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2017 DIGILAW 120 (GUJ)

Baroda Extrusion Ltd. v. SICOM Ltd.

2017-01-18

B.N.KARIA, M.R.SHAH

body2017
JUDGMENT : M.R. Shah, J. 1. Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned Commercial Court, Vadodara dated 29.09.2016 passed below Exh.1 in Commercial Civil Suit No. 275 of 2016, by which, the learned Commercial Court has dismissed the said suit on the ground that the same is vexatious and frivolous, the original plaintiffs have preferred the First Appeal. That the original defendant No. 1 is public financial institution and the original defendant No. 2 is assets reconstruction company. The proceedings were initiated by the defendant Nos. 1 and 2 under the provisions of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as SARFAESI Act), against the plaintiffs for huge sum of dues payable by the plaintiffs. The proceedings against original plaintiffs for recovery of remaining loan amount was also filed by the defendant No. 1 company before the DRT, Ahmedabad. That the proceedings under the SARFAESI Act were challenged by the plaintiff No. 2, before the Bombay High Court. The original plaintiff No. 2 also filed Securitization Application No. 95 of 2015 against the defendant No. 1 before the DRT-II, Ahmedabad. One another Writ Petition was also filed by the plaintiff No. 2 before the Bombay High Court against the SICOM Limited and others including Union of India, Governor, State of Maharashtra, Attorney General of India, Secretary, Department of Finance, SICOM ARC Limited, Gujarat Press Samachar, Sandesh Press, Divya Bhaskar, Loksatta, Gujarat Daily, Times of India, Free Press Journal etc. That number of other proceedings were initiated by the plaintiffs. That thereafter, the plaintiffs instituted present being Commercial Civil Suit No. 275 of 2016 before the Commercial Court, Vadodara against the respondents here in original defendants, in which, plaintiffs have sought following reliefs. (a) That this Hon'ble Court may be pleased to pass an executable decree in favour of the plaintiffs directing the Defendant Nos. 1 and 2 to pay a sum of Rs. 200/- Crores (Rupees Two Hundred Crores only) with pendente lite and future interest @ 18% per annum for compensation for breach of agreement, loss, damages, and defamation by the Defendants. (b) That pending this suit, this Hon'ble Court be pleased to restrain defendant No. 1 to take any legal action for recovery of amount against plaintiff Nos. 200/- Crores (Rupees Two Hundred Crores only) with pendente lite and future interest @ 18% per annum for compensation for breach of agreement, loss, damages, and defamation by the Defendants. (b) That pending this suit, this Hon'ble Court be pleased to restrain defendant No. 1 to take any legal action for recovery of amount against plaintiff Nos. 1, 2 and 3 and from taking actual possession of plaintiff No. 1 company, and their properties and accepting bids of plaintiffs properties. (c) That pending the hearing and disposal of this suit, the defendant Nos. 1 and 2 be ordered to deposit such security before this Court to secure the claim of the plaintiffs as this Hon'ble Court deems fit in the interest of justice in the circumstances of the current case. (d) This Hon'ble Court may be pleased to direct defendant No. 9 to cancel the banking financial institution license of defendant No. 1 as they are doing several illegal acts and breach of permission in any way delegating power under Sections 21 and 43(A) which is not given to them in notification dated 11th December, 1986 and also of forming and operating bogus Asset Reconstruction Office known as SICOM ARC as the same is working without "Asset Reconstruction Company" and Debt recovery agent license which is mandatory and delegating the powers illegally and out of law even to their officers. Also serious inquiry against defendant No. 1 and all the board of directors of defendant No. 1 and defendant No. 2 as since 1986 several business units have been suffered due to defendants illegal activities. (e) That this Hon'ble Court may be pleased to grant any other relief to the plaintiffs as this Hon'ble Court deems fit and proper in the interest of justice. (f) That the Hon'ble Court may be pleased to allow costs of this suit to the plaintiffs. 1.1 That the learned Commercial Court heard the learned counsel for the plaintiffs on maintainability of the suit for the reliefs sought in the plaint. After hearing the learned counsel appearing on behalf of the plaintiffs and considering the reliefs sought in the plaint and considering the provision of Recovery of the Debts Due to Bank and Financial Institution and provisions of SARFAESI Act, the learned Judge has observed that the suit in terms prayers (b) and (c) are not maintainable before the Commercial Court. After hearing the learned counsel appearing on behalf of the plaintiffs and considering the reliefs sought in the plaint and considering the provision of Recovery of the Debts Due to Bank and Financial Institution and provisions of SARFAESI Act, the learned Judge has observed that the suit in terms prayers (b) and (c) are not maintainable before the Commercial Court. Considering the various proceedings/litigations initiated by the plaintiffs and against the plaintiffs and considering the fact that reliefs sought in the present suit were sought by the plaintiffs before the Bombay High Court in Writ Petition No. 770 of 2013, the learned Judge has observed that present suit is nothing but a frivolous and vexation and by impugned order, the learned Commercial Court has dismissed the said suit with exemplary cost quantified at Rs. 50,000/-. 1.2 Feeling aggrieved and dissatisfied with the impugned order passed by the learned Commercial Court in dismissing suit for exemplary cost, the original plaintiffs have preferred present First Appeal. 2. Shri Godiwala, learned advocate for the original plaintiffs has vehemently submitted that in the facts and circumstances of the case, the learned Commercial Court has material erred in dismissing the suit that too with exemplary cost of Rs. 50,000/-. 2.1 It is submitted that learned Commercial Court has materially erred in observing that the present suit filed by the plaintiffs before the Commercial Court is vexatious and is frivolous. It is submitted that it might be true that against the some of the defendants, said suit ought not to have filed. It is submitted that however when the plaintiffs prayed for damages against the illegal acts of the defendant Nos. 1 and 2 and because of illegal act on the part of the defendant Nos. 1 and 2 and plaintiffs suffered damages, the learned Commercial Court ought not to have dismissed the said suit. 2.2 It is submitted that merely because the plaintiffs have initiated some proceedings/ litigations before the appropriate Court/forum by that itself it cannot be said that the present suit was frivolous and/or vexatious against all the defendants. No other submissions have been made. Making above submissions, it is requested to allow the present First Appeal. 3. 2.2 It is submitted that merely because the plaintiffs have initiated some proceedings/ litigations before the appropriate Court/forum by that itself it cannot be said that the present suit was frivolous and/or vexatious against all the defendants. No other submissions have been made. Making above submissions, it is requested to allow the present First Appeal. 3. Having heard the learned counsel for the appellants-original plaintiffs and considering the averments in the plaint as well as relief sought in the plaint and various litigations initiated by the plaintiffs before the other Courts including Bombay High Court and the proceedings initiated against the plaintiffs by defendant Nos. 1 and 2 for recovery of huge sum of Rs. 47,25,03,203/- we are of the opinion that learned Commercial Court has rightly dismissed the suit as not maintainable as well as on the ground that same is frivolous and vexatious. It is required to be noted that in exercise of powers conferred with defendant Nos. 1 and 2, the defendant Nos. 1 and 2 have taken steps against the plaintiffs under the provision of SARFAESI Act as well as DRT Act. Therefore, for any action taken under the provisions of SARFAESI Act and DRT Act, the Civil Suit is barred. It is also required to be noted that with respect to the damages sought/prayed in the suit against the defendant Nos. 1 and 2 and others the very relief was sought by the plaintiffs before the Bombay High Court in Writ Petition No. 770 of 2013. For the similar relief and cause of action, present suit has been preferred before the Commercial Court, Vadodara, which is rightly held to be frivolous and vexatious. 4. The learned Commercial Court has taken note of various litigations initiated by the plaintiffs as well as initiated against the plaintiffs. Therefore, having been satisfied that for some of the reliefs, more particularly, in regard to prayers (b) and (c), Civil Court/ Commercial Court has no jurisdiction and for rest of the reliefs, it is found that the suit is vexatious and frivolous, it cannot be said that learned Commercial Court has committed any error. Under Order VII, Rule 11 of the Code of Civil Procedure, it is the duty cast upon the Court to stop such frivolous litigations at the threshold. Under Order VII, Rule 11 of the Code of Civil Procedure, it is the duty cast upon the Court to stop such frivolous litigations at the threshold. 4.1 The learned Commercial Court has taken note of various litigations initiated by the plaintiffs as well as against the plaintiffs, which are as under: (A) Litigation initiated by the Plaintiffs: (i) Criminal Complaint filed by Mr. Parasmal Kanugo, as authorised officer of Plaintiff No. 1 in the Court of Judicial Magistrate, Savli, District Vadodara against M/s. S.K. Traders for the offences punishable under Sections 406, 420, 504 and 506(2) of Indian Penal Code. (ii) Writ Petition No. 770 of 2012 filed by Parasmal Kanugo against UOI, SICOM Limited, V.C. Deo, Ms. Rajshree Parab, Ms. Pallavi and S.K. Enterprises in Hon'ble High Court of Mumbai inter aha seeking the relief against the notice u/s. 13(2) of SARFA ESI Act and further relief against SICOM Limited that it is not Banking or Financial Institution and also sought the relief of compensation for damages and loss of Rs. 60 crores. (iii) Parsamal Kanugo filed Securitization Application No. 95 of 2015 against the SICOM Limited at DRT - II, Ahmedabad. (iv) Parasmal Kanugo filed the Writ Petition (L) No. 2426 of 2014 in the High Court of Mumbai against SICOM Limited, Mr. V.C. Deo, Ms. Rajshree Parab, Ms. Pallavi, S.K. Enterprises, UOI, CIBIL. The Governor, State of Maharashtra, Attorney General of India, Secretary, Department of Finance, SICOM ARC LIMITED, Gujarat Press Samachar, Sandesh Press, Divya Bhaskar, Loksatta Gujarat Daily, Times of India, 10 Free Press Journal, India Express seeking similar reliefs. (v) Securitization Application No. 69 of 2013 filed by the plaintiff Company and Reena Patel against SICOM Limited, Senior Manager and authorized officer of SICOM Limited, Ms. Rajshree Parab, Ms. Pallavi, Sachin Patel and Vipul Patel (auction purchasers) before DRT, Mumbai (vi) Criminal Complaint No. 48 of 2015 filed by the Parasmal Kanugo against SICOM Limited, Rajshree Parab, Ms. Pallavi and S.K. Enterprises in the Court of Ld. Judicial Magistrate, Savli, Vadodara for the offences punishable under sections 209, 211, 406, 418, 420, 469, 501, 501(b), 502, 506, 120(B) and 114 of Indian Penal Code. (vii) Reference of (sic) filed by the Plaintiff Company under section 15(1) of the Sick Industrial Companies registered before BIFR as Case No. 163 of 2015 on 26.11.2015. Judicial Magistrate, Savli, Vadodara for the offences punishable under sections 209, 211, 406, 418, 420, 469, 501, 501(b), 502, 506, 120(B) and 114 of Indian Penal Code. (vii) Reference of (sic) filed by the Plaintiff Company under section 15(1) of the Sick Industrial Companies registered before BIFR as Case No. 163 of 2015 on 26.11.2015. (viii) Contempt Petition in DRT - I, Mumbai filed by the Plaintiff Company against defendant Nos. 1 to 5 (B) Litigations initiated by Defendant/Defendants against the plaintiffs: (i) Criminal Complaint No. 6302224/SS of 2012 under Sections 138 and 141 read with Section 142 of N.I. Act filed by SICOM: Limited vs. Baroda Extrusion Limited, Mr. Parasmal Kanugo, Mr. Alpesh P. Manugo, Rina G Patel, Mr. Chandrakant Kushaldas and Mr. Keshrichand Shah in the Court of Ld. MM, Andheri Mumbai. (ii) O.A. No. 166 of 2013 filed by the SICOM Limited against Plaintiff No. 1 for recovery of Rs. 47,25,03,203/- in DRT III, Mumbai. (iii) Company Petition No. 192 of 2014 by SICOM Limited against Plaintiffs in the High Court of Gujarat for winding up of Plaintiff No. 1 Company dismissed on 29.09.2015. 4.2 That thereafter, in para 8, learned Commercial Court has observed as under: 8. The some of aforesaid litigations have been initiated by the plaintiffs on the similar facts against the defendants herein for the similar reliefs. The nature of litigations initialed by the Plaintiffs clearly transpire that the plaintiffs left no stone unturned to obstruct the recovery of the public money. The Plaintiff company has also gone ahead to stall the proceedings of recovery against it by initiating the proceedings under section 15 of the Sick Industrial Company Act before BIFR. The parties have knocked the doors of all possible Forums/ Courts to get settled their personal scores. The parties cannot be permitted to occupy each and every forum/court available to them to get settled their personal scores in the guise of sharp and clever pleadings. The Court cannot be taken as granted for entertaining the multifarious proceedings. Now the time has come when such type of vexatious and frivolous litigation must be stopped at the threshold of the court. Such type of vexatious and frivolous cannot be permitted to occupy the dockets of the court, therefore, present suit is deserve to be dismissed at the threshold with the exemplary costs of Rs. Now the time has come when such type of vexatious and frivolous litigation must be stopped at the threshold of the court. Such type of vexatious and frivolous cannot be permitted to occupy the dockets of the court, therefore, present suit is deserve to be dismissed at the threshold with the exemplary costs of Rs. 50,000/- (Rupees Fifty Thousand only) and accordingly, I pass the following orders. ORDER The present suit is dismissed with the exemplary costs of Rs. 50,000/- (Rupees Fifty Thousand only) to be deposited in District Legal Services Authority within 7 days from the date of this order. 5. At this stage, decision of the Hon'ble Supreme Court in the case of T. Arivandandam vs. T.V. Satyapal, (1977) 4 SCC 467 : AIR 1977 SC 2421 is required to be referred to. In the case of T. Arivandandam (supra), the Hon'ble Supreme Court has observed that if in a meaningful - not formal and reading of the plaint it is manifestly vexatious and merit less, in the sense of not disclosing a clear right to sue, the learned trial Court should exercise its power under Order VII, Rule 11 of the CPC, taking care to see that the ground mentioned therein is fulfilled. It is further observed that if cleaver drafting has created the illusion of a cause of action, nip it in the bud at the first hearing by examining the party searchingly under Order X, CPC. It is further observed that an activist Judge is the answer to irresponsible law suits. While considering the duty of the counsel, the Hon'ble Supreme Court has observed in para 7 as under: "7. We regret the infliction of the ordeal upon the learned Judge of the High Court by a callous party. We more than regret the circumstances that the party concerned has been able to prevail upon one lawyer or the other to present to the Court a case which was disingenuous or worse. It may be a valuable contribution to the cause of justice if counsel screen wholly fraudulent and frivolous litigation refusing to be beguiled by dubious clients. And remembering that an advocate is an officer of justice he owes it to society not to collaborate in shady actions. The Bar Council of India, we hope will activate this obligation. It may be a valuable contribution to the cause of justice if counsel screen wholly fraudulent and frivolous litigation refusing to be beguiled by dubious clients. And remembering that an advocate is an officer of justice he owes it to society not to collaborate in shady actions. The Bar Council of India, we hope will activate this obligation. We are constrained to make these observations and hope that co-operation of the Bar will be readily forthcoming to the Bench for spending judicial time on worthwhile disputes and avoiding the distraction of sham litigation such as the one we are disposing of. Another moral of this unrighteous chain litigation is the gullible grant of ex-parte orders tempts gamblers in litigation into easy Courts. A Judge who succumbs to ex-parte pressure in unmerited cases helps devalue the judicial process. We must appreciate Shri Ramasesh for his young candour and correct advocacy." 5.1 Considering the aforesaid facts and circumstances, we see no reason to interfere with the impugned order passed by the learned Commercial Court, Vadodara in dismissing the suit with exemplary cost. We are in complete agreement with the view taken by the learned Commercial Court. No interference of this Court is called for. In view of the above and for the reasons stated above, present appeal fails and same deserves to be dismissed and is accordingly dismissed. 5.2 In view of dismissal of the First Appeal, Civil Application stands dismissed. Appeal Dismissed.