Delhi High Court
Krishna Finhold Pvt. Ltd. vs Gupta And Co. And Anr. on 5 July, 2004
Equivalent citations: 112(2004)DLT581, 2004(76)DRJ32
Author: Vikramajit Sen
Bench: Vikramajit Sen
JUDGMENT Vikramajit Sen, J.
1. The Plaintiff has filed a letter dated 2.7.1996 styled as a 'Loan Application' made it by Gupta & Co., Defendant No.1. Paragraph 3 of this letter which has been signed by Shri Ved Prakash Mittal states that the Applicant is a partnership firm. It also mentions the name of Shri Ved Parkash Mittal as the third partner of Gupta & Co. and Ved Parkash Mittal & Sons. as the fourth partner. In the Suit, however, only Sita Ram has been imp leaded as Defendant No. 2 and not the other partners. A perusal of this document also discloses that the address of Shri Ved Parkash Mittal is WZ-258/3, Nangal Ray, New Delhi-110046 which is the registered office of the Plaintiff. This is clear from a reading of the first document which purports to be a certified copy of the Resolution of the Plaintiff company.
2. In the application for Leave to Defend, it has inter alia been pleaded as follows:
"That the present suit is even otherwise an abuse of the process of this Hon'ble Court, since the same has been instituted by the plaintiff through Shri Sanjeev Mittal, a close relation of Shri Ved Prakash Mittal as stated herein above, against the defendant No. 1 firm and the defendant No. 2 only, despite having full knowledge about who are the other partners of the defendant No. firm. It indeed defies logic that while the alleged loan has been allegedly applied for by the defendant No.1 firm through the said Shri Ved Prakash Mittal under his signatures as partner thereof, is not liable to be imp leaded in the present Suit.
That the present plaint, accompanying applications and affidavits etc. have been signed and verified by Shri Sanjeev Mittal S/o Shri Srichand. The address of the said Shri Sanjeev Mittal is also the same as that of Shri Ved Prakash Mittal, which is explained by the fact that he is the real nephew of Shri Ved Prakash Mittal.
Further, the alleged resolution authorising the said Shri Sanjeev Mittal to institute the present suit, has been signed by one Shri Nitin Mittal, Director who is son of Ved Prakash Mittal, and continues to be, a partner of the defendant No.1 firm, as per the last Partnership Deed dated 01.04.2000. These facts clearly establish the collusion and conspiracy between the said Shri Ved Prakash Mittal and his family members to cheat, defraud, pressurise and coerce the defendants from agitating their legitimate claims. Therefore, the suit filed by the plaintiff is a malafide, fraudulent and on the face of it, the plaintiff is guilty of not approaching this Hon'ble Court with clean hands. In fact as per the settled law, any party which approaches a Court of law malafide and fraudulently and thereby tries to misuse the process of the Court is liable to be thrown out at any stage of the proceedings."
3. The response of the Plaintiff in its reply to these paragraphs is as follows:
" That the contents of sub para xi of para 2 of the affidavit filed by the defendants as stated are wrong and denied. It is denied that the fact that the plaintiff is the daughter of Shri Ved Prakash Mittal has any bearing on the merits of the present case, as alleged.
That in reply to sub para xiii of the para 2, it is not denied that Shri Sanjeev Mittal is nephew of Shri Ved Prakash Mittal. As already submitted, so far as the plaintiff company is concerned, it is a separate legal entity and has a legal right to enforce recovery of amounts due against defendant No.1 firm, which amounts have been duly against acknowledged and admitted having due and payable by defendants to plaintiff company. It is submitted that the deponent is residing in a separate portion of the property bearing separate Municipal number. It is denied that Shri Nitin Mittal is a partner of defendant No.1 firm, as alleged. The same in any case has no bearing on the merits of the present case.
It is not denied that Shri Nitin Mittal is the son of Shri Ved Prakash Mittal. However, the relationship of the directors of the plaintiff company with the partners of defendant No.1 firm has no bearing on the merits of the present case. It is absolutely wrong and emphatically denied that there is collusion or conspiracy between Shri Ved Prakash Mittal and his family members as alleged in para under reply. It is denied that the suit filed by the plaintiff is malafide, fraudulent, as alleged. It is denied that the plaintiff is guilty of not approaching the Hon'ble Court with clean hands. Rest off the para as stated is wrong and denied. As already submitted, plaintiff being a company registered under the Companies Act, 1956, is a separate legal entity and is within its legal rights to file and maintain the present suit for recovery of amou8nts due to it from the defendants."
4. I am of the considered view that the failure to implead Ved Prakash Mittal as a Defendant is malafide. It lends credence to the defense that the Suit/Plaint has been filed as a sequel to the disputes in Gupta & Co. (Defendant No.1) between the families of Shri Sita Ram and Shri Ved Prakash.
5. It also emerges that these very parties are engrossed in arbitration proceedings before Justice K. Ramamurti (Retd.). Ved Prakash Mittal and his family members as well as the Plaintiff had objected to their impleadment in those arbitration proceedings. In a detailed Order the Learned Arbitrator had held that they are necessary parties. The relief before the Arbitrator is for rendition of accounts and dissolution of partnership. This is, therefore, not a case where Leave to Defend should be declined.
6. The moment the Court finds that an admission of material facts proving the claim has been made by a party, a decree should ordinary follow. Reliance has been placed on the balance-sheet of Gupta & Co. in which a sum of Rs.27,22,994 has been shown as outstanding in favor of the Plaintiff as an unsecured loan. However, to decree a Suit on such an entry, without affording a complete opportunity to explain the transaction, would be extremely dangerous. The terms of the loans are not immediately forthcoming. One can conjecture that a loan may have been given for a period of five or ten years. Would it then be equitable or permissible for a Plaintiff to claim a decree within a period of one year merely because taking of the loan has been admitted. This, in my opinion, is not the object of Order xxxvII. The fact that there is indubitably a dispute between the erstwhile partners of Gupta & Co. can lead only to the conclusion that leave to defend ought to be granted in this case.
7. In the morning session, counsel for the Respondent was unable to disclose the shareholding of the Plaintiff. Learned counsel for the Defendant had disclosed that even so far as the Plaintiff was concerned, the Gupta family had a substantial shareholding. It appears to be incontrovertible that on the incorporation of the Plaintiff, 1/3rd shareholding was held by the wife of Shri Sita Ram, the remaining being held by family members of Ved Prakash Mittal. It is also asserted by learned counsel for the Defendant that despite the substantial shareholding, the Gupta family has been removed from the Board of Directors of the Plaintiff and that this has resulted in the filing of a Company Petition before the Company Law Board. I have already adverted to the certified copy of the Resolution authorising the filing of the present Plaintiff. It transpires that Nitin Mittal who has authorised the filing of the Suit as a Director of the Plaintiff is the son of Shri Ved Prakash Mittal, and Sanjeev Mittal who is stated to be another Director of the Plaintiff company is the nephew of Shri Ved Prakash Mittal. This fortifies my prima facie belief that the transactions between the parties were incestuous. Therefore the Suit cannot be decreed without granting a full opportunity to the Defendant to establish its version of the transactions and inter se indebtedness.
8. In these circumstances, the Defendant is granted unconditional leave to defend.
IA No. 4455/02 & 3106/03
9. The injunction is recalled. I have already granted unconditional Leave to Defend to the Suit. There is an admission of liability in the balance-sheet of Gupta & Co., Defendant No.1. An Ex parte ad interim injunction had been granted in respect of property No.AH-41, Shalimar Bagh, Delhi and plot No.1515, DSIDC Industrial Area. It now appears that the first property belongs to the wife of Shri Sita Ram Gupta and the second property exclusively to Shri Sita Ram Gupta. The parties are closely related to each other and the Court is faced with an internecine dispute. Accordingly, it would be unfair to attach the properties belonging only to one of the two rivals groups. It has been stated by learned counsel for the Defendants that the factory and store house mentioned in the loan application dated 2.7.1996 belongs to the partnership firm. It is also submitted by learned counsel for the Defendant that a sum of approximately Rs.45 lakhs stands deposited with the Receiver appointed by this Court in FAO No.578/2002.
10. Till the final disposal of this Suit, it is ordered that status quo be maintained in respect of the factory and store at Village Kasar, Tehsil Bahadurgarh, Haryana. It is further directed that no amounts shall be disbursed for the said sum of Rs.45 lakhs without prior leave of this Court. This protection more than adequately covers the value of the Suit in the event that it is decreed.
The applications stands disposed of in the above terms.
CS (OS) No.918/0211. Written Statement be filed within eight weeks. Replication be filed within four weeks thereafter. Documents be filed Along with the pleadings.
List this matter before Joint Registrar for admission/denial on 25.10.2004