Madras High Court
Pueblo Holdings Limited vs Emirates Trading Agency Llc on 7 March, 2022
Author: P.T. Asha
Bench: P.T. Asha
E.P. No. 40 of 2019
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON : 18.10.2023
PRONOUNCED ON: 19.01.2024
CORAM
THE HONOURABLE Ms. JUSTICE P.T. ASHA
E.P. No. 40 of 2019
&
O.A. Nos. 165 of 2022 & 391 of 2019
PUEBLO HOLDINGS LIMITED
Represented by its authorised signatory
Mr Siddhesh Sham Kshirsagar
having its registered office at
Trust Company Complex
Ajeltake Road, Ajeltake Island,
Majuro, Marshall Islands MH 96960 ... Petitioner
Vs.
1.EMIRATES TRADING AGENCY LLC
A Company Incorporated under the
Appropriate Laws of the United Arab
Emirates having its registered office
and / or business address at ETA Star
House, Salahuddine Road, Deira, Dubai
United Arab Emirates.
2.STAR HEALTH AND ALLIED INSURANCE
COMPANY LTD
A Company incorporated under the Companies
Act, 1956 having its registered officer at No.1,
New Tank Street, Valluvarkottam High Road,
Nungambakkam, Chennai – 600 034.
https://www.mhc.tn.gov.in/judis
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E.P. No. 40 of 2019
3.ESSA ABDULLA AHMED AL-GHURAIR
An Emirati National Working For gain at
Building #3580467, Street 4, Al Quoz 3,
Dubai, United Arab Emirates
4.SYED MOHAMED SALAHUDDIN
An Indian National Residing at No.6 Wallace
Garden, 1st Street, Nungambakkam,
Chennai – 600 034.
5.HAMEED SYED SALAHUDDIN
An Indian National Residing at No.6 Wallace
Garden, 1st Street, Nungambakkam,
Chennai – 600 034
6.AHMED SYED SALAHUDDIN
An Indian National Residing at No.6, Wallace
Garderr, 1st Street, Nungambakkam,
Chennai – 600 034
7.ARIF RAHMAN BUHARY
An Indian National Residing at No.8 Subba Rao
Avenue, 3rd Street, Nungambakkam,
Chennai – 006
8.ETA STAR HOLDINGS LIMITED
A company incorporated under the appropriate
laws of the United Arab Emirates having its
registered / business office at Ascon House,
5th Floor, Salahuddin Road, Deira, Dubai,
United Arab Emirates.
9.ETA STAR HOLDINGS LLC
A company incorporated under the appropriate
laws of the United Arab Emirates having its
registered / business office at Ascon House,
5th Floor, Salahuddin Road, Deira, Dubai,
United Arab Emirates.
https://www.mhc.tn.gov.in/judis
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10.AHMED ABDULLA AHMED AL-GHURAIR
An Emirati National Residing at Villa – A – Chiller,
126 -34 Abu Hail, DM 74 Dubai,
United Arab Emirates.
11.IBRAHIM ABDULLA AHMED AL-GHURAIR
An Emirati National Residing 67, Abubaker
Siddique, Road Deira, Dubai, United Arab
Emirates. ...Respondents
PRAYER: Execution Petition filed under Order XXI Rule 46 of the
Code of Civil Procedure, 1908, for execution of the arbitral award.
For Petitioner : Mr. Ratnanko Banerji
Senior Counsel
Mr. Amitava Majumdar
Mr. Aditya Krishnamurthy
For Mr. Mukund Rao
For Respondents : Mr. J.Sivanandaraj
3&8 Senior Counsel
for Mr. A.S.Bhargav Nath
M/s.Ridhima Sharma
For Respondents : Mr. P.Giridharan
4 to 7 M/s. Priyanka Shetty
M/s. Deepti Prabhu
Mr. C.Thiagarajan
Mr. M.Siddarth
For Respondent 2 : No Appearance.
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E.P. No. 40 of 2019
ORDER
The decree holder has filed the above execution proceedings to execute an award that they have obtained against the first respondent by attaching the shares of the 1st respondent which, they would contend, are ostensibly registered in the name of the respondents 3 to 7. It is the case of the Decree Holder that the shares are being held by respondents 3 to 7 for and on behalf of the 1st respondent. As a prelude, the orders passed on various hearing dates are culled out briefly.
2. This execution petition has been instituted in the year 2019. On 28.03.2019, the 3rd respondent had sought time to file a detailed counter to the above execution proceedings. At that point in time, the other respondents had not been served. Although the 3 rd respondent had undertaken to file a counter in the above execution proceedings, the said counter has not been filed to date and thereafter, the respondents 3 to 7 had started addressing arguments regarding the maintainability of the petition. On 22.03.2021, the senior counsel who had submitted the arguments was reported to be https://www.mhc.tn.gov.in/judis 4/40 E.P. No. 40 of 2019 indisposed and therefore the matter was posted to 12.04.2021. Thereafter, there was a change in the roster.
3. Since the matter had been heard extensively by this Court, on the representation of the parties to the proceedings, the matter was once again listed before this Court as a specially ordered matter by orders of the Acting Chief Justice on 08.05.2023 and the parties had commenced their arguments on 30.08.2023 and orders were reserved by this Court on 18.10.2023. The parties had submitted that they would be filing their written arguments.
4. The 3rd respondent and the 8th respondent had filed their written arguments on 10.11.2023. Respondents 4 to 7 had filed their written arguments on 09.11.2023 and the decree holder had filed their written arguments on 15.11.2023. After orders had been reserved, the 2nd respondent who had never appeared before the Court on any of the earlier dates of hearing had filed a counter into the Registry on 20.10.2023.
https://www.mhc.tn.gov.in/judis 5/40 E.P. No. 40 of 2019
5. This Court is now called upon only to decide on the maintainability of the Execution proceedings and arguments have been made only in this regard.
Submissions:
6. Since the oral arguments had been reduced into written arguments, this Court is only extracting the contents of the written arguments submitted by the respective parties.
(i) Respondents 3 and 8:
7. The 3rd and 8th respondents, although they have submitted separate written arguments, have more or less raised the same issues. It is their contention that the execution petition has been filed on the basis that 6.16 % shares in the 2nd respondent Company are held by respondents 3 to 7 beneficially / in trust for the 1 st respondent / Judgement Debtor. Therefore, the very execution petition cannot be maintained in the light of the order passed by the Division Bench of this Court in O.S.A.Nos. 220 to 223, 227, 228, 230 to 237 of 2018. https://www.mhc.tn.gov.in/judis 6/40 E.P. No. 40 of 2019 These appeals had arisen against the order passed on the various applications in C.S.No.33 of 2018.
8. It is apposite here to mention that the present decree holder is not a party to this suit. It is the contention of the respondents 3 and 8 that in these proceedings the Division bench had held that the beneficial interest could not be decided on account of the following facts:
(a)The money had come from different entities in Dubai.
(b)The Beneficial Interest declared in the financial statement has been prepared in Dubai.
(c)The deconsolidation was done at Dubai between various Dubai based entity as a result of which the beneficial interest ceased to exist.
It is also their further case that this Judgement and Decree has been confirmed by the Hon'ble Supreme Court in Civil Appeal Nos.9786 to 9799 of 2018. That being the case the present execution petition filed for attaching and bringing these shares to sale is also not https://www.mhc.tn.gov.in/judis 7/40 E.P. No. 40 of 2019 maintainable.
9. To put things in perspective, the crux of the dispute in C.S.No.33 of 2018 was whether minority shareholders in a foreign company can seek such a declaration from the Indian Courts that the foreign Companies were holding these shares of the Indian Company as beneficial owners of the foreign company. They had also sought for orders of injunction as well.
10. The next argument that has been advanced is that in another suit C.S.No.320 of 2019, the learned Single Judge has refused to pass an order of injunction restraining the Decree Holder from instituting or prosecuting E.P.No.40 of 2019. The learned Judge had observed that the respondents herein who were applicants therein could raise the question of jurisdiction before the Execution Court. This was reiterated by the Division Bench in its Judgement in O.S.A.Nos.241, 242 and 244 of 2019 filed against the order passed by the learned single Judge in the applications in C.S.No.320 of 2019.
https://www.mhc.tn.gov.in/judis 8/40 E.P. No. 40 of 2019
11. The respondents have further submitted that the Judgement Debtor is in liquidation in Dubai pursuant to the order of the Dubai Court of First Instance dated 07.03.2022 and these proceedings have been brought to the knowledge of the Decree Holder in the proceedings in O.S.A.Nos.155, 163, 165, 166 and 260 of 2022 in E.P.No.52 of 2021. Therefore, the Decree Holder who is aware of the order of liquidation cannot proceed with the execution proceedings. They had also pleaded that there is a collusion between Decree Holder and Al Ghurairs, which is evident from the fact that the 1st respondent had allowed the arbitration proceedings instituted, claiming crores of rupees as compensation, to be left ex-parte without diligently prosecuting the same.
12. They had also submitted that the Judgement Debtor owned property worth over Rs.23,000/- Crores in Dubai, despite which the Decree Holder has not initiated any proceedings to execute the award at Dubai. They would submit that it is the desire of Al Ghurairs who had filed the suit C.S.No.33 of 2018 to take over the assets of respondents 3 to 7. Therefore, they have used the https://www.mhc.tn.gov.in/judis 9/40 E.P. No. 40 of 2019 Decree Holder to achieve this end by filing the above execution proceedings.
13. It is also the contention of these respondents that the relief is barred by law. They would contend that the execution proceedings is barred under Section 3 and 4 of the Benami Transactions (Prohibition) Act 1988. They would submit that Section 89 of the Companies Act is the only exception where beneficial interest is recognised. However, in order to invoke the provisions of Section 89 of the Companies Act 2018 to their advantage, it is necessary that the beneficial interest should be declared in accordance with the provisions of the Act. Such a declaration has not been obtained either by the Decree Holder or the Judgment Debtor as well as respondents 3 to 8. Further, it has been clearly held in the Judgement reported in 1992 (2) LW 42 – Greaves Cotton & Co., Vs. J. Jamal Mohammed Abdulla, that the provisions of the Benami Act would apply in the case of execution proceeding as well. https://www.mhc.tn.gov.in/judis 10/40 E.P. No. 40 of 2019
14. It is also their further contention that the execution proceedings does not prima facie prove the trusteeship, beneficial interest, saleable right or that the 3rd respondent is a garnishee. They would submit that Section 94 of Trust Act has been repealed by Benami Transactions (Prohibition) Act and therefore Section 94 which provided for creation of constructive trust cannot be relied upon by the Decree Holder. They would further submit that in order to enforce the award against the respondents 3 to 7 the property that has been attached should be saleable property over which the Judgement Debtor has a disposing power. Admittedly, in the instant case, the shares stood in the name of respondents 3 to 7 and they did not stand in the name of the Judgement Debtor. They would rely upon the Judgement reported in AIR 1936 Oudh 235 – Kandhai Lal Vs. Sheo Nath in support of this argument. They would further submit that since they do not owe any money to the Judgement Debtor they cannot be treated as a garnishee of the Judgement Debtor.
https://www.mhc.tn.gov.in/judis 11/40 E.P. No. 40 of 2019
15. These respondents had also pleaded that the execution proceedings is barred by limitation and further the respondents rights could not be decided in the execution proceedings. They had also pleaded that the Courts in Chennai is not forum conveniens to decide the issue raised in the Execution Petition. They would also submit that the Executing Court cannot lift the corporate veil. In support of their argument, they would rely upon the Judgement reported in 2020 SCC Online Bom 217 - Mitsui OSK Lines Ltd., Vs. Orient Ship Agency Pvt., Ltd.
16. The respondents 3 and 8 would submit that the Judgement Debtor is in liquidation in Dubai and their assets have been frozen. Despite knowledge of the same, the Decree Holder has not made the liquidator a party to the execution proceedings. Further, taking into consideration the principles of comity of Courts, the Courts that have Jurisdiction is the Courts in Dubai.
17. They would also submit that there is an agreement of a Judicial cooperation in civil and commercial matters and therefore https://www.mhc.tn.gov.in/judis 12/40 E.P. No. 40 of 2019 the order of liquidation passed by the Court at Dubai would be binding upon the Judgement Debtor. That apart, the execution proceedings are outside the scope of Order XXII Rule 46 CPC and it has not been demonstrated as to how the respondents 3 to 7 are garnishees of the Judgement Debtor. They would therefore submit that the execution proceeding is not maintainable and has to be rejected.
(ii) Respondents 4 to 7:
18. In their written arguments, respondents 4 to 7 contended that the relief in the execution proceedings is barred under Section 89 of the Companies Act 2013. The respondents 4 to 7, the 2 nd respondent and the 1st respondent company / Judgement Debtor have not filed necessary forms as contemplated under Section 89 of the Companies Act in order to show that the shares are being beneficially held by respondents 4 to 7 on behalf of the 1st respondent/Judgement Debtor.
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19. Further, the description of the respondents in the execution proceedings and the prayer sought are mutually exclusive. The respondents 4 to 7 have been arrayed as garnishees under Order XXI Rule 46 CPC. These respondents can be arrayed as garnishees only if they owe any money to the Judgement Debtor. The Decree Holder is seeking to attach and sell the movable properties held in the name of respondents 4 to 7 under the provisions of Order XXI Rule 46 CPC on the ground that they are holding the shares of the 2nd respondent Company for and on behalf of the 1st respondent. The relief under Order XXI Rule 46 would be available only if the properties are that of the Judgement Debtor.
20. It is also their contention that the respondents 4 to 7 are domiciled at Dubai and therefore this Court has no in personam jurisdiction over them. This has been upheld by the Hon'ble Supreme Court in C.A.No.9786 to 9799 of 2019. They would further contend that the corporate veil cannot be pierced in execution proceedings and that being the case there is no evidence whatsoever to show that the shares held by respondents 4 to 7 are https://www.mhc.tn.gov.in/judis 14/40 E.P. No. 40 of 2019 for the benefit of the Judgement Debtor.
21. They would also submit that the award passed did not conform to the test provided under Section 48 of the Arbitration and Conciliation Act 1996 since the party against whom it has been passed has not been given prior notice. Further, the relief has not been claimed against the parties to the arbitral proceedings but against the parties who had no knowledge about the proceedings and who have not participated in the same. They would rely upon the Judgement of this Court in LSS Ocean Transport DMCC Vs. KI (Intl.,) Ltd., and another – Arb. O.P. (Comm. Div) No. 195 of 2022 dated 16.10.2023, where it has been observed that the arbitral award can be enforced only against the parties to the arbitral proceedings and not against non parties.
22. It is also their grievance that the decree holder has been selectively impleading them in the various proceeding instituted by them. In the Section 9 proceedings in O.A.No.772 of 2019 and in O.S.A.No.62 of 2019 they have been impleaded however they have https://www.mhc.tn.gov.in/judis 15/40 E.P. No. 40 of 2019 not been impleaded in O.P.No.416 of 2018, which is the petition filed by the decree holder under Section 47 to 49 of the Arbitration and Conciliation Act in respect of the arbitral award.
23. It is their contention that the non filing of the pleadings will not be a bar to argue the issue of maintainability. Further, they have filed a counter to the execution petition in E.P.No.55 of 2019 which has been heard simultaneously along with this Execution proceedings and therefore the non filing of the pleadings in the instant petition is not fatal.
24. They would also submit that the order passed in E.P.No.52 of 2021 and O.S.A.No.155 of 2020 which arises against orders in E.P.No.55 of 2019 would not operate as constructive resjudicata regarding the issue of maintainability. In this regard, they would place reliance on the Judgement reported in 2022 SCC Online SC 1460 – S.Ramachandra Rao Vs. Nagabhushana Rao. They would therefore submit that the execution proceedings have to be rejected as not maintainable.
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(iii) Decree Holder:
25. The Decree Holder has raised a preliminary objection to these submissions on maintainability. They would submit that the arguments raised by the respondents to the maintainability of the execution proceedings cannot be considered as there is no pleading either in the form of a counter or in the form of an application to reject the execution proceedings. In the absence of pleadings, the objection regarding the maintainability cannot be considered. In support of this argument, they would rely upon the Judgements of the Hon'ble Supreme Court reported in 1979 (3) SCC 371 – Shankar Chakravarti Vs. Britannia Biscuit Co., Ltd., and Another and 2022 SCC Online SC 928 – Akella Lalitha Vs. Konda Hanumantha Rao and another.
26. They would also submit that the reliance placed by the respondents upon the Judgement reported in 2007 SCC Online P&H 939 – Shanti Devi (dead) represented by LR Vs. Gian Chand is totally misconceived as the issue in that case was a challenge to a compromise decree passed in an earlier suit by filing a https://www.mhc.tn.gov.in/judis 17/40 E.P. No. 40 of 2019 separate suit which was clearly barred by the provisions of Order XXIII Rule 3 A of the CPC. Therefore, the objection being one based on statutory provisions, the non filing of the pleadings cannot be held to be fatal.
27. The Decree Holder has also controverted the factual submissions made by respondents 3 to 7 under various headings. To the arguments of the respondents that this Court is forum non conveniens, the Decree Holder would submit that to enforce an award in an international arbitration it is well open to the Decree Holder to go forum shopping to enforce the award. To buttress this argument, they would rely upon the Judgement of the Hon'ble Supreme Court reported in 1995 Sup. (2) SCC 280 – Brace Transport Corporation of Monrovia Vs. Orient Middle East Lines Ltd.
28. Further, it is their argument that the Division Bench of this Court in O.S.No.156, 157, 160 to 162 of 2020 had held that the situs of shares of the company is a place wherein its registered office https://www.mhc.tn.gov.in/judis 18/40 E.P. No. 40 of 2019 is situate. In the instant case, the registered office of the 2nd respondent, whose shares are the subject matter of the execution proceedings, is situate within the Jurisdiction of this Court and therefore the filing of the execution petition before this Court is very much maintainable.
29. With reference to the argument of the respondents 3 to 7 that Section 60 of the CPC would not come to the aid of the Decree Holder, the Decree Holder would submit that provisions of Section 60 permitted the Decree Holder to enforce a decree against the property in the name of the Judgement Debtor or in the name of another person who is holding the properties in trust for the Judgement Debtor or on his behalf. The Decree Holder would submit that the respondents 3 to 7 are holding the shares in trust for and on behalf of the Judgement Debtor. They would rely upon the Judgement reported in 2021 (6) SCC 418 – Rahul S. Shah Vs. Jinendra Gandhi in this regard.
https://www.mhc.tn.gov.in/judis 19/40 E.P. No. 40 of 2019
30. The argument of the respondents that in order to claim benefit under Section 89 of the Companies Act, the beneficial interest has to be declared has been countenanced by the Decree Holder by stating that there was no requirement for a written declaration / equitable trust. It is well open to the execution court to pierce the corporate veil. The Decree Holder would submit that it is the fund of the Judgement Debtor that has been infused to purchase the shares of the 2nd respondent in the name of respondents 3 to 7 on their behalf. They would rely upon the following Judgements:
(i)2004 (8) SCC 355 – Canbank Financial Services Ltd., Vs. Custodian.
(ii)1996 (4) SCC 622 – Delhi Development Authority Vs. Skipper Construction Co. (p) Ltd.
31. The arguments of the respondents that the Judgements of the Division Bench and the Hon'ble Supreme Court in C.S.No.33 of 2018 would operate as bar to the relief claimed in that execution petition, has been responded to by the Decree Holder by submitting that the issue that was involved in C.S.No.33 of 2018 was, https://www.mhc.tn.gov.in/judis 20/40 E.P. No. 40 of 2019 Whether the majority share holders in a foreign company can seek declaration from an Indian Court that the foreign company is a beneficial owner of the shares of the Indian Company?
However, the instant case relates to execution of a foreign award against the shares of the 2nd respondent, which is an Indian Company, held by respondents 3 to 7 for and behalf of the Judgement Debtor / 1st respondent.
32. Further, the Judgement of the Division Bench and Supreme Court in C.S.No.33 of 2018 has been distinguished by the Division Bench of this Court in O.S.A.Nos.156, 157, 160 to 162 of 2020 as also by the learned Single Judge in E.P. No.52 of 2001 and in A.No.4033 of 2019 in C.S.No.320 of 2019.
33. The respondents had alleged that Section 89 of the Companies Act 2013 acts as bar to the reliefs claimed in this execution petition. The Decree Holder would state that they are claiming against the Judgement Debtor and not under the Judgement https://www.mhc.tn.gov.in/judis 21/40 E.P. No. 40 of 2019 Debtor and Section 89 (8) of the aforesaid Act states that the bar is only in respect of the beneficial owner or any person who claims through him which is not the case in the instant Execution petition. Further, this argument had also been repulsed in O.S.A.Nos. 156, 157, 160, 161, 162 of 2020. This argument was also advanced and rejected in E.P.No.52 of 2021.
34. The respondents 3 to 7 had contended that the provisions of Prohibition of Benami Property Transactions Act, would be a bar to the relief claimed. Once again these very arguments had been advanced in E.P.No.52 of 2021 and rejected. It is the argument of the Decree Holder that the properties that are sought to be attached are not Benami properties. Further, Section 2 (9) of the Act provides an exclusion in the case of Benami property. It is provided that where the property is held in the capacity of trustee, executor, partner or Director of the Company then such properties would not constitute Benami property. The Decree Holder would rely on the following Judgements to support the above argument:
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(i)1992-2-LW-42 – Greaves Cotton Vs. J.Jamal Mohammed Abdulla.
(ii)1993-LW-710 – Thayammal Vs. kaladevi.
(iii)2020 SCC Online 2550 – Sanjeev Mahajan Vs. Aries Travels Private Ltd.
35. Though in the written arguments the respondent had not placed any argument regarding the documents having been illegally obtained and annexed in execution proceedings (which they had in their oral arguments) the Decree Holder would submit that these documents can still be taken into consideration drawing strength from Judgements of the Hon'ble Supreme Court reported in 2013 (10) SCC 591 – Umesh Kumar Vs .State of Andhra Pradesh, and the Judgement of this Court reported in 2000 (1) CTC 545 – Ganesan Vs. M.Sundararaja Thevar.
36. The contention of the respondents 3 to 7 that the bankruptcy order dated 07.03.2022 passed against the 1st respondent in the Courts at Dubai would operate as bar to the relief https://www.mhc.tn.gov.in/judis 23/40 E.P. No. 40 of 2019 claimed in this execution proceedings is baseless as it is the contention of the Decree Holder that there is no reciprocal agreement between Republic of India and UAE to take cognizance of the bankruptcy proceedings in either of the Country. Reliance in this regard is placed on the Judgement reported in AIR 1977 Mad 199 – Epoh Indian Overseas Bank Vs. S.M.Mohamed Musthaba Sabib.
37. The Decree Holder would submit that the respondents 3 to 7 had no locus standi to resist the enforcement of the foreign award. The award is not being executed against respondents 3 to 7 but only against the shares of the 1st respondent/judgment debtor which they hold beneficially for and on behalf of the Judgement Debtor. The respondents 3 to 7 who are ostensibly registered owners cannot resist the enforcement of the foreign award. They would rely on the following Judgements:
(i)2020 (10) SCC 1 – Government of India Vs. Vedanta Limited.
https://www.mhc.tn.gov.in/judis 24/40 E.P. No. 40 of 2019
(ii)2022 (1) SCC 753 – Gemini Bay Transcription Pvt., Ltd., Vs. Integrated Sales Services ltd,.
38. The argument advanced by the respondents 3 to 7 that they have not been put on notice either in the arbitration proceedings or in the proceedings seeking to enforce the arbitration award is absolutely misconceived in the light of the fact that the award is not sought to be enforced against respondents 3 to 7 in their individual capacity but only against the shares that they hold beneficially for the 1st respondent.
39. The Decree Holder would further submit that the only issue that has to be considered in the execution proceeding is whether the shares that are sought to be attached are the shares being held by respondents 3 to 7 for and on behalf of the 1st respondent/judgment debtor. This issue has to be proved only by the Decree Holder. The Decree Holder would further submit that only if they are able to establish the fact that the shares, subject matter of the execution proceeding, is held by respondents 3 to 7 for https://www.mhc.tn.gov.in/judis 25/40 E.P. No. 40 of 2019 and on behalf of the 1st respondent, they would succeed in the Execution proceedings otherwise the execution proceedings would automatically be dismissed. Therefore, the learned Senior Counsel would submit that the execution petition is very much maintainable.
40. Although respondents 3 to 7 have raised elaborate written submissions which touch upon the merits of the execution proceedings and the award there is no pleading either in the form of counter to the execution proceedings or in the form of an application raising the preliminary objection. The 2nd respondent who had filed a counter after orders were reserved has not appeared before this Court nor advanced any arguments.
Discussion:
41. As stated earlier, the 3rd respondent had initially taken time to file a detailed counter which is evident from the order dated 28.03.2019. They had sought time till the Monday thereafter to file their counter. Thereafter, for reasons best known, the 3rd respondent has not chosen to file the counter but has proceeded to https://www.mhc.tn.gov.in/judis 26/40 E.P. No. 40 of 2019 submit arguments on the maintainability of the execution proceedings.
42. It is pertinent to note that the respondents have filed their counter to E.P.No.55 of 2021 which was initially tried simultaneously with this execution petition. In the instant case, the respondents have questioned the execution proceedings not only on the ground of jurisdiction but also on the merits of the very executability of the award. However, they have chosen to not file their counter. Therefore, it becomes imperative for this Court to first decide whether the respondents could raise the issue of maintainability without a pleading in some form. This being a purely legal submission, this Court is proceeding to consider the various judicial pronouncements in this regard as not much of argument was addressed in this regard by the counsels for respondents 3 to 7 either orally or in their written arguments.
43. In the Judgement reported in 1979 (3) SCC 371 – Shankar Chakravarti Vs. Britannia Biscuit Co Ltd., the question https://www.mhc.tn.gov.in/judis 27/40 E.P. No. 40 of 2019 that fell for the consideration of the Hon'ble Supreme Court was the order of termination issued upon the appellant by the company which was set aside by the Tribunal and confirmed by the learned Single Judge and reversed in appeal, against which a Special Leave Petition had been filed before the Hon'ble Supreme Court. One of the contentions that had been raised is the lack of pleading. The learned Judges had proceeded to observe as follows:
“If there is no pleading raising a contention there is no question of substantiating such a non- existing contention by evidence. It is well settled that allegation which is not pleaded, even if there is evidence in support of it, cannot be examined because the other side has no notice of it and if entertained it would tantamount to granting an unfair advantage to the first mentioned party. We are not unmindful of the fact that pleadings before such tribunals have not to be read strictly, but it is equally true that the pleadings must be such as to give sufficient notice to the other party of the case it is called upon to meet.” https://www.mhc.tn.gov.in/judis 28/40 E.P. No. 40 of 2019
44. In the Judgement reported in 2022 SCC Online SC 928 – Akella Lalitha Vs. Konda Hanumantha Rao and another, the learned Judges had observed that the relief which is not found on pleading should not be granted. The learned Judges has observed as follows:
“It is settled law that relief not found on pleadings should not be granted. If a Court considers or grants a relief for which no prayer or pleading was made depriving the respondent of an opportunity to oppose or resist such relief, it would lead to miscarriage of justice.”
45. The Hon'ble Supreme Court in the Judgement reported in AIR 1968 SC 534 – Sita Ram Vs. Radhabai and others was considering the decree passed by the High Court of Allahabad reversing the Judgement and Decree passed by the Trial Court in and by which the Trial Court had dismissed a suit filed for delivery of jewelery or payment of its value. The Hon'ble Supreme Court had extracted the pleadings of both the plaintiff as well as the defendant and had observed that the plaintiff had not pleaded that https://www.mhc.tn.gov.in/judis 29/40 E.P. No. 40 of 2019 she had deposited the ornaments belonging to one Gomtibai with the appellant with a view to defeat the claim of Gomtibai and that Gomtibai was infact defrauded. However, the Trial Court had proceeded to observe that the appellant and the plaintiff had colluded to deprive Gomtibai. The Hon'ble Supreme Court observed that the Trial Court had determined an issue which did not arise on pleadings of the parties and ultimately the Hon'ble Supreme Court had confirmed the Judgement and Decree of the High Court.
46. In the case reported in 2008 (17) SCC 491 – Bachhaj Nahar Vs. Nilima Mandal and Another, the Hon'ble Supreme Court was considering the correctness of the Judgement passed by the High Court granting easementary right which was neither pleaded nor evidence let in in this regard. The learned Judges observed that in passing such Judgement, the High Court had violated several rules of Civil Procedure. They had in paragraph No.10 sets out the rules that had been breached which is set out hereunder.
“(i) No amount of evidence can be looked into, https://www.mhc.tn.gov.in/judis 30/40 E.P. No. 40 of 2019 upon a plea which was never put forward in the pleadings. A question which did arise from the pleadings and which was not the subject matter of an issue, cannot be decided by the court.
(ii) A Court cannot make out a case not pleaded. The court should confine its decision to the question raised in pleadings. Nor can it grant a relief which is not claimed and which does not flow from the facts and the cause of action alleged in the plaint.
(iii) A factual issue cannot be raised or considered for the first time in a second appeal.
47. Thereafter the learned Judges had discussed the purport / scheme of the Code of Civil Procedure CPC which according to the learned Judges was an elaborate codification of the principles of natural Justice to be applied to Civil litigation. The learned Judges had observed as follows:
“The provisions are so elaborate that many a time, fulfillment of the procedural requirements of the https://www.mhc.tn.gov.in/judis 31/40 E.P. No. 40 of 2019 Code may itself contribute to delay. But any anxiety to cut the delay or further litigation, should not be a ground to float the settled fundamental rules of civil procedure.” “9. The object and purpose of pleadings and issues is to ensure that the litigants come to trial with all issues clearly defined and to prevent cases being expanded or grounds being shifted during trial. Its object is also to ensure that each side is fully alive to the questions that are likely to be raised or considered so that they may have an opportunity of placing the relevant evidence appropriate to the issues before the court for its consideration. This Court has repeatedly held that the pleadings are meant to give to each side intimation of the case of the other so that it may be met, to enable courts to determine what is really at issue between the parties, and to prevent any deviation from the course which litigation on particular causes must take.
https://www.mhc.tn.gov.in/judis 32/40 E.P. No. 40 of 2019
10. The object of issues is to identify from the pleadings the questions or points required to be decided by the courts so as to enable parties to let in evidence thereon. When the facts necessary to make out a particular claim, or to seek a particular relief, are not found in the plaint, the court cannot focus the attention of the parties, or its own attention on that claim or relief, by framing an appropriate issue. As a result the defendant does not get an opportunity to place the facts and contentions necessary to repudiate or challenge such a claim or relief. Therefore, the court cannot, on finding that the plaintiff has not made out the case put forth by him, grant some other relief.
The question before a court is not whether there is some material on the basis of which some relief can be granted. The question is whether any relief can be granted, when the defendant had no opportunity to show that the relief proposed by the court could not be granted. When there is no prayer for a particular relief https://www.mhc.tn.gov.in/judis 33/40 E.P. No. 40 of 2019 and no pleadings to support such a relief, and when defendant has no opportunity to resist or oppose such a relief, if the court considers and grants such a relief, it will lead to miscarriage of justice.
48. In the very same Judgement, the learned Judges had explained the exception to this rule and had stated as follows:
“It is thus clear that a case not specifically pleaded can be considered by the court only where the pleadings in substance, though not in specific terms, contains the necessary averments to make out a particular case and the issues framed also generally cover the question involved and the parties proceed on the basis that such case was at issue and had led evidence thereon. As the very requirements indicate, this should be only in exceptional cases where the court is fully satisfied that the pleadings and issues generally cover the case subsequently put forward and that the parties being conscious of the issue, had led https://www.mhc.tn.gov.in/judis 34/40 E.P. No. 40 of 2019 evidence on such issue. But where the court is not satisfied that such case was at issue, the question of resorting to the exception to the general rule does not arise.” “Another aspect to be noticed, is that the court can consider such a case not specifically pleaded, only when one of the parties raises the same at the stage of arguments by contending that the pleadings and issues are sufficient to make out a particular case and that the parties proceeded on that basis and had led evidence on that case. Where neither party puts forth such a contention, the court cannot obviously make out such a case not pleaded, suo moto.” The above observation will apply on all fours to the instant case on hand and the exception set out by the Hon'ble Supreme Court would not apply to the facts of this case since there are no pleadings for the Court to cull out the case of the respondents. The argument regarding the maintainability has not been set out in the form of pleadings by the respondents.
https://www.mhc.tn.gov.in/judis 35/40 E.P. No. 40 of 2019
49. In yet another Judgement of the Hon'ble Supreme Court reported in 2019 (5) SCC 537 – Deepak Tandon and Another Vs. Rajesh Kumar Gupta, the Hon'ble Supreme Court has observed as follows:
“Fourth, it is a settled law that if the plea is not taken in the pleadings by the parties and no issue on such plea was, therefore, framed and no finding was recorded either way by the Trial Court or the First Appellate Court, such plea cannot be allowed to be raised by the party for the first time in third Court whether in appeal, revision or writ, as the case may be, for want of any factual foundation and finding.”
50. A Division Bench of this Court in the Judgement reported in 1994-2-LW 342 – Saroj Goenka and others Vs. T.Nariman Point Building Services and Trading Private Ltd., was considering the correctness of an order passed by learned Single Judge directing the Company Law Board to consider the issue of maintainability. The learned Judges held that where there were pleadings running https://www.mhc.tn.gov.in/judis 36/40 E.P. No. 40 of 2019 into several pages then in such cases the issue of maintainability could be tried as preliminary issue as it would be convenient for both the parties since ultimately if the proceeding is rejected on the ground of maintainability the parties need not adduce the evidence for all the issues. The Division Bench had laid emphasis on the fact that there should be a pleading for raising the issue of maintainability. Ultimately, the learned Judges had not interfered with the Judgement and Decree of the Single Judge directing the company Law Board to consider the issue of maintainability. That apart, in the earlier proceedings between the parties these arguments have been rejected.
51. Therefore, from a conspectus of the aforesaid Judgements it is crystal clear that in order to consider the issue of maintainability, more particularly when it touches upon the merits of the proceedings, there should be a pleading. Admittedly, in the instant case, none of the respondents who have argued the issues before this Court deemed it fit to place their pleadings for consideration of this Court. After orders had been reserved by this https://www.mhc.tn.gov.in/judis 37/40 E.P. No. 40 of 2019 Court and coming to know of the question raised by this Court as to why a counter has not been filed, the 2nd respondent has, without notice to this Court, filed a counter into the Registry. However, the 2nd respondent has not appeared before this Court and submitted their arguments. Further when the order passed by this Court is taken on appeal the appellate Court would not have benefit of the pleadings to appreciate the challenge to the order on appeal before it.
52. As rightly pointed out by the Decree Holder the issue before this Court is whether the shares registered in the name of the respondents 3 to 7 is ostensibly being held by them on behalf of the 1st respondent. This is an issue which has to be proved by the Decree Holder and such a proof can be done only by letting in evidence in the execution petition after the counter is filed. Therefore, the arguments regarding the maintainability has to necessarily be rejected and is accordingly rejected. https://www.mhc.tn.gov.in/judis 38/40 E.P. No. 40 of 2019
53. Post the matter on 29.01.2024 for filing counter of respondents 3 to 7 to the execution petition.
19.01.2024
Index : Yes/No
Internet : Yes/No
Speaking Order / Non Speaking Order
kan/srn
https://www.mhc.tn.gov.in/judis
39/40
E.P. No. 40 of 2019
P.T. ASHA, J,
kan/srn
Pre-Delivery Judgment in
E.P. No. 40 of 2019
19.01.2024
https://www.mhc.tn.gov.in/judis
40/40