Bombay High Court
Catalyst Tursteeship Ltd vs World Crest Advisors Llp And Ors on 8 February, 2023
Author: R. I. Chagla
Bench: R. I. Chagla
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
INTERIM APPLICATION NO.17490 OF 2022
IN
COMMERCIAL SUIT NO.189 OF 2022
Catalyst Trusteeship Limited ..Applicant-Defendant No.1.
In the matter of
World Crest Advisors LLP ..Plaintiff
vs.
Catalyst Trusteeship Limited & Ors. ..Defendants
....
Mr. J. P. Sen, Senior Advocate a/w. Mr. Shyam Kapadia, Ms. Gathi Prakash,
Ms. Nidhi Asher, Ms. Arushi Poddar i/b Cyril Amarchand Mangaldas for
the Applicant/Defendant No.1.
Mr. Navroz Seervai, Senior Advocate a/w. Ms. Gulnas Mistry, Pavitra Pillay,
Mr. Subit Chakrabarti and Antara Kalamki i/b ANB Legal for Respondent
in IA No.17490/2022 and for the Plaintiff in Commercial Suit
No.189/2022.
Ms. Tanya Mehta a/w. Vaibhavi Bhalerao i/b DSK Legal for Defendant
No.3.
Mr. Sayeed Mulani a/w. Shobhana Waghmare i/b Mulani & Co. for
Defendant Nos.4 to 9
....
CORAM: R. I. CHAGLA, J.
DATE : 8th FEBRUARY, 2023.
ORDER:-
By this Interim Application, the Applicant/Defendant No.1 has sought return of plaint for presentation before the Court in which the suit should have been instituted.
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2. Mr. Sen, learned Senior Counsel for the Applicant/Defendant No.1 has referred to the plaint as amended. His submission is that the plaint as amended could not have been filed in this Court as the challenge in the amended plaint is to the Deeds of Pledge which is apparent from the cause of action stated in clause 30 of the plaint read with the prayers as amended. He has submitted that the cause of action as set out in the plaint is a challenge to the Contract/Deed of Pledge by which the suit shares had been pledged by Defendant Nos.4 to 9 to Defendant No.1 for securing the facilities granted by Defendant No.2 to Defendant Nos.4 to 9 and subsequent transfer of shares in favour of Defendant No.2 by Defendant No.1. Though in paragraph 30 of the plaint it is stated that substantial part of the cause of action has arisen within the territorial jurisdiction of this Court, the Deed of Pledge, which is annexed at Exhibit C-2 to the plaint and which the Plaintiff seeks to declare as void, provides in clause 26 that each obligor which includes the Applicant/Plaintiff agrees that the Court/Tribunals set out in Schedule III shall have exclusively jurisdiction to settle any dispute which may arise out of or in connection with the Deed of Pledge. Accordingly, any suit, action or proceedings referred to as the proceedings arising out of or in connection with the Deed may be brought in the relevant Court. In Schedule III of the Deed of Pledge and, particularly, in clause 9 thereof details of relevant jurisdiction has been provided in which relevant courts/Tribunals are Courts/Tribunals at New Delhi, India.
3. Mr. Sen has submitted that it is settled law as laid down by the ::: Uploaded on - 17/02/2023 ::: Downloaded on - 03/06/2023 10:18:00 ::: rsk 3 1-IA-L-17490-22.doc Supreme Court in A. B. C. Laminart Pvt. Ltd v. A. P. Agencies ,1 that where the jurisdiction clause is clear and unambiguous, specific accepted notions of contract would bind the parties. The other courts should avoid exercising jurisdiction, where the jurisdiction clause confers exclusive jurisdiction on a particular Court. Thus, the Court which is conferred exclusive jurisdiction under the contract has jurisdiction to entertain the suit. He has submitted that in the present case, the Delhi Court will have exclusive jurisdiction as provided under the jurisdiction clause in the Deed of Pledge which is clear and unambiguous. The Defendants have branch offices in Delhi and hence the Delhi Courts otherwise would have jurisdiction.
4. Mr. Sen has also placed reliance on other decisions of the Supreme Court and this Court which are to the same effect. These are Hamil Era Textiles Ld. V. Puromatic Filters (P ) Ltd. 2, Shriram City Union Finance Corporation Ltd. vs. Rama Mishra3 and Traxpo Enterprises Pvt. Ltd. vs. Kolmar Group AG4 . He has also relied on one of the recent decision of the Supreme Court viz.,M/s. Exl Careers and Anr. vs. Frankfinn Aviation Services Private Limited 5, wherein the Supreme Court has considered an Application under Order VII Rule 10 in the light of jurisdiction clause which provides that only courts in Delhi shall have exclusive jurisdiction to settle all disputes and differences arising out of the agreements. The Supreme Court by relying upon its prior decision in 1(1989) 2 SCC 163 2 (2004) 4 SCC 671 3 (2002) 9 SCC 613 4 (2016) 6 Bom CR 312 5 Civil Appeal No.2904 of 2020 ::: Uploaded on - 17/02/2023 ::: Downloaded on - 03/06/2023 10:18:00 ::: rsk 4 1-IA-L-17490-22.doc Swastik Gases (P) Ltd. vs. Indian Oil Corpn. Ltd 6 and State of West Bengal vs. Associated Contractors7, held that presentation of the plaint in a Court contrary to the exclusion clause could not be said to be proper presentation before the Court having jurisdiction in the matter. He has also relied upon decisions on severability of the jurisdiction clause viz., Shin Satellite Public Co. Ltd. vs. Jain Studios Ltd .8 . Clause 25 of the Pledge Deed provides that each provision contained in the Deed is severable and distinct. However, it would not be necessary to consider this clause as Mr. Seervai appearing for the Plaintiff has considered this clause to be not relevant for the purpose of his response to the Application.
5. Mr. Seervai, learner Senior Advocate for the Plaintiff in counter submission has referred this Court to various paragraphs of the plaint as amended. In particular, he has referred to the opening paragraphs of the plaint which proceeds on the premise that the Plaintiff is entitled to 44,00,54,852 shares of Defendant No.3 and to the general property in the shares and also all rights flowing therefrom. He has further referred to the averments made in the plaint with regard to the declaration sought that the Plaintiff is the owner of the suit shares pledged by Defendant Nos.4 to 9 and two other companies with Defendant No.1 and the cause of action is for declaration of the Plaintiff as owner as well as other consequential relief restraining Defendant Nos.1 and 2 from exercising any right in respect thereof. The Plaintiff's cause of action is one of violation of the Security 6(2013) 9 SCC 32 7(2015) 1 SCC 32 8(2006) 2 SCC 628 ::: Uploaded on - 17/02/2023 ::: Downloaded on - 03/06/2023 10:18:00 ::: rsk 5 1-IA-L-17490-22.doc Trustee Agreements by Defendant No.1 transferring shares in favour of Defendant No.2, which transfer is illegal. That is the reason for annexing one of the Trust Agreements at Exhibit A to the plaint
6. Mr. Seervai has submitted that there is reference in the unamended plaint to creation of Pledge Deeds, ten in number, entitled 'Unattested Deed of Pledge' in standard formats and which were not annexed to the plaint, in view of the averment by the Plaintiff that the claim and relief sought in the Suit is not based upon the ten Deeds of Pledge. It is further reiterated in the amended Plaint that though the Deeds of Pledge are referred to as void Deeds, the contention of the Plaintiff is that the relief is not based on the Deeds of Pledge, two of which have been annexed at Exhibit C2 and C3.
7. Mr. Seervai has referred to the amendment in paragraph 30 of the Plaint where the jurisdiction clause has been set out. In the amendment carried out to this clause, reference has been made to EOW complaint dated 24/9/2021 filed with the Economic Offences Wing, Mumbai by which the plaintiff has discovered fraudulent, unlawful consideration for the pledge of suit shares through an unqualified acceptance of the same by Defendant No.2. EOW complaint dated 24/9/2021 was received in Mumbai. The Financial facilities, which was the consideration for the security provided by way of the pledge of suit shares was advanced from the branch of Defendant No.2 Bank in Mumbai, as admitted in EOW complaint. Accordingly, it is submitted that the Agreement of Pledge/Deed of Pledge of the suit shares have been discovered to be void in Mumbai.
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8. Mr. Seervai has thereafter taken this Court through the prayers in the plaint. The prayers are with regard to declaration by the Plaintiff that the Plaintiff is the owner of the suit shares and solely entitled to all rights thereunder. Declaration has also been sought in respect of exercise of rights other than for sale by Defendant No.1 pursuant to invocation of the pledge as pledgee is in violation of Security Trust Agreement and accordingly void. There is a further declaration sought that the transfer of shares in favour of Defendant No.2 by Defendant No.1 is contrary to the rights and powers under Security Trust Agreements and accordingly void and that such transfer does not entitle Defendant No.2 and Defendant No.1 to exercise any right in respect of suit shares. He has thereafter referred to the amended prayers in particular prayer (a1) which is for declaration that the pledge of suit shares in favour of defendant No.1 for securing loan advanced by Defendant No.2 and the documents, writings, transfers and processes followed in relation thereto, including the void pledge contract pertaining to creation of the said pledge, and the actions/transfers executed by Defendants under such pledge, are all void, illegal and vitiated by fraud. He has submitted that the amended prayers seeks declaration that the pledge contract/Deeds of Pledge are void based on the underlying contract/ loan advanced by Defendant No.2 being the subject matter of the EOW Complaint dated 24/9/2021 and the pledge created in favour of Suit shares having been discovered to be for fraudulent consideration. He has accordingly submitted that the cause of action is not with respect to disputes under the Deed of Pledge, but in fact declaration is sought that Deeds of Pledge are void for fraudulent consideration. Hence, the exclusive jurisdiction clause in the Deed of Pledge will not be attracted.
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9. Accordingly, Mr. Seervai has submitted that there is no merit in the application filed under Order VII Rule 10 of the Civil Procedure Code. He has further submitted that in an application under Order VII Rule 10, this Court is only concerned with the pleadings in the plaint and cannot go beyond the statements contained in the plaint. He has also relied upon decision of the Supreme Court in Exphar Sa vs. Eupharma Laboratories Ltd.9 in this context.
10. Mr. Seervai has also submitted that Interim Application has been incorrectly filed under Order VII Rule 10 of the Civil Procedure Code and ought to have been filed under Rule 283 of the Bombay High Court (Original Side) Rules, 1980 for return of plaint in view of this Court being a Chartered High Court. He has submitted that on this technical ground itself the Interim Application be rejected.
11. Having considered the submissions, in my view it is clear from the prayers in the plaint that the Plaintiff has sought declaration that the Plaintiff is the owner of the suit shares and in that context has sought to restrain Defendant Nos.1 and 2 from exercising any rights in respect thereof. The Plaintiff has based its cause of action in the plaint with respect to the action of the Defendant No.1, purportedly acting as Security Trustee, in concurrence and collusion with Defendant No.2 Bank, whereby the suit shares have been transferred to itself and thereafter to Defendant No.2- Bank. The Plaintiff claims that these actions of Defendant No.1 is in violation of Security Trustee Agreements under which it derives its right.
9 (2004) 3 SCC 688
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There is much merit in the submissions of Mr. Seervai. Further, the Deeds of Pledge referred to in paragraph No.12 of the plaint had not been annexed in the unamended plaint as it was the Plaintiff's averment that the claim and relief in the Suit is not based upon the ten Deeds of Pledge and is not relying on the same for its relief and claim in the suit. This has been further reiterated in the amendment carried out in the plaint.
12. The jurisdiction clause of the plaint makes it clear that the Plaintiff had discovered fraudulent, unlawful consideration for the pledge of the Suit shares through an unqualified acceptance by Defendant No.2 in EOW complaint dated 24/9/2021. Accordingly, in prayer clause (a1) a declaration is sought that the pledge of Suit shares by the Plaintiff in favour of Defendant No.1 for securing the loan advanced by Defendant No.2 and the documents, writings, transfers and processes followed in relation thereto, including the void pledge contracts pertaining to creation of the said pledge, and the actions/transfers executed by Defendants under such pledge, are all void, illegal and vitiated by fraud. In this context, the plaintiff has sought restoration of the suit shares in it's favour and ancillary relief. What is further necessary to note is that there is an original claim for damages sought for by the Plaintiff against Defendant Nos.1, 2 and 10 jointly and severally to be paid to the Plaintiff.
13. Having considered the averments in the plaint and prayers thereto, in my view the exclusive jurisdiction clause conferring territorial jurisdiction to the Courts at New Delhi, India, the Deed of Pledge which has been annexed at Exhibit C-2 would not be attracted. In the present suit ::: Uploaded on - 17/02/2023 ::: Downloaded on - 03/06/2023 10:18:00 ::: rsk 9 1-IA-L-17490-22.doc the dispute is not in connection with the Deeds of Pledge but in fact the suit proceeds on the premise that the Deeds of Pledge itself are void on account of the underlying contract by which the suit shares had been pledged being discovered to be fraudulent. Accordingly, the decisions relied upon by Mr. Sen cited supra are inapplicable in the present case.
14. In view thereof, I find no merit in the Interim Application filed under Order VII Rule 10 which in any event should have been filed under Rule 283 Bombay High Court (Original Side) Rules, 1980 and, accordingly the relief sought in the Interim Application No.17490 of 2022 is not granted.
15. The Interim Application is accordingly disposed of.
(R. I. CHAGLA, J.) ::: Uploaded on - 17/02/2023 ::: Downloaded on - 03/06/2023 10:18:00 :::