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2008 DIGILAW 1786 (BOM)

Rajendra Kumar Jain v. Pankaj Gulati

2008-12-18

S.J.KATHAWALLA

body2008
JUDGMENT : . By this notice of motion, the plaintiffs have sought appointment of Court Receiver for safekeeping of an oil painting by Artist K.K. Hebbar, depicting two peacocks, of the dimension of 72" X 30" ("the said painting"). The plaintiffs have also sought an injunction restraining the defendants from dealing with, disposing of, parting with possession of and/or creating, any third party rights in respect of the said painting. 2. The 1st plaintiff is the sole proprietor of an Art Gallery known as "Collectors Paradise" and the 2nd plaintiff is the Manager of the said Art Gallery. The 1st defendant is the customer of the plaintiffs. The 2nd defendant is the Export House dealing in export of art and art objects. The 3rd defendant is an international auction house. 3. It is the plaintiff’s case that in or about January 2005, the 1st defendant visited the 1st plaintiff’s Art Gallery and showed interest in purchasing the said painting. Ultimately, on or about 15th February 2005, the deal was struck between the 1st defendant and the 2nd plaintiff on behalf of the 1st plaintiff for the purchase of the said painting for Rs.20,00,000/-. The 1st defendant made part payment of Rs.15,00,000/- and towards the balance payment of Rs.5,00,000/- the 1st defendant handed over a painting of Artist ‘Ara’ with an understanding that if the said ‘Ara’ painting was sold for Rs.4,00,000/-, then the balance amount of Rs.1,00,000/- would be paid by the 1st defendant in cash. In the event of the said painting not being sold in 6 months, the 1st defendant would pay the balance of Rs.5,00,000/- by cash. According to the plaintiffs, the said understanding was recorded by a letter from the 1st defendant to the 1st plaintiff dated 15th February 2005, a copy of which is at Exhibit ‘A’ to the plaint. 4. The plaintiffs have further submitted that on 16th February 2005, the 1st defendant again visited the Art Gallery and informed the 2nd plaintiff that he would like to replace the painting ‘Ara’ with the painting by Artist Akbar Padamsee on ‘sale or return’ basis. According to the plaintiffs, the purported transaction of return of painting of ‘Ara’ and deposit of painting of Akbar Padamsee was recorded in the form of a receipt which was signed by the 2nd plaintiff and the 1st defendant. 5. According to the plaintiffs, the purported transaction of return of painting of ‘Ara’ and deposit of painting of Akbar Padamsee was recorded in the form of a receipt which was signed by the 2nd plaintiff and the 1st defendant. 5. According to the plaintiffs on the very next day, i.e. 17th February 2005 the 1st defendant took back the painting of Akbar Padamsee and replaced the same with two paintings by Artists Sunil Padval and Sunil Das, against receipt dated 17th February 2005, annexed as Exhibit ‘C’ to the plaint. The plaintiffs have submitted that on or about 21st February 2005, the 1st defendant took back the paintings by Sunil Padval and Sunil Das from plaintiff no.2 and in return left two paintings of Subhash Awchat, one painting of Sanjay Kumar and one painting of Jitesh Kallat with plaintiff no.2, the receipt of which is annexed at Exhibit ‘D’ to the plaint. 6. The plaintiffs have submitted that the 1st defendant visited the Art Gallery of the 1st plaintiff a few days after 21st February 2005 and informed the 2nd plaintiff that there was a ready buyer for the said two paintings of Subhash Awchat, one painting of Sanjay Kumar and one painting of Jitesh Kallat and if the said paintings were handed over to the 1st defendant, he would be able to repay the balance of Rs.5,00,000/- within a couple of hours. According to the plaintiffs, the 2nd plaintiff handed over the said paintings to the 1st defendant without obtaining any receipt and in good faith, because the 1st defendant promised to pay the balance amount of Rs.5,00,000/- immediately. According to the plaintiffs, thereafter the defendant initially gave excuses by stating that the sale could not take place and that he would return the painting as security for the payment of balance amount of Rs.5,00,000/-. However with the passage of time, the 1st defendant refused to answer the phone calls made by the 2nd plaintiff for the balance unpaid price. Admittedly, the plaintiffs have not registered any complaint or have for a period of one year thereafter not written any letter to the 1st defendant recording the aforesaid allegations. 7. However with the passage of time, the 1st defendant refused to answer the phone calls made by the 2nd plaintiff for the balance unpaid price. Admittedly, the plaintiffs have not registered any complaint or have for a period of one year thereafter not written any letter to the 1st defendant recording the aforesaid allegations. 7. The plaintiffs have submitted that some time in March 2006, the 1st plaintiff learnt that the 1st defendant has entered into a contract with the 2nd defendant to export the said painting to New York to be put up for sale by the 3rd defendant in an auction of ‘20th Centuary Indian Art’ on 29th March 2006. The reserved price for the said painting was fixed at 60,000 US Dollars (approximately Rs.27,00,000/-). According to the plaintiffs, the 1st plaintiff through his London Solicitors addressed a letter to the 1st defendant and after recording the relevant facts, repudiated the said contract dated 15th February 2005 for sale of the said painting and inter-alia stated that the said Advocate has instructed the 3rd defendant to withdraw the sale of the painting at their auction and return the painting to the 1st plaintiff. A similar letter was also written to the 3rd defendant inter-alia calling upon them to withdraw the said painting from the auction sale and return the same to the 1st plaintiff. 8. The plaintiffs have pointed out that by a letter dated 24th March 2006, the 1st defendant’s Advocates inter-alia alleged that there was no contract signed by the 1st defendant and that the document dated 15th February 2005 (Exhibit ‘A’ to the plaint) was fabricated and the signature of the 1st defendant was a forgery. The Advocates for the 1st defendant contended that the 1st defendant had paid in full for the said painting and called upon the 1st plaintiff to withdraw their letter addressed to the 3rd defendant. 9. The plaintiffs have pointed out that thereafter in view of the dispute between the 1st plaintiff and the 1st defendant, the defendant no.3 withdrew the painting from the auction. The 1st plaintiff through his Advocates called upon the 2nd defendant not to part with the possession of the said painting or to create any third party rights in the same, in the event of the said painting being despatched to the 2nd defendant by the 3rd defendant. 10. The 1st plaintiff through his Advocates called upon the 2nd defendant not to part with the possession of the said painting or to create any third party rights in the same, in the event of the said painting being despatched to the 2nd defendant by the 3rd defendant. 10. The 1st plaintiff thereafter filed a suit against the defendants in the Supreme Court at New York for handing over the possession of the said painting to the 1st plaintiff or in the alternative for paying the value of the painting estimated at 2,50,000 US Dollars approximately and also for punitive damages of 2,00,000 US Dollars. Thereafter a temporary restraint order was passed by the New York Court restraining the 3rd defendant from parting with possession of the said painting. However, in view of the 1st defendant’s application for dismissal of the suit for lack of personal jurisdiction, the Supreme Court of New York by its order dated 22nd September 2006 held that although the New York Court had jurisdiction to enter into the suit, on the ground of convenience, the same should be filed in India as the transaction took place in India and the evidence is also available in India. The plaintiffs preferred an appeal therefrom which was withdrawn on 26th December 2006. 11. The plaintiffs have thereafter on 12th January 2007 filed the present suit for declarations that the contract (Exhibit ‘A’ to the plaint) dated 15th December 2005 is valid and illegal and the same is repudiated by plaintiff’s letter dated 17th March 2006. The plaintiffs have also sought an order and decree against the defendants to hand over the said painting to the plaintiffs and have also sought a permanent order of injunction restraining the defendants from dealing with, disposing of, parting with possession and or creating third party rights in respect of the said painting. In the alternative, the plaintiffs have also sought a decree against the defendant no.1 for a sum of Rs.65,00,000/- with interest thereon as per particulars of claim set out in Exhibit ‘S’ to the plaint. The plaintiffs have sought a decree against the defendants for a sum of Rs.10,00,000/- being cost of litigation in the New York Court. In the alternative, the plaintiffs have also sought a decree against the defendant no.1 for a sum of Rs.65,00,000/- with interest thereon as per particulars of claim set out in Exhibit ‘S’ to the plaint. The plaintiffs have sought a decree against the defendants for a sum of Rs.10,00,000/- being cost of litigation in the New York Court. The plaintiffs have also prayed that in the event of this Court coming to the conclusion that the plaintiffs were not entitled to repudiate the contract or that the repudiation was not proper, the defendant no.1 be directed to pay to the plaintiff a sum of Rs.6,80,000/- together with interest on the principal sum of Rs.5,00,000/- from the date of filing of the suit till payment and or realisation. 12. The defendant no.1 has filed an affidavit-in-reply dated 22nd March 2007 and has also filed his written statement dated 1st April 2008. It is submitted on behalf of the 1st defendant that the suit filed by the plaintiff is completely false and based upon manufactured and forged documents. The claims in the suit are made with the malafide intention of illegally benefiting from the increase in the art prices. It is submitted that the plaint does not disclose any cause of action for repudiating a contract of sale. It is submitted that the contract for sale was completed on the day that the painting was purchased by the 1st defendant on 15th February 2005 and on that day, the 1st defendant paid the full purchase consideration of Rs.15,00,000/- for the same, on the spot. The defendants were then given possession of the painting and the 1st defendant took the same home with him. The contract was thus concluded on the same day itself, i.e. 15th February 2005. The contract was never recorded in writing and the letter dated 15th February 2005 relied upon by the plaintiffs is a false, fabricated and bogus document put up by the plaintiffs. There is no question of there being any unpaid price or of the 1st defendant having to pay any sum to the plaintiffs in respect of the said painting and there is no ground whatsoever on which the alleged repudiation would be justified by the plaintiffs. There is no question of there being any unpaid price or of the 1st defendant having to pay any sum to the plaintiffs in respect of the said painting and there is no ground whatsoever on which the alleged repudiation would be justified by the plaintiffs. It is submitted that even if the facts put forward in the plaint are correct, the plaintiffs could merely maintain an action for recovery of the unpaid price of the said painting. 13. It is further submitted on behalf of defendant no.1 that the 1st defendant got to know the plaintiffs in or about the end of January 2005 and/or beginning of February 2005 and in February 2005, the 1st defendant purchased the said painting for the full and final consideration of Rs.15,00,000/-. On the said payment being made, the 1st defendant was given the possession of the said painting alongwith the proof of its authenticity in the form of various certificates and also a photograph of the said painting signed on the reverse by Ms.Rekha Rao, the daughter of the late artist. It is submitted that during February 2005 itself, the 1st defendant handed over to the plaintiffs’ Art Gallery some works of art from his personal collections to sell on a ‘sale or return’ basis. The 1st defendant had instructed the plaintiff no.2 about the price expected and the period for which it could continue to be on the market for sale. At the end of the said period or even before that if the 1st defendant wanted the painting to be returned, he would ask for the same and the 2nd plaintiff would return the same to the 1st defendant. It is submitted that on various dates, the 1st defendant had handed over to the plaintiffs art gallery, a few paintings from his personal collection to sell on a ‘sale or return’ basis. This included paintings by the Artists K.H. Ara, Akbar Padamsee, Sunil Padval, Sunil Das, Subhash Awchat, Sanjay Kumar and Jitesh Kallat. The receipt of these paintings on ‘sale or return’ basis by the plaintiffs Art Gallery is evidenced by Exhibits ‘B’ to ‘D’ to the plaint. This included paintings by the Artists K.H. Ara, Akbar Padamsee, Sunil Padval, Sunil Das, Subhash Awchat, Sanjay Kumar and Jitesh Kallat. The receipt of these paintings on ‘sale or return’ basis by the plaintiffs Art Gallery is evidenced by Exhibits ‘B’ to ‘D’ to the plaint. It is submitted that though the receipts were issued by the plaintiff to the defendant no.1, the words "returned" written thereon are not in the 1st defendant’s handwriting, are not signed and the 1st defendant do not know when the same were inserted in the receipts. It is submitted that when such paintings were not sold and were written to the 1st defendant, the plaintiffs would make notings of the same in their ledger book which ledger books are in the possession of the plaintiffs and the 1st defendant do not have any copy/copies of the same. 14. It is submitted on behalf of defendant no.1 that some time during the end of February 2005, the 1st defendant came to know that the 1st plaintiff was not straight forward in his dealings and had a dubious reputation amongst art dealers. As a result, in a short period, and till about March, 2005 all of the art work was gradually withdrawn by the 1st defendant from the plaintiffs art gallery. After withdrawing the art work, the 1st defendant had absolutely no dealings whatsoever or any communication either verbal or written with the plaintiffs or their associates, agents, etc. in respect of any matter. It is submitted that 13 months after the 1st defendant had purchased the said painting from the 1st plaintiff, the 1st defendant was shocked and surprised to receive a letter dated 17th March 2006 (Exhibit ‘F’ to the plaint) from 1st plaintiffs’ Advocates in the U.K. purportedly reversing the sale of the said painting on the false basis that it had not been completely paid for. It is submitted that prior to this letter i.e. for over a year after the said painting was purchased, there had been absolutely no communication either verbal or written from either of the plaintiffs with respect to the said paintings. It is submitted that the said letter was written with malafide intentions and was promted by the plaintiffs noticing the large amount that the said painting was expected to fetch at the said auction. It is submitted that the said letter was written with malafide intentions and was promted by the plaintiffs noticing the large amount that the said painting was expected to fetch at the said auction. On behalf of the 1st defendant it was inter-alia pointed out from the written statement (paras 19 to 28) as to how Exhibit ‘A’ to the plaint, i.e. the purported contract dated 15th February 2005 is a forged/fabricated document. It is submitted that the submissions of the plaintiffs pertaining to the receipts at Exhibit ‘B’ to ‘D’ and in respect of the paintings handed over to the plaintiff no.2 are incorrect and already dealt with by the 1st defendant. It is, therefore, submitted on behalf of the 1st defendant that the plaintiffs are not entitled to any reliefs whatsoever as prayed for, or otherwise. 15. The 2nd plaintiff has filed an affidavit-in-rejoinder dated 2nd April 2008, wherein the plaintiffs have denied and disputed the submissions made on behalf of the 1st defendant and reiterated what is stated in the plaint. 16. I have considered the submissions made on behalf of the plaintiffs as well as the 1st defendant. I have also perused the annexures to the plaint as well as the affidavit-in-reply to the said notice of motion. As set out earlier, it is the plaintiff’s case that the 1st defendant had paid only an amount of Rs.15,00,000/- out of the total consideration of Rs.20,00,000/- in respect of the said painting and had handed over an ‘Ara’ painting as and by way of security. The plaintiffs have further contended that the ‘Ara’ painting was taken away by the defendant no.1 from the plaintiff no.2 immediately on the next date, i.e. 16th February 2005 after depositing a painting of Akbar Padamsee. The plaintiffs have in paragraph 2 of the plaint stated :- "The said transaction of return of painting of Ara and deposit of painting of Akbar Padamsee was recorded in the form of a receipt which was signed by the 2nd plaintiff and the 1st defendant. Hereto annexed and marked ‘B’ is a copy of the said receipt.". 17. The contents of the said receipt at Exhibit ‘B’ belies the aforesaid contention of the plaintiffs. The said receipt does not contain any record of the transaction of return of the Ara painting and deposit of painting of Akbar Padamsee. Hereto annexed and marked ‘B’ is a copy of the said receipt.". 17. The contents of the said receipt at Exhibit ‘B’ belies the aforesaid contention of the plaintiffs. The said receipt does not contain any record of the transaction of return of the Ara painting and deposit of painting of Akbar Padamsee. The said receipt merely evidences the fact that on 16th February 2005, the 2nd plaintiff has received from the 2nd defendant both the Ara and Akbar Padamsee paintings on a ‘sale or return’ basis. After the signatures of the plaintiff no.2 and defendant no.1 on the said receipt, someone has written the word ‘returned’ by hand. The plaintiffs have not even mentioned in the plaint as to when the handwritten endorsement was made and the said endorsement is in whose handwriting. It is only after the 1st defendant in his reply/ written statement pointed out that the word ‘returned’ written on the receipt is not in the 1st defendant’s handwriting and not signed and the 1st defendant is not aware when the same were inserted in the receipts, that the 2nd plaintiff in her rejoinder for the first time alleged, by way of denial that the word ‘returned’ is in the handwriting of the 1st defendant. In any event, the said receipt only acknowledges the fact that on 16th February 2005, the ‘Ara’ and ‘Akbar Padamsee’ paintings were received by the 2nd plaintiff from the 1st defendant and does not contain the date as to when the same were returned to the 1st defendant. This receipt (Exhibit ‘B’ to the plaint) also belies the contents of Exhibit ‘A’, to the extent that the Ara painting was handed over by the 1st defendant to the plaintiff no.1 on 15th February 2005. Similarly, the receipts at Exhibits ‘C’ and ‘D’ also show that on 17th February 2005 and 21st February 2005, the plaintiff no.2 has received from the defendant no.1 the paintings mentioned therein, though again in these receipts, the word ‘returned’ is written after the signatures of the plaintiff no.2 and defendant no.1. No date is mentioned as to when the same were returned back to the defendant no.1 by the plaintiff no.2. No date is mentioned as to when the same were returned back to the defendant no.1 by the plaintiff no.2. It, therefore, appears that the paintings mentioned in Exhibits ‘B’, ‘C’ and ‘D’ of the plaint had nothing to do with the contract of sale pertaining to the said painting and the said paintings were given by the defendant no.1 to the plaintiffs independently of the contract pertaining to the said painting on ‘sale or return’ basis, on the dates mentioned in the said receipts and were subsequently withdrawn by the defendant no.1 as submitted by him. This is further supported by the fact that not only the plaintiffs have not given the date on which the defendant no.1 took back the paintings set out in Exhibit ‘D’ to the plaint on the pretext of making payment of Rs.5,00,000/- within few hours, but the plaintiffs have not bothered to write a single letter to the defendant no.1 setting out the alleged conduct of defendant no.1 and claiming the alleged unpaid price of Rs.5,00,000/- upto 17th March 2006, i.e. for a period of over one year. The reason given that the defendant was giving excuses as alleged, and with the passage of time was refusing to answer the telephone calls, is not convincing more so, because the 1st plaintiff is a person who has agitated his alleged grievance of non-payment of Rs.5,00,000/- and the consequent repudiation of the contract upto the Supreme Court of the State of New York. The entire story of the plaintiffs pertaining to unpaid price of the said painting prima facie appears to be a creation of the plaintiffs upon realizing that the 1st defendant would make a very good packet by auctioning the said painting at New York, which was sold by the plaintiffs to defendant no.1 on 15th February 2005 for Rs.15,00,000/-. 18. The story spunned by the plaintiff is further exposed by the fact that the plaintiffs have in the plaint alleged that the defendant no.1 took away the paintings set out in Exhibit ‘D’ to the plaint by informing her that he has a buyer for the said paintings and that he will be making payment of the said Rs.5,00,000/- within few hours. However, in the letter dated 17th March 2006 written by the first plaintiff’s London Solicitors to the 1st defendant, it is inter-alia alleged that the 1st defendant persuaded the 2nd plaintiff to release the paintings without any other security with a promise that the defendant no.1 will bring another painting by M.F. Hussain to replace the art taken back by the defendant no.1. Again, the said letter is completely silent as regards the alleged contract dated 15th February 2005 purportedly entered into by and between the plaintiff no.1 and the defendant no.1. In the letter written by the 1st plaintiff’s London Solicitors to the defendant no.3 dated 17th March 2006 (Exhibit ‘G’ to the plaint) it is alleged that the defendant no.1 had agreed to return the painting if he could not pay the balance within 6 months of the initial payment. No such agreement is found in the alleged contract set out at Exhibit ‘A’ to the plaint. Though the Advocates for the defendant no.1 in their reply letter dated 24th March 2006 categorically stated that the said document "Exhibit ‘A’ to the plaint" is a fabricated document and if there is any signature thereon, the fabricated document is not signed by the defendant no.1 and is a forgery, the plaintiffs even after more than two and half years did not take any steps to obtain a report of an expert in support of the plaintiff’s case. This fact was discussed when this notice of motion was partly heard by this Court on 16th December 2008. On that day, this Court had inquired whether the 1st plaintiff had in the last 3 years showed in his income tax returns that an amount of Rs.5,00,000/-is payable to the 1st plaintiff by the defendant no.1. The learned Advocate for the plaintiffs had applied for time to answer the said query. The matter was, therefore, adjourned upto 18th December 2008. On 18th December 2008, the learned Advocate for the plaintiffs sought to file an additional affidavit bringing on record a report of handwriting expert obtained in the intervening period. Since the matter was part heard and since the matter was adjourned only for the aforesaid limited purpose, the said additional affidavit is not taken on record by this Court. On 18th December 2008, the learned Advocate for the plaintiffs sought to file an additional affidavit bringing on record a report of handwriting expert obtained in the intervening period. Since the matter was part heard and since the matter was adjourned only for the aforesaid limited purpose, the said additional affidavit is not taken on record by this Court. As regards, the query raised by the Court, the Advocate for the plaintiffs stated that the 1st plaintiff has not filed his income tax returns. 19. In view of the aforesaid, I am of the prima-facie view that the plaintiff has taken delivery of the said painting alongwith the relevant certificates / documents upon payment of the entire consideration of Rs.15,00,000/-. The defendant no.1 had from time to time given certain paintings from his collections to the plaintiffs on ‘sale or return’ basis which had no connection with the transaction pertaining to the said painting. The agreement Exhibit ‘A’ to the plaint also appears to be a got-up document. The entire story of unpaid purchase price appears to have been created by the plaintiffs after realizing that the said painting sold by them to the 1st defendant on 15th February 2005 for Rs.15,00,000/- would fetch more than Rs.27,00,000/- at the auction in New York. The plaintiffs have not even made out a prima-facie case in support of their contention that the defendant no.1 has not paid the entire purchase price of the said painting and that the plaintiffs are entitled to repudiate the said sale. In any event, if the plaintiffs succeeds in establishing the fact that the plaintiff no.1 has to recover any amount towards the alleged unpaid price of Rs.5,00,000/-, the plaintiffs would be entitled to get a money decree as sought by the plaintiffs in the suit. The balance of convenience is in favour of the defendant no.1 and against the plaintiff. 20. In view thereof, the notice of motion is dismissed with no orders as to costs.