Bombay High Court
Kotak Mahindra Bank Limited vs Ridge Innovation Pvt. Ltd. And Rajan ... on 16 October, 2018
Author: G.S. Patel
Bench: G.S. Patel
909-CHSCDL1413-18.DOC
Arun
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
CHAMBER SUMMONS (L) NO. 1413 OF 2018
IN
COMM EXECUTION APPLICATION NO. 1642 OF 2018
Kotak Mahindra Bank Ltd ...Applicant
In the matter between
Kotak Mahindra Bank Ltd ...Plaintif
Versus
Ridge Innovation Pvt Ltd ...Defendant
And
Bhalchandra V Datar & Ors ...Proposed
Defendants
Ms Shakuntala Joshi, with Ms Nikita Pawar and Ms Jalpa Pithadia,
i/b SI Joshi & Company, for the Applicant.
Ms Mallika Taly, i/b S Mahomedbhai & Company, for Defendant
No.1 and the Proposed Defendants.
Ms Brahmi Chittur, Vice-President (Legal) of the Applicant, present.
CORAM: G.S. PATEL, J
DATED: 16th October 2018
PC:-
1. I have before me Chamber Summons (L) No. 1413 of 2018
filed by Kotak Mahindra Bank Limited ("KML"). seeking to add
some directors of Ridge Innovations Private Limited ("RIPL"),
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said to be its directors and formerly promoter-directors of Datar
Switchgear Limited ("Datar Switchgear").
2. The application is based on previous orders that I passed on
8th August 2018 and on 27th August 2018. RIPL is a resultant
company after the original Award Debtor, Datar Switchgear, was
dissolved without winding up by a scheme sanctioned by the Board
of Industrial and Financial Reconstruction ("BIFR"). The resultant
company of that scheme was DSL Enterprises Private Limited
("DSL Enterprises"). Its name was then changed to RIPL.
3. The present application has nothing to do with the long-
standing arbitral dispute that Datar Switchgear had with the
Maharashtra State Electricity Distribution Company Limited
("MSEDCL"). What is important is that Clause 14(xiii) of the
BIFR-sanctioned scheme had a clear-cut provision regarding the
directors' continuing liability. Hence the present Chamber
Summons for amendment.
4. The Chamber Summons is opposed, and very strenuously, by
Ms Taly on behalf of the RIPL. She has several arguments to make
on merits. I will leave these open. She will have an opportunity to
place the necessary material on an affidavit in opposition. One of
those contentions is immediately material today. It runs like this.
The original decretal award against Datar Switchgear was obtained
by Tata Finance Limited ("Tata Finance") in the amount of
Rs.4,70,80,350/- on 16th July 2001. KML claims to have acquired,
by assignment, this decretal debt under a Deed of Assignment dated
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31st March 2003 and there are apparently later Deeds of
Modification of 31st March 2004 and 21st March 2006. Ms Taly
points out that none of this discloses that despite this alleged
assignment in favour of KML, Tata Finance itself entered into
Consent Terms with Datar Switchgear on 30th December 2004 --
i.e. after the Deed of Assignment of 31st March 2003 and its first
modification of 31st March 2004 -- and Tata Finance and Datar
Switchgear took an order on those Consent Terms on 7th March
2005. KML was present before the BIFR at the hearings regarding
the scheme, although it is now said to have been representing
another assignor. KML's presence is noted in the sanctioned
scheme of 5th December 2006, and this is after the third
modification of 21st March 2006. KML did not disclose at any time
that it had obtained an assignment dated 31st March 2003, or that
there were subsequent modifications of 31st March 2004 and 21st
March 2006.
5. All this is, of course, material that will need to be placed on
affidavit and considered. There would have been no difficulty in
doing so, but for one singular and extraordinary fact. This is in fact
the first objection that Mr Taly raises. She says that annexed from
page 19 to the Affidavit in Support of the present Chamber
Summons is a copy of the Deed of Assignment of 31st March 2003.
This is a copy that has carefully masked or obscured (though not
permanently redacted) crucial portions of that document not only
from RIPL, whom she represents, but also from the Court. For even
the copy filed in Court has these portions masked.
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6. At Ppage 34 of the Affidavit in Support is a copy of
"Sschedule T" to the Deed of Assignment. The tabulation shows
only two columns, but it is evident that there was a third. I called for
the original. and It was given to me. I found that indeed the third
column of that table, which sets out what is described as the fixed
portion of purchase price, was carefully stapled over with a white
sheet. I directed Ms Joshi to have that covering sheet removed. That
was done. What then emerged is that there is indeed a third column
captioned "fixed portion of the purchase price". Against Datar
Switchgear this "fixed portion of the purchase price" is shown as
Rs.1 lakh. It is as yet unclear whether this was the consideration for
the assignment of the award, one that was almost to the extent of
Rs.5 crores. I say that this is unclear because there are other portions
of this very document at internal page 3 (brief page 20), internal
page 6 (brief page 23) and internal page 9 (brief page 26) that have
been similarly tapped over and concealed.
7. That this was done by KML is not in doubt. The masking and
taping-over is confirmed by KML's Vice-President, Legal, Ms
Brahmi Chittur, who is present in Court. The arguments seems to
be that it is 'irrelevant' to the cause and that RIPL is 'not entitled' to
see this. The original document of 31st March 2003 has this
masking. I find that in the Deed of Modification dated 31st March
2004 there is an extensive masking or concealment at page 3. This is
true, too, of the subsequent Deed of Modification of 21st March
2006, where there is masking seen in parts of clause 2.1 (pages of
this document are unnumbered).
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8. Prima facie, in my view, KML has at very least attempted to, if
not actively mislead, then at least to actively conceal, material from
this Court, and that too possibly crucial material. No principle
allows a party as a matter of right to make selective disclosures to
the other side or even to say that the Court may see some material
but the opponent may not. As a general, and, I would venture to
suggest, almost inflexible rule, anything the Court can see, the other
side can see. If the assignment was entirely bona fide and genuine,
what need was there to conceal anything? After all, Tata Finance
had an award against Datar Switchgear, and this remained to be
satisfied. If KML stepped into Tata Finance's shoes as an assignee
of that chose in action, then it could simply put that award into
execution (as it has done). Why all this careful and studied
concealment and masking? What is being hidden, from whom, and
for what purpose?
9. If any portion of any document requires an explanation, the
party producing that document may certainly ofer that explanation.
What no party can do is to conceal the portion that requires
explanation. It is no answer at all for Ms Joshi to say, as she is
instructed to do, that 'the Court may see it' but not Ms Taly. That is
absurdly unfair. Every opponent is entitled to take every legitimately
available defence, and cannot in any court be allowed to be taken
unawares. How is Ms Taly to meet a case, or even to assess if there
is a defence to be taken, if there are portions kept from her? Indeed,
she says that when the complete document was demanded during
inspection before this hearing, that request was point-blank refused.
I also note that KML actually had the sheer efrontery to file in
Court a copy of the documents with this masking. It did not merely
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claim to refer to or rely on these documents. It made no attempt to
seek leave to disclose these documents separately and in confidence
to the Court (and which in any case I would have refused). Instead,
it straightaway filed the documents with the masking on each, thus
actively concealing material from the Court.
10. That is entirely and wholly unacceptable. Prima facie it is an
attempt to mislead the Court. This conduct is to be deprecated in
the strongest possible terms, and merits both censure and strictures.
I will reserve that for the next date, afording KML an opportunity
to explain its conduct on Affidavit, provided this is coupled with an
unconditional apology, and an undertaking that under no
circumstances, and, in any event, not without prior leave of the
Court, will KML in any proceeding in this or any other Court at any
time attempt to mask, conceal or black out any portion of any
document to which it refers.
11. I am also making it clear that I will not accept the
undertaking, affidavit, apology and explanation merely from some
employee in the legal department. I expect it to come from as high a
level as possible in that bank and a copy of this order is therefore to
be sent to the Chairman and Managing Director of KML for his
most immediate and urgent attention. This is not a matter to be
taken lightly.
12. I make it clear that should that explanation, apology and
undertaking not be complete or satisfactory in every single respect, I
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propose to proceed further against KML and every one of its
principle officers as permissible in law including in contempt.
13. Once again, to clarify: I am not addressing the merits of the
Chamber Summons or the opposition to it. I am only addressing the
manner in which KML has thought fit to go about this business
about seeking an amendment to its application.
14. No amendment is to be permitted to Commercial Execution
Application No. 1642 of 2018 without specific leave of this Court.
15. I am impounding all three documents shown to me today.
They will be retained by the Prothonotary and Senior Master until
further orders and brought to Court on the next date.
16. The Prothonotary and Senior Master will permit Ms Taly to
take a certified colour copy of all three documents presently
impounded. These documents will then remain in seal with the
Prothonotary and Senior Master until further orders of the Court.
Ms Joshi says that KML's representatives must be allowed to
remain present when the certified copy is being issued. That
application ought never to have been made. It implies a distrust of
Ms Taly and of my Prothonotary & Senior Master, which I will not
tolerate. It is not the Respondent or its lawyer or any officer of this
court that has attempted to conceal material from this Court. None of the representatives or Advocates for KML are entitled to remain present at the time when the Prothonotary and Senior Master issues a colour certified copy of the impounded documents to Ms Taly.
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17. I will list the matter for KML's necessary affidavit, explanation, apology and undertaking first on board on Friday, 19th October 2018. The deponent of that Affidavit will be personally present in Court.
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