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2012 DIGILAW 946 (CAL)

PARMANAND AGARWAL v. PARMESHWAR DAS AGARWAL

2012-10-12

JOYMALYA BAGCHI, KALYAN JYOTI SENGUPTA

body2012
JUDGMENT K. J. Sengupta, ACJ.: These appeals are directed against a common order dated 3rd August, 2010 whereby the learned Single Judge was pleased to dispose of three interlocutory applications, namely G.A. No. 1009 of 2008, G.A. No. 2123 of 2009 and G.A. 407 of 2010. Pursuant to an earlier order both the appeals were directed to be heard analogously. Hence they are disposed of by this common judgement and order. 2. APO No. 365 of 2010 has been taken out by the plaintiffs in the suit against the order of rejection of their prayer for interim relief in G.A. No. 1009 of 2008. The respondent Nos. 1 and 2 in the said appeal (being defendant Nos. 1 and 2 in the suit) have filed a cross-objection therein challenging the order dated 03.08.2010 to the extent it directs them to deposit a sum of Rs. 4 crore with Registrar, Original Side to the credit of the suit and also directs continuation of the interim order till such deposit is made. 3. APO No. 366 of 2010 is also taken out by the said defendant Nos. 1 and 2 in the suit challenging the aforesaid order of the learned Single Judge to the extent its permits amendment of the plaint as prayed for by the plaintiffs in the said suit in G.A. No. 407 of 2010. 4. For an affective adjudication of the aforesaid appeals, reliefs claimed by the plaintiffs in the suit in G.A. No. 1009 of 2010 and in G.A. No. 407 of 2010 are set out herein below: 5. In G.A. No. 1009 of 2010 the plaintiffs (being appellants in APO No. 365 of 2010) prayed for the following interim reliefs: "a) An interim order of injunction thereby restraining the respondents from taking any steps for giving effect to the Memorandum of Understanding. b) Injunction restraining the Respondents from transferring any of the Sponge Iron Plants of the respondent No.7 in any manner whatsoever. b) Injunction restraining the Respondents from transferring any of the Sponge Iron Plants of the respondent No.7 in any manner whatsoever. c) A special officer/Receiver be appointed over an in respect of the 275000 shares held by the petitioner in the respondent No.7 company and returned to the respondent No.1 in compliance of their obligation under the MOU which has been transferred recorded in the name of the Sukanya Trading Pvt. Ltd. d) An order of injunction be passed retraining the respondent No.1 either by himself or his nominees companies under his control from causing any enhancement of the share capita of respondent No.7 company; e) An order of injunction be passed retraining the respondents and the shareholders from transferring the shares of the Respondent No.7 either within themselves or to outsiders: f) An Administrator Special Officer be appointed to take possession of the statutory books and records of SEPL and to keep the same under his control and custody and to administer and control the assets of the respondent No.7: g) An order of injunction be passed restraining the respondent No.9 from exercising any voting rights in respect of the said 2,75,000 shares in the respondent No.7: h) An order of injunct ion be passed retraining the respondent Nos. 1 and 3 from disposing off, alienating, transferring, encumbering the properties mentioned in annexure (I) hereto in their individual names and or in the control of their family members and/or companies: i) A Receiver Administrator be appointed over the properties mentioned in annexure'Q1' to maintain status quo/present condition of the same and to make inventory of all the assets including plaints and machinery's of the respondent Nos.5 and 7: j) Ad-interim orders in terms of prayers above: k) Pass such other order or orders as Your Lordships may deem fit and proper. 6. The plaintiffs also took out two other applications being G.A. No. 407 of 2010 praying for amendment of the plaint consequent upon their discovery of other family assets and businesses allegedly concealed by the first defendant and prayed for the following reliefs therein: a) Proposed amendment to the plaint and Schedule-D of the plaint filed in the above suit being C.S. No.47 of 2008 in the manner morefully shown in red ink in the copy of the plaint being Annexure-F hereto allowed. b) An order of injunction be passed restraining the respondents from dealing with alienating and/or encumbering the said properties shown in Schedule 'C' hereto and/or dealing with or changing the shareholding pattern of the said companies being Schedule 'E' hereto: c) The Receiver/Special Officer be appointed to make an inventory of the properties disclosed in paragraph 5 hereto and the books of accounts as well as records or document of the companies as mentioned in paragraph 7 and 8 hereto to take symbolic possession thereof. d) Leave be given to the plaintiff to the reverified and reaffirm and amendment claims filed in the above suit C.S. No.47 of 2008. e) Direction be given upon the department to carry out the amendment in terms of prayer A within the period of 3 weeks from the date of passing of the order. f) Direction be given upon the department we issue a fresh writ of summons. g) Returnable date of the writ of summons be extended by 11 weeks from the date of issue. h) Ad-interim orders in terms of prayers above. i) Such other and/or further order or orders be made and/or direction or directions be given as this Hon'ble Court may deem fit and proper. 7. Alongside, the plaintiffs took out another application being G.A No. 2423 of 2009 praying for inspection of documents seized and taken custody in the course of income tax investigation relating to the aforesaid additional family assets which they claimed were concealed by the first defendant. 8. After a meticulous and elaborate assessment of facts and arguments of the respective parties, the learned Single Judge by the impugned judgement and order dated 03.08.2002, inter alia, came to a finding that the plaintiffs had failed to make out a strong enough case of repudiation of the aforesaid memorandum of understanding constituting family settlement so as to grant the interim reliefs as prayed for in G.A No. 1009 of 2010. However, the learned Single Judge directed the defendant No.1 to deposit a sum of Rs. 4 crores with the Registrar, Original Side to the credit of the suit and further directed that the interim order shall subsist till such deposit is made. 9. However, the learned Single Judge directed the defendant No.1 to deposit a sum of Rs. 4 crores with the Registrar, Original Side to the credit of the suit and further directed that the interim order shall subsist till such deposit is made. 9. By the self-same order the learned Single Judge however allowed the amendment of the plaint as sought for by the plaintiffs in G.A No. 407 of 2010 with regard to additional family assets which the plaintiffs claimed had been subsequently revealed pursuant to income tax investigation and which according to them ought to form part of the joint family property. 10. Mr. A.K. Mitra, learned Advocate General appearing for the plaintiffs/appellants in APO No. 365 of 2010 submitted that the learned Single Judge failed to consider that the three several memoranda of understanding which had been executed by and between the parties had not been fully implemented and that both the status as well as the corpus of the joint family assets was not fully severed. He further insisted that the learned Single Judge failed to consider that the case of the plaintiffs was not only one of misrepresentation but also of fraud. He submitted that the plaintiffs had been induced to execute the family settlement only with the ulterior object of removing their influence from the defendant No.7 company, the flagship company of the joint family, and after achieving such end the remainder of the family settlement was not implemented. 11. He further submitted that since the learned Single Judge had permitted the amendment of the plaint it was a prima facie acceptance of the fact that the entire corpus of the family assets were not known to the parties when the said memorandum of understanding were executed and the same was concealed by defendant No.1 clearly making out a case of fraud. 12. He further contested that the breach of essential terms of the family settlement admittedly constituted repudiation thereof and the same was not required to be assessed on affidavit evidence. 13. Mr. Mitra, however, admitted that in view of the case made out by the plaintiff that the family settlement stood repudiated his clients had neither prayed nor were they interested in defending the order passed by the learned Single Judge directing the defendant Nos. 1 and 2 to deposit a sum or Rs. 4 crore with the Registrar, Original Side. Mr. Mitra, however, admitted that in view of the case made out by the plaintiff that the family settlement stood repudiated his clients had neither prayed nor were they interested in defending the order passed by the learned Single Judge directing the defendant Nos. 1 and 2 to deposit a sum or Rs. 4 crore with the Registrar, Original Side. On the other hand, he prayed that the interim reliefs as prayed for be granted. 14. Mr. S.B. Mukherjee, learned senior advocate appearing for the defendant Nos. 1 and 2 being respondent Nos. 1 and 2 in A.P.O. No. 364 of 2010 and the appellants in A.P.O. Nos.365, 366 and 109 of 2010 submitted that the learned Single Judge had correctly assessed the state of affairs inasmuch as the family settlement had been given effect to a large extent and the respective shares of the parties in the suit pursuant to the family settlement were in their substantial control. 15. Mr. Mukherjee further contended that once the joint family status was severed in 2007, further acquisition of personal assets could not be mixed with the joint family corpus. He submitted that pursuant to the demerger of defendant No.7 company in terms of the family settlement, proceedings were pending before the Company Court for sanctioning of scheme of arrangement in respect of the said company and any interim order passed in this suit shall adversely affect the said proceeding. 16. In support of his cross-objection in APO No. 365 of 2010 he further submitted that the order directing his client to deposit a sum of Rs. 4 crore was never prayed for by any of the parties nor was it warranted in the facts of the case. In support of his appeal being APO No. 366 of 2010 against the order permitting amendment of the plaint, Mr. Mukherjee submitted that such amendment would change the nature and character of the suit. He argued that, the plaintiffs claimed this suit to be one for partition of joint family assets whereas the amendment sought to include assets and/or legal entities which came into being after the joint family status was severed into 2007. He further disputed the contention that there was any concealment of joint family assets by the defendant No.1 in the instant case. 17. He further disputed the contention that there was any concealment of joint family assets by the defendant No.1 in the instant case. 17. The third defendant in the suit and a respondent in the aforesaid appeals appears to have committed a volta face in the course of the proceeding. Initially, the defendant No.3 supported the case of the defendant No.1 that the family settlement had resulted in complete severance in the joint family status. However, in a latter stage of the proceeding before the Trial Court the said defendant who was to receive the Jharsuguda unit of the defendant No.7 company in terms of the memorandum of understanding altered his stance and claimed that the memorandum of understanding had not been fully implemented and the joint family corpus had remained intact. 18. An appeal against an order granting or refusing interlocutory relief in a suit is essentially against exercise of discretion by the learned Trial Judge. Such discretion of the learned Trial Judge merits interference only if the same is exercised arbitrarily, capriciously or perversely and in such an appeal the Appellate Court would not substitute its own discretion on reassessment of materials on record in place of that of the Trial Court if it is of the opinion that the conclusion of the Trial Court is a reasonable one. In Wander Ltd. and another vs. Antox India Pvt. Ltd. reported in 1990 (supp) SCC 727 a three Judges Bench of the Supreme Court held as follows: "The appeals before the Division Bench were against the exercise of discretion by the Single Judge. In such appeals, the Appellate Court will not interfere with the exercise of discretion of the Court of first instance and substitute its own discretion except where the discretion has been shown to have been exercised arbitrarily or capriciously or perversely or where the Court had ignored the settled principles of law regulating grant or refusal of interlocutory injunctions. An appeal against exercise of discretion is said to be an appeal on principle. The Appellate Court will not reassess the material and seek to reach a conclusion different from the one reached by the Court below if the one reached by that court was reasonably possible on the material. An appeal against exercise of discretion is said to be an appeal on principle. The Appellate Court will not reassess the material and seek to reach a conclusion different from the one reached by the Court below if the one reached by that court was reasonably possible on the material. The Appellate Court would normally not be justified in interfering with the exercise of discretion under appeal solely on the ground that if it had considered the matter at the trial stage it would have come to a contrary conclusion. If the discretion has been exercised by the Trial Court reasonably and in a judicial manner the fact that the Appellate Court would have taken a different view may not justify interference with the Trial Court's exercise of discretion." 19. Similar view was again reiterated by the Apex Court in the case of Purshottam Vishandas Raheja and Another vs. Shrichand Vishandas Raheja and Others reported in 2011 (6) SCC 73 wherein it held: "The test to be applied to assess the correctness of the order of the learned Single Judge would be whether the order is so arbitrary, capricious or perverse that it should be interfered with at an interlocutory stage in an intra-Court appeal". 20. In the present case, the learned Single Judge after an elaborate assessment of facts and rival contentions of the parties appear to have arrived at a factual conclusion that the family settlement had been given effect to a substantial extent and that the respective parties were in effective control of their respective shares in the terms of the said family settlement since 2007. No doubt there were some disputes relating to some aspects appear to have been admittedly there allegations of non-compliance of certain terms of the memoranda of understanding which the learned Single Judge, correctly held required to be decided on affidavit evidence. Furthermore, the learned Single Judge was justified in his opinion that the allegations of non-compliance of the terms of memoranda of understanding by the defendant No.1 did not appear to be strong enough to merit the interim reliefs as prayed for. 21. Other limb of argument of Mr. Furthermore, the learned Single Judge was justified in his opinion that the allegations of non-compliance of the terms of memoranda of understanding by the defendant No.1 did not appear to be strong enough to merit the interim reliefs as prayed for. 21. Other limb of argument of Mr. Mitra's argument that in view of the amendment of the plaint there is a prima facie acceptance of the factum of concealment of additional family assets by the defendant No.1 which constitutes a case of fraud also does not merit grant of an interim order at this stage. Such stance of the plaintiffs was contested by defendant No.1 & 2 on the score that accrual of personal assets post 2007 would not constitute part of the joint family corpus and such rival contentions required to be adjudicated in the course of trial. Hence mere allowing of amendment of the plaint to include the additional family assets as a part of the subject matter of the suit would not simpliciter ground to come to a conclusion of a strong prima facie case of fraud warranting the interim relief in the facts of this case. 22. That apart, grant of interim relief in the instant case with regard to the shares and/or assets of defendant No.7 company would amount to prejudging the main issues in the case and also would affect the proceedings before the Company Court with regard to the prayer for sanctioning of scheme of arrangement in respect of the said defendant No.7 company. 23. We are therefore of the view that the learned Single Judge has come to a reasonable conclusion in the facts of the case not to grant the interim relief to the plaintiffs in the instant case and we do not choose to substitute such discretion of the learned Single Judge since the same neither appears to be arbitrary, capricious or perverse in any manner whatsoever. Accordingly APO No.365 of 2010 stands dismissed. 24. With regard to the counter objection taken by the respondent Nos. 1 and 2 in APO No. 365 of 2010 to the extent the learned Single Judge directed the said respondent No.1 to deposit a sum of Rs. 4 crore with the Registrar, Original Side, we are of the opinion that the same requires to be interfered with. 24. With regard to the counter objection taken by the respondent Nos. 1 and 2 in APO No. 365 of 2010 to the extent the learned Single Judge directed the said respondent No.1 to deposit a sum of Rs. 4 crore with the Registrar, Original Side, we are of the opinion that the same requires to be interfered with. The plaintiffs neither before the Trial Court prayed for in the pleading nor even supported before us, the said direction passed by the learned Single Judge. On the other hand, Mr. Mitra appearing for the plaintiffs candidly admitted that such direction ran against the tenor of the plaintiffs' case that the family settlement stood repudiated. Furthermore, the learned Single Judge appears to have passed the said order ignoring the case of adjustment as claimed by the defendant No.1 in respect of the said amount. We are also of the view that if no specific application for such relief was taken out by the plaintiffs or any prayer was made in support thereof before the Trial Court, the learned Single suo moto did not have jurisdiction to pass such direction for deposit. The Court has power to direct to deposit by a party in a suit on the ground as mentioned under Order 25 of the Code of Civil Procedure and in the present factual matrix no such case has been made out. Furthermore, in view of the fact that the learned Single Judge had come to a prima facie view that the memorandum of understanding had been substantially complied with and the defendant No.1 had claimed adjustment of the said amount, it was wholly unwarranted on the part of the learned Single Judge to pass an order directing the deposit of the said amount which has the effect of a decree. Accordingly, we allow the cross-objection filed by the respondent Nos. 1 and 2 in APO No. 365 of 2010 and set aside the direction of the learned Single Judge directing the defendant No.1 to deposit a sum of Rs.4 crore with the Registrar, Original Side, with a further direction that the interim order will subsist till such deposit is made. 25. 1 and 2 in APO No. 365 of 2010 and set aside the direction of the learned Single Judge directing the defendant No.1 to deposit a sum of Rs.4 crore with the Registrar, Original Side, with a further direction that the interim order will subsist till such deposit is made. 25. With regard to APO No.366 of 2010 challenging the portion of the impugned order permitting amendment of the plaint as prayed for by the plaintiffs in G.A. No. 407 of 2010 we are of the view that the learned Single Judge had correctly applied the law relating to amendment of pleadings. The plaintiffs had sought amendment prima facie on the ground that the facts sought to be pleaded were not within their knowledge and also such prayer was made at the earliest opportunity. 26. The trial in the suit had also not commenced and the learned Single Judge was wholly justified to conclude that amendment at such early stage of the proceeding would not prejudice either of the parties and ought to be permitted. The contention of Mr. Mukherjee that the assets and/or legal entities which were sought to be included as subject matter of the suit did not comprise of the joint family corpus inasmuch as they had come into existence after 2007 and that no case of concealment had been made out are essentially matters of defense which his clients would be entitled to agitate fully in the course of trial by filing written statement, if not filed. The nature and circumstances in such amendment was prayed for in our considered view did not amount to alternation of the nature and character of the suit in any manner. If written statement is not filed, the same may be filed within eight weeks from the date of service of amended copy of the plaint. 27. For the aforesaid reasons we are of the opinion that the impugned order to the extent it permitted amendment of the plaint does not warrant interference and the appeal being APO No.366 of 2010 is accordingly dismissed. Joymalya Bagchi, J.: I agree.