Karnataka High Court
Catalyst Trusteeship Limited vs Mantri Infrastructure Pvt Ltd on 12 November, 2024
Author: H.P.Sandesh
Bench: H.P.Sandesh
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 12TH DAY OF NOVEMBER, 2024
BEFORE
THE HON'BLE MR. JUSTICE H.P. SANDESH
M.F.A. NO.6760/2024 (CPC)
BETWEEN:
1. CATALYST TRUSTEESHIP LIMITED
REGISTERED OFFICE AT GDA HOUSE
FIRST FLOOR, PLOT NO.85,
S.NO.94 AND 95,
BHUSARI COLONY (RIGHT),
KOTHRUD, PUNE,
MAHARASHTRA-411038,
REPRESENTED BY ITS
AUTHORISED REPRESENTATIVE. ... APPELLANT
(BY SRI DYAN CHINNAPPA, SENIOR COUNSEL FOR
SRI PRASHANTH V.G., ADVOCATE)
AND:
1. MANTRI INFRASTRUCTURE PVT. LTD.,
A COMPANY HAVING ITS
REGISTERED OFFICE AT
C-5, RICH HOMES,
NO.5/1, RICHMOND ROAD,
BENGALURU-560 025.
2. MANTRI DEVELOPERS PVT. LTD.,
A COMPANY HAVING ITS
REGISTERED OFFICE AT
C-5, RICH HOMES,
NO.5/1, RICHMOND ROAD
BENGALURU-560 025.
2
3. SHORE DWELLINGS PVT. LTD.,
A COMPANY HAVING ITS
REGISTERED OFFICE AT
C-5, RICH HOMES,
NO.5/1, RICHMOND ROAD
BENGALURU-560 025.
4. AGARA TECHZONE PVT. LTD.,
A COMPANY HAVING ITS
REGISTERED OFFICE AT
MANTRI HOUSE NO.41
VITTAL MALLYA ROAD
BENGALURU-560 025.
5. MINERVA INFRATECH PVT. LTD.,
A COMPANY HAVING ITS
REGISTERED OFFICE AT
MANTRI HOUSE , No.41,
VITTAL MALLYA ROAD
BENGALURU-560 025.
6. MANTRI RESI STRUCTURES PVT. LTD.,
A COMPANY HAVING ITS
REGISTERED OFFICE AT
MANTRI HOUSE, NO.41,
VITTAL MALLYA ROAD
BENGALURU-560 025.
7. CASTLES VISTA PVT. LTD.,
A COMPANY HAVING ITS
REGISTERED OFFICE AT
C -5, RICH HOMES,
NO.5/1, RICHMOND ROAD,
BENGALURU-560 025.
8. PLAZA AGENCIES PVT LTD
A COMPANY HAVING ITS
REGISTERED OFFICE AT
MANTRI HOUSE, NO.41,
3
VITTAL MALLYA ROAD
BENGALURU-560 025.
9. SUSHIL MANTRI
AGED MAJOR
HAVING OFFICE AT
MANTI HOUSE NO.41,
VITAL MALLYA ROAD
BENGALURU-560 001.
10 . INDIABULLS HOUSING FINANCE LIMITED
PRESENTLY KNOWN AS
SAMMAAN CAPITAL LIMITED
A COMPANY IN CORPORATED UNDER
COMPANIES ACT, 1956
REGISTERED OFFICE AT
5TH FLOOR, BUILDING NO.27,
KG MARG, CONNAUGHT PLACE
NEW DELHI-110 001.
AND ALSO HAVING AN
OFFICE AT PLOT NO.87/6,
GROUND MEZZDINE INDIA BULLS HOUSE,
RICHMOND TOWN,
BENGALURU-560 025.
11 . INDIABULLS COMMERCIAL CREDIT LIMITED
REGISTERED OFFICE AT
5TH FLOOR, BUILDING NO.27,
KG MARG, CONNAUGHT PLACE
NEW DELHI-110 001.
12 . ERIDANI INFRASTRUCTURE PRIVATE LIMITED
REGISTERED OFFICE AT
E-903, LOTUZ HOMEZ
SECTOR --111
PALAM VIHAR
HARYANA-122 017.
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13 . ASLEEK BUILDWELL PRIVATE LIMITED
REGISTERED OFFICE AT
L-62/1, L-BLOCK,
SECOND FLOOR,
NEW DELHI-110 001.
14 . AUROKIRAN CAPITAL INVESTMENT ADVISORS
PRIVATE LIMITED
REGISTERED OFFICE AT L-62/1,
L-BLOCK, SECOND FLOOR
NEW DELHI-110 001.
15 . DEUTSCHE BANK AG
REGISTERED OFFICE AT
DEUTSCHE BANK HOUSE
HAZARIMAL SOMANI MARG
MUMBAI-400 001.
16 . NILESH SABOO
AGED MAJOR
SENIOR EXECUTIVE AT
DEUTSCHE BANK HOUSE
HAZARIMAL SOMANI MARG
MUMBAI-400 001. ... RESPONDENTS
(BY SRI B.K.SANJAY, ADVOCATE FOR C/R1 TO R9)
THIS M.F.A. IS FILED UNDER ORDER 43 RULE 1(r) OF THE
CPC, PRAYING TO SET ASIDE THE ORDER DATED 05.10.2024
PASSED ON IA NO.2 IN O.S.NO.7166/2024 ON THE FILE OF THE
IX ADDITIONAL CITY CIVIL AND SESSIONS JUDGE, BENGALURU
CITY.
THIS APPEAL HAVING BEEN HEARD AND RESERVED FOR
JUDGMENT ON 04.11.2024 THIS DAY, THE COURT
PRONOUNCED THE FOLLOWING:
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CORAM: HON'BLE MR JUSTICE H.P.SANDESH
CAV JUDGMENT
Heard the learned Senior counsel for the appellant and learned counsel for the caveator-respondent Nos.1 to 9.
2. This miscellaneous first appeal is filed praying this Court to set aside the order of status-quo granted by the Trial Court dated 05.10.2024 in O.S.No.7166/2024 passed on I.A.No.2 filed by respondent Nos.1 to 9 and grant such other relief as deems fit in the circumstances of the case.
3. The respondents/plaintiffs before the Trial Court also sought for the relief of temporary injunction restraining the defendant Nos.1, 2 and 3 from enforcing or acting upon the invocation notice dated 28.09.2024 and from taking any further action regarding transfer or encumbrance of the pledged shares of Mantri Infrastructure Pvt. Ltd. (100%), Mantri Developers Pvt. Ltd. (51%) or Agara Techzone Pvt. Ltd. (12%) or from enforcing any security under the Bond Trust Deed and Pledge Agreements, until final adjudication of the rights of the parties by the Trial Court and inter alia sought for the relief on I.A.No.2 to restrain 6 the defendant Nos.1 to 3 from enforcing or acting upon invocation notice dated 28.09.2024. The respondents also filed applications and order is passed only on I.A.Nos.2 to 4. It is also borne out from the records that caveat was also filed and learned counsel for both the parties were heard and suit was filed before the Vacation Court and I.A.No.1 was filed under Section 11(3) of Bengaluru City Civil Court Act to take up the matter before the Vacation Court and the same was allowed.
4. The Trial Court having heard learned counsel for both the parties, passed an interim order on I.A.Nos.2 and 4 and comes to the conclusion that there should be some status-quo order as against invocation notice dated 28.09.2024 issued by the defendants, till the disposal of I.A.No.2 for providing a natural justice and for fair justice. The said order has been challenged in this appeal contending that the very impugned order is perverse and contrary to settled principles of law and Trial Court has erred in entertaining the suit, since the suit itself is not maintainable. The relief sought in the application had been rendered infructuous by the concluded transfer of the pledged 7 shares in favour of the appellant. It is also contended that the Trial Court failed to appreciate that the present suit is barred by res-judicata. The conduct of the respondent No.1 was disingenuous inasmuch as it deliberately suppressed that it had previously filed a commercial suit against the same parties in respect of same cause of action. The Trial Court committed an error in entertaining the suit, since there is no jurisdiction as the disputes between the parties falls within the meaning of Section 2(1)(c) of the Commercial Courts Act, 2015 and ought not have entertained the same.
5. It is also contended that when the Court is lagging competent jurisdiction, the impugned order would not have been passed and order is also a non-speaking order which is in contravention of settled legal principles and the Trial Court also does not refer or deal with any of the submissions made by the learned counsel for the appellant and even failed to appreciate that the appellant in its capacity pledgeee, possesses an unfettered contractual right to invoke the pledged shares, and any actions taken in exercise of this right. The counsel also 8 would contend that even several judgments have been relied upon before the Trial Court, wherein the Courts have settled the position of law regarding pledgee's contractual right to invoke the pledged shares and the very narrow scope of judicial interdiction to such right. The Trial Court failed to recognize the malicious conduct of respondent Nos.1 to 9 in approaching the Trial Court with unclean hands and the respondent Nos.1 to 9 must have placed the documents of Bond Trustee Agreement dated 02.06.2018, Common Security Agreement dated 02.06.2018, Bond Trust Deed dated 04.06.2008, Pledge Agreement dated 04.06.2018, Deed of Hypothecation dated 04.06.2018, First Amendment Deed to the Bond Trust Deed dated 12.06.2018, First Addendum Agreement related to an account agreement dated 30.06.2018, First and Second Addendum to the Deed of Hypothecation dated 30.06.2018, Deed of Rectification to the First Amendment dated 29.01.2019, Rectification Deed to Supplementary Memorandum of Engagement (MOE) dated 29.01.2019, Reservation of Rights Letter dated 03.04.2020, Notice (Regarding Springing Pledge) dated 24.04.2020, Reservation of Rights Letter dated 9 17.07.2020, Guarantee Demand Notice dated 14.08.2020, Reservation of Rights Letter dated 28.07.2021, SARFAESI Notice dated 14.03.2022 and Acceleration Notice dated 25.03.2022. When the plaintiffs have not approached the Court with clean hands, the Trial Court ought not to have entertained the application.
6. Learned Senior counsel for the appellant in his argument would vehemently contend that dues from the respondents is more than Rs.530 Crores and without payment of single penny, the respondents have approached the Trial Court and the Trial Court granted the relief passing such an ad-interim order of status-quo. Learned Senior counsel would vehemently contend that the Court has to take note of fraudulent act of the respondents in approaching the Court and seeking the relief, even inspite of Guarantee Demand Notice was issued in 2020 and Reservation of Rights Letter was issued in 2021 and the Trial Court committed an error in granting the relief, inspite of detailed argument was made before the Trial Court. 10
7. Learned Senior counsel for the appellant, in support of his argument, relied upon the judgment in YASHODA (ALIAS SODHAN) VS. SUKHWINDER SINGH AND OTHERS reported in (2022) 17 SCC 307 and brought to notice of this Court paragraph No.30, wherein the Apex Court has observed that "material fact" would mean material for the purpose of determination of the lis. It is also held that a person invoking the discretionary jurisdiction of the Court cannot be allowed to approach it with a pair of dirty hands and filing of the earlier suit and withdrawal thereof without liberty to file another suit was a material fact. The counsel referring this Court would contend that the Trial Court failed to take note of the same.
8. The counsel also relied upon the judgment in K.S. BHOOPATHY AND OTHERS VS. KOKILA AND OTHERS reported in (2000) 5 SCC 458 and brought to notice of this Court paragraph No.10, wherein discussion was made with regard to withdrawal and adjustments of suits and where the plaintiff abandons any suit or part of claim under sub-rule (1); or withdraws from a suit or part of a claim without the permission 11 referred to in sub-rule (3), he shall be liable for such costs as the Court may award and shall be precluded from instituting any fresh suit in respect of such subject-matter or such part of the claim. Learned Senior counsel also brought to notice of this Court discussion made in paragraph No.13 with regard to Order XXIII Rule 1 CPC and also paragraph No.14, wherein discussion was made with regard the judgment in BAKHTAWAR SINGH VS. SADA KAUR reported in (1996) 11 SCC 167 regarding question of grant of permission to file a fresh suit on the same cause of action.
9. The counsel also brought to notice of this Court memo filed before the Commercial Court for withdrawal of the earlier suit as 'Not Pressed' with liberty to file a fresh suit on the same cause of action. Though the Commercial Suit was dismissed as not pressed, no such liberty was given.
10. The counsel also relied upon the judgment in LALLAN PRASAD VS. RAHMAT ALI AND ANOTHER reported in AIR 1967 SC 1322 and brought to notice of this Court paragraph Nos.16 and 17, wherein a discussion was made with 12 regard to pledge is a bailment of personal property as a security for some debt or engagement.
11. The counsel also relied upon the judgment in TENDRIL FINANCIAL SERVICES PVT. LTD. & ORS. VS. NAMEDI LEASING & FINANCE LTD. & ORS. reported in 2018 SCC ONLINE DEL 8142 and brought to notice of this Court paragraph No.21, particularly, paragraph No.21(C) and (E), wherein discussion was made with regard to pledge is concerned.
12. The counsel also relied upon the judgment in FAO (OS) (COMM) 75/2020 and brought to notice of this Court paragraph No.21, wherein discussion was made with regard to Section 176 of Indian Contract Act, 1872, wherein it is observed that law recognizes the absolute discretion of the pawnee to decide whether or not to sell the pledged goods and if so when and to what extent or to further retain the pledged goods as collateral in case a recovery suit is preferred. 13
13. The counsel also relied upon the judgment in AVANTHA HOLDINGS LIMITED VS. VISTRA ITCL INDIA LIMITED reported in 2020 SCC ONLINE DEL 1717 and brought to notice of this Court paragraph Nos.43 to 46 and 60 to 62, wherein discussion was made with regard to interim- measures which can be ordered by the Arbitral Tribunal and also discussion was made with regard to events of default.
14. The counsel also relied upon the judgment in PRIME BROKING COMPANY (INDIA) LTD. VS. NATIONAL SECURITIES CLEARING CORPORATION LTD. reported in 2017 SCC ONLINE BOM 43 and brought to notice of this Court paragraph No.16, legal position as to relationship between pledger and pledge arising out of Section 176 of Indian Contract Act, 1872.
15. Per contra, learned counsel for the caveator respondent Nos.1 to 9 in his argument would vehemently contend that the very contention that Civil Court has no jurisdiction and ought to have filed the suit before the Commercial Court, since the dispute is commercial in nature 14 cannot be accepted. The counsel would contend that when memo was filed to withdraw the suit, liberty to file a suit on the same cause of action was also sought. The counsel also would contend that, if pledged shares are sold, they will lose the amount which fetches more amount than the liability. The counsel would vehemently contend that plaintiffs are nine in number and notices are given only to three persons and relief is sought in the plaint itself with regard to 'OTS Scheme' and when the relief is sought directing the defendant Nos.2 and 3 to deposit the original OTS agreement before the Court, pending final disposal of the suit to ensure enforcement of the settlement reached between the parties, relief is sought for a declaration to declare the invocation notice issued on 28.09.2024 as null, void and unenforceable and no legal effect as the underlined debts have to be discharged through execution of OTS agreement. The suit is also filed for the relief of permanent injunction, apart from declaration and the Trial Court taken note of the fact that not given five working days after the date of notice and notice period is not completed and reasons are also assigned while passing the interim order of status-quo.
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16. The counsel also relied upon the judgment rendered by this Court in OZONE ELEGANT DEVELOPERS LLP, OZONE INFRA DEVELOPERS PRIVATE LIMITED, OZONE REALTORS PRIVATE LIMITED VS. M/S. ARYA FOUR SEASONS in CIVIL REVISION PETITION NO.148 OF 2023 decided on 25.07.2023 and brought to notice of this Court paragraph Nos.3, 7 and 12 with regard to jurisdiction and Commercial Courts Act, Trial Court's reasoning on jurisdiction, wherein the Trial Court also considered the judgment in the case of AMBALA SARABHAI ENTERPRISES LIMITED VS. K.S. INFRASTRUCTURE LLP AND ANOTHER reported in (2020) 15 SCC 585, wherein it is held that present dispute does not come within the definition of a Commercial Dispute, as outlined in the Commercial Courts Act, and thus, the Civil Court has jurisdiction to try the suit. The counsel also brought to notice of this Court order passed in WRIT APPEAL NO.5893 OF 2000, wherein it is observed that the petitioner, through counsel, submitted a memorandum requesting to withdraw the writ petition while reserving the right to file a fresh petition based on the same cause of action, if necessary in the future and also 16 relied upon the decision reported in AIR 1975 KANT 101, wherein it is held that the Court ought either to reject as a whole an application under Order 23 Rule 1(2) CPC to withdraw the suit with permission to file fresh suit on the same cause of action or grant it as whole.
17. The counsel also relied upon number of judgments of different Courts with regard to pledge is concerned and also several judgments of the Apex Court with regard to pledge and right of pledge as against the judgments given by the learned counsel for the appellant.
18. Having heard the learned Senior counsel for the appellant, learned counsel for the caveator respondent Nos.1 to 9 and the grounds which have been urged and also the principles laid down in the judgments, the scope of this appeal is very limited. This Court cannot look into the merits of the case, since the order is not passed by the Trial Court on merits of the I.As. The relief is granted only to maintain status-quo and the records also disclose that the appellant sought time to file detailed 17 objections to I.As. and the said order has been passed by the Vacation Court.
19. No doubt, learned counsel for both the parties relied upon the judgments with regard to jurisdiction of the Court, admittedly, learned Senior counsel for the appellant made the submission that already the appellant has filed an application before the Trial Court invoking Order 7 Rule 10 CPC and he had already addressed the arguments on the I.A. and the counsel for the respondents is yet to argue on the said application. It is also important to note that with regard to grant of relief is concerned, main contention of the learned Senior counsel for the appellant is that the Trial Court committed an error in passing such an order. No doubt, it is brought to notice of this Court that Demand Notice was given in 2020 and Acceleration Notice was given in 2022, relief is sought against the appellant in the main suit as regards the invocation notice dated 28.09.2024 and admittedly, the debentures are transferred in favour of the appellant, but they are yet to sell the same.
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20. It is the main contention of the learned Senior counsel for the appellant that they are having right to sell in terms of the agreements which have been relied upon by the appellant. On the other hand, it is the contention of the respondents that the share amount is more than what the appellant is claiming and if the same is sold for lesser price, the respondents will lose the actual price. This Court does not want to discuss in detail with regard to the rights of the parties is concerned, since the appellant claim dues more than Rs.530 Crores and contend that not even a single penny has been paid by the respondents and respondents press for invocation of 'OTS Scheme' and if the same is invoked, they are ready to pay the amount. When the applications are not considered on merits and only interim-prayer is sought, the Court has to look into the reasoning given by the Trial Court.
21. The man contention of the learned Senior counsel for the appellant is that the Trial Court ought not to have passed such an order and no jurisdiction. I have already pointed out that both on the aspect whether the Court has got jurisdiction or 19 not as well as granting the relief of status-quo is concerned, the matter has to be adjudicated before the Trial Court, since the applications are pending before the Trial Court and order is not passed on merits of the applications which have been filed. While entertaining this appeal assailing the order of status-quo, the Court has to take note whether the Trial Court has assigned reasons while passing the interim-order of status-quo. It has to be noted that, the first prayer is in respect of validity of invocation notice in the main suit.
22. Admittedly, notice was issued on 28.09.2024 and the main contention of the plaintiffs is that the defendant No.1 has given notice on 28.09.2024 and to give five business days after the date of notice for sale, that notice period is not completed. The Trial Court has also taken note of the fact that the appellant made the submission that the sale has not taken place, but debentures are transferred in the name of the defendant No.1 i.e., the appellant and also taken note of the contention that the plaintiffs have not produced Bond Trustee Agreement, Acceleration Notice and these are the grounds urged invoking 20 the conditions contemplated in the said notice and the same has not been perused by the Trial Court. However, taken note of the fact that given four business days after the date of notice for sale includes only 30.09.2024, 01.10.2024, 03.10.2024 and 04.10.2024 and also given the reason that as this case is in Bengaluru and both the parties hail from Bengaluru, Saturday and Sunday are not treated as business day. The Trial Court also taken note that 06.10.2024 is the time limit given in the notice and it infringes the rights of the appellant and also noticed that it is only a transfer of debentures in the name of appellant- defendant No.1 and the appellant-defendant No.1 has not made any sale and Saturday is working day or not also to be taken note of by the Trial Court, while considering the applications on merits.
23. The Trial Court further taken note of the fact that learned counsel for the respondents/plaintiffs made the submission that they are ready for settlement for which appellant/defendant No.1 made the submission that they have to pay the amount to the office of the defendant No.1, but not 21 made any payment till date. However, taking into note that when the defendant No.1 sought time to file elaborate objections to I.A.Nos.2 and 4, an arrangement was made to maintain status-quo as against the invocation notice dated 28.09.2024 till disposal of I.A.No.2. When such order has been passed, having taken note of grounds which have been urged, particularly taking note of the notice dated 28.09.2024, fixing the date as 06.10.2024, admittedly, already shares are transferred in the name of defendant No.1, but sale has not taken place. Hence, it is appropriate to direct the Trial Court to dispose of I.A.Nos.2 and 4 within 15 days from today. It is also brought to notice of this Court that an application is filed under Order 7 Rule 10 CPC contending that there is no jurisdiction and issue is also raised by learned counsel for both the parties regarding maintainability of the suit relying upon judgments and this Court does not want to discuss the same in detail and when the application is pending before the Trial Court under Order 7 Rule 10 CPC, the same has to be considered by the Trial Court or otherwise, it leads to expressing opinion on the merits of the applications which are pending.
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24. In view of the discussion made above, I pass the following:
ORDER
(i) The miscellaneous first appeal is disposed of.
(ii) The parties are directed to maintain status-quo for a period of 15 days from today. Learned counsels for both the parties are directed to conclude the arguments within one week from 12.11.2024 and conclude the same on or before 19.11.2024 without unnecessarily arguing the matter in length and make submissions within the scope of the applications.
(iii) The Trial Court is directed to pass orders on I.A.Nos.2 and 4 and also on I.A. filed under Order 7 Rule 10 CPC on 25.11.2024 as the recovery is high stake of crores .
(iv) The respective counsels are directed to communicate this order today itself to the Trial Court, to enable the Trial Court to up the matter immediately.
Sd/-
(H.P. SANDESH) JUDGE ST