Gujarat High Court
Mahindra Shubhlabh Services Pvt Ltd vs Eam Fruits Llp & on 20 March, 2015
Author: A.J.Desai
Bench: A.J.Desai
C/AO/530/2014 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
APPEAL FROM ORDER NO. 530 of 2014
With
CIVIL APPLICATION NO. 13871 of 2014
In APPEAL FROM ORDER NO. 530 of 2014
With
CIVIL APPLICATION NO. 687 of 2015
In APPEAL FROM ORDER NO. 530 of 2014
With
CIVIL APPLICATION NO. 1040 of 2015
In APPEAL FROM ORDER NO. 530 of 2014
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MAHINDRA SHUBHLABH SERVICES PVT LTD....Appellants Versus EAM FRUITS LLP & 1....Respondents ================================================================ Appearance:
MR DEVEN PARIKH, LD.SENIOR COUNSEL WITH MR RAHEEL PATEL, LD.ADVOCATE FOR NANAVATI ASSOCIATES, ADVOCATE for the Appellant. DHARA P BHATT, ADVOCATE for the Respondent No. 2 MR RASESH H PARIKH, ADVOCATE for the Respondent No. 1 MR. PARTH H BHATT, ADVOCATE for the Respondent No. 2 =========================================================== CORAM: HONOURABLE MR.JUSTICE A.J.DESAI Date : 20/03/2015 CAV ORDER
1. By way of the present Appeal, under Order XLIII, Rule I of the Code of Civil Procedure,1908, the appellant herein - original defendant has challenged the order dated 20/09/2014 passed by learned Chamber Judge, Court No.10 in Civil Suit No.2152 of 2013 passed below Exh-7 - an application under Order IXL Rule I of Civil Procedure Code, Page 1 of 14 C/AO/530/2014 ORDER by which, learned Chamber Judge, City Civil Court, Ahmedabad has restrained the present appellant from invoking a bank guarantee issued at the instance of original plaintiff through defendant No.2 bank, till final hearing of the Suit as well as restraining the Bank from making any payment towards the said Bank guarantee.
2. Appellant herein - original defendant no.1 could not defend his case before learned Trial Court by filing any written statement/ reply in the suit proceedings as well as in absence of any representation through any lawyer on his behalf. This appeal is preferred on this ground amongst others. Since the period of Bank Guarantee has expired during the pendency of litigation, the appellant has filed two Civil Applications before this Court with different prayers.
Civil Application No.687 of 2015 has been filed by the appellant herein for amendment in prayer clause of the Appeal from Order, requesting this Court to direct the respondent No.1 - original plaintiff and respondent No.2 - Bank to renew the Bank guarantee dated 30/06/2014 for the period as this Court deems fit in the interest of justice.
Civil Application No.1040 of 2015 has been filed by the appellant herein under Order XLI Rule XXVII of the Code of Civil Procedure for production of additional documents since the same could not be produced before the learned Trial Court at the time of hearing of application Exh-7.
Since the appellant herein - original defendant No.1 did not file either written statement to the plaint or affidavit-in-reply opposing an application Exh-7, submitted by the original plaintiff under Order IXL of the Code of Civil Procedure and what has been laid before this Court by way of Page 2 of 14 C/AO/530/2014 ORDER producing certain documents, prima facie disputes between the parties, emerge on record, are as under:
2.1 That the original plaintiff is a limited liability Partnership Firm engaged in business of wholesale trading of fruits. The plaintiff used to import fruits from abroad as well as buying the same through domestic and international suppliers and was used to distribute/ sale to different retail chain stores, Indian Railway, etc.
2.2 The appellant herein - original defendant No.1 is a company incorporated under the provisions of Companies Act,1956 and is engaged in the agricultural business. It is in the business of supplying farm equipments from planting to selling with seed supply, crop care and fresh produce distribution services. It is the case of the original plaintiff that respondent No.2 - Bank, which is incorporated under the provisions of the Companies Act,1956 having Banking License as per the Banking Regulations Act and also having several offices. The original plaintiff has its Account with the said defendant No.2 - Bank and defendant No.2 - Bank grants credit facilities to the plaintiff including issuing Bank guarantee on its behalf.
2.3 It is the case of the original plaintiff that plaintiff and defendant No.1 entered into trading relationship since June,2014 and defendant No.1 used to supply fruits to the plaintiff. Initially, the plaintiff used to make payment in advance. Defendant No.1 was used to deliver the fruits / Page 3 of 14 C/AO/530/2014 ORDER goods through the different agents, having cold storage since the fruits being perishable, the same is required to be kept in cold storage, to the plaintiff.
2.4 It is the case of the plaintiff that he had made payment of Rs.22,53,350/- to the defendant No.1 on 30/06/2014 as advance payment for purchase of Chile Apples, against which, defendant No.1 had supplied goods on 30/06/2014 and 01/07/2014.
2.5 It is the case of plaintiff that defendant No.1 enticed the plaintiff to provide Bank guarantee so that the plaintiff can purchase more goods without making advance payments. Accordingly the plaintiff executed a Bank guarantee through the respondent No.2 - Bank to the tune of Rs.40 Lacs.
2.6 It is the case of the appellant that the plaintiff received the details of Accounts, in which, it was found that defendant No.1 debited Rs.41,50,938/- from the Account of plaintiff against the sale of orange, though the plaintiff had never purchased the same from the defendant No.1. It is the case of the plaintiff that defendant No.1 was debiting account of the plaintiff with cold storage charges, though there was no agreement for such charges.
2.7 It is the case of the plaintiff that defendant No.1 has issued Credit Note No.CN/14-15/07 and CN/14-15/08 for amount of Rs.24,50,925/- and Rs.6,69,000/- respectively on 31.08.2014. The credit note of Rs.6,69,000/- pertains to purchase of Chile Apples covered by invoice no.EF/Apple/ 14- 15/4a for an amount of Rs.11,81,181/-. The debit entry Page 4 of 14 C/AO/530/2014 ORDER pertaining to Rs.41,50,938/- for alleged sale of orange and credit entries for Rs.24,50,925/- and Rs.6,69,000/- are unilateral action on the part of defendant No.1 for which the plaintiff has never consented.
2.8 It is the case of the plaintiff that some entries were made by defendant No.1 for sale of orange for Rs.23,56,914.50, though there was no purchase of such orange by the plaintiff and, therefore, the plaintiff apprehended that defendant No.1 shall invoke the Bank guarantee issued by respondent No.2 Bank and, therefore, filed Regular Civil Suit No.2152 of 2014 before learned City Civil Court at Ahmedabad and following prayers were made in the said Suit:
"18(A) The Hon'ble Court may be pleased to declare that the Defendant No.1 has not made sale of orange to the plaintiff for an amount of Rs.41,50,938/- on 02.07.2014 being vide Bill No.EAN/Orange/14-15/1 and it has no right to invoke the Bank guarantee No.006GT01141850001 dated 04.07.2014 issued by Defendant no.2 on behalf of the plaintiff in favour of plaintiff;
(B) The Hon'ble Court may be pleased to pass
order of permanent injunction against
Defendant No.1 restraining the Defendant No.1 from invoking the Bank guarantee No.006GT01141850001 dated 04.07.2014 issyed by Defendant No.2 on behalf of the plaintiff in favour of plaintiff and also direct defendant no.2 not to pay amount covered by the said Bank guarantee;
(C) The Hon'b;e Court may be pleased to award to the plaintiff the cost of this Suit from defendant No.1;
(D) Such other and further orders as may be Page 5 of 14 C/AO/530/2014 ORDER deemed just and expedient be passed in favour of the plaintiff against defendant No.1."
2.9 The plaintiff also produced list of documents at Exh-4 in support of his case and also filed the application Exh- 7 under Order IXL of the Code of Civil Procedure with a prayer restraining the defendants from invoking Bank Guarantee as well as restraining the defendant No.2 - Bank for making any payment towards the said Bank guarantee. The said Suit along with application Exh-7 were placed before the Court on 10/09/2014 for orders. A summon Exh-11 was issued to the respondents, as per proforma Form No.4 on 10/09/2014 itself, on which, the date of hearing was fixed on 10/10/2014. Simultaneously, a summon Exh.12 was also issued on the same date i.e. on 10/09/2014 to the defendants in the proforma Form No.8, on which, the date of hearing was fixed on 12/09/2014 i.e. two days after issuance of the summon on the application Exh-7 submitted by the plaintiff.
2.10 It is the case of the plaintiff that defendants were served with these summonses on 15/09/2014. Since the summon was not served in time, the hearing was adjourned on 19/09/2014. The appellant herein - defendant No.1 neither filed his appearance nor filed any reply to the plaint or application Exh-7 and, therefore, learned Chamber Judge vide order dated 20/09/2014 passed an order allowing the said application and granted interim relief in favour of the plaintiff, as stated in the beginning of this judgement. Hence, this appeal by original defendant no.1 against whom the impugned order is passed.
3. Pursuant to the Notice issued by this Court, Page 6 of 14 C/AO/530/2014 ORDER original plaintiff has filed Affidavit-in-reply in Appeal from Order as well as Reply in all Civil Applications opposing grant of any relief in the matter.
4. Mr.Deven Parikh, learned Senior Counsel assisted by Mr.Raheel Patel, learned advocate for the Nanavati Associates would submit that the order impugned has been passed in absence of sufficient material placed before the learned Trial Court since defendant No.1 was under bona fide impression that hearing of the case was fixed on 10/10/2014, and therefore the defendant could not lead its case by filing reply with necessary documents. By taking me through the summon issued below plaint, he would submit that date of hearing is fixed on 10/10/2014 and when the plaintiff appeared before the Court on 10/10/2014, he came to know that application Exh-7 was already disposed of by order dated 20/09/2014. He would submit that defendant No.1 through oversight and bonafide mistake remained under bona fide impression that the entire case is likely to be heard on 10/10/2014 and, therefore, he could not file his written submission or reply before learned Trial Court even to application Exh-7.
4.1 He would submit that hearing of the application Exh-7 was filed only after two days i.e. on 12/09/2014 and the appellant was never served with the summon before 12/09/2014. Though returnable date was lapsed, both summons i.e. summon issued on plaint as well as on application Exh-7 was served on 15/09/2014. Therefore, he would submit that learned Trial Court ought to have issued a fresh summon to the defendant No.1 before passing the Page 7 of 14 C/AO/530/2014 ORDER impugned order on 20/09/2014 below Exh-7. He therefore would submit that the present appellant had no opportunity to defend his case before the learned Trial Court and learned Trial Court has relied upon only these materials, which have been produced by the plaintiff while deciding application Exh- 7, by which, interim relief was granted in favour of the original plaintiff. He would submit that on this ground alone, the impugned order is required to be quashed and set aside and the matter is required to be remitted for fresh hearing.
He would submit that there were sufficient communications between the plaintiff and defendant No.1 with regard to sale of orange and the plaintiff had agreed for payment, for which, they have agreement for purchase of orange.
4.2 By taking me through certain communications, which have been exchanged through e-mails between them, he would submit that the plaintiff has not put forward his case correctly before the learned Trial Court and learned Trial Court was compelled to believe the half truth placed before learned Trial Court by the plaintiff. He would submit that the appellant - defendant No.1 shall produce all the documents, including those documents, which are produced before this Court, before learned Trial Court and learned Trial Court shall try to establish his case that the plaintiff had agreed to purchase the orange and was not making payment though called for time and again and, therefore, he would submit that on this ground also, the order is required to be quashed and set aside and the matter is required to be remanded for fresh hearing.
Page 8 of 14 C/AO/530/2014 ORDER4.3 By taking through the ratio laid down by Hon'ble Apex Court in connection with interference of the Civil Court, he would submit that when a question of invoking Bank guarantee comes, the Court should slow in restraining the revocation of Bank guarantee till prima facie case is established by the plaintiff before the Court before restraining the revocation of Bank Guarantee. In support of this submission, he has replied upon following judgements :
(i) In the case of General Electric Technical Services Company Inc. V/s. Punj Sons (P) Ltd. And another reported in (1991)4 SCC 230;
(ii) In the case of Hindustan Steelworks Construction Ltd. V/s. Tarapore & Co. and another reported in (1996)5 SCC 34;
(iii) In the case of U.P. State Sugar Corporation V/s.
Sumac International Ltd. reported in (1997)1 SCC 568.
4.4 By taking me through the plaint as well as application Exh-7, he would submit that the plaintiff has prima facie failed to establish that in what manner, fraud has been committed by the appellant herein. He has taken me through the impugned order wherein the Court has observed that there are allegation of fraud and, therefore, powers under Order IXL has been exercised by restraining the party from invoking the Bank guarantee. However, learned Trial Court has not dealt with the same in details and in what manner, the fraud has been committed by the appellant herein - defendant No.1. He therefore would submit that all the questions are required to be dealt with before the learned Trial Court. He would submit that the documents, which are produced by the original plaintiff before learned Trial Court and particularly Page 9 of 14 C/AO/530/2014 ORDER with regard to Accounts, the same shall be explained if opportunity is given to the present appellant for establishing his case before learned Trial Court. He requests that the impugned order is required to be quashed and set aside and the matter is required to be remitted to the learned Trial Court for fresh consideration and Bank guarantee, which has already expired, shall be revived for particular time till Exh-7 is finally heard and decided.
5. Mr.H.M.Parikh, learned Senior Advocate assisted by Mr.Rasesh Parikh, learned advocate for respondent No.1 has opposed this Appeal and has taken me through the plaint; Exh-7 application and list of documents, which are produced before learned Trial Court. He would submit that whenever the plaintiff had purchased the goods and particularly the apples, from defendant No.1, bills have been issued and accordingly the same are produced before the learned Trial Court. The plaintiff had never purchased any orange from defendant No.1. However, when the plaintiff received the details of his account, he was shocked and surprised that defendant No.1 had debited certain amount of money from his account with regard to sale of orange and, therefore, the plaintiff was compelled to request the learned Trial Court for interim relief. He would submit that the plaintiff was enticed for execution of Bank guarantee and by creating false account, a fraud has been committed by defendant No.1. He would submit that the appellant herein - defendant No.1 was aware that the suit is pending before the learned Trial Court, however, he did not care to appear or file written statement or reply. He would submit that respondent Bank has also informed the appellant about stay granted by Civil Court from Page 10 of 14 C/AO/530/2014 ORDER invoking the Bank guarantee executed by the plaintiff, even though he did not care and was not vigilant enough to get information about the case pending before learned Trial Court. He would submit that the communications exchanged through e-mails between the parties are not sufficient to establish that some transactions have taken place between the parties with regard to orange and the same do not establish the case as to whether the orange was delivered to the plaintiff or not? He, therefore, would submit that in such circumstances, ground taken taken by the appellant for non- hearing, does not stand and the same cannot be entertained and the appeal may be dismissed. He would further submit that Bank guarantee executed by original plaintiff through respondent No.2 Bank has expired and the Court cannot compel the parties to renew the same. Only relief the plaintiff can asked for is for damages, if he established the same at the end of trial. He therefore would submit that the appeal be dismissed.
6. I have heard learned advocates appearing on behalf of the respective parties. I have gone through the plaint and the documents, which have been produced by the plaintiff in the application at Exh-7 as well as the impugned order dated 20/09/2014 passed by learned Chamber Judge in application below Exh.7. I have perused the documents, which have been relied upon by the appellant (defendant No.1) in support of his case, those documents are e-mails communications between the parties. Following undisputed facts emerge from the record, are as under:
(i) The suit is filed on 09/09/2014.
(ii) The learned Trial Court issued Notice upon the suit
Page 11 of 14
C/AO/530/2014 ORDER
and further hearing was fixed on 10/10/2014;
(iii) The summon was issued below Exh-7 on the same day i.e. on 10/09/2014 and returnable date was 12/09/2014.
(iv) Both the summons are served on 15/09/2014 i.e. subsequent to returnable date of hearing of application Exh-7;
(v) no fresh summons have been issued though returnable date had expired;
(vi) Summons were served on 15/09/2014 and the application Exh-7 came to be heard on 19/09/2014 and the impugned order is declared on 20/09/2014.
From the above facts, prima facie, it is established that even after service of summons on 15/09/2014, the matter was heard within four days and in absence of any reply or written submission submitted by defendant No.1. Therefore, in my opinion, there are all possibility that defendant No.1 remained under misconception that the hearing is fixed on 10/10/2014 the date mentioned in the summon issued in the plaint. In my opinion, when the learned Trial Court was aware that the summon is not served before returnable date, fresh summon ought to have been issued and parties must have been directed to serve the concerned defendants before another returnable date. On this ground alone, I intend to remand the matter for fresh hearing to the concerned Judge. Since the matter is remanded to the concerned Judge, I would not like to discuss the merits and demerits of the parties, which would effect either of the same when application Exh-7 is heard afresh after hearing all the parties.
Page 12 of 14 C/AO/530/2014 ORDER7. As far as judgements relied upon by Mr.Parikh, learned advocate appearing for the appellant with regard to Bank guarantee, this Court would not like to express any opinion in view of the fact that the matter is being send for fresh consideration. This Court would not like to express any opinion with regard to documents as well as accounts of the parties.
8. As far as submission made by Mr.Deven Parikh, learned advocate with regard to renewal of Bank guarantee is concerned, in my opinion, it would in the interest of justice as well as considering the balance of convenience between the parties that if the Bank guarantee is revived for limited period, there would be no irreparable loss to the original plaintiff. Hence, following order:
"The impugned order dated 20/09/2014 passed by learned Chamber Judge, Court No.10 below Exh-7 is hereby quashed and set aside. The matter is remanded to the learned Trial Court for fresh consideration. Defendant No.1 shall file his written statement as well as reply to Exh-7 application as expeditiously as possible and preferably on or before 27/03/2015. Rejoinder thereto, if any, shall be filed on or before 06/04/2015. The learned Trial Court shall decide Exh-7 application on or before 01/05/2015. Bank guarantee shall be treated as revived up to 08/05/2015. Appellant herein - defendant No.1 is hereby restrained from invoking Bank guarantee in dispute, till 08/05/2015."
Appeal is allowed to the aforesaid extent.
9. In view of the above order passed in the Appeal, Civil Applications do not survive and disposed of as do not Page 13 of 14 C/AO/530/2014 ORDER survive. Direct service is permitted.
[A.J.DESAI, J.] *dipti Page 14 of 14