Delhi High Court
Schneider Electric India Pvt. Ltd vs Rentworks India Pvt. Ltd. & Ors on 17 October, 2019
Author: Rajiv Sahai Endlaw
Bench: Rajiv Sahai Endlaw
* IN THE HIGH COURT OF DELHI AT NEW DELHI % Date of decision: 17th October, 2019 + CS(OS) 598/2018, IA No.4852/2019 (u/O XII R-6 CPC) & IA No.14432/2019 (for condonation of delay of 198 days in filing original documents) SCHNEIDER ELECTRIC INDIA PVT. LTD ..... Plaintiff Through: Ms. Mohna M. Lal, Ms. Geetali Talukdar, Mr. Prashant Kumar & Ms. Anushka Arora, Advs. Versus RENTWORKS INDIA PVT. LTD. & ORS ..... Defendants Through: Mr. Sandeep Sethi, Sr. Adv. with Mr. Rajshekhar Rao, Mr. Vipul Ganda, Ms. Aastha Trivedi, Ms. Chandreyee Maitra, Mr. Sidhant Kumar & Mr. Raghav Kacker, Advs. CORAM: HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW 1. The senior counsel / counsel for the defendant no.1 and the counsel for the plaintiff have been heard pursuant to the orders since 26th November, 2018, when this suit had come up for admission. 2. Rather than re-writing what has transpired, it is deemed appropriate to reproduce the orders passed in the suit from time to time. 3. As aforesaid, the suit came up for admission on 26th November, 2018, when the following order was passed: "8. The plaintiff has sued inter alia for specific performance of a Closure Agreement with the defendant no.1. CS(OS) No.598/2018 Page 1 of 34 9. The plaintiff had taken equipment on hire / lease from the defendant no.1 and which equipment was hypothecated by the defendant no.1 with the defendants no.2 and 3. Holding company of the plaintiff had also issued a letter to the defendants no.2 and 3 assuring payment of lease rentals directly by the plaintiff to defendants no.2 and 3. An amount of Rs.10,18,84,236/- is stated to be still outstanding towards the said hypothecation. 10. The plaintiff, in the meanwhile entered into a Closure Agreement dated 4th September, 2018 with the defendant no.1, whereunder the Lease Agreement was closed and the said equipment was agreed to be sold to the plaintiff for a total consideration of Rs.24,43,08,047/-. 11. It is the case of the plaintiff that though it has paid the said amount to defendant No.1, on the assurance of the defendant no.1 that the defendant no.1 will clear the hypothecation amount due to the defendants no.2 and 3, but has not done so, resulting in the defendants no.2 and 3 demanding the rentals from the plaintiff even though the plaintiff is no longer liable to pay the rental after the Closure Agreement and the defendants no.2 and 3 are also threatening to write to Credit Information Bureau (India) Limited (CIBIL) to reduce the credit rating of the plaintiff. 12. Though the plaintiff has instituted this suit as for specific performance but in fact it is for recovery of Rs.10,18,84,236/- which is the amount due. 13. The senior counsel for the plaintiff states that the plaintiff is ready and willing to deposit the amount of Rs.10,18,84,236/- with the defendants no.2 and 3 in the proportion due to them but since the defendant no.1 has already received the said monies from the plaintiff and CS(OS) No.598/2018 Page 2 of 34 now turning dishonest, the plaintiff be protected by freezing the bank account No.0212 864 0000 495 of the defendant no.1 with HDFC Bank, Mumbai Branch, IFSC Code No.HDFC0000212 and in which account of the defendant no.1 monies more than Rs.10,18,84,236/- are stated to be lying. 14. Issue summons of the suit and notice of the application to the defendants by all modes including dasti and electronic, returnable on 29th November, 2018. The counsel for plaintiff is also given liberty to serve the defendants on his own letter head. 15. Though the ex parte relief sought is in the nature of attachment before judgment and is not to be granted ex parte but in view of the document in writing, it is deemed appropriate to, while issuing notice for a short date, grant such relief. 16. HDFC Bank, Mumbai Branch, IFSC Code No.HDFC0000212 is directed to not allow operations or withdrawals to the extent of Rs.10,18,84,236/- from account No.0212 864 0000 495 of the defendant no.1 RentWorks India Pvt. Ltd. with the said bank. 17. Provisions of Order XXXIX Rule 3 be complied forthwith." 4. Thereafter on 5th December, 2018, the following order was passed: "2. The counsel for the defendant No.3 L&T Financial Services, on enquiry states that all dues of defendant No.3 L&T Financial Services qua the equipment in possession of the plaintiff stand settled and nothing remains due from the defendant No.1 to the defendant No.3 L&T Financial Services on that account. CS(OS) No.598/2018 Page 3 of 34 3. The counsel for the defendant No.2 IndusInd Bank, on enquiry states that a sum of Rs.4,50,25,206/- is still outstanding from the defendant No.1 towards the equipment in possession of the plaintiffs. 4. The senior counsels for the defendant No.1 state that the defendant No.1 will by tomorrow clear the entire outstanding of the defendant No.2 IndusInd Bank and further state that on such clearing the amount, the ex- parte ad-interim order freezing the bank account of the defendant No.1 to the extent of Rs.10,18,84,236/- be vacated. 5. The senior counsel for the plaintiff states that the plaintiff, after institution of this suit has paid a sum of Rs.3,94,57,110/- to the defendant No.2 IndusInd Bank and a sum of Rs.1,91,15,676/- to the defendant No.3 L&T Financial Services, both on behalf of the defendant No.1 and in terms of the statement made on 26 th November, 2018 and it is for this reason that as of today nothing is outstanding to the defendant No.3 L&T Financial Services and only a sum of Rs.4,50,25,206/- is outstanding to the defendant No.2 IndusInd Bank. He states that the defendant No.1 is liable to reimburse the said amounts to the plaintiff, since under the Closure Agreement nothing further was due from the plaintiff to the defendant No.1. 6. I have enquired from the senior counsels for the defendant No.1 that in the event of the plaintiff succeeding in its aforesaid contention, how will the said amount be recovered by the plaintiff. 7. The senior counsel for the plaintiff in this regard states that though the defendant No.1 is an Indian Company but both its Directors are foreign citizens and it CS(OS) No.598/2018 Page 4 of 34 will not be possible for the plaintiff to recover the said amount with interest from the defendant No.1. 8. The senior counsels for the defendant No.1, under instructions state that the balance sheet of the defendant No.1 for the year 2017-2018 shows assets of much more than the amount which the plaintiff claims and the defendant No.1 will not conduct their affairs in a manner so as to make the monetary entitlement, if any of the plaintiff, infructuous. 9. On the aforesaid assurance, it is ordered that on the defendant No.1 furnishing proof to HDFC Bank, Mumbai Branch of payment after today of Rs.4,50,25,206/- or such higher amount as may be due to the defendant No.2 IndusInd Bank, the ex-parte order restraining HDFC Bank, Mumbai Branch from allowing operation or withdrawals to the extent of Rs.10,18,84,236/- from bank Account No.0212 864 0000 495 of the defendant No.1 RentWorks India Pvt. Ltd. with the said Bank shall stand vacated. 10. Written statement/reply to the application for interim relief be filed within the prescribed time. 11. Replication/rejoinder thereto, if any be filed within thirty days thereafter. 12. The parties to, before the next date of hearing, exchange affidavits of admission/denial of each other‟s documents. 13. List for framing of issues, if any and further consideration, if required of the application for interim relief on 2nd April, 2019. 14. The defendant No.1 to also within one week file an affidavit of its unencumbered assets, value whereof is stated to be reflected in the balance sheet of the defendant No.1, with advance copy to the counsel for the plaintiff." CS(OS) No.598/2018 Page 5 of 34 5. On 2nd April, 2019, the following order was passed: "3. The counsel for defendant no.2 states that the entire claim of defendant no.2 stands satisfied and now nothing is due to defendant no.2 from defendant no.1 or from the plaintiff. 4. None appears for the defendant no.3. However as per statement of counsel for the defendant no.1, all the claims of defendant no.3 have also been satisfied and the defendant no.3 has issued a No Due Certificate. 5. The plaintiff has filed IA No.4851/2019 for condonation of 42 days‟ delay in filing the replication. The delay is condoned and the application is disposed of. 6. The plaintiff has also filed IA No.4852/2019 under Order XII Rule 6 of the CPC. 7. The suit even otherwise is ripe for framing of issues and the counsels have been heard. 8. The position which emerges is that though the plaintiff under the Closure Agreement with the defendant no.1 had paid the entire consideration thereunder of Rs.24,43,08,047/- but in order to avoid the defendants no.2 and 3 writing to Credit Information Bureau (India) Limited with respect to the plaintiff, under orders of this Court has paid a sum of Rs.5,85,73,786/- to the defendants no.2 and 3 for discharge of the hypothecation created by the defendant no.1 of equipment sold under the Closure Agreement dated 4th September, 2018 to the plaintiff. 9. It is the case of the plaintiff, that the plaintiff is thus entitled to a decree forthwith against the defendant no.1 for recovery of Rs.5,85,73,786/- together with interest thereon, from the date the amount was so paid till the date of realization. CS(OS) No.598/2018 Page 6 of 34 10. The counsel for the defendant no.1 states that the defence of the defendant no.1 is that there was a mistake in computation of the amount payable by the plaintiff to the defendant no.1 under the Closure Agreement aforesaid and which resulted in the plaintiff not paying the amount which should have been computed as consideration for Closure Agreement. However, on enquiry as to how much according to the defendant no.1 is the shortfall, the counsel for the defendant no.1 is unable to immediately state. 11. The counsel for the defendant no.1 refers to Section 20 of the Indian Contract Act, 1872 to contend that the Closure Agreement dated 4th September, 2018 is void, since both the plaintiff as well as the defendant no.1 being parties thereto were under a mistake as to a matter of fact. 12. Attention of the counsel for the defendant no.1 has also been drawn to Section 22 of the Contract Act, which provides that a contract is not voidable merely because it was caused by one of the parties to it being under a mistake as to a matter of fact. It will have to be pleaded and proved by the defendant no.1, if at all permissible in law, that not only the defendant no.1 but the plaintiff also was under a mistake of fact. 13. Be that as it may, I have enquired from the counsel for the defendant no.1 that since as per the admitted documents on record, the plaintiff under orders of this court has paid monies on behalf of the defendant no.1 in excess of what was due from the plaintiff to the defendant no.1 under the Closure Agreement, why should a decree for recovery of the said monies by the plaintiff from the defendant no.1 be not passed forthwith. CS(OS) No.598/2018 Page 7 of 34 14. The counsel for the defendant no.1 states that the defendant no.1 had assigned receivables from the plaintiff to the defendants no.2 and 3 and the said receivables did not even enter the books of accounts of the defendant no.1. 15. In my view, only when there is a claim of the defendant no.1 for declaration of the Closure Agreement as void, can all the aforesaid questions be gone into; else in a suit for recovery of monies filed by the plaintiff, if the plaintiff on the basis of admitted documents is found entitled to money, the plea of the defendant no.1 of the documents being void without the defendant no.1 seeking declaration to the said effect and which has not been done, cannot be entertained. 16. The counsel for the defendant no.1 states that the defendant no.1 is in the process of suing for such declaration. It is also stated that the defendant no.1, in the written statement has disputed and denied the contents of the Closure Agreement. It is however not denied that the Closure Agreement was admittedly signed by the defendant no.1. The plea of the defendant no.1 is of the document being void and which can be entertained only when a declaration to the said effect is sought; else the parties are bound by the terms of the agreement. 17. The counsel for the defendant no.1 seeks an adjournment. 18. List on 16th April, 2019." 6. On 16th April, 2019, the following order was passed: "2. The counsel for the defendant no.1 states that defendant no.1, though has a counterclaim to be filed in this suit and which he is carrying with him but has not filed the same because the defendant no.1 in its written statement has also taken an objection as to the territorial CS(OS) No.598/2018 Page 8 of 34 jurisdiction of this Court and filing of the counterclaim by the defendant no.1 in this Court would have amounted to acquiescing to the territorial jurisdiction of this Court. It is also stated that defendant no.1 has in this context filed an application under Order XIV of the CPC for framing of a preliminary issue qua territorial jurisdiction but which application has not been listed. 3. I have already in order dated 2nd April, 2019 observed that the plaintiff is entitled to a decree forthwith in the sum of Rs.5,85,73,786/- against the defendant no.1 and the defence of the defendant no.1 is not tenable without the defendant no.1 taking positive steps therefor. However on the counsel for the defendant no.1 on that date stating that he was in the process of filing a counterclaim, passing of the decree against defendant no.1 on that date was deferred. 4. The defendant no.1 however, inspite of taking adjournment on such ground on 2nd April, 2019 has not filed counterclaim till date and is now taking a new plea of territorial jurisdiction and again seeking adjournment on this ground. In this view of the matter, the counsel for the defendant no.1 has been asked to argue on his objection to territorial jurisdiction of this Court and has been heard. 5. Need to repeat the facts of the case is not felt, the same having been set out in detail in the order dated 2 nd April, 2019. 6. The counsel for the defendant no.1 draws attention to paragraph 56 of the plaint qua territorial jurisdiction, which inter alia provides that the dispute resolution clause contained in Clause 11 of the Closure Agreement dated 4th September, 2018 between the plaintiff and the defendant no.1 provides that all disputes arising out of the CS(OS) No.598/2018 Page 9 of 34 Closure Agreement will be tried and adjudicated by the Courts at Delhi. 7. The counsel for the defendant no.1 though does not dispute that the Closure Agreement contains such a Clause qua jurisdiction of the Courts at Delhi, argues that the same does not provide for exclusive jurisdiction. 8. Even if that be so, the same would in any case indicate the parties to have consented to the jurisdiction of the Courts at Delhi as well. 9. It is not as if the agreement for jurisdiction of Courts at Delhi is with respect to a Court which otherwise had no jurisdiction. The equipment, initially leased out by the defendant no.1 to the plaintiff and subsequently sold by the defendant no.1 to the plaintiff vide the Closure Agreement, is admittedly at Delhi. 10. The counsel for the defendant no.1 then states that the said clause in the Closure Agreement does not apply qua defendants no.2 and 3 viz. IndusInd Bank and L&T Financial Services. 11. The dues claimed by the defendants no.2 and 3 have already been paid and the suit now survives only against the defendant no.1, and therefore the said argument also is misconceived. 12. Even otherwise it is not open to the defendant no.1 to controvert the territorial jurisdiction of this Court, not on the ground of this Court not having territorial jurisdiction as far as the suit against defendant no.1 is concerned but on the ground that this Court does not have territorial jurisdiction against defendants no.2 and 3, specially when defendants no.2 and 3 are not taking any such objection. CS(OS) No.598/2018 Page 10 of 34 13. There is thus no merit in the contention of the counsel for the defendant no.1, of this Court not having territorial jurisdiction. 14. The defendant no.1, inspite of order dated 2nd April, 2019 having taken a chance and not instituted the counterclaim / counter suit on account of statement with respect whereto the decree against the defendant no.1 was not passed on 2nd April, 2019, a decree is now liable to be passed forthwith against the defendant no.1 as aforesaid. 15. On request of counsel for the defendant no.1, option has been given to the defendant no.1 to either suffer a decree today or, if wants it to be deferred, pay costs of Rs.50,000/- to the counsel for the plaintiff. 16. The counsel for the defendant no.1 opts to pay the costs. 17. The costs be paid before the ensuing summer break. 18. IA No.16012/2018 of the plaintiff under order XXXIX Rules 1&2 CPC is now infructuous and is disposed of. 19. IA No.4511/2019 of the defendant no.1 under Section 151 CPC for exemption from filing certified copies is allowed subject to just exceptions and is disposed of. 20. IA No.4851/2019 of the plaintiff for condonation of delay is stated to have been disposed of and be not shown in the cause list. 21. IA No.5477/2019 of the plaintiff under Order VII Rule 14(3) of the CPC is allowed and the additional documents are taken on record. The application is disposed of. CS(OS) No.598/2018 Page 11 of 34 22. List for hearing and for consideration of the application of the plaintiff being IA No.4852/2019 under Order XII Rule 6 CPC on 22nd July, 2019." 7. Thereafter the defendant no.1 sought review of the order dated 16th April, 2019 and which review petition was disposed of on 15 th May, 2019 by the following judgment: "1. The defendant No.1 seeks review of the order dated 16th April, 2019. 2. The senior counsel for the defendant no.1/review applicant has been heard. 3. It is expedient to elucidate the facts. 4. The plaintiff had taken equipment on hire / lease from the defendant No.1/review applicant and which equipment was hypothecated by the defendant No.1/review applicant with the defendants No.2&3 i.e. IndusInd Bank & L&T Financial Services. Holding company of the plaintiff had also issued a letter to the defendants No.2&3 assuring payment of lease rentals directly by the plaintiff to the defendants No.2&3. 5. The plaintiff entered into a Closure Agreement dated 4th September, 2018 with the defendant No.1/review applicant whereunder the lease agreement was closed and the said equipment was agreed to be sold to the plaintiff for total consideration of Rs.24,43,08,047/-. 6. It is the case of the plaintiff in the plaint in this suit that though it has paid the total consideration of Rs.24,43,08,047/- to the defendant No.1/review applicant on the assurance of the defendant No.1/review applicant that the defendant No.1/review applicant will clear the hypothecation amount due to the defendants No.2&3 but has not done so, resulting the defendants No.2&3 demanding the rentals from the plaintiff, even though the CS(OS) No.598/2018 Page 12 of 34 plaintiff is no longer liable to pay rental after the Closure Agreement and that the defendants No.2&3 are threatening to write to the Credit Information Bureau (India) Limited (CIBIL) to reduce the credit rating of the plaintiff. The plaintiff thus instituted this suit, as for specific performance but in fact for recovery of Rs.10,18,84,236/- being the amount due to the defendants No.2&3. 7. The suit came up before this Court first on 26th November, 2018, when the senior counsel for the plaintiff stated that the plaintiff was ready and willing to deposit the said amount of Rs.10,18,84,236/- with the defendants No.2&3 to avoid any reduction in its credit rating. The suit was entertained and summons thereof ordered to be issued and ex-parte ad-interim relief granted restraining HDFC Bank with which the defendant no.1 had an account from allowing withdrawal / allowing operations from the said account to the extent of Rs.10,18,84,236/-. 8. On 5th December, 2018, a) the counsel for the defendant No.3 stated that its dues since stood settled; b) the counsel for the defendant No.2 however stated that a sum of Rs.4,50,25,206/- was still outstanding to it; it was informed that the plaintiff, after 26th November, 2018 had paid a sum of Rs.3,94,57,110/- to the defendant No.2 and a sum of Rs.1,91,15,676/- to the defendant No.3 on behalf of the defendant No.1/review applicant and the said amounts were thus due from the defendant No.1/review applicant to the plaintiff. 9. In the orders dated 2nd April, 2019 and 16th April, 2019, for the reasons recorded therein, it was held that the plaintiff was entitled to a decree forthwith in the sum of Rs.5,85,73,786/- against the defendant No.1/review applicant. The counsel for the defendant No.1/review CS(OS) No.598/2018 Page 13 of 34 applicant, on 2nd April, 2019 stated that the defendant No.1/review applicant was in the process of filing a Counter-Claim against the plaintiff and the passing of the decree in favour of the plaintiff and against the defendant No.1/review applicant may be deferred. However on 16 th April, 2019 the counsel for defendant no.1 review applicant stated that though he was carrying the Counter- Claim with him but had not filed the same because the defendant No.1/review applicant in its written statement to the suit had also taken an objection to the territorial jurisdiction of this Court and filing the Counter-Claim in this suit would amount to acquiescing to the territorial jurisdiction of this Court. It was stated that the defendant No.1/review applicant had also filed an application under Order XIV of the Code of Civil Procedure, 1908 (CPC) for framing of a preliminary issue qua territorial jurisdiction but which application had not been listed. After hearing the counsels on 16th April, 2019 and for reasons recorded therein, it was held that there was no merit in the contention of the counsel for the defendant No.1/review applicant, of this Court not having territorial jurisdiction. However, on the counsel for the defendant No.1/review applicant again seeking adjournment, passing of the decree in favour of the plaintiff and against the defendant No.1/review applicant was again deferred and the suit posted to 22nd July, 2019. 10. IA No.5894/2019 under Order XIV of the CPC filed by the defendant No.1/review applicant, mentioned and recorded in the order dated 16th April, 2019 to have been filed, came up before this Court on 24th April, 2019, when the counsel for the defendant No.1/review applicant stated that in view of the order dated 16th April, 2019 qua territorial jurisdiction, the same was infructuous. CS(OS) No.598/2018 Page 14 of 34 11. It is in the aforesaid background that this petition has been filed seeking review of the order dated 16 th April, 2019 to the extent rejecting the plea of the defendant No.1/review applicant of this Court not having territorial jurisdiction. 12. The plaintiff has its registered office at Delhi. The defendant No.1/review applicant has its registered office at Mumbai. The defendant No.2 IndusInd Bank, as per the memorandum of parties has its office at Delhi and the defendant No.3 L&T Financial Services, as per the memorandum of parties has its offices both at Delhi and Mumbai. 13. The plaintiff instituted this suit invoking the territorial jurisdiction of this Court by pleading in paragraph 56 of the plaint as under: "56. The dispute Resolution clause contained in Clause 11 of the Closure Agreement dated 4th September, 2018 provides that all disputes arising out of the Closure Agreement dated 4th September, 2018 between the Plaintiff and Defendant No.1 will be tried and adjudicated by this Hon‟ble Court. Defendant Nos.2 has its offices at Delhi, within the jurisdiction of this Hon‟ble Court, from where they are carrying on business and working for gain. Hence, this Hon‟ble Court has the jurisdiction to entertain and adjudicate and decide the present suit." 14. The defendant No.1/review applicant, in paragraph C-13 of preliminary objections in its written statement pleaded as under: "C. THE HON'BLE COURT LACKS TERRITORIAL JURISDICTION TO ADJUDICATE THE PRESENT SUIT. CS(OS) No.598/2018 Page 15 of 34 13. That, without prejudice to the afore- mentioned, it is further submitted that, there are more than one Defendants in the array of parties. Section 20(b) and (c) of Civil Procedure Code, 1908 ("CPC") provides, inter alia, that every Suit shall be filed within the local limits of Court in whose jurisdiction any of the Defendants, where there are more than one at the time of commencement of the Suit, actually and voluntarily resides or carries on business or personally works for gain, provided that in such case either the leave of the court is given, or the Defendants who do not reside or carry on business or personally work for gain, as aforesaid, acquiesce in such institution, or the case of action, wholly or in part arises. The Plaintiff has relied upon clause 11 of the Closure Agreement which provides that all disputes arising out of the Closure Agreement between the Plaintiff and Defendant No.1 will be tried and adjudicated by this Hon‟ble Court. It is submitted that the Closure Agreement was made only between the Plaintiff and the Defendant No.1, and since the Defendant Nos.2 and 3 not being parties to the Closure Agreement are not privy to the Closure Agreement assuming, though denying, that the Defendant No.2 has any office at Delhi within the jurisdiction of this Hon‟ble Court where from it is alleged to be carrying on business, has no relevance whatsoever. Apart from the fact that Defendant No.2 has no nexus or it is concerned with the subject matter of Suit, there is no cause of action CS(OS) No.598/2018 Page 16 of 34 between Defendant No.2 and the Plaintiff and where there is no transaction in New Delhi between the Plaintiff and Defendant No.2 or Defendant No.3 to the Suit, no suit can be filed in this Hon‟ble Court. In any event, it is not even pleaded by the Plaintiff that the Closure Agreement provides that all disputes shall be instituted by the Parties in this Hon‟ble Court or in New Delhi. In any event, Closure Agreement has not been signed by all the Defendants simply because one Defendant who is not a party to the Closure Agreement resides in Delhi cannot be a ground for filing this suit in this Hon‟ble Court. The relevant clause only provides that the courts in New Delhi shall have jurisdiction in all the matters arising out of the Closure Agreement and does not vest exclusive and sole jurisdiction in the courts of New Delhi nor does it state that the jurisdiction conferred on the Courts in Delhi is an agreement as to jurisdiction between the Plaintiff and all the Defendants since Defendant Nos.2 and 3 are strangers, being third parties to the Closure Agreement. Since Defendant Nos.2 and 3 are not parties to the Closure Agreement, even if jurisdiction is conferred, no suit can be filed against Defendant Nos.2 and 3 by the Plaintiff. If the Plaintiff wants to maintain any action against Defendant Nos.2 and 3 he has to maintain an action under the Deed of Assignment which has been inherited by the Plaintiff. Without prejudice to the rights of Defendant No.1, the said clause is contrary to law as, if no cause of action arises in New Delhi CS(OS) No.598/2018 Page 17 of 34 and if any of the Defendants does not reside or carry on business or personally work for gain in respect of the transaction in dispute, this Hon‟ble Court has no jurisdiction. It is further submitted that this Hon‟ble Court has no jurisdiction, because as provided in the CPC, a Suit can be filed only where the cause of action arises or where the parties are carrying on business, while no cause of action has arisen in New Delhi between the Parties because the Closure Agreement was signed in Mumbai and not in New Delhi and has to be performed in Mumbai and not in New Delhi especially when Closure Agreement and the dispute arising out of it are to be performed in Mumbai as per the Closure Agreement. There is also nothing in the Closure Agreement that any payment or any action has to be taken by any party in New Delhi. Further, there is no property or the subject matter of the Suit situated within the local limits of this Hon‟ble Court. Sections 18 and 19 of the CPC also do not apply to the facts of the present Suit, in any event, the Plaintiff has not invoked the jurisdiction of this Hon‟ble Court under Sections 16, 17, 18 & 19 of the CPC. The Plaintiff has merely relied to file the Suit before this Hon‟ble High Court on the ground that one of the parties is in New Delhi, namely Defendant No.2, even though Defendant No.2, not being a party to the Closure Agreement and not being bound by the contents of the Closure Agreement merely because it has an office in New Delhi, which has no connection with the subject matter of Suit. CS(OS) No.598/2018 Page 18 of 34 The Suit is therefore, not maintainable before this Hon‟ble Court, since no cause of action has arisen within the territorial jurisdiction of this Hon‟ble Court." (emphasis added) and in response to paragraph 56 aforesaid of the plaint pleaded as under: "93. That, the contents of Paragraph No.56 are denied and has already been dealt in the Preliminary Objections." 16. In the aforesaid state of affairs, I have enquired from the senior counsel for the defendant No.1/review applicant to point out the plea, in paragraph C-13, reproduced above of the preliminary objections, in the written statement of defendant no.1/review applicant, qua territorial jurisdiction of this Court insofar as against the defendant No.1/review applicant. It has been enquired, whether not the entire objection qua territorial jurisdiction is on the premise of this Court not having territorial jurisdiction qua defendants No.2&3 and which argument of the counsel for defendant no.1 / review applicant appearing on 16th April, 2019 was dealt with in the order dated 16th April, 2019. It has further been enquired, whether not the defendant No.1/review applicant in its written statement has not controverted the plea in paragraph 56 of the plaint of Clause 11 of the Closure Agreement dated 4th September, 2018 providing for adjudication of disputes arising therefrom between plaintiff and defendant No.1 at Delhi; the only plea in paragraph C-13 is of the said clause not entitling the plaintiff to sue defendants No.2&3 who were not parties thereto at Delhi. 17. The senior counsel for the defendant No.1/review applicant has drawn attention to the underlined part of paragraph C-13 of the preliminary objections of the written statement reproduced hereinabove. CS(OS) No.598/2018 Page 19 of 34 18. The senior counsel for the defendant No.1/review applicant has further contended that there was no admission of the defendant No.1/review applicant, as attributed in para no.9 of the order of which review sought, of the equipment initially leased out by the defendant No.1/review applicant to the plaintiff and subsequently sold by the defendant No.1/review applicant to the plaintiff vide the Closure Agreement, being at Delhi. It is pleaded in the review application that all the equipment in question was delivered from and to places other than Delhi and it is the Bangalore office of the plaintiff which is using the equipment. Attention is also invited to the cause of action paragraph 55 of the plaint to contend that the cause of action pleaded is with respect to the Closure Agreement only and not with respect to the Hire Purchase Agreement which was closed vide the Closure Agreement. It is thus contended that the reasoning in paragraph 9 in the order dated 16th April, 2019, on the premise of equipment being at Delhi, even though factually erroneous, does not constitute a good ground, since the plaintiff has not pleaded cause of action on that premise. 19. I may at the outset state that provision of review cannot be abused to take a second hearing in the matter through a different counsel. 20. The argument of the counsel for the defendant No.1/review applicant appearing on 16th April, 2019 was, that because the clause qua jurisdiction of Courts in the Closure Agreement, though providing for jurisdiction to be of Delhi did not provide for exclusive jurisdiction of the Courts at Delhi, the plaintiff was not entitled to sue in the Courts at Delhi and which argument was dealt with in paragraph 8 of the order dated 16th April, 2019. The argument now urged, at the time of review, is of the said clause being of no avail because by consent jurisdiction cannot be vested in a Court which does not have jurisdiction. The same was not urged on 16th April, 2019. CS(OS) No.598/2018 Page 20 of 34 21. The Closure Agreement, at pages 15 to 23 of Part- III-A file, is engrossed on a stamp paper of Maharashtra and does not record the place of its execution and is executed by defendant No.1/review applicant only. The copy thereof filed by the plaintiff, though has a column for signatures on behalf of the plaintiff, does not contain any signatures on behalf of the plaintiff. The plaintiff, at page 14 of Part-III-A file, has filed an email dated 4th September, 2018 at "6:37 PM" of Saira Lobo of the defendant No.1/review applicant to Vivek Choudhary of the plaintiff to the effect "Please find attached the Closure Agreement and the Board Resolution". The plaintiff, at page 24 of Part-III-A file, has also filed an email dated 4th September, 2018 at 1:10 PM of Vivek Choudhary to Alan Vanniekirk of defendant No.1/review applicant to the effect "As discussed today, please find attached the draft of the indemnity for your confirmation. Once confirmed we will execute the same at our end and sent across to you. Please send us the executed Closure MRA and Invoice for processing the payment". From the said documents it transpires that the defendant No.1/review applicant at Mumbai sent the executed Closure Agreement to the plaintiff at Delhi. The Closure Agreement executed by the defendant No.1/review applicant in Clause 11 thereof provides "This Agreement shall be governed by the laws of India and the courts in New Delhi shall have jurisdiction over matters arising out of this Agreement". With the plaintiff admittedly at Delhi, to which place the Closure Agreement was also forwarded by defendant no.1 / review applicant; in the light of the defendant No.1 having agreed to the jurisdiction of the Courts at Delhi, it cannot be said that the Courts at Delhi do not have territorial jurisdiction at all, for the agreement agreeing to the territorial jurisdiction of Courts at Delhi not vesting exclusive jurisdiction in the Courts at Delhi. Acceptance of Closure Agreement was completed at Delhi only from the plaintiff, in acceptance thereof sending payment to defendant no.1 / CS(OS) No.598/2018 Page 21 of 34 review applicant. As far back as in Bhagwandas Goverdhandas Kedia Vs. Girdharilal Parshottamdas & Co. AIR 1966 SC 543 it was held that a contract is executed at the place where the offer is accepted and from where the communication of the acceptance is transmitted to the offerer. 22. In view of the aforesaid also, no ground for review is made out. The reasons given above have been required to be given owing to the defendant no.1 / review applicant choosing to, in review, arguing anew. 23. It is quite evident that the defendant No.1/review applicant, after avoiding passing of a decree on 2 nd April, 2019 and after making a statement on 24 th April, 2019 that the application under Order XIV of the CPC was infructuous, has filed this Review Petition as an afterthought. 24. No ground for review is made out. 25. Dismissed." 8. On 22nd July, 2019, it was informed that the appeal preferred by the defendant no.1 against the order dated 16 th April, 2019 had come up before the Division Bench of this Court the same day and had been adjourned to the next date with the understanding that the proceedings in the suit shall be adjourned. The same continued on 16 th September, 2019 and the proceedings in the suit were adjourned to today. 9. Today, the senior counsel for the defendant no.1 states that on 12th September, 2019, the following order was passed by the Division Bench of this Court in FAO(OS) No.128/2019 against the order dated 16th April, 2019 and in FAO(OS) No.140/2019 against the order dated 2nd April, 2019: "These are matters of the Commercial Appellate Division. Accordingly, they be placed before the roster Bench on 26th September, 2019, subject to the orders of Hon‟ble the Chief Justice." CS(OS) No.598/2018 Page 22 of 34 10. It is also informed that pursuant to the aforesaid order, the appeals aforesaid were re-numbered as FAO(OS)(COMM) No.247/2019 and FAO(OS)(COMM) No.248/2019. 11. FAO(OS)(COMM) No.247/2019 was disposed of vide order dated 10th October, 2019 as under: "The present appeal is directed against the order dated 16.04.2019 passed by a learned Single Judge of this court by which an application under Order XIV of the Code of Civil Procedure, 1908 for framing a preliminary issue qua territorial jurisdiction has been rejected. A preliminary objection has been raised by the counsel for the respondent with regard to maintainability of the present appeal under Commercial Courts Act, 2015. Learned counsel appearing for the appellant however submits that the suit has not been instituted by the respondent/plaintiff under the Commercial Courts Act, 2015. Mr. Sibal however submits that when the appeal had come up for hearing on 12.09.2019, the Division Bench directed that the appeal be placed before the Commercial Appellate Division Bench and consequent thereto, the present appeal has now been registered as a commercial appeal. Attention of the court has been drawn to the order dated 12.09.2019 passed in FAO (OS) Nos. 128/2019 & 140/2019, which is reproduced below : "These are matters of the Commercial Appellate Division. Accordingly, they be placed before the roster Bench on 26th September, 2019, subject to the orders of Hon‟ble the Chief Justice." CS(OS) No.598/2018 Page 23 of 34 A bare reading of Section 2(c)(xviii) and Section 7 of the Commercial Courts Act, 2015 leaves no manner of doubt that the suit in fact falls under the Commercial Courts Act, 2015 and thus the Registry should have in fact, registered the present appeal under the Commercial Courts Act, 2015. As reflected in the order dated 12.09.2019 parties agreed that the appeals be tried as per the provisions of the Commercial Courts Act, 2018. Learned counsel for the appellant submits that the appellant cannot be rendered remedy less if it be held that there is no provision of appeal under the Commercial Courts Act, as no part of cause of action arose within the territorial jurisdiction of this court and the closure agreement cannot confer jurisdiction on courts at Delhi. By order dated 12.09.2019, the Predecessor Bench of this court has observed that the matter pertained to the Commercial Appellate Division, and to which no objection was raised. In our view, in light of Section 13 of the Commercial Courts Act, 2015, the present appeal would not be maintainable. Without admitting that this court has territorial jurisdiction in the matter, Mr. Sibal submits that in case a final order is passed, impugned order dated 16.04.2019 would not stand in the way of the appellant herein and in case the appellant herein so desires, he can challenge the same and raise all grounds available to him as per law including the ground that this court does not have territorial jurisdiction to entertain the appeal. Senior Counsel further submits that this court does have the territorial jurisdiction to entertain the present appeal under the provisions of the Commercial Courts Act, 2018 as a part of cause of action has arisen CS(OS) No.598/2018 Page 24 of 34 within the territorial jurisdiction of this court and the defendants Nos. 2 and 3 are also located in Delhi. Mr. Rao submits that in the order dated 16.04.2019 passed in CS(OS) No. 598/2018, there is a factual error in the observation made by the court to the effect that the equipment initially leased out by defendant No. 1 to the plaintiff vide the Closure Agreement is admittedly at Delhi. We have heard learned counsels for the parties. In our considered view, the present appeal is not maintainable under the Commercial Courts Act, 2015. However, in the event of a final order being passed against the appellant, the order dated 16.04.2019 would not stand in the way of the appellant in case challenge is laid to the final order including the ground with respect to territorial jurisdiction. While keeping all the objections of the parties and the observations made by the court open, the present appeal is disposed of as being not maintainable." 12. FAO(OS)(COMM) No.248/2019 was also disposed of on 10th October, 2019 as under: "Order dated 02.04.2019 passed in CS(OS) No. 598/2018, more particularly para (15) of the said order has led to the filing of the present appeal. A preliminary objection has been raised by learned Senior Counsel for the respondent with regard to the maintainability of the appeal under the Commercial Courts Act, 2015, however, with the consent of the parties, we clarify that the observations made in para Nos. (15) & (16) of order dated 02.04.2019 do not reflect a final decision of the learned Single Judge and thus, no orders are required to be passed in this appeal. CS(OS) No.598/2018 Page 25 of 34 Needless to say that in case the appellant does not take steps as per the statement made in para 16 of the order dated 02.04.2019 (which learned counsel for the appellant submits, is not required) and in case an adverse order is passed by the learned Single Judge, it would be open for the appellant to assail the same, if so advised, in accordance with law and in the appropriate court of jurisdiction. With these observations, this appeal stands disposed of." 13. The senior counsel / counsel for the defendant no.1 have contended, that (i) with the orders aforesaid of the Division Bench, the suit has been converted into commercial suit; (ii) attention is invited to paragraph 12 of the Preliminary Objections in the written statement of the defendant no.1 as under: "12. That, it is humbly submitted that the Hon‟ble Court has no jurisdiction to adjudicate the present Suit as the nature of the transaction and the facts at hand, conclusively show that the Suit ought to have been filed before the Commercial Division of this Hon‟ble Court in accordance with the provisions of the Commercial Courts Act, 2015 as amended. It is further submitted by Defendant No.1 that the dispute between the parties is a „commercial dispute‟ as defined under section 2(c) of the 2015 Act. In view of the provisions of section 6 of the 2015 Act providing for the exclusive jurisdiction of the Commercial Court to try all suits and applications relating to a commercial dispute of a specified value, the Defendant No.1 submits that the present Suit ought to have been filed before the Commercial Division of this CS(OS) No.598/2018 Page 26 of 34 Hon‟ble Court and the same therefore deserves to be dismissed summarily." and it is contended that the same objection is also taken in paragraph 94 of the reply on merits; (iii) the plaintiff, in the replication however controverted the aforesaid paragraphs of the written statement of the defendant no.1 and reiterated that the suit was an ordinary suit; (iv) however the Division Bench has agreed with the contention of the defendant no.1 of the suit qualifying as a commercial suit; (v) once the Division Bench has held so, the suit having not been found as a commercial suit, is not maintainable and is liable to be summarily dismissed; (vi) the plaintiff, if at all desirous of pressing its claim, will have to file a plaint as in a commercial suit; (vii) attention is invited to the Commercial Courts Act, 2015, particularly to Section 16 thereof amending the provisions of the CPC in their application to a commercial suit in the manner as provided in the Schedule thereto; (viii) attention is next invited to Section 26, Order VI Rules 3A and 15A, particularly sub-rules (4) and (5) thereof, of the CPC as applicable to Commercial Courts and to the Appendix I to the Schedule to the Commercial Courts Act providing the form of the Statement of Truth referred to in Order VI Rule 15A supra; (ix) the plaint does not comply with all the aforesaid provisions and is thus liable to be rejected; (x) alternatively, option has to be given to the plaintiff to carry out the requisite corrections; it is contended that the plaintiff, inspite of the Division Bench having held so, has not carried out the corrections aforesaid and is thus deemed to be not inclined to comply therewith and which can only result in rejection / dismissal; CS(OS) No.598/2018 Page 27 of 34 (xi) the plaintiff is thereby avoiding to comply with the rigours of the Commercial Courts Act and avoiding to verify the Statement of Truth; and, (xii) the plaintiff is not entitled to approbate and reprobate; the plaintiff cannot be permitted to have the appeals preferred by the defendants dismissed as not maintainable and on the other hand continue to pursue the present suit as an ordinary suit. 14. Per contra, the counsel for the plaintiff has contended that (i) as would be evident from the language of the provisions of the CPC as applicable to Commercial Courts Act also, the provisions thereof are not mandatory; (ii) the object of Commercial Courts Act is to provide a speedy remedy; (iii) this Court has been following the practice of re- numbering of the same suits as commercial suits; and, (iv) nomenclature of the suit is irrelevant. 15. The counsel for the defendant no.1, in rejoinder (i) has drawn attention to Section 7 of the Commercial Courts Act and has contended that the plaintiff is required to elect whether to pursue the suit as an ordinary suit or as a commercial suit and if has elected to pursue the present suit as an ordinary suit, the same being not compliant with the provisions of the Commercial Courts Act, is liable to be dismissed; (ii) has contended that the present suit is a commercial suit within the meaning of Section 2(1)(c)(xviii) of the Commercial Courts Act, constituting a dispute arising out of agreements for sale of goods or provision of services as a commercial dispute; (iii) has contended that the plaintiff in a commercial suit is required to affirm all the documents filed therewith in the manner provided in the Commercial Courts Act, which also the plaintiff has CS(OS) No.598/2018 Page 28 of 34 not done; and, (iv) argued that once the plaintiff fails to do so, the suit has to be summarily dismissed. 16. While the counsel for the defendant no.1 has referred to (i) HPL (India) Ltd. Vs. QRG Enterprises 2017 SCC OnLine Del 6955 (DB), particularly to paragraphs 5 and 25 thereof; (ii) Haier Telecom (India) Pvt. Ltd. Vs. Drive India Enterprise Solutions Ltd. 2018 SCC OnLine Bom 2829, and, (iii) Abdeally Sk. Shamsuddin Vs. J.S. Mohammedally 2007 SCC OnLine Cal 383 to contend that the provisions of the Commercial Courts Act are mandatory and in the absence of compliance therewith, there is no suit before this Court, the counsel for the plaintiff has relied on (a) Sambhaji Vs. Gangabai (2008) 17 SCC 117, to contend that the rules of procedure are the handmaids of justice; (b) Shyam Telecom Ltd. Vs. A.R.M. Ltd. 2008 SCC OnLine Del 713 (DB) to contend that a wrong nomenclature under which a proceeding is filed is not relevant as it does not bar the Court from exercising a jurisdiction which it otherwise possesses; (c) Maja Cosmetics Vs. Oasis Commercial Pvt. Ltd. 2018 SCC OnLine Del 6698 but which holds the Court to not be having power to condone the delay in filing written statement beyond 120 days and which has been affirmed by the subsequent dicta in SCG Contracts India Pvt. Ltd. Vs. K.S. Chamankar Infrastructure Pvt. Ltd. 2019 SCC OnLine SC 226 (d) Nirman Consultants Pvt. Ltd. Vs. NNE Ltd. MANU/DE/2759/2019 (DB) to contend that at best the suit stands converted to commercial suit only pursuant to the order dated 12th September, 2019 of the Division Bench in FAO(OS) No.128/2019 and FAO(OS) No.140/2019 and the plaintiff cannot be faulted for not CS(OS) No.598/2018 Page 29 of 34 complying with the provisions of the Commercial Courts Act prior thereto; and, (e) The State of Bihar Vs. Bihar Rajya Bhumi Vikas Bank Samiti 2018 9 SCC 472 to contend that the technicalities should not be allowed to come in the way of the Court doing substantial justice. 17. The counsel for the defendant no.1 has contended that Bihar Rajya Bhumi Vikas Bank Samiti supra was in the context of comparison between Section 80 of the CPC and Section 34(5) of the Arbitration & Conciliation Act, 1996 and is thus not apposite and has referred to Varun Pahwa Vs. Renu Chaudhary 2019 SCC OnLine SC 300 to contend that in the ordinary court procedural non-compliance should not entail automatic dismissal unless the procedural defect is not rectified after it is pointed out and due opportunity given for rectifying it. 18. The counsel for the plaintiff has contended that if at all this Court feels that the plaintiff is required to rectify anything to bring the suit within the domain of a commercial suit, the plaintiff is willing therefor. 19. Having heard the counsels, what immediately comes to fore is that in the entire lengthy arguments of the senior counsel / counsel for the defendant no.1, no whisper has been made of the prejudice if any suffered by the defendant no.1 by non-compliance by the plaintiff of the technicalities which are highlighted during the hearing. It is thus quite evident that the defendant no.1, after stalling the passing of the decree against it pursuant to the orders aforesaid, is now wanting to avoid the passing of the decree by relying on technicalities and which CS(OS) No.598/2018 Page 30 of 34 technicalities have no iota of application to the merits of the case or to the equities between the parties. 20. In this context, it is also worthwhile to note that this Court, since the order dated 2nd April, 2019, has been accommodating the defendant no.1 inspite of making it clear in the order dated 16 th April, 2019 also that a decree was liable to be passed forthwith in favour of the plaintiff and against the defendant no.1. The defendant no.1 first avoided the passing of the decree by this Bench by filing a Review Petition and thereafter by filing an appeal and now after the appeals have been dismissed, is wanting to continue the process of adjournments. 21. Rather, at the time when the counsel for the defendant no.1 was drawing attention to the Objects and Reasons of the Commercial Courts Act referring to the paragraph to the effect that the same was necessary for speedy disposal of high value commercial disputes, it was enquired from the counsel for the defendant no.1 whether not, it was the defendant no.1 who, if not earlier, at least today, instead of addressing on the merits, by wanting to address on the technicalities, which caused no prejudice to the defendant no.1, is coming in the way of speedy disposal of the suit. 22. As far as the orders of the Division Bench of this Court are concerned, though the counsel for the plaintiff herein was before the Division Bench on 12th September, 2019 as well as on 10th October, 2019 when the orders reproduced above were passed, but a reading of neither of the said orders shows it to be the plea of the plaintiff before the Division Bench that the suit should be tried as a commercial suit or CS(OS) No.598/2018 Page 31 of 34 that the appeals preferred by the defendant no.1 should be dismissed as not maintainable. The same, on a reading of the orders of the Division Bench, was the view of the Division Bench itself. It is further found that the Division Bench left open the questions on merits of the appeal, on which the defendant no.1 was not heard, to be heard against the final decree in the suit and passing whereof was imminent in terms of the orders appealed before the Division Bench. 23. In this context, it may also be mentioned that the defendant no.1, though contending in the written statement that the dispute subject matter of the suit from which the appeals had arisen was a commercial dispute, chose to prefer the appeals aforesaid treating the suit to be an ordinary suit. If the defendant no.1 had itself treated the suit as a commercial suit, it would have known that against the orders dated 2nd April, 2019 and 16th April, 2019 no appeal before the Division Bench was maintainable and would have preferred the remedy thereagainst before the Supreme Court. Not only so, the defendant no.1, even after dismissal as not maintainable of the appeals, has not availed of the remedy against the orders dated 2 nd April, 2019 and 16th April, 2019 before the Supreme Court and which orders have thus attained finality and in terms whereof the plaintiff is entitled to a decree forthwith. The defendant no.1 appears to have been satisfied with having the aspect of territorial jurisdiction left open for decision in the appeal against the final decree in the suit. 24. As far as the technical non-compliances by the plaintiff argued by the senior counsel / counsel for the defendant no.1 are concerned, another aspect may be noticed. None of the documents subject matter CS(OS) No.598/2018 Page 32 of 34 of controversy in this suit are in dispute and in fact the facts also are not in dispute. As recorded in the order dated 16th April, 2019, the defendant no.1 was wanting to ward off the decree against it by instituting a counterclaim against the plaintiff but which counterclaim has not been instituted till date. In fact one of the dates i.e. 2nd April, 2019 was taken by the counsel for the defendant no.1 for the said reason only but whereafter the counterclaim though stated to be ready was not preferred. 25. I therefore do not find merit in any of the contentions of the senior counsel / counsel for the defendant no.1 and in pursuance to the orders reproduced above, find the plaintiff entitled to a decree forthwith of Rs.5,85,73,786/- together with interest thereon with effect from 28th November, 2018, when the said amount was paid by the plaintiff to defendants no.2 and 3 on behalf of defendant no.1. 26. While the counsel for the plaintiff states that the plaintiff claims interest at the rate of 18.75% per annum, being the interest which the banks have charged the plaintiff, the counsel for the defendant no.1 states that there is no material on record with respect to the rate of interest. 27. Considering the entirety of the facts and circumstances, interest at the rate of 10% per annum from 28th November, 2018 till 30th November, 2019 is deemed apposite and with effect from 1 st December, 2019 interest at the rate of 15% per annum is deemed apposite. 28. A decree is accordingly passed, in favour of the plaintiff and against the defendant no.1, of recovery of Rs.5,85,73,786/- with CS(OS) No.598/2018 Page 33 of 34 interest at the rate of 10% per annum, with effect from 28th November, 2018 till 30th November, 2019 and at the rate of 15% per annum with effect from 1st December, 2019 till the date of payment / realization of the decretal amount. 29. The plaintiff is also held entitled to costs of the suit computed at proportionate court fees paid on the decretal amount of Rs.5,85,73,786/- together with professional fee and expenses computed at Rs.11 lacs considering that the senior counsel appeared for the plaintiff at least on three dates. 30. Decree sheet be drawn up. RAJIV SAHAI ENDLAW, J.
OCTOBER 17, 2019 'gsr' (Corrected and released on 4th November, 2019) CS(OS) No.598/2018 Page 34 of 34