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2014 DIGILAW 1755 (BOM)

Pushpanjali Tie Up Pvt. Ltd v. Renudevi Choudhary

2014-08-07

B.P.COLABAWALLA, S.J.VAZIFDAR

body2014
JUDGMENT (Per S.J. Vazifdar, J.) 1. This is an appeal against the order of the learned single Judge, dismissing the notice of motion filed by the appellant under Order 39 Rule 2-A of the Code of Civil Procedure, challenging the transfer/confiscation of the shares which are the subject matter of the suit on the ground that the transfer was in breach of an ad-interim order dated 29.10.2013. 2(A). The ad-interim order dated 29.10.2013 was passed in an earlier notice of motion being Notice of Motion (Lodging) No.2150 of 2013, which was finally heard and dismissed by the order of the learned single Judge dated 05.02.2014. The appellant's appeal against that order was also dismissed. With the dismissal of the notice of motion, the ad-interim order automatically came to an end. The appellant however, contends that despite the dismissal of its notice of motion, it is entitled to the reliefs as respondent No.3 had committed a breach of the ad-interim order. (B). In our view there is no contempt by respondent No.3. We have upheld the impugned order dismissing the present notice of motion inter-alia on the ground that respondent No.3 was, for all practical purposes, given no notice of the application for interim reliefs and, more important, had no knowledge of the ad-interim order. For instance the ad-interim order expressly directed that it should be served by hand delivery. The appellant admittedly did not do so and seeks to impute knowledge on the basis of e-mails addressed to respondent No.3 after closing hours of the concerned department of respondent No.3. 3(A). The appellant had filed the above suit for money, for an order directing respondent Nos.1 to 2 to transfer into its DP account the balance shares lying in various accounts of respondent Nos.1 and 2 which were handed over as collateral security in pursuance of certain agreements and a permanent injunction restraining respondent Nos.1, 2 and 3 from selling, transferring and/or alienating the balance shares lying in their DP accounts, including in the pool account of respondent No.3. By an amendment, the appellant also sought an order directing respondent Nos.1, 2 and 3 to transfer into its account, the balance shares lying in the DP accounts of respondent Nos.1 and 2 as well as in the account of respondent No.3, including the pool account of respondent No.3 which were handed over as collateral security by the appellant to respondent Nos.1 and 2 under the said agreements and an order restraining respondent No.3 from selling/transferring, alienating, adjusting any of the balance of the said shares lying in the DP accounts of respondent Nos.1 and 2 as well as the accounts of respondent No.3, including the pool account of respondent No.3. (B). The appellant had filed Notice of Motion (Lodging) No.2150 of 2013 for interim reliefs in terms of the aforesaid reliefs. The notice of motion was dismissed by an order and judgment dated 05.02.2014. The appellant's appeal being Appeal (Lodging) No.92 of 2014 was heard finally and dismissed by our order and judgment dated 12.06.2014. We are informed that a petition for Special Leave to Appeal is pending in the Supreme Court. 4(A). Thus the appellant's notice of motion for interim reliefs has been rejected finally. Prior to these orders, the learned single Judge had passed the said ad-interim order dated 29.10.2013, by which respondent Nos.1, 2 and 3 were restrained from transferring the balance shares lying in the various DP accounts of respondent Nos.1 and 2 which were handed over to them as collateral security under the loan agreements and respondent Nos.4 and 5 were restrained from transferring the said balance shares. The ad-interim order however, ceased to operate upon the final order on the earlier notice of motion. 5. In the present notice of motion which was rejected by the impugned judgment the appellant seeks inter-alia the same interlocutory reliefs on the ground that respondent No.3 has committed a breach of the ad-interim order dated 29.10.2013. Indeed even if the respondents were served with the adinterim order of which breach is alleged and status-quo in respect of the shares had been maintained, it would have made no difference in view of the appellant's first notice of motion having been dismissed by the learned single Judge and by our order and judgment dated 12.06.2014. That however, would not be a ground for condoning a breach of any order, including an ad-interim order. 6. That however, would not be a ground for condoning a breach of any order, including an ad-interim order. 6. As we have dismissed the appeal on merits, it is not necessary to consider whether even if the status-quo ante is ordered in this notice of motion, the appellant would be entitled for all time to come to interlocutory reliefs despite their application for the same having been rejected in the earlier proceedings. We have also not considered it necessary to deal with Mr.Chagla's preliminary objection regarding the maintainability of the appeal as we are inclined to dismiss the appeal on merits. 7. The question is whether there was a breach of the adinterim order dated 29.10.2013. The appellant's case in this regard is as follows. The appellant moved the application for ad-interim reliefs without notice to the respondents at 11:00 a.m. on 29.10.2013. The learned Judge directed the appellant to give the respondents notice and kept the application at 3:00 p.m. on the same day. The appellant sought to serve the papers and proceedings upon respondent No.3 at 3:00 p.m. on the same day but respondent No.3 refused service. The ad-interim order was passed at 4:00 p.m. and a copy thereof was served on respondent No.3 between 6:00 p.m. to 8:00 p.m. on the same day by several e-mails. The appellant accordingly contends that respondent No.3 had notice of the ad-interim order at 6:00 p.m. on 29.10.2013 and despite the same, respondent No.3 committed a breach thereof by transferring/forfeiting the shares. 8. The appellant's case is difficult to accept on both aspects – the service of the proceedings and the service of the ad-interim order. 9. It is difficult to hold conclusively that service was in fact sought to be effected on respondent No.3 at 3:00 p.m. Firstly the post lunch court session commences at 3:00 p.m. It is at 3:00 p.m. that the Court would normally hear an urgent application. The CCTV camera at the office of respondent No.3 shows the person having entered the premises to serve the papers only at 3:41 p.m. The service was therefore, sought to be effected after the application was made. 10. The CCTV camera at the office of respondent No.3 shows the person having entered the premises to serve the papers only at 3:41 p.m. The service was therefore, sought to be effected after the application was made. 10. Even assuming that service was sought to be effected at 3:00 p.m. and that the application was heard at 4:00 p.m. as alleged by the appellant, it would have been physically impossible for respondent No.3 to appear and defend itself by 4:00 p.m. i.e. within less than an hour. Moreover, it is curious that the appellant sought to serve respondent No.3 only at 3:00 p.m., which is when the application for ad-interim reliefs was to be made. The appellant itself stated that it had moved the application for urgent ad-interim reliefs at 11:00 a.m. when the learned single Judge directed the notice to be issued to the respondents and placed the matter at 3:00 p.m. on the same day. There was no justification for not having served respondent No.3 for four hours, although the third respondent's office is only a five minute walk from the Court. 11. The only reasonable inference is that the appellant's attempt was to ensure the absence of respondent No.3 at the hearing of the ad-interim application. 12. Considering the conduct of the appellant in serving respondent No.3, we are not inclined to draw an inference in its favour that it served respondent No.3 as alleged by it. 13. This brings us to the second question viz. whether respondent No.3 was aware of the ad-interim order on 29.10.2013 as alleged by the appellant. The appellant's case is that the ad-interim order was passed at 4:00 p.m. and a copy thereof was served on respondent No.3 between 6:00 p.m. to 8:00 p.m. on the same day by several e-mails. The appellant accordingly contends that respondent No.3 had notice of the ad-interim order at 6:00 p.m. on 29.10.2013 and despite the same, respondent No.3 committed a breach thereof by transferring/forfeiting the shares. 14. The case of respondent No.3 that it came to learn about the order only at 8:45 a.m. the next day i.e. on 30.10.2013, appears probable to us. 15. 14. The case of respondent No.3 that it came to learn about the order only at 8:45 a.m. the next day i.e. on 30.10.2013, appears probable to us. 15. The working hours of the concerned department of respondent No.3 are between 9:00 a.m. to 6:00 p.m. It is not unbelievable that respondent No.3 did not read the e-mails as they were delivered after the closing hours of the concerned department of respondent No.3. What is more important is that the appellant was directed by the ad-interim order dated 29.10.2013 to serve a copy of the order “by hand delivery”. There is no explanation why the appellant did not do so and chose instead to effect the service by e-mails. The appellant having chosen to ignore the ad-interim order directing it to serve respondent No.3 personally, we see no reason to presume in its favour that respondent No.3 had knowledge of the order on 29.10.2013 itself. 16. Mr.Setalvad relied upon section 13(2)(b) of the Information Technology Act, 2000 (IT Act) to contend that respondent No.3 must be deemed to have had knowledge of the ad-interim order dated 29.10.2013 at 6:00 p.m. on that day in view of the e-mails sent by it. Section 13 reads as under :- “13. Time and place of despatch and receipt of electronic record.— (1) Save as otherwise agreed to between the originator and the addressee, the despatch of an electronic record occurs when it enters a computer resource outside the control of the originator. (2) Save as otherwise agreed between the originator and the addressee, the time of receipt of an electronic record shall be determined as follows, namely:— (a) if the addressee has designated a computer resource for the purpose of receiving electronic records,— (i) receipt occurs at the time when the electronic record enters the designated computer resource; or (ii) if the electronic record is sent to a computer resource of the addressee that is not the designated computer resource, receipt occurs at the time when the electronic record is retrieved by the addressee; (b) if the addressee has not designated a computer resource along with specified timings, if any, receipt occurs when the electronic record enters the computer resources of the addressee.” 17. Mr.Setalvad submitted that irrespective of anything and for all purposes, including for the purposes of contempt proceedings, a party must be deemed to have knowledge of the contents of an email on the date and at the time stipulated in section 13(2). He further submitted that the determination of the time of knowledge as stipulated in section 13(2) is mandatory in view of the words “ …... shall be determined as follows ….” therein. In the present case section 13(2)(b) applies. Accordingly, he submitted, respondent No.3 must be deemed to have had knowledge of the ad-interim order at 6:00 p.m. on 29.10.2013 in view of the e-mail messages sent to it between 6:00 p.m. and 8:00 p.m. on 29.10.2013 communicating the ad-interim order. 18. The error in Mr.Setalvad's submission is on account of mistaking the time of receipt of an electronic message to be the time of acquiring knowledge of its content. Section 13(2), as is evident from its plain language, determines “the time of receipt of an electronic record”. Although a person may be said to have received an electronic record when it enters his computer resource, it does not necessarily mean or follow that he had knowledge either of the receipt or of the contents of the same at that time viz. at the very moment of the receipt of the electronic record. Even assuming that the legislature could enact a deeming provision fixing the time when a person is deemed to have acquired knowledge of an electronic record, section 13(2) does not contain such a deeming provision. 19. In any event section 13 of the IT Act is not relevant for deciding whether a party had knowledge of an order for the purpose of the proceedings for contempt of court or for taking action for contempt of court, whether under the Contempt of Courts Act or under Order 39 Rule 2-A of the Code of Civil Procedure. Section 13(2), as we held earlier, determines “the time of receipt of an electronic record”. It does not determine the time of knowledge of the contents of the electronic record or even of the receipt of the electronic record. It would be difficult to have a statutory provision to determine the time when a person acquires knowledge of something. That would depend on the facts of a case. It does not determine the time of knowledge of the contents of the electronic record or even of the receipt of the electronic record. It would be difficult to have a statutory provision to determine the time when a person acquires knowledge of something. That would depend on the facts of a case. Even if there is such a deeming provision in a statute, a person cannot be held guilty of committing a breach of an order on the basis thereof although he in fact had no knowledge of the contents of the electronic message. Take for instance a case where a person establishes that although an electronic record was received in his computer resource on a particular date, he in fact did not access the same till much later. He cannot then be held guilty of having committed a breach of the order for he had no knowledge of the same. A person may not be in a position to access the electronic record much after it was received in his computer for a variety of reasons. For instance, he may have been ill, he may have lost his computer, he may not have access to the computer or there may be an area where there is no internet access. Questions of contempt stand on an entirely different footing. Thus merely because an electronic record is deemed to have been received at the time when it enters a persons computer resource, it does not necessarily follow that he had knowledge of the communication at that point of time especially in proceedings for contempt or while deciding whether the person committed wilful breach of an order of a court. 20. The time of receipt of an electronic record may, at the highest raise a presumption of the knowledge of the receipt and/or the contents thereof but nothing more in contempt proceedings. We are not inclined to draw such a presumption without anything more especially in a petition/motion for contempt or under Order 39 Rule 2-A of the CPC. 21. In the present case, it is not even open to the appellant to rely upon these provisions in view of it having served the ad-interim order by e-mails despite the learned Judge having expressly directed the appellant to serve it upon the respondents “by hand delivery”. 22. 21. In the present case, it is not even open to the appellant to rely upon these provisions in view of it having served the ad-interim order by e-mails despite the learned Judge having expressly directed the appellant to serve it upon the respondents “by hand delivery”. 22. The case of respondent No.3 regarding the manner in which it transferred the shares has not even been denied. The third respondent's case is that the impugned transfers were effected on the night of 29/30.10.2013 at 2:20 a.m. on 30.10.2013. The snap shots of the screens of the Central Depository Services (India) Limited indicate the time of the transactions/transfers. In paragraph 5 of the additional affidavit in reply, respondent No.3 has set out the manner in which it transferred the shares between 2:30 a.m. to 3:30 a.m. by its DP Department for the purpose of early pay in on the start of the day for the sale of the shares effected on 29.10.2013. It is further stated that rest of the shares were also transferred along with the said shares as defendant No.3/respondent No.3 desired to sell the rest of the shares in the early morning of 30.10.2013 and availing early pay in for the same. It is further stated that after service of the ad-interim order on 30.10.2013 at 8:45 a.m., respondent No.3 had not sold any shares from the confiscated shares even though the injunction did not cover the DP account of defendant No.3/respondent No.3. The facility of early pay in was granted by a circular dated 05.08.2005 issued by the National Securities Clearing Corporation Limited for early pay in securities. 23. Paragraph 9 of the appellant's affidavit in rejoinder dealt with paragraph 5. The appellant merely stated that the contents of paragraph 5 are of no relevance. It is not even suggested that the transactions did not take place as stated in paragraph 5 of the additional affidavit. It is not contended that respondent No.3 was not entitled to avail of the circular dated 05.08.2005. 24. If respondent No.3 in fact had knowledge of the ad-interim order dated 29.10.2013 and intended to breach the same, it would in all probability have disposed of all the shares. The appellant has not suggested any reason why some of the shares were in fact not disposed of by respondent No.3. 25. In the circumstances, the appeal is dismissed.