Bombay High Court
Pioneer Sales Agencies (P.) Ltd. vs Olympus Superstructures Pvt. Ltd. on 13 July, 1999
Equivalent citations: 1999(4)BOMCR877, (1999)3BOMLR803, 1999 A I H C 4849, 1999 BOM LR 3 803 (1999) 4 BOM CR 877, (1999) 4 BOM CR 877
Author: S.S. Nijjar
Bench: S.S. Nijjar
ORDER S.S. Nijjar, J.
1. This Notice of Motion has been taken out for a declaration that the consent terms entered into between the plaintiff and the defendant on 31st August, 1998 is null and void and not enforceable and not binding on the defendant. It is also prayed that pending the hearing and final disposal of the Notice of Motion, the plaintiff be restrained by an order and injunction of this Hon'ble Court from in any manner acting upon the Power of Attorney dated 31st August, 1998.
2. The consent terms which were signed between the parties on 31st August, 1998 provided that the parties have settled their dispute in the present suit in respect of the premises on the third floor of the building "Wembley" referred to in Clause 16 of the Consent terms for a sum of Rs. 1,25,00,000/-. The defendant agreed to make payment of the aforesaid amount on or before the expiry of 180 days from the date of execution of the consent terms. Clause 2 provides that there shall be a decree in favour of the plaintiffs and against the defendant for the aforesaid amount together with interest thereon at the rate of 24% per annum with effect from the expiry of 180 days from the execution of the consent terms. By Clause 3 the defendant declared that the defendant is entitled to possess the flats mentioned in the consent terms and they have not transferred, assigned and/or entered into any agreement for sale or created any third party rights in respect of the said flats. Clause 4 provided that the plaintiff will give to the defendant an interest free loan of Rs. 25,00,000/- for the completion of the construction of the flats and other uncompleted portions of the building known as Wembley. The amount of Rs. 25 lacs was to be advanced on the signing of the consent terms for which cheque Nos. 455095, 435090 and 435097 all dated 31st August, 1998 for Rs. 10 lacs, 10 lacs and 5 lacs respectively have been issued by the plaintiffs. By Clause 5 there shall be a decree for the aforesaid sum in favour of the plaintiffs and against the defendant on the expiry of 180 days from the execution of the consent terms. By Clause 6 it was ordered and decreed that the defendant transfer, convey and assign the said flats to the plaintiffs of their nominees on the expiry of 180 days. It is further provided that on the expiry of 180 days the consent terms operate as conveyance of the flats in favour of the plaintiffs without any further act on the part of the defendants. Clause 7 declares that simultaneously with the execution of the consent terms, the defendant has executed an irrevocable specific Power of Attorney in favour of the plaintiffs authorising them to register a copy of the consent terms with the office of the sub-registrar of assurances so that consent terms operate as a conveyance in favour of the plaintiffs or their nominees. By Clause 8 the defendant agreed to restrain himself from disposing of, alienating or encumbering the flats in favour of any third party. By Clause 9 it is provided that the plaintiffs shall permit the defendant to enter upon the said fiats only to complete all pending work on the 4th and 5th floor for a period of 180 days. The defendant agreed and undertook to complete the work before the expiry of 180 days. There are other consequential provisions made in the consent terms. In Clause 13 it is provided that the defendant shall be at liberty to repay the aggregate sum of Rs. 1.50 crores to the plaintiffs on or before the expiry of 180 days. If the amount is paid it shall operate as full and final settlement of the decrees mentioned earlier. Clause 14 provided that for carrying out the various obligations with regard to the payment, the defendant shall be at liberty to raise money for repayment by bringing a prospective purchaser/mortgage of the flats with the permission of the plaintiffs. Clause 15 provides that if the defendant does not pay the aggregate amount then the flats shall be retained by the plaintiffs as owners. By Clause 16 it is provided that on the execution of the consent terms any rights which may have vested in the sister company in the third floor of the building shall stand redeemed and the injunction vacated. The defendant was, however, to complete all the formalities and execute all documents as required by the plaintiffs so as to fully convey the entire 4th and 5th floors in the name of the plaintiffs. By Clause 19 it was provided that the parties shall take appropriate proceedings for withdrawing the respective Court cases and appeals therefrom. The defendant also agreed that he does not have any claim of whatsoever nature against Chirag Mining Works Pvt. Ltd. (hereinafter referred to as "Chirag") and Pioneer Mining and Projects Development Private Limited (hereinafter referred to as "Pioneer"). Clause 21 sets out that the main purpose and object of entering into these consent terms is to secure and safeguard the interest of the plaintiffs to the extent of Rs. 1.50 crores by the defendant within the period of 180 days. In the event of failure on the part of the defendant, the plaintiffs shall continue to be in physical possession and the absolute owner of the entire 4th and 5th floors and their respective car spaces in the building "Wembley" and the said flats shall automatically deemed to be conveyed to the plaintiffs as agreed in clause No. 6. These consent terms are now sought to be declared null and void.
3. In order to understand the controversy between the parties, it is necessary to give a little background as to how the consent terms came to be filed. On 25th February, 1997 the plaintiffs filed Suit No. 922 of 1997 to recover a sum of Rs. 1.72 crores with interest. According to the plaintiffs, the amount not having been paid Company Petition No. 294 of 1997 was filed for winding up of the defendant company under sections 433 and 434 of the Companies Act, in March, 1997. Statutory notice as required under these sections was given on 27-1-1997. The plaintiffs took out Company Application No. 193 of 1997 in the aforesaid petition for ad-interim reliefs. By an order dated 30th April, 1997, this Court (S.N. Variava, J.) directed the company to pay the sum of Rs. 1.20 crores with interest at 15 per cent per annum in 12 equal monthly instalments starting from 15th June, 1997. This direction was given on the basis of the statement made by the Counsel for the defendant Mr. Rao. Against this order, defendant filed Appeal No. 597 of 1997. By further order dated 13th June, 1997, S.N. Variave, J., granted ad-interim injunction, inter alia, restraining defendant from disposing of, alienating its movable and immovable assets including the building Wembley. Order dated 13th June, 1997 was continued by order dated 27th June, 1996 till further orders. Against the aforesaid order, the defendant filed Appeal No. 501 of 1997. Both the appeals were dismissed on 7th October, 1997. By order dated 24th April, 1997, (A.P. Shah, J.) Official Liquidator was appointed as the Provisional Liquidator to take charge of the company together with the assets: Defendant filed SLP (Civil) Nos. 20441 and 20442 of 1997 against the order of the Division Bench dated 7th October, 1997. On 29th October, 1997 when the matter came up for hearing in the Supreme Court, Counsel for the defendant gave an undertaking to deposit a sum of Rs. 10 lakhs. Therefore, Liquidator was restrained from taking charge of the properties in pursuance of the order dated 30th April, 1997 as affirmed by the Division Bench order dated 7th October, 1997. By a further order dated 24th November, 1997, the Supreme Court directed, on the request of the defendant, the Provisional Liquidator to have the valuation made of the property on the 4th and 5th floors of the building through an independent valuer and submit the report. Counsel for the defendant had stated that the defendant would like to pay the plaintiffs by sale of flats on the 4th floor. By order dated 15th December, 1997, after hearing the Counsel for the parties, Special Leave was granted. It was stated that the value of the properties on the 4th and 5th floors of Wembley is Rs. 1,46,94,000/-. Mr. Kapil Sibal appearing for the defendant undertook not to alienate or assign the properties or to create any encumbrances or charge on the same till the disposal of the company petition. It was also stated that additional amount of Rs. 10 lakhs has been deposited by the defendant in pursuance of the order dated 24th November, 1997 and that till then a sum of Rs. 25 lakhs had been deposited. It was further stated that the defendant/ appellant will pay the entire amount of Rs. 1.20 crores with interest at the rate of 15 per cent in monthly instalments of Rs. 10 lakh each and would start paying the instalments from February, 1998. The plaintiffs were permitted to withdraw a sum of Rs. 20 lakhs as well as sum of Rs. 5 lakhs which have been deposited earlier. Thereafter the Special Leave petitions were disposed of by giving the following direction:
"1. The appellants shall pay an amount of Rs. 1,20,00,000/- with interest at the rate of 15% in monthly instalments of Rs. 10,00,000/- each. Each instalment shall be paid on or before the 10th of every month.
2. The first such instalment shall be paid on or before February 10, 1998.
3. The sum of Rs. 25,00,000/- which has already been deposited by the appellants and the further amounts which will be deposited by way of monthly instalments shall be adjusted towards principal and interest in the ratio of 75 : 25.
4. The instalments shall be deposited with the Prothonotary and Senior Master of the Bombay High Court and it will be open to the respondent to withdraw the amounts that are so deposited in the High Court.
5. The appellants shall furnish an undertaking that they shall not alienate or assign the properties on the fourth and fifth floors of the building known as "Wembley" on Final Plot No. 300. T.P.S. of Vile Park, C.T.S. No. 1213 or create any encumbrance or charge on the said properties during the pendency of the company petition. The said undertaking shall be furnished in this Court on or before January 6, 1998.
6. The orders of the High Court dated April 30, 1997 directing the provisional liquidator to take possession of the property as well as the injunction granted on June 13, 1997 shall cease to operate. But in the event of the failure on the part of the appellants to deposit two consecutive monthly instalments of Rs. 10,00,000/- both these orders of the High Court shall come into operation without reference to this Court.
7. These directions will not stand in the way of the appellants disputing the extent of their liability in the company petition before the High Court.
8. The High Court is requested to dispose of the company petition expeditiously.
9. The appellants shall pay the remuneration of the valuer for the valuation of the properties undertaken by him in pursuance of the order of this Court."
The undertaking purported to be in terms of Clause 5 was given on 11-2-98. The defendant did not however make the payments in accordance with the aforesaid order of the Supreme Court. Therefore, on 6th March, 1998 another order was passed by the Supreme Court observing that the appellants had failed to deposit the monthly instalments of Rs. 10 lakhs which was to be paid on or before February 10, 1998 and the undertaking dated 11-2-1998 is also not in accordance with the directions contained in paragraph 5 of the order dated December 15, 1997. Therefore, the Supreme Court recalled the order dated 15th December, 1997 whereby it was directed that the orders of the High Court dated 30th April, 1997 directing the Provisional Liquidator to take possession of the property as well as the injunction granted on 13th June, 1997 shall cease to operate.
4. Thereafter the Company Petition No. 294 of 1997 came up for hearing before the Company Court. It seems that on 9-3-98 a request was made by the defendant for the expeditious hearing of the company petition. This request was not granted. On 9-3-1998 itself the matter was mentioned before the Appeal Court. The request was accepted on the assurance of the learned Counsel for the appellant (defendant herein) that the appellants will deposit in the Court Rs. 1 crore on 16th March, 1998. Therefore, the Liquidator was directed to take only formal possession of the company and not to issue any advertisement. The amount, however, was not deposited. Appeal was dismissed on 18-3-1998 in view of the orders passed by the Supreme Court. Thereafter the company petition came up for hearing before the Company Judge on 16-4-98. As noticed earlier, Rs. 25 lakhs had already been deposited in the Supreme Court. A further dispute was raised with regard to an other amount of Rs. 60 lacs. The defendant was directed to deposit a sum of Rs. 69 lakhs together with interest at the rate of 15 per cent per annum. The defendant was permitted to adjust the amounts already deposited or paid. Against the aforesaid order the plaintiffs filed Appeal No. 794 of 1998. During the pendency of the appeal and the suit, the parties executed consent terms dated 31st August, 1998 which have been referred to above. These consent terms were taken on record in Appeal No. 794 of 1998 and an order was passed on 14th September, 1998. This order records as follows :
"2. Consent terms taken on record. Following order is passed in terms of the consent terms.
(i) In view of the consent terms dated 31st August, 1998 filed in Suit No. 922 of 1997, the order dated 10th April, 1998 passed in Company Petition No. 294 of 1997 is set aside by consent and the company petition is allowed to be withdrawn.
(ii) The Official Liquidator appointed as Liquidator of the respondent company shall stand discharged as Liquidator without having to submit accounts.
(iii) The parties shall bear their irrespective cost of these proceedings.
3. Liberty to apply.
4. Appeal and Company Petition No. 294 of 1997 stand disposed of accordingly."
Thereafter on 18th September, 1998 a decree is passed in terms of the consent terms. The suit was disposed of. Consent terms were taken on record.
5. Now the present Notice of Motion is taken out for a declaration to the effect that the consent terms are null and void.
6. In the affidavit in support of the Notice of Motion, it is stated that illegally the defendant had given cheque Nos. 435092 and 435093 which were returned back to the plaintiffs as the consent terms dated 24th August, 1998 had not been acted upon. On 25th August, 1998 the parties agreed to sign fresh consent terms. These consent terms were signed on 31st August, 1998. In terms of Clause 4 the plaintiffs issued three cheques bearing Nos. 435095, 435096 and 435097 all dated 31st August, 1998 for Rs. 10 lacs, 10, lacs and 5 lacs respectively. According to the affidavit in support, sometime on of about 11th September, 1998 after having withdrawn the cases, filed by the plaintiffs against the defendant, the plaintiff, Mahendra P. Shah, hereinafter referred to as "Shah", approached the defendants and stated that he could not make the necessary arrangements for honouring three cheques given on 31st August, 1998. Shah, therefore, offered to pay to the defendant a sum of Rs. 25 lacs in cash. In good faith, the defendant gave a stamped receipt in the sum of Rs. 20 lacs in Lieu of Cheque No. 435095 and 435096. Mr. Shah, learned Counsel appearing for the defendant, has pointed out that the receipt was given for Rs. 20 lacs as Shah had stated that the cheque for Rs. 5 lacs being cheque No. 435097 will be honoured. The cheque for Rs. 5 lacs was in fact encashed on 2nd September, 1998. No cash was paid. Shah again approached the defendant and offered to issue 5 cheques from the account of his proprietary concern Chirag in lieu of Rs. 25 lacs. Thus cheque Nos. 436282, 436283, 436284, 436285, and 436286 were issued by Chirag in the sum of Rs. 5 lakhs each. These cheques were undated but the month of October, 98 was written on the cheques. Since Shah was uncertain when he would be able to arrange the funds, defendant was requested to put in the date as and when required by Shah. According to the affidavit in support, Shah could not arrange the funds to honour the cheques, The payment of the aforesaid cheques was stopped. Shah is stated to have written to the defendant for the first time on 30th September, 1998 contending therein that the cheques were to be encashed only upon the defendant furnishing adequate security for the cheques. Since defendant did not understand what Shah meant by "furnishing adequate security" the letter was not taken seriously. No answer was given to the letter until 3rd November, 1998. In view of this iradulent conduct of Shah the defendant deposited the three cheques all dated 31st August, 1998 for encashment in the second week of October, 1998. Cheque Nos. 435095 and 435096 were returned with the remark "payments stopped by drawer". Cheque No. 435097 was encashed. This, intimation according to the affidavit in support, was received on 6th October, 1998. Since the payment of Rs. 25 lacs was not forth coming, the defendant filed in dates of four of the five cheques of the undated cheques issued by Chirag. The defendant deposited the aforesaid cheques with the Oriental Bank of Commerce with an intention to pay all the amount the due and payable to the bank and get the fourth floor free from encumbrances. These four cheques were also dishonoured with the remark "payment stopped by the drawer". Intimation to this effect was given to the defendant on 18th October, 1998 which was received by the defendant on 28th October, 1998. In view of the dishonour of all the cheques and non-payment of any amount by cash, the defendant ultimately wrote to Shah on 3rd November, 1998. Receipt of this letter has not been denied nor the contents controverted by Shah. By this letter the defendant had given notice as contemplated under section 138 of the Negotiable Instruments Act. During arguments, Mr. Tiku has, however, stated that no criminal action was taken on the basis of the aforesaid notice. On 4th December, 1998 the defendant called upon the plaintiffs to return the pre-stamped receipt for Rs. 25 lacs. According to Mr. Tiku, all the references to Rs. 25 lacs in the affidavit in support is due to a mistake committed by the draftsman of the affidavit in support and it should actually read as Rs. 20 lacs. By another letter dated 15th December, 1998, the defendant revoked the Power of Attorney dated 31st August, 1998. It is submitted that the conduct of the plaintiffs is fraudulent. It has always been the intention of the plaintiffs to usurp the whole of the fourth and fifth floors of Wembley. Although the property has been valued before the Supreme Court in the sum of Rs. 1.45 crores, it is actually worth about Rs. 3 crores. It was wrongly pleaded by the defendant that the consideration was of Rs. 1.20 crores when in fact the defendant had actually received only Rs. 65 lacs. Rs. 60 lacs had been given back to Pioneer and Chirag on the very day, the loan had been initially given by the plaintiffs to the defendant.
7. Mr. Tiku has submitted that Shah had played a systematic fraud on the defendant from the very beginning. Shah had been introduced to the defendant sometime prior to September, 1995. Defendant was in need of finance to complete the ambitious project of a unique building called Wembley. He required finance in the range of Rs. 60 to 65 lacs to complete the building. Shah represented to the defendant that the finance can be made available but the defendant will have to give double the security. He suggested a transaction whereby Shah would give a cheque in the amount of Rs. 1.20 crores. Out of this, the defendant would issue two cheques in the sum of Rs. 30 lacs each to Pioneer and Chirag Ostensibly in lieu of two work orders both dated 1st June, 1995. Not sensing the dishonest intention of Shah, defendant accepted the offer. A cheque of Rs. 1.20 crore was issued by Shah. It is also the admitted case according to the Tiku that one cheque in the sum of Rs. 30 lacs was issued by the defendant to Chirag and two cheques in the sum of Rs. 15 lacs were issued in favour of Pioneer. All the cheques were issued on 12th September, 1995. Documents of security were created on 11th September, 1995. Therefore, the defendant was surprised to receive a notice dated 27-1-97 demanding repayment of Rs. 1.20 crores. When the defendant protested, Shah had represented that the Notice can be ignored as it had been issued only for tax purpose. Thereafter all the proceedings had been concluded which have been noticed earlier. Mr. Tiku submits that the conduct of the plaintiffs prior to the filing of the consent terms is clear proof of the fact that Shah had never intended to honour the commitments made under the consent terms. He submits that a bare perusal of Clause 4 of the consent terms would clearly show that only intention of entering into the consent terms was to enable the defendant to complete the construction within a period of 180 days. This in turn depended on Shah making available the sum of Rs. 25 lacs. He submits that from the various events it is obvious that the amount of Rs. 20 lacs has not been paid. Therefore, the very purpose for which the consent terms had been entered into has been frustrated. He submits that the plaintiffs cannot be permitted to take advantage of its own wrong and to plead before this Court that there is at best only a breach of the consent terms. To make good the submission that the conduct of the plaintiff has been fraudulent throughout, Mr. Tiku laid a great deal of stress on the receipts which have been relied upon by the plaintiffs with regard to the payment of Rs. 30 lacs to Pioneer and Chirag. He submits that the original receipts merely stated that the aforesaid amount had been paid "against advance as per their work order dated 1st June, 1995." The receipts relied upon by the plaintiffs in various proceedings are totally different. These receipts give details of the debit notes pursuant to the work orders dated 1-6-1995. He submits that this would demonstrate the dishonest intentions of plaintiffs to persuade the Court to pass the orders in favour of the plaintiffs. He submits that there were in fact no work orders. The work orders relied upon by the plaintiffs were get up documents in order to persuade the courts to pass orders in favour of the plaintiffs in all previous proceedings. Mr. Tiku submits that the consent terms are liable to be declared null and void in view of the conduct of the plaintiffs before and after the filing of the consent terms. He submits that the receipt dated 1-9-98 in respect of Rs. 29 lacs was only a pre-receipt. This was issued bona fide on the assurances being given by the plaintiffs. On repeated requests the aforesaid receipt has not been returned by the plaintiffs to the defendant in spite of the fact that the amount of Rs. 20 lacs has not been paid. He submits that if the amount of Rs. 20 lacs had been paid then there was no question of the plaintiffs not demanding the return of two cheques issued by Shah in the sum of Rs 10 lacs each on 31st August, 1998 and the 5 cheques issued by chirag which were left blank. He submits that it is a matter of record that all the cheques were presented to bank and have been dishonoured. It is, therefore, clear, according to Mr. Tiku, that it is proved beyond doubt that a fraud has been played by Shah on the defendant. He has made a pointed reference to the bank statement of Pioneer dated 18th September, 1998. He submits that on the date when the three cheques were issued by Shah, the plaintiffs did not have a bank balance of over Rs. 25 lacs. In fact on the 2nd September, 1998 when the cheques for Rs. 5 lacs was encashed the bank balance was only Rs. 5, 85, 848.90. Thus it is clear that Shah was buying time by making various excuses. He failed to keep any of, the promises either to pay in cash or to have the amounts repaid by Pioneer or Chirag.
8. Feeling desperate, the defendant addressed a letter to the plaintiffs dated 3rd November, 1998 setting out all the details and threatening legal action. He submits that in order to avoid the criminal prosecution, Shah had actually gone so far as to fabricate certain letters dated 2nd September, 1998, 2nd November, 1998, 7th November, 1998, 7th November, 1998, 11th November, 1998 and 11th November, 1998 and 11th November, 1998. Mr. Tiku submits that in the letter dated 30th September, 1998 it was stated that since the defendant has not furnished the security they were requested not to deposit any of the 5 cheques which were undated. They were also requested not to fill up the date on the cheques till the security is furnished as promised by the defendant at the time of collection of the aforesaid cheques. There is no mention of the letter dated 2nd September, 1998 in the letter dated 30th September, 1998. He submits that this letter has been got up for the purpose of these proceedings only. Execution of the receipt dated 1st September, 1998 in the sum of Rs. 20 lakhs is not denied by Mr. Tiku. He, however, vehemently submitted that the defendant had been induced into issuing the receipt on the express misrepresentations made by Shah. The receipt was issued in good faith in view of the fact that all litigation had been settled by consent terms dated 31st August, 1998. He reiterates that the bank statement of the plaintiffs dated 18th September, 1998 clearly shows that on 2nd September, 1998 the plaintiffs were not in a position to honour the two cheques which had been given on 31st August, 1998. Had the two cheques been presented along with cheque No. 435097, they would have been dishonoured. He finds further support for his submission from paragraphs 17 and 18 of the affidavit in reply where it is clearly recorded that Shah was to give an interest free loan in the sum of Rs. 25 lacs to the defendant in terms of Clause 4 of the consent terms. It was for this reason that three cheques have been given on 31st August, 1998. He submits that the agreement to pay in cash is admitted by Shah in paragraph 19 of the affidavit in reply. However, a completely distorted picture is given about the actual transaction. He submits that it is wrongly stated by the plaintiffs that the amount of Rs. 20 lacs was agreed to be paid on the request of the defendant. This averment, according to Mr. Tiku, is false on the face of it in view of the fact that the plaintiffs did not have a bank balance of Rs. 25 lacs on the relevant date. If the payment had been made in cash, then the plaintiffs would not have permitted the defendant to retain cheque Nos. 435095 and 435096. With regard to the letters, Mr. Tiku submitted that there is no proof of the letter dated 2nd September, 1998 having been posted to the defendant. Thus, there is no question of defendant having received the aforesaid letter. He submits that the other letters dated 2nd November, 1998, 3rd November, 1998, 7th November, 1998, 7th November, 1998 and 11th November, 1998 although addressed to the defendant, have actually been received in the office of the Official Liquidator. These letters are said to have been sent under registered A.D./D.P.C. He submits that the letters have been deliberately diverted to the office of the Official Liquidator by the plaintiffs. He submits that enquiries have been made from Vile Parle Post Office which have revealed that these letters never went to the Post Office for delivery to the address of the defendant. These facts are specifically pleaded in the affidavit dated 29th April, 1998. He submits that this clearly shows that the letters have been manufactured by Shah. He submits that if the letter dated 2nd September, 1998 had existed it would have been mentioned in the letter dated 30th September, 1998. The letter dated 2nd September, 1998 is mentioned for the first time by a letter written by Advocates Ramesh Makhija and Company on 2-11-98. This letter also mentions that the defendant had agreed to take a loan of Rs. 25 lakhs from Chirag at the rate of 30 per cent per annum. In lieu of that certain securities are said to have been created. The defendant is stated to have given as security conveyance in respect of the Wembley building and agreement for sale in respect of the ground floor premises of Wembley. They are also stated to have agreed to give a bank guarantee from a Nationalised Bank, promissory note and post dated cheque for Rs. 25 lacs. Since the letter had been received only by the Official Liquidator, the defendant was wholly unaware of the contents of this letter. Inspite of knowing that the letter had been received only by the Official Liquidator yet the information was not passed on to the defendant. The intention, according to Mr. Tiku, was clearly to keep the defendant in the dark till 180 days had passed. The Liquidator stood discharged on 14th September, 1998. The defendant was totally in the dark about the letters. He submits that the letters dated November 2, 1998. November 7, 1998 and November 11, 1998 have been fabricated by the plaintiffs to create a defence to the claim put forward by the defendant in his two letters dated 3rd November, 1998. One of the letters is in the form of a notice under section 138 of the Negotiable Instruments Act calling upon Shah to pay the amount of the dishonoured cheques failing which it is stated that the defendant would be compelled to prosecute the plaintiffs under the Negotiable Instruments Act. The second letter dated 3rd November, 1998 is in reply to the letter dated 30th September, 1998 sent to Chirag informing them that a notice has been sent to Shah under the Negotiable Instruments Act. It is stated that the conduct of Shah is thoroughly fraudulent and dishonest and that he is liable to be prosecuted under the relevant provisions of the Indian Penal Code. He submits that in order to get out of this criminal liability, the second transaction has now been set up and these letters have been manufactured. He submits that in view of the complicated disputed questions of fact it would be necessary for the parties to lead evidence. It would, therefore, be necessary to set the Notice of Motion down for evidence. He submits that the affidavits given in the pleadings cannot be treated as evidence. For this proposition the learned Counsel has relied upon a judgment of the Supreme Court . He further submits that there can be no bar to adducing oral evidence under section 92 of the Evidence Act as the defendants are taking the plea that the receipt which was issued on 1st September, 1988 was issued without consideration. In any event, plaintiffs not having made the payment in cash it would be necessary to show that no reliance can be placed on the receipt by the plaintiffs. For this proposition the learned Counsel has relied on a judgment of the Madras High Court reported in Ramaswami Chettiar v. Lodd Goverdhan Das, A.I.R. 1926 page 35, Similar proposition has been given in a number of judgments which are (i) (A.I.R. 1970 Mysore page 20), (ii) , (iii) (A.I.R. 1929 Nagpur page 21), (iv) (A.I.R. 1935 Allahabad page 529) and (v) . He further submits that if the Court comes to the conclusion that the letters have been fabricated or got up with ulterior motive, then the plaintiffs are liable to be prosecuted for Contempt of Court. For this proposition the learned Counsel relies on judgments of the Supreme Court reported in (J.I. 1994(7) S.C. page 459), and in (1998(75), Delhi Law Times page 287(S.C.)). He submits that if fraud is held to be established then the consent terms cannot be given effect to at all. In support of this proposition, learned Counsel relies on judgment of the Supreme Court . He submits that settlement terms have to be read harmoniously. All the Clauses have to be read together. Settlement terms are composite. Purpose of the consent terms was to enable the defendants to complete the construction of the building. Therefore, plaintiffs cannot be permitted to take advantage of the clauses in the consent terms with regard to the payment, to be made by the defendant without taking into consideration the reciprocal obligation on the defendant to pay as provided under Clause 4 of the consent terms. For this proposition, the learned Counsel relies on (Full Bench). He submits that the mind of the plaintiff is reflected like a mirror image in paragraph 29 of the affidavit in reply. In this paragraph the defendant has pleaded that without prejudice to the other submissions, in any event the decree under Clauses 2 and 4 of the consent terms is severable and Clause 4 cannot affect the decree under Clause 2 and the defendant's obligation to pay the amount of Rs. 1.25 crores.
9. Mr. De Vitre, learned Counsel appearing on behalf of the plaintiffs, on the other hand has submitted that there is no specific prayer for setting aside the consent terms. The defendant only seeks a declaration although the consequences would be the same as to set aside the consent terms. He submits that decree has been passed under Order 23, Rule 3. Under this order, the Court is mandated to record that there is a lawful consent. It is at that time the Court has to examine the issue. He submits that even if the defendant's arguments is taken at its face value, it only amounts to breach of the terms of the consent terms. This cannot amount to nullifying the consent terms. The defendant would have to bring the case within the confines of void and voidable contracts under the Contract Act. He has failed to do so. It is submitted that the conduct of the defendant is such that they are not entitled to any discretionary relief. He submits that the broad scheme of the consent terms is that the defendant accepted the liability of Rs. 1.50 crores. They also accepted that they would make the payment of Rs. 1.50 crores within 180 days. They also accepted that in the event the amount of Rs. 1.50 crores is not paid within 180 days then the fourth and fifth floors will be automatically conveyed to the plaintiffs. He submitted that there is irrefutable evidence of Rs. 20 lacs paid in cash on 1st September, 1998 in lieu of the cheque Nos. 435095 and 435096. Cheque No. 435097 was encashed by the defendant on 2nd September, 1998. Justice Deshmukh had passed an order dated 16th April, 1998 directing the defendant to deposit Rs.
60 lacs. Appeal No. 794 of 1998 was filed against the order of justice Deshmukh. This appeal is withdrawn on 14-9-98. Consent terms are taken on record. This order of deposit of Rs. 60 lakhs passed by Deshmukh, J., was set aside by consent. Official Liquidator was discharged. On 18th September, 1998 the suit itself was decreed in terms of the consent terms. No statement was made either before the Division Bench or before the Single Bench with regard to the non payment of Rs. 20 lakhs. He submits that even in the pleaded case of the defendant in the affidavit in support, it has been stated that Shah approached the defendant with the offer to pay him cash 11th September, 1998. According to the learned Counsel, the statement made are totally false. The objective is to merely delay the execution of the decree. With regard to the letters, he submits that the issuance of the letters can be fully explained. He submits, no doubt, the letters were received in the office of the Official Liquidator. The registered A.D. acknowledgment slips which had been received back in the office of the Attorneys at the relevant time were merely placed in the despatch file by the concerned clerk without bringing them to the notice of the Attorneys. He submits that though Official Liquidator stood discharged by order dated 14th September, 1998, the certified copy of the order was not delivered to the Official Liquidator till 16th November, 1998. Thus the letters addressed to the defendant was rightly delivered to the Official Liquidator. He submits that even the Attorneys of the plaintiffs did not receive a certified copy of the order till 12th November, 1998. Therefore, there is no question of the letters being manufactured or being deliberately sent to the Official Liquidator to avoid the same being delivered to the defendant. The Official Liquidator in fact informed the Post Office authorities only by letter dated 26th November, 1998 that henceforth the correspondence relating to the defendant ought to be delivered directly to the company.
10. I have considered the submissions made by the learned Counsel for the parties. There is no quarrel with the propositions of law which have been canvassed by Mr. Tiku. If indeed fraud is established then nothing stands in the way of any Court in any proceeding to set the matters right. As observed by the Supreme Court, fraud unravels everything. But factually I am not satisfied that any such fraud has been played on the defendant. There are a number of reasons for this view of mine. From the events which have been narrated above leading to the filing of the consent terms, it would not be possible to come to the conclusion that defendant is an innocent party. The case of innocence of the defendant which is sought to be portrayed, in my opinion, could only be believed if the Court comes to the conclusion that the defendant is entirely inexperienced in the matter of business and high finance. Such is not the case. According to the defendant, the transactions between the plaintiffs and the defendant started on a dishonest footing. Shah is said to have been introduced to the defendant sometime in September, 1995. He was a complete stranger to the defendant. Yet, the defendant was persuaded to create documents for a loan amount of Rs. 1.20 crores when in fact he had received only a sum of Rs. 60 lacs. He was also persuaded to create a lease in favour of sister concerns of Shah of the third floor for a paltry sum of Rs. 5 lacs. He was induced to create a mortgage on the third floor of the property in the sum of Rs. 1.20 crores. He was induced into signing two work orders dated 1st June, 1995. He was induced to return a sum of Rs. 30 lacs to Chirag and another 30 lacs to Pioneer. He believed the misrepresentation of Mr. Shah that the work orders are not to be executed. He believed that the receipts executed by Chirag and Pioneer evidencing the receipt of Rs. 60 lacs from the defendant were not to be used anywhere. He was shocked and surprised to receive a statutory notice dated 27th January, 1997 under sections 433 and 434 of the Companies Act. But again, he was induced not to reply to the aforesaid notice as Shah had represented that it was given only for tax purposes. In spite of all the aforesaid falsehoods by Mr. Shah, the defendant still continued to have faith in Mr. Shah. It was only when the matter was before Justice Variava for ad-interim relief in the Company Petition No. 294 of 1997 that the defendant raised the issue of having already paid Rs. 60 lacs. Here again the defendant was not steadfast. Surprisingly, when the order of the Provisional Liquidator was about to be passed, Mr. Rao, Counsel for the defendant, stated that the sum of Rs. 1.20 crores with interest at 15 per cent per annum will be repaid in 12 equal monthly instalments starting from 15th June, 1997 onwards. In my view, it would be reasonable to expect that at least from 30th April, 1997 the defendant would no longer innocently believe the misrepresentations of Mr. Shah. But what is pleaded is quite to the contrary. The history of the litigation upto the filing of the consent terms has already been noticed above. It tells its own tale about the conduct of the defendant. In spite of the so called fraudulent misrepresentations of Shah, defendant was again induced to enter into consent terms dated 31st of August, 1998. Shah is said to have continued with his dishonest conduct. Initially the payment of Rs. 25 lacs was to be made by cheque. Shah is said to have induced the defendant to accept the payment in cash. The defendant, again innocently, issued a receipt for a sum of Rs. 20 lakhs in favour of Shah on 1st September, 1998. Even by this time the defendant did not believe that Shah would act dishonestly. He even accepted the representation of Shah that he will replace the earlier three cheques with 5 cheques of the sister concern. Innocently again, the defendant accepted 5 cheques. Surprisingly, however, the defendant was left with no payment of Rs. 20 lacs. He was neither paid in cash nor by cheque as the payment of the cheques had been stopped by Shah. I am unable to accept such a picture of innocence of the defendant. I am of the considered opinion that conduct of the defendant has been dishonest from the beginning. The plaintiffs filed the suit on 25th February, 1997 claiming recovery of Rs. 1.72 crores. Company Petition No. 294 of 1997 was filed in March, 1997. A notice had been given on 27-1-97. The only explanation given for not giving a reply to the statutory notice is that Shah had stated that this notice has only been given for tax purpose and it need not be responded to. Thereafter the matter came up before Variava, J., on 30th April, 1997 at the ad-interim stage. A perusal of this order shows that it was specifically stated by Mr. Rao that Rs. 65 lakhs has already been repaid to the sister concern. This was denied by the plaintiffs. The order notes that "Prima facie this appears to be no answer to claim of petitioners". The order also notices that nothing has been repaid to the petitioners. Then a plea was made that if the petitioners want the money they must forego their rights to the mortgage. This plea was also negatived by justice Variava. The order also notices that a creditor does not need to give up his security unless and until his dues are fully repaid. Interestingly a third party sought to intervene on the ground that the defendants had in fact created third party rights in their favour. It is even admitted in pleadings by the defendant that certain agreements have been entered into with the prospective purchasers and those agreements had been terminated but none of this was disclosed to the plaintiffs throughout the proceedings. The order specifically notices that third party rights had been created without disclosing the same to the petitioners/plaintiffs. This was sought to be explained away by stating that the agreements with the third parties were terminated and, therefore, it was not necessary to mention the same to the petitioners. It was only as a last resort that the Counsel for the defendant Mr. Rao stated that a sum of Rs. 1.20 crores with interest at 15 per cent per annum will be repaid in 12 monthly instalments starting from 15th June, 1997 onwards. Thus the direction was given to deposit the aforesaid amount. This conduct of the defendant shows that the dealings of the defendant with other parties were also not honest. Subsequent to this order, Justice Variava passed another order on 13th June, 1997 granting ad-interim injunction to the plaintiffs. Both the orders were taken in appeal before the Division Bench which was dismissed on 7th October, 1997. In the appeal also the same arguments were addressed. The matter was further carried to the Supreme Court. Promises were made before the Supreme Court. Undertakings were given before the Supreme Court. All these were complied with by the defendant by acting in breach thereof. The defendant defaulted in making the payments as directed by the Supreme Court. However, so far the defendant had succeeded in stalling the claim of the plaintiffs. Thereafter, in this Court again the same game was played. Before the Division Bench on 9th March, 1998 it was stated that the appellant would deposit in the Court a sum of Rs. 1 crore on or before 10-3-98. This undertaking was given so that the Liquidator would be directed to take over only formal possession of the company and would not issue any advertisement. The Court again showed leniency. Yet no payment was again made. Ultimately the Division Bench dismissed the appeal on 18-3-98. Thereafter the company petition was listed for hearing. There again the same issue was raised. By order dated 16th April, 1998 Justice Deshmukh observed that the petitioner has not been able to explain as to why the petitioner did not disclose the different transactions that had taken place. Thus it was observed that perhaps some enquiry would be necessary into this. The defendant has taken advantage of these observations to take out the present Notice of Motion. The defendant however has failed to notice the other observations. The order clearly observed that there is absolutely no defence with regard to Rs. 60 lacs. Justice Deshmukh further observed that it cannot also be lost sight of that in spite of making repeated commitments before the Single Judge, the Division Bench and the Supreme Court, the respondent Company has failed to repay the amount. Since much is sought to be made of the observations of Justice Deshmukh about the double receipts, the matter has been examined threadbare.
11. Appeal No. 794 of 1998 was filed by the plaintiffs against the aforesaid order. Whilst this appeal was pending, consent terms were tendered in Court. These consent terms were taken on record. The defendant did not raise any of the points which are sought to be argued now. Thereafter decree has been passed in terms of the consent orders on 18th September, 1998. Again, nothing was stated before the learned Single Judge. In the face of the above, it would be little difficult to hold that it is the plaintiffs who are being dishonest in the proceedings. In my opinion, the defendant know fully well that there was no defence to the claim of the plaintiff. The hollowness of the claim had been demonstrated before the Single Judge, Division bench of this Court and the Supreme Court. At every stage the defendant undertook to pay. At every stage the undertaking has been breached. Thereafter the defendant enters into consent terms. Certain undertakings are given in the consent terms. As noticed above, earlier the defendant has acted in breach of the undertakings given to Court, without any compunction. Now he turns his attention to getting out of the consent terms. In my view, these objections ought to have been brought to the notice of the Division Bench on 14-9-98 and 18-9-98 before the Single Judge. It is in such state of affairs that the plea put forward now has to be examined. Much was sought to be made by Mr. Tiku of the non return of the cheques to the plaintiffs. According to Mr. Tiku this fact is clear proof that cash was not paid by Shah. But Mr. Tiku seems to ignore the fact that the same argument would be applicable to non return of the receipt for Rs. 20 lakhs to the defendants. What is sauce for the goose is sauce for the ganders. Having given the receipt on 1st September, 1998 the defendants encashed the cheque of Rs. 5 lacs on 2nd September, 1998. If no amount had been paid, there was no reason whatsoever why the defendant ought not to have encashed the other two cheques in the sum of Rs. 20 lacs especially keeping in mind the previous conduct of Shah. It appears that as on 1-9-98 the plaintiff had complied with the consent terms. The payment had been made in cash. Receipt in evidence of payment had been executed by the defendant. The falsity of the claim put forward by the defendant becomes obvious when one refers to the affidavit in support of the Notice of Motion. In this affidavit it is clearly stated that Mr. Shah approached the plaintiffs on 11th September, 1998 with a request to make the payment in cash. If that be so, then there was no necessity to give a receipt on 1st September, 1998. On that date Shah had not made any offer to pay in cash. The offer to pay in cash according to the affidavit in support, is made on or after 11-9-98. Thus, in my view, looked at either way, the story put forward by the defendants is wholly implausible. I also find it difficult to believe the story put forward that Shah had approached the defendants on 11th September 1998. In the affidavit in support, it is clearly stated that Shah had approached with an offer of cash after the withdrawal of the suit. The Company Appeal is not dismissed until 14th Sept. 1998. The decree is not passed till 18th Sept. 1998. Thus, on the face of it the averments made in the affidavit in support are false. Throughout, the conduct of the defendant has been to defeat the claim of various parties in whose favour rights had been created on certain portions of Wembley. This fact is noticed by Variava, J., in his order dated 30th April, 1997. The defendant does not deny the execution of the two receipts in favour of Chirag and Pioneer. He merely states that the receipt relied upon by the plaintiffs in various pleadings is different from the receipt which was given to the defendant. A perusal of the two receipts clearly shows that no prejudice whatsoever could have been caused to the case of the defendant. Even the receipt on which the plaintiffs seeks to rely clearly mentioned that the aforesaid amount has been paid "against defendants as per the work order dated 1st June, 1995". The execution of the work order is also not denied. It is just sought to be explained away on the plea that these work orders were executed to give a justification for reimbursement of Rs. 60 lacs out of the amount of Rs. 1.20 crores. I find it a little difficult to believe that a prudent businessman like the defendant would execute such bogus documents and make himself liable for a huge amount of Rs. 60 lacs. In fact, Deshmukh, J., has also in the order dated 16th April, 1998 observed as follows:
"In so far as the defence raised about the balance amount of Rs. 60,00,000/- is concerned, it is not in dispute that the respondent company signed the mortgage deed, which clearly shows its liability to pay Rs. 1,20,00,000/- and the only explanation that is given in the affidavit filed by the respondent company for signing the mortgage deed, which according to the respondent company did not depict the true picture is "As the respondent company was badly in need of finance, there was no other alternative but to accede to the unusual and oppressive transaction suggested by the petitioner company." It is further to be seen here that on the same day on which the loan was advanced, an agreement to lease out the third floor of the building was also entered into. According to the respondent company, apart from the mortgage deed, even the agreement to create lease was also to be executed. In my opinion, it is hard to accept that the respondent company, which according to the learned Counsel for the respondents, is a very reputed company, in a single day, signs so many documents, all of which are not to be acted upon."
Thus, I do not find anything wrong in the conduct of the plaintiffs in relying upon the work orders as also on the receipts. The project in which the defendant was engaged in at Film City is not denied. The execution of the work orders is not denied. Execution of the mortgage with regard to the third floor of "Wembley" is not denied. Further, it may be noticed that the original receipts were in fact always in the custody of the defendants. It was therefore, open to the defendants to rely upon these receipts in all the proceedings before the learned Single Judge, Division Bench and the Supreme Court. The only explanation given by Mr. Tiku is that the defendant was so harassed by the litigation, it was not possible to locate the receipts. The aforesaid receipts having been located now, the present proceedings have been taken out. Such an explanation needs to be stated only to be rejected. There seems to be such force in the submission of Mr. De Vitre that the defendant is caught in a web of lies. The main plank for negativing the plea of fresh transaction between Chirag and defendant is that the amount of Rs. 25 lacs was to be paid by replacing the three cheques of Pioneer with five cheques of Chirag. This plea of the defendants is patently false. It is common ground that Cheque No. 435097 in the sum of Rs. 5 lacs was encashed on 2-9-98. Yet Chirag has given five cheques of Rs. 5 lacs each. To get over this difficulty Mr. Tiku submitted that figure 25 lacs occurring repeatedly in the affidavit in support ought to be read as 20 lacs. Even if this is accepted it would not explain as to why the plaintiff gave five cheques. Further why did the defendant not return the 5th cheque on the ground that only 20 lacs were due. The five cheques are also mentioned in the letter dated 3-11-98 written by the defendant to the plaintiff. Thus, in my view the defendant has concocted a story that the five cheques given by Chirag were given in lieu of the three cheques given by the plaintiff. The fact that there was a further loan transaction is quite apparent from the pleadings in paragraph 8 of the affidavit in support. In this paragraph it is averred that the defendant had deposited the five cheques into the defendants Bank Account with the Oriental Bank of Commerce, with the intent to pay off the amounts due and payable to the Bank and get the 4th floor free from encumberance hut, however, all the said 4 cheques were returned unpaid with the remarks "payment stopped by the drawer". I am of the opinion that this plea effectively destroys the plea of the defendant to the effect that the five cheques of Chirag were in lieu of the three cheques of the plaintiff. Clause 4 of the consent terms categorically provided that the plaintiff will give an interest free loan to the defendant of an amount of Rs. 25,00,000/- for the completion of the construction of the flats and the incomplete part of the building. Now the defendant himself avers that amount of Rs. 25 lacs was required to pay the dues of Oriental Bank of Commerce. This would mean that the same amount of loan was to be used for two separate purposes. The charge in favour of the Oriental Bank of Commerce was not disclosed before the Supreme Court. Rather a solemn undertaking was given to the Supreme Court not to create any third party rights in relation to 4th, 5th floor of Wembley, on 15-12-97. As noticed earlier, the undertaking was not given in the required form. The Supreme Court recalled the order with regard to the stay of the order of this Court dated 30-4-1997 and 13-6-1997. The order of injunction dated 13-6-97 restrained the Defendant from creating any third party rights in "Wembley", the charge, if any, in favour of Oriental Bank of Commerce was not disclosed either to this Court or to the Supreme Court. It is disclosed for the first time in the affidavit in support. It was for this reason perhaps that the defendant failed to furnish the undertaking in the Supreme Court. I, therefore, find no merit in this plea of the defendant. These facts clearly support the plea of the Plaintiff that the Defendant required a sum of Rs. 25 lacs, as a short term loan, quite independently from the loan of Rs. 25 lacs given under Clause 4 of the Consent terms. I also do not find any substance in the submission of Mr. Tiku with regard to the fabrication of the five letters which are said to have been written by the plaintiffs and their Attorneys. The Official Liquidator was first appointed by order of Justice Variava on 30th April, 1997. This matter was taken all the way upto the Supreme Court. Thereafter the Official Liquidator continued till 14th September, 1998. This order of discharge of the Liquidator, however, was not given effect to till 26th November, 1998. The letters which are said to be disputed are written between 2nd November, 1998 and 11th November, 1998. A perusal of these letters shows that the plaintiffs have sent various notices to the defendant to comply with the loan transaction. Mere non mention of the letter dated 2nd September, 1998 in the letter dated 30-9-98 would not be sufficient to conclude that the letter has been got up for the purpose of these proceedings. Even if this letter is ignored, it would not improve the case of the defendant. The letter dated 30th September, 1998 clearly mentions the loan transaction and the securities which was sought to be created by the defendant. The defendant was requested not to fill in the dates on the five cheques and not to present them for encashment. This letter was not controverted by the defendants till 3rd November, 1998. It was ignored as the defendant did not understand what Shah meant about not perfecting the securities. Instead the defendant proceeded to present all the cheques for encashment. Needless to say the cheques were dishonoured as the plaintiff had instructed the bank to stop payment. Defendant gave notice under section 138 of the Negotiable Instruments Act. But no criminal complaint was filed. No summary suit is filed on the "dishonoured cheques". In my opinion if there was any substance in the claim of the defendant, he would have prosecuted the plaintiff.
12. Keeping the aforesaid facts in view I am of the considered opinion that the defendant has not come to Court with clean hands. Rather the defendant has tried to mislead the Court at every stage of the proceedings. Even the present Notice of Motion has been taken out on wholly untenable grounds. Mr. Tiku has placed strong reliance on the judgment of the Supreme Court in the case of Chandra Shashi (supra). The opening two paragraphs of the aforesaid judgment are as under : The opening two paragraphs of the aforesaid judgment are as under :
"1. The stream of administration of justice has to remain unpolluted so that purity of Court's atmosphere may give vitality to all the organs of the State. Polluters of judicial firmament are, therefore, required to be well taken care of to maintain the sublimity of the Court's environment ; so also to enable it to administer justice fairly and to the satisfaction of all concerned.
2. Anyone who takes recourse to fraud, deflects the course of judicial proceedings; or if anything is done with oblique motive, the same interferes with the administration of justice. Such persons are required to be properly dealt with, not only to punish them for the wrong done, but also to deter others from indulging in similar acts which shake the faith of people in the system of administration of justice."
Mr. Tiku has also relied on the oft quoted judgment of the Supreme Court in the case of S.P. Chengalvaraya Naidu (supra). Kuldip Singh, J., observed as follows:
"1." Fraud-avoids all judicial acts, ecclesiastical or temporal" observed Chief Justice Edward Coke of England about three centuries ago. It is the settled proposition of law that a judgment or decree obtained by playing fraud on the Court is a nullity and honest in the eyes of law. Such a judgment/decree-by the first Court or by the highest Court- has to be treated as a nullity by every Court, whether superior or inferior. It can be challenged in any Court even in collateral proceedings."
"2....." 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 lever to retain the illegal gains indefinitely. We have no hesitation to say that a person, who's case is based on falsehood, has no right to approach the Court. He can be summarily thrown out at any stage of the litigation."
In my view, the aforesaid observations are squarely applicable to the conduct of the defendant.
13. I have already noticed that the defendant has acted in breach of the undertakings given to this Court as also to the Supreme Court. It has also been noticed that the defendant had created various encumbrances on different parts of the building without disclosing it to the plaintiffs or the courts. The pleadings of the plaintiffs are inconsistent and contradictory in themselves. After taking into consideration an overall view of the circumstances that emerge in this case the Court is constrained to observe that the defendant has acted dishonestly in the proceedings before the Courts. It is the bounden duty of every litigant to state fully and fairly the facts in controversy. The defendant has deliberately tried to mislead the Court. Such a defendant is liable to be summarily thrown out of the Court. The Court would be justified, in these circumstances, to initiate Contempt of Court proceedings against the defendant also. In my view the defendant has abused the process of Court by taking out the Notice of Motion. At every stage of the proceedings, leading to the filing of Consent Terms and thereafter the defendant has tried to deflect the even flow of justice. In my view the defendant has no respect for due process of law or for the orders passed by the Courts. At every stage the defendant had given undertakings to repay. This was always done with the aim of preventing the Court from passing orders, which may be adverse to the defendant, or to delay the due execution of orders already passed. This is amply demonstrated by the Conduct of the defendant before Variava, J., on 30-4-97, the Supreme Court on 29-10-97, 24-11-97, 15-12-97, and 6-3-98. Within three days of the order of the Supreme Court again an undertaking was given before the Division Bench on 9-3-98. Again breached. Gross, though is the behaviour of the defendant the Court will again exercise restraint and not initiate contempt proceedings suo moto. Adoption of this course by the Court should not be treated as condonation of the conduct of the defendant. It is, therefore, recorded that the Court deprecates the conduct of the defendant in no uncertain terms.
14. The Notice of Motion being wholly devoid of merit is dismissed. No costs.
15. At this stage, the learned Counsel appearing for the defendant requests that the ad-interim order of status quo dated 24th Feb., 1999 may be continued. The aforesaid order was obviously passed without considering the relative merits of the Notice of Motion. Having considered the entire matter and having found that the defendant has not come to Court with clean hands, I find no justification for staying the operation of the order. Rejected.
Certified copy expedited.
16. Notice of Motion dismissed.