Bombay High Court
Pankaj Aluminium Industries Ltd vs Bharat Aluminium Co.Ltd on 26 October, 2008
Author: S.J.Kathawalla
Bench: S.J.Kathawalla
-1-
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
NOTICE OF MOTION NO.1222 OF 2006
IN
SUIT NO.1071 OF 2006.
Pankaj Aluminium Industries Ltd. ..Plaintiff.
v/s.
Bharat Aluminium Co.Ltd. ..Defendant.
....
Mr.Haresh M. Jagtiani, Senior Advocate with Ms. Divya
Behl, i/b. Mr.Mohan Bir Singh for Plaintiff.
Mr. Chirag Balsara, with Mr.Mihir Mody & Mr.
Rajesh Talekar, i/b. K. Ashar & Co., for the
Defendant. ....
CORAM : S.J.KATHAWALLA, J.
DATE : 26TH NOVEMBER, 2008.
JUDGMENT:
1. The plaintiff company deals in Aluminium products. The defendant company is manufacturing Aluminium products at its factory at BALCO Nagar, Korba. The plaintiff alongwith its four sister companies/concerns (i.e. shares of which were and are held by persons related to each other) are since the last 20 years taking supplies of Aluminium products from the defendant. The names of the sister companies/concerns are, Anish Metals Pvt. Ltd., Pankaj Extrusion Pvt.Ltd., Pankaj Metals Pvt.Ltd. and Hiren Aluminium Ltd. According to the plaintiff, the defendant treated the plaintiff and the four sister companies/concerns as group companies only for the ::: Downloaded on - 09/06/2013 14:01:59 ::: -2- purpose of trade discount based on the gross purchase orders placed on the defendant by the plaintiff and their sister companies/concerns. According to the plaintiff, they had a credit of Rs.3,52,26,499/- as on 30th January 2006 with the defendant, which amount was sufficient to pay for the various orders of Aluminium wires and ingots and other Aluminium products placed on the defendant. The plaintiff have alleged that the defendant, treating the plaintiff and their sister companies/concerns as group companies, have fraudulently adjusted ig an amount of Rs.3,38,16,720/-
due from one of its sister companies/concerns, viz.
Anish Metals Pvt. Ltd. from the sum of Rs.3,52,26,499/- lying to the credit of the plaintiff.
2. The plaintiff have, therefore, filed the present suit, seeking a declaration that an amount of atleast Rs.3,52,26,499/- was paid by the plaintiff towards the orders placed by it with the defendant and also a declaration that the defendant is not entitled to appropriate Rs.3,38,16,720/- or any other amount therefrom towards the dues inter-alia from Anish Metals Pvt.Ltd. The plaintiff have further sought specific performance by way of directions against the defendant to forthwith deliver 437.5 M/Tonnes of ::: Downloaded on - 09/06/2013 14:01:59 ::: -3- Aluminium goods/products as per the contract and in the alternative have sought an order and direction against the defendant to refund to the plaintiff, the said amount of Rs.3,52,26,499/- together with interest at 18% thereon from 30th January 2006 till the date of payment. The plaintiff have also sought from the defendant an amount of Rs.21,02,26,499/- as per particulars set out in Exhibit 'O' to the plaint, which includes damages.
3. The plaintiff have taken out the notice of motion in the suit seeking various interim reliefs which reliefs are also sought as final reliefs in the suit. However, the only relief pressed before this Court at the hearing of the notice of motion is a direction against the defendant to deposit the sum of Rs.3,52,26,499/- in this Court and permitting the plaintiff to withdraw the same on such terms and conditions as this Court may deem fit.
4. The defendant apart from filing their affidavit-in-reply dated 20th June 2006 have also filed their written statement dated 17th March 2008.
According to the defendant, the grant of reliefs prayed for by the plaintiff in the notice of motion ::: Downloaded on - 09/06/2013 14:01:59 ::: -4- would result in grant of final reliefs in the suit.
It is submitted that on this ground alone, the notice of motion deserves to be dismissed. The defendant have also contended that only the Court at Korba in the State of Chhattisgarh has the territorial jurisdiction to decide the subject matter of the suit.
The defendant prior to the filing of this suit by the plaintiff have, on 31st January 2006 filed a declaratory suit, before the District Court at Korba against the plaintiff, inter-alia praying that the adjustment of ig the payment made by the defendant is valid and the District Judge has issued notices to the plaintiff herein and others. The defendant have also submitted that the plaintiff and its sister companies/concerns have in their respective dealership forms filed with the defendant shown themselves as sister concerns of each other and have also shown that they have common director/s. It is submitted that all the entities have been treated as one group by the defendant. The defendant have denied that the plaintiff and its sister companies/concerns were being treated as a group entity only for a limited purpose as alleged. The defendant have submitted that they are entitled to adjust the amounts due from one group company from the amounts lying in the credit of any ::: Downloaded on - 09/06/2013 14:01:59 ::: -5- other group company and the adjustment made by the defendant is valid and cannot be termed as dishonest or fraudulent. The defendant have also submitted that after adjusting the said amount a sum of Rs.14,09,779/- was lying to the credit of the plaintiff. The defendant have paid to the ICICI Bank the balance amount lying to the credit of the plaintiff in view of the funds obtained by the plaintiff under channel financing scheme of ICICI Bank to which the defendant was a signatory and at present, no balance is lying to the credit of the plaintiff with the defendant.
5. As set out hereinabove, the main dispute raised by the plaintiff in the suit, is that the defendant are not entitled to appropriate Rs.3,38,16,720/- or any other amount therefrom towards the dues from Anish Metals Pvt. Ltd. from the plaintiff or any of its sister concerns and have sought a declaration to that effect in terms of prayer clause (b) of the plaint/suit. The defendant have joined an issue with the plaintiff by disputing the stand taken by the plaintiff and have made submissions justifying their action/ conduct. At the final hearing of the suit an issue whether the defendant was ::: Downloaded on - 09/06/2013 14:01:59 ::: -6- entitled to adjust the said amount, will have to be framed and decided after the evidence of the parties is adduced and arguments advanced. In fact, in the suit, the plaintiff have sought refund of the said amount of Rs.3,52,26,499/- from the defendant with interest thereon, as one of the final reliefs.
6. The plaintiff is admittedly seeking by this motion, one of the final reliefs sought by it in the suit. The above suit is admittedly not a summary suit and the notice ig of motion is not in the nature of a summons for judgment. The notice of motion does not make out any case under Order XXXIX of the Code of Civil Procedure, 1908. The defendant does not admit that the defendant holds such money as a trustee for the plaintiff or that it belongs or is due to the plaintiff. The learned senior counsel appearing for the plaintiff has submitted that the credit worthiness of the defendant is not in doubt and the notice of motion is also not under the provisions of the Order XXXVIII Rule 5 of the Civil Procedure Code, 1908.
However, the learned Senior Advocate for the plaintiff has submitted that the plaintiff is entitled to the relief of deposit of Rs.3,52,26,499/- with liberty to withdraw the same on such terms and conditions as ::: Downloaded on - 09/06/2013 14:01:59 ::: -7- deemed fit by the Court, because the plaintiff have committed a fraud on the defendants. He submitted that the entire purpose of justice would be lost, if the plaintiff has to wait for 20 (twenty) years to recover the said amount, despite the plaintiff being confident of establishing the fraud at the stage of the notice of motion itself. He submitted that the plaintiff is entitled to the relief sought in the notice of motion under section 151 of the Civil Procedure Code, 1908.
7. The learned senior counsel appearing on behalf of the plaintiff relied on the decision of the Hon'ble Supreme Court in the case of Ramchandra Singh v/s.
Savitridevi & Ors., reported in 2003 (8) SCC 319, wherein it is held that fraud vitiates every solemn act. Fraud and justice never dwell together.
Although in a given case, a deception may not amount to fraud, fraud is anathema to all equitable principles and any affair tainted with fraud cannot be perpetuated or saved by the application of any equitable doctrine including res-judicata. There can be no dispute pertaining to what the Hon'ble Supreme Court has held on fraud. However, the learned senior counsel appearing for the plaintiff has failed to note ::: Downloaded on - 09/06/2013 14:01:59 ::: -8- that in paragraph 22 of the same judgment, the Hon'ble Supreme Court has quoted a passage from In Lazarus Estates Ltd. v. Beasley [1956 (1) All.E.R. 341], wherein it is inter-alia stated "the Court is careful not to find fraud unless it is distinctly pleaded and proved; but once it is proved, it vitiates judgments, contracts and all transactions whatsoever." Therefore, in my view, the plaintiff cannot seek the afore-stated relief at the interim stage which is one of the final reliefs, only on the basis of pleading fraud. The plaintiff will ig have to also prove the fraud at the stage of the final hearing of the suit. Only then the plaintiff would be entitled to receive the amount from the defendant, which as of date, is adjusted by the defendant towards their purported dues.
8. The Hon'ble Supreme Court in the case of N.S. Mills v/s. The Union of India, reported in 1976 SC 1152, have quoted from 'Theoretical Basis of Inherent Powers Doctrine - Text material prepared by Jim R. Cargon- Publication of National College of The State Judiciary, U.S.A., as follows :- "the inherent powers has its roots in necessity and its breadth is co-extensive with the necessity." In the present case, as set out earlier, the plaintiff has admitted that ::: Downloaded on - 09/06/2013 14:01:59 ::: -9- the credit worthiness of the defendant is not doubted and the notice of motion is not under the provisions of Order XXXVIII Rule 5 of the Civil Procedure Code, 1908. No case of necessity whatsoever is made out by the plaintiff for this Court to invoke its inherent jurisdiction and pass an interim order in terms of the final relief and which even otherwise is in the nature of a security.
9. Under the circumstances, I am of the view that the plaintiff ighave not made out any case for grant of interim relief as sought. The notice of motion stands dismissed with costs.
[S.J.KATHAWALLA, J.] ::: Downloaded on - 09/06/2013 14:01:59 :::