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Madhya Pradesh High Court · body

2003 DIGILAW 1360 (MP)

PRISM CEMENTLIMITED v. L AND T FINANCE LTD

2003-12-16

S.P.KHARE

body2003
Judgment ( 1. ) THIS is plaintiffs appeal under Order 43 Rule 1 (a), CPC against the order by which the plaint has been returned to the plaintiff under Order 7 Rule 10, CPC for presentation to the proper Court. ( 2. ) THE plaintiff Company filed the suit on 21-8-2003 claiming various declarations and also mandatory injunction for a direction to defendant no. 3 Court Receiver of Bombay High Court to "remit the sale-proceeds to the plaintiff and/or the arbitrator appointed by the plaintiff. The plaintiff submitted an application under Order 39 Rules 1 and 2, CPC for an interim mandatory injunction to the defendant No. 3 to sell the machine and to deposit the sale-proceeds in Civil Court Deposit or with the arbitrator. ( 3. ) THE facts relevant for the present purpose as per plaint are that there was agreement dated 16-8-2001 between the plaintiff and defendant no. 2 Delta Construction Systems Limited, Hyderabad; under this agreement the defendant No. 2 deployed a machine known as "mega-rock breaker" in the premises of the plaintiff at Satna on 10-4-2002; the defendant No. 2 created a pledge of this machine in favour of the plaintiff; the physical possession of this machine continued with the defendant No. 2 but it was not entitled under the terms of the contract to remove the machine from the premises of the plaintiff; the defendant No. 2, however, surrendered this machine to the defendant No. 3 to defeat the rights of the plaintiff; the defendant No. 3 has taken possession of the machine in pursuance of the order dated 28-4-2003 of the Bombay High Court; there is an arbitration clause in the agreement between the plaintiff and the defendant No. 2 and the plaintiff has invoked that clause for appointment of arbitrator for settlement of dispute regarding recovery of Rs. 1,14,12,661/- as damages from the defendant No. 2; the defendant No. 1 claims that the defendant No. 2 had taken the machine on "hire purchase" and because of the default in the payments the defendant No. l approached the Bombay High Court on its original jurisdiction for appointment of Receiver by making an application under Section 9 of the Arbitration and Conciliation Act, 19%; the said Court appointed defendant No. 3 official receiver to take possession of the machine and to sell it; this order was passed with the consent of the defendant Nos. 1 and 2; the Receiver took possession of the machine on 29-5-2003; according to the plaintiff the alleged "hire purchase agreements" between the respondent Nos. 1 and 2 are in fact "contracts of sale on deferred payments" and the ownership of the machinery vested in the defendant No. 2; the plaintiff is entitled to invoke the pledge created in its favour by the respondent No. 2 and has a right to sell the machine; the plaintiff has been given the liberty by the Bombay High Court to obtain an order from a Court of competent jurisdiction to disentitle the Court Receiver from removing the said machine from the premises of the plaintiff; as the bombay High Court has already directed the Receiver to sell the machine the plaintiff and the defendant No. 1 are now in effect claiming rights over the sale-proceeds from the sale of the said machineries as to appropriate the same against their respective claims. On the basis of these averments the plaintiff in para 25 of the plaint has valued the relief of declaration at rupees one lac and the relief of injunction at Rs. 2000/ -. The plaintiff has affixed fixed Court fee of Rs. 500/- on the relief of declaration and Rs. 500/- for the relief of injunction. ( 4. ) THE plaintiff has claimed the following reliefs :- "the Honble Court may kindly be pleased to hold- (i) that the hire purchase agreements dated 12-10-2001 and 12-3-2002 are not hire purchase agreements but are contracts of sale on deferred payments and the title in the said machineries has validly vested in defendant No. 2 and therefore defendant No. 1 does not have any rights against the said machineries or its sale proceeds; (ii) that, without prejudice and in the alternative to prayer (i) above, the rights created by defendant No. 2 in the said machineries in favour of the plaintiff are superior than the rights created in favour of defendant No. 1; (iii) that in view of Clause 10. 9 of the said contract executed between the plaintiff and defendant No. 2, a pledge has been created in favour of the plaintiff in respect of the mega rock breaker installed in the premises of the plaintiff; (iv) that, this Honble Court may kindly be pleased to declare that the surrender of the said mega rock breaker by defendant No. 2 in favour of defendant No. 1 is collusive, fraudulent and illegal; (v) that, this Honble Court may kindly be pleased to declare that the plaintiff has equitable title in respect of the said mega rock breaker and has the authority to sell the same and the appropriate the sale proceeds in view of the provisions contained in the Indian Contract Act, 1872; (vi) that, the defendant No. 1 and/or defendant No. 3 may kindly be restrained from remitting the sale proceeds to defendant No. 1 and/or to the arbitrator appointed by defendant No. 1 and defendant No. 2 in their pending arbitration proceedings. (vii) that, defendant No. 3 may kindly be commanded by a writ of mandatory injunction to sell the machine and to remit the sale proceeds to the plaintiff and/or the arbitrator appointed by the plaintiff vide its letter dated 21-8-2003; (viii) Any other relief, order of direction as this Honble Court deems fit and proper under the present facts and circumstances of the case, may also kindly be granted to the plaintiff; (ix) Costs. " ( 5. ) THE defendant No. 2 submitted an application before the Court under Order 7 Rules 10 and 11, CPC for rejecting the plaint on the ground that the plaint has not been properly valued for purposes of Court fee and pecuniary jurisdiction. ( 6. ) THE Trial Court by the impugned order dated 22-9-2003 held that it is necessary for the plaintiff to pay ad valorem Court fee on the value of the machine which is Rs. 1,95,60,000/- and the plaint has been directed to be returned for presentation to the proper Court. ( 7. ) THE plaintiff filed this appeal on 25-9-2003 along with an application for interim injunction. On 26-9-2003 this Court passed the ex- parte order to the effect: "respondent No. 3 is hereby restrained from handing over the sale proceeds of Mega Rock Breaker to respondent No. 1". Notices were ordered to be issued to the respondents. ( 7. ) THE plaintiff filed this appeal on 25-9-2003 along with an application for interim injunction. On 26-9-2003 this Court passed the ex- parte order to the effect: "respondent No. 3 is hereby restrained from handing over the sale proceeds of Mega Rock Breaker to respondent No. 1". Notices were ordered to be issued to the respondents. On 14-10-2003 on the appellants application again an ex parte interim order has been issued to the effect : "learned Counsel for the appellant has submitted that subsequent to passing of the aforesaid order, on 3rd October, 2003 Honble High Court, Bombay has passed an order whereby the Receiver respondent No. 3 herein is directed to hand over the possession of the said equipment to the petitioner, i. e. , respondent No. 1 of the present appeal. The appellant apprehends that the respondent No. 1 may sell alienate or transfer the disputed mega Rock Breaker and in that event the appellant would suffer irreparable injury and the very purpose of filing of this Misc. Appeal would be frustrated. He therefore, prays that till the service of notice on the respondents, the status quo with regard to the disputed mega Rock Breaker be directed to be maintained. On due consideration the prayer is allowed. The respondents are directed to maintain the status quo with respect to the disputed machine until further orders. Let fresh notices be issued to the respondents by ordinary as well as by Registered Post within three days. Notices be made returnable within two weeks, ( 8. ) THE respondent Nos. 2 and 3 have not appeared before this court so far. The respondent No. 1 has submitted an application on 3-11-2003 for vacating the two ex parte orders mentioned above. It has been stated by the respondent No. 1 that the respondent No. 2 had purchased the machine on "hire purchase"; the defendant No. 1 continued to be the legal owner of this machine; the defendant No. 2 had no right to create any pledge as alleged by the plaintiff; the Bombay High Court by order dated 28-4-2003 directed the official Receiver to take possession of the machine and sell it; on 24-8-2003 the official Receiver removed the rock breaker from the premises of the plaintiff and gave the same to the respondent No. 1; the arbitration proceedings between the respondent Nos. 1 and 2 have been concluded on 12-9-2003 by the arbitrator and he also found that the respondent No. 1 is entitled to possession of the machine and the respondent No. 2 has been directed to surrender the machine to the respondent No. 1; the award has been made on 12-9-2003; the Bombay High Court passed an order on 3-10-2003 by which the court Receiver has been discharged and actual possession over the machine has been given to the respondent No. 1. ( 9. ) THE interim order of this Court dated 26-9-2003 restraining the respondent No. 3 official Receiver from handing over the sale-proceeds of mega rock breaker to the respondent No. 1 has become meaningless in view of the award dated 12-9-2003 of the arbitrator. The award was made before the order dated 26-9-2003 of this Court. The subsequent order dated 14-10-2003 directs the respondents to maintain status quo. But before that the order dated 3-10-2003 has been passed by the Bombay High Court by which the court Receiver has been discharged and the machine as per award of the arbitrator is now in physical possession of the respondent No. 1. The order of status quo passed on 14-10- 2003 would have the effect that the machine would continue to be in possession of the defendant No. 1. ( 10. ) THE Trial Court reproduced Order 7 Rule 11, CPC in the impugned order but did not closely consider its implications. If in the opinion of the Court the relief claimed was "under-valued" or the plaint was "insufficiently stamped" then in both the situations as per Order 7 Rule 11 (b) and (c)it was necessary for the Court to require the plaintiff to correct the valuation or to make up the deficiency in Court fee within a time fixed by it and on failure to do so by the plaintiff the plaint could have been rejected. But the Trial Court did not give these opportunities to the plaintiff and abruptly passed the order returning the plaint under Order 7 Rule 10, CPC. The Court of Additional district Judge is a Court of unlimited pecuniary jurisdiction and it is not spelt out in the impugned order how the suit was beyond the pecuniary jurisdiction of the Court. But the Trial Court did not give these opportunities to the plaintiff and abruptly passed the order returning the plaint under Order 7 Rule 10, CPC. The Court of Additional district Judge is a Court of unlimited pecuniary jurisdiction and it is not spelt out in the impugned order how the suit was beyond the pecuniary jurisdiction of the Court. It may be that by the Distribution memo issued by the District judge under Section 15 of the M. P. Civil Court Act, 1958 the pecuniary limit of the jurisdiction of the Court of Second Additional District Judge might have been limited to some extent but there was no inherent lack of jurisdiction and to meet this situation Section 15 (3) has been engrafted in the M. P. Civil Court act, 1958 according to which it was necessary for 2nd ADJ to refer the case to the District Judge on administrative side for necessary orders. The provision in Order 7 Rule 10, CPC was not at all attracted and the provisions in Order 7 Rule 11 (b) and (c), CPC were not followed. Therefore, the impugned order can not be upheld and has to be set aside. The Trial Court has further not dealt with the question which provision of the Court Fees Act or the Suits Valuation act is attracted in the present case. ( 11. ) IT is well settled that the question of Court fee and pecuniary jurisdiction must be considered in the light of the allegations in the plaint and its decision can not be influenced either by the pleas in the written statement or by final decision of the suit on merits. This principle was laid down by the supreme Court long back in Sathappa Vs. Ramnathan, AIR 1958 SC 245 and has been reiterated in numerous judicial decisions. But it is equally well settled that the ingenuity or dexterity in drafting the plaint and the relief clause can not change the real complexion or substance of the relief. The Court has to see the real substance of the claim and not merely form or verbiage. (Paikansing Vs. Maniksing, AIR 1949 Nagpur 97 ). In order to determine the amount of court fee payable the Court must look to the substance of the claim and not merely the form in which the relief has been prayed for. ( 12. The Court has to see the real substance of the claim and not merely form or verbiage. (Paikansing Vs. Maniksing, AIR 1949 Nagpur 97 ). In order to determine the amount of court fee payable the Court must look to the substance of the claim and not merely the form in which the relief has been prayed for. ( 12. ) IN the present case in the relief clauses (i) to (v) various types of declarations have been claimed and the Court fee has been paid as per schedule II Article 17 (iii) of the Court Fees Act. In clause (vi) injunction has been sought for restraining the defendant No. 3 from remitting the sale-proceeds to the defendant No. 1 or to the arbitrator appointed by the defendant no. 1 and the defendant No. 2 in their pending arbitration proceedings. This is as per Section 7 (iv) (d) of the Court Fees Act. In clause (vii) the main relief has been claimed and that is that the defendant No. 3 be commanded to sell the machine and to remit the sale proceeds to the plaintiff and/or the arbitrator appointed by the plaintiff. The relief claimed in clause (vii) is in substance the recovery of the sale-proceeds of the machine by the plaintiff though couched in the form of mandatory injunction. As soon as the plaintiff claims the sale-proceeds the suit falls under Section 7 (i) of the Court Fees Act "for money" and in such a suit the Court fee claimed is "according to the amount claimed". That required ad valorem Court fee. ( 13. ) THE Court can always take into account the subsequent events and the plaintiff also must look at them. Now the relief claimed in clause (vii)has become redundant as defendant No. 3 official Receiver has been discharged by the Bombay High Court; the machine is not to be sold by the official receiver; the award has been made by the arbitrator and the machine has been delivered to the defendant No. 1. It is now for the plaintiff to consider the question of amendment of the plaint in light of the subsequent events and developments. The valuation of the suit would now depend upon the relief to be claimed by the plaintiff in view of the subsequent events. The defendant no. It is now for the plaintiff to consider the question of amendment of the plaint in light of the subsequent events and developments. The valuation of the suit would now depend upon the relief to be claimed by the plaintiff in view of the subsequent events. The defendant no. 1 has got possession of the machine through due process of law by the award of the arbitrator which has the force of decree and also by the order of the Bombay High Court. The plaintiff can not give a go- by to the stark realities. ( 14. ) IN the result the impugned order of the Trial Court directing return of the plaint to the plaintiff is set aside. The plaintiff may amend the plaint including the relief clause in view of the subsequent developments. The plaint will clearly spell out the basis and mode of valuation. The Trial Court will then decide the question of valuation by a proper order after referring to the relevant provisions of the Court Fees Act, the Suits Valuation Act and the m. P. Civil Court Act. The parties are directed to appear before the Trial Court on 22-12-2003. The plaintiff may make a fresh application for temporary injunction under Order 39 Rules 1 and 2, CPC or any other appropriate provision for interim relief as the application which has been submitted earlier before the Trial Court seeking the interim injunction has become infructuous in view of the subsequent events mentioned above. The order of status quo passed by this Court will continue for a month during which period the defendant No. 1 will not sell the machine in question and the Trial Court will decide the interim application to be submitted before it by the plaintiff within that period on merits on the well known principles of strong prima facie case, irreparable injury and balance of convenience un-influenced by the order of the maintenance of status quo of this Court for the limited duration. A copy of this order be sent to the Trial Court so as to reach there within three days by a special messenger by the Registry.