Calcutta High Court (Appellete Side)
West Bengal Financial Corporation vs Goutam Surana And Others on 13 March, 2019
Author: Sabyasachi Bhattacharyya
Bench: Sabyasachi Bhattacharyya
In the High Court at Calcutta
Civil Revisional Jurisdiction
Appellate Side
The Hon'ble Justice Sabyasachi Bhattacharyya
C.O. No. 767 of 2019
West Bengal Financial Corporation
Vs.
Goutam Surana and others
For the petitioner : Mr. Joydeep Kar,
Mr. Abhijit Sarkar,
Mr. Abhik Chitta Kundu
For the respondent
nos. 1 and 2 : Mr. P. Bag,
Mr. Pradyot Kumar Das,
Mr. Partha Banerjee
For the opposite party no. 4 : Mr. Sanjib Kr. Mukhopadhyay
Hearing concluded on : 01.03.2019
Judgment on : 13.03.2019
Sabyasachi Bhattacharyya, J.:‐
1. The present application under Article 227 of the Constitution of India has been preferred by the second defendant in a suit (Title Suit No. 525 of 2017) instituted by the opposite party nos. 1 and 2 (Goutam and Abhilasha Surana) against the opposite party no. 3 (Maa Jashoda Rice Mill Private Limited), being the first defendant, and the petitioner (West Bengal Financial Corporation).
2. In the said suit, by the first impugned order dated December 14, 2018, the opposite party no. 4, namely Tapas Das, was added as a defendant. By the second impugned order dated January 7, 2019, the petitioner's application for review of the first impugned order was rejected.
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3. The storyline of the present revision has two distinct but converging branches.
4. The first branch originated in Title Suit No. 11 of 2013 being filed by Tapas, the opposite party no. 4, in the court of the Civil Judge (Senior Division) at Bolpur, District: Birbhum. The present opposite party no. 3 (Maa Jashoda Rice Mill Private Limited) was the first defendant and one Saptarshi Das, an alleged director of Maa Jashoda Rice Mill, the second, in the said suit. The present plaintiffs/opposite party nos. 1 and 2, namely Goutam and Abhilasha, were proforma defendant nos. 8 and 9 therein. The reliefs claimed in Title Suit No. 11 of 2013 were:
"(a) A decree declaring the Memorandum of Understanding dated 01.03. 2012 between the plaintiff and the defendant No. 2 as illegal, void and not binding upon the plaintiff.
(b) Declaration by a preliminary decree that the plaintiff is entitled accounts of the assets and profits of the defendant No.1 from formation till decree.
(c) Appointment of Commissioner of Accounts by the Learned Court in respect of the assets, profits and loss of the defendant No.1 from its formation till date.
(d) Final decree of the claim of the plaintiff of such amounts as may be found by the Commissioner of Accounts in his report.
(e) Cost of the suit.
(f) Receiver.
(g) Such further and other, relief or reliefs as the Learned Court would be pleased to allow to the plaintiff in law and Equity. "
5. The basis of Tapas' suit was that he and Saptarshi were directors of Maa Jashoda Rice Mill Private Limited at the time of its formation and obtained loan from the United Bank, Bolpur branch. Subsequently Tapas and Saptarshi fell out and allegedly under undue pressure, Tapas agreed to retire from the board of directors of the company 3 and to transfer the shares held by Tapas and his wife in favour of Saptarshi and/or the latter's nominated persons. Accordingly a memorandum of understanding was executed by Tapas and Saptarshi on such lines on March 1, 2012, which was challenged in Title Suit No. 11 of 2013.
6. In his suit, Tapas sought to add the present petitioner, the West Bengal Financial Corporation (WBFC), as a party by filing an application under Order I Rule 10 of the Code of Civil Procedure. The trial court having rejected such application, Tapas filed an application under Article 227 of the Constitution of India, giving rise to C.O. No. 2794 of 2017. Vide order dated November 26, 2018, a co‐ordinate bench of this court dismissed the said application on merits, holding inter alia that in view of the nature of the dispute raised by the parties in the suit, the presence of the WBFC in the suit was not at all necessary.
7. It is relevant to mention here that Tapas Das, the plaintiff in Title Suit No. 11 of 2013, also filed an application for temporary injunction in connection with the said suit. Such application having been rejected by the trial court, Tapas preferred a miscellaneous appeal, bearing no. 14 of 2014. The Additional District Judge at Bolpur, District: Birbhum, by his judgement and order dated September 5, 2014, allowed the appeal on contest, thereby setting aside the impugned order and restraining the defendant/respondent. 2, namely Saptarshi Das, from alienating or transferring Maa Jashoda Rice Mill Private Limited Company or its property to any stranger or from inducting any stranger in the company till the disposal of the suit.
8. Subsequently the plaintiffs/opposite party nos. 1 and 2 herein, claiming themselves to be directors and shareholders of Maa Jashoda Rice Mill Private Limited, instituted a suit, bearing Title Suit No. 527 of 2017. In the said suit, it was alleged that, by an 4 agreement dated January 11, 2016 between Maa Jashoda Rice Mill and the WBFC, it was agreed that the latter would lend a sum of Rs. 319 lakh as term loan for the purpose of acquiring fixed assets by Maa Jashoda Rice Mill and Rs. 650 lakh as working capital term loan for the purpose of acquiring fixed assets and/or research and development and/or for other purposes. A deed of guarantee, it was pleaded, was also contemporaneously entered into between the opposite party nos. 1 and 2 and the WBFC. Thereafter a demand notice was sent by the WBFC under Section 30 of the State Financial Corporations Act, 1951 (hereinafter referred to as "the 1951 Act"), followed up by a notice under Section 29 of the 1951 Act. Ultimately an advertisement was published on April 15, 2017 in Times Group E‐paper for sale of the assets of Maa Jashoda Rice Mill, according to the opposite party nos. 1 and 2 at an undervalued price.
9. The reliefs claimed by the plaintiffs/opposite party nos. 1 and 2 in Title Suit No. 527 of 2017 were as follows:
" (a) The advertisement published on 15th April, 2017 in Times Group E‐paper for sale of the assets of the defendant no. 1 at an undervalue price of Rs.555 Lakhs, being annexure "H"
hereof be adjudged null and void and be delivered up and cancelled.
(b) The notice Nos. DGM (AMD)/MJRPL/1385 and DGM (AMD)/MJRPL/1389 both dated 20th June, 2017 being Annexures "I" and "K" hereof be adjudged null and void and be delivered up and cancelled;
(c) Declaration that the advertisement published on 15th April, 2017 in Times Group E‐ paper for sale of the assets of the defendant no. 1 at an undervalue price of Rs.555 Lakhs, being annexure "H" hereof and notice Nos. DGM (AMD)/MJRPL/1385 and DGM 5 (AMD)/MJRPL/1389 both dated 20th June, 2017 being Annexures "I" and "K" hereof, as morefully described in the Schedule hereunder written, are not binding on the plaintiffs;
(d) Perpetual injunction restraining the defendants and their agents, servants and assigns from acting in any manner in terms of the advertisement published on 15th April, 2017 in Times Group E‐paper being annexure "H" hereof and from acting in contrary to the settled guidelines for auction sale of the property under the law and from acting in terms of the Notice Nos. DGM (AMD)/MJRPL/1385 and DGM (AMD)/MJRPL/1389 both dated 20th June, 2017 being Annexures "I" and "K" hereof, as morefully described in the Schedule hereunder written;
(e) Injunction; (f) Costs; (g) Such other or further relief or reliefs. "
10. In Title Suit No. 527 of 2017, the plaintiffs/opposite party nos. 1 and 2 took out an application for temporary and ad interim order on which the trial court, vide order dated July 11, 2017, passed an ad interim order of injunction restraining the defendant no. 2/petitioner WBFC from doing any act in any manner in terms of the advertisement dated April 15, 2017 published in "Times Group E Paper" and also from dealing with the assets of the defendant no. 1 in terms of the notice dated June 20, 2017 till August 4, 2017. Subsequently the said injunction was extended from time to time.
11. Being aggrieved with the said ad interim order, the petitioner filed Miscellaneous Appeal No. 98 of 2017 and prayed therein for stay of operation of the order impugned therein. The District Judge at Barasat, District: North 24‐Parganas having 6 refused the prayer for stay, C.O. No. 2552 of 2017 was preferred by the petitioner before this court under Article 227 of the Constitution of India.
12. By an order dated January 15, 2018 passed in C.O. No. 2552 of 2017, a co‐ordinate bench of this court appointed a valuer to ascertain the valuation of the factory premises in Birbhum district proposed to be sold by the petitioning corporation and the valuation report was directed to be filed by the valuer within a fortnight from that date. The remuneration of the valuer and expenses were assessed and directed to be paid. It was further recorded, that in the event the valuation was closer to the figure suggested by the plaintiffs, the entire expenses for the valuation would be borne by the corporation and if the valuation report indicated the figure to be closer to the figure referred to by the corporation, the entire expenses for the purpose of valuation would have to be met by the plaintiffs.
13. C.O. No. 2552 of 2017 was finally disposed of by another co‐ordinate bench of this court vide order dated November 19, 2018, inter alia by directing the trial judge to dispose of the suit, taking into consideration the valuation report submitted by the valuer before that bench within four weeks from the date of communication of the order, making it clear that the plaintiffs were at liberty to arrange for sale of the said assets at any higher value than the suggested value of the valuer. The miscellaneous appeal itself was treated to be disposed of as not pressed and the trial judge was directed to hear the suit and the injunction application together without granting any unnecessary adjournment to either of the parties, recording that the time limit for disposal of the suit as indicated therein was peremptory and mandatory. 7
14. By a subsequent order dated December 17, 2018, the order dated November 19, 2018 was corrected to read as 'four months' from the date of communication instead of 'four weeks' and other minor alterations were incorporated.
15. On March 15, 2018 the present opposite party no. 4 Tapas Das filed an application under Order I Rule 10 (2) read with Section 151 of the Code of Civil Procedure, 1908 in Title Suit No. 525 of 2017, thereby seeking to be impleaded as a defendant in the said suit. The primary premise of such prayer for impleadment was the alleged suppression by the plaintiffs/opposite party nos. 1 and 2 of the facts of pendency of the previous suit filed by Tapas, the injunction order dated September 5, 2014 passed in Miscellaneous Appeal No. 14 of 2014 in connection therewith, the pendency of an application under Order XL Rule 1 of the Code of Civil Procedure in the said suit by Tapas, the alleged creation of a charge in favour of the WBFC in respect of the assets of Maa Jashoda Rice Mill by the present plaintiffs/opposite party nos. 1 and 2, the application for addition of party filed in the previous suit of Tapas and its fate and the pendency of C.O. No. 2794 of 2017 against the order refusing Tapas' application for addition of party in the previous suit at that juncture (although the said revision was dismissed subsequently on November 26, 2018, as mentioned in paragraph no. 6 hereinabove).
16. By the first impugned order in the present revisional application, being Order No. 17 dated December 14, 2018, the trial Judge allowed the application filed by the present opposite party no. 4, Tapas Das, on contest, thereby directing him to be impleaded as party defendantin Title Suit No. 525 of 2017.
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17. Thereafter the present petitioner took out an application for review of the said order dated December 14, 2018, which was dismissed by the trial court vide Order No. 20 dated January 7, 2019.
18. The present revisional application has been filed against both the said orders.
19. Learned senior advocate appearing for the petitioner argues that, in view of the dismissal of the application made by the opposite party no. 4 in his own suit, for addition of the present petitioner, having been dismissed up to this court vide order dated November 26, 2018 passed in C.O. No. 2794 of 2017, the current application of the opposite party no. 4 to implead himself in the present suit of the opposite party nos. 1 and 2, on the basis of such previous suit, was not maintainable in law at all.
20. By placing reliance on the said previous order of a co‐ordinate bench of this court, the petitioner submits that the co‐ordinate bench categorically held that, in view of the nature of the dispute raised by the parties in the said suit of the opposite party no. 4, the presence of the present petitioner in the suit was not at all necessary. As such, it is argued, that the opposite party no. 4 could not now seek impleadment in the current suit of the opposite party nos. 1 and 2 on the premise of pendency of such suit or any order passed in connection therewith.
21. It is further submitted that the present petition for addition of party by Tapas Das was merely a ploy to frustrate the orders passed by this court in C.O. No. 2552 of 2017, initially appointing a valuer to ascertain the valuation of the factory premises in Birbhum District proposed to be sold by the petitioner and thereafter directing the trial court to dispose of the current suit, taking into consideration the valuation report submitted by the valuer before this court.
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22. Since the entire dispute involved in the current suit would be virtually resolved pursuant to the aforesaid orders passed in C.O. No.2552 of 2017 and only the modalities to implement the said orders remained to be completed, the addition of Tapas Das at this juncture would, in any event, be unnecessary to decide the present lis and would delay the same.
23. It is further argued on behalf of the petitioner that the alleged suppression of the pendency of the previous suit of Tapas Das and/or the injunction order passed in the connected miscellaneous appeal or application under Order XL Rule 1 of the Code, have no bearing whatsoever on the present suit.
24. Placing the reliefs prayed for in the two suits, learned senior counsel for the petitioner sought to highlight the difference in scope between the two suits. Whereas the latter suit, bearing Title Suit No. 525 of 2017, pertains to an advertisement emanating from a loan transaction, to which Tapas Das was neither a signatory nor a party, the suit of Tapas Das bearing Title Suit No. 11 of 2013, pertains to a memorandum of understanding dated March 1, 2012 which does not concern the present petitioner or the opposite party nos. 1 and 2 directly and was at best an inter se dispute between the then erstwhile and the then present directors of the opposite party no.3‐company.
25. It is argued that, as per his own admission Tapas, had already retired from the directorship and shareholding of the opposite part no.3‐company at the juncture when the Title Suit No. 11 of 2013 itself was filed. The transactions and loan agreements‐in‐question were all irrespective and independent of the ambit of such suit. In fact, the injunction order dated September 5, 2014 passed in Miscellaneous 10 Appeal No. 14 of 2014 against one Saptarshi Das, one of the then directors of the company, has no effect or bearing on the present suit.
26. It is further submitted that if Tapas is added to the present suit, the scope of the suit would be enlarged and there would be a sea change in the nature and character of the suit itself, which would then become a forum for canvassing the independent alleged rights of Tapas vis‐a‐vis Saptarshi Das, one of the other directors of the opposite party no. 3‐company. Such an attempt, particularly in view of the previous order of this court refusing to implead the present petitioner in Tapas's suit, would be contrary to law and to the spirit of the said order of this court.
27. The opposite party nos. 1 and 2, being the plaintiffs in Title Suit No. 527 of 2017, on the other hand, support the orders impugned herein. It is submitted on behalf of the said opposite parties that there could not be any collusion between the opposite party nos. 1 and 2 and Tapas Das, which is evident from Title Suit No. 11 of 2013 having been filed by the said Tapas also against the opposite party nos. 1 and 2, prior to the institution of the latter's suit.
28. It is further submitted on behalf of the plaintiffs/opposite party nos. 1 and 2 that the scope of review is extremely limited and the yardsticks of review, as contemplated in Order XLVII of the Code of Civil Procedure, were not satisfied in the present case. As such, the trial court was justified in refusing to review its earlier order dated December 14, 2018.
29. Opposite party nos. 1 and 2 further submit that they are the dominus litis in the latter suit and their suit to be a comprehensive one, by impleading Tapas Das in their suit, to which the present petitioner, being one of the defendants, could not have any locus standi to object.
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30. It is further submitted that in view of the nature of rights claimed by Tapas having a chance of being affected by the result of the latter suit, Tapas Das ought to have been impleaded, as rightly done by the court below, in Title Suit No. 525 of 2017.
31. It is further argued that even after the order dated November 19, 2018 passed by a co‐ordinate bench of this court in C.O. No. 2552 of 2017, the suit was yet to be disposed of. The plaintiffs were still at liberty to arrange for sale of the assets at any higher value than the suggested value of the valuer. As such, in view of the allegations of under‐valuation by the defendant no. 2/petitioner, as levelled in Title Suit No. 527 of 2017, Tapas Das had a direct interest in the outcome of the present suit and was rightly impleaded therein.
32. Learned counsel appearing for the opposite party no. 2, namely, Tapas Das, places reliance on a judgment reported at (1994) 2 SCC 1 [S.P. Chengalvaraya Naidu (Dead) by LRS. vs. Jagannath (Dead) By LRS. and others], at the very outset, in support of the proposition that a judgment or decree obtained by fraud was to be treated as nullity and could be questioned even in collateral proceedings. Non‐disclosure of relevant and material documents with a view to obtain advantage amounted to fraud and the decree passed in such a suit was liable to be set aside.
33. On the basis of the ratio laid down in the said judgment, learned counsel for the opposite party no. 4 argues that, in the present case, material facts were suppressed both by the plaintiffs/opposite party nos. 1 and 2 as well as the defendant no. 1/opposite party no. 3 and the defendant no. 2/petitioner.
34. Placing reliance on the application made by the opposite party no. 4 in the latter suit for addition of party, learned counsel categorically argues that the said question was rightly gone into by the trial court in impleading the opposite party no. 4 as a party 12 defendant. In view of the existence of a specific injunction order, passed on September 5, 2014 in Miscellaneous Appeal No. 14 of 2014 in connection with Title Suit No. 11 of 2013, and in view of the scope of the said suit itself and connected applications for receiver and otherwise, opposite party no. 4 was not only proper but a necessary party to Title Suit No. 527 of 2017.
35. It is argued that there were several discrepancies and collusion between the opposite party nos. 1 and 2, Saptarshi Das (a defendant in Tapas's suit) and the present petitioner. Several deeds which were relied on by the original parties to the latter suit, including the loan agreement and other documents, were questionable. Many of the deeds produced in the court below in connection with the latter suit were forged. Such facts, according to the opposite party no. 4, were necessary to be brought to the notice of the court before adjudicating Title Suit No. 527 of 2017.
36. Moreover, the opposite party no. 4 also has a vital interest in the latter suit, since the same pertains to the under‐valuation of the property sought to be sold. In the event the petitioner was successful in selling the property‐in‐question at a lower value than could be fetched for it, the interest of the opposite party no. 4 as well as the opposite party no. 3‐company would be in jeopardy.
37. Hence, according to the opposite party no. 4, the presence of Tapas as a party to Title Suit No. 527 of 2017 was necessary to argue and to bring to the notice of the court the aforesaid points.
38. The argument advanced by the petitioner, as to the rejection of the application of opposite party no. 4 for addition of the present petitioner as a party to his suit, bearing Title Suit No. 11 of 2013, being a deterrent in impleading the opposite party no. 4 as a party to the latter suit, may have its fallacies, since the scopes of the two 13 suits could be arguably different. However, the fact that the premise of the previous rejection of addition of the petitioner as a party to Tapas's suit, was based on the petitioner being an unnecessary party in view of the ambit of Tapas's suit, signifies that the present logic of Tapas (being the alleged suppression of the previous suit and connected orders) to get impleaded in the latter suit was also decided in the said order of refusal.
39. Once it was held that the petitioner was not necessary party to Tapas's suit, the existence of Tapas's suit or connected orders, or the suppression thereof, could not be material any longer for the adjudication of the latter suit. Since Tapas sought to get impleaded merely on the premise of such alleged suppression, and the relevance of the petitioner in such previous suit was turned down upto this court, the same logic would prevent Tapas from being added in the current suit as well.
40. This apart, Tapas had admittedly retired as a partner and had relinquished his shareholding in the opposite party no. 3‐company even prior to filing of Title Suit No. 11 of 2013. Although such relinquishment and the connected Memorandum of Understanding was challenged by Tapas in the said suit, till, and if at all, such suit is decided in favour of Tapas, Tapas only has an actionable claim at best and no right in prasaenti sufficient to entitle him to be added in the later suit.
41. Tapas had filed the previous suit and sought impleadment in the present suit on the plinth of his claims to the status of director and shareholders in the company. Such claim wasex facie in his personal capacity and a dispute inter se Tapas and one Saptarshi and other directors. Such a claim could not validate the argument that Tapas had any stake in the present suit.
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42. It may further be noted that neither Title Suit No. 11 of 2013 nor the current application of Tapas to be added as a party to the latter suit was in representative capacity, to uphold the interest of the company. As such, Tapas would be neither a necessary nor a proper party in the current suit which has been filed by the directors and guarantors in a loan agreement challenging the alleged under‐valuation of the property to be sold in satisfaction of such loan.
43. Tapas, being a total outsider to the said loan transaction and the connected transactions, could not have any direct or even collateral interest falling within the ambit of the latter suit, being Title Suit No. 527 of 2017.
44. As regards the allegations of fraud sought to be levelled by Tapas, those can at best be the subject‐matter of his own suit being Title Suit No. 11 of 2013 and had no relevance to the scope of adjudication in Title Suit No. 527 of 2017. In such view of the matter, the trial court acted without jurisdiction in adding Tapas as a party defendant to Title Suit No. 527 of 2017.
45. However, the subsequent prayer for review made by the petitioner did not strictly satisfy the conditions of order XLVII of the Code of Civil Procedure and as such was rightly rejected by the trial court.
46. Accordingly, C.O. No. 767 of 2019 is allowed in part, thereby setting aside the first impugned order, being Order No. 17 dated December 14, 2018 passed in Title Suit No. 527 of 2017 by the Second Court of Civil Judge (Senior Division) at Barasat, District: North 24‐Parganas, expunging Tapas Das from the cause title of the said suit and refusing the prayer of Tapas Das, the present opposite party no. 4,s to be added in the said suit. However, the second impugned order, being Order No. 20 dated 15 January 7, 2019 does not require any interference, either on merit or in view of the effect of setting aside of the first impugned order dated December 14, 2018.
47. There will be no order as to costs.
48. Urgent certified website copies of this order, if applied for, be made available to the parties upon compliance with the requisite formalities.
( Sabyasachi Bhattacharyya, J. )