Madras High Court
Unknown vs Applicant Is The Plaintiff. ...
Author: M.Govindaraj
Bench: M.Govindaraj
A.Nos.9182 of 2018,7808 of 2018 in C.S.No.468 of 2011 A.NO.9182 OF 2018 & A.NO.7808 OF 2018 IN C.S.NO.468 OF 2011 M.GOVINDARAJ,J A.No.9182 of 2018 Applicant is the plaintiff. Applicant/plaintiff filed above suit for recovery of money from the first and second defendants and for other reliefs. The reliefs claimed are as follows:
“ (a) Order the first defendant to pay the said sum of Rs.25,08,18,836.62 as per the Deed of Assignment dated 08.11.2006 with interest at 22% p.a (quarterly rest) between the date of filing the plaint and the date of payment, with costs of this suit, on some date to be named by the court and in default that the plaint B schedule property may be sold and the proceeds (after defraying there out the expenses of the sale) applied in and towards the payment of the amount of the said principal, interest and costs and further that, if such proceeds shall not be sufficient for the payment in full of such amount, the first and second defendants may be jointly and severally ordered to pay to the plaintiff the amount of http://www.judis.nic.in 1/16 A.Nos.9182 of 2018,7808 of 2018 in C.S.No.468 of 2011 deficiency with interest thereon at the rate of 22% p.a (quarterly rest) until realization and also for that purpose directions may be given and accounts taken by the court;
(b) Declaring the proceeding initiated by the first defendant in RCOP 55 of 2011 on the file of the learned XVI Small Causes Court, Chennai against the sixth defendant as illegal, invalid and non-est in law and consequently restrain the Defendants 1 and 2 from proceeding with the Rent Control of proceedings in RCOP 55 of 2010 as against the 6th Defendant herein.
(c) For a permanent injunction restraining the first defendant his men, agents, servants or any person or persons claiming under it form disturbing the peaceful possession and enjoyment of the IV floor of the mortgager property more fully described in schedule C appended to the plaint by the 6th defendant inducted by the plaintiff except in accordance with the arrangement dated 25.11.2006.”
2. By virtue of an order passed in A.No.3069 of 2011 dated 04.08.2014, respondents 8 and 9 are depositing the rentals to the credit of the above suit. During the pendency of the suit the applicant/plaintiff initiated proceedings before the National Company Law Tribunal, Chennai in CP/856/IBC/2018 u/s. 7 of the Insolvency and Bankruptcy code for http://www.judis.nic.in 2/16 A.Nos.9182 of 2018,7808 of 2018 in C.S.No.468 of 2011 initiation of Corporate Insolvency Process. Therein, the applicant/plaintiff and the first respondent/first defendant have entered into an amicable settlement and a joint memo of compromise dated 03.08.2018 was signed between both the parties and in view of the same, the proceedings were disposed of by the National Company Law Tribunal, Chennai. The relevant portion of Joint memorandum of Compromise dated 03.08.2018 reads as under :
“...
4.A) The Corporate Debtor in compliance of the above, furthe agrees to execute necessary Transfer Deed and deliver possession of three (3) grounds of undivided share in the land situated at “Kothari Buildings” out of 2/3rd undivided share measuring a total extent of 9.5 grounds, comprised in Old survery No.330, Resurvey No.58/2 and 58/81, situate at No.114, Mahatma Gandhi Road, Nungambakkam, Chennai-600 034, together with exclusive ownership of 4th & 5th floor of the building in existence along with proportionate right in all stair cases, lift, well, super structure, covered park shed at the back side and open rear Car parking, in favour of the petitioner or its nominee within a period of three months from this day or within a reasonable period mutually agreed by the Corporate Debtor and the Financial Creditor and the transfer shall be in http://www.judis.nic.in 3/16 A.Nos.9182 of 2018,7808 of 2018 in C.S.No.468 of 2011 compliance of requisite approval of the body Corporate under Companies Act, 2013, Stock Exchange and other statutory authorities, M/s. Gemini Iron and Steels Pvt. Ltd., who had entered into an Agreement subsisting the Mortgage given consent in execution of the transfer of the above property.
B) The Corporate Debtor further agrees to transfer encumbrance free two (2) grounds from and out of 5.3 grounds being part of the larger extent of 8 grounds of land situate behind the present “Kothari Building” which is the subject matter of suit before the Hon'ble Madras High Court in C.S.No.65 of 2008, subject to the disposal that the suit or in any other manner. In the event of the Corporate Debtor not obtaining any right or benefit in the said property no obligation or liability shall arise on the Corporate Debtor in this regard. Further the legal fee and other expenses incurred by the Corporate Debtor for contesting C.S.No.65 of 2008 shall be borne proportionately by the Corporate Debtor and the Financial Creditor. In addition, if the said dispute is settled amicably, any payout shall be borne by the Corporate Debtor and the Financial Creditor or any amount payable for the settlement shall be borne proportionately by the Corporate Debtor and Financial Creditor.” http://www.judis.nic.in 4/16 A.Nos.9182 of 2018,7808 of 2018 in C.S.No.468 of 2011
3. In the light of the joint memorandum of compromise dated 03.08.2018, between the applicant/plaintiff and the first respondent/first defendant the suit relief stands settled. Since there is no relief is sought against the Defendants 5, 7 to 9, applicant/plaintiff is not pressing the suit against them and it can be dismissed ultimately and the suit can be decreed in terms of the joint memorandum of compromise and prayed for refund of full Court fee.
4. Such prayer is objected by the 9th respondent/9th defendant. The background of the case according to the 9th respondent/9th defendant, is interconnected to previous litigations and memorandum of understanding entered between the parties. From the records it is seen that there were several litigations between the first and second respondents and all other respondents. The matters were taken upto Hon'ble Supreme Court and a memorandum of understanding was signed between the parties dated 05.03.2000. In view of the memorandum of agreement signed between the parties in Civil Appeal Nos.
5811,5926,5908,5909,5924,5929,5910,5927,5911,5923,5912,5918,5939,5922, 5907,5944,5913,5925,5914,5916,5915 and 5928 of 1994 orders were passed http://www.judis.nic.in 5/16 A.Nos.9182 of 2018,7808 of 2018 in C.S.No.468 of 2011 by the Hon'ble Supreme Court on 09.03.2000.
5. It should be noted that the 2nd respondent is the Chairman and Managing Director of the first respondent. An Annual General Body meeting of first respondent company was said to have been convened on 05.08.1994, for resolving change in the utilization of funds, raising funds from non-resident Indians and through overseas Corporate bodies by issue of equity shares and dealing with allotment of equity shares to the promoters group on preferential basis. Against which, the share holders viz., the 9th respondents and others raised litigation. All these litigations were taken before the Hon'ble Supreme Court by the first respondent by way of transfer petition. The matters ultimately ended in an agreement of understanding between the parties dated 05.03.2000 and the same was recorded by the Hon'ble Supreme Court and orders were passed on 09.03.2000.
6. A reading of the memorandum of understanding dated 05.03.2000 reveals that
1. The party of First Part agrees to relinquish and convey its two third interest in the undivided share in the portion of the land lying behind the said Kothari Buildings admeasuring 5.33 grounds of the total extent of 8.0 grounds including existing superstructure thereon and forming part of Survey http://www.judis.nic.in 6/16 A.Nos.9182 of 2018,7808 of 2018 in C.S.No.468 of 2011 No.58/1 and 58/81, in favour of one of the above said parties of the Second part viz Kothari Safe Deposits Limited or its nominees or in favour of Mr.Bhadrashyam H Kothari and/or to his nominee(s), for a consideration of Rs.4,53,00,000/- (Rupees Four Crores and fifty three lakhs only). A plan demarcating the portion in respect of which the Party of the First part agrees to relinquish the two-third undivided share is annexed to this Agreement (Annexure II). After the said conveyance, the party of the First Part thereafter will have no right, title or interest in the said lands and the superstructure thereon.
2. Two of the parties of the second part viz., Kothari Sugars & Chemicals Ltd and Investment Trust of India Ltd, the proportionate 1/12th portion of which is being presently sold to the third party, covenant that they have no objection in relinquishing 2/3rd right of the rear side area of Kothari Buildings in favour of M/s. Kothari Safe Deposits Ltd or its nominees or to Mr.Bhadrashyam H.Kothari and/or his nominee(s).
3. The parties of the Second Part hereby agree and undertake that Kothari Safe Deposits Ltd, either directly or through Mr.Bhadrashyam H Kothari and/or his nominees will pay to the Party of the First part the consideration amount of Rs.4,53,00,000/- (Rupees Four Crores and fifty three lakhs only) within nine months from the date of the Decree or order http://www.judis.nic.in 7/16 A.Nos.9182 of 2018,7808 of 2018 in C.S.No.468 of 2011 passed by the Hon'ble Supreme Court in terms of this Agreement and four other agreements.
7. As per the agreement dated 05.03.2000, it is seen that first and second defendants agreed to relinquish and convey 2/3rd interest in the undivided share in the portion of the land lying behind the said Kothari building admeasuring 5.33 grounds of the total extent of 8 grounds including the existing superstructure and in turn the 9th respondent shall pay a sum of Rs.4,53,00,000/- (Rupees Four Crores and fifty three lakhs only). In the very same agreement, the parties have also agreed to transfer the shares in the following manner:
1. a) The parties of the SECOND PART will transfer 859351 equity shares of Rs.10/- each in the equity capital of the PARTY OF THE FIFTH PART to the PARTY OF THE FIRST PART
b) The party of the THIRD PART has agreed to transfer 74980 equity shares of Rs.10/- each in the equity capital of the party of the FIFTH PART to the PARTY OF THE FIRST PART.
c) The party of the FOURTH PART has agreed to transfer 1950 equity shares in the equity capital of the party of the FIFTH PART to the party of the FIRST PART
d) In consideration of the PARTIES OF THE SECOND, THIRD AND FOURTH PARTS transferring the http://www.judis.nic.in 8/16 A.Nos.9182 of 2018,7808 of 2018 in C.S.No.468 of 2011 shares referred to above the PARTY OF THE FIRST PART agrees to pay a sum of Rs.6,31,57,729/- to the PARTIES OF THE SECOND THIRD AND FOURTH PARTS.
1. The party of the Fifth part shall also release its 2/3rd undivided interest in the property bearing D.No.114, Mahatma Gandhi Salai, Chennai-34 in favour of the party describe herein above as 2 (n and in consideration thereof the party described as 2(n) agrees to pay a sum of Rs.4,53,00,000/- to the PARTY OF THE FIFTH PART.
2. The party of the FIFTH PART shall pay a sum of R.6,67,70,028/- to the party of the FIRST PART towards refund of the preferential issue of 24,74,569 equity share of Rs.10/- each issued to the party of the FIRST PART by the Party of the FIFTH PART and which issue had been cancelled by the order of the City Civil Court, Madras and the Supreme Court of India.
WHEREAS, the parties of the FIRST, SECOND, THIRD, FOURTH AND FIFTH PARTS in order to smoothly implement the above agreement have decided to appoint the party of the SIXTH PART to act as Escrow agent to ensure that the terms and conditions of the Agreements dated 5.3.2000 be fulfilled by the parties of the FIRST to FIFTH PARTS.” Thereafter, by way of memorandum of understanding dated 29.11.2001, the parties have appointed an escrow agent wherein among http://www.judis.nic.in 9/16 A.Nos.9182 of 2018,7808 of 2018 in C.S.No.468 of 2011 others they agreed on the following points:
1. The party of the SECOND, THIRD, FOURTH PARTS have agreed to hand over the share certificates of the PARTY OF THE FIFTH PART (more fully described in the Annexure 1 hereto) together with transfer documents duly executed by the respective parties to the Escrow Agent.
2. Under the separate Memorandum of Agreement dated 5.3.2000 entered into between the party of the FIFTH PART and parties mentioned in 2(m) and 2(n) viz., The Investment Trust of India Ltd and Kothari Safe Deposits Ltd., which expression shall also include their nominee/nominees Century Foods Private Ltd., a company incorporated under the Companies Act, 1956 and having its registered office at No.3, Landons Road, Kilpauk, Chennai-600 010, the party of the FIFTH PART herein has agreed to release its two third undivided interest in the portion of the land lying behind Kothari Buildings, 114, Mahatma Gandhi Salai, Chennai-34 more particularly described in the schedule hereto in favour of the party described under 2(n) by way of a release deed.
3. The parties have agreed that the consideration for the above release deed would be a sum of Rs.4,53,00,000/- (Rupees Four Cores and fifty three lakhs only)
4. The above sum of Rs.4,53,00,000/- payable by the party of the SECOND PART viz, 2(n) to the party of the FIRST PART shall be adjusted and set off against the http://www.judis.nic.in 10/16 A.Nos.9182 of 2018,7808 of 2018 in C.S.No.468 of 2011 sum of Rs.6,31,57,729/- payable by the party of the FIRST PART to the parties of the SECOND, THIRD AND FOURTH PARTS as stipulated earlier.
5. The party of the FIFTH PART also agrees to the above set off on account of the fact that they are liable to pay a sum of Rs.6,67,70,028/- to the party of the FIRST PART towards refund of the share money as stipulated supra. In lieu of the above adjustment, the party of the FIRST PART shall pay a sum of rs.1,78,57,729/- to the parties of the SECOND, THIRD AND FOURTH PARTS and accordingly the part described under 2
(n) agrees to pay the balance amount of Rs.4,53,00,000/-
to the offer parties of the SECOND, THIRD AND FOURTH PARTS.
The parties of the SECOND, THIRD and FOURTH PARTS have authorise Mr.Bhadrashyam H.Kothari, son of late Mr.H.C.Kothari to receive the above sum of Rs.1,78,57,729/-.”
8. While the matter stood thus, it appears that the applicant/plaintiff initiated proceedings against the first and second respondents for recovery of money and to take possession of the property involved in the memorandum of agreement dated 05.03.2000 and 29.11.2001 supplemented by memorandum of understanding 31.08.2005. Hence, the respondents and others filed a suit in C.S.No.65 of 2008 in which http://www.judis.nic.in 11/16 A.Nos.9182 of 2018,7808 of 2018 in C.S.No.468 of 2011 an application in O.A.No.92 of 2008 was filed, in which this Court has granted an order of interim injunction restraining the plaintiff and the first and second respondents from anyway alienating the schedule mentioned property pending disposal of the suit. The said interim injunction was made absolute on 22.04.2008.
9. In this background, the ninth defendant in the suit objects to the recording of joint memo of compromise. The contention of the applicant/plaintiff is that he holds the first charge over the property and therefore the respondents cannot have a right prevailing over the rights of the plaintiff. Therefore, the memorandum of compromise recorded before the National Company Law Tribunal can be received and a quietus can be given. First and second respondents have filed counter that the ninth respondent and others have failed to comply with the memorandum of understanding dated 05.03.2000 by not paying the agreed amount Rs.4,53,00,000/-(Rupees Four Crores fifty three lakhs only) to them and therefore they do not have any right over the property and hence the objections of the ninth respondent and others cannot sustain.
10. I have considered the submissions.
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11. Without traversing into the facts, it is very clear that the 2/3rd of the undivided share of portion of the land lying behind the said Kothari building admeasuring 5.33 grounds of the total extent of 8 grounds was the subject matter before the Hon'ble Supreme Court, in which a memorandum of understanding was arrived on 05.03.2000 and it culminated into an order dated 09.03.2000 in the above said Civil Appeal Nos. 5811 of 1994 and batch of cases. On the said basis a further memorandum of understanding dated 29.11.2001 was signed between the parties, in which the amount of Rs.4,53,00,000/- was set off against the amount payable to the other respondents to the tune of Rs.6,31,57,729- and still a sum of Rs.1,78,57,729/- is due from the first and second respondents to the contesting respondents. In that event, the statement made by the first and second respondents that memorandum of understanding was not acted upon and that the ninth respondent and others have not fulfilled their part of contract cannot be accepted and it is contrary to facts and misleading. The right of the parties in respect of this piece of land has been dealt with by the Hon'ble Supreme Court and an order dated 09.0.2000 has been passed. It is submitted by the parties that originally recovery proceedings was initiated by the bank, the original mortgagee before the Debt Recovery http://www.judis.nic.in 13/16 A.Nos.9182 of 2018,7808 of 2018 in C.S.No.468 of 2011 Tribunal and the same is pending. During its pendency, the mortgage was assigned in favour of plaintiff and he has filed the above suit for recovery of money from the mortgagors the first and second defendants. Curiously during the pendency of the proceedings, after about fifteen years, the corporate insolvency process was initiated and ended in compromise. It cannot be understood, as to how simultaneous proceedings, on the same of action, in spite of bar of jurisdiction, and without considering limitation aspects are maintained and orders are passed. These complicated issues cannot be decided in the present application, which will lead to multiplicity of proceedings.
12. Now that whether the order of the Hon'ble Supreme Court dated 09.03.2000 or the order passed by the National Company Law Tribunal dated 03.08.2018 will prevail is the matter for adjudication. The impact and enforceability of Memorandum of Understanding dated 05.03.2000 over the memorandum of compromise dated 03.08.2018 can be tested only after elaborate trial.
13. All the parties herein are the parties to C.S.No.65 of 2008 http://www.judis.nic.in 14/16 A.Nos.9182 of 2018,7808 of 2018 in C.S.No.468 of 2011 also. Unless the suit in C.S.No.65 of 2008 is decided, any further orders in this matter will lead to multiplicity of proceedings. As contended by the ninth respondent the recording of this compromise in the presence of the ninth respondent will make an impact over his rights, even if it is subjected to the outcome of C.S.No.65 of 2008. Instead of complicating the matters, it can be simply decided after the disposal of C.S.No.65 of 2008. Therefore, the joint memorandum of compromise dated 19.11.2018 entered into between the plaintiff and defendants 1 to 4 cannot be received at this juncture in this suit. Instead, the present application as well as the suit can be posted along with C.S.No.65 of 2008 for achieving complete justice.
14. Both the suits C.S.No.468 of 2011 and C.S.No.65 of 2008 can be posted together, either for simultaneous or joint trial as may be decided by the concerned bench. In the result, the application in A.No.9182 of 2018 is posted along with the above suits for final disposal.
07.01.2020.
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