Calcutta High Court
Hindusthan National Glass & Industries ... vs Ganesh Kumar Agarwal on 1 March, 2010
Author: Mohit S. Shah
Bench: Mohit S. Shah, Pinaki Chandra Ghose
APOT No. 74 of 2010
G.A.364 of 2010
A.P.O. of 2010
C.S.205 of 2009
IN THE HIGH COURT AT CALCUTTA
Civil Appellate Jurisdiction
Original Side
HINDUSTHAN NATIONAL GLASS & INDUSTRIES LTD ... Appellant
Versus
GANESH KUMAR AGARWAL Respondent
For Appellant : Mr. S.N.Mookherjee, Sr.Advocate with Mr. Abhrajit Mitra and Mr. Sakya Sen, Advocates For Respondent : : Mr. S.N.Mitra, Sr.Advocate with Mr. Ratnanko Banerji and Mr. Ranjan Kali, Advocates BEFORE:
The Hon'ble CHIEF JUSTICE MOHIT S. SHAH AND The Hon'ble JUSTICE PINAKI CHANDRA GHOSE Date : 1st March, 2010.
THE COURT : Instead of hearing the stay application, we have taken up the appeal itself for hearing by treating the same on the day's list.2
APOT 74 of 2010 G.A.No.364 of 2010 C.S.205 of 2009 This appeal is directed against the order dated 8th January, 2010 of the learned single Judge dismissing the application for interim injunction filed by the appellant-plaintiff to restrain the respondent-defendant from transferring the mining leasehold rights in favour of a third party in respect of the area described in the Memorandum of Understanding dated 4th August, 2008 The respondent-defendant has a mining lease for an area of 466.67 hectares in the district of Sikar, Rajasthan for extracting marble. The Memorandum of Understanding specifically provided that the Understanding was to remain in force for a period of two months and that the Understanding thereafter may be renewed for a further period as may be mutually agreed upon and reduced in writing by the parties. The second clause of the Understanding provided that the respondent-defendant would obtain the requisite permission from the State Government and others for transferring the mining lease in favour of a company incorporated specifically for such purpose or in favour of the plaintiff, if not barred or prevented due to some extraneous factors which are beyond the control of the 3 APOT 74 of 2010 G.A.No.364 of 2010 C.S.205 of 2009 defendant. The second clause of the MoU further stipulated that the defendant would also obtain the mining lease in respect of 67 hectares of land surrendered by the defendant in favour of the proposed company of the plaintiff, unless prevented by extraneous factors beyond the defendant's control. The third clause of the MoU provided for the defendant to help the plaintiff set up a large cement plant. The fourth clause required the defendant to keep the plaintiff informed of the measures taken by the defendant in terms of the Understanding on a fortnightly basis. The fifth clause talked of the undertaking given by the defendant in favour of the plaintiff in transferring required quantity and quality of minerals. The sixth clause of MoU provided that once the geological report is obtained, the plaintiff shall pay advance money as mutually agreed between the parties. The seventh clause of the MoU provided that the defendant would not transfer a mining lease as contemplated by MoU during the currency thereof without the written consent of the plaintiff. The eighth clause specified the consideration of Rs. 36.50 crores. It is also recorded that payment of a sum of Rs.5,00,000/- by way of 4 APOT 74 of 2010 G.A.No.364 of 2010 C.S.205 of 2009 advance against the security by a post-dated cheque. The ninth clause provided that if the permission for transfer of the mining lease was not obtained, the parties would evolve a lawful arrangement for grant of the mining and selling rights to the plaintiff and/or its nominee.
The appellant-plaintiff went to the learned single Judge with a case that the initial period of agreement of 2 months had been mutually extended by the parties, as would appear from the dealings and transactions between the parties. The plaintiff mainly relied on the payment of cheque of Rs.5,00,000/- in favour of the defendant on 9th August, 2008 which cheque came to be encashed in January, 2009. The plaintiff has heavily relied upon the encashment of the said cheque. According to the appellant-plaintiff, it had also incurred expenditure of about Rs. 15 lakhs for the prospecting work and the techno-economic feasibility study. The plaintiff prayed for an injunction to restrain the defendant from transferring the mining lease rights in favour of the third party during the pendency of the suit.
5APOT 74 of 2010 G.A.No.364 of 2010 C.S.205 of 2009 The respondent-defendant contended that the petriod of MoU was only for two months and that it was not extended after expiry of two months period in October, 2008. It is submitted that the cheque of Rs.5,00,000/- was encashed because the amount was treated as a security deposit.
After considering the rival contentions, the learned single Judge held that the Memorandum of Understanding did not appear to have intended to bind the parties in any lasting manner. It was, in a sense, a tentative road map that was chalked out and contemplated a firmer, more comprehensive set of terms to be ultimately arrived at on mutual consent. The learned single Judge further held that the Memorandum contained an express stipulation that it was to be valid for a period of two months. There was no written communication between the parties either during this two-month period or for a reasonable period thereafter and that except the encashment of the cheque of Rs.5,00,000/-, there was no act or conduct on the part of the defendant which could be construed as any act towards extension of the said period of two months. 6 APOT 74 of 2010 G.A.No.364 of 2010 C.S.205 of 2009 Before us, the learned counsel for the appellant submitted that absence of any contract in writing for extension of the period of MoU would not be fatal to the plaintiff's case. Reliance has been placed on the decisions in the cases of Mrs. Chandnee Widya Vati Madden vs. Dr. C.L.Katial and Ors., reported in AIR 1964 SC 978; Nathulal vs. Phoolchand, reported in AIR 1970 SC 546 ; Panchanan Dhara and Ors. Vs. Monmatha Nath Maity & Anr. reported in (2006) 5 SCC, 340 ; Kamal Krishna Kundu Chowdhury vs. Chatoorbhuj Dassa and Ors. reported in AIR 1925 Cal, 324 and AIR 2003 Bom. 360 in support of the contention that such an agreement could also be inferred from the conduct of the parties. It is also contended that while encashing the cheque in January, 2009 the defendant had not written any letter to indicate that the amount has been forfeited. It is submitted that encashment of the cheque amounted to the defendant acting on MoU. Therefore, the injunction as prayed for ought to have been granted by the learned single Judge.
The learned counsel for the respondent-defendant, on the other hand, supported the order of the learned single Judge and also 7 APOT 74 of 2010 G.A.No.364 of 2010 C.S.205 of 2009 contended that the Memorandum was really in the nature of an expression of interest and no legally binding rights were created by the MoU. It is also submitted that the very fact that the amount of consideration by and under which the contract was entered into was Rs.36.50 crores but initially only a sum of Rs.5,00,000/- was paid would indicate that the said amount was not intended to be towards part payment.
Having heard the learned counsel for the parties, in the facts and circumstances of the case, we are in agreement with the reasoning and conclusion of the learned single Judge. The very fact that the parties described the document as MoU and not as an agreement is certainly a factor in favour of the respondent-defendant. Apart from the title of the document, the terms of the Memorandum also indicated that the Understanding was for a limited period of two months, unless mutually agreed upon in writing. Clause 6 required the defendant to keep the plaintiff informed of details of efforts made by the defendant in discharge of the defendant's obligations in terms of MoU on a fortnightly basis. There is nothing on record to show that the plaintiff had at any point of time required the defendant to keep 8 APOT 74 of 2010 G.A.No.364 of 2010 C.S.205 of 2009 it informed of the details of the efforts to be made by the defendant in discharge of the defendant's obligations in terms of MoU.
Having heard the learned counsel for the parties, we do not find any substance in this appeal. The appeal is, therefore, dismissed.
Photostat certified copy of this order be made available to the parties upon compliance of usual formalities.
( MOHIT S. SHAH, C.J.) ( PINAKI CHANDRA GHOSE, J.) Rsg.
Asst. Registrar (CR)