Delhi District Court
Branch Office vs Srs Enterprises on 15 March, 2022
DLCT010070692020
IN THE COURT OF DISTRICT JUDGE (COMMERCIAL
COURT)-01,
CENTRAL, TIS HAZARI COURTS, DELHI
PRESIDED BY: MR. BHARAT PARASHAR
IN THE MATTER OF:
OMP (I) (COMM) NO. 164/20
TATA CAPITAL FINANCIAL SERVICES LIMITED
REGISTERED OFFICE AT :
11TH FLOOR, TOWER A, PENINSULA BUSINESS PARK
GANPATRAO KADAM MARG, LOWER PAREL
MUMABI-400013
BRANCH OFFICE :
7TH FLOOR, VIDEOCON TOWER, BLOCK E1,
JHANDEWALAN EXTENSION, NEW DELHI-110055
...PETITIONER
VERSUS
1. SRS ENTERPRISES
23, MOHAN PLAZA, RAMTE RAM RAOD,
GHAZIABAD, UTTAR PRADESH-201001
ALSO AT :
SADDIQ NAGAR, KHASRA NO. 10678
VIKAS NAGAR, MEERUT ROAD,
GHAZIABAD, UTTAR PRADESH-201003
2. MR. NITIN MATHUR
H. NO. 16, SECTOR-1, CHIRANJIV VIHAR,
GHAZIABAD, UTTAR PRADESH - 201002
3. MS. JYOTSNA MATHUR
H. NO. 16, SECTOR-1, CHIRANJIV VIHAR,
OMP (I) (Comm) No. 164/20 Page No. 1 of 32
GHAZIABAD, UTTAR PRADESH - 201002
.........RESPONDENTS
DATE OF INSTITUTION : 22.10.2020
DATE OF RESERVING JUDGMENT : 21.02.2022
DATE OF PRONOUNCEMENT OF : 15.03.2022
ORDER
ORDER
1. Petitioner Tata Capital Financial Service Ltd. has filed the present petition u/s 9 Arbitration and Conciliation Act, 1996 against respondent No.1 M/s SRS Enterprises, its proprietor Mr. Nitin Mathur, respondent no.2 and against Mrs. Jyotsna Mathur, respondent No.3 as a guarantor, seeking directions to the respondents to furnish security/bank guarantee towards repayment of a loan amount of Rs. 98,41,395.94/-.
2. Briefly stated the necessary facts as are required for the disposal of present petition are as under:
It has been stated that respondent no.1 M/s SRS Enterprises through its proprietor Mr. Nitin Mathur approached the petitioner company for financial assistance, to avail a channel finance loan for its business. A loan application dated 18.09.2017 was accordingly submitted and the respondent no.3 Mrs. Jyotsna Mathur in her personal and individual capacity stood as a guarantor for due repayment of the loan amount. Petitioner company accordingly sanctioned a loan for an amount of Rs. 90,00,000/- vide sanction letter dated 19.09.2017.OMP (I) (Comm) No. 164/20 Page No. 2 of 32
3. Necessary documents dated 25.09.2017 such as Chanel Finance Agreement, Power of Attorney, agreement, letter of undertaking-cum-indemnity bond, deed of hypothecation, irrevocable power of attorney and net worth affidavit, were accordingly executed between the parties.
4. It has been stated that subsequently pursuant to request made by respondent no.1 firm through respondent no.2 vide letters dated 25.09.208 and 21.12.2018 the channel finance facility was extended from time to time. Thereafter upon submission of a loan application dated 12.03.2019 the loan facility was renewed by the petitioner company vide sanction letter dated 22.03.2019 for a sum of Rs. 90,00,000/- and the respondents on this occasion executed a loan-cum-guarantee agreement dated 04.05.2019 and net worth affidavit dated 04.05.2019. A renewal affidavit dated 04.05.2019 was also submitted by the respondents reiterating the outstanding amount of INR 90,00,000/- as on 03.03.2019.
5. It has been further stated that the petitioner company had accordingly disbursed all the amount to respondents in accordance with the said channel finance facility/revised facility. However, the respondent no. 1 and 2 are stated to have defaulted in making repayment of the due amount along with interest, additional penal interest and other lawful charges, etc. despite repeated requests and reminders from the petitioner company. Finally, the petitioner company issued a loan recall notice dated 12.05.2020 calling upon the respondents to make payment and OMP (I) (Comm) No. 164/20 Page No. 3 of 32 also inter alia invoking arbitration Clause XV of the Channel Finance Agreement and Clause 12 of the loan-cum-guarantee agreement.
6. It is in the aforesaid factual context that the present petition u/s 9 Arbitration & Conciliation Act,1996 has been moved with the following prayer clause:
a) That pending the arbitral proceedings, making of the arbitral award and until final execution of the arbitral award, the Respondents jointly and /or severally be ordered and directed to either furnish the security and / or bank guarantee in favour of the Petitioner towards a sum of INR 98,41,395.94/- (Indian Rupees Ninety Eight Lakhs, Forty One Thousand, Three Hundred, Ninety Five and Paisa Ninety Four only) being the amount due and payable as on 21.08.2020 together applicable and additional interest till payment and /or realization and other expenses, costs, charges etc. due and payable to the Petitioner in terms of the said Financial Facility ;
b) That pending the arbitral proceedings, making of the arbitral award and until final execution of the arbitral award, the Respondents, their agents/s, servant/s, and any third person/s claiming through them be restrained by an order or injunction of this Hon'ble Court from in any manner selling, transferring, disposing of and/or alienating or encumbering or mortgaging or charging or parting with possession of or transferring, or inducing anyone else into or creating any right, title, interest or license in favour of anyone else in respect of properties not mortgaged with the petitioner and all the movable assets including stock and trade and immovable assets disclosed by the respondents pursuant to the direction of this Hon'ble Court, as well as disclose all assets on affidavit including books of accounts/ balance sheets for OMP (I) (Comm) No. 164/20 Page No. 4 of 32 last three years, bank account, fixed deposit statements etc.
c) That pending the arbitral proceedings, making of the arbitral award and until final execution of the arbitral record, a Court receiver or any other fit and proper person be appointed as Receiver under Order XL Rule 1 of Code of Civil Procedure 1908 by this Hon'ble Court, with a specific direction to the Court Receiver to take forcible physical possession of the properties not mortgaged with the petitioner, hereinabove and all the movable assets including stock and trade and immovable assets disclosed by the respondents pursuant to the directions of this Hon'ble Court, with police assistance, if necessary and also with the power to sell the said property by public auction or private treaty and appropriate the sale proceeds towards the outstanding loan of the Respondents;
d) That pending the arbitral proceedings, making of the arbitral award and until final execution of the arbitral award, the Respondents be restrained from leaving the country without the permission of this Hon'ble Court and /or be directed to deposit their respective passports in this Hon'ble Court ;
e) ad-interim and interim reliefs in terms of prayers (a) to (d) hereinabove ;
f) for costs of this Petition.
Proceedings before the Court:
7. After notice of the present petition was issued to respondents a joint-reply dated 18.12.2020 was filed on behalf of all the three respondents. In their reply, the respondents not only disputed the claim of Petitioner company stating that not only the amount in question was transferred to M/s 3M India Ltd. unauthorizedly but even the said company despite receiving an OMP (I) (Comm) No. 164/20 Page No. 5 of 32 amount of Rs. 90,32,840/- as per the statement filed by petitioner has failed to supply any goods to the respondents. Accordingly, the responsibility/liability of the respondents to repay any such loan amount has been denied. However, learned counsel for the respondents also raised a number of preliminary objections submitting that the courts at Delhi does not have the necessary territorial jurisdiction to entertain the present petition. It has also been submitted that not only Mr. Sushant Sharma who has filed the present petition is not the authorized competent person on behalf of the petitioner company to file the present petition but even otherwise the power of attorney dated 27.05.2019 executed in this regard is not a legal and valid document. The Attestation by Notary Public of the affidavits filed along with the petition was also stated to be defective in the eyes of law and the petition was thus prayed to be dismissed. It has also been submitted that despite issuance of notice dated 12.07.2020 the arbitration proceedings have not yet commenced and thus on account of the said fact also the present petition being highly belated cannot be entertained and especially in view of Section 9(3) of the Arbitration and Conciliation Act, 1996. The petition is also stated to be barred by Section 9(2) of the Act.
8. In support of his submissions Ld. Counsel for respondents placed reliance upon the following case law:
1. AVM Sales Corporation Vs. Anuradha Chemicals Pvt. Ltd., (2012) 2 SCC 315
2. Ashok Traders & Anr. Vs. Gurumukh Das Saluja & Ors., (2004) SC 1433 OMP (I) (Comm) No. 164/20 Page No. 6 of 32
3. Nirav Deepak Modi Vs. Najoo Behram Bhiwandiwala & Ors., (2012) Bombay 50
4. Pratima Chowdhury Vs. Kalpana Mukherjee & Anr., (2014) SC 1304
5. D.H.M. Framji and Others V s. The Eastern Union Bank Ltd., AIR (38) 1951 Punjab 371
9. Petitioner company thereafter filed its rejoinder and wherein all the averments made in the petition were vehemently denied. It has been stated that the respondents are trying to raise frivolous technical objections and are also raising issues which this court cannot decide in the present proceedings.
10. Ld. Counsel for petitioner further placed reliance on the following case law in support of his submissions:
1. Indus Mobile Distribution Private Limited Vs. Datawind Innovations Private Limited, (2017) 7SCC 678
2. United Shippers Limited Vs. Tata Power Company Limited, MANU/MH/14672010
11. Arguments in the present matter were thereafter heard. Both the parties also filed written submissions in support of their arguments.
12. During the course of arguments initially the petitioner company submitted that they are pressing their petition only qua prayer clause (b) which read as under: -
OMP (I) (Comm) No. 164/20 Page No. 7 of 32b) That pending the arbitral proceedings, making of the arbitral award and until final execution of the arbitral award, the Respondents, their agents/s, servant/s, and any third person/s claiming through them be restrained by an order or injunction of this Hon'ble Court from in any manner selling, transferring, disposing of and/or alienating or encumbering or mortgaging or charging or parting with possession of or transferring, or inducing anyone else into or creating any right, title, interest or license in favour of anyone else in respect of properties not mortgaged with the petitioner and all the movable assets including stock and trade and immovable assets disclosed by the respondents pursuant to the direction of this Hon'ble Court, as well as disclose all assets on affidavit including books of accounts/ balance sheets for last three years, bank account, fixed deposit statements etc.
13. However, subsequently an application under Section 151 CPC was moved by Ld. Counsel for petitioner submitting that he is pressing his petition qua Prayer Clause (a) and (c) also in addition to prayer clause (b).
14. Reply to the said application dated 01.02.2022 was filed by Ld. Counsel for respondents followed by rejoinder to the application by Ld. Counsel for petitioner.
15. It has been stated by Ld. Counsel for petitioner that initially the petitioner company was of the opinion that the interim relief sought under prayer clause (b) of the main petition would be sufficient to safeguard the interest of the petitioner company but as respondents have failed to disclose their assets by way of an affidavit and petitioner has also been unable to OMP (I) (Comm) No. 164/20 Page No. 8 of 32 procure any details of the assets of the respondents so the petitioner company was constrained to seek relief qua prayer clause (a) and (c) also in addition to prayer clause (b).
16. In support of his submissions Ld. Counsel for petitioner has relied upon the case i.e. K.K. Velusamy Vs. N. Palanisamy, (2011) 11SCC 275
17. In the reply filed to the application u/s 151 CPC, Ld. Counsel for respondents has vehemently opposed the request made by petitioner company to consider their petition qua clause
(a) and (c) also in addition to prayer clause (b). It has been stated that since the petitioner company has not taken any steps till date for initiation of arbitral proceedings despite letter of invocation having been issued on 12.05.2020, so the said fact in itself was sufficient to dismiss the present application. It has been also submitted that since arguments in the petition were already heard when Ld. Counsel for petitioner had specifically stated that they are pressing their petition qua prayer clause(b) only so after closing of the arguments and fixing of matter for pronouncement of orders, no such prayer can be now made. The application has thus been prayed to be dismissed.
18. In support of his arguments Ld. Counsel for respondents placed reliance upon the following case law:
1. Arjun Singh Vs. Mohindra Kumar & Ors, AIR 1964 SC 993
2.Mohd. Rafi Vs. Union of India & Anr, 113 (2004) OMP (I) (Comm) No. 164/20 Page No. 9 of 32 DLT 245
3. Rabiya Bi Kassim M Vs. The Country-wide Consumer Financial Service Limited, Bangalore, 2004( 4) Kar. L.J. 189 (DB) Appreciation of arguments:
19. At the outset, I may state that in the present proceedings this Court is not required to go into the merits or demerits of the claim of the petitioner company as regard its right to recover the impugned loan amount from the respondents, since the same will be a matter of adjudication during the arbitration proceedings. At the same time this Court is also not required to look into the claims of respondents that the said loan amount was unauthorizedly released to any third party or as to in what circumstances the said third party did not supply any goods to the respondents and also whether in those circumstances respondents owe any duty or responsibility to repay the loan amount or not.
20. However, in order to succeed in the present petition under section 9 for grant of an interim relief, It is well settled that the petitioner company has to first establish a good prima facie case in its favour beside also showing that the balance of convenience lies in favour of grant of interim relief and that irreparable injury or loss will be caused to the applicant in case no such interim relief is granted.
21. The ambit and scope of the connotation "prima facie" case has been explained by the Hon'ble Supreme Court in the case OMP (I) (Comm) No. 164/20 Page No. 10 of 32 Martin Burn Ltd. v. R.N Banerjee [AIR 1958 SC 79.] interalia as under:
"A prima facie case does not mean a case proved to the hilt but a case which can be said to be established if the evidence which is led in support of the same were believed. While determining whether a prima facie case had been made out the relevant consideration is whether on the evidence led it was possible to arrive at the conclusion in question and not whether that was the only conclusion which could be arrived at on that evidence. It may be that the tribunal considering this question may itself have arrived at different conclusion. It has, however, not to substitute its own judgement for the judgement in question. It has only got to consider whether the view taken is a possible view on the evidence on the record."
22. Thus, the first requirement is to see whether the petitioner company has been able to establish a prima facie case in its favour warranting passing of an order by way of interim measure, or not. Certainly, the petitioner is not required to conclusively prove its case in the present proceedings but has only to show that there is a substantial question to be investigated and that matters should be preserved in status quo or that its interest be protected until the question can be finally disposed of during the ensuing arbitral proceedings.
23. The petitioner is next required to show that irreparable injury will accrue to it if the injunction is not granted, and that there is no other remedy open to it by which the petitioner could protect itself from the consequences of the apprehended injury. In OMP (I) (Comm) No. 164/20 Page No. 11 of 32 the leading case of American Cyanamid Co. v. Ethicon Ltd. [1975 AC 396.], the House of Lords pronounced the principle as under:
"the governing principle is that the court should first consider whether, if the plaintiff were to succeed at the trial in establishing his right to a permanent injunction, he would be adequately compensated by an award of damages for the loss he would have sustained as a result of the defendant continuing to do what was sought to be enjoined between the time of the application and the time of the trial. If damages in the measure recoverable at common law would be adequate remedy and the defendant would be in financial position to pay them, no interlocutory injunction should normally be granted, however strong the plaintiff's claim appeared to be at that stage. If on the other hand, damages would not provide an adequate remedy for the plaintiff in the event of his succeeding at the trial, the court should then consider whether, on the contrary hypothesis that the defendant were to succeed at the trial in establishing his right to do that which was sought to be enjoined, he would be adequately compensated under the plaintiff's undertaking as to damages for the loss he would have sustained by being prevented from doing so between the time of the application and the time of the trial. If damages in the measure recoverable under such an undertaking would be an adequate remedy and the plaintiff would be in a financial position to pay them, there would be no reason upon this ground to refuse an interlocutory injunction."
24. Lastly, the balance of convenience must also be in favour of granting the injunction.
In Dalpat Kumar v. Prahlad Singh [(1992) 1 SCC OMP (I) (Comm) No. 164/20 Page No. 12 of 32 719] , the Hon'ble Supreme Court stated that the court while granting or refusing to grant injunction should exercise sound judicial discretion to find the amount of substantial mischief or injury which is likely to be caused to the parties, if the injunction is refused, and compare it with that which is likely to be caused to the other side if the injunction is granted. If on weighing competing possibilities or probabilities of likelihood of injury and if the court considers that, pending the suit, the subject-matter should be maintained in status quo, an injunction would be issued. Thus, the court has to exercise its sound judicial discretion in granting or refusing the relief of ad interim injunction pending the suit."
25. However, before proceeding to consider the entitlement of petitioner company to obtain any interim relief as prayed for in the petition, the preliminary objections raised by Ld. Counsel for respondents especially as regard the issue of territorial jurisdiction is required to be first considered.
Territorial jurisdiction
26. As regard the issue of territorial jurisdiction of this Court to try the present petition it has been submitted by Ld. Counsel for respondents that admittedly the agreements placed on record by the petitioner company were executed at Ghaziabad and that the respondents have also their place of business at Ghaziabad only. It has also been submitted that the registered office of petitioner company is in Mumbai and even though they may have a branch office at Jhandewalan, New Delhi but admittedly no cause of action took place in Delhi. It has been thus submitted that this Court has no territorial jurisdiction to try the present OMP (I) (Comm) No. 164/20 Page No. 13 of 32 case.
27. In support of his submissions, Ld. Counsel has placed reliance upon the case AVM Sales Corporation Vs. Anuradha Chemicals Pvt. Ltd. (supra).
28. On the other hand, Ld. Counsel for petitioner has vehemently opposed the said submission stating that both the parties have categorically agreed in the two agreements that the place of arbitration shall be Delhi / Chennai / Mumbai / Kolkata and thus as petitioner company has opted to file the present petition in Delhi so as per the agreement entered into by the parties this Court has the necessary territorial jurisdiction to try the present case.
My discussion
29. At the outset, I may state that the submissions raised by Ld. Counsel for respondents disputing the territorial jurisdiction of this Court are completely devoid of any merits. The law in this regard is no longer res integra. In the case Indus Mobile Distribution Pvt. Ltd. Vs. Datawind Innovations Pvt. Ltd. & Ors., (Supra), the Hon'ble Supreme Court after discussing the well settled position of law by referring to various case law observed in para 20 and 21 as under:
20. A conspectus of all the aforesaid provisions shows that the moment the seat is designated, it is akin to an exclusive jurisdiction clause. On the facts of the present case, it is clear that the seat of arbitration is OMP (I) (Comm) No. 164/20 Page No. 14 of 32 Mumbai and Clause 19 further makes it clear that jurisdiction exclusively vests in the Mumbai courts.
Under the Law of Arbitration, unlike the Code of Civil Procedure which applies to suits filed in courts, a reference to "seat" is a concept by which a neutral venue can be chosen by the parties to an arbitration clause. The neutral venue may not in the classical sense have jurisdiction - that is, no part of the cause of action may have arisen at the neutral venue and neither would any of the provisions of Section 16 to 21 of the CPC be attracted. In arbitration law however, as has been held above, the moment "seat" is determined, the fact that the seat is at Mumbai would vest Mumbai courts with exclusive jurisdiction for purposes of regulating arbitral proceedings arising out of the agreement between the parties.
21. It is well settled that where more than one court has jurisdiction, it is open for parties to exclude all other courts. For an exhaustive analysis of the case law, see Swastik Gases Private Limited v. Indian Oil Corporation Limited, (2013) 9 SCC 32. This was followed in a recent judgment in B.E. Simoese Von Staraburg Niedenthal and Another v. Chhattisgarh Investment Limited, (2015) 12 SCC 225. Having regard to the above, it is clear that Mumbai courts alone have jurisdiction to the exclusion of all other courts in the country, as the juridical seat of arbitration is at Mumbai. This being the case, the impugned judgment is set aside. The injunction confirmed by the impugned judgment will continue for a period of four weeks from the date of pronouncement of this judgment, so that the respondents may take necessary steps under Section 9 in the Mumbai Court. Appeals are disposed of accordingly.
OMP (I) (Comm) No. 164/20 Page No. 15 of 3230. Further in the case BGS SGS SOMA JV Vs. NHPC Ltd. (2020) 4SCC 234, the Hon'ble Supreme Court reiterated the aforesaid position while again referring to the aforesaid position of law as was laid down in the Indus Mobile Distribution Pvt. Ltd. case. After examining various judgements on the issue of jurisdiction in Arbitration Matters, the Hon'ble Court observed in para 82 as under:
82. On a conspectus of the aforesaid judgments, it may be concluded that whenever there is the designation of a place of arbitration in an arbitration clause as being the "venue" of the arbitration proceedings, the expression "arbitration proceedings" would make it clear that the "venue" is really the "seat" of the arbitral proceedings, as the aforesaid expression does not include just one or more individual or particular hearing, but the arbitration proceedings as a whole, including the making of an award at that place. This language has to be contrasted with language such as "tribunals are to meet or have witnesses, experts or the parties" where only hearings are to take place in the "venue", which may lead to the conclusion, other things being equal, that the venue so stated is not the "seat" of arbitral proceedings, but only a convenient place of meeting. Further, the fact that the arbitral proceedings "shall be held" at a particular venue would also indicate that the parties intended to anchor arbitral proceedings to a particular place, signifying thereby, that that place is the seat of the arbitral proceedings. This, coupled with there being no other significant contrary indicia that the stated venue is merely a "venue" and not the "seat" of the arbitral proceedings, would then conclusively show that such a clause designates a "seat" of the arbitral proceedings.
In an international context, if a supranational body of rules is to govern the arbitration, this would further be an indicia that "the venue", so stated, would be the OMP (I) (Comm) No. 164/20 Page No. 16 of 32 seat of the arbitral proceedings. In a national context, this would be replaced by the Arbitration Act, 1996 as applying to the "stated venue", which then becomes the "seat" for the purposes of arbitration.
31. Thus, in view of the aforesaid well settled position of law, the case A.V.M. Sales Corporation Vs Anuradha Chemicals Pvt. Ltd. relied upon by Ld. Counsel for respondents is not at all applicable in the facts and circumstances of the present case. The said case in fact deals with the issue of territorial jurisdiction in regular Civil Suits wherein Section 20 CPC and with special reference to Section 20(c) CPC was considered while deciding the issue of territorial jurisdiction. However, the position as discussed above is different in Arbitration Matters. Here the agreement of the partiers is supreme. Thus, as the parties in the present case have already decided the place of Arbitration and the petitioner company has chosen to file the present petition at one of the said places, so this court has got the necessary territorial jurisdiction to try the present petition, irrespective of the fact whether any cause of action has arisen in Delhi or not. Clearly in these circumstances Section 20(c) CPC has no application to the present proceedings. It is the agreement between the parties which is the primary determining factor under Arbitration and Conciliation Act, 1996 for deciding the issue of territorial jurisdiction. Moreover, if the arbitration agreement between the parties mentions four places as the place of arbitration, then the place where either of the party to the arbitration agreement first in point of time invokes the jurisdiction of a Court then the said place will have the necessary territorial jurisdiction.
OMP (I) (Comm) No. 164/20 Page No. 17 of 3232. In the case in hand also the arbitration agreement in schedule-I both under the initial channel finance agreement dated 21.02.2017 and the subsequent extension /renewal of the said agreement mentions Delhi / Mumbai / Chennai / Kolkata as the four places of arbitration. In fact, the renewal /extension of channel finance facility in schedule-I also carry a tick mark on 'Delhi'. Thus, irrespective of the fact whether any cause of action accrued at any of the aforesaid four places, or not, the parties specifically agreed that the place of arbitration shall be either of the four places as mentioned in the agreement. Thus, initiation of present proceedings in Delhi by the petitioner company stands well covered under the impugned agreement(s). However, having now invoked the jurisdiction of Delhi Courts the petitioner company cannot now initiate any such/similar proceedings at any of the other three places. Even in the petition in para 22 it has been stated that the petitioner has not filed any other petition before this Court or any other Court seeking the same or similar relief.
33. In view of my aforesaid discussion, it is thus clear that this Court by virtue of the arbitration agreement(s) entered into between the parties certainly has the necessary territorial jurisdiction to try the present petition.
Absence of proper notarization on the affidavits filed by petitioner.
34. Ld. Counsel for respondents has submitted that as the OMP (I) (Comm) No. 164/20 Page No. 18 of 32 necessary notarization certificate has not been annexed with the affidavits filed along with the petition and the affidavits also does not mention the register number of the Notary Public, so the said affidavits cannot be relied upon, being invalid in law.
35. On the other hand, Ld. Counsel for Petitioner Company has disputed the said claim stating that the affidavits have been properly notarized.
36. In this regard, I may state that though the affidavits filed along with the petition carry the stamp and signatures of Sh. S.P. Verma, Notary Public with his registration number but no register number of the register has been mentioned. However, at this stage of the matter when this Court is only to see as to whether the Petitioner Company has been able to establish a prima facie case or not, so the Court need not to go into such technical objections, if the document in question otherwise inspires confidence. However, as already stated in the present proceedings this court has only to see whether the petitioner has been successful in making out a prima facie case in its favour warranting grant of an interim injunction, or not.
37. Ld. Counsel for respondents has however placed reliance upon the case Nirav Deepak Modi Vs. Najoo Behram Bhimandiwala and Ors.(Supra) and also Pratima Chowdhary Vs Kalpana Mukherjee and another (supra) to contend that absence of mandatory particulars in notarized document may rule out notarization of the document. It has been submitted that as per OMP (I) (Comm) No. 164/20 Page No. 19 of 32 the statutory requirement, it is mandatory for a notary to mention the serial number of notarization including the register number.
38. However, a perusal of the said two cases show that absence of such a certificate by notary public or non-mentioning of registration number may only raise doubts about the authenticity of the attestation and thereby making the execution of said documents suspicious. Thus even in those circumstance also the documents in question cannot be simply brushed aside at this stage of the matter on the basis of suspicion only and more so if the overall facts and circumstances of the case otherwise inspires confidence in facilitating this court to form a prima facie view of the matter. Certainly, the disputes between the parties are to be adjudicated by the Ld. Arbitrator and thus in the overall facts and circumstances of the case, the mere absence of register number of the notary and certificate from the notary public on the impugned notarized affidavits filed in support of the petition are not of such a nature which may lead me to disbelieve the execution of said affidavits filed in support of the petition, at least for a prima facie view.
Authority executed in favour of Sh. Sushant Sharma
39. Yet, another objection taken by Ld. Counsel for respondents is that the authority executed in favour of Mr. Sushant Sharma by Ms. Sarita Kamath is not valid in the eyes of law in as much as Ms. Sarita Kamath was not entitled under the attorney executed in her favour by the Board of Directors of petitioner company to appoint anyone else. It has also been stated OMP (I) (Comm) No. 164/20 Page No. 20 of 32 that nothing has been averred in the plaint as to whether Mr. Sushant Sharma is an employee of petitioner company or not.
40. In this regard, I may again state that the said submission of Ld. Counsel of respondents is also devoid of any merits. The power of attorney executed by Board of Directors of petitioner company in favour of Ms. Sarita Kamath dated 15.04.2015 clearly authorizes her under clause 20 to appoint and authorize under a letter of authority or a power of attorney any other person(s) as her own substitute in case the attorney considers that by doing so, the interest of the company shall be served better, more efficiently and more extensively. Thus, it is clear that Ms. Sarita Kamath was very well authorized by the Board of Directors to appoint any other person(s) as her substitute in case she considered that by doing so the interest of company will be served better, more efficiently and more extensively. Thus, prima facie I do not find anything illegal or irregular in filing of the present petition by Mr. Sushant Sharma by virtue of the powers vested in him by way of power of attorney dated 27.05.2019 executed by Ms. Sarita Kamath. In fact, along with the attorney the I-card of Mr. Sushant Sharma issued by the petitioner company has also been annexed and the attorney also clearly mentions that Mr. Sushant Sharma is an employee of the company, functioning in the union territory of Delhi. Thus the contention of Ld. Counsel for respondents that it is not clear from the petition that Mr. Sushant Sharma is an employee of the petitioner company, or not.
OMP (I) (Comm) No. 164/20 Page No. 21 of 3241. Ld. Counsel for respondents has also argued that the seal of petitioner company as has been affixed on the attorney executed in favour of Ms. Sarita Kamath is also not as per the Articles of Association of petitioner company.
42. I may again state that the Board Resolution dated 28.01.2015 passed by the Board of Directors of the petitioner company as has been placed on record, clearly states that the common seal of the company be affixed on the power of Attorney to be issued in favour of Ms. Sarita Kamath in accordance with provisions of the Articles of Association of the company in the presence of any Director, the Chief Financial Officer or the Company Secretary. Further, the power of attorney executed in favour of Mr. Sarita Kamath also clearly states that the common seal of Petitioner Company has been affixed in the presence of Mr. Praveen P. Kadle, Managing Director of the company. These facts thus clearly belies the claim of Ld. Counsel for respondents that the seal of the company has not been affixed as per the provisions of Articles of Association of the petitioner company.
43. In these facts and circumstances, I may state that the case D.H.M. Framji and Others V s. The Eastern Union Bank Ltd., (Supra) relied upon by Ld. Counsel for respondents is of no help, even if, the impugned power of attorney executed in favour of Ms. Sarita Kamath or the one executed by her in favour of Mr Sushant Sharma are strictly construed. I may again state at the cost of repetition that in the present proceedings this court has to OMP (I) (Comm) No. 164/20 Page No. 22 of 32 only see as to whether the Petitioner Company has been able to establish a prima facie case in its favour or not, for the material issues shall be adjudicated during the course of arbitral proceedings only.
44. Yet another argument of Ld. Counsel for respondents is that there were two separate agreements entered into between the parties and thus common arbitration proceedings could not have been invoked by the petitioner company under the two different agreements.
45. On the other hand, Ld. Counsel for petitioner has relied upon the case United Shippers Limited Vs. Tata Power Company Limited; MANU/MH/1467/2010 to argue that common arbitration proceedings can be initiated in the facts and circumstances of the present case.
46. I may however again state that this objection of Ld. Counsel for respondents is also devoid of any merits in as much as from a perusal of the petition and the documents filed along with, it is clear that the subsequent extension letter for channel finance facility or the Loan Application later on submitted and the subsequent Loan cum Guarantee Agreement so executed were though by way of execution of fresh documents, but they clearly mentioned that the same is in extension of initial channel finance agreement. Thus, prima facie it is clear that the arbitration clause, be it in the initial agreement or in the subsequent agreements were between the same parties and in OMP (I) (Comm) No. 164/20 Page No. 23 of 32 respect of same channel finance facility as was initially extended by the petitioner company to the respondents. Moreover during the course of arbitral proceedings, the respondents will be well within their rights to raise all such objections for a decision by the Arbitral Panel.
47. Ld. Counsel for respondents has also submitted that the petitioner company has not yet initiated the arbitration proceedings and thus they are not entitled to any relief under the present petition.
48. In this regard it will be pertinent to mention that though Section 9(2) Arbitration and Conciliation Act, 1996 provides that where before the commencement of arbitration proceedings a court passes an order for any interim measure of protection under sub section (1) the arbitral proceedings shall be commenced within a period of ninety days from the date of such order or within such further time as the court may determine. However, section 9 nowhere provides any time limit for initiation of arbitration proceedings before the passing of any order under Section 9 by the Court. Though certainly the petitioner company is expected to initiate the arbitration proceedings at the earliest but the present petition under Section 9 cannot be dismissed or rejected on the ground that the petitioner company has not yet initiated the arbitration proceedings despite filing of the section 9 petition.
49. Even the case Firm Ashok Traders and Anr. Vs. Gurmukh OMP (I) (Comm) No. 164/20 Page No. 24 of 32 Das Saluja and Ors., (Supra) relied upon by Ld. Counsel for respondents also states that the petitioner company must be able to satisfy that the arbitral proceedings are actually contemplated or manifestly intended and are positively going to commence within a reasonable time. It however further states that what a reasonable time is, will depend upon the facts and circumstances of each case and the nature of interim relief sought.
50. Ld. Counsel for petitioner has however submitted that the petitioner company bonfidely intends to initiate the arbitral proceedings and they were in the mean time making efforts to secure the huge amount so financed to the respondents by way of the present petition.
51. It is thus clear that there is no fixed time under the law within which the arbitral proceedings ought to have been started from the date of filing of a petition under Section 9 of the Arbitration and Conciliation Act, 1996 except of course the law of limitation, lest the claim may become time barred. However, in the overall facts and circumstances of the case, I prima facie do not find any reason to doubt the bonafide of the petitioner company in being not interested to initiate the arbitral proceedings.
52. At this stage, it will also be pertinent to mention that Hon'ble Supreme Court in "Arcelor Mittal Nippon Steel India Ltd. Vs. Essar Bulk Terminal Ltd." (Supra) has even observed that if a section 9 petition is pending consideration before the OMP (I) (Comm) No. 164/20 Page No. 25 of 32 Court then even if the arbitral proceedings have commenced then also the said petition ought to be considered and necessary orders for grant of relief as prayed for in the petition may be passed, if made out.
53. Thus, it is clear that the present petition is clearly maintainable in the overall facts and circumstances of the case.
54. As regard the argument of Ld. Counsel for respondents that ld. Counsel for petitioner cannot be now permitted to turn around after conclusion of initial arguments to argue that his petition may also be considered with respect to prayer clause (a) and (c) also in addition to prayer clause (b), I may state that the same also does not hold ground in the overall facts and circumstances of the case.
55. The case Arjun Singh Vs. Mahendra Kumar (Supra), relied upon by Ld. Counsel for respondents pertained to an application under Order IX Rule 7 CPC seeking setting aside of the ex-parte proceedings having been moved after the entirety of the hearing of the suit was complet and the Court had adjourned the matter for pronouncement of judgment.
56. The case Mohd. Rafi Vs. Union of India & Ors. (Supra) also relied upon by Ld. Counsel for respondents pertained to revocation of the authority of an Arbitrator by Union of India after final hearing in the matter was over. The Hon'ble Court certainly observed that the hiatus between the event when OMP (I) (Comm) No. 164/20 Page No. 26 of 32 arguments were concluded and fixing the matter for pronouncement of final orders is only notational and subsequent revocation of the authority of arbitrator cannot dis-entitle him from pronouncing the award / orders.
57. In the case Rabiya Bi Kasim M Vs. The Country-wide Consumer Financial Service, Bangalore, the Hon'ble High Court of Karnatka made similar observations that when the matter has been finally heard and posted for judgment than nothing is required to be done by the Court except to pronounce the judgment.
58. Certainly, in the present matter also at the time of initial arguments Ld. Counsel for petitioner submitted that he is pressing the petition qua prayer clause (b) only but subsequently upon realizing that respondents have not filed any affidavit of their assets as was prayed for in prayer clause (b) a request was made by way of an application u/s 151 CPC that the petition may be considered qua prayer clause (a) and (c) also in addition to prayer clause (b).
59. Ld. Counsel for petitioner on the other hand has however while relying upon the case K.K. Velusamy Vs. N. Palanisamy (Supra), has submitted that in order to achieve the ends of justice or if interest of justice requires the Court to do something or take note of something, the discretion to do some acts does not dis- appear even if arguments in the matter have been heard and the case has been reserved for judgment.
OMP (I) (Comm) No. 164/20 Page No. 27 of 3260. However, a conspectus of the aforesaid case law clearly brings out the preposition that the power of the Court to do substantial justice in the overall facts and circumstances of the case does not disappear upon conclusion of hearing of arguments in a matter and while fixing the matter for pronouncement of orders. The Court has to ensure that in the overall facts and circumstances of the case substantial justice is done as regard the rights and liabilities of the party and the same cannot be denied merely on such nature of technical objections. This aspect becomes all the more important when a meaningful reading of the pleadings of the parties show that the substantial transaction of extending the channel finance facility by the petitioner company to the respondents is not primarily in dispute. Thus, keeping in view the overall facts and circumstances of the case, I am of the considered opinion that in order to do substantial justice to the rights of both the parties, it will be in the interest of justice to allow the impugned application u/s 151 CPC moved by Ld. Counsel for petitioner to also consider the present petition for prayer clause (a) and (c) in addition to prayer clause (b).
61. Ld. Counsel for respondent has also submitted that the certificate u/s 65B of Indian Evidence Act filed along with the statement of account by the respondent company is not as per the requirement of section 65B of Indian Evidence Act. In support thereof he has placed reliance upon the case Anvar P.V. Vs. P.K. Basheer, AIR 2015 SC180 and the case Arjun Pandit Rao Khotkar Vs. Kailash Kushanrao Gorantyan & Ors. 2019 SCC OMP (I) (Comm) No. 164/20 Page No. 28 of 32 Online SC 1553
62. In response thereto Ld. Counsel for petitioner submitted that the certificate dated 19.10.2020 u/s 65B of Indian Evidence Act fulfills all the necessary requirements of Section 65B of Indian Evidence Act.
63. In this regard, I may state that while there cannot be any dispute with the preposition laid down in the two cases by Hon'ble Supreme Court but it will be pertinent to mention that though prima facie an affidavit u/s 65B Evidence Act has been filed by petitioner in support of the computerized statement of account but it is also equally well settled that such a certificate u/s 65B Evidence Act is primarily required to be filed at the time of tendering of the document in question in evidence. Reference in this regard can be made to a judgment of Hon'ble Delhi High Court in the case Kundan Singh Vs. State (2015) SCC OnLine 13647. Even otherwise prima facie I do not find anything either in the impugned certificate u/s 65B of Indian Evidence Act filed on record by Ld. Counsel for petitioner or in the statement of account filed along with it which may lead me to doubt its veracity or correctness. Nothing else has been either argued or alleged as regard the correctness or otherwise of the various entries made in the said Statement of Account. Moreover, even if respondents have any objection as regard the various entries of the statement of Account then all such objections can be very well raised before the Arbitral Penal during the course of arbitration proceedings.
OMP (I) (Comm) No. 164/20 Page No. 29 of 3264. Coming now to the merits of the present petition, I may state that a bare perusal of the reply filed by the respondents clearly shows that the execution of various documents in connection with channel finance facility so extended to respondents by the petitioner company has not been prima facie disputed. What has been argued is that the funds were released under the agreement to M/s 3M India Ltd. and who in turn did not supply the necessary goods to the respondents and thus the respondents are not liable to pay the said amount. However, as already mentioned the said issue or other ancillary issues arising there from are clearly subject matter of adjudication by the Arbitral Panel during the course of arbitration proceedings and this Court cannot go into the said issues in the present proceedings.
65. However, from the overall facts and circumstances, it is prima facie clear that a sum of Rs. 90 lakh was extended to the respondents under the channel finance facility/agreement and which amount was not repaid by them. It is also prima facie clear that while the said facility was extended to respondent no. 1 and 2 i.e. SRS Enetripises and its proprietor Mr. Nitin Mathur, the respondent no. 3 Ms. Jyotsna Mathur stood guarantor towards repayment of the said money. Certainly, the petitioner company will be liable to prove the various aspects of the said facility so extended to the respondents during the course of arbitral proceedings but I am of the considered opinion that in view of the overall facts and circumstances of the case, the petitioner OMP (I) (Comm) No. 164/20 Page No. 30 of 32 company has been successful in establishing a prima facie case in its favour in the present proceedings and as against the respondents.
66. Certainly, the balance of convenience also lies in favour of petitioner company in as much as the amount sought to be recovered by it needs to be prima facie secured. It is also clear that the petitioner company will suffer an irreparable loss in case the amount sought to be recovered is not secured.
67. In view of my aforesaid discussion, I am thus of the considered opinion, that it will be in the interest of justice, if respondents are jointly and severally directed to furnish a security either by way of a demand draft or a bank guarantee in favour of the petitioner company for a sum of Rs. 98,41,395.94/- valid till the period of ninety days from the date of this order. It is further directed that such security either by way of a demand draft or a bank guarantee shall be furnished to the petitioner company within four weeks from the date of this order. However, any further extension/renewal of the said security so ordered to be furnished by the respondents shall be subject to further orders of The Arbitral Panel, if any passed under section 17 of the Arbitration and Conciliation Act,1996.
68. In view of the fact that necessary security either by way of a demand draft or a bank guarantee has been directed to be furnished by respondents so no need arises for either appointment of any Court Receiver to take physical possession of OMP (I) (Comm) No. 164/20 Page No. 31 of 32 the property of respondents as prayed for in clause (c) of prayer clause or directing respondents to furnish an affidavit disclosing their assets which has not been mortgaged with petitioner company as prayed for in clause (b) of the prayer clause.
69. In the facts and circumstances of the case the parties shall bear their respective costs.
70. Petition accordingly stands disposed off.
71. File be consigned to Record Room.
Pronounced in open Court on 15.03.2022 (Bharat Parashar) District Judge (Commercial Court)-01, Central, Tis Hazari Courts,Delhi.
OMP (I) (Comm) No. 164/20 Page No. 32 of 32