Bangalore District Court
Jayaprakash K V vs Ms Coastal Projects Limited on 29 June, 2024
1
Com.O.S.No.2463/2017
KABC170098432020
IN THE COURT OF LXXXII ADDL. CITY CIVIL & SESSIONS
JUDGE, AT BENGALURU (CCH.83)
THIS THE 29th DAY OF JUNE 2024
PRESENT:
SUMANGALA S BASAVANNOUR., B.COM, LL.M.,
LXXXII ADDL.CITY CIVIL & SESSIONS JUDGE,
BENGALURU.
Com. O.S. No.2463/2017
BETWEEN:
Shri. K.V. Jayaprakash,
S/o LAte Sri. K.
Vishwanathaiah
Shetty, aged about 60
years, R/at No. 166,
Rajatha, K.R.S Road,
VV Puram. Bangalore -
560 004.
2
Com.O.S.No.2463/2017
(Rep. by M/s G.S. Bhat
and Associates.-
Advocate)
: PLAINTIFF
AND
1. M/s Coastal Projects
Limited Corporate
Office, Plot No. 304-0
Road No. 78, Film
Nagar, Hyderabad,
Telangana,
represented by its
Managing Director.
2. Shri. G. Harihara
Rao, Managing
Director, M/s Coastal
Projects Limited,
Corporate Office, Plot
No. 304-0, Road No.
78, Film Nagar,
Hyderabad, Telangana.
: DEFENDANTS
(Defendant No.1
represented by Sri.
Mukesh Yadav and
Defendant No.2
represented by Sindhu.
V - Advocate)
3
Com.O.S.No.2463/2017
Date of Institution of the 04.06.2017
suit
Nature of the suit (suit on
pronote, suit for Recovery Suit
declaration & Possession,
Suit for injunction etc.)
Date of commencement of
recording of evidence 16.09.2019
Date on which judgment
29.06.2024
was pronounced
Total Duration Year/s Month/s Day/s
07 00 25
(SUMANGALA S BASAVANNOUR),
LXXXII Addl.City Civil & Sessions Judge,
Bengaluru.
JUDGMENT
This suit is filed for mandatory injunction directing the Defendants to hand over the original documents mentioned in schedule 4 of the title in respect of the schedule immovable properties to the custody of the plaintiff. In the event of the Defendants voluntarily failing to hand over the original documents of title pertaining to the schedule immovable properties to the plaintiff in pursuance of the direction in the 4 Com.O.S.No.2463/2017 form of a mandatory injunction, permit the plaintiff to seek the assistance of the bailiff of this court or a commissioner of this court to effect seizure of the documents and on such seizure, to collect the documents at the hands of this court through the officer of this court in the interest of justice.
Further, prays that to direct the Defendants to pay a sum of Rs. 4,81,42,500/- together with interest at 21% per annum from the date of suit till realization of amount and grant such other further relief just and appropriate in the circumstances of the case in the interest of justice and equity.
2. The Brief facts of the Plaint are as follows:-
The Plaintiff is the absolute owner of the residentially converted properties measuring 14 acres 26 guntas consisting of 3 items which are as under:
(a) 28 guntas or 30492 sq.feets, in Sy no. 152/1A of Yelahanka Village, Yelahanka Hobli, Bangalore North Taluk.
(b) 8 acres 28 guntas or 378972 sq. feets in Sy No. 152/1B, 152/A, 152/2B, 152/3A, 152/3B, 152/4A, 152/4B, 152/5A, 152/5B, 152/6A, 152/6B, 152/7A, 152/7B and 152/10A and 152/10/B of yelahanka village, Yelahanka Hobli, Bangalore North Taluk.5
Com.O.S.No.2463/2017
(c) 5 acres 10 guntas or 228690 sq feets in Sy No. 153 of yelahanka village, yelahanka Hobli, Bangalore North Taluk, The aforementioned three properties are more fully described in the schedule collectively, The Plaintiff is in possession of the copies of title deeds. The original title deeds are not available with the plaintiff. The Plaintiff has in pursuance of a Memorandum of understanding between the Plaintiff and defendant No.1 dated 22.09.2012 has handed over the original documents of title to the Defendants.
The Defendant No.1 is engaged in the business of Civil contracts, infrastructure projects and also various other civil related developmental works for which it requires large financial assistance from financial institution/banks. The properties are more fully described in the schedule given hereunder and referred to as the 'Schedule Property'. The Plaintiff was approached by the Defendants on 22.09.2012 representing that the plaintiff has undertaken to provide security to the full satisfaction of the Financier and will resolve all legal issues, if any, pertaining to the properties described in the schedule. That part, on such understanding, process of obtaining financial assistance from financial institutions/Banks, requires collateral security for availing financial assistance from financial institutions and Banks. In this regard, the schedule property was 6 Com.O.S.No.2463/2017 offered as a collateral security to the first Defendant. First Defendant agreed to use the property as collateral security for availing loan from financial institutions/banks and that in respect to the same terms and conditions was brought down and in view of the terms and conditions therein the schedule property described as 'A' Schedule property was given as a collateral security for availing loan in respect of the works. That apart, the terms and conditions of Memorandum of Agreement were also brought into writing. The documents indicate Memorandum of Understanding-cum-Mutual agreement is in force for a lock in period of 3 years 3 months. The terms and conditions are brought down in terms of the period subsisting in terms of the agreement.
The Plaintiff further stated that in the event of any breach of the terms of the conditions of the agreement, the agreement automatically gets cancelled and on such cancellation being undertaken, the original documents are to be returned and the terms of the agreement. Payment, as can be noticed was not paid to the plaintiff. When that being the factual position, the Plaintiff was compelled to issue notice calling upon the Defendants on 07.10.2013 to the release the registered documents and in the event of failure, the Plaintiff also undertook to initiate legal action. On 14.10.2013, a letter came 7 Com.O.S.No.2463/2017 to be written by the Defendant No.1 and in the letter correspondence by the Defendant No.1, the Defendant No.1 has categorically stated in the event of payment as agreed has not happened, it is only to be taken on the date regarding the release of the documents from the bank earliest. There was no positive response that the Defendant No.1 required some more time in respect of giving the amount to the Plaintiff and requested to provide some more time in respect of receiving the amount from the Defendant No.1 and thereby the said letter is a reply. Similarly, C.H. Suresh Babu, who has been addressed also gave a reply. He has wriggled out, except to state that as an institution, he has done mediation job. By virtue of terms of the Agreement and Memorandum of Understanding, there is a prima-facie breach and that which is apparent to have been committed by the Defendant, the first Defendant is disentitled to proceed to hold the terms of the contract and also see that the documents that are in the possession and custody of the defendant will have to be returned and the Memorandum of Agreement automatically becomes cancelled for having committed a perpetrated breach by the Defendant No.1 and the Defendant No.2.
The Plaintiff further stated that he has filed a suit in O.S. No. 9045/2013 against defendants before the City Civil Judge at 8 Com.O.S.No.2463/2017 Bangalore for decree of mandatory injunction directing the Defendants to handover the original documents of the title of the suit schedule property. The Hon'ble Court had issued notice to Defendants on 18.12.2013. The Defendants appeared before this court and engaged counsel on 07.10.2014. There afterwards there was amicable settlement of the lis between the Defendants filed memo reporting settlement. The memo reads as follows:
"The above said matter is settled out of the court. Hence, the settlement MOU dated 26.06.2014 is been submitting to the Hon'ble Court of the reference of the court. Hence, please accept the MOU dated 26.06.2014 and dismissed the case in the interest of justice."
This court by its order dated 10.10.2014 passed the orders as follows:
"Plaintiff filed I.A. under Order 23 Rule 1 of CPC Shri K.S.R. has no objection, hence IA under Order 23 Rule 1 of CPC is hereby allowed i.e., the suit of the Plaintiff is hereby dismissed as withdrawn with liberty to file fresh suit on the basis of same cause of action."
The Plaintiff further stated that, the Plaintiff and Defendant entered into Memorandum of Understanding dated 26.06.2014. The Plaintiff issued legal notice to Defendants on 03.02.2017 calling them to return the original documents. The legal notice issued to the Defendants served and no reply was received by 9 Com.O.S.No.2463/2017 the Plaintiff till then. The Defendants not complied the terms in the Memorandum of Understanding dated 26.06.2014 and legal notice dated 03.02.2017. The Defendants having not complied the terms in the Memorandum of understanding the Plaintiff has undergone immense loss/damage in the business. That apart, defendant having not paid the balance amount, the plaintiff intended to carry out certain other business on the basis of the documents and therefore, in view of the defendants having committed breach by not comply with the terms of the Memorandum and Understanding and that the defendant company has withheld the documents, the plaintiff when demanded to return the documents, defendant did not return the documents, nor did make payment under the agreement. Plaintiff has undergone immense difficulties and hardship in addition to the monetary harassment that has been caused to the plaintiff. Under the circumstances, Plaintiff estimates liquidated damages, which is estimated at 25% of the total amount, which the Plaintiff becomes entitled to be paid by the 1st Defendant to the Plaintiff for having committed the breach of the terms of the agreement.
The Plaintiff further stated that under the Memorandum of Understanding, there does exist a clause as regards the dispute to be adjudicated by the arbitrator to resolve disputes. It need 10 Com.O.S.No.2463/2017 be said that, in view of the documents having become unenforceable in view of the breach having being committed, there is no enforceable arbitration clause. There being absolutely no enforceable arbitration clause, in view of the fact that the defendants themselves have promised and have given an undertaking that they would return the documents and sought some more time to make payments. If the plaintiff is not permitted to secure the documents and the plaintiff is put to immense difficulties and hardship by virtue of the documents being held by the Defendant,s plaintiff is left with no alternative than to approach this court.
The Plaintiff further stated that, the Defendants failed to comply the terms and conditions of the mutual agreement dated 26.06.2014 and also the original Memorandum of Understanding dated 22.09.2012. The Defendants agreed to pay the balance amount forthwith or to pay interest @ 18% per annum on the balance amount, calculating it at 18% per annum from the date till it is paid. The Defendants issued letter dated 30.06.2014 agreeing the undertaking to pay interest @ 21% per annum as against the original agreed interest of 18% per annum on the balance amount. As on 21.01.2017, the Defendants are liable to pay the balance of interest amount of Rs. 4,09,15,000/- upto 21.01.2017. The Plaintiff had issued legal 11 Com.O.S.No.2463/2017 notice calling the Defendants to pay the said amount and also return of the documents. The defendants though have received the legal notice have not replied the same. From 22.01.2017 to 22.03.2017 sum of Rs. 72,27,500/- towards interest. Hence, this suit.
3. The defendant No.1 have resisted the claim of the plaintiff and filed written statement by denying the entire case of the plaintiff. The contention of the defendants that the Plaintiff has while approaching this court as not come with clean hand has suppressed many material facts and therefore is not entitled for the reliefs sought for in suit. Further, the suit is also bad for non- joinder of necessary party and on this ground also the suit is liable to be dismissed. In the para No3 of the plaint, the deed of memorandum of understanding dated 22.09.2012 had been executed in between the Plaintiff and the Defendant No.1. The Plaintiff has deposited the original documents of title of his property with the financial institution in respect of the collateral security the facts of which are well aware to the Plaintiff and that the Plaintiff suppressing the same before this court for his wrongful gains. The Defendant No.1 is engaged in the business civil contracts, infrastructure projects and also various other civil related development works for which the Defendant No.1 requires large financial assistance from financial 12 Com.O.S.No.2463/2017 institutions/banks. The Plaintiff was approached by the Defendants on 22.09.2012 representing that, the Plaintiff has under taken to provide security to the full satisfaction of the financier and will resolve all financial issues, if any, pertaining to the properties described in the Schedule, there was no such understanding as alleged by the Plaintiff. The Deed of Memorandum of Understanding dated 22-09-2012 the Plaintiff herein has arrayed as the second party, the defendant No.1 herein has arrayed as the first party and one Mr. Suresh has named as third party. The real fact is that, on mediation of the above said Mr. Chava Suresh the Plaintiff himself has came forward on his own accord and offered to the Defendant No.1 herein to give the properties of the Plaintiff herein as collateral security to the Defendant No.1 herein and that in lieu of the said service of the Plaintiff the Plaintiff had requested the Defendant No.1 to give a sum of Rs.35,00,00,000/- to the Plaintiff as a refundable amount out of the loan amount and the Plaintiff had expressed to repay the said sum of Rs.35,00,00,000/- along with interest @ 4% Per Annum at monthly rests and agreed to pay interest @ 6% Per Annum if the interest is delayed by the Plaintiff and that in view of the above said words of the Plaintiff, the Defendant No.1 herein has agreed to use the properties of the Plaintiff herein as collateral 13 Com.O.S.No.2463/2017 security for availing of the loan from the financial institutions/banks in respect of the works of Defendant No. 1.
The Defendant further contention that the Plaintiff he himself offered the properties to keep them as collateral security with the financial institutions/banks for the Defendant No.1 expecting the above said Rs.35,00,00,000/-. At the instance of the Plaintiff as stated above the Defendant No.1 has agreed to use the property of the Plaintiff as collateral security for availing of loan from the financial institution/banks and that the above said Deed of Memorandum of Understanding dated 22.09.2012 was also executed to that effect. The Plaintiff is a learned man and doing business, the Plaintiff himself had come forward to deposit his property documents as collateral security, as he was getting the huge amount of Rs. 35,00,00,000. In view of the said understanding of the plaintiff of placing of his property documents for the purpose of collateral security, the Defendant No.1 has given to the Plaintiff the following amounts as under:
(1) A sum of Rs. 1,75,00,000/- vide Demand bearing No. 001413 dated 21.09.2012 drawn at Axis Bank, Bangalore Branch, drawn in the name of the Plaintiff herein and that after receiving the said amount Rs. 1,75,00,000/- on 22.09.2012 the 14 Com.O.S.No.2463/2017 above said Deed of Memorandum of Understanding has been executed by stipulating the terms and conditions therein.
(ii)On the date of execution of the above said Deed of Memorandum of Understanding dated 22.09.2012 the Defendant NO.1 has given a sum of Rs. 25,00,000/- to the Plaintiff vide cheque bearing NO. 000786 dated 22.09.2012 drawn at Axis Bank, Bangalore Branch, drawn in the name of the Plaintiff herein.
The Defendant No.1 further contended that the Deed of Memorandum of Understanding dated 22.09.2012, the State Bank of India has sanctioned the loan and that the Plaintiff he himself had deposited the title deeds of his property with the State Bank of India and executed the Deed of Memorandum Relating to Deposit of the title Deeds for Creation of Equitable Mortgage for Adhoc Cash Credit Limit on 24-01- 2013 by depositing of title deeds on 24-01-2013 the facts of which are very well known to the Plaintiff, but the Plaintiff has suppressed the same.
The Defendant NO.1 further contended that subsequently there was a huge down fall of infrastructure activities all over the country and there was a high hike of the prices in respect of cement, steel and wages etc, as such, the Defendant No.1 incurred huge losses in its entire business. The Defendant No.1 15 Com.O.S.No.2463/2017 submits that, due said down fall of infrastructure business not the Defendant No.1 but all other infrastructure companies have under huge losses, all these facts are very well known to the Plaintiff. The very back bone of the Defendant No.1 Company is its Infrastructure works which the Defendant No. 1 does in large scale in the country, this fact is well aware to the Plaintiff. Even the Defendant No.1 was in such a situation of its business troubles, to held the Plaintiff with the consent of the Plaintiff the Defendant No.1 has given refundable amounts to the Plaintiff on Different dates. The Defendant NO.1 had not taken any amounts from the Plaintiff and the Defendant No.1 has full- filled the terms and conditions of the said Deed of Memorandum Understanding dated 22.09.2012 as stated and narrated in the the fore gone paras of this Written Statement. The Plaintiff herein without repaying the above said amount of sum of Rs. 10,35,00,000/- and interest accrued to the said amount of Rs. 10,35,00,000/-, on the other hand the Plaintiff herein has got issued a notice dated 07-10-2013 addressing to the Defendant No.1 with all false averments therein. The letter dated 14-10- 2013 issued by the Defendant No.1 is denied and the Plaintiff is put to strict proof of the same. The Defendant No.1 has asked the Plaintiff to return the said sum of Rs. 10,35,00,000/- taken by the Plaintiff from the Defendant No.1 and on such repayment of the said sum of Rs. 10,35,00,000/- and its interest.
16Com.O.S.No.2463/2017 The Defendant NO.1 further contended that without repaying the above said amount of sum of Rs.10,35,00,000/- and interest accrued on the said amount, and without returning the cheques of the Defendant No.1 viz., (i) Cheque bearing No. 377399 date 24- 01-2013 drawn for a sum of Rs. 15,00,00,000/- of Bank of Bahrain & Kuwait and (ii) Cheque bearing No. 377398 date 31- 01-2013/drawn for a sum of Rs.18,00,00,000/- of Bank of Bahrain & Kuwait, which the Plaintiff herein had taken from the Defendant No.1 at the time of execution of the above said Deed of Memorandum of Understanding dated 22-09-2012, on the other hand, by suppressing the above said real facts the Plaintiff herein had filed a suit vide O.S. No. 9045 of 2013 on the file of the Hon'ble City Civil Judge, Bangalore against the Defendant No. 1 for Mandatory Injunction praying the court to direct the Defendant Nos 1 & 2 to handover the original documents of title of the suit schedule property. In OS. No. 9045 of 2013 the Plaintiff approached the Defendant No.1 and requested the Defendant No.1 to make effort for return of his property documents from the State Bank of India, the Defendant No.1 appraised with Plaintiff that, unless and until the Plaintiff repays the said sum of Rs. 10,35,00,000/- and interest accrued on the said amount to the State Bank of India, the said State Bank of India will not release the property documents to the Plaintiff and that the Defendant No.1 has also 17 Com.O.S.No.2463/2017 appraised with the Plaintiff that, unless and until the Plaintiff will repay the said sum of Rs.10,35,00,000/- and interest accrued on the said amount the Plaintiff cannot ask the said State Bank of India to release the documents, and that the Defendant No.1 has also asked the Plaintiff to repay the above said sum of Rs.10,35,00,000/- and interest accrued on the said amount to the Defendant No.1 or straight away to the State Bank of India and asked the Plaintiff to show proof of such payment of amounts, and that the Defendant No.1 herein has asked the Plaintiff to return the above said two cheques to the Defendant No.1. while the matter stood thus, the Plaintiff requested the Defendant No.1 to help the Plaintiff by giving some more amounts to the Plaintiff, and appraised with the Defendant No.1 that, if the Defendant No.1 helps the Plaintiff with that help the Plaintiff will come out from the clutches of his financial problems and the Plaintiff stated with the Defendant No.1 that, the Plaintiff will return all the entire amounts along with interest to the Defendant No.1 and requested the Plaintiff to go for execution of a fresh MOU so that the Plaintiff can show the same to his creditors and convince the creditors of the Plaintiff. At the said request of the Plaintiff, the Defendant No.1 trusted the said words of the Plaintiff and having a good intention towards the Plaintiff, the Defendant No.1 has again given the amounts to the Plaintiff as under:-
18Com.O.S.No.2463/2017 (1) A sum of Rs.2,00,00,000/- vide Demand Draft dated 28-05-2014, drawn at Punjab National Bank Bangalore, drawn in the name of the Plaintiff herein.
(ii) A sum of Rs.2,00,00,000/- vide Demand Draft dated 24-06-2014, drawn at State Bank pf India, CAG branch, Hyderabad, drawn in the name of the Plaintiff herein.
As on 24-06-2014 the Defendant No.1 has given to the Plaintiff herein in total a sum of Rs.14,35,00,000/-.
The Defendant No.1 further contended that subsequently trusting the Plaintiff, at the request of the Plaintiff the Deed of MOU dated 26-06-2014 was executed in between the Plaintiff and the Defendant No. 1 only. The Defendant No.1 signed the said Deed of MOU dated 26-06-2014 with an intention to help the Plaintiff and as a non-binding understanding between the Parties. The Defendant No. 1 submits that the MOU dated 26- 06-2014 is not binding as there is no agreement. Due to the downfall of infrastructure business the Defendant No.1 was not in position to give any further amounts to the Plaintiff herein and the Defendant No. has asked the Plaintiff herein to return the above said entire amount of Rs. 14,35,00,000/- and the interest on since from the taking of the said amounts to till the date of paying of the said amounts and that the Defendant No.1 has also asked the Plaintiff herein to return the above said two 19 Com.O.S.No.2463/2017 cheques at the earliest and expressed with the Plaintiff that, as and when the Plaintiff repays the said entire amount of Rs. 14,35,00,000/- and the interest on the said amounts to the said State Bank of India in to the said loan account the Defendant No.1 will ask the bank to release the property documents of the Plaintiff. without repaying the said amounts and without returning the said two cheques, subsequently the Plaintiff has again approached the Defendant No.1 and requested the Defendant No.1 to help the Plaintiff by giving some more amounts to the Plaintiff and he expressed to return the same along with interest along with the above said amounts. as the documents of the property are with the State Bank of India, the Defendant No.1 having an good intention to help the Plaintiff, the Defendant No.1 has again given refundable/returnable amounts to the Plaintiff which comes to a sum of Rs. 55,00,000/-. on on the request of the Plaintiff herein to help the Plaintiff herein the Defendant No.1 has again given a sum of Rs.5,00,000/- vide RTGS Dated 21-08-2017 from Syndicate Bank, Madhapur branch, Hyderabad of the Plaintiff to the A/c No. 10101010889 of Kotak Mahindra Bank(i.e., the then Ing Vysya Bank of the Plaintiff herein and help the Plaintiff monetarily. From 21-09-2012 to 21-08-2017 the Defendant No.1 has given in total a sum of Rs.14,95,00,000/- to the Plaintiff at the said request of the Plaintiff as stated the facts of which are 20 Com.O.S.No.2463/2017 more specifically narrated in the above said fore gone paras of this Written Statement.
The Defendant No.1 further contended that since from the date of taking of the above said amounts i.e., from 21-09-2012 to 21-08-2017 the Plaintiff has neither repaid even single rupee nor interest on the said amount to the Defendant No.1 herein. The Plaintiff has deliberately concealed these facts from this Hon'ble Court that the Plaintiff has not complied with his obligations under the MOU dated 22-09-2012. the Plaintiff with an ill intention to knock away and eat away the above said total sum of Rs. 14,95,00,000/- of the Defendant No.1 which the Plaintiff has taken from the Defendant No.1 herein as stated above, the Plaintiff has created and fabricated the story which the Plaintiff herein has averred in the Plaint of this suit for wrongful gains of the Plaintiff. Whatever the amounts the Defendant No.1 has taken from the State Bank of India the Defendant No.1 has to repay the same to the State Bank of India. It is further submitted that a part of the said loan amount has already been transferred to the account of Plaintiff. the above said total sum of Rs. 14,95,00,000/- are given by the Defendant No.1 to the Plaintiff out of the availed loan amounts which are taken by the Defendant No.1 from the said State Bank of India where the Plaintiff has placed and deposited his 21 Com.O.S.No.2463/2017 property title deeds for the collateral security. The Plaintiff is liable to return the above said total sum of Rs. 14,95,00,000/- along with interest. After giving the above said amounts the Defendant No.1 asked the Plaintiff to pay the above said total sum of Rs.14,95,00,000/- straight away to the credit of the State Bank of India from whom the Defendant No.1 has availed loan where the Plaintiff has handed over his property documents as collateral security. And that, the Defendant No.1 specifically stated with the Plaintiff that, as and when the Plaintiff will repay the above said total sum of Rs. 14,95,00,000/- to the said State Bank of India, then only the Defendant No.1 start to put forth its efforts in getting releasing of the property documents of the Plaintiff to the Plaintiff. The Defendant No.1 submits that, without repaying the above said total sum of Rs. 14,95,00,000/- to the State Bank of India or to the Defendant No.1 the Plaintiff herein playing the tricks in one or other way for his wrongful gains and that the Plaintiff arm twisting the Defendant No.1 for his said wrongful gains. The facts clearly narrate that, there is no fault on the part of the Defendant No.1 and the entire fault lies on the Plaintiff. The Defendants has not committed any breach in respect of the terms and conditions of the above said Deed of Memorandum Understanding dated 22-09-2012 and the Defendant No.1 has not committed any perpetrated breach as alleged by the 22 Com.O.S.No.2463/2017 Plaintiff. The Plaintiff himself has violated the terms and conditions of the above said Deed of Memorandum of Understanding dated 22-09-2012. After closing said O.S. No. 9045 of 2013 at request of the Plaintiff the Defendant No.1 herein has given huge amounts to the Plaintiff as stated above in the fore gone paras of this Written Statement by trusting the words of the Plaintiff.
The Defendant No.1 further contended that when the Defendant No.1 herein has not taken any amounts from the Plaintiff herein, the question of paying of interest to the Plaintiff herein by the Defendant No.1 or by the Defendant No.2 herein will not at all arise. With an intention of escaping from the clutches of liability of repaying of the above said total sum of Rs. 14,95,00,000/- (Rupees Fourteen Crores and Ninety Five Lakhs Only) and interest of the above said amounts the Plaintiff has filed the present suit for his wrongful gains.
The Defendant No.1 further contended that the Plaintiff is not entitled to any liquidated damage since the Plaintiff himself has not complied with the terms of MOU dated 22-09-2012. The MOU dated 22-09-2012, under which the Plaintiff has agreed to provide collateral security, provides for a dispute resolution mechanism. The Plaintiff could have pursued the remedy 23 Com.O.S.No.2463/2017 provided therein to resolve its alleged dispute instead of hurriedly approaching this Hon'ble Court. Since the Plaintiff has failed to pursue the course available to him in the aforesaid MOU, the suit is liable to be dismissed on this ground. The Plaintiff has entered into and Memorandum relating to deposit of title deeds dated 24th January, 2013 with the State Bank of India for deposit of the title documents of the subject property with the State Bank of India. The title documents are in the custody of the State Bank of India under an enforceable agreement executed and consented by the Plaintiff. The Plaintiff, having the knowledge of these facts, is misleading the Hon'ble Court by concealing these factual details. It is not liable to pay Rs. 481,42,500/- or any other sum of whatsoever nature to the Plaintiff. Further, the Defendant No. 1 is not liable to pay any interest on any amount alleged by the Plaintiff. The Plaintiff are also not admitted as true and Plaintiff is put to strict proof of the same. No cause of action has arisen for the filing of the above suit by the Plaintiff. Since no cause of action has arisen for the Plaintiff to file the present suit and this Hon'ble Court has no territorial jurisdiction, the suit is liable to be dismissed. Further, the suit is not within the prescribed period of limitation and therefore is liable to be dismissed on that ground also. under reply of this Written Statement is bad in law for non- joinder of proper and necessary parties i.e., the State Bank of 24 Com.O.S.No.2463/2017 India who had sanctioned the loan amounts in respect of mortgaging of the property of the Plaintiff with whom the Plaintiff has pledged and deposited his property documents as collateral security and who are in custody of the property documents of the Plaintiff. Hence, the defendant No.1 is prays to dismiss the suit.
4. The Advocate for the Plaintiff filed rejoinder stating that the Defendant company undertaken for construction of Metro line in Bangalore. The averments made in written statement the Defendant No.1 paid sum of Rs. 8,35,00,000/- is correct. The Defendant N.1 has not paid the amount as agreed to pay under the Memorandum of Understanding dated 22.09.2012. The Defendant himself admitted and entered into the second Memorandum of Mutual agreement dated 26.06.2014 and admitted the same before this court in O.S. No. 9045/2013. The Plaintiff has not undertaken to repay a sum of Rs. 10.35 crores with interest. The Defendants violated the terms and conditions of the document i.e., Memorandum of Understanding dated 22.09.2012 and the terms of compromise in the suit in O.S. No. 9045/2013 and mutual agreement dated 26.06.2014. The Plaintiff has not suffered any financial problem on the request of Defendant No.2 who gave the property as collateral security and entered into the Memorandum of Understanding and 25 Com.O.S.No.2463/2017 Mutual Agreement. The Defendant No.1 has not helped the Plaintiff and Defendant No.1 has misused the trust and faith of the Plaintiff Plaintiff and misused the plaintiff and obtained his property for collateral security and has not full-filled his obligations and solemn promise. Hence, he prayed to decree the suit.
5. Heard arguments and perused the records.
6. Based on the above pleadings, my predecessor in office has framed the following issues :-
1. Whether Defendants prove that MOU dated 26.06.2014 is not binding?
2. Whether Plaintiff is entitle to recovery suit claim amount from the Defendants with interest ?
3. Whether plaintiff is entitle for mandatory injunction is sought for ?
4. Whether suit bad for non-joinder of necessary parties ?
5. What decree or order?
7. My answer to above issues are as under:
26Com.O.S.No.2463/2017
1. Issue No.1 :- In the Negative.
2. Issue No.2 :- In the Partly Affirmative.
3. Issue No.3 :- In the Not survive for consideration
4. Issue No.4 :- In the Negative.
5. Issue No.5: As per final order, on the following:
REASONS
8. ISSUE No.1: Before going to the contrary facts, it is necessary to mention the admitted facts. The admitted facts are the Plaintiff is the absolute owner of the residentially converted properties measuring 14 acres 26 guntas consisting of 3 items which are as under:
(a) 28 guntas or 30492 sq.feets, in Sy no. 152/1A of Yelahanka Village, Yelahanka Hobli, Bangalore North Taluk.
(b) 8 acres 28 guntas or 378972 sq. feets in Sy No. 152/1B, 152/A, 152/2B, 152/3A, 152/3B, 152/4A, 152/4B, 152/5A, 152/5B, 152/6A, 152/6B, 152/7A, 152/7B and 152/10A and 152/10/B of yelahanka village, Yelahanka Hobli, Bangalore North Taluk.
(c) 5 acres 10 guntas or 228690 sq feets in Sy No. 153 of yelahanka village, yelahanka Hobli, Bangalore North Taluk, The aforementioned three 27 Com.O.S.No.2463/2017 properties are more fully described in the schedule collectively, The Plaintiff is in possession of the copies of title deeds. The original title deeds are not available with the plaintiff. The Plaintiff has in pursuance of a Memorandum of understanding between the Plaintiff and defendant No.1 dated 22.09.2012 has handed over the original documents of title to the Defendants.
9. The Defendant No.1 is engaged in the business of Civil contracts, infrastructure projects and also various other civil related developmental works for which it requires large financial assistance from financial institutions/banks. It is also admitted fact that the schedule property was offered as a collateral security to the first defendant. First Defendant agreed to use the property as collateral security for availing loan from financial institutions/Banks and in regard to the same terms and conditions were brought down and in view of the terms and conditions therein. The schedule property described as 'A' Schedule property was given as a collateral security for availing loan in respect of the works. That apart, the terms and conditions of Memorandum of Agreement were also brought into writing as per Ex.P.1. The Memorandum of Understanding- cum-Mutual Agreement is in force for a lock-in-period of 3 years 3 months. The terms and conditions are brought down in terms of the period subsisting in terms of the agreement. In the event of any breach of the terms of the conditions of the agreement, 28 Com.O.S.No.2463/2017 the agreement automatically gets cancelled and on such cancellation being undertaken, the original documents are to be returned.
10. It is also admitted facts that the Plaintiff has filed a suit in O.S. No. 9045/2013 against defendants before the City Civil Judge at Bangalore for decree of mandatory injunction directing the Defendants to handover the original documents of the title of the suit schedule property. The Hon'ble Court had issued notice to Defendants on 18.12.2013. The Defendants appeared before this court and engaged counsel on 07.10.2014. There afterwards there was amicable settlement of the lis between the Defendants filed memo reporting settlement. The memo reads as follows:
"The above said matter is settled out of the court. Hence, the settlement MOU dated 26.06.2014 is been submitting to the Hon'ble Court of the reference of the court. Hence, please accept the MOU dated 26.06.2014 and dismissed the case in the interest of justice."
11. This court by its order dated 10.10.2014 passed the orders as follows:
"Plaintiff filed I.A. under Order 23 Rule 1 of CPC Shri K.S.R. has no objection, hence IA under Order 23 Rule 1 of CPC is hereby allowed i.e., the suit of the Plaintiff is hereby dismissed as withdrawn with liberty to file fresh suit on the basis of same cause of action."29
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12. Before going to the merits of this case. It is proper to discuss about the maintainability of suit. It is an admitted fact that the Defendant is under the process of Liquidation, under the provisions of the Insolvency and Bankruptcy Code, 2016 and Mr. Ravi Sankar Devarakonda is appointed as the Liquidator by the NCLT, Kolkata by order dated 06.12.2018 under Section 33 of the IBC, 2016. It is also admitted fact that the authorised representative of liquidator examined as Dw.1. The Dw.1 has clearly stated that as per provisions of the IB Code, the liquidator, i.e., MR. Ravi Sankar Devarakonda was appointed by the NCLT, Kolkara vide order dated 06.12.2018 in CP (IB) 593/KB/2017 (State Bank of India vs. Coastal Projects Limited) and he commenced the process of liquidation of the Defendant No.1 company by taking necessary steps. Upon due notificaiton, the Liquidator received and adjudicated claims by various creditors and stakeholder. The valid claims made by the Stakeholders were accepted and invalid ones were rejected with reasons, and were subject to judicial scrutiny by the Hon'ble NCLT.
13. The Defendant has produced the certified copy of the order dated 03.02.2022 on I.A. No. 130/CB/2021 in CP (IB) No. 593/KB/2017 it reveals that I.A. No. 113 of 2021 is dismissed 30 Com.O.S.No.2463/2017 vide separate detailed order in consequence this petition is also dismissed.
14. Ex.D.3 certified copy of the order dated 03.02.2022 on I.A. No. 113/CB/2021 in CP (IB) No. 593/KB/2017 the order of the NCLT Cuttack Bench, in the matter of Insolvency and Bankruptcy coder 2016 Section 60 (5). The application under Section 60 (5) of the IBC read with Rule 11 of the NCLT Rules, 2016. It discloses that the corporate debtor availed a loan of Rs. 774.12 crore from the 1st Respondent financial creditor herein. The application herein is a personal guarantor for the corporate debtor, and the immovable property of the applicant is the collateral security for the said loan. Pursuant to the corporate debtor defaulting in repayment of the loan amount, the first respondent initiated the Section 7, IBC 2016 proceedings against the applicant. The Respondent NO.1 took possession of the immovable property of the applicant vide an order dated 03.08.2021 passed under Section 14, SARFAESI Act, 2002 by the CMM, Bengaluru. The appeal preferred by the applicant before the DRT-Bangalore under under Section 17, SARFAESI Act was dismissed on 04.10.2021. The first Respondent has taken steps to auction the mortgaged property under the SARFASESI ACT, 2002. Hence, the applicant has filed this petition under Section 60(5), IBC, 2016 seeking to quash the proceedings of 31 Com.O.S.No.2463/2017 auction and possession of the immovable property by the financial creditor, and further restraining it from dealing with it prior to the completion of liquidation process of the corporate debtor.
15. The NCLT has determined that the applicant personal guarantor herein, who is a stranger to the insolvency and bankruptcy proceedings pending between the financial creditor and corporate debtor before this tribunal, cannot invoke section 60(5) (c), IBC, 2016 to file this present petition, which therefore is neither maintainable nor sustainable before this tribunal.
16. Further, the notification S.O 4126 (E) dated 15.11.2019 specifically declares the application of part III of IBC to personal guarantors of corporate debtors. However, it is pertinent to state here that Section 243, IBC 2016 which repeals the PTA and PIA Acts, is yet to be notified. Thus, the insolvency proceedings initiated under the two acts are still permitted to be continued. Hence, there is no prohibition against the financial creditor from proceedings against the personal guarantors to recover the debt, other than by insolvency proceedings, in a regular civil suits or under the provisions of the RDB Act, 1993 or the SARFAESI ACT, 2002 or the Commercial Courts Act, 2015 based on the applicable pecuniary jurisdictions. The fundamental 32 Com.O.S.No.2463/2017 principle in civil jurisprudence is that institution of recovery suit/ proceedings is the rule and institution of insolvency proceedings is an exception. The recovery suit is only in respect of the debt, but an insolvency proceedings is in respect of the debtor. The order in a recovery suit is in personam, but an order in an insolvency proceeding is in rem. The insolvency proceedings can be initiated only when the debtor is unable to pay the debt owing to financial crunch meaning insolvency, and when it does not have the money to pay its debts or when the total debt exceeds its total assets. This it is only appropriate to institute recovery proceedings, when the debtor is reluctant to pay the debt albeit solvent with sufficient means to pay the debt.
17. Further, held that the Respondent/financial creditors has initiated auction proceedings against the immovable property of the applicant under the provisions of the SARFAESI ACT, 2002. The apex court in V. Ramakrishnan case Supra has categorically held that proceedings under the SARFAESI ACT are not proceedings under the IBC, 2016. Hence, there is no continue the SARFASI proceedings initiated by the respondent against the applicant and the said proceedings need not to be quashed.
18. Ex.D.4 order of the NCLT, CUTTACK Bench in CP(IB) No. 593/KB/2017 connected with TP No. 255/CTB/2019. The Appliant 33 Com.O.S.No.2463/2017 is a State Bank of India, the Defendant is a respondent. The petitioner has filed this application under Section 7 of the IBC, 2016 for initiating corporate insolvency process read with Rule 4 of the IBC, 2016 against the Defendant.
19. The Hon'ble NCLT has passed an order as under :
The petition filed by the financial creditor under Sec.7 of the Insolvency & Bankruptcy Code, 2016 is hereby admitted for initiating the Corporate Resolution Process and declare a moratorium and public announcement as stated in Sec. 13 of the IBC, 2016, The moratorium is declared for the purposes referred to in Sec 14 of the Insolvency & Bankruptcy Code, 2016. The IRP shall cause a public announcement of the initiation of Corporate Insolvency Resolution Process and call for the submission of claims under Sec. 15. The public announcement referred to in clause (b) of sub- section (1) of Insolvency & Bankruptcy Code, 2016 shall be made immediately.
Necessary public announcement as per Sec. 15 of the IBC, 2016 may be made.
Mr. Ravi Sankar Devarakonda, Registration No. IBBI/IPA- 001/IP- P00095/2017-2018/10195 of D 602, Prestige St. Johnswood Apartment, No.80, Tavarakere Main Road, Bangalore 560 029, email address [email protected] is appointed as Interim Resolution Professional for ascertaining the particulars of creditors and convening a meeting of Committee of Creditors for evolving a resolution plan.34
Com.O.S.No.2463/2017 The Interim Resolution Professional should convene a meeting of the Committee of Creditors and submit the resolution passed by the Committee of Creditors.
Let the certified copy of the order be issued upon compliance with requisite formalities and a copy of the order may also be sent to the applicant/financial creditor as well as corporate debtor and IRP through email.
List the matter on 17.01.2016 2018 for filing of the progress report."
20. This order is passed on 05.01.2018 and present suit is filed on 06.04.2017 it shows that on the date the above order, the present suit is pending before this court for adjudication.
21. The learned counsel for the Defendant argued that in view of the appointment of resolution profession/liquidator the suit of the Plaintiff is not maintainable is under the IBC Code.
22. The question before this court, whether the present suit is maintainable in view of appointment of liquidator under the provisions of IBC Act, 2016 Section 14 of IBC reads as under :
(1) Subject to provisions of sub-sections (2) and (3), on the insolvency commencement date, the Adjudicating Authority shall by order declare moratorium for prohibiting all of the following, namely:--35
Com.O.S.No.2463/2017
(a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority;
(b) transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein;
(c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;
(d) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of J3 the corporate debtor.
Provided that where at any time during the corporate insolvency resolution process period, if the Adjudicating Authority approves the resolution plan under sub- section (1) of section 31 or passes an order for liquidation of corporate debtor under section 33, the moratorium shall cease to have effect from the date of such approval or liquidation order, as the case may be.
Section 33(5) of IBC reads as undergone Section 33(5) stipulates that subject to Section 52, when a liquidation order has been passed, no Suit or other legal proceeding shall be instituted by or against the corporate debtor.
36Com.O.S.No.2463/2017 Provided that a suit or other legal proceeding may be instituted by the liquidator, on behalf of the corporate debtor, with the prior approval of the Adjudicating Authority.
Section 62 of IBC reads as under:
No civil court or authority shall have jurisdiction to entertain any suit or proceedings in respect of any matter on which National Company Law Tribunal or the National Company Law Appellate Tribunal has jurisdiction under this Code. Civil court not to have jurisdiction.
Section 231 of IBC reads as under
No civil court shall have jurisdiction in respect of any matter in which the Adjudicating Authority Adjudicating Authority or the Board is empowered by, or under, this Code to pass any order and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any order passed by such Adjudicating Authority Adjudicating Authority or the Board under this Code.
23. In the case of Chennai Metro Rail Limited, Represented By The Chief General Manager, v. Lanco Infratech Limited, Represented By the Liquidator Lanco House And Ors, The Hon'ble Court noted that According to Section 446 of the Companies Act, 1956, after the Official Liquidator was chosen to serve as the interim Liquidator, no further legal action may 37 Com.O.S.No.2463/2017 be taken against the company either new or pending-without the permission of the Company Court/Tribunal. Similar status has been upheld in accordance with Section 279 of the 2013 Companies Act. However, Section 33(5) of the IBC lacks the word"pending." The court also observed that Chapter II of the IBC deals with the Resolution Process in relation to a "corporate debtor," where the goal is to revive the corporate debtor by formulating a resolution plan, which the Adjudicating Authority and the committee of creditors must then authorise. Chapter III of the IBC deals with the liquidation process that takes place if a resolution plan is not developed within the required time frame or if a resolution plan is not authorised.
24. The objective of the liquidation process is to maximise the value of the corporate debtor's assets for the benefit of the numerous creditors and other parties involved in the company that is being liquidated. Chapter III of the IBC has no time constraints, unlike Chapter II. Therefore, in accordance with Section 33(5) of the IBC, the legislature wisely opted not to include "pending cases or judicial actions" in the scope of the moratorium. Relying on the language of Section 63 of the IBC, the court noted that the bar on the Civil Court is only to "entertain any suit or proceeding in respect of any matter on which NCLT has the jurisdiction under IBC". This would not 38 Com.O.S.No.2463/2017 apply to suits, which were already pending before the commencement of liquidation proceedings.
25. The court also mentioned Section 231 of the IBC, which, among other things, prohibits courts from issuing injunctions with regard to actions conducted in compliance with any orders made by the adjudicating authority. The intention is clearly evident in that the bar only applies to civil lawsuits brought after the Adjudicating Authority has issued an order. It was noted that the aforementioned prohibition under Sections 63 and 231 of the IBC would only apply to new lawsuits. Sections 63 and 231 of the IBC cannot be read in a manner so as to defeat the provisions of Section 33(5) of the IBC. The court, after analyzing the contentions made by both the parties and interpreting the statute, held that the bar under Sections 33(5), 63 and 231 of the IBC would not apply to the present suit and therefore, the proceedings is maintainable.
26. At the outset, the Relevant provisions of Section 13, Section 14, Section 33(5), Section 60(5), Section 63 and Section 231 of the IBC.
27. Section 33(5) of the IBC came up for consideration before the Madras High Court in Chennai Metro Rail Limited, 39 Com.O.S.No.2463/2017 Represented By The Chief General Manager v. Lanco Infratech Limited, Represented By the Liquidator Lanco House And Ors., 2020 SCC OnLine Mad 26397. Comparing Section 446 of the Companies Act, 1956 and Section 279 of Companies Act, 2013 with Section 33(5) of the IBC, the Madras High Court observed as under:
". Section 446 of the Company Act 1956 Act prohibited the commencement of any suit or legal proceeding when a winding up order is made. It also applied for the pending proceeding and the leave was required. Section 279 of the Companies Act 2013 also deals with the word „pendency‟ and this word is conspicuously absent in the main part of Section 33(5) and in the proviso of the IBC2016."
28. A similar view was taken by Kerala High Court in The Liquidator of The Corporate Debtor, Viz., Orieon Kuries And Loans Private Limited The State of Kerala And Ors. MANU/KE/1245/2022. It was specifically observed in the said judgment that unlike Section 14(1)(a) of the IBC, under Section 33(5) of the IBC there is no prohibition for continuance of already instituted suits and proceedings. The moment the liquidation proceedings commence, there would be a bar only in respect of fresh suits or proceedings in terms of Section 33(5) of the Code. However, the pending suits and proceedings 40 Com.O.S.No.2463/2017 shall continue. In view thereof, the Kerala High Court upheld the order passed by the Controlling Authority under the Minimum Wages Act, 1948 even though the same was passed during the liquidation process.
29. To appreciate the difference in the language of Sections 14 and 33(5) of the IBC it may be useful to refer to the scheme of the IBC in the context of the aforesaid Sections. Section 14 and Section 33 are part of two separate Chapters of IBC. Section 14 is part of Chapter II which deals with „Corporate Insolvency Resolution Process‟, whereas Section 33 is a part of Chapter III which deals with „Liquidation Process‟. Chapter II of the IBC deals with the Resolution Process in respect of a „corporate debtor‟, where the objective is to revive the corporate debtor by coming out with a resolution plan, which is to be approved by the committee of creditors and thereafter, by the Adjudicating Authority. Chapter III of the IBC deals with the liquidation process which comes into effect upon the failure to come out with a resolution plan within the prescribed time period or a resolution plan not being approved. The moratorium under Section 14 of the IBC comes into effect upon the Adjudicating Authority passing an order declaring a moratorium and continues till the completion of Corporate Insolvency Resolution Processs. Upon the approval of the resolution plan 41 Com.O.S.No.2463/2017 by the Adjudicating Authority or upon passing of a liquidation order under Section 33 of the IBC, the moratorium shall cease to have effect. After the Adjudicating Authority (NCLT) passes a liquidation order under section 33(4) of the IBC, a fresh moratorium in terms of Section 33(5) of the IBC comes into place.
30. The proviso to Section 33(5) of the IBC only uses the word „instituted‟, but does not use the word „pending‟. Further, in terms of the said proviso, even a fresh suit or legal proceedings may be instituted by the Liquidator with the prior approval of the Adjudicating Authority. So, unlike Section 14 of the IBC, under Section 33(5) of the IBC there is no absolute bar in a suit or legal proceedings continuing along with the liquidation proceedings.
31. A reading of Section 63 of the IBC would reveal that the bar on the Civil Court is only to „entertain any suit or proceeding in respect of any matter on which NCLT has the jurisdiction under this Code‟. This would not apply to suits, which were already pending before the commencement of liquidation proceedings. Section 231 of the IBC, inter alia states that no injunction shall be granted by a Court in respect of action taken in pursuance to any order passed by the 42 Com.O.S.No.2463/2017 Adjudicating Authority.
32. In my view, the aforesaid bar under Sections 63 and 231 of the IBC would only be in respect of fresh suits. Sections 63 and 231 of the IBC cannot be read in manner so as to defeat the provisions of Section 33(5) of the IBC.
33. In this regard i relied upon a decision in M/s. Tata Steel BSL Ltd., vs. Varsha W/o. Ajay Maheshwari, Hon'ble High court of Delhi held that "Therefore, the civil suit pending before the Trial Court cannot be extinguished merely because the resolution plan came into existence, which stood approved by the Adjudicating Authority as well as the Appellate Authority."
34. In view of the discussion above, I am of the considered view that the bar under Sections 33(5), 63 and 231 of the IBC will not apply to the present suit and therefore, the present suit is maintainable.
35. It is the case of the Plaintiff that, the Plaintiff and Defendant entered into Memorandum of Understanding dated 26.06.2014. The Plaintiff issued legal notice to Defendants on 03.02.2017 calling them to return the original documents. The 43 Com.O.S.No.2463/2017 legal notice issued to the Defendants served and no reply was received by the Plaintiff till then. The Defendants not complied the terms in the Memorandum of Understanding dated 26.06.2014 and legal notice dated 03.02.2017.
36. On the other hand the Defendant has taken a contention that the Plaintiff requested the Defendant No.1 to help the Plaintiff by giving some more amounts to the Plaintiff, and appraised with the Defendant No.1 that, if the Defendant No.1 helps the Plaintiff with that help the Plaintiff will come out from the clutches of his financial problems and the Plaintiff stated with the Defendant No.1 that, the Plaintiff will return all the entire amounts along with interest to the Defendant No.1 and requested the Plaintiff to go for execution of a fresh MOU so that the Plaintiff can show the same to his creditors and convince the creditors of the Plaintiff. The Defendant NO.1, at the request of the Plaintiff, the Defendant No.1 trusted the said words of the Plaintiff and having a good intention towards the Plaintiff, the Defendant NO.1 has again given the amounts to the Plaintiff of 4 crore. As on 24.06.2014 the Defendant No.1 has given to the Plaintiff herein in total a sum of Rs. 14,35,00,000/-. Subsequently, trusting the Plaintiff, at the request of the Plaintiff the Deed of MOU dated 26.06.2014 was executed in between the Plaintiff and the Defendant No.1 only. The 44 Com.O.S.No.2463/2017 Defendant No.1 signed the said Deed of MOU dated 26.06.2014 with an intention to help the Plaintiff and as a non-binding understanding between the parties. The Defendant No.1 the MOU dated 26.06.2014 is nor binding as there is no agreement.
37. During cross-examination of DW.1 admitted that inspite of admission of liability defendants have not complied the terms of notice, so the plaintiff had filed a suit before city civil court in O.S.No.9045/2013. During the pendency of the suit, the plaintiff and defendant entered into compromise by executing Memo of understanding cum mutual agreement dtd.26.06.2014. As per this mutual agreement dtd.26.06.2014 the plaintiff is not supposed to pay any interest on amount of Rs.14,35,00,000/-. defendants are agreed to pay the interest on balance amount of Rs.20,65,00,000/- and even defendants are not paid the interest also.
38. Perused the Ex.P.5, Deed of Memorandum of under standing-cum-mutual agreement dated 26.06.2014 it discloses that the Plaintiff and Defendant entered into this agreement. This documents also indicates that in continuation of Deed of Memorandum of Understanding dated 22.09.2012. The first party shall pay the balance amount of Rs. 20,65,00,000/- with in a period of 6 months from the date of this MOU. The Defendant 45 Com.O.S.No.2463/2017 shall pay an interest at 18% per annum on the balance sum of Rs. 20,65,00,000/- and in the event if the first party fails to handover the property documents to the 2 nd party as agreed upon under clause 5 of this MOU, the first party shall continue to pay interest at 18% to the second party.
39. It pertaining to note that the Defendant has not denied the existence and contents of the Memorandum of Agreement. From Ex.P.4 the order sheet of O.S. 9045/2013 it discloses that the parties have entered into compromise between Plaintiff and Defendant on the basis of MOU dated 26.06.2014.
40. From looking to any angle of this case it is clearly shows that the Defendant has entered in the Memorandum of Understanding dated 26.06.2014 and admitted to pay remaining balance amount of Rs. 20,65,00,000/- and also agreed to pay interest at the rate of 18% per annum on remaining balance amount. The memorandum of Understanding is binding upon the Defendant. Hence, the claim of the Plaintiff is maintainable in the present proceedings. Hence, i answer Issue No.1 in the Negative.
46Com.O.S.No.2463/2017
41. Issue No.3 : The plaintiff prayed relief of mandatory injunction directing the Defendants to hand over the original documents mentioned in schedule 4 of the title in respect of the schedule immovable properties to the custody of the plaintiff. In the event of the Defendants voluntarily failing to hand over the original documents of title pertaining to the schedule immovable properties to the plaintiff in pursuance of the direction in the form of a mandatory injunction, permit the plaintiff to seek the assistance of the bailiff of this court or a commissioner of this court to effect seizure of the documents and on such seizure, to collect the documents at the hands of this court through the officer of this court.
42. During cross-examination of Dw.1 the counsel of the Plaintiff suggested that in S.A. No. 384/2022, the plaintiff settled the matter by paying amount of Rs.172.00 crores under one time settlement and SBI has given NOC to the effect of releasing the schedule property after payment of Rs.172.00crores by the plaintiff. Under these circumstances, seeking a relief of Mandatory injunction does not arise.
43. Further, during the course of argument the counsel for the Plaintiff stated that the Sl No.1 relief of this suit is not survive for consideration it become infructuous. Under these circumstances, Issue No.3 is not survive for consideration.
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44. Issue No.2: As above discussed, in this case it an admitted fact that on 22.09.2012, the plaintiff and have entered into a Memorandum of Understanding by giving assurance that the plaintiff has to hypothecate/provide collateral security against the availment of loan form the SBI a sum of Rs. 150 crores and also admitted fact that locking period of 3 years 3 months as such memorandum of understanding cum mutual agreement entered between the plaintiff and Defendant No.1 and in terms of the agreement the said agreement automatically get cancelled as such the Defendant has to return the original documents but the Defendant has not complied with the terms and conditions. The Plaintiff has filed this suit in O.S. No. 9045/2013 for seeking direction to the Defendant to handover the original document and it is also admitted fact that the Defendant entered appearance on 07.10.2014 thereafter there was an amicable settlement between the parties in which the Defendant has filed a memo for settlement on the basis of the memo and also IA under order 23 Rule 1 of CPC the Hon'ble City Civil court has passed order by dismissing the suit as withdrawn with liberty to file a fresh suit on the basis of the same cause of action. A fresh memorandum of understanding has entered between the Plaintiff and the Defendant No.1 on 26.06.2014.
48Com.O.S.No.2463/2017
45. The Defendant has produced the application filed by t he Plaintiff before NCLT under Section 60 (5) of IBC it discloses that the petition is filed against the SBI and liquidator Ravi Sankar Devarakonda, the prayer of the plaintiff is seeking the quash the proceedings of auction and possession of the immovable property by the financial creditor, and further restraining it from dealing with it prior to completion of liquidation process of the corporate debtor. Admittedly, this application is came to be dismissed.
46. The prayer of the present suit is mandatory injunction against the Defendant, to direct the Defendant to handover the original documents of title pertaining to the schedule immovable property and recovery of sum of Rs. 4,81,42,500/-. This relief is not claimed before IRP. Under these circumstances, matter is not considered to be sub-judice. The Dw.1 has voluntarily stated that because the plaintiff has not claimed any liability before liquidator.
47. Ex.P.1 MOU discloses that in lieu of cooperation provided by the Plaintiff providing the schedule property as collateral security for availing the loan by the Defendant in respect of its works. and after availing the said loan from the financial institutions/Banks. The Defendant shall pay a sum of Rs.
49Com.O.S.No.2463/2017 35,00,00,000/- as per the mentioned in clause 2. It also discloses that the on same day the Defendant has made an advance of Rs. 1,75,00,000/- vide Demand draft No. 001413 dated 21.09.2012 issued by Axis Bank and Rs. 25,00,000/- vide cheque no 000786 dated 22.09.2012 drawn at Axis bank, to the Defendant and the Plaintiff accepts the same. It is also discloses that the Defendant has issued a cheques dated 24.01.2013 cheque No. 377399 for Rs. 15 crore and 31.01.2013, Cheque No. 377398 for Rs. 18 crore towards payment as per clause 2 of MOU. It also discloses that the lock in period of 3 years and 3 months.
48. As above discussed the Plaintiff has filed a suit before the City Civil court in O.S. No. 9045/2012, the defendant filed memo stating that there is compromise in between the Plaintiff and Defendant on the basis of MOU dated 26.06.2014 and Deed of Memorandum of Understanding-cum mutual agreement is executed on 26.06.201. As per the memorandum of understanding the Defendant has agreed to pay the balance amount of Rs. 22,65,00,000/- to be paid to the plaintiff. Further the Defendant has on this day paid a sum of Rs. 2,00,00,000/- by way of Demand draft dated 24.06.2014. The Defendant shall pay the balance amount of Rs. 20,65,00,000/- with in a period of six month from the date of this MOU to the Plaintiff. It has 50 Com.O.S.No.2463/2017 been mutually agreed between both the parties (Plaintiff and Defendant) that the interest payable by the Plaintiff to the Defendant as per clause 20 of the MOU dated 22.09.2012 shall stand void until the receipt of the entire amount by the Plaintiff as per clause 2 of this MOU. Further discloses that the Defendant shall compensate the Plaintiff by the way of interest on the unpaid sums due to the Plaintiff. The Defendant out of the total consideration of Rs. 35 crore has paid a sum of Rs. 14,35,00,000/- vide cheques, demand draft, Rtgs etc., The Defendant shall pay an interest at 18% per annum on the balance sum of Rs. 20,65,00,000/-. The interest period shall be considered from the previous MOU dated 22.09.2012 and until the date of payment of the balance amount to the Plaintiff.
49. It is an admitted fact that as on 24.06.2014 the Defendant No.1 has made payment of Rs. 14,35,00,000/- to the Plaintiff. Further, the DW.1 also admitted that the defendant no.1 company has paid only Rs.14,35,00,000/-crores to the plaintiff as per the Ex.P.1 there was a locking period for 03 years 03 months. The defendant has to repay the loan and return the documents of the schedule 1 and 2 properties to the plaintiff. It is proved that the defendant no.1 has not paid balance of Rs.20,65,00,000/- to the plaintiff. Hence, the defendants are violated the terms and conditions of the Ex.P.1. So, the plaintiff 51 Com.O.S.No.2463/2017 caused notice to the defendants. The 1 st defendant and 2nd defendant has given a reply to the said notice and admitted the liability. It is also admitted fact that the defendants are agreed to pay the interest on balance amount of Rs.20,65,00,000/- and the defendants are not paid the interest also.
50. As per the MOU at Ex.P.5 clause 4 the Defendant shall pay the interest at the rate of 18% per annum on the balance sum of Rs. 20,65,00,000/-. The interest period shall be considered from the previous MOU dated 22.09.2012 and until the date of payment of the balance amount to the Plaintiff.
51. The defendant is liable to pay the interest on the amount of Rs.20,65,00,000/- i.e. till the date of filing the suit amounting to Rs.19,16,42,500/- at the rate of interest 21%. The plaintiff claimed amount of Rs.4,81,42,500/- after deducting amount of Rs.14,35,00,000/-. From 22.01.2017 to 22.03.2017 sum of Rs. 72,27,500/- towards interest as to be paid the total amount of Rs. 4,81,42,500/-. The Plaintiff claimed interest at the rate of 21% per annum from the date of suit till realization. The interest claimed by the Plaintiff is not a contractual rate of interest. As per Memorandum of Understanding dated 26.06.2014 defendant agreed to pay the interest at 18% per annum. Hence, the Plaintiff is entitle to claim future interest at 52 Com.O.S.No.2463/2017 the rate of 18%. From the above discussion I hold that the Defendant is liable to pay 4,81,42,500/- with interest at the rate of 18% per annum form the date of suit till the realization.
52. As above discussed due to IBC proceedings the Defendant has declared as corporate debtor, Ravi Sankar Devarakonda, as appointed as a liquidator and he has prosecuted the suit on behalf of the Defendant No.1. In view of the above findings, therefore, the Liquidator is directed to consider to pay the suit claim amount of Rs. 4,81,42,500/- with interest at 18% per annum from the date of suit till realization. Hence, I answer Issue No. 2 is in Partly Affirmative.
53. Issue No.4 : The Defendant has taken a contention that the suit bad in law for non-joinder of necessary and proper party i.e., State Bank of India who had sanctioned the loan amounts in respect of mortgaging the property with whom the plaintiff has pledged and deposited his property documents as a collateral security and who are in custody of the property documents of the Plaintiff.
54. It is an admitted fact that during pendency of this suit the Plaintiff has paid the amount to the SBI and got release the title documents from the SBI. This suit is filed by the Defendant on 53 Com.O.S.No.2463/2017 the basis of memorandum of understanding entered between the Plaintiff and Defendant No.1 on 26.06.2014 at Ex.P.5. So, under these circumstances, SBI is not a necessary or proper party to this suit for final adjudication of this case. Hence, the suit is not bad in law for non-joinder of necessary party. Hence, I hold that the suit is maintainable. In view of the above discussion, I answer this issue in the negative.
55. Issue No.5 : -Therefore, I proceed to pass the following Order.
ORDER The Suit of the Plaintiff is decreed in part.
The Plaintiff is entitled to recover 4,81,42,500/- together with interest @ 18% per annum from the date of suit till realization.
The Liquidator is directed to comply the decree.
Draw Decree accordingly.
54Com.O.S.No.2463/2017 The Office is directed to send copy of this Judgment to Plaintiff and Defendants to their email ID as required under Order XX Rule 1 of the Civil Procedure Code as amended under Section 16 of the Commercial Courts Act.
(Dictated to the Stenographer, typed by him directly on computer, verified and then pronounced by me in open Court on this the 29th Day of June 2024).
(SUMANGALA S BASAVANNOUR), LXXXII Addl.City Civil & Sessions Judge, Bengaluru.
ANNEXURE
LIST OF WITNESSES EXAMINED ON BEHALF OF THE
PLAINTIFF
P.W.1 K.V. Jayaprakash
LIST OF DOCUMENTS EXHIBITED ON BEHALF OF THE PLAINTIFF Ex.P.1 Original Memorandum of Agreement dated 22.09.2012.
Ex.P.2 Certified copy of plaint of O.S. No.
9045/2013.
Ex.P.3 Certified copy of memo filed in O.S. No.
55
Com.O.S.No.2463/2017
9045/2013.
Ex.P.4 Certified copy of the order sheet in O.S.
No. 9045/2013.
Ex.P.5 Original deed of memorandum of
understanding cum-mutual agreement.
Ex.P.6 Office copy of legal notice dated
03.02.2017.
Ex.P.6(a) Two postal receipts.
Ex.P6(b) Two postal acknowledgments.
Ex.P.7 Bank Statement.
Ex.P.8 Certified copy of WP NO. 9800/2022
LIST OF WITNESSES EXAMINED ON BEHALF OF THE
DEFENDANT
D.W.1 Shreerama Satish
LIST OF DOCUMENTS EXHIBITED ON BEHALF OF THE DEFENDANT Ex.D.1 Letter of authority Ex.D.2 C/C of order dtd.03.02.2022 on IA No.130/CB 2021 in CP(IB)No.593/KB/2017 Ex.D.3 C/C of order dtd.03.02.2022 on IA No.113/CB 2021 in CP(IB)No.593/KB/2017 Ex.D.4 C/C of order dtd.05.01.2018 passed by NCLT in CP(IB)No.593/KB/2017 Ex.D.5 C/C of order dtd.06.12.2018 passed by NCLT in CP(IB)No.593/KB/2017 (SUMANGALA S BASAVANNOUR), LXXXII Addl.City Civil & Sessions Judge, Bengaluru.