Calcutta High Court
Arcelor Mittal Design & Engineering ... vs Lindsay International (P) Ltd. & Ors on 6 December, 2016
Author: Soumen Sen
Bench: Soumen Sen
1
ORDER SHEET
AP No.1034 of 2016
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
ORIGINAL SIDE
ARCELOR MITTAL DESIGN & ENGINEERING CENTRE PVT. LTD.
Versus
LINDSAY INTERNATIONAL (P) LTD. & ORS.
BEFORE:
The Hon'ble JUSTICE SOUMEN SEN
Date: 6th December, 2016
Appearance
Mr. Jayanta Mitra, Sr. Adv. with
Mr. Ranjan Deb, Sr. Adv.
Mr. Goutam Mitra, Adv.
Mr. Rishod Medora, Adv.
Mr. Rajiv Lall, Adv.
Mr. Soumovo Mukherjee, Adv.
Mr. Makhan Roy, Adv.
Mr. S. K. Kapoor, Sr. Adv. with
Mr. S. N. Mookherjee, Sr. Adv.
Mr. Abhrajit Mitra, Sr. Adv.
Mr. Saunak Mitra, Adv.
Mr. Satadeep Bhattacharya, Adv.
In this application the petitioner has prayed for attachment of the
bank accounts of the respondents in view of breach of shareholders agreement
dated 21st January, 2010.
The petitioner alleged that under the agreement, the respondent no.1 was to act as conduit between the petitioner and the supplier from whom the respondent no.1 would be required to procure supply for the petitioner. It is alleged that although the amounts payable under the agreement for procuring the said materials have been duly paid to the respondent no.1, the 2 said respondent had acted in breach by not remitting the consideration to the respective suppliers by reason whereof, the supplies are threatening to stop supply materials to the petitioner and the same has also caused loss of reputation for the petitioner in the international market.
Mr. Jayanta Mitra, learned Senior Counsel appearing on behalf of the petitioner has referred to various clauses of the shareholders agreement and submitted that from a bare reading of the said agreement together with the schedule and the subsequent amendment dated 29th February, 2016 it would conclusively establish that the respondent no.1 is merely acting as an agent on behalf of the petitioner and the claim in this petition is on account of failure to furnish proper accounts and make payment to the various suppliers from whom the respondent no.1 has obtained supplies for the petitioner.
The agreement, inter alia, contemplates that the petitioner would invest in and assist the respondent no.1 in developing its business in a manner that would be beneficial to the petitioner and other conglomerate of the petitioner including respondent nos.2 and 3. The agreement in clause 2.6 refers to various jobs which respondent no.2 would be required to carry out under the agreement. The agreement provides that the petitioner would forward requests for quotation to respondent no.1 or an affiliate allowing it to participate in bids to supply on a non-exclusive basis, certain products and/or services to the petitioner and/or its conglomerate conducting business outside India. By a subsequent amendment dated 29th February, 2016, an obligation was cast upon the respondent no.1 to furnish details of surplus over and above gross margin of 5% to the petitioner periodically. The original 3 terms, however, require the respondent no.1 to disclose to the petitioner suppliers' quotations, price, cost, margin, reputations and bonuses.
The petitioner has referred to various invoices and documents to show that although the respondent no.1 had procured materials from different suppliers but the said suppliers were ultimately not paid as a result whereof, a whopping sum of Rs.23,86,99,690/- is payable to various suppliers particulars whereof are given in paragraph 15 of the petition.
The claim principally is on account of unpaid vendors which the petitioner wants to secure in this proceeding.
In order pass an order of injunction of the nature, as prayed for, the Court has to be satisfied that the petitioner is able to make out a strong prima facie case and the balance of convenience is in favour of the petitioner. The Court has also to bear in mind that irreparable loss would be caused to the petitioner in the event an injunction order is not passed as failure to pass such an order would cause more harm and prejudice than the passing would have under the facts and circumstances.
Since at this stage the Court is considering only the averments made in the petition, the Court has to be satisfied with the claim made in the petition and only on a satisfaction being recorded that the petitioner is able to make out a strong prima facie case the Court may pass a suitable order. In the instant case, the agreement does not show that upon failure to pay by respondent no.1 to any of the suppliers the petitioner would be held liable and can be sued for price of the goods sold and delivered by the respondent no.1 to such suppliers. Moreover, the said sum would not be treated as a liability 4 in the books of the petitioner. There is no privity of contract between the petitioner and the suppliers. If the respondent no.1 had committed any breach of the agreement, the petitioner could terminate the agreement and sue the respondent no.1 for damages. The various invoices disclosed in this proceeding clearly show that the respondent no.1 has placed orders on various suppliers of materials on the basis of the specifications given by the petitioner. The suppliers so far have not instituted any proceeding against the petitioner as the respondent no.1 for recovery of money on account of goods sold and delivered. The petitioner do not allege that the respondent has failed to ensure supply of materials to the petitioner on the basis of orders placed from time to tome. The prayers made are in the nature of attachment before judgment. It is not being contended that the respondent is insolvent or in an impecunious situation. The claim of the petitioner is also be adjudicated. In view of the aforesaid, I am not inclined to pass an order of injunction at this stage.
Affidavit-in-opposition be filed within two weeks from dare; reply thereto, if any, be filed within 10th January, 2017. The matter shall appear under the heading, 'Arbitration Motion (Adjourned)' on 17th January, 2017.
(SOUMEN SEN, J.) AKGoswami