Calcutta High Court
Sesa International Limited vs Avani Projects And Infrastructure ... on 16 November, 2017
Author: Sanjib Banerjee
Bench: Sanjib Banerjee
IN THE HIGH COURT AT CALCUTTA
CIVIL APPELLATE JURISDICTION
ORIGINAL SIDE
The Hon'ble JUSTICE SANJIB BANERJEE
And
The Hon'ble JUSTICE SABYASACHI BHATTACHARYYA
APO No. 439 of 2017
GA No. 3144 of 2017
With
CS No. 113 of 2017
SESA INTERNATIONAL LIMITED
-VERSUS-
AVANI PROJECTS AND INFRASTRUCTURE LIMITED AND OTHERS
For the Appellant: Mr Anindya Kumar Mitra, Sr Adv.,
Mr Abhrajit Mitra, Sr Adv.,
Mr Ratnanko Banerji, Sr Adv.,
Mr V. N. Dwivedi, Adv.,
Mr Soumya Ray Chowdhury, Adv.,
Ms Jayanti Char, Adv.
For the Respondent No. 1: Mr Jishnu Saha, Sr Adv.
For the Respondent No. 2: Mr S. K. Kapur, Sr Adv.,
Mr Ranjan Bachawat, Sr Adv.,
Mr Debnath Ghosh, Adv.,
Mr Nikas Teoary, Adv.
For Reliance: Mr Tilak Bose, Sr Adv.,
Mr Ravi Kapur, Sr Adv.,
Mr Aditya Kanoria, Adv.
Hearing concluded on: November 10, 2017.
Date: November 16, 2017.
SANJIB BANERJEE, J. : -
It was probably worth a try, but the appellant's endeavour to stretch the bizarre to absurd cannot be appreciated. The appeal is directed against a rather lengthy judgment of September 5, 2017 passed on an interlocutory petition in a money claim. An initial order of May 17, 2017 was vacated by the order impugned and a different form of security afforded to the appellant. The appellant completely disowns such order and says that it did not seek an order of the kind that it has obtained.
2. The facts as innocently presented in course of the opening of this appeal justified a degree of indignation at the appellant's case not being accepted by the interlocutory court. But as the more complex facts pertaining to the matter unfolded, even before the respondents had a say in the matter, it was evident that the action was instituted with sinister motive and oblique purpose.
3. The simple case of the plaintiff-appellant that was initially presented was that the appellant had invested a sum of Rs.21 crore in a real estate project undertaken by the third defendant (also the third respondent here) through the instrumentalities of the first and second defendant companies (again the first and second respondents, respectively, in this appeal) which were owned and controlled by the third defendant and his men and agents. It is best that some of the key averments in the plaint are noticed at this stage as they form the fulcrum of the plaintiff's claim:
"2. In or around January 2014, the defendant nos.1 and 2, through the defendant no.3, their authorized person and Director represented to the plaintiff followings amongst others:
a) Defendant no.2 (previously named as "DLF Hilton Hotels Ltd." and thereafter "DLF Hotels & Hospitality Ltd.") is a long term lessee under Kolkata Municipal Corporation ("KMC") in respect of a large plot of land (5.59 acres approx) being premises No.8, JBS Haldane Avenue, Kolkata-
700 105 which was being developed through the defendant No.1. The said lease hold land and premises is more fully described in a schedule annexed hereto and marked with the letter "A".
b) KMC have sanctioned a building Plan ("the plan") for construction of two towers comprising service apartments at the said premises. The project was named "Avani Grand".
c) For the purpose of undertaking development of the service apartment area within the said premises, defendant No.2 has entered into a term sheet/Agreement in or about June 2012 with the defendant No.1 whereby, the defendant No.1 has agreed to undertake construction, erection and completion of the new buildings in the service apartment area.
d) KMC in December 2012 has granted the right to Defendant No.2 to sub- lease the service apartments, with proportionate share in the land.
e) The work of construction would commence within August 2014 and the "Avani Grand" project would be completed in December, 2016.
f) The defendants needed funds for development of the said property.
"3. The Defendant nos.1 and 2 through their Managing Director the Defendant No.3, on the basis of aforesaid representations, approached the plaintiff at their registered office within the jurisdiction aforesaid. Replying on the aforesaid representation and being induced thereby the plaintiff agreed to take allotment of 21000 sq.ft. of super built up area in service apartment in the project "Avani Grand" located at No.8, JBS Haldane Avenue, Kolkata -700 105 and the defendants agreed to allot the same at a price of Rs.10,000/- per sq.ft. aggregating Rs.21 crores. The plaintiff agreed to take allotment as aforesaid on the faith that the said construction of work would commence within August, 2014 and would be completed by December, 2016. The aforesaid agreement was entered into orally between Mr. Shankar Lal Bagri, director of the plaintiff on the one hand and defendant no.3 on the other hand for self and on behalf of defendant companies sometime in or around the first week of March 2014 which would also be borne out from the dealings and transactions between the parties and their conduct. This agreement was orally entered into at the plaintiff's registered office at "Jasmine Tower", 31, Shakespeare Sarani, Room No.611, 6th floor, Kolkata - 700 017, within the jurisdiction aforesaid."
4. The remainder of the story sought to be told to the court by the plaintiff is evident from paragraphs 6 and 7 of the plaint:
"6. The defendant No.1 did not commence the work of construction even by the end of August, 2014 and started pressurizing the plaintiff for termination of the allotment.
"7. In or about October, 2014 (by that time also construction had not commenced) negotiations started. The defendant companies through the defendant no.3 proposed and assured that the defendant nos.1 and 2 would refund the received amount of Rs.21 crores paid by the plaintiff with interest thereon at the rate of 18% per annum till date of repayment as also pre-estimated damage of Rs.8 crores by way of compensation and the plaintiff would agree upon termination of allotment of 21000 sq.ft. of super built up areas in the service apartment of the said project. The plaintiff being pressurized and assured by the defendants of payments as aforesaid, ultimately agreed to the said proposal."
5. The repayment allegedly promised by the defendants to the plaintiff was recorded in a letter of November 15, 2014. A copy of such letter is appended to the plaint and the two key paragraphs from such letter need to be noticed:
"This is to place on record that we have agreed to allott All that 21,000 square feet of superbuilt-up area consisting in the Service Apartment, in the project named "AVANI GRAND" located at Municipal Premises No.8, J.B.S Haldane Avenue, Kolkata- 700 105 and inrespect of such allotment you have already paid a sum of Rs.21 Crores (Rupees Twenty One Crores only) towards the full and final consideration amount.
Since the construction of the project is delayed we shall be liable to pay interest on the amount paid by you at the rate of 18% p.a. till the amount is repaid and damages totaling to Rs.8 Cr (Rupees Eight Crores only) over and above the principal amount as stated above. The issue is mutually settled. Kindly sign on the duplicate of this letter in acknowledgement and confirmation of the above."
6. The letter of November 15, 2014 was signed by the third defendant in his capacity as a director of the first defendant and a second time in his capacity as a director of the second defendant.
7. The rest of the case made out in the plaint is that after making payment of a sum of Rs.4.25 crore against the agreed repayment amount as indicated in the letter of November 15, 2014, the defendants failed to make payment of the balance principal amount of Rs.24.75 crore (Rs.21 crore on account of the amount invested and Rs.3.75 crore on account of the compensation after giving credit to a sum of Rs.4.25 crore already received). The total claim in the suit is in excess of Rs.38.17 crore together with further interest. According to the plaint, after an initial payment of Rs.4.25 crore was received by the plaintiff, 23 several cheques of a combined value of Rs.35,88,34,387/- were issued "by the defendant no.3 on behalf of the defendant no.1", all dated February 16, 2017. The yarn spun out in the plaint is that despite the written assurance to the contrary as contained in a letter dated February 8, 2017 issued by the defendant No.3 on the letter head of the defendant No.1 company, the third defendant requested the plaintiff to delay presentation of the said cheques on the promise that the necessary payment would be arranged. It must be noticed that the last two paragraphs in the letter said to be dated February 8, 2017 issued by the third defendant as a director and authorised signatory of the first defendant represented as follows:
"We will not intimate our bankers to stop the payment of the Post Dated Cheques given to you.
"We will not request you for not presenting the cheques on its due date."
8. The case run in the plaint is that upon the third defendant's request to not immediately present the said cheques, "the plaintiff waited till May 4, 2017 but when even by that date the defendants did not give any further response and the 3 months period of validity was going to expire on or about 15th May, 2017, the plaintiff on May 5, 2017 presented all those cheques ... (which) ... were dishonoured ... on the ground of insufficiency of funds." Thus, a case was made out in the plaint of a certain sum of money being invested in a project and money being promised to be returned within months of the payment being made on the ground of the delay in undertaking the project and the cheques issued by way of repayment being dishonoured upon presentation.
9. For the rest of the plaintiff's version that it carried to this court, its interlocutory petition has now to be seen. After the narration in the plaint was substantially reproduced in the petition, the plaintiff claimed that in April, 2017 it had downloaded the annual report of the first defendant for the year ended March 31, 2015, which report included the annual report of its subsidiary, the second defendant in the suit. A copy of such report was appended to the petition. The conclusion drawn by the plaintiff on a reading of the said annual report was that "the respondent Nos. 1 and 2 are in very bad financial condition" (Paragraph 25 of the petition).
10. Over the next several pages in the remarkable petition, the plaintiff asserted that it had discovered from the material pertaining to the first defendant company downloaded by the plaintiff from the website of the Ministry of Corporate Affairs that "the company (the first defendant) has not been paying principal and interest to Reliance Capital Limited and entered into a Memorandum of Understanding to have a moratorium of two years for payment of principal amount and interest." Such moratorium, according to the paragraph 27 of the plaintiff's petition, was to expire in June, 2017.
11. Several paragraphs in the petition thereafter are devoted to the poor financial condition of the defendant companies and of several real estate projects having gone south with the following sentence at the end of paragraph 32 appearing to be the key statement in the petition before repeating further allegations as to the perceived inpecuniosity of the defendant companies and doing lip service to averments that accompany prayers in the nature of attachment before judgment:
"32. ... The only substantial asset of the respondent Nos.1 and 2 which is known to the petitioner and which is of the estimated value of Rs.50 crores is the project called "Avani Grand" located at No.8, J.B.S Haldane Avenue, Kolkata - 700
105."
12. On such averments, the interlocutory prayers sought ranged from a receiver to be appointed "over and in respect of premises No. 8, JBS Haldane Avenue, Kolkata - 700 105 and to make inventory of state of occupation of the said property" to the receiver being "empowered to ascertain the present status of bookings of service apartments and bungalows in 'Avani Grand Project' ..." The further prayers were for the defendants to furnish security in the sum of Rs.45 crore and for the right title and interest of the defendants in the Avani Grand project to "be attached before judgment" in default of the security being furnished. To boot, an injunction was also sought to restrain the defendants from dealing with or disposing of or transferring or creating any encumbrance in respect of the property pertaining to the Avani Grand project.
13. Such petition earned the plaintiff an ex parte ad interim order in terms of prayers (c) thereof, that called on the defendants to show cause why they should not be directed to furnish security for Rs.45 crore. In addition, a special officer was appointed to inspect the premises and report on the status of the Avani Grand project. An injunction was also issued in the following terms:
"The respondent shall not create any further encumbrance in respect of premises No. 8, JBS, Haldane Avenue, Kolkata - 700 105 till the returnable date."
14. May 17, 2017 was one of the last working days before this court closed for a fortnight on May 19, 2017 for its annual summer vacation. The plaintiff's interlocutory petition was next taken up on June 14, 2017. The appearance on behalf of the parties at the top of the order indicated lawyers representing "the respondents" and advocate representing Reliance Commercial Finance. In the opening paragraph of the order dated June 14, 2017 the submission attributed to the respondents is as follows:
"It has been submitted on behalf of the respondents that the respondent No.1 may not have any defence to the claim of Rs.21 crore."
15. It appears to have also be submitted on behalf of the defendants that a mortgage had been created in respect of the Avani Grand property "in favour of Reliance Commercial Finance and pursuant to such mortgage a sum of Rs.270 crore was disbursed by the said company for the instant project". A further submission was also recorded in the order that another company belonging to the Reliance group had also disbursed a sum of Rs.50 crore for the same project and enjoyed a pari passu charge over the security created in respect of the property.
16. The plaintiff's interlocutory petition thereafter meandered through some innocuous hearings before an order was made thereon July 10, 2017 upon the second defendant applying for the Vakalatnama filed on behalf of the second defendant to be taken off the file. Advocate previously representing all the defendants, thereupon, submitted to court that there were no instructions to further represent the second defendant company. Such is recorded in the order of July 10, 2017.
17. The plaintiff was principally resisted by the second defendant in the court of the first instance and by Reliance Commercial Finance Limited. The substance of the common stand of both the second defendant and Reliance Commercial Finance Limited (R-Com) was and is that the second defendant had obtained a long term lease of Premises No.8, JBS Haldane Avenue, Kolkata - 700 105 (hereinafter referred to as the bypass property) at a time prior to the defendant No.1 company coming in control of the defendant No.2. After the defendant No.1 acquired the control of the defendant No.2, a development agreement was executed between the defendant companies on November 9, 2013 for the purpose of the defendant No.1 undertaking construction of service apartments in a demarcated portion of the bypass property and for the defendant Nos.1 and 2 to share the revenue accrued therefrom.
18. Such development agreement records that the defendant No.2 had obtained sanction of a building plan and in terms thereof a hotel is to be constructed at a part of the bypass property and two buildings consisting of service apartments are to be constructed elsewhere in such property. The agreement records that defendant No.1 would incur all development costs for construction of the service apartments and the profit from the transfer of the service apartments would be shared in the ratio of 60:40 between the defendant No.1 and the defendant No.2. The agreement contemplated finance being obtained from Reliance Capital Limited.
19. According to the second defendant, the first defendant was to carry out the construction of the service apartments at the bypass property at its cost and expenditure and, for such purpose, the first defendant was entitled to obtain project finance and loans. In September, 2012 the second defendant created a mortgage in respect of the bypass property by deposit of title deeds to R-Com and a registered deed of mortgage was subsequently executed on October 10, 2012. Several other documents were simultaneously executed by the second defendant and R-Com, including a facility agreement, a deed of pledge, a deed of charge, a deed of guarantee and a deed of termination.
20. The affidavit of the second defendant used in the interlocutory court reveals that an initial finance for Rs.278 crore was sanctioned by R-Com and a further loan was granted by another company from the Reliance stable, Reliance Home Finance Limited, in whose favour of a pari passu charge in respect of the bypass property was created. The entire share holding of and in the second defendant is pledged with R-Com as security for the project loan.
21. R-Com applied before the interlocutory court by way of GA No.1919 of 2017 for leave to intervene in the proceedings and for vacating the order dated May 17, 2017. According to the petition filed by R-Com, the bypass property measures about 5.59 acre and, as per the existing sanctioned building plan, a total area of 7,99,300 sq.ft is proposed to be constructed thereon. R-Com has corroborated the second defendant's stand that the entire share holding in the second defendant is pledged with R-Com. R- Com claims to have advanced a total of Rs.278 crore for the project since September, 2012 and a further Rs.50 crore has been sanctioned by Reliance Home Finance Limited, out of which a sum of Rs.33.34 crore has already been disbursed. Under the facility agreement with R-Com, the defendants have been granted a moratorium which has expired in September, 2017. R-com claims that the entire purport of the ad interim order obtained from May 17, 2017 was to prejudice the rights of R-Com.
22. Both R-Com and the second defendant allege collusion between the plaintiff and the third defendant. At paragraph 17 of R-Com's petition in the interlocutory court, it is alleged that the "defendant nos.1 and 3, in order to defeat the rights of the applicant (R-Com), have caused the plaintiff, a company owned by the Bagris' to file the instant suit." At paragraph 3(m) of the second defendant's affidavit in the interlocutory court, it is averred that "the petitioner is acting in collusion and conspiracy with the other respondents in an attempt to foist liability on the answering respondents, if possible and siphon monies, funds and or assets beyond the answering respondents and the said RCFL in whose favour inter alia the entire shareholding of the respondent No. 1 is pledged."
23. Both the second defendant and R-Com contend that in terms of the documents executed by the defendant Nos.1 and 2 with R-Com, the first defendant could not have entered into any agreement for sale of any proposed unit at the bypass property without the express permission of R- Com. They claim that the plaintiff was aware of such condition and of the mortgage and the embargo as a result thereof. They assert that the entire action is mischievous and there was no scope for the plaintiff to seek any order against the second defendant or any property of the second defendant or the said bypass property in any manner or form.
24. The second defendant and R-Com question the veracity of the letters relied upon by the plaintiff and suggest that the same have been tailor-made for the purpose of the present proceedings and with the malicious design of causing prejudice the second defendant and R-Com to try and defeat the rights of R-Com pertaining to the bypass property, its pledge in respect of the shares in the second defendant and the money it has pumped into the project.
25. In course of the judgment impugned herein, the interlocutory court was constrained to insinuate that it had been misled into passing the ex parte order on May 17, 2017:
"The Court was not aware of the existence of a prior mortgage nor that the entire share of the defendant No.2 has been pledged with the applicant (R-Com) on 17th May, 2017. If these full facts were known to the Court, the Court would not have passed any order concerning the said property at this stage."
26. Elsewhere in the judgment, the interlocutory court observed that the claim was essentially against the defendant No.1 and that the letter dated November 15, 2014 on which much emphasis has been laid on behalf of the plaintiff, "in my view, prima facie is not enforceable against the defendant No.2 and more so in respect of the present property."
27. The action instituted by the plaintiff, the disingenuous manner in which its petition before the interlocutory court was fashioned, the unworthy interlocutory prayers that it carried to the court and the timing of the institution of the suit and the ex parte order that it obtained, reveal a dark side of the legal system. There is no doubt that the process of this court was abused to obtain an undeserving order a couple of days before the summer vacation to inflict maximum prejudice on parties against whom the plaintiff has no claim or the semblance of any cause of action. It was a vicious plan devised in the name of the plaintiff to aid the third defendant and his virtually bankrupt first defendant company to ward off R-Com. The entire exercise was designed to hijack the second defendant and its only valuable asset when the plaintiff had no cause to proceed against the second defendant.
28. No part of the untruthful story carried to court by the plaintiff is worthy of any credence. In addition, the second defendant has demonstrated by referring to another suit on similar lines filed by a sister concern of the plaintiff herein and also controlled by Shankar Lal Bagri, from which it is evident that Shankar Lal Bagri and third defendant Anirudh Daga are acquainted with each other and go back some distance in time.
29. It is difficult to accept that a sum of Rs.21 crore would be paid by one commercial entity to another without any document being executed in support thereof. Indeed, as the second defendant has emphasised, that money was received by the first defendant from the plaintiff in the middle of the year 2014 proves nothing at all, even qua the first defendant. The story attempted to be sold by the plaintiff to the court is that after payment of a total amount of Rs.21 crore between March, 2014 and August 1, 2014, by November 15, 2014 the first defendant agreed to refund the payment at a high rate of interest of 18 per cent per annum and also unilaterally offered to pay Rs.8 crore by way of compensation. The purported letter of November 15, 2014, doubtless, would not appear in the records of the second defendant though the third defendant as a director of the second defendant purported to sign the same on behalf of the second defendant. The second defendant has squarely disowned such letter and the authority of Daga to issue the same on its behalf.
30. Again, there is no explanation why the refund was not immediately made and why cheques were issued only in February, 2017 and which cheques were presented a few days before the suit was lodged. In fact, there is nothing to dispel the suspicion that the documents relied upon by the plaintiff in support of its claim may have been brought into existence after the plaint was prepared. The only set of relevant documents that may not have emanated from the plaintiff and the third defendant is the bunch of memoranda of dishonour pertaining to the cheques and such memoranda preceded the filing of the suit by no more than ten days. The plaintiff and the plaintiff's purported claim have no nexus with the bypass property and the entire malicious essay was to embroil the second defendant in litigation and have a receiver appointed over its valuable property to destroy a project that the third defendant as the person in control of the first defendant knew he could not deliver in terms of the development agreement despite obtaining substantial funds from R-Com and its sister concern.
31. Though the interlocutory prayers in the plaintiff's petition specifically referred to attachment before judgment, there was a change of tack in course of the appeal to suggest that the principles of Order XXXVIII Rule 5 had not been invoked, but it was Order XXXIX Rule 1(b) that had been relied on all along. As a corollary, it is submitted on behalf of the plaintiff that the plaintiff is entitled to an injunction in respect of the residual rights of the second defendant in respect of the bypass property, including the equitable right of redemption. The judgments reported at ILR 21 Bom 226 (Parashram Harlal v. Govind Ganesh Porgaumkar) and (1983) 4 SCC 570 (Kabidi Venku Sah v. Syed Abdul Hai) have been relied upon in such regard. Even after the plaintiff's game was seen through, the plaintiff attempted to clutch as straws such as a Hong Kong judgment cited on behalf of the second defendant in an unreported judgement rendered on June 26, 2015 in Big Island Construction (HK) Ltd v. WU YI Development Co Ltd (Case No.FACV No.1 of 2015).
32. There is nothing that the plaintiff has been able to show that links the second defendant to the money paid by the plaintiff to the first defendant. Even the best arguable case of the plaintiff would show that upon the plaintiff agreeing to obtain the refund and the compensation, the tenuous link - if there was any at all - between the plaintiff and the bypass property was snapped.
33. The entire scheme devised by the plaintiff smacks of collusion with the third defendant. There is no credible reason why the plaintiff made the payment till the beginning of August, 2014 and by October of the same year began negotiations to pull out of the project. There is no basis to the plaintiff's assertion that the first defendant started pressurising the plaintiff in August, 2014 for termination of the allotment and, certainly, no factual foundation for the plaintiff's allegation that between the plaintiff completing the payment in beginning August, 2014 and end of August, 2014 "the market of immovable properties in Kolkata, particularly in that area, started soaring and price of apartments went up." It is baffling that there was no written demand from the plaintiff to any of the defendants between November, 2014 and February, 2017 before cheques were allegedly issued for the balance payment to the plaintiff. There is no explanation why the cheques allegedly issued in February, 2017 were sought to be presented for encashment only few days before the instant suit was instituted. After all, the first defendant's letter of February 8, 2017 promised that the first defendant would not intimate its bankers to stop payment of the post-dated cheques or request the plaintiff to not present the cheques. There was no reason for the plaintiff to timidly accept the alleged oral request made on behalf of the defendants to not immediately present the post-dated cheques, despite the written assurance in the purported letter of February 8, 2017.
34. The simple case sought to be made out by the plaintiff that the entire transaction was on the basis of the representation of the third defendant and that it is the third defendant who controls the second defendant, is not acceptable in the light of the principal asset of the second defendant being mortgaged to R-Com and even the shareholding of the first defendant in the second defendant being pledged with R-Com. If the corporate veil is lifted, the third defendant may not be found lurking behind it in the guise of the second defendant, it is R-Com who looms large all over the second defendant.
35. The collusion between the plaintiff and the third defendant is also evidenced by the fact that the representation in court on behalf of the second defendant to virtually accept the plaintiff's claim was by a person who had not been authorised in such regard by the second defendant and who had to ultimately withdraw from the proceedings. The entire exercise by the plaintiff is an affront to the system and almost mocking at the court. The manner in which the plaintiff has conducted the matter is an insult to the intellect and borders on taunting the court at its perceived impotence to deal with such maladroit litigants and their representatives. The complexity of the plot hatched on behalf of the third defendant in the name of the plaintiff is such that it could not have emanated from Old Post Office Street and had to have its origin in some more up-market address. There is a limit to the court's endurance to such antics and it is time that a spade is called exactly what it is.
36. The second defendant has appropriately relied on a line from a Supreme Court judgment reported at (1964) 7 SCR 760 [Rupchand Gupta v. Raghuvanshi (Private) Limited] where it was quoted with approval that "collusion in judicial proceedings is a secret arrangement between two persons that the one should institute a suit against the other in order to obtain the decision of judicial tribunal for some sinister purpose." Rarely has a more sinister exercise in deceiving the court been attempted than this audacious action by the present plaintiff for the benefit of the third defendant.
37. The second defendant has also referred to a passage from a recent single bench judgment reported at (2016) 4 CHN (Cal) 594 (Jay Bee Properties Private Limited v. Sri Pawan Kumar Budhia) which may be apposite in the present context:
"27. Court time is a valuable national resource. It has to be judiciously spent, both by the judge and the lawyer. A system made for the public cannot be permitted to be hijacked to become a lawyer- centric process, where the judge has to silently suffer however much time is taken to flog a dead horse. With increasing number of legal journals churning out judgments and orders - whether or not they lay down any new law or any new angle to an aspect of law - one is spoilt for choice in citing judgments on the peripheries of the legal issue that arises in a matter. It is both for the judge and the lawyer to stem this rot, if only to ensure that the back-breaking numbers of pending cases are tackled. In particular, costs must be used as a deterrent in commercial matters that are needlessly dragged on."
38. The extent of the complicity between the plaintiff or the Bagri in control thereof and third defendant Daga is stark in the plaintiff disowning the order passed by the interlocutory court by which the residual rights of the first defendant in respect of a particular property have been attached. It has been repeated over and over again that the plaintiff did not seek such order and the same should not be continued. The ostensible reason is that such order is virtually ineffective since the asset is under the control of a bank and is subject to the measures to be taken under the Securitisation and Reconstruction of Financial Assets and Enforcement Security Interest Act, 2002. The real purpose of such submission and the pains to ensure that the order of attachment passed by the interlocutory court is undone, as is plain to see, is so that there is no embarrassment or inconvenience to the third defendant who is in control of the first defendant company.
39. Since the plaintiff has not been able to show in the remotest form any modicum of a claim against the second defendant, no property of the second defendant can be attached in furtherance of the plaintiff's admitted claim against the first defendant and no order of injunction may be issued against any property of the second defendant under Order XXXIX Rule 1(b) of the Code. An order of attachment, as the interlocutory court has rightly found, is a tall order and requires both an unimpeachable claim and the likelihood of such claim remaining unrealised if no order of attachment is passed. An injunction under Order XXXIX Rule 1(b) of the Code requires the plaintiff to demonstrate that he is a creditor of the person whose property is to be affected by the order of injunction. On the material carried to court, the plaintiff does not appear to be a creditor of the second defendant.
40. It is with considerable regret and diffidence that it needs to be observed that the filter that was traditionally in place before a matter reached the court may have been considerably eroded in value and diluted in its moral content. The judiciary is not a system of a judges alone; the object of the exercise in a court is not to obtain an unworthy order or defeat a worthy cause - the pursuit is of justice. Even disregarding the utopian concept of justice, the fairness in the approach or procedure or outcome cannot be compromised or seen to be compromised so that the institution does not lose it relevance or pride of place in a constitutional democracy governed by the rule of law. Even though justice cannot be pursued in the adversarial system by ensuring the removal of injustice, the shared responsibility to prevent unjust causes being espoused in court cannot be shrugged off at the Bar. The judiciary cannot stand, far less remain upright, if either pillar of the Bench or the Bar falters.
41. Though the ad interim order that the appellant herein obtained on May 17, 2017 was vacated by the order impugned in the appeal, such aspect of the matter deserves a word in passing. An ex parte order is an exception and not the rule. Such is also the statutory command in Order XXXIX Rule 3 of the Code. Merely because there is no caveat is no excuse for an ex parte order to be made. Again, an ex parte order has to be of limited import and fitted to deal with the mischief that it seeks to immediately arrest. The appointment of a receiver or special officer can scarcely be made by way of an ex parte ad interim order on an interlocutory petition of an unsecured creditor. Courts must be alive to the extent of prejudice that such an order may cause to a defendant. Even the best arguable case of the plaintiff in this matter, without the deception that has been subsequently discovered, could not have earned this plaintiff an order so overwhelmingly disproportionate to the limited claim that was passed on May 17, 2017.
42. There comes a time when a system must assert itself, if only to survive against the vicious onslaught of such unscrupulous litigants and their advisors as the present plaintiff. If dockets are not to be clogged with unworthy claims and false defences, litigants who carry vexatious causes must be appropriately dealt with in the award of costs. For the plaintiff's colossal attempt to hoodwink the court and try and obtain an undeserving order, the plaintiff-appellant in this case will pay costs assessed at Rs.15 lakh each to the second defendant and R-Com. Though the costs are intended to be punitive and exemplary in character, in effect, such sums may only cover a part of the expenses incurred by the second defendant and R-Com to undo the mischief that the plaintiff set afoot by obtaining the ex parte order on May 17, 2017. Such costs need to be paid within four weeks from date, failing which such costs will carry interest at 18 per cent per annum till payment. The second defendant and R-Com will be entitled to execute this part of the order in accordance with law.
43. The judgment and order impugned dated September 5, 2017 stand affirmed insofar as the ex parte ad interim order of May 17, 2017 was vacated thereby. In view of the submission on behalf of the appellant that it did not seek any order of attachment in respect of Avani Aspires, the order impugned is set aside in such regard. The receiver appointed by the order impugned stands discharged. The plaintiff's interlocutory application, GA 1705 of 2017, stands dismissed.
44. APO No. 439 of 2017 and GA No. 3144 of 2017 are disposed of as above.
45. Urgent certified website copies of this judgment, if applied for, be supplied to the parties subject to compliance with all requisite formalities.
(Sanjib Banerjee, J.) I agree.
(Sabyasachi Bhattacharyya, J.)