsel for plaintiff contended that the defendant, Edge Infrastructure Pvt. Ltd. and GST Farms Pvt. Ltd. formed a consortium namely 'Edge Dwarika JV' vide Consortium Agreement dated 01.05.2012 to develop the lands (i.e. about 8000 sq. mtr) by constructing integrated Group Housing Complex, being Housing Project Raj Garden City, Raj Nagar Extension, Village Noor Nagar, Ghaziabad, wherein Edge Infrastructure Pvt. Ltd. and GSR Farms Pvt. Ltd. were the two land owners. It is further submitted that the defendant approached the plaintiff for joint development of the said lands while disclosing about the Consortium Agreement dated 01.05.2012 and MOU dated CS (Comm) No. 162/2022 Divyansh Pratham Infracom Pvt. Ltd. Vs. Dwarika Inforcom Pvt. Ltd. 18 of 33 15.01.2014 executed between the defendant and other two land owners wherein the defendant's share in the project was 72.25% (i.e. 63% exclusive share and additionally 25% of balance 37% jointly with other two consortium members). Further the defendant offered 50% of the development and profit rights out of 63% in the project which he got vide MOU dated 23.05.2014. It is further submitted that vide MOU dated 17.01.2017 the defendant lost the said 63% rights and as on 17.01.2017, defendant was only having 25% rights in the said project and hence, defendant did not have any right which it could offer to plaintiff for joint development and share of profit.
32. Ld. Counsel for plaintiff contended that the nature of the project was changed from multi-storied group housing to plotted unilaterally. It is submitted that the defendant company in its financial statement of 2016-17, Ex.PW2/1 and also Ex.PW1/29 and 2017-18, Ex.PW2/2 and also Ex.PW1/30 showed this amount as unsecured loans and there is no explanation to the contrary.
33. Ld. Counsel for plaintiff further contended that plaintiff is entitled to the amount of Rs. 1 crore alongwith interest.
34. It is further contended that after changing the nature of project, the defendant sold the plots at market rate being Rs.25,027.80/- per sq. mtr. as per sale deed dated 04.12.2018. Ld. Counsel for plaintiff further submitted that the defendant cannot be permitted to unjustly enrich itself by illegally retaining a sum of CS (Comm) No. 162/2022 Divyansh Pratham Infracom Pvt. Ltd. Vs. Dwarika Inforcom Pvt. Ltd. 19 of 33 Rs.1 crore and is liable to refund the said amount alongwith interest.
35. Ld. Counsel for the plaintiff contended that there is no written and executed MOU between the parties and defendant has falsely stated that MOU was executed in Ghaziabad. It is submitted that defendant's and plaintiff's registered offices are in Delhi and the money is also receivable in Delhi.
36. Ld. Counsel for the plaintiff has relied upon various judgments delivered in MX Media and Entertainment PTE Ltd. vs Contagious Online Media Networks Pvt. Ltd. OMP(I) (Comm) 106 of 2021 of the Delhi High Court; Asset Reconstruction Co. vs Bhishal Jaiswal & Anr. 2021(6) SCC 366; Ultramatix Systems Pvt. Ltd. vs State Bank of India MANU/MH/0552/2007 (Bombay High Court DB); Surjit Sachdev vs Kazakhstan Services Pvt. Ltd. 1997 (66) DLT 54 DB and National Small Industries Corp. Ltd. vs Myson Electronics P. Ltd. and Ors. MANU/DE/2283/2016.
37. Ld. Counsel for defendant contended that the plaintiff and the defendant have agreed upon MOU dated 29.03.2014 sent by the defendant and as per said MOU, the plaintiff was to pay Rs.9 crore upfront, non-adjustable and non-refundable entry fee in the project regarding development of the land which was owned by Consortium consisting of defendant and two other members. The said MOU dated 29.03.14 was acted upon by the parties and CS (Comm) No. 162/2022 Divyansh Pratham Infracom Pvt. Ltd. Vs. Dwarika Inforcom Pvt. Ltd. 20 of 33 the plaintiff has made some payments but later on did not pay the remaining amount of Rs.3.5 crore despite repeated requests by the defendant and has further failed to arrange the fund agreed by the plaintiff in terms of MOU dated 29.03.14 and this resulted into failure of the project. It is also contended that the amount of Rs. 1 crore was non-refundable, non-adjustable hence, cannot be demanded by the plaintiff.
38. It is further contended that the MOU dated 29.03.2014 was e-mailed three months later on 30.06.2014 as a reminder to the plaintiff of their agreed payment dates after it faltered on its payment installment. The plaintiff never objected to the MOU or any of its terms and conditions and also acted in accordance with the said terms and conditions and the plaintiff made initial payments as per the schedule mentioned in the MOU dated 29.03.2014 i.e. first payment of Rs. 1 crore on the day of signing the MOU on 29.03.2014 and another payment of Rs. 1 crore on 02.04.14. Further, it is contended that plaintiff was always acting as a partner in the project and was even taking bookings for the said project and in a mail dated 01.11.2014, also asked the defendant to 'please see and prepare on letter head asap'. The email and document bears the signatures of Shri Ashok Kumar who mentioned the Project as his own new project. Further it is contended that Hon'ble NCLT dismissed the claim of plaintiff as they misguided the Ld. NCLT by posing as Corporate Debtor and mentioned the amount in question as 'Advance to others' in balance sheet of financial year 2014-15 and 2015-16.
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39. It is further contended that the MOU is mentioned as final in the email provided to plaintiff on 30.06.2014 which also included the MOU dated 29.03.2014 and the plaintiff never challenged, opposed, declined it before filing the plaint and it is only now that he is asserting that MOU was not final and even the plaintiff paid the first installment as per the timetable specified in the MOU of 29.03.2014. Further, it is contended that the plaintiff through its mail in December 2016 came to know that defendant changed the nature of society development from multi-storied to low raising/plotted society and the plaintiff remained idle till March/April 2017, and thereafter approached the court on the pretext that by virtue of suo-moto judgment of the Hon'ble Supreme Court, in Writ Petition (Civil) No. 3 of 2020, the suit is within limitation.
40. Ld. Counsel for defendant has relied upon the judgments of the Hon'ble Apex Court delivered in Patel Roadways Ltd., Bombay vs Prasad Trading Co. & Ors. (1991) 4 SCC 270; Aloka Bose vs Parmatma Devi & Ors. (2009) 2 SCC 582; Maruti Suzuki India Ltd. vs Moto Drive (P) Ltd. & Ors.
2019 SCC Online Del 12154; Hagwood Commercial Developers Pvt. Ltd. vs Rahul Madhukar Deshmukh & Anr. 2021 SCC OnLineBom 13906.
My issue-wise findings are as under:
ISSUE No. 1 :
41. The first question that arises for determination is CS (Comm) No. 162/2022 Divyansh Pratham Infracom Pvt. Ltd. Vs. Dwarika Inforcom Pvt. Ltd. 22 of 33 whether MOU dated 29.03.14, Ex.PW1/9 was executed between the plaintiff and the defendant or was it acted upon by the parties.
42. It is noted that the MOU dated 29.03.14, Ex. PW1/9 was not signed by any of the parties. No reason has been assigned by the defendant as to why the said MOU was not signed. The defendant has only stated that it had sent the MOU to the plaintiff company and the plaintiff company did not take any further step to sign the said MOU, however, orally both the parties agreed to abide by the terms and conditions of the said MOU. DW1 Shri Raj Kishore Verma during cross-examination has stated that the plaintiff had taken from the defendant, the MOU for getting it signed from the plaintiff but they did not return it to the defendant and it was verbally agreed that the MOU has been executed. DW1 also stated that there was no email or letter written by the plaintiff to the defendant whereby the plaintiff agreed to the payment of entering cost of Rs.9 crore to be upfront/non-refundable and non- adjustable. DW1 stated that it was verbally agreed. DW1 also stated that there is no email or letter written by plaintiff to the defendant whereby it offered to share 50% of all expenses towards development and construction in the project under consideration for stake of 50% in the development share of the project and also there is no email or letter by the plaintiff to the defendant whereby the plaintiff represented to the defendant that it has the financial ability to provide 50% of all expenses.
43. Thus, it is clear that the aforesaid MOU dated CS (Comm) No. 162/2022 Divyansh Pratham Infracom Pvt. Ltd. Vs. Dwarika Inforcom Pvt. Ltd. 23 of 33 29.03.2014, Ex.PW1/9 was not signed nor the defendant took any further step for getting the same signed from the plaintiff. It has also emerged that there is no letter or email sent by the defendant to show that the aforesaid MOU or the terms and conditions of the said MOU were admitted by the plaintiff or plaintiff agreed to pay Rs.9 crore as upfront, non-adjustable and non-refundable amount.
44. It is contended by counsel for defendant, both the parties agreed to the terms and conditions of MOU, Ex.PW1/9 and the plaintiff has acted upon the said MOU and certain payments were made and the subsequent conduct of the plaintiff shows that the aforesaid MOU was orally agreed between the parties and there are number of following emails which pointed out that parties have entered into the contract in terms of the MOU dated 29.03.2014 Ex. PW1/9.
45. The plaintiff has admittedly made different payments to the defendant i.e. Rs.2,00,00,000/- (Rupees Two Crores) on 15.04.2014 and Rs.50,00,000/- on 11.06.2014. The said payment cannot be said to be in terms of MOU Ex.PW1/9 in as much as the MOU stipulated payment of Rs.1 crore at the time of signing of MOU dated 29.03.2014, Rs.3 crore on or before 14.04.2014, Rs.2 crore on or before 28.05.2014, Rs.2 crore on or before 12.07.2014 and Rs.1 crore on or before 01.08.2014. Admittedly, the plaintiff has not made the payment as per the schedule mentioned in the MOU. There is no email or any other communication on record to show that the defendant has CS (Comm) No. 162/2022 Divyansh Pratham Infracom Pvt. Ltd. Vs. Dwarika Inforcom Pvt. Ltd. 24 of 33 demanded the payment from the plaintiff in terms of MOU dated 29.03.14, Ex.PW1/9. Further it has already come in the testimony of DW1 that there is no document on record to show that plaintiff has agreed to pay 50% of the expenses towards development and construction in the project in consideration for a stake of 50% of the development and had represented that it had financial ability to provide 50% of all expenses.
46. Here it also needs to be mentioned that out of Rs.2.5 crore paid by the plaintiff to the defendant, Rs.1.5 crore was paid back by the defendant. As per defendant, the plaintiff has requested for payment of this amount and has assured that their Directors would be paying the amount against the amount refunded by the defendant, however, there is no communication on record to corroborate the aforesaid averments made by the defendant. The aforesaid refund of the amount was also not the part of the terms and conditions of the MOU, Ex.DW1/9. The aforesaid fact shows that none of the parties has acted upon the said MOU dated 29.03.14, Ex.PW1/9. The defendant although stated that it had provided the copy of said MOU to the plaintiff on 29.03.14, but there is nothing on record to substantiate the aforesaid claim of the defendant. Rather, an email dated 30.06.2014, Ex.PW1/8 is on record to show that the said draft MOU was sent by the defendant to the plaintiff on 30.06.2014.
47. The defendant stated the said MOU dated 29.03.14 as final MOU, but bare perusal of the said MOU shows that it was CS (Comm) No. 162/2022 Divyansh Pratham Infracom Pvt. Ltd. Vs. Dwarika Inforcom Pvt. Ltd. 25 of 33 not the final MOU. Number of blank spaces are there in the said MOU dated 29.03.14 and even the name of the AR of the defendant is blank in the said MOU. Further the date of resolution vide which Shri Raj Kishore Verma was authorized to execute said MOUs is blank. Even the detail of AR of the plaintiff is blank. Thus, it cannot be said that the said MOU was final.
48. The defendant stated that the terms and conditions of MOU were orally agreed. Here, it needs to be mentioned that even in the MOU, Ex.DW1/9, there is a clause '4b' which states that any change, modification or alteration or any amendment in the MOU shall be made only with mutual written consent of the parties. Then the question arises why the defendant did not insist for signing of this MOU when even modification was to be made only with the consent of the parties, in writing. In the different e- mails exchanged between the parties, the defendant nowhere insisted for signing of any agreement nor averred that the MOU dated 29.03.2014 has not been followed by the plaintiff and it only shows that terms and conditions between the parties were not clear and finalized till the time the project was abandoned. Thus, it is clear that the contract between plaintiff and defendant was not finalized and concluded to become enforceable between the plaintiff and defendant.
49. It was also pointed out by the counsel for the plaintiff that in the balance sheet dated 31.07.2017, maintained by the defendant, the said amount of Rs. 1 crore is shown as unsecured CS (Comm) No. 162/2022 Divyansh Pratham Infracom Pvt. Ltd. Vs. Dwarika Inforcom Pvt. Ltd. 26 of 33 loan which fact in itself falsify the defence taken by the defendant. The defendant failed to explain why this amount of Rs.1 crore is shown as unsecured loan in their financial statement, Ex.PW2/1.
50. Even if it is assumed that the plaintiff and defendant have orally agreed on certain terms and conditions of MOU. As per the said MOU dated 29.03.14, Rs.9 crore was the entering cost in the said project and the schedule of payment is mentioned in the MOU and further it is stipulated that the MOU shall be treated to have lost its effect and cannot be given effect to and cannot be acted upon if above initial consideration of Rs.9 crore is not paid by the plaintiff to defendant within the time prescribed. Again the question arises, if the plaintiff did not pay the initial amount, how the MOU will survive. The condition regarding non- refundable and non-adjustable amount can only be enforced when the initial amount of Rs. 9 crore is paid by the plaintiff and parties proceeds further.
51. It is contended by Ld. Counsel for the defendant that plaintiff first time showed its intention not to pay the amount in October 2015. It is noted that vide email dated 16.06.2016, Ex.PW1/24, defendant has informed the plaintiff regarding sub- divisional plan of 140 plots and vide email dated 23.08.16, Ex.PW1/25, defendant sent the layout plan of the plots to the plaintiff. Vide email dated 02.12.2016, the defendant forwarded a letter from Ghaziabad Development Authority dated 24.10.2016, both Ex.PW1/26 sanctioning the revised plan of development of CS (Comm) No. 162/2022 Divyansh Pratham Infracom Pvt. Ltd. Vs. Dwarika Inforcom Pvt. Ltd. 27 of 33 plots by the defendant. It is clear from the aforesaid emails that plaintiff and defendant were still in process of developing the project and it falsified the averments made by defendant that plaintiff has showed his intention to withdraw from the project in October 2015. The aforesaid conduct of the defendant only shows that both the parties continued with the project till the time these emails were sent to the plaintiff.
52. It is noted that subsequently there was some change in the consortium and a fresh consortium was constituted whereby the share of the defendant was reduced to 25% as against 72.25% and a supplementary MOU was executed on 17.01.17, Ex.PW1/28 amongst the consortium members. The aforesaid change of position of the defendant was unilateral qua plaintiff and shows that even the defendant was not following the terms and conditions of the MOU dated 29.03.2014. The change of the position of the defendant by changing the nature of project which was stated to have been agreed upon between the parties i.e. Multi-storied Group Housing Project to plots in itself is sufficient to show that MOU dated 29.03.14, Ex.PW1/9 was not followed or acted upon by the parties.
53. The contention of the plaintiff appears reasonable that when the MOU dated 29.03.2014 was under process of finalization, the plaintiff has paid the amount as the defendant was in urgent need and this amount cannot be taken as a non- refundable amount as mentioned in the MOU dated 29.03.2014.
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54. One of the contention of the defendant is that the plaintiff/Director Shri Ashok Kumar and Shri Chandra Bhan participated in the Bhoomi Pujan conducted on 05.10.2014 and the banners and logo of the plaintiff firm were also displayed therein however, the advertisements regarding the upcoming project/flats were also advertised on the radio and the name of the plaintiff company was also mentioned therein. It is contended by Counsel for defendant that plaintiff has shown the said amount of Rs. 1 crore as advance in their statement of account.
55. No doubt both the parties were intending to be partner in the development of the multi-storied building on the land as aforesaid however, from the material on record, it cannot be said that terms of the contract were finalized between the parties. The plaintiff was permitted by defendant for the aforesaid involvement in the project although payments as per defendant were not made by plaintiff, in itself shows that even the defendant did not wish to abide by the said MOU. The above act of the plaintiff only shows that he was intending to be part in the development of land in the aforesaid project and had paid amount in furtherance of his aforesaid intention but by any stretch of imagination, it cannot be said that both the parties have reached at any conclusive terms and conditions regarding development of aforesaid flat on the said land. It has already been discussed that defendant has shown the said amount of Rs. 1 crore as unsecured loan in their financial statement. Even otherwise if the said amount CS (Comm) No. 162/2022 Divyansh Pratham Infracom Pvt. Ltd. Vs. Dwarika Inforcom Pvt. Ltd. 29 of 33 is shown as advance in the balance sheet of the plaintiff, same shall hardly affect the case of the plaintiff as the plaintiff has itself stated that it has paid amount to the defendant when the negotiations regarding the terms and conditions of the MOU were being discussed and the defendant demanded some amount saying that it has urgent need.
56. Here it was also admitted by the parties that plaintiff company had sent a modified MOU on 07.03.2015 and profile of plaintiff company was asked by the defendant. This fact in itself shows that contract between the parties was not complete as on 07.03.2015 when the said MOU was sent by the plaintiff to the defendant.
57. Ld. Counsel for the defendant has also contended that since plaintiff failed to make payment, defendant had to change the nature of project and finally the project was abandoned. It is not in dispute that in 2016, new layout plan was passed and the project plan was changed from multi-storied housing to development of plotted development. The defendant had shared modified layout plan with the plaintiff vide email dated 23.08.16, Ex.PW1/25. It cannot be believed that said project was changed only because of non-payment on part of plaintiff. Even as per defendant, only 3.5 crore were remaining to be paid by the plaintiff. It has already been stated by defendant that it was because of change in market conditions and new laws and regulations including RERA which made it impossible to execute CS (Comm) No. 162/2022 Divyansh Pratham Infracom Pvt. Ltd. Vs. Dwarika Inforcom Pvt. Ltd. 30 of 33 the project and the project had to be re-planned. Thus, it cannot be said that it was because of plaintiff that defendant had to leave its earlier project and adopted new project. Further, the MOU dated 17.01.17, Ex.PW1/28 executed between the defendant and its earlier consortium partners shows that the earlier project was left and new project was adopted because of some circumstances beyond their control. The defendant failed to quantify any loss suffered by it because of change of project. The defendant has sold plots after abandoning even the new project. No detail has been given regarding the losses suffered by the defendant because of abandoning the new project. Even otherwise, as per defendant, plaintiff has nothing to do with the new project of the defendant. The overall facts and circumstances as discussed above shows that MOU dated 29.03.14, Ex. PW1/9 was not executed between the parties nor acted upon by the parties.
58. The judgments cited by Ld. Counsel for the defendant are not applicable to the facts and circumstances of the present case and in view of the fact that there was no concluded or enforceable contract between the parties.
ISSUE No. 2:-
59. The contention of Ld. Counsel for defendant is that no cause of action has arisen within the jurisdiction of this court. It is submitted that project in question is based in Ghaziabad and the MOU dated 29.03.2014 has been executed between the parties at Ghaziabad which states that all disputes shall be subject CS (Comm) No. 162/2022 Divyansh Pratham Infracom Pvt. Ltd. Vs. Dwarika Inforcom Pvt. Ltd. 31 of 33 to jurisdiction in the courts in Ghaziabad and thus, the present suit is not maintainable for reason of territorial jurisdiction.
60. On the other hand, Ld. Counsel for plaintiff has contended that there is no written and executed MOU between the parties and further the registered office of the plaintiff as well as defendant are in Delhi. The money is receivable in Delhi and the registered office of the defendant is also in Laxmi Nagar, Delhi.
61. It is well settled that plaintiff can institute the suit / approach the court within the jurisdiction of which the defendant resides or carry on its business or personally works for gain or where the cause of action, wholly or partly has arisen. It has already been observed that MOU dated 29.03.2014 Ex. PW1/9 was not signed by the parties thus, cannot be said to have been executed. Hence, no condition regarding territorial jurisdiction mentioned therein would have any application in the matter in hand. Further the defendant is having its registered office in Laxmi Nagar, Delhi which is sufficient for invoking the jurisdiction of this court. The plaintiff also has its office within the jurisdiction of this court. Thus, this issue is decided in favour of plaintiff and against the defendant.
ISSUE No. 3/Relief:-
62. In view of the aforesaid discussions, the present suit is decreed in favour of plaintiff and against the defendant.
The plaintiff has failed to establish that the amount of CS (Comm) No. 162/2022 Divyansh Pratham Infracom Pvt. Ltd. Vs. Dwarika Inforcom Pvt. Ltd. 32 of 33 Rs. 1 crore was given to the defendant against any settled/agreed rate of interest. The plaintiff has claimed interest @ 14% per annum. However, in my opinion the rate of interest @ 9% per annum would be justified under the facts and circumstances of the present case.
Thus, in view of the above, the defendant is liable to pay to the plaintiff a sum of Rs.1,00,00,000/- alongwith interest @ 9 % per annum from the date 11.06.2014 till realization of the said amount.
Costs of the suit are also awarded to the plaintiff. Decree Sheet be prepared accordingly.
File be consigned to Record Room.
Digitally signed byANNOUNCED IN OPEN COURT ARVIND ARVIND KUMAR
Location: Delhi
ON 09th day of May 2024 KUMAR 16:50:40 +0530
Date: 2024.05.09
(ARVIND KUMAR)
District Judge (Commercial Court-01)
East District
Karkardooma Courts, Delhi
CS (Comm) No. 162/2022
Divyansh Pratham Infracom Pvt. Ltd. Vs. Dwarika Inforcom Pvt. Ltd. 33 of 33